[Senate Hearing 110-368]
[From the U.S. Government Publishing Office]
S. Hrg. 110-368
S. 2232, THE FOREIGN AID LESSONS FOR DOMESTIC ECONOMIC ASSISTANCE ACT
OF 2007
=======================================================================
HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 27, 2008
__________
Printed for the use of the Committee on Indian Affairs
----------
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COMMITTEE ON INDIAN AFFAIRS
BYRON L. DORGAN, North Dakota, Chairman
LISA MURKOWSKI, Alaska, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota TOM COBURN, M.D., Oklahoma
DANIEL K. AKAKA, Hawaii JOHN BARRASSO, Wyoming
TIM JOHNSON, South Dakota PETE V. DOMENICI, New Mexico
MARIA CANTWELL, Washington GORDON H. SMITH, Oregon
CLAIRE McCASKILL, Missouri RICHARD BURR, North Carolina
JON TESTER, Montana
Allison Binney, Majority Staff Director and Chief Counsel
David A. Mullon Jr. Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on February 27, 2008................................ 1
Statement of Senator Dorgan...................................... 1
Statement of Senator Inouye...................................... 4
Prepared statement........................................... 4
Statement of Senator Murkowski................................... 3
Witnesses
Anderson, Ralph, CEO, Bristol Bay Native Association............. 20
Prepared statement........................................... 22
Applegarth, Hon. Paul V., CEO, Value Enhancement International... 26
Prepared statement........................................... 30
Brink, Zack, Executive Vice President, Association of Village
Council Presidents............................................. 24
Prepared statement........................................... 25
Crow, Matthew, Deputy Assistant Secretary for External Affairs
and Communications, Economic Development Administration, U.S.
Department of Commerce......................................... 8
Prepared statement........................................... 10
Kitka, Julie, President, Alaska Federation of Natives;
accompanied by Byron I. Mallot, Director, Sealaska Corporation. 16
Prepared statement........................................... 17
Stevens, Hon. Ted, U.S. Senator from Alaska...................... 5
Prepared statement........................................... 7
Appendix
AVCP/BBNA, joint funding proposal................................ 46
National Congress of American Indians, prepared statement........ 43
Support Resolutions for the ``Native American Challenge
Demonstration Project Act''.................................... 129
S. 2232, THE FOREIGN AID LESSONS FOR
DOMESTIC ECONOMIC ASSISTANCE ACT OF 2007
----------
WEDNESDAY, FEBRUARY 27, 2008
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 9:35 a.m. in room
485, Russell Senate Office Building, Hon. Byron L. Dorgan,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
The Chairman. We will begin the hearing today. My
colleague, Senator Murkowski, is on her way and will be here
momentarily. I will make an opening statement and I expect she
will be here and I will recognize her for an opening statement.
Then we have Senator Stevens, who has joined us, who will be
the first witness.
Today, the Committee is going to hold a hearing on S. 2232,
the Foreign Aid Lessons for Domestic Assistance Act of 2007.
This hearing is being held at the request of Vice Chairman
Murkowski. Witnesses will include representatives from the
Administration, various tribal leaders, and experts on economic
development initiatives that are included in this bill.
As many of us know, there are obstacles to individual
Indians and to Indian tribes that wish to stimulate economic
development in their communities. Many of the communities
continue to face extreme poverty, severe health disparities,
overcrowding and substandard housing, substance abuse problems,
a weak education system, and the list goes on.
I think most of us would say this is unacceptable and we
have to change it. One of the ways to change is to provide more
opportunity and jobs. Similar to Third World countries, many of
the social issues faced by Indian tribes in America are a
result of underdeveloped and unstable economies and
governments.
Stable economic growth for these communities, creating jobs
and lasting livelihoods, ought to be a paramount goal for all
of us. I think there are many different ways and many
possibilities and policy choices for how to improve economic
development in Indian Country. There are opportunities with
respect to energy development that I think are very significant
opportunities on Indian lands; and opportunities in the
information technology sector. For example, the Mandan-Hidatsa-
Arikara Nation, in my State, own and operate a successful
document conversion program that is providing very important
jobs.
Today's hearing will focus on a legislative proposal that
has been offered by Senator Stevens to create an economic
development pilot project in Indian Country modeled after the
Millennium Challenge Corporation. In 2004, the Congress
authorized the Millennium Challenge account to be managed by
the Millennium Challenge Corporation. It seeks to provide
assistance through a competitive selection process to
developing nations that are pursuing political and economic
reforms.
I look forward to all of the testimony today and to the
perspectives on the merits of this proposal and other proposals
before us that would deal with economic development. We have
asked our witnesses to provide full written statements, and ask
that witnesses would summarize their comments in five minutes
or less.
Let me say that at the request of Senator Murkowski, I am
holding this hearing. There are a wide range of proposals on
economic development that we will and should consider. This
piece of legislation, authored by our colleague, is one of
those, and we are very pleased that he is able to be with us
today to explain the legislation and the purpose and intent of
the legislation.
We established this hearing on relatively short notice last
week, and I am going to ask Senator Murkowski to chair the
second half of the hearing today. I can only be here for the
first half. But let me thank her for recommending this hearing,
and recognize Senator Murkowski for an opening statement.
Before I do, I do want to say, however, and we will do this
more appropriately at a later date, but yesterday on the floor
of the United States Senate for the first time in 16 years, the
United States Senate passed a piece of legislation to improve
Indian health care. That is no small feat. It has taken us year
after year after year after year to convince the Senate finally
to move forward on Indian health care.
My colleague, Senator Inouye, who has just entered the
room, has been Chairman of this Committee for many, many years,
and has worked on this issue. My colleague, Senator Ben
Nighthorse Campbell worked on this issue. Our colleague,
Senator McCain, worked on it as Chairman of the Committee. My
colleague, Senator Murkowski worked on it with me.
I couldn't be more pleased that we have finally, at long,
long last, made some progress. I look forward to the House
passing its bill and having a conference, and with Senator
Murkowski and other members of this Committee being able to
send a bill to the President for his signature. For the first
time in 16 years we will have made a step in the right
direction on something that is not optional, something that is
mandatory, and that is keeping America's promise with respect
to the health consequences and the health delivery system for
the first Americans.
So Senator Murkowski, thank you for your work on that
important piece of legislation. I know you felt, as I did
yesterday, that it was a significant victory for those who are
the first Americans.
Senator Murkowski?
STATEMENT OF HON. LISA MURKOWSKI,
U.S. SENATOR FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman.
It was a very good day yesterday for Indian Country. I
think we would all agree. I had an opportunity this morning to
meet with a good handful of constituents from Alaska, many
coming from our villages, many Alaska Natives. The enthusiasm
is shared, let me tell you, about finally after all these years
moving the Indian Health Care Improvement Act through the
Senate.
So I appreciate your leadership on it, and know that we are
only halfway, but it is a very good start, and I look forward
to advancing that.
I want to thank you, Chairman Dorgan, for agreeing to take
up the legislation that we have in front of us today, the
Foreign Aid Lessons for Domestic Economic Assistance Act. I
want to thank those that have traveled quite a ways to be with
us here this morning. We have a few of our Alaska Native
leaders. Byron Mallot is back there. We have Julie Kitka from
AFN; Nelson Angapak back there; Ralph Anderson; Zack Brink,
thank you.
This legislation, introduced by Senator Stevens, really
builds on the best practices of the international economic
development and the successful principles of tribal self-
determination here in the United States. I want to thank you,
Senator Stevens, for introducing this legislation and for your
continued commitment to the Native people of Alaska.
I also want to recognize the very diligent work of Alaska
Federation of Natives, AFN, in changing the economic landscape
in rural Alaska and mapping the economic future of the Native
people by merging culture and merging development. We know that
the ingenuity of the Alaska Native people has enabled them to
not only survive, but to thrive for centuries in one of the
harshest, most unforgiving environments. It is that ingenuity
that will enable them to strive into the future in their effort
to harness the private market, to raise the standard of living
and the social well being of rural Alaska.
I appreciate the recognition and the importance that AFN
has placed on sustaining the cultures of the Alaska Native
people, in their effort to apply proven models of economic
development. We know that this diligence to provide new
opportunities for the future of generations of rural Alaskans
will make that difference.
AFN has done some very innovative things. We have engaged
world-renowned economists such as Hernando DeSoto, and the
larger international economic development community, to think
about the economic realities that our rural residents face. The
leadership forums that AFN has hosted in 2004 and 2006 have
been pivotal in building relationships between rural Alaska and
the global community such as the World Bank. It is these forums
that enable them to share the ideas, the methods and practices
of integrating indigenous peoples into the market economy, of
realizing indigenous development potential, and of recognizing
the importance of local cultures.
The Alaska Marketplace is a great example of a success
which integrates culture and development in a competition of
business ideas, bringing together rural entrepreneurs with
technical experts and financiers to bring the development ideas
of the entrepreneurs into life. When you sit down and you talk
to them, a lot of these are young people with great ideas, who
need just a little bit of that financial backing to kick-start
an idea that is going to make a difference within their
community.
I truly appreciate all that Senator Stevens has done in
cultivating all of this activity through the legislation that
we have before us today. Whether it is the Alaska Marketplace,
the developments that we are seeing invigorate this
entrepreneurial spirit in rural Alaska, making it more
investor-friendly, forging a new path in economic development
in our Native communities.
I am looking forward to the testimony that we will hear
this morning, and encouraging this important legislation to
move forward.
With that, Mr. Chairman, I thank you for your time here
this morning. I know that you have other commitments, but I am
glad that you will be able to hear at least a portion of what
we have this morning.
The Chairman. Senator Murkowski, thank you very much.
Senator Inouye?
STATEMENT OF HON. DANIEL K. INOUYE,
U.S. SENATOR FROM HAWAII
Senator Inouye. Thank you, Mr. Chairman.
I commend the Committee for holding this important hearing,
and I wish to commend my friend and colleague, Senator Stevens,
for authoring this bill. This bill will play an important role
in reviving the economies of many of our Native communities.
I ask that the full statement be made part of the record.
The Chairman. Without objection.
[The prepared statement of Senator Inouye follows:]
Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
Thank you Mr. Chairman. I commend the Committee for holding this
important hearing on S. 2232. I wish to commend my colleague and friend
Senator Stevens for authoring this legislation. This bill will play an
important role in reviving the dire economies of many of our Native
communities.
Many of our Native communities continue to suffer from
disproportionately high rates of unemployment, poverty, substandard
living conditions, and poor health. This legislation has been developed
to remedy some of the disparities mentioned earlier by creating long-
term jobs, revenue opportunities, and an investment favorable climate
which would in turn increase Native productivity in some of the poorest
Alaska Native, Native Hawaiian, and Native American communities.
I believe that this legislation will not only provide a wealth of
opportunities but I have always said that one day native peoples will
have to find other means to sustain themselves. Over the years, I have
personally witnessed the Indian Gaming Industry grow into a multi-
billion dollar industry. It has proven to be one of the most successful
economic development tools for Indian Country. Over 200 tribes have
taken advantage of this thriving economic opportunity to provide funds
for government operations, and social programs.
Although gaming has proved to be a success for some tribes it is
not a solution for every community.
As a cosponsor of this legislation, I would like to urge my
colleagues to support this legislation and look forward to working with
them on this initiative. Once again I thank you Mr. Chairman for
holding this important hearing.
The Chairman. Senator Stevens, thank you for joining us
this morning. We will recognize you and you may proceed.
STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
Senator Stevens. Thank you very much, Mr. Chairman.
I follow my good friend and colleague, and we have another
hearing, so I would ask that my statement be printed in full in
the record, as you indicated.
Mr. Chairman, I would hope that this bill might stimulate
another visit to Alaska by this Committee. It has been a long
time. I really believe that those who deal with Indian affairs
primarily in the South 48 have to get a grasp of the problems
that our people in Alaska face with regard to economic
development.
We have 241 villages spread throughout an area that is one-
fifth the size of the United States. The principal area of the
northwest is larger than Texas, and it has scattered villages
there. These villages can be reached year round only by air.
Seventy percent, as a matter of fact, of all the cities and
villages of the State can be reached year round only by air.
They have some summertime boat supply, but basically their
transportation is by air.
We have an isolation that is just absolutely unheard of,
really, in terms of the total Indian affairs of the Country.
Most Indians in the South 48, and I had some experience with
them back when I was in the Interior Department, are in areas
where they are fairly contiguous. Our people are spread out so
much that any economic development is very difficult to
maintain.
You may recall that in the Alaska Native Claims Settlement
Act, Section VII(I), which requires that if any regional
corporation received monies from resource development, they had
to share 70 percent of that with the other regions in the
State. There were 12 regions in the State. We tried to find a
way to broaden opportunity that came from resource development.
That has proven helpful, but it hasn't really gotten down to
the village level.
I want to give really great credit to Julie Kitka,
President of the Alaska Federation of Natives, for suggesting
that we go this direction and look to the Millennium Challenge
as an example of what can be done if our Federal Government
puts its mind to finding a way to assist people in very rural
areas to achieve some economic development, and achieve it and
maintain it.
The difficulties of the past have primarily been we have
had spot programs that have come in and helped individual
villages, but we have not been able to sustain that because of
transportation and communications problems. Now, if you can
bring the Committee to the State, and I really do urge it. We
have made arrangements that the National Guard will take you
throughout the State, and really have a chance to visit these
areas and see the differences between them.
But the real problem is the sustainability of this kind of
development. In the past, it was really improbable. We could
not tell you it could be done. But today, because of
telecommunication and the expansion now of broadband to these
areas, they have opportunities that we have never thought of
before.
There is no reason why Hyatt, for instance, should have
people answering their phones in India. They could very easily
be answered in our villages or some of the Indian reservations
in the U.S. We have to find some way to give an incentive to
bring some of these jobs back home.
The reason that they went to India, of course, was their
nation subsidized the establishment of enormous phone banks.
Now, with the advent of new types of communication, we can beat
that very easily, provided we have the incentive to have these
jobs come home.
