[Senate Hearing 110-]
[From the U.S. Government Publishing Office]



 
  STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 
                            FISCAL YEAR 2009

                              ----------                              


                         TUESDAY, MARCH 4, 2008

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:36 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Patrick J. Leahy (chairman) 
presiding.
    Present: Senators Leahy, Gregg, and Bennett.

               U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

STATEMENT OF HENRIETTA H. FORE, ADMINISTRATOR AND 
            DIRECTOR OF FOREIGN ASSISTANCE


             OPENING STATEMENT OF SENATOR PATRICK J. LEAHY


    Senator Leahy. They've doctored up this hearing room a 
little bit. I have to get used to where all the buttons are for 
the sound, as this is the first hearing of the subcommittee 
this year.
    Senator Gregg and I have a strong interest in ensuring that 
our foreign aid dollars are used wisely. There have been a lot 
of examples, of course, where they have not been, and there 
have been a number of great examples where they have.
    Iraq comes to mind as one example of how not to do it. If 
USAID had been listened to earlier, I think there would have 
been a lot less money wasted. We'll hold a hearing in the full 
committee on the Iraq reconstruction fiasco a week from today.
    We also have some concerns with the effectiveness of our 
programs in Afghanistan and Pakistan, countries that do not get 
enough attention, and where we should be doing more. I'm 
speaking now of USAID's role.
    I'm delighted that Henrietta Fore is here. She is the 
Director of United States Foreign Assistance. She is 
Administrator of the United States Agency for International 
Development. It's quite a mouthful of a title. Ms. Fore, we 
appreciate you being here.
    Some say there's not enough time in an election year to 
accomplish anything significant. I disagree with that. We have 
a lot to do. We should make the most of the time we have. We 
want to focus on the President's fiscal year 2009 budget 
request for USAID, and there's a great deal in the President's 
request that I support.
    He proposes higher levels of funding for development 
assistance than he has before. These funds support USAID's core 
programs. They have strong bipartisan congressional support. 
For international health, the President proposes higher amounts 
for HIV/AIDS, malaria, and neglected tropical diseases.
    I met with him last week, with some other leaders from the 
House and Senate, to talk about his Africa trip. I did point 
out to him, that once again, he has cut funding for child 
survival and maternal health, and family planning and 
reproductive health.
    You can't take away with one hand what you gave with the 
other. We've got to get that in balance. One of the President's 
proposals is to recruit and train 300 new Foreign Service 
Officers to begin to rebuild USAID's professional workforce. 
It's long overdue.
    I will support the President on that. It's something I 
called for years ago. I think we would be a lot further along 
if people had listened back then, but I'm willing to welcome 
converts whenever they show up.
    But, in the meantime, USAID's professional staff has become 
a shadow of what it was. We routinely hear that USAID has 
become a check-writing agency for a handful of big Washington 
contractors and NGOs because you don't have the staff to manage 
a large number of smaller contracts and grants, even though 
oftentimes those smaller contracts and grants are the ones that 
will have the most effect.
    Sometimes the large contractors do a good job. They do 
charge an arm and a leg to do it, but other times there are 
piles of money that are wasted. We get glowing reports, but it 
doesn't always reflect what you see on the ground.
    The small, not-for-profit organizations are shut out of the 
process. I don't think that helps these countries. It certainly 
doesn't help U.S. taxpayers.
    When your predecessor passed by here last year, he had big 
plans for reforming foreign aid, but he did not appear to have 
much of a grasp of USAID's budget and programs.
    You, however, come with considerable USAID experience, and 
I appreciate that. The best advice I could give is to focus on 
two or three key areas where you can make a real difference, 
where USAID can become more accessible and more responsive.
    I know that Senator Gregg is going to a budget meeting, but 
Senator Bennett--who is a very knowledgeable Senator, and one 
who has worked very hard in these areas--I yield to you, 
Senator Bennett, if you'd like to make any comments?
    [The statement follows:]

             Prepared Statement of Senator Patrick J. Leahy

    Good afternoon. This is the first hearing of this subcommittee this 
year. Senator Gregg and I share a strong interest in ensuring that our 
foreign aid dollars are used wisely. There have been many examples of 
when they have been, and many examples of when they have not been.
    Iraq comes to mind as one example of how not to do it. If USAID had 
been listened to earlier I think there would have been a lot less money 
wasted. The Appropriations Committee will hold a hearing on the Iraq 
reconstruction fiasco a week from today.
    We also have concerns with the effectiveness of our programs in 
Afghanistan and Pakistan, and countries that do not get much attention 
where we should be doing more.
    Today we welcome Henrietta Fore who is the Director of United 
States Foreign Assistance and Administrator of the United States Agency 
for International Development. That is a mouthful of a title. Ms. Fore, 
we appreciate you being here.
    Some say there is not enough time in an election year to accomplish 
anything significant. I disagree. We have a lot to do and we should 
make the most of the time we have.
    Today we want to focus on the President's fiscal year 2009 budget 
request for the U.S. Agency for International Development.
    There is much in the President's request that I support. He 
proposes higher levels of funding for Development Assistance than he 
has before. These funds support USAID's core programs that also have 
strong, bipartisan congressional support.
    For international health, the President proposes higher amounts for 
HIV/AIDS, malaria and neglected tropical diseases. But, yet again, he 
cuts funding for child survival and maternal health and for family 
planning and reproductive health.
    One of the President's proposals is to recruit and train 300 new 
Foreign Service Officers to begin to rebuild USAID's professional 
workforce. This is long overdue and I strongly support it. I and others 
called for this years ago. Imagine how much farther along we would be 
today if OMB had listened to us.
    USAID's professional staff is a shadow of what it once was. We 
routinely hear that the reason USAID has become a check writing agency 
for a handful of big Washington contractors and NGOs is because you 
don't have the staff to manage a larger number of smaller contracts and 
grants.
    Sometimes these big contractors do a good job, although they charge 
an arm and a leg to do it. Other times they waste piles of money and 
accomplish next to nothing, although they are masters at writing 
glowing reports about what a good job they did.
    Meanwhile, the small not-for-profit organizations are shut out of 
the process. This is bad not only for U.S. taxpayers but also for the 
countries that need our help.
    When your predecessor testified here last year he had big plans for 
reforming foreign aid, but he did not appear to have much of a grasp of 
USAID's budget and programs.
    You come with considerable USAID experience. The best advice I can 
give you is to focus on two or three key areas where you can make a 
real difference to help make USAID a more accessible, responsive agency 
that is not beholden to a select few.
    I will stop there so Senator Gregg can make any opening comments.

                 STATEMENT OF SENATOR ROBERT F. BENNETT

    Senator Bennett. Thank you very much, Mr. Chairman. I 
appreciate the opportunity. Madam Administrator, I've been on 
your side of the table, and I know that what you are allowed to 
say here is dictated by the elves in OMB, and that many times 
you would like more to agree with the people here than you 
agree with the people who control what you have to say.
    But I notice that microenterprise programs have been cut 
back very dramatically in this budget. In fiscal 2008, there's 
going to be $245 million to go to microenterprise programs. Of 
all of the things I've done since I've been in the Senate, none 
has been more satisfying than the work I've done to try to 
increase the amount of money going for microenterprise.
    The request for fiscal year 2009 is $104.5 million, so it's 
cut more than in half. I don't know who did that, and I really 
don't want to know who did that, but I want you to know that I 
will do what I can to try to change that around here, and get 
back up towards the previous number. I don't see anything but 
enormous value that comes out of this.
    We talk about the standard reasons why it's good for the 
people--overwhelmingly they are women--who get these 
microloans. We get the anecdotal evidence of this woman, and 
this family, and this business, and so on. Ideologically, we 
make capitalists out of these people, and I think that's a very 
good idea. The father of microenterprise has been given the 
Nobel Prize, Muhammad Yunus. He's in town, he's been written up 
recently, and I don't know if we get to the appropriate 
question point period, but I'd like to discuss that with you a 
little bit further.
    Then having said that, I make my standard annual plea, that 
I'm sure you're familiar with and sympathetic with. That is the 
fight against corruption, and the use of these funds in 
governments that are corrupt, and we end up seeing bank 
accounts in Switzerland, or other projects that get handed out 
to sons-in-law, and nephews, and those sorts of things.
    It goes through a laundering process of two or three ways, 
but somehow it ends up more in the pockets of the government 
officials than it ends up making sense for the people involved. 
I've never heard any hint of any kind of corruptions with 
microenterprise, which is another reason why I like it.
    So those are my two hobbyhorses. This is your first time 
here, and I couldn't let you come without just repeating what 
I've repeated to all of your predecessors in these two areas.
    Thank you, Mr. Chairman.
    Senator Leahy. To make it easy for you, we have two tall, 
bald-headed men in gray pin-striped suits, with glasses on. So 
just take either one. It doesn't make any difference, 
especially on this issue that we agree so much on--
microenterprise. It goes to my point that it's easy to give a 
contract to a very large corporation, with a large bureaucracy, 
and oftentimes large cost overruns. It's kind of hard to steal 
the money when you're talking about a $200 or $300 microloan, 
but it may bit-by-bit change society, certainly in a number of 
areas that empower women who would not have been otherwise.
    Go ahead and give your opening statement, please.

