[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 2009 

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________

     SUBCOMMITTEE ON STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS  

                   NITA M. LOWEY, New York, Chairwoman
 JESSE L. JACKSON, Jr., Illinois     FRANK R. WOLF, Virginia
 ADAM SCHIFF, California             JOE KNOLLENBERG, Michigan
 STEVE ISRAEL, New York              MARK STEVEN KIRK, Illinois
 BEN CHANDLER, Kentucky              ANDER CRENSHAW, Florida
 STEVEN R. ROTHMAN, New Jersey       DAVE WELDON, Florida
 BARBARA LEE, California
 BETTY McCOLLUM, Minnesota          

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
    Nisha Desai, Craig Higgins, Steve Marchese, Michele Sumilas, and 
                            Clelia Alvarado,
                            Staff Assistants
                                ________

                                 PART 5
                                                                   Page
 Foreign Assistance in the 21st Century: Proposals for Reform and 
Restructuring.....................................................    1
 Millennium Challenge Account Budget..............................  147
 U.S. Agency for International Development........................  281
 U.S. Department of State Operations Budget.......................  381
 HIV/AIDS and Global Health Programs..............................  525
 Emergency Supplemental Request for Iraq and Afghanistan..........  651
 Fiscal Year 2009 International Affairs Budget Request............  741
 Contributions to International Peacekeeping Activities (CIPA) and 
the Contributions to International Organizations (CIO) Accounts...  809
 U.S. Policy and Programs in Iraq.................................  853
 FY 2009 International Programs Budget............................  917

                                ________

         Printed for the use of the Committee on Appropriations

































PART 5--STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS 
                                FOR 2009
                                                                      

                                                                      




























STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 2009
_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________

     SUBCOMMITTEE ON STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS

                   NITA M. LOWEY, New York, Chairwoman
 JESSE L. JACKSON, Jr., Illinois     FRANK R. WOLF, Virginia
 ADAM SCHIFF, California             JOE KNOLLENBERG, Michigan
 STEVE ISRAEL, New York              MARK STEVEN KIRK, Illinois
 BEN CHANDLER, Kentucky              ANDER CRENSHAW, Florida
 STEVEN R. ROTHMAN, New Jersey       DAVE WELDON, Florida
 BARBARA LEE, California
 BETTY McCOLLUM, Minnesota          
                                    

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
    Nisha Desai, Craig Higgins, Steve Marchese, Michele Sumilas, and 
                            Clelia Alvarado,
                            Staff Assistants

                                ________

                                 PART 5
                                                                   Page
 Foreign Assistance in the 21st Century: Proposals for Reform and 
Restructuring.....................................................    1
 Millennium Challenge Account Budget..............................  147
 U.S. Agency for International Development........................  281
 U.S. Department of State Operations Budget.......................  381
 HIV/AIDS and Global Health Programs..............................  525
 Emergency Supplemental Request for Iraq and Afghanistan..........  651
 Fiscal Year 2009 International Affairs Budget Request............  741
 Contributions to International Peacekeeping Activities (CIPA) and 
the Contributions to International Organizations (CIO) Accounts...  809
 U.S. Policy and Programs in Iraq.................................  853
 FY 2009 International Programs Budget............................  917

                                ________

         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 48-733                     WASHINGTON : 2009

                    COMMITTEE ON APPROPRIATIONS

                   DAVID R. OBEY, Wisconsin, Chairman

 JOHN P. MURTHA, Pennsylvania       JERRY LEWIS, California
 NORMAN D. DICKS, Washington        C. W. BILL YOUNG, Florida
 ALAN B. MOLLOHAN, West Virginia    RALPH REGULA, Ohio
 MARCY KAPTUR, Ohio                 HAROLD ROGERS, Kentucky
 PETER J. VISCLOSKY, Indiana        FRANK R. WOLF, Virginia
 NITA M. LOWEY, New York            JAMES T. WALSH, New York
 JOSE E. SERRANO, New York          DAVID L. HOBSON, Ohio
 ROSA L. DeLAURO, Connecticut       JOE KNOLLENBERG, Michigan
 JAMES P. MORAN, Virginia           JACK KINGSTON, Georgia
 JOHN W. OLVER, Massachusetts       RODNEY P. FRELINGHUYSEN, New Jersey
 ED PASTOR, Arizona                 TODD TIAHRT, Kansas
 DAVID E. PRICE, North Carolina     ZACH WAMP, Tennessee
 CHET EDWARDS, Texas                TOM LATHAM, Iowa
 ROBERT E. ``BUD'' CRAMER, Jr.,     ROBERT B. ADERHOLT, Alabama
   Alabama                          JO ANN EMERSON, Missouri
 PATRICK J. KENNEDY, Rhode Island   KAY GRANGER, Texas
 MAURICE D. HINCHEY, New York       JOHN E. PETERSON, Pennsylvania
 LUCILLE ROYBAL-ALLARD, California  VIRGIL H. GOODE, Jr., Virginia
 SAM FARR, California               RAY LaHOOD, Illinois
 JESSE L. JACKSON, Jr., Illinois    DAVE WELDON, Florida
 CAROLYN C. KILPATRICK, Michigan    MICHAEL K. SIMPSON, Idaho
 ALLEN BOYD, Florida                JOHN ABNEY CULBERSON, Texas
 CHAKA FATTAH, Pennsylvania         MARK STEVEN KIRK, Illinois
 STEVEN R. ROTHMAN, New Jersey      ANDER CRENSHAW, Florida
 SANFORD D. BISHOP, Jr., Georgia    DENNIS R. REHBERG, Montana
 MARION BERRY, Arkansas             JOHN R. CARTER, Texas
 BARBARA LEE, California            RODNEY ALEXANDER, Louisiana
 TOM UDALL, New Mexico              KEN CALVERT, California
 ADAM SCHIFF, California            JO BONNER, Alabama
 MICHAEL HONDA, California
 BETTY McCOLLUM, Minnesota
 STEVE ISRAEL, New York
 TIM RYAN, Ohio
 C.A. ``DUTCH'' RUPPERSBERGER, 
   Maryland
 BEN CHANDLER, Kentucky
 DEBBIE WASSERMAN SCHULTZ, Florida
 CIRO RODRIGUEZ, Texas  

                  Rob Nabors, Clerk and Staff Director

                                  (ii)




STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 2009
                              ----------                              
                                       Wednesday, January 23, 2008.

   FOREIGN ASSISTANCE IN THE 21ST CENTURY: PROPOSALS FOR REFORM AND 
                             RESTRUCTURING

                               WITNESSES

MARY BUSH, FORMER CHAIRMAN, HELP COMMISSION
LEO HINDERY, FORMER VICE CHAIRMAN, HELP COMMISSION
LAEL BRAINARD, VICE PRESIDENT AND DIRECTOR, GLOBAL ECONOMY AND 
    DEVELOPMENT, BROOKINGS INSTITUTE
GEORGE RUPP, CEO AND PRESIDENT, INTERNATIONAL RESCUE COMMITTEE; CSIS 
    COMMISSION ON SMART POWER

    Mrs. Lowey. Good morning. The Subcommittee on State, 
Foreign Operations, and Related Programs will come to order.
    I am very pleased to open our first hearing of the year on 
a subject that is very much on everyone's mind. I am going to 
begin now. Mr. Wolf, my Ranking Member is delayed, and I know 
Mr. Hindery is on the way.
    First, let me note that we have been trying to reform our 
foreign aid program almost since the day it was established. 
There have been efforts to retool our development toolbox in 
virtually every administration. To some extent, such tinkering 
is necessary to continue to adapt our assistance programs and 
mechanisms to the changing needs of the day. However, these 
efforts have resulted in layer upon layer of new programs, new 
mandates, new bureaucratic structures, new congressional and 
administrative directives being heaped on an overstretched and 
out-of-date infrastructure.
    There is finally an understanding in this post-9/11 world 
of the critical nature of foreign assistance and development 
programs to our national security. In fact, in 2002, President 
Bush labeled global development as the third pillar of national 
security, alongside defense and diplomacy.
    With an ever-increasing demand on our foreign assistance 
programs, we find ourselves with a creaking and overloaded 
bureaucracy implementing a broad and confusing panoply of 
assistance programs with a greater emphasis and expectation for 
quick results.
    To be clear, our current assistance and development 
programs are advancing our security and foreign policy 
interests, alleviating suffering, and reducing poverty around 
the world today.
    The men and women who serve at the U.S. Agency for 
International Development, the State Department and the myriad 
of other agencies that implement these programs are no doubt 
dedicated and highly capable. We meet these great people 
wherever we visit, and I think all of my colleagues here have 
had the same experience. However, neither the programs nor the 
people are able to keep pace with the increasing demands and 
the changing political and security environment in which they 
may operate today.
    A recent Congressional Research Service study found that 
nearly one-fourth of our foreign aid dollars are appropriated 
to and implemented by the Department of Defense--I was shocked 
by that, although I knew it was happening. And another 22 
percent is implemented by other departments and agencies. Only 
53 percent of our total foreign aid programs are executed by 
the State Department and USAID. The growing role of the 
military in implementing our humanitarian and development 
programs is an area of great concern to me and will be the 
topic of a special hearing of this subcommittee in coming 
months.
    However, as we consider reforming the foreign assistance 
apparatus, the diffusion of resources and responsibilities 
across the proliferation of agencies and departments must be 
reexamined. The involvement of 10 Cabinet departments over 15 
sub-Cabinet or independent agencies has created a management 
nightmare for our Ambassadors in the field, and has led to a 
lack of oversight, accountability, coordination and coherence 
of assistance programs.
    The effectiveness of our programs and the efficiency of our 
bureaucracy can and must be approved if we are to achieve our 
foreign policy objectives and retain the confidence of the 
American people. It is time for us to look at the foreign 
assistance apparatus of the United States not with an eye 
toward further tinkering around the edges, in my judgment, but 
with the aim of reinventing it to reflect the challenges and 
needs of the 21st century. What is needed is a renewed, more 
focused mission and mandate, a better understanding of the 
expectations of Congress and the American people and a 
streamlined, coherent and empowered structure that can 
implement this vision.
    There have been a number of reports and studies over the 
past 2 years that examine the key issues and provide 
recommendations to guide reform efforts. Today, we have with us 
some of the individuals that have led these efforts.
    The most recent report is from the HELP Commission, which 
was established by Congress in the fiscal year 2004 omnibus 
appropriations bill under the initiative of my good friend and 
esteemed Ranking Member, Frank Wolf. This bipartisan commission 
recently released its report. We are pleased to have with us 
the Chair and Vice Chair of the Commission, Mary Bush and Leo 
Hindery. Commissioners Hindery, Jeffrey Sachs, and Gayle Smith 
issued a separate report with additional recommendations on the 
structure of foreign aid; and I look forward to discussing the 
recommendations of both the majority and the minority reports.
    In addition, we have Dr. Lael Brainard, Vice President of 
the Brookings Institution, just recently having had her third 
young one. And we really appreciate your coming out from 
maternity leave today, but I know what a passion this is for 
you. Lael co-chairs the Brookings CSIS Task Force on 
Transforming Foreign Assistance for the 21st Century. Their 
report is entitled Security by Other Means: Foreign Assistance, 
Global Poverty and American Leadership.
    And, finally, we have George Rupp, President of the 
International Rescue Committee, who has participated in both 
the CSIS Commission on Smart Power and InterAction's effort on 
foreign aid reform.
    All of the reports presented today call for increased 
coherence and coordination of the United States Government's 
foreign assistance programs. They also call for the 
establishment of new structures to achieve our foreign 
assistance goals.
    The majority HELP Commission report focuses on the need for 
coordination of our defense, diplomacy and development 
priorities, calls for a restructured State Department and a 
unified security budget. I would like to hear more about this 
proposal and how we can ensure that the expertise and 
independence of our development programs are not lost when they 
are incorporated into the State Department.
    The other reports recommend a new Cabinet-level agency for 
foreign assistance and development programs. This would elevate 
development in a new and exciting way, but I also have concerns 
that this might result in an eventual separation between our 
foreign assistance programs and our foreign policy agenda.
    There are others who are not here today but whose work is 
also important to the discussion. The Center for Global 
Development and the Senate Foreign Relations Committee recently 
released reports that I would urge members to read.
    I would also like to insert into the hearing record and 
have included in your folders a letter outlining reform 
recommendations from Brian Atwood, Peter McPherson, the USAID 
Administrators in the Clinton and first Bush administration, 
respectively.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Lowey. Meaningful reform, as we all know, is a 
daunting task, one that will require a bipartisan undertaking 
and close collaboration between the executive and legislative 
branches. I hope this hearing will take us one step further 
down that road, and I thank you all again for coming and for 
your participation.
    Before we begin, even though Mr. Wolf is not here, Mr. 
Knollenberg, do you have any comments or statements?
    Mr. Knollenberg. Madam Chairman, it is very kind of you to 
suggest that I might have, but I would be pleased to not make 
any comments now and look forward to hearing everybody's 
testimony. Thank you.
    Mrs. Lowey. Thank you very much.
    Mary Bush, will you begin?
    Ms. Bush. Thank you very much, Chairwoman Lowey.
    Thank you so much for having this hearing today. It is 
very, very important for carrying forward the work not only of 
the HELP Commission but of the many others that you have 
mentioned that are studying this critically important subject.
    I also want to thank Congressman Wolf in his absence for 
having, as you said, the initiative to put together to do the 
legislation that formed the HELP Commission; and all of the 
commissioners I can say were deeply honored to have served on 
this Commission.
    I want to echo several things that you said. One of them is 
that, despite all of the problems that we found in our study 
and that are laid out in our report, we do know that the people 
who work in foreign aid and in our State Department are really 
doing a terrific job with the resources that they have; and 
part of the problems that they face are in our structure and in 
resources and human resources and financial resources and the 
like. And I will speak more about that.
    Another important point is, as you said, this is a 
bipartisan commission, Democrats and Republicans. We came from 
all walks of life, from academia, from government, former 
government, from business, some with much experience in foreign 
aid and some with none whatsoever; and we all came to the 
conclusion that U.S. foreign assistance is broken and that it 
is urgent that it be fixed.
    And our conclusions, our recommendations, I must say, 
really do not break down along partisan lines. There were two 
guideposts that guided our work; and you have referred to 
those, also, Chairwoman Lowey. And that is our humanitarian 
values, the desire of Americans to help others around the world 
who are in need and who want to live better lives, and 
America's security. And we therefore concluded that foreign 
assistance is clearly in the national interest of this country.
    We listened to about 75 experts; and, as we listened to 
them, we divided foreign assistance roughly into three 
categories: humanitarians, security and development. On the 
first two, we think that the United States does a very good 
job.
    It is the third one, development, long-term development, 
where we are, quite frankly, missing the boat. We believe, the 
Commission, that development must be elevated as a priority, as 
a priority for America. President Bush has said that: defense, 
diplomacy, development, the third leg of the stool. I think 
that you, the Congress, and he tried to give that some teeth--
or gave it some teeth, I should say--with the Millennium 
Challenge Corporation which focuses on the long term. But we 
know that it has to be given even more teeth, and that is why 
we are recommending a major revamping of the U.S. Government's 
system for foreign aid.
    The other thing that we all have to recognize is that 
development takes a long time. It simply does not happen 
overnight. It simply does not. And therefore it is very 
difficult to focus on long-term development within the context 
of our 1-year budget cycle. So that is an issue that we think 
has to be addressed.
    We also recognize that development has to take place in 
conjunction with the leaders of the developing countries. There 
must be--as is said in the development profession, there has to 
be local ownership. The leaders of the countries and civilians 
of the countries must really take part in formulating what the 
programs are that will best suit their needs.
    Now, how do we get there? One of the things that I think is 
hugely important is that we have to step back, the Congress, 
executive branch, and the legislative branch, and we have to 
figure out what our vision and our strategy is for development. 
If you do not know where you are trying to go, then how can we 
possibly know that we are taking the right steps to get there? 
So vision might sound like kind of a soft thing. I come partly 
from the corporate world and partly from the government world, 
and I think the vision and strategy are just hugely important.
    It is also important to bring the American people into it. 
And we heard so often early in our deliberations that there is 
no constituency for foreign aid. I do not believe that. I 
really do not believe it. And we had studies done, we got 
anecdotal information. I think that Americans are more and more 
involved in trying to help people around the world, whether it 
is the Iowa farmer going to Kenya to help them be more 
productive, whether it is through the financial giving or 
whatever.
    But what is important is that we in Washington, you, our 
leaders, we hope will take charge of organizing that energy 
that we believe is out there among the American people. And we 
sort of gave it a handle. We call it ``Americans for 
Development.'' The matter is urgent. The matter is very urgent.
    You know, America did a great thing with the Marshall Plan; 
and when this country pulls together all of its energies--the 
government, the business sector, private citizens--to fire on 
all cylinders, then there is so very much that we can achieve. 
Let me give you a few more of the specifics, because I know I 
am on a fairly tight time limit here.
    One of the things that we suggest is that the Foreign 
Assistance Act, which, as you say, was written many, many years 
ago and has been layered over and encumbered with very 
complicating tries at changes, it is very difficult to operate 
under it; and it really does not suit complex 21st century 
needs. I think that the legislative and executive branches 
sitting down together to rewrite the Act can also begin to 
formulate what the vision should be.
    We need an integrated approach. As you say, there are a 
myriad of agencies and departments across the government that 
are involved in aid, and there is no one primary of 
coordination. And as we traveled out to visit some of the 
countries and some of our programs, we found that two or three 
agencies were working on the same issue and giving conflicting 
advice and having conflicting requirements for the countries. 
So it is not efficient, we are not doing a good job in that 
area, and we are not speaking with one voice.
    On the funding, now, Congresswoman Lowey, you mentioned the 
Defense Department and the huge role that they are now playing 
in foreign aid. And what we find, what our Commission found, is 
that they are really stepping into a vacuum and that that 
vacuum exists because the resources are not there for the State 
Department, for USAID, for others that really have foreign aid 
and development as their areas of expertise.
    One of the ways that we suggest that this could be looked 
at is to consider together the defense budget and the budget 
for civilian foreign affairs. And if you look at the total of 
those now, we are spending a certain percentage on civilian 
foreign affairs. I think the number is about 5 percent. But, in 
our view, if the Defense Department is having to spend huge 
amounts on aid and do things having our military engage in aid 
activities, that really, as Secretary Gates himself said, is 
not necessarily the purview of the Defense Department. Then why 
don't we look at those total budgets and think about allocating 
a larger percentage, maybe doubling that, about 10 percent, to 
civilian foreign affairs and helping to prevent some of the 
crises that happen and helping to prevent the very costly 
interventions of our military when there are large ungoverned 
territories and things that call for their intervention.
    Let me mention just two or three other points. One is 
structure; and this--I will be very frank--is the area where 
we--where the Commission had the widest areas of divergent 
opinions. And I know Leo is probably going to talk some about 
the independent Cabinet. But the other two options that were 
given really put foreign aid squarely in the purview of the 
State Department; and we feel that that is important because, 
as we said, our guideposts were security and our humanitarian 
values. And understanding the complexity of the problems that 
exist in the developing world, to us those things have to go 
together, and the administration of aid has to go with security 
and with our political interventions.
    One of our recommendations supported by the majority is a 
major revamping of the State Department; and it would separate 
our activities into four major categories: political and 
security, humanitarian, development and economic, and 
diplomacy. But we think that all of those things must interact 
with each other in order for the United States to carry out 
very effectively its foreign policy. And I can come back and 
answer some more questions on that later but just to emphasize 
that putting aid under the State Department, our aid activities 
under the purview of the Secretary of State, we felt is hugely 
important.
    Another very important piece is what we call a new business 
model for growth. By some accounts, private actors, 
philanthropies, foundations, businesses are putting as much 
into the developing world financially now as the U.S. 
Government. We argue over the numbers. Some say it is not so 
much. Some say it is more. But that is not what is critical 
here. What is critical is the energy that is out there in the 
private sector, and even in the business sector, to address 
these issues.
    We believe that the U.S. Government has to act, has to be 
proactive in involving private actors, that we have to leverage 
our strengths. The private sector is great at capitalist 
ventures, at entrepreneurship. We are great at other things. We 
have got different sets and different kinds of fundings, and we 
think that the United States, that America will do a much 
better job if we put all of these things together.
    We have initiatives that we recommend to help small and 
medium small enterprises around the world. That is what 
generates a lot of the growth here in the United States. The 
same can be true in the rest of the world. It is a neglected 
sector by the capital markets, and it is a neglected sector in 
terms of the training and skills building and capacity building 
that is needed by the people.
    We have a trade initiative. We end up taxing or charging 
more in tariffs for the poorest countries in the world than we 
do for our European partners, for example. We collect more in 
tariffs from MCC-eligible countries than we give to them in 
grants. So our trade policy is totally misaligned with our 
development policy.
    I am going to stop there and close simply by saying that I 
believe in my heart that helping others move up the development 
curve is very simply the right thing to do. But I also believe 
that our children and our grandchildren will only be able to 
enjoy the peace and the prosperity that we enjoy if we help 
others and help give them hope and opportunity. All of these 
things are bound up together.
    And I thank you once again and look forward to questions 
and answers.
    Mrs. Lowey. Thank you very much.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Lowey. Mr. Hindery, welcome.
    Mr. Hindery. Thank you, Madam Chairwoman and members of the 
subcommittee. My name is Leo Hindery. It is my privilege to be 
the Vice Chair of the HELP Commission and an honor to be with 
you this morning.
    As the chairwoman mentioned, I, along with two other 
Commission members, Jeffrey D. Sachs and Gayle D. Smith, 
prepared a minority Commission report and, with your 
indulgence, Chairwoman, would ask that you put that into the 
record.
    I would like to spend the few minutes that I have today 
discussing that report. We entitled it Revamping U.S. Foreign 
Assistance, which we saw as a true alternative to the overall 
HELP Commission Report. While we agree with certain of that 
report's comments and recommendations, we differ on several 
important points.
    Specifically, while the HELP Commission was created by 
Congress to reflect in how best to deploy the tools of 
development assistance, it was our opinion that the full 
Commission report did not adequately make the case for foreign 
assistance, it did not sufficiently establish its stature and 
position within our government, and it did not recommend 
sufficient funding for it.
    Our first significant conclusion, I would comment, is that 
the United States must and should promote development 
assistance as a core pillar of national security and American 
moral values, and we should all recognize in turn the 
substantial overall progress that has been made in economic 
development.
    Even though the principle has been part of the U.S. foreign 
policy doctrine for 60 years, the 2006 National Security 
Strategy of the United States best explains the rationale today 
of development assistance when it says that, ``America's 
national interests and moral values drive us in the same 
direction: To assist the world's poorest citizens in least 
developed nations and help integrate them into the global 
economy.'' It concludes that ``development reinforces diplomacy 
and defense, reducing long-term threats to our national 
security by helping to build stable, prosperous and peaceful 
societies.''
    In the broadest terms, the efforts to develop economic 
development around the whole world during the past 50 years 
have in fact been highly successful--with the notable exception 
of large parts of sub-Saharan Africa which remain trapped in 
extreme poverty--and this success needs to be recognized by all 
of us. The biggest development successes, as we know, have come 
in Asia, but other successes are also part of the recent 
history of Latin America, the Middle East and North Africa.
    The biggest challenges are now concentrated in a much 
smaller part of the world, with the epicenter of the world's 
development challenge being in sub-Saharan Africa and selected 
parts of Central Asia and Latin America. It is not an accident, 
Madam Chairwoman, that development is coming late for these 
last remaining regions since they face the toughest problems in 
the world; namely, high disease burdens, poor infrastructure, 
landlocked regions far from trade and vulnerability to drought 
and other hazards.
    Our second conclusion, and a particularly important one, is 
that the U.S. should establish a new separate Cabinet-level 
Department for International Sustainable Development. This new 
department, in our opinion, would house USAID, PEPFAR, the 
President's Malaria Initiative and Millennium Challenge 
Corporation, plus all of the new emerging initiatives in such 
things as climate change.
    We believe that the case for a separate department rests on 
the following five principles:
    The need, as I said, to upgrade U.S. development assistance 
as a true pillar of U.S. national security.
    The need to improve U.S. Government management and 
expertise in public health, climate change, agronomy, 
demography, environmental engineering, and economic 
development.
    The need to work effectively with similar Cabinet-level 
departments in ministries in partner countries.
    The need to depoliticize development assistance so that it 
can be directed at long-term investments that are critical in 
the fight against poverty, hunger, disease and depravation.
    And, importantly, the need for coherence of U.S. policies 
which truly impact international sustainable development.
    The current system in which USAID is part of the Department 
of State is failing, and the response that Chairwoman Bush puts 
forward we think is itself a failure. U.S. Aid is excessively 
politicized by connecting aid with short-term foreign policy 
exigencies; and until the status of sustained development 
within the government is improved, we believe that the U.S. 
Government will be unable to attract the best experts in the 
development fields.
    The shift in the United Kingdom from having a mere sub-
Cabinet development agency to having a true Cabinet-level 
department called DfID has dramatically increased the standing, 
the reputation and, most notably, the expertise of the United 
Kingdom in the area of international development. Consequently, 
in our opinion, DfID is far, far ahead of USAID as a global 
thought-leader in development policy and, thus, relatively more 
successful.
    Our third conclusion is that the U.S., in order to follow 
through with its oft-repeated commitments to the Millennium 
Development Goals, should in fact make concrete efforts, Madam 
Chairwoman, to the target of having ODA be 0.7 percent of GNP 
and to aim to achieve this by the year 2015.
    Our United States has long recognized that it cannot and 
frankly should not carry the development financing burden on 
its own and that support for economic development in the 
poorest countries must truly be a shared global effort based on 
mutually agreed targets, and all other developed countries 
agree.
    By far the most important shared goals today are the 
Millennium Development Goals, which as you know as a committee 
were adopted by all nations in the Millennium Declaration of 
2000 and which have been reconfirmed at every G8 summit since 
then. Twenty-two major donor countries, including our United 
States, have now pledged to achieve the ODA target of 0.7 
percent of GNP. However, our country has not made, sadly, 
concrete efforts to achieve it; and U.S. ODA constituted just 
0.17 percent of national income in the fiscal year just 
passed--0.17 percent, not 0.7 percent.
    While some Americans--and this is an important point--while 
some Americans believe that the current low level of U.S. ODA 
is offset by a uniquely high level of U.S. private aid as a 
share of GNP, this is simply not the case. U.S. total giving as 
a share of GNP, even including private aid, Madam Chairwoman, 
remains near the bottom of the donor rankings, with a combined 
share still of only around 0.23 percent.
    We believe strongly that the U.S. should join the European 
Union in setting a specific timetable for increasing ODA 
through the period 2015. As the EU already has, the U.S. should 
commit to reach 0.5 percent by the year 2010 and again the 
target of 0.7 percent of GNP by the year 2015. Such a 
trajectory of aid would ensure success in achieving the 
Millennium Development Goals by 2015; and it would put the 
world on a true pathway, a true pathway this time, of achieving 
the end of extreme poverty by the year 2025.
    Finally, committee members, we conclude that U.S. political 
members and leaders should explain to the American people the 
international development commitments we have made and the 
actual levels of U.S. aid that we are making as pillars of our 
security and relative to the spending of other partner 
countries.
    As Chairwoman Bush did identify, Americans do broadly 
support effective and large-scale development assistance. Yet, 
sadly and importantly, they grossly overestimate the actual 
amount of aid given by the U.S. overall and to Africa 
specifically. Americans consistently perceive that the U.S. 
foreign assistance spending is around 20 percent of the Federal 
budget, and they would like it to be around 10 percent. 
However, since our actual assistance figure is only around 1 
percent, we are in the paradoxical situation where the public 
would like to cut aid from an imagined 20 percent of the budget 
to only 10 percent, even though the 10 percent figure actually 
would be a tenfold increase over the level we are actually at.
    Americans are also not aware of the lopsided nature of the 
three pillars of national security policy. In fact, defense 
received 95 percent of the total outlays in fiscal year 2007, 
whereas diplomacy is funded at 1.5 percent of total outlays, 
and development is funded at just 3\1/2\ percent of total 
outlays. In dollar terms, as you well know firsthand, the 
defense spending was $611 billion in 2007, diplomacy may be 
estimated at around $9 billion, and development assistance may 
be estimated at around $23 billion.
    Our other conclusions, committee members, have to do with 
harmonizing U.S. foreign policy commitments with the actual 
budgets and the programs--the actual programs and budgets of 
U.S. development assistance, with supporting multilateral 
objectives and funding mechanisms, and in truly genuinely using 
the full range of development instruments, including 
development assistance, trade opening and partnerships with our 
civil society. These are not as important conclusions as the 
ones I have highlighted, but I also obviously recommend it to 
you and encourage you to consider them.
    Madam Chairwoman and committee members, it has been a 
privilege. Thanks for this opportunity.
    Mrs. Lowey. Thank you very much.
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    Mrs. Lowey. I am pleased that Mr. Wolf has been able to 
join us, and we are going to insert into the hearing record any 
statement Mr. Wolf may wish to make.
    Mr. Wolf. No.
    Mrs. Lowey. Thank you.
    Ms. Brainard--well, Dr. Brainard, welcome.
    Ms. Brainard. Thank you.
    Chairwoman Lowey, Representative Wolf, distinguished 
members of the committee, I just want to tell you how much we 
all appreciate your efforts to look out over the horizon and 
think about making our foreign assistance more effective, 
thinking about bigger reforms, knowing that you are about to 
turn your attention to the immediate task of the short-term 
priority setting among our various competing priorities in this 
area.
    Americans tackle depravation and social injustice around 
the world because our consciences, our hearts and our faith 
tell us it is the right thing to do. But this effort does more 
than make Americans feel good. It makes the world feel good 
about America. By helping to lift the lives of the poor around 
the world, we enhance our own influence and authority in the 
world community.
    Moreover, in a world where seemingly distant threats can 
metastasize into immediate problems, the fight against global 
poverty is becoming a fight of global necessity. It is not just 
a matter of morality but also our security.
    The fight against global poverty harkens back I think to 
some of America's best transitions: The Marshall Plan, the 
Bretton Woods Institution, the Alliance for Progress, but it 
also appeals to the best instincts of a new generation of 
Americans who are more engaged, I would say, than ever before 
in global service opportunities, in volunteering at home and 
abroad, in major advocacy campaigns and in giving, both big and 
small, on behalf of the world's poor.
    So it is time, I think, that our government recognize that 
generosity of spirit that we see in the private sector in the 
public and really think seriously about revamping our National 
Security Strategy to give development a much more influential 
place alongside diplomacy and defense, to deploy foreign aid as 
a key instrument of American soft power but also to recognize 
that it is a key determinant of the face seen by poor people 
around the world of America and, finally, to better leverage 
the resources and the dynamism of our NGOs, of our private 
sector and of our very active public.
    As long as we are functioning in the existing system, I 
would argue our aspirations and our aid dollars are going to 
exceed our impact on the ground. And why? I submitted a 
picture, an organization chart in the testimony, that I think 
sort of tells the story better than anything else.
    We have 50 organizations in the U.S. Government that are 
pursuing 50 objectives. In fact, those numbers--some people 
come up with higher numbers, and they are doing so in a very 
uncoordinated and overlapping way. Why is that? Well, we have 
started with a Cold War infrastructure; and we just keep 
layering new mandates on top of that.
    The subcommittee knows better than anybody else that our 
foreign assistance dollars have grown faster in the last 
several years than at any point since the Cold War, and with 
every new mandate comes a new ad hoc institutional office 
placed somewhere in the system. So we have seen one set of 
organizational structures for PEPFAR, another for the MCC, 
still another for the President's Malaria Initiative; and now, 
of course, layered on top of that we have State/F.
    It is no coincidence I think that the people sitting before 
you have served on several different commissions, one of which 
is congressionally mandated, and I really applaud the efforts 
of the HELP Commission.
    I think it is worth drying out some of the commonalities 
among all of these commissions. All of these efforts call for 
greater U.S. engagement on development, not less. All of them 
call for elevating development on par with defense and 
diplomacy, not in any way subordinating it. All of them call 
attention to the need for stronger civilian operational 
capabilities for development, humanitarian and post-conflict 
mixes. All of them call for much better coordination of foreign 
assistance with other soft power tools, importantly, trade, 
foreign investment, debt relief; and all of them call for 
modernizing our aid infrastructure that was designed for the 
challenges of a different century, in the words of the 
chairwoman of this committee, not tinkering with the status 
quo. So let me just highlight two or three of those and then 
quickly close.
    What do we mean by elevating the development mission? Well, 
I think the President's National Security Strategy of 2002 did 
a great job for articulating the case of why development needs 
to be a third independent strong pillar, as strong as defense 
and diplomacy. I think the concern has been that, in practice, 
that has not happened and that, in particular with the creation 
of State/F, there is the subordination of development to 
diplomacy, a concern I think that was heightened in many 
people's minds, whether or not fairly, when the first framework 
came out with no mention, not a single mention of the word 
``poverty''.
    It is important, I think, to understand that development 
and diplomacy are wholly complementary, but they are really 
very different. Diplomacy is all about state-to-state 
relationships. Like it or not, we often have to work with 
governments that we do not think are doing a very good job on 
development or democratization in the diplomatic mission of our 
government. But development means building societal capacity, 
democratization, improving governance, improving the ability of 
people outside of government to lift up their own lives. And so 
we are always going to have to be able to do those two things 
next to each other but not necessarily through the same 
operations.
    The other thing that I think we have to worry a great deal 
about is that the stature and morale of the development and 
humanitarian mission has really been under siege for some time. 
The morale at our primary development agency is among the 
lowest ten in a ranking of small government agency's work 
conditions, whereas the new Millennium Challenge Corporation 
with its independence, its new mission, was among the top five. 
The result is we have a readiness deficit.
    And this is the second thing, that I think all of us agree 
we have a readiness deficit in civilian development, 
humanitarian and post-conflict missions. And it is very urgent 
to rebuild at that moment. In fact, I think the Defense 
Secretary gave a really great speech on this in his Landon 
Lecture where he says having robust civilian capabilities 
available could make it less likely that military force will 
have to be used in the first place as local problems might be 
dealt with before they become crises.
    So, again, the development function, the humanitarian 
function sits alongside and is very complementary to defense. 
Instead, recent years have seen a systematic weakening of those 
operational civilian capabilities. I will not cite you all the 
statistics here. There are a lot of them. But we have seen the 
diminution of staffing by fully a third; we have seen the 
amount of money that each individual in these agencies is 
supposed to disperse going up by 50 percent, which means they 
are less and less able to really manage and demand performance 
and accountability; and by some counts nearly a third of USAID 
Foreign Service Officers are currently eligible for retirement. 
So the age profile is also a matter of some concern.
    The third thing that we have all talked about is achieving 
coherence across policies. I think this one is obvious again to 
members of this subcommittee. For so many countries, trade is 
just as important as aid dollars, and nowhere do they tend to 
work more at cross purposes than in areas like agriculture, for 
instance, where we do one thing over on the aid side and we do 
something that works for cross purposes on the trade side. So 
we have to find a way of building in systematically policy 
integration.
    And, finally, I think we have to rationalize agencies at 
the end of the day. We have to rationalize agencies and clarify 
missions. Instead of 50 strategic objectives, we should 
probably have about five. Instead of the 50 offices managing 
aid, we should have one capable operational agency.
    Just briefly, our task force looked at the types of 
organizational structures that are practiced in our 
counterparts around the world; and there are basically four 
structures. We looked at each of them and asked how well would 
each of these structures deliver for the U.S. And essentially I 
would say the decentralized structure that we now have, 
multiple agencies, is one of the weakest structures. If you 
look at counterpart agencies in other countries, all of the 
countries employing this tend to punch below their throw 
weight, tend not to speak with one voice.
    Another model is the track that we are currently on, which 
is making USAID the implementation arm of the State Department. 
This is also a model that we see in other countries. The good 
news is it makes for one voice. The bad news is it tends to 
solidify the divide between policy and operations, and it tends 
to again subordinate development to diplomacy.
    Some have suggested the merger of USAID into what we call a 
super-State Department where there is a desire, because 
development and diplomacy should be working more closely 
together, to actually merge them. I find this not a 
particularly realistic proposal. I think the proponents tend to 
underestimate the massive transformation of the culture, the 
mission and the staffing and the incentives of the State 
Department that would be required, not to mention the turf 
battles that would ensue throughout the rest of the bureaucracy 
having served in the midst of those turf battles in a previous 
administration. And I also think it is a little curious.
    We also believe that the alignment of diplomacy and defense 
is extraordinarily important, but I don't think that anybody is 
any longer suggesting that we should submerge Defense into 
State or the reverse.
    Secretary Gates in his speech argued that new institutions 
are needed for the 21st century, new organizations with a 21st 
century mindset, rather than repopulating institutions of the 
past or expanding current agencies. I do not know exactly what 
he had in mind there, but I do think that the one model that is 
worth examining further is establishing a true Cabinet-level 
voice for development. As Leo Hindery said, we have an example 
out there where the creation of DfID in 1997 made a material 
difference to how the U.K. engaged developing countries and the 
impact of its assistance.
    But I think most important is that this committee--or this 
subcommittee--take the mandate of looking at these various 
organizational structures and take that forward. We looked at 
episodes of past reform, seven episodes, in the U.S. context. 
Successful reforms had a few things going for them:
    An emerging political consensus surrounding the urgency of 
the mission. I think that condition is met today.
    Support from key groups outside of government. Again, I 
think that mission is very much met today.
    Timing is absolutely critical. These kinds of changes, if 
they are going to work, have to take place in an early part of 
a new administration.
    And then the last condition is that there needs to be 
personal commitment on the part of the President and there 
needs to be congressional champions and congressional oversight 
to prepare the way for that kind of change.
    So, again, I think the conditions are very ripe at the 
moment. I think it is a big undertaking, and my hope is that 
both the next President will be interested and seized with the 
importance of this and that this subcommittee will serve a 
leadership function in doing that.
    Thank you.
    Mrs. Lowey. Thank you very much.
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    Mrs. Lowey. We look forward to Mr. Rupp's testimony, 
because not only have you been part of the Commission but you 
have also had the experience of implementing foreign assistance 
programs. So thank you very much for being with us today.
    Mr. Rupp. Thank you very much, Madam Chairperson and 
Ranking Member Wolf. I am delighted and honored to be with you 
today, and I salute you for undertaking this hearing on this 
important topic of foreign aid reform.
    I will ask that my full written testimony be accepted in 
the record, since I will abbreviate what I have to say 
substantially because we are already well beyond our time.
    As you know, Nita, the International Rescue Committee was 
founded, as we are fond of saying, in 1933 at the suggestion of 
Albert Einstein to rescue refugees from Nazi-occupied Europe 
and resettle them in this country. We continue to resettle 
refugees in the United States with a network of 25 offices 
across the U.S., and we also do relief and development work 
around the world as we go to war zones to rescue and rebuild 
lives. For 75 years we have worked with people uprooted through 
no fault of their own to bring them from harm to home.
    Before discussing the options for reform, I would like to 
follow the precedent of the previous speakers and consider--and 
I will try to do this briefly--what is wrong with the current 
way the government organizes and administers our foreign aid 
programs. I will make six very quick points and then one that 
is a little bit longer.
    First, it is a very confusing and bureaucratic undertaking. 
Lael Brainard's diagram does more than needs to be said in 
words, but she has also written extensively about this, so I 
will not belabor the matter. I will just add a single sentence 
from the perspective of an operating organization.
    Every U.S. Government agency has different protocols. We 
compete for RFPs, RFAs, IQCs, ATSs, a whole alphabet soup of 
solicitation from several offices, including the State 
Department, USAID, the Department of Health and Human Services, 
the Department of Labor and many other parts of the U.S. 
Government. Again, as Lael has laid out at length and as you, 
Nita, summarized very nicely at the outset of the hearing.
    Second, there has, in addition, been an understandable 
emphasis on anti-terrorism measures since 9/11. The IRC takes 
our responsibilities in this regard very seriously, and we have 
implemented procedures to ensure that we do not support 
terrorist activities in any way and we do not have staff 
members who are in any way associated with terrorism. We did, 
however, join with other NGOs in protesting USAID's recent 
proposal to compile an anti-terrorism database of files on our 
staff and board members. Keeping such files on Tom Brokaw and 
Tom Lantos seems not a very good expenditure of IRC time and 
effort or, for that matter, of AID resources.
    Third, as Lael has already mentioned, the introduction of 
foreign aid reform, the so-called F process, at the State 
Department so far has only added to the complexity of the aid 
process. New procedures put in place forced USAID missions to 
review and revise their programmatic objectives and produce new 
operating plans in an unreasonably tight time line. The result 
has been significant delays in the relief of grant 
solicitations and therefore also, of course, of grant awards 
for the work that needs to be done.
    Not surprisingly, again as Lael pointed out, some of our 
partners at USAID were demoralized by these changes because 
they viewed the ``dual-hatting'' of the Administrator of USAID 
and the Director of Foreign Assistance as the equivalent of 
dismantling USAID. Many long-term USAID staff members have now 
been absorbed into the State Department.
    Certainly the reforms were rolled out in a manner that shut 
out any real dialogue not only with the Hill but also with 
NGOs. Later outreach really came across as too little, too 
late. The new Director of Foreign Assistance, Henrietta 
Holesman Fore, has been reaching out but faces the massive 
challenges resulting from the ill-thought-through launch of 
this process.
    Fourth, there continues to be a trend or preference for 
using for-profit contractors rather than not-for-profits, even 
though we are much more cost-effective in our programming, we 
help raise money to cover some of the costs of the projects, we 
know the communities and cultures in which we work, we recruit 
our staff members overwhelmingly from those communities, and we 
are committed to staying as long as required to get the job 
done.
    Fifth, this preference for for-profit contractors is in 
part driven by the fact that the size of USAID's workforce has 
eroded. As Lael has said, it was downsized by as much as 37 
percent during the 1990s; and many experienced aid officers are 
now retiring. I am told from the highest level at AID that the 
current attrition rate outdates the new hires by a ratio of two 
to one. About half of the current USAID Foreign Service 
Officers are new to their jobs.
    Stretched thin and often inexperienced, USAID chooses to 
bundle programs into a few large contracts, even when the 
results are poor on the ground.
    Sixth, also of great concern is the topic mentioned in your 
opening remarks, Nita, but also by other panelists, namely the 
Defense Department appears to be picking up the slack by 
seeking funding from Congress to run its own parallel aid 
programs. As several of our witnesses have testified, these 
programs are not being proposed because the State Department 
has the capacity--the Defense Department is the best to run 
them. It is a failure to provide adequate resources to civilian 
agencies, resulting in a shift of responsibilities to defense 
even when it is not ready for them.
    Seventh--and this is a slightly longer one of my initial 
seven points--funding for the greatest needs is simply 
inadequate. I have traveled to some countries, such as 
Afghanistan, which I visited for the third time last spring, 
where there are large amounts of U.S. Government funding that 
are being spent on security for American or ex-patriot 
personnel, where the military is attempting to run development 
programs and where large infrastructure projects run by private 
contractors are taking a large profit off the top while farming 
out the real work to less than reliable subcontractors. At the 
same time, I have seen other areas--such as IRC programs for 
the uprooted in the Horn of Africa--where programs are being 
downsized.
    At present, the IRC and our community are doing our utmost 
to bring to attention the ongoing humanitarian crises 
concerning Iraqi refugees displaced in the Middle East. 
Administration efforts to date, however, have been woefully 
inadequate. When we point out the needs in all those areas, we 
are told nothing more can be done because of the budget 
constraints and bureaucratic hurdles.
    In my view, what is missing is leadership. The President 
has not sought enough money in his annual budgets to address 
these problems. Congress, this committee in particular, to your 
credit, has tried to provide some of the money needed that the 
President has not asked for, but then in the negotiations that 
result, nonetheless, significant cuts materialize. The result 
is inadequate funding where the needs are the greatest.
    These budget cuts, or shortfalls, are further compounded by 
timing problems. When decisions on the budget are delayed, the 
government is funded, as you well know, through a series of 
stop-gap measures. This procedure harms relief operations 
overseas. Aid groups go on austerity budgets, let staff go and 
temporarily shut down programs. It is very hard to rehire after 
letting people go and to renegotiate leases after moving out.
    It is, of course, much worse for the people who need 
healthcare, clean water, latrines, shelter and programs to 
educate and protect children. For them, it means poor 
nutrition, lack of inoculations, obstetric care and premature 
deaths.
    The Secretary of State is traditionally the lone voice at 
the Cabinet level and with the President for international 
programs. Because the disconnect between large defense budgets 
and cash-strapped crisis prevention and response programs is 
now more and more evident, Secretary of Defense Gates, as 
several of us have noted, has recently called for increased 
funding for the civilian side of the national security budget. 
I applaud this far-sighted advocacy for a more robust 
nonmilitary capacity, and I thank Secretary Gates for his 
inclusive view of the ways to pursue American interests.
    The President's fiscal year 2009 budget will be submitted 
to you in early February. Advance word--these are admittedly 
only rumors--is that it will underfund U.N. Peacekeepers, 
including important missions such as Congo, and not provide 
enough for other humanitarian programs. We in the NGO community 
are very concerned.
    To summarize this seventh point, U.S. foreign aid is 
reaching record levels, but we are facing budget cuts on the 
humanitarian accounts. The U.S. generously runs the PEPFAR 
program to fight HIV/AIDS; and a new aid agency, the Millennium 
Challenge Corporation, has actually been stood up and operating 
for a select group of countries. Yet one large natural disaster 
could wipe out the disaster aid for a host of trouble spots 
around the world, and camps for refugees and others who have 
been uprooted in Kenya and Ethiopia face the need and demand 
for drastically scaled-back services because of budget cuts. If 
development has been elevated to stand alongside diplomacy and 
defense as key parts of our national security, why do we see 
such an uneven approach to these vital tools?
    So what can be done? Three brief proposals.
    First, face the fact that reform is imperative. Most 
nongovernment organizations agree that changes are needed in 
the way the U.S. Government of foreign aid programs are 
structured and funded. The next 2 years offers us the perfect 
opportunity to introduce ideas for reform, to debate them and 
then to move to implement them as part of an agenda led by the 
new President; and there is no reason this task cannot be a 
bipartisan undertaking.
    Second, provide increased funding for programs that work. 
The United States Government should make a greater investment 
in programs that help the poorest and most vulnerable. While 
some will question whether foreign aid can really help people, 
there are programs that make a proven difference in the lives 
of the poor. I recommend to you a greater investment in 
programs that provide clean water and sanitation, deliver 
primary healthcare and implement community driven 
reconstruction.
    I will use community driven reconstruction as an 
illustration of how the IRC in particular works. We begin by 
overseeing an election of a local community council that 
identifies the highest priority projects for that community. We 
work hard to ensure diverse participation and also support from 
village leaders. In Afghanistan, council members include women. 
Resources--$200 per family, up to $60,000 as a maximum per 
village--are then provided through the government ministry. 
There is tremendous ownership of the programs that result.
    I have admired the products of this process in Kosovo, 
Rwanda, Afghanistan and dozens of other countries: schools, 
health clinics, water systems, bridges. For the IRC, it is 
especially attractive, because we can trace our support for 
this process from Kosovo, where we first developed it, to 
Rwanda, to Afghanistan, where Rwandans came to teach Afghans 
based on their own experience and on the basis of counsel of 
the Minister of Rural Rehabilitation and Development, Hanif 
Atmar, who had been a long-term IRC staff member and is now in 
the Karzai government after being in rural development, has now 
moved into the Ministry of Education.
    These efforts uphold the best of American transitions. They 
support people who are uprooted through no fault of their own 
as they begin their lives anew.
    Two years ago, I chaired a subcommittee of the Board of 
Interaction, the umbrella organization for 165, 170 foreign 
relief and international development programs. That 
subcommittee developed principles and recommendations for the 
reform of foreign aid. I will not impose on you a recitation of 
the principles, eloquent and compelling although they are. If 
you cannot resist, you can look in my written testimony and 
review them at your leisure.
    But I would like to end with what was also the final 
recommendation of that report, a recommendation which will not 
surprise you because it has been anticipated by both Leo and 
Lael and was embraced by the Interaction Board as a whole. It 
is the recommendation that we establish a Department of Global 
Development. All the major development programs, including 
USAID, the Millennium Challenge Corporation, PEPFAR, the 
technical assistance programs of the Treasury Department, and 
contributions to the International Financial Institution and 
U.N. Development programs, they should all be housed together 
in a single agency.
    When forced to work together and report to a single chief, 
U.S. Aid experts would be better able to align aid and 
resources. We would have a better handle on where the money is 
going, and look for and cut out redundant programs, and we 
could address the larger disconnect between the needs and the 
funding available to resource them.
    The International Rescue Committee receives significant 
funding from the Department of International Development DFID, 
the U.K. Department that has been referred to several times. In 
particular, DFID is a major funder of our programs in primary 
health care and community-driven reconstruction in the 
Democratic Republic of Congo.
    What is very impressive about this is that as a funder they 
are able to make long-term commitments based on detailed needs 
assessments, in this case the IRC's series of mortality 
surveys. Parenthetically, the fifth survey has just been 
released and demonstrates the health needs of the Congo 
continue to be dramatic and therefore require precisely the 
kind of long-term commitment that DFID represents.
    In addition, of course, to the crisis intervention 
represented by the role of the U.S., the U.K. and others in 
brokering the recently announced or just announced peace 
agreement in North Kivu, watching DFID in action, I have become 
convinced that this is the model that we should study for 
reforming the U.S. in our bureaucracy so that every emergency 
intervention and all long-term reconstruction and development 
after the conflict are integrated, mutually supportive and 
maximally effective.
    I have focused on the ways that American foreign aid can be 
significantly improved, but I would like to conclude my 
testimony with a deeply felt expression of appreciation for all 
that U.S. foreign aid accomplishes. Day in and day out, the 
generosity of the United States as embodied in the foreign aid 
program is saving the lives of thousands of innocent people 
throughout the world.
    Congress, the administration and indeed all Americans can 
take great pride in the assistance that the United States 
provides. It is a magnificent demonstration to the rest of the 
world of our best qualities, warmth, generosity and concern for 
the most vulnerable. Because our foreign aid program is so 
important both to America and to the people we assist, we 
should move expeditiously to organize it so that it can be even 
more powerful and more effective as a force for good than it 
already is. Thank you very much.
    Mrs. Lowey. Thank you, Dr. Rupp.
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    Mrs. Lowey. I want to thank the whole panel, and I will be 
calling on Members based on seniority of the Members that were 
present when the hearing was called. I am going to alternate 
between Majority and Minority, and we are going to try to keep 
the Members to 5 minutes each per round.
    Let me begin. During my trip to Africa with the Committee 
this summer, wherever we went, everyone spoke about the need 
for coordination. It is clear that the United States does not 
implement its assistance programs in a coherent manner. And as 
has been mentioned, at least 20 different agencies or 
departments share responsibility for foreign assistance 
planning and program implementation. And what is interesting, 
as most of you well know, most of these departments and 
agencies are outside the jurisdiction of the congressional 
committees tasked with overseeing U.S. foreign affairs. There 
is no central reporting; some of the activities of the various 
agencies work at cross purposes, and all of the reports which 
you have referenced recommend streamlining and reducing the 
number of agencies, increasing coherence and coordination.
     I would like first to begin with Mr. Hindery and Dr. 
Brainard. I would like to mention a couple of points in my 5 
minutes, and perhaps you can address them. Are you talking 
about folding all of these 20 different units into 1 agency? 
Are there some programs you believe should remain in other 
departments and agencies? Would you, for example, consider the 
State Department's counterdrug and counterterrorism efforts to 
be programs that should be housed within the new agency? Would 
these remain at the State Department? They build roads, and 
undertake other development activities in order to support 
alternatives to terrorism and drug trafficking. With your 
structure, how would you recommend these activities be 
coordinated? And how would you envision coordination with the 
Department of State, with the Department of Defense, with any 
other programs that are not folded into the new agency?
    Who would like to go first?
    Mr. Hindery. Madam Chairwoman, you and I are of an age when 
Pogo, the cartoon, you know, I met the enemy, and it is me. I 
think that the point of your question is that it is not self-
reforming, and I think that is a key aspect of the conclusions 
you draw. You could not ask these 50 agencies that Ms. Brainard 
speaks about to fix it. So the imperative, I think, is to go, 
as Dr. Rupp and Lael and I have, to the separate department. 
That is the initial formative step that would need to be taken.
    It is no more appropriate that the Counterterrorism Group 
be moved into that department than it is for the 
Counterterrorism Group to be charged with road building and 
things of that sort. There is no angel for the reform as it 
exists today, absent, in our opinion, the establishment of the 
separate department.
    Counterterrorism and drug enforcement issues should stay 
where they are today, but their mandate should be cut back. 
Those activities, as Dr. Brainard just commented, that are 
obviously of a development and humanitarian assistance nature 
need to go into that activity. We are going to see some 
stripping for sure, but it is not a complete alteration of the 
magnitude and moment that has been suggested by super State.
    The concern, I think, that the three of us have, and Dr. 
Brainard and George can speak to it better than I from their 
vantage point, the super State Department is simply a step too 
far. It would be so momentous an undertaking that the reforms, 
the fundamental reforms that are necessary, would be subsumed 
by infighting and the reformation of the oldest of our 
departments, and that was where we came a cropper.
    So I think Dr. Brainard is right: 50 drops down to 5 to 10. 
You are rigorous in how you define ``charter,'' but you do not 
bring into that 5 or 10 agencies or activities that do, in 
fact, properly belong in State and Defense.
    No one should be unduly critical of where State and 
Defense, Madam Chairwoman, have gotten themselves. They have 
fallen into default patterns. Someone had to do it, and it 
wasn't happening in the myriad agency approach that we observed 
otherwise.
    Mrs. Lowey. I will hold the next question.
    Dr. Brainard.
    Ms. Brainard. I think that if we were to get into a serious 
analysis of this, you would probably go function by function 
and ask the question, is it being done well now? You know, if 
it is not broken, we should not be in the business of fixing 
something that is working well. And is there a logic to it?
    Some of the things that are easiest are in the development, 
humanitarian and the kind of postconflict kind of very 
operational civilian stuff. I think that is an easier call. 
What is more difficult are the kinds of examples that you 
mention. For counternarcotics, for instance, there is very 
strong economic development component that does naturally 
belong with all the other pieces because it is--the day-to-day 
operational stuff is economic development. But there is a 
security piece which one could argue should sit elsewhere. The 
same would be true of something like IMET. The same might be 
true of police training. So I think when you get into the 
security realm, and nontraditional security assistance realm, 
that is where you would need to go function by function and 
decide where it sits.
    The other thing that I would say, just looking at the DFID 
model, which I think is helpful, DFID doesn't do everything. 
There are protocols in the U.K. Government where DFID might 
take the lead in an interagency and where, for instance, the 
Defense Ministry might take the lead. And so, for instance, in 
hot environments, the Defense Ministry takes the lead, and DFID 
goes to the meetings and kind of is subordinate to that 
interagency, but in postconflict environments that are well on 
their way to normalization, DFID then would take over that 
interagency.
    So I think you are still going to have a very important 
need, as you are pointing out, for interagency coordination. It 
is just hopefully that it is going to be among 3 actors rather 
than 50 actors.
    Where should that coordination reside? Inevitably some of 
it will reside at the White House, and the White House can 
institute easily a special directorate at the NSC to do that. 
And then beyond that you will have, again, a set of protocols 
where on certain interagency tasks State will take the lead; on 
certain tasks the Department for Global Development might take 
the lead.
    What I think is important is establishing rules and 
regularity so that the policy coordination happens. It is not 
necessarily the--the key thing is not who leads that, but that 
there is a designated leader and a system.
    Mrs. Lowey. I appreciate your input, and if we had more 
time, I would pursue that, so I will get back to it.
    I am on the committee that funds the NIH, and we know what 
CDC is doing, and we know that they are dealing with the Global 
Fund and helped fund it, and water programs across many 
agencies. I think this is really difficult. And you and I know 
that the reason some other agencies have stepped in, and 
certainly we know the Defense Department is stepping in in 
Afghanistan in many situations, because USAID has lost the 
capacity, has lost its members. And I was at Bagram Air Base 
and no names mentioned, but the U.S. military said: ``We cannot 
wait for AID to build that school, so we are going to build 
that school ourselves''. Now, they may not have the books; they 
may not be able to train the teachers, but they are building 
that school. So it is which comes first in giving AID the 
capacity and the trained people there, and I still think it is 
going to take a lot of effort to sort it out, because whether 
it is water, whether it is health, whether it is education it 
may run across many different purviews, and we are going to 
have to look at that carefully.
    My 5 minutes are probably up, so I am going to turn--Mr. 
Knollenberg. Mr. Wolf.
    I just want to thank you and make it very clear from my 
discussions with my colleagues on this subcommittee and the 
Defense subcommittee, many of us are struggling with this 
because we understand the importance of your work, and the 
answers are not absolutely clear.
    Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Madam Chairwoman, for giving me 
the pass. I am going to try to ask these questions quickly. We 
would appreciate a quick response, because 5 minutes goes in a 
hurry.
    The U.S. generally has two reasons for providing foreign 
assistance: number one, funding which helps us with our 
diplomatic and, of course, our political initiatives around the 
world; and then secondly, for those poverty-stricken nations 
that abound. Did the Commission study the effects of both of 
those forms of aid, and what did you conclude with respect to 
the pros and cons of aid, to both sectors? You can be brief on 
that, Mrs. Bush.
    Ms. Bush. Yes. With regard to the first, political and 
security, we studied these issues in generalities, I would say, 
at the 20,000-foot level. We did not try to get into detail 
country by country. We generally concluded that on security and 
political aid, we do very well; on humanitarian we do well; but 
on development, that is where we fall short.
    Mr. Knollenberg. But the point of foreign assistance is to 
normally help a country develop. Take the MCC, for example, 
which is, I guess, in a box by itself, it is separate and 
apart. I notice that you mention in your comments and also in 
the rhetoric in your prepared statement here that the tariffs 
are as high in some cases, and, of course, other duties, as the 
amount of money we are putting there. Keep in mind, too, 
though, that there are other sources of revenue that may be 
coming to that country. There may be other kinds of economic 
aid that may be coming in. Would you say that that is generally 
the case, that normally it is always the case that we are 
getting more back than we are giving them?
    Ms. Bush. We looked at several countries--in fact, I could 
provide that list to you--and in general----
    Mr. Knollenberg. I would like to see that list.
    Ms. Bush. Yes, absolutely.
    Mr. Knollenberg. You have it separated with the threshold 
countries and the compact countries?
    Ms. Bush. We have the compact countries. I am not sure we 
did the threshold countries. We did do the threshold countries. 
Yes, absolutely, we will provide it.
    Mr. Knollenberg. One of the things that bothers me a little 
bit is that if that is the case, was that the case always? In 
other words, were the tariffs there, the duties, before the MCC 
came along?
    Ms. Bush. I don't know the answer to that, but we can try 
to get that answer.
    Mr. Knollenberg. That would be helpful, too, because maybe 
that is something that we could do. At the same time, though, 
if the tariffs were there before, the duties were there before, 
it was not something new. We came along and tried to do 
something beyond that to give them some money.
    Ms. Bush. Right.
    Mr. Knollenberg. I guess maybe that is a policy that should 
be looked at very, very carefully.
    Ms. Bush. The point is they were misaligned. If we are 
giving money in at the same time we are taking back a lot in 
tariffs, then our trade and development policies are not 
aligned well.
    Mr. Knollenberg. In terms of money, maybe you have answered 
this, but I did not hear it. The point of foreign assistance is 
to help a country develop and graduate from foreign assistance. 
Would you say that we are reaching that goal? In other words, 
we don't want to find them dependent upon us forever, so are 
you finding us accomplishing that goal in terms of aid of any 
kind or from any size?
    Ms. Bush. Yeah. I think in recent years we are not 
accomplishing that goal very well at all. I think we 
accomplished it well in some of the Asian countries who did 
receive aid, and, as you know, a lot of those Asian countries 
are going gangbusters. But for countries that now need 
development assistance, I do not think we are accomplishing 
that goal.
    Mr. Knollenberg. Madam Chairwoman, I am out of time.
    Mrs. Lowey. Are you? I think you have another----
    Mr. Knollenberg. Another 30 seconds or so, all right.
    I find all your testimony was good. The only thing is I 
thought it was very, very long. I got confused a little bit 
along the way. But it seems to me that you are all dedicated to 
what you are doing, and there should be something that emanates 
from this.
    Somebody talked about a Cold War-era system that we are 
still using. I don't know who that was; maybe it was in the 
testimony. Why is that? Now, that doesn't fall on your backs, 
but why wasn't something done--or if it was done, I am not 
aware of it--so as to change it? Because I did see this little 
thing in the book. If this is the problem, and this may be the 
problem, the one with all of the lines that you, I think, 
posted, that would scare the death out of anybody. So we have 
got to do something to change this. I don't want to go off 
half-cocked either, because I think we ought to do this right. 
And so I would suggest that while your testimony is something 
we want to study very closely ourselves, I would appreciate any 
information along the lines of what I am requesting----
    Ms. Bush. Sure.
    Mr. Knollenberg [continuing]. Because I think that might 
tell us something that would become maybe a part or a brick in 
the mortar of this change, if it is going to occur. So I would 
like to have you follow through on that.
    Ms. Bush. Absolutely, sir.
    Mrs. Lowey. Dr. Rupp is so anxious to respond.
    Mr. Rupp. I just wanted to make one comment that is 
prompted by your remarks there. The fundamental structure of 
foreign assistance has not been addressed since 1960, so we are 
approaching 50 years without really rethinking what we are 
doing. When it was addressed in 1960, it was a major initiative 
to establish USAID, which was to be an agency in which the 
foreign development assistance of the U.S. would be housed.
    As the independence of USAID has been compromised in a 
whole variety of ways, and all those lines that go through 
Lael's diagram are an indication of how far its centrality has 
atrophied, we have wound up in a place where, to take the two 
purposes you mentioned, the diplomatic or political and 
security on the one hand and poverty alleviation on the other--
where poverty alleviation, the really core initial mandate of 
AID, has consistently been subordinated to all kinds of other 
purposes, certainly to short-term political considerations, to 
security considerations. And there has not been a kind of 
steady attention to the requirements, the very complicated 
requirements, of achieving poverty alleviation, in particular 
in sub-Saharan Africa. So the challenge is to restructure our 
foreign policy, our foreign assistance apparatus so that it can 
once again focus attention on that very challenging need.
    Of course, Nita, we understand completely it is 
horrendously complex to figure out in each case what does and 
does not move into this new department, but to have a 
department in which it is very clear the mandate is to address 
foreign assistance and long-term development in countries where 
we are working, that will lead to a clarification as to what 
goes there and what does not.
    Right now there is no one even to raise that question, 
because what was once the relatively independent voice within 
AID has been completely integrated in various ways or unraveled 
in other ways, and new boxes have been established. The result 
is there is no ``there'' there anymore that really is the focus 
for foreign assistance.
    Mr. Knollenberg. Are we the ``there''?
    Mr. Rupp. You have an absolutely crucial role to play 
because I think the timing is just right. On a bipartisan 
basis, the Congress can play a mayor role in generating 
momentum to move in this direction, and a new President, 
Republican or Democrat, will welcome the opportunity to clean 
up what frankly is by any standards a mess. Again, Lael's 
diagram illustrates.
    And here there is no difference on Mary Bush's comments 
about the majority of the HELP Commission or the Smart Power 
Commission which wound up calling for a Cabinet-level voice 
because they could not quite bring themselves to department. 
But there was no disagreement the status quo was simply 
untenable, and you need to drive getting it reformed.
    Mrs. Lowey. Thank you, Dr. Rupp.
    Before I turn to my colleague Ms. McCollum, I just wanted 
to follow up on two points. Number one, the coordination may be 
a mess, we may not be doing oversight, but there is still, and 
I am sure you would agree, really incredibly important work 
being done in the field by AID and other groups. No matter 
where we go, I continue to be impressed with the commitment and 
that hard work that our people are doing from AID.
    Now, they could use triple the funds, which takes me back. 
I think--I forget who--Mr. Hindery mentioned Afghanistan, I 
think, or somebody did before. And I remember my conversations 
with Ambassador Neuman, and he talked about the good old days 
when they had much more staff, much more resources, so they did 
not have to depend on contracting. They had the capacity. And 
so a lot of the criticism that we saw in the field was that the 
Defense budget is so huge, they could move quickly, but I 
believe that resources that AID has--with the resources they 
are very professional and doing the best job they can, but the 
resources have been cut back, and that is usually the reason 
that Defense will move ahead is because they have those 
resources.
    We all can go on and talk for an hour, and I want to turn 
to Ms. McCollum, but for the record I think that has to be 
made. In fact, in Africa, when we talked about many of the 
nonprofits, in addition to the lack of coordination, they felt 
they had to report to their master, the person who funded him. 
They did not have time to coordinate with the 20 or 30 groups 
that are currently operating in Ghana, Uganda--you saw this--
they were doing their thing.
    So I better stop and turn to Ms. McCollum.
    Mr. Rupp. A very smart member of the Smart Power 
Commission.
    Ms. McCollum. Thank you, and thank you, Chairwoman Lowey.
    Modernizing America's engagement with the developing world 
as an investor, a donor, a partner in providing development 
assistance, humanitarian aid, capacity building, and hope for 
the world's poor is vital for America's role in the world. 
Chairwoman Lowey, thank you for holding this important hearing. 
The timing of this hearing is absolutely right. Modernizing the 
development assistance and improving coordination of foreign 
assistance across dozens of Federal departments and agencies 
must be a top priority both for the Congress and the next 
President.
    As Mr. Rupp pointed out, I did have the privilege of 
serving on the Smart Power Commission, and I strongly support 
the Commission's recommendation. We need to be smart and use 
our Nation's great military, political and economic power 
wisely. This means our development investments need to be 
focused, effective and yield real outcomes in the lives of the 
people who need our help around the world. We need development 
to be an equal partner with defense and diplomacy.
    The National Security Strategy put forward by the Bush 
administration in 2002 and 2006 is based on defense, diplomacy 
and development, as the first speakers have pointed out. Today 
it is clear that development, both strategically and 
structurally, is not an equal partner, but all too often an 
afterthought or secondary concern. There is an ever-growing 
number of Members of Congress, including the members of our 
witnesses here today, who believe the U.S. needs a Cabinet-
level Secretary of Development, a champion to advocate directly 
to the President for development; aid effectiveness; 
coordination across departments, agencies; and give a strategic 
focus to our investments. I strongly support this idea. I 
strongly support Congress and our next President developing a 
strategy, a structure and a level of resource commitment to 
support a Cabinet-level Secretary who has the statutory 
authority to give focus and impose coordination and champion a 
long view of development.
    Foreign assistance modernization must demonstrate America's 
commitment and ability to partner with governments, but also 
with the world's 2 billion people struggling to escape 
oppression, poverty and disease.
    We need to make investments in development assistance that 
reflect the challenges of the 21st century and the realities of 
globalization. We need a strategy that is rooted in innovation, 
coordination, and understanding of culture, customs, languages 
and the complexity of local conditions. Our failures and 
lessons learned in Iraq clearly demonstrate this.
    We need development investments in which $1 yields $2, $3, 
or $4 worth of results. Our Nation's investments in 
development, democracy, and global health, human capacity 
building need to take a view focused on a generational impact, 
not a quick political fix. We need to make a commitment to 
outcomes that are not only based on quantity, but also in real 
improvements in the quality of lives for families in the 
world's poorest countries.
    And finally, we need to restore civilian expertise within 
our government to achieve our development strategy. We need to 
invest in Americans who are willing to serve their country and 
the world. In short, we need a Cabinet-level Department of 
Development.
    So my question for the panel is what is the strategic value 
of creating a Cabinet-level Secretary of Development and 
Humanitarian Assistance as compared to the current delivery of 
U.S. foreign assistance? And how would such an elevated 
leadership improve the effectiveness, coordination and focus of 
U.S. foreign assistance, both here and abroad?
    Thank you, Madam Chair.
    Mrs. Lowey. Ms. Bush and then Ms.----
    Ms. Bush. Thank you, Madam Chairwoman.
    I would like to respond mainly because my Commission, our 
Commission, a majority of our Commission, and I am afraid do 
not think that a separate Cabinet-level department is the best 
structure for the United States of America. DFID has been cited 
here, the United Kingdom has been cited, but we are a very 
different country from the United Kingdom. We have a very 
different government structure. We have a very different way of 
relating even, I think, to our private sector. We have private 
sector actors, private actors that play a strong role in 
assistance and in development around the world. We need to be 
positioned to take advantage of that.
    There is a small, very small, agency or department within 
the State Department called the Global Development Alliance. It 
is a very small program, it has a very small amount of funding, 
but they do outstanding work because their work is done by 
marrying government resources, our expertise, United States 
Government expertise, with that of the private sector, and 
marrying the resources of the United States Government with 
that of the private sector.
    It is one of the things that makes America great, our 
vibrant private sector. We have literally exported 
entrepreneurship and the capitalist system to the rest of the 
world. We need to be positioned to take advantage of that. And 
we already have some things going within the State Department 
that, if expanded and if built upon, we think we can even do a 
better job of that.
    Also what we believe is that if you keep development and 
you keep foreign assistance under the purview of the State 
Department--the Secretary of State is one--is probably one of 
the strongest Cabinet officers that there is. And I have real 
trouble thinking that a new Cabinet officer for development 
would have the kind of voice that is necessary in this 
government to get what is needed for development.
    What we really need here, what we really need, is we need 
the right kind of leadership coming from all sectors, coming 
from the White House and national security, in terms of the 
coordination and the oversight and development for all of those 
agencies----
    Ms. McCollum. Madam Chair, I know my time is running out, 
and I would like to hear from the other panel members because I 
know the position of the HELP committee.
    Ms. Bush. Thank you very much.
    Mrs. Lowey. Let me just say this. Before I turn to Mr. 
Hindery, who wants to comment, there is going to be two votes, 
one beginning at 11:45, so I want to certainly make sure the 
Ranking Member gets there before. With all due respect, if we 
can move. Okay. But you do have that 30 seconds back that I 
just took up.
    Mr. Hindery. Congresswoman, I couldn't disagree more with 
Chairwoman Bush. This overreliance and overfocus on 
philanthropy is ill-placed and misplaced. Even counting our 
country's generous philanthropy, there are 16 countries ahead 
of us, who, if they count their philanthropy, are still ahead 
of us.
    This premise that you can form a super State Department, on 
that premise you should give the State Department literally 
even more things to do. This activity is--if it truly is one of 
three pillars, it deserves standing unto itself. Give it an 
angle; give it a Cabinet-level angle.
    As you stepped out of the room briefly, Dr. Brainard and I 
commented to Chairwoman Lowey that this thing cannot self-
reform, that the structural change--there must be a formal 
structural change, and after that reformation will occur.
    The 50 agencies are struggling for their status. They will 
not reform themselves. And to think that you can put this into 
the State Department, it belies the whole premise. There are 
three pillars. There are not two. There is not defense and 
something called diplomacy/development. We wanted the three Ds. 
We have wanted the three Ds for 60 years, and it is illogical 
to cast it away at this point in time absent, as I think the 
three of us have argued, and perhaps you did in your own 
comments, for the stand-alone department. But please don't be 
deluded by this philanthropy focus. The numbers belie it.
    Mrs. Lowey. It looks like we are going to have to have 
several more discussions.
    Mr. Wolf.
    Mr. Wolf. Well, thank you. And I want to thank the 
witnesses, and I want to thank the Chair for having these 
hearings. It is very important. One of the reasons we did the 
HELP Commission, we had hoped it would help create a consensus 
or a bipartisan feeling.
    A couple of points that I wrote down as I was listening. 
One, I agree with the Chair, there are a lot of good things 
taking place. I don't want to give the impression that nobody 
is doing anything and that everything is falling apart.
    Secondly, I think there has been too much emphasis maybe on 
moving boxes. Personnel is policy. You can have the biggest 
cabinet, the best cabinet, the most shiny furniture, but if you 
have the wrong person there, it just does not help. So, 
personnel, a person who cares, who is really committed makes as 
much difference as where are all the boxes.
    Thirdly, this thing really cannot be partisan. I mean, the 
Republicans may get elected, and we may run this government for 
the next 8 years. That is shocking to some people out there, 
but that may happen. So if this thing becomes partisan, the 
institution that I work in is one of the most partisan 
institutions that I have ever seen since I served in Congress. 
This is my 28th year. I say that with my best friend, 
Congressman Tony Hall, being a Democratic member. This is a 
partisan place, and if this turns into a partisan effort, it 
will fail--guaranteed failure. It will not happen.
    Thirdly, I worry about China. Look everywhere you go, 
throughout Africa and the world, with regard to what China is 
doing.
    One other thing, when we talk about DFID and others, it 
just so happens, whether we like it or not, when I was in Iraq 
last week, General Petraeus says he supports more funding for 
foreign aid, more funding for diplomacy, but we are at war, and 
we have men and women who are fighting in Afghanistan, and 
Britain is not doing that much in Afghanistan. There are men 
and women who are fighting in Iraq. We now have about 180,000. 
I think Britain has 5,000 mainly on the base of Basra, and I 
have been down to see. So we are doing things in this world 
that other nations are not doing, and some may not like us to 
do it, but we are in the process of doing it. And frankly, I 
say to some of these people who criticize us around the world, 
if it were not for the American military, if it were not for 
our government, this would be a much more dangerous world, much 
more dangerous world.
    Also, when we look at reform, I was disappointed that Sachs 
didn't sign this. Sachs has been connected to the U.N., one of 
the most corrupt organizations we have seen. Now look at some 
of the IG stuff being done, the Oil-for-Food program, the 
sexual predators of the Congolese of the U.N. Peacekeepers and 
things like that.
    So be careful. Overall I say we do need to change some 
things, and I would hope that the HELP Commission could really 
have done it. We really have to come together in a bipartisan 
way.
    Lastly, I think all of us, and I put myself as a Republican 
out there with anybody else, I want to make sure we come 
together. Whoever is our President, God bless them, we should 
come together with them and try to change this. I had hoped 
that with the HELP Commission, it would lay the groundwork with 
the intensive hearings on foreign aid, bring in all the past 
Secretaries of State, bring in all the past heads of AID, 
Natzios, and then come down. But lastly, this committee will 
not be the committee to do it. I wish it were. It will be the 
International Relations Committee unless some change happens.
    But I think it is important for us all to get together, and 
I would challenge everybody out there on both sides. Once each 
party--and they are all good people--once each party nominates 
someone, I would urge that there be a bipartisan group, 
Republicans and Democrats, who go in and lay out where we are 
and how important this is so that whoever is elected, God bless 
them, will know that this is important. This will be debated 
during the Presidential campaigns.
    I mean, some of the stupid questions at the debates. Why 
doesn't somebody ask this question? Why don't you have your 
friends who know Wolf Blitzer have him ask something about 
this. Some of the questions have been sort of dumb.
    But we can come together and make sure we all go in and 
meet with both sides so that we do the very best to make sure 
that we are helping the poor and the hungry, but also do it in 
a way that helps strengthen our country, because we are coming 
into some very dangerous and tough times.
    I will read all of the testimony. And I wanted to thank the 
Chair for having this hearing. This is really the first hearing 
on this issue of how do we reform and what do we do to make 
sure that we do what this country can do and must do. So thank 
you for your testimony, and I yield back to the Chair.
    Mrs. Lowey. Ms. Lee.
    Ms. Lee. Thank you very much. I also want to thank our 
panelists for being here today. And I associate myself with the 
remarks of almost every Member here today.
    I want to focus on a couple of things in my comments. One 
is I am concerned increasingly about the militarization of our 
foreign policy. And it is very clear, and we have had 
discussions with the Chair and members of this committee, 
AFRICOM, for example, the African Command, that to me is very 
glaring as an example of what could be for me and for many a 
big problem with regard to now looking at countries in Africa 
and the African continent as a possible pawn in the global war 
on terror as we did during the Cold War.
    So I would like to see if the Commission looked at AFRICOM, 
the African Command, and how you see that emerging, and is that 
something that you think that the military should continue 
with, or should this be more of the purview of our foreign 
assistance?
    The second part of my question has do with the public-
private partnerships that you looked at in your report 
complements USAID's efforts in microfinance and recommends a 
public-private partnership to support small and medium-size 
enterprises. One of the issues--and again, and I want to thank 
the Chair for being open to these concerns that some of us 
have--is the involvement of the United States minority-owned 
businesses in USAID projects abroad. As a former business 
owner, I know how tough that nut is to crack. It is very 
difficult, and what better way to promote the diversity of 
America.
    We have very competent minority-owned firms in our own 
country, but there are extreme barriers to their participation 
in USAID, and I am wondering if the Commission looked at that 
and at the type of contracts and contractors that we utilize in 
our foreign assistance efforts.
    Thank you.
    Ms. Bush. Yes. Thank you. If I may respond. And before I 
do, if I could just make one response to Congressman Wolf's 
comments.
    I fully agree with your comments about partisanship and 
about too much emphasis on moving the boxes. I was very proud 
that this Commission for many, many months was very nonpartisan 
in its work. When we had one issue, and that of structure, that 
we did not come to an agreement on, that is the issue that is 
grabbed upon by the press, and it is grabbed upon by many 
people to show divergence. And I fully agree that we need to go 
back to that bipartisan spirit that we had in order to push 
these things forward, because 90 or 95 percent of what is in 
this report, we have unanimity, we agree, and we agree that we 
need to help people who are living in poverty and help people 
move up the development scale.
    So I really wanted to say that and take the emphasis off 
what the structure is. It is not that important. It is 
leadership.
    Thank you, Congressman Wolf.
    Now, on AFRICOM, one of the things that I said early on, 
and I am not sure whether you were here or not, Congresswoman, 
is that one of the ways that we would like to address getting 
more--that we would like to have considered for addressing 
getting more resources into our civilian foreign affairs, into 
USAID and to the State Department is to consider the budgets 
together, civilian foreign affairs and defense. We need to 
allocate more to civilian foreign affairs. AFRICOM might need 
to be there for security reasons. I cannot comment on that. I 
have to respect Secretary Gates and the powers that be on that 
kind of decision. But, yes, they are performing duties that 
should be undertaken by USAID and by the State Department, and 
it is simply because civilian foreign affairs does not have the 
resources.
    If we look at those budgets together and allocate a larger 
percentage to civilian foreign affairs, then we will do more to 
prevent the need for intervention by our military, either for 
aid activities or for defense activities. That is number one.
    On public-private partnerships, hugely----
    Ms. Lee. Can I just go back to that, because I heard you 
earlier, and that is exactly what I think needs to happen also. 
But we are moving pretty quickly on AFRICOM, so I am wondering 
specifically for AFRICOM, how do you see this emerging now 
within the context of your recommendations?
    Ms. Bush. Well, my apologies, but I just cannot comment 
further on AFRICOM. What we know, because some of our 
Commissioners travel there, is that the military is building 
schools, and they are digging wells, and they are trying to put 
infrastructure together. The aid people are going to the 
AFRICOM people saying, will you help us with these kinds of 
things, because civilian foreign affairs, the aid department, 
does not have the resources that they need. So the Defense 
Department is stepping into the vacuum.
    We do not feel that this is the right thing for our 
country. Our aid establishment, our civilian foreign affairs 
need the resources to be able do what they need to do.
    I hope that satisfies that.
    Ms. Lee. And with regard to----
    Ms. Bush. The public-private partnerships and small and 
medium-size enterprises are extremely important. This is an 
undercapitalized area around the world. There is a huge 
potential. We had a special study done by our staff and some 
outsiders on the potential for growth and development if we can 
help get small and medium-size enterprises going more around 
the world. They need not only the funding, but they also need 
the technical skills, and business skills, and managerial 
skills, and that is one of the reasons that we need to do 
things in conjunction with our private sector. There is so 
much----
    Ms. Lee. Sure, no, I understand that. I am asking 
specifically with regard to the utilization of minority-owned 
firms in our own country.
    Ms. Bush. I am coming to that, I am coming to that. There 
is a chapter as well as an appendix in the back of our report 
about the huge problems in our contracting processes at USAID. 
We do not have the people with the right skills to do the 
contracting. We are doing huge amounts of contracting, which 
therefore means it costs a lot more than if we had direct 
hires, and we are doing it in huge contracts. I forget what 
they are called; one of my staff could tell me.
    But what happens is when you do these huge contracts, the 
smaller companies, and those are typically--some of them are 
women and minority-owned businesses--just do not have the 
wherewithal to bid on these 500 million or billion-dollar 
contracts, so they are getting left out. But we have very 
specific proposals as to how that whole process should be 
reformed in order to include minorities and small businesses of 
any kind. It is something that, in our view, absolutely has to 
happen.
    Ms. Lee. Thank you.
    Could Mr. Rupp respond.
    Mr. Rupp. I would like to comment briefly on AFRICOM. I 
cochair a working group in interaction on civilian-military 
relations, and we have worked now for 2 years and have 
developed a set of principles for the coordination of military 
and civilian relations that has been accepted, signed off on by 
the Department of Defense as well as by the aid agencies, and I 
think it really has moved a long way.
    I agree completely with Mary Bush that AFRICOM is a huge 
challenge, and this has nothing to do with the motivation of 
the leadership of AFRICOM. We have met with General Kip Ward. I 
think his motivations are exactly right. He cares a lot about 
really improving the situation of people in places where the 
military is engaged, but the fact is as long as the funding 
imbalance is as strong and as powerful as it is, just as Mary 
said, whatever the intention, if the money comes through DOD or 
if that is where the money is, then it automatically 
subordinates the work of civilian agencies in a way in many 
parts of the world that increases the security risks for those 
civilian agencies.
    The only answer to that is both structural, namely AFRICOM 
is not a good idea. I would state that flatly, and I would be 
happy to give lots of reasons. But beyond structure, what is 
crucial is that the resources are being provided on the 
civilian side. And I agree completely, Representative Wolf, 
this is a bipartisan concern; this is not Democrat versus 
Republican. It is really critical that we get the balance 
right, and I think it is an area in which there can be 
widespread bipartisan agreement.
    Thank you for your question.
    Mrs. Lowey. Before I turn it over to Mr. Wolf, I just want 
to say, Dr. Rupp, that there is such intense interest on this 
issue, the role of the military with foreign aid, that Ike 
Skelton has a point, and I believe it is Jim Cooper and Susan 
Davis who are working on this. They asked us to be part of 
their working group. But there are many people in the Congress 
who are looking at the appropriate balance and how we work 
together. It will be done in a bipartisan way.
    We are going to have a hearing on this issue.
    Mr. Wolf.
    Mr. Wolf. I thank Madam Chair.
    The sooner this can be done, the better, because I want to 
read a letter that I received yesterday from David Walker, the 
Comptroller of the GAO, the Government Accounting Office, about 
the changes that are coming in this country with regard to 
spending priorities, and if there is such a rush and this thing 
is not dealt with quickly, this thing will be forgotten. He 
says, approximately 3 years ago, Standard & Poor's issued a 
publication stating that, absent policy changes, the U.S. 
Government's debt-to-GDP ratio is on track to mirror ratios 
associated with speculative-grade sovereigns. Within the last 
month, Moody's Investor Service issued its annual report on the 
United States. In that report they noted their concerns that, 
absent Medicare and Social Security reforms, the long-term 
fiscal health of the United States and our current triple A 
bond rating were at risk. Those not-too-veiled comments served 
to note the significant longer-term interest rate risk that we 
face absent meaningful action of our longer-range challenge as 
well. Higher, longer-range interest costs would only serve to 
complicate our fiscal, economic and other challenges.
    He ends by saying, Absent meaningful budget entitlement 
spending and tax reform, this imbalance, which is driven 
primarily by rising health care costs and known demographic 
trends, will result in the tsunami of spending and debt levels 
that could swamp our ship of state.
    The article that I saw yesterday in the Financial Times 
predicts that in 10 years, Moody's will downgrade our triple A 
bond rating to junk bonds. If that happens, and you are trying 
to reorganize and get support for foreign aid, it will be more 
difficult than ever before. So this thing ought to be locked in 
very, very early in the next President's term.
    Thank you, Madam Chair.
    Mrs. Lowey. Thank you very much.
    Since the bells didn't go off, I am going to take the 
liberty of proceeding with some questions, if you can remain 
with us. I wanted to go back to Ms. Bush. The HELP Commission 
report includes multiple recommendations related to budgeting 
and strategic planning. But I want to ask you and pursue your 
recommendation for the development of the unified national 
security budget. That would include funding for assistance 
programs implemented by the Defense Department and civilian 
agencies.
    I wonder, maybe you can comment, would it be easier to 
increase and protect resources for foreign aid if they were 
somehow linked to the defense budget? On the other hand, would 
the ever-exploding defense budget eat up the aid dollars?
    Why do you believe it is important to link our development 
agenda with our defense agenda this way? And are you concerned 
that the approach will further militarize and politicize the 
development agenda and strategy? And is it possible that it 
would make it easier to shift funds away from development 
priorities to defense priorities? I would like to hear from all 
of you, whoever else would like to comment.
    I want to make it clear that I think we all believe that it 
is essential that we look at the coordination between the 
Defense Department and USAID and the State Department and how 
we interact, but the unified budget is a question that I have 
real concerns about.
    Ms. Bush. Thank you, Chairwoman Lowey, and I can understand 
your concern. We were struggling to come up with something 
thoughtful and something that could possibly make sense as a 
way to getting more money to civilian foreign affairs. I 
realize, as your questions point out, that there are risks to 
it, risks that maybe more would go to Defense.
    Now, if we had Secretary Gates in place as he is, who is 
saying that we need to plus up civilian foreign affairs, and if 
the relevant committees here in the Congress were to listen to 
his advice, then I suspect that maybe more would go to civilian 
foreign affairs. But Secretary Gates might not be in place. 
People in this Congress might change. So it might not be the 
best way to look at it.
    It was one possibility as we struggled to try to call to 
everybody's attention the fact that the Defense Department is 
doing a lot more in the aid area and the fact that we need more 
for prevention of problems. Our way might not be the best, so 
forgive us on that.
    But what I also wanted to say is that we now have on our 
Web site an outline for the rewriting of the Foreign Assistance 
Act. We didn't go as far as trying to rewrite, we couldn't do 
that, but we have that outline. And we think that if that 
outline could form the basis of discussions among Congress 
people, as well as the executive and legislative branches, then 
that might be another way of getting at that issue as to how 
much we spend on civilian foreign affairs as opposed to 
defense.
    Mr. Hindery. Madam Chair, I think the more important 
recommendation was that this activity adopt a form of budgeting 
that is more mirrored to that of defense, something called, in 
an acronym, PPBES. The problem is that we have long-date 
agendas with short-date budgeting. And the premise of the 
report and the seminal recommendation was that the budgeting 
process be mirrored more like that of defense.
    The concept of unitary is simply, to acknowledge 
Congresswoman McCollum's comment, three pillars. You have got 
your three departments. It is imperative that they have 
mirrored budgeting processes so that, as Dr. Brainard 
commented, that ratio of what is properly apportioned--and 
that's for others to decide--you can make those determinations. 
You simply cannot physically do it now. You are comparing, as 
Congressman Wolf knows as well, apples and oranges. One 
accounts one way, one accounts the other. So it is not an 
overemphasis on the unitary system as much as it is an emphasis 
on reforming the actual budget process.
    Ms. Brainard. I do think that often the perception when 
people talk about unified budgeting is that we are either 
looking for ways to go into the 050 account to find foreign aid 
or the reverse, and I think there is a bit of a danger. I think 
what is more important is to establish a very strong case, 
bipartisan strong case, for fully funding capacity on both 
sides of the budget, and so it is both on the 050 and on the 
150.
    I think, going back to Congresswoman Lee's point about 
AFRICOM, here we are at a point where Africa is growing faster 
than it has in decades. We have this huge opportunity. 
Everybody is worried that in Africa the dominant face on 
development is going to be China. Well, this is not a moment 
where, just because of the way our resources work, we want our 
face in Africa to be a military face.
    And so I do think that these things are very related; that 
unless we can resource the capacity on a civilian side and put 
that face in the field that we want Africans to see, we are not 
only going to lose the sort of soft power race vis-a-vis China, 
but we are going to be sending a very strange message in Africa 
that we see our predominant interest there in military terms.
    Mrs. Lowey. Did you have any comment?
    Mr. Rupp. I agree with that completely.
    Ms. Bush. If I might just add one quick sentence. My staff 
has passed me a note, back to that national security budget, 
the intent was--and this might make it clearer--was to 
illuminate the imbalance, to illuminate the imbalance, and to 
think about should we not be spending more, say 10 percent, of 
our total national security on prevention and civilian foreign 
affairs.
    Mrs. Lowey. Well, let me just say in closing I think all of 
us on this panel would support that recommendation, and I know 
there is going to be a lot of debate about the structure, but 
we all agree that we have to take a greater role and invest 
more and increase our budget for the important role of foreign 
assistance. Whether USAID is part of the State Department; 
whether it is part of a separate agency or a Cabinet 
department, there are concerns about separating development 
from foreign policy.
    This has been a really important hearing. We appreciate 
your taking the time. We appreciate your input. And I can 
assure you that we will be following up not just with our 
hearing, but with our conversations from those who passionately 
feel one way or the other.
    So I want to thank you very much and thank the members of 
the committee, and the meeting is adjourned. Thank you.

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                                        Tuesday, February 26, 2008.

                  MILLENNIUM CHALLENGE ACCOUNT BUDGET

                                WITNESS

AMBASSADOR JOHN J. DANILOVICH, CHIEF EXECUTIVE OFFICER, MILLENNIUM 
    CHALLENGE CORPORATION
    Mrs. Lowey. Good morning. It is a pleasure to be here. We 
are all in rare form, ready to begin the year, and we thank 
you, Ambassador Danilovich, for appearing before us. I do miss 
your wife and cheering committee. There are many people who 
have worked hard with you on this program here today, so I 
welcome you on behalf of the Committee and on behalf of my 
Ranking Member, Mr. Wolf.
    We are delighted to welcome you, Mr. Ambassador, the chief 
executive officer of the Millennium Challenge Corporation. We 
look forward to discussing the President's Fiscal Year 2009 
request for the Millennium Challenge Account, and I want to 
congratulate you on signing the compact with Defense. Yes, I 
was there, with several of us on the Committee not too long 
ago, and it did bring a great deal of attention as a result of 
the President's visit. I think it is very, very important.
    The President's budget request, $2.225 billion for the 
Millennium Challenge Corporation, is an increase of 30 percent 
over the Fiscal Year 2008 enacted level, and while this is less 
than the amount that has been requested in the past years, it 
is a substantial increase for a program that you and I know has 
been slow to implement, and I know you have done a great deal 
to try and turn that around. But we really need to see that 
impact on the ground.
    It is this Committee's responsibility to look at the 150 
account holistically, and the President's budget represents 
trade-offs and choices that advantage the administration's new 
initiatives over core humanitarian and development programs, 
and it is left to the Congress to make sure that support for 
these essential programs is not undermined.
    As the MCC enters its fourth year of operation, it is an 
appropriate time for us all to take stock of the achievements 
and challenges ahead. I have always believed that the MCA holds 
tremendous promise and potential to bring about transformative 
change in the developing world. Indeed, since its inception, 
the MCC has signed 16 country compacts totaling $5.5 billion. 
Third, 15 threshold agreements totaling $324.7 million, and I 
see you take out your pen. Are those the correct numbers?
    Mr. Danilovich. They are correct.
    Mrs. Lowey. I just want to make sure.
    Mr. Danilovich. They are correct.
    Mrs. Lowey. Okay. Through the course of today's hearing, I 
hope to learn more about your efforts to translate the enormous 
potential into measurable results on the ground. Last year, I 
questioned the slow pace of disbursements and the lack of 
progress on compact implementation.
    This summer, I saw firsthand, in Ghana and Morocco, the 
challenges facing compact implementation, including 
establishing mechanisms in recipient countries to manage and 
disburse funds and coordinating the efforts of the host 
government with U.S. Government entities and civil society.
    I am disappointed, however, that many of my questions and 
concerns from a year ago remain unresolved today.
    In Fiscal Years 2005 and 2006, only $61 million of the $3 
billion worth of signed compacts has been disbursed, 26 percent 
of expected disbursements.
    In Fiscal Year 2007, the MCC disbursed $137 million, more 
than twice as much as the previous year, but when this figure 
is compared to MCC's own disbursement projections, you have 
only reached one-fourth of your target. This simple statistic 
suggests that progress on compacts is slowing down rather than 
speeding up.
    I hope you will explain why the MCC has not achieved these 
implementation targets, and I would also like to hear you 
assessment of what you will achieve in 2008 because, as we sign 
more multiyear compacts, I remain concerned that the emphasis 
is still not on implementing the compacts. I know you have 
tried to focus on it, but we still do not see that emphasis 
that have already been signed.
    What is the status of these compacts? Are any moving 
forward at the expected pace and on target to complete their 
planned programs within the five-year limitation?
    In the past year, you reorganized the MCC to increase its 
focus on compact implementation and accountability, and I 
understand that the new compact implementations unit's review 
of signed compacts found that external factors, such as 
increased construction costs, increased gas prices, the dollar 
depreciation, and inaccurate estimates will significantly 
impact the ability to fully implement compacts.
    For example, although one compact outlines plans to support 
three projects--building on an irrigation system, expanding 
significant infrastructure, and supporting an industrial park--
the Kern analysis demonstrates that only two of the projects 
can be completed within the five-year compact timeline. Other 
compacts that include the building of roads will also be scaled 
back.
    In some cases, only half of the planned roads will be 
completed within the current compact resources. I hope to 
explore, in the question-and-answer period, why these issues 
were not anticipated when negotiating the compacts, and how you 
are addressing these issues in new compacts.
    Many argue that the MCC is a new and different mechanism 
that provides predictable and targeted resources for countries 
that demonstrate good government and meet other indicators. 
Indeed, the MCC is another means of scaling up resources for a 
certain subset of countries. However, obligating billions of 
dollars for multiyear compacts that take years to start further 
opens the MCC to criticism that you are tying up precious 
resources that could be used to meet urgent needs and support 
development programs that have more immediate impact on the 
ground.
    This is particularly the case in countries with both USAID, 
bilateral development programs, and MCC compacts. If MCC 
compacts were truly additional, one would expect that USAID 
programs would continue to fund health, education, agriculture, 
and other sectors while the MCC would address more systemic 
concerns through its multiyear compacts. However, the reality 
is that USAID, strapped for resources, is often winding down 
its programs in countries where MCC compacts assign despite the 
fact that their impact might not be felt for years.
    Unfortunately, this is the case in six MCC countries in the 
Fiscal Year 2009 budget request, including Benin, Ghana, and 
Armenia. Current program implementation data show that these 
programs are not yet demonstrating significant impact, yet 
these countries are losing health and development resources 
quickly, including a $17 million reduction in Benin, a $23 
million reduction in Ghana, and a $35 million reduction in 
Armenia. I would like to discuss this unintended consequence of 
putting MCC dollars into a country. We will get to that in the 
Q&A.
    Ambassador Danilovich, I want to say, again, I appreciate 
your hard work. I appreciate your commitment. I appreciate your 
enthusiasm. Your testimony today is important, and I look 
forward to discussing the new initiatives you are undertaking 
to make the MCC a more effective and results-oriented 
development agency. But before we move to your testimony, I 
would be delighted to turn to Mr. Wolf, the Ranking Member, for 
his opening statement. Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair. Welcome, Mr. Ambassador. 
I will just submit my statement for the record. Hopefully, 
though, in the testimony, you can elaborate a little bit more 
on the success and also the failure and how we honestly and 
morally judge this rather than just the testimony of the MCC or 
the administration.
    Secondly, how you relate to others, such as the World Bank 
and AID, when coming into a particular country.
    Lastly, practically speaking over the last several years, 
how do you differ, in a positive way, from just an AID program?
    If you can answer those three questions when you get into 
the testimony. Thank you, Madam Chair. I yield back.
    Mrs. Lowey. Mr. Ambassador, we look forward to hearing your 
testimony. As you know, your full statement can be placed on 
the record, so you may summarize it, if you wish.