I think this Committee in particular has the toughest job
of any in terms of trying to bring about economic development,
because of the isolation of our people and because of the lack
of development on the Indian reservations in the South 48.
I hope that this will be an example. If we can get this
bill passed, it would show what can be done if the Federal
Government decides to combine the efforts of all the agencies
and try to bring about and sustain economic development in
areas where people currently think it is not possible.
So again, I thank you very much for holding the hearing. I
do hope that my colleague from Hawaii, and by the way, they
have a similar situation. If you look at Hawaii, Hawaii's outer
islands really make Hawaii larger than our State. We have half
the coastline of the United States, but they have this enormous
bank of islands out there with the indigenous people still
living there. They, too, have a problem, and they need a
challenge. There is no reason why this bill can't be expanded
in the first instance to include Hawaii, if that is your desire
to do so. It would make a lot of sense, because with the advent
of new communications, not telecommunications, but really total
communications, a communications-based economy in these areas
where they have many people.
By the way, our students out there are computer literate at
the age of eight. We have the highest penetration of computer
literacy in the Country. Out there in those areas, those
schools are teaching children how to use the new systems that
many people of the South 48 are not using. At a very young age,
they are into computer development, into internet access, and
they can find jobs related to the new kind of economy, the
internet economy, if we work to make it happen.
So I thank you for the hearing. I hope you will think about
coming up. We can find some very nice times to come up. These
people can show you some of the best fishing in the world and
other things, too. One time in the past, we took the whole
Appropriations Committee to Alaska, and it was a very
enlightening trip. I think that those who went along, there
were 14 who went along, and went throughout the State and they
learned a great deal, and they in years after that were very
receptive to some of the ideas we had about trying to help
Alaska per se.
I make the same suggestion to this Committee in terms of
trying to look at these villages and see what this plan means
to those villages if it properly implemented.
So I do thank you for your time. We have a lot of good
friends here in the audience who are going to testify. I wish
we could stay, but Senator Inouye and I have to have our own
committee. We have revolving chairs, you know, so he is
Chairman now.
Thank you very much.
[The prepared statement of Senator Stevens follows:]
Prepared Statement of Hon. Ted Stevens,
U.S. Senator from Alaska
I'm pleased to be here this morning to offer my support for the
bill before your Committee today--S. 2232, the ``Foreign Aid Lessons
for Domestic Assistance Act of 2007.'' I introduced this bill, along
with you and Senators Inouye and Akaka, in the Senate in October 2007.
Welcome to our Alaska friends who are here today to testify on
behalf of this legislation--Julie Kitka, President of the Alaska
Federation of Natives, Zack Brink, President of the Association of
Village Council Presidents and Ralph Anderson, Executive Director of
the Bristol Bay Native Association, and other Alaska Natives here today
to offer support.
First, Madame Chairwoman, congratulations to you and Chairman
Dorgan on securing passage--after 10 years of efforts--of the
reauthorization of the Indian Health Care Improvement Act yesterday on
the Senate floor. It contains provisions that will benefit all Alaska
Natives and American Indians. I am a cosponsor of that important
legislation, and I look forward to its speedy consideration by the
House and signing by the President.
Today, however, your Committee turns its attention to another area
of critical importance to the well-being of American Indians, Alaska
Natives and Native Hawaiians--economic success and independence.
Despite modest improvements in the economic and social
circumstances of American Indians, Alaska Natives and Native Hawaiians,
they continue to have extremely high rates of unemployment and poverty,
poor health, substandard housing and the related ills of alcohol and
drug abuse. Native people have vibrant cultural legacies and abundant
natural resources on and under their lands and in their waters. Many
Native communities have marketable timber, huge reserves of coal,
natural gas, oil, fish and shellfish and other natural amenities.
At the same time, Native economies are hobbled by geographic
remoteness, distance from markets and population centers, poor physical
infrastructure, and a lack of governmental transparency contributing to
stagnating Native American economies.
Because Native economies are often plagued by the same challenges
as the economies of the developing world, Native economies are likely
to benefit from the application of proven models employed in
international development efforts, most notable the Millennium
Challenge Act of 2003. This initiative aims to foster those policies
that are known to be effective and reduce poverty and promote
sustainable economic growth in the host country. Typically, the
activities that are assisted are related to agriculture, irrigation,
and related land practices, physical infrastructure development to
facilitate marketing of goods and services, and a variety of health
care programs.
Similarly, the objectives of the legislation before your Committee
today are just as straightforward: enhancing the long term job creation
and revenue generation potential of Native economies by creating
investment-favorable climates and increasing Native productivity.
The Foreign Aid Lessons for Domestic Economic Assistance Act will
also authorize administering federal economic development assistance by
encouraging the integration and coordination of such assistance to
benefit Native economies. To do that, the bill requires that any
assistance provided must be coordinated with other federal economic
development assistance programs for Native Americans.
Madame Chairwoman, I hope your Committee will look favorable on
this legislation and work for its passage during this Congress. Our
Native people are looking to us for this much needed assistance to gain
economic self-sufficiency and a share of the prosperity that so many
others in our nation already enjoy. Thank you for the opportunity to
speak on its behalf today.
The Chairman. Senator Stevens, thank you very much for
being here today and providing testimony on a new and
interesting idea. We appreciate the work of you and Senator
Inouye. We will let you go, and we have other witnesses that we
will then call to the dais.
We are going to have two panels today. The first will be
Mr. Matt Crow, who is the Deputy Assistant Secretary for
External Affairs and Communications, Economic Development
Administration, U.S. Department of Commerce in Washington, D.C.
Following Mr. Crow, we will have Ms. Julie Kitka, President
of the Alaska Federation of Natives; Mr. Ralph Anderson,
President of Bristol Bay Native Association; Mr. Zack Brink,
Vice President of the Association of Village Council
Presidents; and Mr. Paul Applegarth, the CEO of Value
Enhancement International.
We will introduce them at greater length, but in the
meantime, Mr. Crow, thank you very much for being with us from
the Economic Development Administration. Your entire statement
will be made a part of the permanent record, and we would ask
that you summarize. Thank you very much.
STATEMENT OF MATTHEW CROW, DEPUTY ASSISTANT
SECRETARY FOR EXTERNAL AFFAIRS AND COMMUNICATIONS,
ECONOMIC DEVELOPMENT ADMINISTRATION, U.S. DEPARTMENT OF
COMMERCE
Mr. Crow. Thank you, Mr. Chairman and Vice Chairman
Murkowski, members of the Committee.
I am honored to be here today representing the Department
of Commerce. I am also pleased to be here at the same hearing
as Julie Kitka. I have known Julie since I came to work at the
Commerce Department, and on my visits to Alaska. She has been a
great friend and a great source of advise and counsel to the
Department of Commerce and to the Bush Administration as well.
I appreciate the opportunity to discuss with the Committee
the Foreign Aid Lessons for Domestic Economic Assistance Act of
2007. While the Administration hasn't taken a position on the
bill, the Department is pleased to offer its observations today
based on our experience working with Native American
communities.
Overall, the Department appreciates the bill's emphasis on
planning to promote successful economic development and the
effort to incorporate performance benchmarks in order to better
ensure results are achieved in areas where economic development
opportunity lags.
The Commerce Department has promoted economic growth in
Native American communities in the following ways. The
International Trade Administration, ITA, their Commercial
Service at the Department, plays a key role in promoting Native
American exports abroad. Since 2004, the Commercial Service has
helped its growing base of Native American businesses to
achieve approximately $1 million in export sales in
international tourism in tribal lands. The Commercial Service
has provided research on target markets for Native American
artisan work, funded activities at international industry trade
shows, and presented training seminars for Native American
communities on marketing their Native trade crafts and their
lands as travel destinations across the world.
EDA, my agency, makes investments to promote economic
development in Native American communities. Native American
communities are eligible to compete for EDA investments and
can, by statute, receive up to 100 percent Federal funding for
their economic development initiatives.
Since 2001, EDA has made over 500 investments in Native
American communities and organizations for economic
development, totaling over $88 million. These investments are
estimated to have created over 9,000 jobs for Native Americans,
saved another 6,500 jobs, and leveraged over $395 million in
private sector investment.
Each year, EDA awards approximately 55 planning
investments, totaling $2.5 million to Native American
governments to help with the creation of comprehensive economic
development strategies, CEDS plans. EDA expects to maintain
this level of investment in 2008. By drafting economic
development strategies that reflect local priorities, Native
American governments position themselves to direct their
resources to optimal use.
EDA has four policy priorities that guide our investment
philosophy. We look for investment opportunities that promote
innovation and competitiveness, entrepreneurship, regional
collaboration, which is key the rural areas that Senator
Stevens referred to, and connecting those regional economies to
the worldwide marketplace. These four cornerstones of EDA's
approach have been successful in creating higher skilled,
higher wage jobs, attracting private investment, and preparing
America's regions for success in the 21st century.
In selecting projects for investment, both for distressed
Native American communities as well as other distressed areas,
EDA relies on grassroots ideas. As an example of EDA's
investments in Native American Indian communities, let me tell
you about one of our more fruitful partnerships. In Qwinhagak,
near Bethel, Alaska, EDA invested $1.2 million to extend the
runway 800 feet to accommodate aircraft handling bigger
payloads. This successful investment generated almost 200 new
higher skill, higher wage jobs and is positioned to facilitate
the shipment of cargo between remote Alaska areas and
Anchorage, which benefits a whole region of Alaska, not just
the local village.
The Foreign Aid Lessons for Domestic Economic Assistance
Act of 2007 correctly identifies the fundamental need to begin
any economic development with strategies designed to achieve
sustainable growth and reduce poverty over a defined period.
The bill intends to mirror the framework established by the
Millennium Challenge Act, which improves how the U.S. provides
foreign aid to underdeveloped countries. If this demonstration
project follows the Millennium Challenge Act model, it is
critically important Native American communities be able to
show development readiness by the improvement of schools and
education levels, elimination of regulatory barriers to
business creation, and a reduction overall in violent crime.
In addition, the bill recognizes the critical need to
measure actual results. Equally significant, it recognizes that
accountability in the implementation of such projects is an
important incentive for success. Accordingly, it authorizes the
Secretary to suspend or terminate assistance for poor
performance, so resources can be redirected to more promising
initiatives.
I also appreciate the intent of the bill to simplify the
complex maze of often confusing regulatory requirements that
Native American areas face in accessing assistance from a
myriad of Federal programs. The demonstration bill, S. 2232,
proposes to provide Native American communities with a multi-
year strategic economic development plan developed by the
community, and pushes the major decision-making to the local
level. This is an important first step to a successful outcome,
as is the provision of technical assistance to support capacity
building, which a number of communities are likely to need.
We appreciate the intent of this bill to adapt the
framework of the Millennium Challenge to Native American
communities. We look forward to working with Chairman Dorgan
and Vice Chairman Murkowski to bring our experience in economic
development to bear in Native American communities.
Thank you for your time, and the Commerce Department looks
forward to being helpful as this bill moves through Congress.
[The prepared statement of Mr. Crow follows:]
Prepared Statement of Matthew Crow, Deputy Assistant Secretary for
External Affairs and Communications, Economic Development
Administration, U.S. Department of Commerce
Introduction
Chairman Dorgan, Vice Chairman Murkowski, and Members of the
Committee, I am honored to be here today representing the Department of
Commerce. I am also pleased to be at the same hearing as Julie Kitka,
President of the Alaska Federation of Natives. The Department of
Commerce knows Ms. Kitka well, and we have come to greatly appreciate
her passion, commitment, and new ideas regarding improving economic
opportunity in Native American communities.
I appreciate the opportunity to discuss with the Committee the
``Foreign Aid Lessons for Domestic Economic Assistance Act of 2007.''
Although the Administration has not taken a position on the bill, in
this tight fiscal environment, it is clear that spending constraint is
one of the Administration's top priorities. However, the Department is
pleased to offer its observations today, based on our experience
working with Native American communities. Overall, the Department
appreciates the bill's emphasis on planning to promote successful
economic development, and the effort to incorporate performance
benchmarks in order to better ensure results are achieved for areas
where economic opportunity lags.
Department of Commerce Experience with Native American Communities
The Department of Commerce has promoted economic growth in Native
American communities in the following ways:
International Trade Administration Promotes Exports and Tourism
The International Trade Administration's Commercial Service plays a
key role in promoting Native American exports abroad. Since 2004, the
Commercial Service has helped its growing base of Native American
businesses to achieve approximately $975,000 in export sales and
international tourism in tribal lands. The Commercial Service has
provided research on target markets for Native American artisan work,
funded activities at international industry trade shows, and presented
training seminars for Native American communities on marketing their
native crafts and their lands as travel destinations.
Economic Development Administration Invests in Job Creation
The Department of Commerce's Economic Development Administration
(EDA) makes investments to promote economic development in Native
American communities. Native American communities are eligible to
compete for EDA investments, and can by statute receive up to one
hundred per cent federal funding of their economic development
initiatives.
Since 2001, the Economic Development Administration (EDA) has made
509 strategic investments to Native American communities and
organizations for economic development, totaling over $88 million. It
is estimated that these investments will have created over 9,400 jobs
for Native Americans, saved another 6,500 jobs, and leveraged over $395
million in private sector investment over the lifecycle of the
projects.
Each year, EDA awards approximately 55 planning investments
totaling $2.6 million to Native American governments to help with the
creation of comprehensive economic development strategies, and EDA
expects to maintain this level of investment in 2008. By crafting
economic development strategies that reflect local priorities, Native
American governments position themselves to direct their resources to
optimal use.
EDA has four policy priorities that guide its investment
philosophy; we look for projects that promote:
innovation and competitiveness,
entrepreneurship,
regional collaboration, and
connection to the worldwide market.
These four cornerstones of EDA's approach have been successful in
creating higher-skilled, higher-wage jobs, attracting private
investment and preparing America's regions for success in the 21st
century.