                 SUMMARY STATEMENT OF HENRIETTA H. FORE

    Ms. Fore. All right. Thank you very much, Mr. Chairman. I 
am so intrigued with these subjects. I love the issues of women 
and business enterprise, as you know, Senator Bennett, so I 
would love to talk about this more deeply. Senator Leahy and 
Senator Bennett, thank you both for your support for the U.S. 
Agency for International Development over the years, but also 
now. It is very important for the development efforts of our 
country.
    With your permission, Mr. Chairman, I will give a shorter 
oral statement. I've placed my longer statement in the record.
    Senator Leahy. Your full statement will be part of the 
record.
    Ms. Fore. Good. Thank you very much.
    The degree of turmoil and poverty in the world right now 
poses both challenges and opportunities for our assistance 
programs, and underscores the vital role of development in 
achieving our objectives. The dramatic election in Pakistan, 
Kosovo's declaration of independence, the humanitarian crises 
all over the world--never has foreign assistance been more 
critical to our national security and to the citizens of the 
developing world.
    The path from poverty to prosperity is a long one, but 
already we have made progress this century. In 1981, 40 percent 
of the population of developing countries was in poverty. In 
2004, that percentage had decreased to 18 percent, and is 
projected to decline further to 10 percent in 2015.
    As we discuss the budget request, which can often seem dry 
and abstract, it is important, as I know you are very aware, to 
remember what this funding will mean to our partners and 
recipients all around the world.
    For example, Senator Leahy, because of your vision, we have 
had great success in the services and emerging technologies to 
allow war victims, as well as other people with mobility-
related disabilities, to become productive participants in 
their social, political, and economic communities.
    The Prosthetic Rehabilitation and Barrier-Free 
Accessibility Project in Vietnam paved the way in providing 
mobility and barrier-free access to tens of thousands of 
individuals in Vietnam, as well as in other countries where its 
approaches and lessons have been learned and replicated.
    The Marla Ruzicka War Victims Assistance Program has 
provided assistance to individuals, families, and entire 
communities harmed as a result of coalition military 
operations. To date, 1,311 projects have been implemented 
directly, assisting nearly 2 million war victims and their 
family members.
    Both Senator Leahy and Senator Gregg, your continued 
attention in health and education, and the needs of Iraqi 
refugees, has helped ensure that they receive resources so 
desperately needed. Senator Bennett, thank you for being a 
leader in advocating for economic growth programs for the many 
people that we serve, as a means for people to find sustainable 
solutions and livelihoods.
    These are small examples of the many people that we serve. 
Those who have the least means and opportunity, yet still yearn 
to build their lives, their nations, and their futures. With 
that backdrop, I would like to describe the highlights of the 
fiscal year 2009 request.
    President Bush's fiscal year 2009 foreign operations budget 
for the State Department and the United States Agency for 
International Development requests $22.7 billion--a 2.7 percent 
increase for the fiscal year 2008 enacted level. Our request is 
an increase of over $2.1 billion, compared to the fiscal year 
2008 President's budget request for State Department and USAID 
foreign operations accounts.
    The key new component to this year's request is the $92 
million to launch the Development Leadership Initiative for 
USAID, which aims to strengthen and invest in USAID's 
critically important Foreign Service Officer core. Not only do 
we need to ensure the size of USAID's workforce keeps pace with 
the significant increases in USAID program management 
responsibilities, but we also need to make sure the workforce 
has the necessary expertise and skill sets.
    The fiscal year 2009 request demonstrates our strong 
commitment to fighting poverty, with a focus on promoting 
economic growth and strengthening democratic governance, 
specifically in Africa and the Western Hemisphere.
    This is reflected in our request for the Development 
Assistance Account, which is more than a 40 percent true 
program increase from the fiscal year 2008 request.
    While we continue our strong commitment to key 
intervention, such as health, education, and environment, the 
fiscal year 2009 request renews our focus on creating 
comprehensive programs that address development gaps in other 
sectors. We aim to leverage the large investments that we are 
making through PEPFAR and the MCC with balanced development 
programs to ensure that all of the investments that the United 
States makes on the ground are lasting and secure.
    While I know the Public Law 480 title II appropriation is 
handled by a separate subcommittee, over the past 6 months 
commodity costs have risen 41 percent, eroding the buying power 
of the funds appropriated in this account, and making it ever 
harder for us to meet the humanitarian needs around the world.
    We hope that our supplemental budget request will be 
enacted as soon as possible, and that any restrictions on our 
ability to meet lifesaving emergency food aid needs will be 
considered within the context of rising prices. There is a 
direct link to our development goals and other humanitarian 
assistance programs funded by this subcommittee.
    I look forward to engaging with this subcommittee to ensure 
that America retains its humanitarian leadership. In support of 
the war on terror, this request will provide strong support for 
our critical efforts in Iraq and Afghanistan, as well as the 
continued focus on security assistance to our key allies, such 
as Israel and Egypt.
    In both Iraq and Afghanistan, we are creating strong 
foundations for the governments to build upon. Our Iraq 
programs continue to focus on economic and governance reform, 
and in Afghanistan we are bringing the government closer to the 
people through improvements in health and education services, 
justice administration, and local governments. We will continue 
to work with the Government of Pakistan to end extremism and 
violence, particularly on the frontier region.
    This is a robust request, one that is fully justified and 
critical to the interests of the United States, and I would be 
glad to take your questions. Thank you.
    [The statement follows:]

                Prepared Statement of Henrietta H. Fore

    Thank you for this opportunity to appear before the committee today 
in support of the President's fiscal year 2009 Foreign Operations 
budget request and to discuss our Nation's foreign assistance 
priorities. The degree of turmoil and poverty in the world right now 
poses both challenges and opportunities for our assistance programs and 
underscores the vital role of development in achieving our objectives. 
The dramatic election in Pakistan. The transfer of power in Cuba. 
Kosovo's declaration of independence. The safety concerns that so many 
of our staff and the staff of our partners face on a daily basis. The 
humanitarian crises in Darfur, Chad, West Bank Gaza, Iraq, Burma and 
Democratic Republic of Congo . . . to name a few. Never has foreign 
assistance been more critical to our national security, and to the 
citizens of the developing world.
    The path from poverty to prosperity is a long one. Success can't be 
realized in a matter of months, by a single Administration, or by any 
one generation of development leadership. But already we have made 
progress this century. In 1981, 40 percent of the population of 
developing countries was in poverty. In 2004, that percentage had 
decreased to 18 percent and is projected to decline further, to 10 
percent in 2015. According to Freedom House, by the end of 2007, the 
number of not free countries dropped from 59 in 1980 to 43, the number 
of partly free countries increased from 52 to 60, and the number of 
free countries increased from 51 to 90.
    We are here today to talk about the fiscal year 2009 Budget for 
Foreign Operations. As we discuss these numbers--which can often seem 
dry and abstract--it is important, as I know you are very aware, to 
remember what this funding will mean to our partners and recipients all 
around the world. The surest, truest compass point I know to remember 
the why of what we do is to see first hand the people we serve. The 
Peruvian farmer in the highlands, the Malian girl who just attended her 
first day at school, the Sudanese family who found safety in a refugee 
camp, a youth activist in Ukraine, a young trafficking victim from 
Vietnam, a landmine victim in Lebanon, a Kyrgyz business woman looking 
to expand her business. These are the people we serve--those who have 
the least means and opportunity yet still yearn to build their lives, 
their nations and their futures. With that backdrop, I would like to 
describe some highlights of the President's fiscal year 2009 Foreign 
Operations request.
    President Bush's fiscal year 2009 Foreign Operations Budget for the 
State Department and the United States Agency for International 
Development (USAID) requests $22.7 billion, a 2.7 percent increase 
above the fiscal year 2008 enacted level. Our request is an increase of 
over $2.1 billion compared to the fiscal year 2008 President's Budget 
for State Department and USAID Foreign Operations accounts. This robust 
request was built with an improved model that reflects an integrated 
approach between State and USAID and Washington and our missions in the 
field, and a collaborative effort with other U.S. Government agencies 
involved in foreign assistance.

                       FOREIGN OPERATIONS REQUEST

    The fiscal year 2009 budget request will strengthen and expand U.S. 
capacity for global engagement by enhancing our ability to pursue 
diplomatic and development solutions to vital national security issues. 
It reflects the critical role of the Department of State and USAID in 
implementing the National Security Strategy and addressing the 
conditions that facilitate terrorism by promoting freedom, democracy, 
and development around the world. The budget request supports five key 
goals: supporting our war on terror efforts, strengthening USAID's 
operational capacity, expanding our poverty reduction investments, 
maintaining a strong focus on health, and continuing our focus on 
security assistance. I would like briefly to address for the committee 
each of these goals.

                          GLOBAL WAR ON TERROR

    Terrorism is the greatest challenge to our national security, and 
the war on terror will continue to be the focus of both diplomatic and 
reconstruction efforts as long as violent extremist ideologies and 
their proponents find safety and support in unstable and failing 
states. As the President said in his September speech to the U.N. 
General Assembly, the best way to defeat the extremists is to defeat 
their dark ideology with a more hopeful vision of liberty. We have made 
important strides in diplomatic and foreign assistance efforts in Iraq 
and Afghanistan, even as we recognize the daunting work that remains. 
The fiscal year 2009 request includes $2.3 billion to continue 
providing strong support for our critical efforts in Iraq, Afghanistan 
and Pakistan.
    Our engagement with Iraq remains the centerpiece of the United 
States' effort in the War on Terror. The administration's fiscal year 
2009 request of $404 million is critical to achieving our long-term 
goals in Iraq, the Middle East and the War on Terror. While the 
strategy to achieve success in Iraq has evolved, the overarching goal 
remains unchanged: a unified, democratic, federal Iraq that can govern, 
defend, and sustain itself, and is an ally in the War on Terror.
    This request includes economic, democratic and governance reform 
programs that take advantage of the recent security gains to help the 
Iraqis create a strong political and economic foundation. I also would 
urge Congress to act quickly on the President's remaining $986 million 
requested in the fiscal year 2008 Global War on Terror Supplemental. 
These funds are urgently needed to help the Iraqis become more self-
reliant and undermine Iraq's insurgency through job creation programs 
for young men, capacity building, governance and reconciliation 
programs at both the community and national level. We would like to 
thank this Committee for its leadership and continued support for the 
Marla Ruzika War Victim's Assistance program. This program has provided 
assistance to individuals, families, and entire communities harmed as a 
result of coalition military operations. To date 1,311 projects have 
been implemented directly assisting nearly 2 million war victims and 
their family members. Your support has been essential in achieving 
these excellent results.
    The President's request of $1.05 billion in foreign assistance for 
Afghanistan will assist to fight the insurgency and establish long-term 
stability in the country. The United States is pursuing a multi-year 
program of economic development, security sector assistance, and 
political engagement buttressed by efforts to establish democratic 
institutions and improvements in governance, rule of law, and service 
delivery by the Government of Afghanistan. I would urge Congress to 
also act quickly on the fiscal year 2008 supplemental for additional, 
and critical, assistance programs to help Afghanistan push-back on 
recent gains by the Taliban. The fiscal year 2009 request sustains 
activities that are supported by the fiscal year 2008 Supplemental 
request, which is aimed at making government more accountable and 
closer to the people through improvements in health and education 
services, justice administration, opportunities for political 
participation, and local governance. Efforts to improve Afghan 
governance, establish and strengthen democratic institutions and 
achieve prosperity for the Afghan people are just as crucial to winning 
the War on Terror as security assistance to fight insurgent groups, 
prevent narcotics trafficking, and train the Afghan Security Forces.
    With the increasing influence of extremists in the Pakistan border 
region with Afghanistan, Pakistan has become an even more critical 
front to winning the War on Terrorism, particularly in Afghanistan. The 
$826 million requested supports the Government of Pakistan in 
fulfilling its vision of a moderate, democratic, and prosperous country 
at peace with its neighbors and contributing to regional stability. It 
will be important to align these resources with the newly elected 
democratic government of Pakistan, and we are prepared to engage fully 
with that government on its development priorities, including in the 
Federally Administered Tribal Areas.
    A Fiscal Year 2009 Global War on Terrorism Supplemental request is 
not included in this budget request. As needs are better known, the 
administration will request additional funds for Foreign Operations.

               STRENGTHENING USAID'S OPERATIONAL CAPACITY

    Under President Bush and with the full support of Congress, the 
United States has launched the largest international development effort 
since the Marshall Plan. USAID's workforce and infrastructure must keep 
pace. This request includes $92 million to launch the Development 
Leadership Initiative (DLI), which aims to strengthen and invest in 
USAID's critically important Foreign Service Officer Corps. Not only do 
we need to ensure the size of USAID's workforce keeps pace with the 
significant increases in USAID program management responsibilities, but 
we also need to make sure the workforce has the necessary expertise and 
skill sets.
    The request for the Development Leadership Initiative will allow 
USAID to hire an additional 300 Foreign Service Officers, a 30 percent 
increase in the career Foreign Service workforce. DLI will address 
critical staffing challenges in stewardship and technical areas, which 
will help provide increased accountability in U.S. foreign aid 
programs. We need more talent on the ground, in more countries, with 
the resources and skills to help build the capacity of people and 
institutions.
    The overall request for USAID administrative accounts represents a 
significant increase in the resources for training and information 
technology from the fiscal year 2008 enacted levels. Increased training 
will enable the Agency to ensure that staff have essential job skills 
and leadership training to carry out the development mission. We need 
to modernize antiquated business systems to improve the integrated 
procurement and financial management processes, continue e-government 
initiatives, and improve the agency's ability to report results.

                RENEWING THE FOCUS ON POVERTY REDUCTION

    The fiscal year 2009 request demonstrates our strong commitment to 
fighting poverty, with a focus on promoting economic growth and 
strengthening democratic institutions and governance. This is reflected 
in our request for the Development Assistance (DA) account, which 
represents a 40 percent true programmatic increase from the fiscal year 
2008 request.
    A key priority in building this year's budget is strengthening our 
commitment to Africa. Funding is targeted to address development gaps 
and to support economic opportunity and governance programs critical to 
the success of the massive investments we have made through the 
Millennium Challenge Corporation and the President's Emergency Plan for 
AIDS Relief. The budget provides significant increases for democracy 
funding in African countries.
    Another key priority is reinvigorating investment in the Western 
Hemisphere. Programs to advance democracy and free trade in the region 
are prioritized, with significant investments for Peru and Central 
America. Our goal is to encourage transparent and competitive political 
processes, promote the rule of law and respect for human rights.

