[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]






                THE AGENCY FOR INTERNATIONAL DEVELOPMENT
                      AND THE MILLENNIUM CHALLENGE
                  CORPORATION: FISCAL YEAR 2012 BUDGET
          REQUESTS AND FUTURE DIRECTIONS IN FOREIGN ASSISTANCE

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 16, 2011

                               __________

                           Serial No. 112-11

                               __________

        Printed for the use of the Committee on Foreign Affairs




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 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California          BRAD SHERMAN, California
STEVE CHABOT, Ohio                   ELIOT L. ENGEL, New York
RON PAUL, Texas                      GREGORY W. MEEKS, New York
MIKE PENCE, Indiana                  RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina           ALBIO SIRES, New Jersey
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska           THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas             DENNIS CARDOZA, California
TED POE, Texas                       BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida            BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
BILL JOHNSON, Ohio                   CHRISTOPHER S. MURPHY, Connecticut
DAVID RIVERA, Florida                FREDERICA WILSON, Florida
MIKE KELLY, Pennsylvania             KAREN BASS, California
TIM GRIFFIN, Arkansas                WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
VACANT
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director











                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Rajiv Shah, M.D., Administrator, U.S. Agency for International 
  Development....................................................    13
Mr. Daniel Yohannes, Chief Executive Officer, U.S. Millennium 
  Challenge Corporation..........................................    22

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Ileana Ros-Lehtinen, a Representative in Congress 
  from the State of Florida, and chairman, Committee on Foreign 
  Affairs: Prepared statement....................................     4
Rajiv Shah, M.D.: Prepared statement.............................    16
Mr. Daniel Yohannes: Prepared statement..........................    24

                                APPENDIX

Hearing notice...................................................    66
Hearing minutes..................................................    67
Questions submitted for the record by the Honorable Ileana Ros-
  Lehtinen and written responses from:
  Mr. Daniel Yohannes............................................    69
  Rajiv Shah, M.D................................................    95
Written responses from Rajiv Shah, M.D., to questions submitted 
  for the record by the Honorable Gus Bilirakis, a Representative 
  in Congress from the State of Florida..........................   126
Written responses from Mr. Daniel Yohannes to questions submitted 
  for the record by the Honorable Dana Rohrabacher, a 
  Representative in Congress from the State of California........   135
Written responses from Rajiv Shah, M.D., to questions submitted 
  for the record by the Honorable Albio Sires, a Representative 
  in Congress from the State of New Jersey.......................   136
Questions submitted for the record by the Honorable Donald M. 
  Payne, a Representative in Congress from the State of New 
  Jersey, and written responses from:
  Mr. Daniel Yohannes............................................   137
  Rajiv Shah, M.D................................................   138
Questions submitted for the record by the Honorable Jeff Duncan, 
  a Representative in Congress from the State of South Carolina, 
  and written responses from:
  Mr. Daniel Yohannes............................................   172
  Rajiv Shah, M.D................................................   174

 
 THE AGENCY FOR INTERNATIONAL DEVELOPMENT AND THE MILLENNIUM CHALLENGE 
CORPORATION: FISCAL YEAR 2012 BUDGET REQUESTS AND FUTURE DIRECTIONS IN 
                           FOREIGN ASSISTANCE

                              ----------                              


                       WEDNESDAY, MARCH 16, 2011

                  House of Representatives,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 o'clock a.m., 
in room 2172 Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the committee) presiding.
    Chairman Ros-Lehtinen. The meeting will come to order. I 
will recognize myself and then my good friend, the ranking 
member Mr. Berman for 7 minutes each for our opening 
statements. Then I will recognize any of our members who would 
like to offer an opening statement for 1 minute each.
    We will then hear from our witnesses and I ask that you 
please summarize your prepared statements in 5 minutes each 
before we move to questions and answers with our members under 
the 5-minute rule.
    Without objection the witnesses' prepared statements will 
be made a part of the record and members may have 5 legislative 
days to insert statements and questions for the record subject 
to the limitations of the rules.
    The Chair now recognizes herself for 7 minutes.
    There is little that is discussed here in the Congress 
these days that does not immediately run up against the issue 
of our Nation's fiscal situation. Today's hearing is no 
exception. Our Government's vast annual deficit, the rapid run-
up of the public debt, the borrowing and, indeed, the outright 
printing of dollars to pay that deficit and debt, have become 
extraordinarily critical issues.
    This is not simply a crisis at the Federal level, but also 
a crisis for state and local governments, and many individual 
Americans as well. On a personal note, our county mayor was 
recalled by 88 percent of the electorate based on this budget 
crisis just yesterday.
    It is a crisis that appears in newspaper stories every day, 
with headlines like: ``From California to New York, States are 
Facing Monstrous Deficits, and Cities in Debt Turn to States, 
Adding Strain.''
    With such stories in mind, it is easy to understand why the 
American people are demanding that we carefully scrutinize our 
Government spending, both domestic and foreign, both large and 
small.
    A rate of increasing our budgets, such as the 2-year 
increase of an estimated 57 percent in USAID's budget between 
Fiscal Year 2008 and Fiscal Year 2010 or the estimated 147 
percent increase in USAID's budget between Fiscal Year 2001 and 
Fiscal Year 2010, is just not feasible in light of what is 
happening here at home. As I said in our hearing with Secretary 
Clinton this month, we must make difficult decisions in light 
of the unfortunate fiscal priorities facing us.
    Those who complain about diminished levels of U.S. aid 
funding need to ask themselves: How much less would an 
insolvent United States be able to do? There are, in fact, 
freezes or cuts that can be made that would actually help us 
maintain our efforts to help the most impoverished people 
abroad who truly need our help.
    We can take greater steps toward using small-scale 
education vouchers of just a few dollars or less to help 
parents in poor countries choose their children's schools. This 
will help them get around the wasteful, corrupt bureaucracies 
that tend to expend large sums while not always providing poor 
children with a good education.
    If we cut our Development Assistance funding, we can move 
some of that funding to USAID's Development Credit Authority 
program, which has a proven track record of leveraging about 
$28 dollars in private funds in support of development for 
every dollar provided by USAID.
    As we cut elsewhere, we can move more funding to USAID's 
Global Development Alliance program, which, again, leverages 
private capital in support of development, focusing on 
partnerships with corporations and major private donors, who 
can contribute large, matching sums again cutting our 
Government's cost.
    We can freeze further increases in personnel. USAID's 
staffing alone has already grown by an estimated 22 percent in 
just the past 2 years, for example. We can require the reform 
of the several international development aid agencies run by 
the U.N., ending the waste caused by staffing and program 
duplication that ultimately comes out of American taxpayers' 
pockets.
    We can insist that governments in developing countries that 
receive our assistance be as committed to helping their own 
people as we are, and end purchases of things like self-
flattering monuments that fly in the face of our taxpayers 
efforts to help. We should not be giving aid to corrupt, 
unaccountable governments to begin with. The focus should be 
from the grassroots up.
    Our hearing this morning is about the budget requests for 
USAID and MCC and the need to ensure maximum return on our 
investments. This hearing also concerns the lessons learned 
since USAID's creation 50 years ago, as well as the need for a 
new assistance concept, which led to the creation of the 
Millennium Challenge Corporation in the year 2004.
    In that regard, concerns have been raised as to whether the 
MCC will remain a unique agency that focuses on economic growth 
and the graduation of countries from dependence on our aid, or 
if it will begin to fall into the trap of providing more and 
more assistance agreements with foreign governments, 
irrespective of U.S. requirements or priorities.
    After more than five decades of providing aid to other 
countries, we know that assistance can produce dependency and 
corruption. Ms. Dambisa Moyo, an economist and critic of our 
current assistance program, made these comments in 2009:

          ``The African Union estimated that corruption was 
        costing the continent [of Africa] $150 billion a year, 
        as international donors were apparently turning a blind 
        eye to the simple fact that aid money was inadvertently 
        fueling graft.''

And she continues:

          ``A constant stream of `free' money is a perfect way 
        to keep [a] bad government in power. The aid system 
        encourages poor-country governments to pick up the 
        phone and ask the donor agencies for [the] next capital 
        infusion.''

And she ends with this:

          ``It is no wonder that across Africa, over 70 percent 
        of the public purse comes from foreign aid.''

    We know that economic growth is ultimately the only way 
that development in impoverished countries can be sustained 
after our assistance programs end and, at some point, they need 
to end.
    Today, we have before our committee two leaders of United 
States aid agencies who are working hard to meet the challenge 
of preventing cycles of aid dependency and to create the kind 
of economic development in those countries that will do just 
that, develop while helping those most in need.
    At this point I would like to recognize my friend and 
colleague, Congressman Berman, the ranking member of this 
committee, for his opening statement.
    [The prepared statement of Chairman Ros-Lehtinen 
follows:] deg.