In selecting projects for investment, both for distressed Native
American communities as well as other distressed areas, EDA relies on
grassroots ideas. When economic development strategies are developed by
local decision makers, the whole process works better.
As example of EDA's investments in Native American and Indian
communities, allow me to review one of EDA's more fruitful
partnerships:
Native Village of Kwinhagak
In 2004, EDA made an investment in the Native Village of Kwinhagak
near Bethel, Alaska. EDA invested $1.2 million to extend the airport
runway 800 feet to accommodate planes handling bigger payloads. This
successful investment generated 189 jobs. The runway is strategically
located to ship cargo to remote wilderness in southwest Alaska and to
Anchorage. Therefore, this runway extension benefits a whole region,
not just a locality.
S. 2232
The ``Foreign Aid Lessons for Domestic Economic Assistance Act of
2007'' (S. 2232), proposes to base assistance to Native American
communities upon a multi-year strategic economic development plan
developed by the community. This is an important first step to any
successful economic plan. The bill intends to mirror the framework
established by the Millennium Challenge Act, which improves how the
U.S. provides foreign aid to under-developed countries. Under this
model, communities receiving assistance would need to show development
readiness by the improvement of schools and education levels;
elimination of regulatory barriers to business creation; and a
reduction in violent crime. The bill recognizes the critical need to
measure actual results and that accountability in the implementation of
such projects is an important incentive for success.
While these are positive features, we have some concerns with the
proposal. The authorized program of $20 million per year, for example,
would be inconsistent with the President's 2009 Budget.
We have also been informed that the Justice Department has concerns
about the definition of ``eligible entity'' in section 3 of the bill.
Since Congress has not recognized any group of Native Hawaiians as an
Indian tribe and there is a substantial, unresolved question whether
Congress may treat the native Hawaiians as it does the Indian tribes, I
understand that Justice recommends that Native Hawaiian community
organizations be deleted from the list of eligible entities.
There is also concern over other agencies transferring development
funds to the Department of Commerce. We would, of course, need to
discuss such arrangements with our sister agencies.
Conclusion
We appreciate the intent of this bill to adapt the framework of the
Millennium Challenge to Native American communities. While there are no
Department of Commerce funds available for this program, we look
forward to working with Chairman Dorgan, Vice Chairman Murkowski and
the Committee, to bring our experience in economic development to bear
in helping Native American communities prosper.
Mr. Chairman, Vice Chairman Murkowski, and Members of the
Committee, thank you for your time and we look forward to being helpful
as this bill moves through the Congress.
The Chairman. Mr. Crow, thank you very much for your
testimony.
Let me ask a couple of questions. Is it your feeling that
this proposal duplicates any other program that exists to
provide stimulus or help?
Mr. Crow. No. If you go back to a couple of years ago,
there was an idea that unfortunately was strangled in its crib
by different groups, called the Strengthening America's
Communities Initiative. It was a similar idea, to take all the
economic development plans across the government, which there
are approximately 15 different agencies involved in economic
development, and combine them under one roof. Unfortunately,
that didn't see the light of day several years ago. So the
answer to your question is no.
The Chairman. But this is being offered because there is a
feeling that there needs to be something more. You seem to feel
like the Administration does not support this or has concerns
about it. If there is a general feeling there needs to be
something more and this is not it, what is the Administration
recommending?
Mr. Crow. To the degree that they want to see a greater
coalescing of the economic development plans across the
spectrum of Federal agencies, they support the bill. The
funding measures that would have to come over to the Commerce
Department, as delineated in the bill, will have to be
discussed with our sister agencies, but I don't think you are
going to find anybody in the Bush Administration who is going
to argue that this would be a much more efficient way to
deliver economic development aid to Native American
communities.
The Chairman. And would you see, as you have reviewed this
bill, it applies to Alaska Natives, Hawaiian indigenous people,
as well as Native Americans in the lower 48 States?
Mr. Crow. Yes.
The Chairman. Senator Murkowski?
Senator Murkowski. Well, to follow on Senator Dorgan's
question then, is it just the money? In your written testimony,
when you cite to the concerns, you first reference the
authorized amount of $20 million per year as being inconsistent
with the President's budget. Then you just referenced the
difficulty in kind of transferring to the Department of
Commerce from other agencies. Is that the biggest hurdle, in
your opinion?
Mr. Crow. It has been historically because each of those
Cabinet offices and agencies have their own appropriators and
their authorizors. As you know, everybody gets very nervous in
Washington when you start talking about moving large sums of
money and different responsibilities for different agencies
under one roof. In my estimation, that was one of the greatest
hurdles that the Strengthening America's Communities initiative
had.
Senator Murkowski. You are obviously within Commerce. We
know that in the State of Alaska, EDA does great things,
whether it is the runway that you cite in Kwinhagak, or the
various other EDA projects. We recognize that it makes a
difference. But it is also just one small pocket of money, if
you will. So often, the challenge is how do you marry that up
with anything that is going to complete the project? Where do
you go? It is kind of shopping from agency to agency to build a
project that, as you know, kills a lot of projects.
Mr. Crow. You put your finger on a huge problem, not only
in rural Alaska, but also across the United States. For a rural
community or a collection of rural communities from a regional
standpoint to come together to shop all the different baskets
of Federal economic development funding is a long and tedious
process. It is a huge challenge for them. They almost have to
hire somebody singularly on salary just to do that, and they
don't have the resources to do that.
So in essence, they have to go around and cherry-pick all
these different agencies like HUD, AG, Education, Commerce. It
is a terrible burden on them.
So I agree with you 100 percent. One of the greatest
challenges of recognizing where the resources are in the
Federal Government is finding them out in the first place and
then trying to figure out what you are eligible for. There is
no central control point. There is no one office you can go to
to clear all that through.
I am not advocating having that one central office dictate
economic development policy. Far from it. We want to keep that
at the local level, but it would be a huge advantage for rural
communities to be able to go to one central location to find
out what the resources are.
Senator Murkowski. So in your opinion, then, what is being
proposed through Senator Stevens' legislation is something that
makes sense.
Mr. Crow. It is. Yes.
Senator Murkowski. From an efficiency perspective and from
the perspective of being able to accomplish what we are looking
for, which is economic development in, at this point,
economically distressed villages in Alaska or otherwise.
Mr. Crow. And from a performance management standpoint, a
performance review standpoint, with the concerns that OMB would
have and the GPRA measures, we think it would be far easier to
track.
Senator Murkowski. Well, I like your comments because they
are positive. I get concerned recognizing that the hurdle of
getting the commitment from other agencies to participate and
work in a cooperative manner toward something like this is
probably a bigger struggle. That I find discouraging, because I
think we have to look beyond the typical framework that we face
within government right now because what we are doing is we are
putting up roadblocks to economic development. Whether it is in
Alaska Native villages or on reservations or for Native
Hawaiians, we are not able to advance what we know we need to
do.
So at some point in time, there has got to be greater
coordination and a greater acceptance that we are going to have
to change how we are approaching this problem.
Where do you suggest we start?
Mr. Crow. Well, to your point, I have never met a grant
recipient or a potential grant recipient that cared or
particularly wanted to care one way or the other about internal
machinations back here in Washington, about the turf battles
with different agencies and funding. They just have great
ideas. They have innovative ideas that they want to use to grow
jobs, and they are looking for the priming of their economic
pump.
I wish EDA could do more. We do as much as we can, but I
agree with you completely that we owe it to the customers and
to the taxpayers in these rural areas to make the delivery
mechanisms, and the ability to deliver the Federal money. We
are not talking about just giving the money to them. Most of
these funds are matching funds. Most communities, particularly
in Alaska, show terrific leadership. They show buy-in from the
private sector. They show buy-in from the rural communities'
leadership. They show buy-in from the economic development
professionals like Julie.
We need to make it easier for them, not harder for them, to
deliver the economic development help that they need. Because
the ideas are there, the resources are there, but the ability
for them to climb through the maze of all the economic
development funding mechanisms in the Federal Government, it
shouldn't be their problem in the first place, but it is.
Senator Murkowski. Do you have anything specific within EDA
or the Department of Commerce that you feel has been successful
in retooling economic development within Alaska Native
communities?
Mr. Crow. I think I would have to point singularly to our
work with the Department of Labor on workforce development
issues. We have found that helping the Labor Department, and
this is a good example of two Departments actually working
together for the common good, they have identified areas in
rural Alaska which have a workforce development problem. In
other words, there are manufacturing jobs there, but there are
not the skill sets for the people to come and work at the
plants. On manufacturing sites, Labor has identified those. We
have worked with Labor in those communities to develop
workforce training sites.
So we take a gentleman who is making $12,000 or $13,000 a
year as a dishwasher and turn him into a $65,000 a year x-ray
technician at a manufacturing plant. Those are the kinds of
jobs we create. We are in the job business, but we are not in
the low paying job business. We want to create higher paying
jobs.
So I point to working with the Labor Department and their
WIRED initiative.
Senator Murkowski. Why has that been more successful?
Mr. Crow. I think it combines two agencies who singularly
don't have the expertise, but together they have great
expertise. So we take the Commerce Department with their
ability with economic development in international trade, and
you take the Labor Department who knows how to train people
with their funds as well, with some of their budget. So I think
you have a marriage there of two fairly efficient, well-managed
Cabinet agencies pulling together and we are actually creating
jobs a little bit faster than we used to in the past when we
operated independently of each other. Up until 2002, there
wasn't a heck of a lot of communication between the Labor
Department and the Commerce Department.
Senator Murkowski. What do you figure the biggest
impediment is to meaningful economic development within Alaska
Native villages right now? Is it dealing with the bureaucracy
that we have put up for them?
Mr. Crow. I think it is partly that. I think it is
infrastructure. I think it is getting the water, getting the
sewer, getting the power, the broadband to these regions. It is
giving them the ability to identify the resources to work
together to learn what works in other rural communities in the
United States. While there are unique challenges to Alaska,
there are tremendous success stories from a rural perspective
in the Lower 48. If we could somehow combine the best practices
and methods which we see in the Lower 48 with attempts in
Hawaii and Alaska, I think that would really benefit the
customers and the taxpayer.
Senator Murkowski. Do you have any good ideas about how to
do that?
Mr. Crow. I would like to see some sort of a national
organization which could gather together best practices and
methods from rural communities across the United States, to
exchange ideas for people like Julie and people who are here
today from their communities, to come to this organization on a
regular basis to learn from the success stories of the other
rural communities, because by information sharing, you are not
going to get that at national conferences and through brochures
and through the Internet. You have to actually talk to
practitioners. You have to talk to the people in those
communities. That is an idea that I have absolutely no money to
fund, or know where I would get it from.
Senator Murkowski. Well, it is something that we have
talked about, too. Oftentimes here in the Committee, we hear
all the bad statistics about what is facing Alaska Natives and
American Indians around the Country, whether it is in the
health care area or whether it is the shortage of housing or
the substandard housing. We hear all of the negatives. We need
to remember that there are a lot of good things that are
happening out in Indian Country.
But what is the forum for sharing best practices? What is
the forum where you can sit down with one another and learn
from the successes or perhaps the failures that have ultimately
yielded success so that we don't have to start over in every
reservation in every village with these new ideas.
I don't know, Mr. Chairman, how we accommodate that at the
Committee level, but it would sure be nice to have a focus on
the good news instead of always the negative. So I appreciate
your suggestions, Mr. Crow. I appreciate your testimony this
morning and for your willingness to work with Julie, AFN and so
many of our leaders on this issue.
The Chairman. Mr. Crow, thank you very much for being with
us today. We appreciate your attendance and your testimony is
very helpful.
Next, we will ask for the second panel to come forward: Ms.
Julie Kitka, the President of the Alaska Federation of Natives;
Mr. Ralph Anderson, the President and CEO of Bristol Bay Native
Association; Mr. Zack Brink, Vice President of the Association
of Village Council Presidents; and Mr. Paul Applegarth, CEO of
Value Enhancement International and former CEO of the
Millennium Challenge Corporation.
As I indicated previously, I am also a member of the same
Defense Appropriations Subcommittee that Senator Stevens and
Senator Inouye had to leave to attend, so I will have to go to
that subcommittee, and Senator Murkowski will chair the
remainder of the hearing.
I want to thank the witnesses especially for being with us
today. We will begin with Ms. Kitka.
I would say to all of you that your full statements will be
made a part of the permanent Committee record and we would ask
that you summarize.
STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA
FEDERATION OF NATIVES; ACCOMPANIED BY BYRON I. MALLOT,
DIRECTOR, SEALASKA CORPORATION
Ms. Kitka. Thank you, Mr. Chairman, Madam Vice Chairman.
On behalf of the Alaska Federation of Natives, I really
appreciate your scheduling time for the hearing. We support the
Senate bill that is before you. We urge that there might be a
couple of technical amendments to the Senate bill that we might
want to do, and we would be glad to get that to your staff.
But overall, what we want to convey to the Committee is our
excitement in working on creating economic opportunities for
our communities, our excitement in working on national
demonstration projects with our brothers and sisters, and our
intense interest in focusing on rural America and what
additional things need to be put into place for Native
Americans that live in remote rural areas on that, because the
challenges sometimes are different than ones that are more
urban.
In addition to this bill, which we fully support and are
very excited about, we really would urge that a national
priority for high-speed telecommunications be made a priority
for this Committee. In order for us to participate in the
global economy, and we are part of the global economy,
everywhere you look around us we are part of that already, we
need to have access to the high-speed telecommunications.
We also really need the investment climate in our
communities changed. We need tax policies and investment
policies that incentivize economic empowerment of or people.
And we need authorization language and funding for what we call
clusters of economic initiatives. This bill is very important
because it will move us forward as Native people all over the
Country in the areas where the demonstration project is,
whether or not the U.S. economy is very robust and growing in
leaps and bounds, or whether or not we are in recession. It is
that core of an initiative that will help us in either
situation where the economy is at.