                Opening Remarks of Ambassador Danilovich

    Mr. Danilovich. Thank you. Thank you very much, Chairwoman 
Lowey, Ranking Member Wolf, and the distinguished Members of 
the Subcommittee. I welcome this opportunity to meet with you 
today to discuss President Bush's Fiscal Year 2009 budget 
request for the Millennium Challenge Corporation. I would like 
to summarize my statement very briefly for you and submit the 
whole version for the record.
    I would also like to thank the Subcommittee for your 
continued support of the MCC. The funds you have provided so 
far are now yielding tangible results. Partner countries are 
using MCC investments to issue land titles, increase farmer 
incomes, create jobs, increase market access, improve 
infrastructure, strengthen small-scale fisheries, expand 
artisan training, open health clinics to contain the spread of 
HIV/AIDS and other diseases, build girl-friendly schools, 
expand vocational training, strengthen access to credit, and 
improve access to water and sanitation services.
    The President is requesting $2.225 billion to continue 
MCC's efforts and to consolidate our early successes at 
reducing poverty in developing countries, committed to good 
governance, investing in their people, and economic freedom.
    Last month, MCC celebrated our fourth anniversary here on 
Capitol Hill, and we were honored to have a standing-room-only 
crowd, including you, Madam Chairwoman, Congressman 
Knollenberg, others from Congress, ambassadors, as well as 
friends from the development community. All of us can take 
great pride for the tremendous achievements made by the MCC 
since 2004, only four short years ago. With $5.5 billion 
committed to 16 countries worldwide, we are an important 
component of American engagement around the world, building 
true partnerships to reduce poverty and increase economic 
growth.
    We know this through a recent Gallup poll, revealing that 
MCC, in comparison to other donors, provides more oversight, 
more help toward sustainability, and does a better job of 
building capacity.
    We know this in the HELP Commission recommendations for 
assistance reforms that mirror MCC's approach, including our 
emphasis on democratic principles, good governance, country-led 
development, and economic growth.
    We also know this in the findings of the Smart Power 
Commission at the Center for Strategic and International 
Studies, which cite the MCC for addressing corruption in 
developing countries by creating incentives by which continued 
aid is tied to good performance.
    Of the $2.225 billion requested by the President for MCC, 
roughly $2 billion of that amount is for new compacts, 
including funds to evaluate proposals and support compact 
development. Our existing pipeline of countries includes 
Malawi, Moldova, Jordan, Senegal, Timor-Leste, Bolivia, and 
Ukraine. Additionally, in March, the Board of Directors will 
consider the possibility of including the Philippines.
    It is too early to determine exactly which of these 
countries will sign compacts. This is, after all, a competition 
for funds, and not all of these countries will get compacts in 
2009. With support from Congress, countries with the best 
proposals and compliance with MCC's 17 good-government 
indicators should be able to enter into compacts. One hundred 
and fifty million of the amount is budgeted for threshold 
programs, and $105 million is budgeted for MCC's administration 
and audit expenses.
    Unlike in past years, we anticipate that there will be no 
funds carried over from Fiscal Year 2008 into Fiscal Year 2009. 
This means that the 2009 appropriation alone will determine 
MCC's activities and accomplishments in that year.
    The $2.225 billion funding level will support our efforts 
to accelerate progress on the ground. Since we last met, I have 
reorganized the agency to deliver more progress on the ground 
with greater speed. This means giving our MCC resident country 
directors more authority to make smart, common-sense decisions, 
and providing the best possible support for our partner 
countries as they implement their compacts. It means 
accelerating disbursements as more and more projects move from 
design into implementation.
    To accomplish all of this, we will maintain aggressive 
oversight of MCC-funded activities on the ground. We will also 
carefully manage the external economic pressures that come from 
being in full-fledged implementation, such as dollar 
depreciation, increasing energy and transport costs, and a 
worldwide construction boom.
    We will adjust to changes that occur during the 
implementation of infrastructure projects as feasibility 
studies and designs are completed.
    To further increase incentives for good policy performance 
and good implementation practices with our current partners, we 
will be seeking authorization legislation this year, and we 
look forward to working with this Committee on this.
    MCC is not a handout. It is not an easy program, but we are 
committed to maximizing the effectiveness of each U.S. taxpayer 
dollar we invest, not only by completing projects but also by 
supporting countries as they build their capacity to do this 
for themselves. MCC's legacy will be the delivery of 
sustainable results that benefit the poor through country-led 
implementation.
    This legacy will be shared with you, Madam Chairwoman, and 
Members of your Committee with Members of Congress and with the 
American people. Working together, we will continue to motivate 
policy reforms, fight corruption, help countries to strengthen 
their capacity, empower women, and pave the way to private 
enterprise and trade.
    So, today, I fervently ask for your continued support of 
the Millennium Challenge Corporation's aid for funding at the 
president's request of $2.225 billion. Chairwoman Lowey, 
Ranking Member Wolf, distinguished Members of this 
Subcommittee, thank you for your strong working relationship 
that you have had with the MCC, not only with myself but with 
our staffs over the past few years.
    It is this positive and constructive engagement which has 
made this results-oriented, performance-based model of 
development assistance a success. We look forward to working 
with you to achieve the president's request for the MCC, and I 
very much welcome your questions this morning. Thank you very 
much.
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    Mrs. Lowey. Thank you very much, Mr. Ambassador. I just 
want to say, at the outset, that if Members come and go, it is 
no reflection on the scintillating performance, but there are 
probably a half a dozen appropriation hearings at the same 
time, so I do want to apologize.
    Each Member will be limited to five minutes, and I hope we 
will have another round. So I would like to begin by making a 
couple of points, and then you can respond within the time 
allocated.
    First of all, I want to thank you again for your efforts to 
streamline MCC's operations and to focus on the obstacles of 
implementing the existing compacts. Your Fiscal Year 2009 
budget justification warns of alarming cost overruns on several 
infrastructure projects due to rising global construction costs 
and other external and unanticipated shocks, including currency 
fluctuations.
    Your staff has told us that, in some cases, costs are now 
50 percent higher than expected. To make up the difference, the 
MCC will have to either scale back these projects or ask host 
countries, other donors, or members of the private sector to 
make up the difference. While infrastructure projects are 
understandably subject to cost reestimation, the data raise 
deeper questions about the MCC's forecasting capabilities and 
due diligence process.
    So if you can comment. Are you prepared to share with the 
Committee that the external factors cited in the congressional 
justification were the sole reason for these changes, and what 
percentage of these cost reestimations were the result of poor 
cost forecasting on the part of the MCC staff, and, more 
importantly, what steps are you taking to ensure more accurate 
estimates are undertaken in the development of future compacts, 
and how will you notify this Committee, this Congress, about 
the changes in compact projects. Should we expect an official 
notification of these changes, and how will the public compact 
countries, and in the United States, be notified about program 
changes?
    One of the hallmarks of the MCC is accountability. So 
without some information, the public cannot be part of that 
discussion. Let me stop at that point, just so you will 
remember all of the questions.
    Mr. Danilovich. It is a big question, and it is one which 
we are very focused on, and it comes under the broader heading 
of our implementation efforts in general.
    The project reestimates that we are encountering in a 
number of our countries to date is something which we are 
confronting head on and dealing with in a very dynamic, robust, 
and aggressive fashion. We are not alone in this challenge, and 
we are not unique in this challenge. The U.S. Government is 
facing it in several programs throughout the world, and, 
indeed, other development agencies are also confronting this, 
whether it be European-specific countries or European Union or 
Far Eastern countries who are involved in development 
assistance around the world.
    It only stands to reason that all of us have been affected 
by the depreciating dollar. In some countries, it has been 
dramatically significant. In Armenia, the dollar has 
depreciated by 44 percent. You can imagine the impact that has 
on our program. We also have the increasing costs of oil, the 
increasing construction costs that have gone on throughout the 
world, the increasing energy costs, all of which have adversely 
affected what were our original estimates with regard to these 
programs.
    We have, as you have noted, briefed the House 
Appropriations staff on this. We very much believe this is 
something which we must work on together. It is something for 
which we must find mutual solutions, and we are engaged in 
finding solutions for those challenges now, and we will 
continue to do so.
    For example, in a number of countries, we will be 
stretching our dollars to the maximum amount to achieve the 
same results. We will refine and tighten existing projects as 
they exist. We will seek cooperation with the governments of 
the countries in which we are operating to have them 
participate in some of our programs as well.
    We have signed, last week, a cooperative agreement with 
DIFID, the U.K. foreign aid development agency for five 
specific countries and specific projects in which they and we 
are working on together. This is not only an example of nice 
donor coordination, which is important for effectiveness and 
efficiency on all of our parts, but it is also a very strong 
example of cooperating with other donor agencies to achieve 
what were the original objectives of our compact.
    Madam Chairwoman, you have mentioned one particular country 
by name. That country was Mali, where there are three specific 
projects, one of which will not be done by the MCC, at this 
point. The agriculture project will be done. The airport, which 
is crucial for economic development, will be done. The third 
project, the industrial park, will not be done by the MCC. It 
is contingent on the airport program, which we are, in fact, 
strengthening and increasing in scope from its original 
parameters. The industrial park, which is in an adjacent piece 
of land to the airport; we are working very closely with the 
World Bank to have them see that project is continued through 
to its completion.
    We have met with representatives in country. We have met 
with President Toure here in Washington two weeks ago. He has 
also met with President Bush, when he was here, to discuss this 
project. He is very happy with the solutions that we are 
finding for the completion of the $461 million package 
altogether.
    The same stands for the case in Armenia, where we are 
working with the government there to make sure that roads are 
being done. The same in Honduras, where CABEI, the Central 
American Bank, will be doing parts of roads as well.
    It is not so much a matter of cost reestimates, but of cost 
reestimates to accommodate not only the external factors, which 
we have all been buffeted by, but also certain tightened 
projections within our own organization.
    It is difficult to point a finger and say, ``Well, the 
dollar, in this case, did that, and the energy cost was 
responsible for this,'' although we can find the specific 
percentage figures, some of which I pointed out, or to say that 
the MCC is responsible, to what extent, for these estimations.
    Our estimations have been entered into in working with the 
countries concerned. They have been the result of serious due 
diligence. There has been a time lag between the signing of the 
compact and now the implementation, and, during that period of 
time, we have encountered these cost reestimates. We are facing 
them. We are not alone in doing so. All development agencies 
are doing this straight across the boards. We are confident 
that we can complete these projects as originally envisaged but 
with a different participating structure.
    Mrs. Lowey. My time is over, but I just want to conclude by 
saying that this is a dialogue that I hope we will continue----
    Mr. Danilovich. Yes.
    Mrs. Lowey [continuing]. Because what concerns me, we 
certainly do not want to give the message to that country or to 
the world that the United States is reneging on its promises. 
If we promise we are going to do three projects, and we 
understand there are external factors, but if there are 
internal factors, I would expect that you are addressing them, 
and you will keep us posted because it is not a very good 
signal that we are only doing one thing when we were going to 
take care of fishing, and we were going to deal with 
agriculture, and we were going to deal with artisans. That 
happens to be Morocco. I just got back.
    Mr. Danilovich. Right, right.
    Mrs. Lowey. So I look forward to continuing the dialogue, 
and I thank you.
    Mr. Danilovich. Thank you.
    Mrs. Lowey. Mr. Wolf.
    Mr. Wolf. How do you judge success and failure objectively? 
How will we know, objectively?
    Mr. Danilovich. We are seen now, which is, more or less, 
the right time to see. After four years of existence, the 
first, more or less, year and a half, we did not have any 
signed compacts. After the signing, it takes a certain period 
of time to implement them technically, paperwork, legally, 
judicially, et cetera, and it takes a little bit longer to 
implement them with shovels in the ground.
    I am looking at a picture right up here of a vineyard in 
California. I have just come back from Morocco, as Madam 
Chairwoman has pointed out, where we are planting figs, dates, 
and olives. It takes time to irrigate. It takes time to plant. 
It takes time for the seed to grow. It takes time for the sun 
to rise. It takes time for the next harvest, and, in answer to 
your question, we are now seeing, in countries throughout the 
world, where there are agricultural projects--Madagascar, our 
first country. The farmers are now producing germanium oil, 
which is used in oil and soap. It is a higher factor. So we are 
seeing farmers getting increased profits, increased 
productivity, increased market access in Madagascar, the 
results being shown there.
    In Armenia----
    Mr. Wolf. But how do we know, objectively--I understand 
that.
    Mr. Danilovich. Right.
    Mr. Wolf. You sit back, and you look at them, but how can 
we know objectively? Has GAO looked at this? Has anyone looked 
at this on the outside and said, ``Okay. These guys have done a 
great job here. Here there have been the successes. Here there 
have been the failures''? Has anyone done an objective analysis 
as to the effectiveness or the failure, either way?
    Mr. Danilovich. Well, I think our analysis of what is 
developing in country and the in-country examination of these 
results, the actual beneficiaries could not be more objective. 
These are the people that are benefitting, whether it is the 
farmers in Armenia, who are being trained, thousands of them. 
These people are the ones that are objectively receiving the 
benefits of this program.
    Mr. Wolf. Well, for the recipient to say they would be the 
decider as to objective success or failure, I am saying that 
somebody that does not have a vested interest in it, any 
outside--have you had anyone look at this from an outside 
perspective, GAO, for instance, to say, ``This has been great 
here, not so great here. Here is how it changes''? Has anyone 
looked at that?
    Mr. Danilovich. We work, of course, with the IG and with 
the GAO on a number of areas.
    Mr. Wolf. But has anyone, overall, looked at the successes 
and failures. That is what I am trying to get.
    Mr. Danilovich. And issued a report on them.
    Mr. Wolf. Yes.
    Mr. Danilovich. Well, the results are just beginning to 
surface.
    Mr. Wolf. I know, but it has been four years. Has anyone 
looked at it objectively, other than you and the 
administration?
    Mr. Danilovich. Well, as I have said----
    Mr. Wolf. And the recipients?
    Mr. Danilovich. Well, I think the recipients are the ones 
that the Committee should be interested in. Those are the ones 
who we have set out to benefit from these programs. So I know 
of no better judge than a farmer or a fisherman or a girl that 
has gone to school that has benefitted from these programs.
    Mr. Wolf. But if they are the ones that are getting the 
money, they are not going to say this thing is not working. I 
am asking you, has there been any outside, objective analysis? 
I think we should ask for someone to take an outside, objective 
view, and I would hope the Chair would ask GAO or CSIS or the 
Council on Foreign Relations, some outside group to come in and 
take a look.
    The second question is, when there is so much need around 
the world everywhere you look, when you are making a decision, 
do you look to see whether or not the country involved is 
relatively supportive of the United States government or not? 
Do they vote with us in the U.N.? Do they generally support us 
on most issues? Are they supporting us with regard to 
counterterrorism? What are they doing? Does that come into the 
play?
    Mr. Danilovich. As you know, our programs are policy based. 
If a country has good policies in place, meaning a democracy 
government, political rights, civil liberties, which are 
fundamental American core principles, they are then eligible, 
if they pass our criteria, for MCC funding. So, in that 
respect, they are supportive of American ideals and concepts.
    There is no test. I have not gone through a test to see if 
Armenia has supported the United States and the United Nations, 
if that is what you are asking.
    Mr. Wolf. Do you think that might be a good thing, to look 
at some of these things, since the need is so great around the 
world?
    Mr. Danilovich. Well, this is not a reward program for 
voting with the United States; it is a program to reduce 
poverty and sustain economic growth.
    Mr. Wolf. But there is enough poverty in a lot of 
countries.
    Mr. Danilovich. There is, and we only have countries that 
participate who pass our criteria. We are not necessarily a 
need-based program. It is need combined with passing our 
criteria of good democratic governance.
    Mr. Wolf. Let me ask one other question. Compare the dollar 
value now to the dollar's strength, say, in the year 2001. What 
would your budget be if you were to compare that?
    Mr. Danilovich. We have not done a projection on that. The 
dollar depreciation in countries has varied. It is very hard 
for me to give a ball-park figure for over 16 countries.
    Mr. Wolf. Can you look for us?
    Mr. Danilovich. I would like to revert to the Committee on 
that.
    Mr. Wolf. Madam Chair, I would like to ask if you have some 
outside group that can objectively look and say that this has 
been a tremendous program, it has worked very, very well, but 
here are some of the areas that you may want to change, or here 
are some failures that we have learned from, more than just 
having the administration, the ambassador, be the one.
    Mr. Danilovich. Congressman, we do have a number of 
organizations--CSIS, the Center for Global Development, and 
others--who have issued reports on the MCC from time to time.
    Mrs. Lowey. I would suggest that we continue that dialogue 
and evaluate and have further discussion of your suggestion.
    Mr. Danilovich. Thank you.
    Mrs. Lowey. Thank you. Mr. Jackson.
    Mr. Jackson. Thank you, Madam Chair. Thank you again, 
Ambassador Danilovich, for your testimony.
    Let me apologize for the three hearings that I have at 
exactly the same time between here, Labor, and the Agricultural 
Subcommittee. Let me also take this opportunity to welcome 
Chairwoman Lowey back from her brief illness.
    Congressman Kennedy approached me in the hall a few moments 
ago regarding the Cape Verde contract. As you well know, 
Ambassador, one of the first MCC compacts was with Cape Verde. 
In fact, MCC really learned how to implement many of its 
programs through lessons learned in its relationships with Cape 
Verde.
    Here, we have a 30-year democracy, not just an African 
nation but a 30-year democracy, and many of the contracts were 
not let, and yet, during the lessons-learned period, the time 
expired with Cape Verde, the five-year compact reorganization 
time.
    Patrick and I would like to know what can be done to reopen 
the Cape Verde considerations and what can be done to provide 
them with an extended timeframe, if necessary, for which they 
can close any negotiations that need to be closed so that they 
may take advantage of the MCC. That is a concern of Patrick 
Kennedy's.
    I would like to ask one other question before we get to the 
second round. Ambassador, during your hearings in the last 
three years, you and I have discussed the philosophical role of 
the MCC as one of the tools in our foreign aid and development 
toolbox. In the past, I have been critical not of the role of 
the MCC but of the administration and what I perceive to be the 
shortsighted practice of asking for huge increases for the MCC, 
on the one hand, and requesting cuts to programs like 
development assistance and child survival and health, on the 
other hand.
    I have been critical of this practice in the past because 
it does not seem as though there is any rhyme or reason to our 
development agenda.
    Last month, the Subcommittee held a hearing on foreign 
assistance reform in which several witnesses highlighted the 
need for better coordination of U.S. foreign assistance. Going 
forward, Ambassador, how do you see the MCC fitting into the 
overall U.S. foreign-assistance landscape, and should we 
coordinate the MCC's efforts with our overall development 
agenda? And, recognizing that my time is coming quickly to an 
end, I was asking my colleague, Mr. Schiff, a few moments ago, 
when I was looking at how Chart 1 defined and allocated U.S. 
dollars, I noticed a distinction between program administration 
and oversight and monitoring and evaluation, two percent 
monitoring and evaluation, nine percent program administration 
and oversight.
    Is not monitoring and evaluation part of program 
administration and oversight, and, really, are not we looking 
at 11 percent of MCC funds being spent on the bureaucracy of 
the MCC? I thank you, Mr. Ambassador, and thank you, Madam 
Chair, for the time.
    Mr. Danilovich. Thank you, Congressman Jackson, and thank 
you, Congressman Kennedy, for being here also. You and I have 
had the opportunity to discuss your interest in Cape Verde 
previously, and it is an ongoing interest on our part, not only 
for us to make sure that the Cape Verde compact is completed in 
its entirety; we are working very closely with the MCA entity 
there to make sure that Phase 2 of the ports is done, and we 
are confident that that will be achieved.
    Should there be a necessity for an extension, we will 
return to the Committee, and we will return to Congress, to see 
if that is possible to do.
    It is our hope that countries within the MCC program will 
perform well, not just on the implementation of their programs 
but on the performance of their indicators, and, if that is the 
case, we hope that the Committee will allow us to have a 
concurrent compact with those countries that are performing 
well in both streams and, perhaps in the future, if it is 
possible to have a concurrent compact with a country that is 
doing well in their performance on both streams, to give them a 
second compact in the middle of their programs to encourage 
them to continue with reforms and to encourage them to continue 
with their development programs.
    So we intend to work fully with our countries. It is a 
partnership. It is a partnership, not only with regard to 
rescoping and redefining the programs but to extending the 
programs. We want people, countries that have joined the MCC 
program, which is not an easy program to be part of, to remain 
part of it. We want to engage with them to make sure that 
happens, and we want to continue that relationship as long as 
they are doing their responsibility of program implementation, 
country ownership, as well as performance on the indicators.
    I want to encourage Cape Verde to continue, not only on 
implementation, but also on the performance of their 
indicators.
    Congressman Jackson, with regard to overall donor 
coordination, I think it is important to point out that the 
international affairs budget has increased dramatically over 
the last decade. We work very closely with other organizations 
within the U.S. Government, with USAID. In fact, as you know, 
USAID implements our threshold program. In addition to that, we 
work with them in a number of countries, and, in fact, the U.S. 
Global Leadership Conference has said that in the majority of 
MCC countries, aid has increased, in fact, and not diminished 
overall.
    It is not a versus situation, one against the other, a 
combat situation between the Millennium Challenge Corporation 
and USAID. We believe fully in core funding of all U.S. 
development programs. We very much support that. Our little 
niche represents only six percent, our request, only six 
percent, of the overall practically $40 billion budget, and it 
is hard to imagine that this six percent actually causes such 
angst within the donor community itself when it is, in and of 
itself, so small.
    It is also important to remember that we are not the same 
as a number of other U.S. government agencies. You created us 
to be different. That is what we are all about. You did not 
create another agency to be the same as what was already 
existing. You defined us by our criteria. You defined us by our 
good standards. You defined us by the reduction of poverty and 
sustainable economic development over the long term.
    This is not an urgent program. This is not an immediate 
program. It is a program that is there to achieve results, to 
reduce poverty, and sustain growth on a permanent basis. That 
is what we are all about. That is what is happening now. Those 
are the results that we are seeing now in country after country 
after country, and whether it is CGD which first supports that 
or CSIS, or the other organizations, or a new, comprehensive 
analysis of what we have achieved, those achievements are 
naturally in the natural progression of programs, whether they 
be infrastructure or agriculture or education or health, now 
coming onstream.
    We very much believe in all development programs. Countries 
come to us with infrastructure programs. They look at that as 
being the backbone of sustainable development. We also have a 
commitment, a strong commitment, within the MCC, to health, and 
I think you are aware of those health programs that we do have; 
to education, and we have outstanding education in the MCC.
    But, generally speaking, these programs, which are country-
sourced, country originated, country initiated, come to us with 
infrastructure programs, and we do coordinate those with the 
other U.S. Government organizations. We are working with OPIC 
in a number of countries, we are working with PEPFAR in a 
number of countries, and with USAID in many, many countries.
    May I have a closer look at those figures that you have 
quoted and revert to the Committee on that? Thank you, 
Congressman.
    Mrs. Lowey. I want to thank my colleague for bringing up 
the coordination issues. I do not want to pursue at this point, 
but, in our travels to many of the countries, everyone may be 
working on it, but it is still not good enough, and you and I 
both know that.
    Let me turn to Dr. Weldon.
    Mr. Weldon. Thank you, Madam Chair, and thank you, Mr. 
Ambassador. I appreciate the work you do. I was very supportive 
of the creation of the Millennium Challenge Account and the 
principles defining the program. I thought it was very 
important, actually, that we try to do this, and I believe it 
is really too early to pass judgment on the success or failure. 
I think it is going to take a considerable amount of additional 
time before we can develop the accurate measures.
    I have never actually looked at all of your 17 
qualifications, but one of the things that I have been 
interested in is the role of women and their access to 
education and the economic system, and the suppression of that, 
particularly, actually, in Muslim countries where some of that 
is religiously rooted or traditionally rooted, and its negative 
impact on economic growth.
    I noticed you have several predominantly Muslim countries 
that you have entered into, or you are about to enter into, and 
monies have been disbursed. Is that one of the 17 criteria? Do 
they have to have free and open access for women into the 
economic system and the educational system, because I know this 
is a problem, particularly women in some of the professional 
fields--engineering and science and things like that.
    Mr. Danilovich. Thank you, Doctor, for your question. If I 
could make a comment, I actually do not think it is too early 
to pass judgment on the MCC. I think, as we move out of our 
fourth year, that it is possible now to pass judgment on the 
MCC, even in this early stage.
    There is more good news yet to come, but there is already 
strong indication of very good results, very good news, on our 
programs, that the MCC incentive effect is working, that there 
are tangible results with regard to sustainable development, 
that these programs are beginning to roll out, whether they be 
an infrastructure or agricultural or educational.
    Mr. Weldon. Well, if I could get you to pause for a second, 
I think what Ranking Member Wolf was getting at is how do we 
get some objective measures of that?
    Mr. Danilovich. Right.
    Mr. Weldon. We are going to have a change of administration 
in a few months, and there is going to be a lot of 
reevaluation, I think, no matter who is in the White House. So 
it would be very useful if we could have some good, objective, 
credible measures of that.
    Mr. Danilovich. With regard to your question, with regard 
to women and gender, the Women's Edge Coalition here in 
Washington has pointed out that the MCC has perhaps the best 
gender policy of any U.S. government agency. We have, in fact, 
a gender specialist within our organization--we have had that 
now for over a year--who is specifically dedicated.
    Mr. Weldon. Okay. Let me put you on pause for that one. 
Okay?
    Mr. Danilovich. Yes.
    Mr. Weldon. You have got several Muslim countries here, and 
what I have been told is this is a huge problem in the Muslim 
world. You have got one here, Morocco. How do you go about 
doing that? Is it a fact that women in Morocco have free access 
to the educational system? They can enter into the workforce. 
They can drive, et cetera.
    Mr. Danilovich. I am very pleased you have asked that 
question with specific reference to Morocco. It is a problem, a 
challenge, in the developing world, in general, and in the 
Muslim world and in Morocco.
    With specific reference to Morocco, I was just there two 
weeks ago and spent a considerable amount of time with the 
minister, a woman, who is in charge of gender, and we worked 
very closely in Morocco and in all of our countries to ensure 
that women participate fully in the consultative process which 
results in the compacts and that they participate fully in the 
program.
    This takes the form of a number of areas. For example, in 
the fishing and in the agricultural programs, which I visited 
in Morocco, there are women who are involved in both of these 
programs, as well as in the artisan craftsman work that is 
being done.
    Mr. Weldon. So let me put you on pause again.
    Mr. Danilovich. Sure.
    Mr. Weldon. So you look for program-specific access. You do 
not look at the society in general in terms of restrictions 
placed on women.
    Mr. Danilovich. In Jordan, we have a threshold program. It 
is a small program which specifically targets municipal 
government development, and in that program there are specific 
targets for women's participation in government, and in recent 
provincial municipal elections, I think 258 women were elected 
to council positions. This is an attempt, in Jordan and in 
Morocco and in all of our countries, Muslim or otherwise, to 
incorporate women into the overall thrust of poverty reduction 
and sustainable development.
    Mr. Weldon. Very interesting. Well, this is something I 
would like to follow up with you, Madam Chairman. I think it is 
a very important issue. Is my time up?
    Mrs. Lowey. Yes, it is. We will get back to you again, and 
I would love to follow up with you. As you know, I have spent a 
lot of time on this issue----
    Mr. Weldon. Yes, I know.
    Mrs. Lowey [continuing]. And I would appreciate your input, 
and, again, we are going to miss you.
    Mr. Weldon. Thank you. I am going to miss you, too.
    Mrs. Lowey. So I look forward to working with you. Thank 
you.
    Mr. Danilovich. Madam Chairwoman, I know this is subject 
which is of interest to you, specifically with regard to women. 
You know we have a girls primary education indicator, which a 
country must pass, and we also have a significant program, 
Burkino Faso, both in the threshold and what will hopefully be 
their compact program, which is dedicated to education, 
specifically to women.
    Mrs. Lowey. Let me thank you very much, and having just 
dedicated, not too long ago, a wonderful girls' school in 
Pakistan, I am very well aware, and I am sure we are all very 
well aware, we barely made a dent in that issue. So we have a 
lot more work to do, even though we can point to some 
successes, and I look forward to the dialogue. Mr. Schiff.
    Mr. Schiff. Thank you, Madam Chair. Ambassador, let me ask 
you about a couple of different areas, one more general, one 
more specific, and this regards the threshold program and 
eligibility.
    The program is intended to focus on countries that are on 
the cusp of eligibility to incentivize them to undergo further 
reforms so that they will be eligible for the MCA compact. Some 
countries, like the Kyrgyz Republic, which failed every 
governance indicator the year they were selected, and all but 
one year, the year they signed their threshold agreement, have 
been included.
    In 2009, you have added Mauritania, a country that fails 
all three democracy indicators, fails all five indicators in 
investing-in-the-people category, and has shown little overall 
progress in the indicators over the last several years.
    Other countries that were closer to passing the indicators 
were not selected. This race is, I think, a substantial 
question about why are we including in the threshold category 
countries that do not seem to be good candidates? And then we 
have sort of a second threshold category: Why are we passing 
over other countries that are more promising? Are we using some 
of the criteria that Mr. Wolf would like to see us use but 
maybe is not the design of the program in picking and choosing 
to elevate certain countries through the threshold that may not 
belong there or may not really, at any time in the near future, 
meet the criteria for a compact?
    Then, second, I am interested, and I do not put Jordan at 
all in this category--I put Jordan in the ``most promising 
category,'' but I am interested in how the two-year-old 
threshold agreement with Jordan is going. That is focused on 
strengthening municipal governance and modernizing their 
customs administration in light of the municipal elections, the 
national elections last year. I would be curious to see how you 
think Jordan is developing.
    Mr. Danilovich. Thank you, Congressman Schiff. The 
threshold program is one which the MCC began a few short years 
ago, and you are correct in saying that it is targeted at 
countries who indicate that they have performance weakness on 
our indicators. If they had passed the indicators, they would 
not be part of the threshold program.
    The point is to find where countries have done poorly on 
these indicators and where we have the hope, because of 
political will and because of reform efforts already underway, 
because of indications made by their government, they will try 
to move forward in the democratic sphere, in the investing-in-
people sphere, and in other areas where there are certain 
weaknesses, and for the sake of a broad-brush comment, it is 
usually with regard to corruption and customs that countries 
have weaknesses on their indicators.
    We would hope that in all of these threshold countries that 
we can move them along in the right direction, and this has, in 
fact, happened in a number of threshold countries who have 
become now compact eligible and some of whom received compacts.
    Mr. Schiff. I understand that that is the general 
justification. That does not explain, though, why you have 
elevated countries that show far less promise in meeting those 
threshold requirements and not included countries that show far 
more, that have been more successful and more promising. What 
criteria are being used because, plainly, some of the MCC 
public criteria do not seem to be----
    Mr. Danilovich. We, in fact, explore very closely the 
performance and the potential for performance improvement in 
these countries before we enter into these programs. In most 
countries--in fact, without exception--we have been satisfied 
with the performance that has been made, even if it has not 
quite pushed them over in the 365-day, annual assessment 
process of the indicators.
    In Jordan, with specific reference to your question, we are 
very pleased with the progress that has been made there, and, I 
think, if you have some more information, I would be very happy 
to give you specific information on Jordan with regard to 
municipal elections and customs. There has been progress made. 
It remains to be seen whether or not----
    Mr. Schiff. I am sorry, Ambassador. Before we get to 
Jordan, though, I still want to drill down a little bit on my 
first question, which is, if you have, let us say, 15 criteria, 
and you have countries that make little or none of them, but 
you include them in the threshold program, and we have other 
countries that made a third or half of them that plainly are 
further along the path towards meeting the criteria, why are 
you picking countries that are further from eligibility?
    You are clearly not solely using the public criteria of the 
MCC, so what are you using? What are the hidden variables?
    Mr. Danilovich. Well, there are no hidden variables 
involved in this. We look at their performance on the 
indicators and what we believe their potential is to improve on 
that performance.
    Because we have so many countries, 15, that are in our 
threshold program, aside from talking about Jordan, which I 
would like to give you a specific report on each of those 
countries: why they were chosen, what they have done, and what 
impact it has had on their indicator performance, I think that 
would go a long way in illuminating how our threshold program 
works.
    Mr. Schiff. I guess we will need to follow up because I am 
still not clear. If you have 10 countries that you are looking 
at for threshold eligibility, and you are not ranking them in 
the order of the number of criteria they already meet, then 
there must be some other criteria being employed. There is no 
reason otherwise to pick a country that fails all of the 
criteria over a country that meets five of the 15 criteria.
    So I still do not understand very specifically how Kyrgyz 
and Mauritania leap ahead of countries that show more promise 
of attaining eligibility. So if you can get back to me, if you 
cannot answer me today, why are those countries and some others 
leaping ahead of others that show more promise? What criteria 
are you looking at beyond the 15 public criteria?
    Mr. Danilovich. Thank you, Congressman. I would like to 
have the opportunity to revert to you on that, if I could.
    Mr. Schiff. Okay.
    Mr. Danilovich. Thank you.
    Mrs. Lowey. Actually, just to add to my colleague's 
question, I would like to know why a threshold country that is 
failing in the corruption and customs, which you are saying are 
the areas that they usually fail, getting a second threshold 
compact, such as 2009 Indonesia, Kenya, and Uganda; and 2008, 
Albania, Zambia, and Paraguay? It seems to me that sends a 
signal, well, if you do not straighten up your corruption, we 
will give you another one. Take some more time to straighten it 
up.
    I would think that I would want to say to a country, ``If 
you do not clean up your act, you are not going to get a 
compact. Forget it. You are out of the queue.''
    So I think that Mr. Schiff asked a very important question 
that I would like to follow up on with regard to threshold----
    Mr. Danilovich. Threshold.
    Mrs. Lowey [continuing]. Compacts. Thank you.
    Mr. Crenshaw.
    Mr. Crenshaw. Thank you, Madam Chairman. Along those lines 
of the criteria, I want to ask you about human trafficking. You 
know, it is unbelievable that that still goes on in the 21st 
century, and I know our country has been a leader in trying to 
get a campaign against that, to make the world aware of it. I 
think we have got a long way to go. It is amazing how 
disinterested people are that people are bought and sold in 
today's world.
    The TIP's Report that I read every year indicates that we 
were making some progress around the world. More countries are 
taking an interest in that, and I know it is one of the 
criteria that fits in one of MCC's 17 criteria, but I would 
like you to talk about that.
    Where does it fit? What do we do to monitor it? I was 
looking at some of the stats, and out of the 16 compact 
nations, only one is a Tier 1 country that is fully compliant, 
or, at least, trying to. Eight of the countries are on Tier 2. 
They are working at it, but three of the countries that we give 
money to; they are on the watch list.
    So what do we do? How do we monitor that with the 
countries? What do we say to them? How do we know what is going 
on? How can we encourage them to change things? Talk about 
that, how that fits in these criteria, and how long do we allow 
it to go on before we say you have got to change your way?
    Mr. Danilovich. Trafficking in persons is a subject of 
great concern to us. It is rampant throughout the world. It is 
unimaginable, as you have said, that something such as this 
exists with men and women and young boys and young girls, but 
it is a reality that we are all very much aware of, and that it 
exists in some of our countries, as you have just pointed out.
    It is something which falls under our ``ruling justly'' 
category. It is something that we monitor, along with our other 
indicators, as well. We follow very closely the annual report 
which comes out that you referred to, and we make it very clear 
to the countries that we are involved with that we will not 
tolerate their poor performance in this particular area, 
particularly if they end up on the watch list.
    We have had instances where this has been done, and we will 
continue to monitor and evaluate that very closely and keep a 
close eye on it.
    Mr. Crenshaw. You know, I was looking through the criteria, 
like ``ruling justly.'' Most of the countries get the green 
line. Where does it fit in, ``ruling justly''? Is it 10 
percent, 20 percent, 50 percent? Because it seems like 
trafficking ought to be seriously evaluated and to still be 
able to meet that criteria when you are not complying with the 
watch list of the TIP's Report. What kinds of conversations do 
you have with the country? How do you monitor it, and what kind 
of response do you get?
    Mr. Danilovich. We obtain information, on an annual basis, 
from our indicator assessors. In the civil rights category, 
``ruling justly,'' what you see on the sheet that has ``ruling 
justly, economic freedom, and investing in people'' has 
individual categories. In fact, underneath each one of those, 
there are four, eight, 16, 32 categories that all feed into 
that. So, in fact, each indicator is probably a compilation and 
a cumulative report, on perhaps 60 or 70 assessment indicators 
that go into civil rights or political liberties, whatever it 
may be.
    I cannot give you a percentage of what TIP affects the 
indicator performance. I would, however, like to give you a 
very thorough report on how we have engaged with countries that 
have been in violation that are on the watch list and a more 
thorough discussion of where the TIP component comes in, what 
quantification it has.
    Mr. Crenshaw. Thank you, Madam Chairman. Is my time up? 
Okay. Just real quick.
    Mrs. Lowey. Go ahead.
    Mr. Crenshaw. Thank you. Welcome back, Madam Chairman. I am 
glad you are back. You look great.
    Just real quick, when we award an account, and then 
somebody is going to build a road or build a utility plant, do 
we give the United States any preference? Should we give them 
preference? Is there a downside to that? Briefly, tell us about 
that.
    Mr. Danilovich. Sure. The MCA, which is the entity which 
implements these programs in country, if you want to call it a 
``joint venture'' company, it is not exactly, but the 
accountable entity that does exist awards those contracts to 
contractors to perform on roads or canals, or whatever program 
it may be. There is a Buy America clause in them, but we are 
very transparent in our bidding process and the whole 
procurement matter. These are all on the Web site. It is open 
to international competition.
    American companies participate very aggressively in many of 
our countries and many of our programs, but we also hope to 
encourage countries to build their own economies and their own 
capacity to participate in these programs. Often they do not 
have that ability but can do so on a subcontractor basis, even 
if they cannot be awarded the main contract, which perhaps 
might go to an American company.
    Mr. Crenshaw. Would there be a downside in having a 
preference for----
    Mr. Danilovich. Well, there would not be a downside, 
specifically, no, and many American companies are international 
operators in these particular types of infrastructure projects 
throughout the world and do bid and do get our contracts.
    We also, as I mentioned, like to encourage countries to 
develop their own industries and their own support capacities.
    Mr. Crenshaw. Thank you. Thank you, Madam Chairwoman, and 
welcome back.
    Mr. Israel. She is back and better than ever. You do have a 
great group of members and an excellent staff, too.
    Ambassador, my primary interest is in Congress's renewable 
energy and the cost of oil and renewable energy opportunities 
throughout the world.
    According to your testimony, the greatest external pressure 
on cost has been crude oil, the crude oil price index, a 72-
percent increase in the index. You are investing about five 
percent of the total value of MCC compacts on energy projects. 
I see you have a project in Tanzania. I am not sure what it is, 
but it says ``energy.''
    Mr. Danilovich. Yes.
    Mr. Israel. In Georgia, you are doing some emergency 
repairs on the north-south gas pipeline. I would like you to 
briefly elaborate on what you are doing with respect to energy 
infrastructure. Are there opportunities to help economic 
development projects in renewable energy? There are countries 
in the world that have natural resources that can be used for 
renewable energy.
    Then I would like to arrange a follow-up meeting with you 
so we can delve into this further because I would also want to 
yield a minute of time to Mr. Kennedy. Thank you, Ambassador.
    Mr. Danilovich. Thank you, Congressman Israel. It is 
important to bear in mind, as I know you all know that these 
programs are country sourced. They are programs that are 
designed by the countries for themselves for their own 
solutions for their own problems. They are programs which we 
fund with our grants, but they are their programs, which they 
create, and, although energy is a significant impact on all of 
our programs, it is true that they are a small representation 
of our overall activities.
    In Tanzania, there is an electric cable which is being run 
from the mainland to Zanzibar, which suffers from electrical 
blackouts and brownouts and power shortages, which will secure 
electricity on that island. There is also a hydro-electric 
program in Tanzania which will help with regard to the supply 
of energy there.
    In Georgia, the north-south pipeline is critical for the 
supply of energy, gas, heating, and electricity in the country. 
The repairs there have been completed on that pipeline. It is 
critical for their commerce and for their domestic tranquility, 
frankly.
    In a number of countries, again and again, the question of 
energy comes up, not only with those countries that have 
capacity for geothermal energy but those countries that have 
capacity for wind, oleic energy, et cetera.
    I was in Central America recently, and, in those three 
specific countries--Nicaragua, Honduras, and El Salvador--each 
of the presidents have mentioned their desire, specifically in 
their own countries, to have energy programs, which they 
dramatically need, and they have also expressed a desire, in 
and of themselves individually, not collectively, to work on 
programs together in that specific area.
    I would like to digress for one minute, if I could, with 
regard to Nicaragua, where there have been significant advances 
and results in the programs there, specifically in agriculture. 
I went with President Ortega, and we have had a very 
complicated relationship with his country over the----
    Mr. Kennedy. Mr. Ambassador, if I could.
    Mr. Danilovich. Yes.
    Mr. Kennedy. If you could follow that up with him and his 
office, that would be great because I would like to get in 
something really quick, following up on the question of Mr. 
Jackson.
    It is great that you say that you might be able to 
recompact with Cape Verde in an interim or succeeding compact, 
but, you know, I can say Stahi's--was terrific, and he is 
running a great job. MCC readily acknowledges that Cape Verde 
was one of the first compacts, and there was a learning curve.
    Mr. Danilovich. Yes.
    Mr. Kennedy. And Cape Verde paid the price for that 
learning curve. It was not able to get the projects up and 
going the way some of the later compacts were. So it should not 
be held responsible for MCC's learning curve, is the point I am 
trying to make.
    Mr. Danilovich. Yes.
    Mr. Kennedy. Now, the biggest project on the island is the 
port, and that port cannot be completed in the five years.
    Mr. Danilovich. That is right.
    Mr. Kennedy. And that is the lifeblood of Cape Verde. For 
them not to be able to complete that because of the learning 
curve of MCC is not fair, and we have got to work something out 
here, and I am looking to get your help to do it. Either we get 
some legislative language to fix this thing, or something has 
got to give because it is not Cape Verde's problem, and it is 
not a matter of your indicators. This is not an issue of 
indicators.
    Mr. Danilovich. No. Congressman, we will do all that we can 
to make sure that Cape Verde succeeds in its implementation of 
its compact.
    It is important to point out that the learning curve in a 
partnership is on both sides, and the Cape Verdeans, with all 
due respect to them, had a very difficult time in moving their 
programs forward.
    There is also, and I think it is important to point this 
out, a problem with their performance on the indicators. But 
regardless of that, regardless of these factors, regardless of 
the learning curve, and regardless of the indicators, both of 
which I give you my commitment that we will work on, we do not 
want to not succeed in any of these countries. We want to do 
what we have committed to do. We will work to see those done in 
the end.
    Mr. Kennedy. Well, the devaluation by $50 million is a big 
change, and I do not know why that was not factored into the 
first MCC in the language, but that is a big fly ball.
    Mr. Danilovich. Yeah. There are a number of factors on the 
Cape Verdean side that have affected those adjustments. I can 
assure you, we will work to see those programs done.
    Mr. Kennedy. Thank you very much.
    Mr. Israel. Madam Chair, I just want to reiterate, if the 
ambassador would send someone up to my office, in the near 
future, to delve into the renewable energy issues, I would 
appreciate it.
    Mr. Danilovich. Yes, by all means.
    Mr. Israel. Thank you, Madam Chair.
    Mr. Danilovich. Thank you.
    Mrs. Lowey. Thank you for your work on this issue. Mr. 
Kirk?
    Mr. Kirk. Thank you, Madam Chair. I will not be out-sucked-
up-to, so I just want to say, you look fabulous.
    In November, the Millennium Challenge got the results of 
their audit from your outside auditors, and it said that MCC's 
internal controls over financial reporting and its operation 
contain significant deficiencies, and these are material 
weaknesses. In two incidents, noncompliance was cited with 
federal law and regulation.
    The MCC did not sufficiently execute monitoring functions 
related to advances. It had a lack of written policies and 
procedures of financial reporting. It did not comply with the 
Federal Financial Management Improvement Act. It did not comply 
with the Federal Information Security Management Act.
    Just for those of us not in accounting, material weakness 
is a significant deficiency, designer operation for internal 
components, which causes the attention of the leadership. I am 
particularly concerned on the potential violations of the law 
in two key financial-reporting statutes.
    Their auditors also cited that MCC does not have a 
property-management system. This is in the November audit. MCC 
chief financial officer not part of the compact grant process, 
material weakness. MCC not complying with GIPRA or Management 
Act. Not the greatest audit to see from somebody with $7 
billion.
    Mr. Danilovich. Congressman, it is important to also point 
out that the Office of the Inspector General has, every year 
for the last four years--2004, 2005, 2006, 2007--given us an 
unqualified, clean audit. We have just received our fourth 
clean audit, unqualified audit, since our existence.
    The points which you have brought up are those which we are 
dealing with very aggressively. With the cash balances, we now 
have instituted a common payment system, CPS, which is directly 
addressing that question, and it will eliminate most cash 
balances in countries in the immediate future.
    We have also set up a bid system, which is business 
intelligence and data storage, which allows countries to report 
progress on their development programs so that we are able to 
more closely monitor and evaluate them.
    With regard to FISMA, a point which you have brought up, 
there were 10 specific findings in 2007, eight of which have 
been closed already. We work closely, and transparently, with 
the IG. They charge us a significant amount of money. They are 
with us on a daily basis. We welcome that opportunity. They 
have pointed out certain weaknesses in our organization, all of 
which have been addressed. There are no violations of the law.
    The points I would reiterate again, with regard to our 
audits, they are clean and unqualified. The points which we 
have mentioned, 10 initially; eight have been closed. We are 
fully addressing the remaining two points. We are very much 
aware of this and very much in control of working with the IG 
to address any weaknesses which we have in our internal 
administrative structure. It is something which we take very 
much to heart, and we welcome their day-to-day involvement in 
our activities.
    Mr. Kirk. You can imagine, when you say ``significant 
deficiencies that are material weaknesses,'' I mean, an 
unqualified audit means the auditor feels that they are 
accurately reporting the subject's position, and that accurate 
reporting says ``material noncompliance with laws and 
regulations.''
    Mr. Danilovich. Right. Well, in those 10 instances that you 
have pointed out, I have mentioned that we have addressed and 
closed, not by our opinion but by their opinion, closed those 
matters. So whatever the significant weaknesses were, they were 
addressed and dealt with and do not exist any longer, and that 
is what the purpose of the IG is.
    Mr. Kirk. I just hope, by the time of the markup, it is 100 
percent.
    Mr. Danilovich. I hope it is, too, and I can assure you, it 
will be. And I would very much like to report back to you as 
soon as we hit that 100-percent mark.
    Mr. Kirk. Yes.
    Mr. Danilovich. Thank you.
    Mr. Kirk. Thank you. I just want to get your cash position, 
too. You have given roughly $7 billion, and the total 
disbursed, as of February 2008, is $300 million.
    Mr. Danilovich. Slightly over $300 million has been 
disbursed to date. By the end of this year, that figure will be 
more than doubled, close to $650 million. By the end of the 
financial year, 2008, MCA country entities will have signed $1 
billion, in excess of $1 billion, in contracts.
    That is the natural evolution of projects. That is a 
progress that one can be satisfied with, and I am pleased that, 
although the startup has not been as rapidly as we would have 
liked, that the trend is dramatically in the upward direction, 
both in terms of disbursements and in terms of commitment. 
Commitments over $1 billion at the end of this financial year, 
eight months from now, is a huge step forward, and that will 
continue dramatically in 2009. That is the way it should be: 
2006, slowly, 2007, 2008 more, 2009 more, 2010 more. That is 
the way these projects work.
    If you look at some of the material which you have, it 
shows the curve of infrastructure projects, not ours, but 
general infrastructure projects, with regard to disbursements 
over the life of a program. They are slow to start out with. 
There is a huge amount of engineering, feasibility, 
refeasibility work that has to be done before the money gets 
sent out. We have to have a strong foundation before we 
disburse the money. We are building those foundations. Those 
foundations are now being built upon. That is why the 
disbursements, and the commitments, are trending upwards.
    Mr. Kirk. I would just say, we often get a call. Our 
chairman will get a call from our full committee chairman about 
the unobligated, nondisbursed balances. You have got Rodney 
sitting behind you. I have known him for 20 years, and, boy, 
this program becomes a ripe target when the full committee 
chairman calls, with numbers like this.
    Mr. Danilovich. I thank the Chairwoman as well as Members 
of this Committee, on the change from the dramatic trend which 
we are now seeing.
    Mr. Kirk. Thank you, Madam Chair.
    Mrs. Lowey. Thank you. Ms. McCollum.
    Ms. McCollum. Thank you, Ms. Chair, and thank you for your 
work on this, Ambassador. We have kind of talked about the 
extension and the threshold compacts a little bit, but I want 
to get a little more specific with it.
    Madagascar visited many of our offices. They are a country 
that is on the move, well organized, and trying to really do 
what is right for the people that they represent.
    So I want to kind of talk about this whole idea of 
thresholds and extensions. As the requests for extensions will 
double, and as MCC matures, you are going to have to balance, 
and you are going to have to have flexibility for maximized 
effectiveness with the need to hold firm on deadlines, for the 
sake of fairness to other countries, as has been pointed out.
    So I think, if you have more information to share with the 
Committee on that, that would be helpful.
    As second compacts move forward, it raises more questions 
for me about the integration of MCC with other U.S. foreign 
assistance agencies. So what steps have you taken to improve 
integration with USAID?
    Now, threshold countries--I was on the Policy Committee--we 
were not talking about that in the original MCC, and the fact 
that USAID is now charged with helping threshold countries with 
what I know is going on with their funding makes me wonder how 
USAID is doing with helping Madagascar reach some of 
Madagascar's legitimate poverty-reduction goals, for example, 
reducing child mortality, improving maternal health, combatting 
HIV/AIDS, malaria; in other words, a healthy population so that 
you have a healthy workforce, children healthy enough to go to 
school.
    So what can you tell me about your working with USAID 
because, quite frankly, as I have watched programs get cut, 
programs that save children's lives--early intervention, 
education for girls--as we struggle with that, and now the 
president, through his program--we talk about earmarks--this is 
presidential initiative, MCC--to now reach down to USAID and 
say, ``Hey, we need you to bring these countries up.''
    Your goals and objectives might be radically different than 
the goals and objectives of this Committee for what USAID's 
focus should be, especially in maternal child health and child 
survival and even child marriage.
    Mr. Danilovich. Thank you, Congresswoman McCollum. I 
understand that Henrietta Ford will be before the Committee 
later this week, and I am sure she can very competently answer 
your questions with regard to USAID's activities throughout the 
world and those specific areas.
    I do not know if the Committee is aware of the fact that we 
pay USAID to implement our threshold programs, so it is not an 
added burden on their budget to implement our programs. We do 
this, rather than having to incur the burden ourselves of 
hiring personnel and sending people out to countries where 
USAID already has personnel, bearing in mind, these are small 
programs, sometimes $20 million, $25 million, $50 million, and 
they are paid a percentage of that program through----
    Ms. McCollum. Madam Chair. Sir, could you provide us all of 
those pass-throughs because, in fact, if that is not an 
increase in what they are doing, it is just shifting the focus 
of what they are doing. Do you understand what I am saying?
    Mr. Danilovich. I understand.
    Ms. McCollum. Even if you are not taking it out of their 
budget, you are still taking it out of their focus and their 
stated goals and objectives. I am not saying it is a bad thing.
    Mr. Danilovich. Sure.
    Ms. McCollum. I am just saying, we really need to follow 
the numbers, follow the money, and follow what is happening in 
these countries because, quite frankly, one of the things 
Madagascar is very concerned about is their population growth.
    Mr. Danilovich. Yes.
    Ms. McCollum. Madam Chair, they need more money for family 
planning. But in USAID, even if it is a pass-through to work on 
other governance issues, that is less money, less time, less 
energy that USAID has to put into voluntary family planning, 
letting families, married couples, choose what is best for them 
because their population is--what is it? It was more than 50 
percent, like, under 13 and growing. They cannot sustain that.
    So they were saying, ``Hey, folks. Where is the help on 
this, if you really want to help us meet our poverty 
reduction?''
    So I look forward to having that so when we talk to USAID, 
we can follow up. Thank you very much.
    Mr. Danilovich. Thank you very much.
    Mrs. Lowey. Ms. Lee.
    Ms. Lee. Thank you very much. Good to see you, Madam 
Chairman.
    Mrs. Lowey. It is nice to be back.
    Ms. Lee. Welcome back. You look great, wonderful.
    Hi, Mr. Ambassador. It is good to see you again.
    Mr. Danilovich. Very good to see you.
    Ms. Lee. Thank you again for being here, and, of course, 
you know I am going to follow up on our discussion. Thank you 
for the meeting, and you know my concern with regard to the 
involvement of minority- and women-owned businesses in MCC and 
how you are proceeding with your contracting.
    Now, as a former business owner, and I know we talked a 
little bit about this, you are using the existing contract 
vehicles--the blanket-purchase agreements, the indefinite-
delivery, the indefinite-quantity contracts--and I know that 
these types of contracting mechanisms provide real barriers to 
the inclusion of minority- and women-owned businesses.
    Now, I understand also, and you told me about your website, 
which was great, some of the services that you are actually 
purchasing include agriculture, consultant services, 
environmental and engineering consulting services, impact 
evaluation assessment services, financial management services, 
and legal services.
    I know there are qualified minority- and women-owned 
businesses in all of these sectors, and so what I want to ask 
you is, how are you now approaching your contracting vehicles 
to be more inclusive of our wonderful firms throughout the 
country which reflect the diversity, not only in our own 
country but in MCC's countries where, of course, we have 
historical and cultural connections?
    Also, how are you conducting your outreach--we talked a 
little bit about that in our meeting--to minority-owned firms? 
Are you doing advertising? Are you doing the workshops, 
seminars? Just what exactly are you doing? Do you have any 
goals? Are you doing SBA 8[a] contracting? Just kind of where 
are you on this?
    Mr. Danilovich. Thank you, Congresswoman Lee. It is a 
pleasure to see you and a pleasure to see a fellow Bay Area 
resident as well.
    Ms. Lee. Incidentally, I just want to welcome, Ven, my 
former legislative director, who I do not know if you ripped 
off, but----
    Mr. Danilovich. We ripped him off.
    Ms. Lee [continuing]. I just want you to know that it is 
good to see him on this side of the aisle. You have a wonderful 
person to work with you.
    Mr. Danilovich. Thank you. We are happy to have him. I know 
we do. Thank you.
    Our meeting together very much gave us a lot of energy with 
regard to the questions which you are very concerned about. Our 
subsequent meetings between our MCC staff and your staff as 
well have also pushed us along in this direction. It is 
something we take very much to heart. It is something we focus 
on.
    As you know, we have had outreach and representation with 
blacks in business on a number of occasions. We have engaged 
with the Thurgood Marshall Scholarships for employment 
purposes. We have increased diversity since I arrived at the 
MCC. We have a significant number of minorities and women in 
our senior and executive management levels within the 
organization.
    With regard to business outreach with minority groups, we 
have had, for the last several compacts here in Washington, 
outreach programs. We had one just yesterday for Tanzania, 
where we discussed with the private sector. There must have 
been 150 to 200 people at the MCC yesterday; small businesses 
in the area--Washington, Atlanta, New York based. Some of the 
people that I spoke to with regard to their engagement in our 
programs, in this particular case, in Tanzania specifically. 
But we do this in general for all of the countries we have in 
Africa and elsewhere.
    I also want to be in touch with your staff in the immediate 
future for a trip out to the Bay Area to have an outreach in 
Oakland and not only in your district but in the valley, in 
general, down in Silicon Valley and the Bay Area, to discuss 
further outreach with small businesses to make them aware, more 
specifically, of what the MCC is doing internationally and 
where they might be able to participate.
    Not to make any prejudgment in this area, but given 
geographical proximity, I, again, turn to Central America, 
where there may be some definite engagement in the three 
Central American countries that we have.
    Ms. Lee. I think all of this is very important, and I 
appreciate your concerted effort to do this, and I want to go 
back to the question with regard to the contracting mechanisms.
    Mr. Danilovich. Yes.
    Ms. Lee. Have you looked at how that is working? Also, do 
you have any goals established, in terms of procurement goals, 
for minority- and women-owned firms also for hiring?
    Mr. Danilovich. We do have goals, and we have met most of 
our goals. I would like to think that our goals are fairly 
aggressive and that we have met those and, in some cases, 
surpassed them, and, in some cases, we have fallen below. I 
would like to give you another update. I hope we have been 
doing that. I promised you that we would. I know, verbally, we 
have.
    I would like to give you a written update of where we are 
on that and also to explore specifically things that you have 
mentioned with regard to blanket procurement and things of that 
nature.
    Ms. Lee. Okay. Thank you very much. I would like for the 
Committee to have this information also.
    Mr. Danilovich. Yes. Certainly.
    Ms. Lee. You know, as we get into this, and, Madam Chair, I 
know we talked about USAID, but I just want to make the point 
again for the record that, historically, it has been very 
difficult for minority-owned companies and women-owned 
companies to do business in the international arena, and I 
think NCC affords a great opportunity for entry into the 
international marketplace while doing some good stuff. We have 
plenty of qualified firms who can do this, just as with USAID, 
which has been dismal in its record with contracting with these 
companies.
    So, hopefully, you all can set a new standard, and maybe 
USAID can follow suit.
    Mr. Danilovich. Thank you, Congresswoman.
    Mrs. Lowey. I just want to thank you for bringing up that 
issue. As you know, this Committee has oversight over XM, PDA, 
OPIC, and there are other opportunities, and I remember, years 
ago, when we first began talking about XM, it was the larger 
countries that really did not need help to enter these markets. 
I know that there has been a greater focus on small businesses 
and certainly with MCC, that provides another opportunity. So 
thank you very much, and I appreciate you working with us.
    Mr. Danilovich. Thank you.
    Ms. Lee. Mr. Chandler.
    Mr. Chandler. Thank you, Madam Chairman. Mr. Ambassador, 
nice to see you again. The good news is I think you are almost 
through today. I believe I am at the end of the food chain. 
Well, I guess there may be some other questions, follow-ups, 
but, in any event, I would like to explore with you, just very 
briefly, the issue of poverty.
    There have been some criticisms of the MCC about being 
maybe a little too growth focused, maybe pursuing the whole 
notion of just let's grow the economy in a macro sense, and we 
will see what happens. We will assume that results will be good 
and that this growth will, in a trickle-down sort of fashion, 
reach some of the communities who are in the most dire of need.
    What I am curious about is, do you have tools, or what 
tools do you have, to be able to diagnose and assess whether 
this macroeconomic growth model will, in fact, benefit the 
poor. Will it get down specifically to those communities, and 
are you able to measure that?
    The second thing is, are you doing any measurement in terms 
of geographical within a country, whether the programs are 
benefitting the geographical areas that may have the highest 
levels of poverty and the most need of the advances going to 
some of the better-off portions of particular countries?
    Mr. Danilovich. Thank you, Congressman. The MCC program 
specifically targets the poor. This is a program for the 
development of the poor, of those at the lower end of the 
economy, the people that Congresswoman Lowey has met in 
Morocco, who I met two weeks ago. You shake the soft hand of 
the prime minister, but you shake the rough hands of the 
farmers, the people that till the soil, the fishermen who fish 
on a daily basis, who go out in their little boats. These are 
not big, industrial shipping boats with machinery on them.
    These are the poor that are being affected. This is not a 
trickle-down program. I do not know what the opposite of that 
would be--It is a spurred-up program. These are poor, basic, 
humble people who we are having a direct impact on, who have 
created these programs, whether it be in Morocco or in Central 
America or in Armenia or in Georgia.
    In fact, I would like to point out to you that I was 
recently in Central America with President Ortega in Nicaragua, 
an unlikely country perhaps, given our complicated relationship 
with them. We went up to the north, speaking of a geographic 
area, which is a poor part of the country, the two provinces of 
Aleon and Chanadaga, where our programs are taking place. They 
are, in this particular instance, agricultural areas.
    We visited an agricultural fair, and again and again and 
again and again and again President Ortega was told, in this 
agricultural fair, God bless the United States of America. God 
bless the MCC. Our profits have increased. Our production has 
increased, as they showed him beets and yams and potatoes and 
onions and garlic, everything that they were growing, because 
they are the productivity of the poor. The well-being of the 
poor had increased, and that is the way it is straight across 
the boards.
    I must say that, at the end of this, President Ortega spoke 
before a crowd of 6,000 people, and, at the end of his speech, 
as ironic, as unlikely as it may seem, he said, ``Viva Los 
Estados Unidos!'' That is a nice byproduct of economic 
development.
    Mr. Chandler. Well, I agree with all of those statements. 
What I am really trying to get at, I think, is what tools do 
you have in place to be able to measure this, to be able to 
measure whether this development really is going to the correct 
communities and not maybe getting diverted a little bit into 
some of the hands--you know what I am talking about.
    Mr. Danilovich. Sure, of course. Well, I will tell you, 
when these compacts come to us, at least at the initial stages, 
much less so now because countries know that we will not 
tolerate receiving a program which does benefit vested 
interests, whoever it may be--a road to a specific area which 
benefits individuals which are not part of the economic growth 
of the country, let us say, but in for their own economic 
growth.
    We have a very clear assessment of these programs when we 
go into them, and throughout the life of these programs, we 
continue to assess them, monitor them, evaluate them, to make 
sure that as we had hoped, as in the case of Nicaragua. As in 
the case of Madagascar, for example, with geranium plants and 
oil and things of that nature, that what we had set out to do, 
that the actual specific results for economic rates of return 
or number of people affected is, in fact, taking place. If it 
is not, we then redefine and look at what is wrong with the 
program.
    Sometimes we exceed our expectations; sometimes they are 
less. In any case, we move them in the right direction to get a 
good economic rate of return for these agricultural programs in 
these specific poor geographic areas. In Morocco, for example, 
the geographic areas that we are pinpointing are poor areas of 
the country, not the well-off areas of the country.
    Mr. Chandler. So you feel like you are monitoring this 
very, very closely.
    Mr. Danilovich. Yes.
    Mr. Chandler. Okay. Thank you.
    Mr. Danilovich. Both for successes and for failures. I 
would put it that way.
    Mrs. Lowey. Thank you. I am going to turn to Mr. Wolf for a 
question and then turn the chair to Mr. Jackson while I deal 
with another hearing for a few minutes, but I shall return.
    Mr. Danilovich. Thank you.
    Mr. Wolf. Thank you, Madam Chair.
    Let me come back to the issue that I raised, and I think 
you did not give it enough time, and we can talk about it. I 
would like you to come by my office.
    I support foreign aid. This Committee came out with 1.8. We 
spoke on the phone. I tried to get it even higher. So I am 
coming from that side of the effort.
    Mr. Danilovich. I understand.
    Mr. Wolf. I was the first Member of Congress to go to 
Darfur and to see the genocide with Don Payne. It was my 
resolution with regard to that.
    Now, when you are looking and seeing who you give the money 
to, Madagascar has been with us most of the time on most of 
those important issues. Some countries, like Mali and 
Mozambique, have never been with us.
    Now, on the issue of human rights, religious freedom, or 
Darfur, if we had enough money, we should give it to everybody, 
if we could help people, but if we only have so much money, 
what is wrong with saying, ``Okay. We are going to give to a 
country where the poorest of the poor live, but they generally 
are with us on trying to speak out on the issue of doing 
something with regard to the genocide, that has been going on 
for five years''?
    The genocide in Darfur has been going on longer than you 
have been in existence, so what would be wrong with saying, 
``We are going to give the benefit of the doubt to a nation 
that goes with us to help us on that issue''?
    Mr. Danilovich. Congressman, the MCC program was not 
designed----
    Mr. Wolf. I do not care about how it was designed. You have 
changed the criteria on several indicators. You have added some 
by executive order, if you will. What would be wrong with 
saying, we are going to give the benefit of the doubt to 
somebody, a country that is willing to stand up with us on the 
issue of genocide in Darfur?
    Mr. Danilovich. Congressman, are you suggesting we have a 
genocide indicator?
    Mr. Wolf. Well, it may not be a bad idea. Have you been to 
Darfur?
    Mr. Danilovich. No.
    Mr. Wolf. Have you been into camps? Have you talked to the 
women who have been raped? Have you talked to the women that 
are afraid to go out every single day? It may not be a bad 
idea. Do you think it would be a bad idea to have a genocide 
indicator?
    Mr. Danilovich. I think it does not come within the ambit 
of the reduction of poverty and sustainable economic growth, 
but I would be happy to explore that with you.
    Mr. Wolf. Well, I am kind of disappointed in your answer. I 
mean, the president has called what is taking place in Darfur 
genocide. The Congress has done it, both in the House and the 
Senate. So if a country is helping us with regard to that issue 
versus a country that is not, it seems to me that we ought to 
give aid to the country that is helping us. You do not agree 
with that?
    Mr. Danilovich. I respect your opinion. I do not have--
    Mr. Wolf. Or you differ with me.
    Mr. Danilovich. No. I do not differ with you, Congressman. 
I do not think that comes in my area of responsibility.
    Mr. Wolf. That is washing your hands.
    Mr. Danilovich. I am not washing my hands.
    Mr. Wolf. That is exactly washing your hands.
    Mr. Danilovich. No, it is not.
    Mr. Wolf. It is washing. I believe----
    Mr. Danilovich. Excuse me, Congressman.
    Mr. Wolf. I personally believe it is, and I am going to 
offer an amendment, when we mark up, either in the Subcommittee 
or full Committee, with regard to giving the benefit of the 
doubt to countries that help us on human rights and religious 
freedom, and yes--genocide. We allowed genocide to take place 
in Rwanda, and we did nothing. We allowed basically genocide to 
take place in Srebrenica, and we did nothing, and now we are 
allowing it to take place in Darfur, and very, very little is 
being done. With that, I yield back.
    Mr. Jackson [presiding]. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman. Ambassador 
Danilovich, nice to see you.
    Mr. Danilovich. Very good to see you.
    Mr. Knollenberg. I have a couple of quick questions, and I 
do appreciate getting some recognition early. Thank you.
    I had a hearing this morning. I have one now. I have one 
later. So it is a crazy, crazy day.
    Last year, as you know very, very well, Congress decreased 
funding by about 50 percent from the President's budget. For 
Fiscal Year 2009, the MCC asked for much less funding than they 
did in Fiscal Year 2008.
    My question is, was there a shift in focus that allowed for 
the lower request? Do you have any thoughts about that 
specifically that you can tell me?
    Mr. Danilovich. The $2.225 billion request for the Fiscal 
Year 2009 budget, I believe, is an accurate and fair figure for 
the pipeline of countries that may become compact ready in the 
Fiscal Year 2009 time period.
    I mentioned earlier that we have a pipeline of seven or 
eight countries who are in various stages of evolution with 
regard to presentation, due diligence, et cetera, and the 
particular figure of $2.225 billion is broken down with about 
$2 billion committed to possible compacts. The remainder amount 
is for administration and other matters.
    So rather than starting out with a figure which the 
Congress has been disinclined to support, we feel that $2.225 
billion is a just and fair and realistic figure for the 
programs that we have in Fiscal Year 2009.
    Mr. Knollenberg. I would hope so because I have a feeling 
that if it is lower, maybe they will give you less, too, and, 
in my judgment, that is not a good idea. I would like to see it 
maintained at a higher level.
    Mr. Danilovich. We feel it is an honest figure.
    Mr. Knollenberg. This is just a follow-up question. Does 
this shift in focus and decrease in funding adversely affect 
any current or future compacts that you will sign?
    Mr. Danilovich. No, it does not. The compacts, and this is 
the good aspect of the MCC funding. When a compact is signed, 
the money is committed. It is guaranteed, and, in fact, many 
countries have asked us, when there has been a reduction in the 
request that has been made to Congress, and Congress has 
appropriated less than those amounts, countries have called us 
immediately--presidents, prime ministers, et cetera--and said, 
``Does that mean we are not going to get our money?'' And we 
have always been able to say, which is the case, that your 
money is committed. It is yours for the duration of the 
compact, and there is no threat to that money, even though the 
appropriation has been less.
    Mr. Knollenberg. There is this debate that has been 
surrounding MCC over the past year, and, relative to the 
obligated funding that I think you have talked a little bit 
about already, versus committed funding----
    Mr. Danilovich. Yes.
    Mr. Knollenberg [continuing]. I do not know how much 
further you might want to go on that, but it is my 
understanding, again, that the MCC obligates full funding when 
the compact is signed, but, certainly, there is accountability 
here, and I think that is still being maintained, is it not, in 
a thorough fashion?
    Mr. Danilovich. The accountability is being maintained, and 
the trend of disbursements and commitments is dramatically 
going upwards. Very briefly, to date, we have disbursed just 
over $300 million. By the end of Fiscal Year 2008, it will be 
double that. We will have committed signed contracts of $1 
billion by the end of Fiscal Year 2008.
    The trend is as it should be: upwards and stronger through 
2008, 2009, and, et cetera. You will see a dramatic increase, 
as is the case with infrastructure projects. They are observing 
their natural evolution and progress.
    So the disbursements, as well as the commitments, will now 
begin to increase dramatically.
    Mr. Knollenberg. You feel pretty comfortable, then, with 
what you see, looking forward?
    Mr. Danilovich. Yes, I do.
    Mr. Knollenberg. This is a quick question. The original 
countries that signed the MCC compacts--Madagascar, Honduras, 
Cape Verde--I think they are in their third year now, are they 
not, all three of them?
    Mr. Danilovich. Yes.
    Mr. Knollenberg. Have there been discussions as to whether 
to allow these countries to reapply for MCC compacts once their 
original compacts have expired?
    Mr. Danilovich. There has been some discussion. Many 
countries are very anxious, almost after signing, to have a 
second compact. A number of the countries that we have worked 
in that are now in their first or second year have said, 
``Well, can we have another compact now?''
    The fact of the matter is, with regard to the initial 
countries that you have mentioned, are first countries--one, 
two, three, four, five--Madagascar, Honduras, Cape Verde, et 
cetera--they are getting near the end of their compact phase, 
and many of them are preparing proposals in the hope that they 
can have a consecutive compact. It depends on two things. One 
is the successful implementation of the first compact and their 
compliance and adherence to the indicators.
    It should never be forgotten that this is a good policy 
program, not a good politics program. It is not tied to the 
United Nations or to any other international organization. It 
has to do with good performance on good government policies, 
and as long as countries continue that throughout the life of 
the compact and at the end of their five-year period, and have 
good implementation, they can have a consecutive compact if the 
proposals are solid.
    Mr. Knollenberg. I want to thank you for your leadership in 
the last year or so. I think you have done an outstanding job, 
Ambassador, and I feel very strongly about this program.
    Mr. Danilovich. Thank you.
    Mr. Knollenberg. I think it is working.
    Mr. Danilovich. Thank you.
    Mr. Knollenberg. You have got to tell us how it is 
working--
    Mr. Danilovich. Thank you.
    Mr. Knollenberg [continuing]. And that it is continuing to 
succeed. I wish you the very best in terms of this program 
because I think it makes a lot of sense, and I think the 
accountability is built into it in a way that it has never been 
there before. We seem to have been, over the past decade, if 
you will, putting money out there, but I do not know how much 
reasoning or how much scrutiny there was on that. I have doubts 
about a lot of it, and I hope that this is a program that we 
might be able to see those countries that want to apply for a 
compact number two or the second time around, the second 
attempt.
    So continue the work, and I appreciate very much having the 
chance to chat with you.
    Mr. Danilovich. Thank you, Congressman.
    Mr. Knollenberg. Thank you.
    Mr. Jackson. Ambassador, let me make a couple of 
observations. I have a few questions that remain. Chairwoman 
Lowey has made it very clear that, while she is at another 
hearing, she does have some questions that she would like to 
ask you, so I am not empowered to close the hearing, even at 
the conclusion of my questions, so I appreciate your patience 
in waiting for the Chair.
    My question concerns civil society participation. Country 
ownership and civil society participation in compact 
developments are hallmarks of the MCA. However, in the first 
group of approved compacts, the quality and extent of civil 
society consultation has been somewhat mixed, especially with 
regard to the meaningful participation of women's groups.
    Going forward, how will the MCC ensure that countries carry 
out consultations with a diverse group of civil society 
organizations, including women's groups, and meaningfully their 
input during the compact development?
    Mr. Danilovich. Congressman Jackson, the points that you 
have raised are critical to the MCC and points which we 
consider to be absolutely essential for----
    Mr. Jackson. You mentioned Jordan earlier.
    Mr. Danilovich. But in every single country, every single 
country, without exception. I mentioned Jordan simply because 
there happens to be a program there now. Well, we can cite a 
number of specific examples, but, in an absolutely country-by-
country way, we have requested and insisted upon civil society 
participation in the creation of these compacts. And when we 
have reason to believe that that has not happened, we have sent 
these proposals back and said, ``This has not been the result 
of a broadly based consultative process. It has not included 
women, it has not included the poor, it has not included the 
people who you say are going to benefit from these programs. 
You will have to go back and do it again.''
    They have because they have tacitly acknowledged that they 
did not pursue a broadly based consultative program that dealt 
with a diverse constituency; that brought these people into the 
creation of the program. It is not just in the creation of the 
proposals themselves that we insist upon civil society 
participation but in the subsequent implementation of them, in 
the composition of the accountable entity and in also the 
continued involvement of NGOs in various societies.
    I meet with a number of countries that come to mind. I meet 
with civil society again and again. When I am there, I hear 
their complaints, take their pluses, and their satisfaction 
with the program. They are heard, not only by the likes of 
myself and my colleagues from the MCC, who are here today who 
visit countries, but also by the accountable entity.
    So civil society participation, diverse participation, 
women participation is something which we insist and demand 
upon from the beginning to the end of our programs. If we do 
not see it, we make a complaint about it, we make sure that it 
is done, and we follow through on it. We consider this to be a 
hallmark in all of our countries. The point was raised with 
regard to Muslim countries. I would say that, although you 
could make that general definition, in the developing world, 
there are sometimes challenges with civil society 
participation, and we see that in varying degrees in the 
different countries that we operate in.
    Nevertheless, whether it is a Muslim country or a Central 
American country, African, or a country in the Caucasus, we 
demand that there be strong civil society, broad-based 
participation in our programs.
    Mr. Jackson. The MCA's authorizing legislation requires 
that the MCC, and I quote, ``shall seek to ensure that the 
government of an eligible country takes into account the local 
level perspectives of the rural and urban poor, including 
women, in the eligible country, and consults with private and 
voluntary organizations, the business community, and other 
donors in the eligible country.''
    I understand that the MCC does provide guidance to eligible 
countries on how to conduct a consultative process within its 
general guidance notebook. However, problems remain in ensuring 
that the voices of women, poor people, and the rural citizens 
are actually heard. Can you tell me what the MCC will do to 
ensure that government consultations with civil society are 
actually meaningful, and will the MCC adopt standards for 
evaluating the quality of such processes?
    Mr. Danilovich. I think ``meaningful'' is the operative 
word. We are not doing this for window dressing. We are not 
doing this for tokenism. We are doing it so that there is 
meaningful participation in all segments of civil society. We 
follow through on that through our embassy, through other donor 
organizations, not just American donor organizations.
    We have a close working relationship with USAID on a number 
of levels. We rely upon their input. We rely upon embassy 
input. We rely upon ambassadorial input. We rely upon other 
donors to discuss, and they discuss specifically the process 
that has gone on with the MCC, even though it is not their 
program.
    I can assure you that our programs come under scrutiny, not 
just by yourselves but also in- country, and not just by the 
citizens and by the beneficiaries in the countries but other 
participants, and other government organizations, that are in 
these countries take great interest in what the MCC is doing. 
One of the things they take interest in is our consultative 
process.
    It is not just enough that we have the guidelines, as you 
mentioned. I can assure you, we follow through on them to make 
sure it happens, as I mentioned, not only in the beginning of 
the consultative process in the creation of these proposals but 
in their implementation throughout the period. I have met, as I 
said, with civil society, and if they criticize what is being 
done, or if it has not been done, or been followed through--and 
when we do hear these complaints--we follow through on them 
with regard to their validity. If there is a problem with it, 
we impress upon the accountable entity, the implementing unit, 
to do something about it.
    Mr. Jackson. Many of the countries with whom the MCC works 
have benefitted from a longstanding relationship with the State 
Department and the U.S. Agency for International Development. 
State and USAID personnel on the ground have years of relevant 
experience and expertise to offer, having worked closely with 
the host country, civil society, and the private sector.
    With USAID operating child-survival programs in many of the 
countries where the MCC also has health compacts, particularly 
in sub-Saharan Africa, how are the MCC and USAID working to 
ensure that programs are using resources effectively and not 
duplicating programs or interventions?
    Mr. Danilovich. More specifically, Congressman, I would say 
that, with regard to health programs, there are a number of 
instances where we cooperate with PEPFAR, and there is no 
duplication, where we have programs, for example, in Lesotho. 
We have a $363 million program, the most significant part of 
which is the creation of health clinics and health services, 
and we work very closely with the PEPFAR representatives in-
country and in Washington to find a synergy between the 
buildings that we are creating and the services which the 
PEPFAR unit is supplying, and we are finding this to be very 
effective, very efficient, a very good form of cooperation.
    Mr. Jackson. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman. I guess I lied. I 
said I was not going to ask another question. This is just a 
quick one.
    I understand this has not been discussed, but I spoke 
relative to the accountability, obviously, of the MCC. Do you 
have any information that might suggest that there has been 
some corruption in a place or two, and, if so, what are you 
doing about that?
    Mr. Danilovich. As you know, corruption is our hard 
indicator. They must pass 50 percent of the other indicators, 
but corruption, they must pass. It is the prerequisite for 
joining the MCC, and a number of our threshold programs--in 
fact, the vast majority of them--specifically focus on 
corruption itself. In corruption, it means judicial process 
reforms, access to law, access to jurisprudence, access to the 
courts, as well as, in fact, training journalists to do 
investigative journalism to reveal cases of corruption or 
alleged corruption.
    We have had, in the Philippines, for example, we have a $20 
million program more or less focused on this. The Philippine 
government augmented our $20 million with $20 million from 
their own coffers, $40 million in total, to support this 
corruption program. It has resulted in a number of increased 
prosecutions, court cases, et cetera, with regard to revealing 
corruption. It has happened in a number of other countries, in 
Africa and elsewhere, where our efforts perhaps target reforms, 
which directly affect corruption. We look at corruption as a 
killer to these programs in order to have direct results.
    So it is something that we take very seriously. That is why 
it is our one must-pass, hard-hurdle indicator.
    Mr. Knollenberg. The benchmarks, I do not know what you 
call them, but those are being looked at realistically, and, 
apparently, they are being met----
    Mr. Danilovich. Yes.
    Mr. Knollenberg [continuing]. Or you do not go to the 
second----
    Mr. Danilovich. Absolutely, no. There are instances where 
indicator performance has not been maintained after the initial 
signing, and we are entering into policy improvement 
remediation on these areas.
    None of our countries have had a significant policy 
reversal, where there has been a performance subsequent to 
signing below the median, or that has resulted perhaps from new 
data, from more accurate data, from joining a new income group 
from LIC to lower-middle-income country, or because any one of 
a number of those factors. We have entered into discussions 
with these countries on how to improve their indicators, and, 
in no case, will a country ever be given a second compact 
unless they, again, are eligible, and unless they pass the 
indicators.
    Mr. Knollenberg. Thank you very much, Mr. Ambassador. I 
appreciate it. Thank you, Mr. Chairman.
    Mr. Jackson. Mr. Ambassador, in the interest of time, I 
have been asked to ask a few of the Chairwoman's questions so 
that she might have the answers for the record.
    Mr. Danilovich. Thank you.
    Mr. Jackson. One of the key distinguishing factors of the 
MCC process is its eligibility criteria. The MCC has 17 
performance indicators that are measured by outside sources 
which the board uses to make its decisions. It is my 
understanding that the Philippines passed the eligibility 
requirement or criteria at the December 2007 meeting but was 
not deemed eligible.
    Can you explain what happened? Why did the board choose not 
to follow the criteria in making the decision?
    Mr. Danilovich. The Philippines has passed the MCC 
criteria, report card, score card, in fact, for the last three 
years, and we will be considering the Philippines' eligibility 
for a compact at our board meeting on March 11th.
    We thought it appropriate to take a longer period of time 
to review some of the indicators on the Philippines, and, in 
fact, we have a delegation coming from the Philippines in the 
immediate future to explore in greater depth, to drill down, to 
make us satisfied that we can look seriously at their selection 
as an eligible MCC country.
    As you know, when that selection is made for eligibility, 
it does not mean they have a compact. They then must create a 
compact. They must submit the compact for due diligence on our 
part, and they must continue their good performance on the 
indicators, which, as I have said, has been good for the last 
three years. So that matter will be discussed at the board 
meeting in March, and we look forward to a decision at that 
time.
    Mr. Jackson. The Chair continues: What led the board to 
decide to reconsider the Philippines' eligibility so soon after 
rejecting it? And if the board deems the Philippines eligible 
in March, how will this change the Fiscal Year 2009 request?
    Mr. Danilovich. The eligibility of the Philippines, as with 
many other countries, which I have mentioned to you in my 
opening statement, are part of a competition for MCC funds. As 
I mentioned, not all of those countries, and I believe I 
mentioned eight or nine, will be eventual compact countries. 
They have to submit, after a broadly based consultative process 
with civil society, a decent proposal that has to be 
investigated, terms have to be agreed, et cetera. It is not an 
easy process.
    If we are able to have four or five compacts in Fiscal Year 
2009, that will, in fact, reflect the $2 billion figure, which 
we believe will be the fair figure for compacts in the 
financial year 2009.
    Welcome back, Congresswoman.
    Mrs. Lowey  [presiding]. Thank you very much. The Fiscal 
Year 2009--includes $1.8 billion for five to six new compacts, 
and it seems ambitious to add such a large number of additional 
compacts when you are experiencing difficulties implementing 
the current portfolio. Of the seven countries that are 
currently eligible for funding, at least three are experiencing 
internal political turmoil that will likely make them 
ineligible--East Timor, Bolivia, and Ukraine--and the fourth, 
Senegal, has proven to be an unreliable partner in the past.
    So, two points. If you could outline how you project that 
$1.88 billion will be allocated among compacts if only three 
countries are prepared to sign compacts in Fiscal Year 2009, 
and I understand that it takes approximately 24 months to 
develop a compact. Can you please provide a summary to us of 
those countries that are currently compact eligible, where they 
stand in the process, and what compacts do you believe you will 
be able to sign in Fiscal Year 2009, considering the extensive 
work that must be done before signing a compact?
    So, do you realistically believe that you are going to be 
able to sign five to six new compacts in Fiscal Year 2009, Mr. 
Ambassador? Convince us that you are going to be able to do 
that.
    Mr. Danilovich. I will. I will try.
    Mrs. Lowey. You do not have to. You can just say that you 
are going to change the recommendation. I will let you off the 
hook.
    Mr. Danilovich. No. In fact, one of your colleagues 
inquired as to whether the $2.225 billion figure less than the 
$3 billion that had been previously corrected, if I could 
please explain that. Why is it less than $3 billion?
    I did so in a couple of ways. Since Congress has been 
disinclined to support the $3 billion figure in the past, 
therefore, this particular figure, we feel, is just and fair. 
It is an honest figure of what could be achieved in Fiscal Year 
2009. Of course, the number of countries is reflective of the 
size of these compacts, but if they are around $450 or $550 
million, and whether the compacts are four or five, depending 
upon the size, either 1.8 or 2 billion of those would be 
dedicated to new compacts in Fiscal Year 2009.
    It is not clear who on this list would be eligible and will 
be coming forth with a compact. I think the countries you 
pointed out are those which certainly are problematical. On the 
other hand, Moldova, Jordan, Malawi are probably further along 
the way in this process, bearing in mind it is some way out in 
the future.
    The Philippines, as was discussed with Congressman Jackson, 
a decision may be taken at the March 11 board meeting. They 
have, in fact, passed the eligibility criteria for the last 
three years, and, in fact, are one of the best-performing 
countries across the boards on their indicators in the lower-
income category.
    So depending upon which countries and the size of the 
compacts, that $2 billion, $1.8, $1.88 to $2 billion, it is 
impossible to be precise, but is a really honest and fair and 
realistic figure. It is not the $3 billion that we came to you 
with previously, which we could have justified, but we feel 
that this figure, $2.225 billion, with the $1.8 to $2 billion, 
for new compacts, depending upon who they may be, will be 
justified in Fiscal Year 2009.
    Mrs. Lowey. I am not sure that you are convincing, but this 
conversation can continue.
    I have one question. I was in Bolivia about six months 
ago--something like that, maybe less--I do not remember--maybe 
it was last year--and I thought I had a great meeting. I was so 
successful that after I left, they nationalized the energy.
    Mr. Danilovich. Are you going back soon?
    Mrs. Lowey. But I think what was interesting about it, 
because we really visited a huge number of our projects, and 
various groups--Youth Build, agricultural projects--many very 
exciting things that were going on there. He had no idea, no 
idea, what we were doing. In fact, I had the whole centerfold 
of the local paper, and I presented it to him. That was 
interesting.
    Given the situation in Bolivia--I will not take too much of 
the time--I would be interested to know if he is even aware of 
the MCC and who, at that level, are you working with in 
Bolivia, and do you think that, given the situation there, you 
are going to be successful in signing a compact in Bolivia?
    Mr. Danilovich. Briefly, to answer your question, Madam 
Chairwoman, I met with President Morales in New York--not in 
Bolivia but in New York--in September. I told him that we were 
unable to consider a Fiscal Year 2008 proposition for him 
simply because we did not have the funds. In any case, he is 
also aware that we have various serious concerns with regard to 
the economic and political trends in his country, and he also 
knows that those trends are something which will be reflected 
on their indicator performance.
    I think it would be perhaps unfair to look out into the 
future, but it is certainly something which you are aware of, 
which the Committee is aware of, and which we, at the MCC, are 
aware of with regard to Bolivia's eventual prospects for a 
compact.
    Mrs. Lowey. I should say, given your--at Nicaragua, 
anything is possible. We just do not know. In fact, I remember 
when we were in Nicaragua, this Committee was in Nicaragua, not 
too long before that, and all of those who were part of the 
Sandinista Party--I do not even know him. I do not even know 
Ortega. They were all locally distancing themselves. So your 
comments raise some hope. We will look forward to some positive 
actions.
    Mr. Danilovich. Thank you.
    Mrs. Lowey. Let me just close the hearing by thanking you 
again for your leadership. I appreciate your acknowledgement 
that there have been some issues regarding implementation in 
your effort to focus on implementation, but, as you can see, 
this Committee is very engaged in the MCC. The idea is very 
exciting. We still have many concerns about the implementation, 
and, particularly, that money is being tied up with so many 
urgent needs.
    So I look forward to continuing the dialogue, and I 
appreciate your appearing before us today. This concludes 
today's hearing on the Millennium Challenge Account's Fiscal 
Year 2009 budget request. The Subcommittee on State and Foreign 
Operations and Related Programs stands adjourned. Thank you 
very much.

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                                      Wednesday, February 27, 2008.