    Mr. Berman. Thank you very much, Madam Chairman. I do 
appreciate the opportunity to review the Fiscal Year 2012 
budget request for USAID and MCC, and to explore the steps each 
agency is taking to make our aid programs more effective and 
more efficient. I want to welcome both Dr. Shah and Mr. 
Yohannes here.
    This is Mr. Yohannes' first chance to testify before the 
committee.
    When Dr. Shah last testified before this committee, he had 
only been in the job for a few months. Immediately he was 
caught up in coordinating the U.S. Government's response to the 
earthquake in Haiti. Understandably much of the hearing was 
devoted to examining the status of those relief efforts.
    At that time the administration was also in the midst of 
conducting its QDDR and simultaneously a review of development 
policy, so we did not get much of a chance to get into the 
specifics about his plans for reform.
    Thankfully, Dr. Shah did not let the press of all this 
other business deter him from pursuing an overhaul of the 
agency. In the year since he last appeared before us, he has 
embarked on a very ambitious reform agenda aptly named ``USAID 
Forward.''
    The aim of this effort is to change fundamentally the way 
the agency does business. It encompasses reforms in nearly 
every aspect of the agency's programming and operations. Under 
Dr. Shah's leadership USAID is taking aggressive steps to 
harness science, technology, and innovation in support of 
development. He is exploring new ways of partnering with the 
private sector to leverage resources and achieve break-
throughs.
    Likewise, the MCC finds itself at a pivotal juncture. 
Created by President George W. Bush as a new approach to 
development, the MCC forms partnerships with poor but well-
governed countries to eliminate constraints to growth.
    Given that the MCC was established by Republicans for the 
explicit purpose of creating a new model for development 
assistance, I find it astonishing that H.R. 1, the Republican 
CR, slashes funding for the MCC by nearly 30 percent from the 
Fiscal Year '10 enacted levels. Even the development credit 
authority--cited by my chairman as a small but effective way of 
leveraging dollars--is cut in H.R. 1, not expanded.
    Now that the MCC's first two compacts have been completed 
in Honduras and Cape Verde, and final evaluations are being 
conducted, we have an opportunity to assess the added value of 
the MCC. Many aspects of the MCC's innovative model in such 
areas as country ownership, transparency and accountability, 
and managing for results are already being adopted by other 
foreign affairs agencies as a result of the QDDR.
    Yet, the MCC has not been content to sit on its laurels. It 
is continually proposing new ways to improve and strengthen its 
effectiveness including a new initiative to expand partnerships 
with the private sector.
    I share the view of everyone on this committee that in this 
difficult economic climate we have an obligation to ensure that 
every tax dollar is put to the best possible use and that we 
are receiving a meaningful return on our investments. No area 
of the budget should be exempt from scrutiny.
    I must say that I am concerned by the unrealistic 
expectations, often based on misinformation, that cuts in 
foreign assistance will fix the deficit. A poll last fall by 
the Kaiser Family Foundation found that four in 10 Americans 
erroneously believe that foreign aid is one of the two biggest 
areas of spending in the Federal budget.
    A December poll by the University of Maryland showed that 
when asked to estimate the amount of Federal budget that is 
devoted to foreign aid, the average American says 25 percent. 
When asked how much would be an appropriate percentage, the 
median response is 10 percent. Of course, what we actually 
spend is about 1 percent.
    What is particularly interesting about this poll is that 
over the 15 years it has been conducted, the amount Americans 
think is spent on foreign aid has gone up from 20 to 25 
percent, while the amount they think should be spent has 
remained steady at 10 percent. Even during this time of 
economic distress, people still think we should be spending 
about 10 times as much on foreign assistance as we actually 
are.
    As members of this committee, I think we have a special 
obligation to exert leadership to help correct some of these 
misunderstandings. The U.S. Agency for International 
Development and the Millennium Challenge Corporation provide 
the bulk of our development assistance around the world. They 
use different approaches, work with a different though 
sometimes overlapping pool of countries, but they both seek to 
reduce global poverty by promoting economic growth.
    Reducing global poverty is not a matter of altruism, though 
it would be the right thing to do even if it brought us no 
direct benefits. The truth is that addressing hunger, disease, 
and human misery abroad is a cost-effective way of making 
Americans safer here at home. Our foreign assistance benefits 
us as much as it does our local partners.
    Let me offer a few examples. Anyone who had the experience 
of suffering the H1-N1 flu last year, which fortunately turned 
out to be much less deadly than we feared at first, can tell 
you that it is worth investing in surveillance, detection and 
prevention systems abroad.
    For just pennies a dose, we can rid the world of polio, 
which was one of the most dreaded childhood diseases of the 
20th Century in the United States.
    More than one in every five U.S. jobs is linked to exports 
and imports of goods and services, and approximately half of 
all U.S. exports go to developing countries. If those countries 
are not stable enough to serve as reliable trading partners, we 
lose our overseas markets. And if these people don't have a way 
of earning income, they won't be able to afford our products.
    Dramatic increases in food prices in 2007-2008 created a 
global crisis and led to political and economic instability 
around the world. If we are not helping to increase global food 
production, addressing the impact of climate change, and 
enabling couples to plan the size of their families, these 
problems are only going to get worse.
    The recent democracy movements across North Africa and the 
Middle East have demonstrated not only the benefits of our 
security assistance, but also the importance of contingency 
funds for a flexible response. Countries that descend into 
chaos and anarchy provide breeding grounds for extremism and 
training grounds for terrorists. Just a small investment in 
supporting stable and peaceful transitions to democracy could 
yield far greater gains for U.S. national security than 
billions for developing new weapons.
    Since my time has expired, even though my statement has not 
ended, I will ask unanimous consent to include my entire 
statement in the record and I will forego describing the work 
of our foreign aid programs in Iraq, Afghanistan, and a number 
of other countries as part of our national security strategy. 
Thank you, Madam Chair.
    Chairman Ros-Lehtinen. Without objection. Thank you, Mr. 
Berman.
    Chairman Smith, who chairs the Africa, Global Health, and 
Human Rights Subcommittee, is recognized for 1 minute.
    Mr. Smith. Thank you very much, Madam Chair.
    Dr. Shah, in your testimony you state that USAID supports 
faith-based organizations. Last week I chaired a hearing on the 
Democratic Republic of the Congo and Catholic Relief Services' 
Sexual and Gender-Based Violence Advisor Francisca Vigaud-Walsh 
testified that she has repeatedly seen rape survivors in the 
eastern Congo walk many kilometers from their displacement camp 
to the nearest parish for assistance.
    They do so not only to avoid stigmatization by going to 
services available within the camp, but also because they trust 
the church. This scenario is played out repeatedly throughout 
Africa. Many people trust the churches and faith-based 
organizations and will seek them out even when non-FBO services 
are closer or readily available.
    A Gallup Poll asked sub-Saharan Africans in 19 countries 
about their confidence in eight social and political 
institutions. Seventy-six percent responded they were most 
confident in their religious organizations in their countries.
    Not only are faith-based organizations culturally important 
in places like Africa, often they are the primary provider of 
healthcare services. I am concerned and I hope, Dr. Shah, you 
speak to this, that as the Global Health Initiative is unveiled 
and as it evolves, what is being done to ensure that grants are 
not discriminated against in terms of going to faith-based 
organizations because they----
    Chairman Ros-Lehtinen. Thank you.
    Mr. Smith [continuing]. Do not include population control?
    Chairman Ros-Lehtinen. Mr. Ackerman, the ranking member of 
the Subcommittee on Middle East and South Asia.
    Mr. Ackerman. Thank you, Madam Chairman. I fear that we 
have forgotten how to reason. When we were kids we used to 
tease each other and ask silly-seeming questions like, ``Do you 
walk to school or take your lunch?'' It seems to me that is the 
question that has been placed before us today. As I only have 
30 seconds left, I will try to unwind the puzzle when I have my 
5 minutes. I yield back.
    Chairman Ros-Lehtinen. Thank you so much.
    Mr. Rohrabacher, the Subcommittee on Oversight and 
Investigations chair.
    Mr. Rohrabacher. Thank you very much, Madam Chairman. Early 
this morning I was called by our U.S. Ambassador to Pakistan. 
He was on a plane escorting a U.S. Government employee, Raymond 
Davis, out of Pakistan. This is a cause for joy and happiness 
and we are very grateful that he has been released.
    That a recipient of U.S. aid would treat our people in such 
a way is shocking and should suggest that we take a close look 
at the fundamentals of who we give our aid to and whether or 
not they are our friends or whether they are treating us like 
suckers. Thank you very much, Madam Chair.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Payne, the ranking member on the Subcommittee on 
Africa, Global Health, and Human Rights is recognized.
    Mr. Payne. Thank you very much. I also think that we need 
to review how our so-called friends treat us. However, we also 
need to evaluate how our representatives behave in foreign 
countries. I think everything has to be held in balance.
    Let me just say that if these cuts continue, we will 
certainly see an impact on not only our U.S. economy but 
national security, and our Nation's moral standing. These cuts, 
in my opinion, go too deep. We all know that we will have to 
tighten the belt. We all agree with that and we think we should 
move but I do not want to see us being a pound wise and a penny 
foolish.
    Some of the increases in staff at USAID is because they are 
taking away from contractors and in the long run there will be 
saving of funds. Once again, thank you very much, Ms. Chair.
    Chairman Ros-Lehtinen. Thank you, Mr. Payne.
    Mr. Chabot, Subcommittee on Middle East and South Asia 
chairman.
    Mr. Chabot. Thank you, Madam Chair. Let me just remind my 
colleagues on the other side of the aisle when they continue to 
rant against H.R. 1 and they were slashing and cutting and 
burning and all the rest that we are broke and that is the 
reason we are trying to be responsible and do the right thing.
    As far as the American people not understanding exactly how 
much is being paid out, there are all kinds of things floating 
out there that Members of Congress get free medical care and do 
not pay into Social Security. There are a lot of things and a 
lot of misinformation out there.
    I have got a judiciary hearing. I probably will not be able 
to stick around and leadership has a jobs forum. There is a lot 
going on so let me just ask either during this hearing or in 
follow-up on questions, I am interested in funding. The USAID's 
political party policy explicitly states, ``Assistance to non-
Democratic political parties is prohibited.''
    The vagueness of the policy, however, raises a couple of 
questions. I just want to know what the policy is relative to 
the Muslim brotherhood in Egypt. Thank you.
    Chairman Ros-Lehtinen. Thank you, Mr. Chabot.
    Mr. Meeks, the ranking member on the Subcommittee on Europe 
and Eurasia.
    Mr. Meeks. Thank you, Madam Chairman. Let me just say that 
it is vision sometimes that we have to have. Yes, we have got 
to tighten our belt. We have to look at what our colleagues, 
what our allies in Great Britain did. They tightened their 
belt.
    They are having a fiscal crisis but yet they had vision 
enough to know not to cut substantially their foreign aid 
budget because the world is a much smaller place and we are now 
moving in that direction where we are working with other folks 
and that is what we need to do.
    It is pay me now or pay me later. It is either have short-
term gain or long-term pain. If we slash the way we are talking 
about slashing, we are going to feel the pain in the long-term. 
We should have some vision and understanding of the entire 
world that we live in because we don't live in this world by 
ourselves. I yield back.
    Chairman Ros-Lehtinen. Thank you.
    Mr. David Rivera of Florida.
    Mr. Rivera. Thank you, Madam Chairman. I hope as we get 
into our question and answer period that you will address a 
major concern of mine which is USAID's treatment of its own 
subcontractors in hostile environments such as Cuba.
    I think the reason Alan Gross' situation speaks to this, it 
is my understanding that USIAD recently or is now basically 
abdicating its concern for our workers who are in our service 
and are exercising their duties on behalf of this country by 
requiring the signing of waivers for NGOs and for 
subcontractors, waivers over their own safety of this 
personnel.
    I think it is outrageous that we would basically wash our 
hands over our own people in the service of this country for 
USAID's development programs and democracy building programs. I 
hope we will address that in the hearing.
    Chairman Ros-Lehtinen. Thank you so much.
    Mayor Cicilline.
    Mr. Cicilline. Thank you, Madam Chairman. Welcome to the 
witnesses. We heard recently from the Secretary of State about 
the three pillars of our foreign policy; diplomacy, 
development, and defense. I recognize that all three of those 
are important parts of it and particularly look forward to 
hearing about the development component today.
    I think we need to all be reminded that the commitments we 
make and the investments we make in this area of our foreign 
policy are not only describe our values as a country in 
promoting freedom and democracy around the world, but also 
ultimately enhance our national security interest by creating a 
safer world. I look forward to your testimony and welcome you 
to the committee. I yield back.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Mike Kelly is vice chair of the Subcommittee on Asia 
and the Pacific.
    Mr. Kelly. Thank you, Madam Chair.
    Thank you for being here today. I have got to tell you, 
though, we are the only country in the world that gives more 
than anybody else, 1 percent of our budget, toward what 
everybody else does. If we would quit going around the world 
going mea culpa, mea culpa, mea maxima culpa, we just don't do 
enough, I think we would get a lot more accomplished.
    I don't think that we are talking about not helping foreign 
countries. I think we are talking about doing what's prudent 
for the American people. I wish the people on the other side of 
the aisle would stop going around the world and telling 
everybody how terrible America is. We should be talking about 
how great we are. Nobody does more than we do for the world. 
Thank you.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Keating. Oh, Mr. Connolly. Sorry. Thank you.
    Mr. Connolly. Thank you. I want to say to my friend wearing 
the green tie with an Irish name who just admonished the other 
side of the aisle, at least I don't know Democrats who go 
around the world saying mea culpa, mea culpa, mea maxima culpa. 
I speak Latin, Mr. Kelly, so I know whereof you speak.
    I will say this. If we continue to slash the foreign 
assistance budget irresponsibly as your side of the aisle did 
in H.R. 1, we are going to cripple our ability to exercise 
diplomacy. Then we are going to say requiescat in pace. We need 
a vibrant robust foreign assistance program as Secretary Gates 
said in the Bush administration when he was in that 
administration and as Secretary Clinton said just a few weeks 
ago before this very committee. I wish Mr. Chabot was still 
here because I want to respond to him, too, since he directly 
addressed----
    Chairman Ros-Lehtinen. Perhaps in the afterlife.
    Mr. Connolly [continuing]. This side of the aisle.
    Chairman Ros-Lehtinen. Right now, Mr. Mack, Subcommittee on 
the Western Hemisphere chairman, is recognized.
    Mr. Mack. Thank you, Madam Chairman. I appreciate the 
hearing today because I have some big concerns when it comes to 
the Millennium Challenge Corporation and what messages we might 
be sending around the world. I would like to also just add my 
two cents into this back and forth. I do not speak Latin so I 
am not going to do any of that but I will tell you this.
    I think what I do speak is what the American people are 
saying is, ``We are broke. We are broke. Every time we spend 
more money, we borrow it from somewhere else.'' We cannot 
afford to continue to do that. I will agree with my colleagues 
that we have a lot of priorities but so far what I've seen on 
the other side of the aisle is they haven't found something yet 
that they would like to cut.
    Every time we go to a hearing all we hear is, ``We are 
slashing. We are slashing.'' But you haven't offered anything 
to cut and we are in this predicament because of the leadership 
of the other side.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Mack. I don't know where Latin fits into that but thank 
you, Madam Chair.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Murphy of Connecticut.
    Mr. Murphy. Thank you, Madam Chair.
    I look forward to your testimony. I think part of the 
frustration comes from the fact that a lot of us don't 
understand the distinction that gets made between a scared cow, 
which is the Department of Defense, and the State Department 
and USAID budget that seems ripe for targeting.
    I think every country in the industrialized world has 
figured out that a national security strategy involves being 
very strong when it comes to tanks and guns but being very 
strong when it comes to foreign aid as well. I think that we 
see a double standard that doesn't make sense with how most 
national security experts would describe a safe nation in the 
long run.
    My one query as you make your comments is back to Mr. 
Kelly's point in part. I want to make sure that when we are 
putting aid into these communities, how do we make sure that we 
get credit for it? How do we make sure that it has an American 
face--to the degree that we can--so that people understand the 
commitment that we are making here. I know it is an ongoing 
conversation and something I am very interested in hearing 
about.
    Chairman Ros-Lehtinen. Thank you.
    Ms. Buerkle of New York who is the vice chair of the 
Subcommittee on Terrorism, Nonproliferation, and Trade.
    Ms. Buerkle. Thank you, Madam Chair.
    Good morning and thank you for being here this morning. I 
agree with the gentleman, Mr. Connolly, who said we need a 
vibrant foreign affairs policy. However, that policy needs to 
be one that is prudent with the American taxpayer's money when 
it is accountable to the American taxpayer's money and what is 
in the best interest of this country. I look forward to the 
hearing this morning. Thank you.
    Chairman Ros-Lehtinen. Thank you so much.
    Judge Poe, the vice chair of the Subcommittee on Oversight 
and Investigations, to wrap up.
    Mr. Poe. Thank you, Madam Chair. In my opinion the foreign 
aid process is a mess. Fifty years after a Foreign Aid 
Authorization Act the process is still what President Kennedy 
called bureaucratic, fragmented, awkward, and slow. It is no 
surprise that our aid in real dollars is now at the highest 
level since 1985 and that in FY 2009 we gave twice as much 
money away as any other country.
    We need to bring transparency and accountability back to 
the process. In typical Washington fashion all of our foreign 
aid is done at once in one bill. We either pass the bill for 
everybody or no one gets it. I am introducing legislation today 
that breaks this process up. It changes House rules so members 
are able to vote on each individual country one at a time.
    For every dollar handed out we will be able to ask, How 
does this further the interest of the United States? If a 
country can justify that it is critical to U.S. interest, then 
it will pass. If not, the bill should not pass. I think it is 
time we show some accountability as Members of Congress and 
account for the money we spent overseas. Thank you, Madam 
Speaker.
    Chairman Ros-Lehtinen. Just the way it is. Thank you, 
Judge.
    The Chair is pleased to welcome our two esteemed witnesses. 
Dr. Shah is the Administrator of the United States Agency for 
International Development. He was nominated by President Obama 
and sworn in as the 16th USAID Administrator in December 2009.
    Previously Dr. Shah served as Under Secretary for Research, 
Education, and Economics, and as Chief Scientist for the U.S. 
Department of Agriculture. He has also served as the Director 
of Agricultural Development in the Global Development Program 
at Bill and Melinda Gates' Foundation. Dr. Shah earned his 
medical degree from the University of Pennsylvania Medical 
School and a master's degree in health economics from the 
Wharton School of Business.
    Dr. Shah, thank you for attending.
    Then we will hear from Mr. Daniel Yohannes, the Chief 
Executive Officer of the Millennium Challenge Corporation. He 
was nominated for this position of CEO by President Obama in 
2009. Mr. Yohannes is an active philanthrophist and a former 
banker previously serving as vice chair of the U.S. Bank.
    Immediately prior to his confirmation Mr. Yohannes served 
as president of NMR Investment, a firm specializing in 
financial services and the renewable energy sector. From '92 to 
'99 Mr. Yohannes also served as president and CEO of Colorado 
National Bank and prior to that held numerous leadership roles 
at the Security Pacific Bank now called Bank of America.
    It is also a pleasure to have you here, Mr. Yohannes. 
Please feel free to summarize your statements. Your statements 
in full will be made part of the record.
    Thank you, Dr. Shah. We will begin with you.