We also realize that it is one piece of the economic puzzle
in considering and encouraging a whole look at economic
initiatives like the cluster approach and demonstration
projects. We really cannot underestimate how important that is
in our view. We would like to let the Committee know that we
would like to bring forward a couple of additional
demonstration projects for consideration of the Committee, one
in telecommunications and communications strategies of areas
that we think can go forward, but also demonstrations in regard
to compacting energy resources and new technology components on
that. So with the permission of the Committee on that, we would
like to bring that forward within the next 30 to 60 days,
actual concrete proposals and ideas on that. Again, we think
that the cluster approach is the way to go.
We have also been focusing a lot on how do Native people,
how do we become competitive in the economy? How do we be
competitive in our State, in our Nation, and globally? We do
think that we need additional tools to help us be more
competitive, and we think that we have to go things more
efficiently and more strategically and with much more foresight
in what we are doing. Again, we believe that this legislation
that is pending in front of you will help us in the areas where
we are doing the demonstration, but if we are able to prove
that successful, we sure like it ramped up. We have other areas
in our State, other areas in the Country that would like to
participate in the demonstration project, but we need to be
prepared to ramp up and scale up some of these initiatives very
quickly if we are able to prove that they make a lot of sense.
Again, I am not going to rehash what is in the legislation
with the written testimony. We strongly support it. We think it
is very innovative. We think that it will has lasting results.
And most importantly, it will be helpful to us as Native people
regardless of where the U.S. economy is at. That is really
significant when you see the changes that are going on and how
people that basically are at the bottom of the economic sphere
are impacted so much by changes in the U.S. economy, to know
that this legislation and this tool will help us regardless of
that. I think that is really significant.
So with that, I would just ask that my written testimony be
included in the record, and thank you very much for the
leadership shown in the Committee and your support on this
legislation.
[The prepared statement of Ms. Kitka follows:]
Prepared Statement of Julie Kitka, President, Alaska Federation of
Natives
Good morning, Mr.Chairman, Vice Chair Murkowski and distinguished
members of the Committee. Thank you for the opportunity to appear
before you today on behalf of the Alaska Federation of Natives (AFN),
to express our views on S. 2232. If enacted, this legislation will
bring a welcomed new approach to stimulating Alaska Native, Native
Hawaiian and Lower-48 Indian tribal economies. We strongly urge its
passage during this Congress.
My name is Julie Kitka. I am President of the Alaska Federation of
Natives, Inc.; I am pleased to appear here today in support of this
innovative and critically important legislation.
By way of background, AFN is the largest statewide Native
organization in Alaska, representing more than 130,000 Alaska Natives.
We are a young, growing population, expected to double in size every 23
years, so our need for a solid economic base is critical. The Alaska
Native population, although united in AFN, is a very diverse group.
There are at least eight distinct cultural and ethnic groups: Yupik,
Cupik, and Inupiat Eskimo peoples; Athabascan, Tlingit, Haida and
Tsimshian Indian peoples; and Aleuts. Our Native cultures are land-
based, and our occupation and use of our land predates Plymouth Rock
and the pyramids. Within each cultural group, there is diversity--
across generations, across geography, and across gender. Because of
this great diversity, there is no ``one solution fits all.'' We need a
cluster of economic, health and educational initiatives that will
empower our Native people to be able to maintain our unique land-based
cultures and participate fully in the larger society. One such
initiative is embodied in S. 2232 and H.R. 3351.
America's Native peoples, including Alaska Natives, continue to
suffer disproportionately high rates of unemployment and poverty, poor
health, substandard housing, and associated social ills when compared
to any other group in our nation. Although there has been steady
improvement in absolute terms, particularly in the area of health, the
fact remains that there has been little progress in the last 30 years
towards closing the gap between Native peoples and the American public
at large in most indicators of well-being.
This poor statistical profile plagues Native communities in remote
parts of Alaska, for example, despite a rich cultural legacy and
abundant natural resources on their lands and in their waters. The
extraction of natural resources from remote communities in Alaska,
valued at billions of dollars, produces only modest direct economic
benefit (jobs, household income, business purchases and public
revenues) for most residents. Physical remoteness, distance from
markets and population centers, poor physical infrastructure, and the
lack of either a strong private sector or of healthy, transparent
governmental institutions are among the reasons so many Native American
economies remain stagnant. In several of these economies, these long-
existing factors are compounded by a new challenge--the effects of
climate change. The public perception may be that casino-style gaming
is lifting tribes out of poverty, but the reality is that most Native
American communities do not benefit from gaming due to geographic
remoteness, legal constraints or other factors.
To address this issue, AFN, working with the Association of Village
Council Presidents (AVCP) and the Bristol Bay Native Association
(BBNA), and their 87 federally recognized tribes, has spent several
years developing and supporting an economic development proposal that
would take the best lessons of the last 50 years of American experience
in providing foreign aid to developing countries and apply them in the
domestic context in remote, predominantly Native American areas. Since
Native economies are often plagued by the same challenges as economies
of the developing world, we believe strongly that our communities can
benefit from lessons learned from international development assistance.
These lessons include:
The need to focus on sustainable poverty reduction, economic
growth and job creation.
The importance of local ownership, whereby the intended
beneficiaries of programs determine priorities and are
responsible for implementation.
The need to focus on outcome-oriented objectives--where the
beneficiaries determine, up-front, what outcomes they want to
achieve and how they will measure success.
The importance of establishing quantitative measures of
success. Key to this are collecting baseline data up front, and
establishing an arm's-length program of monitoring and
evaluation that tracks progress against benchmarks and that
highlights the need for mid-course adjustments.
The importance of capacity building. Skills learned in
setting objectives, implementing programs, and making
adjustments based on measurable results are readily transferred
to other programs and to public and private sector activities.
AFN has advocated for building on the concepts and principles of
the Millennium Challenge Corporation, and was pleased to work with
Alaska's congressional delegation and Senators Akaka and Inouye in
refining the concept. S. 2232 embodies the concept we believe is needed
in our communities. It adapts the lessons of foreign aid to
underdeveloped economies, such as the experience of the Millennium
Challenge Corporation, to the provision of Federal economic development
assistance to similarly situated remote Native American communities in
this country.
This bill will serve to re-invigorate Native economies by using a
compacting model to channel a significant amount of development funds
to implement locally designed economic development strategies. The bill
authorizes $100 million over five years, for disbursement to a total of
five pilot projects; one each in Alaska and Hawaii and three in the
Lower-48 states.
The objectives are simple: to enhance the long-term job creation
and revenue generation potential of Native economies by creating
investment-favorable climates and increasing Native productivity. A
corollary, but equally important, objective is to improve the
effectiveness of existing Federal economic development assistance by
encouraging the integration and coordination of such assistance for the
benefit of Native economies.
Consistent with the philosophy of the Millennium Challenge
Corporation, S. 2232 recognizes that communities that have made the
threshold decision to improve their economic conditions and evince a
``readiness for development'' are precisely those most likely to make
the best use of development aid. S. 2232 would provide Federal
assistance, over and above the funding currently available, to those
Native communities that are determined to be ``eligible entities'' by
the Secretary of Commerce and are therefore poised to negotiate and
enter into a bilateral compact with the United States. A key feature of
the legislation is that the specific strategies and objectives will be
determined by the eligible entities themselves.
This novel federal initiative would have as its mission reducing
poverty in Native communities. The compacts authorized under the bill
would have to be consistent with the broad purposes of the Act, but
must also contain five elements:
1. The specific objectives for sustainable economic development
and the reduction of poverty that the eligible entity and the
United States expect to achieve;
2. A description of the respective roles and responsibilities
of the eligible entity and the United States in the achievement
of such objectives;
3. A list and description of regular benchmarks to measure
progress toward achieving such objectives;
4. An identification of the intended beneficiaries,
disaggregated by income level, gender, and age, to the maximum
extent practical; and
5. A multi-year financial plan.
A critical component of the demonstration project is in its demands
for accountability in the performance of the Compact terms and the use
of financial resources.
For the Alaska component, AFN has been working closely with two
Native regional organizations in southwest Alaska, the Association of
Village Council Presidents and the Bristol Bay Native Association.
Together these adjacent Native regions span 96,000 square miles, and
contain 87 Native villages and one-quarter of the Native population of
Alaska. These regions have a rich cultural heritage, and truly
incredible natural resources, yet paradoxically have among the highest
poverty and unemployment rates in the state, and in the country.
We believe that these regions are ripe for this demonstration
project. Both regional organizations are experienced with operating
federal programs under Indian Self-Determination Act compacts, have a
history of collaboration, and have done much of the planning legwork
for undertaking economic development using this model.
Our experience, and that of BBNA and AVCP and others, is that many
federal programs that should foster economic development are
splintered, suffer from lack of coordination between the federal
agencies, are often poorly timed, and are complex and poorly understood
by their intended beneficiaries. Thus, they remain under-utilized, as
was borne out by the 2001 General Accounting Office report, GAO-12-193,
which reviewed the effectiveness of some 100 federal programs that
serve Native Americans.
What we need is a paradigm shift in the way the federal government
promotes economic development for Native American communities. S. 2232
represents just such a shift. It also represents the fruition of
several years of intense discussion within parts of the Alaska Native
community on how we can meet the challenge of reducing poverty and
promoting sustainable economic growth in our rural villages. S. 2232
will enhance the long-term job creation and revenue generation
potential of Native economies by creating investment-favorable climates
and increasing Native productivity. Accordingly, we urge this Committee
to pass S. 2232 as soon as possible.
Senator Murkowski. [Presiding.] Thank you, Julie. Your full
testimony will be included as part of the record. Thank you for
all that you have done to help facilitate this.
Byron, Mr. Mallot?
Mr. Mallot. Thank you, Senator.
My name is Byron Mallot. I am a former President of the
Alaska Federation of Natives. When Julie asked if I might come
to Washington to testify on this bill, I was very excited by
the opportunity. Recognizing that it also involves hopefully
demonstration projects in the State of Hawaii, and of course
within Indian Country here in the Lower 48, I contacted a
colleague and friend, Nanoa Thompson, who is a trustee of
Kamehameha Schools in Hawaii, as well as the leader of the
Polynesian Voyaging Society on whose board I sit, in order to
obtain his counsel and his thoughts about this kind of
potential.
I certainly cannot speak for him, but I can make an
observation regarding his thoughts. He was very excited by the
idea. He tried to get back here to Washington in order to
testify, but because of the shortness of time was unable to. As
I think about Alaska, as you are well aware, Senator, we are
beginning to celebrate 50 years of statehood. After 50 years of
statehood, we are still wrestling with the kind of negative
issues that you commented upon earlier. But also as you
commented upon, we have much success to celebrate within our
State, and even within rural Alaska, and particularly within
the Native community. The success of ANCSA, the Alaska Native
Claims Settlement Act, and the institutions that it has created
and made successful over these 50 years, along with the
discovery of oil at Prudhoe Bay, will be the historical
touchstones for the first 50 years of statehood, and even well
into the 21st century.
But in spite of that success, and I think building upon
best practices and what we have accomplished, this bill
captures where we are, the notion that there is still much to
be done, but recognizing that we need to be smart about where
we go and how we move forward; the idea of being able to
measure performance; the notion of being able to combine assets
and resources from a multiple of agencies with different
mandates in order to be flexible and responsive; the notion of
creating incentive for Native institutions, Native communities,
Native minds to bring to fruition opportunities that are
building upon generations of learning. All of that is
tremendously exciting.
I think that as we begin a new century, it could take us to
another level in terms of how we think of our relationship with
the Federal Government, which is one of a trust responsibility;
of how we think of about and how we work with agencies and
institutions of the Federal Government; of how we work
internally, the leadership of AFN as a statewide institution
bringing ideas and advocacy to where it is needed; looking to
its owner institutions such as here at this table, to provide
direction and strength; and allowing the kind of innovation,
the kind of leadership, the kind of new thinking and the need
for new ways to accomplish what we need to accomplish is all
what is most exciting to me about this legislation. I urge its
passage.
Thank you very much.
Senator Murkowski. Thank you. We appreciate your testimony
here and joining us this morning.
Next, we will hear from Mr. Ralph Anderson with Bristol Bay
Native Association out of Dillingham. Welcome.
STATEMENT OF RALPH ANDERSON, CEO, BRISTOL BAY NATIVE
ASSOCIATION
Mr. Anderson. Thank you, Senator Murkowski.
I am Ralph Anderson. I am the Chief Executive Officer at
the Bristol Bay Native Association, which is a nonprofit
consortium of 31 tribes in Bristol Bay.
First, I want to thank you and Senators Steven, Inouye and
Akaka, for introducing this important piece of legislation. It
will help to make a transformative, positive change in the way
the Federal Government approaches economic assistance in Native
American communities.
It will be a large step toward lifting some of the most
impoverished people in America out of poverty and linking us to
the national and global economy, while preserving the
distinctive cultural lifestyle values that make us the Native
people who we are.
It is true that we have made much progress in terms of
health, education, housing and other social indicators in the
decades since ANCSA, but our improvements haven't really
completely closed the gap with other Native Americans and with
other Alaskans. We still lag behind in terms of average income
and lead in most negative social indicators such as suicide
rates, incarceration rates, alcohol and drug abuse and
joblessness. We are still more likely to suffer alcohol and
drug addiction, joblessness than average Alaskans. We remain
heavily reliant on Government-provided services.
At BBNA, we have been thinking long and hard about what
might be done to improve our economy and the general well being
of our people. To provide some context, the Bristol Bay region
has about 7,000 people living in 31 villages in an area the
size of Ohio. We have many well-known obstacles to progress.
Our villages are remote, transportation costs are high, and the
mainstay of our cash economy, the commercial fishing industry,
has been in relative decline the past few years. There have
never been many year round jobs in the villages. Many people
have moved out of our region.
With the rise in oil prices, gasoline in Dillingham is now
$4.93 per gallon. Heating oil is $4.20 per gallon. And prices
for both in the villages can range between $5 and $10 a gallon.