               U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

                                WITNESS

HENRIETTA H. FORE, U.S. DIRECTOR OF FOREIGN ASSISTANCE AND 
    ADMINISTRATOR OF USAID
    Mrs. Lowey. We will come to order. Today, we welcome 
Henrietta Fore, the Administrator of the U.S. Agency for 
International Development and Director of U.S. Foreign 
Assistance. I am glad you are feeling better, Administrator 
Fore. I want to begin by complimenting you on the new energy 
and vision you have brought to USAID. We appreciate what you 
have been doing. And as a strong supporter of USAID's work, I 
do appreciate your efforts to rebuild and strengthen the agency 
and regret that you have assumed these responsibilities at the 
agency with little time left in this administration to 
implement substantial changes. However, you do have the 
opportunity to lay the foundation for reform upon which the 
next administration can build. 
    I, also appreciate the more consultative process you have 
instituted as the Director of Foreign Assistance. Last month, 
the subcommittee held a hearing examining foreign aid reform, 
which, I am glad, includes the need to strengthen USAID's 
management and to expand its staffing. As you know, the 
subcommittee reversed the cuts to USAID's operating expenses 
budget that were put forward by your predecessor, cuts which 
would have further weakened an already debilitated and 
demoralized agency.
    Your budget request includes a substantial increase in 
operating expenses for the first installment of the Development 
Leadership Initiative, a new three-year commitment to double 
the number of Foreign Service Officers at USAID. And while I 
applaud the initiative, your focus seems to be exclusively on 
the hiring of junior Foreign Service Officers at a time when 
USAID needs significantly more mid-level technical experts and 
program managers. And while I understand the necessity of 
recruiting and retaining junior officers to build the Foreign 
Service for the future, the challenges we face in Iraq, 
Afghanistan, Pakistan, Sudan, and other high priority posts 
require officers with more experience. And I hope we can engage 
in some discussion on how you would hope to address this 
immediate challenge in the context of your budget request.
    As you know, many are concerned that USAID has lost the 
technical expertise that once made it the world's preeminent 
development agency. And as a result of this diminished 
standing, the Bush Administration has further marginalized the 
agency by housing new initiatives, such as the coordinator for 
reconstruction and stabilization, the Millennium Challenge 
Account, and the Office of the Global AIDS coordinator outside 
of USAID. And while USAID does not set the vision or the 
strategy for these programs, it is asked to serve as the 
contracting mechanism for their implementation. Often at the 
expense of USAID's own programs, staff are diverted to these 
other tasks. Furthermore, USAID's own policy and planning 
expertise was gutted by your predecessor when he moved the 
entire staff of the agency's Policy and Program Coordination 
Bureau to the State Department.
    Now, while we appreciate you are left with great challenges 
to rebuild capacity at USAID, I hope you can tell us today how 
you also plan to address the significant concerns related to 
procurement. In recent years, USAID has relied heavily on 
umbrella agreements and indefinite quantity contracts to 
implement its programs. This has virtually eliminated the 
ability of small U.S.-based non-governmental organizations, 
indigenous non-governmental organizations, and small and 
minority-owned businesses to compete for USAID funds. At a time 
when the agency should be engaging new partners, I am concerned 
that this practice is increasingly closing off avenues for 
innovative new organizations to work with you.
    Turning to the Fiscal Year 2009 request for foreign 
assistance, I want to first acknowledge the increased resources 
sought by the President for bilateral development assistance 
and Economic Support Funds. I strongly believe that we need to 
be scaling up our assistance programs to address the myriad and 
complex global challenges facing our nation. However, despite 
the overall increases in the foreign assistance requests, there 
are some clear winners and losers. Funding for micro-
enterprise, and safe drinking water is reduced; increases in 
HIV/AIDS and malaria are offset by cuts to family planning, 
maternal and child health, and tuberculosis programs. Congress 
has increased funding for these programs and made them a 
priority and yet, the President's budget again shifts resources 
away from these areas.
    I am also concerned about the cuts to humanitarian 
assistance programs in the Fiscal Year 2009 budget at a time 
when we have burgeoning refugee needs in Iraq and continuing 
crises in Africa and Asia. Although the budget proposes to 
increase the overall funding for Africa, your own staff has 
acknowledged that HIV/AIDS comprises sixty percent of these 
funds, while funding for other health programs is reduced. And 
while I certainly support the funding for HIV/AIDS and I have 
worked hard, as you know, to increase it above the President's 
request in the past five years, we certainly cannot help the 
people of Africa by ignoring the myriad other problems facing 
the continent. Every year, 4.8 million children in Africa die 
of preventable causes such as diarrhea and pneumonia and 1.5 
million Africans die of tuberculosis. To face these challenges, 
it is clear we need a more comprehensive strategy.
    As you well know, education is a top priority of mine and I 
thank you for including a robust request for basic education in 
the Fiscal Year 2009 level. It is still seventy million dollars 
less than the Fiscal Year 2008 enacted level, but it is a 
significant increase over last year's request. However, funding 
alone, as you and I know, will not ensure that more children 
are receiving a quality education and I look forward to 
receiving the basic education strategy from the President, as 
was directed by the Fiscal Year 2008 bill, and hope that it 
will be bold and creative.
    As the Director of Foreign Assistance, it is also your 
responsibility to ensure that country-level programs are 
coherent and address the most critical development priorities 
in a country. But under the current system, the F process is 
responsible for the coordination of less than half of the total 
assistance being provided in a particular country. Initiatives, 
such as PEPFAR, the President's Malaria Initiative, and The 
MCC, are not required to be part of the in-country planning 
process. And I hope that we can discuss the steps you are 
taking to better coordinate the full U.S. foreign assistance 
portfolio.
    Administrator Fore, I look forward to working with you, as 
we strengthen USAID's ability to address the development 
priorities of the twenty-first century. The challenges are 
immense, but I believe that your reforms and initiatives 
represent an important step in the right direction. But before 
we move to your testimony, let me turn to Mr. Wolf, the ranking 
member for his opening statement.
    Mr. Wolf. Thank you, Madam Chair. I will just submit the 
statement and I want to welcome you, thank you for your years 
of service. Also, thank all of your people, who are serving in 
very difficult parts of the world. And also, I think when 
history is written with regard to the Bush administration, with 
regard to the effort with foreign assistance, I think it will 
be a very positive chapter. I think that how the President was 
received just a week ago in Africa is an indication. But, thank 
you, very, very much and I will just submit the statement for 
the record.
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    Mrs. Lowey. Of course. Administrator Fore, we are looking 
forward to hearing your testimony and your testimony will be 
placed in the record. So, proceed, as you wish.
    Ms. Fore. Thank you, very much, Madam Chairwoman. It is 
good to see you. You are also looking well today. And thank 
you, very much, Congressman Wolf. We appreciate your support. 
It has been strong and clear and very much appreciated for our 
foreign assistance efforts, both at the United States Agency 
for International Development, as well as with the Office of 
the Director of U.S. Foreign Assistance. So, I thank you.
    My written statement I would propose to go into the record 
and with your permission, I will give you a short oral 
statement.
    The degree of turmoil and poverty in the world right now 
poses challenges and opportunities for our assistance programs 
and underscores the vital role of development in achieving our 
objectives. The violence in Kenya, the dramatic election in 
Pakistan, Kosovo's declaration of independence, humanitarian 
crises all over the world, never has foreign assistance been 
more critical to our national security and to the citizens of 
the developing world.
    The path from poverty to prosperity is a long one. But, we 
already have made progress this century. In 1981, forty percent 
of the population of developing countries was in poverty. In 
2004, that percentage has decreased to eighteen percent and is 
projected to decline further, to ten percent in 2015. As we 
discuss this budget request, which can often seem dry and 
abstract, it is important as I know you are very aware, to 
remember what our funding goes toward, what it means to our 
partners around the world, and what it means to the recipients 
around the world. The Peruvian farmer in the highlands, the 
Malian girl, who has just attended her first day at school, the 
Sudanese family, who has found safety in a refugee camp, the 
landmine victim in Lebanon, a Kyrgyz business woman looking to 
expand her business, these are the people we serve, those with 
the least means and opportunities. Yet, they still yearn to 
build their lives, their nations and their futures.
    With that backdrop, I would like to describe a few 
highlights of our Fiscal Year 2009 budget. President Bush's 
Fiscal Year 2009 Foreign Operations budget for the State 
Department and the United States Agency for International 
Development requests 22.7 billion dollars, a 2.7 percent 
increase of above the Fiscal Year 2008 enacted level. Our 
request is an increase of over 2.1 billion dollars compared to 
the Fiscal Year 2008 President's budget request for State 
Department and USAID foreign operations accounts. A key new 
component of this year's request is the ninety-two million 
dollar launch of the Development Leadership Initiative for 
USAID to which you have referred in your opening remarks. It 
aims to strengthen and invest in USAID's critically important 
Foreign Service Officer Corps. Not only do we need to ensure 
that the size of USAID's workforce keeps pace with the 
significant increases in USAID's program management 
responsibilities, but we also need to make sure that the 
workforce has the necessary skills and expertise that it needs 
for the future.
    In Fiscal Year 2009, the request demonstrates our strong 
commitment to fighting poverty with a focus on promoting 
economic growth and strengthening democratic governance, 
specifically in Africa and in the Western Hemisphere. This is 
reflected in our request for the Development Assistance 
account, which is a more than forty percent true program 
increase from the Fiscal Year 2008 request. While we continue 
our strong commitment to key interventions, such as health, 
education, and environment, the 2009 request renews our focus 
on creating comprehensive programs that address development 
gaps in other sectors. We aim to leverage the large investments 
we are making through PEPFAR and MCC with balanced development 
programs, to ensure that all the investments the United States 
makes on the ground are lasting and secure.
    In support of the War on Terror, this request will provide 
a strong support for our critical efforts in Iraq and 
Afghanistan, as well as a continued focus on security 
assistance to our key allies, such as Israel and Egypt. In both 
Iraq and Afghanistan, we are creating strong foundations for 
the governments to build upon. Our Iraq programs continue to 
focus on economic and governance reform. And in Afghanistan, we 
are bringing the government closer to the people through 
improvements in health and education services, justice 
administration, and local governments. We will also continue to 
work with the government of Pakistan to end extremism and 
violence, particularly in the Frontier region.
    This is a robust request. It is fully justified. It is 
critical to the interest of the United States. And I am glad to 
take your questions.
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    Mrs. Lowey. Thank you very much for your comments. And we 
will proceed with five minutes for each of us and then, 
hopefully, we will be able to have a second round. And I want 
to apologize in advance, there are probably more than a half a 
dozen appropriations hearings, so some of us may be coming and 
going to give our input to the others. That does not mean this 
is any less important. So, I thank you.
    Madam Administrator, at the hearing on foreign aid reform, 
we had a robust conversation about the role of DOD in 
humanitarian and development assistance. And, indeed, the 
subcommittee intends to hold a hearing later this year on the 
role of the military in foreign assistance. I would like to ask 
you a couple of questions about that and if you have any other 
comments. What efforts are you undertaking to improve the 
interagency planning and coordination process and do you 
believe that assistance provided by DOD is being well 
coordinated with USAID assistance, both in Washington and in 
the field? And do you believe that the assistance programs 
being funded by DOD will have a lasting development impact or 
are they aimed mostly at changing hearts and minds in the short 
term? I found, for example, on a recent trip to Afghanistan, 
both USAID and other people working with USAID were 
demoralized, because the military was going out and building a 
school and they were able to do it very quickly, but what 
actually was happening in the school was not their business. 
And I understand that this was a directive, because they felt 
that USAID was taking too long with the contracting process and 
could not operate as fast as they could.
    So, in general, I would like to know how can the U.S. 
Government improve its coordination across the different 
agencies and departments conducting international development 
work, such as DOD, the Department of Labor, USDA, MCC, PEPFAR, 
when MCC and PEPFAR fall outside the authority of the Director 
of Foreign Assistance?
    And I remember another instance with your predecessor. 
There was a huge article in the Wall Street Journal about all 
the work that General Abizaid was doing in Africa. And when 
your predecessor was talking about the coordination role, I 
said, ``What about this?'' His response was: ``Oh, I have 
nothing to do with that.'' So, it just does not make any sense 
to me and I would be interested in your views.
    Ms. Fore. Thank you, very much. And in your travels, I know 
that you have had a chance to see much of this coordination and 
sometimes separation between the funding streams that we send 
through our United States Government agencies. I think it is a 
challenge for all of us, because foreign assistance, as you all 
know, comes to us through many lines of funding, through many 
types of funding, and through many agencies. It was not this 
way decades ago, but it is this way now. And so part of our 
challenge in the Office of the Director of Foreign Assistance 
is how to gather all of these agencies and their efforts 
together, so that we can have a greater impact, as the United 
States.
    We have a few coordinating mechanisms that are starting to 
work. We are making a very strong effort to ensure that our 
foreign assistance programming begins with a country. We are 
placing an emphasis on the country. So, in our country teams, 
gathering all the agencies at post, is an important part of 
this effort. These agencies are all part of our country 
operating plans. The new guidance that we have going out for 
the 2010 budget will encourage this coordination in the field 
at the country level.
    Mrs. Lowey. Including the MCC and PEPFAR?
    Ms. Fore. All agencies. So, all agencies that are operating 
within the country and will be programming money in the 
country.
    We, also, want to reach out to another group that we think 
is very important, which is the private voluntary 
organizations, as well as the businesses and other institutions 
that have money coming into a country. Because whether you are 
working in education or health or any other sector, it is 
important that we try to coordinate this, integrate it, build 
upon each other's successes, exchange with each other best 
practices. So, the country base is key for integration.
    The second area we are trying to integrate more fully is 
with the Development Policy Coordinating Committee. We have 
just reinvigorated this committee. I chair it. We chair it with 
the National Security Council. All agencies that are part of 
our foreign assistance structure are there. I think we can make 
some good progress and as you said in your opening remarks, 
what we can do is lay a foundation for the future.
    Coordination and integration is difficult. It is not easy. 
But let me pick up on your example of Afghanistan, it is 
important for children to attend school. But, it is also 
important to build the school. And if we can utilize the skills 
and strengths of our various agencies, we should do so. The 
military has real capacity to build and to move equipment when 
needed in humanitarian disasters and other ways. So, I would 
hope that we could use the best of every agency and we will 
look forward to the upcoming hearing and in ways that we can 
help.
    Mrs. Lowey. Thank you very much, and I would like to 
continue the dialogue on that issue. Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair. Last year at the request 
of Mr. Kirk and others, I put language in with regard to the 
Syrian and Chaldean Christians, who were in Iraq. Can you tell 
us what you are doing with regard to that? And, also, I had a 
call yesterday about the Syrian, Chaldean Christians, who are 
currently in Syria, who are having a very difficult time, since 
they are not Muslim, and cannot work. What can you do for them 
and what are you doing for those, who are in Iraq now, based on 
the language that was in the bill?
    Ms. Fore. Thank you, Congressman Wolf. Perhaps, we may 
speak to you and your staff about the Syria issue separately. 
May I----
    Mr. Wolf. Sure, please.
    Ms. Fore. In the Nineveh Plains in Iraq, we have a number 
of programs that are underway and we will have more. Currently, 
we are working in health, in education, in job training, 
vocational training, as well as inclusion in the government 
structure. As you know through our PRTs, we are hoping to work 
more closely with this group, in a decentralized way. Your 
interest and your knowledge in Iraq has been very helpful in 
supporting and spurring these programs, but we will come to you 
with further thoughts on what we can be doing to help this 
group.
    Mr. Wolf. I was in Nineveh three weeks ago and your PRT was 
doing a good job, but the Christians there feel somewhat alone. 
They have no militia. They are not getting a lot of cooperation 
from the Kurds. And I think there has to be a greater effort. 
Now, the person that has been appointed by the State Department 
is a good sign, but if you could maybe come by and tell us the 
actual concrete things that are being done both inside and 
outside the country. And maybe Mr. Kirk can participate at that 
time, too. And the sooner, too, the better, if you could.
    Ms. Fore. Good. I will follow up on that right away.
    Mr. Wolf. The committee authored the Help Commission last 
year. We would like to hear your comments about that. And have 
you read the book, and I am in the process of reading it, Three 
Cups of Tea, about Mortonsen, the fellow--has anyone read that 
book? Well, you ought to read the book. He is making an impact 
in Pakistan in a way that is somewhat unique. But, can you 
comment on the Help Commission, your thinking and perhaps 
recommendations to the committee whereby we can make some 
authorization changes? And then if you have not read the book, 
if you could take a look at it, maybe we can chat about it.
    Ms. Fore. Good. Thank you, very much. The HELP Commission, 
it has been a very effective and thoughtful commission. They 
have made a number of very good recommendations. One that 
Chairwoman Lowey mentioned on procurement is one that we are 
moving on right now, because it is going to be very important 
for us to reach out to many smaller organizations, who are 
innovative, who have capacity to work. So, in a number of 
areas, the HELP Commission has some very interesting 
suggestions. If we may follow up with you for some possible 
authorizations, legislation, they have a number of suggestions 
that we think are very fruitful.
    Mr. Wolf. Last question and I know my time is probably 
running out. What has the impact been on AID and our foreign 
aid program, and mostly, your employees on the softening of the 
dollar?
    Ms. Fore. The dollar's purchasing power just does not reach 
anywhere near as far as it used to. We feel its effect in a 
number of areas. The operations within USAID is the number one 
area that we need to fund. Your help last year was extremely 
important. The Development Leadership Initiative was created 
because we are at a crisis for hiring new foreign service 
officers, as well as individuals with the skills that we need 
for the future. Our operating accounts are suffering because 
the U.S. dollar is--has less purchasing power. It is also true 
when we are purchasing commodities, anything around the world. 
So, it has a very strong impact. As you know, when you looked 
at the currency markets this morning, buying power is just much 
less than it could be. So, for all of us, we are struggling 
with restrained budgets and it means that we are going to have 
to be making more tradeoffs and doing less in a number of areas 
just because of the buying power of the dollar.
    Mr. Wolf. Thank you, Madam Chair.
    Mrs. Lowey. Thank you. Mr. Jackson.
    Mr. Jackson. Thank you, Madam Chair. First of all, Madam 
Director, let me first thank you for your service to the nation 
and for the extraordinary efforts that you are undertaking to 
transform the U.S. role in foreign assistance across multiple 
agencies. I can imagine this is an extraordinarily difficult 
task. But so far, you are doing a yeoman's, a yeoperson's job 
at the effort.
    Most recently, the Chair led a delegation of members of 
this committee and other members to Africa and most notably, at 
least for me, was the extraordinary satellite visual slum in 
Nairobi, Kenya, known as the Kaibera slum. I think every member 
of the delegation was struck by those, who took us on a tour of 
the Kaibera slum, suggesting that Kenya was a stable 
government. But when one looked at the vast amount of poverty 
associated with that particular slum, from our perspective, it 
was just a matter of time before that powder keg would explode.
    Obviously, with the recent elections in Kenya, many of the 
more violent activities that have taken place in that country 
since the election have occurred within the context of extreme, 
and I do mean extreme poverty, in Kenya. And it raises the 
question about whether or not our assistance programs, at least 
in Kenya, are directed towards the elimination of such slums 
and the elimination of such poverty or whether or not we are 
providing educational assistance in the current conditions for 
which people, who are extremely poor, find themselves. I would 
like your thoughts about that.
    And secondly, while in Liberia, I noticed in your budget 
request, there is an additional fifty million dollars and in 
your testimony, you said to complete the effort to transform 
the Liberian military, fifty million dollars to transform the 
Liberian military. And I remember distinctly on this codel 
having a meeting at one of the training sites where the 
contractors were arguing that there were pipeline issues with 
respect to the resources they were receiving from the State 
Department and from various aid agencies, such that they would 
actually have to send contractors back home, because of gaps in 
the funding. I do not know if we ever actually settled, Madam 
Chair, as to whether or not those gaps were actually legitimate 
gaps and I think that Michelle and others raised some concerns 
about that. I am wondering is fifty million dollars enough to 
close the gap in their training. They seem to be stuck in a 
cycle where as soon as we send them fifty million, they bring 
the contractors back. By the time they retool themselves, they 
have spent a significant amount of money and then they have to 
go back home again, because they do not have enough to complete 
the training and then it starts all over again. It is an 
endless cycle here, when Ellen Johnson Sirleaf says, this needs 
to be completed in the security sector for government to move 
forward.
    I thank the administrator and I thank the Chair for 
yielding your time.
    Ms. Fore. Thank you, very much. I am aware of the many 
challenges currently being experienced in Kenya. So, let me 
begin with Kenya and then turn to Liberia.
    We are all disappointed with talks that are stalled. There 
should be an ability to have a democratically elected 
government that is operating and operating well for its people. 
Our programs do focus on the reduction of poverty, as well as 
the increase of income generation. But, they also focus on 
reducing child mortality and reducing infectious diseases and 
encouraging more children to go to school. All of these 
programs must work together. We are reprogramming now for an 
increase in democratic governance for Kenya. We think this is 
the moment that is essential for it. But, poverty never leaves 
our broad sustained outlook on how we can help a country--and 
Kenya is included.
    Much of our funding in Kenya, as you know, is through HIV/
AIDS. But even through the HIV/AIDS program, benefits are 
realized in education and other sectors. But, I would enjoy 
having a conversation, a deeper one, on development and what it 
can do in the poorest areas and in this particular slum in 
Kenya, if we might continue that.
    In Liberia, we have--we know of your visit and we know of 
your great interest in it. We have really moved on this very 
strongly, the Secretary and the President are also very 
interested and our funding has been strong. The training of 
troops is part of a three-year commitment and we will look at 
the pipelines with the committee and staff to see what we can 
do to help. Our current commitments in education, in economic 
growth, in entrepreneurship, in many other sectors will all 
bear well for Liberia for the future.
    Mrs. Lowey. And this bill----
    [Off microphone.]
    Mrs. Lowey. Well, we took care of part of it in the Fiscal 
Year 2008 bill----
    [Off microphone.]
    Mrs. Lowey. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Madam Chairman. Madam 
Administrator, nice to have you here.
    Ms. Fore. Thank you.
    Mr. Knollenberg. I will get into a question about in the 
fiscal year 2008, this subcommittee appropriated ten million 
specifically for northern Iraq and the religious minorities in 
that region. This funding is very critical to the Chaldeans, to 
the Syrians, and to the Syriacs, to make sure that they are 
protected. Has USAID begun to work with local organizations on 
the ground over there in northern Iraq, to prioritize the 
reconstruction projects specifically? Would you just comment on 
that, please?
    Ms. Fore. Yes. And your interest is shared by Congressman 
Wolf and Congressman Kirk and many other members of the 
committee. And we have been working very strongly in this area 
and we would be pleased to come up and speak to you more about 
it, to make sure that we are focused in the areas that you 
think are most important.
    It is important that we support the Christians, and that we 
support the Syrian communities. We are currently working in 
health, in education, in vocational training, which is very 
important, and in micro-enterprise development. And through all 
of these programs, we are trying to encourage the integration 
of this community into the government structure and into the 
justice system. So, we would be pleased to have further 
discussions on this with you.
    Mr. Knollenberg. Just a follow-up. The U.S. commitment in 
northern Iraq and the religious minorities, I believe, is very, 
very important. I happen to have about thirty-five thousand 
Chaldeans in my district. You may be aware of that. This 
funding is the first step in a long process to secure the 
region and the people and USAID's work with local Iraqi 
communities is very critical to ensuring that this funding is 
not misused. And I cannot stress enough, and I am sure you 
agree, that with the importance of the government and local 
organizations working together, you can comment on that or I 
can finalize or ask another question on top of it. But, it 
seems to me that would be your view, as well?
    Ms. Fore. It is. Using local organizations is the key to 
development. Development must be long term. It must be done in 
coordination, and integration with the people of the community. 
That is the way that development works best.
    Mr. Knollenberg. And then on to another point, I cannot 
help stress enough the importance of the Iraqi-American 
community, such as the one--and they are spread around the 
country to a great extent. I believe the grouping that is in my 
district, maybe is it number two, in terms of the country? I am 
not sure about that, I guess. But, it certainly is a sizable 
grouping. And I strongly believe that the people in my district 
have ideas, too, and we talk to them quite frequently. They 
have ideas and contacts in Iraq that can only benefit, I 
believe, our efforts in northern Iraq. Would you agree with 
this, yourself, and have you or others within USAID met with 
these groups?
    Ms. Fore. I have not yet met with them. But, as you speak, 
I would very much like to. We are encouraging public-private 
partnerships. We think there is an enormous benefit from 
utilizing the diaspora, who have come to America and who want 
to help their homelands, because, as we were talking earlier, 
it is people helping their own nations that will build them. 
So, we would like to reach out.
    Mr. Knollenberg. They are very enthusiastic, I can tell 
you, back home. Another question--you can imagine that. Another 
question, this is on the blockade of Armenia by Turkey and 
Azerbaijan. It has begun to create some extreme circumstances 
for the country of Armenia. However, it seems the 
administration continues to decrease the economic assistance 
request for Armenia. This is a question I will bring up with 
the Secretary of State, at the appropriate time. But, I thought 
you might have some thoughts on this. Last year, Congress 
approved some sixty million for Armenia. And how does the 
administration expect Armenia to compete in the region with 
dual blockades and so little assistance from the U.S. I just 
thought I would get your thought on that.
    Ms. Fore. Armenia is a very important country for us. It 
has shown great strides in recent years and it is one of the 
success stories that we have in the world and in the region. In 
Fiscal Year 2008, Armenia received an increase in funding and 
therefore per capita has the highest foreign assistance rate 
for Europe and Eurasia. There is an MCC program there. It is in 
its second year. So, these programs together are integrated and 
help to move Armenia forward.
    Mr. Knollenberg. And I do know, yes, there is an MCC 
agreement there and I am very strongly approving of that, too. 
I think that is something that, even though the money has been 
decreased, diminished, I believe we are on the right track with 
that idea----
    Ms. Fore. Good.
    Mr. Knollenberg [continuing]. About accountability and the 
rest of it. So, I will stop with that. I think I am pretty 
close to the end of time. But, thank you, Madam Administrator.
    Ms. Fore. Thank you.
    Mrs. Lowey. Thank you. Why do not we go to a question of--
--
    Mrs. Lowey [continuing]. With the time that we have.
    Mr. Israel. Madam Administrator, perhaps one of the few 
agreements that I have with the Bush administration on foreign 
policy is its proposed civilian reserve corps, a group of 
trained civilian teams with skill sets in nations with no 
functioning governments. I was--this would be embodied in the 
Office of the Coordinator for Reconstruction and Stabilization, 
CRSS. I was in Afghanistan last month and I was more at a place 
called Musa Cola. A week after I left Musa Cola, there was an 
operation that regained Musa Cola for coalition forces and 
people of Afghanistan. We had originally coalition forces that 
had taken Musa Cola from the Taliban and the Taliban took Musa 
Cola back from coalition forces and now coalition forces have 
taken Musa Cola back and I am told that is possible that the 
Taliban will take it back again.
    And when I was talking to some of our special forces about 
Musa Cola, I said is the local population pro-Taliban. They 
said, no, sir, they are not pro-Taliban, but they are good 
betters. And they know that we may be going in and we will 
build a bridge and we will teach them some governance, but that 
we are not there to stay. We are going to leave and then the 
Taliban will come back, blow up the bridge, and kill the 
people, who supported the bridge builders.
    A military solution can never be permanent. A military 
solution is not always the most effective way to secure long-
term stability. Sometimes, you need to kick in doors; 
sometimes, you need to rebuild houses. And I have always 
believed that one of our deficiencies is not tapping into the 
enormous potential of civilians around the country with trained 
skill sets, who are willing to be deployed to these areas to 
build the bridges and teach maintenance and teach engineering 
and build schools and train teachers. This need, I think, would 
be filled with the SCRS, 248.6 million dollars, the best 
bargain that we could possibly get, at seventeen hours in Iraq. 
The same seventeen hours in Iraq, we can deploy civilians all 
over the world in countries that need them.
    I was very pleased with the letter that you sent me on 
December 10th, in which you indicated that the State Department 
is seeking to create a five-hundred person civilian reserve 
corps, to help meet an urgent need of the United States to ease 
the burden on our armed forces, who have been obliged to take 
on reconstruction tasks due to lack of available resources 
among the civilian agencies of the federal government. And you 
note Secretary Rice has tasked SCRS with making the CRC a 
reality. You, also, note, USAID fully supports these efforts 
and has been fully involved in the interagency process that 
approve these measures. USAID will be a key partner in the 
formulation and implementation of plans for stabilization 
operations.
    I want to thank you for that letter and just ask you to 
elaborate on your support of this effort and ask what this 
committee could do to ensure its success.
    Ms. Fore. Thank you, very much, Congressman Israel. It is a 
very important program and I thank you, very much, for your 
support. I think all of us saw that after 2001, the 
vulnerability that we have as a nation when there are failing 
states in the world. And the Civilian Stabilization Initiative 
is a very important initiative for this country to address this 
need.
    We have also watched how the military has a surge capacity 
that can move as we need it and where we need it. We do not 
have that in the civilian side. USAID has had a long and really 
remarkable experience in doing humanitarian work and having 
emergency teams that head out and they are able to save time 
and money and lives, because they are fast, they are well-
trained, they are experienced, and they are used to doing this 
all around the world. They can mobilize in twenty-four hours or 
forty-eight hours and it is a very important capacity.
    And this Civilian Stabilization Initiative carries some of 
that within it. It would allow for an active response corps, a 
standby response corps, and a civilian reserve corps that can 
go anywhere it is needed in the world. I think it would 
certainly benefit the United States. USAID, with its long 
history, would be approximately forty percent of the active and 
the standby corps and that makes it very much a strong partner. 
We are trying to share best lessons learned among all of the 
civilian agencies, because many agencies have capacities, as we 
were speaking about earlier, that we need to integrate our best 
practices and strengthen them. But, I think it will serve this 
country well and your support is very much appreciated.
    May we come back to you about ways that you can help us? 
Authorization is, of course, most wanted.
    [The information follows:]

                   Civilian Stabilization Initiative

    To implement National Security Presidential Directive 44 (NSPD 44), 
the Reconstruction and Stabilization Policy Coordination Committee 
(PCC) established four sub-PCCs and two working groups in November 
2007. USAID co-chairs three of the four sub-PCCs, and one of the two 
working groups. It participates in all processes led by the Office of 
the Coordinator for Reconstruction and Stabilization (S/CRS), including 
the development of policy documents through the PCC and various 
exercises to test tools and systems. In addition, USAID is currently in 
the process of developing recommendations on how best to contribute to 
two of the S/CRS-led interagency Readiness Response Corps--the Active 
Response Corps (ARC) and the Standby Response Corps (SRC).
    USAID would like to ensure that this interagency process 
strengthens USAID's leadership role in development and humanitarian 
assistance, that has included transition, reconstruction and 
stabilization activities. USAID will continue in this leadership role 
under the Interagency Management Structure through the coordination 
mechanisms that the interagency is developing through S/CRS' 
facilitation. However, there are several areas where the Subcommittee's 
offer of assistance will be appreciated to ensure the success of the 
civilian stabilization initiative. These are:
    (a) To support NSPD 44 as well as USAID's Development Leadership 
Initiative and efforts to rebuild and strengthen the Agency, it is 
important that S/CRS provides funding for all costs related to new 
employees who will be part of the Active Response Corps (ARC).
    (b) In addition, S/CRS should provide the salary and all support 
costs of USAID's existing employees when they are called to serve as 
part of the interagency Standby Response Corps (SRC).
    (c) Since USAID will be providing critical expertise and field 
experience needed to ensure the success of NSPD 44, and providing 
approximately 38 percent or more of the interagency workforce of the 
Active Response Corps (ARC) and the Standby Response Corps (SRC), it is 
important that USAID has a voice in all key interagency decision making 
process that affects its core mission, strategic priorities, staffing 
and budgeting.
    As such, USAID wants to ensure that the following language is 
included in H.R. 1084: ``in consultation with the Administrator of the 
United States Agency for International Development.'' USAID fully 
supports the added emphasis on coordinated planning and the use of 
existing training capacities in the U.S. Government.

    Mr. Israel. That will be fine. Thank you, Ms. Chairman.
    Ms. Fore. Thank you.
    Mrs. Lowey. Congressman Crenshaw?
    Mr. Crenshaw. Thank you, Madam Chairman. Let me ask you a 
similar question I asked. The MCC was here yesterday and I 
asked them, when they enter in a contract, what part does the 
country's efforts to stop human trafficking play in the 
contract. And the administrator said, that there are criteria 
that they look at. One of the criteria is ruling justly and 
part of ruling justly is trying to do something about human 
trafficking and he kind of talked about there might be twenty 
or thirty issues under ruling justly. And, obviously, the MCC 
is concerned about it and I think we all ought to be concerned 
about it. It is kind of the dirty little secret that is finally 
coming to light that this goes on around the world in today's 
world.
    But, if the United States is going to be the leader in this 
campaign against human trafficking, we have federal laws that 
say we can deal with countries to stop the humanitarian, non-
humanitarian aid, if they are not working in that regard. We 
have the TIPS list that shows there are efforts being made and 
I think the results are being found. But, still, we have a 
contract with countries that are on the watch list.
    And so, my question to you is similar, when you decide to 
give assistance through the USAID, what part does it play in 
the country's efforts to work against this? And then it makes 
sense that we ought to maybe do more, if that is one of our 
criteria and that is part of our federal legislation to deal. 
What are you all doing and what can we do better to raise the 
visibility about this issue, to do more to try to bring it to 
an end?
    Ms. Fore. Congressman Crenshaw, thank you, very much, for 
that question. I think it is an area that all of us have been 
working hard on trying to find the best ways to get at the 
issue. Our funding, as you know, goes towards a number of 
areas, the three Ps. Prosecution, protection and prevention are 
very important and we are working in countries where we see the 
highest rates of problems and concern. It is an issue that we 
have been thinking about, also. We have tried to use more 
public-private partnerships.
    I believe you know that we have a program now with MTV 
Europe, in which they have a number of programs in trafficking 
that are shown on the media and television in South Asia, in 
Europe, in many of the other centers, so that we can try to 
make this an effort that is not just government and government 
contracts, but it is something that we all carry as part of how 
we do business, both in the public and private sector. But, I 
would welcome further discussion on this with you and welcome 
your suggestions and ideas on ways that we might increase the 
visibility and the importance within our program.
    Mr. Crenshaw. Thank you.
    [Recess.]
    Mrs. Lowey. I will proceed. Very good. Thank you. Madam 
Administrator, I have noted the increased resources in the 
President's request for many health and development programs. 
However, on the humanitarian aid side of the ledger, there are 
significant cuts. And, unfortunately, we find ourselves 
perpetually under-funding the disaster account and then seeking 
funding through supplementals to make up the shortfall. This 
year's budget request for OFDA is $298 million, $131 million 
below the Fiscal Year 2008 enacted level, and $275 million 
below the Fiscal Year 2007 level, when funding from 
supplementals is included.
    In light of the continuing needs in Iraq, Afghanistan, and 
Africa, the resources in the request are not only insufficient 
to meet current requirements, but also leave us without funds 
to respond to unanticipated crises, including natural 
disasters. And the $298 million in the President's request 
would allow the agency to respond to less than thirty-five 
events, when, on average, the United States has responded to 
nearly eighty crises a year. How do you justify this?
    Ms. Fore. Madam Chairwoman, thank you for bringing up this 
area. It is an area that is always a challenge. As you know, 
with humanitarian responses, there are many things we do not 
know when we are putting our budgets together. So, this request 
for 2009 is exactly the request that we had last year. We do 
rely upon supplementals to increase this during the year, 
because it is the way that we can meet unanticipated needs, as 
well as needs that are ongoing. It is probably not the best way 
to do this, but we manage together to, at the end of the year, 
meet the humanitarian needs. But, we look for help in 
supplementals.
    Mrs. Lowey. Well, I guess the question I would ask is this 
a case of USAID requesting and OMB rejecting?
    Ms. Fore. Since this is exactly what it was last year, I 
think there is----
    Mrs. Lowey. But, it is unrealistic.
    Ms. Fore. Yes, there is a conversation that goes on and it 
is our policy----
    Mrs. Lowey. Okay. We talked a lot, I did and others did, 
about the strategy in Africa that is not balanced. I certainly 
have supported the tremendous increase for HIV/AIDS. In fact, 
we have gone above the President's request, and I do think that 
this will be an important part of this President's legacy. 
However, while overall funding for Africa is increased in the 
President's request, funding for development assistance is down 
by $33 million, funding for maternal and child health, family 
planning, and infectious disease programs in Africa is 
decreased by $153 million from the Fiscal Year 2008 enacted 
level. And, again, to repeat, I am strongly supportive of the 
HIV/AIDS number. And we have worked to increase it above the 
President's request, as you know, in the past five years. But, 
I am very concerned that to truly help the Africans tackle the 
challenges they face, we must not cut funding for complementary 
and critical programs.
    So, I wonder what you are doing to pursue a more balanced 
government strategy in Africa that will ensure sustainable 
long-term growth in the continent. As you review all the 
programs in Africa, what types of assistance do you believe is 
most lacking in our programs that you would like to see 
increased?
    Ms. Fore. Thank you, very much. Yes, Africa has been a 
focus for this budget and we are requesting a twenty-five 
percent increase for Africa in the budget from the FY 2008 
request. Health programs are a very important part of our 
request. However, we seek a balance in our programs. HIV/AIDS 
and your support for HIV/AIDS, as well as your support for 
education, are important, because education and health must 
work together to be effective for increasing healthy families 
in Africa. The child survival, the maternal child healthcare, 
and the family planning numbers are where they were last year 
in the request but lower than enacted. And our concern is that 
we have a balanced portfolio. There are many needs. It is a 
difficult budget. But, it is also important that we have 
health, education, economic growth, and democracy and 
governance. If there were two areas that we would like to see 
increased for Africa, it would be economic growth and access to 
funding and skills for entrepreneurs, because we feel that this 
could really encourage stability in African countries, as well 
as help in democracy and governance. There are many countries 
in Africa that are undergoing elections and preparation of 
voters and candidates and programs that encourage municipal 
government are all very important for us in Africa.
    Mrs. Lowey. Welcome back, Mr. Rothman.
    Mr. Rothman. Thank you.
    Mrs. Lowey. You are next.
    Mr. Rothman. Thank you, Administrator Fore. Pleasure to see 
you here and thank you for all of your service. Last year 
during our hearing about the Fiscal Year 2008 budget, both my 
colleague Mr. Kirk and I asked your predecessor, Randall 
Tobias, about funding that USAID provided to the Al Quds 
University, which has groups affiliated with designated 
terrorist organizations on its campus, such as the Islamic 
University in Gaza, which is controlled by Hamas, a designated 
terrorist organization, and American Near East Refugee Aid 
(ANERA), which works with the Islamic University. These reports 
derive from an article that appeared in the Washington Times 
last March, prompted the USAID Inspector General Donald 
Gambatista to conduct an audit of the agency that concluded in 
December of 2007. The audit was aimed at determining whether 
USAID had sufficient controls and vetting procedures in place 
to prevent U.S. taxpayer dollars from being funneled to 
terrorists. In a nutshell, the study found that USAID currently 
receives a failing grade on this effort. One of Mr. 
Gambatista's conclusions was that USAID's policies, procedures, 
and controls are not adequate to reasonably ensure against 
providing assistance to terrorists. He also noted that USAID 
did not always follow federal laws when approving aid to a 
Hamas-controlled university in Gaza and noted that USAID funded 
terrorist-linked groups on at least two occasions between 2003 
and 2005.
    Madam Administrator, what steps is USAID taking to ensure 
that Palestinians' universities are providing neither direct 
funding nor even in-kind or indirect assistance to student 
chapters of terrorist organizations on campus?
    Ms. Fore. Thank you very much for your concern, correct 
concern that we share, that it is important that our funds go 
into the right hands and certainly do not go into the hands of 
terrorists or those who wish us ill. I have looked at the 
Inspector General's report. All of the items that have been 
brought up have either been remedied or we are in the process 
of remedying them.
    Mr. Rothman. May I ask how so, Madam Administrator? What 
steps have you taken and to address which problems?
    [The information follows:]

                         Partner Vetting System

    Yes. The Inspector General's report recommended that USAID expand 
its anti-terrorism vetting to worldwide use. Even before the Inspector 
General's report was released, we had initiated a process for the 
design, approval and implementation of a Partner Vetting System. This 
system will enable USAID to compare data received from assistance 
applicants to data maintained on intelligence databases.

    As you know, last summer we put out a request to the public 
for their comments on some proposed rules. We put out three 
requests between July and October. We have received more than 
150 responses to this proposal.
    We are now talking to Members of Congress and staffs as 
well as to our nongovernmental organization partners, because 
all of us must do this together as a group to be vigilant and 
smart about how we are approaching our funding.
    So these discussions we anticipate will continue for the 
next few weeks. We anticipate initial implementation of this 
system in West Bank and a few other countries.
    Mr. Rothman. May I follow up with one more question? I 
apologize for cutting you off. I want to make sure that I just 
get this aspect in. This may be one of the items addressed by 
your efforts, and that is a requirement for students who 
receive scholarships or other forms of direct assistance from 
USAID to withhold from joining a terrorist organization on 
campus or signing onto an anti-terrorism pledge.
    Now I know that for some Americans, curtailing First 
Amendment rights by preventing students from joining a club 
that advocates one thing or another would be distasteful. But 
imagine if this were a club that we were directing money for 
scholarships for children to join the KKK or the Nazi Party? 
You can just keep the hypothetical going with clearly bad 
actors and bad organizations, and these terrorist organizations 
literally advocate suicide bombings of civilians and others.
    So I do not think it would be inappropriate for us to say, 
if you want a scholarship from USAID, you must sign a pledge 
that you will not participate in any terrorist organizations, 
and that includes student organizations that advocate 
terrorism. Is that something that you would look favorably 
upon?
    Ms. Fore. Yes, it seems reasonable that we should look at 
every possible avenue. We must be vigilant and smart in all 
areas.
    We want to encourage students who wish to study in the 
United States to come to the United States. So the databases, 
the knowledge on the ground among our private voluntary 
organization partners, the knowledge of their professors, of 
their universities, all of that should be part of what we can 
do to help understand more about this. But we will certainly 
consider your suggestion as well.
    Mr. Rothman. Thank you very much. Thank you, Madame 
Chairman.
    Mrs. Lowey. Mr. Kirk.
    Mr. Kirk. Thank you. Let me just say that--Christians, and 
I just want to say that we will be happy to have you converse 
if you want to follow up on your commitment.
    I just would say, and we talked about this before, if we 
briefly look at the projects identified by USAID as being 
excluded in various places, right now we could not find about 
30 percent of them. So, if we could nail that down, that would 
be a very good thing.
    On what my friend from New Jersey outlined on the 
terrorist--system, the NGO community would be very much against 
you on this, but I think from what you are hearing from the 
subcommittee is that we are very much with you on handling 
that.
    I just would recall that the former head of Hamas was a 
professor there, a number of people on the board of the Islamic 
university. Gilad Shalit was reported to be held in this U.S.-
funded institution, which is very worrying, and then Fatah 
police finding 2,000 AK-47s, hundreds of RPG launchers and 
ammunition, and then the discovery of five Iranian citizens 
arrested, including an Iranian general, training activists to 
manufacture explosives in the universities U.S.-funded 
chemistry lab.
    So it is my understanding, in the fiscal year omnibus, we 
put in a denial of funding, also with respect to private 
entities or educational institutions who have a principle 
offeror or a board member or trustee of an individual who is 
determined to be involved in advocating terrorist activity, or 
determined to be designated as a foreign terrorist 
organization. Of course, Hamas has that, and so anybody who is 
with the party and, therefore, a board member of these 
organizations, gets the ax. I hope that we can go in that 
direction.
    Can you lay out the schedule for implementing the terror 
vetting system?
    Ms. Fore. Yes, thank you, Congressman Kirk. We will be glad 
to work with you on the programs.
    Mr. Kirk. You got it from all three barrels here.
    Ms. Fore. Thank you, yes, and I appreciated having the 
chance to talk with you yesterday in your office.
    Currently, the program that we have for the West Bank 
includes in it the vetting of the top few board members for any 
contract that is going to be receiving money. So the current 
vetting system has this in it, and your strong support and 
vigilance has encouraged that.
    The new vetting system that we are now talking about with 
Members of Congress, staffs, and the private voluntary 
organization community, would be even stronger, which is why 
our intention would be to initially implement it in West Bank 
as well as in a few other countries.
    It is important that we roll this out in the areas of 
highest risk. Our current programs, the IG has come back to 
look at a second time and feels that they are currently 
adequate. But we think it is prudent to go a step deeper.
    We are also working with other agencies--Department of 
State and other Federal agencies--because we, as the United 
States Government wish to have the same strong guidelines, so 
that we are being smart and capable in both searching our data 
bases, as well as in the restrictions that we are putting on 
for who gets funding within areas of highest risk. We need to 
have a full tool kit.
    Mr. Kirk. Right, and I want you to have that full took kit. 
So I want you to have more than a pilot. Are you going to have 
more than a pilot of October 1st of 2008? Is the worldwide 
system going to be deployed by the time our next Appropriations 
Bill is likely to bring in to force, or do we need to order you 
to do that?
    Ms. Fore. We certainly hope that we will have it in place.
    Mr. Kirk. I take that as a yes; we do need to order you to 
do it?
    Ms. Fore. Well, I think we will get there on our own.
    Mr. Kirk. Worldwide?
    Ms. Fore. Worldwide--but as our discussions progress in the 
next two months, I think we will know how we are faring; so if 
we could come back to you on that?
    Mr. Kirk. Yes, Madame Chair, since we kick in October 1st 
or something like that, we have so many problems with the 
integrity of the system as it is, that it would be great action 
by this committee just to mandate it, for a worldwide 
deployment by fiscal year 2008, so we can get out of these 
kinds of embarrassments.
    I have one last thing, Waziristan. We obviously think that 
is where Bin Laden is hiding, so it is very important.
    This committee, in report language, designated $10 million 
for Waziristan in fiscal year 2006, and $20 million for 
Waziristan in fiscal year 2008. Currently, U.S. bilateral 
disbursements in Waziristan is a single digit oval number.
    Our total contribution to UNICEF in Waziristan is $100,000 
for fiscal year 2007. Our expected contribution to UNICEF in 
Waziristan for fiscal year 2008 is $500,000. Then you have this 
enormous mountain of the President's fiscal year 2009 request 
for the Fatah is $109 million.
    So the good thing is, you got it. You understand how 
important this region is. But we are going from zero to hero in 
one fiscal year. So can you talk about capacity? Because this 
committee has now mandated that you be spending money and 
executing programs in Waziristan since Fiscal Year 2006, and 
you have not been able to do it. Now you are coming forward 
with $109 million, just for the Fatah part of Pakistan.
    Ms. Fore. We share your concern about the Fatah region. We 
have $150 million that we are now programming. We now have all 
of the contracts coming on line. So they are starting as we 
speak.
    This is a very important part of Pakistan on the far 
western border, up against Afghanistan. It is a critical area. 
The approach for funding within the frontier is to focus on 
health, health clinics, education, schools, roads, as well as 
economic development, so encouraging businesses and 
microenterprise and world development.
    I think we have the capacity. We are working with local 
nonprofit organizations. We are working with organizations that 
have worked with us elsewhere in Pakistan. We also now have 
assigned a Deputy Mission Director in Peshawar to oversee this. 
So I think we will be able to program this year, and the 
programs are coming online as we speak.
    Mr. Kirk. Madam Chair, I just would say, we all support 
this assistance. But I do remember when we funded U.S. 
development in counter-narcotic activity in Hellman's Province, 
which is where half of all the world's heroin is grown, in 
2005, AID contracted with Kemonicks to carry out the 
alternative development.
    They got shot at one afternoon and bugged out, and the U.S. 
Government took the whole year off then, in a place where half 
of all the heroin on the planet is grown.
    My worry is, and we have raised this, if we are effective, 
the first thing that will happen is, our contractors will be 
shot at. If we take the Kemonicks' approach and just bug out, 
then we have not done anything. So I am just worried about that 
scenario unfolding again.
    Mrs. Lowey. I think the safety of the AID workers is a real 
issue.
    Mr. Kirk. Right, well, here is the problem. The U.S. 
military was still stuck there. So they were like, we need 
these foreign assistance programs to carry out our mission and 
make it safer. But if the civilians bug out, they just leave 
the troops there.
    Mrs. Lowey. You know, this is something that I think we 
could, Mark, certainly have a greater dialogue on. Because 
certainly in the Fatah region, North and South Waziristan, many 
of the experts feel that this is what the new leadership in 
Pakistan is focusing on. They know who are the good guys and 
who are the bad guys, and how you actually can identify who you 
can work with so you can continue doing the development work, 
which is really key. How you identify local NGOs may be the 
answer.
    But, of course, sending AID workers into dangerous areas, 
is a huge challenge.
    Mr. Kirk. I think we discussed this before; that a U.S. 
national, there is no way not to make that person a sensitive 
person. A foreign service national, a Pakistani contractor, 
politically is a very different animal. So if we go with 
Afghans or we go with Pakistanis----
    Mrs. Lowey. So you are agreeing?
    Mr. Kirk. Absolutely; my critical thing is the mission, the 
civilian mission needs to be carried out without anybody 
bugging out, because it is so important.
    Mrs. Lowey. To be continued, because Ms. McCollum has been 
waiting patiently. Thank you.
    Mr. Kirk. Thank you.
    Ms. McCollum. Thank you, and Madame Chair, thank you for 
your questions on the role of USAID. I am, like you, very 
concerned about USAID being a subcontractor for the MCC, 
PEPFAR, and the whole issue of going into a war zone or 
military conflicts, when USAID's focus was development aid, not 
reconstruction in the middle of a conflict. So I think we 
really need to have a serious discussion, and I know you are 
putting together the framework in which to have that discussion 
about who responds when, where and how and how to do it safely.
    But I would like to shift gears just a little bit. Food 
prices are up in the United States. I just talked to a member 
of the Canadian Parliament, prices are up there. I had a chance 
to be with some people from the Bundestag. They are up in 
Germany. They are up all over the world.
    The Financial Times has reported that WFP is warning of a 
new food crisis, spreading around the globe, due to high food 
prices. It says countries like Indonesia, Mexico, Egypt, and 
Pakistan are rationing food for the first time in decades. In 
politically sensitive countries such as Pakistan, these high 
food prices and hunger could quickly produce or add to 
instability.
    In the poorest of countries, high food prices are creating 
a new wave of devastating hunger. I just had a conversation 
with a friend who had spoken to some young adults in Malawi, 
who now are watching their bus fares go up, limiting the trips 
that they take, because of the cost of petrol prices. So they 
are watching their meager subsistence living challenged by what 
is going on with oil and food prices.
    So the high food prices are a humanitarian issue, an issue 
which will put USAID back even further than it already is on 
working to help countries develop. I would like to know how you 
are responding to this emergency crisis, and what in the budget 
is directed towards that crisis?
    Also, given your commitments to PEPFAR, the MCC, and other 
programs, do you have sufficient capacity to identify, and then 
to really be on the ground to respond appropriately to basic 
human development issues like hunger?
    3.5 million children's deaths are caused by malnutrition. 
It is not the only cause of preventable death, but it also 
lowers the level of schooling which this committee works on, 
and reduces economic productivity for the adults. Food 
insecurity undermines all the work and all the dollars that are 
put together by this committee and the American people to help 
folks.
    So I need to know what your long-term strategy is on this, 
to fight food insecurity. Because I am not seeing it in the 
budget, and I am very concerned as now you are having to 
provide databases to do what I think is proper to keep people 
from improperly accessing universities and teaching hate and 
violence. But that was not the mission or the role of USAID. 
That was other agencies' responsibilities. What are you doing 
on hunger?
    Ms. Fore. Thank you very much, Congresswoman McCollum. We 
are concerned with all of it as a development agency. Our reach 
is broad because development is broad. It is long-term. It is 
complex. It involves every segment of society. Food and food 
prices----
    Ms. McCollum. Madame, I only have a limited amount of time. 
I want you to get down to what you are doing. My faith-based 
community is concerned about it, too. I hope USAID is 
concerned. So tell me what you are doing.
    Ms. Fore. Food prices, as you know, have gone up around the 
world. So our purchasing power, the ability to feed the people 
that we currently are feeding has gone down.
    In our budget, we have put forth an amount of 350 million 
in the supplemental request. We seek supplementals, and we 
anticipate supplementals. We could use your help in fully 
funding supplementals.
    The second part that we would like to be able to do, is to 
do more local purchase of food. We anticipate that with ocean 
freight, with storage and handling, that we could purchase 
between 30 and 40 percent more food if we could purchase more 
locally. It is an area of great concern to us. People are 
hungry.
    Ms. McCollum. Madame, I understand that, and I have 
actually been fairly supportive on the issue, being from a farm 
state, about doing that.
    Ms. Fore. Yes.
    Ms. McCollum. You talked about a supplemental. Food prices 
have been going up since before the President submitted his 
budget. So in submitting that budget, you already knew you were 
not going to making the target of people we are serving right 
now.
    Supplementals are fine. But we should be budgeting on-line. 
I would like you to provide to the committee, how under-funded 
do you think this budget is already making you.
    Ms. Fore. Good, I would be pleased to do that; thank you.
    Ms. McCollum. I do not think this should be part of the 
supplemental, Madame Chair. I think we should do responsible 
budgeting here. If you know it is a problem, we should address 
it now.
    Mrs. Lowey. I think that is a good point, and we should 
continue the discussion. Certainly, I brought that up when it 
came to disaster assistance. I do not know if you were in the 
room at the time; maybe you had left.
    But the point that I made is very similar. The disaster 
assistance request from the Administration was quite a bit less 
than is realistic; something like 35 events, compared to about 
80 that are necessary.
    I asked the Administrator whether there was a dialogue with 
OMB, and who was opposing this. Because I know you would not 
have put forth a budget like that that was not realistic. So it 
is similar with this issue, and we can continue that 
discussion.
    So I think we can add that to the number that we discussed, 
thank you; Mr. Schiff?
    Mr. Schiff. Thank you, Madame Chair.
    Madame Director, I just have, first of all a question. As 
the Direction of U.S. foreign assistance, I assume that FMF is 
part of your portfolio that you have direct responsibility for?
    Ms. Fore. It is.
    Mr. Schiff. In your testimony, you mentioned that you are 
seeking significant increases to foster a well-trained Egyptian 
army. There is one subject matter I would like to start out 
with.
    Mrs. Lowey. I have to go to another hearing. So if you can 
be the Chair as well, that would be great. I shall return.
    Mr. Schiff [presiding]. You will have unlimited time to 
answer this question. [Laughter.]
    Mr. Schiff. I want to ask about the rationale for a 
significant increase to foster a well-trained Egyptian army. 
What is the external threat to which these funds are directed? 
Why does Egypt need all of these resources for its military?
    Is not the primary threat to the Egyptian government an 
internal threat, not an external one; and would we not be 
better off using a substantial portion of these resources, 
either for economic development within Egypt, which would 
probably be of a greater value to the Egyptian population, and 
also a greater value to us? Because I doubt the Egyptian 
population appreciates what we do for their military, or even 
knows what we do for their military.
    Also, in that respect, could these resources or a portion 
of them be better spent on other countries in the region that 
are facing growing threats from Al Qaeda, places like Tunisia, 
Algeria, Morocco, or elsewhere?
    We are talking about a very, very substantial sum. I have 
my own views about the importance of Egypt in the peace 
process, which is very substantial. But I think Egypt has given 
us less reason to be encouraged. It has been more apathetic 
than energetic on that front.
    So why devote so much resources to Egypt's military; why 
not more on the development side in Egypt, and why not more on 
the development side in the region?
    Ms. Fore. Thank you very much, Congressman Schiff. The 
foreign military financing portion of this request in 2009 is 
$1.3 billion, and the portion for Economic Support Funds is 
$200 million.
    The foreign military financing is at its historic level. 
This has been straight-lined, so that fiscal year 2008 and 2009 
are at the same level.
    Egypt has been and remains a long-time critical ally and 
partner for us in the United States. They are a very important 
country in their region, as you point out.
    The foreign military financing is coordinated with our 
friends in the Department of Defense. The Secretaries have both 
discussed it and its usages, and feel that it is very important 
that we maintain these levels.
    On the economic assistance side, we have seen great 
economic progress for Egypt. They have moved on privatization 
in the financial sector and in the real estate sector. There 
are making a strong push in education, as well as in democracy 
and governance. So I think we are using well the funds that we 
currently have programmed and that we anticipate in the 2009 
budget.
    Egypt also is beginning to help in the region, as a donor 
and as a colleague. This, I think, is important for stability 
in the region. We look forward to working with Egypt.
    But security is a very important part of development. They 
can work together. If a country is stable and if there is good 
security, it means the development and economic assistance can 
accelerate; that it can work faster.
    Mr. Schiff. If I can just make a brief comment, and then I 
have a second question. The fact that the Egyptian foreign 
military assistance is on a straight line and consistent with 
what we have done in the past is not a real persuasive point 
for me, considering that what we have done in the past has not 
produced very good results in the Middle East, as far as I can 
see. Doing more of the same is likely to give more of the same 
result.
    I do not think the problem in Egypt is that it does not 
have a strong enough military. The potential for instability in 
Egypt, I do not think is owing to the strength of its military. 
I think it is owing to the neglect of its population, and the 
slow progress it has made towards democratization. The military 
support does not do anything to address that and, in some 
respects, may even be counter-productive.
    So I know you are not in a position today to change 
Egyptian policy. But I think you are going to find an 
increasing number of Members of Congress raising this issue of 
pushing back on it and perhaps forcing a change, unless we see 
other changes on the ground in Egypt.
    Let me ask about one other policy issue. In your testimony, 
you mentioned that the aid to Pakistan will be aligned with the 
new situation in terms of what has resulted from the election 
process in Pakistan and other facts on the ground. Can you give 
us any indication today how you see that aid changing in 
character, as the situation in Pakistan has changed?
    Ms. Fore. Yes, Pakistan is another critical country for us, 
an ally on the Global War on Terror, and it is important for 
stability of the region.
    Our programming comes in several parts. About $600 million 
is used in Economic Support Funds and for military financing. 
It is focused on health and education and roads. But we are now 
putting double our assistance in governing justly and 
democratically. Because given the recent election, we want to 
try to help and support the people of Pakistan to be able to 
shape their government and their nation.
    I would anticipate that we will continue with that, as we 
have spoken with Congressman Kirk. We have $150 million that is 
being programmed now for the Fatah region. The Frontier region 
is increasingly important. It is a difficult and challenging 
environment. Our work there is in education and health but also 
in microenterprise and economic development.
    And then because of the earthquake assistance, we still 
have $50 million that we are programming that is helping out in 
rural development.
    All of this, as a whole, helps the development prospect for 
Pakistan, so that it can be peaceful and prosperous and stable.
    Mr. Schiff. I probably will have a follow-up that I want to 
get in another round, if we are able to; Mr. Chandler?
    Mr. Chandler. Mr. Chairman, thank you very much.
    Madame Director, thank you for your testimony and thank you 
for being here. I am going to, if I may, follow up a little bit 
on what Mr. Schiff was talking about, and get down to a little 
bit more detail.
    One of the main policy considerations in this budget 
request is fighting the global war on terror. One of our 
biggest allies, or certainly one of our few strong allies in 
the Middle East, is Tunisia
    Tunisia has a diverse growing economy. They are a leader in 
the Arab world in encouraging and guaranteeing women's rights. 
They have been a key ally of ours on the global war on terror. 
They have strongly suppressed Tunisian terrorists groups, and 
they are located right next to Libya and Algeria.
    I do not understand why it is that this budget suggests and 
asks for a 63 percent cut in Tunisia's budget; and you just 
talked about historical numbers and straight-lining Egypt. If 
Egypt is being straight-lined, why is Tunisia not being 
straight-lined?
    Ms. Fore. Thank you, Congressman Chandler. The budgets are 
never easy. There is never enough money to do all of the things 
that one would wish. So we have had to make choices and 
tradeoffs. Tunisia is economically a success story. Tunisia has 
been growing.
    Mr. Chandler. Is this the time to penalize them for their 
success though, in this kind of a volatile region, when they 
are an ally of ours and the FMF funding is the main one that is 
being cut, and they need that money, as I understand that, to 
continue to fight terror?
    Ms. Fore. Well, our proposal is as in the budget. We will 
go back and look at this and consider your thoughts on this.
    Mr. Chandler. Well, I wish you would. Because really, they 
are a strong ally of ours, and I do not think is the time; and 
we are not talking about much money. You know, we are talking 
about $7 million, roughly.
    But it is, I think, is a poke in the eye; and I do not 
think that we want to, at this point in time, poke in the eye 
an ally of ours in the Arab world, of over $7 million; thank 
you.
    Ms. Fore. Yes, this was not meant as a poke in the eye.
    Mr. Chandler. I am confident that it was not meant as a 
poke in the eye, but I think that it could be perceived as 
that.
    Ms. Fore. Yes, all right. Yes, we are celebrating their 
success. Thank you.
    Mr. Schiff. Thank you, Mr. Chandler. Mr. Wolf?
    Mr. Wolf. Thank you, Mr. Chairman.
    On the Egyptian issue, following up on Congressman Schiff, 
this is really not a question for you because I do not want to 
put you on the spot. You are not the Secretary of State, and 
you do not make those decisions.
    But there is a frustration, and of course the Congress 
capitulated and backed down in the last Congress on the whole 
Egyptian question. You do have an impact.
    We have gotten very little out of the Mubarak government. I 
think we have given them $50 billion since Camp David. I met 
with Ayman Nour's wife last year. Ayman Nour is still in jail, 
and the Administration really does not raise that case very 
much. Certainly, they may raise it privately, but it is not a 
public issue.
    Of course, in politics, when somebody says they are for you 
privately, but they are not willing to be for you publicly, you 
begin to wonder how much they really are for you.
    So we are really not getting it. I think Mr. Schiff makes a 
pretty legitimate point. I do not think it is going to change 
in this Administration. But hopefully in the next 
Administration, there will be a message sent, and hopefully you 
will be with us in the next Administration, in the McCain 
Administration. I think you will be able to play a very 
important role.
    The area that you can make a big difference is in the 
Coptic Christians. The Coptic Christians get very little of the 
economic assistance to Egypt. They are very faithful. They are 
very loyal to their government. They have been there forever.
    So if you can look to see, we have raised this issue 
before. Congressman Aderholt raised it and different people. I 
do agree with Mr. Schiff on that point. We advanced $200 
million last year, and I think it went down to $100 million. I 
think that was a Presidential waiver, which means, for all 
practical purposes, it is not going to happen. But if you could 
look at the Coptic Christian issue, I would appreciate it.
    Ms. Fore. I would be glad to do so.
    Mr. Wolf. On the issue of the Sudan refugees, in the 2008 
Bill, the committee allowed up to $5 million for permanent 
placement of personnel in Eastern Chad to help with the 
internally displaced people from both Sudan and the Central 
African Republic. What steps has USAID made with regard to the 
permanent residency in Eastern Chad of personnel?
    Ms. Fore. We have been looking at ways that we can increase 
our help to the internally displaced persons. We have begun to 
direct funding in that direction. Why do we not give you a 
briefing for what we have currently underway.
    Mr. Wolf. Okay, fine. And another issue that you may not 
want to cover publicly, what is the status of finding out who 
killed the AID employee in Khartoum?
    Ms. Fore. May I also ask to do that in your chambers?
    Mr. Wolf. Sure, sure. The last issue is I was part of this 
effort with SANFAR and others on this civilian stabilization 
initiative. There was a different name: Core Effort for 
Reconstruction.
    Where will that be in the State Department; and has there 
been some thought to taking it out of the State Department and 
having it connected to the NSC? Because if my understanding is 
correct, you not only have State Department people, but you 
have Defense Department people, Agriculture people, Civilian 
Affairs people, Justice Department people.
    Where will it be in the State Department, and has the 
Administration looked at something like FEMA, an independent 
agency, as a model? Espexcially given that you have such a wide 
variety of people from different agencies? Where will it be in 
the State Department now under this Administration?
    Ms. Fore. We have a number of initiatives I think that 
would help, and we should give you a briefing on what we have 
looked at and ways that we have approached it. There is to be 
one single command and control center, and that is so that if 
the President, if the Secretary of State says it is time to go 
here that the group goes, and that is very important.
    But all of the agencies are involved through the NSC 
process in looking at a situation to see if it is time to send 
people and in what skill area and how many of them and how soon 
so that there is a shared decision making body.
    The actual reporting structure within the Department of 
State is that the Coordinator for Reconstruction and 
Stabilization reports in to me as the Director of U.S. Foreign 
Assistance. And since approximately 40 percent of the people 
who respond will be coming out of USAID, that is also very 
synergistic; so that it is a rapid response capability, that 
will both utilize U.S. Government employees, as well as begin 
to trigger the civilian response team.
    Mr. Wolf. What is the status of the civilian response, 
whereby the Administration was going to bring in people who had 
retired from Government? What is the status now?
    Ms. Fore. Well, we have requested authorization language, 
and that is here before Congress. In the 2009 budget, we are 
requesting funds to be able to hire 250 people in the active 
response corps, 2,000 people in the stand-by response corps, 
and 2,000 in the civilian response corps.
    Mr. Wolf. But that has not been set up, as of yet?
    Ms. Fore. It has not. We have a request. We have organized 
it. We have a single command and control system. We have 
organization within the Federal Government. But we do not, as 
yet, have the funding to move forward.
    Mr. Wolf. Okay, thank you very much. I appreciate that. 
Thank you, Mr. Chairman.
    Mr. Schiff. Thank you, Mr. Wolf; I wanted to just close one 
loop on Egypt, and then ask you about a couple of other 
matters.
    I think we have seen in Pakistan some of the risks 
associated with the strategy where we embrace one person as 
being an indispensable player, to the neglect of the political 
process, democracy, other people in Pakistan.
    That house came close to crumbling down. I think there is a 
risk that we do the same thing in Egypt; that we have put all 
our bags in the Musharraf basket, father or son.
    That much is in Pakistan, where by getting so completely 
behind one person, we did not endear ourselves to the religious 
parties. But we did alienate the secular parties and the 
democracy reformers. Because it was apparent to them that we 
valued our alliance with one person more than we valued the 
growth of democracy in Pakistan.
    I think many of the secular reformers and non-secular 
reformers in Egypt probably take the same view; that we are all 
talk, and then we become very pragmatic when it is in our 
national interest to do, and democracy is chucked out the 
window.
    So I think we should be very careful about that, and I 
think we should re-evaluate whether these assumptions we have 
had for a long time are, in fact, assumptions that are 
improving our security or are taking away from it.
    In Pakistan, I think what you are talking about is very 
sensible and smart, to make these investments in democracy 
building, given what has taken place there.
    Within the scope of the FMF funding though, I am interested 
to get your thoughts on whether we should consider a stronger 
focus in that funding; not for the Pakistani military, vis-a-
vis, a confrontation with India, but rather strengthening the 
military and its ability to deal with Al Qaeda.
    Now I know we have got some funding from the Northwest 
Providence. But still, I think we have a substantial amount 
going to things which do not improve the security of the United 
States, do not really improve the security of Pakistan, that 
are arrayed against an ally of ours in India. Why not condition 
more of that aid in being directed against Al Qaeda, rather 
than being directed against India?
    Ms. Fore. This deserves a deeper discussion. Our current 
policies and foreign assistance programs do focus on education 
and health and roads and economic empowerment, so that people 
see that there is an alternative.
    Pakistan has been a strong ally in the Global War on 
Terror, and we do reach out in a number of ways with the 
military, and we can talk about that further.
    I think for all of our programming, it is important to see 
that there has been a change and, I mean, that there has been 
an effect, whether it is in Pakistan or Afghanistan or Egypt. 
There are stories of long-term achievements, that foreign 
assistance has been beside the leaders of the country.
    Our policy is to work with all leadership, and we think 
that is also important, as countries do change in time and 
leadership does change. But you need leadership at every level.
    Mr. Schiff. I appreciate that. I am not sure it is 
responsive to my question though about whether we ought to 
consider within the FMF conditioning more of that assistance to 
the fight against the Taliban, rather than the fight against 
India. Do you want to comment on that?
    Ms. Fore. Well, perhaps we could talk about that in your 
offices?
    Mr. Schiff. Okay.
    Ms. Fore. Thank you.
    Mr. Schiff. Let me ask, if I could, about one other area 
that is of great interest to me, and that is the support for a 
free press around the world.
    How much a part of your portfolio is that, and what are the 
agencies under your jurisdiction involved in the promotion of 
free media? What more can we do? Are there adequate programs 
out there to support it?
    We have seen what has happened in Russia and other 
countries; not only with the murder of journalists and the 
impunity for those murders, but in shutting down radio stations 
and the shutting down of dissenting views. We see that in our 
neighbors to the south of us, in South America.
    What institutions are there, and do they have adequate 
support?
    Ms. Fore. It is a very interesting area. It is one that we 
can never have enough support for, because media as you well 
know can change people's hearts and minds, and they have a 
chance at getting information.
    We work in Russia. We work in Burma. We work in Venezuela. 
We work with non-governmental organizations, who are thoughtful 
in how the media can encourage greater information and freedom 
for people to be able to forge their own thoughts about what 
their nation could become.
    Cuba right now is one of the areas that we are programming 
in and for, and it is our commitment as a nation that we 
encourage people to have information about their government and 
about their country and about their processes.
    They also need to develop institutions. In many of our 
foreign assistance budgets, we do not have enough funding for 
building institutions. So we try to look to public/private 
partnerships in the area of media, to try to help us in 
building institutions.
    But this is a long-term process, and it is one that we have 
been deeply engaged in. Around the world, we spend about $1.7 
billion on democracy. Within that is much work in media. But it 
is always an area that we can use more assistance and help from 
the private sector to be partners with us.
    Mr. Schiff. Thank you; Ms. McCollum.
    Ms. McCollum. I would like to commend USAID in its 
environmental work; especially some of your cooperative efforts 
around the world, like the Forest Service International 
Programs. I had an opportunity and went in a country to see 
some of them, and they are truly amazing projects that really 
engage people in a very positive, positive way.
    But environmental issues are becoming more and more 
increasingly developmental issues, as we talk about 
sustainability. You probably saw in the United Nations' 
development programs last Human Development Report, which was 
entirely focused on fighting climate change.
    The report calls climate changing, and I quote from it, 
``the defining human development issue of our generation.'' 
That is the end of the quote. It goes on to warn us that long-
fought hard decades of development that was making progress is 
at risk of being completely wiped out by the negative effects 
of global climate change.
    In short, climate change is a developmental issue. 
Biodiversity, clean energy, and climate change all appear in 
the development assistance budget this year, and I commend you 
for that. But I would like to know more specifically about some 
of the plans and how you are going to be funding those plans; 
and is there an over-arching strategy to tackle climate change 
issues in development countries, and not just a few targeted 
countries. So where are you on that?
    If you could answer that question, and de-forestation 
usually is something that comes up right away and is often the 
cause of greenhouse gas emissions. So I would like to hear a 
little more in-depth on that; thank you.
    Ms. Fore. Thank you very much; yes, development and 
environment are integrally inter-related. De-forestation often 
occurs because there are poor farmers that need agricultural 
land, and they begin to burn the forests. That is question of 
livelihoods.
    So development, agriculture, environment, and water 
resources and biodiversity and natural resource preservation, 
as well as sensitization and understanding, are all linking to 
the overall encouragement of environment and development, so 
that there are places that are protected by their populations. 
Do we do this in all countries? No, we do not, because we 
simply do not have the funds to do that.
    We do target in some areas, such as in Congo. There is a 
very large forest and park that is an important asset for 
Africa--and the Amazon, that has Congressional support. We also 
understand that the Amazon is a very important area.
    So we target, in some cases. We end up having to make 
choices. But for environment and climate change and adaptation, 
agriculture, biodiversity--all of it is inter-linked in the 
natural resources of the development world. It is a very 
important area in this budget. We have $333 million that we 
have proposed in the environment, and $125 million for 
biodiversity.
    Ms. McCollum. Thank you.
    Mrs. Lowey [presiding]. I know that we could go on. But we 
appreciate your appearance before us. Again, we appreciate your 
energy.
    There are so many questions that have been raised today, 
and I know that we will look forward to your responses and 
continuing the dialogue as the process moves forward.
    But I thank you very much for your time. This concludes 
today's hearing on the U.S. Agency for International 
Development's Fiscal Year 2009 Budget Request. The Subcommittee 
on State, Foreign Operations, and Related Programs stands 
adjourned. Thank you very much.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                       Thursday, February 28, 2008.

               U.S. DEPARTMENT OF STATE OPERATIONS BUDGET

                                WITNESS

PATRICK F. KENNEDY, UNDER SECRETARY OF STATE FOR MANAGEMENT, DEPARTMENT 
    OF STATE
    Mrs. Lowey. Good morning. The Subcommittee on State, 
Foreign Operations and Related Programs will come to order. I 
want to welcome Under Secretary for Management, Pat Kennedy. 
Ambassador Kennedy is responsible for the people, resources, 
facilities, technology, consular affairs, and security of the 
Department of State, both in the United States and overseas. 
When do you sleep?
    Mr. Kennedy. When possible.
    Mrs. Lowey. In my judgment, Mr. Ambassador, few 
responsibilities at the Department of State are more critical 
to our diplomatic efforts around the world than the portfolio 
you manage. You oversee a budget that under the President's 
fiscal year 2009 request totals nearly $10 billion, an increase 
of 20 percent over fiscal year 2008, excluding emergency 
appropriations.
    More than any time during my 20 years in Congress, 
diplomacy and development assistance are being viewed as key 
components of our national security.
    In a speech last November at Kansas State University, 
Secretary of Defense, Robert Gates, echoed this sentiment when 
he said: ``what is clear to me is that there is a need for a 
dramatic increase in spending on the civilian instruments of 
national security, diplomacy, strategic communications, foreign 
assistance, civic action and economic reconstruction and 
development.''
    I certainly agree with this assessment. However, I know 
that you and I agree that we need to do more than just add more 
diplomats, more development staff, more foreign aid dollars, if 
we are to truly transform our foreign policy institutions to 
meet the challenges of the 21st Century. We need to increase 
and enhance the skills and knowledge of our diplomatic and 
development staff to effectively interact with the communities 
in which they serve.
    They must get outside the Embassy walls and engage in 
people to people diplomacy, and they must execute a 
comprehensive and integrated U.S. government strategy to meet 
the diplomatic and development needs of the host nations. I 
would dare say, and I know my colleagues would agree with me, 
some of the finest, most committed and skilled people I have 
ever met are those that we will need at the Embassies as we 
travel and see the programs which we are responsible for.
    The President's fiscal year 2009 budget requests over 1,543 
new positions at the Department of State. While I acknowledge 
the need for enhanced education, training and security 
personnel, I am concerned by the limited number of new 
positions requested to expand our public diplomacy efforts 
globally.
    A Pew Global Attitudes Project Survey of 47 nations 
released last June found anti-Americanism to be ``extensive.'' 
The survey found that favorable ratings of the U.S. were lower 
in 26 of the 33 nations for which trend data was available. How 
can we realistically expect to reverse this trend with just 20 
new positions?
    I understand that many of the new positions are aimed at 
giving you an excess of staff over current requirements to 
allow for staff to rotate into training. Yet I believe that 
Congress already provided funding for this reason in response 
to the request for over 1,000 positions above attrition for the 
Diplomatic Readiness Initiative between fiscal years 2001 
through 2004.
    Unfortunately, these staff instead went to fill the needs 
in Iraq and Afghanistan, as well as other posts, and once 
again, the Department has no excess staff for training. I hope 
you will elaborate on how you intend to avoid a similar 
situation from happening again. I am pleased to see the robust 
increase for passport and visa services--448 positions under 
the Border Security Program, and an additional 130 positions 
under the Worldwide Security Protection Program.
    I hope that these staff increases will reduce passport 
delays resulting from the Western Hemisphere Travel Initiative 
and will decrease wait times affecting students, business 
professionals and others seeking travel visas to the United 
States. Your budget also seeks 351 positions for a new Civilian 
Stabilization Initiative.
    Both Secretary Rice and Secretary Gates have highlighted 
this initiative as vital to building up the civilian response 
capability in postconflict situations such as Iraq and 
Afghanistan.
    And both have pointed to the decline of such expertise in 
USAID as being one of the reasons why this initiative is 
necessary. Yet, instead of rebuilding this capacity at USAID, 
the agency responsible for postconflict assistance, this 
initiative is developing this capability at the Department of 
State.
    I am concerned that we are burdening our diplomats, as we 
have our military, assigning responsibilities to them that fall 
outside their core mandate and expertise. It is interesting to 
contrast the over 1,500 new positions being requested to the 
State Department on top of the over 1,100 new positions that 
were requested in fiscal year 2008 with a total of 300 new 
positions for USAID.
    In fact, we are told that the new Development Leadership 
Initiative seeks only 1,000 positions over three years at 
USAID. Finally, I will note that while these initiatives to 
strengthen our long-term staffing and training capabilities are 
important it is this Committee's responsibility to review the 
full request for both personnel and assistance programs within 
the 150 account.
    In that light, I am concerned that humanitarian assistance 
programs are severely underfunded in the President's request. 
It is nearly impossible for Congress to fund increases for 
operating costs when humanitarian needs are not met. If you are 
going to protect the D&CP budget, then the Administration needs 
to do a better job of ensuring that the budget addresses 
humanitarian and development assistance requirements.
    I also want to spend some time specifically on worldwide 
security protection and our Embassy compound in Baghdad, and I 
know my colleagues do as well. The safeguarding of our 
diplomatic and development personnel in Iraq and around the 
world is a top priority. The fiscal year 2009 budget requests 
an increase of $194 million and 200 positions for worldwide 
security protection.
    I hope your testimony will include an update on the 
implementation of the Secretary's Panel on Personnel Protection 
Services in Iraq October 2007 report, including the projected 
timeline for occupancy of both the housing and offices in the 
New Embassy compound in Baghdad. Ambassador Kennedy, there are 
a great many issues we could discuss. The challenges facing you 
and this Committee are staggering.
    I am particularly concerned that the Department of State 
and USAID lack the capacity necessary to respond to the 
diplomatic and development crises of our day and that the 
Defense Department, sharing these concerns, has stepped in to 
fill the void. Before we move to your testimony I want to yield 
to the Ranking Member, Mr. Wolf, for any statement he may wish 
to make.
    Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair. I want to welcome 
Secretary Kennedy. I think it is his first time before the 
committee. There are a number of issues which we will just put 
in the record, and we can ask you questions. I think it is 
important that you are there now, and I would recommend that 
the Department think in terms of how their relationship was 
with Mr. Armitage and Grant Green. They were always up here.
    They were always available. I think the committee, 
certainly the subcommittee, takes the whole oversight issue 
very, very seriously. There have been some management problems 
we will ask about with regard to the Embassy and the issue with 
the contractors. Lately, the State Department is almost AWOL 
with regard to the Hill.
    This is not meant to be a criticism of you because I know 
you are new. If you are really looking for a model with regard 
to the relationship with the Hill I think it was certainly 
preferable during the days of Armitage, who you could always 
get on the phone, always get an answer, always get something 
done, and also, Grant Green, who I guess you are filling the 
capacity that he had.
    So anyway, we welcome you. We look forward to working with 
you and hopefully, you know, the administration will be 
aggressive on all these issues to the very last day, January 
20, 12:00 in the afternoon. At that time, what happens, 
happens. So anyway, we welcome you. I look forward to asking 
you some questions. Thank you, Madam.
    Mrs. Lowey. I would love to hear your testimony. I think 
what Mr. Wolf was saying should be listened to carefully. I 
remember that not only did he respond to my calls, but he 
called me and kept us up to date on any change of direction 
that was taking place, and it was very much appreciated.
    Mr. Wolf. Yes. For instance, Negroponte, I spoke to him 
about six or seven months ago, and he said well, you know, what 
do you think about this issue with regard to the aid to Mexico? 
I said I have some concerns about it. The Mexican government is 
corrupt, there are some problems going on. He said I am going 
to have Secretary Shannon come up and see you, he will be back 
on Wednesday.
    That has been six months ago, and Shannon has never been up 
here. It is like there is no give and take. I am really 
concerned that some will say well, we are in our last year, we 
really do not care what the Congress thinks. I think what the 
Chair has said is important. Armitage would call, bipartisan, 
Republican, Democrat, come up here and deal with the problems.
    Mrs. Lowey. We welcome you again, Ambassador Kennedy, and 
we look forward to your testimony. You know your full statement 
will be in the record, so feel free to proceed as you wish. 
Thank you.
    Mr. Kennedy. Thank you very much, Madam Chairwoman, Ranking 
Member, other members of the committee. I welcome the 
opportunity to lead off for the State Department of the 
President's fiscal year 2009 budget request and discuss with 
you the portion of the request relating to management and 
consular issues.
    Please let me begin by expressing how much we at the State 
Department appreciate the support you have given us, and I very 
much, as you both indicated, look forward to working with you 
this year as you consider our budget request. When I held 
positions previously in other administrations I was a regular 
visitor on Capitol Hill. I welcome the opportunity to interact 
with you or with any members of your staff.
    That is my personal style, and I welcome that. I have 
requests pending with both of you for meetings with you to go 
over what I regard as the most important issues. I know how 
busy your time is up here, but whenever you have the time 
available, I am at your disposal seven by 24.
    Mr. Wolf. How about tomorrow?
    Mr. Kennedy. I will be here in the morning, sir. I will get 
with your staff, and I will see you tomorrow morning. As the 
Secretary's principal management advisor, my responsibility is 
to make sure that the personnel, infrastructure and management 
resources of the Department are deployed to best support the 
Department's national security mission.
    Our diplomatic platform, which supports more than 70,000 
people from more than 40 agencies at 268 posts worldwide who 
carry out the Department's diplomatic and foreign mission, must 
be fully staffed, properly trained and appropriately supported 
with critical infrastructure, including technology, personnel 
security and secure facilities in order to accomplish their 
difficult mission.
    Funding for this diplomatic platform is key to America's 
success in the war on terror where the State Department serves 
as the front line in the protection of our borders and our 
national interests. The Department must have the requisite 
resources to pursue diplomatic solutions for the most pressing 
national security needs.
    I would like to ask you to act quickly on the balance of 
funding requested in the fiscal year 2008 global war on terror 
supplemental, and I know that Deputy Secretary Negroponte will 
be appearing before you next week to discuss this. The funds 
are currently and urgently required to continue the 
Department's diplomatic efforts in Iraq.
    The supplemental also addresses critical security and 
construction requirements in Afghanistan, support for 
international organizations functioning in Iraq and Afghanistan 
and peacekeeping missions in Darfur, as well as other important 
foreign assistance efforts. This funding is necessary to our 
ongoing diplomatic mission, and I ask for your support.
    In discussing our budget request I want to first emphasize 
the importance of our funding request for additional human 
resources, as the Chair has mentioned. Over the past four 
years, Congress has been very, very helpful in providing funds 
for positions in the security and consular arenas.
    We are again requesting funding for additional positions in 
this field, 200 for diplomatic securities' worldwide mission, 
and 448 funded through fees for our border security programs 
necessitated by the growing workload in both passports and 
visas. We have not been as successful in recent years in making 
our case to the Congress to fund other positions.
    In fact, over the past four years we have not received 
funding for any positions beyond security and consular affairs. 
The Secretary, as reflected in the President's budget request, 
sees a critical need for additional positions in those areas 
this year.
    The Department request supports 520 new positions funded 
through the Department's diplomatic and consular appropriation 
as follows. Three hundred positions for language training. The 
Department's global engagement requires significant 
enhancements in critical foreign language capability such as 
Arabic and Chinese.
    Language designated positions in critical language needs, 
which are often the hardest to teach, sometimes taking as much 
as two years of effort, have increased by 170 percent since 
2001. We have requested funds for 300 positions to expand the 
number of Foreign Service personnel in language training. 
Reports by the Government Accountability Office and other 
groups have confirmed the significance of the Department's 
staffing deficits related to language requirements.
    Increased interagency training. Our request includes funds 
for 75 new positions to allow for increased participation by 
Foreign Service personnel in interagency professional training 
and joint military training. Our workforce will benefit greatly 
from opportunities at the National Defense University and other 
similar military institutions that will facilitate a 
coordinated U.S. government response to critical challenges.
    As you have noted, Secretary Gates has also called upon the 
State Department to move forward and particularly work with our 
military colleagues. Activities over the next decade are 
clearly going to be interagency activities, and bringing up the 
skills and capacities of our personnel through training jointly 
with our military colleagues and those other agencies involved 
in foreign affairs activities I believe is a critical component 
in advancing our national agenda in this way.
    Liaison with military counterparts. Foreign Service 
officers working as political advisors have long provided four 
star military commanders with insight into how military plans 
and actions relate to the full spectrum of U.S. international 
objectives. We have requested funds for 50 new political 
advisor positions in 2009 to provide additional support to one 
and two star military commanders around the world.
    More and more activities overseas have both a civilian and 
a military dimension, and placing additional State Department 
personnel at military commands will reap global benefits.
    Enhanced interagency capacity for national security. 
Executive Order 13434 in May of 2007 mandated a creation by all 
U.S. government entities of a cadre of national security 
professionals within the U.S. government prepared to address 
cross-cutting national security and increased collaboration 
among agencies.
    We have requested funds for 75 new positions to allow us to 
fully participate in the education, training and professional 
and interagency details and exchanges envisioned by that 
Executive Order.
    Public diplomacy personnel. These 20 positions will improve 
public diplomacy efforts within the framework of the national 
strategy for public diplomacy and strategic communication. I 
might add that the additional language qualified personnel will 
also and significantly enhance our public diplomacy efforts as 
well because an officer who has a language capability increases 
our productivity in all critical areas including public 
diplomacy significantly.
    This request also includes, as in previous years, Foreign 
Service pay compensation reform which would create a single, 
global based pay scale for the Foreign Service as part of a new 
performance-based pay system. A single, global pay scale would 
eliminate the pay disincentives caused by the loss of locality 
pay upon transfer to foreign assignment.
    This sizeable and growing financial disincentive, whenever 
a member of the Foreign Service transfers from Washington to 
overseas their salaries are now cut by 20 percent, has a 
lasting impact on Foreign Service personnel who spend the 
majority of their careers overseas.
    Diplomacy is a difficult, sometimes dangerous business, and 
the sacrifices made by Foreign Service personnel and their 
families are real. I am asking that you provide the necessary 
funding, subject to future authorization, to address this 
problem.
    In a new approach, we are also requesting funding for 351 
positions for the civilian stabilization initiative. Over the 
past two years the Department of State has led the work of 15 
agencies to determine the full civilian capacity needs of the 
United States government to respond to the stabilization and 
reconstruction challenges that we face and will continue to 
face over the next decade.
    The $249 million requested for this initiative will 
support, train, equip and deploy an interagency civilian 
response corps composed of active and standby components and a 
new civilian reserve of outside experts. This initiative 
provides a full complement of U.S. government civilian 
personnel that we need to respond to the national security 
stabilization challenges of the next decade.
    Within 48 hours after a crisis erupts it will allow us to 
deploy rule of law experts and law enforcement experts from 
State and Justice, economic experts from Commerce and Treasury, 
border security experts from Homeland Security, and equally 
importantly, the conflict and recovery expertise of officers 
from the United States Agency for International Development.
    This initial response can be supplemented as needed within 
60 days by deployment of a substantial number of civilian 
reservists drawn from the private sector and state and local 
government agencies from across the country, such as police 
officers, judicial advisors, agronomists and municipal 
administration experts.
    This initiative is strongly supported throughout the 
interagency, notably by the Department of Defense, but also by 
other foreign affairs agencies including USAID. All recent 
endeavors including our activities in Iraq and Afghanistan 
clearly highlight the great need for enhanced coordination 
across the federal government in stabilization and 
reconstruction activities, and this initiative will help us 
achieve this goal.
    Let me highlight a few other major management areas. The 
request provides $1.163 billion for worldwide security 
protection to increase security for diplomatic personnel, 
property and information in the face of international 
terrorism. The funding will extend the program to upgrade 
security equipment and technical support, information and 
systems security, perimeter security and security training.
    This funding will also support the worldwide local guard 
force protecting diplomatic missions and residences. Funding 
increases will meet new security demands in all regions and 
implement the visa and passport security strategic plan to 
safeguard the important integrity of U.S. travel documents.
    Because people continue to be the single most important 
factor in deterrence and response to terrorist acts, the 
funding will support the previously noted 200 new security 
professionals.
    The request includes $414 million including revenue from 
fees for the central fund investments in knowledge management 
and information technology.
    The ability of the Department, as the Chair noted, to 
support transformational diplomacy, information sharing, right 
sizing efforts and e-government initiatives depends 
increasingly on robust, secure information technology. Funding 
increases in 2009 will support the State Messaging and Archive 
Retrieval Toolset project, diplomacy through collaboration and 
enhanced infrastructure that will provide American diplomats 
with any time, anywhere computing.
    The fiscal year 2009 budget provides $2.124 billion in fee 
revenue for the Border Security Program. This program helps 
secure American borders against illegal entry by terrorists and 
others who threaten our homeland. At the same time, it 
facilitates the entry of legitimate foreign visitors and 
students.
    Revenue from the machine readable visa fees, enhanced 
border security program fees, the Western Hemisphere travel 
surcharge and visa fraud prevention fees will fund continuous 
improvements in systems, processes and programs. These fees 
will also fund 448 additional positions required to address 
rising passport demand associated with the Western Hemisphere 
Travel Initiative and rising visa demand including increases 
related to the border crossing card renewals.
    The Department is determined to prevent the passport 
backlogs of the past, and I am personally monitoring our 
passport production on a weekly basis, but we require these fee 
funded resources to be successful in our efforts.
    The request also provides $1.79 billion to continue 
security driven construction projects and to address the major 
physical, security and maintenance needs of U.S. Embassies and 
consulates. This total includes $844 million for the Capital 
Security Construction Program to continue replacing diplomatic 
facilities at our most vulnerable overseas posts. Fiscal year 
2009 proposed projects includes new Embassy compounds in Santo 
Domingo, Dakar, Maputo and Malabo. During the fifth year of our 
Capital Security Cost Sharing Program, U.S. government agencies 
with personnel abroad will contribute $455 million to 
construction from their budget.
    The request also includes $105 million to upgrade compound 
security at high risk posts and to increase protection for 
potential targets, such as schools. Finally, the request 
includes $841 million for ongoing operations including major 
rehabilitation.
    These programs are essential to protect the investment in 
real estate, which are currently valued at over $14 billion, 
and to keep more than 15,000 properties in good working order 
so they remain viable platforms for our international efforts.
    In conclusion, while we need the positions I have 
discussed, we also need added funding. Overall, in fiscal year 
2008 we have a very constrained operating situation.
    The bulk of increases in state operating funding this year 
has been absorbed by worldwide security upgrades and 
international organizations, two absolutely essential programs, 
but leaving little or no resources to enhance our core 
diplomatic activities. This situation has been made much more 
difficult by substantial and growing exchange rate losses.
    As you have all seen in the paper, the euro yesterday 
reached the point where it takes $1.50 to purchase one euro. In 
addition, overseas inflation, in many countries exceeds that in 
the United States. These external factors directly impact the 
buying power of our resources overseas with detrimental 
effects.
    The Department has been unable over the past couple of 
years to provide well-earned wage increases for many of our 
locally engaged staff abroad. We have not had the necessary 
resources to fully train our personnel in requisite language 
skills for the positions which we have. The Department has not 
had the resources to adequately address maintenance for our 
overseas facilities.
    These are but some of the choices we are forced to make 
when our primary operating account, Diplomatic and Consular 
Programs, is funded below the request level. I ask that you 
keep these concerns in mind as you review our fiscal year 2009 
budget request. I know that the Congress, and in particular, 
this subcommittee, understands that diplomacy and foreign 
assistance programs are critical to reaching enduring solutions 
to challenging national security issues.
    It is from this perspective, as Under Secretary for 
Management, that I ask for your continued support in 
strengthening our diplomatic platform at home and abroad. I 
pledge that I am available 24 hours a day, seven days a week, 
to answer any questions that you or your staff may have. I will 
redouble my efforts in that regard. Thank you very much, and I 
look forward to any questions that you might have.
    [The information follows:]