 STATEMENT OF RAJIV SHAH, M.D., ADMINISTRATOR, U.S. AGENCY FOR 
                   INTERNATIONAL DEVELOPMENT

    Dr. Shah. Thank you very much Madam Chairman, Ranking 
Member Berman, and members of the committee. I am honored to 
join you here today in support of the President's Fiscal Year 
2012 Foreign Operations Budget Request.
    First, I want to briefly comment on USAID's response to the 
devastating earthquake and subsequent tsunami that hit Japan 
last Friday. As we speak today, a disaster assistance response 
team and two urban search and rescue teams from Fairfax and LA 
County, the same men and women that responded so bravely and 
effectively to last year's tragic earthquake in Haiti, are 
working to save lives in Japan. I would like to thank these 
teams for their courage.
    In the Middle East our humanitarian response experts are 
currently on the Tunisian border and in Egypt helping 
coordinate and deliver assistance to the tens of thousands of 
people that are fleeing the conflict in Libya meeting immediate 
needs and returning foreign workers safely to their countries 
of origin.
    Madam Chairman, 1 year ago in this chamber, you asked me to 
increase our private sector engagement to harness the power of 
technology and to expand the use of our development credit 
authority to more effectively leverage private investment.
    Ranking Member Berman, you emphasized the importance of 
ensuring that aid reaches those who need it most and that it is 
delivered with maximum effectiveness and efficiency. I have 
taken these concerns to heart. Consistent with the President's 
Policy Directive on Global Development and the Quadrennial 
Diplomacy and Development Review, we have launched a series of 
comprehensive reforms we call USAID Forward, designed to cut 
red-tape, improve accountability, and deliver better results.
    We are also placing a renewed emphasis on economic growth, 
driven by private sector investment as demonstrated through our 
Feed the Future Food Security Initiative. Groundbreaking new 
partnerships with Pepsi-co and General Mills will deliver tens-
of-millions of dollars in investment in African agriculture 
achieving tremendous leverage for our taxpayers and helping to 
create stability in places where food riots and famines are all 
too familiar.
    Our FY 2012 budget request doubles the capacity for 
development credit authority and more than doubles the ceiling 
on loan guarantees allowing us to generate $28 of private 
investment for every single dollar of taxpayer funds applied.
    And across our portfolio, we are seeking new ways to 
harness the power of technology for development. In Haiti, 
rather than rebuilding brick-and-mortar banks devastated by the 
earthquake, we are partnering with the Gates Foundation to 
begin a mobile banking revolution in the country.
    In India we help farmers access solar powered micro-
irrigation systems that are in part produced in the United 
States and improving food security abroad while creating jobs 
in Georgia and Michigan.
    The FY 2012 budget includes dedicated funding for these 
innovative approaches to development while outlining a number 
of specific and significant cuts. This budget eliminates 
bilateral development assistance in 11 countries and shuts down 
USAID missions in three. It cuts development assistance in at 
least 20 countries by more than half. It reallocates almost 
$400 million in assistance and shifts more than 30 Foreign 
Service positions toward priority countries and initiatives 
designed to align with our national security and keep us safe.
    This year, for the first time, the President's budget 
presents USAID war funding in a separate account called the 
Overseas Contingency Operations, or ``OCO'' Account. This 
transparent approach distinguishes between temporary one-time 
war costs and our enduring budget.
    USAID's logo is a handshake accompanied by the motto ``From 
the American People.'' Now more than ever, we are delivering 
benefits for the American people.
    In the most volatile regions of Afghanistan and Pakistan 
USAID is working side by side with the military playing a 
critical role in stabilizing key terrain districts, building 
responsive local governance, improving the lives of local 
citizens, and ultimately paving the way for American troops to 
return home safely.
    As General Pertaeus warned just yesterday, inadequate 
resourcing of our civilian partners, State and USAID, could, in 
fact, jeopardize the accomplishment of the overall mission.
    USAID's work also strengthens America's economic security. 
By establishing links to consumers at the bottom of the 
pyramid, we can effectively position our country and our 
companies to sell more goods and services in the markets of 
tomorrow.
    Best of all, we deliver these benefits for the American 
people for less than 1 percent of our Nation's total budget. 
Putting these values into action will deliver real results for 
the American people, making us safer and more prosperous.
    I thank you and I look forward to your comments and 
questions.
    [The prepared statement of Dr. Shah follows:]
    
    
    
    Chairman Ros-Lehtinen. Thank you so much.
    Mr. Yohannes.

STATEMENT OF MR. DANIEL YOHANNES, CHIEF EXECUTIVE OFFICER, U.S. 
                MILLENNIUM CHALLENGE CORPORATION

    Mr. Yohannes. Madam Chairman, congratulations on taking the 
gavel of the House Foreign Affairs Committee. We look forward 
to working with you and Congressman Berman, and every member of 
the committee to advance American interests and values and 
reduce poverty in developing countries around the world.
    I am especially pleased to be appearing here today 
alongside my good friend Dr. Shah. We speak on a regular basis 
about how our agencies can collaborate, avoid duplication, and 
leverage our comparative advantages.
    If there are no objections, I would like to submit my full 
testimony for the record and summarize it for you now.
    Let me offer my view of what makes the MCC so effective and 
distinctive. Republicans and Democrats, including some of you, 
worked together to create MCC in 2004. You outlined a new 
vision for development, one based on accountability and a 
business-like approach.
    My own background is in banking. I bring a banker's 
perspective to my role as CEO of MCC. I have a client, the U.S. 
taxpayer. I have a partner, the countries receiving MCC 
assistance and the citizens they represent. I have a goal, to 
get the best return.
    We focus on economic growth, sustainability, country 
ownership, transparency, and results. I am very pleased that 
the principles that MCC was founded on and have implemented for 
the past 7 years are central to the administration's new global 
development policy and to the priorities that we have heard 
from Congress.
    In deciding where to invest, MCC measures whether a country 
has created a policy environment for sustained economic growth. 
This focus on economic growth and a transparent selection 
process allow us to say no to those countries that are not 
accountable to their people and not pursuing policies that 
promote markets and economic growth.
    We believe that engaging with developing countries in a 
targeted selective way is a good way to achieve development 
impacts. This is fiscally responsible and it is critical for 
helping poor countries attract private sector investment which 
I believe is the only path to ending reliance on assistance.
    MCC also puts a laser focus on results. All donors and host 
countries are interested in achieving results. What sets MCC 
apart is our rigorous, systematic, and transparent methods of 
evaluating the impact of our programs. From the beginning, our 
projects are subjected to a thorough analysis to ensure that 
there will be an economic rate of return.
    From MCC's current investments we expect more than 170 
million people and the poorest countries will benefit. We 
expect incomes to rise by over $12 billion over the life of 
those investments. Those projects are underway and on track.
    We do have early data that is extremely promising. Let me 
give you an example. In Honduras preliminary data collected by 
program implementers of our agriculture program suggest that 
farmers receiving assistance from MCC saw their annual net 
income rise 88 percent on land being cultivated with new 
practices from $1,880 per hectare to $3,550 per hectare.
    I want to stress that this is early data and we will know 
much more when independent evaluations are complete. This is 
the kind of strong return on the U.S. taxpayer's investment 
that MCC is working to deliver.
    Looking ahead President Obama has requested $1.125 billion 
to fund MCC in the next fiscal year. This amount would enable 
MCC to sign compacts with Indonesia, Georgia, and Ghana. These 
countries were selected because of their strong policy 
performance, their status as important emerging markets, and 
their strategic importance to the United States.
    With that, Madam Chairman, I would like to again state my 
appreciation for your support and this committee's support for 
MCC. I look forward to our discussion. Thank you.
    [The prepared statement of Mr. Yohannes follows:]
    
    
    