While it is true that the Federal Government already spends a
great deal of money providing services to Alaska Natives, a
feature of this funding is that most of it is provided in
distinct channels, with Indian Health Service funding for
health, NAHASDA money for housing, and BIA funding for line
services, some road construction and a variety of social and
education services.
In a sense, the Native organizations in rural Alaska such
as BBNA have grown up around these funding sources. That
sometimes gives us tunnel vision that makes it difficult to
think more broadly beyond the service programs that are already
provided. None of these major funding streams has directly
promoted economic growth, although the BIA does have a loan
program and there is some flexibility in the use of other BIA
funds. BBNA, for example, operates BIA programs, but we receive
a grand total of $9,000 specifically to support economic
development.
This hearing is about a bill that is the fruition of
discussions about economic development within the Alaska Native
community over the past several years. The fundamental idea is
to build upon two success stories. One is the experience of the
Millennium Challenge Corporation which provides funds to
developing countries for use in locally determined economic
development strategies, but with clear accountability and
measures for determining success built on the funding
agreements.
The other success story is domestic, the tribal self-
governance compacting under the Indian Self-Determination Act.
Tribal self-governance has allowed tribal entities to operate
Federal services and in many instances to design programs, but
to date it is limited to the Indian Health Service and BIA.
Both the Millennium Challenge Corporation and Indian self-
determination use the compacting devices for providing funds,
which has the effect of cutting through the red tape normally
associated with government contracts, and also signifies that
these agreements are more than just ordinary grants. They are
commitments between governments.
We believe that by providing funds for the Native
communities specifically to foster economic development, S.
2232 plugs a major gap. It has features that we believe are
absolutely critical for such a program to succeed. One, it
provides enough funding to make a difference. Two, it is self-
directed and allows the recipients to develop the economic
development strategies and projects to be funded, although with
the advice and assistance of the funding agency. Number three,
it provides assurance that funding will be available for the
entire project period, as opposed to the annual funding of most
grants. And finally four, it requires benchmarks for measuring
our success.
The bill authorizes a new demonstration project for
economic development with the Department of Commerce that would
fund five demonstration projects nationally for five years.
Total funding would be $100 million over the five years. Alaska
Natives would receive one demonstration project, with Native
Hawaiians one and tribes in the Lower 48 would receive three.
Another important feature of the bill is that it would
allow, but not require, existing funding sources or existing
funding from a variety of agencies to be integrated into the
compact.
We believe that this is an exciting opportunity to make a
real difference in the lives of Native American people and we
urge that it be enacted.
Thank you very much for allowing me to testify.
[The prepared statement of Mr. Anderson follows:]
Prepared Statement of Ralph Anderson, CEO, Bristol Bay Native
Association
Chairman Dorgan, Vice-Chairman Murkowski, and distinguished members
of the Committee, thank you for the opportunity to appear before you
today to speak in support of S. 2232, the Foreign Aid Lessons for
Domestic Economic Assistance Act.
My name is Ralph Andersen. I am testifying today in my capacity as
Chief Executive Officer of the Bristol Bay Native Association, which is
a non-profit Native organization based in Dillingham and serving 31
communities in Southwest Alaska. I have been in my current position for
about 2\1/2\ years. I am also from Bristol Bay and have spent most of
my life in rural Alaska--I grew up in the village of Clarks Point, a
small village about 15 miles from Dillingham on Nushagak Bay.
First, on behalf of BBNA, I would like to thank Senators Murkowski,
Stevens, Inouye and Akaka for introducing S. 2232, and to thank this
Committee for providing the opportunity to testify. We believe this
legislation, if enacted, will make a transformative, positive change in
the way the Federal Government approaches economic assistance to Native
American communities. It will be a large step toward lifting some of
the most impoverished people in America out of poverty and linking them
to the national and global economy, while preserving the distinctive
cultural and lifestyle values that make we Native people who we are.
It is true that although we have made much progress in terms of
health, education, housing and other social indicators in the decades
since the Alaska Native Land Claims Settlement, but our improvements
have not closed the gap with other Americans. We still lag far behind
in terms of average income and lead in most negative social indicators
such as suicide rates, incarceration rates, alcohol and drug abuse, and
joblessness. We are still more likely to suffer alcohol and drug
addiction and joblessness than average Alaskans. And we remain heavily
reliant on government-provided services.
At BBNA have been thinking long and hard about what might be done
to improve our economy and the general well-being of our people. To
provide some context, the Bristol Bay Region has about 7,000 people
living in scattered communities in an area the size of Ohio. We have
many well-known obstacles to progress: our villages are remote,
transportation costs are high, the mainstay of the cash economy--
commercial fishing--has been in relative decline, and there have never
been many year-round jobs in the villages. Many people have moved out
of our region. With the rise in oil prices, gasoline in Dillingham is
now $4.93 per gallon, heating oil is $4.20, and prices for both in the
villages can be over $5 or even $7 per gallon.
Yet--in a seeming paradox--the Bristol Bay region is rich in
natural resources, it has a vibrant Native culture, the Native
corporations own hundreds of thousands of acres of land, and there is
no reason to think our commercial salmon fishery won't continue to be
an important economic base for the foreseeable future. By any measure
Bristol Bay is a world class destination for sports hunters and
fishermen, and for eco-tourists. Improvements in telecommunications
partially offset geographic barriers, and link even the smallest of our
villages to the modern global environment.
Given the positive factors, we do not believe there is any inherent
reason why Bristol Bay and rural Alaska in general cannot develop a
robust sustainable economy, while preserving our culture and lifestyle.
While it is true that the Federal Government already spends a great
deal of money providing services to Alaska Natives, a feature of this
funding is that most of it is provided in distinct channels--Indian
Health Services funding for health, NAHASDA money for housing, and
Bureau of Indian Affairs funding for land services, some road
construction, and a variety of social and education services. In a
sense the Native organizations in rural Alaska have grown up around
these funding sources, and that may sometimes give us tunnel vision
that makes it difficult to think more broadly, beyond the service
programs we already provide.
None of these major funding streams is directed at promoting
economic growth, although the BIA does have a loan program and there is
some flexibility in the use of other BIA funds. BBNA operates BIA
programs, but we receive a grand total of only about $9,000
specifically to support economic development.
Today's hearing is about a bill that is the fruition of discussions
about economic improvement within the Alaska Native community over the
last several years. The fundamental idea is to build upon two success
stories: One is the experience of the Millennium Challenge Corporation,
which provides funds to developing countries for use in locally
determined economic development strategies, but with clear
accountability and measures for determining success built into the
funding agreements.
The other success story is domestic: tribal self-governance
compacting under the Indian Self-Determination Act. Tribal self-
governance has allowed tribal entities to operate federal services and
in many instances to design the programs, but to date it is limited to
Indian Health Service and Bureau of Indian Affairs funding. Both the
Millennium Challenge Corporation and Indian Self-Governance use the
``compacting'' device for providing funds, which has the effect of
cutting through the red tape normally associated with government
contracts, and also signifies that these agreements are more than just
ordinary grants. They are commitments between governments.
We believe that by providing funds to the Native community
specifically to foster economic development, S. 2232 plugs a major gap.
It has features that we believe are absolutely critical for such a
program to succeed.
1. It provides enough funding to make a difference.
2. It is self-directed. It allows the recipients to develop the
economic development strategies and projects to be funded,
although with the advice and assistance of the funding agency.
3. It provides assurance that funding will be available for the
entire project period (as opposed to the annual funding of most
grants).
4. It requires benchmarks for measuring success.
The bill authorizes a new demonstration project program for
economic development, within the Department of Commerce, that would
fund five demonstration projects nationally for 5 years. Total funding
would be $100 million over the 5 years. Alaska Natives would receive
one demonstration project, Native Hawaiians one, and tribes in the
Lower 48 states would receive three. Another important feature of the
bill is that it would allow, but not require, existing funding from a
variety of federal agencies to be integrated into the compacts.
We believe this is an exciting opportunity to make a real
difference in the lives of Native American people, and we urge that it
be enacted.
Thank you again for the opportunity to testify.
Senator Murkowski. Thank you, Ralph. We appreciate your
comments and your presence here today.
Next, we will hear from Zack Brink, who is Vice President
of the Association of Village Council Presidents out of Bethel.
Welcome, Zack.
STATEMENT OF ZACK BRINK, EXECUTIVE VICE PRESIDENT, ASSOCIATION
OF VILLAGE COUNCIL PRESIDENTS
Mr. Brink. Thank you, Senator Murkowski, and thank you for
the opportunity to speak to you on behalf of the Association of
Village Council Presidents about the importance of this bill.
My name is Zack Brink. I am testifying today in my capacity
as Executive Vice President of the Association of Village
Council Presidents, whose headquarters are located in Bethel,
Alaska.
I have worked for AVCP for a total of 15 years. Myron
Naneng, AVCP President, was not able to attend this hearing and
sends his apologies and best wishes.
On behalf of the Native people of the Yukon Kuskokwim
Delta, thank you for your many years of service in the
Congress, in the Senate, and on this Committee meeting here
today. We are grateful for you and your staff's hard work over
the years. Quyana.
By way of background, the AVCP region in Southwest Alaska
represents 56 tribes and is approximately the size of Oregon.
AVCP was organized in 1964 and serves as the regional Native
non-profit corporation.
Our message today is that the Association of Village
Council Presidents is very supportive of S. 2232 and urges
Congress to act and pass this bill.
For the past several years, the Association of Village
Council Presidents, Bristol Bay Native Association and the
Alaska Federation of Natives have been working together in an
innovative manner. We have partnered together to lay the
groundwork for our project and we are ready to take the next
step. We have taken it upon ourselves to make the lives of our
people better and we are here to share with you how important
this project is for us.
The overall goal of the project is to substantially improve
the economic, educational, social health and cultural status of
our people. We see these four areas of focus as tied together.
It is our belief that any improvement in one area directly
impacts the other areas. In our region, the predominant Native
language is Yup'ik.
Despite a rich cultural heritage and widespread reliance on
subsistence resources, Southwest Alaska has the highest poverty
rates in the State and very high instances of substance abuse,
suicide and other indicators of social health. By funding this
bill, the lives of our people in the region would benefit
greatly in the economic, educational, social and cultural
arenas.
We want to build on what we already know that works in our
region. Our strengths include our Yup'ik culture, language and
people. We want to design the projects to fit our region and to
build on our past successes. Specifically, we want this project
to work in our villages. We want to meet the challenge of
reducing poverty and promoting sustainable economic growth in
our rural villages.
When considering S. 2232, please consider the following
issues. The AFN/AVCP/BBNA partnership is working. Over the past
several years, this partnership has been preparing for this. We
have put considerable time, effort and planning into the
project. AVCP is committed to making it work.
The AVCP region is ready to take the next step. Our 56
tribes met and passed resolutions in support of the project,
both at the regional and village levels. The AVCP Board of
Directors is in full support of the project.
Our strategy works for us. The overall goal of the project
is to substantially improve the economic, educational, social
health and language/cultural status of our people. This
strategy is holistic and it works for us in filling the gaps.
We want to design our project in this manner.
We want to share what we learn. In this demonstration
project, we want to share what we learn. We also want to learn
from others through the model, specifically through the
Millennium Challenge Corporation model. We want to design our
own model. Lessons learned from a domestic demonstration will
help all of us.
The AVCP region exists in an environment of extremes. What
that means is that all the economic, educational, social
health, and language/cultural indicators are either very high
or very low. They are either at one end of the spectrum or the
other. The lessons learned will help all of us.
The project will take time. We know that this will not
happen overnight or just over a couple of years. This is a
long-term project and we want it to be successful.
In conclusion, AVCP believes that this project will work
and we ask for your support.
Quyana.
[The prepared statement of Mr. Brink follows:]
Prepared Statement of Zack Brink, Executive Vice President, Association
of Village Council Presidents
Introduction
Thank you for the opportunity to speak before you today on behalf
of the Association of Village Council Presidents to talk about the
importance of Senate Bill 2232: Foreign Aid Lessons for Domestic
Economic Assistance Act of 2007.
My name is Zack Brink. I am testifying today in my capacity as
Executive Vice President of the Association of Village Council
Presidents whose headquarters are located in Bethel, Alaska. I have
worked for AVCP for a total of 15 years. Myron P. Naneng Sr., AVCP
President, was not able to attend this hearing and sends his apologies
and best wishes.
On behalf of the Native people of the Yukon Kuskokwim Delta, thank
you for your many years of service in the Congress, in the Senate, and
on this Committee meeting here today. We are grateful for you and your
staffs hard work over the years. Quyana--Thank you.
Background
By way of background, the AVCP Region in southwest Alaska
represents 56 Tribes and is approximately the size of Oregon. AVCP was
organized in 1964 and serves as the regional Native-Nonprofit
Corporation.
S.B. 2232: Foreign Aid Lessons for Domestic Economic Assistance Act of
2007
Our message today is that the Association of Village Council Presidents
is very supportive of S.B. 2232 and urges Congress to act and
pass this Bill.
For the past several years the Association of Village Council
Presidents, Bristol Bay Native Association, and the Alaska Federation
of Natives have been working together in an innovative manner. We have
partnered together to lay the groundwork for our project and we are
ready to take the next step. We have taken it upon ourselves to make
the lives of our people better, and we are here to share with you how
important this project is for us.
The overall goal of the project is to substantially improve the
economic, educational, social health and cultural status of our people.
We see these four areas of focus as tied together. It is our belief
that any improvement in one area directly impacts the other areas. In
our region the predominant Native language is Yup'ik. Despite a rich
cultural heritage and widespread reliance on subsistence resources,
Southwest Alaska has the highest poverty rates in the state, and very
high instances of substance abuse, suicide, and other indicators of
social health. By funding this Bill, the lives of our people in the
region would benefit greatly in the economic, education, social and
cultural arenas.
We want to build on what we already know that works in our region.
Our strengths include our Yup'ik culture, language and people. We want
to design the project to fit our region and to build on our past
successes. Specifically, we want this project to work in our villages.
