[Senate Hearing 112-272]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-272
 
  STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 
                            FISCAL YEAR 2012

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

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   on

                                S. 1601

   AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF STATE, FOREIGN 
 OPERATIONS, AND RELATED PROGRAMS FOR THE FISCAL YEAR ENDING SEPTEMBER 
                    30, 2012, AND FOR OTHER PURPOSES

                               __________

                          Department of State
           United States Agency for International Development

                               __________

         Printed for the use of the Committee on Appropriations


   Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/
        committee.action?chamber=senate&committee=appropriations

                               __________




                  U.S. GOVERNMENT PRINTING OFFICE
64-618                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


                      COMMITTEE ON APPROPRIATIONS

                   DANIEL K. INOUYE, Hawaii, Chairman
PATRICK J. LEAHY, Vermont            THAD COCHRAN, Mississippi, Ranking
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
HERB KOHL, Wisconsin                 KAY BAILEY HUTCHISON, Texas
PATTY MURRAY, Washington             LAMAR ALEXANDER, Tennessee
DIANNE FEINSTEIN, California         SUSAN COLLINS, Maine
RICHARD J. DURBIN, Illinois          LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            LINDSEY GRAHAM, South Carolina
MARY L. LANDRIEU, Louisiana          MARK KIRK, Illinois
JACK REED, Rhode Island              DANIEL COATS, Indiana
FRANK R. LAUTENBERG, New Jersey      ROY BLUNT, Missouri
BEN NELSON, Nebraska                 JERRY MORAN, Kansas
MARK PRYOR, Arkansas                 JOHN HOEVEN, North Dakota
JON TESTER, Montana                  RON JOHNSON, Wisconsin
SHERROD BROWN, Ohio

                    Charles J. Houy, Staff Director
                  Bruce Evans, Minority Staff Director
                                 ------                                

    Subcommittee on State, Foreign Operations, and Related Programs

                  PATRICK J. LEAHY, Vermont, Chairman
DANIEL K. INOUYE, Hawaii             LINDSEY GRAHAM, South Carolina
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
BARBARA A. MIKULSKI, Maryland        MARK KIRK, Illinois
RICHARD J. DURBIN, Illinois          ROY BLUNT, Missouri
MARY L. LANDRIEU, Louisiana          DANIEL COATS, Indiana
FRANK R. LAUTENBERG, New Jersey      RON JOHNSON, Wisconsin
SHERROD BROWN, Ohio                  JOHN HOEVEN, North Dakota
                           Professional Staff

                               Tim Rieser
                             Nikole Manatt
                             Janet Stormes
                         Paul Grove (Minority)
                        Michele Wymer (Minority)

                         Administrative Support

                             Maria Veklich
                       LaShawnda Smith (Minority)


                            C O N T E N T S

                              ----------                              

                        Wednesday, March 2, 2011

                                                                   Page

Department of State: Secretary of State..........................     1

                        Tuesday, April 12, 2011

U.S. Agency for International Development........................    59


  STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 
                            FISCAL YEAR 2012

                              ----------                              


                        WEDNESDAY, MARCH 2, 2011

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:10 p.m., in room SD-126, Dirksen 
Senate Office Building, Hon. Patrick J. Leahy (chairman) 
presiding.
    Present: Senators Leahy, Mikulski, Lautenberg, Brown, 
Graham, Kirk, Blunt, Coats, Johnson, and Hoeven.

                          DEPARTMENT OF STATE

                        Office of the Secretary

STATEMENT OF HON. HILLARY RODHAM CLINTON, SECRETARY


             opening statement of senator patrick j. leahy


    Senator Leahy. Thank you all. I welcome the Secretary who 
probably feels like she is back as a Member of Congress with 
the amount of time she's spent on the Hill recently, but Madam 
Secretary, we all appreciate it, and it's very helpful to us.
    Each Member sitting to my left is new to the subcommittee, 
so I want to welcome all of you publicly, and I am sure Senator 
Graham will want to recognize you as we go ahead.
    Senator Graham and I work together on the Judiciary 
Committee--where his expertise has been indispensable. We run 
the Bipartisan National Guard Caucus and have traveled together 
to different parts of the world, some enjoyable and some about 
as miserable as you're ever going to see. He has unique 
knowledge as a former judge advocate general and I welcome him.
    The chairmen and ranking members of this subcommittee have 
usually worked to produce a bipartisan, usually almost 
unanimous bill. Senator McConnell and I did--when I was either 
chairman or ranking member, and Senator Gregg and I have and 
others will.
    I understand that Rich Verma is leaving and returning to 
practicing law. We'll miss you. We missed you when you left the 
Senate and went to the Department and we'll miss you now.
    Madam Secretary, the Congress, which has not yet finished 
work on the fiscal year 2011 budget, received yesterday the 
justification for the fiscal year 2012 budget. So my questions 
will probably straddle both.
    The House majority's proposed draft cuts your budget for 
the remainder of 2011. The impact of those cuts on the 
operations of our Embassies--which all Americans who travel, 
study, or work abroad depend on--will be severe. Every time 
there is a problem in a country, Americans in that country go 
first and foremost to the American Embassy. We saw that in 
Egypt and Libya. The impact of the House proposal on our 
national security programs from Afghanistan to Mexico will also 
be severe.
    The development of foreign markets for U.S. exports, which 
creates thousands of jobs here in the United States, and our 
influence in international organizations, are going to be 
affected by these cuts.
    We've all been fascinated by recent popular uprisings in 
Tunisia, Egypt, Libya, Iran, Yemen, and elsewhere. I think that 
the courage and determination of the people in these countries 
in overcoming generations of fear and apathy is extraordinary. 
It's inspiring, but it also raises the question: What comes 
next?
    In fact, in many ways, it's hard to see how the Government 
of Iran doesn't come out stronger as a result of the upheaval, 
and that concerns everybody here.
    The United States should be a strong voice for people 
living under repressive, corrupt regimes who are demanding the 
freedoms we often take for granted, and whose support we need 
in countering terrorism around the world.
    We've seen the power of the Internet, Facebook, Twitter, 
and other social media. We saw how the Mubarak regime tried to 
silence it and failed. We know how Iran rulers are cracking 
down on it.
    This subcommittee, since 2008--I mention this especially 
for our new members--has appropriated $50 million for programs 
to promote Internet access and circumvent government censorship 
around the world. It's one of the reasons why people have their 
voices heard now, and so I want to talk about how the State 
Department is using these funds.
    I think that your budget request is a far more responsible 
approach to the national security challenges we face than what 
we've seen in the other body's fiscal year 2011 proposal.
    We face multiple threats. We have important interests in 
the Middle East and South Asia and on every continent. China, 
our biggest competitor, is expanding its influence around the 
world, and we've got to be engaged if we're going to combat 
that. There's a global food crisis some seem oblivious to. We 
can't punt these challenges to the next generation.
    There are issues like human rights, transparent, 
accountable government, and the rule of law which is why I 
wrote the Leahy amendment a decade-and-a-half ago, and it was 
passed with bipartisan support.


                           prepared statement


    I'm going to put the rest of my statement in the record, 
turn it over to Senator Graham, and then to you, Madam 
Secretary, and we'll go to questions.
    [The statement follows:]
             Prepared Statement of Senator Patrick J. Leahy
    Welcome, Madam Secretary.
    Madam Secretary, the Congress has yet to finish work on the fiscal 
year 2011 budget and we only received yesterday the justification 
materials for part of your fiscal year 2012 budget request, so I 
suspect today's questions will straddle both.
    The House majority has proposed drastic cuts in your budget for the 
remainder of 2011. The impact of those cuts on the operations of our 
Embassies, which all Americans who travel, study, or work abroad depend 
on as we have been reminded of in Egypt and Libya; on national security 
programs from Afghanistan to Mexico; on the development of foreign 
markets for United States exports; and on our influence at the United 
Nations and other international organizations, would be dramatic.
    I hope, in addition to discussing your fiscal year 2012 budget 
request, that you will give us your reactions to the House continuing 
resolution.
    We have all been fascinated by recent popular uprisings in Tunisia, 
Egypt, Libya, Iran, Yemen, and elsewhere. The courage and determination 
of the people of these countries in overcoming generations of fear and 
apathy is as extraordinary as it is inspiring.
    At the same time, it is hard to see how the Government of Iran does 
not come out stronger as a result of all this upheaval, which deeply 
concerns all of us.
    The United States should be a strong voice for people living under 
repressive, corrupt regimes who are demanding the freedoms we often 
take for granted, and whose support we need in countering terrorism. We 
have seen the power of the Internet, Facebook, Twitter, and other 
social media, and how the Mubarak regime tried, and failed, to silence 
it, and how Iran's rulers are cracking down.
    Since 2008, this subcommittee has appropriated $50 million for 
programs to promote Internet access and circumvent government 
censorship. You have spoken about this and I hope you will tell us how 
the State Department is using these funds.
    Turning to fiscal year 2012, I believe your budget request is a far 
more responsible approach to the national security challenges we face 
than what the House has proposed in its fiscal year 2011 continuing 
resolution. While the mood in the Congress is to cut spending, the age 
old refrain ``penny wise and pound foolish'' could not be more 
applicable.
    We face threats and have important interests, not only in the 
Middle East and South Asia, but on every continent. China, our biggest 
competitor, is expanding its influence in every hemisphere. There is a 
global food crisis that our friends in the House seem oblivious to, and 
their answer to climate change is to punt to the next generation. We 
face huge challenges in our own hemisphere.
    Our priorities also must include promoting human rights and 
tolerance, transparent and accountable government, and the rule of law. 
That is why I wrote the Leahy amendment almost a decade and a half ago.
    For those who question the need for the funds you are requesting, 
there are many other compelling examples.
    We can begin with global health--preventing outbreaks of deadly 
viruses and other infectious diseases that can quickly become pandemics 
that kill millions of people including Americans.
    Or international terrorism, organized crime and other trans-
national crime, which are growing threats to Americans and the citizens 
and governments of other nations, especially democratic governments 
whose institutions are weak and prone to corruption.
    There is the pressing need to respond to rising temperatures, 
melting glaciers, growing populations of hungry people who need energy 
and jobs, and whose access to land and safe water is shrinking. These 
are elements of a global train wreck in the making.
    We know this budget will not solve every problem in the world, but 
it will at least ensure that the United States is equipped to play a 
leadership role--something that some of our friends in the House seem 
unconcerned about.
    Today more than ever we recognize the need for fully staffed 
Embassies, effective diplomacy, and strong alliances. We greatly 
appreciate the work you are doing. And we again commend the dedicated 
men and women of the State Department and USAID who are serving America 
here at home and at posts around the world, often at great personal 
risk.