    Chairman Ros-Lehtinen. Thank you very much for excellent 
testimony and they will be made part of the record.
    I wanted to ask some questions. I don't think we will have 
time for answers but would love to have them in writing later 
if I could and we will provide those for you.
    On Honduras, thank you for mentioning that country. While I 
was disappointed that the Honduran Government was unable to 
qualify for a second compact due to the wrongdoings of its 
predecessor government headed by Manuel Zelaya, I recognize the 
principal decision of MCC. I commend MCC's commitment to 
working with the current Government of Honduras to advance its 
efforts in support of accountable governance, enhanced 
management of public resources and fiscal transparency.
    However, our State Department is continuing to impose 
pressure tactics and unjust visa policies against those who 
defended the sanity of the Honduran constitution and the rule 
of law against Zelaya's attacks more than a year after 
President Lobo took office.
    So our State Department that is harassing those who uphold 
the rule of law in Honduras are really undermining the very 
investments that MCC and USAID have made, are making, and plan 
to make. One is punishing and the other one is trying to help. 
So what steps is MCC taking to compensate for the time lag 
under its corruption indicator for future determinations?
    My second question is for Dr. Shah and that is about the 
announcement of a U.S. enterprise fund for Egypt. Yesterday 
Secretary Clinton said in Cairo that she will seek a quick 
congressional approval of an enterprise fund for Egypt funded 
at $60 million. Monies from such funds come out of AID's budget 
as a rule.
    Our committee has not been consulted but was only told 
informally yesterday when we inquired there are serious issues 
involving some of our earlier enterprise funds. In one case the 
executives of the funds were allowed to set up a stock option 
plan and when they closed down the fund's operations, the CEO 
reportedly gave himself $22 million, the chief financial 
officer was awarded $9 million, the managing director 
reportedly got over $8 million, and other executives got 
between $1 million and $4 million each.
    Meanwhile, $200 million of that fund's cash was transferred 
to a legacy foundation. The taxpayers got back a grand total of 
$27.5 million. The oversight of this legacy foundation's set-up 
by enterprise funds as they have closed down operations have 
been questionable to say the least. Why would we do this again 
now in Egypt given these issues?
    Lastly, and you can get back to me in writing, on 
Afghanistan. In early 2010 the Washington Post reported that 
the Kabul bank with its ties to the Karzai family and sometimes 
questionable practices played a part in what they say is, 
``Crony capitalism that enriches politically connected insiders 
and dismays the Afghan populous.''
    I wanted to ask if the accounting firm Deloitte or any 
other USAID contractors reported incidences of malfeasance at 
the bank, what was the damage estimate conducted as a result of 
the run on the bank, and did USAID conduct a performance review 
or audit of the Deloitte contract?
    In my opening statement I pointed out that times are tough 
and I want all of our agencies who appear before us, our agency 
heads, to know that some of us are very serious about cutting 
the budget. I had mentioned that the mayor of Miami Dade County 
and a county commissioner--Miami Dade is a very large county--
was recalled by 88 percent of the electorate yesterday, an 
amazing turn of events due in large part for approving a 
bloated county budget that increased property taxes.
    There were no problems of raft or corruption or ethical 
issues involved in these two officials at all. Voters want 
fiscal sanity. I would hope that all of our agencies when they 
present their budgets keep that in mind and that this is a 
serious issue and perhaps serious differences between some of 
our parties.
    Thank you, gentlemen, and look forward to getting your 
questions later.
    I now would like to turn to my ranking member, Mr. Berman, 
for his questions.
    Mr. Berman. Thank you very much, Madam Chairman. I'm going 
to ask, for me anyway, a relatively short question. Not 
completely short, but relatively short, to give both of you a 
chance to take the remaining hopefully 4 minutes or so to 
answer it.
    Assume H.R. 1 was enacted into law, the House Republican 
CR. In USAID's case there would be a 50-percent cut in disaster 
assistance. The catastrophic damage in Japan serves as a 
reminder of how important it is to have a flexible funding 
ready and available to use in emergency. If this were in a poor 
country how could we have responded in such a situation?
    In MCC's case a nearly 30-percent cut in your budget would 
mean reducing, delaying, or scrapping any number of compacts 
that you spent years preparing for. How would that affect your 
ability to leverage tough economic and political reforms?
    I might point out in this case these cuts are totally 
disproportionate, even if one were to accept the overall 
reductions contained in the Fiscal Year '11 budget proposed by 
the majority party here.
    Dr. Shah first.
    Dr. Shah. Thank you. The cuts to the humanitarian account 
and the cuts in H.R. 1 overall for USAID would be absolutely 
devastating. The humanitarian account allowed us to support the 
recovery in Haiti. Just in the last few weeks it allowed us to 
run three different humanitarian operations and respond quickly 
and efficiently, transmitting our values and protecting our 
national security and preventing the need to send in our 
military. The option of using the military as the first line of 
defense as opposed to civilian humanitarian response is very, 
very costly and a far less effective way to address these 
concerns.
    I would also add that those cuts also would affect our food 
security program, essentially shutting down Feed the Future, 
which is a private sector-oriented program based on the 
principles of selectivity and accountability and designed to 
focus on precisely those countries and communities where the 
link between food and security, food riots, and famines is 
very, very strong.
    It would reverse progress in malaria which, for example, 
has seen a 30-percent reduction in all-cause child mortality as 
a result of a program President Bush created and we have 
continued. That would be reversed significantly and would 
undermine our ability to conduct our procurement reforms which 
allow us to reign in contractors and better manage resources. 
The meta-story is, over a 15-year period, USAID staffing has 
been cut by more than 40 percent.
    The Agency is significantly diminished because of it and we 
have outsourced at great cost to American taxpayers and large 
inefficiencies some of the functions that absolutely need to be 
conducted by U.S. direct hire staff. All of these reform 
priorities, including our priorities in Afghanistan, Pakistan, 
Iraq, Sudan, and Haiti would be significantly undermined.
    Mr. Berman. Mr. Yohannes.
    Mr. Yohannes. Thank you, Congressman Berman. We have been 
working with Zambia, Indonesia, and Cape Verde. The proposed 
cut would have a significant impact in Indonesia as Indonesia, 
of course, is the most populous country in the world and the 
largest Muslim country in the world. We have been working with 
them primarily and it relates to the embarkment projects. This 
would have measured consequences in terms of not getting those 
projects complete if, in fact, the 30-percent cut is made 
permanent. Thanks.
    Mr. Berman. Thank you, Madam Chairman.
    Chairman Ros-Lehtinen. Thank you very much.
    Mr. Smith.
    Mr. Smith. Thank you very much, Madam Chair.
    Gentlemen, thank you for your testimony and for your 
service to the country. Let me ask, or make a very brief 
statement and then ask a few questions.
    Secretary of State Hilary Clinton did, in my opinion, a 
grave disservice in the struggle to reduce maternal mortality 
worldwide when on March 1st before this committee testified 
that 529,000 women die from complications in childbirth each 
year.
    Obviously any woman who loses her life in childbirth, or 
for any reason, is a numbing loss, especially to her family. I 
would respectfully submit that conveying false information, 
misleading and inflated numbers, may have shock value but in 
accuracy in assessing efforts to mitigate maternal mortality 
and engaging in hyperbole is wrong.
    The Secretary of State failed at first to acknowledge the 
massive study on maternal mortality financed by the Gate 
Foundation published in the Lancet last may that found 
significant progress. It had dropped to 342,000. And if deaths 
attributable to the HIV/AIDS pandemic were excluded, it drops 
to 281,000. Still unconscionably high but not 529,000.
    On September 15, 2010, WHO and several other U.N. agencies 
announced that maternal deaths worldwide had dropped by a 
third. That was the headline, dropped by a third. There 
estimate is about 358,000.
    Obviously still unconscionably high but, again, I would 
respectfully submit false numbers expressed by Mrs. Clinton to 
this committee undermines the initiatives that are working, 
especially skilled birth attendants, safe blood, adequate 
nutrition which I know, Dr. Shah, you have been a champion of, 
as has the Secretary of State, and maternal health. We need to 
be accurate in our numbers to the greatest extent possible. Two 
major studies last year couldn't have been more clear that we 
are indeed making progress.
    Secondly, let me just say briefly that in late February Dr. 
Bernard Nathanson, the founder of NARAL Pro-Choice America, 
back in 1969 passed away. I would, again, respectfully submit 
to this administration that a reappraisal, and I won't hold my 
breath. It may not happen, but a reappraisal at least, about 
the child in the womb and the inherent bigotry and prejudice 
against that child in the womb that is inherent in the abortion 
culture and the promotion of abortion worldwide by this 
administration at least be taken a second look at.
    What caused Dr. Nathanson to change his mind and go from 
being the leading abortionist in the United States of America 
to a leading pro-life advocate? He started doing prenatal 
interventions, blood transfusions. He began to recognize, 
especially working at St. Luke's Hospital in New York, that the 
child in the womb ought to be regarded as a patient who if that 
patient has a disability or a disease is in need of a 
lifesaving intervention to enhance or to even save their life.
    He saw the gross inconsistency of dismembering or 
chemically poisoning a baby in one hospital room or clinic room 
while helping that child with a medical intervention in the 
other and he became a very strong prolifer. I would hope the 
administration would take a second look at its embrace of 
abortion globally because it really does undermine Millennium 
Goal 4 which calls for mitigating child mortality.
    Let's face it, abortion is child mortality and there are at 
least 113 studies that show a significant association between 
abortion and subsequent premature births. So even for the 
babies who are born later there is an increase or risk of 36 
percent of preterm birth after just one abortion and a 
staggering 93 percent increased risk of prematurity after two.
    Disability is attributable to some extent, a very large 
extent, to that kind of prematurity or low birth weight. In a 
developing world we promote abortion. Not only do those 
children die, those mothers are wounded, there is also a 
significant problem of disability that will be the deleterious 
consequence to those children.
    I'm closely out of time. Also, Dr. Shah, I asked you in the 
beginning of my open statement about faith-based organizations. 
We are very concerned, many of us, not everyone, that faith-
based organizations will be excluded because of their lack or 
unwillingness to provide certain types of population control 
and that whole integration effort, which I know is underway, 
could preclude them from doing what they do best and that is 
helping mothers and children and families in the developing 
world.
    Chairman Ros-Lehtinen. Thank you, Mr. Smith.
    Mr. Ackerman, the ranking member on the Subcommittee on 
Middle East and South Asia.
    Mr. Ackerman. Thank you, Madam Chairman.
    I wish we could all be that passionate about people who are 
already born as we are about people who are yet to be born. I 
don't know if I am more frustrated or amused when some of our 
colleagues imagine things that aren't necessarily true and then 
just rail against them. We seem to have a lot of that going on 
lately.
    I don't know anybody on our side of the aisle who goes 
around the world disparaging our country but if you want to 
imagine that and make it up, that is fine. If you would like to 
name names, that is fine, too. For every Democratic name you 
give us, or me, I will give you five Republican names who go 
around disparaging our President and our administration. But to 
the question of the day, whatever that might be, I think it is, 
``Do you walk to school or take your lunch?'' That is really 
the question I want to ask.
    If you are mad about whatever it was your county 
commissioner did or doesn't do, do you deny U.S. assistance to 
people in another part of the world? I mean, what does one 
thing have to do with the other? I am not entirely sure. I 
think we have forgotten how to ask the questions or what the 
policy implications of those questions might be.
    Maybe it is that we are more afraid of our voters than we 
are of international disasters or international terrorists, but 
we have to approach these issues, which are big issues, with a 
lot more intelligence than we seem to be prepared to do and 
that is all of us.
    I have heard a couple of people, at least, bemoan the 
imagined fact that we are broke. We are not broke. We are the 
richest nation in the world. We are the world's strongest 
economy. We are doing pretty well. One of the reasons that we 
are doing well is because we've done the right things. Not 
always. We make mistakes.
    The market went down. The market will come back up. We have 
to figure out what the wrong things are and what the right 
things are so that we can do the right things more consistently 
and not do the wrong things at all if that is possible. If 
there is one lesson we should have learned on 9/11 is that if 
we don't visit bad neighborhoods, they will visit us.