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    Ms. Lowey. Thank you very much. In your comment about the 
choices you were forced to make is one of my first questions 
that I would like to address. I understand that the report you 
provided the Secretary last May of your review and 
recommendations for staffing at Embassy Baghdad recommended 
that the USAID Inspector General staff no longer have an office 
in Baghdad.
    Furthermore, the report recommended the USAID Inspector 
General staff be based in the regional office in Jordan and 
that only two people at a time from that office would be 
provided space on a temporary basis in Baghdad. Now, I 
appreciate the importance of carefully reviewing and allocating 
agency staff space in Baghdad.
    In last Spring's conference report accompanying the fiscal 
year 2007 emergency supplemental this Committee expressed its 
concern about the growth in staffing at Embassy Baghdad. I know 
we still have many concerns which we will discuss today. We 
directed the Department to undertake a staffing review.
    However, I want to assure you that it was not the intent of 
this committee to restrict the USAID IG employees in Baghdad. 
First of all, I understand that the full Baghdad Embassy 
staffing report was requested by Committee staff but that the 
Department considers it an internal document and has refused to 
make it available to this Committee. I find this position 
frankly extraordinary, and difficult to believe.
    It was this Committee that directed the review be 
undertaken in the first place. How can you justify not making 
the full report available to this Committee? USAID currently 
manages over $1.5 billion appropriated in fiscal years 2006 and 
2007 for programs in Iraq. At a time when effective development 
programs are so key, if you could explain to me the rationale 
for moving USAID's program oversight personnel out of Baghdad, 
I would appreciate it.
    Maybe you could explain to me whether the USAID IG 
concurred with your report's recommendation, whether they think 
they will be more effective working out of Jordan now that you 
took their offices away. What about the USAID Administrator? 
Did she concur? In other words, who made this decision?
    Mr. Kennedy. Madam Chairwoman, I made the recommendation.
    Before I assumed this position I was requested by the 
Secretary of State and Ambassador Crocker--actually, when I was 
leaving my previous position at another agency and on my way 
back to the State Department I was asked to go to Iraq, review 
the entire staffing operation there and to make a 
recommendation to the Secretary as to what were the most 
logical balance of staff in Baghdad, in the region, and those 
positions that could be returned to Washington because of the 
desire to keep the number of staff in Iraq as low as possible, 
given mission, cost and security concerns.
    Ms. Lowey. Now, just to refresh the Members' minds, could 
you tell us about the total number of staff in Baghdad?
    Mr. Kennedy. The total number of staff in Baghdad in terms 
of all agencies is over 700. That is in Baghdad.
    Ms. Lowey. So you do not think the oversight responsibility 
warrants more than two people on site, and you think they can 
function just as well from Jordan, and if you could explain to 
me whether the USAID Administrator concurred?
    Mr. Kennedy. Madam Chair, the program oversight people 
remain in Baghdad. It is the auditors and the inspectors who 
would split their time between Amman, Jordan and Baghdad.
    Ms. Lowey. Maybe you can explain. Does not an inspector 
inspect, look at the program to see what is happening?
    Mr. Kennedy. AID has in effect a two tiered system. They 
have program officers who actually run the program.
    Ms. Lowey. Correct.
    Mr. Kennedy. And then they have inspectors who come in 
review the program.
    Ms. Lowey. The IG, part of the IG operation.
    Mr. Kennedy. The IG.
    Ms. Lowey. And you only want two of those in Baghdad?
    Mr. Kennedy. On a rotating basis. Two would come in, review 
whatever programs they were involved with, then they would 
leave and two others would come in from the Regional Office. 
AID uses regional inspectors general extensively. For example, 
there is a large AID Regional Inspector General's Office in 
Cairo, Egypt. So this is not something that is an unknown and 
untested----
    Ms. Lowey. So did they concur? Did they say that is a great 
idea?
    Mr. Kennedy. No, ma'am, they did not concur.
    Ms. Lowey. Okay. And what about the USAID Administrator? 
Did she think it was a great idea, too?
    Mr. Kennedy. She accepted the report.
    Ms. Lowey. In other words, she did not think it was a great 
idea, she accepted the report.
    Okay. Let me just say this. Given the number of staff and 
given our concerns, frankly, in this Committee and the whole 
Congress about the lack of appropriate oversight, until people 
like Stuart Bowen and the IG began doing their work it took two 
and a half years, frankly, before a computer system was even 
put in place.
    Stuart Bowen, who is one of the, most impressive people, 
finally put that system in place. Now that the USAID IGs are 
assuming more of the responsibilities we will have to continue 
that discussion because it does not make any sense. You did 
say, for the record, that the IGs did not concur?
    Mr. Kennedy. That is correct. Yes, ma'am.
    Mrs. Lowey. Thank you very much. Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair. Thank you for your 
testimony. I hope and believe the committee, will support the 
effort with regard to the pay and with regard to the language. 
I think that is very, very important. I do believe the 
gentleman who was interviewed on that one news show who got up 
and said he did not want to go to Baghdad was really not very 
good for the foreign service.
    I am not sure where he is now, but he was not your best. I 
know your people have paid a tremendous price, I know they live 
in very difficult conditions, so I commit that we will do 
everything we can with regards to the pay, particularly now 
that the dollar is weak, and the language. I think you are 
making a very powerful point.
    Also, I have always supported, and I hope this committee 
does, too, the Embassy security issues. I think they are 
absolutely critical after what we just saw took place in 
Serbia, after we saw the young AID employee gunned down in 
Khartoum. These people are risking their lives, so I think it 
is important that we do that.
    I was disappointed--when I was in Baghdad, we were out in 
the region the first week of January, I took a tour of the 
Embassy, and the people never said anything about the fire 
problems. Then when I got back here there was a Washington Post 
story. We asked for a GAO investigation and then a Secretary.
    Can you bring us up to date on the Embassy in Baghdad and 
when you expect to be in with everything being certified?
    Mr. Kennedy. Yes, sir. As you know, I was sworn in this 
position formally on December 10 and had taken over informally 
after confirmation a few days before. I have served twice in 
Iraq, so I am well aware of the situation there.
    Having been out there both for the staffing survey that the 
Chair referred to and the security survey that the Secretary 
also had me as part of a panel last October, the first thing I 
knew I had to do was to get my hands around all the issues 
related to the situation in Iraq. I have committed to dispatch, 
and I have dispatched, a series of teams of professionals from 
the Office of Overseas Buildings Operations.
    These are fire marshals retired from various departments 
around the country who are experts on fire safety, electrical 
engineers, mechanical engineers, construction engineers. We are 
now engaged, sir, in the process that we do for any new embassy 
building. This is called accreditation and inspection.
    We review every system in the building, whether it is 
mechanical, electrical or fire safety, and ensure that the 
system is in full working order and that the system has been 
built according to the contract specifications. So that review 
and inspection process is ongoing at this moment.
    Teams are out there. The first fire inspection team was out 
there and did discover that there were a number of situations 
where the installation of fire safety equipment, sprinkler 
heads, alarms, and whatever, were not done according to the 
contract specifications and the fire code. They prepared lists. 
Those lists have been given to the contractor.
    Mr. Wolf. When do you think you will be in?
    Mr. Kennedy. Pardon me, sir?
    Mr. Wolf. When do you think you will be in the Embassy?
    Mr. Kennedy. I think we will be in the annex and the 
housing probably in April if everything goes according to plan. 
There is a second issue related to the principal building, the 
chancery building itself. If I might, sir. When this building 
was constructed, when the compound was planned in early 2004, 
it was assumed that when we got to 2008 there would be certain 
situations on the ground in Iraq which clearly are not present 
now.
    The Commanding General of Multi National Forces, General 
Petraeus, now has an office literally feet from Ambassador 
Crocker. Ambassador Petraeus and Ambassador Crocker have 
discussed this, and, when Ambassador Crocker and the Embassy 
move out of the palace, which has to be returned to the 
government of Iraq, General Petraeus has said in order to keep 
going the excellent joint effort by the State Department and 
the Defense Department, the U.S. mission and the U.S. military 
forces, he and Ambassador Crocker should be co-located. 
Ambassador Crocker and Ambassador Petraeus wish to remain co-
located, have offices nearby, so they can continue that effort.
    I have dispatched a team to Baghdad, and they are out there 
now and I am waiting for their full report in consultation with 
other agencies, to figure out what changes we have to make in 
the chancery building and using the second annex building in 
order that General Petraeus and some 250 of his staff who were 
never planned to be here at this time in 2008 can remain co-
located with Ambassador Crocker.
    So in terms of the chancery, unfortunately, sir, I cannot 
give you an answer now, but as soon as the team has come back 
and reported to me and the engineering work is complete I will 
notify your staff, and will be glad to come up and see you and 
tell you when Ambassador Crocker and Petraeus will continue 
their joint efforts in the chancery.
    Mr. Wolf. Okay. One other question. I know my time is up. I 
see that you are a graduate of Georgetown. I did a letter to 
Georgetown the other day raising the issue of the Saudi Prince 
who gave $20 million to Georgetown University. As you know, the 
Saudis have funded radical Wahhabism around the world, and 
fifteen people who were on those airplanes that killed a number 
of people from my congressional district were from Saudi 
Arabia.
    Does it trouble you of a Saudi Prince giving money to 
Georgetown University? I know the relationship that the State 
Department has with Georgetown, the number of foreign service 
officers. One, does that trouble you, and two, do any foreign 
service officers go through that center that has been funded by 
the Saudi Prince?
    Mr. Kennedy. Sir, on the second part I will have to get 
back to you in an answer. I have been, you know, in New York or 
overseas for most of the last couple of years except the last 
two where I was at another government agency, and so I will 
have to get you information on that.
    Speaking personally, I believe that religious freedom, 
tolerance and respect for all religions, tolerance and respect 
for all people without regard to race, creed, color, sex or 
national origin are very important to me, and I believe in the 
foundation of this nation.
    Therefore, I do not think that we should be involved in any 
way in any entity in the United States supporting any kind of 
radical ideology which challenges the rights of people to 
practice their faith or their beliefs as they feel appropriate.
    Mr. Wolf. Well, I appreciate your comments and completely 
agree. I think it would be very difficult for that center if it 
is funded by a Prince who is connected to Wahhabism to then 
conduct a study as to the impact of Wahhabism with regard to 
those issues that you have raised. I thank the Chair for that.
    Mrs. Lowey. Mr. Schiff is next, but I am going to take the 
liberty of the Chair if you do not mind just following up 
because I think it is so important.
    You mentioned that Ambassador Crocker and General Petraeus 
like working together, correct, two feet away from each other; 
now in the Palace, correct?
    Mr. Kennedy. Yes, ma'am.
    Mrs. Lowey. It is going to take about a year to retrofit 
this embassy space, I understand. Is that correct?
    Mr. Kennedy. That is an outside, worse case estimate.
    Mrs. Lowey. Outside, worst case?
    Mr. Kennedy. Yes, ma'am.
    Mrs. Lowey. Every response to my question has been over a 
year.
    Mr. Kennedy. When Ambassador Crocker moves, as I mentioned, 
General Petraeus wants to move. General Petraeus needs space to 
process classified information. We built that embassy to 
process classified information for a limited number of people.
    I have consulted with other U.S. Government agencies, and 
that is why, Madam Chair, that the team that I just mentioned 
is out in Baghdad right now, reviewing the space, reviewing all 
the issues related to converting space from unclassified use to 
classified use.
    When I receive the report of this team, I will then be able 
to tell you how long it will take. We will not proceed on that, 
without consulting with this committee and others on that 
regard.
    So I need to come to you with a proposal that says, we can 
do this in this timeframe; and, as well, DOD has said that they 
are willing to fund a chunk of this effort.
    Mrs. Lowey. I bring that up, and I wanted to bring it to 
the committee's attention because I assume that you will share 
with us the number of staff that will be displaced in this 
compound--it would be USAID staff, other State Department 
staff, Federal agency employees--by moving Petraeus's group.
    I want to make it very clear. My point is not that it is 
not a good idea. But it is my understanding, and perhaps you 
can share with us the current estimate that most people are 
saying it will take. I understand it will take a year to 
retrofit and make this area classified.
    So we are talking a year from now. This next year is going 
to be pretty critical, in terms of the U.S. relationships and 
what we are doing in Iraq, and what the Iraqis are or are not 
doing.
    So I guess maybe those who are saying we are going to be 
there for a long, long time understand what this plan is all 
about. But my colleagues, that means that the General's staff 
and Crocker's staff will stay at the Palace; and this Embassy 
compound that was so critical will not be able to be occupied 
until a one year from now.
    Mr. Kennedy. If I could, Madam Chair, it is true that 
Ambassador Crocker's staff, some of them, and General 
Petraeus's staff, will have to remain in the Palace if this 
plan is approved, for whatever time it takes to make that space 
ready so that General Petraeus can engage in classified 
processing.
    That does not mean, however, two things. It does not mean, 
if the plan is approved, that there will be any civilian staff 
displaced from the new compound. There is sufficient space in 
the third building on the compound in order to move anyone who 
has to leave the chancery.
    Mrs. Lowey. By the way, if we denied the funding, would 
that accelerate the work that is being done there? It is about 
$30 million, I understand, to retrofit.
    Mr. Kennedy. That is, as I said earlier, the ballpark 
estimate, which is why I have dispatched the team out there. 
Because I do not work on ballpark opinions. I work on specifics 
that I can justify to this committee. That is, yes, the 
ballpark estimate, of which DOD will pay a significant portion 
of that money. Because the work is being done for their 
benefit.
    Mrs. Lowey. How much will the Department of Defense pay for 
the retrofitting, an estimate?
    Mr. Kennedy. I would say at least half. But again, I need 
the architectural and engineering study that is now ongoing to 
come back and render its report to me.
    Secondly, Madam Chair, there are three principal office 
buildings in that compound, plus the housing. As I said to 
Representative Wolf a few minutes ago, when the fire, safety, 
and the other inspections are done and I issue the Certificate 
of Occupancy, we would move into the principal annex on the 
compound, and we would move into the housing.
    Mrs. Lowey. Well, perhaps what we should do is turn to Mr. 
Schiff.
    Mr. Wolf. If the Chair would just yield, I think it is 
important that we help them to get in there as quickly as 
possible. Because we have lost some people who have been in the 
other facility. It is not protected from mortars--although the 
mortaring has stopped, to a certain degree. But I think it is 
important.
    Also, some of those trailers, if you have been in them, are 
not in very good condition. The space is horrible, and a lot of 
our people are suffering in a very tough environment. So I 
think as much as we can, we should help get them in to that 
facility, because there has been a tremendous expenditure of 
funds, whereby they can begin to use that facility.
    Mrs. Lowey. I just want to make it clear that based on the 
report of staff, who just got back from Iraq and were briefed 
and then briefed me, I was told that to retrofit and make this 
a classified building--would take about a year and costs about 
$30 million. So I just bring it to our attention, and I think 
we are going to need some additional information.
    Mr. Kennedy. You are correct, Madam Chair, that is the back 
of the envelope estimate. I always try to make sure that any 
number that is discussed is broad enough to encompass all 
circumstances. But we do not yet have the architectural and 
engineering work done that will enable me to present you with a 
formal proposal for your review.
    Mrs. Lowey. And I hope that will include whom of the 
embassy staff, USAID people, et cetera, will be displaced, and 
where will they be relocated. I hope not all in Jordan.
    Mr. Kennedy. I can give you that answer now. No USAID staff 
will be displaced, because they occupy the principal annex 
building.
    There is a second annex building, and the personnel from 
the Chancery building, who were displaced by the co-location of 
Ambassador Crocker and General Petraeus, would move to the 
second annex; all of which are on the compound, all of which 
are constructed according to the diplomatic security standards 
that have been presented to you. So they will all literally be 
on the same compound. They will be in either one building or 
another. But it is all the same compound and all the same 
security.
    Mrs. Lowey. Thank you very much, and I am in agreement with 
Mr. Wolf. We do not want a delay, and if the reconfigurations 
will delay for about a year, then I think this is a real issue 
that we should have another discussion about.
    Mr. Kennedy. Absolutely.
    Mrs. Lowey. Mr. Schiff.
    Mr. Schiff. Thank you, Madam Chair; Ambassador, thanks for 
joining us today. I have one area that I would ask you about, 
and then I have a request I would like to make of you.
    I have been here for almost eight years now. I think the 
most important speech I have heard anyone make in those eight 
years was the speech that Secretary Gates made at Kansas State 
in November of last year.
    Among the central points in his statement, he said, 
``Funding for non-military foreign affairs programs has 
increased since 2001, but it remains disproportionately small, 
relative to what we spend on the military, and to the 
importance of such capabilities''--half a trillion dollar on 
the Defense budget, compared to a Foreign Affairs budget for 
State that is about $36 billion less, he pointed out, than they 
spend at health care at the Pentagon.
    We have 6,600 foreign service officers. He pointed out that 
that is less than the personnel for one aircraft carrier strike 
group. I thought that was a pretty dramatic way to compare the 
investment we are making in soft power versus hard power.
    What he concluded was, ``What is clear to me is that there 
is a need for a dramatic increase in spending on civilian 
instruments of national security--diplomacy, strategic 
communications, foreign assistance, civic action, economic 
reconstruction and development.''
    He pointed out not only the irony but probably the heresy 
of a Defense Secretary devoting a major address to why the 
State Department budget in effect needed to be dramatically 
increased and that we were disproportionately spending money on 
his department as opposed to another.
    I would assume that Secretary Rice agrees with the 
sentiments that he expressed. My question is, what kind of an 
increase are we seeing in the budget for the State Department, 
and the budget for our foreign service officers in the budget 
for soft power, compared to last year's budget?
    If you have the Secretary of State and the Secretary of 
Defense both advocating for a dramatic re-prioritization of our 
expenditures, is it reflected? My guess is, it is not. If it is 
not, why is it not? That is my question, and then I have a 
request to make after you have had a chance to respond.
    Mr. Kennedy. This budget before you today, sir, does 
represent a significant amount. It does not certainly, by any 
means, resolve all the issues that the State Department has in 
terms of resources.
    But if I could divide that up into a couple of pieces, you 
find additional resources here. There are the 1,500 additional 
positions that the Chair referred to earlier.
    Mr. Schiff. Well, if you can start out as a threshold point 
of comparison, what is the increase in the State Department 
budget that has been requested over last year?
    Mr. Kennedy. In the administration of foreign affairs, 
which are the operating accounts which I deal with most 
directly, the increase of 2009 over 2008 is $690 million.
    Mr. Schiff. What is the percentage increase in the State 
Department budget? I mean, what the Secretary talked about, it 
went beyond merely foreign service officers. He talked about 
spending on all civilian instruments of national security 
diplomacy, strategic communications, foreign assistance, civic 
action, and economic reconstruction development.
    Mr. Kennedy. The total request for the 150 account, which 
is all the elements, is about 20 percent, sir.
    Mr. Schiff. A 20 percent increase since last year?
    Mr. Kennedy. Yes, sir, which is a significant increase--
when you break that down into the pieces I feel most 
comfortable responding about because they are in my 
jurisdiction, the additional funding that provides us the 
additional personnel that we need, the additional security that 
we need, the ability to fund an issue which is coming more and 
more to the floor, that is the significant problem that we are 
facing because of exchange rate losses.
    Mr. Schiff. What is the comparison of the State Department 
budget from last year to this year's budget?
    Mr. Kennedy. In last year's budget, it was about $7.5 
billion, and it is about a nine percent increase. This is for 
the operating accounts.
    Mr. Schiff. Well, I am asking you for the overall budget 
for the State Department. How does it compare as a percentage? 
What increase in the State Department budget do you have, as 
compared to last year?
    Mr. Kennedy. Nine percent.
    Mr. Schiff. Nine percent, okay--so you have a 20 percent 
increase in certain accounts, and a nine percent increase 
overall. That means, you have got to have decreases in other 
parts of the State Department budget.
    Mr. Kennedy. No, it is 20 percent for the entire 150 
account, and nine percent for the State Department operating 
account. So the entire budget goes up, and the portion of it 
which is devoted to State Department operating accounts--again, 
sir, went from $7.5 million to $8.2 million, a $690 million 
increase, which is roughly nine percent.
    Mr. Schiff. Thank you; let me make a request to you. One of 
the things that I am concerned about, in addition to the 
trajectory that we are on--and I think that the aircraft 
carrier group is a good metaphor, both in terms of comparing 
the size of our foreign service capability and our hard power 
capability. I think it is also a good metaphor in terms of how 
long it takes to turn the direction of that ship around.
    I am concerned also about the morale of the Department. One 
of the things that we all do in our districts, we will go out 
to one of our large employers in the District, and we will have 
a forum with the employees at a lunch hour, where they will 
come and they will share their thoughts or ask questions.
    Similarly, when we go, and I was in Baghdad a couple of 
months ago, we will sit down with the troops from our state, 
and it is a pretty free-flowing discussion, which gives us some 
really good insight. That is not into what General Petraeus is 
thinking; but what is it like on the ground.
    The request I would like to make is, would you work with 
me? I would like to come by the State Department and sit down 
during lunchtime or time with a big group of people from the 
State Department and just hear their thoughts on how things are 
going, what are they dealing with, what are the pressures they 
are facing with the Department, how they think things are 
going.
    Would you be willing to work with me to set that up, and 
would you encourage the State Department employees to be 
unbridled in their comments? Because when I have tried this 
with the Justice Department, I have to say, they always want me 
to work through their Congressional liaison, and they do not 
want anyone to talk to me directly.
    I always say, look, they are not going to be speaking for 
the Justice Department, okay? I am not going to hold anyone. 
But would you be willing to work with me and encourage people 
to talk?
    Mr. Kennedy. Absolutely, and I do not want you to think 
that I practice pre-selection. But we would make sure that you 
got a very, very good representative sample of Civil Service 
and Foreign Service, new, mid-grade, and senior. Sir, I would 
welcome that, and at the end of this hearing, I would be glad 
to talk to you or any staff member you want to designate as 
your point of contact. We would absolutely, positively welcome 
that.
    Mr. Schiff. Thank you.
    Mr. Kennedy. I will even buy your lunch.
    Mr. Schiff. You do not have to do that, but I might let 
you. Thank you very much.
    Mr. Kennedy. Thank you, sir.
    Ms. Lowey. Mr. Israel.
    Mr. Israel. Thank you, Madam Chairman.
    Mr. Secretary, I have two questions, one about the embassy 
and the other about the Civilian Stabilization Initiative. 
Going back to the embassy, what is the total number of 
personnel in the embassy?
    Mr. Kennedy. The total number of personnel in the embassy 
is a little over 700.
    Mr. Israel. That is diplomatic, security, operational?
    Mr. Kennedy. Those are U.S. Government employees.
    Mr. Israel. Okay.
    Mr. Kennedy. Those are U.S. Government employees in 
Baghdad, civilians for all agencies.
    Mr. Israel. What is the projected number of total U.S. 
personnel in the new embassy when it opens?
    Mr. Kennedy. We will have about 713 U.S. origin staff, plus 
we have a number of contractors. We have a number of foreign 
national staff, about 151 foreign national staff both Iraqi and 
third-country nationals. And we have also associated with that 
a significant number of contractors, both our maintenance 
contractors, which are a couple of hundred, and our security 
contractors, which are close to 1,000 if you count both the 
personal security personnel and the staff.
    Mr. Israel. Okay, close to 2,000, very good. That is $740 
million total cost?
    Mr. Kennedy. No, $592 million, sir.
    Mr. Israel. All right, it is somewhere between $592 million 
and reported costs of $740 million.
    Here is my question. If you are an Iraqi translator, who 
has been serving with a Special Forces unit, and you risk your 
life in the service of that unit and the security interests of 
the United States of America, and your life has been threatened 
and your family's life has been threatened, and you want to 
apply for a special immigrant Visa, will you be able to apply 
for that Visa, have the interview, submit your paperwork, and 
get your Visa in that embassy; or will you be told that you 
need to go to Jordan or Lebanon or elsewhere to complete that 
process?
    Mr. Kennedy. The answer to that, sir, is I believe that you 
should be able to do that in Baghdad.
    Mr. Israel. I believe that, as well. But will you be 
assured of that?
    Mr. Kennedy. I have two points, if I may, sir.
    Mr. Israel. Yes.
    Mr. Kennedy. I am not trying to play on the words.
    Mr. Israel. Yes.
    Mr. Kennedy. The translators are receiving humanitarian 
roles under a program that that the Congress has endorsed, that 
we support, that involves the Department of Homeland Security. 
So we have to make arrangements for them to participate in 
this. The Special Immigrant Visa Program is exclusively a State 
Department program.
    Many of those translators and their families have already 
left Iraq, and I do not believe that they should be required to 
go back to Iraq in order to make application. We have already 
taken steps and worked with Homeland Security and our own 
personnel so those applications can be processed.
    Mr. Israel. I am sorry, Mr. Secretary, my time is running 
out, and I want to make sure, I want to get this other question 
in.
    But moving forward, for those who have helped our country 
and our military and risked their lives, it is unfathomable to 
me, bordering on the immoral, to tell them that you have got to 
go to Lebanon or Jordan or elsewhere, when we are building, at 
your estimate, a $580 million facility for 1,000 people right 
in Baghdad.
    I hope that you will pass on to the Secretary that there is 
an enormous amount of frustration and consternation about that 
fact, and assure us that that embassy will serve those people 
and they will not be asked to go elsewhere.
    Mr. Kennedy. I believe that they should not be required to 
go elsewhere. If they wish to go elsewhere----
    Mr. Israel. If they wish to--but if they wish to go to the 
embassy and pick up their paperwork, and do their interview and 
get their Visa, they should not be told no, you have to go 
elsewhere. Because right now, that is what they are being told.
    Mr. Kennedy. That is because right now, we do not have the 
facilities to process them, because we are not in the new 
compound.
    Mr. Israel. Understood, okay.
    Mr. Kennedy. But personally, I agree with you. It is 
something that I am advocating.
    Mr. Israel. I will work very closely with you, so that we 
can advocate together.
    Mr. Kennedy. I will look forward to that.
    Mr. Israel. Second issue, one of the things I do support 
very strongly is the Civilian Stabilization Initiative. Now 
Administrator Fore testified yesterday to the committee that 
she enthusiastically supports that.
    I know that there are some concerns with respect to 
security. Can you assure the subcommittee that those security 
concerns, that the protection of the civilian response cadre, 
will be met?
    Mr. Kennedy. The responsibility vested in the Secretary of 
State and the Chief of State under the Omnibus Diplomatic 
Security Act is absolutely clear, and it also involves 
obviously myself and the head of the Bureau of Diplomatic 
Security.
    We put people in harm's way every day. But we put people in 
harm's way within the tightest amount of protection we can 
possibly generate. The plan that we have now to set up the 
basic corps includes having 24 diplomatic security agents on 
staff as part of the administration oversight development 
cadre. They will assemble a package.
    So when we do dispatch members of the Civilian Response 
Corps to Xanadu, they will go there within an envelope that is 
as safe as we can possibly make it.
    But I cannot give you a 100 percent guarantee. Tragically, 
two members of the State Department's Diplomatic Security 
Service have been killed in Iraq. So when security officers 
themselves are being killed, it is impossible to give you a 
perfect guarantee.
    But this is part of the plan. It is part of the planning. 
We send people into harm's way. But we do everything we can to 
mitigate that danger, so that they can carry out their mission.
    Mr. Israel. My time is expired. But I would encourage you 
to share those details with the subcommittee staff. I know that 
there is some very significant concern about the operational 
security in relationship to DOD, with respect to providing 
security for the civilian response cadre. Hopefully, your 
assurances will be effective.
    Mr. Kennedy. John Herbst who is the designated leader for 
this project, and I will be glad to come up and see staff and 
discuss this issue, sir.
    Mr. Israel. Thank you, Madam Chair.
    Ms. Lowey. Thank you; Mr. Jackson.
    Mr. Jackson. Thank you, Madam Chair. I would be happy to 
yield the gentleman an additional minute, Mr. Israel, if he had 
additional questions.
    I had one question, Ambassador, concerning the operable 
functioning of the POLADs with the One Star and Two Star 
Generals. I wish you would share with the committee how this 
actually works.
    You are requesting a number of positions that have 
historically been reserved for higher ranking military 
personnel so that they can have, I guess, inter-operability 
with decisions made at the State Department. Tell the committee 
how this works.
    Mr. Kennedy. Yes, sir.
    Mr. Jackson. Let me just make this one point, before you 
go. Do we have a Commander-in-Chief that gives military 
generals and advisors specific instructions to carry out sets 
of orders around the world, which obviously and by definition 
protect U.S. interests, but have the possibility of exacting 
U.S. force in various parts of the world. That is a clear line 
of communication.
    You have the same Commander-in-Chief who might, though that 
use of force, be communicating with the Secretary of State, 
very different but comparable policy goals and objectives on 
the diplomatic front.
    While they work in tandem, they do not necessarily work 
together as functions. Sometimes we have a carrot. Sometimes we 
have a stick. But what I am seeing in your budget proposal is 
that you seek to merge the idea of carrot and stick by having a 
field commander receive essentially advice from the Secretary 
of State, which might be fundamentally different than the 
advice of the Commander-in-Chief. If you could explain to the 
committee the operable function of these POLADs with the 
generals in the field, I would appreciate it.
    Mr. Kennedy. Yes, sir; let me start, if I might by, this is 
an extension of a program. The State Department has political 
advisors with Four Star Generals throughout the world right 
now. If you went to CENTCOM or EUCOM, or AFRICOM, you would 
find State Department POLADs there. You would also find POLADs 
assigned to the Office of the Chief of Staff of the Army or the 
Commandant of the Marine Corps.
    They are there, not to give alternate instructions, not to 
countermand, but to provide link and bridges and advice and 
information. Let us take that down to the next level.
    Mr. Jackson. I guess I am saying, Mr. Ambassador, that 
there might be alternate instructions, however. There might be 
an instruction from the President of the United States to a 
military general in the field to conduct a particular military 
action; while at the same time, the possibility of a foreign 
service officer working with the State Department on the carrot 
side of the equation.
    Would the instruction be any different or the advice to 
military commander in the field be different from the State 
Department than that?
    Mr. Kennedy. No, sir.
    Mr. Jackson. Not at all?
    Mr. Kennedy. What the purpose of the office is, is to make 
information that the State Department has, regional expertise, 
cultural expertise. The commander is having to traverse through 
two embassies to provide the commander, in order for them to 
carry out their defined instructions, additional assistance and 
information. It is of assistance. It is a two-way street, but 
it is not, in any way, a command or countermanding relationship 
at all.
    It is to provide simply information and advice on the 
region of the world where the Command exists. An officer who 
has served in our East Asian Bureau for years and at several 
embassies will be on the staff of the Combatant Commander, 
specific and then with subordinate commands, as well.
    So it is simply there to ensure that anything that the 
State Department can do to assist and facilitate. This is how 
things work in Washington, where you have State and Defense 
working together.
    You all have visited embassies overseas, and you have been 
briefed by the country team, where you will see the Ambassador, 
who is the Chief of Mission, the Senior Political Officer, and 
the Defense Attache or the Military Group Commander all sitting 
around the table, exchanging information and advice. But each 
one of them have their instructions from their home agency. 
This is to provide advice, counsel, and assistance, but it in 
no way changes lines of authority.
    Mr. Jackson. My time is expired. But I do want to raise 
just one other point that you can submit for the record.
    Mr. Kennedy. Please.
    Mr. Jackson. The subcommittee staff submitted questions to 
some of us concerning the September 16th incident involving the 
Blackwater private security contractors, in which the seventeen 
Iraqis were killed.
    We understand that in the wake of the incident, the State 
Department has undertaken a review of all of the incidents 
involving the private security contractors in Iraq, the use of 
deadly force.
    We would like to know the status of that review, and what 
other incidents might have been reported, that the State 
Department has determined. But you can submit that to the Chair 
for the record.
    [The information follows:]

    Mr. Kennedy: On January 3, the Bureau of Diplomatic Security (DS) 
formed the Iraq Use-of-Force Review Team to identify and review all DS 
employee and contractor use-of-force incidents in Iraq from June 2004 
through September 15, 2007. The team concluded its review on February 
15, 2008, identifying and reviewing 484 incidents. While the 
overwhelming majority of those use-of-force incidents appeared 
reasonable due to the threat environment in Iraq, DS forwarded five 
incidents to the Department of Justice for further review and action as 
deemed appropriate.

    Mr. Kennedy. Very good; thank you.
    Mrs. Lowey. Mr. Rothman.
    Mr. Rothman. Thank you, Madam Chairman.
    Mr. Secretary, thank you for being here and thank you for 
your service to our country all these years and in the years 
ahead.
    Mr. Secretary, recently a memo was sent to U.S. Ambassador 
Ryan Crocker by a former embassy senior advisor, Mr. Manual 
Miranda, which was quite scathing about the state of the U.S. 
Embassy in Baghdad's management.
    After spending a year working at the embassy, Mr. Miranda 
asserted that, ``While Congress debated the Iraq question and 
whether to commit more troops and more funds to Iraq in 2007, 
the embassy was largely consumed in successive internal 
reorganizations with contradictory management and policy 
goals.''
    Other criticisms of the embassy include: wasting taxpayer 
dollars due to ``deeply entrenched bureaucracy'' that fails to 
``think outside of the box,'' little institutional memory; and 
finally, the embassy did not sufficiently respond to General 
Petraeus's call for a civilian surge.
    Mr. Secretary, what is your response to such criticism? 
What is the State Department and the U.S. Embassy doing to 
rectify these problems, if you agree those problems existed or 
presently exist?
    Mr. Kennedy. Well, I do not think it would surprise you, 
sir, since I have served twice in Iraq and have done two other 
investigations to report there, that I just totally and flatly 
disagree with everything that he says.
    The State Department has surged. We have 557 U.S. State 
Department positions slated for Iraq, and we are increasing 
them regularly. In Baghdad, we are already up to 454, which is 
an 82 percent fill rate.
    In addition to that, we have 70 State Department positions 
and 70 State Department people at the regional offices; and we 
have another 318 State Department and other civilian personnel 
out at what are called the PRTs, the Provincial Response Team. 
So we have surged incredibly since I went to Iraq in 2003 on 
loan to the Defense Department.
    Mr. Rothman. As you may know, there has been some criticism 
or some suggestion--and I would be interested in your response 
or your thoughts on--that the people that the State Department 
had sent to the Embassy were not of sufficient experience or 
the caliber that the tasks required.
    Mr. Kennedy. I have seen the reports from SIGIR. But the 
reports I have seen from SIGIR are reports about problems in 
that regard during the Coalition Provisional Authority in 2003 
and 2004, which pre-dates the establishment of the U.S. Embassy 
in June of 2004. I will just give you an example, sir, if I 
might
    Mr. Rothman. Please.
    Mr. Kennedy. Normally, in an embassy, you have an 
Ambassador and you have a number of other senior officers 
serving at that post. It is literally ones or twos, where you 
ever have an Ambassador and Deputies at that post who have 
served previously as Ambassadors. It is almost unheard of.
    Ambassador Crocker, number two, is an Ambassador. The Chief 
of the Economic Section is our former Ambassador to Greece. The 
Chief of our Political Ministry section is a former Ambassador. 
There are widely dispersed throughout the entire structure 
individuals who are former Deputy Chief of Mission.
    Mr. Rothman. So if I may, if there were problems a year 
ago, you are saying we have our A-team on the ground there now?
    Mr. Kennedy. I believe we have our A-team yes, sir. Ryan 
Crocker has personally twisted arms. I have made telephone 
calls.
    Mr. Rothman. If I may, how long would you say or 
characterize that our team there has been the State 
Department's A-team?
    Mr. Kennedy. I think that we have had a State Department A-
team there since 2004, when John Negroponte went in, and the 
Deputy had just resigned as our Ambassador, to a position in 
Europe, specifically to come to Iraq to be the number two, 
which is almost unheard of, as well, for someone to leave an 
Ambassadorial position during their tenure.
    Mr. Rothman. I can imagine how strongly you feel about 
this, and I get the intensity of your feelings on this subject, 
and I appreciate you responding to the question.
    I want to move on to another question, if I may, Madam 
Chairman, having to do with the violent protests in Belgrade 
last week. First of all, I am very pleased that the 
independence of Kosovo was recognized, and I want to thank the 
Secretary and her staff for all that she did to support that 
declaration.
    I am concerned about the safety of U.S. personnel working 
in Belgrade. Under Secretary of State Nick Burns has said that 
Serbia has a fundamental responsibility to protect U.S. 
diplomats and citizens. Are you comfortable that the Serbian 
government understands its responsibility to protect U.S 
personnel working in Belgrade, number one; and finally, number 
two, is the United States ready in every regard to protect our 
personnel in the event that the Serbian government does not?
    Mr. Kennedy. I was the person on the phone with the post, 
and then arranged with Nick Burns and the Secretary to make 
those calls.
    The Serbian government absolutely, totally, unequivocally 
failed to carry out its responsibilities under the Vienna 
Convention. However, if I might, thanks to the efforts of this 
committee and others who provided assistance to the State 
Department. You saw these terrible pictures on the screen. It 
looked like the building was on fire. It looked like it was 
being overrun. The answer was, thanks to funds made available 
by this committee, it never happened.
    This was an old embassy and we will be building a new one. 
We are letting the contract this year--old building downtown, 
no set-back, no real distance from the walls. The result was, 
though they got over the wall and penetrated the waiting room 
of the counselor section, thanks to funding from this 
committee, they never penetrated the hard line.
    We, thanks to your funding, constructed hard lines. I would 
be glad to send up to the staff the pictures of the beating on 
the doors that the mob did never penetrated. We have a crumple 
zone. You know, the rooms and the buildings that are literally 
on the street, they set some of those on fire. But the fire 
never went into the building proper.
    So the efforts that we undertook with your funding and your 
assistance made for a wonderful TV shot. But the regional 
security officers inside did their jobs. The Marines did their 
jobs.
    Mr. Rothman. Are we going to prevent them from getting to 
the crumple zone, again?
    Mr. Kennedy. That requires the Government to do its job. 
But we have put in additional people to repair the doors. They 
did not penetrate the hard lines.
    Mrs. Lowey. Thank you, Mr. Rothman.
    Mr. Kirk wants to ask a couple questions. I am sorry, but 
we will have to conclude the hearing, and then Mrs. McCollum 
will ask some questions, also. Mr. Kirk wants to get in one 
question. Then Ms. McCollum is going to take the Chair and ask 
her questions. Then we will close the hearing.
    Mr. Kirk. Thank you, I have a quick thing. I hope you are 
still rolling on capacity at our embassy in Beijing. I see, for 
the other parts of this Government, the quick deployment of the 
Consumer Product Safety Commission and FDA inspectors to China 
is a huge issue.
    Building a new embassy, then maxing it out, and not being 
able to have the support for those people would be a bad, wrong 
decision. I urge the department to hold old Embassy Beijing. I 
know we have some security issues there. But what Consumer 
Product Safety Commission people are doing, I do not think, is 
an urgent national security of the United States, and the old 
site would be a very good one; that is A.
    B, on November 8th, 1995, the Jerusalem Embassy Act became 
law, dedicating us to moving the embassy to Jerusalem. On May 
22nd, 2000, Governor Bush said, if elected President, he would 
move the U.S. Embassy to Jerusalem; quote, in his speech, ``The 
city has chosen as its capital.''
    On December 12th of last year, the President wrote a 
memorandum to the Secretary saying, ``My Administration remains 
committed to beginning the process of moving the embassy.'' 
Since this is your last fiscal year to present, are we rolling, 
or was this an empty commitment?
    Mr. Kennedy. Sir, the Administration is committed to 
beginning the process of moving our embassy to Jerusalem.
    Mr. Kirk. So let me nail you down. Since you leave your job 
on January 20th, 2009, what will be completed by the time your 
resume hits the street?
    Mr. Kennedy. Mr. Kirk, I do not know what the answer to 
that question is. The President and the Administration believe 
that moving the embassy now would complicate our ability to 
play a helpful role in ending the current violence in Israel, 
the West Bank, and Gaza.
    But the President's commitment is there. It has been 
expressed, and the State Department is prepared to carry out 
the President's instructions.
    Mr. Kirk. Do you have a single, tangible anything, since 
this is the last year you are in office? Is there no work plan?
    Mr. Kennedy. We are prepared to exercise and carry out our 
responsibilities. When the President gives us the instructions 
to move, sir, we will move.
    Mr. Kirk. Great; I am really hoping you work with Sandy on 
the FTA and CPSC deployment.
    Mr. Kennedy. We understand that. We have been in touch with 
the people who work on this. We have been in touch with the 
East Asian and Pacific Bureau. We are in the process, and the 
financial plan for this fiscal year has been briefed initially 
and is pending at OMB to come up with new outlining on how we 
will spend our fiscal year 2008 money. Off the record, I will 
say that that includes an expansion of our capabilities in 
Beijing with the new annex.
    Mr. Kirk. And we are totally excited about Wuhanand 
Chungqing after that.
    Mr. Kennedy. Understood.
    Mr. Kirk. Thank you.
    Ms. McCollum [presiding]. Thank you, Under Secretary 
Kennedy. I want to first express my strong support for 
strengthening America's diplomatic corps.
    One of the essential lessons we all learned from September 
11th is that National Security in this new century requires 
more than having the best military in the world. The President 
is right when he stresses the three ``Ds''--defense, diplomacy, 
and development, and we need the best military and the best 
diplomatic corps, and the best developmental capability.
    I have two questions. One is on the Civilian Stabilization 
Initiative. I will go through both of them and then I will 
await your answer.
    The Civilian Stabilization Initiative was supported by both 
Secretary Rice and Secretary Gates. The $249 million requested 
in this budget is the jump start to the initiative. I can see 
the value in rapid response capacity for State, USAID, Justice, 
and other civilian agencies within 48 hours of a crisis 
anywhere in the world. My question is about the exit strategy 
for the civilian surge.
    Your testimony noted that the initial response team could 
be supplemented, if they need it, within 60 days by civilian 
reservists. But when the decision is made, who is it made by 
and when does the emergency response need to transition to a 
sustained mission? So I would like the nuts and bolts on that.
    Any event requiring a crisis response will almost certainly 
require a long-term stabilization and reconstruction. So my 
question on this is, which U.S. agency will be charged with 
leading the long-term effort, and what is the role of civilian 
reservists in a longer-term effort?
    My second question, and I will give you both together, is 
regarding the Peace Corps. I am very concerned about the number 
of articles that have appeared this month regarding statements 
made by the State Department and security officials allegedly 
asking Peace Corps volunteers and Fulbright scholars to assist 
in keeping tabs on Venezuelans and Cubans in Bolivia.
    Furthermore, I understand that the Bolivian Government has 
filed criminal charges of espionage against the U.S. Embassy 
official involved in the incident. If accurate, these reports 
are troubling, very troubling.
    In poll after poll conducted over the past year, the U.S. 
reputation and influence around the world is at an all time 
low. Incidents like this serve to further damage our 
reputation, and to neutralize the positive, public diplomacy 
gains brought by Peace Corps volunteers and Fulbright scholars.
    So my questions are, sir, is this report accurate? If so, 
did the official violate the Department policy with this 
request? If he violated the Department policy, what action has 
been taken regarding this employee?
    What steps has the Department of State implemented to 
clarify U.S. policy to security officials conducting these 
briefings, to avoid these mistakes happening in the future, or 
even the appearance of a mistake in the future? What has been 
done to assure the Government of Bolivia that the U.S. is not 
asking Peace Corps and Fulbright scholars to engage in 
surveillance and to repair the damage done by this incident?
    Sir, my state has many Fulbright scholars. My state also 
has many Peace Corps volunteers. The one thing that I know 
keeps them safe and they are most proud of is that they are to 
just do the important work of diplomacy.
    Mr. Kennedy. Absolutely; if I can take the second one 
first. The reports are false; absolutely totally false. Let me 
describe exactly what happened.
    The State Department's regional security office gives 
safety and security briefings to all new arriving Peace Corps 
volunteers and to Fulbright staff, because it is the 
responsibility of the Chief of Mission to ensure the safety of 
personnel. So we brief them on the dangers or not of living and 
working or volunteering in a country of operation.
    In the course of a briefing on safety and security, a new 
Assistant Regional Security Office sort of flipped the page and 
started to give the next briefing slide, so to speak. For U.S. 
Government employees, we do a safety and security briefing, and 
then we do a briefing about what you do if somebody approaches 
you and asks you to provide information about the U.S. 
Government, and to report those.
    So yes, the person started to do the next slide, and then 
someone said, wait a minute now. This is a different group, and 
he stopped.
    The Bolivian Government, who has expressed its hostility 
towards the United States in many ways, including personal 
attacks on the U.S. Ambassador, has over-blown the situation 
wildly out of proportion.
    So there is no U.S. Government program to use Peace Corps 
volunteers or Fulbright scholars in any way, other than as you 
said. The volunteers do incredible work. The Fulbright Exchange 
individuals do incredible work, as well.
    Ms. McCollum. Mr. Kennedy, in my opinion, that is why 
keeping the military transferability from people going directly 
from the military, as was floated in a previous Congress, makes 
things very, very important that we not do that.
    It was in the Senate, I believe. I could be wrong, but I 
think it was Senator McCain. It was corrected. But there was 
some Senate language at one time. So thank you for your 
explanation of this; the next question.
    Mr. Kennedy. On the Civilian Stabilization Initiative, I do 
not want to seem avoiding the question. But I truly believe 
that the exit strategy for each one of these cases will depend 
upon the specific nature of the case involved. I think if there 
is a long-term effort involved, it could certainly involve the 
Agency for International Development, because of their 
expertise in humanitarian assistance.
    It could also though involve the State Department's Bureau 
of International Narcotics and Law Enforcement or the 
Department of Justice, if we need to build up capabilities in 
that regard.
    So who takes over and carries on the next step after the 
civilian stabilization issue commences, I think will depend 
upon the circumstances. I can see an incredible role for the 
Agency for International Development. I can also see roles, for 
example, for the Bureau of International Narcotics and Law 
Enforcement. Because as I am sure you are aware, by statute, 
AID cannot engage in any police or law enforcement training, 
and the country may well need that capability.
    So it will be, I think, incident-specific with the 
appropriate U.S. Government agencies taking over for the long 
haul, depending upon the capabilities that that nation needs 
assistance in.
    Ms. McCollum. Mr. Kennedy, I want to go back and just make 
sure that, for the record, you want to deny that this report as 
not true; and I can give you a copy of what I am looking at 
here in a second. It is dated February 8th, 2008. It is written 
by a Gene Friedman Rodosky and a Brian Ross, and I will quote 
from it.
    ``I was told to provide the names, addresses, and 
activities of any Venezuelan or Cuban doctors or field workers 
I come across during my time here.''
    The source was a Fulbright scholar who is identified as 
John Alexander Van Shock, who told ABCnews.com in an interview 
in La Paz. Van Shock's account matches that of Peace Corps 
members and staff who claimed just last July their entire group 
of volunteers was instructed by a U.S. Embassy official to 
report.
    The State Department went on, and I am quoting the State 
Department, and it just says for the quote, ``In error.'' Then 
it goes on to say, ``A violation of long-standing U.S. policy, 
which prohibits the use of Peace Corps Fulbright scholars for 
intelligence persons. We take this very seriously.''
    So I want to give you a chance to respond to what a 
Fulbright scholar said. I mean, this is a person who just did 
not ``fall off the turnip truck'' to quote my grandmother. ``I 
was told to provide names and addresses of any Venezuelan or 
Cuban doctor that I came across.'' It did not say ``approached 
me.'' But John says, ``that I came across with.''
    Mr. Kennedy. Congresswoman, I have outlined what is the 
State Department policy. I have outlined what I have been 
advised of, that the safety and security briefing was given, 
and then the officer erroneously started to go into another 
portion of the briefing that we do not give to Peace Corps 
volunteers and Fulbrighters.
    But he started to give, you know, the second briefing, 
which we would normally give to a U.S. Government employee. We 
give multiple briefings. We only give, and this is my term, the 
safety and security briefing to Peace Corps volunteers and 
Fulbrighters. It is not the policy of the State Department, it 
is not the policy of the United States Government to do this.
    Ms. McCollum. Clarify then something else. If I heard you 
correctly--because I do not want to walk out of here and not be 
clear on something, in case I am asked to repeat it, sir--you 
said that another embassy staff person might be given a 
briefing that said, if someone approaches them for information, 
they should report that individual.
    Mr. Kennedy. That is right.
    Ms. McCollum. Okay, but yet, even if it was an error that 
it was given, the Fulbright scholar said, ``I was told to 
provide the names and addresses and activities of any 
Venezuelan or Cuban doctors--that I came across,'' which is 
different than someone approaching me.
    So if you could clarify and find out what happened at that 
briefing and get back to the committee.
    [The information follows:]

    NOTE: Under Secretary Kennedy and Acting Assistant Secretary for 
the Bureau of Diplomatic Security, Greg Starr, provided a briefing for 
Representative McCollum on this issue on March 12, 2008.

    Mr. Kennedy. Absolutely; we will get that information to 
you, and I will be glad to have one of our senior officers at 
the Bureau of Diplomatic Security that oversees our briefings 
on safety and security personally come up and give you a full 
outline of the situation, absolutely.
    Ms. McCollum. Because I know that you were not present at 
the hearing.
    Mr. Kennedy. Yes.
    Ms. McCollum. And you are only repeating what you have been 
told, to the best of your knowledge.
    Mr. Kennedy. Absolutely.
    Ms. McCollum. Okay, I want to thank you again for your time 
and your service to this country, as well as the support staff 
that you have with you. We will be having a number of questions 
submitted for the record.
    This concludes today's hearing on the fiscal year 2009 
budget request for the Department of State Operations. The 
Subcommittee on State, Foreign Operations, and Related Programs 
stands adjourned.

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                                           Tuesday, March 11, 2008.

                  HIV/AIDS AND GLOBAL HEALTH PROGRAMS

                               WITNESSES

AMBASSADOR MARK DYBUL, U.S. GLOBAL AIDS COORDINATOR PEPFAR
KENT HILL, ASSISTANT ADMINISTRATOR FOR GLOBAL HEALTH, UNITED STATES 
    AGENCY FOR INTERNATIONAL DEVELOPMENT

                 Opening Statement by Chairwoman Lowey

    Mrs. Lowey. The subcommittee on State, Foreign Operations, 
and Related Programs will come to order. I would like to 
welcome Ambassador Mark Dybul, Director of PEPFAR, and Dr. Kent 
Hill, USAID's Assistant Administrator for Global Health.
    Better integrated, more comprehensive health programs and 
strategies are essential, if we are to maximize our limited 
assistance dollars and truly combat the poverty and disease 
ravaging many parts of the world. In that light, I have asked 
you to testify jointly today, so that we can examine the 
President's fiscal year 2009 request for HIV/AIDS assistance in 
the context of overall funding for global health.
    Over the past 10 years, this committee has made global 
health a key priority, increasing funding from $1 billion in 
1997 to $6.6 billion in 2008. We understand that investing in 
health lays the foundation for further development activities 
and sustainable economic growth. The United States has been a 
leader and innovator in the global health community from our 
pioneering efforts to eradicate polio and other childhood 
diseases, to current efforts to fight the HIV/AIDS pandemic. 
Five years ago, only 50,000 people living with HIV/AIDS were 
receiving anti-retro viral treatment. Today with American 
leadership, almost 2 million people are receiving treatment. 
Clearly, we are making a difference. The President has shown 
leadership on HIV/AIDS and I am proud that Congress exceeded 
the President's $15 billion funding target for global HIV/AIDS 
by more than $3 billion over the past five years.
    As we look to the second phase of PEPFAR, we must evaluate 
the successes and challenges of this program and adjust 
accordingly. The HIV/AIDS pandemic has ravaged the African 
continent and shows no sign of slowing down, despite the $22 
billion provided by the United States over the last 10 years 
and the $36 billion dollars provided by other donors. While 
U.S.-funded HIV/AIDS prevention programs reached 57 million 
people in fiscal year 2007, new infections are on the rise. In 
2007 alone, 2.5 million more people were infected with the 
virus. This is simply unacceptable and requires us to reexamine 
our prevention efforts to ensure that we are reaching those 
most at risk and providing them with the appropriate tools to 
protect themselves.
    Ambassador Dybul, as you know, in the omnibus, we provided 
you with flexibility in applying the prevention earmarks. I 
look forward to hearing how you intend to use that flexibility 
to expand access to prevention in the coming year. We also, 
need to devote more resources to strengthen the capacity of 
nations to better meet these health challenges. If any of these 
interventions are to be sustainable in the long term, it 
requires that developing countries be able to shoulder more of 
the responsibility for the health of their populations. In my 
judgment, we should be investing more in health infrastructure 
and the training of healthcare professionals.
    It is time our response to this pandemic was part of the 
more comprehensive approach to address health in Africa and 
around the world. Congress took the first step towards a more 
integrated and comprehensive health strategy when we 
consolidated all health funding into one account, the Global 
Health and Child Survival account. I was disappointed to see 
that the Administration did not embrace this approach and once 
again requested funding in stovepiped accounts that inhibit 
integrated assistance strategies. I am also disappointed that 
once again the President's budget request increases funds for 
HIV/AIDS while cutting funds for other complementary global 
health programs. Congress provided a $356 million increase for 
maternal and child health, family planning, and infectious 
disease programs in the fiscal year 2008 omnibus. Yet the 
President's fiscal year 2009 budget request cuts funding for 
these programs by $251 million, including a $57 million 
decrease for TB, $65 million for avian flu readiness, $77 
million for maternal and child health, and $90 million for 
family planning. I am concerned that many health programs in 
Africa, Asia, and the Western Hemisphere will be forced to shut 
down or greatly reduce operations under the President's 
request.
    With respect to maternal health and family planning 
programs, the evidence clearly demonstrates that healthy women 
are the cornerstone of their families and their communities. In 
2001, President Bush pledged to maintain the level of family 
planning funding, saying ``one of the best ways to prevent 
abortion is by providing quality voluntary family planning 
services.'' Yet, over the past two years, the President seems 
to have reneged on that commitment. I am truly outraged that 
the Administration is playing political games with women's 
lives.

                              TB PROGRAMS

    Dr. Hill, I hope you can address the cut to the TB 
programs. The United States is a leader in the global 
tuberculosis community. Our support for the Stop TB initiative 
has led to breakthroughs on the identification, isolation, and 
treatment of multi-drug resistant tuberculosis or MDR-TB. Just 
last month, the World Health Organization estimated that 
approximately five percent of the nine million new cases of TB 
annually are multi-drug resistant. Rates were particularly high 
in the former Soviet Union. It is hard to understand why the 
President would choose to cut tuberculosis funding by $7 
million for Eastern Europe and Eurasia at this critical time.
    Are we putting our strategy to address MDR-TB at risk with 
this large cut to the tuberculosis program? TB treatment and 
care is an example where USAID and PEPFAR have collaborated 
from the beginning. I look forward to exploring how this 
collaboration will continue in fiscal year 2009, what 
investments in TB identification and testing PEPFAR will be 
making, and why funding for Eastern Europe and Eurasia was 
reduced. In your testimony, I hope you will also both address 
the fundamental issue of how we can create a more integrated 
health strategy without diluting the impact of focused 
approaches, such as PEPFAR. I would also like your thoughts on 
how we can make our health investments more sustainable.
    Knowing the importance of global health programs, this 
subcommittee has provided the tools and resources to help save 
lives. Ambassador Dybul and Dr. Hill, I look forward to hearing 
your remarks and working with both of you on these and other 
issues. I was going to turn to Mr. Wolf, but I believe he is 
still at the conference. Mr. Kirk, do you want to make a few 
opening statements?

                       Mr. Kirk's Opening Remarks

    Mr. Kirk. Thank you, Madam Chair. Obviously, when we look 
back on the global picture, we see that in the last several 
years, the United States has made the largest investment ever 
in healthcare in developing nations. And I remember when 
Congressman Merczik and Congressman Porter started this program 
in 1985 with a 25 million dollar earmark. Then chair of this 
subcommittee, Mr. Obey said, there is no way we will ever have 
a diseased earmark in this account. To his credit, he changed 
his mind in the middle of our press conference and came and 
endorsed a new and separate AIDS program.
    The program limped along largely with those of us very 
concerned about international health until 1999. I remember as 
a staffer holding hearings in the authorizing committee on this 
practically dragging members to come and see what was one of 
the greatest humanitarian crisis. And now, it is great to see 
the kind of resources the United States provides. It would 
appear that we are providing more assistance in this area than 
all other countries combined. There is a case sometimes in 
which we worry about the United States being number two or 
number three in an area. I do not think there is any area in 
which the United States provides more resources than all other 
countries put together. And so, it is quite a commitment and 
will raise a couple of issues there. But, it is probably one of 
the most under reported, but good humanitarian stories of the 
United States.
    Thank you, Madam Chair.
    Mrs. Lowey. Thank you. And gentlemen, please proceed. 
Ambassador Dybul and then Dr. Hill and your entire statement 
will be placed in the record. So, please proceed as you wish. 
Thank you.

                  Ambassador Dybul's Opening Statement

    Ambassador Dybul. Thank you, very much, Madam Chairwoman, 
Representative Kirk on behalf of the minority and all the 
members of the committee and the staff. The partnership between 
PEPFAR and this committee, in particular, both members and 
staff, over the years has been one for which we are extremely 
grateful. Your commitment and leadership in the fight against 
HIV/AIDS in a bipartisan way is one of the fundamental reasons 
PEPFAR has been such a huge success and we thank you for it.
    Before I go into some of the numbers for the fiscal year 
2009 budget, I would like to take just a moment to discuss the 
profound impact our support is having on the ground. And as you 
know, President and Mrs. Bush just got back from Africa. It was 
a very inspiring trip. Their response really vividly 
illustrated that we are not only changing the course of a 
pandemic by impacting lives, but we are creating hope for a 
future generation. I was fortunate to be in Tanzania where 
President Kikwete told President Bush that the relations 
between the two countries has never been better. And all around 
the city, residents proudly displayed large billboards thanking 
the American people for their support on HIV, on malaria, and 
for the Millennium Challenge Corporation. Women were wearing 
congas that said thank you for your friendship. It was a rather 
extraordinary outpouring of affection and a demonstration that 
good humanitarian programs also build strong relationships that 
are good for the American people.
    Thanks to the commitment of President Bush, the Congress, 
and the American people, as was mentioned, the U.S. is the 
global leader in the fight against HIV/AIDS and the fiscal year 
2009 six billion dollar budget request from the President 
represents a continuation of that commitment and includes 4.9 
billion dollars for the 15 focus countries or what is likely to 
be the focus countries and bilateral programs, and this is an 
increase of 341 million dollars over the 2008 request. We are 
also requesting 500 million for the Global Fund, a 200 million 
dollar increase over the request in 2008. And this demonstrates 
the President, the administration, and the American people's 
strong commitment to the Global Fund as a vehicle for the world 
to contribute to this important epidemic, because it is a 
global epidemic requiring a global response.
    Importantly, the 2009 request is the first installment of 
the next five-year commitment of the American people to HIV/
AIDS and it was with that commitment that the President made 
that the President was able to get the G8 to commit to 60 
billion dollars and to double the goals, five million people in 
treatment, prevention for 24 million people, and care for 24 
million, including 10 million orphans and vulnerable children. 
And that is extraordinary, that American leadership led 
directly to a response from the rest of the world.
    In rolling out the largest international public health 
initiative in history, we move rapidly. We are 94 percent 
obligated and 55 percent outlaid through last year, rather 
extraordinary numbers for a new program, as you know. But as 
you know, our success is not measured in dollars spent. It is 
measured in lives improved and lives saved. And you have gone 
through some of the results we have achieved so far. I do not 
want to repeat the numbers in prevention, care, and treatment, 
because they are in the record and we all know them well. But 
because of the issues, Madam Chairwoman, you raised about 
integration and building capacity, I would like to touch on a 
couple that sometimes we do not talk about very much.
    Innovative strategies are really being developed to 
substantially reduce mortality among HIV-infected individuals 
and orphanhood, as well as expand health workforce capacity and 
resource-poor settings. There is a new study from Uganda that 
was published in Lancet by U.S. Government people actually that 
showed that home-based delivery by lay staff through these 
things. Extending treatment to world communities, care and 
treatment to world communities where limited healthcare 
capacity would otherwise be, we saw a 95 percent reduction in 
mortality among HIV positive people. So, we are beginning to 
see not only numbers of people in treatment, but reduction in 
mortality, and 80 percent reduction in mortality among their 
uninfected children, showing the benefit of treating parents on 
the mortality of young children, uninfected children, and 
importantly, a 93 percent reduction in orphanhood. The best 
treatment for orphans is to keep their parents alive and so we 
saw 93 percent reduction in orphanhood, contributing to that 
larger impact that we need to have.
    We, also, continue to focus on building capacity for 
sustainable response. As you mentioned, 85 percent of our 
partners are local organizations and we have recently tripled 
the amount of resources available for pre-service training of 
healthcare workers. Through September of last year, we 
supported training for 2.6 million training and retraining 
encounters and we are projecting that we will support training 
and retraining for 2.7 million just in 2008, more than the 
entire total of the previous four years. And importantly, we 
have recently done an estimate that shows that PEPFAR is 
supporting the salaries of more than 110,000 healthcare 
professionals and workers, including those managing programs. 
So, we are building that long-term sustainable capacity 
supporting the healthcare workers that will pay off and that is 
contributing not only to the HIV-positive, but to the HIV-
negative children and preventing orphans.
    The data suggest that money into HIV/AIDS is having a 
positive impact on other areas of health systems. We estimate 
that 638 million dollars in 2007 alone went into healthcare 
capacity building. It is a rather extraordinary investment, 
more than we actually spent on all of HIV/AIDS not too long 
ago.
    Some striking data recently from health experts in Rwanda, 
the government, themselves, showed that 40 percent of PEPFAR 
resources in Rwanda had an impact on health systems beyond HIV/
AIDS, 40 percent. That is rather extraordinary. A peer review 
paper from Haiti showed that HIV resources are building health 
systems, not siphoning resources from them. Another recent 
study in Rwanda showed that the addition of basic HIV/AIDS 
services to primary health centers contributed an increase in 
maternal and reproductive health, prenatal pediatric and 
general healthcare. Large jumps were also seen in the 
utilization of non-HIV lab testing, syphilis testing, antenatal 
care, and family planning.
    In Botswana, infant mortality rose and life expectancy 
dropped by one-third, life expectancy in a country by one-
third, because of HIV/AIDS, despite increases in resources for 
child and basic health by that government. Now because 
President Mogae has led an all out battle against HIV/AIDS, for 
the first time in decades, we are seeing infant mortality 
decline and adult life expectancy increasing. That is a big 
impact on healthcare overall. And as the chair of the Institute 
on Medicine panel that reviewed PEPFAR said, overall, PEPFAR is 
contributing to making health systems stronger.
    Stepping back to take a larger view on how we connect with 
the rest of development, because we believe this is an 
important issue, as you know with strong bipartisan support 
from Congress, we have together doubled resources for 
development, quadrupled them for Africa, which includes the 
Millennium Challenge Corporation, the President's Malaria 
Initiative, the Women's Empowerment and Justice Initiative, the 
African Education Initiative, the International Education 
Initiative, and many others, and PEPFAR is a part of that and 
linked to it. In fact, I came from a breakfast this morning 
with the heads of all of those organizations to see how we can 
work better together.
    PEPFAR, also, supports linkages directly to U.S. Government 
programs, particularly in education. For example, in Haiti, we 
are working with partner organizations to meet the food and 
nutritional needs of orphans and vulnerable children using a 
community-based approach, including Title II resources, the 
programs committed to developing sustainable food sources. So, 
the staff has aggressively supported community gardens 
primarily for orphans and vulnerable children to generate 
markets through these gardens.
    We recently collected data on our projected resources in 
2008 for food and related support, food, nutrition, 
livelihoods, and safe water, largely because this committee 
asked us to do so, and we found that we had 93 million dollars 
dedicated to those types of programs within the PEPFAR program. 
It is a rather substantial commitment.
    In education, we developed a strong partnership with the 
African Education Initiative, which is now part of the 
International Education Initiative implemented through USAID. 
In Zambia, we are funding scholarships to help keep nearly 
4,000 orphans, grades 10 to 12, who have lost one or more 
parents in school.
    In Uganda, we have a program that is working with AEI to 
strengthen life skills and prevention curricula in school. This 
program with two million dollars in 2007 targeted four million 
children and 5,000 teachers. We estimate that approximately 
two-thirds of the orphans and vulnerable children we support, 
around 207 million so far, receive some type of education 
support through PEPFAR. And as we improve the linkages with 
these programs, we are creating better indicators, so we have a 
sense of the impact on outcome overall and how we are improving 
systems and improving the healthcare system, not just looking 
at numbers. And we are piloting these new indicators now and 
also looking internally to make sure we are staffed 
appropriately to provide this type of support.
    Madam Chairwoman, Representative Wolf, and members of the 
committee, we conclude by emphasizing that through PEPFAR and 
our broader development agenda, the American people engage in 
one of the greatest humanitarian efforts of our time. Through 
this partnership, people of distant lands have a new window 
into our hearts, as Americans. They know what we stand for, 
because we stand with them, and we saw that overwhelmingly in 
Africa, as the people responded to President and Mrs. Bush, 
really on behalf of the American people. And so, we thank you 
for the work you have done to build this extraordinary program, 
to build this incredible support for the American people 
globally. We look forward to our continuing work together as we 
enter the next phase of the Emergency Plan. Thank you.
    [The information follows:]

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    Mrs. Lowey. Thank you. Dr. Hill.

                      Mr. Hill's Opening Statement

    Mr. Hill. Congresswoman Lowey, Representative Wold, other 
distinguished members of the committee, I am delighted to have 
the opportunity to testify on the fiscal year 2009 Child 
Survival and Health, CSH, budget request. But before I begin, 
on behalf of my staff at USAID and the people we serve, I want 
to affirm the very strong leadership of this committee and 
thank members of Congress for your longstanding and 
enthusiastic support for health programs. I am also pleased to 
say that it is always an honor to testify with my good 
colleague and friend, Ambassador Mark Dybul. We spend a lot of 
time together working on the issues we are talking about here 
today.
    Indeed, as Congresswoman Lowey indicated in her opening 
remarks, there has been a tremendous increase in funding for 
health during this administration. Let me specify what this 
means for USAID. In 2000, USAID managed just over a billion 
dollars in health programs. Today, at least for 2008, that 
number for USAID was about 4.8 billion dollars, which we 
estimate the breakdown to about 2.6 billion or so coming from 
Ambassador Dybul, some of that went on to the Global Fund, four 
hundred million of health funding and other accounts, not CSH 
accounts at all, and, of course, the 1.8 billion dollars in 
child survival health funding from Congress. And I will be 
testifying today primarily on the 2009 request, which is indeed 
lower, at 1.58 billion dollars.
    USAID's global approach to health focuses on the 
development and the delivery of low-cost, high-impact 
interventions that can reach children and adults in poor 
countries, to prevent and treat the leading killers, such as 
TB, pneumonia, diarrhea, malaria, malnutrition, and other 
diseases, and, of course, HIV. USAID has a proven track record 
in global health. Infant and child mortality rates are 
decreasing measurably with global child deaths, reaching a new 
low of 9.7 million according to a UNICEF report in September of 
last year and that 9.7 million number was for 2006. To get some 
perspective on that, you need to compare that 9.7 million who 
died to about 13 million children who died in 1990. And UNICEF 
began to collect these statistics in 1960. That number for 2006 
represented the lowest we have ever recorded. So although we 
have a long way to go, we can at least say with some certainty 
that the interventions that we are doing work and can make a 
big difference. And, of course, the population is larger and 
yet the amount who have died is lower.
    Our support has helped to reduce under five-mortality in 
about 30 countries. But, unfortunately, we have reduced 
maternal mortality in only about 10 countries. In just its 
second year of operation, the President's Malaria initiative, 
PMI, reached about 25 million persons and is already beginning 
to show reduced malaria burden in poor countries, and I will 
talk just a bit more about that in a few moments.
    USAID has played a key role in developing, testing, and 
introducing new interventions and technologies that have saved 
countless lives. And the research that was done and that we 
piloted and we rolled out includes oral rehydration therapy, 
Vitamin A, zinc treatment for children, treatment for diarrheal 
diseases, and water disinfection technology. These are not 
expensive interventions and they made a huge difference.
    Our health categories are sometimes seen as separate and 
distinct and, as Ambassador Dybul is saying, in fact, the 
reality is quite different. USAID integrates its program, 
especially at the community level, with an approach that 
increases the affordability and sustainability of our 
interventions. We provide, for example, broad support for both 
anti-natal care and community-based health platforms, and these 
platforms from which family planning, child vaccinations, 
malaria control, HIV/AIDS, and other important interventions 
are delivered in a consolidated fashion. Our programs also work 
together to strengthen drug management, supervision, quality 
assurance systems, and other critical health systems needed to 
deliver basic public health services.
    Appropriated funding for the CSH account, now called the 
Global Health and Child Survival account, has been increasing 
dramatically in recent years thanks to congressional support 
that recognizes these on-the-ground successes of U.S. aid 
programs. Due to stringent budget constraints and competing 
priorities, our fiscal year 2009 request of 1.58 billion 
dollars is, in fact, a decrease over what was enacted in 2008 
of 1.8 billion dollars. Still, we feel this is a request that 
will have broad public health impact and will enable us to 
continue to exert our leadership in international health. And 
perhaps, we can talk more about this issue in the question and 
answer.
    Even under our constrained budget environment, CSH has the 
highest funded technical sector in the USAID budget and the USG 
remains the largest bilateral donor for health assistance in 
the world. To maximize the impact of our health resources, 
USAID is leveraging monetary contributions, information, ideas, 
and technology from the private sector. These private-public 
partnerships have dramatically increased our impact. Let me 
give you an example. Last year, the PMI leveraged private 
sector resources to provide eight million insecticide treated 
mosquito nets in four countries. Others have extended treatment 
for pneumonia, delivered fortified foods, and put the world on 
the brink of polio eradication.
    With the funding provided by Congress in 2008, the Child 
Survival and Maternal Health component of what we do has had 
the opportunity to develop a new five-year strategy. And I 
think you will find this interesting. We plan to focus the 
major share of those resources in about 30 USAID-assisted 
countries that represent at least 50 percent of all the 
maternal and child deaths worldwide. And here is the goal. We 
will work with these priority countries to achieve an average 
25 percent reduction of maternal and under-five mortality, as 
well as, we hope, a 15 percent reduction of child malnutrition 
in at least 10 of them. At the same time, to help address the 
human resource crisis in these countries, we are making an 
historic commitment to increase by, at least 100,000, the 
number of trained, equipped, and supervised community health 
workers and volunteers serving at primary care and community 
levels. This new strategy will be continued in fiscal year 2009 
with a 370 million dollar request for the Child Survival and 
Maternal Health component of the CSH funding. In family 
planning and reproductive health, the request from all accounts 
was 328 million and from the CSH account about 302 million. We 
will still, even at that rate, remain the largest bilateral 
donor in the world.
    Since 2002, we have more than doubled the funding directed 
to high need countries in Africa. In Africa, our programs 
typically are integrated closely with maternal and child health 
programs, with a special focus on postpartum family planning. 
In countries where HIV/AIDS prevalence is high, efforts are 
made to improve access to services by HIV positive women and 
couples.
    The HIV/AIDS 2009 CSH request is 342 million dollars and 
that will support work in 90 countries outside of the 15 PEPFAR 
focus countries. These non-focus or other bilateral countries 
account for about 50 percent of the HIV infections worldwide. 
USAID works very hard to integrate these CSH non-focus HIV 
programs with other USAID health and development programs and, 
of course, the strategy for the implementation of that is done 
under the direction of Ambassador Dybul. In some of these 
countries, USAID is the only USG presence addressing the 
epidemic, providing a lifeline for those infected and affected 
by the disease. With the generous increase in funding provided 
by Congress for the international tuberculosis control, USAID 
will scale up interventions, talking about 2008 here, for MDR 
and extensively drug resistant TB. Additional funding will be 
targeted to countries with performance in either case detection 
or treatment outcomes. This strategic approach will be 
continued in the 2009 85 million dollars request for TB 
programs under the CSH account. Another 12 million is 
anticipated to be spent from other accounts.
    Progress in scaling malaria prevention and control 
interventions by PMI and our international partners has been 
dramatic. This is one of those places where the increases 
really have occurred, in addition to HIV. There is now growing 
optimism with the national malaria control programs and 
partners that malaria in Sub-Sahara Africa can be controlled. 
The fiscal year 2009 request of 385 million dollars from all 
accounts and 300 million from CSH for malaria meets the funding 
pledged by the President when he accounted PMI in 2005.
    Coming to the end here, we have a 25 million dollar fiscal 
year 2009 request for neglected tropical diseases, which will 
expand the program launched by Congress, which in its first 
full year, delivered about 35 million treatments in four 
countries to 14 million people. The new presidential initiative 
will dramatically expand this to 300 million persons in 30 
countries at a price tag of 350 million dollars over five 
years. We will begin to scale up soon.
    USAID is also intensely focused on the simultaneous efforts 
of preempting the emergence of pandemic capable virus, Avian 
influenza, and assisting countries to prepare for the potential 
of a pandemic. In the last two-and-a-half years, and partly 
because of the support of Congresswoman Lowey, USAID has spent 
335 million dollars, including 115 million last year. And, as 
she pointed out, the request for this year is 50 million 
dollars that we will focus largely on three countries, which 
have shown the greatest immediate potential for initiating the 
pandemic, if it happens Indonesia, Egypt, and Vietnam. USAID 
remains the major contributor to approaches that strengthen key 
elements of health systems, doing so in ways that link these 
investments to improved health outcomes.
    I think Americans can be proud that millions are alive and 
healthy because their tax dollars were wisely and 
compassionately used abroad. The need for continued United 
States global health leadership is important and apparent. 
Thank you, again, for your continued support and the 
opportunity to testify before you today.
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                                 AFRICA

    Mrs. Lowey. I want to thank you both for your testimony and 
Ambassador Dybul and Dr. Hill, you can both respond to the 
fiscal year 2009 budget cut from $741 million to $587 million 
in health funding for Africa. Nearly one-third of the 30 
country programs in Africa will see their budgets reduced by 
more than $10 million. Can you provide an explanation and what 
percentage of the unallocated funding within the central global 
health budget will be provided to African countries? What 
impact will the family planning funding reduction have on 
Africa? And perhaps you can explain why Africa, with its 
extraordinary needs, as presented in your testimony, appears to 
be disproportionately impacted by the decrease in global health 
funding.
    Mr. Hill. Well, let me take a stab at that to begin with. I 
think the most difficult questions we ever face have to do with 
the request levels on health programs, and I would be less than 
honest if I were not to say to you that as someone who 
passionately cares about these topics, we always wish the 
requests were much higher than even what is appropriated by, 
generously appropriated by, Congress in the field of health. We 
know what can be accomplished and, therefore, we very much want 
to have as much opportunity to make a difference as possible.
    On the other hand, I have to acknowledge that it is a very 
painful and delicate budget process each year, where even 
within health there is debate our priorities, and it is--I 
think, as Ambassador Dybul testified--that there was an 
increase of, a considerable increase of about 340 million 
dollars in the 2009 request for HIV. Also there is an increase 
in malaria. The actual request by the administration this year 
is about the same as last year, in terms of the request levels. 
The priorities have changed a little within the health fields, 
with more going to HIV and malaria.
    But beyond health, there are other things that the 
administration and OMB is thinking about. We are doing 
something with respect to USAID that has to do with the bigger 
increase request to Congress for OE. It is not a lot of money, 
but it is 92 some million dollars to implement the Development 
to Leadership initiative, to bring on 300 new foreign service 
officers. These are all part of the overall request from the 
administration and the money, it is felt, needs to come from 
someplace. So--

                            FAMILY PLANNING

    Mrs. Lowey. Perhaps you could just address the cut in 
family planning funding. What would the impact be?
    Mr. Hill. Well, you are right that the first, I think, five 
or six years in the administration, we spent, or the request 
was, about 425 million dollars. Sometimes, we even got a little 
bit more than that. The impact on family planning--I have 
always wanted to spend more on family planning--the results of 
what we have done this far as reported in the written testimony 
would indicate that since we began the family program in 1965, 
we went from 10 percent of the developing countries having 
access to family planning, to 42 percent. We increased by over 
400 percent. We have reduced the number of children per family, 
in our 28 biggest family planning programs, from over six to 
three. We have had phenomenal success. We have graduated a 
number of countries and we have a lot of players in the game 
right now.
    And by the way, you asked about Africa. I should indicate 
there has been a major, over the last year or two or three, 
refocusing of family planning monies towards Africa, in 
general. So, I would have to look at the statistics 
specifically on 2009 relative to 2008; but, in general, we have 
been moving monies from other parts of the world to Africa. We 
are cutting down in the Philippines and other places where we 
will be graduating soon, and moving money to Africa. So, we 
agree that the greatest needs remain in Africa and we will try 
to continue to focus more there.
    So, we will try our very best, with other monies we have 
for family planning, to prioritize and to get the most we 
possibly can out of the dollars that we can spend.
    Mrs. Lowey. Before I turn to Ambassador Dybul, we know that 
the number of women of childbearing age continues to increase. 
So, to decrease the amount of money for family planning does 
not seem to make much sense. Ambassador Dybul?
    Ambassador Dybul. Thank you, very much, Chairwoman. You 
know, in terms of Africa and HIV, we have done extremely well. 
The President's request for 2009 is an increase for our 
bilateral programs from the request of around 340 million and a 
little bit more than that from the enacted level. So, our 
bilateral programs will increase considerably and Africa 
receives the vast majority of our resources. And if you look at 
the treatment that you mentioned, 1.45 million globally, 1.3 
million in Subsaharan Africa. And if you look at all of the 
results that we have, whether it is counseling and testing or 
PMTCT, you see that same proportional demonstration in Africa, 
and that is because two-thirds of the people infected in the 
world reside in Africa. So, 12 of the 15 focus countries are in 
sub-Saharan Africa; Haiti, Guyana, and Vietnam together do not 
have as many infected people as one of the focus country in 
Africa. So, as you look to the future, there are other 
countries in Africa where we have a lot of money that aren't 
yet focus countries; Zimbabwe, Democratic Republic of Congo, 
Malawi are countries where we have substantial investments, as 
well. So, Africa has done very well under PEPFAR and will 
continue to do so, in terms of our global AIDS dollars.
    Mrs. Lowey. My times is up. We will continue this 
discussion, I am sure. Mr. Wolf?

                      Mr. Wolf's Opening Remark's

    Mr. Wolf. Thank you, Madam Chair. I want to thank you both 
for your work and for the good job you do. I have so many 
questions, but there is not a lot of time to go through. Some 
are more specific. But, overall, how well does China do or 
Russia do compared to the United States on the programs that 
both of you are involved with? How much China and Russia put 
in, with regard to your program and, Mr. Hill, with regard to 
your programs? Try to make it as specific as you can, because 
we are on our five-minute rule--
    Ambassador Dybul. China--in terms of HIV/AIDS, Russia has 
not put substantial resources towards HIV/AIDS. They have 
increased them by 167 percent over the last couple of years, 
starting from about $10 million and are now about $167 or $150 
million a year. China, on the other hand, has substantially 
increased their investment in HIV/AIDS, into the hundreds of 
millions of dollars.
    Mr. Wolf. Outside the country?
    Ambassador Dybul. In the country.
    Mr. Wolf. No, what about outside?
    Ambassador Dybul. Outside of the country, I know that 
Russia has, and I hear that China is beginning to contribute 
resources to the Global Fund. I have not seen much in the way 
of specific HIV activity, in terms of investment. My 
understanding of the investment of China, in particular, in 
Africa is more general infrastructure and other activities, but 
not specific to HIV/AIDS.
    Mr. Wolf. Do you not think the administration should be 
pressuring both China and Russia and there are a number of 
other countries that would fall under that category, whose 
economies are relatively good. With the price of oil, Russia is 
doing very, very well. Should not the administration be very 
aggressive in pressing these countries?
    Ambassador Dybul. We are aggressive not only with these 
countries, but all countries with resources. HIV/AIDS is a 
global epidemic that requires a global response and those 
resources----
    Mr. Wolf. But how effective have you been or has the 
administration been?
    Ambassador Dybul. We have not been as effective as we would 
like to be. We would like to see increased resources and we are 
working to do that.
    Mr. Wolf. But, I never hear the administration talking 
about that.
    Ambassador Dybul. Well, we do talk with all of our 
partners. And I was in China recently and because the Global 
Fund board meeting was there, the Global Fund is working with 
those countries to try to get increased investment from them. 
Again, there has been some modest success there. But, it is an 
area where we are very concentrated on increasing resources, 
not only from those countries, but from other countries with 
resources.
    Mr. Wolf. Well, I think the administration--should not. 
Bono and others be speaking out urging the Chinese to do more, 
the Russians to do more, and some of the other countries, 
Singapore, and countries like that.
    Ambassador Dybul. I would not want to speak for Bono, but 
we believe everyone should be speaking out for the global 
increase.
    Mr. Wolf. Well, then I am going to request, can I start 
hearing the administration begin to put some pressure or 
positive examples on some of these countries to participate and 
do more?
    Ambassador Dybul. Yes, sir, we will continue our efforts 
and expand our efforts to get the rest of the world to respond 
in an appropriate way to the epidemics.
    Mr. Wolf. Mr. Hill, how do they do in your area?
    Mr. Hill. Let me begin with Russia. Recently, I think it 
was last week, there was a delegation of about 10 people from 
the Russian foreign ministry primarily, who were here at 
President Putin's request, because he has announced the 
creation or he is going to create a foreign assistance agency. 
And they have visited--they were visiting us, as well as other 
places, such as WHO, et cetera, to try to find out what they 
ought to do to contribute to the developing countries. I had an 
hour with the group. The last meeting with them, I made an 
appeal to them that a primary focus of what they could do that 
would be very useful is to work on health issues, that there 
was a lot of low hanging fruit there. We have had some 
cooperation with Russia in some projects where we have helped 
train some health workers in Moscow that then turned around and 
went to Africa to work on HIV matters.
    Mr. Wolf. But how are they doing now?
    Mr. Hill. Right now, I mean, they have billions of dollars 
of surplus. They have enough money, they should be able to put 
more into this. But there are two parts to the answer of this. 
I would like them not to just be thinking about how to expand 
their influence and goodwill abroad, but to contribute at home 
as well. They have a huge infrastructure health problem in 
their own country that they need to address, as well. We work 
with them on HIV and TB and maternal and child health matters 
and they can put a lot more money into their programs, too. So, 
I think they will do more of this. I have mixed feelings about 
them doing a lot abroad. But, if they focus on areas like 
health and make a good contribution, they can be part of the 
solution.
    Mr. Wolf. So, we can move on to the next question. Give 
Russia and China a grade today, how would you grade them?
    Ambassador Dybul. In terms of responding to their own 
epidemic----
    Mr. Wolf. Outside, briefly, a, b, c, d, f.
    Ambassador Dybul. Well, I mean, being from the State 
Department----
    Mr. Wolf. Well, that is what I want----
    Ambassador Dybul [continuing]. It is tough to give it a 
grade.
    Mr. Wolf. But, I want to hear--the State Department does 
not know. You know. How are they doing?
    Ambassador Dybul. They could do better; they could do 
better.
    Mr. Wolf. But can you give them a grade?
    Ambassador Dybul. I cannot give them a grade. I think they 
can do better.
    Mr. Wolf. Why can you not give them a grade?
    Ambassador Dybul. I do not spend a lot of time going 
through all the numbers and their dollar amounts.
    Mr. Wolf. But, you know more than anybody else in the 
government. This is your area.
    Ambassador Dybul. I would say that they could do more both 
internally and externally to combat HIV.
    Mr. Wolf. With all due respect, I want the recognition, I 
think you are ducking the issue. Can you give them a grade, 
Russia and China?
    Mr. Hill. It would probably be c minus or less, because 
they just do not put any money into making major contributions 
abroad. As I say, I have mixed feelings about going back to the 
Cold War era, where given the direction that Russia is going in 
a number of areas, I am not terribly excited about them doing a 
lot on democracy enhancement around the world, based on what 
they are doing at home.
    Mr. Wolf. No, but I meant not in democracy, but in health, 
child survival----
    Mr. Hill. In health, there is no reason why they could not 
and should not do more for their own people and abroad, and 
they have acknowledged that they have done almost nothing on 
this, which is why they want to set up an agency.
    Mr. Wolf. Okay. And the next question--if you could submit 
for the record all the efforts both of you have made with 
regard to the administration asking Russia and China and other 
countries to participate, so we can see how effective you have 
been.
    The last question is, because of time, what impact is the 
current economic situation with the cost of fuel and food and 
all, having on both of your programs around the world? I mean, 
if you look at a dollar today compared to the pound, compared 
to the Euro, when you put this budget together versus last 
year, what impact is that having on both of your programs?
    Mr. Hill. Well, you know, I am not responsible directly for 
nutrition and food, but I have been reading the reports. I 
think the biggest impact on USAID right now is the price of 
food and how much we can do with the amount of money we have. 
That is the most significant crisis with respect to what USAID 
does abroad, as far as I know, relative to the cost. In the 
health area, the costs for our programs in the 50 countries in 
Africa, for example, can vary so much in terms of inflation and 
other factors. It is hard to generalize. But the fact that the 
health dollars have quadrupled for USAID has allowed us to more 
than compensate for any increased cost of doing it. So, we are 
overwhelmed by the opportunities to do much more. It is not 
like it has been flat lined for the most part overall and that 
has helped us to handle cost increases that occur in various 
programs.
    Mr. Wolf. How about your----
    Ambassador Dybul. Same as Dr. Hill. Because the increases 
have been so substantial for AIDS program, we have not seen a 
diminution in our ability to expand our programs and you can 
see from the numbers the great expansion. There are problems in 
certain countries with hyperinflation and other areas. And 
while we experience those things, we buy offshore. So, drugs 
and other commodities are not purchased with those inflationary 
costs. We have established a supply chain management system, 
for example, to ensure that we have the lowest prices available 
regardless of those types of fluctuations. So, it can be an 
issue and it is something that we monitor, but we have been 
able to implement programs and implement basically get-arounds 
where these problems occur. But, there is no question that the 
dollar--the decline in the dollar has had some impact on our 
buying power in some of the countries.
    Mr. Wolf. Thank you, Madam Chairman.
    Mrs. Lowey. Thank you. Mr. Jackson?
    Mr. Jackson. Thank you, Madam Chair. I just want to--I 
think I have two questions and I want to follow-up on a 
question raised by--on the question raised by Mr. Wolf and the 
inquiry initially offered by the Chairwoman. There has been 
some questions about the capacity of sub-Saharan African 
nations to actually absorb either increased revenue funds in 
the child survival accounts or in additional capacity to handle 
the HIV and AIDS crisis. And so, some have argued that China, 
Russia, other countries should make a greater contribution to 
the global fund. But, even with that greater contribution, some 
have sought to argue that those sub-Saharan African nations are 
incapable of absorbing more funds because of the local 
healthcare capacity, that is the shortage of healthcare 
workers, the shortage of doctors, the shortage of clinics, the 
capacity, the infrastructure at the local level to actually 
absorb, to handle, or provide the service. I would like your 
comments on that.
    But just before you do, which I think is a logical follow-
up to what Mr. Wolf was saying, I want to follow-up on a 
question, on the line of questioning raised by the Chair. In 
past hearings, I have raised concerns that we are not 
comprehensively addressing the best way to promote global 
development and health. And while I support funding for our 
global HIV/AIDS programs, I am disappointed that we have 
severely cut by 14 percent our child survival and healthcare 
programs. What we increase on the one hand, we appear to 
decrease on the other hand. And I think some of these questions 
go the heart of capacity. When I look at this book here that 
lays out the administration, the State Department's proposal, 
we look at Ethiopia, the actual 2007, and then we compare it to 
2009, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South 
Africa, Tanzania, Uganda, and Zambia, almost all PEPFAR 
countries in Africa are facing cuts, some drastic to their 
child survival and healthcare programs relative to fiscal year 
2008 levels. And according to this justification, Ethiopia's 
global HIV funds are flat, but its child survival funds are 
slashed by almost 57 percent. Kenya's global HIV funds are 
flat, but its child survival funds are cut by almost 48 
percent. Zambia's global HIV funds are flat, but its child 
survival funds are cut by 56 percent. These are some of the 
poorest countries in the world facing the highest rates of 
mortality for children under five and, yet, the budget proposes 
to cut the very funds that prevent that.
    These are just a few examples of what seems to be a growing 
trend for funding non-AIDS health accounts. As you know, the 
same communities where you are saving lives threatened by AIDS, 
lose children under five and women in childbirth, because these 
programs have not seen comparable investment or any increase 
when adjusted for inflation. I would like to hear your thoughts 
on that, Dr. Hill and Ambassador Dybul.
    And then lastly, I strongly support funding for PEPFAR and 
the Global Fund. But, Ambassador Dybul and Dr. Hill, are our 
successes in AIDS treatment coming at the expense of not 
treating completely preventable health problems, as justified 
or as requested in this particular budget?
    And maybe my last question, so I can just get it out of the 
way, child survival, maternal, and health funds are used to 
support immunization, micro-nutrients, diarrheal disease 
control, prenatal and postnatal care, safe delivery, prevention 
and treatment of infection, newborn care, and other basic 
health services that save the lives of women and children. We 
are not talking about antiretrovirals or anything complex. We 
are talking about basic healthcare. Yet, these funds were cut 
by 18 percent. Why? And cannot we do both global HIV and child 
survival?
    I thank the chair for the time and I look forward to your 
answers.
    Mr. Hill. Let me begin with the question about the 
infrastructure in Africa. You are right to point to how 
significant a problem it is. In fact, if you look at what the 
development experts write about it, they will talk about some 
countries in the world, and say, ``we think we can get here in 
three years or five years or 10 years.'' If you flip over to 
the back of the book and read what they say about sub-Saharan 
Africa, they might use numbers like a half a century. They feel 
that the infrastructure is so weak and the resources are so 
lacking. So, they talk in terms of decades. So, you are 
absolutely right to say that, which means that those of us who 
do strategic planning about what to do with the resources we 
spend there must bear this in mind, and I would point out that 
between 2001 and 2008, the ODA, Official Development Assistance 
to have tripled and the amount spent in Africa has quadrupled 
Africa. So, there is far, far more resources going into Africa 
now than just seven or eight years ago.
    But it is not just a question of how the money goes in or 
how much you have to put in. The question is what do you do 
with the money that addresses the problem that you mentioned, 
Congressman Jackson. And the answer is that we do not let any 
proposal get by us for what will be done with the money in any 
of these accounts, whether it is PEPFAR, and Ambassador Dybul 
and I sit on a committee with Bill Steiger at HHS, where we 
approve on what the plans will be for what happens in these 
countries in Africa. No proposal passes that does not answer 
three questions. One question is how will this program be 
sustained? What impact will it have on infrastructure? And how 
will it leave something behind? Second, how does what we are 
doing fit with what the Global Fund is doing and other 
international groups are doing? And third, how does it fit with 
what other bilaterals are doing? If they cannot give good 
answers to these questions, particularly that first one on 
infrastructure and sustainability of health systems, we send it 
back to the drawing board. So, virtually every program we run 
has a component, which is supposed to work with the ministries 
of health, the ministries of finance for continuous financing 
that will make a difference, that will hopefully accomplish 
more than just do an immunization or treat some particular 
disease.
    Now to your tough question, again, on the priorities and 
why there is less money for CSH in certain countries in Africa. 
I would note that the big increases in, and I will leave HIV 
aside for a minute, malaria and what is anticipated now in 
neglected tropical diseases will have a lot of impact on the 
children and the mothers and everybody who lives in Africa. 
When you have a million children a year under five who die from 
malaria, and the goal of PMI is to address that with these 
dramatically increased funds and if the reauthorization bill 
goes through, which has got a lot of money in it for malaria 
and TB and not just HIV, the possibility of significantly 
reducing mortality will really have a big impact because of 
those priorities of monies. Should we have taken the money out 
of CSH and put it into malaria? That is a debate that health 
experts will have.
    Mr. Jackson. Can we not do both?
    Mr. Hill. It would be nice to do both. If there would be 
sufficient money, that would be the best way to go, of course.
    I want to say something on neglected of tropical diseases. 
We talk about mortality figures. We often do not talk about 
morbidity figures. There are whole villages in Africa where a 
great many in the village are blind. I mean, it is 
unbelievable. The burden and the suffering on the economies and 
the families in the countries are unbelievable. They are called 
neglected tropical diseases for a reason. And I think we are 
going to get a good response from other donors. And The Gates 
Foundation sent an immediate note to the administration 
expressing support for this. So, I guess the only thing I would 
say is if there are tough decisions, which have to be made 
about where do you put your money and how do you save the 
lives, that is always going to be painful.
    And I will end with this point, I think one of the biggest 
differences in this administration and how we have done 
business and how we have done business before, with the 
exception of just the tripling of the ODA, which is huge, it is 
this emphasis on public-private partnerships. USAID, from 2001, 
has leveraged 1.4 billion dollars in tax dollars for 4.8 
billion dollars of contributions from the private sector. So, 
it is not just what USAID or the USG or PEPFAR does, it is a 
huge--we have a lot more partners now for PMI and the neglected 
tropical diseases we estimate is going to be in the range of 
hundreds of millions of dollars for the drugs that are going to 
be donated. So, we are leveraging our funds very well, even 
when, in some cases, they appear to be going--they are going 
down some, in terms of the request.
    Ambassador Dybul. Congressman Jackson, I think you, as Dr. 
Hill said, the question of absorption is a very important one 
and why I spent so much time about what we are doing to build 
the absorptive capacity and capacity of countries. And it is 
fascinating, if you look by country overall, you see the exact 
same slope when you begin interventions. It is a slope that 
looks like that, because you begin building capacity and then 
as the capacity is built, you can expand your programs. And 
where you begin on that slope determines where you are. So, 
most of the focus countries are in the expansion trajectory. 
Botswana is now approaching what is considered universal access 
for prevention, care, and treatment, particularly treatment and 
care. But there was a time in 2002 when everyone was highly 
critical of them, because it took them two years to get 200 
people in treatment. Now, they have over 100,000 on treatment. 
They had to build that capacity to expand the program.
    If you take a country like Mozambique, that has 600 doctors 
for 20 million people, you can see that there is an absorption 
issue. And that is why we spend so much of our effort building 
capacity as we go and that is why we do not ask for massive 
amounts of money each year. We increase on an annual basis our 
request, because we are building the capacity so we can expand 
our programs. And that is an important part of what we do.
    Relative to flat-lining, in terms of African countries for 
HIV/AIDS, they are flat lined in our request, because we 
always, in each year, look at the money that is available and 
how countries are doing, what capacity they have, and how they 
did relative to their goals, because we are very results 
oriented. So, all of those countries are likely to see an 
increase in HIV/AIDS resources next year. But, at this point, 
we cannot determine that.
    In terms of the impact of treatment of HIV versus all these 
other issues, I think it is a very important one and a 
difficult one. But, I think HIV, particularly in Subsaharan 
Africa, is just unique. The fact of the matter is that there 
are very few diseases that kill 15- to 50-year-olds. Fifteen- 
to 50-year-olds are the parents, the teachers, the healthcare 
workers, the peacekeepers. HIV disproportionately kills all of 
those people. That is why as we have seen treatment, we see 83 
percent reductions in non-HIV infected infant mortality, 
because the parents are staying alive to keep the children 
alive, why we see a 93 percent reduction in creation of 
orphans. That is basic child survival and health and if we do 
not get the HIV/AIDS activities right, it will not work. In 
Zambia, two-thirds of new teachers were dying from HIV/AIDS. 
You can dump all the money you want into education, if all of 
your teachers are dying, you are not going to be able to 
educate. So, it all fits in together and that is why we are 
trying to link our programs better, the malaria programs and 
the neglected tropical disease programs, the education 
programs.
    It is a very good point and one we are very cognizant on 
and we thank you for continuing to raise it, something Dr. Hill 
and I and many others worked on, to make sure our programs are 
leveraging each other.
    Mrs. Lowey. Thank you very much. At some point later on in 
the hearing, I would like you to address what is happening in 
Botswana, because, as you know, economically, they are in 
fairly good shape. And after leveling off, the numbers went up 
and now I understand they are leveling off again. So we do not 
have time now, but at another point.
    Mr. Crenshaw.
    Mr. Crenshaw. Thank you, Madam Chair. You know, when I 
heard the President say he wanted to spend $30 billion on HIV/
AIDS, it certainly shocked me because when you look back, we 
spent $15 billion, and I think some good things have happened, 
and we have been a leader in the world.
    But now when you look at $30 billion, you know this 
subcommittee does a lot of things that most people back home do 
not quite understand. We have spent $23 billion on problems 
around the world, and we have got a lot of problems at home.
    So I cannot help but when I see the HIV/AIDS issue, when 
you read that 4.3 million people in 2006 contracted HIV/AIDS. 
And I think somewhere it said that for every one that we give 
antiretroviral drugs to, there are six new cases.
    So it raises the question: How much money is required 
because it seems like there is not enough money in the world to 
kind of keep on doing what we are doing, which kind of comes 
back to the question of prevention.
    Maybe you could talk some about how you view that?
    People keep getting AIDS, and we keep giving them anti-
retro-viral drugs--again, I am not a mathematician, but it does 
not seem to ever come to an end.
    So, talk some about how we focus on the prevention side 
because we should focus there. Maybe talk about the first $19 
billion we spent, how many cases came about, are we making 
progress, or are there less cases than there were before?
    I believe at the end of the day, that we have got to 
somehow figure out a way to stop it from starting because we do 
not have enough money, enough time, to cure all the diseases 
that come.
    Ambassador Dybul. Well, Congressman Crenshaw, you put your 
finger on what I think is one of the greatest insights of the 
Emergency Plan and what the American people have done, and that 
is: Unlike many other initiates, we did not focus just on 
treatment. The President said, and Congress supported it, that 
we have to do prevention, treatment, and care for exactly that 
reason.
    It is not just a money issue. It is a humanitarian issue. 
The best way to treat HIV is to prevent the infection to begin 
with, just like the best way to care for an orphan is to 
prevent the orphan to begin with. So, about 29 percent of our 
resources, if you count counseling and testing, which many of 
the people in the world do, goes for prevention activities.
    And we have actually had good news in prevention. The 4.3 
million figure is a somewhat older one. In 2007, there were 2.5 
million new infections. Now, that was not just because there 
were so many new infections. We actually had some techniques 
that allowed us to the math a little bit better.
    But one thing that is clear is that Africa, as a whole, is 
stabilizing or decreasing. We have seen a 30 percent reduction 
in HIV prevalence over a five-year period in Kenya. You saw 23 
percent reduction over five years in Zimbabwe; we saw at least 
a 50 percent reduction in Uganda over a five-year period.
    We have seen stabilizations or declines in Botswana and 
Namibia, and Zambia, and many other countries in Subsaharan 
Africa. Ethiopia another, Nigeria another. But we have seen 
success.
    When you look at the data, the reason we have seen success 
is significant changes, particularly in young people's 
behavior, because, again, it is the young people who become 
infected. That is why we supported a comprehensive approach 
that Africans developed called the ABC approach: Abstain, Be 
Faithful, and Correct and Consistent Condom use, which involves 
a lot of different things.
    Those were simply terms that mean basically: teaching young 
people to respect themselves and respect others. Consequences 
of that are: boys do not abuse young girls because gender and 
equality is a major drive over HIV/AIDS in Subsaharan Africa. 
So we are teaching young boys and young girls to respect each 
other. And we are teaching old men not to prey on younger 
girls, and teaching society that it is not an acceptable thing 
because we know that is one of the issues in Subsaharan Africa.
    We have seen remarked reductions in young men, in terms of 
their partnerships, an almost 50 percent reductions, for 
example, in Kenya as we saw prevalence come down, the number of 
men who tried to prey on younger girls, the number of partners 
that they have; very good for gender equality.
    We have seen delays in when young people become sexually 
active; we have seen the increase in condom use. So these 
behavior-change activities, the A&B behavior-change activities, 
and also correct and consistent condom use, we have seen having 
an effect.
    Now, unfortunately, the effect that we are seeing in some 
places being offset in other places, so we have got to redouble 
our efforts everywhere. But that is why we are focused on 
prevention, treatment, and care, not just on treatment.
    Treatment has the bigger price tag because, as you point 
out, it is more expensive. But prevention is where we need to 
draw a line in the sand effectively, and have the bulwark 
against new infections, and that is why we are so focused on 
prevention.
    We have a lot of activities going on. We have reported them 
to you in our annual report and other things. To even intensify 
our efforts prevention more, to take prevention to the next 
step; to use 21st Century technologies and techniques to have 
prevention, much like we went after smoking in the United 
States. But it is going to take time.
    It took 10 years for us to see a smoking reduction in the 
U.S. after the Surgeon General's warning went on. It is going 
to take us time, but we are seeing great trends, and we are 
going to keep pushing those issues in the next phase because 
you are absolutely right.
    Mr. Hill. Just to add a couple of points. I think your 
instinct that something is not going to work here, if we do not 
redouble our efforts on prevention, is exactly right.
    That is what a mathematician would say. Anybody who takes a 
look at where we are, even if you have tremendous increases in 
the global giving, if the infection rate is not brought down 
even further, it is going to be a very difficult or impossible 
task.
    It reminds me of something that happened to my wife and I, 
and our two kids, when we were living in Moscow for seven 
months in 1991. I was teaching at Moscow State University. We 
woke up one night and there was this very loud water noise in 
the apartment. We went into the bathroom and discovered that a 
pipe had broken.
    There was a huge stream of water just coming right in. It 
was completely soaking the floor. We called the front desk 
where we were. They sent down this woman with a bucket and a 
sponge. I watched her for a little while. It was 3:00 in the 
morning and she would get that water and that sponge soaked up 
and put it in the sink, and squeeze it out.
    It was obvious that it was coming in ten times as fast as 
she was getting it out. I said: ``You know you better go find a 
place to turn off the tap. You have got to get the water turned 
off.'' Sometimes that is the way we have to approach this. We 
have not figured out a way to turn off the tap.
    But the good news is that since President Bush inaugurated 
PEPFAR, and the comprehensive ABC Strategy that has been 
controversial in some ways, I think there is a lot more global 
buy-in now to the reasons for a comprehensive approach, which 
includes condoms, which includes abstinence until marriage, 
which includes being faithful, et cetera.
    If you look at the dollars that Ambassador Dybul has been 
in charge of, when you look at them on a pie chart, it shows I 
think about 6 percent for condoms, about 6 percent or 7 percent 
for sexual behavior changes in A & B, that is less than 15 
percent of the total dollar that goes to prevention.
    So it has not been too much. Probably we could spend a 
little bit more, but it will need to continue to remain 
balanced to be effective.
    Mr. Crenshaw. The really quick answer to that statistic 
that for every patient that you begin on antiretroviral, there 
are six new patients, is that going down? Was that ten at one 
time for every new one and now it is six? Is the trend going 
down?
    Ambassador Dybul. It is. There are two reasons for that. 
One, we have significantly revised the number of new 
infections. In 2006, it was 4.3, now it is 2.5. Two, we are 
greatly expanding the number of people in treatment, so that 
ratio is changing.
    It is a nice thing to say but it does not reflect the 
reality on the ground. The fact of the matter is that you need 
to treat people, keep the parents alive; keep the kids out of 
orphanages.
    But you also need to prevent infections; 70 percent to 80 
percent of the people who are HIV/AIDS positive do not need 
treatment. Everyone needs to have an infection averted.
    So those numbers are old numbers, but they do not reflect 
the reality. I think we just need to focus on prevention, care, 
and treatment because you are absolutely right, if you do not 
prevent infections, we are just going to have more treatment 
and more care, and more destruction of a social fabric.
    Thank you, Madam Chair.
    Mrs. Lowey. Thank you. Mr. Schiff.

                                MALARIA

    Mr. Schiff. Thank you, Madam Chair.
    Mr. Hill, I wanted to ask you a couple of questions about 
our malaria efforts.
    In recent years, malaria programs, supported by the United 
States and other donors, have sometimes leaned toward funding 
commodities like mosquito nets, drug treatments, et cetera, at 
the expense of cultivating the expertise necessary to help 
recipient countries implement their national strategic malaria 
plans.
    Mosquito net is not of much value if it sits in a warehouse 
because there is no expertise to implement a plan to deliver it 
to vulnerable people in a remote, sometimes hostile, 
environment where malaria is endemic.
    Can you tell us what USAID is doing to ensure that there is 
an appropriate balance struck between funding commodities and 
capacity?
    Can you explain the role of the NGOs in providing the 
technical expertise to overcome operational bottlenecks?
    And then can you discuss a little bit a related question 
about the sort of competition between efforts to eradicate 
malaria, and efforts to try to prevent it or treat it?
    I know that there has been debate with some of the strong 
funding by private organizations like The Gates Foundation, 
that have a focus on radication, while others in the field feel 
that is pie in the sky, and diverts necessary resources from 
the other part of the malaria effort.
    So if you could address that issue as well?
    Mr. Hill. Very interesting questions. I am just struck by 
how remarkably different the question is now than it was three 
years ago. I am in my fourth year in charge of global health. 
When I came in, the concern about USAID was exactly the 
reverse.
    The concern was, and there were lots of critics, on both 
the conservative and liberal sides, who had looked at the way 
USAID had spent its money and said: ``You know you are paying a 
lot of consultants and doing TA, but you are not providing any 
commodities.''
    They tried to hold our feet to the fire and say: ``How many 
nets, and how much medicine, and how much indoor residual 
spraying, et cetera have been provided?''.
    In fact, once we got over being defensive about the attack, 
we actually decided the critics were, in part, right. We went 
back to the drawing board and we went into see then 
Administrator Nazios and proposed a radical change.
    The radical change was that, in fact, we were going to try 
to ramp up, try to do more on commodities, try to concentrate 
the money and not spread it all over fifty countries in Africa, 
or Asia, whatever, and try to have more impact. So that is what 
we did.
    Now, our critics, almost without exception, have come 
around to say: ``You have finally gotten it right. I wish you 
had not taken so long, but you have finally got it right.'' So 
I have not had a question about not giving enough TA for quite 
some time now. It is kind of pleasant to get it.
    The basic thrust of your question is absolutely on the 
money. You cannot have a pendulum that swings from no TA to all 
TA or all commodities to no commodities. You have to have the 
right balance. You have to have the supply chain management 
mechanism in place. You have to have the TA to train the folks 
who do the spraying. They have to know what kind of spray to 
put on the hut depending on what kind of a surface is inside.
    If you do not do that, your money is wasted on commodities. 
So your point is well taken. Admiral Zemen, who is in charge of 
the President's Malaria Initiative and sits in the Global 
Health Bureau, is doing a terrific job. He has a whole group of 
interagency experts working on this, and they believe the same 
things you do: That you have got to maintain the balance, and 
it must have the appropriate amount of training and sustainable 
TA to see it work.
    Ambassador Dybul. If I could jump in, and I am sorry to do 
this, but it relates to a point that the Chairwoman asked, and 
Mr. Jackson asked, which is: How are you putting these programs 
together?
    I think it is a great example of how you can put TB, 
malaria and HIV together in Zambia, and Mrs. Bush announced 
this project. We support a program called RAPIDS that because 
of HIV/AIDS goes into homes, with 22,000 volunteers that reach 
350,000 homes, because they are going in to take care of 
orphans, and they are going in for HIV care in the home.
    If you are going to someone's home once a week, or once 
every two weeks, you can take a bed net. And if you are going 
to the home once a week or once every two weeks, you can 
actually make sure the bed net is hanging in the appropriate 
way to make sure it is out.
    So, in a public-private partnership, USAID and PEPFAR, 
because HIV-positive people need nets too, delivered 500,000 
bed nets to homes that would cover 1.5 million people. We did 
that at a cost of three-quarters less than it would have cost 
the President's Malaria Initiative because they used our 
infrastructure. And the infrastructure is usually two-thirds 
the costs of delivering the bed nets, and the private sector 
paid for half the bed nets because we needed a public-private 
partnership.
    Now, we are going country by country with the President's 
Malaria Initiative to see how we can do that, which just gives 
you more money so you can buy more bed nets because we have an 
infrastructure that is going out to deliver them. So I think it 
is a very good example of how you put things together.
    Mr. Schiff. Thank you, that sounds wonderful. Could you 
also comment on the issue of the eradication?
    Mr. Hill. Yes, that is an interesting question. We also had 
this debate about polio whether you control it or eradicate it, 
and TB and malaria as well. And you have got the advocates 
spending lots of money on research to get the vaccine that will 
deal with all these things.
    Again, it goes back to your initial assumption at the very 
first: your sense that there probably has to be a balance is 
the right answer for this question as well.
    You need major money going into research, even though the 
research may take five, ten, twenty years to produce the 
results you want. But if you put it all into research, lots and 
lots of people will die right now of things that can be 
controlled if treated properly.
    So one of the ways that we cooperate with The Gates 
Foundation, and other donors, is that they sometimes feel that 
the niche they ought to work in, or the NIH, for that matter, 
and other parts of the U.S. government, feel that the niche 
they ought to focus on is the vaccine for avian pandemic, or 
work on TB or malaria, or HIV.
    USAID has always been on the front lines of dealing with 
the problem in the field. Where we get involved with research 
is: Once it comes out of the laboratory and they are ready to 
pilot test it, whether it is zinc, or whatever it is, we will 
do that.
    But a part of USAID, or other donors, is work on developing 
the vaccine, so we support it but it would not be the best use 
of our money.
    Thank you, Madam Chair.
    Mrs. Lowey. Thank you.
    Dr. Weldon.
    Dr. Weldon. I want to thank both the witnesses for the work 
they do. It is a pleasure to have you in front of the 
Committee.
    A couple of quick questions: At my request, the Committee 
inserted some language regarding accountability for the Global 
Fund. Specifically, I had received complaints from faith-based 
initiatives that they were ignored.
    It was not really clear to me if it was bias on the part of 
the Global Fund, or just the fact that these faith-based groups 
do not have the resources to apply for grants.
    We asked for a report within 120 days. I realize that 120 
days has not gone by yet. I assume that you both are involved 
in preparing that document, and that would be available to the 
committee soon.
    Can you shed any light on your findings thus far on this 
issue?
    Ambassador Dybul. Yes, I can. It is a very important point 
because, as you have pointed out, often, Dr. Weldon, faith-
based organizations provide 30 to 70 percent of the health care 
in Subsaharan Africa, according to the World Health 
Organization. We have gone out of our way in our bilateral 
programs to ensure that they are engaged in these programs. In 
fact, the malaria program, I just described, is delivered to a 
faith-based consortium.
    The Global Fund, historically, had some difficulty with 
faith-based organizations. It is something that we are aware 
of. It has something to do with their coordinating mechanisms.
    In the last year, they have had two consultations on how to 
bring faith-based organizations in the countries, to bring the 
faith-based organizations in and train them.
    They have another one in Dakar soon. They have already held 
one in Kenya. Because part of the issue is the capacity, and 
people knowing where you are. We have had to do the same thing 
because, historically, we did not have a lot of faith-based 
organizations in the U. S. government.
    Dr. Weldon. They tend to be very small.
    Ambassador Dybul. Some of them are small, but we have seen 
an increase in the number of faith-based organizations.
    One of the things that the Global Fund is now working on is 
identifying their principal and sub-recipients, so that we have 
a better sense of who is actually implementing the program. 
Once we have that, it will be easier to see where we need to do 
reach-out. But we will get the report to you.
    There is no question that there has been some issues. The 
Global Fund is aware of it and it has begun working on it.