                           PROMOTING FREEDOM

    The United States supports freedom through promoting institutions 
that foster just and democratic governance for three reasons: as a 
matter of principle, as a central pillar of our national security 
strategy, and to advance our broader development agenda. For this 
reason, our request for governing justly and democratically (GJD) 
programs has increased 27 percent from fiscal year 2008 enacted levels.
    U.S. foreign assistance will support the President's Freedom Agenda 
to end tyranny and the Secretary's vision of Transformational Diplomacy 
by promoting and strengthening effective democracies in recipient 
states and moving them along a continuum toward consolidation and 
sustainable partnership. Our objective is to reduce the number of 
authoritarian states that do not allow meaningful political competition 
and do not respect human rights, and to increase the number of 
democracies and improve the quality of their governance.
    Over 75 percent of the money is targeted to fragile democracies and 
authoritarian states. With this Committee's continued strong support 
for democracy programs, we will support elections in Afghanistan, build 
government capacity in Iraq, and support a genuine transition to 
democratic, civilian rule in Pakistan while building up the capacity to 
govern in the volatile frontier region. We will also continue to 
support democracy activists in some the world's most repressive regimes 
in countries like Belarus, Burma, Cuba, Iran, North Korea, Syria, and 
Zimbabwe.
    To assist us in the work that we do, American private capital flows 
to the developing world have tripled over the last three years--and now 
represent over 80 percent of financial flows to developing countries. 
This is a profound--indeed, radical change in the relationship between 
institutional and private foreign assistance flows. Across the broader 
development landscape, I envision USAID making an invaluable 
contribution, by using its convening influence to better coordinate 
public and private sector resources and programs that support human 
progress in the developing world. We will devote more of our 
management, technical expertise and financing resources to coordinating 
international development--and to building partnerships that will 
accelerate the pace of progress.

                   MAINTAIN A STRONG FOCUS ON HEALTH

    This request continues our commitment to improving interventions 
that address critical worldwide needs for HIV/AIDS, malaria, 
tuberculosis, neglected tropical diseases, other infectious diseases, 
maternal and child health, and family planning. A total of $1.58 
billion is requested for the Child Survival and Health Programs Fund 
(CSH). This includes $385 million to support the President's Malaria 
Initiative (PMI) to provide prevention and treatment in 15 countries 
severely burdened by malaria; $370 million for life saving 
interventions for children and mothers, including immunizations, 
newborn and post-partum care; and $301 million for high-quality, 
voluntary family planning.
    The Global HIV/AIDS initiative continues to be the centerpiece of 
our health programs and is the largest source of funding for the 
President's Emergency Plan for AIDS Relief (PEPFAR). The request of 
$4.779 billion is a substantial increase over the fiscal year 2008 
enacted level. Funding will support country-based activities, 
international partners, technical support, and oversight and 
management. The fiscal year 2009 request is the first of a new, 5-year, 
$30 billion commitment that builds upon and expands our initial 5-year, 
$15 billion commitment.

                 CONTINUED FOCUS ON SECURITY ASSISTANCE

    Building well-governed, democratic states and reducing poverty is 
an anti-dote to extremism and requires a foundation in security. The 
United States must remain a leader in combating transnational security 
threats, including terrorism, the proliferation of weapons of mass 
destruction, transnational crime and illicit narcotics. We also must 
continue to support bilateral and multilateral stabilization efforts in 
countries that are in or rebuilding from conflict. The United States 
cannot do this alone. Therefore, our security assistance request will 
help ensure that our coalition partners and friendly foreign 
governments are equipped and trained to work toward common security 
goals and share burdens in joint missions. This request includes more 
than $5.1 billion for security assistance, a five percent increase over 
fiscal year 2008 levels.
    The largest component of our security assistance request is $4.8 
billion in Foreign Military Financing (FMF). This includes $2.6 billion 
for Israel, a $150 million increase from fiscal year 2008, to support 
the first year of a 10-year $30 billion strategy to help Israel 
maintain its qualitative military advantage.
    The President also is requesting an additional $550 million to 
improve security in our hemisphere through the new Merida security 
initiative. This initiative will combat drug trafficking, transnational 
crime, and related threats in Mexico and Central America, while 
consolidating democratic gains. Also in the Western Hemisphere, we are 
requesting $406 million for the Andean Counter-drug Program to continue 
reducing the flow of drugs into the United States.
    In Africa, we are committed to supporting peace keeping and 
counterterrorism efforts. The fiscal year 2009 request includes $50 
million in Peacekeeping Operations to complete the effort to transform 
the Liberian military, invest in building and transforming Southern 
Sudanese guerilla forces into a conventional army, support peace in the 
Horn of Africa, and provide technical assistance and training to the 
Democratic Republic of the Congo to stabilize this volatile region. The 
$61 million total request in several accounts for the Trans Sahara 
Counterterrorism Partnership will facilitate coordination in countering 
terrorism between countries in West and North Africa.
    The President's request also includes the Civilian Stabilization 
Initiative (CSI), designed to strengthen the U.S. Government's response 
to stabilization and reconstruction crises. While it is funded from the 
Department of State Operations budget, I would note that CSI provides 
for the creation of a 250-member interagency Active and 2,000-member 
Standby Response Corps, of which almost half will be based at USAID. 
Likewise, the U.S. Civilian Reserve Corps will allow the Secretary of 
State, and USAID as the development agency, to draw on expertise from 
citizens across the United States in municipal and local government, 
the private sector and non-governmental partners. Working closely with 
our Active and Standby Response Corps, these city managers, community 
police advisors, municipal utility engineers and other experts will 
allow us to put the right people in the right place at the right time 
when we need them most.
    Finally, I would like to note that there have been concerns 
expressed among our partners in the NGO community that humanitarian 
funding has been reduced in the fiscal year 2009 request. I want to 
assure the committee that this administration supports America's proud 
tradition of helping those most in need when natural or man-made 
disaster strikes. As always with regard to humanitarian assistance 
accounts, additional requests for resources will be made during the 
course of the year, as the level of requirements becomes clearer. While 
I know that the Public Law 480 Title II appropriation is handled by a 
separate subcommittee, the funds requested for emergency food aid have 
a direct link to our overall development goals and other humanitarian 
assistance programs funded by this subcommittee. I look forward to 
engaging with this committee to ensure that America continues its 
humanitarian leadership.
    As Secretary Rice recently said, it is American Realism that 
informs our pursuit of a just economic model of development. Despite 
the wealth of many, the amount of deprivation we see still remains 
unacceptable. Half of our fellow human beings live on less than $2 a 
day. But we know what works: We know that when nations embrace free 
markets and free trade, govern justly and invest in their people, they 
create a prosperity of their own that fosters opportunities for all 
their citizens to participate fully in their political and economic 
system.
    We have met, or are on course to meet, our international 
commitments to increase official development assistance: Since 2001, we 
have quadrupled our bilateral assistance to Africa and we've nearly 
tripled our development assistance worldwide. This unprecedented 
investment calls on us to focus--more than we ever have before--on 
setting clear goals. Managing performance. Demanding accountability. 
And generating results. To that end, we have submitted a robust budget 
while we work to both modernize and revitalize the delivery of foreign 
assistance.
    I know that many of our colleagues in the development community and 
in Congress have important questions about how the management of 
foreign assistance is proceeding since the creation of the position of 
Director of Foreign Assistance. Since I carry this portfolio, as well 
as that of Administrator of USAID, I have devoted much time to 
improving this process, as I pledged to the Congress I would. Over the 
past 9 months, I've made significant changes in the foreign assistance 
budget processes based on specific suggestions from colleagues in USAID 
and State--particularly those in the field--and from our partner 
organizations and from you in Congress. This includes shifting the 
emphasis to the field by providing more opportunities for field 
proposals into the budget formulation and distribution processes. 
Additionally, we have started implementing a number of changes to 
streamline the fiscal year 2008 Operational Plan preparation and 
approval processes, increasing transparency and improving communication 
to the field. We are pleased that these changes will reduce the amount 
of field time required to prepare the Plan and reduce the volume of 
materials submitted to Washington by between 20 and 80 percent. We are 
also starting a new competitive procurement for the Operational Plan 
database--placing a premium on user-friendliness, performance and 
flexibility in the system.
    Mr. Chairman, the robust fiscal year 2009 Foreign Operations 
request is fully justified and critical to the national security 
interests of the United States. We understand that these funds are the 
result of the efforts of hard working American taxpayers. By 
strengthening the capacity of USAID, strengthening our collaboration 
with other U.S. Government agencies and our coordination with the 
private sector, we will manage these funds efficiently as stewards of 
the American people.
    Thank you very much. I would be pleased to respond to questions.