    How do you justify this disengaging from the world and its 
problems, especially at a time when such change is coming to so 
much of the world? Where we could have a major influence to get 
things right to make ourselves safe or more secure, wealthier 
if that is your goal, but enriched certainly, then we have to 
continue with the kinds of programs that Dr. Shah and Mr. 
Yohannes are talking about today, or hopefully talking about 
today.
    I think we seem to be here today mostly for our own 
entertainment and you have not had a chance to say as much as 
you thought you were going to say. Let me just ask the 
question. Do you walk to school or do you take your lunch and 
what does one thing have to do with the other?
    Dr. Shah. May I respond to that, Madam Chairman?
    Sir, I think we need to walk to school and take our lunch. 
At the end of the day I just want to clarify that USAID does 
not fund abortion abroad. No U.S. tax dollars go to that 
purpose. Maternal mortality is a great example of where being 
results-oriented, as Daniel has discussed, we are achieving 
real impacts on the ground.
    We have launched new partnerships with private sector 
partners to leverage our money five-fold in that specific area 
as the chairman has asked us to consider. At the end of the 
day, when a woman is more likely to die in Southern Sudan in 
childbirth than she is to complete grade school, that is not in 
our national interest.
    If we even once have to send our military into that type of 
environment, it will cost more than decades of modest goal-
oriented, results-oriented investments that can be made with 
partners, made with the private sector, achieve real results, 
and be done accountably. We recognize the need to reform and 
are committed to that. Now is our chance to realize some of 
these important gains and results.
    Chairman Ros-Lehtinen. Thank you very much.
    Mr. Rohrabacher, Subcommittee on Oversight and 
Investigations.
    Mr. Rohrabacher. Thank you very much, Madam Chairman.
    Let me just note that Mr. Smith, who has a passion on this 
issue of the unborn, is one of the most compassionate Members 
of Congress for children who are born as well. I find that the 
little comment insinuating that he is not, to be not only 
inaccurate but unfair, grossly unfair----
    Mr. Ackerman. Would the gentleman yield?
    Mr. Rohrabacher. I just have 5 minutes. As long as it is 15 
seconds to apologize, I will yield.
    Mr. Ackerman. I want to apologize that you misunderstood 
everything that I said. I did not say Mr. Smith. I said us, you 
and me.
    Mr. Rohrabacher. Well, I didn't hear the us part but I 
didn't hear Mr. Smith either and I think that many of us took 
it that you were attacking Mr. Smith so thank you. I don't 
think that criticism applies to any of us.
    Frankly, for those of us who think we are doing pretty well 
I think that the American people will try to figure that out 
whether they think we are doing pretty well. We are having to 
borrow 40 cents on every dollar that we spend. For a third year 
in a row this administration has proposed about $1.5 trillion 
more in spending than we are taking in.
    With that type of policy our currency will collapse within 
a short period of time. We are not doing pretty well. We have 
set America on a course for the destruction of the well being 
and quality of life of the American people. Unless we make some 
very serious reforms and change the direction of our country, 
all of our people will suffer. We are not doing pretty well.
    Certainly all of us would like to be generous beyond our 
means because Americans love to be benevolent toward other 
people because we are free and we understand how when people 
are struggling, because most of us come from families that were 
poor at one point, but we can't give away money that we don't 
have.
    If we have to borrow it from China and we saddle future 
American children with paying the interest on this debt, we are 
doing a huge disservice to them. We need to reexamine 
everything including defense and I think that is a legitimate 
criticism of many Republicans that were unwilling to try to 
find savings in defense while we are willing to cut other 
things.
    We need to reexamine all of the spending and especially in 
terms of what we are taking from the American people and giving 
to someone else. That is what foreign policy and that is what 
foreign aid is all about. We are taking from the American 
people resources and wealth and giving it to other people. It 
better be structured in the right way so it is efficient and we 
better damn well know that there is a payback.
    We end up with countries like Honduras. Madam Chairman, we 
have American citizens whose property has been expropriated in 
Honduras. They expect us to give them assistance and treat them 
well while they expropriate the property of American citizens 
and do not take the steps to make that whole and make those 
Americans whole again.
    I will be trying my best to see that Honduras doesn't get 
one penny until it deals with the property expropriations of 
Americans in Honduras. There is a big difference between 
emergency aid and development aid. A huge difference. Indonesia 
is grateful to us because we went there and helped them after 
the tsunami. We should make sure we give emergency aid to those 
people who are in crisis around the world. Development aid is a 
whole different thing.
    Mr. Berman. Would the gentleman yield?
    Mr. Rohrabacher. You know what? I need to finish this 
because I have a couple more seconds. Let me just note that I 
don't see any reason why development aid can't be made in a way 
that they are paid back. In recent days I have been trying to 
get in touch with the freedom fighters in Libya who are 
fighting the Gaddafi regime.
    I have been informed by their representatives that any 
money that the United States Government expends to help them 
win their freedom they will repay that debt back to the people 
of the United States of America. There is no reason in the 
world why we shouldn't be working with other countries in that 
same way.
    If we are going to help them raise their standard of living 
or win their freedom, let us get a payback so that the children 
of this country aren't saddled with paying the interest on this 
debt for the rest of their lives. I have used all but 4 seconds 
and you are certainly welcome to comment for those 4 seconds.
    Chairman Ros-Lehtinen. Thank you, Mr. Rohrabacher.
    Mr. Payne, the ranking member on the Subcommittee on 
Africa, Global Health, and Human Rights is recognized.
    Mr. Payne. Mr. Berman, did you want a second or two? I will 
yield.
    Mr. Berman. I thank the gentleman for yielding. Even if one 
accepts the premise of my friend from California, Mr. 
Rohrabacher, it doesn't explain why we cut disaster assistance 
in H.R. 1. I am not talking about traditional development 
assistance; the Republican CR cuts disaster assistance by 50 
percent, 50 percent that helps us do what we did in Indonesia 
and in Haiti and in these places.
    Mr. Payne. Thank you very much. It is certainly clear that 
the world is interdependent. What has happened in Japan is 
going to have an impact on us. Even tourism that would go to 
our State of Hawaii will be reduced significantly because 
Japanese will not be traveling as they will mourn for years and 
years. If anyone doesn't see that the world is interdependent, 
what has happened in Bahrain and Libya in oil? I just think 
that we need to relook.
    Let me just also talk about Secretary Clinton that my 
friend Mr. Smith raised. The 529,000 number came from an 
outdated fact book that the World Bank issued in 2006. Of 
course, our programs are working and because the world is 
paying closer attention, this number is now estimated at 
360,000, 1,000 per day, which is still unacceptable but I would 
like to get that information to Mr. Smith.
    Let me just quickly----
    Mr. Smith. Would the gentleman yield?
    Mr. Payne. Yes.
    Mr. Smith. The point was the Secretary presented to this 
committee--I was not in the room at the time or I would have 
raised it directly with her--that was the information as of 
now.
    Mr. Payne. She used outdated information.
    Mr. Smith. Thank you.
    Mr. Payne. Let me just quickly mention that--we could talk 
about so many issues but the whole question of elections and I 
would just like to say that in Africa there will be 16 
elections coming up. I wonder what USAID is going to be able to 
do as it relates to elections. We have the problem in Cote 
d'Ivoire and I think we need to put more pressure on Gbagbo to 
step down. We have elections coming up in Nigeria and other 
parts of the country, DRC, and I am not sure that the 
preparedness is there.
    Also, let me mention that as we talk about being broke, we 
are spending over $1 trillion a year in Afghanistan. We spend 
hundreds of millions of dollars in Iraq and no one talks about 
that. It makes no sense at all when we talk about spending less 
than 1 percent of our GDP on trying to help people live. We 
spend trillions of dollars on killing people. We are going in 
the wrong direction. I think the morality of our national 
direction needs to be questioned about the election, sir.
    Dr. Shah. Thank you. I just want to say that across Africa 
supporting democratic governance and effective elections is one 
of our top priorities. I think what we were able to do in 
Southern Sudan is a good example of how, when we coordinate 
with the international community, coordinate with the efforts 
of diplomacy, do joint planning with our military and, frankly, 
be aggressive about prepositioning certain capabilities, voting 
booths, ballots, even pencils and the mechanisms required to 
conduct a successful, in this case, referendum, we can make a 
difference.
    Our team was able to successfully see that through. That is 
the model of what we are trying to replicate throughout the 
continent. Our investments in Africa matter a great deal. We 
are seeing right now that we are being outstripped in our 
investments in Africa by the Chinese on a regular basis. On a 
year-on-year basis they are increasing their investments.
    We have tried to present a budget between USAID, MCC, OPIC 
and the other development partners in the Federal Government 
that will reprioritize smart strategic investments in Africa 
and do it in a way that holds leaders and governments and 
governance systems accountable for real results.
    One example of that is our Feed the Future Program, where 
borrowing an MCC practice that is an absolute best practice, we 
have limited the program to those governments that are willing 
to double their own investment in agriculture and be 
accountable for seeing that through. I will ask if Daniel wants 
to add to that.
    Mr. Yohannes. Approximately about 70 percent of our 
investments are in the continent of Africa, about $5.2 billion, 
and 60 percent of the funds are being utilized in agriculture 
and infrastructure. This is an area that is key and vital for 
trade investment opportunities. Ghana is one role model in the 
region just to give you an example of how successful we were in 
Ghana alone. The MCC-trained farmers for the first time sold 
$300,000 of crops to the World Food Program. Not only are we 
helping this country to become----
    Chairman Ros-Lehtinen. Thank you.
    Mr. Yohannes. Thank you, Madam Chair.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Rivera.
    Mr. Rivera. Thank you, Madam Chair. In light of the 
situation with Alan Gross, U.S. citizen, which I believe is 
being held hostage by the Castro dictatorship and recently 
received a 15-year sentence for exercising democracy-building 
programs in Cuba, what is the status of the Section 109 
democracy programs with respect to Cuba?
    Dr. Shah. Thank you. First, let me say with respect to Mr. 
Gross that we have been in contact with and continue to work 
aggressively, primarily through the State Department, to ensure 
an effective outcome of that situation. I believe the Secretary 
and others have spoken to that point specifically.
    With respect to our Cuba program, we will be sending the 
congressional notification up before the end of the month. As 
you know, we have requested $20 million for the program. We 
believe it aligns strongly against the congressional directions 
that are offered. We intend to see that through and implement 
it in a manner that allows for real transparency and results 
with respect to how that program is implemented.
    There has been a lot of work that has gone into it. Our 
team is happy to offer a much more detailed briefing on the 
specifics of the program going forward but our goals will be to 
accelerate implementation, get that done in a timely way, get 
the congressional notification up, and align all of the 
investments with the basic objective of supporting civil 
society and democratic space in that environment. Thank you.
    Mr. Rivera. Thank you. What is the status of USAID's effort 
to require liability waivers from NGOs involved in Cuba 
democracy promotion programs?
    Dr. Shah. I will have to come back to you with the specific 
answer to that question. I will say in general we invest a 
great deal of management effort. I personally engage directly 
with our implementing partners around the world on issues with 
respect to the safety of their staff. It is well known to this 
committee that USAID officers, USAID Foreign Service Nationals 
who are locally employed staff, and USAID implementing 
partners, all take tremendous personal risks.
    Every day I walk through my office there is a plaque on the 
wall in our lobby that puts the names and the years of people 
we have lost in service. That is also true for all of our 
implementing partners. How we manage their security, our 
efforts to design programs that allow for them to be safe and 
effective, and our efforts to reach out and engage with our 
community are very robust and have grown stronger through our 
experiences in places like Afghanistan and Pakistan.
    Mr. Rivera. Are we pursuing these liability waivers for 
NGOs with any other country on the planet?
    Dr. Shah. I will have to come back to you on liability 
waivers specifically, sir.
    Mr. Rivera. Are there any efforts? Are you familiar with 
any efforts recently on liability waivers for NGOs on Cuba?
    Dr. Shah. I don't know the specific answer to that so I 
will come back in a letter with a very detailed response.
    [The information referred to follows:]
    