              OPENING STATEMENT OF SENATOR LINDSEY GRAHAM

    Senator Graham. Well, thank you, Mr. Chairman. I'm honored 
to be on the subcommittee. This is a change for me, and it's 
something I've been looking forward to for a very long time.
    And we have worked together on the Judiciary Committee. We 
have good contests and we work together well, and that's what 
the Senate is supposed to do, sometimes fuss and sometimes 
fight, but sometimes get something done.
    Now, on my side, Mr. Chairman, you mentioned the 
subcommittee members. We really have a rich resource for the 
Nation here.
    Senator Kirk is a Naval reservist who is going to be in 
charge of piracy. He doesn't know that yet, but he has been 
involved in international security matters for a very long time 
and is a really unique guy to have in the Senate.
    Roy was one of the leaders in the House and he's going to 
tell us how to deal with the House, when it comes to finding 
the difference between $14 billion----
    Senator Mikulski. That does require treaty negotiations.
    Senator Graham. Yes. Well, I think Roy's your man. He knows 
how to get things done.
    And we've got a Governor. I really look forward to hearing 
your view of what it's like in the prairieland to talk about 
foreign operations and foreign aid.
    We've got a businessman, who just got mad, very 
successfully, ran for the Senate and is here for all the right 
reasons, and that's Senator Johnson. I'd very much like your 
view of how this fits into the overall problems we have as a 
Nation, where we should be going in terms of foreign 
operations.
    I mention Dan Coats last for a reason. He was an 
ambassador. He's actually lived in the world of which we're 
talking about, who represented our country in Germany. Just 
within a few days of arriving, 9/11 happened, and I think he 
can really share with the members of this subcommittee what 
it's like to represent America abroad, particularly when you're 
at war.
    So we have a good team over here, and I'm very proud of my 
colleagues, and, Mr. Chairman, working together, we're going to 
defend America. And it's my view this account is as much of 
winning the war as any other account that we will deal with.
    Secretary Clinton said something when we were meeting that 
just, I think, we have to come to grips with. She said that 
everybody in the world doesn't believe America can't do 
anything that needs to be done and we don't have money 
problems.
    I've found that to be true. How many times have you 
traveled overseas where somebody in a foreign government will 
ask you for money, never believing that we can't provide the 
money or we can't provide the resources? Because, from their 
point of view, America is the group of people--even though they 
won't say this publicly, privately--that can fix anything.
    Well, I like to think of ourselves in good terms, but we 
can't fix everything, and we have money problems. So part of 
the challenge is to educate our allies throughout the world 
that we're hurting here at home and we're going to have to do 
more with less, that we still have a good heart and we want to 
be involved and not leave vacuums that would be filled in by 
bad people, but we've got to get our fiscal house in order.
    And we, on our side particularly, have to go home and 
convince people who are hurting--who've lost their jobs and 
budgets have been cut and they don't know if they're going to 
get the next paycheck, and many of them are living on 
unemployment benefits--that spending money overseas really does 
matter.
    And so that's the challenge, the tale of two people, the 
world at large, who believes America has an unlimited ability 
to help and we have no budget problems. People here at home 
have to be shown why it matters to be involved.
    If we were not involved in Egypt for 30 years with their 
army, God knows what would have happened. And that is not 
popular to talk about on the stump, but it is a reality of the 
world in which we live in. How we help the Libyan people, the 
Tunisian people will matter, because if we don't help them, 
somebody else will.
    So I'll look forward to working with you, Mr. Chairman, to 
try to articulate to the American taxpayer, who's under siege, 
that we have to stay involved in the world, and General 
Petraeus believes that the civilian side of the military-
civilian partnership is more important than ever, that we 
cannot win in Iraq if we don't keep the civilian component 
strong, because you'll be in the lead. And the civilian surge 
in Afghanistan is as important as any brigade we're going to 
send.
    So we have to convince the world that we have limited funds 
here on our own people to spend money wisely. I cannot stress 
enough, from my point of view, that the foreign operations 
account can make the difference between a safe America and an 
at-risk America.
    Can it be reduced? Can it be reformed? Yes. But if you 
don't see it as a national security tool then I think we're 
missing the mark as a nation. So I look forward to working with 
you.
    Senator Leahy. Thank you very much, and, Secretary Clinton, 
please go ahead.

            SUMMARY STATEMENT OF HON. HILLARY RODHAM CLINTON

    Secretary Clinton. Thank you very much, Chairman Leahy and 
Ranking Member Graham. It's wonderful being back here in the 
Senate and having this opportunity to discuss these important 
issues with you, and I welcome all the new Members to the 
Senate. I hope that they enjoy their time here as much as I 
enjoyed my 8 years. I'm looking forward to working with this 
subcommittee because there is an enormous amount that we have 
to do together.
    I recently took part, on Monday, in emergency meetings in 
Geneva to discuss the unfolding events in Libya, and I'd like 
to begin by offering you a brief update.
    We have joined the Libyan people in demanding that Colonel 
Gaddafi must go now without further violence or delay, and we 
are working to translate the world's outrage into actions and 
results.
    Marathon diplomacy at the United Nations and with our 
allies has yielded quick, aggressive steps to pressure and 
isolate Libya's leaders. We welcomed yesterday's decision to 
suspend Libya from the Human Rights Council, as I had urged a 
day earlier.
    USAID is focused on Libya's food and medical supplies and 
is dispatching two expert humanitarian teams to help those 
fleeing the violence into Tunisia and Egypt. Our combatant 
commands are positioning assets to prepare to support these 
critical civilian missions, and we are taking no option off the 
table, so long as the Libyan Government continues to turn its 
guns on its own people.
    The entire region is changing, and a strong, strategic 
American response will be essential. In the years ahead, Libya 
could become a peaceful democracy or it could face a protracted 
civil war or it could fall into chaos. The stakes are high.
    This is an unfolding example of using the combined assets 
of diplomacy, development and defense to protect our interests 
and advance our values. This integrated approach is not just 
how we respond to the crisis of the moment. It is the most 
effective and most cost-effective way to sustain and advance 
our security interests across the world, and it is only 
possible with a budget that supports all the tools in our 
national security arsenal.
    Now, I agree that the American people today are justifiably 
concerned about our national debt, but I also believe that we 
have an opportunity, as well as an obligation, to make 
decisions today that will keep us safer and more secure and 
more prosperous into the future.
    In Iraq, almost 100,000 troops have come home and civilians 
are poised to keep the peace. In Afghanistan, integrated 
military and civilian surges have set the stage for our 
diplomatic surge to support an Afghan-led reconciliation that 
could end the conflict and put al Qaeda on the run. We have 
imposed the toughest sanctions yet to rein in Iran's nuclear 
ambitions. We have re-engaged as a leader in the Pacific and in 
our own hemisphere. We have signed trade deals to promote 
American jobs and nuclear weapons treaties to protect our 
people. We worked with northern and southern Sudanese to 
achieve a peaceful resolution and prevent a return to civil 
war.
    And we are working to open political systems, economies, 
and societies at this remarkable moment in history in the 
Middle East, where we are trying to support orderly, peaceful, 
irreversible democratic transitions.
    Our progress is significant, but our work is ongoing. We 
believe, obviously, that these missions are vital to our 
national security and now would be the wrong time to pull back.
    The fiscal year 2012 budget we discuss today will allow us 
to keep pressing ahead. It is a lean budget for lean times. I 
launched the first ever Quadrennial Diplomacy and Development 
Review (QDDR) following on my experience when I served with 
Senator Graham on the Armed Services Committee, what the 
Pentagon had done with its QDDR. So this QDDR helped us 
maximize the impact of every $1 we spend. We scrubbed the 
budget. We made painful, but responsible cuts.
    We cut economic assistance to Central and Eastern Europe, 
the Caucasus and Central Asia by 15 percent. We cut development 
assistance to more than 20 countries by more than one-half.
    And this year, for the first time, our request is divided 
into two parts. Our core budget request is for $47 billion, 
which supports programs and partnerships in every country, but 
North Korea. It is essentially flat from 2010 levels.
    The second part of our request funds the extraordinary, 
temporary portion of our war effort that we are responsible for 
in the same way the Pentagon's request is funded, in a separate 
Overseas Contingency Operations account, known as OCO.
    Instead of covering our war expenses through supplemental 
appropriations, we are now taking a more transparent approach 
that reflects our fully integrated civilian military effort on 
the ground. Our share of the President's $126 billion request 
for these exceptional wartime costs is $8.7 billion.
    Let me walk you through a few of these key investments. 
First, this budget funds vital civilian missions in 
Afghanistan, Pakistan, and Iraq.
    In Afghanistan and Pakistan, al Qaeda is under pressure as 
never before. Alongside our military offensive, we are engaged 
in a major civilian effort to help build up the governments, 
economies, and civil societies of those countries in order to 
undercut the insurgency.
    These two surges set the stage for a third, a diplomatic 
push in support of an Afghan process to split the Taliban from 
al Qaeda, bring the conflict to an end and help stabilize the 
entire region.
    Our military commanders, as you just heard, including 
General Petraeus, are emphatic that they cannot succeed without 
a strong civilian partner. Retreating from our civilian surge 
in Afghanistan with our troops still in the field would be a 
grave mistake.
    Equally important is our assistance to Pakistan, a nuclear-
armed nation with strong ties and interests in Afghanistan. We 
are working to deepen our partnership and keep it focused on 
addressing Pakistan's political and economic challenges as well 
as our shared threats.
    And after so much sacrifice in Iraq, we have a chance to 
help the Iraqi people build a stable, democratic county in the 
heart of the Middle East. As troops come home, our civilians 
are taking the lead helping Iraqis resolve conflicts peacefully 
and training police.
    Shifting responsibilities from our soldiers to our 
civilians actually saves taxpayers a great deal of money. The 
military's total OCO request worldwide will drop by $45 billion 
from 2010, while our costs for the Department of State and 
USAID will increase by less than $4 billion. Every business 
owner I know would gladly invest $4 to save $45.
    Second, even as our civilians help bring today's war to a 
close, we are working to prevent tomorrow's. This budget 
devotes more than $4 billion to sustaining a strong U.S. 
presence in volatile places. In Yemen, it is helping to provide 
security, development and humanitarian assistance to deny al 
Qaeda a safe haven. It focuses on those same goals in Somalia. 
It is helping northern and southern Sudanese chart a peaceful 
future, helping Haiti to rebuild. And it proposes a new global 
security contingency fund that would pool resources and 
expertise with the Defense Department to quickly respond to 
challenges as they emerge.
    This budget also strengthens our allies and partners. It 
trains Mexican police to take on violent cartels and secure our 
Southern Border. It provides nearly $3.1 billion for Israel and 
supports Jordan and the Palestinians. It does help Egypt and 
Tunisia build stable and credible democratic systems. And it 
supports security assistance to more than 130 nations.
    As Senator Graham said, over the years, we've seen great 
ties created because of that funding. We did help to train a 
generation of Egyptian officers who refused to fire on their 
own people.
    Third, we are making targeted investments in human 
security. We have focused on hunger, disease, climate change 
and humanitarian emergencies, because they threaten not only 
the security of individuals, but they are the seeds of future 
conflict.
    Our largest investment is in global health programs, 
including those launched by President George W. Bush. These 
programs stabilize entire societies that have been devastated 
by HIV/AIDS, malaria and other illnesses. They save the lives 
of mothers and children and halt the spread of deadly diseases.
    And, yes, global food prices are approaching an all-time 
high, and 3 years ago, this led to protests and riots in dozens 
of countries. Food security is a cornerstone of global 
stability, and we, under our policy, are helping farmers grow 
more food, drive economic growth, and turn aid recipients into 
trading partners.
    And climate change threatens food security, human security 
and national security. So our budget builds resilience against 
droughts, floods and other weather disasters, promotes clean 
energy, and preserves tropical forests.
    Fourth, we're committed to making our foreign policy a 
force for domestic economic renewal. We are working 
aggressively to promote sustained economic growth, level the 
playing field and open markets to create jobs here at home.
    To give you just one example, our economic officers in 
Vietnam helped Boeing secure a $1.5 billion contract for eight 
787 aircraft to be assembled in North Charleston, South 
Carolina. And I personally lobbied for that, Senator.
    Fifth and finally, this budget funds the people and the 
platforms that make everything possible that I've described. It 
allows us to sustain diplomatic relations with 190 countries. 
It funds political officers defusing crises, development 
offices spreading opportunity, economic officers who wake up 
every day thinking about how to put Americans back to work.
    Several of you have asked the Department about the safety 
of your constituents in the Middle East. Well, this budget 
helps fund the consular officers who evacuated more than 2,600 
people from Egypt and Libya and nearly 17,000 from Haiti. They 
issued 14 million passports last year and served as our first 
line of defense against would-be terrorists seeking visas to 
enter our country.
    At the same time, I'd like to say just a few words about 
funding for the rest of 2011. As I told Speaker Boehner and 
Chairman Rogers and many others, the 16 percent cut for State 
and USAID that passed the House last month would be devastating 
to our national security.
    It is no longer possible in the 21st century to say that 
you are walling off national security by going after non-
defense discretionary spending. We are so much more integrated 
and interdependent, and it would force us to scale back 
dramatically on critical missions that are absolutely supported 
by Secretary Gates, Admiral Mullen, General Petraeus, and 
others.
    Now, there have always been moments of temptation in our 
country to resist obligations beyond our borders, but each time 
we shrink from global leadership events summon us back to 
reality. Now, we saved money in the short term when we walked 
away from Afghanistan after the cold war, but those savings 
came at an unspeakable cost, one we are still paying 10 years 
later in money and lives.
    We have, over generations, enabled Americans to grow up 
successful and safe because we've led the world, we've invested 
resources to build democratic allies and vibrant trading 
partners, and we did not shy away from defending our values, 
promoting our interests and seizing opportunities.
    Having now traveled more than any Secretary of State in our 
history, I know that the world has never been in greater need 
of the qualities that distinguish us, our openness and 
innovation, our determination, our devotion to universal 
values. Everywhere I travel, I see people looking to us for 
leadership. This is a source of strength, a point of pride and 
an opportunity for the American people. But it is an 
achievement, not a birthright. It requires resolve, and it 
requires resources. And I look forward to working closely with 
you as we try to keep our country safe and maintain American 
leadership in the world.