    Senator Leahy. Thank you. I know, last year, the State 
Department created the Office of the Director of Foreign 
Assistance, the F-Bureau.
    It's created a lot of confusion, anxiety, and opposition. 
Designating every country to one of five categories, and 
focusing assistance in what they considered to be the highest 
priority for that category, often didn't take adequate 
consideration of the mission's priorities, or what experts on 
the ground said was needed.
    The one good thing I've heard about is Rich Green who was 
given the unenviable job of picking up the pieces after 
Ambassador Tobias. Everybody gives him high marks for the work 
he does.
    What's the status of the F-Bureau today? Is it full steam 
ahead, or are you changing the procedures? What's going to 
happen?
    Ms. Fore. Thank you, Senator Leahy. It is full steam ahead. 
In the Office of the Director of U.S. Foreign Assistance, I 
know that Rich Green is glad to hear that he's picked up the 
pieces. We have been working very hard to try to simplify, to 
streamline----
    Senator Leahy. I've probably ruined his career by praising 
him. Go ahead.
    Ms. Fore. But we're trying very hard to simplify, to 
streamline, and to communicate.
    Senator Leahy. But those are words that we say about 
everything. You know, we're robust, we're streamlined, we're 
effective, but it's what actually happens that counts.
    I mean, we heard it about another Department right after 
Katrina--we're streamlining, we're robust, we're this, we're 
that, and, of course, nothing happened. We've got to be able to 
point to things and say, ``Look, this is why it's better now 
than it was before.''
    Anyway, go ahead.
    Ms. Fore. All right. We've listened very hard, so those 
words actually mean something for us. We've moved to country-
based programming, so that we are now putting more emphasis on 
the field. This must be field-centered. It must be that the 
country team in the field gathers and really talks about the 
development needs in the country. That they, as a team, begin 
each budget request.
    It is also important that it's integrated with the 
country's plans for development. If the country doesn't have 
ownership in the sectors and the areas of the programs that 
we're working in, it will not result in sustained development. 
You have worked in this field long enough to know that we must 
facilitate long-term development. So the country team has that 
mandate.
    Then, the budget moves to Washington, and we have 
Assistance Working Groups. Assistance Working Groups take the 
work coming out of their mother bureaus--so out of USAID, and 
out of State Department--and they try to gather around the 
table all the U.S. Government agencies that are interested in 
that country or sector.
    It's very complex, it's difficult, but they try to make 
trade offs based on the opportunities that they see--for 
example because of democratic elections, or because of economic 
openings, or because of stability after conflict--to try to 
focus our assistance in a way that's better coordinated than it 
has been in the past.
    Senator Leahy. But you have to oversee this. You also have 
to oversee PEPFAR, military assistance, the MCC, and so on. Are 
we really talking about two jobs?
    Because what I've worried about in the past, in both 
Democratic and Republican administrations, has been a lack of 
emphasis on putting strong administrators at the top. I mean, 
have we given you jobs that really should be handled by more 
than one person?
    Ms. Fore. Well, there's lots to do, but I think the jobs 
are strengthened by being together. Why I say that is something 
as simple----
    Senator Leahy. Both Director of Foreign Assistance and 
Director and Administrator of USAID?
    Ms. Fore. Yes. Something that you had been speaking about, 
the invigoration and the growth of USAID personnel, it is 
difficult if you are a USAID Administrator to move that through 
the many avenues to get it approved.
    I think this year, because it was my number one priority, 
and because I am doing better, it was successful.
    I also think that this year we have focused on trying to 
simplify, and we have reduced the required paperwork from 
between 20 and 80 percent for the field and for the people 
involved in the budget process. We know we're at the beginning 
of this process. It's not in the middle, nor have we reached 
the end of how to realign foreign assistance, and how to 
organize it.
    But with the new organization of the Office of the Director 
for Foreign Assistance and the common definitions, I think we 
have a good start.
    Senator Leahy. You'd mentioned Afghanistan, one of the most 
important programs we have in the world. I don't know if you 
saw the December 2007 issue of Atlantic Monthly. It said it was 
so hard to work with USAID, it wasn't worth it.
    Another NGO supporting women in Afghanistan, describing 
work with USAID, said, ``I've seen a whole lot of folks come 
and go. Most of them are great. Some are just putting in their 
time. They come and go quickly, and there's often not an 
effective handoff. Every time you try to do something, is the 
dawn of creation all over again.'' It went on to say how hard 
it is to find funding for $10,000, $15,000 projects, applying 
for millions to build a road, even though the area might not be 
secure that the road goes through, you could sure build that 
road, and it photographs well.
    But how about these other things?
    Ms. Fore. Your opening comments, Senator Leahy, about the 
need to be sure that we have a number of smaller implementors, 
is something that we are very much aware of at USAID, and we 
want to reach out to them.
    This request for additional personnel, United States direct 
hires in USAID, will help, because there must be good 
accountability and oversight, and the ability to have many 
smaller partners requires additional staff.
    We have many programs around the world, as you know, that 
are focused on smaller enterprises and encouraging women to 
participate. It is something of, obviously, great importance to 
me personally, but we are making sure that we are improving how 
we reach out around the world, in both our contracting 
mechanisms, as well as the effectiveness, what results we're 
achieving with the funds that we have.
    Senator Leahy. Well, speaking of the funds we have, the 
dollar is dropping precipitously. I think it takes about $1.50, 
$1.60 to buy a Euro. I remember when 70 cents would buy a euro.
    The Canadian dollar used to cost us 70 cents, and now it 
actually costs more than $1. Canada's economy is strengthened, 
but it's partly because ours has weakened so, and our dollar 
has gone way, way down.
    Thus, the price of fuel goes way, way up. You're talking 
about these things you're doing, but with the plans we've made 
for the budget 6 months ago or 1 year ago, the value of the 
dollar, the cost of fuel the situation today is different.
    Is there going to be a supplemental request to make up the 
difference?
    Ms. Fore. Well, at the moment we are struggling with the 
challenge of the lower buying power of the dollar in almost 
every aspect. It affects our operations, it affects our ability 
to buy food, it affects most of our partners around the world. 
It certainly affects partners that have offices in Europe.
    We are constantly analyzing the budgets, and discussing 
what can be done, trying to utilize all of our funds, as 
effectively as possible.
    Senator Leahy. But you don't know whether there's going to 
be a supplemental request for that.
    Ms. Fore. I do not know.
    Senator Leahy. Thank you. Senator Bennett.
    Senator Bennett. Thank you, Mr. Chairman. Can we talk about 
the microenterprise number? Give me some insight as to why it 
was cut in half?
    Ms. Fore. Yes. The amount that we currently have, the $104 
million, is just a beginning since it represents programs whose 
primary focus is microenterprise. As you know, funds for 
microenterprise programs come from a number of other 
crosscutting programs, from missions and from programs around 
the world. I would anticipate that for fiscal year 2009, that 
number will end up much higher than where it is now.
    Microenterprise has been a real strength for USAID for many 
years. As you correctly mentioned, microenterprise has set a 
number of best practices for the industry. What we also have is 
a whole new burgeoning industry. I was just at a web-based 
outreach fair that was a part of what we're calling the Global 
Development Commons, in which the microenterprise industry has 
web-based leaders, community leaders, so that communities build 
up around microenterprise best practices. Lots of private 
companies are now strongly in the microenterprise sector.
    When, Senator Leahy, you and I, were together at the World 
Economic Forum, one of the things that we heard from a number 
of banks around the world is microenterprise and how important 
it is. But what they were also saying is that, for them, 
microenterprise is a for-profit activity. They would like us to 
think about what they call ``the missing middle.'' So there's 
microenterprise and then there's entrepreneurs that are the 
next stage up, and then, of course, the big multinationals.
    But they are finding that they would like us to blend into 
that middle category to try to encourage entrepreneurship, 
whether it's in Liberia or anywhere around the world. So we 
will try to view this holistically as economic growth to 
encourage entrepreneurship. It does encourage the empowerment 
of women and small enterprises, whether in the agricultural 
sector, or any other sector, because it is how people build 
their own family wealth and stability, but it also sets a 
stable, middle class in countries.
    Senator Bennett. Okay. I'm with you and I support that but 
let's not begin to cannibalize some of the people at the 
bottom.
    The other thing that I have found over the years--and 
clearly, you don't fall into this category--but there has been 
resistance on the part of some in the State Department, simply 
because they don't get to control the money. That's one of the 
reasons why it works, because it goes into the hands of people 
who will use it creatively.
    It is a for-profit operation, even at the very lowest 
level, because the repayment level is so high. I'm not telling 
you anything you don't know. The repayment level is so high, 
the default percentage is so small, and lots of people get in 
it for a variety of humanitarian reasons, but it's also very 
good business all the way around. So just to reinforce that.
    Can we talk about corruption? Do you deal with that? We've 
seen all of the fuss that's gone on in the World Bank, with the 
retirement by Mr. Wolfowitz, and his replacement by Mr. 
Zoellick, a lot of conversation down there. I'm not close 
enough to be able to say absolutely no action, but at least 
that's been part of the press's report that the World Bank has 
spent a lot of time talking about corruption in these 
countries, and then business as usual. It has overwhelmed Bob 
Zoellick as he's trying to carry on in that effort.
    What role does USAID play in this fight? I believe that 
corrupt governments constitute the number one obstacle to 
getting people out of poverty and making foreign aid--whether 
it's ours or any other country's--work intelligently for the 
people. That as long as you have a corrupt government, no 
amount of money you can put in can change the conditions in the 
country.
    What leverage do you have? What information do you have? 
What background can you share with us?
    Ms. Fore. Thank you, Senator Bennett. It's a very difficult 
area, and it is one that is on everyone's mind as they are in 
the field. But also, in Washington, as we are trying to look 
for best practices and what levers we can use through the 
political, economic, and societal means.
    Most of our activities for anti-corruption fall within our 
governing justly and democratically, categories in the budget. 
In all the programs they try to target areas that are most 
important. So whether it is at the local government level, or 
whether it is at a customs office, or whether it is at a 
business licensing facility, or whether it is in the national 
government--we try to help civil society organizations that can 
act as watchdogs. We strengthen journalists and the media, so 
that there is transparency and an ability to view the financial 
operations of a government.
    We also try to encourage and help with good financial 
systems. For many countries, a government's capacity, the 
ability to have a clear financial system, or a clear budgeting 
system, is very weak. If we can strengthen that, it encourages 
transparency, and through our training programs, bringing 
visitors both here, as well as training in the country, they 
learn how to look for and how to put in internal controls and 
external controls, so that money is indeed watched.
    Senator Bennett. Let me share with you an experience I had 
with a Finance Minister.
    I said to him, ``All right, what do you need?'' He said, 
``I need competent people.'' He said, ``I preside over a 
Finance Ministry with tens of thousands of employees. I could 
fire every one of them, if I had 15 people I could trust.'' 
This was a man who was trained in the United States, got a 
Ph.D. in economics from one of our finest universities.
    He said, ``I can't get USAID to give me any scholarship 
money. They tell me, `Well, if we gave you scholarship money, 
you'd just pick your nephew and your son-in-law, and all of the 
rest of them, and send them to the United States on a free 
educational junket that the U.S. taxpayer would pay for.' ''
    In other words, it would all be kept in the family. We saw 
a lot of that in the Olympics Movement. We, in Salt Lake City, 
got blamed for the corruption that was in the International 
Olympic Movement. We didn't start it, but we ended it.
    So this Finance Minister said, ``All right. You pick them. 
The USAID officials go out in my country and pick the 
brightest, most ambitious, most attractive people, train them 
in the United States in basic economics and business 
procedures, and then send them back to me. They won't do it. 
They'll put money into a bridge. They'll put money into a 
warehouse. They'll build some kind of monument.''
    He said, ``I could fire all of these people in my 
ministry.'' He couldn't, because that's part of the employment 
of that particular country. They keep their employment up by 
keeping huge amounts of people working on the government 
payroll. But he said, ``If I had 15 people that I could trust, 
who were properly trained, I could make a true difference in 
the way things work here. I can't train them in this country. 
They've got to come to the United States. USAID would get far 
greater return on its investment if they were to--they pick the 
very best and brightest among our young people, and take them 
to the United States, with the full understanding that by 
virtue of their having their education paid for by the U.S. 
Government, they're going to come back, they're going to be 
employees of the Finance Ministry of this country, and we can 
start to get something done.''
    Have you ever had any conversations like that?
    Ms. Fore. Well, I haven't had the conversation where USAID 
hasn't said, ``Yes, we'll do it.''
    So we can talk about this particular Finance Minister and 
country, but USAID does exactly these kinds of programs all 
over the world. I think they are enormously important. We try 
to use it, because building human capacity and human capital is 
one of the most important things that we can do.
    One of the areas that we've been talking about in the 
Global Development Commons is how to exchange best practices 
around the world. So that if you are Finance Minister, or 
someone working within the Ministry, you pick up good ideas 
about the work that you have before you, at the time you need 
it, rather than waiting for training.
    So I think that part of this education must be on the web. 
Part of it should be in person, where they come to America, or 
to another country, where we can teach a variety of skills. But 
it is very important, Senator Bennett.
    Senator Bennett. I'll share the name with you privately 
then.
    Ms. Fore. Yes. Good, thank you.
    Senator Bennett. Thank you. Thank you, Mr. Chairman. I 
would like to talk to you about India.
    Senator Leahy. Go ahead.
    Senator Bennett. We assume that since India is prospering, 
India doesn't need any foreign aid anymore. There are some 
programs that, frankly, the Indian Government isn't qualified 
to handle, and USAID is.
    I have heard, from people who are in the Embassy over 
there, that we've made a really dumb mistake in our long-term 
relations with India to say, ``Okay. You're now financially 
capable of doing this yourselves, and so we're going to 
withdraw any aid from India.''
    India is going to be an extremely important country in our 
future, and maybe it's not spot-on for what USAID's mission is, 
but in terms of our geopolitical relationship with India, a few 
dollars spent now to keep some of those programs alive would 
pay huge geopolitical dividends later on.
    You don't have to comment, but I want to put that bug in 
your ear, as they say.
    Ms. Fore. Yes. Very good, Senator Bennett. We are 
transitioning in India, to more public/private partnerships, 
because we think there is an enormous capacity, in both the 
United States, as well as in Indian business, that could pair 
up with us in a number of sectors.
    Senator Leahy. One program that has worked, according to 
your folks and the Iraqis that have participated in it, is the 
Community Action Program. I don't want to get too bogged down 
on Iraq, no pun intended, because we've wasted more money there 
than your entire fiscal year 2009 budget. But the Community 
Action Program that supports local initiatives to rebuild has 
been very successful.
    You don't have anything in the fiscal year 2008 
supplemental or the fiscal year 2009 request for this program. 
If it's that successful--I mean, is it so successful that we 
don't need it?
    Ms. Fore. We have a number of programs for which we are 
requesting funds, and we have a number that we are sharing with 
other agencies. So some of these programs, we are funding from 
different streams. So perhaps, Senator Leahy, I could come back 
to you with the funding----
    Senator Leahy. Would you, please?
    Ms. Fore [continuing]. Sources for it. Yes.
    [The information follows:]
                              USAID Budget
    The Community Action Program (CAP) is a well established Iraq-wide 
program that has been successful in mobilizing citizens at the local 
level through the civil society process to make a difference in Iraqi 
communities. CAP II will end in September 2008 and USAID is reviewing 
options for a follow on program. It is currently funded from IRRF II 
with $22.4 million obligated and ESF with $145 million. A congressional 
notification has been submitted for a reobligation of IRRF II funds in 
the amount of $20 million.