    
    

    Mr. Rivera. Okay. Thank you very much.
    I will waive my time.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Rivera.
    Mr. Meeks, the ranking member, the Subcommittee on Europe 
and Eurasia.
    Mr. Meeks. Thank you, Madam Chairman.
    I didn't want to get into this but I just hope that folks 
don't forget the baton they passed to us after 8 years of a 
Republican administration, 6 years of a Republican majority in 
both the House and the Senate, and a Republican President. What 
was inherited we have got to fix and that is what we are trying 
to do here. I hope we don't go back to foreign policies.
    We heard before that Iraq was going to--it was not going to 
cost the American people no money. They were going to pay us 
all this back. We heard that before and we are hearing that 
again that somebody is going to pay us back money. We haven't 
gotten anything.
    It is still costing us billions of dollars in Iraq. I hope 
we don't go to the kind of diplomacy where we begin to change 
names from such trivial things of French Fries to Freedom Fries 
insulting our allies, calling them old Europe. I mean, those 
are the kinds of policies that put us in a problem dealing with 
the rest of the world.
    I'm hoping that we don't ever go back to that kind of 
policy to talking that way where we are alienating out allies. 
We should be doing the kinds of things that you are doing, 
bringing our allies together working together on this place 
that we call Earth trying to save folks, not cutting about 67 
percent from international disaster assistance, 45 percent from 
migration and refugee assistance, and 41 percent from global 
food relief. I mean, we are all human beings no matter what 
country we come from and no matter where we are we should be 
working together.
    Now, I am going to try to leave that alone. I do want to 
know from you because I want to give you a chance to ask 
because I really wanted to come here and ask to get an update 
on Haiti. There are elections there. We have talked about we 
wanted to build it better. Can you tell us where we are with 
Haiti? They are having elections. My colleague, Mr. Payne, 
talked about some important elections that are coming up and we 
need to do that also in Haiti.
    Let me just pause for a second and ask you, where are we 
with Haiti?
    Dr. Shah. Thank you for that question. As you know, we have 
been very committed to putting in place a more innovative, more 
forward-looking development program and reconstruction program 
in Haiti. There are a number of examples where we have tried to 
build back better. We are building a mobile money platform that 
already has three times as many participants in it actively 
saving money and being part of a formal economy than existed in 
the previous more traditional banking sector.
    In agriculture we are making large scale supportive 
investments to bring private investors including companies like 
Coca-Cola that are now creating the Haiti Hope Product to 
really help create well-managed value chains and supply chains 
that can reach back to Haitian farmers and restart the Haitian 
agricultural economy.
    In housing we are down from 1.5 million people just a few 
months ago in temporary housing down to 810,000. We are seeing 
the slope of that curve continue to get steep. We think we are 
being successful there.
    In rubble removal we have removed more than 20 percent of 
the rubble that was there from the earthquake and we have done 
it at a pace that is roughly twice as fast as the pace from 
which rubble was removed in the Aceh earthquake. In all of 
those examples the United States leadership of the 
international community, our focus and rigor around real 
results and our efforts to work with local partners like in the 
construction sector in particular, where we are literally 
training local construction firms to build back to a higher 
earthquake standard, use rebar from local materials to get wall 
strength up to a higher level than what the traditional 
construction methods were, are all having real affects.
    I think the Haiti program should be judged over a multi-
year effort but we have tried to use that program to showcase a 
more private sector-oriented, a more robust, and a more 
efficient effort to reinvest in our neighbors.
    Mr. Meeks. I'm going to throw a couple of questions out 
there. You probably won't get a chance to answer them but on 
the staffing needs I would just like to know whether or not it 
makes some sense to make sure that you have decentralized in a 
sense so that more people are on the ground who knows what is 
going on. For example, there is a situation where in Chad if 
you invest through the government it cost more to build a 
school than by using, say, an NGO.
    Whereas in Afghanistan the opposite might be true. Only 
people on the ground would know that so are we utilizing the 
individuals on the ground so that we can make those kinds of 
decisions as opposed to just saying we are going to use an NGO?
    Further, I would like to know whether or not the proposed 
continuing resolutions H.R. 1 whether or not you will be able 
to continue your mandate of objectives in Afghanistan and 
Pakistan if it goes through. Whether or not you will be able to 
help support the democratic movements in Belarus or for the 
needs of displaced African Latinos and indigenous populations 
in Ecuador and Columbia.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Kelly, the vice chair of the Subcommittee on Asia and 
the Pacific.
    Mr. Kelly. Thank you, Madam Chair. Not to continue to kick 
a dead horse but I have got to tell you, I am trying to 
understand because there is an old adage out there that charity 
begins at home. I would say this: There is not one person in 
America who does not have a passion to helping those who are in 
need but we are in denial.
    As Dana pointed out, when you are borrowing 40 cents on 
every dollar you spend, understand that once you spend the 
dollar, the dollar has been spent. Whether it is spent at home 
or abroad or any place else the dollar is gone. Once it is gone 
it is gone.
    Now, I am looking over these figures and while we continue 
to talk it is only 1 percent of our budget. Let me just point 
this out. Maybe I am just not getting it because I just have a 
bad habit of doing that being in business for yourself where 
you have got to have your own skin in the game and every dollar 
you give is your dollar.
    In 2008 for USAID $5.9 billion. In 2009 $6.31 billion. In 
2010 $8.03 billion. Now, I would hardly say that America is 
being cheap. I think what the American people are asking us to 
do is please, we don't want to stop helping other people around 
the world but at what point do we come to the realization that 
we are truly broke? We are in denial.
    This country is not seeing what we need to see. We need 
fiscal responsibility. Now, I am not saying stop being 
philanthropic. I'm just saying when you spend a dollar, spend 
it smart. Let us just spend it smart.
    Let me ask you, Dr. Shah, I am looking over your testimony. 
I am looking at some things here. Countries such as China which 
has over $2.6 trillion in foreign cash reserves, yet has 
received nearly $1 billion in assistance from the Global Fund 
in the United States to finance its response to AIDS, malaria, 
and TB. They should finance their own health programs.
    How do we justify the $4 million request for China under 
USAID's apportionment of the global health and child survival 
account when China can and should finance its own health? I 
mean, it is like me asking Bill Gates if he needs a loan. Where 
are we going with this? Where does the common sense come in to 
what we have to do to get through this crisis we are in?
    If you could please help me out because I am so confused 
right now as to what it is we are trying to do with those 
dollars we spend. Listen, I will tell you right now. Everybody 
wants to help. It is just when you are broke, you are broke. I 
am asking if we are going to spend a dollar, let us spend it 
really, really smart because this money does not belong to me 
or to this Congress or to this government.
    This is all taxpayer money. It is nice to be benevolent 
with somebody else's money. I have done that out of my own 
wallet so it is nice to give somebody else's money away. If you 
could just help me. How do we justify giving China $4 million? 
You know, we are going to borrow it from them and then give it 
back to them. That does not make any sense to me.
    Dr. Shah. Thank you, sir. I will say that the fiscal 
responsibility point is something we are introducing in all of 
our work at every level and let me give you an example starting 
with China.
    The $4 million is targeting XDR and MDR tuberculosis. That 
is multi-drug resistant tuberculosis and a new strain of 
tuberculosis called XDR TB that literally we do not as a global 
community have a solution for that is efficient and effective 
in terms of both the diagnosis and the treatment.
    That effort is to try and identify new diagnostic 
mechanisms and a new treatment methodology so that we can 
essentially bring the cost down on how we treat TB patients all 
around the world. The reason we have to do it there is that is 
where these strains are and that is where the more innovative 
solutions for diagnostics are.
    If we were successful with that program, we would be able 
to reduce the unit cost of treating TB by 30 or 40 percent on a 
panel of millions of patients around the world. The truth is 
the global community is currently not winning the fight against 
global tuberculosis because of these new strains and because of 
the lack of effective tools. The diagnostic technology we use 
is almost 100 years old.
    As others have pointed out, we don't do that in any other 
area of fighting so we need new technologies and new 
approaches. That is what that is about. I will also say on the 
fiscal responsibility point that we are trying to look at this 
from a macro perspective.
    For the overseas contingency operation account, for 
example, we have determined a $4 billion investment in that 
capability allows for a reduction in DOD's OCO account by $41 
billion. That is the kind of tradeoff that we think can allow 
for real fiscal responsibility and stability while achieving 
the objectives of keeping our troops safe and ensuring 
stability in areas where we have vital national interest.
    Mr. Kelly. Okay. I understand that. Do we have any 
indication of anybody around the world that is sending money to 
the United States to help us with our problems?
    Dr. Shah. Well, a number of the programs that we do are 
global research programs that do, in fact, attract resources 
and put those investments in U.S. universities, U.S. 
corporations, U.S. institutions. One good example is 
partnerships with other countries----
    Chairman Ros-Lehtinen. Thank you.
    Mr. Connolly of Virginia is recognized.
    Mr. Connolly. Thank you, Madam Chairman.
    By the way, I think we did get some foreign assistance from 
some countries during the Katrina crisis in the Gulf. There are 
examples. I guess I am troubled by this line of questioning 
that says, ``We are broke,'' whatever that means, as a great 
country. Therefore, apparently we are supposed to conclude we 
can't afford to do any of these investments. Any of them.
    We can afford to continue to deny ourselves oil royalties 
so we can give a break to the oil companies. The estimate of 
our subcommittee was that total amount is $53 billion. If we 
can afford to do that, we can afford to continue to provide $1 
trillion a year in tax expenditures, tax breaks to a lot of 
corporations that do business overseas, privileged groups 
economically in the United States. If you want to be 
consistent, we can't afford that. Maybe it was a good thing 
once. We can't afford it.
    The idea that the world's surviving superpower cannot 
afford to back up its diplomatic efforts is to me a reckless 
thought, an unacceptable thought. Frankly, provides the 
American people with a false Hobson's choice, one I think the 
Foreign Affairs Committee, of all committees, ought to reject.
    Dr. Shah, the continuing resolution that was passed by the 
House majority a few weeks ago proposed a 19-percent cut to the 
2011 requested levels of development assistance. Could that 
impair your ability to do your job from your perspective?
    Dr. Shah. Yes, sir. That would.
    Mr. Connolly. I can't hear you.
    Dr. Shah. Yes, sir. That would. I believe that would 
undermine our ability to invest in our procurement reforms and 
reign in and better manage our contracts and grants programs 
around the world. I think it will undermine some important new 
initiatives like our accountable assistance for Afghanistan 
program that does require greater management resources in order 
to get out and evaluate projects.
    We have just launched a new evaluation policy that I think, 
borrowing from MCC, will be the best in the world. It insist 
that every single project we do gets an independent third party 
evaluation and that evaluation is made public at 3 months 
within the completion of that program but it will take some 
investments and our capabilities in order to implement that 
policy around the world.
    Perhaps most critically it will reduce significantly our 
ability to run the Feed the Future program which will reach 18 
million people in 5 years, moving them out of poverty and 
hunger in precisely those places where poverty and hunger leads 
to food riots, famines, and threatens our sense of stability 
and our natural security.
    Mr. Connolly. But you are the head of AID. What about this 
compelling argument we just can't afford it? Those might be 
nice things to do but we just can't afford it. What is your 
answer?
    Dr. Shah. Well, sir, I believe it is far more costly for us 
to deal with the instability and the riots that result. It is 
even more costly frankly for us to give away food to starving 
people than it is to invest----
    Mr. Connolly. So what you are contending is that sometimes 
when we don't make relatively modest investments up front we 
can pay huge cost down the line having forgone that 
opportunity. Is that what you're arguing?
    Dr. Shah. Yes, sir. I will give you one example. Before I 
got to USAID programs that should have been done as fixed cost 
contracts but it requires more up-front contracting capacity to 
write a fixed-cost contract were done as cost reimbursement 
contracts where you don't have the ability to essentially 
control cost.
    You can lose in a single poorly managed contract hundreds 
of millions of dollars and you can frankly with that same 
investment in doing it more efficiently, more effectively with 
more business like approach up front, save those resources and 