We want to meet the challenge of reducing poverty and promoting
sustainable economic growth in our rural villages.
Issues to Consider
When considering S.B. 2232 please consider the following issues:
1. The AFN/AVCP/BBNA Partnership is working. Over the past
several years this partnership has been preparing for this. We
have put considerable time, effort, and planning into the
project. AVCP is committed to making it work.
2. AVCP Region is ready to take the next step. Our 56 Tribes
met and passed resolutions in support of the project both at
the regional and village levels. The AVCP Board of Directors
are in full support of the project.
3. Our strategy works for us. The overall goal of the project
is to substantially improve the economic, educational, social
health and language/cultural status of our people. This
strategy is holistic and it works for us in filling the gaps.
We want to design our project in this manner.
4. We want to share what we learn. In this demonstration
project we want to share what we will learn. We also what to
learn from others through this model, specifically through the
Millennium Challenge Corporation Model.
5. We want to design our own model. Lessons from a Domestic
Demonstration will help all of us. The AVCP region exists in an
environment of extremes. What that means is that all the
economic, education, social health, and language/cultural
indicators are either very high or very low. They are either at
one end of the spectrum or the other. The lessons learned will
help all of us.
6. The project will take time. We know that this will not
happen overnight or just over a couple years. This is a long
term project and we want it to be successful.
In conclusion, AVCP believes that this project will work and we ask
for your support.
Quyana. Thank you.
Senator Murkowski. Thank you, Zack. We appreciate your
testimony this morning.
We will finally hear from Mr. Paul Applegarth. Paul is the
CEO of Value Enhancement International out of Connecticut and
formerly the CEO of the Millennium Challenge Corporation.
Welcome, Mr. Applegarth.
STATEMENT OF HON. PAUL V. APPLEGARTH, CEO, VALUE ENHANCEMENT
INTERNATIONAL
Mr. Applegarth. Thank you, Madam Vice Chairman, and thanks
for the invitation to speak today about the Foreign Aid Lessons
for Domestic Economic Assistance Act, which Senators Inouye,
Stevens, Akaka and yourself have introduced. It is a real
pleasure to be here. I will speak only briefly this morning,
but I have given longer remarks for the record, which with your
permission would be added to it.
Senator Murkowski. Those are included as part of the
record.
Mr. Applegarth. Thank you.
It is likely that anyone coming into this Committee room by
mistake this morning would wonder why we are talking about
foreign aid in the Committee on Indian Affairs, yet we are,
thanks to an original insight of the leaders of AFN, BBNA, and
AVCP. About two years ago, they came to me, introduced
themselves, and said in effect, even though we are in the
United States, our people face challenges like those in a
developing country. Do you have some ideas from your experience
in international development that might benefit us?
I gave them a couple of suggestions, and thought that would
be it. So to my surprise, they came back several months later,
and even more to my surprise, they had implemented by earlier
suggestions. They asked if there was more they could do, and
that ultimately led to the reason that we are here today,
legislation which establishes a pilot program targeted to
Native Americans based on the lessons of 50 years of
international development assistance.
The objective of the legislation is to promote poverty
reduction among Native Americans through sustainable growth and
economic development using the lessons of international
development. The MCC, which is a major U.S. initiative in
foreign aid, is built on these same lessons.
As you have heard this morning from my panel colleagues and
as you noted in your own remarks and Chairman Dorgan noted in
his remarks, despite some improvement in recent decades, many
Native American communities, whether they are American Indians
or Alaska Natives or indigenous people in Hawaii, face issues
similar to those that people face in the developing world. They
continue to suffer disproportionately high rates of
unemployment and poverty, poor health, substandard housing, a
lack of access to basic infrastructure like power and water,
and limited job opportunities.
These conditions lead to high alcoholism and suicide rates,
and the loss of young people to urban areas, threatening
traditional culture and heritage and in the case of Alaska at
least, a valued traditional lifestyle. Now, many communities
also face increased concerns about environmental changes that
could be precipitated by global warming.
As you know, Madam Vice Chairman, the concept of foreign
aid is not well regarded by many Americans. In several
instances, this poor reputation is probably deserved. However,
foreign aid has had successes. In the more than 50 years of
international development assistance, there have been a number
of lessons learned about what works and what doesn't work. The
lessons include that programs intended to assist long-term
development should explicitly focus on sustainable poverty
reduction, economic growth and job creation. Sometimes those
programs get diverted to all other kinds of objectives, but if
you do not make poverty reduction and growth the objective of
the program, they are not likely to happen.
Another lesson is that local ownership is important.
Development assistance is much more effective when the
beneficiaries identify what they need and themselves take
responsibility for ensuring that the programs are a success.
If I can divert some from my prepared remarks, I think if
you listened to some of the discussion this morning, you would
think this legislation is primarily about better coordination
in Washington, more efficiency, and more program integration. I
think that is a valuable plus of the legislation, but it misses
the fundamental point. This approach represents a fundamental
change in the way programs work. Who decides? The people who
are going to benefit or the people here in Washington
administering the program?
Who is responsible for success, the people here in
Washington or the potential beneficiaries? It is a different
mind set of who has ownership, who decides what the priorities
are, and who is responsible for success or failure.
Programs should also focus on results, by the impact on the
people who are the intended beneficiaries. Simply focusing on
how much money is spent or how quickly it is dispersed is a
recipe for disaster. Viewing development assistance more as an
investment and focusing on what you get for these taxpayer
dollars, as this legislation does, is a much more effective
approach in determining which programs work and making sure
that they work.
It is also important to establish quantitative measures of
success up front, collect baseline data, and track progress
toward those objectives. This doesn't take a long time to do,
but it is very important in determining both whether your
program is successful and whether you need to make mid-course
adjustments to make it work better.
Another lesson is that those programs should also build
capacity, as well as achieve specific objectives. Skills
learned in setting objectives and implementing programs are
readily transferred to other programs and to other public and
private sector activities.
And finally, the assurance of longer term funding over the
life of a program is important. Being dependent on annual
appropriations, which are uncertain in their amount and when
and if the money will ever arrive, and which expire at the end
of a fiscal year, makes program management very difficult. It
leads to inefficiencies, wasteful spending and in the words of
several of my friends in the developing world, it has led to
corruption in some cases. Far better to have steady assured
funding up front.
The legislation before us today is built upon these
lessons. Under it, the potential beneficiaries have ownership
from the beginning. They choose the priorities. They compete
based on the quality of their plans, and they have to win.
Competing and winning builds ownership.
They are judged on their existing poverty rates and their
ability to implement a good plan. The funding is explicitly
directed to promoting economic growth and the elimination of
poverty. Each proposed program must have specific objectives,
identify who will benefit and establish regular benchmarks to
measure progress. Ownership is built up front. The entities
must compete. It is their plan and they have responsibility to
implement it. This of course also builds local capacity and
promotes entrepreneurship. Compacts can be up to five years in
length and are fully funded up front. The funding is ``no
year'' money. The authorization does not expire, so there is no
artificial rush to spend everything by September 30 of each
fiscal year.
Let me give you a concrete example of how this might work
in practice. One of the entities in Alaska that hopes to be
able to participate in the demonstration project has already
begun working on what its proposal might be. Thanks to prior
studies, it has excellent social, economic and demographic data
on the population of Alaska, both Native American and other.
While the data shows improvement for all groups, it also shows
a persistent gap between the status of Native Americans and
other parts of the population.
The program they are working on is explicitly targeted to
help close that gap. It is testing the program against the
lessons learned. The priorities are decided in Alaska by the
people who would benefit from the program, people from one of
the poorer areas of Alaska, not here in Washington. The
intended results are specific, targeted to growth and poverty
reduction, and measurable. The beneficiaries, as well as you
here on the Hill, performance managers at OMB, and U.S.
taxpayers can know in advance what the funding will be used for
and what the implementation plan is. They will be able to
monitor progress and at the end of the program they will be
able to know with confidence whether it has been successful.
The proposed legislation also incorporates one lesson not
built into the original Millennium Challenge bill. It is
structured as a pilot and a demonstration project. It allows
the parties to learn. Establishing the initial program as a
demonstration project gives time to move up the learning curve
and to get startup issues behind them. Once they have, the
experience with the pilot can be used to fine tune both a
larger program built on the same lessons, as well as to make
adjustments in other programs intended to benefit Native
Americans.
The benefits of a pilot are not limited to Native Americans
and other directly involved in the programs. There is a need
for education elsewhere as well. MCC, which was a start up in
2004, has been criticized by some, and I think quite unfairly,
for being slow in making commitments and disbursements.
Certainly, in a world of fast-disbursing emergency assistance
and in which money not spent by September 30 is lost, it may
seem slow. But emergency assistance to provide relief is not
the model or the lessons on which MCC was built, nor how it or
the program established by this legislation should be
evaluated. As each highlighted this morning, those are long-
term fundamental problems, and they require deliberative, well
planned and long-term solutions.
Ultimately, both MCC and this legislation should be
evaluated on the outcomes they achieve and the progress their
programs make toward their objectives and their benchmarks. In
the interim, since the outcomes are not known immediately,
there are other measures. In terms of the pace of its own
commitments, MCC compares favorably with other international
aid institutions, even though it has slowed somewhat from its
early days. There are other benchmarks set out in my written
testimony.
In short, establishing the program first as a demonstration
project will allow us time to educate everyone on the approach
and to better manage expectations.
In closing, let me say, as you know, this legislation has
bipartisan sponsors. The original MCC legislation was passed
with bipartisan support and the support of many of your Senate
colleagues who serve on the Senate Foreign Relations Committee.
I remember with particular appreciation and respect the support
and assistance that I and the others at MCC received from many
of them, including both Senators Lugar and Biden, who were the
Chair and Co-Chair of the Committee, and Senators Feinstein,
Coleman, Hagel, Dodd, Sununu and others. This was a very
distinguished and helpful group, and the result showed the
value of a bipartisan effort.
You all now have the opportunity to bring some of these
international lessons and ideas here domestically to address
the same fundamental problems of helping people to escape
poverty and to achieve sustainable long-term growth and to do
so on a bipartisan basis. I hope that you will. Thanks very
much.
[The prepared statement of Mr. Applegarth follows:]
Prepared Statement of Hon. Paul V. Applegarth, CEO, Value Enhancement
International
Good morning, Mr. Chairman and Madame Vice-Chairwoman, Senator
Murkowski, and Members of the Committee. I am Paul Applegarth, CEO of
Value Enhancement International, and, formerly, the founding CEO of the
U.S. Millennium Challenge Corporation.
Thank you for the invitation to speak with you today about S. 2232,
the Foreign Aid Lessons for Economic Assistance Act of 2007, introduced
by Senators Inouye, Stevens, Akaka, and yourself, Madame Vice-
Chairwoman. It is a pleasure to be here. I will speak only briefly this
morning, but with your permission will provide longer written remarks
for the record.
It is likely that anyone entering this Committee room by mistake
this morning would be wondering why we are discussing Foreign Aid in
the Committee on Indian Affairs. Yet we are, thanks to an original
insight of the leaders at the Alaskan Federation of Natives, BBNA, and
AVCP.
About two years ago, they came to me, introduced themselves, and
said, in effect: ``Even though we are in the United States, our people
face challenges like those in a developing country. Do you have some
ideas from your experience in international development that might
benefit us? ''
I gave them a couple of suggestions, and thought that would be it.
Somewhat to my surprise, they came back several months later, and even
more to my surprise, had implemented my earlier suggestions. They asked
if there was more they could do, and that ultimately led to the reason
we are today--legislation which establishes a pilot program targeted to
Native Americans based on the lessons of fifty years of international
development assistance.
The objective of the legislation is to promote poverty reduction
among Native Americans through sustainable growth and economic
development, utilizing these lessons of development. The Millennium
Challenge Corporation, the United States' major new initiative in
foreign aid, is built on these same lessons. The experience with the
pilot projects created by the legislation can be used to fine-tune both
a larger program based on the same lessons, as well as to make
adjustments in other programs intended to benefit Native Americans.
As you have heard this morning from my colleagues here on the panel
despite some improvement in recent decades in measures of their
economic and social well-being, many Native American communities--
American Indians, Alaska Natives and Native Hawaiians--do face issues
similar to those faced by peoples in the developing world. They
continue to suffer disproportionately high rates of unemployment and
poverty, poor health, substandard housing, a lack of access to basic
infrastructure like reliable power and water, and limited job
opportunities. These conditions lead in turn to high alcoholism and
suicide rates, and the loss of young people to urban areas, threatening
traditional culture and heritage, and the case of Alaska, a valued
traditional life style. Now, many communities also face increased
concerns about environmental changes that could be precipitated by
global warming.
The Lessons of International Development
Mr. Chairman, as you know, the concept of what foreign aid does is
not well regarded by many Americans. In several instances, this poor
reputation is richly deserved. However, foreign aid and development
assistance have had a number of successes. In the more that fifty years
of international development assistance, there have been a number of
lessons learned--lessons about what works and what does not.
Because Native economies are often plagued by the same challenges
as the economies of the developing world, they are likely to benefit
from these lessons. The legislation we are discussing today has been
designed with them in mind.
The lessons include:
Lesson #1: Programs intended to assist long-term development
need to explicitly focus on sustainable poverty reduction,
economic growth and job creation. If you do not make poverty
reduction and growth the objective of the program, it is less
likely to happen. Much of U.S. foreign aid has other
objectives. It is directed to important humanitarian
assistance, to disaster relief efforts, or simply to reward
friends of the United States. Many of the efforts are by their
nature short-term. To achieve long-term poverty reduction and
ensure Native Americans permanently escape the cycle of
poverty, these short-term assistance efforts must be
complemented with assistance explicitly targeted to economic
growth, including development of the private sector. If
sustainable poverty reduction and job creation are not explicit
objectives, experience shows that they are less likely to
happen.