    Senator Leahy. I would like to know if there are other 
donors picking that up and who that would be.
    Last year, we appropriated $446 million for child survival 
and maternal health programs, about $90 million above the 
President's request, because every expert we heard from told us 
how important that is. You measure how well a health system is 
doing in a country by how many children die before the age of 
five, how many women died needlessly of pregnancy-related 
causes.
    The administration has done a lot to increase funding for 
AIDS and TB and so on, but you propose to cut funding for child 
survival and maternal health in fiscal year 2009. Has the need 
gone away?
    Ms. Fore. The need is still there, and the United States is 
still the largest bilateral donor in these areas. Our fiscal 
year 2009 request is about at the same level as our fiscal year 
2008 request.
    It shows a strong priority, but it also shows that, with 
reduced resources and stretched resources, that we need to be 
more broad-based in our health programs. We continue to do very 
fine work in all of these areas. They have probably been the 
single most important long-term effort for the United States 
Government.
    Senator Leahy. But it will be a cut below what we had last 
year?
    Ms. Fore. If we----
    Senator Leahy. No, actually----
    Ms. Fore. Yes, from the enacted level. But from the 
requested level, it's about even.
    Senator Leahy. We appropriated $456 million for family 
planning and reproductive health, which we were told is very 
helpful. Actually, it's about the same that we appropriated in 
1995. You propose to cut it by $156 million, down to $300. That 
makes sense?
    Ms. Fore. Well, we continue to have a very strong priority 
in this. It is still very important to us that there is United 
States leadership. We remain the largest donor. In all of these 
areas, maternal and child----
    Senator Leahy. The largest donor in dollar amounts, but 
there are many countries that give more as a percentage of 
their GDP. Do we not?
    Ms. Fore. Correct.
    Senator Leahy. But you feel the cut is justified?
    Ms. Fore. We would wish to have money for everything, but 
in a time of constrained resources, we wanted to be sure that 
there was broad-based approach to health. So we have a number 
of excellent health programs, whether they're PEPFAR, the 
neglected tropical diseases, and others, across the health 
sector.
    So areas where we have great successes and we have done 
well, we tried to stretch the dollars as far as we can.
    Senator Leahy. This is one that has been successful?
    Ms. Fore. Sometimes it's especially because they've been 
successful. If they've been very successful, then it is time 
that public/private partnerships can help pick it up, and local 
governments can help pick it up, and other donors can help pick 
it up. So we try----
    Senator Leahy. Well, let's----
    Ms. Fore [continuing]. To share those best practices with 
others.
    Senator Leahy. Well, let's talk about some of these places. 
You've--between the Child Survival and Health program and the 
Economic Support Fund, you're requesting $470 million for 
Pakistan.
    Now, we've given them billions of dollars over the past 2 
years. Has that money been spent wisely? Or is it--in a country 
where corruption is so endemic and accountability seems almost 
nonexistent--are we spending money just to buttress political 
statements we've made?
    Ms. Fore. Well, in Pakistan, in the health sector, the TB 
case detection rate has improved significantly, from 25 percent 
in 2004 to 50 percent in 2006. Treatment success rates for 
these patients is 83 percent, very close to the 85 percent 
target.
    Senator Leahy. Not my question. Are you convinced that none 
of that money has or----
    Ms. Fore. We have in place a number of programs to try to 
be sure that we are monitoring every single dollar, so that we 
are sure that the American dollars are going for areas that are 
most productive, that are well spent, that are getting the 
results that we expect.
    Senator Leahy. So is that money----
    Ms. Fore. We've had several audits.
    Senator Leahy. Yes. Has that money been well spent and 
productive in Pakistan?
    Ms. Fore. The audits show it's been carefully spent, and 
the results show that we have some very good, strong results in 
democracy, in health, in education, and in economic growth.
    Senator Leahy. If this were your money, personally, would 
you feel confident in that it's going to Pakistan?
    Ms. Fore. I think of all of it as being my money, 
personally.
    Senator Leahy. Well, that's not my question.
    Ms. Fore. Well, I think that Pakistan is such a strong and 
important ally for us, an ally in many areas--the global war on 
terror--but also, it's an ally in many areas in which we have 
shared interests.
    Foreign assistance works in many ways, both short term and 
long term, and sometimes our investments are rewarded by 
immediate results, and sometimes they take a long time.
    So I think we are doing a good job in investing the money, 
and for some of the results, we will not see them immediately. 
But when you see some of what we've accomplished in education, 
or in economic growth, or in governance, it's remarkable. 
Americans should feel very proud of their assistance.
    Senator Leahy. Indonesia--the largest Muslim country in the 
world--faces huge challenges. I've heard from so many 
administration officials and the President speak of the 
importance of Indonesia. You're suggesting cutting our 
assistance to them. Does that make sense?
    Ms. Fore. Well, Indo----
    Senator Leahy. Or has the assistance that we've given them 
been so successful we don't need it?
    Ms. Fore. Indonesia is what we consider a key country. It 
is important for us in regional security. It's important to us 
in democracy and economic growth. You know that we've been 
helping on the reconstruction in Aceh. It is an MCC threshold 
country.
    Fiscal year 2009 budget is $186 million. There are long-
term programs. Indonesia is just a very, very key country for 
us.
    Senator Leahy. We have spent $74 million to support 
programs related to Cuba since 1996. For fiscal year 2008, the 
President requested, and we appropriated $45 million--that's a 
500 percent increase over the previous year.
    In November 2006, a GAO study concluded that poor oversight 
of the Cuba Program did not provide adequate assurance that 
funds were properly used. They said administrative costs on the 
part of grantees were high. Shipping costs to get goods into 
Cuba were very high.
    According to the GAO study, there are instances in which 
cashmere sweaters, Godiva chocolates, Nintendo Game Boys, and 
Sony PlayStations were among the items purchased with U.S. 
Government funds to be shipped to dissidents in Cuba.
    How much of this money has been spent on programs in Cuba 
for dissidents and others? How much has been given to people 
here, right here in the United States?
    Ms. Fore. I do not have an answer for that one. In our 
fiscal year 2009 budget, we have requested $20 million. It's 
the number suggested by CAFCII, and it encourages democratic 
freedom and our support for the people of Cuba.
    Senator Leahy. Well, yes. That's easy to say, but you've 
got this GAO study. Have you responded to it?
    Ms. Fore. We believe that we've taken care of all of the 
outstanding issues and remedied them.
    Senator Leahy. Could we have a copy of that response?
    Ms. Fore. Yes, of course.
    Senator Leahy. Thank you. Senator Bennett. I have other 
questions that will be for the record.
    The President took a great deal of credit for a number of 
the programs that we've supported in Africa and elsewhere on 
his latest trip. But the money you talked about was not the 
money he'd requested. We actually put more money in for a 
number of these programs.
    When I asked the President about how it's great to take 
credit for it, but he's put in less money than what he needs, 
and then we have to find the money by robbing Peter to pay Paul 
to do it--he said, ``Well, I know how appropriations work. You 
always find the money.'' I said, ``No. I disagree with you.''
    If you're repairing roads and bridges in this country, 
sure. Everybody's going to say, ``Wait a minute, my State needs 
to replace that bridge or that road. It's dangerous. Besides 
which, it's going to look good back home if we can.'' You're 
going to want to increase it.
    I said to the President, ``How many of us do you think 
are--at a time we are going into a recession--how many of us do 
you think have constituents pounding on our doors saying, 
`Please give more money for foreign aid?' ''
    I don't have too many people back home saying, ``Please 
give more money for foreign aid.''
    I think it's worthwhile if it's well spent. But I also 
worry when I see something like this Cuba GAO report that it's 
not being. I think, years ago, of a country where we spent 
hundreds of millions of dollars to build housing. They showed 
me one half-finished, one-room apartment. The Administrator of 
the program did come up in a very expensive car, certainly a 
lot more expensive than I own.
    We provide $10 million to U.S. nongovernmental 
organizations for environment and rule of law programs in 
China. Additional funds are provided for democracy programs 
under the Democracy Fund account.
    When you watch what's happening in China, I would like a 
significant portion of that $10 million used for environmental 
programs, and in a manner that encourages matching private 
funds and U.S./Chinese partnerships.
    Can you work with us to do that?
    Ms. Fore. Yes. Well, Senator Leahy, I know how important 
foreign assistance is around the world. I know how much good it 
does. I know that it is a good investment for all of us, and I 
thank you for your leadership and support of it.
    As an American, I am really honored and proud when I see 
our programs around the world. So we will endeavor to do our 
best to work with all of you to create the finest programs on 
behalf of the American people.
    Senator Leahy. Well, look at this China one, too. It's just 
one of many. But as Senator Bennett pointed out, it's often not 
the big--the grandiose Aswan Dam projects, but it might be a 
lot of microenterprise loans and maybe a whole lot of smaller 
educational or health programs.
    I was glad to hear you mention the Marla Ruzicka Fund. 
That's one I wrote. I'm glad to hear it is working. I know a 
few of you knew Marla Ruzicka. An impressive young woman who 
died much too soon. Thank you very much.
    Ms. Fore. Thank you, Senator Leahy.