generate better results for American taxpayers.
    Mr. Connolly. By the way, that same CR cut humanitarian 
assistance 42 percent. Does humanitarian assistance affect what 
is going on in Libya or even the tragedy in Japan?
    Dr. Shah. Yes. The humanitarian account is supporting all 
of the relief efforts. In Japan it's a good example. It is also 
supporting our ability to get members of the Nuclear Regulatory 
Commission and other technical agencies out there to provide 
support and engage with our partners. Those are the types of 
things we put at risk.
    Mr. Connolly. Thank you. My time is up, Madam Chairman.
    Chairman Ros-Lehtinen. Thank you so much.
    Mr. Mack, the chairman on the Subcommittee on the Western 
Hemisphere is recognized.
    Mr. Mack. Thank you, Madam Chairman. Again, thank you for 
this hearing.
    First of all, I have some questions about Honduras. So we 
have heard that we are doing pretty good. I think the elections 
were pretty clear this last election that the American people 
don't think we are doing pretty good. Then we hear that we are 
not broke.
    All you have to do is look at this graph and if we continue 
with the current policy that was pushed by the Democrats, we 
are talking about close to 800 percent debt, over 800 percent 
held by the public as a percentage of the GDP. I don't know 
where some people are coming from. Too bad they left but we are 
broke and we are not doing pretty good and we have got to be 
serious about where we spend our dollars.
    I would also like to say this. I agree that we need to 
stand up for U.S. businesses throughout the world. The case of 
a U.S. business in Honduras has been going on for over 7 years 
and needs to be solved. The Honduran Embassy in the U.S. has 
been engaged in my office on this issue that they inherited 
with the Lobo administration. I would just suggest to those 
that it is time to get together to solve that problem.
    I am very concerned about the current state of affairs in 
Honduras. President Obama, his administration, and the State 
Department have been applying enormous pressure on Honduras. 
Why Honduras? Because Honduras decided to stand up for what 
they believe in, stand up for their constitution and they did 
the right thing by removing Zelaya. For some reason our 
Government has decided they shouldn't do what is right for 
their country but they should do what we tell them to do.
    Specifically the State Department has been doing everything 
in its power to force Honduras to succumb to the U.S. demands 
revoking visas, cutting off critical defense support, 
suspending MCC funds. My question is this: Isn't it true that 
this is nothing more than punishing a small country that we 
aren't happy with?
    Mr. Yohannes. Mr. Congressman, a couple of things. Number 
one, the MCC funds were not suspended by the State Department. 
In fact, Honduras did an outstanding job in getting the first 
compact completed. The only reason why they did not get the 
second compact is because they did not qualify. They did not 
pass the corruption indicators which----
    Mr. Mack. Let me say this. The corruption indicators are 
perception based. Correct?
    Mr. Yohannes. They are perception based but having said 
that I have had----
    Mr. Mack. Weren't they in the margin of error?
    Mr. Yohannes. That is absolutely correct but let me say 
this. I have had conversations with President Lobo and his 
administration. They recognize----
    Mr. Mack. I am sorry. Was not this corruption that is 
perception based, that you acknowledge is perception based, and 
it was in the margin of error, isn't it true that this 
corruption occurred under Zelaya and the very person that the 
administration tried to bring back to power after its country 
said we are not going to continue with the corruption?
    Mr. Yohannes. Again, corruption is corruption. It does not 
matter which government----
    Mr. Mack. Isn't it true that the new government in Honduras 
has been making large strides in reducing corruption?
    Mr. Yohannes. In fact, they are and they understand what 
has happened in the last couple years and----
    Mr. Mack. So the message--sorry but I have a little bit of 
time here. So the message we are sending is that if you do the 
right thing, if you stand up for your constitution, if you 
believe in the rule of law, if you do those right things we are 
going to punish you.
    But if a country like Nicaragua who invaded Costa Rica, we 
are going to continue to allow you to have funds. Doesn't this 
send a message to people in Latin American countries and Latin 
America that there is not a consistent way that our foreign 
policy is being delivered in Latin America?
    Mr. Yohannes. We are working with the Lobo administration. 
They have set aside a 2-year program to strengthen the anti-
corruption areas primarily by strengthening the audits and 
primarily management of public resources so we are continuing 
to get engaged with them.
    Mr. Mack. If it was in the margin of error and all that 
Honduras had done to try to eliminate the corruption that was 
under the former President who this administration tried to 
bring back to power, wouldn't it be the right thing to do to 
continue with the MCC compact?
    Mr. Yohannes. We have a very limited source of funding.
    Chairman Ros-Lehtinen. Thank you very much.
    Mr. Yohannes. We have a lot of countries that are competing 
for it so----
    Chairman Ros-Lehtinen. Thank you.
    Mr. Yohannes [continuing]. At the end of the day we have to 
make the best decision.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Cicilline of Rhode Island is recognized.
    Mr. Cicilline. Thank you, Madam Chairman.
    Mr. Yohannes, thank you for being here today to talk about 
the important work of the Millennium Challenge Corporation. I 
really would like to acknowledge the excellent work of the MCC 
and the work that it is doing really to incentivize policy or 
reform in good government in a number of countries all around 
the world.
    I want to express here my deep concern about the cuts that 
are being proposed for funding for the MCC. The MCC has made 
strategic investments in countries like El Salvador and 
Honduras by improving infrastructure, strengthening property 
rights, enhancing access to markets and assisting in business 
development. These are investments that really are contributing 
to the long-term sustainability in these countries.
    I would also like to acknowledge the excellent work that 
has been done through the MCC in Cape Verde. You might know my 
district is home to a very vibrant and wonderful Cape Verdean 
community and I am very proud that Cape Verde may well be the 
first nation to receive a second compact with the MCC. They 
have made incredible progress with the help of the MCC and I 
just want to acknowledge that.
    My question really is what can we do, what steps are being 
taken, what can we do to ensure that countries like El Salvador 
and Honduras who have made substantial progress in reforming 
policies and strengthening their markets, improving their 
governments, what can we do to help them continue on that path 
so that they, too, might be eligible for a second compact and 
what procedure is in place to continue that kind of support 
that is both in their interest, obviously in their national 
interest, but also in the interest of our country?
    Mr. Yohannes. Thank you, sir. As you know, it is extremely 
competitive to get to our program. We select countries that are 
well governed, those that have accepted market principles, and 
those countries that have made a tremendous commitment to 
investing in their people. Those are the major criteria.
    We are very selective. We only work with about 22 different 
countries out of about a 100. We work with the best of the 
best. This is primarily with the goal that we want to make sure 
that this country is on a path to replace aid dollars with 
dollars from the investment community.
    Many of the investments we make in those countries are not 
only used to improve the infrastructures and so forth but the 
key is the policy reform which is extremely critical to create 
the conditions and the environment for private sectors to 
flourish.
    Having said that, El Salvador has done an outstanding job. 
In fact, I was there last year. I met with many of the 
beneficiaries that have benefitted from our program, both men 
and women. Also have seen the road that has been built which 
will connect the north and the south that has been the dream of 
the El Salvadoran people for the last 50 years.
    I have been to Honduras. I have seen the benefits that have 
been provided to both men and women in that country. In 
addition, in Honduras we built 510 kilometers of road so that 
the farmers could have access to markets. Having said that, 
they also made a tremendous investment. They have set aside an 
additional $30 million to maintain the roads.
    They also passed a major legislation primarily in the 
financial sector to make sure that people who do not own land 
also have access to credit. There has been a lot of 
accomplishments both in El Salvador and in Honduras. Again, 
Honduras was not eligible this time but we are engaged with 
them and would hope that if they continue to implement what 
President Lobo and his administration have planned, there is no 
reason why they should not be considered for a second compact.
    Mr. Cicilline. I yield back, Madam Chairman.
    Chairman Ros-Lehtinen. Thank you very much.
    Ms. Buerkle, the vice chair of the Subcommittee on 
Terrorism, Nonproliferation, and Trade, is recognized.
    Ms. Buerkle. Thank you, Madam Chairman.
    I would like to just begin my comments by Representative 
Mack referred to a chart, and we have it over here on our 
right, regarding the tidal wave of debt that we will continue 
to incur if we continue on the path that we are on.
    The first thing I do want to say is in defense of my very 
good friend from New Jersey, Representative Smith, he is not 
only a champion of the unborn, he is a champion for human 
rights for all people, born and unborn, so I want to make sure 
that is in the record loud and clear. Thank you.
    I come from New York State and I represent upstate New 
York. New York along with 43 other states is facing terrible 
deficits and issues. There is no question they will be forced 
to make a decision about whether or not they are going to be 
able to pay their debt or pay their employees. Many states in 
this country are just in dire straits when it comes to spending 
and debt and whether or not they can keep their state alive. We 
are all aware of that. We see articles regarding this all the 
time.
    My question to you is, and this piggybacks on Mr. Kelly's 
question, Americans have suffered 20 months of 9 percent 
unemployment and greater. We are facing fiscal crisis. As was 
pointed out we are borrowing 40 cents on every dollar. We need 
justification.
    How do we go to the American people? American people many 
of them are losing their homes. They are unemployed. How do we 
justify spending this money in other countries and not having 
it available for the American people?
    Mr. Yohannes. Thank you, Madam Congresswoman. This is about 
our future. This is about our security. This is about our 
prosperity. This is building the next set of emerging 
economies. This is about trade investment opportunities for 
American businesses. This is about job creation here in 
America. We are working to put these countries on the path to 
become self-sufficient so they will never have to depend on 
foreign aid again.
    Having said that, if we leave these countries alone then, 
in effect, we are giving these countries to our competitors. 
Keep in mind after the war we had the Marshall Plan. We helped 
a lot of countries. Today 75 percent of our trade is with those 
countries that we supported. I really believe that the 
countries we work with are poised to do the same in the next 10 
years.
    Ms. Buerkle. Thank you. Let me ask, and this question is 
for both of you. Is there an end game with some of the aid that 
is going to some of these countries? Will this aid end or does 
it just go on indefinitely?
    Dr. Shah. Let me address that in the context of our food 
security programs or in our health programs. Our goal is to 
basically put ourselves out of business by supporting a vibrant 
civil society, a real vibrant private sector, or effective 
public investments that are made locally that can carry out 
these goals.
    In malaria, for example, in sub-Saharan Africa, just 5 or 6 
years ago we were all talking about how 1 million children 
under the age of 5 died. Hospitals were overwhelmed.
    Through a very smart program put in place by the Bush 
administration and picked up and supported by our 
administration, we have essentially gotten insecticide treated 
bed nets to kids through schools, community centers, hospitals. 
It is keeping them out of hospitals so the hospitals are now 
able to see other types of patients.
    As a result we have seen about a third of all those kids 
who die under the age of five in sub-Saharan Africa are now 
living. What that does is that allows families to invest in 
their education. It allows people to invest in human capital, 
and it is the pathway for growth that allows exactly what 
Daniel said, countries to stand on their own two feet.
    The thing I worry about is in the way that some of the cost 
reductions are applied, in this case we would have to take 5 
million of those kids and stop providing insecticide treated 
nets to those kids. This is a $4 intervention. Unwinding some 
of the more effective programs that lay the basis of 
sustainable growth and real development will over time result 
in the need for us to have a different approach, mostly 
military, to areas that are insecure and unsafe.
    Ms. Buerkle. Thank you. I have 15 seconds left. I want to 
just end by saying that the American people are a generous 
people and they want to help but we here in this Congress have 
an ultimate responsibility of holding all agencies accountable 
for how we spend the taxpayer's money and we have to be prudent 
and we have to put their needs first. Thank you very much.
    Dr. Shah. Thank you.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Manzullo, the Subcommittee on Asia and the Pacific 
chairman is recognized.
    Mr. Manzullo. Thank you very much. Mr. Shah, in your 
testimony at the end of page two and the beginning of page 
three, you mentioned a new venture capital investment fund 
called the Development Innovation Ventures Fund, DIV. On the 
USAID Web page describing the fund it lists the E-Bike as one 
of the fund's first grantees. The E-Bike, according to the Web 
site, is a ``practical, scalable, pollution-free form of mobile 
transportation.''
    The Web site further says,