Lesson #2: Policies matter. If a country's policies are not
supportive of development, if they do not fight corruption,
promote economic freedom, and invest in their people's health
and education, including the education of young women, if they
do not manage their natural resources well, growth does not
occur.
As the chart on the next page shows, there is a strong
correlation among good polices, aid effectiveness and growth
rates. Fortunately, by being in the United States, Native
communities are relatively well off in terms of their macro-
policy environment. There are certainly improvements to be
made, but we rank near the top of most country policy rankings.
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Lesson #3: Local ownership is important. Intended beneficiaries
of programs should determine priorities and be responsible for
implementation.
Critics of traditional approaches to development assistance
sometimes say that ``it consists of consultants and development
officials from developed countries going to developing
countries and saying `You need this, and we're here to do it
for you.' \1\ They then do their work, depart for their home
countries, and leave nothing behind.'' This assertion does an
injustice to many dedicated professionals, but does contain at
least a kernel of truth. Development assistance is more
effective when the beneficiaries identify what they need, and
themselves take responsibility for insuring that the programs
are a success.
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\1\ Similar criticisms are made of Congressional ``earmarks'' that
mandate that certain amounts of foreign aid must be directed to
specific purposes.
There is no Federal economic development paradigm for Indian
country, and if there is list of Lessons Learned for Indian
economic development assistance similar to those in the
international area, no one I have asked is aware of it.
However, it should be acknowledged that Native American
communities have some experience with this approach \2\ The
Foreign Aid Lessons for Domestic Economic Assistance Act of
2007 builds on the most effective tools to date: self-
determination, contracting and self-governance, and leave
provide broad Federal parameter but leave specific program
objectives and tactics to the tribes.
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\2\ The highly regarded Indian Self-Determination and Education
Assistance Act of 1975 (25 U.S.C. 450 et. seq.) has been particularly
effective in devolving Federal decision making and authority to
administer programs and services from the United States to tribal
governments. Its transfer of authority and resources has resulted in
more effective and efficient program administration as well as the
development of an Indian civil service whose skills are transferable to
tribal economic development efforts. At the end of the day, however,
the ISDEAA is a mechanism whereby Indian tribes and tribal consortia
manage Federal funds, and is therefore akin to a contracting program.
Lesson #4: Programs should focus on, and be measured by their
outcomes--by their impact on the people they are intended to
help. Simply focusing on how much money is spent and how
quickly it is disbursed is a recipe for disaster. Rather, an
investment approach whereby the beneficiaries determine, up-
front, what results they want to achieve, and how they will
measure success is crucial, i.e., ``what they will get for the
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money.''
Lesson #5: It is important to establish quantitative measures
of success up-front, and to track the progress toward those
objectives. Proponents of many programs claim success in
qualitative terms. However, establishing clearly articulated
quantitative targets and rigorously tracking progress toward
those targets promotes accountability and leads to more
successful programs. Keys to this are collecting baseline data
up front, and establishing an arm's-length program of
monitoring and evaluation that tracks progress against
benchmarks and that highlights the need for mid-course
adjustments.
Lesson #6: Each program should build capacity, as well as seek
to achieve its specific objectives. This is why local ownership
and responsibility for implementation is so important. Skills
learned in setting objectives, implementing programs, and
making adjustments based on measurable results are readily
transferred to other programs and to public and private sector
activities.
Lesson #7: Assurance of longer term funding over the life of a
program is important for success. Being dependent on annual
appropriations, which are uncertain in their amount, and when--
and even if--the money will arrive, and which expire at the end
of a fiscal year, makes program management difficult. It leads
to inefficiencies, wasteful spending, and in some cases
corruption.
S. 2232 and the Lessons of Development
The original legislation establishing MCC is built on these
lessons, as is the legislation before you today.
Potential beneficiaries compete to be selected for funding, based
on the quality of their plans, their existing poverty rates, and their
ability to implement the plan. Funding is explicitly directed to
promoting economic growth and the elimination of poverty.
Ownership is built in up front, as the entities must compete, it is
their plan, and they have responsibility to implement it. This of
course builds local capacity, and promotes entrepreneurship.
Compacts can be for up to five years of operations, and are fully
funded up front.
Funding is ``no year'' money; i.e., authorizations do not expire,
so there is no artificial rush to spend everything by September 30 of
each year.
Finally, programs proposed under the legislation must have specific
objectives, identify intended beneficiaries, and establish regular
benchmarks to measure progress.
To give an example of how this will work in practice: One of the
entities in Alaska that hopes to be able to participate in the
demonstration project has already begun working on what its proposal
might be. Thanks to prior studies, it has excellent social, economic,
and demographic data on the population of Alaska, both Native American
and other. While the data shows improvement for all groups, it also
shows a persistent gap between the status of Native Americans and other
parts of the population. The program they are working on is explicitly
targeted to help close that gap. Intended results are specific,
targeted to growth and poverty reduction, and measurable. The
beneficiaries, you here on the Hill--and U.S. taxpayers--can know in
advance for what the funding will be used and what the implementation
plan is. You will be able to monitor progress, and, at the end of the
program, know whether it has been successful.
Advantages of a Demonstration Project and Benchmarks for Success
The proposed legislation also incorporates one lesson not built
into the original MCC bill--it is structured as a pilot and
demonstration project. It allows the parties to learn.
The Foreign Aid Lessons for Domestic Economic Assistance Act of
2007 represents a fundamental change in approach. Many potential
beneficiaries are accustomed to having the government set priorities,
design programs, handle implementation, procure goods and services, and
manage many other aspects of these activities.
It will take time for Native Americans--in Alaska, Hawaii, and the
lower 48 states--and government officials to understand that this
approach is different and to come up the learning curve. Once they
have, the experience with the pilot can be used to fine-tune both a
larger program based on the same lessons, as well as to make
adjustments in other programs intended to benefit Native Americans.
The benefits of a pilot are not limited to Native Americans and
others directly involved in the programs. There is a need for education
elsewhere as well. MCC, which was a start-up as recently as 2004--has
been criticized by some--for the most part, unfairly I believe--for
being slow in making commitments and disbursements. Certainly, in a
world of fast-disbursing emergency assistance and in which money not
spent by September 30 is lost, it may be seem slow. But that is not the
model or the lessons on which it was built, nor how it should be
evaluated.
Ultimately, both MCC and this legislation should be evaluated on
the outcomes they achieve, and the progress their programs make toward
their benchmarks. In the interim, other measures exist.
In terms of the pace of its commitments, MCC compares favorably
with other international aid institutions, even though it has slowed
somewhat from its early days.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Similarly, benchmarks can be set for the pace of disbursements. It
would be unreasonable in measuring the pilot's success to expect that
100 percent of the funding for a 5-year program would be disbursed in
the first year. In a fully functioning, steady state program, achieving
a pace of 20 percent a year might be reasonable. However, allowing for
initial start-up challenges, the time needed to decide objectives,
prepare proposals, to evaluate them, and mobilize to implement them is
likely to result in a disbursement pace will below that in the
project's early years.
Establishing this initial program as a demonstration project gives
time for participants to come up the learning curve and to get start-up
issues behind them. It allows them to educate constituents, and to
manage expectations.
In Closing
The original MCC legislation was passed with bipartisan support,
and with the support of many of your Senate colleagues who serve on the
Foreign Relations Committee. I remember with appreciation and respect
the support and knowledgeable assistance we received from many of them,
including Senators Lugar and Biden--the Chair and Co-Chair of the
Committee--Senators Feinstein, Coleman, Hagel, Dodd, Sununu, and
others.
You now have the opportunity to bring some of those same lessons
and ideas here domestically, to address the same fundamental problems
of helping people to escape poverty and achieve sustainable long-term
growth--and to do so on a bipartisan basis. I hope that you will.
Thank you.
Senator Murkowski. Thank you, Mr. Applegarth, and all of
you for your testimony. We certainly appreciate it here this
morning, not only to give a little bit of background on the
legislation itself and how it fits in with the Millennium
Challenge Corporation, but also to understand from the local
perspective what this might mean.
Mr. Applegarth, let me start with you. Just to better
understand how we might see direct application in Alaska. Mr.
Crow had some very good testimony this morning about what we
actually have within the bureaucracies that we have set up and
the difficulty in moving the money between the agencies to
allow for real, and complete economic development. And your
point is that there needs to be a fundamental change in how we
allow these programs to work.
Given what Mr. Crow described, and the structures that we
have within agencies, short of this legislation and this MCC
approach, do you believe it is possible to do what Julie and
the folks at AFN want to do in terms of economic development,
short of this legislation?
Mr. Applegarth. There are people here with more experience
with that particular group of agencies than I have. There are
certainly some good programs that are already existing, and
some very well- intentioned professionals here in Washington.
But, if you look at the world of international development,
there are also very well-intentioned programs and some good,
hard-working professionals. Insiders in the development
community sometimes characterize their efforts as: People from
a developed country, whether it is Washington or London, or
Paris, come to a country and say, ``Hey, we are here to help,
this is your problem, and we are going to fix it for you.'' And
so professionals go for a while, they spend some money, and
they leave. There is no capacity-building, and at the end of
the day it is not clear that a lot has been accomplished except
spending for consultants and other things. It is hard to see
the real benefit on the people and really see a fundamental
change in the lives of the people.
This legislation, and these lessons on which it is based
really turn that model on its head. It starts from which
problem do the people in the affected area believe is their
highest priority. And what is the best way to fix it? A compact
under this program is a vote of confidence in the potential
beneficiaries, in the people that are experiencing the problem
on a day to day basis, and are they willing to sign up to take
responsibility to get it done? While there is certainly a trust
and verify element in this, you are shifting the responsibility
out of Washington and putting it onto people on the ground. So
they have to step up: say yes, we will take it, develop plans,
explain what they are and how it is going to work, and then be
willing to be tracked against it. You certainly still have high
standards in terms of making sure the money is used well, but
it really is a shift.
Certainly a lot of developing countries don't qualify for
this vote of confidence. MCC only takes, roughly, the top
quartile of countries. Even before a country gets to talk to
MCC, it wants to see its government is committed to the
fundamental kind of policy environment that is important for
growth.
Senator Murkowski. Let me ask you, Senator Stevens raised
this in his opening remarks, Alaska geographically is a
challenge because it is so remote. You have very small villages
that are very isolated and so the ability to build a stronger
economy is very limited because of, primarily geographic
factors. In your experience, in working with the Millennium
Challenge Corporation, and how that came together, and
recognizing the developing countries that you wanted to assist,
are Alaska's issues much more unique than other countries that
can avail themselves of the MCC? In other words, do we need to
do anything different with Alaska because of our small,
isolated population and the fact that you have very localized
economies? Are there more similarities or more differences?
Mr. Applegarth. Well, I think there are both. The reality
is there are some 150 developing countries. They are widely
diverse. The differences between Bangladesh and Cape Verde, for
example, are vast. And I think that is part of the point, that
you can't, in Washington or in a centralized donor country,
make decisions of what is going to work in each situation. It
is not a cookie cutter approach. That is why it is important to
have the people at the local level who know the situation best
driving the process.
There are similarities--I can think right away of a
couple--between the situation in Alaska and some other emerging
economies, and there are opportunities for lessons learned. I
think one of the many good things we did at Millennium
Challenge was to encourage the people in each country
responsible for program implementation to talk to each other.
We would sponser group meetings and then suggest some topics of
conversation. That would be the last thing we would say,
because then everybody gets animated and talks among themselves
and a real exchange of lessons. Encouraging this kind of dialog
between the native program located in Alaska, and those in
developing countries, would be one of the things we could do.
To sum up I think there probably are some lessons that would be
attributable to Alaska or Hawaii or the lower 48 in some other
emerging markets that we could look closely at.
I believe one of the advantages that Alaska has is the
leadership provided by the BBNA and AVCP. They deal on a day to
day basis with the local communities and making sure they are
involved in the processes. I have had the opportunity to sit in
some of the Council meetings and watch the process of debating
resolutions and coming to a conclusion or not. And anybody who
thinks that this rubber stamp process has another lesson
coming. There is animated, active debate. Ralph and Zack and
their colleagues must really have to have a thick skin
sometimes. Because there is involved--I will put it this way--
there is involved local ownership of the issue.
Senator Murkowski. Let me ask the two of you, Ralph from
BBNA's perspective, and from AVCP's perspective, it is one
thing to know that you have a reliable funding stream, and I
appreciate the benefits that that certainty yields. But it is
also about what you can build in your region. Zack mentioned
the poverty rates there in the area, the unemployment, the
poverty, is as extreme there as anywhere in the Country. As you
are sitting and dreaming about what you could do with this
potential, how do you see a specific program developing out
there that can provide for this level of economic development
in an area that has just been historically--I don't want to say
depressed--there is very little economic vitality in the region
in many of those outlying villages.
Mr. Brink. I think what we envision in this area is what
will work. I can't say what will work in that area. They know
what will work in their area. And I think what they were
talking about is tourism. There are several individuals in the
Yukon River that are trying that. So they are the ones that
they know what will work and then we want to build on those. I
am not from the Yukon, I am from the Kuskokwim area, and the
Kuskokwim in summertime, the fishing and hunting networks that
we have, that brings income to some individuals. In the Yukon,
there is not a whole lot of that.
So they will need to take the opportunity for them to try
things that will enhance their lives.
Senator Murkowski. What about out in the Bristol Bay area,
Ralph?
Mr. Anderson. Thank you, Senator. You know, over the past
five years, we have been discussing this whole concept of how
best we can meet our economic challenges and how can we help to
move our people into the 21st century. Paul mentioned some
things that I think were absolutely right on. One is that for
many years we have lacked capacity-building from service
providers. We would have government officials come swooping and
say, hey, we are from the government and we are here to help.
They might be there to take care of an emergency problem or
some specific problem with funding ending on September 30, and
then they are gone, with maybe a facility built or a service
started without any local person left behind to do the actual
maintenance in carrying out the project or carrying out the
service.