           STATEMENT SUBMITTED BY SENATOR CHRISTOPHER S. BOND

    Senator Leahy. We have received the prepared statement of 
Senator Christopher S. Bond that will be made part of the 
record at this time.
    [The statement follows:]

           Prepared Statement of Senator Christopher S. Bond

        REBUILDING THE U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

    As I have said many times, 80 percent of the current war on radical 
Islam and terrorism must employ our Nation's smart power, or non-
kinetic forces. By putting more sandals and sneakers on the ground, we 
lessen the likelihood of having to put boots on the ground. The pointy 
end of this smart power spear, in the past, has been USAID's Foreign 
Service. They have been deployed abroad, overwhelmingly in the world's 
poorer countries, and increasingly, in some of the same places our 
folks in uniform find themselves, working closely together. Today, 
USAID's Foreign Service amounts to about 1,100 Officers, mostly 
deployed--spread very thin--among the more than 80 Missions USAID 
staffs. At the same time, USAID's program management responsibilities 
have grown, particularly since 9/11, having reached a low point in the 
mid to late 1990s.
    USAID and its mission are about 60 years old, and over that period 
they have been an important instrument of U.S. foreign policy and 
national interest, and the principal means by which the U.S. Government 
extends America's humanitarian assistance to the world. This small 
agency and its mission may well be even more important in today's world 
than they have been in the past. Yet their capacity to deliver has 
shrunk dramatically from times past and now must rely largely on 
contractors that lack the necessary expertise and experience to conduct 
sustainable development. Perhaps we started to take a holiday from 
history after the end of the cold war, or perhaps it started even 
earlier, in the wake of our withdrawal from Vietnam. Whenever it began, 
however, the result is today a serious problem for U.S. Foreign policy.
    In short, the size of the Foreign Service Officer workforce has not 
kept pace with the significant increase in USAID program management 
responsibilities. Between 1995 and 2007, funding for USAID-managed 
programs increased by 40 percent while FSO staffing decreased by 24 
percent, for example. This combination of increased program funding and 
decreased staff levels has eroded the agency's core leadership and 
technical capabilities.
    Today, I am told, some 45 percent of all of USAID's Foreign Service 
Officers are eligible to retire as is some 71 percent of the Senior 
Foreign Service. To make the problem worse, as we have fewer and fewer 
Foreign Service Officers to administer USAID's programs, they turn of 
necessity to more and more contracts and grants, so that the face of 
USAID abroad is increasingly their contractors and grantees. Many do 
good work, but there are some important things that private citizens 
can't do that direct hires of Uncle Sam can, like dealing officially 
and directly with the host governments, for example. It also leads to a 
vicious circle--as USAID has turned increasingly to contracts and 
grants to implement its mission, it's hiring priorities have 
increasingly focused on more contract and grant management officers, at 
the expense of specialties and professions that once typified USAID's 
field presence.
    The administration is proposing to begin the rebuilding of USAID, 
focusing first on its Foreign Service, by beginning to hire above 
attrition for the first time in many years--300 Foreign Service 
Officers above attrition in fiscal year 2009--toward a goal of roughly 
doubling USAID's Foreign Service over the next several years. I know 
that this is beyond the horizon of the current administration, but I am 
very impressed by the broad consensus that seems to be emerging in the 
Congress, in both Houses and across Party lines on the importance of 
this initiative, and I urge my colleagues on the Committee to give it 
their full support.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Leahy. There will be some additional questions 
which will be submitted for your response in the record.
    [The following questions were not asked at the hearing, but 
were submitted to the agency for response subsequent to the 
hearing:]

            Questions Submitted by Senator Patrick J. Leahy

                    ADMINISTRATOR FORE'S PRIORITIES

    Question. We are all mindful that this is an election year and time 
is short. What do you see as the two or three most pressing challenges 
facing USAID--in the way USAID is structured, managed or the programs 
it administers, what do you plan to do about them, and do you have the 
necessary legal authorities and the resources to do it?
    Answer. Revitalizing and reinvesting in critically-important USAID 
capacity to carry out our core development and humanitarian assistance 
mission is my top priority. We need more USAID talent in the field, in 
more countries, to help build the capacity of people and institutions--
and engage more broadly with development partners. In addition, to 
anticipate the societal losses and setbacks that occur when conflict 
disrupts our partner nations, USAID, and the State Department, must 
have similar capacity to ``surge'' as other parts of the U.S. 
Government, so that together, we can place enough of our conflict 
prevention and reconstruction assets in the right places at the right 
times.
    The President's fiscal year 2009 budget request includes Operating 
Expense funds to enable USAID to hire 300 Foreign Service Officers ( 
FSOs) in addition to those hired to replace FSOs lost through 
attrition--the Development Leadership Initiative--and $36 million for 
information technology systems development in the Capital Investment 
Fund. If appropriated, these resources will strengthen our good 
stewardship of taxpayer dollars, begin to restore the technical 
expertise USAID has been famous for, and provide 21st century tools to 
enable our people to work more efficiently. The fiscal year 2009 budget 
also requests funds for significant investments in post-conflict 
capacity.
    I feel deeply that USAID must re-establish intellectual leadership 
in the development community and am moving rapidly to strengthen the 
agency's capacity in this regard. We have reinstituted an agency policy 
coordination process and are hiring well-qualified staff to work with 
me and the senior leadership team to lead policy development. One of 
the first fruits of this new process is a new Economic Growth strategy 
that I expect to make public shortly.
    USAID has long emphasized evaluation for accountability and, more 
important, as a source of development learning. The recent lack of a 
coordinated evaluation plan hampers our ability to identify common 
issues and best practices across the portfolio. Therefore, I am 
reinstituting a central evaluation function that will be an independent 
voice to assess the effectiveness of USAID's programs. The new 
Evaluation Unit will focus on: (1) establishing a core Agency 
evaluation expertise; (2) developing and implementing an annual 
evaluation agenda; (3) managing evaluation support services used by 
Missions; and (4) strengthening evaluation policy and training agency-
wide.
    Last but not least, USAID needs to extend our reach to private 
sector partners and NGOs who are eager to combine their own expertise 
and resources with ours to overcome development challenges, and to the 
American people, so that they understand the vital role of development 
in national security and the impact their tax dollars are having on the 
lives of people around the globe.

                   DEVELOPMENT LEADERSHIP INITIATIVE

    Question. You have talked about your Development Leadership 
Initiative to begin rebuilding USAID's professional staff. Assuming we 
give you the funds you have asked for, what tangible differences will 
this make in the way USAID does business--if I were an NGO or 
contractor, or a beneficiary of USAID assistance in a foreign country, 
how will it change things for me?
    Answer. The Development Leadership Initiative will enable USAID to 
engage more directly with more partners on the ground and devote more 
attention to strengthening institutional capacity in the countries in 
which we work. Currently, the severe shortage of qualified procurement, 
financial management and technical personnel, in the field and in 
Washington, restricts USAID's ability to build productive relationships 
with a wider range of host country counterparts, significantly expand 
the innovative Global Development Alliances model and other types of 
public-private partnerships and manage a substantially larger number of 
contracts and grants, particularly with local non-governmental 
organizations NGOs.
    With a significant new cadre of procurement, financial management, 
program and technical officers, USAID staff will be able to spend more 
time working directly with beneficiary organizations such as local NGOs 
to strengthen their governance structures and financial management 
systems, better preparing them to continue their work once USAID's 
assistance ends.

                   INTERNATIONAL DISASTER ASSISTANCE

    Question. In fiscal year 2008, including the supplemental, we 
appropriated $429 million for International Disaster Assistance. That 
was more than the President asked for but 25 percent less than the 
fiscal year 2007 budget. This leaves a shortfall of about $175 million 
from the level that the Office of Foreign Disaster Assistance expects 
to need in 2008, yet the President has not asked for any additional 
funding. OFDA says it is already preparing to cut back programs by 25 
percent.
    This means the United States will provide less emergency shelters 
for disaster victims during the rest of this year, impacting hundreds 
of thousands of people. It means less potable water to reduce the risk 
of disease in IDP camps. It is estimated that over 600,000 vulnerable 
people in Darfur will be cut off from basic health immunizations and 
education. In Kenya, half a million people who would have received 
seeds and tools to restart their agricultural livelihoods in areas 
affected by the recent conflict will have no support.
    Are you aware of this? Does the administration plan to request any 
additional funding for these crucial programs in fiscal year 2008? What 
do you suggest we do about it?
    Answer. Yes, we are very much aware of the dynamic, changing, and 
critical humanitarian situations. We maintain close contact with our 
staff and partners on the ground and their constant feedback helps us 
to make the necessary budgetary adjustments to ensure that the most 
critical humanitarian programs remain operational and the needs are 
met. We understand the humanitarian assistance budget situation for 
fiscal year 2008. Additional resources for our fiscal year 2008 
humanitarian programs were not requested; we will do what we can with 
our existing resources.

                   CHILD SURVIVAL AND MATERNAL HEALTH

    Question. Last year, we appropriated $446 million for child 
survival and maternal health programs. This was about a $90 million 
increase above the President's request because every global health 
expert has advised us that effective public health systems begins with 
children and pregnant women. You can measure the effectiveness of a 
country's health system by whether children do not die needlessly 
before the age of 5, and women do not die needlessly of pregnancy 
related causes.
    While this administration has done a lot to increase funding for 
AIDS, TB, and malaria, you propose to cut funding for child survival 
and maternal health in fiscal year 2009 below the fiscal year 2008 
enacted level. Why does this make sense?
    Last year, we appropriated $456 million for family planning and 
reproductive health which, again, public health experts tell us is one 
of the essential building blocks of a functioning health system. That 
is about the same amount we appropriated in 1995, yet you propose to 
cut it to $301 million.
    Why does this make sense, when we know that there are women in many 
poor countries that need contraceptives and cannot get them, and we 
know that unplanned births only compound the difficulties of families 
that are already barely able to earn enough income to survive?
    Answer. The fiscal year 2009 request for Maternal and Child Health 
activities reflects the constrained budget environment and competing 
priorities for HIV/AIDS and Malaria. The United States Government (USG) 
programs in HIV/AIDS and Malaria also benefit maternal and child 
health. The USG is a major donor in the field and will continue its 
technical leadership. The fiscal year 2009 aggregate request for 
Maternal and Child Health is the highest funded element in the USAID 
health portfolio.
    Our activities in child survival and maternal health are 
increasingly focused on the countries with the greatest need and with 
the greatest opportunity to improve outcomes for mothers and children. 
Africa continues to receive more maternal and child health funding than 
other regions, with 33 percent of CSH maternal and child health funds 
in the fiscal year 2009 request.
    The fiscal year 2009 aggregate request of $327 million for family 
planning and reproductive health includes $301 million in Child 
Survival and Health Programs Funds (CSH). The request is less than the 
appropriated levels in recent years due to the constrained budget 
environment and competing priorities. The USG remains the largest 
bilateral donor for family planning and reproductive health, even at 
the fiscal year 2009 request level.

                         TRANSITION INITIATIVES

    Question. The Office of Transition Initiatives (OTI) provides quick 
recovery and reconstruction assistance for countries emerging from 
conflict. By all accounts it has done a good job with a small budget, 
often under very difficult conditions. Yet you propose to cut its 
budget from the $44 million we appropriated in fiscal year 2008 to $40 
million in fiscal year 2009. How do you explain this when the President 
is asking for $248 million for the new Civilian Stabilization 
Initiative, which has the same mission of helping countries stabilize 
and transition from war to peace?
    What role do you see USAID playing in the Civilian Stabilization 
Initiative?
    How do you see OTI and the Civilian Stabilization Initiative 
coordinating their activities and cooperating on the ground?
    Answer. USAID will play a key role in the Civilian Stabilization 
Initiative (CSI) by providing a significant portion of stand-by 
personnel to respond to major reconstruction and stabilization needs. 
USAID experts in areas ranging from Rule of Law to Micro-enterprise to 
Parliamentary Process to Human Rights Protection will be made available 
to participate in a CSI action in order to help bring stabilization and 
recovery to a nation that has undergone a recent major upheaval.
    The Office of Transition Initiatives (OTI) has consistently engaged 
with U.S. Department of State, Office of the Coordinator for 
Reconstruction and Stabilization (S/CRS) since its creation and will 
continue to with new proposed formats such as the Civilian 
Stabilization Initiative. It is envisioned that OTI and other related 
actors will participate as part of the Civilian Stabilization 
Initiative response teams. In countries where OTI is already deployed, 
OTI field teams will coordinate with and be a part of advance civilian 
teams in the same manner that OTI has provided assistance to other 
urgent priorities. CSI activities are expected to engage OTI staff in 
front-lines programmatic responses, just as OTI staff have joined 
larger U.S. Government efforts in recent priority responses, including 
the Tsunami Relief in Sri Lanka and India, the earthquake response in 
Pakistan, and flood relief activities in Bolivia.