        ``USAID, borrowing from the private venture capital 
        model, will seek through a competitive process to 
        invest resources in promising, high-risk, high-return 
        projects that breakthrough innovations often require 
        that are often difficult to undertake using traditional 
        agency structures.''

    Furthermore, according to Grants.gov, the Federal 
Government's official Web site for announcing grants, it states 
that the purpose of the fund is to, ``Institutionalize further 
in USAID the serendipitous process by which great ideas are 
conceptualized, developed, and refined to be real world 
operational challenges.''
    This is a venture fund, right, that the taxpayer could end 
up losing money on?
    Dr. Shah. Well, sir, it is a grant program that is 
operating with principles that are modeled after a venture fund 
so that we can get a higher return on our investment.
    Mr. Manzullo. So it is a giveaway program? It is a grant?
    Dr. Shah. Yes. We have----
    Mr. Manzullo. And there is no basis for repayment?
    Dr. Shah. No, we do not----
    Mr. Manzullo. Alright. Then tell me about this E-Bike. Who 
makes this E-Bike?
    Dr. Shah. Well, all of the grantees of this program are 
small entrepreneurs----
    Mr. Manzullo. I asked, who makes the E-Bike?
    Dr. Shah. I am not sure of the specific----
    Mr. Manzullo. I think you should know that. This is the 
first grantee.
    Dr. Shah. There was a wave of grantees. We got thousands of 
applications----
    Mr. Manzullo. I understand that. So somebody is going to 
take this solar-powered bicycle paid for by U.S. taxpayers' 
funds and give it somewhere in the world and that is going to 
help save the world?
    Dr. Shah. No, that is not it, sir. We are investing in 
developing new technologies that can be sold----
    Mr. Manzullo. Oh, come on, please.
    Dr. Shah [continuing]. In developing countries. One example 
is the----
    Mr. Manzullo. Where is this E-Bike going with U.S. 
taxpayers' dollars? Where is it going?
    Dr. Shah. Well, if it is developed and if it is a viable 
business model, then a small U.S. entrepreneur could sell that 
product in developing countries around the world just like----
    Mr. Manzullo. And the U.S. taxpayer is supposed to pay for 
that?
    Dr. Shah. We are investing in the development of some of 
those technologies.
    Mr. Manzullo. The U.S. taxpayer is paying to buy E-
Bicycles, solar-powered bicycles, to give away to other 
countries.
    Dr. Shah. No, sir. We don't buy and give away any bicycles.
    Mr. Manzullo. Where is the money going?
    Dr. Shah. The investment goes into technology development.
    Mr. Manzullo. Oh, come on. This bicycle was already 
developed by the time your program started.
    Dr. Shah. No, they have to be refined. They have to be 
built into a business model and sold----
    Mr. Manzullo. Then why are the U.S. taxpayers buying a 
solar-powered bicycle? How is that going to help out the world?
    Dr. Shah. Sir, U.S. taxpayers are not buying solar-powered 
bicycles.
    Mr. Manzullo. Wait a second. Just a second, Mr. Shah. You 
said that it is a grant. Is that correct?
    Dr. Shah. A grant to the entrepreneur to develop a business 
model
    Mr. Manzullo. And the grant money comes from the U.S. 
taxpayer?
    Dr. Shah. Correct.
    Mr. Manzullo. So the U.S. taxpayer is buying an E-Bicycle. 
Isn't that correct?
    Dr. Shah. The U.S. taxpayers investing in business----
    Mr. Manzullo. Will you answer the question, please? Don't 
use the word ``investment.'' Use the word ``spend'' or 
``paid.''
    Mr. Berman. Madam Chairman, I think the gentleman should be 
able to answer the questions in the words he choses.
    Chairman Ros-Lehtinen. Thank you, Mr. Berman.
    Mr. Manzullo. I understand. Are U.S. taxpayers' dollars 
being used to buy this E-Bicycle? Yes or no?
    Dr. Shah. No, we are not buying and giving away E-Bicycles.
    Mr. Manzullo. So where is the money going?
    Dr. Shah. To U.S. entrepreneurs----
    Mr. Manzullo. So they can develop----
    Dr. Shah. I can give you a number of examples. Another 
partner we are working----
    Mr. Manzullo. No, I am just asking about the bicycle. Okay? 
U.S. taxpayers' dollars are being given to somebody to develop 
this bicycle.
    Dr. Shah. To develop a business to sell bicycles wherever 
they can.
    Mr. Manzullo. I understand. Does the taxpayer get 
reimbursed on the sales of these bicycles?
    Dr. Shah. No, these are small up-front grants that are 
providing seed capital to develop businesses that can be scaled 
through----
    Mr. Manzullo. I understand, but this is the problem. This 
is why the U.S. taxpayers are really upset. I don't know any 
Americans that can afford to buy a solar-powered bicycle 
themselves. Now the American taxpayers are buying solar-powered 
bicycles and essentially giving them away to countries around 
the world. This is a waste of taxpayers' dollars. The sooner 
you guys wake up and understand that, the better off you are 
going to be and take limited resources and use them for better 
purposes.
    Dr. Shah. Sir, the development innovation program is 
focusing on those interventions that can reduce the cost of 
achieving----
    Chairman Ros-Lehtinen. Thank you, Dr. Shah.
    Dr. Shah [continuing]. And we are seeing that work in a 
number of----
    Chairman Ros-Lehtinen. Judge Poe, the vice chair of the 
Subcommittee on Oversight and Investigations is recognized.
    Mr. Poe. Madam Chair, I am waiting for a poster. I would 
yield to Mr. Fortenberry if that is agreeable to the chair.
    Chairman Ros-Lehtinen. Absolutely.
    Mr. Fortenberry first and then we will go to Judge Poe.
    Mr. Fortenberry. Thank you, Madam Chair, for holding the 
hearing.
    Thank you, gentlemen, for coming today. Let me touch upon a 
subject that was brought up earlier. It is sensitive but, 
nonetheless, I think it needs to be unpacked further.
    You are correct in stating that the United States does not 
directly subsidize the procurement of abortion in our overseas 
program. However, the United States does subsidize and 
underwrite organizations that are directly involved in the 
provision of abortion. That is a new position, a new policy of 
this administration which is frankly troubling to me.
    I think our development goals, our foreign policy 
initiatives, should be built upon the consensus of values in 
this country. My goodness, we have enough to do with meeting 
basic humanitarian needs that we shouldn't be exporting our own 
philosophical and cultural divides and imposing them on other 
people. I would submit that for your consideration.
    I think what you do is important. I think that it is 
intimately related to national security, economic well being, 
as well as what is the call really in the hearts of most 
Americans to try to do something to help those who are in 
vulnerable situations.
    As we do that we develop relationships. We develop trust 
and that helps with communication. That breaks down barriers 
and that prevents the potential for conflict and it opens up 
the possibility for economic well being between different 
peoples. With that said, what works? What works best? What 
doesn't work?
    Dr. Shah. Thank you. We have restructured a number of our 
major strategies to focus on exactly that question. We want to 
invest in those things that work and move resources away from 
those things that don't. We have just unveiled a new education 
policy, for example, that is targeting 100 million children and 
ensuring that they get improved learning outcomes.
    For decades a lot of the investment and spending that has 
gone into development assistance and education has been 
somewhat effective but has not measured the educational 
attainment of the kids. By measuring that attainment and 
focusing and investing in those strategies whether it is 
teacher training or getting kids access to better material and 
curricula that work, we can demonstrate and document that we 
are getting better outcomes.
    That is one example. Across our health portfolio we are 
reinvesting our resources in things like vaccines and 
immunization, malaria prevention, HIV prevention, new TB 
diagnostic technologies that can bring down the cost of 
treatment and diagnosis because those things are, frankly, an 
order of magnitude more efficient in achieving the outcomes 
than the traditional way of doing business.
    A lot of the innovations we are trying to pursue across all 
of these areas are looking at what is more expensive and can we 
find new ways to provide services and help achieve the same 
outcomes at much lower cost.
    Just last week we launched a partnership with the Gates 
Foundation, Norway, the World Bank, and Canada where we 
leverage our dollars. For every dollar we put in we raised four 
from them. It is called Saving Lives at Birth and it focuses on 
developing new innovations that allow community health workers 
who are not paid.
    They are trained but not paid to in people's homes and in 
communities really help save lives in that critical 48 hours of 
birth and immediate life. Those are the kinds of innovations 
that we think can reduce the cost and get us better outcomes.
    Mr. Fortenberry. Which become all the more important in 
light of the fundamental purpose of this hearing to talk about 
constraints in the budget which are very, very real and we are 
all having to make very difficult decisions about priorities 
and how we are going to tighten the belt. It is unsustainable 
the pathway that we are on so we all have to embrace this 
reality and do what we can with limited resources. What doesn't 
work?
    Dr. Shah. Well, I would say there are some things that 
don't work. We have done, I think, far too much teacher 
training without measuring outcomes so we are reducing our 
investment in that area and focusing more on learning 
attainment. When we do things like try to provide health 
services through only hospitals, that is a very costly way to 
provide health services in the lower-income parts of the world 
and we should be looking for community-based solutions that are 
cheaper so we are shifting resources from hospitals to 
communities.
    Mr. Fortenberry. I am running out of time so I need to cut 
you off. So in that regard as well, do we make an attempt? 
Perhaps it has to be subtle at points and sensitive that this 
is a gift of the United States Government?
    Dr. Shah. We try to be aggressive in pointing out that 
these investments are from the American people. That is our 
tagline. The logo goes on everything we do and we demand real 
results. I think MCC----
    Mr. Fortenberry. Let us turn to Millennium Challenge right 
quick if you could answer the question as to what has worked 
and what hasn't worked because it is a new framework--I have 10 
seconds. It is a new framework for accountability and it is 
very fascinating. I think we are starting to get evidence.
    Mr. Yohannes. What makes MCC distinctive, so different from 
any other development agency that our approach to development 
is like a business? We do a very thorough----
    Chairman Ros-Lehtinen. Thank you. Thank you very much.
    Mr. Royce, the chairman on Subcommittee on Terrorism, 
Nonproliferation, and Trade is recognized.
    Mr. Royce. Thank you, Mr. Yohannes. Let me raise an issue 
on Millennium Challenge that I have been concerned about for 
some time and that is the $240 million contract with Senegal. I 
will give you just one of many of the issues that I have raised 
repeatedly with your agency and that is the fact that you have 
a 160-foot tall North Korean-built statue being shipped in by 
the 83-year-old President.
    The cost, I would guess, is around $50 million and he gets 
35 percent of that as a kickback. We are talking about the 
President of the country gets 35 percent of that as a kickback 
to a personal foundation. This is a guy who created a special 
ministry for his son in order to pay his son. We have a 
European diplomat who was given a gift of about $200,000 
walking out of the country before a loan came in the other 
direction.
    I just wonder. It is not just that our aid dollars freed up 
Senegalese funds to be used for a statue taller than the Statue 
of Liberty, taller than the Redeemer statue in Brazil. This 
thing is a colossus, North Korean art, sitting there. It is the 
fact that the North Korean regime got the money. Our U.S. 
taxpayers put money into Senegal and that frees up money for 
this kind of an operation.
    Frankly, you strip away everything else and we are 
essentially rewarding a guy who is helping fund the regime in 
North Korea, besides just the corruption that is going on 
there. I have written repeatedly, raised this issue with the 
Secretary of State, tried to get everybody to reevaluate the 
$540 million over in Senegal. I know we say we are bringing up 
these issues with him but he has extended his term to 7 years 
in office.
    Come on. Could you give me your take on what we are doing 
right now with President Wade in Senegal?, which is certainly 
moving in the wrong direction. I have been to Senegal. I was 
there back when it was moving the right direction. Right now we 
are doubling down on somebody who is back peddling as fast as 
humanly possible in terms of the rule of law.
    Mr. Yohannes. Thank you very much, Mr. Congressman. You 
know, in terms of the statue, I mean, those things happen. We 
are not happy about it but some of the poorest countries they 
seem to be doing something like that which is stupid but, 
nevertheless, that goes on.
    In terms of looking at the country as a whole, when you 
consider Senegal with other countries, primarily in the area of 
corruption, in the area of good governance, in the area of 
freedom of the press and economic policies and investment in 
people, they do score extremely well.
    Having said that, you know, a number of issues have come to 
us in the last couple months. In fact, there was an incident 
that happened a couple of months ago where President Wade 
exempted a couple of the ministries from procurement processes 
and we responded back and we worked in conjunction with the 
State Department, the World Bank, and others.
    We sent a message that if you decide to remove those 
exemptions that will suspend or terminate our compact and they 
reversed after they heard our complaint. It appears to be 
sometimes a problem but we are responding to it. We are making 
some changes. They are responding to us. After all, you know, 
they have about $500 million. They don't want to do that.
    Mr. Royce. I understand that but think on this, all right? 
As I said, once they were moving in the right direction. They 
had think tanks that were promulgating the right ideals. You 
brought out these facts. The facts I look at is how 
Transparency International sees it. They say that Senegal has 
fallen from No. 71 in '07 to 105 out of 178 countries, 105 from 
the list in their corruption ranking.
    In other words, they are not moving in the right direction. 
They are slipping about as fast as a country can slip. I would 
argue that at some point in time you have to send a message and 
you have got to send a message to other countries that you are 
serious.
    If Senegal isn't it, and if cutting this deal with the 
North Koreans to bring in a statue taller than the Statue of 
Liberty which 35 percent of the money gets kicked back to a 
personal foundation of President Wade, if he has a relationship 
with what he is doing with his son, if that isn't the red 
light, I don't know what is. I would really suggest to you what 
I have suggested in numerous blogs and letters----
    Chairman Ros-Lehtinen. Thank you.
    Mr. Royce [continuing]. And in meetings with the Secretary 
of State please reverse this action. Thank you.
    Chairman Ros-Lehtinen. Thank you.
    Judge Poe, the vice chair of the Subcommittee on Oversight 
and Investigations is recognized.
    Mr. Poe. Thank you, Madam Chair. Thank you both for being 
here. I want to make it clear that in your operation you are 
doing what Congress has commissioned you to do. I have a chart 
here that is furnished to us by the Department of Defense and 
the State Department. It is off their Web site. A very simple 
chart. All of the red represents countries that receive aid 
from the United States whether it be foreign aid and maybe 
military aid.
    The green represents those countries in the world that 
receive military aid from the United States. And those few 
countries that are in blue they receive no aid from the United 
States. As you can see, it is most of the countries in the 
world. There are 192 countries in the world give or take those 
last two who sometimes are countries and sometimes they are not 
countries but we give aid to most of those countries.
    I understand the reason. It is to promote humanitarian 
goals in the interest of the United States and some of those 
noble things. But it concerns me that we give aid to our 
``friends'' Chavez in Venezuela; that we give aid to Cuba, that 
we give aid to Russia and, of all things, we give aid to China, 
the country that controls most of our debt. And the other 
countries throughout the world receive some type of aid.
    Many of these, I would guess most of these countries, they 
don't even like us. They vote against our interest in the 
United Nations. As my friend Louie Gohmert says we don't need 
to pay people to hate us. They will do it on their own. Maybe 
there is some truth to that. It seems to me that maybe we 
should rethink the way that when we are talking about the 
budget and foreign affairs and the State Department that we 
allocate money.
    Maybe each of these countries should stand or fall on their 
own. As you know, we vote for foreign aid appropriations all 
the countries together in one piece of legislation whether it 
is Israel or whether it is some other country. I am a big 
supporter of Israel. I think that most Members of Congress are. 
I can't speak for them but I think most Members of Congress 
would want to appropriate aid to Israel.
    If we want to give aid to Israel, we have got to give it to 
all of these other countries as well. So maybe the time has 
some to let each of these countries stand or fall yearly on 
their own with an up or down vote. Each country in the State 
Department presents to us the arguments for, and maybe against, 
continuing aid for each country one at a time. Maybe that is 
our responsibility to rein in spending.
    Foreign aid, you mention that. If I mention that in my 
congressional district in Southeast Texas, people really just 
get irritated about that. I understand the percentage of it 
from the budget but people are concerned about foreign aid.
    Dr. Shah mentioned that we are helping educate people 
throughout the world. Well, we are at a time where many states 
are cutting back education so why are we giving money to 
countries to educate their kids when we are losing money, don't 
have as much money to educate our own? It is questions like 
that that I constantly get.
    Dr. Shah, I don't want to commit you but what do you think 
about that philosophy? Should we just let each country stand or 
fall on its own or should we continue the same process?
    Dr. Shah. Well, I would suggest and believe strongly that 
our assistance is part of our national security strategy. When 
you look at it in aggregate it is a very, very small investment 
that yields relatively higher returns. In education in 
Pakistan, for example, when we are able to get hundreds of 
thousands of kids in FATA and Waziristan and other dangerous 
parts of the countries in schools where they have an 
alternative to madrassas, that is an outcome that is good for 
our national security.
    Mr. Poe. But isn't it true that in Pakistan we have now 
issues with the Pakistan Government about giving safe haven to 
the Taliban and maybe some of the money that we are giving them 
is turning up in the hands of the bad guys? Doesn't that 
outweigh educating the kids in Pakistan?
    Dr. Shah. We have robust vetting and monitoring systems in 
our Pakistan program and in other programs around the world so 
that we can track where our resources have gone. I guess that 
is the second point which is we are not just writing checks to 
governments. A lot of this work, depending on where and under 
which circumstances, supports civil society, often supports 
democratic governance initiatives, supports the types----
    Mr. Poe. Excuse me, Dr. Shah. I want to reclaim my time 
with 16 seconds. Do you have an opinion about whether we should 
put it all in one big massive bill or split them up country for 
country regardless of what kind of aid it is?
    Dr. Shah. I think we should be focused on reform and 
results and think of this as part of our national security 
strategy and based on that, make relative tradeoffs across the 
entire portfolio.
    Chairman Ros-Lehtinen. Thank you.
    Mr. Poe. You cannot answer my question, or won't. Thank 
you, Madam Speaker.
    Chairman Ros-Lehtinen. Thank you. Thank you so much and I 
want to thank first our members for excellent, thought-
provoking questions. Thank you to our two wonderful panelists. 
We thank you for the time and we will move ahead and see where 
we can meet each other between the fiscal realities that 
confront us and the needs of our world. Thank you so much and 
the meeting is adjourned.
    [Whereupon, at 12:10 p.m., the Sub deg.Committee 
was adjourned.]
                                     

                                     

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     Material Submitted for the Hearing RecordNotice deg.



                               
                                 
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