                            LEAHY AMENDMENT

    Senator Leahy. Thank you very much, Madam Secretary. 
Senator Graham and I kind of whispered to each other that we 
don't know how you handle the jet lag with the amount you 
travel, but I feel fortunate this country has you representing 
us in the parts of the world where you go.
    I'm going to ask a question mostly for the record about the 
use of the Leahy amendment. It's been the law for more than 13 
years. It says if a Secretary of State has credible evidence 
that a unit of a foreign security force has committed a gross 
violation of human rights, U.S. aid to that unit stops unless 
the foreign government brings the responsible individuals to 
justice. We want to make sure that they are held accountable 
and that U.S. assistance is not used to commit a crime.
    Recently, we have seen on the news the use of tear gas, 
clubs, rubber bullets and live ammunition against peaceful 
protestors in different parts of the world. I'm not going to go 
into all the countries where this would apply, but just look at 
the Middle East and South Asia--countries where aid is 
contingent upon the Leahy Amendment in, among others, 
Afghanistan, Bahrain, Egypt, Israel, Jordan, Iraq, Tunisia, 
Morocco, Lebanon, and Pakistan.
    So I ask--you can provide this information later, but I'd 
like it within a week--have any military or police units in 
those countries I listed been deemed ineligible for U.S. 
assistance under the Leahy amendment?
    Secretary Clinton. Yes, Sir. We will do that.
    Senator Leahy. In Libya, the issue is not whether Muammar 
Gaddafi's regime will end, but when and how it ends and how 
many people are going to die needlessly before then.
    Some Members of Congress have urged the administration to 
provide weapons to the Libyan opposition. I understand the 
sentiment, but I'm not quite sure who the Libyan opposition is. 
They have a number of different factions and tribes. Some seem 
loyal to Gaddafi. Some are opposed. Some seem to be trying to 
save their own necks and some seem opportunistic.
    How do we go about arming these people, and know who to 
arm? Also, what's the administration's position on a NATO-
enforced, no-fly zone over Libya?
    Secretary Clinton. Well, Senator, I think that all of these 
matters are under active consideration, but no decisions have 
been made, and for good reason, because it's not at all clear 
yet what the situation demands.
    We are actively reaching out, for example, to Libyans who 
are working to bring down the Gaddafi regime. We only set up 
our Embassy in 2009. We did not have relations, as you know, 
for many years with Libya. We are working to understand who is 
legitimate, who is not.
    But it is premature, in our opinion, to recognize one group 
or another. We have to keep our focus, at this point, on 
helping the Libyan people.
    And I think it's important to recognize that there is a 
great deal of uncertainty about the motives, the opportunism, 
if you will, of people who are claiming to be leaders right 
now. I think we have to be focusing on the humanitarian mission 
and then gathering information as we can.
    With respect to the no-fly zone, we have been discussing 
that with a lot of our allies and are looking at it, but there 
are many, many challenges associated with it.
    So, at this time, we're focusing on how we can get medical 
supplies and food in to the people who are in safe enough zones 
that it can be delivered to assist them as they try to rid 
themselves of this regime.

                   INTERNATIONAL CRIMINAL COURT (ICC)

    Senator Leahy. The United Nations Security Council, in a 
unanimous vote, imposed sanctions against Libya, which I 
applaud. The ICC will conduct an investigation for possible 
prosecution of the Gaddafi regime for crimes against humanity.
    The United States is not a member of the ICC. There's 
actually a prohibition in law, which I did not support, I might 
say, on U.S. support for the International Criminal Court.
    If they were to ask the United States for information 
during an investigation so they could prosecute Gaddafi, his 
family or those around him, would we be able to provide that 
information?
    Secretary Clinton. We believe so, Senator. In fact, the ICC 
announced today they would be opening up an investigation file 
on Colonel Gaddafi and those around him.
    We also have our own interest in pursuing an American 
investigation regarding Pan Am 103. Some of the comments that 
have been made by some of the Libyan officials that they know 
that Gaddafi personally ordered the bombing of Pan Am 103, and, 
as a Senator from New York, I represented many of the families 
of victims because there were many from Syracuse University.
    So in addition to supporting the ICC where we can, we are 
reaching out through the FBI and the Department of Justice to 
see what else we can do to pursue justice for the victims of 
Pan Am 103.

                         OPEN AND FREE INTERNET

    Senator Leahy. I don't want to go beyond my time, but you 
recently gave a speech at George Washington University. You 
talked about the importance of protecting access to an open and 
free Internet. Again, I agree with you. And you also spoke 
about that a year ago.
    Congress has provided $50 million for efforts to keep it 
open. Twenty-two-million dollars of that has been spent. Is 
there a clear strategy for supporting Internet freedom and 
should we continue to fund that through State or other relevant 
agencies, including the Broadcasting Board of Governors?
    Secretary Clinton. Well, Senator, we are very committed to 
this. I've given two speeches on it. I've made it a high 
priority within the Department. We have awarded more than $20 
million in competitive grants through an open process, 
including evaluation by technical and policy experts.
    This year, we will award more than $25 million in 
additional funding, and we're taking what you might call a 
venture-capital-style approach. We're supporting a portfolio of 
technologies, tools and training, because, frankly, we don't 
know what will work best. This is a pretty new field.
    Senator Leahy. Fast-changing field, too.
    Secretary Clinton. Yes, and we, I have all these young tech 
experts who are doing this. So I'm just repeating what they 
tell me, but we are moving as fast as we can to deal with 
situations that are totally unprecedented.
    When Egypt shut down the Internet, nobody had ever done 
that before. And then, you know, some bright young people 
figured out how to get around that with voicemail on cell 
phones. So we are in a real race on behalf of openness for the 
Internet versus those who wish to control it and limit its 
openness.
    So I think we have moved as fast as we responsibly could 
and are funding what we think of as the best bets that will 
actually produce the best results.
    Senator Leahy. Thank you. Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    Madam Secretary, I think what you've done is going to 
become legendary, and the person who follows you should not try 
to duplicate this. It's not good for your health to constantly 
be in the air. I cannot tell you how I am impressed with your 
personal energy and the engagement you've offered on behalf of 
our country, and I really do appreciate it. I think we all are 
amazed at your work ethic.

                                  IRAN

    A couple of years ago, the young people took to the streets 
in Iran. They were met with a very brutal response, and they 
were upset about the election, which I think most of us would 
agree was probably not free, fair, and transparent. Looking 
back, do you think we missed an opportunity there?
    Secretary Clinton. You know, Senator, we spoke out at the 
time, and we were also not only conscious of but advised by 
people from within and outside of Iran that it was very 
important for them not to be seen as though they were in any 
way directed by, or affiliated with the United States and that 
this needed to be viewed as an indigenous Iranian movement.
    So I think we struck the right balance, but, obviously, 
what we have seen in the year-and-a-half or so since is the 
brutality of the Iranian regime, its absolute commitment to 
repressing any kind of opposition.
    And I have been upping, certainly, my rhetoric. We have, 
under the legislation passed by the Congress, the ability to 
designate human-rights abusers. We've been using that very 
dramatically.
    Senator Graham. Have we designated anybody in Iran as being 
a human-rights abuser?
    Secretary Clinton. Yes, Sir, we have. We have designated a 
number of them. I just designated some more of them a few days 
ago.
    Senator Graham. What is the highest official who's been 
designated?
    Secretary Clinton. I think--I don't remember--I'll get you 
all of that. The prosecutor general was somebody we just 
designated.
    Senator Graham. Would you consider Gaddafi a human-rights 
abuser?
    Secretary Clinton. I would consider Gaddafi a human-rights 
abuser, and I would consider the leadership of Iran as abusing 
human rights.
    Senator Graham. Including President Ahmadinejad?
    Secretary Clinton. I think that there is certainly evidence 
of that, yes, Sir.
    Senator Graham. Well, let's drill down to this. The idea of 
a no-fly zone probably is complicated, but it makes sense to me 
to make sure that the Libyan people will not have to face air 
power and that we have the ability to do that.
    I understand the concerns about just passing out weapons to 
the Libyan opposition. You don't know who you're passing them 
out to.
    Would it be smart if there was another uprising in Iran 
where the people took to the streets that we stand behind the 
people in the streets and impose a no-fly zone in Iran, if they 
used air power to oppress their own people or is that a 
different situation?
    Secretary Clinton. Well, Senator I think that I'm not going 
to speculate on a hypothetical.
    Senator Graham. Okay. Fair enough.

                            OIL FROM CANADA

    Let's talk about oil. Gas prices are going to go up to $4 a 
gallon. I think we're well on our way. Are you familiar with 
the oil sands in Canada?
    Secretary Clinton. Yes, Sir.
    Senator Graham. And the pipeline that's being proposed to 
be built from Canada to Texas, I think, Louisiana?
    Secretary Clinton. Yes, Sir.
    Senator Graham. I've been told that the second-largest-
known deposit of oil is the oil sands in Canada and that it is 
equal to or greater than Saudi Arabia and Iran, and there's 
some problem with the pipeline.
    What's your view of the pipeline? Should America be trying 
to receive this oil from Canada?
    Secretary Clinton. Well, Senator, since my Department bears 
the ultimate responsibility for making a recommendation on the 
pipeline, I am not able, at this time, to express an opinion.
    Senator Graham. Are you generally supportive of receiving 
more oil from Canada and less from the Middle East?
    Secretary Clinton. I am generally supportive of receiving 
more oil from Canada. I am absolutely supportive of us doing 
more in energy efficiency and renewables and looking for clean 
ways to use our own resources as well.

                   TROOP WITHDRAWAL AND STATE'S ROLE

    Senator Graham. Well, let's go to war zones. Now, in Iraq, 
by the end of the year, according to the agreement negotiated 
by the Bush administration, all American troops are supposed to 
withdraw by 2011. Is that correct?
    Secretary Clinton. That's correct.
    Senator Graham. Now, come 2012, there's a lot still to be 
done in Iraq, and you will be the lead organization. Is that 
correct?
    Secretary Clinton. That's right, Sir.
    Senator Graham. That is a major obligation.
    Secretary Clinton. Yes, it is.
    Senator Graham. Probably never undertaken in the history of 
the State Department. What would it take for you to safely and 
effectively do your job? Are you going to have to build a State 
Department army to provide security? How do you get around? And 
if the Iraqis ask for some American troops, at their request, 
to stay behind to provide force protection, training, 
intelligence gathering, and logistical support, would you 
believe it would be wise for us to agree to some level of troop 
presence in 2012?
    Secretary Clinton. Well, Senator, first let me say it is 
unprecedented. We have been planning, as a State Department, 
since the Bush administration. There was not only a Status of 
Forces Agreement signed, but also a strategic framework 
agreement signed, and, in that, in the Bush administration, we 
agreed with the Iraqi Government that we would provide a 
significant presence, we would continue to provide support for 
police training and other functions.
    Senator Graham. Are you worried about the safety of your 
people----
    Secretary Clinton. Yes, Sir. Yes, Sir, we are worried.
    Senator Graham. I am, too.
    Secretary Clinton. We are worried.
    Senator Graham. How many people would you envision being in 
Iraq to do the jobs that you'll be tasked to do?
    Secretary Clinton. I think we're looking at thousands.
    Senator Graham. I mean like more than 10,000?
    Secretary Clinton. More than 10,000, yes.
    Senator Graham. And we've got to realize, as a 
subcommittee, we're going to have 10,000 American citizens, all 
civilians, trying to do business in Iraq, all over the place, 
with no troops.
    Secretary Clinton. Well, in fact, we have a total of about 
17,000 civilians and the great proportion of those will be 
private security contractors.
    Senator Graham. And that is basically a private army 
replacing the American military. So I'd like us to think long 
and hard as a Nation whether that make sense. You being in the 
lead makes perfect sense.
    Now, let's move quickly to Afghanistan in 42 seconds. 
You're negotiating a strategic framework agreement with the 
Afghan Government. Is that correct?
    Secretary Clinton. We call it a strategic partnership 
dialogue, but that's what it is.
    Senator Graham. Okay. And the surge of military forces has 
an equivalent civilian surge, is that correct?
    Secretary Clinton. Yes, Sir.
    Senator Graham. General Petraeus has told me, you, and 
everyone else he cannot win the fight in Afghanistan without 
you, USAID, Department of Agriculture, and Department of 
Justice. Is that correct?
    Secretary Clinton. That's right.