                    MILLENNIUM CHALLENGE CORPORATION

    Question. This year, like last year, and the year before that, the 
President is requesting billions of dollars for the Millennium 
Challenge Corporation at the same time that he wants to cut other 
programs--for basic education, the environment, child survival and 
maternal health, to name a few. Isn't this the classic case of robbing 
Peter to pay Paul, after we were assured that the MCC would be 
additional money, and that USAID is paying the price?
    Answer. The steady increase in the President's requested levels for 
the traditional assistance accounts since 2002 demonstrates 
conclusively that Millennium Challenge Account (MCA) has been additive.
    The President's request in fiscal year 2009 for the three largest 
``traditional'' assistance accounts--Child Survival and Health, 
Development Assistance and Economic Support Fund--has risen from 
approximately $4.6 billion in fiscal year 2002--before Millennium 
Challenge Corporation's (MCC) establishment--to $6.4 billion in fiscal 
year 2009, an increase of nearly 40 percent. Adding the fiscal year 
2009 request for $2.2 billion for the MCC represents an increase of 87 
percent in fiscal year 2009 over fiscal year 2002, a strong indicator 
of the President's commitment to foreign assistance.
    In a world of limited resources, individual country programs 
increased and decreased before MCA existed, and will continue to 
increase and decrease with MCA on the scene. What the existence of MCC 
requires of us is better integration, and that takes place on a country 
by country basis with considerations of needs, sectors, and timing.
    MCC's mission is poverty reduction through economic growth and is 
one of many important tools the U.S. Government has to accomplish its 
foreign assistance goals. MCC Compacts are targeted to countries that 
perform better then their peers on independent policy criteria and are 
designed by partner countries to address their constraints to economic 
growth--often infrastructure and rural development. MCC cannot do this 
alone. Before Compacts begin, and while they are being developed and 
implemented, USAID will need to continue to use its resources to 
improve the overall political, economic and social environment 
necessary for the success of MCC's larger investments. The synergies 
between MCC and USAID programs to achieve maximum development impact 
are recognized by both agencies.
    This means that USAID must continue to address critical reforms in 
the broader ``enabling environment'' needed to expand political and 
economic freedom, and foster local private sector growth. These 
elements are essential for the large MCC investment to have maximum 
impact and for the U.S. Government to achieve its broader 
transformational goals. A vibrant local private sector is key to 
reducing countries' reliance on foreign assistance and is the ultimate 
exit strategy; MCC and USAID working in tandem can accelerate that 
timeframe. In many MCC countries, particularly the poorest, USAID may 
need to continue its work after the completion of an MCC Compact 
whether the country remains eligible for additional MCC compacts or 
not.
    These realities are reflected in the process of determining country 
assistance programming. The goal of U.S. Government assistance efforts 
is to have the most effective possible mix of programs given each 
country's unique circumstances. Annual changes in requested assistance 
flows from the Economic Support Fund, Development Assistance and Child 
Survival and Health accounts to individual countries reflect a range of 
complex country specific factors, only one of which is projected MCC 
disbursements.

                                 CHINA

    Question. The fiscal year 2008 State and Foreign Operations Act 
provides $10 million through U.S. educational and nongovernmental 
organizations for environment, democracy and rule of law programs in 
China. Additional funds are provided for democracy programs under the 
Democracy Fund account. We want a significant portion of the $10 
million to be used for environment programs, and I would hope it will 
be done in a manner that encourages matching private funds and U.S.-
Chinese partnerships.
    As you determine how to use these funds, I would appreciate it if 
you would consult with us first.
    Answer. Thank you for providing the opportunity to consult with the 
Appropriations Committee about USAID's programming of congressionally-
provided funds in China. USAID's ongoing environment programs in China 
link counterpart United States and Chinese universities to collaborate 
on environmental activities while encouraging matching funding from the 
private sector. Of the $10 million Development Assistance (DA) earmark, 
USAID plans to allocate approximately $5 million to environment 
activities in China in fiscal year 2008 that address clean energy and 
climate change, natural resources and biodiversity, and environmental 
governance.
    In the area of clean energy and climate change, USAID will support 
continued work to promote good governance practices in connection with 
strengthening regulatory standards for cleaner coal and energy 
efficient lighting (China is the world's largest consumer and 
manufacturer of each, respectively), and improving access to financing 
for clean technologies. We will establish public-private alliances and 
stronger U.S.-China partnerships in these areas.
    USAID will increase activities in China with two critical regional 
biodiversity programs addressing trade--illegal trade in wildlife and 
endangered species and trade in illegal forest products. As China is 
among the world's largest consumers in the illegal trade of wildlife 
and forest products, new USAID activities will strengthen China's 
ability to improve inspection, certification, and enforcement practices 
that help stem the flow of these illegal products into China from its 
Asian neighbors.
    In addition, USAID plans to allocate another $700,000 in Economic 
Support Funds (ESF) from the $5 million Tibet earmark to improve 
environmental conservation and natural resource management through 
increased adoption of practices that support sustainable rangeland 
management, livestock development techniques, and wildlife conservation 
in Tibetan areas.
    USAID also funds the China Environmental Health Project, which 
supports partnerships between Western Kentucky University, Southwest 
University of China and Anhui University of Science and Technology. The 
project will develop new practices for addressing water quality 
protection and mitigating pollution from coal combustion in southwest 
China, and it will analyze the relationship between pollution and 
public health.
    Similarly, the University Partnership for Environmental Law in 
China pairs Vermont Law School with Sun Yat-sen University in Guangdong 
Province in a 3-year training and technical assistance program to 
promote the establishment of environmental law clinics. Its public 
outreach heightens public awareness of environmental issues and 
increases accessibility to information regarding the environment in 
China. These partnerships bring to bear on these pressing issues, the 
capacities, institutional strengths and financial investments of all 
the partner universities. Further, as the USAID Administrator, I have 
directed the agency to seek means to triple USAID's public-private 
sector investments, and USAID has a person dedicated to do just that in 
the southeast Asia region, including China.

                           MERIDA INITIATIVE

    Question. The President wants to spend $1.4 billion in Mexico and 
Central America over 3 years to combat drug trafficking. Most of the 
funds are for the army and law enforcement programs. We all want to 
help Mexico and other countries facing enormous challenges from drugs 
and organized crime, but I believe this Initiative all but ignores 
important aspects of the problem, particularly poverty and a 
dysfunctional judicial system. Was USAID consulted in advance about 
this Initiative, and if so, what did you recommend?
    Answer. USAID participated in the entire planning process of the 
Merida Initiative and is fully supportive of the resulting proposal. 
USAID will continue to be actively involved at each step of 
implementation should Congress fund this Initiative.
    Interagency cooperation within each country and a high level of 
cooperation between the Governments of the United States and Mexico 
have been essential to developing the Merida Initiative. During this 
process, representatives of USAID, the Departments of State, Justice, 
Homeland Security, Defense, and Treasury have participated in crafting 
the proposed partnership with the Governments of Mexico and Central 
America. We anticipate maintaining the same type of close cooperation 
within and between governments during the implementation phase of the 
Merida Initiative.
Background
    The administration has proposed the Merida Initiative as a 3-year 
program and has sought funds in the fiscal year 2008 supplemental bill, 
and the fiscal year 2009 budget. The proposed $1.4 billion was for 
Mexico, with a total amount for Central America still to be determined.
    While combating drug trafficking is a critical element of the 
package, the Merida Initiative is much more broadly focused. Through 
the Merida Initiative, the United States seeks to assist in 
strengthening our partners' capacities in the three broad areas of (1) 
counter-narcotics, counterterrorism, and border security; (2) public 
security and law enforcement; and (3) institution-building and rule of 
law.
    For Mexico, in the proposed fiscal year 2008 supplemental bill, the 
funds destined for the military are less than 40 percent of our total 
fiscal year 2008 supplemental request, with the remainder going to help 
civilian institutions. That percentage drops in the fiscal year 2009 
proposal, with only 22 percent allotted for the military and the 
remainder for civilian institutions. Over $130 million for these 2 
years would go to programs specifically focused on judicial 
institution-building and the rule of law in Mexico.
    With regard to the judicial system, it is important to note that 
the Mexican legislature has just passed comprehensive judicial reform 
in an effort to modernize and improve the Mexican justice system. While 
the proposal to amend the Mexican constitution must still be adopted by 
a majority of Mexican states, the legislation does establish a 
presumption of innocence for defendants, facilitates transition to an 
accusatorial system, and includes several reforms aimed at improving 
policing and investigative authority.
    The elements of the Merida Initiative directed to support Mexican 
judicial reform will help Mexico improve its economic climate. The 
establishment and implementation of a fair, predictable and flexible 
set of legal rules is vital to the processes of business formation, the 
establishment of capital markets, the ownership and transfer of real 
and intellectual property rights, the protection of contract rights, 
and other key elements that underpin economic development.
    As a member of NAFTA and our third largest trading partner, Mexico 
is the world's 14th largest economy. Yet, at the same time, 40 million 
Mexicans live at or below the poverty level. At $7,870, Mexico ranks 
73d in the world in terms of Gross National Income per capita, compared 
to the United States' $44,970.
    The greatest impact of the United States on the Mexican economy is 
our expanding trade relationship. Mexico is the United States' third 
largest trading partner; we traded over $1 billion per day in goods and 
services with Mexico in 2007. Mexican exporters pay their workers 37 
percent more than companies that do not export.

                        BIODIVERSITY PROTECTION

    Question. For fiscal year 2008, we appropriated $195 million for 
biodiversity programs. This includes funding to protect forests, 
watersheds and endangered species in the Amazon, central Africa, 
Indonesia, and elsewhere. Unfortunately, this falls far short of what 
we should be doing to protect these threatened areas. How much are you 
proposing for these activities in fiscal year 2009?
    Answer. Preserving biological diversity is critical to sustainable, 
long-term social and economic development, and is an important issue in 
its own right. There is a serious problem in countries around the world 
where habitat and species are disappearing at an alarming rate, and 
this is especially problematic in developing countries where many of 
the poorest people's livelihoods are often directly dependent on 
forests, fisheries and wildlife.
    The United States and our developing country partners address this 
issue in a holistic manner. Conflict, poverty, and the lack of better 
and more sustainable employment opportunities drive desperate people to 
put tremendous pressure on the ecosystems on which endangered animal 
and plant species rely. Weak political legitimacy, accountability, and 
governance constrains efforts to enforce conservation measures and 
suppress criminal activity.
    Recognizing the depth and complexity of the problem, the United 
States integrates its biodiversity conservation programs into a broad 
range of long-term development efforts designed to help countries 
achieve peace and security, govern justly and democratically, realize 
economic and social growth, invest in their people, maintain public 
health, and provide humanitarian assistance.
    Our request level for fiscal year 2009 is $115 million from the 
Development Assistance (DA) account plus $10 million from other 
accounts--totaling $125 million directed to 32 regional and country 
programs. These requests are based on specific needs and priorities 
identified by our embassies and field missions, taking into account 
competing priorities and the availability of funds.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin

                      NATIONAL SOLIDARITY PROGRAM

    Question. One of the more successful development efforts in 
Afghanistan, the National Solidarity Program, appears significantly 
underfunded. The program uses a participatory process to allow citizens 
to work with their local governments to prioritize and apply for 
funding for decided upon projects--building critical local ownership 
and oversight. At a time when development needs are critical to the 
long-term success in Afghanistan, please explain USAID efforts to 
support this program.
    Answer. USAID views the National Solidarity Program (NSP) as an 
important tool to build support for the Afghan Government in rural 
areas of the country. Created by the Government of the Islamic Republic 
of Afghanistan in 2003, the NSP helps Afghan communities to identify, 
plan, manage and monitor their own development projects. The program 
lays the foundation for a sustainable form of inclusive local 
governance, rural reconstruction, and poverty alleviation.
    Since its inception in 2003, USAID has contributed $50 million to 
the NSP, including $15 million in fiscal year 2007 base and 
supplemental funding. In fiscal year 2008, USAID plans to contribute an 
additional $50 million, doubling our total support for the program in a 
single year.
    Fiscal year 2007-2008 USG contributions break out as follows:

                        [In millions of dollars]
------------------------------------------------------------------------
                        Fiscal year                             Amount
------------------------------------------------------------------------
2007 Base..................................................            6
2007 Supplemental..........................................            9
2008 Base Request \1\......................................           10
2008 Supplemental Request \1\..............................          40
------------------------------------------------------------------------
\1\ Subject to approval and appropriation by the U.S. Congress.