                                ZIMBABWE

    Dr. Weldon. Ambassador Dybul, you mentioned Zimbabwe. There 
was an article that was brought to my attention in The 
Washington Post by a Craig Timberg that people in Zimbabwe are 
attributing the decline in the AIDS rate to the decline in the 
economy, and the fact that you have less concurrence, multiple 
sexual partners at the same time.
    I thought that was pretty striking; and I thought it was an 
indirect validation of the importance of our preventive 
educational initiatives. Is that an accurate assessment?
    Would you agree with Mr. Timberg's analysis on the ground, 
in Zimbabwe, I assume you have been there and you have some 
people who are there, and can speak with some insight on that? 
Is that correct?
    Ambassador Dybul. I think it is an excellent point. As you 
said, it is very indicative.
    The science has not demonstrated that that is the specific 
impact. But when we look at the data that show the 23 percent 
decline in prevalence in Zimbabwe, we did see a very 
significant reduction in the number of men with multiple 
partnerships in the last year.
    So the anecdotal evidence actually reflects well the 
demographic health-survey data. And these are data we see 
repeated over and over again. There is no question that 
multiple concurrent partnerships, which is a culturally 
accepted practice in a number of places in Subsaharan Africa, 
is contributing to HIV. There is very good data on that.
    That is one of the reasons we focused so much on being 
faithful activities. Uganda called it zero grazing because that 
was culturally appropriate there to teach a man that they 
should stay with a single partner. So these be-faithful 
activities we think are very important.
    And the anecdotal evidence that Craig Timberg provided is 
certainly reflected in the actual hard data from Kenya and 
Zimbabwe and Uganda, that partner reduction, when men reduced 
the number of their partners, when they are faithful to single 
partners, has a significant impact on infection, and that is 
one of the reasons we concentrate so much on it.

                         TRANS-GENERATIONAL SEX

    Dr. Weldon. Another thing that was brought to my attention 
is this issue of men preying on young girls.
    In your comments earlier, you alluded to that rather 
quickly. Did I understand you correctly that you have got 
measurable indicators that that is on the decline in some of 
these high-prevalence areas as well?
    Ambassador Dybul. Yes, it is called trans-generational sex. 
It is, again, a common practice unfortunately in some areas 
where older men have sex with younger girls.
    We think it is part of the reason in some countries, two, 
three, four times the number of young girls are infected as 
young boys. We think that this is contributing to that.
    We do not have specific data yet on trans-generational sex, 
but it counts as part of those data we are seeing about men 
having fewer partners, which we think is having an impact on 
trans-generational sex.
    We have a number of programs that target these types of 
groups. There is a great new program in Tanzania actually 
getting to moving prevention to the next level to try to 
actually create television cartoons and radio characters to 
stigmatize older men who prey on younger girls. Sometimes 
stigma is a good thing.
    They are actually creating a character. I cannot remember 
his name, that we want eventually to have everyone decide to 
say: Oh, that guy is a x, to try to stigmatize him to reduce 
this type of approach.
    So we already have programs now. I imagine some of you have 
seen them, that try to teach young girls how to defend 
themselves against young boys, but also go after effectively 
the older men who prey on the younger girls. It is very much a 
part of what we do.
    We do not yet have the specific data because we did not 
have that much on the incidence of trans-generational sex 
except we know it occurs. But that fidelity data, that number 
of reductions in partners among men, would indicate that we are 
having some success there as well.

                                FISTULA

    Dr. Weldon. Thank you. I just got one more quick question 
for Administrator Hill. Congressman Smith has asked me to sign 
letters and do some things regarding the problem of fistula. It 
relates to the older men preying on the younger girls because 
the ones that are prone are these very young girls that end up 
getting pregnant. Have we made improvements under your tenure, 
over the last year or two because when it was originally 
brought to my attention, it seemed like it was a pretty 
significant problem, again in Subsaharan Africa,
    Mr. Hill. And it is also something you find in places where 
there has been civil world war. Any place where there is more 
gender-based violence and young girls are affected.
    And it is also to be found any place where the obstetric 
care for women is poor because a lot of this is caused by not 
having trained mid-wives present for a birth.
    Congressman Smith and I have talked about this for three 
years. Partly through his bringing this very powerfully to our 
attention and because we have a lot of support for it from 
USAID, we have actually had major increases, doubling, 
tripling, the amount of money that we are putting into fistula 
repairs.
    Obviously, there are two things you have to do here. This 
is a leprosy-like condition in terms that you can be ostracized 
if you have this horrible, difficult experience which you must 
live with. If you can repair the woman, that is obviously the 
compassionate and right thing to do.
    But the best way, of course, is to prevent them in the 
first place. So anything that we can do that improves the 
quality of antinatal care and skilled birth attendants, and 
training for them, is the way to prevent fistula.
    But, yes, spending is going up. It is going to continue to 
be a very important part of what we are doing. It is a very 
legitimate program.
    Dr. Weldon. Thank you, Madam Chairman.
    Mrs. Lowey. I would just like to add to that, Dr. Weldon, 
that one of the best treaters of fistula is UNFPA. And what we 
are seeing I believe in the Democratic Republic of Congo 
because of the conditions there, the increase in rapes, you 
have really seen a major increase in fistula. I think we have 
put about $25 million into fistula.
    Ms. Lee.
    Ms. Lee. Thank you very much, Madam Chair, it is good to 
see both of you here this morning, and thank you for everything 
that you are doing. You are doing a very fine job, both of you.
    Let me ask you, Ambassador Dybul, about the fact that women 
in Subsaharan Africa especially, who are receiving anti-retro-
viral treatment for example, according to the Centers for 
Disease Control, it was reported that in 2006 about 92 percent 
for instance in Uganda said that these pregnancies were 
unintended.
    And other studies show that about 84 percent of pregnancies 
among women in the three what are they called the mother-to-
child programs in South Africa, were unintended.
    So, in light of the proven impact of contraceptives, as it 
relates to helping to reduce HIV infection, does not it make 
sense to really be very aggressive in providing contraceptives 
to women in these mother-to-child transmission programs, to 
help them avoid unintended pregnancies so they do not have to 
come back in. That is the first question.
    Secondly, let me just ask you about commercial sex workers, 
and the prostitution pledge, could you clarify how the funds 
are provided, or not provided, to organizations that provide 
services to commercial sex workers?
    I had the opportunity to talk to many. I think it was in 
Zimbabwe, and 95 percent of the commercial sex workers, maybe 
98 percent, maybe 100 percent, said that if they had the proper 
schooling, education, jobs, they would not be doing this kind 
of work.
    So part of what we have to do is, I think, is increase our 
funding for technical, or vocational education, skills 
training, so that women will have viable alternatives in terms 
of being able to take care of their families. So how does this 
prostitution pledge play out at this point?
    And then, finally, on the global side, I think this year we 
are looking at 500 million requests, which is down about 341 
million from last year's contribution. I, for one, believe we 
need to really increase our contribution to the Global Fund 
because as we move from emergency to sustainability, the Global 
Fund is really an organization that is doing a phenomenal job.
    We can leverage our resources. We are partnering with other 
countries, and we are able to do quite a bit with what little 
money there is, is important.
    Ambassador Dybui. Thank you, Congresswoman Lee, and thank 
you for all the work you have done on these issues.
    In terms of your first question, it is a fact, as Dr. Hill 
was talking about, that HIV-positive people need the same 
activities as HIV-negative people.
    If you did the same types of studies among HIV-negative 
women, you would probably find the same rates that you were 
talking about among HIV-negative women. And the same with many 
other areas. Because HIV is so prevalent in subsaharan Africa, 
there is no issue of development that is not related to HIV/
AIDS.
    For our program, for the AIDS program, we believe it is our 
responsibility to the HIV/AIDS piece, whereas the family-
planning piece, and the other pieces, are pieces that USAID 
should do, and we should be coordinated and linked with the 
programming, but we should not be responsible for doing them 
any more than we can do our development. Otherwise, USAID would 
not exist.
    Mr. Hill. Do you mean testing for HIV?
    Dr. Weldon. If you are talking about mother-to-child 
transmission, I actually think if people want to talk about 
family planning as family planning, that is an important thing 
to do.
    But, as transmission, that is a difficult issue, and there 
are a number of ethicists who have talked about the difficulty 
of saying the method of preventing mother-to-child 
transmission, as opposed to family planning as family planning, 
is difficult.
    The reason for that is a couple fold, principally because 
it is a cost-benefit analysis argument. People have used 
similar arguments to do some things that are very difficult 
such as quarantining all HIV-positive people, which could be a 
cost-beneficial way to prevent infection.
    That is not to say that family planning is not something 
that should not be supported. But as prevention, it is a far 
more difficult issue.
    Ms. Lee. Do not you think at least offering condoms as a 
way to prevent infection--you do not come back.
    Ambassador Dybul. Condoms absolutely. I thought we were 
talking about general family purposes.
    Ms. Lee. No, I am talking about condoms.
    Ambassador Dybul. Since PETCO began, the American people 
have provided 1.9 billion condoms.
    As Peter Pede said, more than the rest of the world put 
together, commensurate with the fact that we have more 
resources than the rest of the world put together.
    I visited countries recently where we were the only country 
contributing to the condom provision in those countries. 
Condoms are an important part of what we do, so we do provide 
very large numbers of condoms, which we do in the context of 
also providing behavior-change education.
    Because if the women had the ability to not engage, or if 
young men did not try to prey on the women to begin with, and 
change their sexual behavior, then we would not be in that area 
to begin with. So the overall approach really gets to changing 
people's fundamental behavior.
    I think you are right. It is important to do all those 
things, and that is why we do have condom provisions.
    Ms. Lee. But when a woman leaves the hospital after having 
had a child, do we provide female condoms, male condoms.
    Ambassador Dybul. We have provided female and male condoms 
through PEPFAR. We can get you the distribution, the division 
of the two. You know female condoms have had some difficulty 
gaining cultural acceptability, but there has been some 
progress down the last couple of years. So we can get you the 
specific numbers of female versus male condoms. But it is a 
part of what we do, and Dr. Hill may actually know them.
    On the sex-worker issue, people engage in prostitution, we 
agree completely. They are not there out of choice. They are 
there because of socioeconomic and other issues. So the 
Leadership Act says that we should be providing services for 
people engaged in prostitution, that we should provide 
compassionate services.
    These are human beings and we need to provide compassionate 
prevention, care, and treatment services, and we do. We fund at 
least 120 programs. I have visited many of them. They are 
extraordinarily good programs, so we need to be providing them.
    We also do provide programs to try to get women out of 
those activities, micro-finance programs and sometimes, for 
example, in Botswana, we have programs to create candles and 
beads and other things.
    Unfortunately, sometimes we see fairly high recidivism 
rates because it is difficult to make as much money. But it 
something we are very actively involved in and we think is 
important.
    The pledge does not say that we should not do those things. 
In fact, we are doing them. We are doing more of them than 
anyone, that is part of our compassionate response. The issue 
around the so-called pledges, there is no question that 
prostitution is contributing to the spread of HIV, and there is 
no question that it is inherently demeaning to women.
    So, as a general principle, we believe we should be opposed 
to sex trafficking and prostitution. But that does not mean, in 
any way, that we do not provide compassionate services in a 
very generous way, in a non-judgmental way, towards the women 
who are engaged in those activities because they are not there 
out of choice. They are there for other reasons. So we have to 
have this compassion.
    Ms. Lee. Why do we have to have this pledge, this 
principle?
    Ambassador Dybul. I think it is important to state the 
principle for those two reasons. From a public-health 
perspective, we do know that prostitution is contributing to 
the epidemic, and because we know that it is inherently 
demeaning to women. And we cannot overcome the sexual 
inequality that we have, which is important to succeeding in 
HIV/AIDS, if we support this type of gender inequality.
    I understand that there is a difference of opinion here. I 
think it is a reasonable difference of opinion, but I think we 
have a reasonable point here. As long as it is not impacting 
our ability to provide compassionate services, and it is not. 
Because I have seen these programs. They are extremely 
important programs, I try to visit them when I travel because 
it is so important.
    On the Global Fund, again, I understand your point when we 
have this discussion on an annual basis. We did increase the 
request from $300 to $500 million. Again, each year we try to 
determine, given the resources available, what the distribution 
between the bi-lateral and the multi-lateral programs should 
be. We are still the largest contributor to the Global Fund. We 
contribute about 30 percent to the Global Fund. We are a huge 
supporter of the Global Fund administratively in terms of 
secretarial support.
    For the rest of the world, the Global Fund is fundamentally 
the only vehicle for them because they do not have the types of 
bilateral programs that we have. So we do believe it is 
important to be a significant contributor to the Global Fund. 
With $500 million, we will still be the largest contributor to 
the Global Fund. But we understand the different point of view, 
and we have this discussion on an annual basis, and we look 
forward to having the discussion again next year.
    Mrs. Lowey. Thank you very much. Mr. Kirk.
    Mr. Kirk. Again, I just remember when we first bifurcated 
this program in 1985 because we were worried. As the head of 
the Harvard School of Public Health, Jonathan Mann said under 
Nakagima, the WHO in Africa was totally corrupt, and so we 
created a bilateral assistance program to make sure that we 
were saving lives rather than fueling what was then seen 
especially by public health professionals at Harvard as a very 
corrupt and inefficient delivery mechanism. I would hope always 
that we would keep two spigots going, because it does create 
some more creativity and frankly competition for the program 
and who can save the most lives, which is, of course, the 
point.
    I have another one--just looking globally at the program--
is I am a little worried about the number of people who depend 
on this program to survive and continued funding in the 
outyears. When you look at foreign assistance in the United 
States, we have gone through several dominant ideas I would 
call them. In the 1940s, it was CARE, you know, Concerned 
Americans for the Recovery of Europe and Refugees. In the 
1950s, it was infrastructure. In the 1960s, it was new 
governance. In the 1970s, we went through a big emphasis on 
basic human needs; the 1980s, structural adjustments. Basic 
education emphasized in the early 1990s, and that is still in 
our bill.
    Child survival, really huge in the mid-1990s, still in our 
bill. Microenterprise became the big thing in the late 1990s, 
still in our bill. Obviously Millennium Challenge, which has 
had an up and then down. AIDS with the 2002 commitment. I would 
say, quite frankly, right now in this bill and in the DOD bill, 
we are in the middle of a PRT wave in funding. And the question 
is, what is the next President's big thing going to be?
    I am worried, though, that we have what, roughly two 
million people who utterly depend on outside foreign assistance 
to live at roughly $1,200 a patient? Give me a sense of your 
appreciation of what in the DOD we would call the bow wave, 
which is unless you pay this money, some hugely bad things 
already happen and you cannot do anything new until you keep 
these patients alive another year, and how big that number 
should be and how worried you might be that some other huge 
foreign policy priority or another intellectual wave hits the 
Congress that commands foreign assistance money.
    I mean, what do we do now that we have two million people 
depending on foreign assistance and their home government has 
no prospect of supporting their care?
    Ambassador Dybul. Well, Congressman Kirk, it is a very 
important question, and I think it is one of the reasons we 
have so much appreciated the strong support from this 
subcommittee, because it will be important to continue this on. 
It has been a very bipartisan support, and that has been very 
important, to have the continued, ongoing bipartisan support.
    And I think it is for a reason we discussed briefly while 
you had to step away, which is that AIDS is a unique disease. 
It kills 15- to 50-year-olds, and if we do not tackle, if we do 
not manage HIV/AIDS in--I was in Lesotho recently. There is a 
village next to the one I visited with 150 people. A hundred 
twenty of them were HIV positive.
    Mr. Kirk. Here is my concern.
    Ambassador Dybul. Yes.
    Mr. Kirk. When we save that person, which is a success, in 
Fiscal Year 2008, success has really been sustaining that 
patient basically through Fiscal Year 2040.
    Ambassador Dybul. Yes.
    Mr. Kirk. There is little appreciation in the Congress or 
the public of the size of that financial commitment. This is 
sort of like a Medicare commitment or a Social Security 
commitment. It is building in a huge what might even be called, 
thought of or probably should be thought of as an entitlement 
inside the foreign aid bill.
    Ambassador Dybul. It is a lifelong commitment until we have 
a technological breakthrough that we do not know of right now, 
and it is a very good point and one that people need to think 
seriously about.
    Mr. Kirk. Here is the other thing just if you can give me 
your thinking.
    Ambassador Dybul. Yes.
    Mr. Kirk. There is a difference between adding a new 
patient, which should add a 40-year financial commitment or a 
50-year financial commitment, or expending money on public 
health and awareness and prevention.
    Ambassador Dybul. Yes.
    Mr. Kirk. Because the size of the patient population is 
utterly dependent on the U.S. taxpayer.
    Ambassador Dybul. Absolutely.
    Mr. Kirk. It then means you have less money to do public 
awareness, prevention, of which cost is the most. Give me your 
sense.
    Ambassador Dybul. Well, and that is exactly why it has been 
so important.
    Mr. Kirk. Is it 10 million patients? Is it 30 million? 
Where do we hit the bounds?
    Ambassador Dybul. The President has set the goal of 2.5 
million total for American support for the next five years. 
There are about 23 million people who are HIV-positive living 
in poor countries, of course, the poor.
    Mr. Kirk. We basically bid to the care of 10 percent.
    Ambassador Dybul. Fortunately, only 20 to 30 percent of 
HIV-positive people need treatment at any one moment, and 
fortunately, the rate of new infections per year is actually 
slowing considerably, particularly the net number of new 
infections if you subtract death from new infection rate. But 
that is why, and we talked about this a little bit earlier as 
well, that we have a comprehensive program that is prevention, 
treatment, and care.
    Mr. Kirk. But have you costed out sort of the size of the 
financial commitment?
    Ambassador Dybul. We have costed it out, and there actually 
has been concern about increased costs of therapy over time for 
HIV-positive people because of second-line and other therapies. 
When we have looked at models, that probably will not hold up, 
and the reason for that is just like the cost of first-line 
therapy has dropped substantially, the cost of second-line 
therapy will drop substantially.
    And something we talked about in terms of infrastructure. 
We actually conducted a study because we had this concern of 
four countries, and we looked at 24 sites, public, private, 
big, small, to look at the cost of treatment over time, to see 
was the cost going up, was it coming down, was it staying the 
same. What we saw was a dramatic decrease in cost in the first 
six months going from two to three thousand dollars to five to 
six hundred dollars. And the reason for that is because we had 
to pay for the initial infrastructure to get the system set up. 
Once you have that set up, the ongoing costs actually come 
down.
    Mr. Kirk. So have you costed out to care for 2.5 million 
people that really have no hope for their home government to 
care for them what is the 10- or 20-year cost?
    Ambassador Dybul. We have only done the 5-year cost, but it 
should be the same 5-year afterwards.
    Mr. Kirk. Right.
    Ambassador Dybul. And that is where we got to the $30 
billion that the President asked for for the next phase of 
PEPFAR, because that would allow us to do prevention, care, and 
treatment, including the treatment for those 2.5 million, 
prevention of 12 million new infections and care for 12 million 
individuals. So those projections are an ongoing issue for 
people to look at.
    I would also point out, however, that there are countries 
that will begin, and that is why our general development is so 
important, so, for example, South Africa over time has 
dramatically increased their resources. They are up to $800 
million a year of their own money. They were at very little 
just four years ago. So, over time, these costs will be picked 
up, and that is why the other part of our development agenda, 
the economic development, is so important, because countries 
Botswana, Namibia, South Africa, over time Tanzania, Kenya will 
be able to pick those costs up.
    Mr. Kirk. Some of these governments are successes like the 
South African government, and so over time, you would expect 
infection rates to decline, public health and awareness, so the 
patient population would become more manageable, whereas the 
basket case, totally corrupt and evil governments like Zimbabwe 
will then have larger and larger percentage patient populations 
because the state and the public health infrastructure has 
collapsed, and then you have a moral dilemma do you pay off the 
local dictator.
    Ambassador Dybul. Yes. Right. Surprisingly infection rates 
in Zimbabwe have dropped substantially, and we talked a little 
bit about why that could be, and actually their infrastructures 
are held up a little bit. But you are correct. Countries that 
are not making economic progress will actually be the ones that 
need to be sustained for the long-term, and that becomes an 
issue that we will all need to work with collectively over the 
period of time.
    But unfortunately, we probably will not be able to have 
economic development, we will not be able to have security 
unless we tackle HIV/AIDS. When you have 120 of 150 people in a 
village dying, when you have 75 percent of pregnant women in a 
district in Botswana infected, when you have two-thirds of new 
teachers dying, when you cannot field a battalion of 
peacekeepers in South Africa because they are HIV-infected, we 
cannot have peace and security in Africa, which means we cannot 
have economic growth. So it is a bit of a back and forth.
    Mr. Kirk. Yes. I just worry that once the United States 
agrees to protect this village, it is a 30-year commitment.
    Ambassador Dybul. It is.
    Mr. Kirk. So then if you agree to protect the next village, 
do you fully understand the size of this long-term? Thank you. 
Thank you, Madam Chair.
    Mrs. Lowey. Thank you. Ms. McCollum.
    Ms. McCollum. Thank you, Madam Chair. I think it has been a 
good discussion, and we have all been asking some good 
questions, and I want to thank you, gentlemen, for your answers 
on them.
    Dr. Dybul, I will start with you. PEPFAR has been a huge 
success over the past five years. It has given hope to 
millions, and you have played a large role in that, and I thank 
you for your work. We know the first years were truly an 
emergency effort. The crisis demanded enormous commitment and 
rapid response, and America led the way. Now Congress is 
working to transform the President's emergency plan for AIDS 
relief to the President's enduring plan. For PEPFAR to be a 
long-term success, our focus in the next five years must be on 
closing the chasm between HIV/AIDS services and basic health 
services: clean water, family planning and nutrition, all of 
which work better in helping to support ARVs' success.
    So, as program implementers and medical experts are 
wondering and as some are criticizing PEPFAR for failing to 
seriously grapple with the developmental challenges that 
undermine our HIV/AIDS work that I just mentioned, the Global 
Health Council President, Nils Daulaire, argued in front of the 
House Committee on Foreign Affairs last fall that HIV/AIDS 
efforts cannot succeed in the long run without linking PEPFAR 
more closely to other interventions. And I think you gave a few 
examples on that, but I need to hear more examples of what we 
are going to be doing in order to do a better job of bringing 
all our health and developmental tools to bear on HIV/AIDS.
    If a patient gets ARVs but sells them for food because they 
are starving, PEPFAR is not a success. And if an infant is born 
HIV-free from an HIV-positive mother and then dies at year two 
from diarrhea, PEPFAR has failed. The measure of PEPFAR's 
success is improving health and lives saved. So, Dr. Dybul, I 
have three questions for you.
    How much PEPFAR spending today is actually focused on 
providing those wraparound services you were speaking of? In 
your opinion, how much for wraparound is too much to make our 
HIV/AIDS intervention effective? Fifteen percent of PEPFAR 
funds, 10 percent, 5? And what suggestions could you have for 
Congress as we work to rewrite PEPFAR to help you build the 
linkages between PEPFAR and other basic health services?
    Dr. Hill, you work hard to save lives. We know that 
improving health and building a stable community demands more 
balance in our global healthcare investments. You alluded to it 
in your testimony. Eighty percent of our global health 
investment now is HIV/AIDS, 80 percent. That does not reflect 
the global disease burden or mortality rates.
    Now I am concerned about the lack of investment in child 
health, maternal health and family planning. In his testimony 
again, President Daulaire went on to say, and I quote him, 
``Antiretroviral drugs alone cannot save children without child 
health services that are currently withering on the vine 
because resources and manpower are being redirected to HIV/
AIDS. Every year as many children around the world die from 
diarrhea as people die from AIDS. It costs six cents to cure a 
child of diarrhea. Nearly $100 million invested in attacking 
the common causes of childhood death like diarrhea saves 
between 115,000 and 200,000 children. Every $100 million 
invested in maternal health provides care for 4 million women. 
Every $100 million invested in family planning prevents, 
prevents 825,000 abortions. Yet this year's budget cuts child 
survival and maternal health by $251 million.''
    So here is my other concern, and Mr. Kirk talked about it 
and a few other members did too, and it was a concern I had 
when I voted for the original PEPFAR, and it is not pleasant to 
talk about. Every person we put on treatment is a lifetime 
commitment. Every million more people we put on treatment 
extends our commitment farther into the future. A $50 billion 
PEPFAR program is going to crowd out other necessary and cost-
effective investments in global health and many other foreign 
assistance priorities.
    This is the committee of tough choices. We are going to 
have to choose which programs get funded and which ones get 
cut, and we know those cuts mean children and families around 
the world are going to suffer and not have the same hope and 
opportunity that they should have. So, Dr. Hill, you had to put 
the budget together. Could you please tell me and this 
committee what cuts are going to be made to child survival and 
health to conform to the budget request of putting 80 percent 
in HIV/AIDS?
    Mr. Hill. Let me begin. Thank you very much for the 
difficult but important questions. I think you began by making 
the, I think commendable point, that is without any question 
true, that we had better think very seriously about what the 
connection is between HIV programs and other health 
programming, and you raised a question of balance and you 
mentioned the 80 percent of health monies for HIV, and this is 
a concern of course. Let me respond to that as best I can.
    I think it is funny, I had somebody in my office just last 
week who used to work in South Africa, one of our health 
directors, and he said, you know, I remember the day we sent a 
cable to Washington begging them for $2 million for HIV. It was 
not on the radar screen. And now I think it is someplace 
between 350 and 400 million dollars that USAID is spending in 
South Africa, and I think it is well over half a billion that 
PEPFAR puts into it.
    So there has been a sea change, and it happened because 
people became so absolutely petrified by what would happen if 
an HIV pandemic swept across and decimated populations and 
everything else would fall apart if this happened. And in a 
bipartisan way, the Congress tried to address that, and now 
looking back, you could ask the question, or even looking 
forward: do we need to make absolutely sure that we do not get 
unbalanced, that we do not neglect things we ought not to 
neglect?
    And so I think your basic premise is right. I think we 
ought to keep our eye on these other parts of the health 
portfolio as well. I would indicate something I am pretty sure 
you already are aware of, but I think a lot of people are not. 
They think that if the bipartisan reauthorization bill passes 
for $50 billion, it is $50 billion for HIV, and it just 
contributes further to the imbalance you are talking about, 
when in fact, the draft bill at least would have $9 billion 
that would be malaria and TB and which would substantially 
quadruple the PMI efforts that were already large, and increase 
significantly our capacity in TB. So those parts at least can 
help the other parts of the portfolio, which will save hundreds 
and thousands and tens of thousands of lives.
    Let me also mention and amplify your point that most people 
who die of HIV, at least a lot of them, die of TB--ordinary TB, 
that they are vulnerable to because their immune system is 
compromised. Every dollar that we put into TB that is not for 
HIV-positive people can have a positive impact on what 
Ambassador Dybul is doing because there is less TB around to 
infect the people who then will require the treatment. So what 
we do with the rest of the health portfolio will have an impact 
on whether the HIV efforts succeed or do not succeed.
    There have been increases in other parts of health besides 
PEPFAR if you look at malaria and now neglected tropical 
diseases. But I think your concern about maternal and child 
health is legitimate. I think we need to focus there as well, 
although maternal and child health will be affected by the 
successes in malaria and they will be affected by some of these 
other things as well. But some of these other more standard 
things are extremely important as well and we really need to 
work on it.
    Just yesterday Ambassador Dybul and I were on a conference 
call in different buildings here in D.C. with our staffs to 
talk about how to integrate more effectively, and this brings 
me to my last point. I would hate to see a situation where 
people who are concerned about non-HIV health sectors viewing 
PEPFAR and the reauthorization bill as a way to do these other 
things, family planning and other things that are legitimate. I 
would hate for them to think that the best way to do that is to 
put it on the shoulders of PEPFAR. I think that will muddy the 
work that Ambassador Dybul has to do.
    I think it is much better to put money in the portfolios, 
whether it is USAID or whatever, that do this work and tell us 
to cooperate with PEPFAR to do the wraparounds in a way that 
makes sense rather than trying to expand the focus of PEPFAR 
into all sorts of other health initiatives, which would require 
an expansion of their infrastructure in ways that would not be 
as rational or efficient as it would be to deal with the other 
places that are actually doing the work.
    But we work together even now. Even though the pots of 
money are separate, we work now to coordinate in HIV-positive 
infested areas so to speak and will continue to do that. And 
maybe I will just add one point. We have always talked about 
health here, but to be perfectly blunt, I think this would fit 
with something Representative Kirk said earlier as well. We 
better keep our eye on the big development pictures as well.
    I mean, at some point, there may have to be a PEPFAR-like 
commitment to economic growth, because all of these things are 
interconnected. For these countries eventually to have the 
infrastructure that will support and be able to take over some 
of the burden of treatment and other primary health services, 
they are going to have to have economies that grow. There is 
going to have to be jobs for people. If there are jobs for 
people, that affects the vulnerability of young women. If there 
is education for people, it affects the vulnerability of girls 
to what gets them in trouble with HIV/AIDS. So I hope we keep 
our eye on the big development picture, and not even just the 
diverse health portfolio. Thank you.
    Ambassador Dybul. Would you like me to respond to 
Congresswoman McCollum's three questions? I will do it quickly.
    Your first question was how much money do we spend on 
wraparounds. First of all, we do have some great programs for 
general development, the Millennium Challenge Corporation, 
OPIC. How much do we spend on specific wraparounds? Let me give 
you some specific examples. In 2007, $698 million for capacity 
building, which went for physical infrastructure and also 
supported the salaries of 100,000 healthcare workers. They do 
not just do HIV/AIDS. That is not how clinics in Africa work. 
You know the clinic does HIV on Tuesdays and Wednesdays or 
Thursdays and Fridays and it is regular the rest of the time, 
or people rotate through the HIV/AIDS clinic. So we are 
actually building that capacity physically and through 
workforce.
    As I mentioned, $93 million in 2008 on food, nutrition, 
livelihoods, and clean water. A hundred and fifty million 
dollars for TB in 2008, up from $27 million just a few years 
ago. About $300 million for orphans and vulnerable children 
work. Huge amounts of money going into what would typically be 
called wraparounds, and it is having an impact. We are seeing 
TB coverage increase among HIV-positive people, which is 80 
percent of TB in some countries, from 40 percent to 80 percent. 
The malaria example I told you covering 1.5 million people with 
nets in six weeks in Zambia at three-quarters less the cost.
    And now the data are bearing this out. As I mentioned, 83 
percent reduction in infant mortality among non-HIV-positive 
kids because of our interventions and care and treatment to 
keep the parents alive, because we know there is a threefold 
increase in kids dying if their parents die. So HIV-negative 
kids staying alive. A 93 percent reduction in orphans----
    Ms. McCollum. Can I just say a qualification?
    Ambassador Dybul. Yes.
    Ms. McCollum. When you are talking about that, you are only 
talking about the increase in the focus countries, though?
    Ambassador Dybul. I am talking, correct, where----
    Ms. McCollum. Just for the record, it is not all of Africa?
    Ambassador Dybul. Correct, correct. It is where our 
intensive work is occurring.
    Ms. McCollum. Thank you. That is why I wanted to know what 
there was more of.
    Ambassador Dybul. Right, right. I understand. A 93 percent 
reduction in orphans. In Botswana, we have seen for the first 
time a reduction in infant mortality and an increase in life 
expectancy because of HIV interventions. So the impact of HIV/
AIDS is far beyond that.
    How much money is too much? What percent? Well, I gave you 
a lot of dollar amounts. If you add them all up, that is quite 
a bit. Rwanda actually as a government did an evaluation. They 
said 40 percent of their PEPFAR dollars--now they are double-
checking their math and they are even going to go to Harvard to 
work on it--but 40 percent of their PEPFAR dollars contributed 
to non-HIV/AIDS general healthcare, 40 percent. That is a 
pretty healthy number because of all those things I told you 
about.
    What suggestions could we have for Congress for language, 
and I would have to say none because it is all in the original 
Leadership Act. We are coordinating on TB, President's Malaria 
Initiative, neglected tropical diseases now, gender, water, 
food, workforce, education, economic growth. We gave you 
examples of all of it in dollar amounts. For most of it, we are 
trying to collect more of it.
    So there is no question we can do better. We are trying to 
do better on it. But all the authority is there in the 
Leadership Act, and we are trying to build on it. We are only 
three and a half years old. I think we have done an awful lot 
in these areas for three and a half years. We have a lot left 
we can do, no question about it. The authority is there, and we 
intend to use it.
    Mrs. Lowey. Before I turn to Mr. Wolf, I just want to thank 
you both for your focus on coordination. As you know, every 
other conversation we have, we have been talking about 
coordination, coordination, and I just want to say I think it 
was Dr. Hill who talked about a PEPFAR commitment to economic 
growth. I would hope that the country planning process which is 
in place led by those in the country who really understand the 
country and the community would be making those decisions in 
coordination with PEPFAR as to how best to allocate the 
dollars.
    So I know we are all on the same page. I know USAID 
Administrator Dr. Henrietta Fore is on that page. And frankly, 
on our trip to Africa in August, there was too much stove-piped 
implementation. And what we heard over and over again, one 
person would say: ``I do not have time to really know what my 
colleague is doing because I am so busy fulfilling my own 
commitments to my own grantee.'' So I would hope that all the 
testimony today focusing on coordination will only strengthen 
and that USAID working together with PEPFAR and the MCC and all 
the programs will really utilize the bottom-up country planning 
process so that the coordination becomes reality.
    Mr. Wolf.
    Mr. Wolf. Well, I thank the Chair, and I think the last two 
questions that both sides of the aisle asked are important. 
This is why I raised earlier the contribution of China and 
Russia and other countries. And I selected to be on this 
committee. This is really not a question. I want to ask you 
about the IG. But I selected to come on this committee to do, 
and I thought the gentlelady the same, to help people, to make 
a difference. My faith tells me, you know, Matthew 25 says to 
help the poor, the hungry and the sick. Long-term is now the 
next administration. That is when all these problems come up. 
And I do not think there is enough thought about it. There is 
that Simon & Garfunkel song, ``The Boxer'', ``Man hears what he 
wants to hear and disregards the rest.''
    I was talking to a group of people the other day. The 
American people are concerned about where this country is 
going. They are concerned about the subprime. They are 
concerned about the real estate market collapsing in a large 
portion of the country, whether it be Florida, whether it be 
New York or whether it be California, whatever.
    They are concerned that if you read the other day, and of 
course, you are in a different field, but Dr. Walker, who is 
head of the GAO, announced that in the next nine years or 10 
years we are going to lose our AAA bond rating. Well, if we 
lose our AAA rating, the subprime market will be like a picnic 
compared to that. And he is talking about we will have the same 
bond rating as Mexico. We have a $9 trillion debt. Russia does 
not have a $9 trillion debt. China does not have a $9 trillion 
debt. We have $53 trillion of unfunded liability with regard to 
Medicare, Medicaid, Social Security. The dollar is dropping. 
The dollar dropped yesterday. It is not going to be a shock if 
it drops again today. The cost of fuel is up now.
    So I think both sides have asked a question, and are you 
crowding out everything else that is redevelopment in southern 
Sudan, all the other issues? And I just do not know. We are 
going to have a $400 billion deficit this year. This year the 
deficit will be $400 billion. You know, maybe we need to put 
together a bipartisan panel similar to what we did on the 
Baker-Hamilton Commission to kind of take a look and to see how 
we kind of deal with this issue, because as Mr. Kirk said, once 
you have somebody relying on this, it is almost criminal to 
take them off.
    So I do not know. I think when we talk about this is a 
long-term problem, we are not talking about in the old days, it 
is 20 years out. This is next year. Whoever is elected 
President will be faced with this problem. So what I want to 
ask you, Mr. Dybul, is we had the issue we raised last year, 
the Boston Globe story about the IG, the limousines and 
everything else. How is that working, the new IG? Has enough 
been done? Is there anything else that can be done? Does the IG 
have adequate funding? And with the increased funding that is 
coming on now, a scandal of spending could just be devastating, 
particularly if people are looking to kind of move in the 
different areas. How is that working now?
    Ambassador Dybul. As it turns out, I am the Chair of the 
Finance and Audit Committee of the Global Fund, which oversees 
this area, so I have a fair amount of knowledge it. The board 
has taken very swift action on these issues. An IG is in place, 
an extraordinary IG. I hope you have had the chance to meet 
with him. He has got a year-long plan he is working on. He is 
going to present it in two weeks to our Finance and Audit 
Committee, his work plan for the year, including his staffing 
needs and the resources for that. And my vice chair on this 
committee and the entire committee and the board is fully 
committed to ensuring that the IG is in place.
    The issues that were raised in The Boston Globe were one-
time issues. That account has been closed. It was related to an 
individual who is no longer with the Global Fund. So that issue 
is pretty much set to the side. What we are really concentrated 
on is long-term strengthening of the Local Funding Agents, 
strengthening of the accountability and transparency markers. 
The new executive secretary of the Board, all the committees 
are very much committed to that. They are on track in a number 
of these areas. You have asked us to report to you on a number 
of these areas and we do so.
    And so, as with all our programs, there is a lot that we 
can improve on, but the steps are being taken. These issues 
were taken very seriously. There were a number of board 
decisions on them, and action is being taken on all of those. 
And I will be able to come back to you with a lot of 
information because I oversee for the Global Fund these 
activities, and we have our meeting in two weeks, so I would be 
happy to come back and tell you where we are.
    Mr. Wolf. How many will be on the IG's staff?
    Ambassador Dybul. The IG is going to tell us. I actually 
have a meeting with him tomorrow, but he is going to tell us at 
the meeting in two weeks what he thinks his staffing needs will 
be for this year, for next year and for the following year.
    Mr. Wolf. So what is his background?
    Ambassador Dybul. He has actually been an inspector general 
I think for 20-some years in a number of different areas. He 
has jumped on a number of very critical issues already. He is 
actually setting a work plan I think we would all be very 
pleased with, including looking at the Local Funding Agents, 
looking at the reporting and accountability structures, looking 
at sub and Principal Recipients, looking at the reporting of 
goals, setting ethical standards within the Global Fund. So he 
has got a very aggressive, excellent work plan, and again, I 
would be happy to come back after the meeting when he presents 
to the board completely and meet with you and give you a full 
readout on the work plan he has put forward.
    Mr. Wolf. Maybe you can ask him to come by my office.
    Ambassador Dybul. I am sure he would be very happy to do 
that.
    Mr. Wolf. Okay. Thank you both. Thank you, Madam Chair.
    Mrs. Lowey. I want to thank Ambassador Dybul and Dr. Hill 
for your very thoughtful presentation. I have some additional 
questions, which we will submit for the record, but I do want 
to say that we are indeed fortunate to have people of your 
caliber serving our country in this capacity, and I want to 
thank you for your knowledge and your commitment to these 
issues. I thought this was an excellent hearing.
    There are some very serious questions being raised, and 
certainly this deficit which has grown exponentially in the 
last six years has got to affect the decisions we are going to 
make. And I would hope that in a bipartisan way, we can 
seriously look at the commitments we have made and the 
resources we have as we move forward.
    This concludes today's hearing on the fiscal year 2009 
budget request for Global HIV/AIDS and USAID's Global Health 
Program. The Subcommittee on State, Foreign Operations, and 
Related Programs stands adjourned.

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                                           Thursday, March 6, 2008.

        EMERGENCY SUPPLEMENTAL REQUEST FOR IRAQ AND AFGHANISTAN

                                WITNESS

JOHN D. NEGROPONTE, DEPUTY SECRETARY OF STATE

                  Opening Remarks of Chairwoman Lowey

    Mrs. Lowey. The Subcommittee on State, Foreign Operations, 
and Related Programs will come to order.
    I understand that we have some protestors in the room, and 
I want to make it clear that I certainly respect your right to 
be here and respect your views, but I would ask that you 
respect this very important hearing. You may engage certainly 
in silent protest, but I ask that you keep seated and not 
disrupt these proceedings. I thank you very much.
    I would like to welcome Deputy Secretary Negroponte to 
today's hearing on the President's fiscal year 2008 request for 
Emergency Supplemental Appropriations. At the outset, Deputy 
Secretary Negroponte, I just want to say that I do regret that 
Members have not had the opportunity to review the testimony 
and prepare adequately for today's hearing.
    The Committee requires all testimony 48 hours in advance so 
that Members and staff are able to review and prepare their 
questions. In the case of today's hearing, testimony was not 
provided to the Committee until very late yesterday afternoon, 
which is very disappointing, but let us begin.
    Mr. Secretary, the Administration has requested nearly $7 
billion in emergency appropriations for Iraq, Afghanistan, 
Sudan, Pakistan, North Korea, Mexico and the Palestinian 
Authority. Most of this request came last fall when there was 
insufficient time to fully examine the Administration's 
proposal.
    As you know, Congress provided $1.4 billion in emergency 
funding in the fiscal year 2008 omnibus appropriations bill for 
the most critical and time-sensitive items. We deferred 
consideration of the remainder of the request until the spring 
of 2008 in order to more fully examine the details.
    Let me begin with Iraq. The Administration has requested 
nearly $3 billion for assistance and operations in Iraq from 
this subcommittee. However, I continue to have concerns about 
the absence of a consistent and coherent diplomatic and 
reconstruction strategy, the inability to program funds in an 
accountable and effective manner and the lack of Iraqi 
political will to commit its own resources to reconstruction.
    I would also like to hear about your plans to transition 
more of the responsibility for reconstruction from the military 
to USAID and the State Department.
    Much has been said by the Administration and my GOP 
colleagues about the success of the surge. While I would agree 
that the addition of more American soldiers has brought down 
the level of violence, the measure of success in my judgment is 
not this temporary reduction in violence. The true measure of 
success is broad and sustainable political reconciliation in 
Iraq.
    The true measure of success is a transition from a U.S. 
military-led stabilization effort to an Iraqi-led effort. In my 
opinion, none of this is happening to the extent necessary.
    With respect to the security situation, while general 
violence seems to have decreased, my understanding is that a 
more disturbing pattern has emerged of targeted attacks on 
doctors, engineers and other technocrats--the very people 
needed to run the country.
    Ambassador Crocker and General Petraeus are expected in 
Washington within a month to present another update on the 
surge. We also look forward to Ambassador Crocker coming before 
this subcommittee to make the case for the budget request.
    In Afghanistan we continue to struggle against an 
insurgency fueled by terrorists, safe havens in Pakistan and 
funded by bumper crops of opium. Chances for consolidating 
success earlier were lost as the Administration diverted its 
attention to a war of choice in Iraq. Now the Taliban and Al-
Qaeda are growing stronger, the Karzai government is struggling 
to meet the expectations of the Afghan people, and the 
international community frankly is losing interest.
    But we cannot afford to fail in Afghanistan. While the 
Administration has requested over $800 million in emergency 
funding for Afghanistan, the vast majority, over $500 million, 
is to build roads and provide power. I fail to understand why 
so much of the infrastructure burden is being borne by the 
United States.
    Why are the World Bank and the Asian Development Bank not 
doing more in this area? Why are other bilateral donors, 
including the Saudis and the Japanese, not committing more to 
infrastructure development?
    Additionally, the President also requested the first 
tranche of a three-year, $1.4 billion request for the Merida 
Counternarcotics Initiative, including $550 million in the 
fiscal year 2008 supplemental.
    The rise of narcotrafficking and related violence in our 
southern neighbor is very troubling. One direct consequence of 
Plan Colombia has been the relocation of drug cartels from 
Colombia to Mexico. This pattern of simply shifting from one 
area to another is not new. It continues the flow of drugs into 
our communities. Our counternarcotics strategy has failed to 
stem this balloon effect.
    The Administration's proposal again focuses a great deal on 
military hardware, yet there is no reason Mexico cannot 
continue to procure its own helicopters. The fundamental 
problem in Mexico is not too few guns or helicopters. It is a 
lack of capacity and political will in the law enforcement 
institutions, coupled with rampant corruption.
    I would like to see a greater focus on addressing 
corruption in the Mexican police and justice system, as well as 
safeguarding human rights.
    With respect to your request for the Palestinian Authority, 
I am gravely concerned with the current situation on the 
ground. I understand that President Abbas has allegedly made 
several statements about possible renewed armed struggle with 
Israel and bragged about Fatah's teaching resistance tactics to 
Hezbollah.
    Obviously, these remarks are deeply concerning, as was 
President Abbas' initial announcement to suspend peace talks 
with Israel. I understand that Secretary Rice is attempting to 
bring President Abbas back to the negotiating table. He has 
indicated that he will resume peace talks in the future. I hope 
you can provide this Committee with a status update and the 
steps you are taking to determine Abu Mazen's true intentions.
    This is particularly important in light of the 
congressional notifications USAID sent on Friday on cash 
transfer assistance to the Palestinian Authority. I have put a 
hold on these notifications. Clearly Abu Mazen's comments cast 
doubt on his commitment to the peace process.
    Furthermore, several requests of mine have not been 
fulfilled, and I am working with the Department and USAID to 
receive both the certification on the ESF conditions and 
information on the agreement between the U.S. and Palestinians 
governing this assistance.
    There are many other issues addressed in this supplemental 
request, from assistance to the tribal regions of Pakistan to 
aid to North Korea to elections and peacekeeping in Sudan.
    In my remaining time I want to note again my deep concern 
about the limited deployment of UNAMID in Darfur and the 
Khartoum government's continued obstruction of this 
peacekeeping force. I would like to hear what steps you are 
taking to ensure the robust deployment of this force.
    I am also very concerned about the shortfall of 
humanitarian assistance in both the supplemental request and 
the fiscal year 2009 bill, especially in light of the ever-
rising number of Iraqi refugees and internally displaced 
persons. I hope you can address these issues as well.
    Before I turn to Mr. Knollenberg--Mr. Wolf, my Ranking 
Member, is delayed--let me just note my frustration and 
disappointment in the way that this Administration continues to 
treat one of our closest allies in the Middle East, Jordan.
    I know that the Jordanians have been asking for the past 
several years for a multi-year economic and security package to 
help them deal with the economic and security burdens they are 
bearing due to the war in Iraq and the growing threats they are 
facing along the borders.
    I am also aware that the King renewed this request during a 
meeting with the President earlier this week. I hope you can 
elaborate on the U.S.-Jordan relationship and how you intend to 
proceed with this request.
    Would you like to make a statement, Mr. Knollenberg.

                       Remarks by Mr. Knollenberg

    Mr. Knollenberg. Thank you, Madam Chair. I would love to 
make a short statement if I could.
    First of all, thank you for being here, Mr. Secretary. All 
the issues we are going to be discussing are significant. They 
are very important, but there is one brief comment I want to 
make about Colombia, the Colombia Free Trade Agreement, which 
apparently is in the midst of coming up.
    I think Colombia is one of our most important allies in 
this hemisphere. They have made great progress in recent years, 
and I hope we get a chance to vote on the free trade agreement 
with Colombia as soon as possible.
    I know, Mr. Secretary, that this is an issue that you have 
been working on for some time. I would just say please keep 
working on it because I think it is very important to the 
security of this country and also this hemisphere.
    With that, I will conclude my comments. I look forward to 
your testimony. Thank you.
    Thank you, Madam Chair.
    Mrs. Lowey. Deputy Secretary Negroponte, your full written 
statement will be placed in the record. Please feel free to 
summarize your oral statement.
    We have a limited amount of time this morning. We have a 
great deal of interest and a large panel, so we want to make 
sure we leave plenty of time for questions. Please feel free to 
proceed. Thank you.

              Opening Remarks by Deputy Secretary of State

    Mr. Negroponte. Thank you, Madam Chair, Congressman 
Knollenberg, Members of the committee. Thank you for the 
invitation to appear before you. I appreciate the opportunity 
to discuss the Department's urgent need for resources to 
address ongoing conflicts and crises that threaten our national 
security and humanitarian values.
    In Iraq and Afghanistan, U.S. and Allied Forces are 
fighting hot wars that our adversaries would like to spread to 
Pakistan, for example, and the greater Middle East. To keep 
that from happening, our war fighters require maximum 
diplomatic support.

                       MEXICO AND CENTRAL AMERICA

    In Mexico and Central America, we confront a different kind 
of war, a war of crime, contraband and drugs. The Mexican and 
Central American Governments now have made an unprecedented 
offer to help us fight that war and win it once and for all. We 
cannot let powerful drug and gang lords to the south expand 
their violent reach across our border.

                              NORTH KOREA

    In North Korea, we have the opportunity to resolve the last 
conflict of the Cold War, bringing peace and stability to one 
of the most important regions of the world, Northeast Asia.
    In the Middle East, our diplomacy is sharply focused on the 
Israeli-Palestinian conflict. We have to be stronger, more 
creative and more determined than the enemies of peace.

                                 DARFUR

    In Darfur, we are mounting humanitarian and political 
efforts that require an uninterrupted flow of resources to 
mitigate and reverse an unacceptable human tragedy. Without the 
international community's engagement in Darfur, that tragedy 
could grow worse.
    Refugee assistance and humanitarian aid have long been 
fundamental features of U.S. foreign policy. This is difficult, 
resource-intensive work. Just in the last six months, commodity 
costs have risen 41 percent. I make this point here, although 
Public Law 480 Title II appropriations are handled by a 
separate subcommittee, to underscore the fact that humanitarian 
and refugee assistance support our diplomatic effectiveness on 
the ground.
    Basic human needs are at risk not only in Darfur and 
neighboring Chad, but also in the case of Iraqi refugees in 
Gaza and recently in internal displacements affecting Kenya and 
Sri Lanka.
    I have submitted to the committee a detailed statement for 
the record, so I will try to be brief in commenting on specific 
aspects of our fiscal year 2008 supplemental request.
    In Iraq, the Administration's objective is to extend the 
hard won security gains achieved by the military surge and to 
continue to promote political reconciliation, reconstruction 
and economic development.
    Fulfilling these goals falls heavily on the Department of 
State, which operates not only the United States Embassy in 
Baghdad, but also three regional embassy offices and 24 
provincial reconstruction teams, soon to be 27, for which we 
have requested $679.2 million.
    These PRTs are significant innovations in the way America 
can and must practice 21st century diplomacy. They are 
essential elements in achieving the goals I cited above and in 
ensuring the effectiveness of our foreign assistance to Iraq 
for which we request $956 million. Without the funding in this 
supplemental request we will have to cease operations in the 
very near term of our embassy operations in Baghdad.
    Our bilateral efforts in Iraq and in Afghanistan are 
complemented by the United Nations Assistance Mission in Iraq, 
UNAMI, and the U.N. Assistance Mission in Afghanistan, UNAMA. 
These U.N. missions reinforce our efforts to combat terrorism 
through their work on human rights, rule of law, civil society 
development, political capacity building, counternarcotics and 
police and military issues. They are the prime justifications 
for our $53 million assessment for U.N. activities related to 
the global war on terror.
    Afghanistan is a top foreign policy priority for the United 
States, which is reflected in the magnitude of our $839 million 
supplemental request. Our counterinsurgency strategy rests on 
the belief that by transforming the environment, helping to 
improve Afghanistan's governance, transportation and commercial 
networks we can drive a wedge between the people and the enemy 
and at the same time reconnect the people to their government.
    Having said that, I would emphasize the importance of the 
safety of our own personnel as they undertake this critical 
work. We request $162 million to support additional high threat 
protection teams, overhead cover for personnel safety and more 
fully armored vehicles. We also request funding of $160 million 
to provide secure housing for mission staff.
    We cannot separate the challenges we face in Pakistan from 
the situation in Afghanistan. The porous land border between 
these countries provides ample opportunity for extremists to 
foment violence and instability in both places.
    Our $60 million request will address urgent governance 
needs in Pakistan's federally administered tribal areas, 
funding critical areas such as employment generation, 
reconstruction opportunity zones and education, projects which 
will address the underlying causes of extremism along 
Pakistan's western frontier with Afghanistan.
    Nearer to home we have an excellent opportunity to respond 
to Mexican President Calderon's historic request for 
cooperation in confronting criminal organizations that traffic 
contraband into the United States and threaten Mexico's 
democratic institutions.
    Here is a key fact. Mexico and Central America make up the 
transit zone through which pass 90 percent of the cocaine that 
reaches American streets. We have, therefore, requested $550 
million in the fiscal year 2008 supplemental and an additional 
$550 million in the President's fiscal year 2009 foreign 
operations budget request.
    North Korea denuclearization will be a major step towards 
peace and stability in Northeast Asia. The Six Party Talks 
present a real opportunity to make progress. We appreciate the 
inclusion of half our funding request in the omnibus 
appropriation. We now require the balance of $53 million to 
procure and ship additional deliveries of heavy fuel oil. As we 
move forward, we also need language in this supplemental 
funding bill to allow the Department of Energy to spend its 
funds in North Korea when the time is right.
    Achieving peace and stability in Darfur and the surrounding 
regions is another Administration priority. As the committee 
knows, the Department requested a total of $723.6 million to 
fund our contributions for the U.N. peacekeeping mission in 
Darfur. Full funding of that mission remains essential.
    In parallel, our request for $70 million in ESF 
supplemental funds will support Sudan's national elections. If 
these elections fail, the fragile peace between north and south 
may be jeopardized. We believe that there can be no lasting 
solution for peace in Darfur if the comprehensive peace 
agreement does not hold.
    Finally, I would like to express the Department's 
appreciation for the inclusion of $155 million of the 
President's $375 million fiscal year 2008 West Bank Gaza global 
war on terror supplemental request in the fiscal year 2008 base 
appropriation, but I must emphasize that our outstanding $220 
million supplemental request is urgent. Those monies are 
necessary to sustain our support for the priorities of a 
Palestinian Authority Government that both the United States 
and Israel view as a true ally for peace.
    Madam Chair, I have sketched out the Department's 
supplemental funding request in broad strokes, but I believe 
the examples that I have cited illustrate the fact that the men 
and women of the Department of State and USAID are on the front 
lines of change in a dangerous world.
    They are helping the United States build alliances and 
partnerships against terror, drug trafficking, the threat of 
nuclear weapons, violent political instability and humanitarian 
tragedies affecting critically important regions of the globe.
    I respectfully ask for the committee's strong support and 
timely passage of the Department's request. Thank you.
    [The information follows:] 

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Lowey. Thank you very much.
    I will be calling on Members based on seniority of the 
Members that were present when the hearing was called to order, 
and I will alternate between Majority and Minority. Each Member 
is asked to keep their questions to within five minutes per 
round.

                                  IRAQ

    I would like to begin with Iraq. The focus of the 
President's January 10, 2007, surge strategy was to improve the 
security situation long enough to create space for political 
reconciliation. While there have been some small steps forward, 
broader political reconciliation on a new elections law and a 
natural resources law and a host of other issues has not 
occurred.
    We have been hearing a great deal lately from the 
Administration on the success of the surge and improving the 
security situation. However, if indeed the surge has worked and 
the security situation has improved, we should be able to 
significantly reduce the number of U.S. troops in Iraq and rely 
more heavily on Iraqi forces to maintain stability.
    However, more than a year after the surge we still have 
more troops in Iraq than we did before the surge, and General 
Petraeus has asked for a pause in the drawdown as he assesses 
the current situation.
    I would like you to address four points, Mr. Secretary. 
When the force levels drop to the pre-surge levels, can the 
areas that have been cleared of insurgents be held? If the 
surge is working, should we not be able to bring our troops 
home and turn this over to the Iraqis?
    What percent of operations in Iraq are led by the Iraqi 
security forces versus U.S. troops, and is it true that the 
nature of the violence has shifted to target more civilians 
with critical positions such as doctors and engineers? Is this 
a systematic cleansing of the technocrats? Who is behind it and 
what is being done to counter such violence?
    If you can respond, I would be appreciative.
    Mr. Negroponte. Thank you, Madam Chair. With regard to 
Iraq, first of all, with respect to the surge, I was, as you 
know, ambassador in Iraq from June of 2004 to March of 2005.
    I have since that time been back four times to visit that 
country and examine conditions there, and my last trip was in 
November of last year. It was the fourth of four trips that I 
have taken, and I think that it was probably the best in terms 
of the improvements that I had seen in the situation there.
    I spent about six days going to about nine or 10 different 
places, so I do think there has definitely been an improvement 
as a result both of the surge and of the increased capacity of 
Iraqi security forces.
    As to the level of our forces, how long they will stay----
    Mrs. Lowey. Could you just tell us what percent of the 
operations are led by the Iraqis? I am interested in the 
transition from U.S. troops to the Iraqis.
    Mr. Negroponte. Right. I do not know the answer to that 
question, and I think it would be more properly answered by 
either General Petraeus or the Department of Defense.
    I can certainly seek to submit that to you for the record, 
but what I would say about this is that Iraqi forces are 
becoming more capable. Whether or not they can lead operations, 
I think it is important that they have an increased capacity. I 
think that has happened, and I think that there are areas in 
the country that have now been declared to be areas of 
provincial Iraqi control.
    I cannot give you the exact number of provinces, but I can 
guarantee you when I got to Iraq there were no Iraqi forces in 
control of providing security in the various provinces, so the 
build up and the improvement in their capacities has been 
substantial.
    As to when one might expect a reduction of United States 
forces, certainly that is the intent. The intent is to build up 
the Iraqi army and police capability to the level where they 
are going to be able to take over more and more responsibility, 
and hopefully that in time will reduce the requirement for the 
presence of U.S. forces.
    I think that Ambassador Crocker and General Petraeus are 
going to come here in the month of April to report to Congress 
and the President and the American people, and I think that 
they are going to be much better equipped than I to give you 
their judgments as to when these developments might occur.
    I think I may have overlooked one of your questions there.
    Mrs. Lowey. Well, I just want to know about the targeting 
of civilians. That is of great concern to me.
    Mr. Negroponte. We share your concern. This is something 
that maybe has been more pronounced in recent times, but I 
think attacks on the educated Iraqis, people who are qualified 
to help build that society, has been an issue throughout the 
Iraq conflict.

                                SECURITY

    It highlights the urgent need to establish effective 
security in the various communities of Iraq so that people will 
feel safe carrying out their day-to-day activities, but I would 
not say that it is unique to recent months or weeks. It was a 
problem even when I was ambassador in Iraq.
    But it does highlight the need for restoring security not 
only in some kind of general way, but also all the way down to 
the community level, so that means that there is a requirement 
not only for effective Iraqi army forces, but also improved 
Iraqi police operations.
    Mrs. Lowey. I am going to turn this over to Mr. Wolf 
because my time is up, but it is really disappointing that we 
keep hearing about success, but we do not see major transition 
from our troops to the Iraqis and seeing a real taking charge 
of their country.
    So I look forward to your information that you can submit 
for the record, and I look forward to hearing from Ambassador 
Crocker and General Petraeus. Thank you.
    Mr. Wolf.

                      Opening Remarks By Mr. Wolf

    Mr. Wolf. Thank you, Madam Chair.
    Welcome, Mr. Secretary. I apologize. I was giving a speech 
on the Floor. I apologize for not being here for your opening 
statement.

                            IRAQ STUDY GROUP

    The two questions I would ask together. Maybe you could 
join them. One, the Congress authorized and directed in the 
omnibus to reestablish the Iraq Study Group. Sixty-one of the 
77 recommendations of the Baker-Hamilton Commission have been 
carried out. If you recall, the surge was called for on page 
73.
    Now we are hearing silence from the Administration. There 
was a vote in the House that passed overwhelmingly. It is in 
the omnibus. There is the direction there.
    Is the Administration, or are you talking to the U.S. 
Institute for Peace, to both Baker-Hamilton and the Members? 
This passed in December, and here we are in March. What is the 
status of that?

                                 DARFUR

    Number two, on the issue of Darfur do you not think we 
really need some bolder action? This has been going on now for 
five years. There was the article this past week in the New 
York Times with regard to the genocide continuing. The Antonov 
bombers continue to fly.
    Can you kind of tell us what new and different activity 
that you have planned, the Administration wants to do, to deal 
with this genocide?
    So there are two issues combined in the interest of time.
    Mr. Negroponte. Right. If I could on the second one first, 
you may be aware, Mr. Wolf, that the President has named a new 
Special Envoy for Sudan, Ambassador Richard Williamson, who 
replaced Mr. Natsios, who recently resigned from that function.
    He just has been out in the area. He is including a trip to 
Sudan itself, both to Khartoum to the south and to Darfur. He 
had meetings with government officials there, and we have had, 
if you will, an intensification of our dialogue with the 
Sudanese Government in a hope of moving the peace process 
forward both with respect to the comprehensive peace agreement 
with the south and the Darfur peace agreement.
    Parallel with that we are working hard to support the 
United Nations as it seeks to deploy the African Union-U.N. 
peacekeeping force to the Darfur area. In fact, Ambassador 
Williamson is in New York today meeting with the troop 
contributing nations to the peacekeeping forces, and we are 
doing what we can to accelerate the deployment of that force, 
which has not been fast enough for our taste.
    So those are two of the things that are----
    Mr. Wolf. If I could? Do you not think the Administration 
should pull some of the best? This has been going on for five 
years, as long as World War II. I mean, the people in the 
camps. Senator Brownback and I were the first two Members of 
the Congress to go there.
    I mean, if you are a woman in those camps for years and you 
see the world going by, I mean, could you not bring the very 
best minds together, bring somebody like Tony Blair, who is 
working on the Middle East, bring somebody like that to come 
in?
    Mr. Williamson is a good man, and Andrew Natsios did a good 
job. They are both outstanding people, but something new and 
different has to be done. Just to say we are going to work with 
the U.N., the people you are talking to on Khartoum are the 
same people that started this, that funded the Janjaweed.
    When I was there I saw the military, the Khartoum 
Government military, and the Janjaweed 100 yards from each 
other. They funded them. Something new and dramatic and bold 
and different has to be done.
    I would urge you just bring the best people. It is not 
business as usual. Bring the best minds, the best thoughts, the 
best military people, the best that come together for something 
bold to provide some hope that this thing will end.
    Mr. Negroponte. If I may, I think on the humanitarian 
situation I think our record has been good----
    Mr. Wolf. I do too.
    Mr. Negroponte [continuing]. In terms of what we have done 
to alleviate both with the malnutrition, to help increase life 
expectancy in the camp.
    Where we have really come up seriously short is in our 
ability to establish and to contribute to the establishment of 
security in those camps and in our ability to encourage the 
parties to work together so the conditions can be created so 
that these people eventually can go back to their homes, the 
longer term solution.
    I certainly agree with the urgency of your concern, but the 
approach that we are pursuing is to try to get those U.N. 
peacekeeping forces there because we think that is the best way 
to establish security for the camps and for the humanitarian 
workers and do what we can to encourage the negotiating 
process.
    Mr. Wolf. What about the Iraq Study Group question?
    Mr. Negroponte. On the Iraq Study Group, you and I have 
discussed this before, Mr. Wolf.
    I do not believe that at the moment there is an active 
consideration of doing that, and I am not entirely certain that 
the group itself is seeking to be reconstituted, but----
    Mr. Wolf. But it is the law of the land. It was in the 
bill. The Congress has directed this to take place. I think the 
Administration has to deal with the issue. I mean, I do not 
think we can pass a law and just pretend it never took place.
    I mean, I am not going to put you on the spot now, but can 
you check? Have there been conversations? I see my time is up. 
Have there been conversations with the State Department?
    Mr. Negroponte. I will. I will check.
    Mr. Wolf [continuing]. And the ambassador? Is anything 
going on?
    Mr. Negroponte. All right. I will get back to you on that.
    Mrs. Lowey. Mr. Secretary, I just want to make it clear 
before I turn to Mr. Jackson that there is unanimity in this 
Committee and I would dare say in this Congress that this 
Administration and this Congress has to use everything at its 
disposal to stop the genocide in Darfur.
    The President has some time left in his Administration. He 
declared it a genocide. It would seem to me that in every 
meeting with the Chinese and every meeting with the leaders in 
Africa, using the media, a day should not go by when he does 
not use his leadership of the free world to make it clear that 
this is intolerable.
    I would expect that when Cabinet leaders in the United 
States visit China they will use any leverage they have to make 
it clear that this cannot continue.
    I just want to thank Mr. Wolf for bringing this issue up. 
He has been an important voice, but there is unanimity in this 
Congress, and I would urge you to work with the President.
    I understand he has appointed a new person, Mr. Williamson, 
but I would urge the President himself to continue to speak on 
this important issue using every tool at his disposal--personal 
meetings, using the media. We cannot allow this to continue.
    Mr. Jackson.
    Mr. Jackson. Thank you, Chairwoman Lowey.
    Deputy Secretary Negroponte, welcome to the subcommittee.
    Mr. Negroponte. Thank you.
    Mr. Jackson. I want to thank you for your testimony and 
thank you for your service to the country.
    I want to start by saying that I strongly support the 
Administration's request for CIPA, Public Law 480 and the ESF 
to South Sudan, but I think your request still falls several 
hundred million dollars short of the total emergency funds 
needed for foreign operations.
    The supplemental request that we are discussing today was 
first presented to us over a year ago on February 6, 2007. At 
that time the Administration requested $3.301 billion for state 
foreign operations. The request was subsequently amended on 
October 22, 2007, when the Administration requested an 
additional $3.596 billion for a total of $6.897 billion.
    I am restating this timeline because this request is almost 
five months old, and a lot of things have changed in the world 
since then. We have new problems in Kenya. The Chairwoman led a 
delegation most recently, and we recognized maybe not initially 
from the violence, but from the economic and political 
circumstances of the country, great instability, problems in 
Chad and the DRC.
    Many NGOs at work in subsaharan Africa told me that the 
State's Population Refugee and Migration Bureau told them to 
make severe cuts to their refugee programs in East Africa based 
on the appropriations Congress provided the PRM. I think these 
NGOs were told to make these cuts because of the increasing 
demand of the Iraqi refugee crisis on PRM.
    Instead of telling these NGOs that we are doing valuable 
work in the Sudan, the DRC, Kenya, Rwanda and Chad to curtail 
their activities, why do you not simply ask this committee for 
more funds, or does the Administration not view these 
situations as emergencies?
    Mr. Negroponte. First of all, Mr. Jackson, let me say, I 
mean, the budget is prepared in a dynamic world and with 
changing circumstances and so I do not think it is surprising 
that at times the budget process cannot quite keep up with 
developments as they occur.
    You mentioned Kenya. You mentioned other situations. I 
would mention that there are situations we can see in the 
future that may require more attention on our part such as the 
situation in the Pakistan-Afghanistan border area.
    My figures here, and I am not sure I see the--it looks to 
me like our supplemental request is for an additional $30 
million, but I would have to submit to you for the record a 
response to the question that you have asked me because I do 
not find the data right here in the information before me.
    Mr. Jackson. Thank you, Mr. Secretary. That really leads to 
my next question.
    I understand that your pending supplemental request for the 
Migration and Refugee Assistance Account is about $30 million.
    Mr. Negroponte. Right.
    Mr. Jackson. I am told by many NGOs that are working in 
that field that $30 million is short probably by a factor of 
10, somewhere in the neighborhood of $300 million, that we 
cannot meet the ongoing needs and some of the new demands 
generated by the crisis in Chad, Sudan, Somalia and the DRC, as 
well as Kenya, and that we can prevent drastic cuts in basic 
assistance to refugee camps throughout the Horn of Africa, 
which is hosting the Congolese, the Somalis and the South 
Sudanese who are unable to return home because of the ongoing 
insecurity.
    Deputy Secretary Negroponte, will State work with us to 
make sure, given that this request is nearly five months old, 
make sure that we provide adequate funds to meet the ongoing 
needs of these refugees and IDPs and address these new 
emergencies in Chad, Sudan, Somalia, the DRC and Kenya?
    Mr. Negroponte. All right. I think we will have to look at 
that, Congressman. I think one of the things that occurs to me 
is we will have to also look at whether other elements of our 
humanitarian assistance programs are supportive of these 
objectives in some way first.
    Secondly, what else the rest of the international community 
is doing to work with us to alleviate these situations because 
of course we are not the only donors out there.
    You mentioned Chad, for example, which happens to be an 
area that the European Union has a strong interest in. They are 
in the process of sending a security force down there, and that 
would seem to me that might be an area where the European Union 
might be prepared to proffer some assistance.
    Mr. Jackson. Well, I appreciate your answer, Mr. Secretary.
    Members of this committee know very well, as my time has 
expired, that I have followed these accounts since my service 
on the committee for a number of years. Part of your last 
response seems to suggest that the buck should be passed to 
many donor communities, donor countries.
    This request, Madam Chair, falls far short of our nation's 
commitment, and we have not historically passed this 
responsibility on to the donors.
    I thank the Chairlady for her time, and I thank you, Mr. 
Secretary.
    Mrs. Lowey. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Madam Chair.
    Mr. Secretary, just this week we saw the Iranian president 
travel to Iraq and hold meetings, and it is clear that the 
Iranian Government's goal, in my judgment, is to build and 
maintain power in the Middle East.
    Therefore building and sustaining democracy programs in 
Iran; I believe, also should be a top priority for this 
Administration. I think we need to ensure our allies in Iran 
have what they need to create some grassroots democracy. There 
has been evidence of that in times past--and, most importantly, 
that they feel protected. That is a hard thing to do, but that 
is one of the goals obviously.
    To accomplish this I think we have to ensure that the 
funding remains in the pipeline. Do you personally feel that 
the Iran democracy funding in the supplemental would sustain 
those programs better between fiscal years than they would be 
if we were just doing it every year? Would it be better to have 
that possibly be inserted in the interim between those fiscal 
years?
    Mr. Negroponte. Yes. Thank you, Congressman. We do have 
monies that we are seeking in the fiscal year 2009 request, and 
of course we are committed to encouraging democracy in Iran.
    I would be the first to agree with you that Iran, the 
country of Iran and its government, are a source of 
troublemaking throughout the Middle Eastern region. In fact, I 
cannot think of an area of the Middle East, whether it is Syria 
or Iraq or even in South Asia, in Afghanistan, not to mention 
Lebanon and the Palestinian territories, where the hand of Iran 
is not evident in some way in terms of encouraging extremist 
elements.
    But that having been said, when we crafted this 
supplemental I would recall that it is an emergency 
supplemental request, and I think that in the area of democracy 
support we thought of that as more of the kind of item that you 
would incorporate in the regular appropriation, although that 
is not in any way to downplay the importance of the issue.
    Mr. Knollenberg. I believe that the opening, and there are 
openings for democracy in Iran, and I believe they will 
continue to come. Perhaps one here, one there, but they are 
always put down pretty easily.
    However, the government and our allies should be prepared 
to deal and seize the window of opportunity whenever it occurs. 
No one can predict that. Would that be something that you would 
sense too as being important and significant?
    Mr. Negroponte. Yes.
    Mr. Knollenberg. And one of the things I would like to do 
is, and this would not necessarily have to be with you 
personally, but with your staff, is to talk about some of the 
details of our democracy plans.
    I believe now do we not appropriate something like $50 
million a year not in this particular bill, but in the regular 
course of funding?
    Mr. Negroponte. I think it may have even been higher at 
some point.
    Mr. Knollenberg. Higher than that?
    Mr. Negroponte. The number $75 million sticks in my mind, 
but we would be pleased to----
    Mr. Knollenberg. I would like to do that.
    Mr. Negroponte [continuing]. Meet with you, Congressman, on 
that subject.
    Mr. Knollenberg. And then another quick question if I have 
time.
    The situation in the Gaza Strip has intensified, in fact, 
to a point where the Palestinians have called off the peace 
negotiations with Israel. While this situation continues I 
believe to be fluid, it is important that the Administration 
and Congress take this into consideration when considering the 
supplemental request.
    Have you reconsidered your request of I think it is $220 
million for the West Bank and Gaza?
    Mr. Negroponte. Sir, we think it is important to support 
the Palestinian Authority, going back to a question that 
Chairwoman Lowey raised earlier.
    We think that the government of Mr. Abbas and Mahmoud Abbas 
himself are a force for peace in the area and is a constructive 
force, and we need to work with them in order to try to advance 
the peace process as best and as far as we can.
    We think that right now in the remaining months of 
President Bush's Administration represent an excellent 
opportunity to move the peace process forward. In the 
meanwhile, the Palestinian Authority needs resources and needs 
money in order to continue to survive and pay its bills, and 
some of the monies here are intended to be provided to them for 
that purpose.
    Again, we are not the only country that is contributing to 
the viability of the Palestinian Authority. There are others as 
well.
    Mr. Knollenberg. I understand. Thank you very much.
    Mrs. Lowey. Before I turn to Mr. Schiff, I just want to 
clarify that this Chair has put a hold on the money, as you 
know, pending information from the State Department concerning 
the agreement we had regarding the expenditures of the money 
and the accounting system and certainly because of the latest 
action, a clarification of the intentions of Mr. Abbas and 
being a reliable partner in any kind of negotiation.
    Mr. Schiff.
    Mr. Schiff. Thank you, Madam Chair.
    Mr. Negroponte. Could I make a few points on that matter, 
because I think there were questions really embedded in that.
    Number one, we will share with you the agreement that we 
have with the Palestinian Authority. Number two, we sent up a 
notification, but we recognize the need for certifying certain 
points which we know has to come up to you before we actually 
obligate the funds.
    So we hope, and we would like to work with you to clarify 
the situation so that we can achieve a release on your hold.
    Mrs. Lowey. I look forward to receiving the details 
concerning the accounting procedures, the expenditures that you 
expect to use the money for and certainly the intentions of Mr. 
Abbas.
    Mr. Negroponte. Who, as of the last account, has 
recommitted to holding talks and to the peace process, and we 
certainly are going to continue to encourage him to do that.
    Mrs. Lowey. I would certainly express our appreciation on 
this committee for any efforts that you make in moving the 
peace process forward.
    I will turn to Mr. Schiff. Let me just say we will suspend 
after Mr. Schiff's questions and vote and then come back.
    Mr. Schiff.

                                REFUGEES

    Mr. Schiff. Thank you, Madam Chair.
    Mr. Secretary, as you know, the influx of Iraqi refugees 
estimated at around half a million has put enormous strain on 
Jordan's economy.
    These refugees, who represent a 10 percent increase in 
Jordan's population, have inundated Jordan's health care and 
education systems and have also acted as a spur to increased 
housing and energy prices. The global increase in oil prices 
has further exasperated the situation in driving the kingdom's 
budget further into deficit.
    Jordan is one of our key allies in the Middle East. They 
have been very quiet, but unstinting, in their support of our 
fight against Al-Qaeda and supporting our troops in Iraq. For 
this, the country has been targeted by Al-Qaeda and has seen 
its economy and society disrupted.
    I believe we have a strategic interest in ensuring that 
Jordan can weather this economic storm. My question is would 
the Administration support additional aid for Jordan in a 
supplemental?
    Mr. Negroponte. Congressman, I do not know about the 
supplemental, but let me say the following.
    First of all, among the Arab countries in the Middle East I 
think there is no better friend than the country of Jordan. We 
have a very, very close relationship. We cooperate with Jordan 
in all the ways that you just described and so I would 
definitely agree with you on that point.
    As was noted earlier in the hearing, the King of Jordan is 
in town as we speak. He met with the President the other day. I 
attended that meeting, and the king, his majesty, expressed an 
interest in a multi-year approach to our assistance to Jordan, 
which at the moment is provided on a year-to-year basis.
    The President responded that we would take a look at that 
proposal by his majesty, so that is where we stand on it at the 
moment. As you know, the assistance that is provided to Jordan 
is substantial. It is on the order of more than half a billion 
dollars a year, and I would expect that to continue in the 
foreseeable future.
    Mr. Schiff. I am aware of that, but I am also aware how the 
circumstances in Jordan have changed as a result of the war in 
Iraq and the enormous refugee problem that they have, and I 
hope you will keep an open mind to supplemental assistance.
    Mr. Negroponte. I understand.
    Mr. Schiff. I thank you. I have additional questions, but I 
am going to have to run off to vote and so we will recess until 
after the votes.
    Mr. Negroponte. Thank you.
    [Recess.]
    Mrs. Lowey. So if you can explain to us why the military is 
still providing the majority of our reconstruction aid, and not 
the State Department and USAID, and what is your plan for 
assuming responsibility for all reconstruction and 
stabilization assistance?
    Frankly, is there any planning at the State Department for 
a transition to a civilian led effort in Iraq without the 
current level of troops operating in an environment where 
troops were located over the horizon in Kuwait, for example? 
What would the security requirements be in a situation such as 
that? What would the staffing needs be in such a situation?
    So let me make one other point, and then if you can 
respond. Again, I mentioned this before. If the security 
situation has so dramatically improved and stabilized, one 
would expect that state and USAID officials would be able to go 
about their work without U.S. military security.
    The PRTs, you would expect, would be able to operate 
outside of the military security envelope. Is that the case 
today; and when do you think it would be possible for the PRTs 
to operate, independent of military protection? If you could 
respond, what is USAID doing? What is the State Department 
doing to deal with this straight up front?

                                  PRTs

    Mr. Negroponte. We have substantial USAID programs, and we 
also have a request, Madam Chair, for funding for PRTs for 
precisely the kind of purpose that you describe.
    We have now, I think I mentioned in my statement, some 24 
PRTs, and we are seeking assistance monies that they will use 
in support of governance projects, rule of law.
    Mrs. Lowey. Can they function without the military 
protection?
    Mr. Negroponte. At the moment, they cannot function without 
either military protection, which is what a majority of them 
do, because they are imbedded in military units; or they have 
personal security details, civilian contractors, who provide 
security to them.
    So I would say that they cannot function without some kind 
of security protection. But we would hope that that situation 
would improve over time, and it probably is a question of the 
level of the protection that they need, as opposed to whether 
or not they might need any at all. But hopefully that will 
diminish over time. It should.
    Mrs. Lowey. We have been hearing about great success. As 
you know, the military is concerned that they are stretched too 
thin. So in your planning, in your discussions with Ambassador 
Crocker and with General Petraeus, what kind of time are you 
talking about?
    Mr. Negroponte. Well, I think I am going to have to leave 
it to Ambassador Crocker and General Petraeus to answer that. 
They will be coming here in April. I think that we need to 
direct that question to them. But obviously, we want to do it 
as quickly as we possible can.
    We have about 6,000 contractors now, who provide security 
to our civilian operations around Iraq. I do not know how long 
we will need that level of private security contractors to 
provide that type of security. But hopefully it will diminish 
over time.
    Mrs. Lowey. Is there planning going on now at the State 
Department for a transition to a civilian-led effort in Iraq, 
without the current level of troops?
    Mr. Negroponte. I cannot tell you that there is 
specifically a blueprint of some kind that has been laid out. I 
am not aware of any.
    Mrs. Lowey. Well, I thank you, and I would hope that 
General Petraeus and Ambassador Crocker will appear before this 
Committee. Because these are essential questions that we need 
answers to.
    We keep hearing about how the surge is successful and 
people are going about their business. Yet, on the other hand, 
there is no transition to a civilian-led effort. So I would 
appreciate that information, and I thank you. Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair.
    Let me go back to an issue, just to express my frustration 
and, at times, disappointment in the Administration on the 
issue of China and on the issue of Darfur.
    The Administration will miss the opportunity to deal with 
Darfur. I will predict that when you all leave, if you do not 
do something aggressive before the Olympics, the genocide 
Olympics, as Mia Farrow calls them, this thing will gone on; 
and it will go down in the history book as, you have left with 
this thing raging.
    Now we all know that China has that ability. We know that 
China has the ability to stop it. Now I sent you a letter, and 
I hope you got it. I think you did. I asked you and the State 
Department people to see that the U.S./China Commission report 
that what China is doing is selling weapons. I do not know if 
you have read it, yet. Have you read it?
    Mr. Negroponte. I do not know.
    Mr. Wolf. Well, your office said that they were going to 
courier over and get it. Everybody in the building was going to 
see it.
    It is shocking. I mean, I wish I could just let everybody 
in the country see what is in there. It is about China. It is 
all about China, and yet it is classified. We cannot see it. We 
cannot tell people what evil things China is doing.
    Now I saw a letter a while back. Clark Randt sent a letter 
up here, saying we will work with you when you come--not me--to 
China for the Olympics. Let me just say, Madam Chair, no Member 
of Congress who has ever spoken out on the issue of Darfur and 
human rights ought to go to the Olympics. I mean, if they do, 
hypocrite will be the word that follows.
    Now I am disappointed that the President is going. I saw an 
article the other day that Nat Hentoff wrote. Ronald Reagan 
would have never gone to the Olympics; and you worked for him 
and I supported everything you did then in South America with 
regard to the Contras. Ronald Reagan would have never gone to 
the Olympics. I guarantee that--never gone.
    But Clark Randt was saying, we will help you with regard to 
your accommodations over here. The American Embassy should not 
be doing that. We know what China is selling. I mean, I cannot 
say it. But I want to say it out here, so everyone can see what 
they are doing to our country.
    We know they are spying. As Chairman of the committee last 
year with jurisdiction over the FBI, I know what the FBI tells 
me how they are spying against high tech companies in my 
district and around the country.
    So this is not you, and I apologize. You have had a great, 
distinguished record, and this is not directed against you, I 
want the record to show.
    Mr. Negroponte. I understand.
    Mr. Wolf. But we are going to miss the opportunity of 
impacting Darfur. This group that you are talking to, the 
Bashir government, they will not even allow our containers to 
come in to build the embassy. Well, they will not allow a 
container to come in to build the embassy, and they are the 
same ones that killed 2.1 million Christians in the south.
    They are the ones who allowed Osama Bin Laden, and the 
Congress forgets it and the Administration forgets it. Did you 
read the book, Looming Tower?
    Mr. Negroponte. Yes.
    Mr. Wolf. Osama Bin Laden lived in Sudan from 1991 to 1996. 
There are Taliban who are there. So Clark Randt ought not be 
the cruise director for anyone.
    Secondly, I am requesting officially that no one from this 
Administration--and obviously, I cannot control what the 
President does--no person in the Bush Administration should go 
to China for the genocide Olympics. It would be like going to 
the Olympics in 1936. It would be like FDR going to the 
Olympics with Adolf Hitler in that stadium in 1936. Do not go. 
Do not have anyone go.
    I have been even thinking of offering an amendment to this 
committee, prohibiting any Federal funds for any Federal worker 
to travel with Government money. If they go on their own and 
they want to spend their money to go to the genocide Olympics, 
fine; but no Federal money.
    In fact, I think I will offer the amendment in subcommittee 
with the Chair or the full committee, if you would like me to. 
No American officials should be there with the Chinese 
government. There are Catholic priests in jail today. There are 
Catholic bishops caught in the Cardinal Kung Foundation. There 
are about five Catholic bishops in jail. I have been to Tibet. 
There are Buddhist monks in Drapchi prison and Buddhist nuns.
    So there are two questions. They are not even questions. 
You are going to miss the opportunity. Frank, Secretary Paulson 
has been over there, over and over and over. I hear when he 
gets there, he never mentions the issue of this; and if he has, 
I will stand corrected and say he raises it, number one, every 
time.
    I will tell you, if I was Secretary of the Treasury, and I 
went there, I would raise it. The last time I went to China, 
they would not give me a visa. Frankly, I do not think the 
Administration has done a very good job. Now President Bush 
deserves a lot of credit. I have said it over and over, I think 
these ads where they criticize Bush are inaccurate. He has done 
more than anybody else, he and Andrew Natscios.
    So I give you all the credit. I would have nominated the 
President for the Nobel Peace Prize on this. But the Olympics 
is the opportunity. We demonstrate our feelings by our actions.
    If you are a Catholic bishop in one of the prisons in 
China, or you are a Buddhist monk or nun, or you are an 
Evangelical pastor, and you hear on the news your President, 
the President of the United States, and his Secretary of State 
are in our country today at the Olympics, can you imagine how 
demoralized they will be? Some of these bishops are 80 years 
old. They will be demoralized. They will be broken.
    So frankly, I respectfully ask that the President not go. I 
cannot control that. But I am going to offer an amendment that 
no Federal official--and I am not going to ask you if you are 
going to go. I know you are not going to go. But Clark Randt 
ought not even go. Because this amendment will cover Clark 
Randt.
    Now if the Chinese change their attitude by then, great. 
But if they are still doing this thing with regard to Darfur 
and not cooperating; if they are still spying against the high 
tech companies; if they are still selling weapons to country 
`x' and `y' and `z' where our American soldiers are involved at 
all, then I think no American Government official, from the 
highest to the lowest, should attend.
    I am not going to push you and embarrass you into saying, 
you agree with me. But I will tell you, that will be the 
amendment. I tell you, if this genocide is still going on, and 
an American is in that stadium, waving, if you will, they will 
go down in history as people cooperating in the genocide 
Olympics of 2008, and history will never, ever, ever forgive 
them.
    Because in all these years we have gotten nothing except 
more death, more destruction. I have seen those Hines 
helicopters gunning the people down. I have seen the weapons 
that the Janjaweed are carrying, that are coming because of the 
Chinese.
    So this is a real test. This is a moral test for this 
Administration; and let me say, Madam Chair, it is a moral test 
for this Congress, if you have ever voted against the issue of 
Darfur, if you belong to the Human Rights Caucus, and God bless 
Tom Lantos.
    You know, two of the heros, Hyde and Lantos, were always 
the ones on the floor that spoke out on all these issues; and 
Henry was one of the best, and so was Tom Lantos, on the 
Contras down in Central America. They are gone, and now people 
think maybe you can have it both ways.
    You cannot be up here voting and criticizing genocide and 
Darfur and Iran and weapons, and still go and celebrate what 
Mia Farrow has appropriately said is genocide Olympics.
    Lastly, we should follow what Steven Spielberg did. He said 
he was not going to participate in this activity. With that, if 
you want to comment, you are welcome to comment.
    Mr. Negroponte. No, I just have one very brief comment, 
Congressman Wolf. Because I think that I feel compelled to say 
this; which is, there is no greater spokesman for human rights 
in the world than our President, President Bush.
    Mr. Wolf. And I would add to that, I agree, and have 
mentioned the President with regard to the Nobel Peace Prize. 
But this Administration is not over. To go in sit in the 
stands, if you should read Nat Hentoff's piece, and I will send 
it to you, would be almost like FDR going. Do you think FDR 
would have gone to the Olympics in 1936?
    Mr. Negroponte. I would just say----
    Mr. Wolf. I said, do you think he would have gone?
    Mr. Negroponte. Well, he did not go.
    Mr. Wolf. I said, do you think he should have gone?
    Mr. Negroponte. Sir, I just would repeat, I think the 
President is the strongest possible advocate for human rights 
around the world, wherever he travels, including as and when he 
goes to China.
    Mr. Wolf. But when you are in China, the President should 
publicly say it. It is like when somebody comes up to me and 
they say, I am really with you, Wolf, but privately. I just do 
not want my name to be identified publicly.
    If you cannot be with me publicly, then you are not with 
me. The President has to speak out publicly, because of those 
Catholic bishops and the Evangelical pastors and the nuns and 
the Buddhist monks that are in prison, and the Wegars.
    Lastly, human rights in China are worse today than the day 
that this Administration came into power. Would you also get 
the letter that Clark Randt sent out, offering to help and to 
cooperate with that, and let me know what you think about it?
    Mr. Negroponte. Okay.
    Mrs. Lowey. I know that you have to go, Mr. Secretary. I 
would like to just close with two points. I am going to be 
seeing King Abdullah in just a few minutes. In fact, we have 
several meetings with King Abdullah. What should I tell him 
about his request to the President for a bilateral aid 
agreement? Do you have a message for him?
    Mr. Negroponte. Well, I think I already mentioned that we 
responded to His Majesty that this was something we would take 
a look at and that we would consider. But it was the first that 
we had heard of this request, and I think that we have got to 
discuss this within the Administration internally. But it is a 
matter that is under consideration within the Administration.
    Mrs. Lowey. As far as I am concerned, and I know my 
colleagues share that view, the King has been a strong, strong 
friend and ally. His country has enormous burdens, as a result 
of Iraq and the refugees, who are currently in Jordan.
    His message, urging peace between Israel and the 
Palestinians, has been resonating. I feel very strongly that he 
needs as much assistance as we can provide, and I would hope 
that you would take that message back.
    I just have to make one other point about Afghanistan. I 
mentioned before that it really was surprising to me that most 
of the money was requested for roads, and certainly that is a 
function of the World Bank and other entities.
    There are, as I understand, some successes with your 
counter-narcotics programs. Given the fact of our success with 
counter-narcotics programs in Latin America, you mentioned, we 
now have a major problem in Mexico, the transit point.
    Given our total failure in Latin America with counter-
narcotics programs, there has been success, I understand, on a 
small scale in Afghanistan in that if communities renounce the 
poppy, combined with the strengthening of the capacity of the 
law enforcement sector to enforce and prosecute drug crimes, 
the assistance we are providing really has had a tremendous 
impact. So I would hope you would take that message back, as 
well.
    We have been struggling in this Committee and other 
committees with the whole issue of narcotics, the impact on the 
poppies, everywhere in our country certainly and throughout 
Europe; and I would hope that you can re-design your request 
for Afghanistan, consistent with some of the successes.
    Let me close and thank the Committee, and thank you for 
appearing before us. Additional questions will be submitted to 
you for the record, and do you have a word?
    Mr. Negroponte. Just on the last two points you raised, 
first of all, I can assure you, we value the relationship with 
the Kingdom of Jordan greatly. They are a great ally and friend 
in the Middle East. So I want to reassure you of that.
    On the question of the nature of our program in 
Afghanistan, I do recall extensive discussions with our former 
Ambassador there, Ambassador Newman, when he was there.
    On the issue of roads, it is not so much the big 
infrastructure projects; i.e., the Ring Road and all of that. 
It is the farm to market roads, so that you can enable the 
Afghan peasant to be better empowered through better access to 
the economy. So I think there may be an element of that in 
there, too. It is not as if there were just large 
infrastructure projects.
    Mrs. Lowey. No, let me make it very clear. I am not 
questioning the wisdom of roads. Their products have to get to 
the market.
    Mr. Negroponte. Right.
    Mrs. Lowey. I am just saying that there are other entities 
that can pay for those roads; and I am pleased that Saudi 
Arabia finally completed their commitment to the Ring Road.
    But with oil at $105, a barrel, there are other entities 
who have an interest in the stabilization of Afghanistan, who 
could do more to build the roads. Certainly, the World Bank has 
traditionally taken a major role in that.
    So let me thank you; and I know there are many questions 
that my colleagues have had, and we will be submitting them for 
the record. I look forward to continuing the dialogue.
    Mrs. Lowey. Thank you very much.
    Mr. Negroponte. Thank you.
    Mrs. Lowey. The hearing is adjourned.

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                                         Wednesday, March 12, 2008.