                              JOINT BASING

    Senator Graham. Now, do you think it would be wise for this 
country if the Afghans made a request, as part of this 
negotiation, to have joint basing past 2014, where they request 
our presence, where there would be a joint basing arrangement 
with American air power and special forces capability to ensure 
that we maintain the gains that we've fought so hard, as a 
signal to the region that America is not leaving this place in 
a helpless situation? What would be your view of such a 
request?
    Secretary Clinton. Well, Senator, it's not only the United 
States, but NATO----
    Senator Graham. Absolutely.
    Secretary Clinton [continuing]. At the Lisbon Summit made a 
commitment that we will be supportive of the Afghans after 2014 
when our combat mission ends.
    There are many ways to achieve that. We have ruled out 
permanent American bases, but there can be other ways where we 
provide support for the Afghans.
    Just as you referenced with the Iraqis, they have not asked 
us for anything, but they have huge gaps in their capacity and 
they are in a very dangerous neighborhood, so they may well 
come to ask.
    But that's a very different situation, because, then, we 
have fulfilled our obligations. Our combat troops have done 
their duty, some to the greatest possible sacrifice. And, now, 
it is a nation asking for the United States' continuing 
support, and that will be up to this Congress and this 
administration to evaluate.
    Senator Leahy. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman----
    Senator Leahy. And then we'll go to Senator Kirk. I'm going 
back and forth in the order that Senators arrived.
    Senator Brown. Thank you, Mr. Chairman. And, Madam 
Secretary, welcome. It's nice to see you.

                              LABOR RIGHTS

    Want to talk about labor rights. The Obama administration 
announced that the United States would use the labor chapter of 
the Central American Free Trade Agreement, which, as you 
remember, passed the House in a late-night vote by only one or 
two votes, and passed the Senate a bit more comfortably.
    Many were concerned about already violations of labor laws 
and other reasons, other reservations some had about the 
Central American Free Trade Agreement.
    To its credit, the Obama administration set the State 
Department working with the Labor Department; have approached 
Guatemala on enforcement of this.
    It has been 6 months since the formal consultations with 
Guatemala began. The Government of Guatemala has not taken 
steps to remedy its failures to enforce labor laws. The 
complaint remains unresolved. Is the administration proceeding 
to some kind of arbitration with Guatemala?
    Secretary Clinton. Well, I informed the foreign minister in 
our last meeting last month that we were going to have to 
pursue our remedies because they have failed to respond in a 
satisfactory way.
    Senator Brown. Putting aside Guatemala for a moment, does 
that mean that our trade agreements, labor laws are not as--
either as strong or as enforceable as they might be?
    Secretary Clinton. No. I think that that may be true in 
some cases, not in other cases. But, certainly, we have been 
trying to work with the Government of Guatemala to resolve this 
matter, short of mediation, short of trying to use the remedies 
that are available to us, and we have not been satisfied. So we 
are looking at going to the next step.
    Senator Brown. Again, putting aside Guatemala, are there 
efforts, in conjunction with the Department of Labor, for those 
two arms of the U.S. Government to look at all of these trade 
laws that we have passed here, understanding that the 
reluctance of many of us to vote for trade agreements is based 
on environmental issues, in some cases, shift of power to 
private corporations away from democratically elected 
governments, but also labor law itself? Are there sort of 
ongoing efforts by State and by Labor to look at potential 
labor-law violations with whether it's a bilateral or 
multilateral trading partner through free trade agreements?
    Secretary Clinton. Yes, and I think this is a very 
important issue that often doesn't get enough attention in a 
strategic context. And by that I mean, in and of itself, the 
abuse of human beings in labor situations, child labor, other 
kinds of conditions that are just not acceptable, need to be 
addressed, and we have to get smarter about that, not only in 
what we do, but internationally.
    But, also, if you looked at what happened in Tunisia and, 
to some extent, what happened in Egypt, the secular opposition 
is coming out of the trade-union movement.
    In Tunisia, the best organized group, other than what is 
clearly going to be a well-organized Islamic political 
presence, will be trade unions.
    In Egypt, the best organized group; other than the Muslim 
Brotherhood, are trade unions.
    We supported trade unions in Poland. That's how we got 
Solidarity. We have supported trade unions in other areas, but 
then we stopped doing it as a country. And I think we've got to 
be smart strategically about what are the levers that can best 
be employed to help create indigenous, organized centers of 
power and influence that are not going to be prey to ideology 
and radicalism.
    And I think that going back to what we did in the 1970s and 
the 1980s in supporting trade unions in a lot of these emerging 
democracies is very much in our interests.
    Senator Brown. You might say it's also happening in Madison 
and Columbus and Trenton, but that would be a whole other 
issue.
    Let me shift to----
    Secretary Clinton. Politics.

                           INFECTIOUS DISEASE

    Senator Brown. Yes. Let me shift to something else, 
something that Chairman Leahy has been so very involved in and 
that is--and Senator Durbin--and that is infectious disease in 
the developing world.
    There's a new diagnostic tool called GeneXpert, X-P-E-R-T, 
which can detect drug resistance, identifying tuberculosis in 
people living with HIV/AIDS. Most people that die of HIV/AIDS--
I believe, most people, well more than 50 percent--in the 
developing world are actually dying from something like 
tuberculosis, often drug-resistant tuberculosis.
    This GeneXpert can deliver results in about 90 minutes, all 
clear advantages over the standard microscope method which was 
developed literally 100 years ago. I mean, we haven't had that 
much--except for some of the antibiotics--haven't had that much 
progress in tuberculosis (TB).
    Fulfilling the administration's $4 billion pledge, the 
Global Fund will be critical to financing the rollout of this 
diagnostic.
    Talk to us, just for a moment, if you would, how the 
administration will use its resources to capitalize on the 
opportunities for this new diagnostic for TB.
    Secretary Clinton. Well, that's the kind of opportunity 
that we need to be seizing, but, unfortunately, Senator, under 
the fiscal year 2011 spending bill moving through the House, 
critical global health programs are going to be cut 
dramatically, and it's going to jeopardize the progress we are 
making all kinds of ways.
    For example, 5 million children and family members are 
going to be denied treatment for malaria, and 3,500 mothers and 
more than 400,000 children under 5 are going to be losing the 
opportunity for child-survival interventions.
    And when you talk about infectious disease, more than 16 
million people are going to be denied treatment for tropical 
diseases, 43,000 children and families will die from 
tuberculosis, because they'll be denied treatment, and 18.8 
million fewer polio vaccinations and 26.3 million fewer measles 
vaccinations would occur. And that's just on our best estimate 
about what will happen if the 16 percent cut to our budget 
that's in the House proposal goes forward.
    So when you talk about what we should be doing to get ahead 
of disease, we're going to be so far behind instead of what 
we've done over the last 2 years to establish a strong platform 
that is really going to strengthen our response. And investing 
in the GeneXpert program, investing in some of the 
breakthroughs and stopping the transmission of HIV/AIDS, all of 
that is going to be very difficult for us to fund.
    Senator Brown. On a similar health issue--and I understand 
my time has expired--cuts to international family planning I 
assume will result in more maternal deaths, more abortions, 
more unintended pregnancies, more all kinds of afflictions in 
the developing world. Correct?
    Secretary Clinton. That is certainly my belief, and I think 
that is backed up by significant experience and evidence.
    Senator Brown. Thank you. Thank you, Mr. Chairman.
    Senator Leahy. Thank you. I know Senator Graham talked 
about the Keystone oil sands project, and you also have a 
letter from several Senators which I also signed.
    Senator Kirk.
    Senator Kirk. Thank you, Mr. Chairman. Mr. Chairman, I'm 
just 60 days new to the Senate and to this subcommittee, but I 
first worked on my first foreign ops bill 27 years ago as a 
staffer, and I think I've known Tim Rieser for 20 of those 
years now. So I feel very happy to be here finally on the other 
side after having been on the House Foreign Ops Committee.
    I wanted to raise two issues with you. First, with regard 
to Iran, under your husband's administration, we passed the 
Iran Sanctions Act. That was way back in 1996. The Congress 
then enhanced that in July 2010.
    The Government Accountability Office has identified 41 
companies that are potentially in violation of one or both of 
those statutes. CRS reports 29 such companies in probable 
violation.
    In December, Under Secretary Burns told the House that we 
have launched a formal investigation of these companies, but, 
as yet, the State Department has only designated one entity, a 
Swiss-Iranian entity called NICO, as in violation of the Iran 
Sanctions Act, and then the 2010 legislation.
    How many companies do you have currently under 
investigation now at the State Department for violating one or 
both of these statutes?

                             IRAN SANCTIONS

    Secretary Clinton. Well, Senator, first, let me say that I 
was the first Secretary of State to impose sanctions. You're 
right. They were passed in the 1990s and nobody imposed 
sanctions until I did. And we are actively considering a number 
of other companies.
    I think we've commenced investigation across the board. I 
will provide you with that information. Some of it is 
classified. Some of it is not, but I'd rather give you a full 
answer in a classified setting or classified document.
    Senator Kirk. I appreciate that very much.
    A second topic in the news recently, great concern to me 
for a long time, is expanding piracy in the Indian Ocean. This 
is a map showing their range in 2008, in 2009, and 2010. 
Obviously, with the murder of four Americans now, it's a front 
page in the news.
    We have deployed significant naval forces there under a 
Task Force 151, but it would appear--and my read of the 
administration is you and others think that we may have crossed 
a dividing line or a turning point. I would say that if we 
can't be tough on pirates on the open seas we can't be tough on 
almost anything.
    The second Washington administration committed upwards of 
10 percent of all revenue to paying off the Barbary Pirates. 
President Jefferson finally decided it was too expensive and 
too dangerous and authorized the very small U.S. Navy in its 
first mission to take on the Barbary Pirates, which required 
close-quarter action and led to a hero named Stephen Decatur, 
which Decatur, Illinois, is named after.
    It would appear that up close and personal combat on the 
high seas is necessary by the United States to suppress this. I 
would just point out the main ports, especially of Agarside and 
Hobyo; seem to be where they're operating. It would make sense 
for us to station a U.S. naval vessel, say, 12.1 miles off the 
coast of Hobyo and basically attack and sink anything coming 
out farther than that.
    How are we on crossing this divide and now basically 
recovering our Jeffersonian tradition of getting active with 
the private trade?