    Funds provided by USAID for the NSP are under the daily direction 
and control of the Government of the Islamic Republic of Afghanistan 
and are used to meet local development priorities identified by 
Afghans. USAID funding contributes to the Afghan Government's objective 
of extending the NSP to all eligible villages.
    By promoting understanding of good governance at the local level, 
the NSP works to empower rural communities to make decisions affecting 
their own lives and livelihoods.

                     DEMOCRACY PROGRAM IN PAKISTAN

    Question. Please elaborate on plans to provide long-term democracy 
programs, including political party, election, civic strengthening, and 
rule of law efforts, to Pakistan?
    Answer. Background.--USAID will conduct two assessments that will 
guide its future democracy and governance activities: (1) a broad, 
Democracy/Governance Assessment; and, (2) a specific assessment on the 
state of the Rule of Law that will recommend specific programmatic 
initiatives. Following is a general description of the program based on 
the currently allocated budget.
    Probable Areas of Activity.--USAID will work with Pakistan's 
governing institutions, political parties, and the public to develop: 
(1) an issues-based political dialogue, (2) democracy within mainstream 
political parties, and (3) a transparent electoral process. A key focus 
will be on increasing transparency and accountability in support of 
anti-corruption reforms.
    The strategy adopts a two-pronged approach:
  --First, targeting improvements in local governance through community 
        projects that are designed and implemented by local citizens. 
        This approach helps to change citizen perceptions of how their 
        government works and its role in improving their lives. 
        Projects may include water systems, repair of public buildings 
        such as schools or health clinics, or other collaborative 
        activities.
    A large component of the Federally Administered Tribal Area (FATA) 
program is geared to increasing the capacity of the local government in 
FATA. A key objective is to help extend the writ of government 
throughout FATA, in part by demonstrating to the people that the FATA 
government can provide them with services that respond to their needs.
  --Second, focusing on national level political and governance 
        challenges by working with the institutions that shape the 
        entire system, such as the legislature and key ministries. 
        USAID has launched a training program for newly elected 
        parliamentarians to orient them to rules and procedures, and 
        legislative processes. This and other projects are timely given 
        the window of opportunity presented by the recent elections, 
        the gradual liberalization of the media and the return of an 
        independent judiciary. Other activities will encourage civil 
        society groups to hold accountable newly elected leaders while 
        providing the groups greater access to their provincial and 
        national assemblies.
    Question. The administration has noted in presentations regarding 
the budget that the fiscal year 2009 request marks the first time the 
President is submitting to Congress a jointly planned State Department-
USAID budget. The purpose of the merging of the foreign assistance 
budgets and policies of the State Department with USAID is to maximize 
the impact of our foreign assistance dollars to reduce widespread 
poverty, among other objectives. We know that women are the majority of 
the world's poor and research has shown that investing in women 
increases economic productivity, child education, family nutrition and 
stems the spread of HIV/AIDS. However, the budget does not reflect a 
clear strategy for addressing gender in our foreign assistance 
programs. Please explain plans to integrate women's programs into 
foreign assistance programs.
    Answer. I firmly believe in and support consideration of gender in 
the planning, development and implementation of USAID programs and 
strategies. USAID has always held a leadership role on gender and I 
intend that that leadership should continue.
    Women benefit significantly from USAID programs. For example, in 
fiscal year 2006 women represented 58 percent of all clients of USAID 
microfinance and enterprise development programs. The agency also 
trains women entrepreneurs in marketing and business planning. In 
Bangladesh, a training program for entrepreneurs created 5,000 jobs, 80 
percent of the positions going to women. USAID is aggressively pursuing 
reforms to improve the business environment in more than 50 developing 
countries, making a major impact advancing economic opportunities 
available to women.
    USAID has requirements related to gender in the Automated 
Directives System (ADS). Under these regulations gender is to be 
included up front in the planning process and in the procurement 
process as part of all solicitations issued by the Agency. The entire 
ADS is now being reviewed and up-dated to ensure that it reflects USAID 
priorities which include the integration of gender into the programs of 
the Agency. Two years ago the Office of Women in Development gathered 
quantitative data on the extent to which gender was included in country 
strategies and in procurement solicitations. The revision of the ADS in 
2003 to make requirements concerning gender explicit had an impact on 
the integration of gender throughout the planning process. The study 
results showed a clear improvement in the thoroughness of the 
discussion of gender in documents from 2003 and beyond over the pre-
2003 period. The Office continues to work with Operating Units in 
Washington and in the field to promote and facilitate the integration 
of gender into all USAID programs.
    With regard to monitoring and evaluation overall, in those programs 
for which USAID measures benefits to individuals, to the extent 
possible, results are disaggregated by sex to best track the inclusion 
of women and girls in our programs.

                                 WATER

    Question. How are assistance programs that focus on issues of 
water, including clean water, sanitation, water management, and 
conservation, developed, implemented, and overseen within USAID?
    Answer. USAID and State consult with Congress on water language in 
the appropriations act and the Simon Water for the Poor Act. A joint 
USAID-State team then decides priorities for water assistance in the 
context of the Foreign Assistance Framework. Two of the Framework's 
Objectives include water--Investing in People and Economic Growth. The 
former incorporates USAID's health programs which include the clean 
water supply and sanitation components. The latter incorporates USAID's 
environment programs and agriculture programs which include the water 
management and water conservation components. Coordination across these 
objectives is achieved through USAID's cross-cutting Water Team.
    Programs are then designed and implemented in close partnership 
between USAID and a broad array of non-governmental organizations, 
universities, companies, and government agencies in the assisted 
countries and the United States.

                                 BURMA

    Question. What plans does USAID have for both immediate and long-
term democracy assistance for both Cuba and Burma, should circumstances 
in either country suddenly allow for a more open political process or 
transition?
    Answer. In Burma, the United States' top priority is the 
establishment of a democratic state that observes the rule of law and 
fully respects human rights. Since the U.S. Government does not have a 
bilateral assistance agreement with the Government of Burma, the 
Department of State and USAID provide assistance to achieve this 
priority synergistically through international and local non-
governmental organizations.
    The goal of U.S. democracy assistance is to build the capacity of 
the Burmese people to participate in a democratic society by providing 
them with the information and skills necessary to participate 
effectively in a dialogue that leads to a transition to democracy. This 
includes providing educational opportunities to prepare the future 
leaders that a democratic Burma will require. These programs complement 
our diplomatic efforts urging the Burmese regime to begin a credible, 
inclusive dialogue with pro-democracy activists and ethnic minorities 
to pave the way for a transition to a free, open, broadly 
representative government that respects the human rights of all of its 
people. U.S. assistance programs maintain flexibility in order to 
pursue emerging opportunities. The co-chairs of the interagency Burma 
Assistance Working Group would be happy to provide an oral briefing as 
the situation in Burma develops.

                                  CUBA

    Question. What plans does USAID have for both immediate and long-
term democracy assistance for both Cuba (and Burma), should 
circumstances in either country suddenly allow for a more open 
political process or transition?
    Answer. In addition to USAID's ongoing Cuba program, the agency 
has, for the past 18 months, been engaged in intensive inter-agency 
planning for democracy and transition assistance to Cuba, upon United 
States recognition of a transition \1\ government in Cuba. This 
planning effort is being coordinated by the Cuba Transition 
Coordinator, working with the Department of State's Bureau of Western 
Hemisphere Affairs (WHA), the Coordinator for Reconstruction and 
Stabilization (S/CRS), and USAID. Democracy and governance assistance 
to Cuba is planned in three phases--Hastening, Transition, and Long-
Term Democracy and Governance Phases--which correspond to benchmarks 
identified under U.S. law on assistance to Cuba.
---------------------------------------------------------------------------
    \1\ ``Transition'' refers to a particular ``trigger'' or key 
development when the USG and U.S. Congress agree that the situation on 
the island is such that requirements of Helms Burton and/or other 
legislative restrictions are met and the United States can provide 
broader assistance than legislation currently permits.
---------------------------------------------------------------------------
    Key tasks in the current, ongoing Hastening Phase include: 
providing humanitarian assistance to families of political prisoners 
and others; supporting the release of political prisoners and improving 
human rights conditions; strengthening civil society and the pro-
democracy movement; supporting freedom of information through the 
dissemination of materials and equipment; and increasing international 
encouragement of democracy. The USAID program, through its support to 
non-governmental organizations and U.S. universities, currently 
provides: Leadership training to Cuba's proponents of human rights; 
global publication of reports by Cuba's independent journalists 
worldwide via the Internet and distributed in hard copy inside Cuba; 
and direct outreach to the Cuban people through distribution of books, 
newsletters, videos and radios.
    The Transition Phase is focused on the goal of free and fair 
elections, as well as other key objectives identified by the Commission 
for Assistance to a Free Cuba (CAFCII). Programming during this phase 
will commence when requested by a United States-recognized transition 
government in Cuba. Key tasks during this Phase include: Assisting a 
transitional government to establish the legal framework for elections 
and civil liberties; strengthening political parties and independent 
groups through trainings; supporting creation of independent media via 
journalist trainings; supporting the transitional government's 
institutions to administer and secure free and fair elections, through 
the establishment of independent electoral bodies, voter registries and 
voter education; and supporting the transitional government's measure 
to establish rule of law, and provide training for security and justice 
personnel in human rights. During this Phase, there will also be a 
focus on activities to increase private sector business and economic 
activity, such as start-up grants for microfinance institutions.
    The Long-Term Democracy and Governance Phase plans for assistance 
to a democratically-elected Cuba along the lines of an assistance 
portfolio implemented by the USG in other post-transition settings, 
with the goal of assisting the Cuban people in establishing democracy 
and good governance of key institutions. Key tasks during this Phase 
include: Supporting a democratic Cuban government in establishing good 
governance of key executive institutions, through technical support to 
key ministries; building and consolidating rule of law institutions; 
reforming legislative functions, via adoption of rules of procedure and 
establishing leadership and committee structures; supporting 
transparency and accountability reforms; the institutionalization and 
strengthening of political parties; strengthening of civil society; and 
establishing human rights institutions.
    Additionally, fostering economic growth and opportunity under a 
transitional Cuban government will be critical to reinforcing and 
solidifying a democratic transition on the island. As part of the 
Inter-Agency Economic Working Group (EWG) for Cuba, USAID has been 
heavily involved in scoping out key areas of economic assistance that 
will be crucial in the event of a transition. These areas include 
macroeconomic stabilization and reform, private sector strengthening, 
trade and investment, business sector development, agriculture, and 
infrastructure.

                          SUBCOMMITTEE RECESS

    Senator Leahy. Thank you. The subcommittee will stand in 
recess.
    [Whereupon, at 3:30 p.m., March 4, the subcommittee was 
recessed, to reconvene subject to the call of the Chair.]
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