         FISCAL YEAR 2009 INTERNATIONAL AFFAIRS BUDGET REQUEST

                                WITNESS

HON. CONDOLEEZZA RICE, SECRETARY OF STATE

                  Chairwoman Lowey's Opening Statement

    Mrs. Lowey. Good morning. Madam Secretary, I am delighted 
to welcome you to our committee. And I want to advise you that 
there may be some procedural votes unless Chairman Lewis can do 
something about it. So we may be interrupted. But we will 
begin.
    I want to welcome Secretary Rice to the Subcommittee on 
State, Foreign Operations, and Related Programs hearing on the 
President's Fiscal Year 2009 International Affairs Budget 
Request. I believe this might be your last hearing before this 
subcommittee as Secretary of State. I have commented many times 
that your endurance is remarkable. And I want to thank you on 
behalf of the committee for your service to our country.
    Madam Secretary, I commend you for a budget request that 
seeks to strengthen our diplomatic and development corps, the 
heart and sole of our foreign policy, and expand assistance 
that advances American interests and projects American values 
around the world. You are seeking a total of 38.3 billion 
dollars in funding for State Department operations and foreign 
assistance funds within the jurisdiction of this subcommittee, 
an increase of 2.8 billion, or 8 percent over what Congress 
appropriated in fiscal year 2008.
    I strongly support the increased international affairs 
request as well as increased funding for the development 
assistance account which funds programs like basic education. 
However, I am disappointed by proposed cuts for essential 
programs such as family planning and child and maternal health, 
and also the significant shortfall in humanitarian assistance 
in the President's request and the serious cut to U.N. 
peacekeeping are also of great concern to me.
    It seems the Administration finally recognized the need to 
strengthen USAID, the agency with primary responsibility for 
our foreign assistance programs. However, the proliferation of 
programs and authority related to foreign assistance outside of 
USAID has created a disjointed and uncoordinated approach to 
foreign aid. The civilian stabilization initiative is the 
latest in a long line of initiatives which the Administration 
has chosen to house in the State Department rather than USAID. 
Yet USAID has the primary responsibility for providing 
humanitarian and post-conflict reconstruction assistance. With 
the State Department increasingly engaged in running aid 
programs is anyone left to do the work of diplomacy?
    I would also like your thoughts on the expanding role of 
the military in providing aid, often without adequate direction 
and coordination with USAID. Additionally, I remain concerned 
that too much of our assistance, especially in Africa, is 
governed by presidential initiatives that are not part of the 
country planning process originating in the field. This 
initiative-based approach has prevented, in my judgment, a more 
integrated and comprehensive assistance strategy to advance 
broad development and political governance objectives. The 
recent violence in Kenya and the political impasse there point 
to one of the shortcomings in our assistance. I know that this 
is the region you care so deeply about and I commend you for 
personally engaging to help resolve the Kenya crisis but I 
would like to hear from you on how, if possible, we can prevent 
or at least work hard to prevent such crises.
    Let me now touch upon a few regional programmatic and 
policy concerns. While we are seeing some political progress in 
the DRC and Northern Uganda I am far less hopeful about the 
prospects for Darfur, particularly without a more robust 
deployment of UNIMED and a revitalized Darfur peace process. 
The Khartoum government's continued obstruction of this force 
and failure to fully implement the comprehensive peace 
agreement threaten to throw Sudan back into civil war. While 
the President has declared this genocide and spoken out against 
it I urge you to engage in more forceful diplomacy with nations 
such as China, South Africa and Indonesia that have often 
opposed strong U.N. Security Council resolutions and to engage 
with true contributing nations to do their part.
    It is unconscionable that this genocide continues after 
four years. And I urge you and the President and all of the 
Cabinet secretaries to speak of it daily and address it in all 
meetings with foreign governments.
    In Latin America, and I know you are heading there today or 
tomorrow, while I note the robust funding you are seeking for 
the Merida Initiative, I am concerned that it does too little 
overall for Central America. Once again it seeks to combat the 
drug problem without addressing the underlying economic and 
societal issues that are exacerbating a surge in narcotics and 
other illegal trafficking.
    In South Asia we are reaping the grim rewards of decades of 
a shortsighted policy. For too many years with too many 
administrations U.S. policy towards Pakistan was focused on 
short-term security interests, neglecting the long-term needs 
of building civil society, empowering and educating women and 
girls, and developing democratic institutions. In the process 
we have advanced neither security nor stability, as evidenced 
by the escalating terrorist violence in Pakistan today.
    While I certainly recognize and have supported the 
important security relationship between the United States and 
Pakistan, for too long our economic assistance has primarily 
been in the form of budget support. I am convinced that in 
order to achieve a more stable Pakistan the United States must 
engage more broadly with the Pakistani people. I am pleased 
that the fiscal year 2009 request for Pakistan moves away from 
budget and I hope it will lead to a more balanced relations 
with Pakistan.
    In Afghanistan, as I mentioned last week for Deputy 
Secretary Negroponte, I fear that we are losing the window of 
international consensus and commitment to help the country gain 
a strong foothold on its long climb out of conflict. Donor 
fatigue is resulting in fewer donors fulfilling their pledges, 
yet we cannot afford to fail again in Afghanistan. I understand 
that there is some encouraging preliminary indications that a 
more robust alternative development strategy, combined with 
aggressive counternarcotics enforcement and interdiction, is 
starting to bear fruit. While we have yet to see evidence of 
that in the annual U.N. Drug Report, I hope that we can build 
upon and expand successful programs.
    Finally, I know you are just returning from a trip to the 
Middle East. I look forward to hearing your assessment of the 
current situation in Gaza and your discussions with President 
Abbas and with Prime Minister Fayad. As you know, I placed a 
hold on the $150 million in cash transfer assistance to the 
P.A. because of specific process requirements that had not been 
fulfilled by the State Department and USAID, specifically, 
receiving a copy of the memorandum of agreement that would 
govern the disbursement of these funds, and a certification 
that the conditions included in the ESF section of the fiscal 
year 2008 fill has been met.
    I also expressed concern about President Abbas' commitment 
to peace in light of his recent comments. I have since received 
a copy of the draft memorandum of agreement and your assurance 
that the Palestinian leadership is committed to peace with 
Israel. While I must say I remain skeptical about the political 
will of the Palestinian leadership that all too often lapses 
into inflammatory rhetoric that belies their stated commitment 
to peace, I want no one to doubt the commitment of the United 
States to pursue peace when Prime Minister Olmert and President 
Abbas have once again publicly affirmed their commitment to the 
peace process. Based on these events I lifted the hold on $100 
million in cash transfer assistance.
    Madam Secretary, I have maintained a hold on the additional 
$50 million pending a certification that I understand is 
forthcoming.
    Madam Secretary, in closing I must say I was disturbed to 
hear Deputy Secretary Negroponte defer repeatedly to General 
Petraeus and Ambassador Crocker in response to questions from 
this committee on the status of training of Iraqi security 
forces. The transition from a military-led to a civilian-led 
reconstruction and stabilization effort and State Department 
planning for a U.S. diplomatic and development presence in a 
post-military environment, I do appreciate that Ambassador 
Crocker and General Petreaus are our diplomatic and military 
field commanders; however, is the State Department not 
responsible for orchestrating our foreign policy?
    Madam Secretary, as always, you have a full plate. And I am 
sure that my colleagues are delighted that I did not cover the 
rest of the world. I know that recent events in Serbia and 
Armenia have added to your challenges. I look forward to your 
testimony. But before I turn to you let me turn to the ranking 
member Mr. Frank Wolf for any comments he may wish to make.

                       Mr. Wolf's Opening Remarks

    Mr. Wolf. Thank you, Madam Chairwoman.
    Madam Secretary, I welcome you. Thank you for your service 
and thank those in the State Department who have served around 
the world, and thank their families. I have a number of 
questions but in the interest to save time I will just submit 
the statement for the record and welcome.
    I yield back. Thank you.
    Mrs. Lowey. Thank you. And again welcome, Madam Secretary. 
On behalf of the committee we urge you to proceed and, of 
course, your whole statement will be placed in the record so 
proceed as you wish. Thank you.

                   Secretary Rice's Opening Statement

    Secretary Rice. Thank you very much. And I would like to 
thank you, Madam Chairwoman, and I would like to thank the 
committee. This indeed is my last appearance before you as 
Secretary of State to discuss the President's 2009 budget 
request and also to discuss in any way that you would like the 
foreign policy challenges that we face to which that budget 
request is applicable.
    I want you to know that I really do appreciate the spirit 
with which this committee has worked with me. We have achieved 
a lot. We have not always agreed. But I believe that the work 
that we have done together has served the country well. And it 
indeed has been a quite momentous time. You have made it 
possible for the State Department to engage in transformational 
diplomacy by being willing to support new positions. And, 
indeed, as you know the President has made a significant 
request this time for nearly 1,100 new diplomats, foreign 
service officers, and 300 USAID personnel. We believe that 
after all the work that we have done to reposition personnel to 
more important places, not more important places but places 
that are in need of our efforts, that it is time to 
significantly expand the capabilities of our diplomatic corps 
and USAID. And I ask your support for this initiative because I 
think it will be very important and an important ground work 
that we can leave to our successors.
    Many of you have also been very supportive of the efforts 
that we are making to make the State Department more responsive 
to the kinds of crises that we now face through the civilian 
response. And you mentioned, Madam Chairwoman, that it is 
lodged in the State Department. That is right. But what the 
President has done is to give the State Department interagency 
responsibility. And that is because we believe that it needs to 
be under the general direction of American foreign policy and, 
therefore, under the Secretary of State. But I can assure you 
that the efforts of USAID, the Defense Department, and indeed 
others, would be coordinated through that effort.
    You have also helped us with matters of increasing security 
needs, our facilities' needs to increase our efforts in public 
diplomacy and exchanges, something that I first said to this 
committee that we wanted to be able to do, and we continue to 
increase our efforts there. We have in this period of time we 
have doubled foreign assistance to Latin America, we have 
quadrupled it for Africa, we have increased it three times 
worldwide. I think it is really a record that we can be proud 
of, and that is a record that we can be proud of together 
because without you it would not have happened.
    We of course are engaged in a number of high priority 
foreign policy items. And I am sure we will have a chance to 
talk about those. But I would just like to ask you in addition 
to looking at the 2009 budget request to act quickly on the 
balance of the 2008 global war on terror supplemental, very 
important to our near term operating and foreign assistance 
efforts in Iraq and Afghanistan, in Pakistan, in places that 
are really at the front line in the war on terror. And I ask 
your support for that effort.
    I have a longer statement, Madam Chairwoman, but in the 
interest of being able to really engage I would ask that the 
longer statement be placed for the record and I can now take 
your questions.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. Lowey. Thank you very much.
    We are joined by Mr. Lewis.
    Mr. Weldon. Madam Chairman, I have a question for you. I 
have never seen anything like this before. We are trying to 
hold a hearing, I find all these protestors in here really 
distracting. Is there any kind of rule or policy? You know, I 
am all for freedom of speech on the street but, you know, we 
are trying to listen to the Secretary of State here and people 
are holding up placards.
    Mrs. Lowey. Mr. Weldon, let me just say I appreciate your 
comments but we are here in the United States of America and as 
long as they do not disrupt this proceeding and as long as they 
are silent they will be welcome. But they may not stand and 
they may not disrupt the proceedings. But I certainly 
understand and respect your concerns and I would hope that all 
of our visitors who are here today respect the concerns of all 
of us. This is a very important hearing and we want to engage 
with the Secretary. And I expect that those who are here to 
protest the hearings will do so in a respectful way.
    Mr. Weldon. Well, I would agree with you it is a very 
important hearing but I think it is being turned into a circus.
    Mrs. Lowey. I think that we should all focus on the 
Secretary of State. I respect your views, certainly. You are my 
colleague and I respect your views. But as long as the 
protestors are quiet and they sit down and they do not disrupt 
the hearing everybody is welcome to be part of and listen to 
the following proceeding.
    Therefore, we will turn to Mr. Lewis.

                       Mr. Lewis Opening Remarks

    Mr. Lewis. Thank you very much, Madam Chairman.
    Madam Secretary, welcome. And let me join those who express 
their appreciation for your fabulous service to our country and 
the world. If I am disappointed at all it is that from time to 
time we have found ourselves for the first time, at least in my 
view of our work in public affairs overseas, begun to see a 
tendency for Americans to find themselves divided overseas. I 
know that you are working very hard on having us speak with one 
voice when America is abroad. I personally think there should 
be no such thing as partisan confrontation when we are dealing 
with diplomatic matters. And I very much appreciate and support 
your effort in connection with that.
    Further, I very much support your recommendation and 
request for added support in all our foreign assistance 
programs. Our public has a tendency to think that we are 
spending most of our national budget on foreign assistance and 
certainly you know that is not anywhere near the case. But in 
turn, our voice should be heard and heard effectively. I would 
appreciate it if you would spend just a moment describing for 
us, discussing with the committee this new effort, the title I 
believe is civilization stabilization in post-conflict states.

                      CIVILIAN STABILIZATION CORPS

    As you explain or describe that for us I understand that 
there are $249 million requested and 351 positions. It strikes 
me that at least a piece or in part that may mean that the 
President is coming full circle and maybe nation building is a 
part of our effort now. And I must say I do not reject that at 
all but nonetheless it is curious.
    As you describe this new effort I wonder if it is possible 
if a piece of this effort might very well address a challenge 
in Afghanistan that has long been a contention of mine, that is 
if there is a classic American program in which we have tried 
to impact our economy at home it has involved subsidizing 
people who are in the agriculture business. And I am wondering 
if the State Department could not take the lead, maybe by way 
of this new organization, to begin to pay Afghani farmers for 
not growing poppies and in turn take some time as they are 
subsidized in encouraging our people who are experts at 
alternative crops in helping the development of alternative 
crops over a period of time, some years. Certainly if we were 
to proceed on such a path the least it would do is impact by 
way of cutting back the availability of heroin around the world 
and maybe save many, many lives as a result of it.
    So, Madam Secretary, I am anxious to hear about this 
program. I appreciate your being here. Thank you.
    Secretary Rice. Thank you very much. I am delighted to have 
a chance to talk about the civilian stabilization corps, the 
civilian response corps, but also the entire civilian 
stabilization effort because I think that we have all learned 
the hard way that one of the great threats to American security 
is failed states. Those that have been in long-term conflict 
are coming out of conflict, are not capable of policing their 
borders and they are not capable of rule and law, are beset by 
corruption. Ultimately it is a place that drug traffickers and 
arms traffickers and indeed terrorists live in those kinds of 
societies.
    And we tried post-conflict stabilization several ways. I 
think the effort in The Balkans relied very heavily on the 
United Nations, relied very heavily on an international effort. 
But I think we would all say that if you look at the state of a 
place like Kosovo or even Bosnia-Herzegovina today it really 
has not made the transition to a functioning society.
    If you look at the way that we tried to do this in 
Afghanistan it was a bit through the bond process what I will 
call the adopt-a-ministry approach with different countries 
taking on different responsibilities for, as you have called 
it, nation building, Congressman Lewis. And then in Iraq, which 
was a war zone, the Defense Department took the lead. And I 
think also did not quite have the right tools to really have a 
civilian stabilization effort.
    And so what this does is to now really build for the United 
States an institution that will truly be the civilian 
counterpart to what we have had to rely on the military to do 
through the National Guard and through the Reserves which 
really should not be their primary responsibility. It means 
that, first of all, there will be a core of people who would 
work in the State Department who would be trained and ready to 
go out and do stabilization operations. We have already used 
some of them in places like Sudan and Haiti. And we would hope 
to have the ability to do it in even greater measure in Sudan 
should the political circumstances there change. There would be 
another ring around them of people who would be in effect in 
the U.S. government but on reserve call in places like USDA, in 
the Agriculture Department, or in Treasury or places like that 
that if you need an expert on agriculture you can call on these 
people.
    And then finally, to mobilize the larger civilian 
population to have people who would volunteer almost like a 
reserve unit to do training on a two-week-a-year basis or so so 
that we could mobilize city planners and jurists. Let us take 
the prosecutor who is in Arizona and perhaps would like to go 
and help the Afghans do rule of law work. I could never keep in 
the State Department city planners and jurists and all the 
people who need to do that. But the American people I think 
would be responsive to wanting to go to a place like 
Afghanistan or Liberia or whatever and engage in that activity.
    So that is the idea of the response corps, run out of the 
Department of State with interagency coordination
    You mention a very interesting example, for instance, in 
Afghanistan. We do have USDA personnel, agriculture personnel 
there. We have some extension operations from universities in 
Afghanistan. But this could be a much bigger effort to really 
help Afghan farmers to turn away from the production of poppy 
and to something more favorable. It is hardest right now in 
places like Helmand because it is also a security problem in 
places like that.
    But you asked and I would have to admit I think we have 
learned that, yes, it is really important to be able to help 
others build their states, to help others build their nations. 
My view is it is still something that we need to do with 
civilians. We need to do it with greater USAID involvement. We 
need to do it with greater involvement of the population as a 
whole. And that is what the President is trying to do with this 
initiative.
    Mr. Lewis. Thank you, Madam Secretary.
    Mrs. Lowey. Mr. Schiff.
    Mr. Schiff. Thank you, Madam Chair.
    Madam Secretary, I had really three areas that I wanted to 
ask you about. And I will try to make my questions quick so 
that you can respond to all three if possible.
    The first I wanted to ask you about is Iran and the Iran 
Sanctions Act. There have been a number of occasions where the 
State Department appears to have failed to issue findings 
regarding the Sanctions Act where the Sanctions Act would 
apply. And my question is have these investigations gone 
forward? Have they resulted in findings? If they have resulted 
in findings but there has been a decision not to enforce the 
Iran Sanctions Act why has not a waiver been issued? So if you 
could tell us the status of investigations under the Iran 
Sanctions Act.
    Second, I wanted to raise with you the disparity in the 
Administration's funding request vis-a-vis Azerbaijan and 
Armenia. The Azeri government, in particular President Aleyev, 
has been ratcheting up anti-Armenian rhetoric over the past few 
months in Nagorno-Karabakh. In early 2007 Aleyev warned that 
the enemy should know that Azerbaijan can liberate native lands 
by any means at any time. And in November of last year the 
defense minister of Azerbaijan vowed that as long as 
Azerbaijani territories are occupied by Armenia the chance of 
war is close to 100 percent.
    There have been persistent reports of the Azerbaijani 
government increasing its defense budget by up to 30 percent. 
And yet notwithstanding this rhetoric, their increases in 
defense spending, the Administration is proposing to break 
tradition by not providing military parity between Armenia and 
Azerbaijan and instead proposing nearly four times as much 
assistance to Azerbaijan as Armenia. And I would ask you to 
explain why that is the case.
    And finally Jordan, as you know, has been a tremendous ally 
but they are incurring enormous costs as a result of the 
refugee problem. And last week I expressed my belief to 
Secretary Negroponte, Deputy Secretary, that we ought to 
support additional aid for Jordan in the supplemental. And I 
want to reiterate that and express my view but also know why 
the ESF for Jordan, which totalled 360 million in fiscal year 
2008 has been pared back to 263 million in the Administration's 
request. So if you could address those three points.

                                  IRAN

    Secretary Rice. Thank you, Congressman Schiff.
    First on Iran, I will get back to you with the state of the 
investigations because I think it is probably more appropriate 
in a closed circumstance. But we take very seriously these 
investigations. And indeed, I believe that, as I mentioned 
before, the act is helpful to us not only in looking at 
specific cases but also in helping to get voluntary efforts to 
isolate Iran through voluntary sanctions. And I think we are 
having some effect, for instance, on financial institutions 
around the world. We are having some effect on export credits 
around the world. We are seeing people in part because of the 
sanctions that Treasury has done, the designations that 
Treasury has done, but also because people recognize that doing 
business with Iran means that you cannot tell who you are doing 
business with. I think we are having some progress on the 
voluntary side.
    But I would not hesitate to sanction and, if necessary, 
waive if that were appropriate. But I will get you something on 
the actual status of what is in the pipeline.

                         ARMENIA AND AZERBAIJAN

    In terms of Armenia and Azerbaijan, we have worked very 
hard, as I think you know, to try to bring some resolution to 
the Nagorno-Karabakh situation. We have been close several 
times. We have never been able to get there. I have made the 
case to both parties that it is retarding progress in that part 
of the world and they ought to resolve this situation.
    But in terms of funding request, we think that we are 
appropriately responsive to Armenia's development assistance 
needs. The state of emergency in Armenia has made it necessary 
to suspend some of our programs there because, as you know, 
when there is a state of emergency there are some programs that 
we cannot operate. And so we have done that. We are working 
very hard to have political dialogue with the Armenians to get 
them to lift the state of emergency. And I might note also that 
Armenia is of course an MCC country and we are going to have to 
say to the Armenians that the state of emergency is also 
jeopardizing that program.
    Mr. Schiff. I would only say to quickly interject that the 
state of emergency in Armenia occurred after the 
Administration's budget request and so that does not reflect 
the disparity in the foreign military funding. But if you could 
go on to the Jordan issue before I run out of time.
    Secretary Rice. Sure. I might just note too, Armenia still 
is largest per capita in that whole area. But we think it is 
appropriate for Armenia.

                                 JORDAN

    On Jordan we, we have no better ally than Jordan in many 
ways, in the war on terror and a modernizing Middle East. And 
so the request again we think is appropriate for Jordan's 
needs. Jordan has benefitted from time to time from 
supplemental appropriations. And we have worked very hard to 
get Jordan into the threshold program for MCC. And we are 
working toward a compact with them.
    And, finally, I think the most important thing we have 
recently done for Jordan is in terms of its debt buy-back which 
was very highly sought.
    So we believe that this is an appropriate level given----
    Mr. Schiff. Are you open to an increase in the 
supplemental?
    Secretary Rice. Well, we have requested in the supplemental 
what we think is absolutely necessary. But Jordan is a good 
ally and we have--they have benefitted from time to time from 
supplemental appropriations.
    Mr. Schiff. Thank you, Madam Chair.
    Mr. Jackson [presiding]. Mr. Lewis.
    Mr. Lewis. Madam Secretary, I am embarrassed for the entire 
committee. And the Chairwoman is particularly concerned about 
this. We are building a new visitors' center in the Capitol.
    Mr. Lewis. And if this Appropriations Committee does not 
find a hearing room where we can have the Secretary of State 
present where we actually have an exchange we are nuts. It is 
long, long overdue. And just right across the room we could 
have an exchange and we could go and vote, et cetera. I hope we 
never do this to the likes of you again. But indeed the 
committee is embarrassed. And most of us have to go vote, try 
to get back. In the meantime, God bless you, Ma'am, you are 
doing great.
    Secretary Rice. Thank you.
    Mr. Jackson. Thank you. Thank you, Mr. Lewis.
    Let me first also begin by thanking Chairwoman Lowey and 
Secretary Rice. Welcome back to our subcommittee and thank you 
for your testimony and for your service to the country.
    As you well know, we have a number of votes that are 
potentially pending on the Floor. I have a number of questions 
that I would like to ask pending the return of the Chair and 
pending the return of members. So I will go through these 
questions, Madam Secretary. In the event that there are 
subsequent votes and members are unable to return I will 
suspend the hearing pending the return of the Chair.
    I want to discuss three items: first, your State operations 
request, specifically CIPA, and our arrears owed to the U.N; 
secondly, your overall foreign operations request, specifically 
your funding for child survival and health; third, your 
supplemental request and what I feel might be some shortcomings 
in that request.
    First, contributions for international peacekeeping 
activities. I understand that your request for 2.389 billion 
for U.N. peacekeeping, however, OMB, the Office of Management 
and Budget, allocated only 1.497 billion, leaving the State 
Department with an $892 million hole to fill in current 
assessments in the U.N. peacekeeping account. What is the 
status, Madam Secretary, of the United States' arrears at the 
U.N. in the U.N. regular and peacekeeping budgets, and how does 
the Administration propose to deal with these past arrearages? 
And given that your budget does not seek to address them will 
you simply hand this debt off to the next administration? Madam 
Secretary.

                        PEACE KEEPING OPERATIONS

    Secretary Rice. First thank you, Congressman. First of all, 
have been able to support the peacekeeping operations to which 
we are committed. We are able to do that on the funding stream 
that is there. And that is what I have been principally 
concerned about. It is also the case that some high priority 
peacekeeping operations have been funded in supplemental 
appropriations, Sudan for instance, at one point Lebanon a year 
ago. And so the combination of supplemental funding and the 
fact that we are able to keep up with the obligations that we 
have to actually fund peacekeeping forces in the field I think 
we are meeting our obligations.
    Obviously it would be best if we were able to not just have 
a cash flow approach but to actually fund the entire amount. 
But given all of the demands on the budget I have been able to 
say to Secretary General Ban Ki-moon that the United States 
will meet its obligations. And I think you would find that we 
are doing so.

                                 DARFUR

    Mr. Jackson. Why has the Administration only requested 414 
million for fiscal year 2009 for the U.N. peacekeeping mission 
in Darfur? Peacekeeping experts believe that this mission, 
poised to become the largest in U.N. history, will require 
about 550 million from the U.S. alone.
    Secretary Rice. I wish we were at the point where we needed 
550 million. Unfortunately, the peacekeeping operation has been 
slow to get up and running. We are fully funding the south 
which is a fully operational peacekeeping mission. And I can 
assure you, Congressman, that we do have intentions in 
supplemental funding to continue to deal with Darfur. We will 
not allow the absence of resources to be a problem for our 
obligations to fund those missions.
    We did, for instance, even fund the African peacekeeping 
increases when we were able to change the nature of that force. 
But the big problem right now is the spend rate just is not 
very high because, unfortunately, we do not have the forces and 
we do not have--and Bashir's government has not permitted that 
force to go forward.

                                  CHAD

    Mr. Jackson. In Chad the budget allocates only 40 million 
to support MINURCAT in Chad. Are not the French strong 
advocates for funding this mission and it not its performance 
integral to solving the problems in and around Darfur? Has 
there not been greater instability in Chad recently creating 
further regional chaos? And how did the U.S. come up with the 
$40 million as its anticipated costs for that mission?
    Secretary Rice. Well, the Chad mission is of course the 
U.N. mission and this is our voluntary contribution to it. I 
believe, Congressman, I can get you the exact amount but I 
believe it is representative of what we think it will take to 
actually fund the mission. The French do have the lead there. 
They have their forces on the ground. We are principally in a 
matter of supporting the forces of others.
    I can say that we have been very active on the diplomatic 
front, of course. As you know, there was a near disaster in 
Chad very recently. And so we have been very active in that and 
we have been very active with the Sudanese in trying to keep 
them from destabilizing Chad through their efforts. But the 
amount is what we believe we need to have to fund the mission 
there.

                    DEMOCRATIC REPUBLIC OF THE CONGO

    Mr. Jackson. The Administration has requested 211 million 
for the 17,000-strong peacekeeping force in the Democratic 
Republic of the Congo. This number is less than the estimated 
285 million in U.S. costs in fiscal year 2008 and far short of 
the 316 million in projected needs for fiscal year 2009. In 
light of the U.S.'s December vote in the Security Council to 
extend MONUC's mandate and considering the need to preserve the 
fragile peace accord just reached in the Congo's unstable 
eastern region is this funding reduction justified, Madam 
Secretary.
    Secretary Rice. Congressman, again we are funding our 
obligations. And we have not faced a situation in which we have 
been unable to fund our obligations. I might note that in 
addition to funding the peacekeeping operations there we 
believe that one of the biggest problems in the DROC is 
actually the state of the forces of the DROC itself.
    I held a summit in Addis with the heads of, well, the 
foreign minister's representatives of the DROC. But the 
President Kagame was there, the president of Burundi was there. 
And we put a great deal of emphasis not just on the 
peacekeeping force which we are, we are funding, but also on 
funding for the security forces of the DROC. And I think that 
you will see there is money that we have put forward to do 
that.
    Mr. Jackson. Thank you, Madam Secretary.
    Mr. Israel.

                              SAUDI ARABIA

    Mr. Israel. Thank you, Mr. Chairman.
    Welcome, Madam Secretary, it is great to see you. I have 
some questions with respect to Saudi Arabia, particularly the 
efforts that we have made to encourage the government of Saudi 
Arabia to facilitate greater religious freedom and tolerance 
and to reduce the curricula which often features inciteful 
behavior.
    In 2006 the State Department came before Congress to report 
on discussions with the government of Saudi Arabia that had 
resulted in a Saudi confirmation of a set of policies to 
promote greater religious freedom and tolerance. The State 
Department characterized the Saudi position as a significant 
development. Notwithstanding that characterization I remain 
deeply concerned that the Saudis have not made sufficient 
progress in reducing the violence and the extremism, the 
intolerance that is often exhibited, particularly in curricula 
in their schools.
    Three questions: number one, has the State Department 
created a formal mechanism to monitor the implementation of the 
July 2006 policies? If it has not, why not? And if it has, what 
have you found so far?
    Secondly, the State Department is required to report to 
Congress under H.R. 1, section 2043, implementing 
recommendations of the 9/11 Commission Act of 2007 on progress 
by the Saudi government to implement the July 2006 previously 
identified policies.
    And third, aside from Saudi Arabia it seems to me, and this 
may be my own perception, that the Department of State has 
always been somewhat reluctant to insist on reform of curricula 
and to set up procedures to monitor curricula and violent 
expressions. And I am wondering if you can put my mind at ease 
on that?
    Secretary Rice. Yes. Thank you very much, Mr. Congressman. 
Let me say I do not think, I certainly do not feel reluctant in 
the least to raise this and raise these questions quite 
strongly with the Saudis. And, in fact, one of the changes that 
have taken place and I do believe the Saudis are beginning to 
understand that some of the extremist rhetoric and curriculum 
and whatever else is backfiring inside the kingdom itself. And 
the rise of extremism in the kingdom aimed at the kingdom has 
been of considerable concern to them and has--as has to us some 
efforts that appear to have exported some of that to 
neighboring or other countries.
    So this is actually a discussion that we have and we have 
quite forthrightly. The vehicle for doing that is a strategic 
dialogue that we hold with the Saudis about twice a year, once 
in Riyadh and once here. It has a working group on the human 
dimension in which we raise issues of human rights, issues of 
extremism. And while I would be the last to say that there has 
been anything like the kind of progress that I think we will 
need to, they will need to see frankly for their own good as 
well as for the good of the world as a whole, they are 
discussions that are very much ongoing and they do provide a 
mechanism by which we can monitor and then take what we know to 
the Saudis for discussion. And so it is very high priority 
because I, frankly, believe that in the war on terrorism and in 
the rise of extremism going to the root of some of these issues 
is going to be very important.
    Mr. Israel. In addition to the strategic dialogue that we 
have with the Saudis are there mechanism within the State 
Department, are there funding avenues with the State Department 
to help other countries modernize, revamp and reform their 
curricula? Can we be doing more on that?
    Secretary Rice. Well, one of the most active efforts that 
we have had has actually been in Pakistan where some time ago 
President Musharraf had a very progressive minister of 
education who wanted to start, for instance, the reform of the 
madrassa system to make the curriculum not just a religious 
curriculum but also one that dealt with science and math and 
modern skills for children.
    We have through USAID and other efforts tried to help with 
that. It is obviously a sensitive matter because the United 
States cannot be seen to be writing the curriculum for another 
state. But we are trying to provide assistance to these 
educational efforts. And we think they are very important. And 
we have similar efforts in a number of other places.
    Mr. Israel. Thank you, Madam Secretary. I yield back my 
time, Madam Chair.
    Mrs. Lowey [presiding]. Thank you.
    Mr. Wolf.

                              HUMAN RIGHTS

    Mr. Wolf. Thank you, Madam Chair.
    I have five minutes, you cannot really get in very much. I 
am going to have one major question. But I second what 
Congressman Israel said, I do not think we have really done 
enough with regard to the radical Wahabiism that the Saudis are 
funding. All you have to do is read ``Looming Tower.'' Omar 
Mullah, Omar Mullah went to a madrassa funded by the Saudis. 
Thousands up along the Pakistan. So he is absolutely right. And 
we really need to see the Administration do more.
    I would hope that we could have a greater emphasis in the 
closing of this Administration on the issue of human rights. I 
was disappointed to see the State Department drop, ``The New 
York Times,'' the State Department no longer considers China 
one of the world's worst human rights violators according to 
its Annual Human Rights Report. That is really a mistake.
    Madam Secretary, I saw the American ambassador in Vietnam 
give an interview, an hour-long interview, one word, three 
words, four words on human rights. He says I will spend time on 
human rights, and then he goes on. That is the whole interview. 
The Catholic Church is being persecuted there, the Buddhists 
are being persecuted there. Our ambassador and our embassy 
should really be an island of freedom if you will and, frankly, 
it is not. You should have appointed an American Vietnamese who 
have family there who could articulate. But I am sure this 
gentleman is a good man. I am not saying that, but this is not 
a priority. Our embassy in Vietnam is a trade embassy, it is 
not a human rights.
    I want to congratulate you and thank you for your efforts 
with regard to the Middle East. I want to ask you to do 
something. It is a little unusual but I would hope that you 
would do it. In Psalm 122, I was in church a couple of weeks 
ago and at the end the pastor prayed for the peace of 
Jerusalem. And as you know, in the Bible in Psalm 122 it says, 
`Pray for the peace of Jerusalem: May those who love you be 
secure. May there be peace within your walls and security 
within your citadels. For the sake of my brothers and friends I 
will say, Peace be within you. For the sake of the house of the 
Lord our God, I seek your prosperity.''
    I appreciate you were willing to fund the effort with 
regard to Congressman Hall and Cardinal McCarrick with regard 
to that effort. I would like to ask you to urge our former 
congressman, colleague, Congressman Tony Hall and Cardinal 
McCarrick and some leading rabbis in our nation to convene, and 
I looked up the definition of convene, ``convene: come together 
or assemble for public purpose,'' to convene a convocation in 
Jerusalem sometime this summer or this fall to literally do 
what Psalm 122 says. I know Congressman Hall would be certainly 
able to do that and I think Cardinal McCarrick. And I mean not 
just American religious leaders but religious leaders from 
around the world, including the Pope. But I think what you are 
doing is so important, and if we miss this opportunity to bring 
peace to the Middle East the next president, whoever he or she 
is, will really be very reluctant I think to pick it up for a 
period of time. We may lose a year or two or three.
    So I support everything you are doing but I would ask you 
to consider and I am not going to put you on the spot to say 
yes or no now, but think about asking Tony, Congressman Hall, 
former ambassador or somebody that I think you know, the 
President knows well, Cardinal McCarrick who I think is highly 
respected, was on the Religious Human Rights Commission and 
well thought of, to gather with leading Jewish rabbis in this 
country of all political backgrounds to see about having a 
convocation sometime this summer or this fall in, in Jerusalem. 
If you are Christian the Church of the Holy Sepulchre is very 
important. If you are Jewish the Western Wall is very 
important. If you are Muslim the Dome of the Rock is very 
important. But in order to have a spiritual aspect to come 
alongside with your diplomatic efforts. So what I would like 
you to do is I am officially asking that you ask Congressman 
Hall, Cardinal McCarrick, some of the leading rabbis in this 
country, in our country, to meet with--and I appreciate your 
meeting with the Interfaith Religious Council, you were the 
only one that has ever done that. And I think that never got 
very much coverage here in the United States. But to work 
through that interfaith group out there in the region to have a 
major convocation in Jerusalem to do precisely what it says and 
asks us to do in Psalm 122.
    Will you consider doing that? I know I am not asking the 
State Department to put this on. I think we are not going to 
get into that. But I think Congressman Hall and Cardinal 
McCarrick and some of the leading rabbis could.
    Secretary Rice. Well, thank you very much, Congressman. It 
is a very interesting idea and we will certainly consider it.
    As you know, I talk frequently to Cardinal McCarrick and 
Ambassador Hall is a great man. I want to thank you for 
suggesting that I do that meeting with the interfaith religious 
dialogue out there; it was one of the more interesting meetings 
that I had. I think we had a pretty candid discussion about 
what it is going to take in terms of people of faith overcoming 
differences. And I want to thank you for suggesting it. It was 
really a very, very good opportunity to do that. And as a 
minister's daughter I am very much aware of the power of 
prayer. So thank you very much and we will definitely look at 
the idea.
    Mr. Wolf. I appreciate that. I met with the council members 
and they were very, very impressed. And I think they could fill 
the vacuum that would send the countermessage that we are 
getting from Hamas for hateful and missiles coming out of Gaza. 
I think this would send a message. And I think with the closing 
eight months left or whatever the case may be I think it would 
bolster also, put great positive pressure, not negative 
pressure, on the forces in that region to come together because 
I think if you do so is there much more that you want to tell 
us a little bit about, and that will be my last question--
    Secretary Rice. About the Middle East effort?
    Mr. Wolf [continuing]. About the Middle East peace, how do 
you see it going, what is happening? But if you could let me 
know or maybe just give Tony a call or give Cardinal McCarrick 
a call and see if we can do this. Thank you.

                              MIDDLE EAST

    Secretary Rice. Thank you. As to the Middle East effort in 
general, as you remember after Annapolis we really established 
three tracks plus one. And let me just say that on the 
negotiating track which is being run by Foreign Minister Livney 
and Mr. Abu Allah on the Palestinian side, I think that the 
encouragement there comes from the fact that they are not 
talking outside about what they are talking about inside. They 
have been very clear that they are having very important 
discussions, very consequential discussions, but that they are 
going to do it in a way that is serious and that they are not 
trying to report to the press every day about what they are 
doing.
    And that has led to some sense that perhaps nothing is 
going on there. I have never seen greater commitment. I cannot 
say that they will get there but I have not seen greater 
commitment from the two people than I have seen from them and 
also from President Abbas and Prime Minister Olmert.
    And to me when I was just there the most important thing 
was that we had to establish that in a context in which there 
is going to be a people and there is going to be turbulence and 
there are going to be people, particularly Hamas, that do not 
want this to work and so they will try to bring about violent 
incidents to try and keep the talks from going forward, these 
talks are going forward. And I especially thought it courageous 
on the part of the Israeli leadership after the terrible events 
in Jerusalem which were condemned by Abu Mazen that the 
Israelis within hours said that they were going to continue the 
negotiations.
    So that track continues and we are trying to support it.
    What we are working on and need to work more aggressively 
on is the West Bank improvement because there improving the 
lives of ordinary Palestinians will demonstrate that President 
Abbas can do that, that he can have a contrast between the West 
Bank and Gaza. And so that work is being--General Jones is out 
working as we speak. General Fraser will hold a roadmap 
obligations and implementation meeting at the end of this week. 
And so we are working very hard on these other tracks.
    The final piece that I really would like to see come more 
into relief is we need also the Arab states to be very active 
in supporting this effort. And some are but, frankly, the 
Israelis are going to need to know that the outreach of the 
Arabs to them is coming as a part of this broader effort.
    So those are the efforts we are engaged in Congressman 
Wolf. I believe we have got still a good chance, and as the 
President put it, plenty of time to get an agreement by the end 
of this year. It is going to take hard work and there are some 
very difficult issues. But I have never--I really have to say 
that the commitment of these parties is quite remarkable and we 
will try to help them.
    Mrs. Lowey. Madam Secretary, I would like to segue from 
your comments. I know you were reading my mind because when we 
were both in Jerusalem, I think it was back in September or 
October we were both part of the program and you and I spoke. 
And you know how passionately I feel about the concern that it 
will be too little too late. It is now March. Tony Blair has 
had his commitment conference, the Donors Conference. And 
unless there is a real difference between the West Bank life 
and the Gaza life, between the Fatah leadership and the leader 
of Hamas, I worry about the success of the peace process.
    So it is very disappointing to me that with the 
relationships that this President has and his father had with 
countries such as Saudi Arabia, and I build upon what my 
colleague Steve Israel said as well, it is very disappointing. 
And I know that they are hedging their bets, and that is why it 
is even more disappointing, that they cannot be made to commit 
now to build now in the West Bank. Why is there not some 
housing providing jobs? Why is there not some economic 
development providing jobs?
    And you and I know, and everyone who has been involved in 
this process understands that unless the Palestinians are 
supported by Saudi Arabia and the Emirates and all the other 
countries in the region it is going to be very difficult for 
them to take that final step. And when you have the Saudis and 
the Emirates in the region, the oil producing countries getting 
$105 a barrel, the fact that they cannot show some evidence on 
the ground and create the jobs is mind boggling to me.
    So again I would just like to urge you and the President to 
urge our friends the Saudis, we talk about weapons deals--and I 
am not going to get into that issue now--but not to make it 
clear to them that they have a responsibility now. It is not 
good enough for them to make a commitment, for them to think 
about it. We need to see some action on the ground now. And I 
know you and I agree.
    Mr. Wolf. Will the Chairwoman yield? I completely agree 
with that. And the Saudis have not done their jobs. They are 
putting money in American companies, buying up Citicorp and 
doing all of that; they can do exactly what the Chair said, 
they ought to put some of the money up publicly, quickly, or 
else it is big hat and no cattle. So I completely believe what 
Ms. Lowey said.
    Mrs. Lowey. And it may be too little too late, frankly. So 
I know that there is strong agreement here.
    I want to make one other point which is somewhat related as 
well. I mentioned before Secretary Negroponte's discussion, 
rather the lack of discussion of the planning at the State 
Department. And I asked him, ``There is planning going on now 
at the State Department for a transition to a civilian-led 
effort in Iraq without the current level of troops?'' His 
response was that he was not aware of any.
    Well, this is very troubling. And it would seem to me the 
deputy secretary should be able to discuss the planning 
involved in a transition from the military to the civilian. And 
so I would just want, like you to address three points: number 
one, is the Department working on plans to transition to a 
civilian-led effort in Iraq? What specifically has the 
Department of State done to enable the continuation of our 
diplomatic and development missions in Iraq without the 
envelope of military security? And how can we have confidence 
in the Department's capability to project its thought power in 
a post-conflict environment if there is no planning now for 
contingencies?
    We hear about the success of the surge and then we are told 
they are not planning for this transition. This does not make 
any sense, especially when many of us are concerned that when 
the military succeeds in A and then they move to B then there 
are really problems in A again.
    So if you could briefly discuss in a few minutes we have 
before we vote the planning that is going on to transition from 
military to civilian and I would be most appreciative?
    Secretary Rice. Certainly. May I just say just one word on 
the Middle East peace. There are pledges in hand from Saudi 
Arabia----
    Mrs. Lowey. Pledges?
    Secretary Rice. That is right. From Saudi Arabia and 
others. And so my----
    Mrs. Lowey. While they are closing deals in Nevada and 
Citigroup? We heard all about them when we were in Jerusalem.
    Secretary Rice. Right. I was just saying, Congresswoman, 
you know I want everybody to do more. But we are just trying to 
get people to make sure they pay their pledges. That is, if we 
do that.
    Mrs. Lowey. Has anybody done anything, have the Saudis done 
anything on the ground, built any housing, put people to work?
    Secretary Rice. What we are trying to do is through the 
efforts that Tony Blair has is to identify projects that people 
could contribute to because it will require some changes in 
terms of movement and access also on the Israeli side. And so 
there is a package that has to be put together here. But I am 
always for people doing more, you know that.
    Mrs. Lowey. Is anything, maybe I am not aware of it, is 
anything currently happening on the ground? We hear about the 
pledges and maybe.
    Secretary Rice. Yes, there are plans for several major 
projects that Tony Blair----
    Mrs. Lowey. Plans?
    Secretary Rice. Yes. But they should be coming, starting to 
come online. That is part of what General Jones is helping 
with.
    Mrs. Lowey. When?
    Secretary Rice. I do not know when the first ones will. But 
we are trying to make sure that there is a when you need a 
roadblock moved or you need a road to be opened that that piece 
of it can be there so that an economic project can be put in 
place. And----
    Mrs. Lowey. However.
    Secretary Rice. Yes?
    Mrs. Lowey. I am sure you would agree that there is housing 
that can be built, there are jobs that can be created in the 
West Bank without moving a roadblock and without--I mean that 
is all part of the total agree----
    Secretary Rice. I agree.
    Mrs. Lowey. You agree?
    Secretary Rice. I agree.
    Mrs. Lowey. And it seems to me we have been talking about, 
many people have been talking about this for the past year like 
Dennis Ross. I have been talking about it primarily since the 
fall. And so it is September, October, November, nothing.
    Secretary Rice. Well, I would not say nothing.
    Mrs. Lowey. Commitment. There is nothing on the ground.
    Secretary Rice. There are commitments. There are efforts to 
do the planning. Salaam Fayed has about 150 projects that he 
has been doing and we have been helping him with. So things are 
going on. But I just said I do not think the progress is fast 
enough and we are going to redouble those efforts in terms of 
the planning.
    Mrs. Lowey. Right.
    Secretary Rice. Yes. We are very much aware that we have 
two concerns going forward about maintaining our diplomatic, 
economic, et cetera, efforts, the civilian side. We have surged 
in support on the civilian side, in support of the President's 
military surge. We have surged through PRTs, for instance, 
increasing the number of PRTs, almost doubling the number of 
PRTs. They have been----

                                  PRTs

    Mrs. Lowey. What percent of the PRT staff is military and 
what percent is AID?
    Secretary Rice. Well, they are completely merged operations 
at this point. And we did embed them and that has been very 
effective. What we are planning for, and David Satterfield is 
working with Ryan Crocker on this question, is in places where 
we will in effect not be embedded any longer how will you keep 
the presence in provincial, the provincial presence? Because we 
found that in Iraq the localized presence is as important as 
our presence in Baghdad. And so we are looking at those issues.
    We are also looking at questions like how we would maintain 
the effort of our ministry assistance team. It is one reason 
that we are going to continue to be reliant on contract 
personnel for security. And Bob Gates and I have a memorandum 
of understanding of how to make that work because we are going 
to have to keep these efforts going as American, whatever, 
whatever happens with the American military presence.
    So, yes, there is work going on on this issue. We are quite 
aware that we have to keep the civilian effort going forward.
    Mrs. Lowey. I would also be interested in knowing--and you 
can get back to me on that--is what percentage of the 
responsibility has really been turned over to the Iraqis? The 
PRTs as we know have been accomplishing quite a bit, so have 
the cap agencies.
    Secretary Rice. Yes.
    Mrs. Lowey. However, it is my understanding from my 
discussions that they cannot find people who will assume the 
responsibility among the Iraqis.
    Secretary Rice. Well, let me just give you one concrete 
example. If you look at one of the things the PRTs have been 
very concerned about, budget execution, because they want the 
provinces--they want the Iraq central government to be able to 
execute its budget, get the money to the provinces and then the 
provinces to be able to execute. That percentage in our 
counting of how much of their budget they have been able to 
execute has gone up significantly between 2006 and 2007. So 
that is the kind of thing where the Iraqis are not trained to 
do it and they are actually doing it.
    But it is a long, it is a long haul because this is a civil 
service that essentially did not exist. And one of the things 
that we are talking not just about here but is more U.N. effort 
in this regard and also more effort from other donors who may 
wish to contribute to that effort rather than to the military 
effort.
    Mrs. Lowey. Dr. Weldon, would you like--I am going to go 
vote, would you like to continue?
    Dr. Weldon. I would be delighted----
    Mrs. Lowey. Thank you.
    Dr. Weldon [continuing]. Madam Chairman.
    Mrs. Lowey. Thank you.
    Dr. Weldon. Madam Secretary, as always it is a pleasure to 
have you here. And let me just begin by saying I applaud you 
for your service to our country and your dedication to the 
principles upon which our nation was founded, the principles of 
democracy and freedom for which so many have died to defend 
throughout the history of our great nation. I have some 
questions for you about the recent statements of Mr. Abbas in 
that Jordanian newspaper ``Al-Dastur.'' He did that interview.
    I was particularly troubled. I just came back from Israel 
myself. I was there about two or three weeks ago. And some of 
the concerns of a lot of the people that I spoke to, and I hear 
this as well domestically, is that a lot of the Palestinians 
who claim they want peace really do not want peace, they just 
are temporarily pursuing a peace agenda but their goal is still 
the destruction of Israel. But he said, and I will quote him 
from that article, ``At this time I am against armed struggle 
because we cannot achieve it.'' Sort of implying that if he 
could achieve the destruction of Israel he would do it if he 
had the military resources to do it.
    And then he goes on to say things might be different in the 
coming stages, which I thought was a really troubling comment.
    Now, Saeb Erekat I guess tried to do damage control and a 
couple of days ago sent out a letter saying those quotes were 
listed out of context. There was really no attempt though in 
Erekat's letter to explain what Abbas was actually saying. And 
I wonder if you could comment on this because in light of all 
the work you have been doing and the President has been 
pursuing to try to achieve peace, you cannot achieve peace if 
the people you are working with do not really want it, and so.
    Secretary Rice. Yes.
    Mr. Weldon. Go ahead.
    Secretary Rice. Well thank you, Mr. Weldon. I am confident 
that President Abbas is somebody who is committed to the 
negotiated solution of this issue and recognizes that only a 
negotiated solution is going to result in a Palestinian state. 
We did immediately go to them about the comments. They say he 
says they were taken out of context. I do know that we have all 
had the experience of saying things to press we wish we had not 
said. And I can tell you that this is somebody who for many, 
many, many years now has rejected the idea of violence as a 
means to statehood.
    He is also somebody who is a great--who has great problems 
with Hamas. The military wing tried to assassinate him in Gaza. 
I just believe that this is somebody who is dedicated to the 
negotiated process and I do think there is any evidence. I 
cannot account for the comments. I think they were extremely 
unfortunate. We made that very clear to them. But I believe he 
is a partner for peace for the Israelis and I believe Prime 
Minister Olmert believes he is a partner for peace.

                                  FARC

    Mr. Weldon. Moving on, I have some constituents who have 
been held by the FARC for a number of years. And you have had 
your staff come and brief me several times, and I appreciate 
that and the effort of State Department to try to reach some 
sort of an accommodation and get these people out. I know their 
loved ones who have contacted my office in the past have been 
very concerned.
    I have been reading reports that Chavez funds the FARC. Is 
that true?
    Secretary Rice. Well, we are certainly--the Colombian 
government is learning a great deal about the relationship 
between the, apparent relationship between Venezuela and the 
FARC. That work is not complete yet. As you know, they are 
apparently looking at some of the information that has been 
made available to them because of the recent deaths of some key 
FARC leaders. But I would just note that publicly the President 
of Venezuela tried to get the FARC taken off the terrorist 
lists of various countries saying that they should not be 
considered terrorist, when in fact they are considered 
terrorists because they engage in kidnappings and bombings. And 
if my counterpart from Colombia were sitting here right now, 
the foreign minister, you could hear a story of somebody who 
was held for six years in captivity by the FARC.
    Mr. Weldon. Yes, that was one of the things I wanted to----
    Secretary Rice. The Venezuelans, more is being learned, but 
the President of Venezuela has been pretty clear that he 
believes FARC is a legitimate organization.
    Mr. Weldon. The FARC has been declared----
    Mr. Jackson [presiding]. Dr. Weldon.
    Mr. Weldon. Is my time up?
    Mr. Jackson. Yes, sir, it is.
    Mr. Weldon. Okay. Thank you. I will follow up with you with 
some written questions on this issue.
    Secretary Rice. Of course.
    Mr. Weldon. Thank you very much.
    Mr. Jackson. Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman.
    Good morning, Madam Secretary.
    Secretary Rice. Good morning.

                                  IRAQ

    Ms. Lee. Okay, Madam Secretary, now I know we disagree on 
this so let me just preface my remarks by saying what is a fact 
actually that we all agree on, and that is in another week we 
will mark the fifth anniversary of what many consider a very 
tragic bombing and invasion and war against Iraq and now what 
many see as a permanent occupation. And I see it as that also. 
Nearly 4,000 of our brave young women have been killed, just 
eight were killed this week. Five hundred billion dollars and 
counting, could climb as high as $3 trillion and more. These 
investments, this money could easily have been invested in our 
sagging economy to address the recession, and it is an Iraq 
recession, and we have to remember how this, how our resources 
are really digging us into a deeper hole in terms of the 
American people and the struggles that they are seeing now in 
their daily lives. And of course there were no weapons of mass 
destruction.
    Now, I have got to ask you about this whole notion of 
permanent military presence in Iraq because on six occasions 
the President signed legislation which we all agreed upon 
saying that there should be no permanent military bases in 
Iraq, yet when he signed the most recent defense authorization 
bill he issued a signing statement which signaled that he 
really did not intend to comply with that anyway.
    So I want to ask you because I asked Deputy Secretary 
Negroponte this, do you believe that there is a plan to build 
or have a permanent military presence in Iraq or not?
    Also, Ambassador Satterfield I believe it was last week 
indicated that he thought that there was congressional 
authority to continue to conduct combat operations in Iraq and 
to stay there indefinitely because of the 2001 resolution, 
which I did not support, and the 2002 resolution authorizing 
the use of force against Iraq. And so I am wondering about the 
status of force agreement, what this means? Do you see 
congressional authority being necessary or not? Because I am 
hearing and we are seeing mixed signals from this 
administration on the permanency of U.S. presence in Iraq.
    And then the second question is, I wrote to you I think it 
was January 10 about an urgent request to take appropriate 
action to ensure that the vital humanitarian goods and services 
are successfully delivered in Gaza. In the letter I indicated 
that, and let me just read you part of this letter, ``One of 
the most important steps necessary to enhance the prospects for 
success will be to ensure that humanitarian assistance is able 
to reach those civilians most in need in Gaza.''
    I have not heard back from you yet in terms of a response 
but I wanted to know what is taking place and how you see the 
humanitarian needs now in Gaza because it is a deplorable 
situation, and just basic medicine, food, water, you know, it 
is a situation I do not think anyone would see as tolerable. 
And I am still waiting on your response. And maybe you could 
answer some of those questions here at committee.
    Secretary Rice. Certainly. Thank you, Congresswoman Lee.
    First of all, Secretary Gates and I have both made clear 
that the United States does not seek permanent bases, permanent 
military bases in Iraq. And----
    Mr. Jackson. The Secretary will suspend.
    Let me strongly encourage visitors in this hearing room to 
not interrupt the Secretary or member of this committee while 
they are speaking. The Chairwoman of the committee has made it 
very clear that you are guests of the committee and we respect 
your right to protest, your First Amendment right, but there 
will be no interruptions of the Secretary and there will be no 
interruptions of Ms. Lee while they are giving their answers.
    Madam Secretary.
    Secretary Rice. Thank you.
    So, no, we do not seek permanent military bases in Iraq.
    Ms. Lee. Then why would the President sign a signing 
statement on that specific portion of the bill?
    Secretary Rice. The agreement which we are working on with 
the Iraqis is indeed a status of forces agreement which is 
intended to give our forces the ability, the legal ability to 
continue to operate in Iraq. It does not set force levels. It 
does not make commitments to specific kinds of operations. But 
it does provide a legal basis for our forces to operate, bases 
that will not be there when the U.N. resolution expires on 
December 31.
    Ms. Lee. Yes, Madam Secretary, I understand that. But I am 
wondering why the President would take that specific section 
out of the defense authorization bill and say and issue a 
signing statement really just, you know, subverting that, that 
law in terms of permanent military bases.
    Secretary Rice. Well, I can only say, Congresswoman, that 
we have been very clear that the United States does not seek 
permanent military bases in Iraq. We do need to have our forces 
continue to operate there. And, yes, the President believes 
that the President does have the authority to continue our 
forces operating there.
    Ms. Lee. Will you come back for congressional authority for 
that status of force agreement?
    Secretary Rice. The status of forces agreements exist with 
many, many different countries around the world and they have 
not come to Congress. We will continue to brief about the 
nature of those discussions but those discussions are to give 
our people a safe and legal way to operate in Iraq.
    As to Gaza, I have personally been involved in working on 
that issue. First of all, we made additional money available to 
UNRWA for the Gaza to try--we have now got $148 million this 
year to try and make certain that there is enough funding. 
Because UNRWA made a request for more funding we have answered 
that request.
    But I have also been very engaged with the Israelis to try 
and make certain that humanitarian convoys can get through 
Kareem Salama and through Ha'aretz into the region. And so, for 
instance, I was called and told that there were 80 trucks that 
were lined up that could not get through in the convoy. I 
intervened directly and those 80 trucks got through. So we work 
these issues on a, out in the region on a daily basis. I 
intervene whenever necessary. We really do not want innocent 
people in the Gaza to suffer.
    The problem, of course, is that Hamas has taken the Gaza 
hostage and the people of Gaza with it. Abu Mazen is still 
providing 58 percent of the P.A. budget to the people of Gaza. 
But it would be extremely helpful, of course, if Hamas were not 
firing rockets into Israel. And so we are working with the 
Egyptians, we are working with the Israelis, we are working 
with the Palestinian Authority to try to bring about a better 
situation in Gaza. But on a day to day basis we work to try and 
alleviate the----
    Ms. Lee. Is there anything we can do to help.
    Mr. Jackson. Ms. Lee, your time has expired.
    Ms. Lee. Okay. If we get a second round.
    Mr. Jackson. Mr. Knollenberg.

                    AZERBAIJAN AND NAGORNO-KARABAKH

    Mr. Knollenberg. Thank you, Mr. Chairman.
    And welcome, Madam Secretary, appreciate your being here 
and appreciate what you do. You have obviously heard of this 
situation and I am going to discuss the situation with 
Azerbaijan and Nagorno-Karabakh. And as you know, of late there 
has been a ratcheting up of not just rhetoric but also threats 
by the Azerbaijani individuals. And this is the worst cease 
fire violation in over ten years. And I think just this last 
week eight people were killed, allegedly.
    To me this is not acceptable and it is something I wanted 
to work with you on in any way that we can to work at in fact 
discontinuing military funding for Azerbaijan under the 
circumstances taking place. I have had discussions with your 
staff and they have been very, very level about things. They 
have been very diplomatic as well, which they should be. But I 
am also concerned that nothing is taking place here with 
respect to challenging not just the rhetoric but the threats. 
And some of these in the last week have been very, very 
substantial, it is almost like when we talk about our friend 
Aleyev--and I knew his father by the way and I have been to 
visit him and I do not think his son is any different--but in 
any event he is saying literally that they are buying military 
equipment and they have increased their military force by eight 
times in the last several years. So they are not really talking 
about the war on terror, what they are talking about is a 
regional war of some kind that they would like to get into with 
Armenia.
    And I strongly believe that instead of using this funding 
to help in the war on terror they are gearing up for, as they 
say, a regional war. So I want to hear what plan you might have 
or what the Administration position might be on Aleyev's 
hatred-filled statements and his blatant acts of war against 
Armenia?
    Secretary Rice. Well, we have certainly tried many, many 
times even during my tenure to resolve the Nagorno-Karabakh 
situation. And we thought we were close a couple of times and 
we could not quite get there. And we do address the parties, 
and in this case when the rhetoric gets like this then we send 
warnings about what it would mean if this were to create 
circumstances of the kind that you talk about.
    We have problems right now, unfortunately, on both sides. I 
am sure you know, Congressman, we have been very concerned 
about the state of emergency in Armenia. And we have had to say 
to Ter-Petrosian that it is really very important that the 
state of emergency be lifted so that we can resume some of the 
aid programs that we have in Armenia. So, yes, we are very 
concerned about the heating-up rhetoric. But I think the way to 
do it, the way to deal with this is to try to maintain open 
channels to both sides and to try to bring them to a solution.
    The solution actually is in sight and there has been a lot 
of good work done through the group that had worked on this, 
which includes Russia and so forth.
    Mr. Knollenberg. Are you saying a solution is in sight?
    Secretary Rice. I am saying that there is a solution we 
believe that they both ought to be able to take. It is not that 
they are about to take it. I did not mean in sight in the sense 
that they are about to take it.
    Mr. Knollenberg. The reason that I bring this up is 
because, and as I say it is the worst breach in over ten years. 
And as I say allegedly these people were killed. I believe that 
most of those that were allegedly killed were Azerbaijanis and 
not Armenians. And I know of late, in fact I have got a 
statement here which I believe to be relevant and I believe to 
be also up to date, is that as recently as March the, what is 
it here, March 3, 4, 5 and on the 6th and the fact is that 
right now they cannot even guarantee the mediators safety to 
move into that section of the world. And it seems to me that 
this man Aleyev has been making threats. And he has also said 
them, made them recently in the last couple of weeks.
    So I wonder how that rhetoric hits obviously the 
Administration and yourself in your position? As I say, your 
people have been very, very open with me but I do not see any 
solution evolving, I do not see an outcome that looks 
acceptable in the immediate future.
    Secretary Rice. Well, in the immediate future I do not 
think Nagorno-Karabakh can be solved, I agree. My point is that 
we have been close several times. And the solution is not 
unknown. In fact, it was down to one question about a 
particular passageway just a couple years ago.
    And so we will continue to try to work that. But I just 
have to emphasize we have problems on both sides right now and 
we are trying to make sure that both sides act responsibly in 
terms of rhetoric and also in terms of domestic policy.
    Mr. Knollenberg. Which I know is a very, very tough job. 
But it seems to me that--and I was not the least bit kidding 
about removing their funding, their military funding because if 
Azerbaijan is building up to a point that they have also said 
that they would move into Armenia and challenge them whenever 
they wanted to because they have an economic situation that is 
stronger, far stronger than Armenia and in time they probably 
could put a military organization together that would march in 
and take over. Now that is not the outcome any of us want. But 
I am really concerned about that and that is why I am 
suggesting that we take away their military funding, at least 
threaten it because they are threatening Armenia.
    Secretary Rice. Well, I think right now, Congressman, we 
believe that the best approach is to continue to try to get 
both sides to act responsibly, to keep our aid programs in 
place to the degree that we can. Again, we have had to suspend 
some in Armenia. But to keep them in place, to keep working 
with the parties to see if we cannot do this.
    The way that we get this resolved is to resolve the 
Nagorno-Karabakh.
    Mr. Knollenberg. Yes. Well, I appreciate that very much 
because that is something we will be looking at very closely 
because many of us are ready to obviously maybe do a more 
drastic thing but certainly to get attention. So thank you, 
whatever we can do to communicate with you on this issue we 
will. And thanks again for the help of your staff.
    Secretary Rice. Thank you.
    Mr. Knollenberg. Thank you.
    Mrs. Lowey [presiding]. Mr. Chandler.

                              AFGHANISTAN

    Mr. Chandler. Thank you, Madam Chairman.
    Madam Secretary, I believe that our decision, our country's 
decision to go into Iraq caused us to take our eye off the ball 
in Afghanistan. And I am very concerned about the situation in 
Afghanistan. It appears to me to be somewhat intractable. There 
are a lot of reports, not all the reports but many reports 
suggest that the situation is deteriorating there. My main 
concern is the fact that Al-Qaeda has what amounts to a safe 
haven in Waziristan in the tribal areas. And what I would like 
to know first of all is are you pleased with the Pakistani 
efforts in Waziristan? What can we do in that arena to deal 
with that safe haven? I do not think Afghanistan will ever be 
fixed until we deal with that problem. And do you believe that 
the Pakistanis are doing whatever they can to solve that 
problem?
    Now, the second question I have has to do with Tunisia. 
Tunisia is an ally of ours, a strong supporter. They have made 
many strides in a lot of different areas, including the areas 
of women's rights and so forth. They are an important ally in a 
region. All you have to do is look at the map and you can see 
that it is important for us to have Tunisia on our side. Yet 
when you look at the 2009 budget request it calls for something 
in the neighborhood of a 60-plus percent cut in our aid to 
Tunisia. We are not talking about much money that goes to 
Tunisia in the whole scheme of things relatively speaking. It 
looks to me like it amounts to a symbolic poke in the eye to 
the Tunisians. And I would like you to address that. And I 
would hope that you could revisit that.
    Secretary Rice. Thank you, Congressman.
    On Tunisia we believe that what we try to do is we try to 
assess what the needs are at any particular time and to meet 
them to the degree that we can. And the programs that we are 
running in Tunisia are not so much in terms of sort of basic 
development and programs. We have a lot of programs with them 
in rule of law and democracy building. And it is a good, in 
some ways a good relationship. It has had its ups and downs 
even since I have been secretary.
    But I think that what we try to do is to determine what we 
believe is really needed there and then to meet that need. And 
we believe that is the case in Tunisia. But if you would like I 
will get you a more, fuller----
    Mr. Chandler. Well, the biggest cut is in FMF spending.
    Secretary Rice. Yes.
    Mr. Chandler. And it is, in my view it is very symbolic. 
And the Tunisians are not at all happy with it. And it really 
is such a relatively small amount of money and I am having a 
hard time understanding.
    Secretary Rice. I understand. We assess what we believe 
they need on the FMF side and what we can do on the FMF side. 
And we try to meet those needs. We obviously have competing 
budgetary pressures in other places.
    But, Congressman, I will look again and I will get back to 
you.
    In terms of Afghanistan, I was just in the south of 
Afghanistan in Kandahar. And we are--there are two things--and 
I will return to Waziristan in just a moment but there are two 
things that we do need to do very urgently in Afghanistan. One 
is that the quite substantial counterinsurgency effort that is 
being carried out there by NATO forces needs to, the Canadians 
in particular need a partner there. And we have worked very 
hard to get them one because Kandahar, Helmand, that area is 
one of the toughest areas, it is the heartland of the Taliban.
    The NATO forces are fighting well there and when the 
Taliban comes at them the Taliban loses. The Taliban has 
therefore gone to tactics of trying to intimidate the 
population using force against innocent people. And that means 
you have to worry about after clearing an area holding it and 
then building in it, the kind of classic counterinsurgency 
effort.
    And on the build side the international effort is just not 
very well coordinated which is why Secretary General Bond has 
just named a coordinator for international assistance. And so 
that is a very urgent task in the Kandahar region.

                               WAZIRISTAN

    As to Waziristan, we have been consistent in talking to the 
Pakistanis about how they can do more and how we can help them 
to do more. I think it is important to recognize that North 
Waziristan has never been governed in effect. It is an area in 
which state structures are very weak, a kind of classic 
ungoverned area in which terrorists can take hold. It is a 
border that is very difficult to deal with because there are 
relations across, and I mean familial relations across that 
border. We worked with the Afghans and the Pakistanis to try to 
mobilize tribal support through a local, through Loya Jirga to 
deal with both sides of the border. But ultimately the 
capabilities of the Pakistanis are going to have to get better 
to deal with the Waziristan problem. And that----
    Mr. Chandler. Are you satisfied with their efforts?
    Secretary Rice. I believe that everybody could do more. But 
I will tell you I think it is not just a problem of will, I 
think it is a problem of capabilities in Waziristan. It is a 
tough----
    Mr. Chandler. Is it also a problem of will?
    Secretary Rice. I believe that they know that they have to 
do something about Waziristan. I feel strongly that they--we 
are in a better place about this than when they tried to make a 
deal essentially some time ago which I believe did not work. 
And we were clear that we would see if it worked but I believe 
it did not work. And I believe the Pakistanis now understand 
that they have to take a different tack there. But getting the 
capabilities there is not an easy matter.
    Mrs. Lowey. Mr. Kirk.
    Mr. Kirk. Thank you, Madam Chairwoman.
    I just want to say while you were gone our colleague Mr. 
Jackson was here, I know was the epitome of decorum and did a 
good job in your absence.
    Madam Secretary, first of all I want to say how much I 
support the Merida Initiative. And since I come out of the WHA 
side of the State Department it is good to see a new effort 
and, in reality, may make the most difference for a larger 
number of Americans than almost any other foreign policy 
initiative, and want to help you on that.
    Secondly, to thank you working with your team and Sandy 
Randt on expanding our diplomatic footprint in China. I am 
particularly worried that the new embassy there is going to be 
maxed out and to keep the old embassy structure and to fuel the 
continuation of the expansion of U.S. government, especially 
the Consumer Product Safety Commission. I was pretty hard on 
them in a hearing yesterday because the State Department has 
opened a door for them to house them for inspectors to protect 
U.S. goods and consumers. My problem now is getting them to 
deploy. But Sandy, your team in Beijing has done a very good 
job.
    I also want to say your team has been very good working 
with us on what could be a major upgrade in the missile defense 
of Israel that I hoped the President could announce in May. And 
we have been working with your deputy John Negroponte and John 
Rude, Secretary Gates and Deputy Secretary Englund, and 
especially Defense Minister Barak on that. And so just your 
team has been very excellent. And I hope we can make this 
commitment in May?

                                  IRAN

    I did want to ask you about Iran though. I am very close to 
Admiral Fox Fallon. And sad to see his departure, et cetera. 
And I think we both agree that there is poor to no good 
military options with regard to Iran and, therefore, the U.N. 
multilateral diplomacy route which you have been pursuing has 
been a very good one. And I congratulate you on three U.S. 
Security Council resolutions on that.
    My worry is on the other side of the multilateral house 
which is just three blocks from the White House is the 
headquarters of the World Bank. And I think most Americans do 
not want any conflict with Iran but we also do not want to 
subsidize the Iranian government. Now, the U.S. subsidizes 20 
percent of the World Bank. I do not think that most people know 
that in 2005 the World Bank cut a $49 million check to the 
government of Iran. In 2006 they cut a $166 million check to 
Iran. In 2007 they cut a $220 million. So U.S. taxpayer support 
through the World Bank to the government of Iran is 
accelerating. That is $425 million in U.S. and allied money 
going directly to the Iranian Finance Ministry with some fairly 
hilarious technical problems that we designated the principal 
bank that was handling these transfers as a state proliferator, 
we are on the edge of designating their Central Bank as a state 
sponsor of terror. So I am not exactly sure how the World Bank 
check clears even.
    And we have $818 million pending that will go three blocks 
away from the White House to the government of President 
Ahmadinejad. So has this come up on your radar screen? Because 
certainly from President Ahmadinejad's viewpoint he has three 
U.N. Security Council resolutions condemning him and then he 
gets a check for $435 million signed in Washington, D.C.
    Secretary Rice. Well, it has come on my radar screen, 
Congressman. We have really opposed non-humanitarian assistance 
to Iran from the World Bank. And we have lobbied about it. And 
my understanding is that since 2005 there have been no new 
commitments to Iran which is a good space. Now, some of this 
will play out over time from former commitments or from 
humanitarian commitments. We have not stood in the way of 
purely humanitarian commitments, as the U.N. Security Council 
does not. But I do not think that with the exception of 
humanitarian assistance, the World Bank should not be involved 
with Iran.
    Mr. Kirk. Thank you. I just I think we are sending a bit of 
mixed message. And a discussion with you and Bob Zoellick might 
help because you are winning in the U.N. Security Council.
    And so I want to raise one other issue though which is 
regarding Afghanistan. Last year when we talked you said, you 
know, we are doing work to designate the Taliban as a foreign 
terrorist organization. And right now we have a split in the 
administration over whether to issue that designation or not. 
We saw a record poppy crop in 193,000 hectares and the 2008 
U.N. summary says that the cultivation is almost completely 
concentrated in Taliban-controlled areas fueling the 
insurgency. About 1,700 attacks out of these areas against 
Afghan civilians and our NATO allies.
    The DEA has told us that it would be of great assistance to 
them to have this foreign terrorist designation because we 
would like to start taking down Afghan narco-drug kingpins as 
we have been so successful in many other countries like 
Colombia, Ecuador, Bolivia, and even Pakistan where the poppy 
crop has gone to next to zero. Tell me how you are doing 
because I think this would be a good upgrade for DEA and to get 
the Taliban designated as a foreign terrorist organization.
    Secretary Rice. Well, Congressman, the Taliban is of course 
already designated under U.N. Security Council resolutions and 
under our own executive order. And we have thought that we--I 
continue to look at it and I continue to personally look at 
the, it is not a question of whether the Taliban is an 
organization, a terrorist organization, that is not the 
question. The question is whether this particular designation, 
given that we already have the Security Council designation and 
the executive order, would actually help matters given that we 
are trying to fight a counterinsurgency war in Afghanistan with 
the support of Afghans. And so that is the issue. And we have 
to weigh whether there would really be an additional, any 
additional power from doing an----
    Mr. Kirk. I understand the reconciliation process, you 
know, but I would hope that we would at least be empowering DEA 
to executive a kingpin strategy.
    Secretary Rice. Absolutely.
    Mr. Kirk. Right. And we have not yet identified who the 
kingpins are and I think that would be a good step.
    Thank you, Madam Chairman.
    Mrs. Lowey. Ms. McCollum.
    Ms. McCollum. Thank you, Madam Chair.
    Madam Secretary, there are some requests in the fiscal year 
2009 budget which are encouraging and others which are less so. 
One area that I found very discouraging is the $259 million cut 
to the immigration refugee assistance. This is a moral failure. 
At a time when the demands of Iraq refugees in Jordan, Syria 
and Lebanon, millions of refugees and displaced persons from 
conflicts across Africa and the globe increasingly go unmet.
    I was in Jordan and Syria last year and I listened to a 
number of stories of Iraqis who are rightfully expecting aid 
and help from the United States. In a conflict where so much 
has gone wrong we must commit ourselves to getting this right. 
The future of Iraq is waiting outside of its borders and it is 
running out of time. So I would like you to talk about that.
    I also am glad to see that the Administration is advancing 
proposals to address the serious threat of transnational crime 
in criminal youth gangs in Central America and Mexico. I want 
to see more money going to gang prevention activities in 
Honduras, El Salvador, Guatemala, Nicaragua. You have recreated 
the imbalances in Plan Columbia that this committee acted last 
year to correct. And so I would like you to talk about that a 
little bit.
    But I am also concerned about the $1.1 billion requested 
for the Merida Initiative in the supplemental and in the 
regular budget. It appears that only $5 million is set aside 
for gang prevention activities, that is less than 1 percent 
invested in prevention and long-term solutions. And we know the 
devastation that these gangs not only create in the countries 
there but right here with many families here in the United 
States.
    I see plus-ups for development assistance in El Salvador, 
Guatemala, Nicaragua and Honduras, but together these increases 
are less than $50 million in a $1.1 billion request. Again that 
is less than 5 percent for total prevention. So I would like 
some understanding from you about what is going on with the 
imbalance.
    Madam Secretary, I realize you are asking for my support on 
this but many of us in the committee feel that we need more 
detailed information, myself in particular. So I need to be 
able to understand better the commitment that you are asking. 
And I can submit some questions in detail to you and you can 
have someone from your office get back.
    Secretary Rice. Yes. Well, I am happy to do that, 
Congresswoman, if you want to give me more detail.
    Ms. McCollum. I will.
    Secretary Rice. I did not understand the point about Plan 
Colombia. Could you just repeat what it was?
    Ms. McCollum. Well, this committee redirected a lot of, a 
lot of the----
    Secretary Rice. Oh, from security assistance.
    Ms. McCollum. Right.
    Secretary Rice. Yes, okay.
    Ms. McCollum. And so we saw it go back again. And we should 
be having a conversation I hope where we are moving forward 
together rather than going back and recreating imbalances.
    But if I could close with this and maybe ask you to speak 
to this first and then the refugee crisis. This week's 
announcement of the expanded Israeli settlements in the West 
Bank is a blow to your mission in that region. This expansion 
is unacceptable because it violates the roadmap. Madam 
Secretary, I am looking for clear, unambiguous position on 
continued Israeli settlement expansion. I want you to be 
explicit about this Administration's position on the continued 
settlement expansion on the West Bank. And can you give me 
assurances that no U.S. funds in this budget will be used to 
facilitate or enable or to secure the expansion of Israeli 
settlements in the West Bank which violates the roadmap?

                           REFUGEE ASSISTANCE

    Secretary Rice. Thank you. First, let me address the 
refugee assistance. We in fact have a significant increase in 
refugee assistance, but we are looking at those needs, and this 
is also the kind of issue that we sometimes deal with in 
supplemental appropriations funding, because it is a process 
where not everything can be anticipated in an 18-month budget 
cycle. I might note too that of course we have an emergency 
fund for refugee matters that we do tap from time to time. So I 
assure you it is a very high priority, and we are making 
certain that it is adequately funded.

                             LATIN AMERICA

    As to the questions concerning Latin America, Colombia, 
Merida, et cetera, the Merida Initiative has been worked out 
with the Mexicans and with the Central America portion with the 
Central Americans to put together a balanced initiative that 
deals with the crime, drug, gang-related activities that, 
frankly, are threatening to destabilize significant parts of 
both Mexico on the border and Central America, and the flow 
upwards from Central America into Mexico of those violent 
activities.
    And so, it is a package, and it has been put together in 
consultation with the Mexicans. There will be more work to be 
done on it, and it is a multi-year initiative, but I am sure 
that as we get experience with the Merida Initiative, that 
there will be questions about, perhaps, the redistribution or 
whether or not there need to be more funds to certain kinds of 
activities, but I just want to assure you, we have worked this 
with, and will continue to work this effort with the Mexicans 
and with the Central Americans.
    I believe it is one of the most important initiatives that 
we have had, because both for the United States and for the 
populations, this increasing gang activity, violent gang 
activity, is extremely troubling, and I think it is why you are 
going to see some things in cooperation with Mexico that would 
have been really unthinkable just a few years ago, and so it is 
a very serious initiative.
    As to Plan Colombia, I have to say that I think Plan 
Colombia has been a real bipartisan success, and I was just in 
Colombia just a little while ago, and what you see is, security 
matters, and yes, development matters, but the Colombians are 
doing a lot of the development themselves. Medellin is an 
amazing place for the efforts that they are making in 
development, but security matters, and we have worked with the 
Colombians, not just the balance between security and 
economics, but also the balance in what Colombia itself can put 
into the problem.
    Now, Colombia's economic development is going to be helped 
most by the passage of the FTA that we now have negotiated with 
the Colombians. That will do more for Colombia than all of the 
development assistance you could possibly fund, and so I just 
strongly, again, would----
    Mr. Jackson. Ms. McCollum.
    Ms. McCollum. Madam Secretary, if you could answer my last 
question. This is not Ways and Means, and we will do the trade 
there.
    Mr. Jackson. Ms. McCollum.
    Ms. McCollum. My time is running.
    Secretary Rice. Well, I consider the trade, Congresswoman, 
to be part of the package of dealing with Colombia's economic 
development, and that is my point, but the security assistance 
is necessary. That is really what has made Colombia come back 
from the brink of a failed state. That is what is allowing them 
to go forward with the demobilization of the paramilitaries and 
to begin to erode the capabilities of the FARC.
    Mr. Jackson. I understand that the Secretary has 
approximately 25 more minutes of time with our committee, so we 
have time for a brief second round.
    Ms. McCollum. Mr. Chair.
    Mr. Jackson. Ms. McCollum.
    Ms. McCollum. I did ask the Secretary to submit the Latin 
American questions, to have someone come to my office and 
answer that.
    Secretary Rice. Yes.
    Ms. McCollum. And she chose to use time to explain it 
orally rather than answer the question I did ask her about, and 
that was the settlements.
    Mr. Jackson. Madam Secretary.
    Secretary Rice. I am happy to answer that if I may. I am 
sorry, I just forgot, Congresswoman. Yes, I am happy to speak 
to it and I have spoken to it publicly, that the United States 
considers the expansion of settlement activity to be not 
consistent with Israeli obligations under the Roadmap, and we 
have made that very clear, and I have also said that it is 
certainly not helpful to the peace process.
    There is a process we have set up for dealing with Roadmap 
obligations of both sides, which General Fraser is going to 
hold that trilateral this week, and I can assure you that we 
are following very closely to assure that U.S. dollars are not 
being used to support the settlement activity. I am sorry, I 
did not intend to ignore the question.
    Mr. Jackson. Mr. Wolf.
    Mr. Wolf. Thank you, Chairman.
    Madam Secretary, when I asked the other question, I briefly 
mentioned the issue of human rights and religious freedom, and 
on the issue of Sudan and Darfur, I believe it will take 
actions beyond where the administration has been to date to 
deal with this issue. I think the key to unlocking the problem 
in Darfur is really in Beijing. I, when Mr. Negroponte was 
here, made the comment that I am going to offer an amendment to 
prohibit federal employees to go to the Embassy from--the using 
our embassy with regard to going to the Games.
    But is there more that we should be doing with regard to 
putting pressure however you want to put it? With regard to 
China, is there more that we should be doing with regard to 
getting some change with regard to the current circumstances in 
Darfur? It is been going on now for five years. I acknowledge, 
you know, the President has spoken out about it, done a lot on 
that issue. Nobody has to be defensive on that issue. I 
acknowledge it, but I think you are coming to the end, and 
clearly, I think, after the Olympics are over in August, the 
opportunity to get the Chinese to do something dramatic with 
regard to bringing that to an end will pretty much cease.
    The human rights conditions have gotten worse in China, 
even all the activity has not made that much difference, but 
they do care about this, as Mia Farrow calls it, the Genocide 
Olympics. Can you tell us what you think you are going to do, 
or the administration will do, with regard to China and Darfur, 
or what you plan on doing? Is it something bold? I know you 
have Rich Williamson who seems like a pretty good person.
    Something different. I mean, you have tried so many things. 
It has not been successful. You saw the New York Times the 
other day. The bombing of the Antonovs are now continuing. What 
are your ideas of dramatic, bold activity can be done to bring 
this to a conclusion, and what activity can you do with regard 
to China that gets China to put pressure on the Khartoum 
government?
    Secretary Rice. Well, Rich Williamson has just been, has 
been out there, and we are going to try to support his efforts 
on the peace process as a part of trying to solve this, and 
also trying to bring some pressure from the south. One of the 
advantages of the CPA, of which you were very supportive, 
Congressman, is that with the CPA on somewhat firmer ground 
now, the comprehensive agreement on somewhat firmer ground, and 
with the SPLM again being a part of or working within the 
government structures, they do have an interest in the 
resolution of Darfur, and so we are hoping that that can help 
with the internal Sudanese problem.
    But you are frankly right. The international community has 
not done enough, and it needs to do more. The Chinese, the 
President has talked to President Hu. I have talked to Foreign 
Minister Yang. We have gone at this and at this. I think the 
Chinese have done something to help improve the situation, but 
we will continue to press them to do more. They are not alone. 
One of the problems that we have is that when Bashir wants to 
be African, he is African, and when he wants to be Arab, he is 
Arab, and he tends to play off the Arab League card a little 
too much, and so I have spent a good deal of time, actually, 
with Arab leaders, recently with President Mubarak when I was 
in Egypt, saying that they really have to put pressure too.
    So China is part of the problem, but so too, the Arabs need 
to do more, and we need to take this status of forces agreement 
that Ban Ki-moon believes he has now with Bashir and make sure 
that those forces get in.
    Mr. Wolf. Well, we cannot solve it here, but I think it is 
going to take something bolder than that. The Khartoum 
government will not even allow our containers in to begin to 
construct our embassy in Khartoum, and if they are not going to 
allow containers in--that is been going on for a year to year 
and half and they are arguing about visas. This is the same 
group of people that basically allowed Osama bin Laden to live 
in Sudan from '91 to '96, so I think it would take bold action, 
whether it be a no-fly zone, I think you ought to bring the 
best minds together.
    Five years is a long time. It is longer than World War II, 
and it is continuing to go on and now it is escalating again, 
and so I think it will take--and you do not want to leave here 
knowing that this is still a problem. You are going to regret 
it. You will just say over and over when you are out there in 
Stanford, you are going to say, why did--I mean, so we will be 
successful, but just something dramatically bold to make the 
difference. I beg it.
    The other issue, and this whole five-minute time thing is 
just out of control. How do you deal with these issues in five 
minutes? And I think the witness----
    Mr. Jackson. Mr. Wolf, I have just been informed that the 
Secretary has even less time than we expected, and if we are 
going to have a successful second round, it is going to be even 
less than five minutes. So let me allow the gentleman an 
opportunity to ask some questions.
    Mr. Wolf. Well, it really is not a very great way of 
developing foreign policy, but I will say this. Madam 
Secretary, I sent you a letter earlier this week asking for 
your help with the Iraqi government regarding the recent news 
that Chaldean Catholic Archbishop Paulos Rahho of Mosul has 
been kidnapped, and the Iraqi Christians are having a very 
tough time.
    Secretary Rice. Well, on the latter, this is an issue that 
we do work with the Iraqi government in terms of the ability of 
all people to worship in Iraq. It is one of the reasons that we 
believe the overthrow of Saddam Hussein was important, and they 
have got to deliver on that. In terms of the Archbishop, 
everybody is working at it, Congressman. Everybody wants to 
find a way to get him released.
    Mr. Wolf. Thank you.
    Because of time constraints, I am going to limit, at the 
staff's request of Mrs. Lowey, the remaining questions by 
members to one question. The Secretary, I understand, has to 
leave in approximately eight minutes.
    Let me start by saying that I want to strongly support the 
administration's supplemental requests for CIPA, Public Law 480 
and ESF to south Sudan, but I think the request still falls 
several hundred million dollars short of the current emergency 
need in foreign operations. The supplemental request that we 
are discussing today was first presented to us over a year ago 
on February 6, 2007, and at that time, the administration 
requested 3.301 billion in state foreign operations.
    The request was subsequently amended on October 22 when the 
administration requested an additional 3.596 billion for a 
total of 6.87 billion. In the past four years, OFDA, the Office 
of Foreign Disaster Assistance, has required 550 million, Madam 
Secretary, and despite the administration's pressure to adhere 
to the stringent budget requests, Congress was able to provide 
an additional 430 million in FY 2008, 110 million of it 
designated as emergency funds.
    However, according to your supplemental budget request, 
there are no new funds requested for OFDA. Again, according to 
many NGOs that have contacted our office, they need OFDA funds 
to address funding shortfalls for ongoing humanitarian crises 
in Sudan, the DRC, Afghanistan, and to prepare for a volatile 
situation in Chad, Kenya and Somalia. Madam Secretary, will you 
work with us to make sure that there are sufficient OFDA funds 
in this request?
    Secretary Rice. We are looking at a number of the 
humanitarian issues in the supplemental request, including also 
food assistance, which has gone up, as you recognized, 
significantly because of the dollar, and so we are working on a 
number of these issues. I think we will be all right on the 
disaster relief, but I will get back to you, Congressman.
    Mr. Jackson. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman.
    This will be just a brief question, but it is on the 
international community should agree that without Arab nations' 
support, the peace process between Israel and the Palestinian 
Authority will fail, and in that regard, this is undermining 
the peace process. Also, what are we demanding from the leaders 
of, say, the Arab states, particularly Saudi Arabia and Egypt, 
to ensure that they continue to support the peace process, and 
further, what is being done to ensure Hamas and Fatah do not 
enter into a governing agreement? Those two points, if you 
will.
    Secretary Rice. Yes, well, Abu Mazen has been very clear 
about the last of those, that he considers Hamas to have 
launched an illegal coup, and they would have to undo that 
before he had any interest in talking with them. In terms of 
the Saudis and the Egyptians, we want them to give economic 
support. They have pledged it.
    Mr. Knollenberg. They have pledged it, but are they doing 
anything?
    Secretary Rice. We would like to get more of it flowing--
some of it is, actually, flowing to Salam Fayyad. I think it is 
important to say that, but more of it needs to--and political 
support, because when and if we are fortunate enough that there 
is actually an agreement, then Abu Mazen is going to need the 
support of the Arabs to make that agreement, to make the kinds 
of compromises that he is going to need to make in order to get 
an agreement.
    Mr. Knollenberg. Okay. I have some other questions, but I 
will yield to the Chair, Madam Chair, for her concluding 
remarks. Thank you very much. I appreciate you being here. 
Thank you.
    Mrs. Lowey. I am going to take the liberty, if I may, of 
giving Mr. Schiff a minute to ask a quick question, Ms. Lee a 
minute, and then I will conclude. Is that okay? Thank you very 
much.
    Mr. Schiff. Thank you, Madam Chair.
    Just to put a finer point on the questions if I had been 
around earlier, and will follow up with you. State Department 
spokesman Sean McCormack stated in October of last year that in 
every single case where companies' actions have triggered the 
Iran sanctions, it has been looked into. So if we could work 
together, if you could let me know and the committee know what 
actions were taken as a result of those findings. Under the 
same act, the President was required to publish in the Federal 
Register a list of all significant projects that have been 
publicly tendered in the oil and gas sector in Iran. That has 
not happened since 1997, and I would ask if you could provide 
the committee with an updated list.

                                 JORDAN

    My short question is about Jordan, about our funding for 
Jordan. Can you tell us very quickly what efforts you are 
making to get the Gulf states, the Saudis and others, to help 
Jordan financially, given what it is facing?
    Secretary Rice. Yes, we do make those efforts. I will not 
name them by name because they are pretty quiet efforts for 
obvious reasons in the region, but yes, we do make those 
efforts to have people help Jordan. I think some of that help 
does come through, but probably the most important thing we 
have recently done for Jordan is to help them with their debt 
buy-back, which has really saved them a lot of money.
    Mr. Schiff. Thank you, Madam Secretary.
    Thank you, Madam Chair.
    Ms. Lee. Thank you, Madam Chair. Following up on my 
question earlier, I just wanted to find out if Congress could 
do anything to help in terms of the delivery of goods and 
services to Gaza to address the humanitarian concerns and 
crisis. You mentioned some of the things you were doing. And 
then secondly, I just wanted to verify that you agree with what 
the Ambassador said with regard to those resolutions that 
authorize the use of force against Iraq, and any country, 
really, the resolution of September 2001 and the resolution of 
2002.
    Ambassador Satterfield said in his hearing with Chairman 
Ackerman that he felt that that did provide for an open-ended 
agreement to continue with combat operations until the next----
    Secretary Rice. Well, I can only speak to the President's 
authority, and the President has the authority, we believe, to 
continue the operations.
    Ms. Lee. Okay.
    Secretary Rice. Secondly, on what can be done to help, I 
think you are helping, providing--we have been able to get the 
assistance bumped up when we have needed to. Sometimes it 
requires reprogramming, because we often are dealing with a 
circumstance in which things change on the humanitarian side, 
and you have been very amenable to those requests.
    Ms. Lee. Thank you very much.
    Thank you, Madam Secretary.
    Secretary Rice. Thank you.
    Mrs. Lowey. Thank you very much, Madam Secretary. I wanted 
to conclude on an issue that there has been increasing concern 
about in the Congress, and that is the role of the Defense 
Department and the role of the Department of State, and as you 
probably know, the Defense Authorization Committee, as well as 
the Foreign Aid Authorization Committee, are focused on it and 
we have had some joint meetings, and almost every think tank in 
Washington, D.C. and around the country are focused on it.
    So if I may just make a few points, and briefly, you can 
respond and then submit the rest in writing. In 2000, you 
stated in a Foreign Affairs article that ``We do not need to 
have the 82nd Airborne escorting kids to kindergarten,'' but 
the Department of State has in practice ceded many of the 
responsibilities and authorities of foreign assistance, 
particularly security assistance, to the Department of Defense.
    While there are certain situations where it makes sense to 
the military to provide assistance, such as after a massive 
natural disaster or in the immediate aftermath of combat 
operations, a prolonged and expanded mandate for the military 
to conduct humanitarian and reconstruction programs is neither 
in the interest of the military nor the broader interest of the 
nation. We do not need to burden an already stretched military 
to assume a greater responsibility for foreign aid.
    Furthermore, in matters of security assistance, while it 
may well be the military that provides the expertise or the 
training or manages the procurement of military equipment, it 
is the Secretary of State that manages the overall relationship 
between the United States and the recipient countries, and any 
assistance, including military assistance, must fall squarely 
under the foreign policy direction of the Secretary of State, 
and as such, as you know, you are answerable to this 
subcommittee for your funds and additionally to the House 
Foreign Affairs Committee and Senate Foreign Affairs Committee 
for your authority.
    Yet increasingly, funds are supplied through interagency 
transfers that circumvent the will of this subcommittee or a 
program by the Department of Defense. So if you can respond, 
either now or at another time, depending on your time, if you 
could submit to this committee every instance in the past two 
fiscal years where the Department of Defense exercised 
authority provided under Section 1206 of the Defense 
Authorization Act, I would like to know the country, the dollar 
amount, the purpose of such assistance, and the interagency 
clearance process, specifically if you approved each such use 
of this authority.

                          INTERAGENCY TRANSFER

    Secondly, I would also like to know every instance in the 
last two fiscal years in which you received interagency 
transfer of funding under Section 1207 of the Defense 
Authorization Act, again, the country, the dollar amount, the 
purpose of such assistance. And I would like to know how much 
assistance is being provided by the Defense Department under 
the other authorities in the Defense Authorization Act, Section 
1033 relating to authority to provide additional support for 
counter-drug activities of Peru and Colombia, as well as 
Section 1004 which further expands support for counter-drug 
activities, Section 2249[c] of Title 10 which provides 
authority to fund education and training of foreign military 
and other government officials, under the Regional Defense 
Combating Terrorism Fellowship Program, Section 2561 of Title 
10 which provides authority to provide humanitarian assistance.
    So basically, what I would like to know, and you can just 
make a brief statement and obviously submit the rest for the 
record, are you consulted every time any of these authorities 
are utilized?
    Secretary Rice. Well, on 1206 and 1207, I must formally 
give concurrence, and not only have I formally given 
concurrence, it is very often the case that I have been the one 
who has initiated on some of these. I really do think that this 
works. It is an authority that has long been needed. There are 
just many circumstances right now that are crossover between 
the Defense Department and the State Department, for instance, 
the training and equipping of Lebanese armed forces, having to 
get assistance to the Lebanese when they were involved in the 
conflict with Fatah al-Islam up in Narbot.
    So, this does work. This 1206, 1207 authority works. I am 
not a shrinking violet in dealing with the Defense Department 
on these issues, and I think we have had outstanding 
cooperation, but if I could speak to the larger point that you 
are making, it is absolutely the case that if the United States 
does not update, increase, modernize its diplomatic and aid 
assistance corps, then the military will fill the vacuum, 
because we cannot simply not do these things, and that is why 
the President has requested the additional 1,100 diplomats, and 
I think you will find that, in a kind of last suggestion, we 
will think that that will need to increase more.
    That is why we have increased the number of USAID officers 
in this request, and it is why the civilian response corps is 
such an important concept for us, because these are things that 
ought to be done by civilians. We just do not have the 
capacity, we do not have the institutional capability to do it 
right now, and we think that the President, in suggesting this 
new institution, is addressing exactly the concern that you 
have.
    It ought to be led by the State Department, but we need the 
capability to do it.
    Mrs. Lowey. Let me just say that I hope we will continue 
the dialogue. There is a great deal of concern on this issue, 
as I mentioned, from all the various committees, the 
authorizing and the appropriation, and from my perspective as 
chair of an appropriations committee, I just wonder why you do 
not just ask us for the money, and if there is adequate 
planning, you know what you need, you know the deficits, and I 
know we will have a great many more conversations about the 
civilian corps, but my first reaction is, when I am in 
Afghanistan or in other places, USAID is complaining about the 
lack of expertise because they do not have sufficient staff.
    So I just question whether we cannot get the authority to 
hire additional staff, and you have made an important step in 
that regard, and whether you will be more successful in the 
civilian corps, rather than hiring people at USAID who have 
expertise in education, who have expertise in water program, 
who have expertise in other programs. So as you and I know, 
this is a very long discussion, and I think I mentioned at the 
outset, almost every think tank is focused on this, in addition 
to the committees in the House, and as there is a transition 
after the elections, I think your experience based upon--and 
your expertise and your knowledge of these issues would be 
invaluable, so I would like to consider that dialogue.
    Let me close by just thanking you again. It has really been 
a pleasure working with you. You have been open, direct, you 
have kept us briefed on a whole range of issues. I know from my 
perspective, Democrats and Republicans, the amount of insight 
and knowledge you need to deal with the whole world is a 
tremendous, tremendous responsibility and challenge, and we 
wish you good luck and continued success, and I am hoping for 
the remainder of the term, we can continue to work together 
aggressively to face the major challenges ahead.
    Thank you so much for being here today.
    Secretary Rice. Thank you so very much, and thanks to the 
members of the committee.
    Mrs. Lowey. The meeting is adjourned.
                                          Wednesday, April 2, 2008.