                           PIRATES VS. TRADE

    Secretary Clinton. Well, Senator, I look forward to working 
with you on this, because I share your outrage, and it is a 
matter of great concern to me with the deaths of the four 
Americans on the Quest.
    We have put together an international coalition, but, 
frankly, we're just not, in my view, getting enough out of it. 
So we're looking at a lot of different options. I've tasked the 
State Department to come up with a much more comprehensive 
approach. We're working with the Department of Defense.
    And I would make three points. One, one of our big problems 
is that a lot of the major shipping companies in the world 
think it's the price of doing business, and they're not 
pressuring their governments. They're not particularly 
concerned. They pay a ransom and they just go on their merry 
way. That has been a huge problem.
    Second, naval ships that have been involved from, I think 
now, something like more than 20 nations just have not been 
willing to really put themselves out. They're happy to patrol 
and they're happy to say they are and then kind of count 
themselves as part of the coalition against piracy, but when 
push comes to shove, they're not really producing.
    And, third, it's hard to imagine that we're going to be 
able to resolve this until we go after their land-based ports.
    So I will be happy to get back to you with the results of 
our efforts, but you're right. I mean, from the shores of 
Tripoli, I mean, we were talking about this at the dawn of the 
American Government, and here we are back with 21st century 
piracy, and I'm just fed up with it and we need to do more and 
we need to make it clearer that the entire world had better get 
behind whatever we do and get this scourge resolved.
    Senator Kirk. I read from the tea leaves. I think you are 
very forward leaning in the administration on this, and I want 
to encourage you. I think that's great. And I do think military 
action, not necessarily boots on the ground, but military 
action----
    Secretary Clinton. No, not boots on the ground.
    Senator Kirk. Right, but military action. Once they come on 
the high seas, they're on our territory. We have overwhelming 
military advantage. Since Somalia doesn't have much of any kind 
of maritime trade, anybody more than 12 miles off the coast 
moving out into the Indian Ocean, basically, I think, is 
subject to attack and sinking by international----
    Secretary Clinton. Well, they also have these mother ships.
    Senator Kirk. Right.
    Secretary Clinton. So even if they are small fishing 
vessels, that's one thing, but they're now launching their 
attacks off of these so-called mother ships. So I think there's 
ways to make distinctions.
    Senator Kirk. Yes. And a standard procedure would be just 
to put a round into the rudder of the ship. At that point, they 
run out of food and water, but it's too bad that they made 
this----
    One last thing then, since I have time. I'm concerned 
about, in the age of budgetary constraint, to continue your 
momentum in expanding the United States diplomatic footprint in 
China.
    We don't have a domestic terrorism threat in China, and so 
expanding a United States diplomat in a nonclassified 
environment with basically an office key and a door lock, I 
think is entirely appropriate.
    And what U.S. exporters tell me is they follow the flag. 
So, for example, we have a very expensive new consulate in 
Wuhan that was established, but all those--security standards, 
et cetera, generate extraordinary costs. And since we have more 
than 100 cities in China of very large size, just putting one 
or two diplomats behind a regular office door, I think, is an 
acceptable level of risk and has tremendous upside for exports 
of the United States.
    In a way, too, have you kind of conquer the security god 
and move this forward, because I actually--I don't see we have 
kind of terrorism danger in Central China, but this would have 
a huge upside for United States exporters.
    Secretary Clinton. Senator, one of the major issues that I 
raised in the QDDR was risk management. We have gone so far 
onto the side of trying to think of every possible risk and 
then protect against it that I do think it can hobble us.
    And so I will take a close look at what more we can do in 
China, because China is, as you know, very aggressive 
diplomatically all over the world.
    Senator Kirk. Right.
    Secretary Clinton. And they are increasing their diplomatic 
footprint everywhere, and we've got to be competitive, 
including within China.
    Senator Kirk. That's right. Mr. Chairman, I just think this 
is a possibility because it's one of the few countries where we 
don't have a domestic terror threat against U.S. diplomats, and 
so lower-cost office solutions may be the way to expand the 
footprint at low cost to this budget. Thank you, Mr. Chairman.
    Senator Leahy. Thank you. Something that I've been saying 
for years, so, obviously, I'm agreeing.
    Senator Mikulski.
    Senator Mikulski. Madam Secretary, it's just wonderful to 
see you back in the United States Senate, and like all of our 
colleagues, we welcome you.
    My gosh, 79 countries, 465,000 miles, I mean, that's a lot 
of travel to advance America's interest, but it is not only the 
time you spent, the mileage you travel and the energy you put 
into it, but the results that you've demonstrated.
    We're very proud of you as America's top diplomat in the 
way you've represented the United States of America, the great 
way you've negotiated very important breakthroughs, whether 
it's the help with the new NATO construct or continued momentum 
in the Middle East with the Palestinians and the Israelis, and 
not forgetting the poor and the dispossessed and the women and 
children. So we want to thank you.
    But as the CEO of the State Department, I'd also like to 
salute the men and women who work for you and, therefore, work 
for the United States of America, our people in Foreign Service 
and our people who work for USAID, often not as valued, not as 
treasured, but out there in the front lines.
    And in saluting them, I want to talk about the consequences 
of the continuing resolution, not only to our diplomatic 
issues, to the advancement of soft power that wins the results 
where we've expended hard power.
    But could you tell me, as we look at this continuing 
resolution and the consequences of the continuing resolution 
and the consequences of H.R. 1, first of all, what is the 
impact on the morale of the State Department knowing that they 
face shutdowns, know that they face draconian cuts, and, yet, 
at the same time, they are serving in harm's way along with our 
most valued military? How is the morale there?

                        STATE DEPARTMENT MORALE

    Secretary Clinton. Well, Senator, thank you for your 
concern. You know, I think morale is very high. It's been high 
because we have worked to try to support our diplomats and our 
development experts, both in the Foreign Service and Civil 
Service as well as the thousands of locally engaged staff that 
we employ.
    And I think that there is a great sense of mission about 
what people are doing. They know, you know, for example in 
Senator Coats' old stomping ground of the Embassy in Germany, 
we cut the public affairs budget in Germany and the ambassador 
there, Ambassador Murphy, worked with us, even though it meant 
that he wasn't going to have all the people and the resources, 
because we had to move that to the Middle East. We had to move 
that to other parts of the world where the need was so much 
greater.
    And we've had a terrific sense of cooperation. We've had so 
many people who have served in Iraq and Afghanistan. When I 
took over, there were 300 civilians in Afghanistan and they 
were on 6-month rotations, and, now, there are 1,100, and 
they're there really doing the work that needs to be done.
    But, at the end of the day, you know, budgets are about 
values. They're about priorities, and if it appears as though 
nondefense discretionary means that the Defense Department 
keeps getting what they need to fulfill their mission for 
America and we've been running as hard as we can to be the 
partners that our military wants from us and we don't get that 
kind of support, well, obviously, that's going to send a very 
loud message that, you know what? After all, we were just 
kidding. We're handing Iraq off to you. Just figure out how to 
do it. We don't have the money for you. Just get out there and 
make it work. I mean, it just doesn't add up. So, of course, 
there's going to be a lot of concerns, but this is a really 
motivated team we have right now.
    Senator Mikulski. Well, I really appreciate the fact that 
they're motivated, but they also have to be compensated and 
that has to be recognized.
    I would hope that those on this subcommittee and those in 
the United States Senate would recognize if we do fence off in 
our budget deliberations security people that we need to look 
at the State Department and as people who were particularly 
serving abroad.
    But could you tell me the consequences of H.R. 1 on 
national imperatives? On page 5 of your testimony, I was indeed 
struck by the fact, as you shared with House colleagues, the 
concern that this could dramatically impact on Iraq, Afghan, 
and Pakistan. Could you share with us what that would mean?
    Secretary Clinton. Yes, Senator. Thank you.
    Senator Mikulski. You talked about the impact on the Global 
Health Initiatives----
    Secretary Clinton. Right.
    Senator Mikulski [continuing]. With Senator Sherrod Brown's 
questions.