Being from the small village of Clarks Point, I grew up
there. There are 60 people, and 30 of us were students, grade
school students. And now the population is cut in half. There
are now 30 people living there. Our school is barely being kept
open. We are still above the 10 student threshold.
We developed some concepts between us, between our groups,
AVCP, BBNA and AFN. We started this a couple of years ago
actually, when we had our first formal meeting between us on
the project.
There is also a really key component of the legislation
that will help us to move along. There is a provision in there
for planning because we need to know, and we would also like to
find out from Millennium Challenge how the compacts are set up.
We are familiar with compacting. We know how they operate. So
we would also like to find out from Millennium Challenge just
how they have their compacts set up and how they are
administered and programs developed.
There is also another component here where we need to teach
a new agency, Commerce, the whole concept of compacting,
because my understanding is that the only agency that I am
aware of that compacts with Native tribes and Native Alaskans
is the Department of Interior. Although there may be an
Administration policy encouraging other DOI services to be
compacted, we haven't seen any. So this is also helps us to
expand the concept of compacting to other departments. So there
is some planning that would need to occur.
We have explored in the Bristol Bay region
telecommunications possibilities, energy possibilities, but we
also understand that in order to be successful, we need to go
about implementing the project as carefully as possible,
because we want to be successful. We don't want to set
ourselves up to fail, because our success means that Native
Americans, Native Alaskans throughout the State will also
benefit. We will be opening doors for other opportunities for
them as well. So we want to succeed.
As far as specifics for the villages, and Zack was very
accurate in saying that different areas have different needs.
One of the things that we have seen in Bristol Bay and
everywhere in Alaska is just the astronomical costs for energy.
We are having people leave our region or leave our villages as
well. At the same time, we are facing really poor economic
conditions. How do we provide for families in the villages to
buy heating fuel at $5 a gallon in the coldest winter months
when it is 20 or 30 degrees below?
Those are some of the challenges that we are facing. If you
take a look at the $100 million over five years, and you count
the number of eligible entities, we are not going to see $100
million apiece. We are not going to see enough money to build
roads, airports, and infrastructure with the costs the way they
are. But we will be able to build companies to build roads and
airports, to build infrastructure, to provide economic
opportunities and jobs in our regions.
We might not be able to provide some direct program
services and facilities as a result of the legislation. If you
divide $100 million by six, and that doesn't leave very much,
if you are just doing the math. But we will be able to build
the companies and build enterprises that would allow them to
pursue other funding sources as well.
Senator Murkowski. Let me ask you about that, Julie,
because you mentioned that what you needed were the tools for
competition, and whether the tools for competition are ensuring
that you have high-speed Internet, basically the ability to
communicate not only village to village, but around the globe.
What else are you considering in terms of the tools for
competition that are going to make the difference?
Ms. Kitka. Well, we need an education component. We need
more training money for workforce development. It is absolutely
critical because if you are going to be moving towards more
communication and knowledge economy on that, an educated
workforce and an educated people and community is essential on
that.
So I would say that you need access to the high-speed
Internet. You are going to need additional training and
workforce development money that is able to be compacted, that
people can really move not only a sizable number of people into
greater and greater ability to use the communications and
technologies, but also move people to the whole model of life-
long learning.
I think that that is really what you are saying in regard
to how do you move our people to be more competitive in the
world is to change the mind set. It is not really changing. It
is just encouraging and making explicit that that is what life
is about, is life-long learning, and getting people from where
they are at to move forward and continue to develop.
As I said, another aspect is what I have called changing
the investment climate. We had an economic forum one time here
a few years ago, and we had a speaker that does a lot of
investing all around the world. We were talking about what the
differences are in some of these countries and in Alaska, and
they basically said the United States Government incentivizes
us to invest in Brazil, in India, in China. The U.S. Government
does that. And if you want us to invest in your State or your
rural area, the government really has to take a look at what
are its economic incentives and its climate that it provides to
incentivize that.
Senator Murkowski. Is that just at the Federal level or is
it also at the State level?
Ms. Kitka. I think it is both. One in particular I
mentioned at the beginning of the testimony, the idea of
additional demonstration projects. One which I have been
particularly interested in is taking a look at what is going on
the Middle East in the Arab countries, in particular Dubai and
others, where they have created these free trade zones where
companies can relocate there and they pay absolutely no taxes.
They have areas there where they become magnets for all these
world class universities to locate there, to provide world
class education.
These countries, when they are looking at how do they build
sustainable economies and transition from oil economies to
other ones to benefit their people and position themselves,
they really are looking at education and expanding that, but
also again this whole investment climate of how do you
incentivize people to locate there.
I really think it is really ripe for a national
demonstration project on what we would call a free trade zone
to try to incentivize business opportunities in Alaska, in
Hawaii, and in the reservations.
It may sound like it is just nothing but big thinking, but
I think if you think in terms of the global economy and how
things move so rapidly and how far the United States is falling
behind in being competitive in the world, I really think that
the Committee and the Congress really needs to take a look at
how can each part of the Country gets its strategic edge and
help us be more competitive in the global economy based on our
strategic edge.
When I think about Alaska in particular, I think our
closeness to Asia and the Pacific and that whole rim, and the
growth of those economies and what that means, our potential
trade partners, I really see Alaska and our people and the
people of the Pacific Northwest and California as being
transition areas for that part of the world.
Again, with some of these demonstration projects, you can
test some of these things out. You don't have to make a full-
blown total commitment, but you can test things out for a few
years to say does this make a difference in making us more
competitive; does this take advantage of our strategic
competencies that we might have or our geographic location; and
does this move us forward.
I would argue that we are really far behind in doing that.
That is why I am suggesting that even at this late time in this
Congress on that, that we consider entertaining more
demonstration projects and moving those forward, because I do
think that we are falling behind more than we realize. We do
need to catch up.
Senator Murkowski. I appreciate your comments about the
trade zones or the economic development centers where you do
incentivize, whether it is educational institutions or some
level of industry to come in. I think that that is important.
I think that leads to the other initiative that you had
indicated that you would hope to include as a demonstration
project. This is the focus on energy resources. I am convinced
that if we are not able to get our energy costs under control
and have reliable, affordable clean energy available, it will
be very, very difficult for us to be competitive in that global
marketplace.
The comments have been made today about what the high
energy costs are doing to our villages, whether it is Clarks
Point where you grew up, Ralph, where you are seeing people
move out of the villages because of high energy costs. I think
if we can focus on this as an area and figure out how we bring
down our energy costs.
I know you have had the conversation with the President of
Iceland. We have seen how that country has been able to attract
world business leaders to come locate in, again, a
geographically remote country like Iceland, not because of the
labor force there, but because there is affordable, reliable,
clean energy sources.
So I would hope that of the initiatives, as you try to
advance this, that the energy piece is one that we are able to
tackle. We have some initiatives that we are working with.
NakNik is looking at how they might be able to bring on
geothermal, not just for their community, but for the
communities within that region, to be able to tie them into
that. If you had an economic center where you did have an
energy source that worked there, I think your possibilities are
greatly expanded.
I wanted to ask, Julie, you had mentioned some technical
amendments that you would present to staff, just in terms of
additions to the legislation. Are there any specifics to the
technical amendments that we might want to know about?
Ms. Kitka. The one technical amendment I would suggest
would be a severability amendment that if anything is ruled
unconstitutional, that it would be severed. I know that if you
look at the Justice Department's concerns on the Hawaiians
being included in that, AFN is absolutely totally behind the
Hawaiians staying in this project, but if that helps overcome
some of the concerns with Justice Department on the bill,
having that severability if there is any reason why they
shouldn't be on that, I think that that helps the bill go
forward.
Also, I was going to say in regard to, and I think that
there was one technical amendment that was to in the other
agencies on that make it more permissive for the agencies, as
opposed to mandatory, so that you are building the cooperation
of the agencies that are participating, contributing resources
into Commerce, as opposed to hitting them over the head. So it
was kind of like build up the mechanism and build up the
attractiveness of that, and allow the ability to have
negotiations and build positive things to make that happen, as
opposed to it being viewed negatively. So I think those are the
two there.
And certainly if there was an interest in making explicit
capturing best practices on that, I am sure that there is a
technical amendment that could be developed on that.
We also felt that there was something that could be done
totally aside of legislation to try to help capture some of the
best practices. That would be just basically maybe a letter or
a request from this Committee to the Millennium Challenge,
opening up that inquiry and saying we really would like to see
this sharing take place. I think that when we went to meet with
them, Ralph and many of us sat down for briefings over there on
that. I think that there is a real willingness for people to
share what is going on, but if we can formalize that somewhat
and maybe, like I said, even a letter going over there
expressing the interest of the Committee in making sure we
capture some of these best practices, could get the ball going
as well.
Senator Murkowski. Which would be I think very important to
be able to share that.
We are going to have to wrap up here in just a few minutes.
Is there anything further? Byron, I haven't directed a
question at you this morning. Is there anything further that
you wanted to add in terms of support or the initiatives as
they may apply in Alaska?
Mr. Mallot. Well, just based upon the testimony and
discussion here, I would emphasize the notion of continuing to
think about appropriate incentives. Senator Stevens mentioned
that in his testimony.
I think we also need ultimately to effect an attitudinal
change about rural Alaska within our State, the notion that
putting dollars into rural Alaska some how is a sunk cost,
while building something in another place might be an
investment.
I also think that as we look at high energy costs, with
what is happening with climate change, a more profound focus on
the ultimate future of our rural communities and rural places
in our State, and their importance not just to Alaska, but to
the United States and to the world, as being places that we can
learn and act and hopefully bring again best practices and
lessons that can be applied elsewhere.
My final comment would be that we know that high energy
costs are bringing rural Alaska to its knees as we speak, that
the out-migration is significant, and that the need to wrestle
that 500 pound gorilla to the ground is absolutely necessary
and vital. It is preaching to the choir, but it is something
that very much needs to be emphasized and dealt with.
So thank you very much for your leadership, Senator.
Senator Murkowski. Well, we will work with you on all these
issues. The energy one, I do believe, is the biggest hurdle we
have now within certainly most parts of the State to real
economic advancement. If the residents can't afford to continue
to live there, that means they can't afford to continue to do
any business there, and we do see that migration into town or
elsewhere, leaving the State. That is something that we have to
be able to get our arms around.
Julie?
Ms. Kitka. Madam Vice Chair, I neglected to extend our
deepest thanks for the Indian Health Care Improvement Act
getting done yesterday. I was meaning to do that, but I kind of
jumped into our testimony. I think that that is really
critically important that that happened. We are so pleased with
that. We can hardly wait to get back home and share the news.
That is a major accomplishment for the Senate. We want to thank
you and Chairman Dorgan and all the staff people and all the
members of the Congress that made that happen, because we know
that that has been a long time coming and a lot of work, but we
deeply appreciate it. It was very significant.
Senator Murkowski. Well, I appreciate your kind words. When
you think about the economic health of a region, regardless of
where it is, whether it is Alaska, Hawaii or Bangladesh, we can
work hard to create good, strong economies, but if you don't
have healthy individuals, if you don't have healthy families,
you simply do not have that strong economy that you need.
And so I view the focus on the Indian Health Care
Improvement Act as an integral part to how we bring about
economic development and real economic stability within a
region. We have to be able to provide for the health care
needs, and as we know, we have to be able to provide for those
health care needs out in those regions. I think that this Act
goes a long way in helping to do that, so that along with
education, along with job training, is the healthy individual.
So we will continue to push on that.
We will ask for your help on the House side in encouraging
them to move it along so that we can actually get this one tied
up this year. It is going to be very, very important to us.
Gentlemen, anything further that you would care to add
before we conclude?
Paul?
Mr. Applegarth. Senator, pardon me, when I mentioned the
efforts of AVCP and BBNA, I failed to mention AFN and Julie and
Nelson's efforts in helping to pull this legislation together,
and in involving everybody in the local communities. I didn't
want that oversight to be uncorrected.
Since I have the floor, I also want to emphasize a couple
of other things quickly. One is how quickly lessons learned
spread. One of the things that we have seen is if you shift the
responsibility to the people at the local level, the benefits
of lessons learned spreads automatically. They take the
initiative to call their counterparts elsewhere. It is not
something that needs to be coordinated or planned in a forum.
For example, I remember when the local coordinator of a MCC
program in one of the African countries asked for a list of the
other coordinators from their other countries. He got on the
phone and called them, and said, what are you doing about this
or that. MCC probably would have gotten that idea after a
couple of months, but the reality is, it was happening well
ahead of us. This is an example of the market working and
ownership being taken, with individual participants who
accomplish their own goals go out and do things.
I also think new technologies offer us an opportunity to
preserve life at the local villages in a way that some of us
are just beginning to imagine. We are seeing about the power of
distributed computing in terms of stay at home moms doing work
or other kinds of things. There may be a way to apply similar
concepts, and allow people to become economic powerhouses in
their same village. They do not have to leave home, not have to
spend the energy to commute somewhere else and so on, and still
generate income and help preserve the traditional lifestyle.
How this would work in practice, I don't yet know, but the
reality is this kind of approach in this legislation allows
those kinds of ideas to bubble up into proposals and to
programs where other people can learn about it.
Finally, it really is important that you have held the
hearing today. Thank you very much for your own efforts.
Senator Murkowski. Thank you.
And I want to thank AFN, AVCP and BBNA for your efforts to
work together, to coordinate. I greatly appreciate the interest
of so many Alaskans that are here at the Committee today to
listen to this. I think we are all looking at this as a new
idea, an approach that is going to startle some, is going to
scare some because it is not the norm. Sometimes you have to
shake things up in order to change the way that things have
happened for a long period of time.
So again, I appreciate the leadership and the ingenuity of
so many of you that have brought us to this point. We will be
working on it on this end, and again thank you. I appreciate
the fact that you have traveled some great distances to be
here, and I look forward to working with you. Thank you.
With that, this hearing is adjourned.
[Whereupon, at 11:25 a.m., the Committee was adjourned.]
A P P E N D I X
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