 CONTRIBUTIONS TO INTERNATIONAL PEACEKEEPING ACTIVITIES (CIPA) AND THE 
      CONTRIBUTIONS TO INTERNATIONAL ORGANIZATIONS (CIO) ACCOUNTS

                                WITNESS

KRISTEN SILVERBERG, ASSISTANT SECRETARY, BUREAU OF INTERNATIONAL 
    ORGANIZATION AFFAIRS
    Mrs. Lowey. Good morning. The Subcommittee on State, 
Foreign Operations, and Related Programs will come to order.
    I am pleased to welcome Ms. Kristen Silverberg, Assistant 
Secretary of State for International Organization Affairs. But 
before turning to the details of the budget request, I want to 
reiterate my strong support for the important and indispensable 
work of the United Nations. We have an obligation as a leader 
in the community of nations to strength the economic security 
and humanitarian agencies of the United Nations.
    Assistant Secretary Silverberg, I know how important the 
international organizations and peacekeeping budget is in 
meeting our international obligations and advancing the foreign 
policy and national security of the United States. Today's 
hearing focuses on the fiscal year 2009 budget request, $3.026 
billion in assessed contributions and $276.9 million in 
voluntary contributions to the United Nations and other 
international organizations. This request is a decrease of 
$171.5 million from the fiscal year 2008 request, including the 
supplemental request, and is at least $700 million short of the 
total projected dues for the United States.
    I am concerned that at a time when the United States is 
asking the United Nations to step up its peacekeeping and 
assistance activities in high-threat environments such as Iraq, 
Afghanistan, Lebanon and Sudan, the administration is reluctant 
to provide the increased resources these activities require. I 
am further troubled when I hear our Ambassador to the United 
Nations, Zalmay Khalilzad, say any increased costs of those 
special political activities should be offset through savings 
in other parts of the United Nations budget. In effect, you are 
asking the United Nations to fund programs in Iraq and 
Afghanistan by cutting programs in other parts of the world 
such as in Africa and in Latin America.
    Furthermore, the administration has criticized the United 
Nations for its use of supplemental budgets rather than 
building all costs into its regular base budget plan. Shall I 
count the number of supplemental requests we have received from 
the administration? In fact, in fiscal year 2008, the 
administration requested its assessed contributions for the 
United Nations missions in Iraq and Afghanistan as part of the 
2008 supplemental request and not the base budget. How can you 
criticize the United Nations' budgeting approach as piecemeal 
when you are doing the very same thing?
    Now, clearly there must be greater efficiencies in the 
United Nations budget, and I certainly welcome and applaud the 
administration's continuing pressure for management reforms. I 
think it is absolutely essential for the United Nations to 
maintain its credibility.
    I am also concerned that the United Nations spends a 
disproportionate amount of time, energy, resources looking for 
ways to bash Israel instead of resolving critical security, 
humanitarian, and human rights challenges around the world. 
This is particularly true of the United Nations Human Rights 
Council, and I am disappointed that the United Nations regular 
budget continues to fund this discredited institution.
    With respect to Iran, the United Nations has, with prodding 
from the United States, taken strong measures to sanction 
Iran's pursuit of a nuclear capability that is in violation of 
international treaties and protocols. It will be important to 
ensure that the sanctions imposed by United Nations Security 
Council Resolution 1803 are indeed enforced.
    Ms. Silverberg, I hope you will address in your testimony 
the level of arrears the United States has amassed on our 
United Nations dues and the administration's strategy for 
addressing them. I would also like to hear your assessment of 
the United Nations capital master plan, the project to renovate 
the United Nations headquarters in New York. Given the number 
of New Yorkers and other Americans who work at the United 
Nations headquarters, as well as the thousands of tourists that 
visit every year, I am concerned about whether adequate 
security upgrades are in the plan. I would also like an update 
on the cost implications and the status of the United States 
commitments to the renovation budget.
    In the area of peacekeeping, the President's request once 
again underfunds the considerable needs. Unless you are 
expecting the emergence of peace worldwide, I would like to 
know how much will be necessary in supplemental appropriations 
to meet the current projected costs. We can agree that United 
Nations peacekeeping operations should be closed down as soon 
as it makes sense to do so, but do you really expect the 
situation in the Democratic Republic of the Congo, South Sudan, 
Liberia and Lebanon to so dramatically improve 9 months from 
now to justify budget reductions for these missions of 25 to 30 
percent? I find this hard to believe.
    With respect to the United Nations mission in Darfur, 
deployment of the United Nations-AU hybrid force continues to 
be painfully slow, and the peacekeeping force remains woefully 
underequipped, particularly to protect civilians. What are we 
doing to help the mission secure the hardware, transport 
helicopters, attack helicopters, and transport vehicles to 
adequately cover the vast amount of territory it has been 
assigned? We have been told that troop contributions to the 
force have been somewhat easier to come by, but what is the 
capability of these troops? Are they trained and equipped to be 
more effective than their predecessors in the AMIS force? Will 
support for them be sustained even after they are deployed?
    Finally, in your testimony I hope you can address the 
proposed reductions to voluntary international agencies such as 
UNDP, UNIFEM, and UNICEF. Given clear congressional support in 
the fiscal year 2008 act, I fail to see how you can justify 
cutting the UNDP core budget by 23 percent and UNIFEM by 73 
percent.
    Assistant Secretary Silverberg, I look forward to hearing 
your remarks and discussing these concerns in greater detail, 
but before we move to your testimony, let me turn to Mr. Wolf, 
the Ranking Member, for his opening statement.
    Mr. Wolf. I thank you, Madam Chair. I welcome you to the 
committee. They are all important issues. You saw the Wall 
Street Journal piece yesterday about the corruption. Did you 
see in the editorial that this committee in a different life 
established the Gingrich-Mitchell effort at the U.S. Institute 
for Peace? It seems like that has just come for naught. There 
has not been the aggressiveness on the part of the 
administration. For those of us who support the effort we find 
it somewhat puzzling that there is not more activity by the 
administration to bring about reform, the whole issue over the 
procurement corruption, and lastly the whole issue--and we will 
get into it in the hearing--hopefully you will talk a bit more 
about it--of many of the countries that we support--and I think 
it is helpful to support the poor, but they turn around and 
they vote against us on issues that the gentlelady mentioned, 
on the issue of Israel, on the issue of human rights, on the 
issue of Darfur. That is almost a free vote. How could anyone 
be voting against us on the issue of trying to stop genocide? 
Yet it just seems administrations come and they go, and nothing 
ever changes.
    But anyway, I welcome you. You might want to comment on 
that Wall Street Journal piece in your testimony, too, if you 
could.
    Thank you very much. I yield back.
    Mrs. Lowey. Thank you.
    Assistant Secretary Silverberg, as you know, your full 
statement will be placed in the record. Feel free to summarize 
your oral statement. I want to make sure everyone has time for 
questions, but proceed as you wish.
    Ms. Silverberg. Thank you, Madam Chairwoman, and Ranking 
Member Wolf and all the members of the subcommittee. I am very 
glad to be here today to talk to you about the important budget 
request for international organizations and peacekeeping. I 
will summarize quickly, and then I think launch straight into 
some of the important questions you have raised.
    But first let me agree enthusiastically with the 
Chairwoman's statement that the U.N. plays a critical role in 
nearly all of our highest foreign policy priorities. On our 
efforts to address Iran's nuclear aspirations, to deploy a 
peacekeeping force to Darfur, to strengthen democracy in places 
like Iraq and Afghanistan, all depend in large part on 
effective action within the United Nations, and this budget 
request is an important part of that effort.
    We are working with the U.N., as you know, to quickly 
deploy a peacekeeping mission called UNAMID to Darfur. It has 
faced significant hurdles. Khartoum has raised obstacles, both 
covert and overt obstacles, to deployment. The U.N. 
coordination of the mission has been sluggish and bureaucratic, 
and the international community has failed to provide some of 
the resources essential to the mission's success. We are 
determined to overcome these obstacles, but, of course, 
frustrated that we are still dealing with them. All levels of 
the administration are engaged in addressing them.
    The U.N. is critical to addressing Iran's nuclear 
aspirations. Last month we were able to work in the Security 
Council for a third round of sanctions on Iran reflecting the 
international community's profound concerns and will continue 
to look for ways to work within the Security Council and the 
IAEA on that issue.
    The U.N. is assuming new responsibilities in Iraq and 
Afghanistan, and that is very welcome. I would be happy to talk 
to the committee in more detail about that.
    We are working on some of our key human rights priorities, 
including in particular Burma, within the Security Council--we 
have put it on the Security Council agenda for the first time; 
and, of course, the U.N.'s important humanitarian work through 
the World Food Program, UNICEF, UNHCR and other U.N. bodies 
which are helping to feed tens of millions of people, provide 
immunizations to children and to combat HIV/AIDS and other 
diseases, and we think that is essential.
    Just to go straight into some of the issues, Madam 
Chairwoman, you addressed and also Ranking Member Wolf raised--
although I would be happy to talk in greater detail during the 
Q&A session. We are facing a very difficult time on our 
budgeting for all of these accounts, and in particular you 
raised the question of arrears. I think it is helpful, at least 
in my mind, to divide these into the different accounts.
    On the CIO, on our assessed contributions to the U.N. 
regular budget and dozens of other organizations, we have had a 
practice really since the 1990s of deferring payment for a few 
of those organizations, paying at the end of the year. Because 
of shortfalls in our funding between 2004 and now, we further 
deferred--we deferred additional organizations as a way of 
avoiding arrears. Last year we exhausted the ability to do that 
and went into arrears for the first time in about five 
different organizations, and we are concerned that we are about 
to expand the number of arrears. This, of course, is very bad 
for both U.S. prestige and influence in the organizations, and 
in some cases it can cause some problems regarding cash flow 
and other things. So we think it is essential that we begin the 
process of addressing those arrears.
    Obviously in a tight budget situation, we can't do 
everything at once, but this budget request includes what we 
think of as a down payment on the problem. So we have requested 
an additional $50 million to start addressing that issue.
    We also have on the peacekeeping side some very long-
standing arrears dating from the 1990s of about $500 million, 
and these are mostly the result of a legislative cap then in 
place on the amount of our peacekeeping payments to the U.N. 
That cap was lifted for a few years recently, which allowed us 
to begin, with Congress' support, to pay back some of those 
amounts was then reimposed, although lifted again for 2008, 
which we appreciate. But we have an additional set of payments 
due to the U.N. because of that period.
    And then, of course, we have had a shortfall in payments 
not related to the cap. And so we are addressing those issues 
with the U.N. peacekeeping operations. And again, we think it 
is essential that we fully support U.N. peacekeeping, which, as 
the Chairwoman said, is essential to addressing these conflict 
situations, ungoverned spaces, in Africa especially and around 
the world.
    And with that I would be happy to take any questions.
    Mrs. Lowey. Thank you.
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    Mrs. Lowey. Assistant Secretary Silverberg, the passage of 
the third Security Council resolution sanctioning Iran is a 
positive step; however, U.N. sanctions will only be as 
effective as their enforcement. UN Security Council Resolution 
1737 established a committee to oversee the implementation of 
the sanctions. Can you give us the status of the sanctions 
committee? Has it done anything?
    Ms. Silverberg. This is an important issue. Through our 
three sanctions resolutions, we have set up different 
categories, different types of sanctions, so, financial asset 
freezes on individuals involved in proliferation programs, 
sometimes on companies, including Iranian financial 
institutions, calls on member states to ensure that 
proliferation-sensitive materials aren't transferred either 
inadvertently or on purpose to the Iranian Government and other 
things along those lines.
    As you say, all of those are only effective if member 
states take the decisions both within their domestic legal 
authorities and in cooperation with each other to enforce them. 
And we have taken a number of steps to make sure that happens. 
One is to work bilaterally with countries. That includes 
countries--the major investors in Iran, in Europe and other 
places to deal with the major financial centers in the UAE and 
Dubai in particular, and to deal with our partners on the 
Security Council, Russia and China in particular, to make sure 
that we have their full support for exhausting the limits of 
their authorities both within the Security Council resolutions 
and, particularly in the case of the European Union, even 
beyond what is required in the sanctions.
    As you know, U.S. policy goes well beyond what is mandated 
by the Security Council, and what we said to the Europeans is 
that we would like to see the EU take similar steps. Within the 
U.N. and in cooperation with the sanctions committee, we have 
tried to work on making sure that there is both political will 
and capacity in member states to implement their sanctions. And 
I think we have dealt with two different types of problems. One 
is the countries that don't report to the U.N. on their 
compliance with the resolutions because of lack of will. There 
are also some member states who have said, that the reporting 
obligations or the ability to ensure that they have domestic 
legal capacity is that they are stretched, basically, in 
capacity. We support some governments bilaterally to make sure 
that they essentially have the resources in place to meet their 
obligations, but we think there is still a lot to do on that 
end. So, as you point out, this is going to be an ongoing 
challenge.
    Mrs. Lowey. What happens if a nation violates the Security 
Council resolution, such as Syria's violation of the ban of 
arms imports from Iran? Can the sanctions committee investigate 
violations? Can they take action against violators? Can you 
give me examples of such action?
    Ms. Silverberg. Well, I should say as an aside that our 
concern regarding Syria's violations of its Security Council 
obligations relate not only to the resolutions affecting Iran, 
but resolutions affecting Lebanon, affecting Iraq. We really 
have a broad concern about Syria's willingness to comply with 
its international legal obligations. With each of the sanctions 
regimes, there are slightly different rules.
    But, yes, all of them can investigate failure to and pursue 
failure to adhere to Security Council obligations. And in the 
case of egregious violation, we would consider that a reason to 
go to the Council for additional follow-up action. And it is 
something essentially that we have to rally the international 
community to pressure governments to comply, which is the 
approach we have taken with respect to Syria.
    Mrs. Lowey. So they can investigate, but the question is do 
they? And what have been the results of those investigations?
    Ms. Silverberg. I think one difficulty we have with 
sanctions committees is they generally operate based on 
consensus, whereas in the full Council, of course, we 
sometimes--not often, but sometimes--take things to a vote 
knowing full well it won't be a unanimous decision. And the 
sanctions committee has to be unanimous, and the difficulty we 
have, of course, is with these 15 members with very disparate 
views securing decisions. So I think we think of the primary 
focus for ensuring compliance with Security Council resolutions 
to be the Council itself rather than the committee.
    Mrs. Lowey. Well, I am going to turn it over to Mr. Wolf. 
But it is clearly disappointing to us because it is evident 
that if you are going to have successful sanctions on Iran, you 
are going to need the compliance of China, both politically and 
certainly in specific actions, and Russia and the European 
Union, and that doesn't seem to be evident.
    So let me turn it over to Mr. Wolf. I will be calling on 
Members based on seniority of the Members that were present 
when the hearing was called to order. And I will alternate as 
usual between the Majority and the Minority. We will keep it to 
5 minutes per round.
    Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair.
    In the fiscal year 2008 House report, the committee 
directed the Department of State to report back on the voting 
practices of United Nation member states for the current and 
past 3 years regarding United Nations reform, Israel and 
Darfur. The committee expected the report no later than August 
15th of last year when the temperature was about 98 degrees. It 
has not been received. Why have we not received the report if 
it was due in August of last year?
    Ms. Silverberg. Thank you, Congressman.
    I believe I just signed out the clearance for that paper to 
be transmitted to the Hill, so you should be receiving it--I am 
sorry. I am sorry. I am referring to the annual report.
    Mr. Wolf. This report, why----
    Ms. Silverberg. Okay. I am sorry. I am sorry. I was 
referring to the annual report. That report is still underway, 
and of course we will get it to the Hill as soon as possible.
    Mr. Wolf. But, Madam Chair, I would suggest if we are going 
to put language in to ask for a report by a certain date, and 
we don't get it, and there are no repercussions, then why even 
put it in, to make us feel good? Sometimes we put a report in 
and just kind of forget about it and move on. Really, this is 
not that difficult of an issue.
    Ms. Silverberg. It is a fair point, and I can't disagree on 
the importance of complying with Congress' deadlines. So, yes, 
we will make every effort to get it to you as soon as possible.
    Mr. Wolf. Can you kind of give us a reference of when that 
would be?
    Ms. Silverberg. I need to check with my staff, but I would 
be happy to follow up with you later today and let you know 
what the----
    Mr. Wolf. Does the State Department consider a country's 
U.N. General Assembly voting record when it makes funding 
recommendations to the Congress? For instance, there is so much 
need around the world, and so if you find a country where their 
representatives at the U.N. are consistently voting against us 
on the issue that the Chair mentioned and other issues that 
have nothing to do with their own vested interests, that have 
nothing to do with their economy--each nation has to vote in 
its own best interests, but there are universal interests of 
human rights, religious freedom, things like this. Does the 
administration look at that and can you comment and explain how 
aggressive you and the administration are--in looking with 
regard to aid and funding on these issues, to the voting record 
in the General Assembly?
    And secondly, has the administration ever punished a 
country by saying, listen, you have poor people, and we are 
concerned about them, but country A also has poor people, and 
we are concerned about them. So we only have so many dollars, 
and I wish we had enough dollars to put it in A and your 
country, too. If we did that, we would absolutely do both. 
Clearly, no question about it. But if we don't have it, is it 
morally wrong to favor a country that happens to be voting with 
us on Darfur and the genocide? And I would hope the answer 
would be a resounding no, both by the Congress and by the 
administration. But maybe I am out of step with people's 
thinking. I don't know. But do you have a policy, and can you 
give me an example of where you have done something about it to 
a country?
    Ms. Silverberg. Sure. Well, thank you very much.
    I think this goes to the core issue of the United Nations 
and the problems we have working within it. For many, many 
governments in the U.N.--this is inevitably true of a nearly 
universal organization--will never vote with us. They have 
profoundly different interests--Iran, Syria, Venezuela, 
Zimbabwe, et cetera. The problems with the U.N. arise from the 
fact that many governments who share our principles, who serve 
elected representative governments, repeatedly vote against us, 
and that is true in the General Assembly, it is sometimes true 
in the Security Council. We are very disappointed, for example, 
by Indonesia's abstention on the Iran sanctions resolution. And 
until we get at this core problem, how do we make democracies 
cooperate better in the United Nations? We will not be able to 
address either the anti-Israel bias, the prolific spending, the 
lack of seriousness on human rights issues, all these other 
things.
    So I think you have hit on what really is the essential 
issue, in my experience, in terms of our difficulties with the 
U.N. I can't think of an example where we have withheld funding 
for a government based on its U.N. General Assembly voting 
record. I think the appropriateness of that approach would 
depend on the country and what particular vote or set of votes 
we were concerned about. And I guess the point I tend to make 
in interagency or interbureau discussions about this is that it 
is frequently the case for these governments, for bilateral 
relationships with the governments, that the General Assembly 
voting record won't be at the top of our list of concerns. We 
will have issues related to their treatment of their own 
people, or their participation and their support for a serious 
peace process, or their support for a robust action against 
Iran. And I think that even as I am Assistant Secretary, I 
think that it is appropriate frequently for those things to be 
higher on our priority list.
    The thing that I think it is important for us to do is make 
sure that the General Assembly voting record is somewhere on 
the list. And you will recall that I cornered you unfairly when 
I saw you in Cairo a couple of years ago with a point about the 
Egyptians' terrible voting record. And I think the fact that 
you raised it with the Egyptians at that point was very useful. 
We heard back that they knew you had raised it, and I think 
that kind of thing can have an impact. But the appropriateness 
of sort of a financial sanction or a particular diversion of 
development resources, for example, I think partly just depends 
on the context, what country we are talking about and what the 
voting--
    Mr. Wolf. My time is up. I would say, Madam Chair, I think 
if the committee can't deal with this, then I think we are 
losing. I mean, we can talk about these issues, and the 
administration can talk about them, but if there is never any 
price to pay, there will never be any change. It is clear. We 
will have a hearing, there will be a report, there is a country 
I am not going to mention, but with the aid that we were giving 
them, it is unbelievable, unbelievable, that they were voting 
against us every time. And there are some universal issues. 
Clearly if a country is voting on an agriculture interest or 
something--I mean, they have to look out for their own country, 
but on the issue of Darfur and the genocide, that has been 
going on for 5 years. This is not the first vote, the second 
vote. There were many. So if they can't be with us there, what 
do we expect them to be with us on?
    So I think the committee should write language requiring 
that on some of these things, that on universal problems, that 
there is kind of what I call 90/10, if you will; 90 percent of 
the people in the world, if you interviewed them at 3:00 in the 
morning, would say this is a bad issue, and I am there. And if 
these governments can't be with us on this 90/10, then I think 
we should cut the aid off. And if this committee doesn't do it, 
I might try to offer some language. But I think the 
responsibility also rests with you all.
    Ms. Silverberg. May I add one point.
    Mrs. Lowey. Yes.
    Ms. Silverberg. Because I do think this is absolutely 
essential.
    As part of our effort to engage democratic, responsible 
governments more effectively on their voting records, we, under 
the leadership of NSC, have convened an interagency process to 
start dealing with, basically, how do we deal with them now? 
And one of the parts about that process that I have found 
particularly useful is we are doing much better analysis on how 
countries vote not just on key--our sort of key votes, but also 
on a broader set of issues, and cross-referencing that against 
U.S. financial aid. And I think it has pointed to some really 
interesting things about how some governments treat their 
relationship with us, multilaterally. So we would be delighted, 
I think, to come talk to you about that.
    Mrs. Lowey. I just want to make two points because I think 
certainly on your latter point, the gentleman is absolutely 
right. However, there are many issues that we would have to 
consider in this discussion. If a country has a corrupt 
government, and there is no way that the current leadership in 
that government is making responsible decisions, and the people 
are starving, and there is need of education, there is need of 
health care, I think this is an important issue that we should 
discuss. Do you cut off aid when a government is irresponsible, 
and there are tremendous needs to move that government towards 
democracy or responsible decisions?
    The first point that you mentioned, I would like to 
emphasize again, because there is absolutely no reason why the 
Department of State cannot be more efficient in reporting to 
us--there have been several reports that have been outstanding 
despite constant reminders. So I don't think there is any kind 
of legitimate explanation for not responding to the gentleman 
with a report in a timely manner.
    Mr. Wolf. If the gentlelady would yield. Even on the first 
issue, it boils down to basically tough love. I would help all 
the poor people. If you only have so much--and many times--I 
remember during the 1980s when we took away MFN from Romania, 
the argument by the business community was that if you take 
away MFN from Romania, you will hurt the Romanian people. Well, 
every time I went to Romania, the Romanian people wanted us to 
take MFN away because they wanted to do something to the 
government to force the government to change. I think you have 
a good point, but I think the other side is sometimes by doing 
this, you push a government, and there may be some pain. But 
the average person in Romania said, there will be some pain, 
but we are prepared to go through this pain to force our 
government to respect human rights and religious freedom. This 
is an issue that everyone is talking about, but not much has 
been done.
    I yield back.
    Mrs. Lowey. Before I yield to my good friend Mr. Jackson, I 
would just like to say to the gentleman that I think this is a 
very important issue. I thank you for bringing it up. But I do 
think that each decision should be made independently, and I 
think this committee has the responsibility certainly to take 
every point you have made into consideration. But I think as an 
aid package is reviewed, it should be part of the response, 
just not an automatic response.
    Mr. Wolf. Sure. I will agree with that.
    Mrs. Lowey. So let me turn to Mr. Jackson.
    Mr. Jackson. Thank you, Madam Chair.
    Let me thank Assistant Secretary Silverberg and welcome you 
back to our subcommittee. Thank you for your testimony and for 
your service to the country.
    I want to associate myself with, I think, this very, very 
important dialogue between the Chair and between the Ranking 
Member. Reports ought to be presented to this committee in a 
very timely way. The language that is placed in this bill goes 
through great debate back and forth between the staffs and 
between the Majority and Minority Members to get that language 
included in the bill in the first place, and if there is no 
teeth to the language, then I think it is troubling. And I 
think that the Chairwoman's assessment that we have to strike a 
very sensitive balance between aid for the poor and moving 
these governments is very important.
    I want to touch upon something the Chairwoman alluded to in 
her opening statement regarding the arrears at the U.N. I am of 
the opinion, Assistant Secretary Silverberg, the next President 
of the United States in their administration, whether it is his 
administration, Mr. Obama's, Mr. McCain's, or her 
administration, Ms. Clinton, that the very first opportunity 
they have to speak to the U.N., they ought to be announcing 
that in their pocket is a check paying our bills. I think that 
would set an important precedence for the next President in 
terms of--the next President in terms of their ability to 
advocate our national security interests and the interests of 
democracies around the world with our moral authority within 
the United Nations.
    However, in the request of the $2.8 billion in U.S. debt to 
the U.N., 1.2 billion stems from unpaid or prior year 
assessments. When the Secretary was here a week or so ago, she 
indicated that these arrears were a timing or cash flow 
problem. I would love to hear you clarify what she meant by 
timing, and when a significant portion of the U.S. arrears 
appear to be from prior years, and I want you to answer that 
question in this particular context. Peacekeeping experts have 
told our office that the U.S. will need about $2.1 billion to 
pay fiscal year 2009's assessments for U.N. peacekeeping, yet 
your budget requests only 1.5 billion, a shortfall of over 600 
million.
    At a recent Senate Foreign Relations Committee hearing, 
Secretary Rice suggested that you could, quote, manage, 
unquote, payments to U.N. peacekeeping with the requested 1.5 
billion. Three questions: Won't this managing simply entail 
handing more of the half billion in additional debt off to the 
next administration, which is my point about making that 
announcement. Secondly, which of the U.N.'s 17 peacekeeping 
missions will be shortchanged by this underfunding, or will 
they all absorb it? Will the U.S. stall, cut or slow-roll 
payments for particular missions, including but not limited to 
the mission in Darfur? And lastly, the U.S. has used its vote 
in the Security Council to support all of these missions. 
Should we not be providing full funding for the missions that 
we voted for, Madam Secretary?
    Ms. Silverberg. Thank you very much. I will address my 
comments largely to peacekeeping, which I think is the focus, 
although, of course, I am happy to talk about the regular 
budget side, too, if that is helpful.
    I think a couple of important points. First, the vast 
majority of our prior year arrears, as they are called, at the 
U.N. relate to a congressional legislative peacekeeping cap on 
the amount of funding we can pay for peacekeeping. It has been 
capped at 25 percent. At some periods in the 1990s, we were 
assessed at close to 30 percent. For most of the recent years 
it has been closer to 27, and now closer to 26. But what that 
has meant is that the cap at 25 percent has built up--starting 
in the 1990s has gradually built up a set of amounts that we 
can't--by law cannot pay to the U.N. I would distinguish 
between two different categories. One are the pre-Helms-Biden 
so-called arrears, where again, subject to a congressional 
cap--in our view, Helms-Biden, the deal we worked out, the 
previous administration cut with the U.N. at that time was 
meant to create in essence a clean slate with the U.N. We would 
make a big cash sum payment in exchange for a fresh start. The 
U.N. doesn't see it that way with respect to the peacekeeping 
funding, but because of our view of the essence of Helms-Biden, 
we have never asked for paying the 1990s arrears, and that is 
about $500 million--but in our view we have never sought 
support from Congress for money to make up those amounts.
    We have supported lifting the cap, and we think that 
Congress took a very helpful step in that regard by lifting it 
in 2008, which will allow us to start using our funds, start to 
pay back some amount of the arrears. This is going to be a much 
longer-term effort. Obviously in a tight budget situation, we 
can't do everything overnight, but we do think that lifting the 
cap and beginning the process of dealing with the shortfall is 
essential.
    On this year's assessment on the peacekeeping mission, our 
ongoing resource demands for peacekeeping missions, it is a 
very tight budget year, and I absolutely can't disagree with 
you either on the importance of U.N. peacekeeping, which we 
think is essential, or on the importance of paying our bills.
    I think what the Secretary was saying when she said we were 
going to manage on a cash flow basis was with regard to our 
ongoing bills. She wasn't referring to the long-standing 
arrears. I think she was referring to ongoing payments due at 
the U.N. In the past we have been able to manage within the 
account, and I think this is the result of a lot of things. One 
is that peacekeeping budgeting is inherently unpredictable. We 
never, in the history of peacekeeping funding, have never 
gotten it perfectly right in our request to Congress, and we 
won't this year, I suspect. Some of our peacekeeping missions 
will have higher demands than we expect, and some will have 
lower. And as you know, we brief congressional staff on a 
monthly basis so that we are always in close contact with 
Congress about where we need to readjust, how we need to manage 
within the account. And I think the Secretary made clear in her 
testimony that we don't think this is an ideal situation, and 
it would be much better from our perspective if the budget 
situation allowed for something other than that cash flow 
management approach. But this year we think that is the best we 
can do.
    Mrs. Lowey. Mr. Crenshaw.
    Mr. Crenshaw. Thank you, Madam Chair.
    I want to ask you about human rights. Your bureau is 
charged with oversight, and as I understand it, you have helped 
do some good things in terms of resolutions talking about human 
rights in Burma and North Korea, Iran. But when you look at the 
U.N., I guess they used to have what was known as the U.N. 
Commission on Human Rights, and now that has been replaced by 
the Council on Human Rights. And the old Commission on Human 
Rights was, in my view, flawed at best. And the new Council 
seems to have some issues as well. Since 2006, they have passed 
19 resolutions condemning Israel for violation of human rights, 
but they haven't really done much else. They haven't spoken out 
on Darfur. They have really been reluctant to address China and 
Tibet. And I guess the question becomes is this new Council--is 
anything better than the old Commission on Human Rights? I 
mean, is it serving any useful purpose? Is there anything the 
United States can do to make them be more objective? It just 
seems like it is the same old thing. You just criticize Israel 
from time to time, and that is about it.
    So talk about that. Has it changed much? Is it any good 
use?
    Ms. Silverberg. To be very honest, I think in some ways the 
Human Rights Council is worse than its predecessor. You 
remember that we, in leading up to the 2005 effort, the U.N., 
the international community at large, decided we needed to 
address the problems with the Commission, which Kofi Annan had 
said had cast a--I think a black mark--I can't remember the 
words he used--but a black mark on the entire U.N. body. So 
there was a lot of consensus around the international community 
to replace it with a more credible body and one that could take 
quicker, more effective action in the case of ongoing crises.
    And what we found is that in some ways this body is less 
able to take affirmative action, is more willing to focus on 
the Israel-bashing exercises, which you discussed. We have had 
even in the last session, we had the election of some people we 
think are biased, mostly against the U.S. and Israel, and 
really don't have a fair perspective on human rights situations 
in Burma and Belarus and Zimbabwe and all of these places. And 
we have seen the Council eliminate the special mandate, the 
special rapporteurs who are meant to focus on particularly 
Belarus and Cuba. And we have seen the Cuban Government 
gloating, in essence, about the victory they had at the Human 
Rights Council. So it is really an undeserved victory.
    So we have been dismayed, I think it is fair to say. There 
are a lot of things we can do in the U.N., in the larger U.N. 
system. One is to focus very much on the Third Committee of the 
General Assembly which has a mandate on promoting human rights, 
and we have worked hard with our colleagues in DRL and with all 
of our allies in Canada and Australia and throughout Europe to 
get some tough resolutions in the Third Committee on North 
Korea, on Burma and other cases. And we have tried to work on 
the actual on-the-ground work the U.N. does on the promotion of 
human rights. And this is something the U.N. Democracy Fund, 
which President Bush proposed, is helpful in this regard.
    The Office of the High Commissioner, which does a lot of 
technical assistance on human rights issues, continues to do 
good work. So I guess it is to say we have a very pessimistic 
view of what is likely to happen at the Human Rights Council, 
but there are other avenues in the U.N. where we can press on 
human rights issues.
    Mr. Crenshaw. I applaud you all for what you have done in, 
I guess, the Third Country that you pointed at, Belarus. Is 
there anything we ought to be doing, anything we can do? If it 
is even worse than it was before, is there anything you can do 
about the membership on the committee or are we at least 
raising our concerns? If it has gone in the wrong direction, 
and we just stand by but we have other avenues, it seems like 
we ought to be trying to make the point that this new Council 
is worse than it was before, whether it is dealing with the 
membership on that committee or whatever. Anything else you can 
think of that we can do to try to correct that?
    Ms. Silverberg. I thought the Committee did something very 
useful, including language in the last appropriations bill 
expressing strong concern about the Human Rights Council and, 
in fact, saying that we shouldn't--that no funds out of that 
bill should go towards the Human Rights Council. I thought that 
was useful. We can use that to communicate to our colleagues 
how serious the concern is.
    The other thing is support for some of the other avenues 
within the U.N., including the U.N. Democracy Fund, which is 
one of--this goes to the points I was making with Congressman 
Wolf about the importance of democratic--of cooperation with 
democracies. At the U.N., the U.N. Democracy Fund is one of the 
key places where democracies are working on a core set of 
shared issues. And so it is a real focal point for that kind of 
cooperation, and it is the kind of thing we can leverage on 
other issues in the U.N. system.
    And then, finally, the other thing is this. We have tried 
to be much more creative about how we use the Security Council 
on human rights issues, including Burma. We still try to do it 
in a way that is consistent with the jurisdiction of the 
Council so we don't wander into every human rights issue. But 
where we see a threat to international peace and security, we 
try to use that very effectively. And the committee support for 
that kind of thing is also very helpful.
    Mr. Crenshaw. Madam Chairman, I think as human rights gets 
elevated more and more, we ought to continue to do the things 
we are trying to do to make people aware of that. If you have 
got the United Nations, the old Commission on Human Rights, I 
mean, most of the people on that Commission were the worst 
abusers of human rights, and now they have got a new Council 
that is supposed to make it better. So I think if there are 
things we can do to turn up the heat, because it is pretty 
outrageous, particularly as more and more issues like Tibet and 
Burma come to the forefront, we should do so. I hope we can do 
that----
    Mrs. Lowey. We certainly will deal with that again as we 
write the bill, and I thank you for emphasizing it.
    Ms. McCollum.
    Ms. McCollum. Thank you, Madam Chair.
    Secretary Silverberg, with our Nation's reputation already 
badly bruised due to the Iraq war, Guantanamo and other 
scandals, choosing not to meet our commitments around the world 
is irresponsible and inexcusable. And I heard you talk about 
the cap and those things that were not capped. Has the 
administration within the last several years sent a letter to 
Congress asking for the caps to be removed?
    Ms. Silverberg. Yes, we have. We have supported removal of 
the cap both orally in testimony, and I think I testified to 
this even last year, although I would have to doublecheck, and 
also in writing. I am sorry. And the President's budget 
proposal each year asked for a lifting of the cap.
    Ms. McCollum. I will check that. I am concerned that the 
administration is being less than honest with Congress and the 
American people because the budget requests that they put 
forward fully expect Congress to increase accounts in which 
they have cut. We backfill them, and that is largely left to 
supplemental requests, as the Chair put out.
    I think there is a simpler and more direct way in which the 
administration should be putting forward its budgets. In other 
words, ask what you need for. Now, I hear that the State 
Department wanted more, and OMB stuck you with a lower amount, 
but at the end of the day, there is only one administration and 
one Congress, right? And we are left now holding the 
administration accountable for doing less than what it promised 
to do.
    To date the U.S. owes $266 million in peacekeeping debts. 
Now, this budget request is below, as the Chair pointed out, 
what is needed to cover the fiscal year 2009 peacekeeping 
obligations. This guarantees that the debt will grow larger.
    The budget request for $1.5 billion amounts to a shortfall 
of over $600 million. Shortfalls in funding undermine the 
success of vital peacekeeping missions in some of the most 
sensitive areas of the world. So I am looking to the State 
Department's request, and this is what I see. I see cuts to the 
U.N. force in Lebanon, cuts to Kosovo, cuts to Liberia, cuts to 
Haiti, cuts to Darfur. And I am very alarmed by what I am 
seeing. I am especially concerned about the cuts and the impact 
these cuts would have on the peacekeeping mission in the DRC. 
The request is at least $58 million below what is needed. The 
U.S. voted to support this peacekeeping mission in the U.S. 
Security Council just last December, and the U.S. helped 
negotiate the peace.
    So my questions are, how does the administration justify 
the proposed funding reduction to the DRC? What is the effect 
on America's image when we vote to support peacekeeping 
missions and then fail to provide our share? And what will 
happen to peacekeeping missions if the peacekeeping account 
continues to operate under the resolution of fiscal year 2008 
at a level of $1.3 billion for the first 6 months of 2009?
    Ms. Silverberg. Thank you.
    And I agree entirely, first, on the importance of the U.S. 
meeting its obligations and, second, on the importance of full 
support for peacekeeping operations. This is something the 
administration has worked very hard to support. As you say, we 
have used our votes on the Security Council to support U.N. 
peacekeeping operations in lots of places around the world, and 
we think they are essential. Our budget request is a best 
estimate of what is likely to be needed for peacekeeping 
operations. I don't know with precision what will be needed, 
and neither the U.N. nor anyone else can tell you, because by 
definition we are budgeting for very volatile situations that 
change rapidly on the ground. The best we can do is manage 
within the account.
    Ms. McCollum. To follow up on that--I probably won't get 
all my questions answered doing this. Conditions are rosy and 
improved in Lebanon, conditions are much, much better in 
Kosovo, and, according to you, things are going swimmingly well 
in Liberia. Haiti is all stable, and Darfur is okay.
    Ms. Silverberg. Well, I think actually in some of those 
cases, yes, there are reasons to think drawdown--for the 
Kosovo--the plan we are pursuing now with Kosovo suggests an EU 
operation coming in and taking over from the U.N. operation. 
So, yes, we have proposed to close down that operation 
entirely, and we have done that in----
    Ms. McCollum. Even with the current situation in Kosovo 
today?
    Ms. Silverberg. I think we are going to have to do a phase-
down approach. So the U.N. mission will phase down as the EU 
mission builds up. But, yes, that is the plan which we worked 
out in close cooperation with the Secretary General and our 
European allies, and I think that general idea enjoys strong 
support.
    In Liberia, we have seen the Secretary General propose 
already a drawdown of troops because of an improved situation 
on the ground. So at the moment we have ongoing a reduction of 
some 2,800 troops, and then we will reassess when we get to--I 
think next September is the mandate renewal.
    There are other places where we are trying to ramp up very 
quickly, and Darfur is one of them, of course. And there are 
other places we are just watching as they go along.
    With respect to MONUC, which you raised, we will have to 
see what the impact on the Nairobi communique and the Goma 
agreement are. We hope that both will be helpful, but we really 
will have to watch that really on an ongoing basis to see what 
troop level is appropriate.
    Ms. McCollum. Could you give us a documentation that 
supports what you said about Liberia being a planned cut and 
the documentation that supports what you said about Kosovo?
    Ms. Silverberg. Sure. We would be happy to.
    The Liberia support is in the resolution itself and also in 
the Secretary General's Report. And on MONUC I think we have 
lots of materials on that point.
    Mrs. Lowey. Thank you.
    Mr. Kirk.
    Mr. Kirk. Thank you.
    I return to the Security Council, et cetera. And I really 
congratulate you on a third round of resolution that you and 
Zal got through. But I just wonder, in my discussion with Bob 
Zoellick at the World Bank, he said that he would cancel the 
payment of hundreds of millions of dollars from the World Bank, 
which is just three blocks from the Oval Office, to the Finance 
Ministry of Iran if the World Bank was mentioned in a Security 
Council resolution, but we failed to do that. And so apparently 
not only do we continue to pay the Finance Ministry of Iran 
from 19th Street in Washington, D.C., but now the World Bank is 
starting--has failed to update its financial disbursement 
disclosure on the Web, so we have lost data on what check has 
been sent to Ahmadinejad lately from the Bank. I get a sense 
that the left hand doesn't know what the right hand is doing, 
and that the Treasury and the World Bank are directly 
undercutting what you are doing.
    Ms. Silverberg. I haven't spoken to President Zoellick 
about this, but I think what I would have added is that the 
World Bank was mentioned in 1747. It wasn't mentioned in 
exactly the terms we wanted. But the resolution clearly calls 
on international financial institutions not to make loans or 
guarantees to Iran.
    You will remember that we pushed for tougher language and 
explicit prohibition. Some of our allies, even strong 
supporters of action on Iran, objected to that not so much on 
policy grounds, but really on legal grounds. They have a view 
that because the U.N. creates treaty obligations only for 
member states, that it can only bind member states rather than 
other organizations. I think our view was that it can bind the 
member states who cast the votes in all of those other 
organizations, so that this really wasn't an important 
distinction.
    Mr. Kirk. I think a lot of members of this committee fail 
to realize that money that we appropriate goes to the World 
Bank and then is paid directly to the Finance Ministry of the 
Islamic Republic of Iran.
    Ms. Silverberg. That is right. That is right. And I think 
one important point is that thankfully we have not seen from 
the leadership of the World Bank proposals for new loans or 
guarantees since 2005. So I think with regard to any new 
proposals, we have seen very responsible leadership.
    Mr. Kirk. You can imagine Ahmadinejad, he sees a U.N. 
resolution on one side, and then his Finance Ministry says, oh, 
by the way, the Americans at the World Bank just cut us a check 
for 150 million bucks. So some words for the U.N. and check 
coming in.
    Ms. Silverberg. I think it is a very fair point that the 
administration is ongoing--but I will say in Treasury's 
defense, I think the Treasury is extremely serious about this 
point. We have opposed every proposal or suggestion for a new 
loan or guarantee. I think they will cast their votes 
accordingly. So I am quite confident that Treasury is very 
serious about this issue.
    Mr. Kirk. Let me turn to Lebanon. Our committee provided to 
UNIFIL in fiscal year 2007 125 million in the regular 
appropriation, 184 million in the supplemental; fiscal year 
2008 contributions 243 million, and fiscal year 2009 requests 
of 186 million.
    Now, Congressman Israel and I with 100 of our colleagues 
wrote to Secretary Rice looking for the U.N. to change the 
mandate of UNIFIL, to stop the flow of Iranian weapons into 
Hezbollah hands. UNIFIL right now says it will not engage 
Hezbollah or stop the armed shipments. And just a couple of 
headlines. The AP on the 3rd says Israel says Hezbollah now has 
30,000 rockets. This is all delivered since the war. The Hartz 
on the 3rd, Hezbollah announces we are ready for war with 
Israel, which would be the second one. Tehran press says 
Hezbollah missiles now could target the Dimona reactor in 
Israel. And Gulf News reports Hezbollah rockets are longer in 
range. So not only have they fully replenished under the U.N. 
watch, they now have the ability to rain destruction on more 
Israeli cities.
    It seems that right now in this committee, we have approved 
$552 million for this peacekeeping force, which is simply going 
to catalog the slaughter. It has been completely unable to stop 
the rearming of a foreign terrorist organization that poses a 
direct threat not just to the people of Israel, but to the 
democracy in Lebanon.
    Ms. Silverberg. I think you will recall that when we 
adopted 1701 during the--basically in the process of ending the 
conflict--we included language, we agreed to language that said 
that generally the mandate for UNIFIL was south of the Litani, 
but that UNIFIL could cover border issues, the Syrian border, 
at the request of the Government of Lebanon. That request has 
not been forthcoming. In light of the paralysis within Lebanon 
these days, the Syrian----
    Mr. Kirk. So the question is for the U.S. Taxpayer, what 
did we get for 552 million bucks?
    Ms. Silverberg. We have seen UNIFIL take action against 
both--when they locate arms south of the Litani, we saw 
something that was very helpful, which was for the first time 
the UNIFIL presence allowed the LAF to deploy to the south, and 
they are doing joint patrolling and other things. That is 
essential.
    But there is no question that we are very concerned by the 
report, not just Israeli reports, but Hezbollah statements, 
that they have rearmed south of Litani. We think this is 
fundamentally important.
    There are a lot of things we can do on the border, even 
absent a Government of Lebanon request to UNIFIL. One is just 
to LAF itself, and that is something we do very actively, I 
think. I think we have provided maybe $400 million in support--
although I have to check that number--in recent years. 
Obviously we work with other governments. The German Government 
has a pilot program.
    Mr. Kirk. Obviously you know that prior to the war, we 
provided hundreds of millions of dollars to UNIFIL the last 
time, and they just ran away.
    Mrs. Lowey. Thank you.
    Mr. Israel.
    Mr. Israel. Thank you, Madam Chair.
    And, Assistant Secretary Silverberg, welcome. And let me 
ask you to indulge me. I have horrific allergies, so I will try 
to muddle through this.
    Two questions, one with respect to Darfur and one with 
respect to what international organizations are doing to 
monitor and cut off Saudi Arabia's financing of terrorism. With 
respect to Darfur, before joining the Appropriations Committee, 
I was on the Armed Services Committee, and I was able to write 
into the defense authorization bill language that points out 
that 100 miles west of the border between Sudan and Chad, there 
is an airfield called Abidjan airfield that would be capable of 
supporting humanitarian and peacekeeping missions with respect 
to Darfur. That language passed. It was actually signed by the 
President in the DOD authorization. I worked with Congresswoman 
Lee on this matter.
    Secretary Gates owes the Congress this month a status 
report on what kinds of upgrades would be necessary in order to 
ensure that the Abidjan airfield is, in fact, capable of 
supporting those humanitarian and peacekeeping operations. And 
I would ask you and your colleagues in the Department of State 
to begin conversing with DOD once that report is submitted. It 
is going to be critically important, and, in fact, it is a 
profound opportunity for international organizations to provide 
the logistics necessary to improve the situation on the ground 
in Darfur. So I commend to your attention that language, and I 
will be anxiously awaiting Secretary Gates' report, and we will 
follow up with your office to see what kind of coordination is 
necessary between the State and DOD.
    Shifting to international organizations' monitoring of--
financing of terror, one of your missions, of course, is to 
pursue U.S. interests through international organizations in 
areas including counterterrorism. I believe Mr. Wolf alluded 
earlier to an article in the Los Angeles Times with respect to 
testimony by Stuart Levy, a Treasury under secretary, to the 
Senate indicating that the Saudi Government has not taken 
important steps to go after those who finance terrorist 
organizations or to prevent wealthy donors from bankrolling 
extremism through charitable contributions. He noted in his 
testimony, we continue to face significant challenges as we 
move forward, including fostering and maintaining the political 
will among other governments to take effective and consistent 
action. Our work is not nearly complete. And then the L.A. 
Times report notes that U.S. officials and counterterrorism 
experts have said that international support for the effort has 
waned while terrorist groups have found ways around the 
financial restrictions. At the same time, there have been turf 
battles among the 19 Federal agencies that work on the problem. 
Nineteen Federal agencies are trying to figure out how to 
monitor and prevent Saudi Arabia's financing of al Qaeda and 
other terrorist organizations.
    It is ludicrous to me that 19 Federal agencies haven't 
figured this out. And every day since 9/11, the Saudi 
Government keeps writing checks to al Qaeda and other terrorist 
organizations.
    So my question is, what specifically is your office doing 
with respect to counterterrorism? What role do you have to play 
with respect to those other 18 agencies, I suppose, who are 
working on this problem? What needs to be done in order to 
expedite this process?
    And I will continue to work very closely with my Chair. 
Perhaps at some point a hearing on this kind of issue, 
specifically addressing the lack of coordination in the Saudi 
financing of terror, would be something that the Chairwoman 
would consider. Thank you.
    Ms. Silverberg. Thank you.
    I can't speak with any particular expertise to the broader 
problem because it sounds like I am a tiny subset of what is an 
unwieldy bureaucracy, but I can tell you what the IO and 
particularly Security Council piece of this problem is.
    The Security Council has adopted resolutions both 
addressing counterterrorism, support for counterterrorism 
generally, and also addressing in particular the al Qaeda and 
Taliban threat. What we have seen over the years since the 
immediate aftermath of 9/11 is a real loss of energy and 
enthusiasm from member states about the importance of 
implementing these resolutions. We have a harder time listing 
people who would be subject to Security Council sanctions. We 
see less reporting generally.
    One thing we have tried to do in IO is to reenergize the 
counterterrorism function in the Security Council, and we have 
had some good--I think we now have a good opening to do that 
for a couple of reasons. One, the leadership of the executive 
directorates of the bodies attached to both of these sanctions 
committees is very good now, and we have had a number of 
meetings with them about ideas for how they can work with 
member states on their objections. That would be true not just 
of a country like Saudi Arabia, but of many countries around 
the world that either lack political will or resources to take 
their obligations seriously. So anyway, I think that is our 
Council piece of it.
    I should say we think the U.N. systemwide has a bigger role 
in counterterrorism than has been appreciated over time, and 
that is true on both sort of the hard security side, but also 
on the softer side of the global war on terror; communicating, 
for example, the problems with terrorism. So we have asked 
UNESCO to host a conference on what it is that radicalizes 
kids, that draws them into violent terrorist groups, and they 
have agreed to do that. We have worked with UNESCO on 
curriculum reform and this kind of thing. So generally it is a 
high priority for us to make sure that all of the aspects of 
the counterterror fight are fully engaged in the U.N. system.
    Mr. Israel. My time has expired, but I would ask if you 
would compile for the subcommittee a list of all of your 
efforts with respect to reenergizing member states, curriculum 
reform and the other things you are doing with respect to 
counterterrorism.
    Thank you, Madam Chair.
    Mrs. Lowey. I want to thank the gentleman for bringing up 
that very important issue. If you talk to experts on Pakistan, 
they will talk about the increase in madrasas that are teaching 
the most extreme form of Islam and many are funded by the 
Saudis. So I thank you for bringing up this issue, and I think 
it certainly should be the focus of discussions that we have. 
Thank you.
    Ms. Lee.
    Ms. Lee. Thank you, Madam Chair.
    Good morning, Madam Secretary. I have to preface my 
statement by saying, of course--and you talk about a tight 
budget year, and we all recognize that. Our economy is in 
shambles, and we are spending $500 billion to occupy Iraq. Some 
are estimating this could lead us to maybe a $3 trillion 
occupation and more. And so, yes, I understand this tight 
budget situation.
    I hope the administration understands also that the 
American people understand that this occupation should end for 
many reasons. It is appalling, really, quite frankly, that when 
we look at Haiti, when we look at Liberia, the fragile nature 
of both of these countries, to reduce their U.N. peacekeeping 
budget by--I think Haiti you have about a 22 percent reduction. 
The administration estimated about $146 million, and I think 
the request now is only $114 million. Under our Chair's 
leadership--and thank you, Madam Chair, for arranging the 
meetings with President Ellen Sirleaf Johnson. We met with her, 
and she talked about the fact that they need enough money to 
sustain some stability or to create some stability in Liberia, 
yet we are seeing a huge cut, I think, of more than $56 million 
for Liberia.
    And then the other cut that is really shattering, you know, 
in terms of what it is going to do to the lives of women and 
girls. When you look at the UNIFEM account, we all recognize 
violence against women and girls, it is an extreme human rights 
violation, a public health epidemic, barrier dissolving, global 
challenges such as extreme poverty, HIV and AIDS, and here we 
are talking about cutting I think it is $3.6 million, a 75 
percent cut in this account, from $3.6 million to $950,000.
    And I could go on and on, but I just think when you look at 
the priorities in this budget, I would have to ask what are we 
doing? I mean, you know, how do we move forward to create a 
world where the United States leads in terms of global peace 
and security and stability and development with regard to our 
standing and assistance and what we should be doing?
    Ms. Silverberg. Well, first let me say I think there is no 
danger of this administration, of the U.S. Government 
abandoning Liberia. It is too high a priority for Secretary 
Rice. And I think she would absolutely want to make sure that 
we in IO are doing whatever we have to do to make sure that 
Liberia is fully funded.
    Ms. Lee. But this is a 22 percent reduction in the 
stabilization--excuse me--$156 million cut.
    Ms. Silverberg. As I was saying earlier, the Security 
Council has already approved a reduction of 2,450 troops and 
then another number of police, and that will happen by 
September 2008. We would expect some additional drawdown to be 
considered at that point depending on the security situation. 
Obviously we will do this in close consultation with the 
Liberians to make sure they have what they need. But in our 
view, we have seen really dramatic improvements, and when you 
think about 2002, when we had marines parked off the coast, and 
we were talking Charles Taylor was on the loose, and we really 
had a crisis, we are in a much better situation.
    Ms. Lee. Sure. I agree. So the President understands that 
this cut is coming, and this is part of their plan, and they 
are fine with that, the President of Liberia?
    Ms. Silverberg. Yes, the Liberians are aware of the 
drawdown. This was again adopted in a Security Council 
resolution. I am not aware of any major concerns with them on 
that, but I would have to doublecheck with my colleagues and 
ask to make sure. But, yes, this is all publicly discussed.
    On UNIFEM, I don't disagree with you one bit on the merits 
of the organization. I support it. We have worked, I think, 
very effectively with them. Again, it is a tight budget 
situation. So in this account, we did an increase--we didn't 
have increases really anywhere. So our 2009 request is exactly 
the same as our 2008 request, but we understand that Congress 
funded at a higher level last year.
    Ms. Lee. Yeah, $3.6 million in 2008, and now it is down 
to--at least your request of $950,000. Tragic.
    What about Haiti.
    Ms. Silverberg. Haiti, I think, is one--this is going to 
really be a long-standing effort, MINUSTAH. It is one where we 
won't want to see any drawdowns unless we are confident that 
the implementation of the Haitian National Police Plan is 
moving apace, and we are really just in the second year of the 
5-year plan. So we will have to see how we are doing on that.
    Ms. Lee. There was a 22 percent reduction, I think, in your 
budget.
    Ms. Silverberg. Again this is an estimate. To the extent it 
is not possible, then we will have to manage within the 
account. But we hope that the Haitian National Police Plan will 
allow the kind of security improvements that will allow us to 
start a drawdown.
    Ms. Lee. Thank you, Madam Chair.
    Mrs. Lowey. Thank you.
    We are expecting votes shortly, but I think what we will do 
is begin a second round. Depending on when the votes come and 
how many, we will either adjourn or continue, and we will make 
that judgment when the bells go off.
    I would like to ask you a question about UNFPA. The world 
just marked the 20th anniversary of the safe motherhood 
movement, yet we are still losing far too many women needlessly 
due to complications during pregnancy and childbirth. The 
United Nations Population Fund is the leading U.N. agency 
addressing maternal health and family planning, yet the United 
States has withheld life-saving funds from this agency for the 
past 6 years. Specifically the administration has indicated 
that funding for UNFPA programs around the world is being 
withheld due to an ongoing concern with UNFPA's demonstration 
program in China that is designed to promote a voluntary 
approach to family planning.
    From your perspective, what is the best way to promote a 
voluntary and human-rights-based approach to family planning in 
China? Is the United States working bilaterally to encourage 
China to support a human-rights-based approach to family 
planning? What role do you think the United Nations should have 
in addressing concerns about China's family planning program? 
And what impact is the withholding of funds having on UNFPA's 
programs in Africa and Asia?
    Ms. Silverberg. As you know, Congress has had for many 
years a provision of the--Kemp-Kasten provision, which 
prohibits the administration from providing funding for any 
organization that participates--supports or participates in the 
management of a program of coercive abortion. So the provision 
doesn't ask the administration to look at what the impact of 
the participation is. It doesn't ask it to look at the merits 
of the organization at large. It really just asks one question, 
which is, is this an organization that is supporting or 
participating in the management of a program of coercive 
abortion.
    Mrs. Lowey. By the way, you should be aware that several 
years ago, the administration appointed a commission of three 
people who came back and reported to us after visiting China 
and looking at these programs that there were not forced 
abortions, and that they were certainly not in violation of 
Kemp-Kasten.
    Ms. Silverberg. As I recall the report of the Commission, 
it said that the UNFPA was not knowingly participating in a 
program of coercive abortion. And again, that is not what Kemp-
Kasten says. It says ``supports or participates.'' And so it 
really raises two questions, which is, one, is there a program 
of coercive abortion? And in our view there clearly is. The 
Chinese Government in many counties continues to impose 
excessive, sometimes equivalent to a year's annual salary, 
penalties on couples that have an additional child. And the 
second question is whether UNFPA was supporting or 
participating in the management of this program. And again, we 
thought it was clear that they were, both through their 
financial and technical assistance to the Chinese Family 
Planning Commission.
    Mrs. Lowey. It wasn't clear to the three Commissioners, but 
I understand your comments.
    Ms. Silverberg. So this process, the next annual report to 
Congress on the administration's decision for this year is with 
PRM, and I understand that it is underway now. But I will say 
that we have raised a couple of ways that would--a couple of 
things that would permit UNFPA to receive full funding from 
Congress. One would obviously be a change to the underlying 
Chinese family planning program, and we very much hope that 
that is underway, that that is something the Chinese Government 
will consider. And the second is for UNFPA to change its 
relationship with the Chinese government.
    So we proposed a number of years ago, we proposed, for 
example, that UNFPA only do business in the countries where we 
don't see these coercive practices or, conversely, for the 
Chinese Government to suspend its practices in the places where 
UNFPA wants to do business. So we have tried to look for ways 
that would allow UNFPA funding without violating what we think 
is a very legitimate and serious policy judgment that we need 
to stay far away from any kind of support for coercive 
abortions.
    Mrs. Lowey. Well, Mr. Kirk may remember several years ago--
in fact, I believe Mr. Kirk drafted the amendment.
    Mr. Kirk. I am not a----
    Mrs. Lowey. I think it is important to state for the record 
that many of us did work in a very careful manner to craft an 
amendment whereby it would not function in areas where abortion 
was legal, and it was still opposed by the administration. But 
I don't want to prolong this discussion. I don't recall, Mr. 
Kirk, if you were part of that meeting when the Commissioners 
came back and reported to us, all three of them.
    But it would be nice if we took consistent positions. And 
we deal with the administration of China when they don't 
support a whole range of issues and values that we advocate. 
But we will move on because my time is up, and I will turn to 
Mr. Wolf, who I am sure will have a question on another issue.
    Mr. Wolf. Well, when you said China, this radar went off, 
and I think the administration's policies on China are just so 
misguided. It is very disappointing for me as a Republican.
    We plan on offering an amendment to the supplemental, I 
hope it is in the supplemental as it comes out of the bill, 
prohibiting any government employee from attending the Olympics 
on taxpayer dollars, and Clark Randt ought not be the cruise 
director for Congressmen or Senators or representatives of this 
administration, Cabinet officials, going to these Olympics.
    It is really bigger than that. There is a U.S./China 
Commission report showing that China is spying against us very, 
very aggressively. China is selling weapons that are a direct 
threat to men and women who serve in our military, a direct and 
major threat to them.
    I looked at the Cardinal Kung Foundation Website the other 
day, and they said there were, I believe, 25 or 35 Catholic 
bishops and priests in jail or under house arrest. Congressman 
Chris Smith took holy communion from Bishop Su. He has not been 
seen since. One person saw him being moved from one car to 
another car, and I assume he may very well be dead.
    Congressman Smith and I were in Beijing prison number 1 in 
1991 where we saw Tiananmen Square demonstrators who were 
making socks for exports to the West. Many of them are still in 
prison today. They have closed down the sock manufacturer in 
Beijing prison number 1.
    But we see what they are doing in Tibet with the Buddhist 
monks and nuns, and I guess we really don't see what they are 
doing because the Western press has been forced out--there are 
so many reasons--the way they treat Rebiya Kadeer. I don't know 
if you read yesterday's Washington Post op-ed piece by Rebiya 
Kadeer. They have taken her kids away, they are in prison, 
beating them, and Clark Randt can't even get in to see them. 
That is how little effectiveness we actually have.
    And so I hope this amendment is adopted by the committee on 
the supplemental so that we don't put it in our bill after the 
Olympics are over. We are not saying there ought to be a 
boycott of the Olympics. I think the athletes have worked hard. 
But no American Government official, unless Clark Randt wants 
to spend his own money and his own dime to buy the ticket--but 
no government official should go to China on taxpayer money. We 
are making an exception for the President, because obviously--I 
mean, hopefully his heart will tell him not to go, and we are 
not going to stop Secret Service and security and 
communication, which leads me to the issue that I was going to 
ask you about until you mentioned the word China.
    As far as Darfur, we know what they are doing or not doing 
and how China has been recalcitrant at the U.N. On the whole 
issue of Darfur. China in essence holds the key to the 
solution. So that is another issue, which leads me to what new 
information do you expect to come out of Special Envoy Rich 
Williamson's--he is a good person, and I think the President 
made a good selection. And I think Andrew Natsios was a good 
selection, and I commend the President or Senator Danforth on 
the North/South negotiation and the peace there. What should we 
be expecting now as a Nation and as the Congress? Because I am 
sure Williamson has been going over there back and forth. The 
world is waiting to see, but the conditions are no better, and 
in some respects they are actually worse, because people in the 
camps are just so exhausted, and they are so beaten down. And 
from an international point of view, what should we expect at 
the U.N., and when should we expect it?
    Ms. Silverberg. I think the special envoy has focused 
really intensely on UNAMID deployments specifically. He is 
obviously the right person to do that because of his U.N. 
experiences. And so he has presented the Sudanese with 
essentially an option, with a list of our expectations with 
regard to their cooperation with the deployment of the mission, 
which has been less than optimal, as you know. We have seen 
both pretty overt obstruction from them, including a case where 
Sudanese armed forces opened fire on a U.N. supply convoy; 
objections to certain nationalities deploying as part of the 
force, which is the Thai and Nepali in particular, which is a 
problem because they are essential to make sure this force has 
the necessary enablers. And then we have also seen some sort of 
covert obstruction, so delay in giving visa authorization or 
denial of the ability to do night flights, that kind of thing. 
And so what Rich has been doing is focus with the Sudanese on 
our expectations of their cooperation. At the same time, he has 
been developing a list of punitive options if we don't see 
that. And I think he takes that possibility very seriously, 
too.
    Mr. Wolf. Is there any timeline that we should expect? I am 
not asking you to tell me what they are today if it hasn't been 
presented yet to the President, but is there a timeline?
    Ms. Silverberg. On the punitive measures or on the 
deployment itself?
    Mr. Wolf. On whatever we plan on doing or whatever 
recommendations he plans on making.
    Ms. Silverberg. I think he is in ongoing discussions with 
the Sudanese, so I think it might be better to let him talk 
with you about that.
    On the deployment side, he has set out a goal that we have 
3,600 new African troops deployed by June. We think that is 
quite possible.
    Mr. Wolf. What is the number now?
    Ms. Silverberg. The number is 9,200 troops and about 1,300 
civilians. What he would like to see with these 3,600, which 
are made up of Ethiopian, Egyptian and Rwandan forces in 
particular in combination with a bunch of other enablers, we 
would like to see that kind of quick impact.
    We are doing a lot of work, mostly through AF, supporting 
those troop contributors and their ability to deploy. The 
Egyptians are in pretty good shape, but both with respect to 
the Ethiopians and the Rwandans, we are supporting their 
efforts to get--to be deployable sooner rather than later. And 
so that is our working goal.
    Mr. Wolf. And the money is available?
    Ms. Silverberg. Yes, sir, the money is available.
    Mr. Wolf. But is there a date that the State Department or 
the administration is looking to say, okay, here is when we are 
going to announce our new policy, our new plans so the world 
knows?
    Ms. Silverberg. I think that will be a decision made by the 
President with the advice of the Secretary and Rich, I think. 
So I think I should let them----
    Mr. Wolf. Well, it must be bold. I have been critical of 
the President going off to China to the Olympics, I have also 
said in the same conversations that I commend the President for 
his activities with regard to Darfur. He has probably done more 
than any other world leader, and I know he cares deeply about 
it. I think it is important for the administration, as this is 
your last year in power, to put everything in place, because my 
sense is whoever wins the Presidency, this issue won't be the 
most pressing issue for 6, 7, 8, 9 months. You don't want to 
walk out the door on January 20th with this thing still 
lingering the way that it is.
    Thank you, Madam Chair.
    And thank you for your time.
    Mrs. Lowey. Thank you.
    Ms. McCollum.
    Ms. McCollum. Thank you.
    I would like to talk about food aid for a few minutes, the 
World Bank and the World Food Program. And some in our own 
government are warning that we face a global hunger crisis 
stemming from soaring food prices. Adding to the challenge is 
our falling dollar, making it more difficult and more costly 
for the United States to respond with more commodities.
    We need a strategic response to face these challenges, and 
we need to increase the support for agricultural activities in 
the developing world. So in the budget there is a request for 
$14.6 million in an increase to the Food Agricultural 
Organization, which, as you know, is an organization that 
supports sustainable agricultural programs in developing 
countries. But $14.6 million is really not that much money when 
you look at the number of lives that are impacted and will 
continue to be impacted with hunger in the upcoming years. So 
what was the administration's idea for this proposed increase? 
What do they hope to really gain with this amount? And how is 
your office coordinating with USAID and State and multilateral 
and bilateral programs targeted at agriculture?
    Ms. Silverberg. Great. We have a lot of support for FAO's 
mandate. We have serious concerns about FAO's ability to 
implement its mandate to use taxpayer resources in a way that 
can best serve food security, food safety issues and other 
things.
    In essence, you will recall that with support from this 
committee, we supported an independent external evaluation of 
FAO, basically the way that FAO operates, and it came back with 
over 100 specific recommendations of things that needed to 
happen at FAO. Before any of those things were implemented or 
even underway, FAO adopted a really massive budget increase 
last fall, and we and a number of the strongest supporters of 
FAO voted against or abstained. I think countries that did not 
support the budget increase make up about half of FAO's 
resources.
    What we have said is that we need to--again, external 
report pointed to a lot of problems, authoritarian management, 
basically inefficiencies. What we would like to see is FAO 
undertake some efforts on that before we see massive budget 
increases. We need to make sure that that money can be spent 
effectively.
    Ms. McCollum. Knowing that there is a crisis out there, and 
then knowing that you don't think that the Food and 
Agricultural Organization is the best way to work on changing 
things right now, the second part of my question is, what is 
your office doing then to make up for the lack of support that 
we are going to be giving this organization with USAID, State 
and other multilateral and bilateral organizations?
    I just came back from Pakistan and Afghanistan where they 
are going to have an increase of $12 million in food aid. And 
when I asked Secretary Rice what countries were going to be 
cut, it is not even countries being cut by not having the food 
aid available that they need, there is dollars already being 
shifted when we know we don't have enough dollars in this 
budget for food aid. So what are you doing?
    Ms. Silverberg. I actually don't think that FAO is the best 
mechanism for addressing this.
    Ms. McCollum. I didn't say you did. I said there are 
problems there. I said what are you doing to replace the 
opportunity that should be available to us, but, because of 
lack of confidence, is not available to us at FAO? What are you 
doing?
    Ms. Silverberg. I don't think FAO generally is a good 
opportunity on this kind of issue. This is a problem for the 
World Food Program. FAO is funded primarily for assessed 
contributions and deals with standard setting and things that 
can lay the basis for----
    Ms. McCollum. I didn't say you had to fund FAO. I said what 
are you doing? If you don't think you can put the dollars in 
there to help feed people who we know will be starving, what 
are you doing to make up for the lack of having that 
organization to work through?
    Ms. Silverberg. As I was saying, I don't think even in the 
best circumstance that would be the organization we would work 
through, but we would work through the World Food Program. And 
as you know, we have a supplemental request of $350 million 
before the Ag Committee. AID, in response to investors' latest 
appeal, is looking on a country-by-country basis whether there 
are additional funds that need to be requested, and we also 
have a proposal before Congress that would permit more local 
purchase, which I think would be very helpful in addressing the 
impacts of the energy crisis on the current food crisis.
    Ms. McCollum. I am not satisfied with the answer, but I 
will let it go.
    Mrs. Lowey. Thank you. I will ask one more question, and 
then anyone who has additional questions can submit them for 
the record.
    It is well demonstrated that the lack of a strong, well-
resourced women's entity at the United Nations, one with 
policymaking and operational responsibilities as well as an 
effective presence at the country level, led by an Under 
Secretary General, has impeded the advancement of gender 
equality and the empowerment of women. A number of countries 
and regional blocs have expressed strong support for a gender 
equality architecture within the U.N. system, including Canada, 
Liberia, MERCOSUR, Mexico, Switzerland, Norway, EU, 
Philippines, Australia and New Zealand. Will the United States 
be added to this list? And how do you justify the 73 percent 
cut in the administration request for UNIFEM?
    Ms. Silverberg. Thank you.
    We strongly support a strengthened women's mechanism at the 
U.N. The one thing we have cautioned with all of our allies on 
that is that we don't lead to something that undermines our 
mainstreaming effort. Women's issues can't be the function of 
just one under secretary general. Every part of the U.N. system 
has a core responsibility for dealing with women. You can't do 
humanitarian aid through the World Food Program if you can't 
deal with the women who are the fundamental providers, have 
meals for their kids. You can't deal with development programs 
at UNDP unless you deal with the fact that most new 
entrepreneurs in developing countries are female. And so what 
we have said is we need to strengthen the mechanism, but 
without doing anything that suggests to other parts of the U.N. 
system that they don't have a job on women.
    On UNIFEM, I don't disagree at all with your strong support 
for that organization. I share it. It is obviously a very tight 
budget situation. So our 2009 request reflected our 2008 
request. As I said to Congresswoman Lee, we absolutely think 
this is a good organization.
    Mrs. Lowey. You know, it is interesting. I think most of us 
on this committee strongly support the United Nations, yet over 
and over again we have talked about the fact that we are way 
behind, $2.8 billion in dues, way behind in arrears, yet we are 
spending $12 billion a month in Iraq. And it is estimated that 
the war is going to cost about $3 trillion. So I would strongly 
suggest that the administration reevaluate a cut in 
peacekeeping, our lack of fulfilling our responsibilities when 
it comes to dues and certainly when it comes to important 
organizations such as this.
    Now, since Mr. Kirk just came back, and I was about to 
close the hearing, if you have an urgent question----
    Mr. Kirk. One last issue.
    My only last question is a disturbing trend that we saw 
first in Lebanon and now in Gaza of Fatah-e-Islam now operating 
directly out of UNRA camp. The Prime Minister of Lebanon, Fuad 
Siniora, described the UNRA camps as the places that 
represented the greatest threat to the Lebanese democracy, and 
yet we provide hundreds of millions of dollars to UNRA, which 
allows Fatah Islam to operate.
    I mentioned Fatah Islam because Ahmed Abdel-Rahman, who is 
the top security aide to the Palestinian President, Mahmoud 
Abbas, describes them as extremely terrorist, not linked to 
Fatah and a radical organization. And this is the Palestinian 
President's office describing this. We now see Fatah Islam 
announce their operations in Gaza inside the UNRA camps.
    So we have 154 million bucks that our committee approved 
for UNRA. Do you think we ought to begin to condition our 
funding on at least running a refugee camp without an al Qaeda 
cell that has directly been stated to us by the elected 
government of the Palestinians and the elected government of 
Lebanon as a direct threat to their survival, that they maybe 
shouldn't be there?
    Ms. Silverberg. I think I would want to ask the lawyers, 
but I think I would read existing legislative restrictions to 
prohibit--you know, our existing requirement that UNRWA report 
on its ability to prevent misdirection of funds to radical 
groups including those involved in terrorism I think would----
    Mr. Kirk. So the question is with the Nahr al-Bared camp up 
in northern Lebanon, clearly a heavily armed fortress was 
built, and all of the UNRA staff knew it. So shouldn't we might 
restrict the funding to that camp?
    Ms. Silverberg. I guess I wouldn't want to get into the 
details of what we think is happening in the camps in this 
setting, although I would be happy to do it in any other 
setting. But there is no question that the camps in Lebanon 
have posed a grave risk, and we saw the Lebanese Armed Forces 
taking some really courageous and actually hopeful response to 
them----
    Mr. Kirk. Your counterpart Secretary Welch has been 
vociferous in giving a blank check to UNRA. And I would say the 
record is fairly clear that because of the incompetent, 
ignorant or completely absent administration of UNRA, we are 
funding both sides of this conflict. We are funding the 
Lebanese Government, and we are funding the terrorists. We are 
funding the Palestinian Authority, and we are funding not just 
Hamas--these guys are to the right of Hamas.
    Ms. Silverberg. I think what David may be dealing with is 
on the one hand, especially within Lebanon, the strong view of 
the Lebanese authorities that these camps need to stay camps, 
that they don't want to see assimilation of these groups; and, 
two, the fact that we think humanitarian--a humanitarian 
response to both----
    Mr. Kirk. I would bet you that if you asked Prime Minister 
Siniora should we provide UNRA funding to the Nahr al-Bared 
camp, he probably would have said no, because it was a direct 
threat to his own government. And if you had said to President 
Abbas, do we interrupt funding to certain places that seem to 
be--he would probably, based on his own security chief, give a 
different answer than Assistant Secretary Welch.
    Mrs. Lowey. Thank you.
    And, Assistant Secretary Silverberg, I thank you again for 
your time.
    This concludes today's hearing on the administration's 
fiscal year 2009 budget request for international organizations 
and peacekeeping activities. And the Subcommittee on State, 
Foreign Operations, and Related Programs stands adjourned. I 
thank you.

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                                          Thursday, April 10, 2008.

                    U.S. POLICY AND PROGRAMS IN IRAQ

                                WITNESS

AMBASSADOR RYAN C. CROCKER, U.S. AMBASSADOR TO IRAQ
    Ms. Lowey. Good morning. The Subcommittee on State, Foreign 
Operations, and Related Programs will come to order.
    I want to welcome Ambassador Crocker. I appreciate your 
making time for the Appropriations Committee during your very 
busy week in Washington. Before we begin today's hearing to 
review U.S. policies and programs in Iraq, let me commend you 
once again for your service to our nation.
    Your retirement at the end of the year will cap an 
extraordinarily impressive career. In addition to serving as 
Ambassador to Iraq and Pakistan, you have held other especially 
difficult assignments in places such as Syria and Afghanistan. 
Your service and sacrifice are deeply appreciated and embody 
the best qualities of our Foreign Service, just as General 
Petraeus represents the courage, commitment and can-do attitude 
of our military.
    However, even the most capable of our diplomats and the 
most skilled of our generals cannot put Iraq back together if 
the Iraqis do not help themselves. Since 2003, Congress has 
appropriated over $45 billion for relief and reconstruction in 
Iraq. In the coming weeks, this Committee and the Congress will 
consider the Administration's request for an additional $3.4 
billion for the Department of State and USAID's efforts in 
Iraq.
    The war has already cost the American taxpayer $500 
billion, nearly 10 times more than the Administration initially 
estimated, and some distinguished economists have made the case 
that the true cost impact of the war is $3 trillion.
    However, we cannot even begin to quantify the cost in 
American and Iraqi lives and the damage to America's reputation 
globally. Indeed, I fear that our national security, the 
stability of the region and the security of the world are more 
at risk now than before the Iraq War began.
    Ambassador Crocker, you and General Petraeus have made the 
case to various committees this week that the surge has 
succeeded. With all due respect, Mr. Ambassador, the surge in 
my judgment has not delivered what was promised.
    We must look beyond any short-term security gains to assess 
whether Iraqis are making sustainable progress on the broader 
political, economic and security reconciliation objectives. 
After all, with the best military in the world one would expect 
that more U.S. troops would yield an immediate improvement on 
the security side.
    What happens when U.S. troops are reduced? Can the Iraqi 
forces sustain these gains? If so, why are we not transferring 
responsibility to the Iraqis more expeditiously?
    It is also important to ask how much of the success of the 
surge is due to factors outside of our control, including the 
cease fire of Muqtada al-Sadr, which was largely negotiated in 
Iran, and the reduction in violence due to the sad fact that 
ethnic cleansing and segregation have removed minority 
populations from most of the mixed ethnic neighborhoods around 
Baghdad.
    With a military that is stretched to the breaking point, 
more and more soldiers and their families suffering from PTSD 
and a domestic economy heading into recession, we have to 
consider tough questions. Are Iraqi leaders showing sufficient 
political will and commitment to political reconciliation?
    Ambassador Crocker, I hope that you will talk with us about 
what is happening on the political scene in Iraq. Do the 
positive steps in recent months represent sufficient progress 
in the areas that really matter? Are we making sufficient 
progress to warrant continued commitment of U.S. blood and 
treasure? And, Mr. Ambassador, is there an exit strategy?
    While we have seen some legislative successes on some of 
the benchmarks such as De-Baathification and oil revenue 
sharing, questions remain about how and if these new laws will 
be enforced and implemented. Other benchmarks, such as 
disarming and disbanding militias, remain unmet.
    The larger question that remains unanswered for many of us, 
for many Americans, is whether the conditions and the political 
will exist among Iraq's leaders and its neighbors for a 
unified, stable, democratic Iraq that provides a fair and 
equitable stake for all Iraqis in the political, economic and 
social framework of the country. If not, after five years why 
are we still risking Americans' lives and treasure?
    Should we not instead focus on a more realistic strategy 
for long-term regional security? To that end, I would like you 
to address two transitions that I hope are already underway. 
First, a transition from a military-led reconstruction and 
stabilization effort to a civilian-led effort.
    I understand that in the initial post-combat operation 
days, it may have been necessary for DOD to play a larger role 
in reconstruction. But I do not think it is appropriate, cost-
effective, sustainable or in our best interest for U.S. 
soldiers still to be collecting trash or for that matter 
providing small business micro grants or even changing 
lightbulbs.
    It is the role of USAID to train and help Iraqis assume 
responsibility for rebuilding and maintaining the political, 
economic and social infrastructure and institutions of the 
country. Have these activities been fully transitioned or even 
partly transitioned over to USAID?
    In that light, why is there an increased funding request in 
the supplemental for the Commander's Emergency Response 
Program? After five years in Iraq, the agency with the 
appropriate knowledge and authority should be managing these 
programs.
    Now, when I asked Deputy Secretary Negroponte if there were 
such transition plans to transfer this responsibility to the 
State Department and USAID he suggested that I ask you. So I 
hope you will be able to elaborate on these plans, particularly 
the staff and resource implications for State and USAID if 
there is a drawdown on troop levels.
    Second, a transition from a U.S.-led to an Iraqi led and 
Iraqi-financed reconstruction and stabilization effort. With 
oil at $105 a barrel, I do not understand why we are still 
spending so much money to maintain and secure Iraqi 
infrastructure. Why are more of these oil resources not going 
to benefit the Iraqi population? Can you speak to reports that 
significant amounts of Iraqi oil are being diverted to the 
black market, some fueling the insurgency?
    Ambassador Crocker, we have much more to discuss, including 
many questions from my colleagues. So let me conclude again by 
commending the courage and commitment of you, your staff, your 
family and all our brave young men and women, those who wear 
the uniform as well as those civilians who put themselves in 
harm's way--to pursue diplomacy, development and humanitarian 
assistance on behalf of the American people. We may not always 
agree on U.S. policy, but I can assure you we are united in our 
gratitude for the service and sacrifice of our fellow citizens.
    I now would be delighted to turn to my Ranking Member for 
any comments he may wish to make.
    Mr. Wolf. Thank you, Madam Chair.
    Mr. Ambassador, welcome and thank you for your service and 
all the people who serve with you and also if you would pass it 
on to General Petraeus and all the people who serve with him. 
We appreciate it very, very much.
    I watched most of the hearings, and I did not hear this one 
issue come up. I would like you to think about it as we take 
leave for a break. The Christians in Iraq are going through a 
very difficult time. Forty Assyrian churches have been bombed 
in Iraq since 2004. In January alone we were told that six 
churches and two nunneries and one orphanage run by a nunnery 
were attacked, and you know the Catholic bishop was killed 
about six weeks ago, and there was a Catholic priest killed 
last week.
    There are a large number of Iraqi refugees living in both 
Jordan and in Syria. The Iraqi Government has only pledged $17 
million of $25 million and given $17 million. What I would like 
to ask is if we could get a decision by the end of next week 
that there would be someone perhaps from our government based 
in Amman to deal with the refugees.
    Many of them are Christians. As you know, the Christians do 
not have a militia. They are a very peaceful people. They have 
made a tremendous contribution to Iraq. In the Biblical history 
of Iraq, Abraham was from Iraq. If we could have somebody in 
our government to be responsible for dealing with the 
refugees--both Christian and non-Christian, but the Christians 
are having a particularly difficult time in both Jordan and 
also in Syria--I would appreciate it.
    Secondly, if you could on an urgent basis urge or demand 
the Iraqi Government to take some of their revenue. We saw 
refigures from the creation of the fund to date. They have 
$98.8 billion in resources for their oil, and as the price of 
oil has gone up they could take some of that money to help 
their own people.
    Now, I understand the committee, we have done that and I 
think we will continue to do so, but I saw a figure that the 
need for this coming year is about $1 billion. I believe it is 
$893 million with the opportunity to continue to grow. If we 
could have the Iraqis put up a large portion of that money 
because it is their people. We want these people to have 
education. We want them to have food and housing.
    Lastly, if the Administration could have someone in Amman, 
or if you think appropriate in Damascus--I think Amman may be a 
better place--to coordinate the efforts, bring in perhaps World 
Vision and other NGOs to help the refugees that are both in 
Syria and in Jordan I would appreciate it.
    I think the Iraqi Government has a moral, and I think a 
legal obligation to also help fund that, so if you can be 
thinking about that as we go to vote I would appreciate it.
    Again, please thank your people for their service to the 
country. I appreciate it.
    Ms. Lowey. Thank you.
    Mr. Obey.
    Mr. Obey. Mr. Ambassador, you know the old French saying. 
The more things change, the more they remain the same. I have 
been here 39 years, and it is deja vu all over again, as Yogi 
Berra would say.
    I remember when another distinguished diplomat used to come 
up to the Hill to try to sell us that there was light at the 
end of the tunnel in Vietnam, Phil Habib, a terrific Foreign 
Service Officer. I had great respect for him, but virtually 
everything he told us was wrong. I think, frankly, that most of 
what we are getting from the Administration is wrong.
    We have been mired in this war now for five years. The so-
called surge has been touted as a success because the number of 
violent actions in Iraq has dropped, but in fact I have three 
very large problems with that interpretation.
    First, it ignores the fact that a good deal of the decline 
in violence is simply because many regions have been 
effectively ethnically cleansed. The groups have already been 
separated. Example: Baghdad once had a 65 percent Sunni 
majority population around the start of the war. It is now a 75 
to 80 percent Shi'a majority city. No need to keep killing 
people if your enemies are already gone. That is the problem.
    Second, you have the implied argument that violence will 
start up again when the surge dissipates and when we begin to 
leave. That to me is a confession that the basic realities have 
not changed. What it really is saying is that violence will go 
down only so long as we have a huge presence there or else the 
parties will be at each other's throats. That means we are 
caught in a Groundhog Day loop, and the logic of that would 
have us stay there forever because the surge apparently only 
works so long as we are surging.
    Third, the Administration cannot tell us when a withdrawal 
is feasible. They cannot tell us how many troops they expect to 
be there in Iraq at the end of the year. That means in my view 
there is no real plan for getting out. It means the 
Administration really does not have an exit strategy except a 
wing and a prayer.
    It reminds me of a poker player who compulsively always 
stays in the game no matter how bad his cards are in the faint 
hope that something will turn up. In my view, we need to set a 
goal--if not a deadline, at least a goal--for ending our 
participation in combat in order to shake up the place.
    It seems to me that such a goal would send a message to our 
friends that they have to shape up and compromise, and it would 
send a message to our enemies that they no longer have the 
argument that they can persuade people to continue to attack us 
because we are an empire that plans to stay there forever.
    We can speculate about what will happen in Iraq, but there 
is no need to speculate about what these actions mean on the 
homefront because we already know what the continued presence 
in Iraq is costing us in terms of lost opportunities at home.
    I am sad to say, but this war has already ruined one 
Administration, and I think the Administration policies have 
already guaranteed that it will ruin the next one. This war has 
drifted along for so long that there is no real possibility 
that our participation in that civil war will be ended while 
George Bush is in the White House.
    The hard reality is, therefore, that any incoming 
Administration will probably need at least six months and 
probably more to begin to arrange a responsible and orderly 
withdrawal from combat activities, and it will then probably 
take a year or more from the date of decision to actually 
accomplish a prudent withdrawal. That means that at least the 
first two years of the next Administration will be consumed by 
cleaning up this God awful mess.
    That will cost at least $200 billion, and it will mean for 
more than two years there will be no money for health care, 
there will be no money to make major repairs on our own 
economy, our own national infrastructure.
    Elections are supposed to bring to a country a fresh start 
and a new beginning, and in my view Administration policy in 
Iraq has effectively denied that new beginning to the 
President's successor. It is tragic, it is infuriating, and it 
is why so many of us have fought to try to get the 
Administration to face the reality.
    As I have said many times, it reminds me of the old story 
about Eddie Stanky who used to play second base for the old New 
York Giants. Leo Durocher was the manager, and in spring 
training Durocher was hitting ground balls to the infield.
    Stanky dropped two in a row and so Durocher said here, kid, 
I will show you how it is done. He grabbed the glove. He went 
out to second base. The very first ball hit to Durocher, 
Durocher dropped. Durocher turned to Stanky and said blast it, 
kid, you got second base so screwed up nobody can play it.
    Now, that is a funny story, but it is not funny when 
applied to Iraq because the sad problem is if you substitute 
Iraq for second base and George Bush for Eddie Stanky, you got 
the picture.
    It is a picture that I think is ruining the ability of 
whoever becomes President to put this country on a fresh course 
on anything, and that is why while we may debate about what 
will happen in Iraq, we have to face the fact, in my judgment, 
that if we do not have a significant commitment early on to 
withdraw our forces from combat we are going to be ruining the 
possibility for the future President to have any significant 
effect, at least for the first three years of his 
Administration. I hate to say that, but it is the sad reality 
and it is why there needs to be a sense of urgency about this 
policy.
    I want to echo the Chair's comments in praising you for 
your service. You are a first rate public servant. I just think 
you have a bad case to sell, but thank you.
    Ms. Lowey. Mr. Lewis, do you want to try and get your 
remarks in before we vote?
    Mr. Lewis. Madam Chairman, I very much appreciate your 
recognizing me, but I had hoped to hear the Ambassador's 
opening statement. I am not sure any of us will have time to 
get back.
    In the meantime, the dialogue I have just heard reminds me 
that I am not Yogi Berra, but deja vu all over again. I have 
been here only 30 years, not 39, but my first term on this 
subcommittee I remember discussions about the Middle East, 
about Central America, that were very similar to the 
discussions that I heard this morning.
    Madam Chairman, I appreciate it very much and probably 
ought to go vote.
    Ambassador Crocker, I am sorry.
    Ms. Lowey. Ambassador Crocker, your comments are too 
important to do them in any quick way. I think what we will do 
is recess, take our votes and then come back.
    Thank you.
    [Recess.]
    Ms. Lowey. Please proceed.
    Ambassador Crocker. Thank you, Madam Chairwoman, Mr. 
Chairman. If it is agreeable to you, ma'am, in the interest of 
time I would be happy to waive the reading of my statement and 
ask instead that it be entered into the record perhaps with 
questions. Yes, ma'am.
    [The information follows:]