                             BUDGET ISSUES

    Secretary Clinton. Right. Well, one-half of the State, 
USAID budget increase from fiscal year 2008 base appropriations 
has funded the military-to-civilian transition in Iraq, the 
civilian surge in Afghanistan and the expanded support of our 
efforts to fight terrorism in Pakistan. Significant cuts to the 
budget could profoundly compromise ongoing and critical efforts 
in those front-line states.
    In the Middle East, proposed cuts would force us to scale 
back help and undercut our influence at a particularly crucial 
time. We would be also cutting back on what I think is an 
important part of our economic efforts to create jobs with the 
people that literally are out there every day trying to fight 
the Chinese or fight the Europeans to make the sale for an 
American business located back here at home.
    Peacekeeping in critical areas where we help to fund what 
is done in Darfur, Congo, and many other places.
    We have so many issues that we now see as directly related 
to our national security that would be severely impacted, and, 
I would argue, derailed by the size of the cut in the House-
passed budget.
    Senator Mikulski. That's pretty powerful, and we've also 
heard--in fact, it's very powerful.
    Baltimore is the home to iconic international agencies that 
serve the world, from Catholic Relief Agency, serving the poor 
and the dispossessed all over the world, but particularly in 
Central and Latin America; the Johns Hopkins School of Public 
Health, delivering global health services and training leaders 
to be there, and they, too, express concern about this.
    But I'd like to shift gears a minute to the Twitter 
revolution that's going on in the world and to places like 
Egypt, et cetera.
    The role of social media has been indeed stunning from a 
fruit grower setting himself on fire in Tunisia to the possible 
fall of Gaddafi that's imminent on the kinds of questions that 
Senator Graham was raising is so powerful, and we would have 
never predicted it.
    Now, tell me, the State Department has a role in winning 
hearts and minds, being up on the latest and greatest media and 
so on. What role do you see where, one, you knew what was going 
on? And, second, how do you see staying in touch with the young 
people of these regions that obviously are yearning, have 
aspirations that are not Shahada aspirations? They're economic 
and democratic--small--aspirations.
    Secretary Clinton. You're absolutely right, Senator. The 
evidence is overwhelming that it is economic concerns that are 
driving so much of what we're seeing. You know, a university 
graduate who had to work as a vegetable seller and then was 
harassed by corrupt police looking for a bribe, a Google 
employee who was fed up because a young blogger was pulled out 
of a cafe and beaten to death by security forces in Alexandria.
    So time and time again we see how security and economic 
opportunity really collide, and it's being played out in real 
time in Twitter, Facebook and other social media.
    I started shortly after becoming Secretary of State a kind 
of little mini-think tank inside the State Department to see 
how we were going to play, and going back to Senator Graham's 
question, one of the first things we actually were able to do 
was during the demonstrations after the Iranian election when 
the Iranian Government tried to shut down social media, these 
young people were able to help keep it open, even including 
calling and trying to make sure that the companies doing it 
understood the importance of that communication network.
    So fast forward, we now have a Twitter site in Arabic, a 
Twitter site in Farsi. I am putting a lot of our young 
diplomats who speak Arabic out on every media you can think. I 
did a Web chat with an Egyptian Web site. On 2 days' notice, 
they went out into Tahrir Square, they gathered 7,000 questions 
for me. We are really trying to play in that arena as best we 
can.
    And I would only add this, because I'm passionate about it: 
The United States did an amazing job during the cold war. We 
sent our values, our culture, our inspiration across the Iron 
Curtain through Voice of America, Radio Free Europe. I mean, we 
were on the front lines.
    The Berlin Wall falls, you know, we kind of said, okay, 
fine. We're done with that.
    We are in an information war, and we cannot assume that 
this huge youth bulge that exists, not just in the Middle East, 
but in so many parts of the world, really knows much about us. 
I mean, we think they know us and reject us. I would argue they 
really don't know very much about who we are. They don't have 
the memory of World War II and the cold war and Jack Kennedy 
and all. They don't have any of that context.
    And what we send out through our commercial media is often 
not very helpful to America's story. I said this morning before 
the Senate Foreign Relations Committee that I remember early 
in--right after the Afghan war started--meeting an Afghan 
general who said he was so surprised because all he knew about 
America was that men were wrestlers and women wore bikinis, 
because all he ever saw from American television was World Wide 
Wrestling and Bay Watch. That was it.
    So we have a great cultural export, but we're not competing 
in the way we need to compete in the information-values arena. 
Al Jazeera is. The Chinese have opened up a global English 
network and a network in other languages. Russia has opened up 
a global English network. We are missing in action.
    You know, we kind of figure, okay. Well, you know, our 
private sector we spend gazillions of dollars and we pump out 
all of our networks around into hotel rooms around the world. 
The fact is most people still get their news from TV and radio. 
So while we're being active in on-line new media, we have to be 
active in the old media as well.
    And I talked with Senator Lugar this morning about our 
Broadcasting Board of Governors. Walter Isaacson is the new 
chair. He's really committed to this. But I would really 
welcome this subcommittee's attention because why are Americans 
watching Al Jazeera? Because we don't have anything to compete 
with it so they're turning to Al Jazeera. And so let's try to 
figure out how we're going to win the information war.
    Senator Leahy. Thank you. We'll go next to Senator Coats 
and then to Senator Lautenberg.
    Senator Coats. Thank you, Mr. Chairman. Madam Secretary, I 
just want to associate with what my colleagues have said about 
your extraordinary commitment to a world which has wildfires 
all over the place. It's not just one or two things you have to 
stay engaged in, and your commitment to that and perseverance 
is remarkable. I'm not sure how one person can possibly do all 
that you've done and are doing, but we commend you for it.
    What's happening in the Middle East, I think, has all of us 
raising questions about something I guess we didn't think we 
would see in our lifetime. I remember growing up thinking, 
well, the wall will never come down. We'll always be dealing 
with a cold war. We've seen the extraordinary change that took 
place then.
    In that regard, we, I think in some cases, saw it coming, 
and anticipated not the wall collapse necessarily, but a change 
taking place, where we could help foster the growth of 
democracy. And there were bumps in the road and it was not 
easy, but we engaged there.
    Now, we have a whole new situation in the Middle East that 
is not dissimilar to the fact that countries under despotic 
leadership are suddenly given the opportunity or trying to 
seize the opportunity of providing for a more democratic 
situation in terms of governship, so forth.
    But the question is back then we were not in the financial 
situation domestically that we are in now, and so the question 
is how do we engage in doing the things that we've been talking 
about here, now, with what potentially could be a tremendous 
opportunity?
    Secretary Clinton. Right.
    Senator Coats. I mean, it's easy to look at the negative 
side of this--what's happening and say woe is us, and what's 
going to happen? There's also potentially a great upside to all 
this.
    So the question is, at a time of limited resources, how do 
we begin to address some of the kinds of engagement that can 
help promote a more peaceful, stable democratic type of Middle 
East?
    The question I have relates to the amount of flexibility 
that you have or might need to have and also the ability to say 
move funds from certain buckets in a sort of a surge capacity?
    And as I look at the various programs that we have in 
place, all of which provide important support, I'm just 
wondering if it wouldn't be possible--because I think the 
budget was developed before much of what's happened in the 
Middle East took place--if it wouldn't be possible to try to 
steal from Peter to pay Paul, I guess, in some of the programs 
that are currently in the budget--for instance, the educational 
exchange, the Millennium Challenge account, the Assistance for 
Europe, Eurasia and Central Asia account, the U.S. Agency for 
International Development development and so forth.
    Would it make some sense to look to see where we might be 
able to ratchet down or get some savings out of that to 
transfer into some type of coordinated effort now in the Middle 
East? And if that's the case, what would it take from us to 
help you be able to do that?
    Secretary Clinton. Well, Senator, I appreciate that, 
because we have started that. We have tried to cut back in 
areas, particularly in Europe and Eurasia, where we think we 
have the ability to do so.
    I'm always a little reluctant, because I'll say this today 
and then tomorrow there'll be some crisis in the Caucasus and 
people will say, well, why weren't you paying attention to 
that? So it's a dilemma.
    We have tried to keep our base budget as flat as possible, 
and in it is the way we run all of the departments.
    Now, some of what we generate in the Department--about $700 
million on passport fees--goes right into the Treasury.
    So we perform the services. We keep having higher demand in 
areas that we have to meet for the American people because your 
constituents won't like it if we say, well, wait a minute. You 
have to wait on your passport, because we're shifting money 
into the Middle East.
    So we've got to be constantly asking ourselves those 
questions, but I think we'll have the opportunity to really 
engage in this over the next weeks, because I know that the 
Senate is facing a difficult set of decisions.
    My only plea is let's not take a cleaver to it. Let's try 
to be as surgical as possible in figuring out what is really in 
America's national security interests, how we prioritize.
    And I agree with you that the region from Morocco to 
Bahrain is in a transformational period of change. We have a 
lot at stake in what happens there, and we particularly want to 
be influential in whatever transition occurs in Tunisia and 
Egypt. But we've got to keep our eye on all the other moving 
parts, too, because we have energy needs, for example. We have 
Iran trying to fill the void with their narrative.
    So I think this is an area of great peril, but great 
potential, and I will certainly try to work with the 
subcommittee to figure out how we can meet the needs there.
    But I also have a responsibility to make sure that while 
we're focused there we're not leaving Sudan to crumble into 
becoming a huge Somalia. So, I mean, it's a constant 
evaluation, but we'll certainly work closely with this 
subcommittee to try to get to the best possible outcome.
    Senator Coats. I assume some of our allies have come to the 
same conclusion, that it's in their interest, both from an 
energy standpoint, immigration standpoint, social-economic 
standpoint, political standpoint to be engaged. What kind of 
communications have you had with our friends in Germany, Italy, 
France, and other countries that will want to, hopefully, in 
some kind of coordinated effort engage in this kind of thing?
    Secretary Clinton. That's exactly what we're trying to do. 
On Monday, I met with the four foreign ministers from Great 
Britain, France, Germany and Italy. I met with the high 
representative for the European Union. I met with the Russians, 
the Turks, just a lot of people, but particularly with our 
European allies to talk about how we're going to coordinate so 
we don't duplicate, so that we have a much better sense of how 
we're going to deliver on what the people of these countries 
are seeking.
    I would point out--because I thought it was very 
significant--the conservatives in Great Britain have gone 
through a very brutal budget-cutting effort, as you know. 
However, they increased their commitment to foreign aid, and 
they did so because Prime Minister Cameron said, this is how we 
demonstrate we're involved, we're leading, we're out there. And 
I thought it was an interesting decision on his part, because 
he said he thought it was a way of making sure Britain still 
had the ability to lead.
    So while we coordinate, they're all facing their own 
challenges. Some of them are making the decision that this is a 
high enough priority that it should go ahead of even domestic 
priorities.
    Senator Coats. Thank you, Mr. Chairman. Thank you, Madam 
Secretary.
    Senator Leahy. Thank you, Senator Coats, Ambassador Coats, 
and welcome to the subcommittee too.
    Senator Lautenberg. Thanks very much, Mr. Chairman.
    Greetings, Madam Secretary, and I must tell you that, as we 
listen to your response to the multiplicity of questions that 
you have to deal with, that you're as good up front as you are 
all of the fronts of the world. And it's been terrific to see 
your energy and your vitality taking you to places, and, as I 
said when you were here for a moment, you don't even look 
tired, which is amazing.
    And I don't know whether or not you will outrank all 
preceding Secretaries of State for frequent-flyer mileage, but 
I think you're quickly approaching that point. And we're so 
grateful for the excellent, excellent service that you've 
rendered the country and the world, and we want you to 
continue.
    Madam Secretary, thank you for the reminder that things 
done through diplomatic channels might substitute for, in some 
cases, military action, and that's a very important reminder, 
that we can save lots of lives, lots of grief and lots of money 
in the process if we can do that. So we thank you for that.
    Now, we've seen that there may be new evidence that Gaddafi 
himself ordered the Pan Am 103 bombing, and you mentioned the 
number of people that perished, and we had a large number also 
in New Jersey. And the former justice minister for Libya told a 
newspaper last week, and he said, ``I have proof that Gaddafi 
gave the order about Lockerbie.'' And I am pleased that you 
said yesterday that the Justice Department would look into this 
matter.
    Now, is it possible that Muammar Gaddafi could be tried for 
murder if captured, and would that be something that we could 
pursue? We said that al-Megrahi was the perpetrator, but he got 
instructions from the top.

                    GADDAFI CONNECTION TO PAN AM 103

    Secretary Clinton. Well, Senator, I share your deep 
feelings about the bombing of Pan Am 103, because we both 
shared constituents who were so deeply and tragically affected 
by that, and I think justice must be served.
    The United States was very adamantly opposed to the release 
of al-Megrahi, and we have a pending investigation in the 
United States District Court in the District of Columbia of the 
bombing of Pan Am Flight 103.
    So we have reached out to our colleagues in the FBI and the 
Department of Justice because they have the lead, as you know, 
in this, but urging them to evaluate any and all information 
for its potential use as evidence in the further investigation 
of this case.
    Now, I think that anyone who might have been connected--
because I don't think it would have been just him, I think 
there are others around him who might also have knowledge or 
even participated in the order--should be pursued.
    And in the Security Council resolution, we made a referral 
to the International Criminal Court, but this is a separate 
American investigation. So I think that both should go on 
simultaneously.
    Senator Lautenberg. I wonder whether there is a point in 
time or a point in action when the debate over the no-fly zone 
and its complications might be accelerated, if they continue 
with their murderous attack on civilians using aircraft. Would 
there be any acceleration of pace that might say, hey, enough 
of that, and we're going to stop it in its tracks?
    Secretary Clinton. Well, I think all of us want to see an 
end to the killing. There are a lot of complications. One of 
them is that in the Security Council resolution that was passed 
there was no authorization for military action. The Arab League 
put out a statement this morning saying that they strongly 
opposed foreign military intervention. So in addition to the 
logistical challenges that are posed to our or any military, 
there are very strong political expressions of opposition.
    And I think it's important that the United States not be 
seen as some radical that Web sites are trying to portray us, 
that whatever we did in a military capacity was not for the 
people of Libya, but for oil. I mean, we cannot afford for that 
to even be a narrative out there.
    So this is complicated from every perspective, but NATO, 
under Secretary General Rasmussen, is looking into what might 
be done through NATO. Our Defense Department is looking into 
what might be done through the Defense Department.
    My immediate concern right now is that we do everything 
possible to support the humanitarian mission. I want to see 
American planes and American ships that are bringing food and 
supplies and ferrying Egyptians back into Egypt. I want us to 
be seen as really actively supporting the humanitarian needs. 
And I think it's going to take a lot more consideration before 
there'll be any judgment about anything approaching military 
action.
    You know, General Mattis, CENTCOM Commander, testified--I 
don't know if you were there, Senator--at the Armed Services 
Committee yesterday, and he basically said, first, you have to 
take out all the airfields. There were both pros and cons of 
our no-fly zone in Iraq for years.
    So I don't want to substitute, certainly, my judgment for 
our professional military's assessment. I want to focus on what 
I can do, which is the humanitarian mission, and I think having 
military assets support us is a really strong message about who 
we are as a people.
    Senator Lautenberg. I want to last ask one thing, and I 
applaud President Obama's rescission on the Mexico City policy, 
known as the Global Gag Rule, and the House's fiscal year 2011 
continuing resolution would bring back this damaging policy.
    What kind of an impact would that have on the 
reinstatement, if we did it, the Global Gag Rule, on the return 
of mortality and women's health across the world?

                             WOMEN'S HEALTH

    Secretary Clinton. Well, I believe strongly it would be 
detrimental to women's health around the world. I think that 
what we have tried to do is to follow the law, making clear 
that we do not support abortion, but that we do support family 
planning and we do support providing quality care to women.
    You know, this is a passion of mine, Senator, because there 
are still too many places in this world where women are treated 
not just as second-class citizens, but hardly human beings. And 
we have to support women's health and women's empowerment and 
give women a voice in their own lives, which actually is one of 
the best tools we have to try to move societies to become more 
democratic.
    So the administration is committed to ensuring that our 
agencies, international organizations and nongovernmental 
organizations have the ability to develop and deliver long-
range women's health programs, including reproductive health 
programs.
    Senator Lautenberg. Thank you very much, Madam Secretary. 
Thanks, Mr. Chairman.
    Senator Leahy. Thank you, Senator Lautenberg. Senator 
Johnson, another new member of the subcommittee. Welcome and 
please go ahead, Sir.
    Senator Johnson. Thank you, Mr. Chairman. Thank you for 
your warm welcome and that of Senator Graham.
    Madam Secretary, it is nice to meet you.
    Secretary Clinton. Thank you.
    Senator Johnson. I'd also like to thank you for your hard 
work and efforts. I think it's obviously not gone unnoticed.
    I'd like to start out just by asking your evaluation of the 
strength and the intentions of the Muslim Brotherhood in Egypt.

                      MUSLIM BROTHERHOOD IN EGYPT

    Secretary Clinton. Senator, this is a continuing assessment 
on our part, because there is no doubt that for years the 
organization was opposed to President Mubarak and was also 
promoting an effort to impose Islamic law on Egypt.
    There are those who claim now that they are prepared to 
participate in a democratic system, which means that they would 
have to compromise, which means that they would have to respect 
the institutions, and, in particular, respect the rights of 
minorities and women, including the Coptic Christians.
    I think that our perspective has been that we think, as 
Egypt moves toward constitutional amendments and the laws 
necessary to set up political parties, that they must make 
absolutely clear that no political party can be committed to 
the overthrow of the government, can be unwilling to support an 
inclusive society--including Christians, women and others--and 
it is going to be difficult to judge until we actually see what 
happens, but we have expressed a lot of cautions and we'll 
continue to do so.
    Senator Johnson. On a scale of 1 to 10, what's your level 
of concern about their ability to take over that government and 
turn it into an Islamic republic?
    Secretary Clinton. Well, I think that the experience that 
the world remembers from Iran is a very sobering lesson. When 
that government came into being, it was claimed by the 
religious authorities that it would be a secular government. It 
proceeded to organize itself. It appointed ministers for 
finance and defense and everything else you have ministers for.
    And then the Ayatollah Khomeini appointed clerics to shadow 
each of the ministers, and, within a year, it was a 
theological-based government. And, now, it's got this hybrid, 
where the real power lies with the clerics, but there's an 
elected--so-called elected--president. Everyone is very 
concerned, especially in the region, and especially the people 
who were part of the movement to bring democracy to Egypt and 
similarly, in Tunisia.
    You know, Senator, we don't have control over a lot of 
what's going on, but I think we do have an obligation to work 
with those who we believe are committed to true democracy, 
which is not just having an election and then calling it quits, 
but supporting the institutions of democracy--an independent 
judiciary, a free media and everything else--and it's not clear 
to me whether a religiously based party will commit to that, 
and we're just going to have to wait and watch.
    Senator Johnson. That's fair enough.
    I totally agree with you about the power of information, 
and we talked about the Internet initiatives. And I'd like to 
have your evaluation in terms of the priority of our 
information initiative. I mean, what are the components that 
you want to most emphasize in that region of the world?

                         INFORMATION INITIATIVE

    Secretary Clinton. You know, I've been consulting with the 
new chair of the board of the Broadcasting Board of Governors, 
which is our governmental entity that's not in the State 
Department--it's connected to the State Department--that runs 
our Voice of America, our Radio Free Europe, et cetera.
    But I believe that we've got to take seriously 
recommendations that were made a year ago in an excellent 
report that Senator Lugar and his staff issued about where 
we're falling short as a nation, that we're not--really not up 
competing.
    I'll give you two quick examples, because I hope that you'd 
be interested in this. I'd love to work with you. When I became 
Secretary of State, I was appalled to learn that the Taliban 
owned the airwaves in Afghanistan and in the tribal areas in 
Pakistan. They had little FM radio-transmitters on the back of 
motorcycles and they were going around threatening everybody, 
and, you know, the governments of Afghanistan and Pakistan, 
and, frankly, the United States military and everybody else, 
just kind of threw up their hands, and they'd shut down 
broadcasting after dark, and it made no sense to me. I mean, 
we're the most technologically advanced country in the world.
    So slowly, but surely, we've been trying to take back the 
airwaves in Afghanistan against Taliban with the most primitive 
kind of communication equipment.
    Now, take that as one example where I don't think we were 
very competitive--and we have worked like crazy to change 
that--and then go to the most extreme where you've got a set of 
global networks that Al Jazeera has been the leader in that are 
literally changing people's minds and attitudes, and like it or 
hate it, it is really effective.
    And, in fact, viewership of Al Jazeera is going up in the 
United States because it's real news. You may not agree with 
it, but you feel like you're getting real news around the clock 
instead of a million commercials and arguments between talking 
heads and the kind of stuff that we do on our news, which is 
not particularly informative to us, let alone foreigners.
    Well, that's why I worry that the Chinese are starting a 
global network. The Russians are starting a global network, and 
we have not really kept up with the times.
    So I would commend Senator Lugar's report to you, and I am 
ready, able and willing to do anything I can to support us 
getting in and leading this communications battle.
    Senator Johnson. It's also important what information we 
convey, and there's a pretty interesting article in The Wall 
Street Journal by Donald J. Kochan--I hope I'm pronouncing his 
name correctly--talking about the Arabic Book Program. And his 
complaint, if I can typify it as a complaint, is that we were 
translating books into Arabic such as ``Who Pays the Price'', 
``The Sociocultural Context of the Environmental Crisis'', and 
``The Joy Luck Club''.
    Are we going to concentrate on providing the types of 
information that will actually help them build democracies, 
actually help them build a strong economic system?
    Secretary Clinton. You know, Senator, I believe--and this 
may be--I'm a child of the cold war. I believe our cultural 
exports properly presented powerful incentives for democracy 
building, because what it does is free people's minds.
    You know, there is that famous book, I think it's called 
``Reading Lolita in Teheran'', where it's really subversive to 
read fiction and literature.
    I talked to a lot of the people who were behind the Iron 
Curtain. They told me our music kept their spirits up, our 
poetry. We used to do a lot in sending American artists around 
the world.
    So I agree teaching democracy is important, but how do you 
teach democracy? I don't think if you just lecture at somebody 
that necessarily is the best way, but if you inculcate the 
aspiration of the human soul, where people want to be free, 
they want to think their own thoughts, as the young tech people 
in Tahrir Square did. You know they were living democracy by 
expressing themselves.
    So I think we have to do both. I think we have to do a 
better job of getting America's message, our values, across, 
and we have to do a better job in the nuts and bolts about how 
do you put together a political party, how do you run an 
election, how do you put together a free and independent 
judiciary.
    So I think it has to be both in order to be really breaking 
through to people in ways--especially young people today who 
are in our own country--sometimes hard to figure out how best 
to reach and touch and teach. I think it's true worldwide. 
We've got to be creative.
    Senator Johnson. Thank you.
    Senator Leahy. Thank you. Senator Blunt, then Senator 
Hoeven and----
    Senator Blunt. Thank you, chairman. And, Secretary Clinton, 
thank you----
    Senator Leahy. I would note the Secretary has to leave by 4 
p.m..
    Senator Blunt. I thought you were going to say by 3:45 p.m. 
I'm pleased that----
    Senator Leahy. Roy, I'd never do that to you.
    Senator Blunt. Well, Secretary, it's been an impressive 
hour-and-a-half. Thank you for your service. Thank you for your 
hard work all over the world for our country, and I thought--my 
view is that the State Department has been generally leading by 
some days and--at least by some hours and occasionally some 
days statements that need to be made about Egypt and Libya and 
other places, and I appreciate that.
    This is probably not the right subcommittee for this and 
this is probably not the right question for you, so it's not a 
question as much, just go on the record. I really don't agree 
that the no-fly effort in Libya should be that difficult. I 
know what the military is saying at this point, but I do 
remember after the first Desert Storm what happened in Iraq 
when we let Saddam get his helicopters in the air and get his 
airplanes in the air, and it was a tragedy and a travesty then.
    And whatever we could do out of the--you know, the near 
bases in the Mediterranean or other places, I frankly think the 
threat of a no-fly zone, if we could put any group together, so 
it wouldn't be solely an American effort, a United States 
effort is worth vigorously pursuing. And a tragedy is happening 
there now and you're speaking up on it and I appreciate that, 
but I would think we could do more.
    The other thing I want to say, I thought the veto in the 
United Nations last week was a good thing to do and I'm glad to 
see that we're doing that.
    At the same time, the United Nations, just a few weeks ago, 
said that the human-rights situation in Libya was pretty good. 
Fortunately, yesterday, they changed their minds and decided it 
wasn't so good.
    A couple of appropriations questions here at an 
appropriations hearing. One is on your core budget request. How 
does the 2010 level compare with the 2008 level in the core 
budget?

                    2008 VS. 2010 CORE BUDGET LEVEL

    Secretary Clinton. Let's see. Let me turn to my staff here 
and----
    Senator Blunt. Actual appropriating questions are really 
surprising.
    Secretary Clinton. Yes, I know.
    Senator Blunt. I get that.
    Secretary Clinton. This is amazing, Senator. I'll get that 
to you in a second. I promise.
    Senator Blunt. Well, the other question I'll ask, after you 
get that answer, is how does the 2008 core budget--I understand 
and am going to be pretty supportive of the extraordinary 
things that you're being asked to do now that would not 
normally be in the core, but the second question I'd have is 
how does the 2008 core compare to what the House did? Did they 
use your budget to get other budgets above 2008 or are you 
below 2008?
    So the question is: How does this budget compare to the 
2010 level----
    Secretary Clinton. Core to core.
    Senator Blunt. How does that compare to what the House did? 
Does anybody have that there behind you? Could you give me 
those answers?
    Secretary Clinton. They will. They're looking at that 
little tiny print. They'll get it.
    Senator Blunt. All right. Well, while they're looking--
we'll come back to that. I think on the Iran Sanctions Act, 
which I actually negotiated in the House and have complained 
both to the State Department under your leadership and under 
Secretary Rice's that I didn't think we were aggressive enough, 
but my last letter on this was 2009, and, hopefully, we're--I 
think we've had one company now that we have taken specific 
action against, and I will continue to think we should be more 
aggressively using the tools we have there.
    There was another thing that we did in 2008 which was the 
Iran Freedom Support Act. I know we've designated human rights 
abusers, but under the other part of that, the Freedom Support 
Act, no funds have ever been requested under that particular 
title.
    Do you have a sense of that, whether funds are coming from 
some other place in the State Department budget or maybe we're 
just not utilizing that because we don't think it's the time to 
do that, but----
    Secretary Clinton. Senator, there is a lot of efforts going 
on, but I would like to be able to get back to you, because 
some of those matters are not in my bailiwick. They are in 
other agencies, so I'd like to pull it together for you and 
then present it to you.
    Senator Blunt. Okay. So that question is, why has the 
administration--I think that would come through State, but it 
might not be exactly something you're looking at every day--not 
requested the use of funds pursuant to the Iran Freedom Support 
Act?
    And the other would be has it allocated any funds under the 
Middle East Partnership Initiative (MEPI)?

                                  MEPI

    Secretary Clinton. Yes. In fact, that's one of our 
strongest programs, so called MEPI, which, you know, started in 
the Bush administration, but we've continued it, and we think 
it's a very important tool. So we have quite a bit of funding 
coming out from MEPI.
    Senator Blunt. And is it used in Iran?
    Secretary Clinton. No.
    Senator Blunt. Okay. So then my question then would be what 
are we doing with Iran Freedom Support and why not?
    And, now, do we have the answer to the other questions, the 
actual appropriating questions?
    Secretary Clinton. The fiscal year 2008 is a 36-percent 
reduction from the 2010 core budget, so 36 percent off of $47 
billion.
    Senator Blunt. So there was a 36-percent increase from 2008 
to 2010.
    Secretary Clinton. Right.
    Senator Blunt. And how much of a decrease from 2010 was 
there then in the House-passed budget?
    Secretary Clinton. Sixteen percent.
    Senator Blunt. Sixteen?
    Secretary Clinton. Yes, Sir.
    Senator Blunt. So the House still has the Department quite 
higher than it was in 2008 in its core functions.
    Secretary Clinton. Well, they included the OCO functions as 
well. So it's 16 percent off of everything, and that's been 
hard for us to figure out, because some of this was very 
specific language. I mean, whatever finally comes out of the 
Congress I hope does give us some flexibility and not try to go 
account by account, because what we have found in looking at 
what the House did, it would severely impact what we were doing 
in the OCO budget.
    And, you know, part of what we've been doing since 2008, 
which Dr. Condoleezza Rice started and which I then picked up, 
is to try to meet the needs that we saw around the world, 
because, from our perspective, the world is very different than 
it was in 2008. We have far more responsibilities.
    But I think we owe you a kind of explanation of that, so 
that you can compare apples to apples, if you will.
    Senator Blunt. Well, I want to do that, and I want to 
compare apples to apples, because I really do want to be 
supportive of the extraordinary things you're being asked to 
do, particularly filling the gap as others leave Iraq. And it's 
easier for me to do that if I'm comfortable that we have really 
divided those in a way we all understand that some things are 
going to have to happen in this spending picture. And so core-
to-core comparison would be helpful for me, and I will expect 
you to get that.
    Secretary Clinton. Yes.
    Senator Blunt. I'm glad you will, and, again, thank you for 
your work, and thank you for your ability to talk about so many 
issues so well for a good long period of time.
    Secretary Clinton. Thank you very much, Senator.
    Senator Leahy. Thank you, Senator Blunt. Senator Hoeven, 
former Governor, and welcome to our subcommittee.
    Senator Hoeven. Thank you, Mr. Chairman. I appreciate it.
    Madam Secretary, thanks for being here. I know you've been 
on for almost 2 hours now.
    Secretary Clinton. That's all right.
    Senator Hoeven. And I know with the pace you've been going 
at--thanks so much for being here and for your work on behalf 
of our country.
    I want to follow up on a couple of things that have been 
brought up. The first one is I think Senator Graham talked to 
you about the Keystone XL pipeline. We're very familiar with 
that. It goes through North Dakota. And, of course, we're a big 
oil-producing State now. We work a lot with Canada.
    The Keystone pipeline actually comes down our Eastern 
Border and goes from the oil sands in Canada all the way down 
into Texas or Cushing, I'm not exactly sure, but the XL now is 
on our Western Border, actually just in the very eastern border 
of Montana.
    I understand you declined to comment at this point, but I 
just want to tell you I think it is very good to be bringing 
down more oil from Canada for our country's needs.
    Also, from North Dakota, we are building an on-ramp to that 
pipeline. So, in addition to the heavy crude that comes from 
Canada, from the oil sands in Canada, light sweet crude from 
North Dakota will be put on that pipeline as well, and we'll be 
producing more than 120 million barrels of oil this year. We're 
now the fourth-largest producer among the States. So that's a 
real opportunity and wanted to make sure you're aware of it, 
and, of course, appreciate your consideration.
    On the siting, we will certainly work with you and be as 
helpful as we can in that process. And, again, we work a lot 
with our Canadian neighbors on energy issues.
    On the no-fly zone, I want to add my support for that 
effort. I think a no-fly zone is something that we can and 
should do with our allies as expeditiously as we can, and being 
a Governor for 10 years and seeing not only our guard, but 
reserves and active forces, they're amazing, and I know that 
they can do the job.
    I'd like you to comment, if you would, given the budget 
constraints that we have, how can we do the best job possible 
in terms of managing our foreign aid in a way where we 
influence the outcomes, for example, in the Middle East, not 
only in terms of providing foreign aid, but in terms of 
withholding foreign aid to get people's attention? How do we 
influence these events in the Middle East?
    And what do you see resulting in terms of the kinds of 
governments that we're going to see in Egypt, Tunisia, Libya, 
and Yemen and all these places?
    And I want to ask one more--because then I'm going to just 
let you go, so I don't use up a lot more of my time--talk a 
little bit about Iran's nuclear ambitions and how that plays 
into this equation, too, if you would.