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    Ms. Lowey. Thank you very much.
    I think I will begin with a question responding to a 
statement that I understand was in the President's 11:30 
speech. He said that in Iraq the U.S. commitments to 
infrastructure in Iraq will move towards zero.
    Now, Mr. Ambassador, the Administration has asked for 
nearly $3.5 billion in operations and assistance funding for 
Iraq, including $174 million for infrastructure sustainment, 
$70 million for infrastructure security and $80 million to 
build prisons, as well as $273 million for Iraqi ministerial 
capacity development.
    Are these not things the Iraqis should now be paying for 
themselves? On ministerial capacity building, is that not an 
astounding sum for technical assistance programs that generally 
run in the tens of millions, not hundreds of millions?
    For example, we are spending $5 million in Nigeria for 
these purposes, and $10 million in southern Sudan to help them 
build government capacity. So I would like to frame it in this 
way. How much, first of all, have we spent to date on 
ministerial capacity development? How much time has been put 
into these types of programs? With so much time and money, why 
did these ministries lack capacity? In a five-year timeframe, 
the military has trained and equipped over 140,000 Iraqi 
security forces during this same period. I would be interested 
in knowing how many professional government employees you have 
trained and equipped.
    What is your estimate of the total number of civil servants 
needed to provide a professional workforce for the Government 
of Iraq? How many does Iraq have now?
    If you have an assessment of what government capacity 
exists right now, we would appreciate it. If you do not have 
such an assessment, why should we give you any money to 
implement a capacity development program? And then if you can 
tell us how these funds are being spent.
    If you need me to repeat any of the parts, I would be 
delighted to.
    Ambassador Crocker. Thank you, Madam Chairwoman. In terms 
of ministerial capacity, we do consider that an extremely high 
priority.
    An Iraqi Government has to be able to function. It has to 
be able to design and execute budgets, deliver services to the 
people, act as a government, and we have seen that they face 
significant challenges in that regard. That is why General 
Petraeus and I last year sat down and reviewed what we were 
doing and what we thought we should be doing to help the 
ministries in particular do more.
    That led to a decision on our part to increase the number 
of advisors by a total of 75, and those 75 are now all in 
place. The Iraqis have----
    Ms. Lowey. Just to clarify that, there is no question, you 
will agree, that this is a priority. But we have been there for 
five years, and transitioning from military to civilian 
capacity has been a priority, reconciliation, et cetera.
    So I guess what I wonder is with so much time and money 
spent, why do they lack the capacity?
    Ambassador Crocker. There are several reasons for that, 
Madam Chairwoman. Chronologically, the first is the capacity 
was quite limited at the time that Saddam was toppled.
    A number of Iraqis had fled already. Many were not up to 
their jobs in any kind of modern context, and the violence 
subsequently, particularly in the very bad year of early 2006 
to early 2007, took a heavy toll on the ministries, both their 
personnel, some who left the country or were displaced 
elsewhere in it, or simply not able to function. It really has 
been since the summer in many cases where ministry employees, 
with us in support, were actually able to seriously get back to 
work.
    We have seen results, but this is the period, as security 
has improved, where we think we can make a difference or, more 
importantly, help the Iraqis make a difference, so I think 
during this period we are now in we are going to see a much 
richer payoff and the ability of the Iraqis to themselves 
deliver services with us in support.
    Ms. Lowey. If you can share with us or get back to me? How 
many professional government employees have been trained and 
equipped, and what do you estimate as the total number of civil 
servants needed to provide a professional workforce?
    My concern is and I know the concern of many of my 
colleagues is we have been talking about political 
reconciliation, and the President certainly talks about 
security and sustainability, and without a professional 
workforce you certainly cannot have that kind of leadership.
    So if you can be more explicit if you have it? How many 
have you trained, and how many do you need to train?
    Ambassador Crocker. I do not have the detailed figures 
right in front of me, Madam Chairwoman. I do know that the 
number is in the thousands primarily through USAID's 
development program. We can certainly get those for you, as 
well as in our other civilian development programs.
    I will see what we can do in also answering your second 
question, what we think a country-wide professional civil 
service would need to look like to adequately deliver the 
services to the people.
    Ms. Lowey. I thank you very much.
    Because of my great respect for you I am not going to 
pursue it, but it would seem to me if we are talking about 
transitioning and we know that Iraq had one of the most 
educated populations certainly, and maybe it was the de-
Baathification process that kind of sent all the educated 
people off into the wilderness or someplace else, but it would 
seem to me if this is a key priority that the President is 
talking about, we have to know those numbers before we can 
appropriate and respond to the kind of request that you have 
given us. It just does not make any sense. I would be most 
appreciative for that.
    Mr. Wolf.
    Mr. Wolf. Thank you, Madam Chair.
    The first question I raised in the opening statement. Can 
you get us a commitment by the end of next week? One, we will 
insist to the Iraqis that they must fund the refugee problem. 
It is a moral issue. They must fund it.
    Secondly, that we can get some person in the region not in 
Baghdad, but probably in Amman or in Syria, to work on this 
issue, particularly of the Christians, but also of the non-
Christians who are living a very difficult life.
    Ambassador Crocker. Thank you.
    Mr. Wolf. I have one other question, so I want to----
    Ambassador Crocker. Right. Just very quickly then, sir, on 
the first, yes, I can commit to you that upon my return I will 
personally press this issue of the need for increased funding 
in supporting of refugees by the Iraqi Government.
    I have had that conversation before, and, frankly, your 
intervention on this is helpful to me as I carry that effort 
forward with the Iraqi leadership. They do need to do more.
    Mr. Wolf. And also in the protection of the Chaldean and 
Assyrian Christians in country.
    The second issue is, Congressman Shays and I offered an 
amendment that passed 355 to 69 to reconstitute the Iraq Study 
Group, the Iraq Study Group II. Lee Hamilton has expressed 
interest that he would do it. I think Jim Baker has now said 
so.
    Did you find the Iraq Study Group to be helpful, and what 
are your thoughts about us bringing this together? They would 
report probably after the Presidential election certainly so 
there would be no one saying that there was any political 
involvement. Also, it would provide a baseline, an honest, 
objective bipartisan, if you will.
    One, did you find the Iraq Study Group helpful, and what 
are your thoughts? It has passed the Congress. It has been 
signed by the President, and the U.S. Institute for Peace said 
they are ready to move, but can you give us your thoughts about 
doing that?
    Ambassador Crocker. Yes, sir. These would be my personal 
thoughts, my own thoughts.
    Mr. Wolf. Yes, please.
    Ambassador Crocker. I did find the Iraq Study Group initial 
report to be helpful. It came out a month or so before I 
arrived in Iraq, and I found it extremely useful just in 
shaping my understanding of the key issues out there.
    I would welcome a return to Iraq by members of the group, 
and I would agree with you that I think the timing of the 
report would be important, to follow and not necessarily 
precede the election in November.
    Mr. Wolf. Would you express that heartily at the White 
House and also let the Secretary know of your opinions, that 
the question was asked and your answer? I know you are not 
speaking for the Administration, but I think your position 
carries a lot more credibility than many others.
    In the interest of time, I will have some other questions 
for the record, but I yield back the balance of my time. Again, 
thank you and thank all the people who serve with you.
    Ms. Lowey. Mr. Obey.
    Mr. Obey. Mr. Secretary, first let me get to the question 
of the surge.
    As I understand the surge, what we really have had is an up 
again/down again operation, which leaves us today approximately 
where we were eight months ago in terms of the number of 
troops. That fact has been used to soothe the American people 
by conveying the impression that things are on a downward slide 
in terms of troop involvement in Iraq.
    We also then have the President's news that he is shrinking 
troop commitments from 15 months to 12 months, but as I 
understand the practical effect of that, it does not apply to 
anyone serving in Iraq until after August. As I understand it, 
people who are in Iraq right now are not going to be 
experiencing the pleasure of a shorter stay.
    If that is the case, then it seems to me that all that that 
announcement does is to make things even more difficult for the 
next President because we already know that this President has 
said we are going to have an increase in the number of troops 
in Afghanistan. That is what he said in Europe, so that puts 
added strain on the military leadership to find the troops that 
they need to fulfill the missions that they are assigned.
    And then, secondly, we discovered that that problem is 
going to get even tighter because the 15 month commitment is 
now reduced to 12, but it only applies to the next President. 
It has no impact whatsoever on this President, so I think the 
only practical effect is to complicate the next President's 
decision making process and in fact creates a bigger squeeze on 
the Army in the process.
    So that is not a question. That is just a comment, but let 
me ask a couple questions. In 2003, I offered an amendment in 
committee which would have required roughly half of our 
reconstruction aid to Iraq to be in the form of loans rather 
than grants, and that was done because of our understanding 
that Iraq had immense oil reserves and would sooner or later 
down the line be making a lot of money and could well afford to 
pay for that reconstruction.
    We now see that Iraq, contrary to this country where we 
have large deficits, we now see that Iraq is expected to have 
another surplus. That being the case, why should we not require 
that at least half of the funds that we have expended in Iraq 
be in the form of loans?
    Ambassador Crocker. Mr. Chairman, you are referring to the 
funds already expended?
    Mr. Obey. No. No, no, no. I am saying with respect to new 
funds, why should we not stipulate that at least half of those 
funds be in the form of loans since Iraq has a surplus and we 
do not?
    Ambassador Crocker. What we are attempting to do is again 
transition from our spending to their spending. We described a 
bit of that, General Petraeus and I, in our respective 
statements where the Iraqis pick up themselves the things that 
we have been doing.
    One example is in the Community Stabilization Program, 
USAID's program, where we have transitioned employment for 
trash collection from us to the Baghdad municipality. I think 
that is certainly the thrust I will be continuing on. I already 
had discussions with the Iraqi leadership.
    Since we are already transitioned away from building 
things, bricks and mortar, I am not sure whether loans would be 
effective devices for the programs we are continuing, for 
example, like ministerial capacity.
    Mr. Obey. Well, I would like frankly to hear an argument 
that is more persuasive than that because it seems to me if we 
are in fact looking to transition responsibility, then we ought 
to be looking for opportunities to transition responsibility, 
and one of the ways you can do that is by providing that at 
least half of whatever we do there in the coming years in this 
area is going to be repaid eventually.
    One other question. An article that appeared in Foreign 
Affairs in May/June said the following: ``Sunni sheiks 
meanwhile are getting rich from the surge. The United States 
has budgeted $150 million to pay Sunni tribal groups this year, 
and the sheiks take as much as 20 percent of every payment to a 
former insurgent, which means that commanding 200 fighters can 
be worth well over $100,000 a year for a tribal chief.''
    Then it goes on to say, ``The surge may have brought 
transitory successes, although if the state of attacks in 
February is any indication, the decrease in violence may 
already be over, but it has done so by stoking the three forces 
that have traditionally threatened the stability of Middle 
Eastern states: Tribalism, warlordism and sectarianism.''
    What would your response be to that?
    Ambassador Crocker. Mr. Chairman, I think this program has 
helped security and stability in Iraq certainly short term.
    Mr. Obey. Well, if I can interject, it appears to certainly 
have helped in the short term, but if there are some 90,000 
people who are being paid $300 per person per month and armed 
by the U.S. Government what happens when that shuts off? Are 
you not buying off a problem today and creating a bigger one 
tomorrow?
    Ambassador Crocker. Sir, that is exactly what we and the 
Iraqi Government want to ensure does not happen. First, we do 
not arm anybody. There are plenty of arms out there. They show 
up----
    Mr. Obey. What happens when we stop paying them?
    Ambassador Crocker. The intention as agreed with the Iraqi 
Government is to transition them from our support over to the 
Iraqis, and some over 20,000 have already gone through that 
transition where they are still being paid, but they are now 
being paid by the Iraqi Government primarily in Iraqi security 
forces, but also in civilian employment.
    The Prime Minister of Iraq has assured me that it is his 
intention to transition all of these people into some form of 
employment. The majority will be into civilian employment, 
civilian jobs, perhaps 20 to 30 percent of the total into the 
security forces but then the rest through vocational education, 
technical training or directly into civilian employment. He has 
made that commitment and said of course----
    Mr. Obey. Well, my time has expired. Let me simply observe 
that it seems to me that we are trying to promote independence 
by in fact indulging in dependency. I would like to be 
persuaded that that is going to have a long-term payoff, but I 
remain unpersuaded.
    Madam Chair, thank you much for the time.
    Ms. Lowey. Thank you.
    Mr. Kirk.
    Mr. Kirk. Thank you. Mr. Ambassador, I am just wondering if 
early in your A-100 class, when you became part of the Foreign 
Service, did you offend the Secretary of State in any way? 
Because I look at your career, you have served in Iraq, Qatar, 
Tunisia, Iraq, Lebanon, Afghanistan, Pakistan, and Iraq again. 
And I am just wondering, do we not owe you a posting in 
Belgium?
    Ambassador Crocker. I would not know how to behave in 
polite society.
    Mr. Kirk. I do not think we have a more able diplomat here 
and if your career is a dance card, this is probably the 
roughest dance card that I have seen in a Foreign Service 
career. And I just, on behalf of the people of my district, 
want to thank you for your service in the roughest 
jurisdictions of the United States.
    With that kind of background, especially two postings in 
Iraq and Iran, you are probably uniquely capable as a career 
Foreign Service Officer to answer this question, which is a 
number of people are talking about opening a dialogue with 
Iran. My understanding is you actually have been in charge of 
running the U.S.-Iran dialogue in large part. So, can you 
describe this dialogue and who you are talking to? In general, 
what are the results of the dialogue that you have had with the 
government of Iran so far?
    Ambassador Crocker. Thank you, sir. Last spring, the 
administration authorized a direct dialogue with Iran on issues 
relating to security in Iraq and it was further agreed that 
these would be trilateral talks. Since they would take place in 
Iraq, they would be about Iraqi security, the Iraqis should be 
in the room. We held several rounds at my level with my Iranian 
counterpart and also at a sort of an expert's level below that 
with representatives from our two governments. I wish I could 
tell you that these talks had brought some measurable 
improvements, in terms of security in Iraq. Unfortunately, they 
have not thus far.
    We are prepared to stay engaged. We think it is important 
to keep trying and we have been saying for some months, in 
response to Iraqi request, that we are ready to return to the 
table. The Iranians have agreed and changed their mind and 
shift the dates and so forth. Last week, the Iraqi government 
said publicly that they would like to convene another round. We 
have told them that we are prepared to do so. We are awaiting 
an Iranian response. But, I believe it is important to continue 
the effort even though there have not been results. Iran 
clearly plays a major role, a major negative role and if this 
can bring security in Iraq to a better place, it is worth the 
effort.
    I would just add, sir, that we did have an earlier dialogue 
with Iran on Afghanistan that I was part of. This was under the 
United Nation's auspices. So, again, we were not in the room 
alone. But, we actually made some progress in the 2001-2002 
period. So, I would like very much to see if that perhaps could 
be done again.
    Mr. Kirk. Made progress under the previous president of 
Iran, President Khomeini.
    Ambassador Crocker. Yes, sir.
    Mr. Kirk. This was before the election of President 
Ahmadinejad. On June 14th, the Iraqi Ministry of Interior 
ordered the creation of a local police force for the Assyrians 
in Nineveh Plain. They issued order 1793 authorizing a force of 
about 700 policemen to patrol the nine Christian villages there 
in the Nineveh Province. Two years after the order, the police 
force does not exist. Last month, we were given a strong 
reminder, obviously, of the danger there with the murder of the 
Catholic Archbishop of Mosul. Central Command tells my office 
that they support the standing orders of the Iraqi government 
and the Kurdish regional representative here, Mr. Barzani, told 
me that the KRG supports the creation of this police force. The 
community has issued detailed planning of the police force to 
protect them. I do not think we have had detailed planning on 
this for any other set of villages in Iraq, but we certainly 
have it for these villages. So, what is the holdup here? It is 
something that I would hope we could get authorized and funded 
pretty quickly, 700 police officers to protect these 
communities.
    Ambassador Crocker. Sir, I checked with our PRT in Nineveh 
on this and was informed overnight that the 700 positions have 
been established and that the police are in the process of 
filling them from Christians in the area and they will serve in 
the area. So, this seems to now be in motion.
    Mr. Kirk. Thank you. We will follow up. I will just give 
you a copy of this, so you see the detailed work and very much 
appreciate the follow through.
    Ms. Lowey. I just, at this point, would like to, before I 
turn to Mr. Jackson, I apologize for having a recess and I know 
you have a limited amount of time. So, could we keep everyone 
to five minutes, that would be helpful. Mr. Jackson.
    Mr. Jackson. Thank you, Madam Chair. And in light of the 
time and out of deference to my colleagues, I will, if you do 
not mind, Ambassador, bid you both of my questions and you can 
summarize the answers in the interest of time. Thank you, 
Chairwoman Lowey, Ambassador Crocker, welcome back to our 
subcommittee and thank you for your testimony and for your 
service to the country. The problem with being the fifth 
committee in three days is you have probably been asked every 
question and answered them many times. But, here it goes 
anyway.
    Ambassador Crocker, the President, you, and General 
Petraeus seem to be saying that the surge is working and 
generally going in the right direction. But both you and the 
General say that despite this, we will be drawing down our 
troops from 156,000 to 140,000 by the end of July, followed by 
a period of ``evaluation and consolidation,'' followed by an 
indefinite ``assessment period.'' What I am trying to figure 
out, Ambassador, is if you cannot draw down our forces if we 
are showing progress and if you cannot draw down our forces if 
we are not showing progress, then could you share with our 
committee under what conditions would we be able to draw down 
our forces, in your mind?
    Ambassador Crocker. Sir, we are, of course, drawing down 
our forces and by July, our combat power will be reduced by 25 
percent from what it was at the peak of the surge, basically 
down to pre-surge levels. It certainly is the view of General 
Petraeus and I hold that we then need to--we need to look at 
what the situation is. And we have gone through, in our 
previous testimony, some of the factors we look at, the quality 
of Iraqi security forces, their numbers, political conditions, 
sectarian and/or ethnic friction, and so forth. So, that will 
be the process of assessment. And in many respects, it is more 
art than science. It is how it feels.
    It is certainly our intention, and I do not mean to speak 
for General Petraeus, obviously, but we know each other pretty 
well, that we want to get our forces home. We want to be sure 
that we do so in a way that does not unnecessarily risk the 
gains that they fought so hard to achieve. So, we have got to 
have this evaluation. There are some areas that we already 
think we will be looking at. But, this, in our view, is the 
prudent way to proceed. It does not mean that we just plateau 
at the pre-surge level and that it is for ever. Not at all. 
But, it does mean that we have to take a very careful look at 
what happens next.
    Mr. Jackson. Madam Chair, out of deference to my colleagues 
and given the time constraints of the Ambassador, I will submit 
the rest of my questions for the record. Ambassador, I would 
appreciate a response. Madam Chair, thank you.
    Ms. Lowey. Mr. Chandler.
    Mr. Chandler. Thank you, Madam Chairwoman. Mr. Ambassador, 
I am confident that you are a tremendous public servant. I am 
confident that you are doing the very best that you can do 
under these circumstances. I am also confident that taking on a 
country like Iraq to raise is one of the worst foreign policy 
mistakes that our country has ever made and I think you are in 
an intractable situation, very, very difficult situation.
    We have spent--it is hard to understand what all the 
figures are, get to accurate figures. But, if we spent five 
hundred billion dollars, which is, of course, a huge amount of 
money so far--the OIG came in and testified to this committee 
that we wasted between 15 and 20 percent of the money that we 
spent in Iraq. So, that puts us up to wasting about 100 billion 
dollars on this effort so far. The latest figures that I have 
seen is that we are spending in the neighborhood of 340 million 
a day. I do not know if that is absolutely accurate or not. 
But, suffice it to say, we are spending an enormous amount of 
money every day in the country. And what I would like for you 
to tell me is what incentive does the al-Maliki government 
actually have to reform? Is it not to some extent the case that 
the quicker they are effective in their reforms, the quicker 
the spigot gets turned off. We are sending all of this money 
over there and do we not have a little bit of an incentive 
problem in this situation?
    Now, another question I would like to ask follows up on 
what Mr. Obey said a little while ago, one of his baseball 
analogies. I had a little bit of difficulty, in fact, I have a 
great deal of difficulty who is on whose team, whose wearing 
which jersey. You have Sunnis, the Sunnis were fighting Shi'a. 
They were all mixed up and fighting each other. Then, you find 
out that the Shi'as are fighting the Shi'as. You have got the 
Kurds, you have got the PKK, you have got Iranians, you have 
got Syrians--it is all mixed up together. You have got al-Qaeda 
in the mix somewhere. What do we have here? Do we really even 
know what is going on in Iraq? How many competing militias are 
there out there? Do you have a handle on what all the competing 
militias are? Is the Iraqi army or the government aligned with 
any particular militias? Does that change? And to Mr. Obey's 
point about warlordism, when we are empowering--for instance, 
in Anbar Province, when we are empowering all of these tribal 
elements and we are paying them huge amounts of money, we may 
not be directly giving them armaments, but we are certainly 
empowering them to get whatever resources they need to do what 
they want to do, we have seen this happen in other countries. 
We saw it happen in Afghanistan in the 1980s. What would keep 
us from keeping or causing a situation of warlordism to be the 
norm in the region going forward? Thank you.
    Ambassador Crocker. Thank you, sir. With respect to 
assistance and incentives, again, the Iraqi government, with 
its substantial additional resources, is setting out its plans 
to spend those resources and they are showing an increasing 
ability to do so. As they develop that capacity, that enables 
us to spend less. That was the point I was making about--you 
know, it is just a relatively small example, but it is 
significant to transfer an employment program for trash 
collection, 100 million dollars from us to the Baghdad 
municipality when the municipality had developed the capacity 
to actually implement this themselves.
    Mr. Chandler. But why would they want us to spend less?
    Ambassador Crocker. Sir, the Iraqis are like people 
everywhere. They are proud of their country and their identity. 
They want to be running their own affairs, by and large. It was 
a question of could they do it. Well, in this case, yes, now 
they can. It did not take a major negotiation to get them to do 
it. So, we will transition these things as quickly as we can in 
an atmosphere where the Iraqis want to be responsible.
    And that would be also a theme in my response to your 
second set of issues, sir. Iraq is complicated, there is no 
question, at every level, including the one you cite. But, when 
one looks at the events recently in Basra, for example, broadly 
speaking, it was the case of the Prime Minister of Iraq, as the 
constitutional commander in chief of Iraqi security forces, 
sending those forces down to Basra to deal with extra legal or 
illegal militia elements. And there is a fair collection down 
there. The so-called J-Shalmati special groups, which are the 
most lethal, but also several other militias that have formed. 
And that is exactly how it was perceived by the broad range of 
Iraqi political opinion.
    The Prime Minister received extensive support for this 
action from Shi'a, Sunni, and Kurdish leaders, because the 
perception was that he was using the instruments of the state 
against those, who were outside the framework of law, without 
respect to their sectarian identity, that he would use--as 
Shi'a Prime Minister, he would use Iraqi security forces 
against Shi'a militias, just as he has used those forces, and 
it is ongoing, in both cases, simultaneously, against Sunni 
extremists, al-Qaeda, and their supporters in the northern city 
of Mosul. So, as it is perceived broadly by Iraqis, this is not 
militia on militia, by any means. This is Iraqi security forces 
against both Sunni and Shi'a extremes.
    Ms. Lowey. Thank you very much, but he failed. Mr. Rothman?
    Mr. Rothman. Thank you, Madam Chairwoman. Ambassador 
Crocker, let me repeat the gratitude expressed to you by my 
colleagues, to you and your family, for all of the years of 
service you have given to our country. There are a couple of 
facts I just want to get clarified. There is a belief of the 
American people--I just had 13 town hall meetings the last 
couple of weeks--about what the stakes would be if the United 
States withdrew its forces from Iraq, albeit it over a period 
of 12 months, 16 months, or two years, or three years. There is 
some misunderstanding, I think, by a lot of folks as to what 
the consequences would be. Some people say, well, Syria would 
step in and I remind them that Syria's economy is in trouble. 
They have their own military challenges, as a minority regime, 
and they are not coming into Iraq to occupy Iraq. And they are 
worried that Iran might occupy Iraq, if we left. I pointed out, 
please correct me if I am wrong, the United States of America 
has had approximately 140,000 combat troops fighting in Iraq 
for five years, 140,000 of the best troops in the world and we, 
yet, have been unable to occupy Iraq, the 26 million people in 
Iraq. In fact, we do not even pretend that that is our goal, to 
occupy Iraq. But, certainly, we have not pacified it, let alone 
occupied it with 140,000 combat troops there for five years.
    So, one says, well, are the Iranians better to do--would 
they be better to do that than us? And my view has been the 
Iranian military is nowhere near as capable or professional as 
the United States military. So, they certainly could not 
pacify, let alone occupy Iraq and I would not think they would 
want to. They have great unemployment and great economic 
challenges of their own. Plus, Iran and Iraq are not friends, 
since they lost a million people in a war in the 1980s. And 
while Iraq has three ethnic groups and Iran has many more, 
Persian Shiites from Iran are not necessarily dear friends of 
Iraqi Shiites, who now control--or now in the majority in Iraq.
    So, is it fair to say that neither Syria nor Iran, even if 
they had the intention, have no greater capability to either 
pacify or occupy Iraq than the United States has and so that is 
not going to happen when and if we withdraw.
    Ambassador Crocker. Congressman, you make some important 
points. Our posture in Iraq is certainly what General Petraeus 
and I--the basis we work from is looking at our troop posture 
and redeployments on the basis of conditions rather than a time 
line, that the troops go out when the conditions on the ground, 
in our judgment, permit that to happen with acceptable risk 
of----
    Mr. Rothman. Forgive me, Mr. Ambassador, my time is 
limited. The question was whether you think Iran intends or has 
the capability to occupy Iraq.
    Ambassador Crocker. If we move to a time line for 
withdrawals, irrespective of conditions, I see some grave risks 
and I have articulated those previously.
    Mr. Rothman. Do the risks include Iranian occupation of 
Iraq?
    Ambassador Crocker. I believe they would involve very much 
more significant and severe Iranian interference in Iraq.
    Mr. Rothman. Do they involve the occupation of Iraq?
    Ambassador Crocker. I do not believe that either Iran or 
Syria are in anyway capable, separately or jointly, of 
occupying Iraq.
    Mr. Rothman. Thank you, Mr. Ambassador. I did have one 
other fast question, which had to do with the fact that the 
Kurdish regional government has only received less than five 
percent of the overall reconstruction assistance from the 
United States, yet they make up about 17 percent of the 
population. So, they have gotten five percent of the 
reconstruction assistance. They make up 17 percent of the 
population. Would you be willing to work with this committee to 
direct a larger component of U.S. reconstruction assistance to 
the Kurdish north of Iraq that is more in line with the 
percentage of Iraqi population that they represent?
    Ambassador Crocker. Congressman, as you know, as we work 
through where our assistance makes the most difference, we do 
it on the basis of fairness, but also of need. And I think that 
has to be taken into concern--into consideration, as well. But, 
obviously, we are always prepared to work with the committee 
and understand our concerns----
    Mr. Rothman. Thank you.
    Ambassador Crocker [continuing]. And deal with this 
cooperatively.
    Mr. Rothman. I appreciate that. Thank you, Mr. Ambassador, 
Madam Chairman.
    Ms. Lowey. Thank you. Ms. McCollum?
    Ms. McCollum. Thank you, Madam Chair. Ambassador Crocker, I 
want to go back on a point that Mr. Obey and Mr. Chandler had 
talked about earlier and that is the Sons of Iraq or the 
Awakening groups. On Monday in the New York Times, one of the 
generals, Iraqi Commander Hashem for Baghdad is quoted as 
saying, ``the main thing is that all the arms should be in the 
hands of the state. We will never allow any armed group to 
carry arms as an alternative to the state to provide security 
for the citizens.'' In other words, they should have control of 
the arms. Do you agree with that statement?
    Ambassador Crocker. I do agree with that statement.
    Ms. McCollum. Well, I have a question at the end that I 
think puts us in a bind for this particular answer. Have all 
the individuals in the Sons of Iraq, who have been supplied 
with weapons and are now on the U.S. payroll, have they been 
vetted for security beyond biometrical data collected?
    Ambassador Crocker. Beyond the biometrical data?
    Ms. McCollum. Yes.
    Ambassador Crocker. Getting that data and running against 
databases is our main security check on them, yes.
    Ms. McCollum. But, they all have not been vetted that way 
or they all have?
    Ambassador Crocker. I do not have that figure in front of 
me. It was on General Petraeus's slides. But, the vast majority 
certainly, if not 100 percent.
    Ms. McCollum. Are all the agents of the paramilitary is 
verified to ensure we are not arming child soldiers again? I 
refer to the New York Times article, the opening statement, ``a 
thin teenage boy rushed up to a patrol of American soldiers 
walking through Dora, a shrapnel-scarred neighborhood in the 
capital, lifted his shirt to show him the mass red welts on his 
back and he said, `that he was a member of the local Sunni 
Awakening group, paid by the American military to patrol the 
district.' ''
    Ambassador Crocker. We certainly are not signing up 
children for this. I mean, I cannot say in this particular 
case----
    Ms. McCollum. But, there might be the----
    Ambassador Crocker [continuing]. The teenager could be 18 
or 19, as well.
    Ms. McCollum. Does the U.S. formally train these militia 
men before they are armed? Because, there are reports that 
these paramilitaries act more like vigilantes than police in 
certain areas. Do they receive U.S. training?
    Ambassador Crocker. They do receive some training, yes, and 
they do not operate as independent elements. They operate in 
full coordination not only with the coalition forces, but also 
with Iraqi security forces.
    Ms. McCollum. In fact, that some of the Sons of Iraq, who 
are now receiving U.S. tax dollars, were actually members of 
Sunni insurgent groups that attacked or possibly killed U.S. 
soldiers. Is this statement correct?
    Ambassador Crocker. That may well be the case. You know, 
reconciliation is not reconciling with your friends. It is 
reconciling with your adversaries. And if former adversaries 
are prepared to say we want to stop shooting you and shoot at a 
common enemy instead, we are going to agree to that.
    Ms. McCollum. Is it accurate to say that this is not a 
cohesive unified force, the Sons of Iraq, but rather a 
configuration of armed tribes, political factions, that are, at 
time, in competition with one another for power and economic 
resources?
    Ambassador Crocker. They are individuals, sometimes of 
tribal affiliation, sometimes not, from a particular locality.
    Ms. McCollum. They can be in competition with one another?
    Ambassador Crocker. They can be, but what brings them 
forward is their desire to bring security to their own 
neighborhoods.
    Ms. McCollum. General Petraeus is quoted as saying, ``the 
Sons of Iraq will stay loyal to the U.S. policy, as long as it 
was in their interest.'' When loyalty to the United States or 
the Iraqi government is no longer in their interest, could 
these thousands of armed paramilitaries pose a threat? And I 
heard you speak to the fact that the Iraqis need to be given 
more time to transition to pay for this, but my understanding 
is currently we are paying 300 dollars per person. What time 
line have the Iraqis been given to provide their own security 
and should they be disarmed once we stop paying them, if we are 
the ones who stop the payment?
    Ambassador Crocker. Well, again, Congresswoman, it is our 
intention and also the Iraqi intention that these individuals 
transition from being paid by the U.S. to being paid by the 
Iraqis. And I noted in response to an earlier question, the 
majority of these individuals will not----
    Ms. McCollum. Madam Chair, this is different than a time 
line for withdrawal. This is a time line for the Iraqi 
government to pay for their own security. And, Ambassador, if 
you could get back to us with any, at least, tentative time 
lines on when we can expect the Iraqis at least to pay for 
their own security. This is not about our time line for 
withdrawal. This is about their time line to stand up and pay 
for their own security. Thank you.
    Ms. Lowey. Mr. Schiff.
    Mr. Schiff. Thank you, Madam Chair. At the outset, I want 
to associate myself with the remarks made by Chairman Obey. 
Now, in year five of the war, where we seem to be is that we 
will have our troops at a level, which is essentially a 
historic high, but for the aberrant time of the surge for 
perhaps the indefinite future. And I think what we are hearing 
is that, Ambassador, what you would like to do is essentially 
stay the present course that we are on, the present diplomatic 
strategy, the present military strategy, in the hope that 
things will change for the better. I think it is very realistic 
with that strategy to expect that we will be in Iraq for 
several more years to come, at a minimum, and potentially at 
the same high levels of troops. I do not think that the 
American people will accept that course. Once more, I think 
they are right to reject it. I do not think the country is 
going to accept our presence in Iraq extending to the length of 
two World War IIs.
    So, I have two questions. If this track is not sustainable 
and, in my view, not desirable, what are the alternatives? And 
I am not talking simply about the question of how soon we draw 
down troops, but rather you have been employing a certain 
diplomatic strategy in the region. You are going to continue 
employing that strategy. It seems to me, though, at the pace of 
progress, in terms of reconciliation, in terms of the regional 
diplomatic effort, that it will take many more years before 
there is any real demonstrable improvement in the situation. If 
that track is not going to work, what are the alternatives that 
we can pursue, that have been rejected, but that we need to 
consider? And furthermore, what steps are being taken now in 
the reasonable prospect that we will have a next administration 
with a very different idea of what we should be doing in Iraq? 
What steps are we taking now to mitigate the risk that when we 
do draw down our forces, that there is an increase in violence? 
What steps are we taking today?
    So, those are my two questions: what are the alternatives 
to our present course? What are the responsible alternatives 
and also what steps are we taking now, if there is a change of 
our policy in a few months?
    Ambassador Crocker. Sir, as the senior civilian official in 
Iraq, my whole focus and effort is on doing everything I can to 
see that the course of action on which we are currently 
embarked is successful. And I think, as I said in my statement 
and as you have heard, I think there has been progress. Neither 
General Petraeus nor I has said that the surge has succeeded. 
We have said that the surge is working, that violence levels 
have come down. And as this has happened, we are starting to 
see some positive signs, both at the local levels and at the 
national levels, as a better security climate allows more 
political and economic activity. My focus is----
    Mr. Schiff. If I could----
    Ambassador Crocker [continuing]. Directed to making that 
work.
    Mr. Schiff. If I could interject. In my view, the progress 
has been so halting, the steps of reconciliation have been so 
small, that if we extrapolate and expect that the pace of that 
reconciliation will remain the same, even if we assume it is in 
a positive direction, it will remain the same, we are still 
going to be there for years and years and years. And I do not 
think that is sustainable. I, also, think the only reason we 
are going back to the pre-surge levels is because our own 
military cannot sustain the pace, much less the facts on the 
ground. So, what I still would like to hear from you is what 
are the alternatives? What are the strategies that you are not 
employing, that have been rejected for whatever reason, you can 
tell us why you rejected them, but what are the alternatives if 
we are not willing to accept the strategy that says we are 
going to be there for several more years. It may get better, it 
may not, but, realistically, we cannot expect anything dramatic 
to improve in the next several years?
    Ambassador Crocker. Again, I am not focused on 
alternatives. I am focused on making this current effort 
succeed. I have said previously that I believe that moving away 
from conditions-based redeployment and using just a time line 
without respect to conditions puts us at a very high level of 
risk of seeing this spiral away from us in very serious ways 
that could allow al-Qaeda to reestablish its presence in Iraq 
as our strategic enemy, that could allow Iran significantly 
more influence, and could lead to sectarian violence on a scale 
we have not seen before. So, I think we are on a course of 
action that is showing not only promise, but results, and I 
think we should continue to drive that forward.
    Mr. Schiff. Madam Chairwoman, my time is up, but if the 
Ambassador maybe could respond back to us in writing about the 
steps that you are taking now in the event that there is a 
change of course next year, to mitigate the risk of any 
escalation of violence, I would appreciate it. Thank you, Madam 
Chair.
    Ms. Lowey. Ms. Lee.
    Ms. Lee. Thank you, Madam Chair. Good to see you again, 
Ambassador Crocker. Again, thank you for your service. You have 
a very difficult job and you are doing a great job, though. And 
let me just ask you, though, once again, and I have to keep 
restating this issue with regard to no permanent military 
bases, because you, the State Department, the Pentagon, the 
Congress, the American people all have said in one way, shape, 
or form, that we do not intend to build permanent military 
bases in Iraq. Yet, the President issued a signing statement in 
December and I am wondering again if there is some disconnect 
between the President and his administration or what does he 
see as the definition of no permanent military bases, as it 
relates to your definition of what the building of no permanent 
military bases means in Iraq.
    Secondly, let me ask you with regard to just the whole 
refugee assistance, I mean, it is now, what, 4.9 million Iraqi 
refugees? One million have gone home now. I think it is one 
million--well, one percent, no, one percent of the 4.9 million, 
which, to me, is very tragic. How do we plan to help the 
refugees return home and when--and I know some believe that the 
government of Iraq should be spending money to repatriate their 
own citizens in their own country. But, we are the ones 
responsible. I mean, we are the ones who bombed. We conducted 
Shock and Awe. And so, I am one who believes that we do have a 
responsibility to help bring the refugees home. But, how in the 
world are we going to do that and when and how much is it going 
to cost?
    Finally, let me just say, it is always worth remembering 
and reminding and stating for the record that this invasion and 
occupation really has been disastrous. It is entering its sixth 
year now and it has been a disaster that really, I do not see, 
think we have seen in recent times. And most Americans now 
regard it as a serious mistake. And, of course, I have to 
remind you that the Vice President just said, so, you know, 
several weeks ago and I think we have to come to grips with 
what is going on and try to figure out we can get out and get 
out quickly.
    Ambassador Crocker. Thank you, Madam. With respect to 
permanent bases, following the exchanges that we had yesterday, 
I actually checked with the White House this morning and heard 
what I expected to hear, that the position of the U.S. 
government is that we do not seek permanent bases in Iraq.
    Ms. Lee. Regardless of the signing statement saying that 
the President really did not want to comply with that provision 
of the Defense Authorization Bill?
    Ambassador Crocker. Again, I have not seen the statement, 
but the policy was very clear, no permanent bases. With respect 
to refugees, of course, as you know, because you helped make it 
possible, we are providing substantial assistance to refugees 
and I think that is a very right and proper thing. I, also, 
think it is important that the Iraqi government step up its 
contributions and the two can be complementary.
    With regard to returns, statistics--good statistics are 
hard to come by in Iraq. The sense I have, perhaps anecdotally, 
is there is more going on in the way of returns than one 
percent. We are certainly seeing people come back to different 
areas. This will have to be a very carefully managed process, 
obviously, so that they go back to safe homes and safe 
neighborhoods. And we are working. USAID is partnered with the 
U.N., primarily UNHCR. I had a chance to meet with the 
commissioner, the high commissioner for refugees when he 
visited Iraq and he told me at that time he was returning 
international staff precisely to help with these return issues. 
And the two of us together are working closely with the 
concerned Iraqi authorities just to be sure that there are 
mechanisms and procedures in place that get people home safely.
    Ms. Lee. Thank you. And I think this needs to be expedited 
and done quickly, because it is a humanitarian disaster, as you 
know. Finally, let me just say with the few minutes that I have 
left, I asked General Petraeus yesterday with regard to al-
Qaeda being in Iraq before Shock and Awe, as well as Iran, what 
is your response to that? Five years ago, was al-Qaeda in Iraq, 
close to Iraq and Iran? And if so, what was their role, if 
not--in terms of our own national security, are we safer today 
than we were five years ago?
    Ambassador Crocker. In terms of al-Qaeda, there was and 
still is, to some extent, a group called Ansar al-Sunna that 
was, in our judgment, al-Qaeda affiliated, that was operating 
in northern Iraq and seemed to have support from Iran. I 
believe that the al-Qaeda leader, subsequently killed by 
coalition forces, Abu Musab al-Zarqawi, was also in Iraq prior 
to 2003, although it is unclear, at least to me, whether the 
Iraqi regime had knowledge of that.
    Ms. Lee. Thank you.
    Ms. Lowey. Thank you very much. And I want to express to 
you again, on behalf of the Committee, that we appreciate the 
time that you are spending with us. We wish you good luck. We 
know the difficulty of this challenge. And I just want to leave 
you with three points that have been expressed, certainly by 
this Committee, but I would like to make it very clear that 
there is a great deal of concern that we are siphoning 
resources away from the real War on Terror. Certainly having 
served in that region of the world, Afghanistan, Pakistan, you 
understand that better than most.
    Number two, it is extraordinary to us that with oil at $105 
a barrel, that the countries in the region just refuse to do 
more and participate.
    And, three, that Iraq, with oil at $105 a barrel, has to 
take more responsibility, not just for governing and 
reconciliation, but certainly for the expenses connected with 
their infrastructure and the other normal governing functions.
    So, again, we thank you very much. There have been some 
questions laid on the table and I know you will respond. I have 
been particularly interested, if we are talking about 
reconciliation and if we are talking about the Government of 
Iraq taking responsibility, where is all the money going for 
training, if, in fact, they do not have that capacity yet? So, 
if you can share that with us certainly before we appropriate 
the number requested for the training and building capacity.
    So, again, on behalf of all of us, we thank you. We wish 
you good luck. You are certainly the pride and joy of the 
diplomatic corps, the Foreign Service, and we thank you so much 
for your service to our country. Thank you.
    Ambassador Crocker. Thank you, Madam.
    Ms. Lowey. Adjourned.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                          Thursday, April 10, 2008.

                 FY 2009 INTERNATIONAL PROGRAMS BUDGET

                                WITNESS

HON. HENRY M. PAULSON, JR., SECRETARY, U.S. DEPARTMENT OF THE TREASURY
    Ms. Lowey. Good morning. The Subcommittee on State, Foreign 
Operations, and Related Programs will come to order. Today, we 
are very pleased to welcome Secretary Henry Paulson to discuss 
the Department of the Treasury's $2.41 billion Fiscal Year 2009 
budget request for contributions to international programs, an 
increase of $941 million above the Fiscal Year 2008 
appropriation.
    Mr. Secretary, you have come to our Subcommittee at a time 
when many Members have serious concerns about the state of our 
domestic economy. Each of us has constituents who are reeling 
from record gas prices, falling home values, and shrinking job 
opportunities. Many of us also question aspects of the 
regulatory plan unveiled last week.
    While this hearing is about Treasury's role on the 
international stage, these domestic issues, as you know, have a 
significant impact globally. I am very interested to hear your 
views on the effect of the current financial crisis on the 
global economy and the multilateral development banks, their 
risk exposure, and the potential liability for U.S. taxpayers. 
I hope your opening statement will shed some light on how the 
liquidity crisis is affecting developing nations' already 
limited access to credit and the role of international 
institutions in mitigating this risk.
    Over the past several months, this Subcommittee has 
examined the effectiveness and coordination of U.S. bilateral 
foreign assistance. With that in mind, Mr. Secretary, I am 
interested in hearing why Treasury should have its own capacity 
to provide international technical assistance and why these 
programs should remain outside of the existing foreign aid 
infrastructure. Indeed, experience has shown that our 
assistance is most effective when it is well coordinated, both 
within the United States government and with other donors.
    As one of the lead negotiators with the G-8, and as the 
U.S. representative to the multilateral banks, I am interested 
in hearing the steps you are taking to represent U.S. 
development priorities during discussions with world leaders.
    The United States has been supporting a reform agenda, and 
I believe that the World Bank is making progress in this area 
under its new leadership. I was pleased that the World Bank 
leadership endorsed the Volker Panel Report, which laid out 
concrete steps to address whistleblower protection, corruption 
investigation allegations, and the role of the Internal 
Investigations Unit at the Bank. However, I remain concerned 
about continuing corruption allegations, including recent 
evidence of collusion in the India health sector programs.
    Although both the World Bank and India are taking action on 
this issue now, it took three years for the Bank to admit these 
charges. I would like to hear what Treasury is doing to 
encourage immediate implementation of the Volker 
recommendations, including the establishment of a strong 
whistleblower protection policy.
    The Fiscal Year 2009 budget request includes a 15-percent 
increase in our contribution to the World Bank, and, therefore, 
Treasury oversight will be more important than ever.
    Additionally, I am deeply bothered that the World Bank 
Group continues to disburse funding to Iran. In fact, while no 
new loans have been provided since 2005, disbursement of 
existing loans to Iran has increased in each of the last four 
years. It is perplexing that, despite United Nations sanctions 
against Iran, the World Bank has approved over $1.3 billion in 
loans for Iran. While some of these loans are humanitarian in 
nature, many are for broad, infrastructure projects. In 
addition, the Bank also provided loan guarantees to companies 
doing work in Iran in 2005.
    I would like your thoughts on these policies and whether 
there are additional steps the U.S. should be taking to stop 
the flow of these disbursements, halt future investment 
guarantees, and dissuade European and Asian banks from 
investing in Iran.
    The Treasury Department plays a critical role in stemming 
terrorist financing but cannot be successful when our allies 
leave their commitments unfulfilled. What is the Treasury 
Department doing to catalyze action in other countries, 
particularly Saudi Arabia, to prevent funds from reaching the 
hands of terrorists?
    With respect to debt relief, I commend the administration 
for its commitment. However, I am concerned that we are not 
doing enough to ensure that these funds are reaching their 
intended recipients or being spent as envisioned. Many of us 
were outraged when we first learned of so-called ``vulture 
funds,'' which prey upon poor countries, swooping in and buying 
their debt when it is about to be written off, only to sue for 
the original value of the debt, plus interest, once it has been 
forgiven. These unforgivable actions have defrauded needy 
countries while lining the pockets of wealthy businessmen.
    Mr. Secretary, what steps will the Treasury Department take 
in the coming year to address vulture funds and to ensure that 
debt relief for heavily indebted, poor countries is 
sustainable?
    The Fiscal Year 2009 budget requests significant funds for 
global climate change, an issue that we all know this 
administration had had difficulty embracing, and I do commend 
you for your very important personal leadership and commitment 
to corporate environmental responsibility going back to your 
time at Goldman Sachs. I imagine that your commitment played a 
role in the funding requested for the Clean Technology Fund, 
and I hope you will share more details on this initiative.
    However, I must note that I do not believe that eight years 
of backsliding on international climate change commitments can 
be rectified simply by throwing money at the problem. It is 
essential, and I am sure you would agree, that the United 
States exercise leadership on curbing greenhouse gases and 
investing in alternative energy and clean technology here at 
home.
    Secretary Paulson, I would like to close by noting that you 
have just returned from China, where you were the most senior 
U.S. government official to visit since the Chinese 
government's violent crackdown in Tibet. Many of us have spoken 
out forcefully against China's oppression of peaceful 
democratic activists in Tibet and elsewhere, its inaction and 
complicity in the genocide in Darfur, and continued 
intransigence on United Nations resolutions that impose 
sanctions on Iran.
    In the past, you have not raised concerns about these 
issues in your conversations with the Chinese, illustrating 
what appeared to be a bifurcated policy within the 
administration towards China. The State Department would press 
China on human rights concerns while the Treasury Department, 
which wields far greater leverage, would not engage on these 
issues. While I appreciate the distinct roles played by each 
agency, I fear that the Treasury Department's past silence has 
sent a message of inconsistency or, worse, indifference on many 
critical concerns. I was, therefore, pleased to hear that on 
your recent trip you did engage the Chinese government on the 
issue of Tibet. However, I hope this will not be an isolated 
incident and that you will continue to press the Chinese 
government on issues of concern.
    Secretary Paulson, I appreciate your being with us. I look 
forward to hearing your testimony. I look forward to working 
with you to ensure that our investments in the multilateral 
development banks address the development priorities of the 
21st Century, and before we move to your testimony, let me turn 
to Mr. Wolf, the Ranking Member, for his opening statement.
    Mr. Wolf. Thank you, Madam Chair. Mr. Secretary, welcome to 
the Committee.
    In his first speech before the British Parliament, William 
Wilberforce, who was the one who abolished the slave trade in 
England, in talking to his colleagues and in talking to the 
leadership, the business leaders of England, said the 
following. He said to them, ``Having heard all of this, you may 
choose to look the other way, but you can never again say you 
did not know.''
    There is no one in this administration, and particularly 
you, and no one in Congress who does not know about the 
nation's long-term financial outlook--in fact, when you were 
appointed, I really felt very good about it because I had heard 
you speak out on that issue, and I thought you were going to do 
something about it.
    David Walker, whom I know you know, who has left GAO to go 
out and raise the consciousness of the country on this issue, 
said, ``We have a tsunami of debt and spending that can swamp 
our ship of state.''
    Many think, we are $9 trillion in debt. We have $53 
trillion of unfunded obligations. I saw your quote last week, 
when the Social Security and Medicare Trustees Report recently 
came out, that only reinforced the dire consequences of our 
fiscal health. The Medicare Trustees Report concluded that 
consideration of reforms to ensure the financial security of 
Medicare must occur, stating, ``The sooner the solutions are 
enacted, the more flexible and gradual they will be.''
    I know you know about the Social Security Report. It echoed 
the same sense of urgency, saying, ``The projected trust fund 
deficit should be addressed in a timely way. Making adjustments 
sooner will allow them to spread over more generations.''
    The value of the dollar is dropping. In today's Washington 
Times, ``Global Food Riots Turn Deadly Throughout the World.''
    What more evidence do we need? Congress, too, and the 
administration need to realize that our children and 
grandchildren cannot afford to have their leaders choose to 
look the other way.
    Just last week, and I know you know about this because you 
had a representative there, there was a roundtable discussion 
held by Maya McGinnis and the Committee for a Responsible 
Federal Budget. It was a diverse group--Republicans and 
Democrats and independents and Wall Street people--from 
business, finance, former CBO directors, former OMB directors, 
think tanks. Everyone there, but for one or two, expressed 
concern about the entitlement crisis that we are facing.
    It is also a generational issue. Speaking not only as a 
Member but as a father and as a grandfather, really what kind 
of country are we going to turn over to our children?
    I was taken by the editorial page, if you saw it, in 
Newsweek last week. I think you know Pete Peterson. Do you know 
Pete Peterson? He said in that editorial--he was talking about 
the crisis, and he ended by quoting Dietrich Bonhoeffer. I am 
sure you know who Dietrich Bonhoeffer is, the German pastor who 
was instrumental in the resistance movement against the Nazis. 
Dietrich Bonhoeffer said, and I quote, ``The ultimate test of a 
moral society is the kind of world it leaves to its children.''
    Now, Jim Cooper and I have a bill in Congress with 80 co-
sponsors. Senator Conrad and Senator Gregg and Senator 
Radanovich have a similar bill over on the Senate side. There 
are the votes to pass this in the House. I have been told there 
are votes to pass it in the Senate.
    I have written the administration a number of times on the 
issue, and most of the time we do not even get an answer. But I 
urge you to be like Esther in the Bible. In such a time as 
this, with all of your knowledge and expertise, I hope you are 
going to pick this issue up. If you fail, you fail, but never 
to really try. We can pass this now. We can pass it. This would 
be a gift for the next president, whoever he or she is.
    If you do not, and if the administration does not, I would 
predict, and I will never be able to really find out because I 
do not think we will be talking with each other once you leave, 
and you are in a different place, going back to New York or 
Chicago, I honestly believe, Mr. Secretary, one, I believe that 
you are probably one of the most competent people has been 
appointed to this spot.
    As I was talking to Mr. Froemmer, your congressional 
relations person, I said, ``The failure of Secretary Paulson to 
speak out and work on this is kind of like if a top brain 
surgeon in town failed to speak out on a problem, then the 
other brain surgeons are not going to deal with it.''
    You are the top brain surgeon on this issue, and I will 
predict, if you leave here without forcefully addressing this 
issue, wherever you may go, you will live to regret it. You 
will sit on your rocking chair, and you will say, when you see 
the media reports next year and the year after, you will say, 
``You know, I could have dealt with that. I could have done 
something about that. I know I could have done something.'' I 
think you are going to say, ``I am really sorry.'' You may not 
tell anybody else other than your close family, but you are 
going to say, ``I am really sorry I did not pick this issue 
up.''
    So my request--we cannot force you to do it, but my request 
is that you will today begin to say, ``Okay. We are going to 
work for the Cooper-Wolf Bill, we are going to work for the 
Conrad-Gregg Bill, we are going to put the resources of the 
administration, put the knowledge that you have and the 
expertise that the Department has behind this whereby we can do 
this, and we can do it, as Dietrich Bonhoeffer said, not only 
for our generation but also for our children and our 
grandchildren.''
    With that, Madam Chair, I yield back the balance of my 
time.
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    Ms. Lowey. Thank you, and, with that, we look forward to 
hearing your opening statement.
    Secretary Paulson. You all have asked a number of questions 
in your statement. I have a short statement that will run five 
or six minutes which does directly address a number of your 
questions; I will make the statement, and you can be thinking 
whether you want to have me go through all of the questions you 
asked, one by one, or whether we want to go through the process 
again, but I will give you a very quick statement because, 
Madam Chair and Congressman Wolf, I really appreciate the 
opportunity to discuss the president's Fiscal Year 2009 budget 
request for the Department of Treasury's International 
Programs.
    The budget request of approximately $2.241 billion reflects 
the administration's commitment to promote economic growth and 
reduce poverty in the developing world. This year, we also 
include funding for a new international initiative, the Clean 
Technology Fund, to help major developing countries move into a 
low-carbon growth path.
    Treasury International Programs include funding the 
multilateral development banks' debt restructuring and 
technical assistance. The budget request is for resources to 
help countries establish the policies and programs necessary to 
create the conditions for long-term, private sector-led growth. 
In doing so, the United States invests in conditions that 
foster economic, social, and political stability.
    Through U.S. leadership, the MDBs have increased 
coordination of public and private sector lending programs to 
remove obstacles to private sector development. MDB private 
sector programs concentrate on fiscal infrastructure, 
investments in human capital, policy reforms, and improving 
regulatory and legal environments. The private sector programs 
complement these activities by providing or facilitating access 
to private sector financing. This access is often combined with 
technical assistance and sharing of best practices to help 
build stronger companies, which, in turn, build stronger 
economies.
    We have also made substantial progress to improve the debt 
sustainability of many developing countries. This includes the 
Multilateral Debt Relief Initiative, approved in 2005, and last 
year's agreement by the Inter-American Development Bank to 
provide 100-percent debt relief to the Bank's five poorest 
borrowing countries on all loans outstanding as of December 31, 
2004.
    In response to U.S. urging, the MDBs are also promoting 
good governance, transparency, and anticorruption systems to 
better ensure the funds provided by the United States and other 
donor nations are used prudently and for their intended 
purpose, to support development programs. This includes 
improving accountability and using performance-based allocation 
systems to ensure that countries with stronger policies receive 
higher funding priority.
    This request also includes new replenishment of the World 
Bank's International Development Association [IDA] and the 
African Development Fund. The increase for IDA demonstrates 
U.S. leadership at delivering real results for the world's 
poorest countries. Our contributions to IDA and ADF 
specifically will improve the Bank's effectiveness and 
transparency as it works with fragile states, such as 
Afghanistan and Liberia, and expands efforts on anticorruption 
policies, regional economic integration, and climate change 
initiatives.
    In September of 2007, President Bush proposed a major, 
multilateral initiative to create a new international Clean 
Technology Fund, the CTF, to help developing countries adopt 
clean energy technologies. As countries develop and build their 
long-term energy infrastructure, it is in the world's best 
interest to build that infrastructure using the most efficient, 
clean technology rather than highly polluting but less-
expensive technology.
    This budget request includes $400 million for the first 
installment of a total U.S. pledge of $2 billion over three 
years to this multilateral trust fund, which would be 
administered by the World Bank. With additional funding from 
other countries, we will be helping to finance clean energy 
projects in the developing world which will benefit all peoples 
in the world by reducing greenhouse gas emissions.
    This request also includes $141 million for debt-
restructuring programs. These funds will meet U.S. commitments 
for bilateral debt reductions for heavily indebted poor 
countries, HIPCs, and help fulfill U.S. pledges for 
contributions to the HIPC Trust Fund Contribution and Tropical 
Forest Conservation Act programs.
    The HIPC Initiative is lifting crippling debt burdens off 
many of the world's poorest countries, freeing resources for 
poverty reduction when those countries have demonstrated both 
sound economic policy and a commitment to fighting poverty.
    The third component of our budget request is Treasury's 
Technical Assistance program. This is a small program that 
never makes the headlines, but from my travels around the 
world, I know that it is both effective and valuable. 
Treasury's financial experts help countries strengthen their 
capacities to manage public finances, lay the financial 
groundwork for private sector led growth, and combat money 
laundering and terrorist financing. Building that capacity is 
also a vital complement to investments in other areas, debt 
relief, for example, and to the effectiveness of development 
assistance generally.
    If developing countries' fiscal houses are not well 
managed, our investments in schools, hospitals, roads, and 
other critical infrastructure will not be sustained or will 
have to be sustained by us indefinitely.
    In conclusion, we believe that full funding of these 
international programs will allow Treasury to work with and 
support developing countries throughout the world as they 
strive to lift their people out of poverty and provide greater 
opportunities for prosperity and security.
    Thank you for your past support and for your current 
consideration of these programs. I look forward to working with 
you during your deliberations and welcome your questions.
    Ms. Lowey. Thank you, Secretary Paulson. As I noted in my 
opening statement, I am deeply concerned about the impact of 
the current crisis on the multilateral development banks, their 
risk exposure, and the liability to American taxpayers. I 
understand that you met with your G-8 financial minister 
colleagues earlier this week to discuss the global impact of 
the financial crisis.
    As an example of these concerns, I have learned that the 
Inter-American Development Bank may have significant exposure 
to the crisis. According to an internal memo, dated January 28, 
2008, the Bank reported almost $300 million in losses in 2007, 
stemming largely from the subprime mortgage crisis.
    This raises a whole host of questions, which I would like 
you to address. First of all, in your judgment, was the IDB 
investing in risky assets? What actions did Treasury take, as a 
member of the board, to change this investment strategy? Why 
was the IDB investing in U.S. subprime mortgages when a host of 
leaders were raising concerns about the ethical propriety of 
subprime lending, much less the growing risk of a collapse in 
this market? Does Treasury thinks this is a socially 
responsible and prudent investment of U.S. taxpayer dollars?
    As the newly installed chairman of IDB's Board of 
Governors, what specific policies will you implement to ensure 
better oversight of IDB's investment portfolio and protect the 
institution in the future? Has Treasury undertaken a review of 
the investment portfolios of the other banks? What is the full 
exposure of the other institutions to this current crisis?
    You have just overseen an unprecedented $29 billion bailout 
of Bear Stearns. Should we expect American taxpayers to be on 
the hook for a bailout of the multilateral development banks?
    Secretary Paulson. Let me begin by saying, the meeting with 
the G-7 financial ministers begins tomorrow and takes place 
this weekend, and I just came from Miami with a meeting with 
the Inter-American Development Bank.
    Let me begin by saying that, as we have talked with finance 
ministers around the world, the good news when you look at the 
developing markets, is this turmoil did not begin in the 
developing markets, and it really has had very little impact to 
date on the developing markets. I think you mentioned in your 
opening statement that the multilateral development banks need 
to be very vigilant and be able to look and figure out what 
role to play.
    Now, in terms of your question about the IADB and subprime, 
this is a strong financial institution. Its triple A is not at 
all in jeopardy. This is something Treasury spent a fair amount 
of time on recently, that Chairman Luis Alberto Moreno has 
brought in an independent adviser to report to the board on 
this issue, but it looks very contained and very manageable.
    Ms. Lowey. But there is a $300 million loss.
    Secretary Paulson. Right now, I think, a marked-to-market 
loss on some of the securities in an overall portfolio that is 
in that neighborhood, yes. But, as I said, this is a relatively 
small portion of the overall assets, and, he has retained an 
independent firm to report to him on that.
    In terms of the World Bank and the others, I do not see any 
significant direct impact. I think the impact will be, to the 
extent there is an impact on the regions and the economies they 
serve, because, as you know, weakness in one economy around the 
world ultimately impacts others. But, to date, I think, in all 
of the meetings that I have had, and I met with the finance 
ministers of many of the Latin American countries, I have met 
with the finance ministers of the African countries, the Asian 
countries, for the most part, the economic situation outside of 
the U.S. is relatively strong.
    Ms. Lowey. But getting back to the banks, what is their 
exposure? You indicate that the Inter-American Development Bank 
is strong. What about the other banks?
    Secretary Paulson. As I said, as far as I know, this is not 
an issue for them.
    Ms. Lowey. Has Treasury done a review of their portfolio?
    Secretary Paulson. They are being reviewed, and there are 
processes in place in all of those banks to review their 
portfolio, as there is in the Inter-American Development Bank.
    Ms. Lowey. So, at this point, you are saying that there is 
no exposure, or are you saying that it is still under review? 
in the process of reviewing it.
    Secretary Paulson. You cannot be a bank by triple A 
securities, where you are buying mortgages and others, without 
there being some exposure, but this is not anywhere near 
comparable to what you have seen in some of the private sector 
financial institutions. This is something that is being looked 
at, and it is limited exposure. The IDB clearly has the most, 
and, as I said, they have got a process in place to deal with 
that.
    Ms. Lowey. So, you are in the process of reviewing it. I 
will turn this over to my colleague.
    Secretary Paulson. I am not in the process of review; I 
said, they are in the process of review, and their board of 
directors, their investment committee, their investment adviser 
in the process of reviewing it.
    Ms. Lowey. Well, if you can just keep me apprised of the 
results of this review----
    Secretary Paulson. We will continue to do that.
    Ms. Lowey [continuing]. That would be very helpful. Thank 
you.
    Mr. Wolf. Thank you. Mr. Secretary, do you want to comment? 
I have some other questions. Can we get your support, active 
support, so you do not feel badly when you leave here?
    Secretary Paulson. I would say this. In terms of feeling 
badly, when I came down here, one of the reasons that I was 
attracted to come down here--I knew it was not going to be 
easy--was that the President had the courage to take on the 
Social Security issue. He asked me to undertake a fresh 
approach and to reach out to Members on both sides of the aisle 
in an attempt to start a process which could either be well 
along while we are here or completed when we were here.
    Since I have been trained to run toward a problem rather 
than run away from a problem, while many people said to me, 
``You are tilting at a windmill''--not that this is not a very, 
very major issue, because I happen to think that entitlement 
reform is one of the two or three major issues, and it is one 
of the major issues we, as a country, face. So every time I 
have testified before the budget committees, I have made that 
point.
    I made a huge effort to try to get people to come together 
and deal with this, and I had a lot of individual meetings 
where, behind closed doors, people said that something might be 
able to be done, but we could not get this together. In my 
judgment, there was not the political will in Congress to do 
this, and so the role we have been playing right now has been 
continuing to talk about it, put out studies from Treasury 
that, hopefully, will depoliticize it and make it easier for 
the next administration to do.
    Mr. Wolf. Well, Mr. Secretary, if I can--I only have so 
much time--there are 80 co-sponsors on this bill, and we are 
waiting for you to act, and you have not. You may have been 
part of the discussion over a year ago. Circumstances have 
changed. I read that Standard & Poor's and Moodys inferred that 
we could lose our triple A bond rating in 10 years. Is there a 
potential for that? Could I ask you, is there a potential for 
that?
    Secretary Paulson. I am not going to say there is a 
potential for that. I would say that the problem you have 
pointed to is a serious problem.
    Mr. Wolf. But both of them said that we could lose our 
triple A rating. What would be the result in the United States 
if we lost our triple A bond rating?
    Secretary Paulson. Well, the way I describe the situation 
is that I am sure that this country will ultimately solve the 
problem, but the longer we wait, the less financial flexibility 
we have, and the greater price the younger generation will pay.
    To get back to your issue, I have talked with the majority 
leader, the minority leader, with you, with Jim Cooper. I spent 
a lot of time with Kent Conrad and Judd Gregg. And you have 
some ideas on process, and I have got to tell you, I respect 
those ideas for progress. I do not think it is the Treasury 
secretary's role to sort of dictate to the House what the 
process should be for solving it, but I am happy to participate 
in any process you all want to put together. This is a serious 
problem, and your leadership has been exemplary, and I do hope 
we continue to talk when I leave. I care a lot about this, and 
all I can tell you is I have made a huge effort, and I am 
spending most of my time now on other things where there is a 
chance of getting them done, and they are more pressing in the 
short term.
    I am sincerely disappointed that we could not get people to 
come together, because this should not be a political issue. 
This is an economic issue.
    Mr. Wolf. Well, I do not think it is a political issue now. 
We have a large number of Democratic Members that are on it. 
Jim Cooper is a highly respected Member of the Congress. 
Congressman Hoyer has spoken out on behalf of this. Kent Conrad 
has been very sincere. I have been told there are the votes to 
pass this in the Senate. So we really need you to be engaged. 
Not to be engaged is to walk away. Just to put out a statement, 
and when you put out your statement on the Social Security 
Medicare report, you said something to the effect of, I do not 
like playing solitaire. This is not solitaire. There are 80 
Members up here who want to participate. They want to 
participate and want to work with you so we can really do what 
is best, and I do not believe it is a partisan issue, and I 
believe there are enough good men of faith on both sides of the 
aisle of all political backgrounds.
    If you look at the co-sponsorship that Jim has, I think he 
has Congressman Moran, and he has Congressman Tanner. He has a 
very broad cross-section. We really need you to weigh in. We 
need you to be a participant. You are not just another person. 
You are the key brain surgeon in this town on this issue, and 
you carry a tremendous amount of credibility. I respect you 
highly. In fact, as I remember saying, when I heard you were 
going to be appointed, I referenced that Politico statement 
that was in the article--finally we have someone who really 
understands this, and I know you have spoken out on it.
    So we really need you to weigh in, and I would like you to 
submit for the record, or if you want to tell us verbally, what 
would the ramifications be if Standard & Poor's and Moodys are 
accurate. If you say someone is going to intervene, I do not 
know who they are. Because we have said, Jim and I have said to 
other Members, If you have a better idea that can pass, then we 
should be for it, but if you do not have a better idea that can 
pass, then this can pass. We have people like Bill Frenzel and 
Maya McGinnis, prominent, credible people in this town who have 
dealt with these issues.
    Brookings believes it is very important. They helped us 
craft the bill. The Heritage Foundation's Stewart Butler helped 
us craft the bill. David Walker supports the bill. You are the 
quarterback. You are the key person. It is very difficult 
without you in, and the administration--I am not going to put 
you on the spot on this--I want to move on to another issue, 
but the administration is never reluctant to come up here and 
ask Members on both sides of the aisle, when they are looking 
for a vote on a free trade agreement, they had people down here 
over and over. They took people to Colombia. They are never 
reluctant to come up here when it is an issue with regard to 
Afghanistan or Iraq, and they ought not be reluctant to come up 
here on an issue that everyone knows about.
    I just would end my question with this. I find this to be 
so powerful. If you recall, slavery was running rampant in 
Great Britain. The slave trade was an important part of their 
economy. No one in Parliament wanted to deal with that, and for 
Wilberforce to say to them, ``Having heard all of this, you may 
choose to look the other way, but you can never again say you 
did not know.'' Mr. Secretary, history will never allow you to 
say you did not know. With that, I yield back.
    Secretary Paulson. I can just say to the Congressman, I 
appreciate your point of view. I will have no trouble looking 
in the mirror because of how much time I spent on this, and it 
was not just a matter of speaking out, and there are a lot of 
other congressional leaders that know how much time I spent on 
it, and a lot of people who think I spent too much time on it.
    So I appreciate your leadership, and I am going to respect 
you forever for the amount of time, and I am hopeful that you 
will get something done, and I thank you for your comments.
    Ms. Lowey. Ms. McCollum.
    Ms. McCollum. Thank you, Madam Chair. Secretary Paulson, I 
would like to thank you for joining us this afternoon. First, I 
want you to know I support the administration's request for the 
IDA-15 replenishment. My support is based on IDA's mission, its 
success, and because of its very impressive leadership with 
President Zoelleck at the World Bank. President Zoelleck is to 
be commended for picking up the pieces at the World Bank during 
a difficult time and leading the institution forward with a 
very successful IDA replenishment effort.
    IDA, by definition, is a commitment to providing aid to 
meet development needs in the world's poorest countries and 
help their people. The countries eligible for IDA are based on 
per capita income of less than $1,065. These investments are 
going to serve the needs of the poorest people of the world.
    Because of the per capita income eligibility requirements, 
there are 34 countries which are former IDA recipients, such as 
Botswana, Egypt, and Turkey, all of which have graduated to 
middle-income status. This is clearly a mark of success.
    I have a copy of a very interesting article, Madam Chair, I 
would like to submit for the record, which is in the Journal of 
Economics Perspective, entitled ``Where Does the Money Go? Best 
and Worst Practices in Foreign Aid'' by William Easterly. This 
article details the research and evaluates more than 30 
bilateral and multilateral foreign assistance entities and 
ranks them based on criteria for best practices for aid 
organizations. In this research, IDA ranks as number one among 
all other international organizations. By comparison, the U.S. 
ranks sixteenth, just beneath Italy.
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    I believe IDA is a good investment by this Subcommittee, 
and it deserves to have our full efforts.
    Secretary Paulson, I do have a question for you. I 
understand that the U.S. is currently in arrears in IDA, and I 
would like to know how much, and I would also like to know, 
Secretary Paulson, is there a plan and a timeline to eliminate 
our arrears in IDA?
    I have one other question that goes to something you 
touched on in your testimony, which is the technical expertise 
that the Treasury can offer. The work that you are doing makes 
a lot of sense. Strengthening the capacity of bureaucracies and 
institutions within developing countries to address financial 
issues, tax policies, financial services, and enforcement is 
critical to long-term good governance.
    I would like to raise the possibility of expanding the 
scope of this work. I see the role of parliamentarians to be 
vital in participating in the development equation, and 
building their capacity to understand and evaluate budget 
policy, foreign assistance financing, and other financial 
issues critical in establishing good governance for countries 
receiving aid.
    I have heard from World Bank officials, for example, that 
the lack of parliamentary capacity with regard to finance 
issues can actually inhibit parliamentary consent, as well as 
oversight of development interest. Can you envision extending 
your technical assistance at Treasury in training 
parliamentarians and parliamentary staff in developing 
countries? Thank you for being here.
    Secretary Paulson. First of all, several things. Thank you 
for your support on IDA because we believe very clearly that 
that is a good place to put money and, clearly, Bob Zoelleck 
does. That is number one.
    In terms of the arrears, I am going to get to your 
question, but, more broadly, we are $872 million in arrears 
when we look at all of the multilateral development banks. 
About half of that is to the World Bank, and, in IDA, we are 
$380 million in arrears. So when you look at our request this 
year, we only requested $42 million because we have been making 
the request, and it has not been coming through. We only 
requested $42 million, and that is for IDA. That is what it 
takes to make some payments that absolutely need to get done.
    Now, to technical assistance, I wanted to say something, 
and the Chairwoman, Congresswoman, had made a point early on 
when she said that she was concerned that our technical 
assistance may not be coordinated as well as it should with 
other technical assistance.
    What I have seen is fascinating because, as I go around the 
world in Latin America and Asia, I have seen that, the caliber 
of people we can hire with financial expertise that want to 
come and work at Treasury, is extraordinarily valuable, and 
there is a huge demand for their services because as these 
countries are wanting to, and showing, that they do not just 
have to be the subject of grants, that they can attract 
investment. What Treasury is able to do for them, in terms of 
putting together programs to attract investment, small 
investment, infrastructure financing, or help them tap, which 
Treasury did for the first time with an African country, the 
euro bond market, is really extraordinarily valuable.
    So long after I am gone, I hope someone will look at how 
the resources are spent because the $29 million for Treasury 
and OTA, relative to the millions and millions in other forms 
of aid, (and I am not saying this on a parochial basis) in 
terms of value for the buck, we should have multiples of what 
we have, and if something else should be cut, then it should be 
cut. I really believe that.
    I do believe there is room also to train parliamentarians 
and others about economic issues because I am seeing a 
wonderful thing is happening in Africa and in Latin America. 
Countries are seeing that they can take their financial destiny 
in their own hands, that they can develop capital markets, that 
they can attract investment, that they can create jobs, and it 
is not all about grants. I will tell you that the people that 
we have at Treasury and what they are able to offer is 
extraordinary, and I get back from Africa, and I am getting 
together the West African finance ministers or the East African 
finance ministers--two different meetings--and I have got one 
member of their technical assistance department there, and they 
are all fighting over who is going to spend the time with him 
or where he is going to spend the time.
    So, again, I do not think you are going to be able to have 
the same program if they are all mushed together as part of 
some State Department program, and I do not think you will hire 
the same quality people, and I do not think they will have the 
expertise that they would have at Treasury. So that is why we 
worked as hard as we did to increase the budget there from a 
low level to a paltry $29 million.
    Ms. Lowey. Thank you very much, and I assume Treasury 
coordinates with USAID so that the agencies are working 
together.
    Secretary Paulson. Yes, we do. We are one big happy family, 
and we coordinate, and we work together, and everything I have 
said to you, I have said to Secretary Rice, and she is all for 
our program, and very supportive of it, and we work together. 
But I still think we should have more people doing the things 
that Treasury does because I do believe in markets, and I also 
believe in clients.
    I think, when you ask what these countries want, they want 
help attracting investment. They like microfinance. They want 
investment for small businesses. They want investment for 
infrastructure. They want help training government officials. I 
have to tell people all of the time, they want help with taxes. 
How do you put together a tax system that works? How do you do 
that? I have to tell people all of the time, we would like to 
help you, but these are all the resources we have.
    Ms. Lowey. To be continued. Mr. Kirk.
    Mr. Kirk. Thank you, Mr. Chairwoman. I would just say I 
would strongly support what you said. I share the Chair's 
concern that there is too much foreign aid going through DoD, 
but this Treasury technical assistance is outstanding and, I 
think, should remain at Treasury.
    I also want to compliment the Chair, good work on the IDB 
because I am concerned about the losses there as well.
    Just a couple of quick things. I hope, as part of the SAID, 
which you are going to leave with China coming up, that you 
formally invite representatives of the McCain, Obama, and 
Clinton campaigns to begin to show the continuity with China. I 
would just put in that word.
    We have not talked about the large IMF gold sale that may 
be underway. Obviously, that has some concerns to the U.S. 
Congress.
    But I want to focus on Iran. The World Bank has sent a $49 
million check to the Islamic Republic of Iran in Fiscal Year 
2005, a $106 million check to the Islamic Republic of Iran in 
Fiscal Year 2006, a $220 million check to the Islamic Republic 
of Iran in Fiscal Year 2007, and, to date, has spent $189 
million on Iran. That is about $618 million going directly to 
the Finance Ministry of President Ahmadinejad, and then is 
planning on sending him another $699 million.
    Since we own about 20 percent of the World Bank, that is 
$240 million of U.S. taxpayers going directly to the Finance 
Ministry of the Islamic Republic of Iran. Now, this supposedly 
supports some projects, but, as you well know, the money is not 
paid to support the projects; the money is paid to the finance 
minister of Iran. One of the things we have seen is this sort 
of tragic comedy with the World Bank trying to pay Iran. 
Originally, the World Bank paid through Bank Melli, but then 
you designated Bank Melli as a bankroller of proliferation and 
global terrorism, which then held up $5 million of U.S. 
taxpayer money, bank money, which was caught in that.
    The Bank's Web site says that the projects supported are 
for sewerage (their word), sanitation, and water, but United 
Nations Security Council Resolutions 1737 and 1803 blacklist 
several entities involved in Iran's nuclear and ballistic 
missile program, including the Fahrs Trash Company and the 
Kalla Electric Company, which may be directly involved in the 
sewage, sanitation, and water projects supported by the World 
Bank.
    Now, my office asked if we could see who was being funded 
by the World Bank-directed projects to review the prohibited 
entities under the United Nations Security Council resolution, 
and we were told to call the U.S. executive director of the 
World Bank. When we talked to the U.S. executive director of 
the World Bank, he said, ``We have no access to that 
information, no transparency.''
    So here is my question. If the Bank is operating in places 
and sectors of Iran which we know are sanctioned by the United 
Nations Security Council resolution, how do we know that we are 
not funding, directly funding, United Nations-sanctioned 
entities, in violation of 1737 and 1803? Would you ask 
Secretary Rice and Ambassador Khalilzad to open this 
transparency up? I am worried that we are headed into a lack of 
transparency that reminds me of the United Nations Oil-for-Food 
program, where we are directly funding entities sanctioned by 
the United Nations Security Council. I am wondering, really, 
does the president of the United States know that three blocks 
from his office we just cut a check for 189 million bucks to 
the Islamic Republic of Iran?
    Secretary Paulson. First of all, Congressman, I very much 
respect your work on Iran. If we had time, I would love to tell 
you all of the things that I have done, and what we have done 
at Treasury here because I think we have broken some new 
ground, and Stewart Levy and the team are doing some things 
that make a difference.
    Now, again, when you look at the----
    Mr. Kirk. Let me just interrupt you a second. Stewart is 
doing an outstanding job of shutting down financing in Iran, 
and his work is being directly undercut by the money sent to 
Iran by the World Bank.
    Secretary Paulson. To get to this, the last vote on a 
program to send money to Iran for humanitarian purposes came a 
couple of years before I arrived at Treasury. Treasury opposed 
that. I can do a lot of things, but one thing I cannot do is 
change World Bank law and United Nations law. So I followed, 
with support and interest, your questions. I read with interest 
Bob Zoellick's letter to you, signed off on by the general 
counsel of the United Nations and by the general counsel of the 
World Bank, saying that they have followed scrupulously the 
letter of the law. So I appreciate your question.
    I talk with the president frequently about Iran. The last 
time I talked with him was earlier this week about it, and I 
appreciate your frustration, but I do not run the World Bank. 
We are, as you point out, an important shareholder. We have a 
very strong leader there, and Bob Zoellick needs to operate 
under the laws and the rules he has inherited. There is a 
governance system, and he has had his general counsel look at 
it very carefully. They have looked at the United Nations 
resolution carefully. The general counsel has looked at that 
carefully.
    I am going to tell you, I am going to continue to be 
vigilant, and if I see a chance to have any breakthroughs on 
Iran before I leave, I would love to do it.
    Mr. Kirk. Let me just conclude by agreeing with my 
colleague from Minnesota, Betty McCollum. She points out that 
we are, roughly, seven to $800 million behind in IDA. Would it 
not be great to transfer the $700 million from the IBRD pending 
for the Islamic Republic of Iran to IDA so that we are helping 
the poorest of the poor countries and not helping Iran? Thank 
you, Madam Chairman.
    Secretary Paulson. I would like to not even stop there. 
Thank you.
    Ms. Lowey. Mr. Israel.
    Mr. Israel. Thank you, Madam Chair. Mr. Secretary, two 
questions.
    I am intrigued by the International Clean Technology Fund. 
I, in fact, have been proposing a Global Green Fund for the 
past several years. I would ask you to elaborate on exactly 
what it is doing, and, specifically, will the funding be 
targeted to microenterprises, macrofinancing, mid-level 
businesses?
    Secretary Paulson. Let me talk about this because you are 
asking me to talk about my favorite topic.
    Mr. Israel. Mine, too.
    Secretary Paulson. I have spent an enormous amount of time 
since coming here looking at climate and the environment, and 
when you look at it, you need to look at the science, which is 
overwhelming; you need to look at the economics; and you need 
to look at the political equation. They are all at different 
places, but the thing that is just as apparent to me as 
anything is, no matter what we do, we are not going to solve 
this problem unless there are major technology breakthroughs 
and adoption of clean technologies around the world.
    A ton of carbon in the air from China is every bit as 
harmful as one from the U.S. or Europe, and you look at all of 
the projections, 80 percent of the emission increases will come 
from developing countries. So this is hugely important. There 
is nothing else like this fund. This would be consistent and 
compatible with everything else. We have vetted it with what 
the G.E.F. is doing, what the United Nations is doing, but what 
this fund is, this fund would be--we already have the Japanese 
and the British interested. We have got a host of other 
developed countries and some developing countries interested, 
and what this fund would do, it has three big objectives.
    The first one is to finance the differential between the 
technologies that are being used in the developing countries 
and the cleanest technologies that are available. Let me step 
back and say, a lot of times the developing countries will say 
to us, ``Well, you polluted in your development phase,'' and I 
will push back, and I will say, ``Yes, but there are a lot of 
technologies that are available today that were not available 
when we polluted, and you need to eliminate tariffs.'' It is 
economically wrong, and it is morally wrong, to not use the 
cleanest technologies and charge tariffs on our technologies. 
We need to get these cleaner technologies used, and this gets 
right at that.
    The second thing is, government is never going to be able 
to pay for all of this, when you look at it economically, so we 
need to find a way to leverage the private sector and get the 
private sector involved, and we need a way to encourage these 
countries to put forward policies that are environmentally 
responsible and have a path to cleaner technologies.
    So this fund is aimed at all of those, and, frankly, in 
terms of some of the details that you have asked, the questions 
about microtechnology and what sectors and so on, those details 
have not been hashed out, and this would be things that I would 
look forward to working with the Committee on as we move 
forward here.
    I think there is a significant role for this Committee. But 
what we have done, and what we have been clear on, is that this 
would be purely related to clean technologies in the developing 
world, and the governance would be the donors, and it would be 
housed at the World Bank because they have a lot of experience 
in doing that. Then, within that framework, I think there is 
some flexibility here.
    Mr. Israel. I would appreciate an opportunity to meet with 
some of the folks on your team to delve into this. There is 
nothing more important to me than this issue, and, in addition 
to being on this Subcommittee, I also serve on the Energy and 
Water Subcommittee. I am not sure what kinds of consultations 
you have had with Secretary Bodman. They have their own 
international program. So it is very important that we get 
together, and I learn more about this.
    Secretary Paulson. We look forward to it. We have consulted 
broadly. This is consistent with everything we are doing in 
this country, and as we have gone around the world, although 
people have put money into a lot of other worthwhile things--
there is a whole series of things that they have put money in, 
but, in my judgment, nothing else--all of that is worthwhile--
nothing else is targeted directly because if this problem is 
not solved over the next 30 years, nothing else is going to 
really make much difference.
    This is targeted there, it is consistent with that, and I 
think there is room. There is nothing I would like more, in the 
time I have got left, than to have our people work with this 
Committee to figure out a path forward here.
    Mr. Israel. I did have another question. My time has 
expired. I am going to send you a letter asking you to give me 
and my colleagues an assessment of the Saudi Financial 
Intelligence Unit. Under Secretary Levy has expressed some 
concerns about some of the stovepiping and Saudi behavior. We 
do not have time now, but I would like to follow up with you on 
that, Mr. Secretary.
    Secretary Paulson. We will respond.
    Ms. Lowey. Thank you. Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Madam Chairman. I appreciate, 
Mr. Secretary, your being here this afternoon.
    Just very quickly, I have a question relating to a report. 
In last year's omnibus spending bill, there was a provision 
included directing the Department of the Treasury to report to 
Congress on currency manipulation of International Monetary 
Fund member countries. I believe, by law, this report is due on 
April 24th. Can you just update me on the status of that 
report?
    Secretary Paulson. We are working to finish that report up 
soon. Usually when people ask about that, they are asking about 
China and currency because, although it is broad, and it is not 
aimed at that, they are usually asking about China. I would 
say, with China, we would still like to see them do more, but 
the pace of change has accelerated. The RENMINBI (RMB) dollar 
broke below seven for the first time today. It has moved about 
18 percent since July. In the last quarter, it has been 
appreciating at about a 16-percent pace on an annualized basis. 
I think they are increasingly seeing we and the IMF and others 
are talking to them continually about this, but I think they 
are also seeing that as they are struggling with some of the 
issues that they have, like inflation and----
    Mr. Knollenberg. I would rather wait for your report. If 
you say it is on the way, that is good enough for me for now.
    Secretary Paulson. When I say ``on the way,'' I do not mean 
``in the mail,'' but you will be getting it in a matter of 
weeks.
    Mr. Knollenberg. Okay. Very good. Let me go to another 
point real quickly. I am a strong supporter of microfinance--
they used to call it ``microcredit''--and its effect on local 
economies around the world. More and more people around the 
world depend on these loans to get their business started. In 
regions and individual countries, the effect of microfinance 
programs, however, is different. I learned the other day that 
it is a little different in Iraq than it is in some of the 
other countries.
    Is it possible that while the program works well in a 
country like Somalia, at the lower level, could we change that 
to a larger number, from, say, $500 to $3,000 or thereabouts, 
because I have been told, from consultation with a variety of 
people, that Iraq requires more money than, say, some of these 
other countries? So would it not be beneficial if we were to 
raise it to a new bracket, a new level, in some of those other 
countries so that they, too, could experience maybe not 
microfinance but something a little above that level?
    Secretary Paulson. I would say this, that in my career and 
in my not-for-profit career before coming to Treasury, I had an 
opportunity to really witness the huge benefits coming from 
microfinance. And I think as a general principle, you are 
right, it needs to be different, in different areas.
    At Treasury, what we have tended to focus on is something 
taking it up to another level still, but still very small 
businesses. And so, we have developed and rolled out programs, 
working with the multilateral development banks and working 
with OPEC in Latin America and in Africa, and where we are 
seeing really impressive results. So, again, you can take this 
all the way up the income scale and small businesses are very 
powerful. And, of course, microfinance is really small 
businesses and I think they are going to have to be scaled 
different and adapted differently, depending on where in the 
world you are rolling it out.
    Mr. Knollenberg. Some of the opportunities that are 
available to first, small business, let us say, I am not 
talking about the microcredit, I am talking about something 
above that, because, as I said, we have been told pretty 
strongly that you cannot work on microcredit alone into the 
Iraq situation. It has got to be above that. I do not know how 
much information there is out there, how much availability 
there is for money for, say, small businesses or for 
entrepreneurs, but we have had conversations with Administrator 
Coor and others on this subject and Iraq does, I think, need 
something well beyond the microcredit level. I understand there 
has to be standards required of whatever monies are placed into 
the small business possibilities in Iraq. But, it would seem to 
me that that is something that we should be looking at very 
closely and it would improve the situation, because, right now, 
I do not think we are getting the bang for the buck, because of 
the opportunities that are missed.
    Secretary Paulson. Yes. What we have is we have a 
relatively few number of key people in Iraq right now dealing 
with the tariff sale, dealing with tariff financing, and then 
we have technical advisors working on budget execution, working 
with the central bank, working on monetary policy, and so on. 
We have a request that is part of the Defense supplemental for 
12 additional people. It is not in Treasury's budget, but it is 
part of that budget, where they would be the kinds of people 
you would need there to work on some of these other programs 
you are referring to.
    Mr. Knollenberg. Thank you, very much. I appreciate your 
response.
    Ms. Lowey. Mr. Jackson.
    Mr. Jackson. Thank you, Madam Secretary, and Mr. Secretary, 
thank you, very much. Thank you, Madam Chairman, and thank you 
Mr. Secretary for your service to the country and for your 
testimony.
    Mr. Secretary, I want to focus a couple of my questions on 
the idea of debt relief. In 1999, I introduced a bill, the Hope 
for Africa Act, human rights opportunity partnership and 
empowerment. One of the tenants of that bill was full debt 
relief for all Sub-Saharan African countries. Secretary 
Paulson, I know you understand the detrimental role that debt 
payments have on many poor countries. Nobody benefits from 
these payments. Many of these debt payments were not incurred 
by the current governments saddled with them and these debts 
just proportionately affect the poor people in these countries 
by preventing the governments from providing basic services, 
like education and healthcare.
    I am concerned that not enough has been done to evaluate 
these debt relief resources. It has been three years since the 
Gleneagles G8 debt relief agreement. I am wondering what impact 
has this debt relief had on development outcomes in recipient 
countries and also how does the United States propose to 
continue funding our commitments to compensate the World Bank 
dollar for dollar for any lost income due to higher levels of 
debt relief?
    And, secondly, last week, our good friend Congresswoman 
Maxine Waters passed out of the financial services committee 
H.R. 2634, the Jubilee Act for Responsible Lending and Expanded 
Debt Cancellation of 2007. Does Treasury support this bill and 
its goal of increasing multilateral debt relief?
    Secretary Paulson. Right. Okay. First of all, Congressman, 
thank you for my home town and thank you for your question. And 
I think you're right on that debt relief has been critical. I 
think you know how aggressive President Bush has been for his 
aid to Africa and in debt relief. I have spent a fair amount of 
time, as our team at Treasury has, working through the debt 
relief for Liberia and a big part of what we are doing with IDA 
and with the big request in increase, and I just want to just 
point out to everybody on this committee that Treasury's 
overall budget went up a little bit and the big increase we 
were proposing for this part of the budget, which does not 
translate into a lot for Treasury overall, is emblematic of the 
importance we place on these programs. And so, look at IDA, 
look at African Development Bank, look at what we have done for 
Liberia.
    And then to get to your arrears, it is not as positive a 
story. We put forward--I am just hoping we get this--we tried a 
different approach this year. Last year, we put in a much 
bigger request. None of it got through Congress. This year, we 
put through what we just absolutely need, the $42 million for 
the World Bank to deal with IDA.
    Now, in terms of Jubilee, I am sure that is a good program. 
This is not something we are pressing, because we think--we 
see--when we are over $800 million in arrears for the debt 
relief for the countries that need it the most and the really 
low-income countries and we are way behind on that. We have not 
got behind the effort, the broader effort, which is I am sure 
very well intended and would be beneficial for the Jubilee 
Program. It is just a matter of priorities and funding what it 
is we have already done and got on the table. But, I appreciate 
your leadership in this area.
    Mr. Jackson. With respect to Liberia for the few moments 
that I have left, can you lay out for us, from your 
perspective, what Treasury's plan is for Liberia? The 
Chairwoman led a delegation of members of this committee to 
Liberia recently and we looked closely at some of the 
structural problems on the ground in that country and, clearly, 
Ellen Johnson Sirleaf is in need of the assistance.
    Secretary Paulson. She is a hero. And there is a lot--first 
of all, you know what we did in terms of the debt relief and 
she is--and I will tell you, she is very grateful for that help 
with the African Development Bank, IMF, the World Bank. And 
what I would like to do, since you are so interested in this, I 
will send a team up to meet with you and just really take you 
through all the things, because this program is really 
multifaceted and a lot of it is focused on capacity building, 
because this is a country--this woman is a true hero. She has 
come into a very difficult situation and she needs help on all 
fronts. And Treasury is much more focused on some of the 
economic capacity building and helping put together a tax 
system and those kinds of things. But, there is really quite a 
broad effort.
    Ms. Lowey. Mr. Crenshaw.
    Mr. Crenshaw. Thank you, Madam Chairwoman, and thank you, 
Mr. Secretary. We talked a little about the frustration with 
the World Bank, especially in light of the fact that the U.N. 
Security Council has now passed another round of sanctions. But 
be that as it may, I want to commend you and the administration 
on some of the things you have done dealing with some of the 
state-owned Iranian banks, because I think that it has helped 
other banks, major banks, to have a willingness to deal with 
them. But, there are a lot of smaller banks, as you know, that 
still tend to deal with those big Iranian state-owned banks. 
And I wonder are we doing enough? Are we as aggressive as we 
ought to be? Because, I think in the big picture, it is 
working. But, when you have a handful of smaller banks that are 
still violating the law, it seems like maybe we should be more 
aggressive with them and get them on the right side.
    Secretary Paulson. Well, I would say this, I think what we 
did differently, from the time I came down here, was, in 
addition to working--and I really do believe sanctions are 
much, much more effective--I have watched it--if they are 
multilateral, okay. And if they are based on good concrete 
evidence and you can do something on a multilateral basis.
    But one of the things we did was we reached out, rather 
than just going through the governments, we went to the heads 
of commercial banks all over the world, recognizing these are 
run by good people, that they do not want to be doing, funding 
terrorism, funding weapons acquisitions inadvertently, and 
there were a lot of tricks that were being used and the lack of 
transparency in u-turn transactions. So, we spent a fair amount 
of time and it has made a big difference. And I do not think it 
is as much the big bank versus the small bank, as it is by 
country. But one of the things that I found is that countries, 
banks care what the U.S. Treasury thinks about them. And we 
have worked very hard with European banks. I have spent time 
with China and the big banks in China. We have got more work to 
do with certain banks in the Middle East and Secretary Levy 
just got back from a very productive trip there. I think the 
way--all evidence is, it is making a difference. But this, like 
anything else, is not a knockout punch. But, these are measures 
that clearly have an effect and really need to be continued.
    Mr. Jackson. That is encouraging. You mentioned sanctions 
when the multilateral, obviously, are more effective than 
unilateral. Let me ask you this, in light of that, this new 
security council resolution, even though some people argued it 
got watered down a little bit to please China and Russia, but I 
am wondering, is this kind of maybe the beginning for some of 
our European allies to be more involved?
    Secretary Paulson. Our European allies have been helpful in 
this and a number of things. This has not been as forceful as 
we would have liked, but it clearly does call for vigilance. 
And I think now there is room to follow-up coming out of the EU 
with something that would be, again, multilateral.
    Mr. Jackson. Are we having conversations with them about--
--
    Secretary Paulson. We are having nonstop conversations, and 
that will be something that we will talk about this weekend. It 
is something whenever I have another finance minister or anyone 
at any level from any of these governments come and sit down, I 
have Stewart Levy there. We go through this and we want their 
cooperation, first, with the U.N., and if it--we do not get 
everything we want there, then let us do it at the EU level, do 
it at the FATF. You know, it is been very--there has been some 
things done that have not got a lot of publicity, but, believe 
me, the Iranians have noticed it.
    Mr. Jackson. By the way, my time has run out, but any 
chance ever getting China to kind of step up?
    Secretary Paulson. Well, I would say this--we would like 
China, as well as others to do more. China has been supportive 
of a number of the resolutions and as far as I can see, there 
are major banks and they are very sensitive to this, have 
respect of those resolutions. We spend time reminding them of 
the importance of that. And so, again, there is--and what you 
saw happen at the Financial Action Task Force, which, again, 
cited, it is a multilateral effort, which cited Iran and their 
financial system. So, this is having an impact and it will 
continue to have an impact.
    Mr. Jackson. Thank you, sir.
    Secretary Paulson. This is something where you cannot look 
for a knockout punch, but we need to continue it and I just 
hope we continue it long after I am gone, unless and until they 
change their behavior, which hopefully will not take until long 
after I am gone.
    Ms. Lowey. Ms. Lee.
    Ms. Lee. Thank you, Madam Chair. Good afternoon, Secretary. 
Good to see you. Thank you for your testimony. Let me just say, 
first, I know this is not the subject of today's hearing, but I 
am glad to see that the administration is finally beginning to 
recognize that there is a housing crisis and that we cannot 
bail out only lenders and builders and forget the plight of 
individual homeowners. I do not believe the administration's 
plan goes far enough, but I hope that you will work with 
Congress to make sure that homeowners get some relief.
    Secretary Paulson. Congresswoman, thank you. I do not need 
to sound defensive, but I have to tell you that I, personally, 
and the President and this administration has been all over 
this issue from early this summer, looking to take actions that 
can be taken, with the help of Congress, and looking to take 
actions that can be done without legislation, when it has been 
supported by Congress. And there is a lot that we are taking 
without legislation and I am looking forward to some of the 
things that are being worked on, actually becoming law, 
including FHA modernization, which I have been waiting six 
months for from Congress, which will help. So, we are all over 
it. It is an issue and it is a significant issue and I care a 
lot about it and the administration does and Congress does and 
we can keep working on it.
    Ms. Lee. Thank you. I think this is millions--where we have 
to work together, millions of homeowners.
    Secretary Paulson. Right.
    Ms. Lee. This American dream of home ownership really is 
turning into a nightmare for millions of Americans.
    Let me ask you a couple of questions, one as it relates to 
Darfur. First, I am very pleased that the Congress passed and 
the President signed the Sudan Accountability and Investment 
Act into law. I think the President signed it last December, 
very quietly. It was after--during the holidays, I think. But, 
it was really shocking to me that he issued a signing 
statement. And I just want to read you what the signing 
statement says, because we held a hearing, the House Financial 
Services Committee held a hearing, asked the administration to 
come. No one from the administration was willing to come and 
stand behind this President's signing statement. His signing 
statement said, let me read it to you, ``this Act purports to 
authorize state and local governments to divest from companies 
doing business in main sectors in Sudan and, thus, risk being 
interpreted as insulating from federal oversight, state and 
local divestment actions that could interfere with the 
implementation of national foreign policy. However, as the 
Constitution vests the exclusive authority to conduct foreign 
relations with the federal government, the executive branch 
shall construe and enforce this legislation in a manner that 
does not conflict with that authority.''
    So, I would like for you to clarify the President's signing 
statement for me and I want to know really, have you been 
instructed by the White House not to enforce any of the 
provisions in this new law? Genocide is taking place, as we 
speak.
    Secretary Paulson. Well, I would just simply say that in 
terms of Treasury--first of all, I believe that this 
administration has been very focused on Darfur for a long time, 
long before I got here, and has made herculean efforts to do 
something and make a difference. And I remember talking to Bob 
Zoellick, when he was at State Department, long before I got 
here, and others, that the Treasury has--we have at Treasury 
cited and sanctioned, working with State and with the White 
House, individuals in the government, close to the government, 
that as promoting terrorism, illicit finance, and have been all 
over that.
    Ms. Lee. I understand.
    Secretary Paulson. And I think it makes a significant 
difference.
    Ms. Lee. But, that is why I am surprised, though, that the 
signing statement was issued by the President, in essence, 
undermining the law that we all worked on together.
    Secretary Paulson. Well, I will--that is definitely not my 
interpretation of that, but I would be very happy to pass your 
comments on and having someone come up and brief you on that.
    Ms. Lee. Thank you, very much. And my second question has 
to do with OFAC and Cuba. GAO recently conducted a study and 
found that 61 percent of OFAC's enforcement was spent on Cuba 
sanctions. Now, I am going to ask you, do travelers to Cuba 
pose a terrorist threat to the United States? Why are we 
wasting so much money enforcing sanctions against people who 
travel back and forth to Cuba?
    Secretary Paulson. No. And what you need to understand is 
most of the energy and initiative from OFAC is aimed at other 
areas. What you are looking at is a group of people that 
enforce the law and do the licensing for travel. And I do not 
have--I was coming here to talk about other topics, so I am 
directionally going to be right and if I am not totally right, 
then someone will correct it for the record. But, I believe 
that the unit at OFAC that deals with licenses for travel to 
Cuba processes upwards of 50,000 a year. So, what you are 
seeing with that group is most of just processing licenses. And 
everything that I have seen, and I think what you see, is 
people coming in complaining if there is a particular problem. 
But, everything I have seen is that the numbers have increased 
and that process has been going smoothly. And so what they are 
doing is not focusing on terrorism. OFAC has got other 
initiatives, but this is just simply largely licensing and the 
administrative process for travel to Cuba and enforcing the law 
there.
    Ms. Lee. Well, if we have another go round, Madam Chair, I 
would like to follow-up with that.
    Ms. Lowey. Mr. Rothman.
    Mr. Rothman. Thank you, Madame Chairman.
    Mr. Secretary, thank you for being here. Thank you for your 
service to our country.
    Secretary Paulson. Thank you.
    Mr. Rothman. I wanted to ask you first about Iran's central 
bank, Bank Markazi. I know the administration and others in the 
world community have imposed sanctions on transactions 
involving Iranian banks and they have been somewhat successful 
with some small and large banks in Iran. But we are told in 
particular by the Financial Crimes Enforcement Network, among 
others, and the State Department, that Iran is still able to 
use its central bank, Bank Markazi, to funnel international 
money into Iran for various development purposes that have been 
prohibited or sanctioned by the US and the international 
community.
    What more can the U.S. do? What is the U.S. doing with 
regards to Iran's central bank? And specifically, why has the 
bank not been designated pursuant to Executive Order 13224 or 
13382?
    Secretary Paulson. First off, thank you for that question. 
I think I first highlighted this issue in a speech I made at 
the Council on Foreign Relations in New York in June where I 
talked about multilateral sanctions and sanctions based upon 
strong evidence, and when we had strong intelligence and being 
able to take actions. At that time I put a big spotlight on 
Markazi and the work they had done when Sepah and a number of 
the other banks had had problems.
    I think on that, I do not think it is appropriate for me to 
comment on any actions we have not yet taken, other than to say 
we are reviewing these carefully all the time. When we believe 
it makes sense and when we have the right basis and it is the 
right time, we will take the appropriate action. We have been 
watching the central bank closely and we have been talking 
about it publicly.
    Mr. Rothman. That is a tantalizing answer implying that 
either the allegations of the actions of the central bank are 
not worth our attention or that our strategy has not matured 
enough to be executed.
    Secretary Paulson. If I thought it was not worth our 
attention I would not have spoken about it.
    Mr. Rothman. So is it the latter, that our strategy is not 
mature enough yet to be executed?
    Secretary Paulson. I am not going to say it is not mature 
enough. I do not think I should be commenting on our 
intelligence strategy in a public hearing----
    Mr. Rothman. That is a different answer and I respect that.
    Secretary Paulson [continuing]. Real time.
    Mr. Rothman. Fair enough.
    Secretary Paulson. But this is something that, we are 
focused on Iran and we are well aware of Markazi.
    Mr. Rothman. Fair enough. So perhaps in a closed setting 
there might be a different answer.
    Secretary Paulson. Perhaps. But clearly this is----
    Mr. Rothman. It has not escaped your attention.
    Secretary Paulson. It has not escaped our attention.
    Mr. Rothman. Fair enough.
    Secretary Paulson. I will send you a copy of my remarks.
    We are intensely focused on Iran and their financial sector 
and you cannot do that without focusing on their central bank 
and its actions.
    Mr. Rothman. I have another question on Saudi Arabia. As 
you know, cooperation from Arab and Muslim countries is crucial 
in the global fight against terror financing. Have regulations 
been put in place to ensure that Saudi international charities 
are not funding terrorism? And what can you tell the committee 
about Saudi funding of Hamas?
    Secretary Paulson. This is a complicated and important 
topic. Again, this is one that I am sure Stewart Levy would 
come up and in a closed session talk to you about this, but let 
me say in open session that there have been big strides made in 
the way in which Saudis have cooperated with U.S. intelligence 
in dealing with terrorist finance. Okay? So there has been 
major progress, close cooperation, they are a close ally. There 
is clearly----
    Mr. Rothman. Is it fair, Mr. Secretary, to say that----
    Secretary Paulson. Let me just finish.
    Mr. Rothman [continuing]. It continues to be, will continue 
to be during your stewardship a serious, continuous focus on 
Saudi Arabia----
    Secretary Paulson. Yes, and----
    Mr. Rothman [continuing]. And the funding of terrorism?
    Secretary Paulson. Yes, but there is room, as you said, 
there is room for improvement in certain areas, and in terms of 
Saudi funds which leave the country, and so I think dealing 
with financing outside of the country, it is a difficult, it is 
a complex issue. More needs to be done. There is room for a lot 
of improvement in that area.
    Mr. Rothman. And you are working to make those 
improvements?
    Secretary Paulson. We are continually working to make those 
improvements.
    Mr. Rothman. Thank you, Mr. Secretary.
    Secretary Paulson. But it takes two to make the 
improvements. We cannot unilaterally make the improvements, so 
we are working.
    Mr. Rothman. Hopefully we have some leverage with them.
    Secretary Paulson. Yes.
    Mr. Rothman. Thank you, Madame Chairman.
    Ms. Lowey. Thank you, Mr. Rothman.
    Mr. Schiff.
    Mr. Schiff. Thank you, Madame Chair.
    I wanted to follow up on my colleagues questions about the 
Iranian central bank. I had a chance to ask you about it at one 
of your prior appearances before the subcommittee and I have 
also raised it with your counterpart at Commerce and with the 
Secretary of State.
    It seems that, not just with respect to the central bank 
but also with energy companies that are doing business, Swiss 
companies and others, with Iran, that we probably have the 
information we need to take actions under the Iran Sanctions 
Act. We have not done it. I am sure there are reasons why that 
is the case. But in Congress we are kind of left in the dark 
about it. We provide a tool and it looks like the tool is not 
being applied, and I think under the Iran Sanctions Act the 
process is to report to Congress about a violation and a 
decision to waive the violation or not pursue it for national 
security or other reasons. But I want to renew the request I 
have made because we have not heard from any department yet 
about what kind of investigations are ongoing, in the past 
where have those investigations led, why have we decided either 
not to take action or are we planning to take action when we 
get further information?
    Secretary Paulson. Let me give you, which may not be a 
totally satisfactory answer to you, but the first thing is the 
sanctions, this is not a province of Treasury. This is State 
Department so this is out of my lane. But I am interested in 
the area and I will just give you an answer from 100,000 feet 
which is consistent with what I said to an earlier question.
    I have watched behavior and I believe it is just in general 
in this world, this is not always true, but we will have much 
more success if we do something on a multilateral basis. It 
will really have an impact.
    So if we and when we are working with countries and making 
progress to do something on a multilateral basis, if then the 
U.S., using its extraterritorial reach, goes in and starts 
sanctioning on an ad hoc basis countries, that may actually 
work to help the regime we are trying to affect because it may 
undermine the multilateral effort. But that should not be taken 
as an answer to any specific why we under any sanctions act we 
have not sanctioned anyone or why, the sanctions program, 
because this is not something that is in the control of 
Treasury and I think you should get someone from the State 
Department to come up and brief you.
    Mr. Schiff. I agree, and we have asked for that. Both the 
information and the briefing. None of it has taken place yet.
    The State Department has its tools. You have your tools. It 
may not be under the Iran Sanctions Act, but you have used 
those tools, as I understand it, in dealing with some of the 
other private banks in Iran that were skirting the prohibitions 
on financing terrorist organizations.
    Secretary Paulson. Right.
    Mr. Schiff. So you do have tools in your tool box that have 
been employed with some of those private banks. The question my 
colleague asked, which I am interested in too, is why are we 
not employing those tools with respect to the central bank if 
they are doing the same thing.
    Now I understand there may be reasons and you have alluded 
to some.
    Secretary Paulson. I cannot answer this any differently for 
you than I did for him, so----
    Mr. Schiff. What I am trying to express is that----
    Secretary Paulson. You would like to see us use our tool 
and----
    Mr. Schiff. More than that. We would like to know when we 
give you tools that either you are using them or you have a 
good reason not to use them, and if you cannot describe in open 
session why you are not using them, then I would ask that you 
discuss with us in closed session what the status of our 
investigations are, what we have concluded, why we have decided 
that, for example, there is a Swiss company that is going to 
invest in Iran's energy sector. Again, this is out of your 
bailiwick, but----
    Secretary Paulson. We should probably stick to the central 
bank and----
    Mr. Schiff. All right, let us stick to the central bank.
    Secretary Paulson. And that I will have Stewart Levy or one 
of his people come up and talk to you and tell you what we know 
about that situation. I think in this area when it comes to 
dealing with actions taken against Iranian banks, and I think a 
very imaginative set of actions in terms of going to all kinds 
of other banks around the world, you will like what you see and 
you will see a level of activity from the Treasury Secretary on 
down which I think has been extraordinary. I think the reason 
everybody is focused on the central bank is because I have 
talked about it and we have talked about it publicly. So we are 
all over that.
    We will, when we think it is appropriate to do something 
there, we will, and I would be very happy to talk to you, have 
our people talk to you about it privately.
    Mr. Schiff. Thank you very much, Mr. Secretary.
    Thank you, Madame Chair.
    Ms. Lowey. I want to thank you, Mr. Secretary, for your 
open, forthright presentation. I would like to thank our two 
gentlemen here for bringing this very important issue to this 
hearing. I would like to follow up with you in whatever medium 
is appropriate in a closed session because it is frustrating to 
us that you interact with China, you interact with Russia, you 
interact with the European states. We understand that a 
multilateral response is essential. We also understand that 
sanctions where you and the United States have taken the lead 
are not as effective because we do not have the cooperation of 
China, Russia and the European Union.
    So we understand that the Secretary of State and the 
Department of State may be taking the lead. We also understand 
that the sanctions are not strong enough, and that through your 
interaction you have some tools in your tool box that could be 
helpful if we work as a team.
    Secretary Paulson. I would suggest that it would be quite 
helpful, and I would have some of our people who do this, come 
up in a closed session to talk about what it is that Treasury 
does, what we have in our tool box, and the things we deal 
with. And that is to a large extent focused on the financial 
sector, but it is also focused on individuals and what we are 
doing and why we are doing it. I think that would be very 
useful and I think our people would very much appreciate that 
opportunity.
    Ms. Lowey. I would appreciate that. We will arrange it. But 
I want to make it clear, for those of us who have been working 
on this issue for many years, it is very frustrating that we 
cannot engage China more aggressively, and we cannot engage 
Russia and the European Union. But I will save this discussion 
for the closed session.
    Secretary Paulson. I would say in terms of China we have 
been very involved with, and I have been very involved 
personally with the financial sector there. And in terms of 
engaging them. Stewart Levy has been very involved. So our 
focus has been on the financial sector on a whole variety of 
things. So I think they could go with you, Stewart could go 
through with you, or someone country by country what we are 
doing and how it all fits together.
    Ms. Lowey. That is very helpful, and let me thank you, Mr. 
Secretary. This has been a really good hearing. So we thank you 
very much.
    I am going to close this hearing because we are expecting 
votes momentarily, and we will continue this discussion. Thank 
you.
    Secretary Paulson. Thank you very much.
    Ms. Lowey. Thank you very much. This committee is 
adjourned.

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                            W I T N E S S E S

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                                                                   Page
Brainard, Lael...................................................     1
Bush, Mary.......................................................     1
Crocker, Ambassador, R. C........................................   147
Dybul, Ambassador Mark...........................................   525
Fore, H. H.......................................................   281
Hill, Kent.......................................................   525
Hindery, Leo.....................................................     1
Kennedy, P. F....................................................   381
Negroponte, J. D.................................................   651
Paulson, Hon. H. M., Jr..........................................   917
Rice, Hon. Condoleeza............................................   741
Rupp, George.....................................................     1
Silverberg, Kristen..............................................   809