                              FOREIGN AID

    Secretary Clinton. Well, Senator, first, I appreciate the 
contributions that North Dakota is going to make to our energy 
needs. I wasn't aware of that, so I appreciate being informed.
    I think we are trying very hard to utilize our foreign aid 
in a positive behavior-influencing way, and every country is 
different, to be obvious about it.
    The Tunisians are anxious for our help. I met with the 
Tunisian foreign affairs secretary when I was in Geneva. They 
remember that the United Sates stood for their independence 
back in the 1960s. They'd like to see us involved in helping 
them. Tunisia has never been a country that we've paid maybe 
enough attention to, but it's a small country. It has a chance 
to really make it as democracy if it gets the right help.
    Egypt is very sensitive about getting foreign aid. They 
don't want foreign aid. They want economic aid, and they draw a 
distinction there. And so as we deal with our Egyptian 
counterparts, we have to be very sensitive to their belief that 
they've been around 7,000 years and they can do this pretty 
much on their own, and so part of what we have to do is figure 
out how best to work with them.
    In a country like Yemen, it is a very unsettled situation. 
It is a country with many different forces at work and there 
are secessionist movements in both the north and the south. Al 
Qaeda in the Arabian Peninsula is headquartered there. It's a 
very poor country. You know, right now, it's not at all clear 
what's going to happen to President Saleh and his ruling party. 
So we are watching and trying to do as much as we can to 
influence what he does and what the opposition does in order to 
glide to a better outcome.
    But I think it is also important to stress that one of the 
reasons why we're so adamant about Iran not getting nuclear 
weapons is because we don't want them to be able to intimidate 
their neighbors, to be able to influence their neighbors, to 
threaten their neighbors by their being a nuclear-armed 
country.
    Imagine what we would be facing if Libya had not given up 
its nuclear weapons in 2003. That was a long negotiation. It 
was a successful negotiation. I personally worked to get the 
last highly enriched uranium out of Libya. But imagine where 
we'd be if this regime had nuclear weapons.
    So, similarly, with North Korea, with Iran, we never take 
our eye off that ball, because that is so important to what 
we're trying to achieve. And Iran is--even though Iran has no 
relations with the opposition and, in some cases, are in 
adversary relationship with Sunni Muslim Brotherhood groups or 
other groups that are not of their choosing, they are doing 
everything they can to influence the outcomes in these places.
    So this is a fast-moving, very difficult set of individual 
cases, but I think you're right to ask that we look at them 
across the region and factor in Iran, because Iran is going to 
do everything they can to influence the outcome, and we've got 
to be there, and we've got to do everything we can to prevent 
that from happening.
    Senator Hoeven. How are they working right now to influence 
these outcomes and affect the governments that result after 
these uprisings?
    Secretary Clinton. Well, for example, Senator, we know that 
through their proxy, Hezbollah, in Lebanon they are using 
Hezbollah, which is a political party with an armed wing, to 
communicate with counterparts in Egypt, in Hamas, who then, in 
turn, communicate with counterparts in Egypt. We know that they 
are reaching out to the opposition in Bahrain. We know that the 
Iranians are very much involved in the opposition movements in 
Yemen. So either directly or through proxies they are 
constantly trying to influence events there. They have a very 
active diplomatic foreign policy outreach.
    Senator Hoeven. And, Mr. Chairman, if you'd indulge me for 
just one more question, and we're working to counteract that 
how?
    Secretary Clinton. Well, in every way we can. That's why we 
are in these countries with our teams of experts, our aid 
experts, our diplomats. I sent Under Secretary Bill Burns, a 
former ambassador to Jordan, into the region to do a full 
survey. I've got Assistant Secretary Jeff Feltman in Bahrain as 
we speak working with the government there to try to help them 
understand what it's going to take to resolve this political 
standoff.
    Our ambassadors in Yemen, Egypt, you name it, are working 
hard. Our former ambassador or still our ambassador to Libya, 
but who was out of the country because of a dispute with the 
Gaddafi regime is working hard to reach out to everybody going 
on in the opposition in Libya.
    So, I mean, we have diplomats. We have development experts. 
We have military. We have an enormous outreach that is working 
right now. Because what I have found, Senator, is that most 
people want us to be helpful, but they don't want us to be 
taking a leading role. And so how we deliver on the aid they're 
seeking without looking as though we're trying to take over 
their revolution is our challenge.
    But it's also the challenge for the Iranians. You know, 
they don't have a lot of friends, but they're trying to curry 
more friends. So it's a constant effort on our part, and I have 
to have the resources and the flexibility to be able to move 
people around and try to figure out the best way for us to be 
successful.
    Senator Leahy. Thank you.
    Senator Hoeven. Thank you, Madam Secretary.
    Senator Graham. Very briefly, Mr. Chairman, this has been 
an outstanding hearing. You've done a great job. We've all 
learned a lot.
    I think Rich is going to provide us some pipelines, what 
would the $14 billion difference between the House continuing 
resolution and the 2012 request, what would that mean to 
operations throughout the world, and that way we can make a 
good decision.
    I doubt if either number holds, the House number or the 
President's number. Somewhere in the middle is probably where 
we're going to be, but if the House number makes sense, I'm all 
for it. I just want to know how it's affected.
    And one last question about Iran, because that was very 
fascinating to listen to. I don't believe it's possible to 
contain a nuclear-armed Iran. I think the ripple effect would 
be devastating. What's your thought on that? Could you contain 
a nuclear-armed Iran?
    Secretary Clinton. Well, I hope we never reach that 
question, Senator, because I think it would be very 
destabilizing in the region. I think it would prompt other 
countries, particularly those with the means, to seek their own 
nuclear weapons program.
    We saw what happened when India got its program. Pakistan 
immediately had to get its program. And when the genie is out 
of the bottle, it is really hard to know what's going to happen 
next. So I think we have to be as vigorous as possible in 
trying to prevent that from happening.
    Senator Leahy. Thank you.
    Madam Secretary, I think we've heard this from both sides 
of the aisle; you've given us an amazing tour of the world. You 
and I also often talk privately in other venues and I know it's 
not just in these hearings, and we are very fortunate to have 
you representing the United States.
    I think the bottom line, though, for so many of the things 
you pointed out that you do and that the United States has to 
do for its own national security, is that it's hard to do if 
the resources are cut off. We either pay now or we pay later. 
If the resources are cut it off, we don't have much that we can 
do.

                     ADDITIONAL COMMITTEE QUESTIONS

    One last thing that comes to mind, of course, is our 
assistance for refugees. Both Republican and Democratic 
Senators have expressed concern about the plight of refugees, 
but the House just cut U.S. assistance for refugees by 40 
percent. Yet, there are continuing the problems in Darfur, 
Burma.
    There are also Iraqi, Afghan, Palestinian, refugees, and 
more have been displace in the past few weeks in areas where we 
have an enormous interest. We have assisted refugees for years 
and this has resulted in good will and helps America's 
interests greatly including in our fight against terrorism.
    But the cold reality is the other body has just cut the 
refugee budget by 40 percent. At some point, we have to pay 
attention to reality more than rhetoric. So I appreciate what 
you've been saying here today.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
            Questions Submitted by Senator Patrick J. Leahy
    Question. Tom Friedman of the New York Times recently described our 
relations with the Arab world this way:

    ``Keep your oil prices low, don't bother the Israelis too much and, 
as far as we're concerned, you can do whatever you want out back. You 
can deprive your people of whatever civil rights you like. You can 
engage in however much corruption you like. You can preach whatever 
intolerance from your mosques that you like. You can print whatever 
conspiracy theories about us in your newspapers that you like. You can 
keep women as illiterate as you like. You can under-educate your youth 
as much as you like.''

    Friedman says it was that attitude that enabled the Arab world to 
be insulated from history for the last 50 years--to be ruled for 
decades by the same kings and dictators.
    Those days are changing in ways few predicted, and our relations 
with Tunisia, Egypt, Bahrain, and Libya will change because of it. 
Another Middle East expert quoted in the New York Times said this: 
``There has to be a major rethinking of how the United States engages 
with that part of the world. We have to make clear that our security no 
longer comes at the expense of poor governance and not rights of the 
people.'' Do you agree, and if so, how do you see our relations 
changing with any of the other countries in that region whose 
governments remain in power?
    Answer. The United States has always had to make difficult 
calculations as it balances its interests. In the case of Egypt, for 
example, it was indeed in our interest to support Egypt following the 
Camp David Accords. The 30 years of peace that followed allowed for 
both Israel and Egypt to develop and strengthen in a particularly 
challenging region. Moreover, our closeness to certain governments 
enables us to have conversations with them about things like democracy 
and human rights--conversations that we would not be able to have 
otherwise. It is probably not a coincidence that the same Egyptian 
military that we have supported for the last 30 years chose not to fire 
on protesters.
    In fact, we talk about these things with other governments because 
it is in our strategic national interest to do so--to promote good-
governance and openness in Middle Eastern societies. I said at the 
Forum for the Future in Doha last January that ``in too many places, in 
too many ways, the region's foundations are sinking into the sand . . . 
If leaders don't offer a positive vision and give young people 
meaningful ways to contribute, others will fill the vacuum.'' By 
helping Middle Eastern societies transition toward more democratic 
systems of government, we will definitively repudiate the extremist 
narrative that feeds on repression and isolation.
    The United States maintains an active agenda promoting reform in 
the region. Our Ambassadors and Embassies across the region are fully 
engaged in these issues, whether through public statements, private 
diplomatic conversations, or targeted programming. Recent events only 
reaffirm the importance of our assistance efforts in the region, 
particularly those that support the development of economic 
opportunities and civil society.
    We are committed to enduring partnerships with our regional allies. 
As events in the region have unfolded, we have maintained close contact 
with them, engaging leaders by phone and in person, as my recent trip 
to Egypt and Tunisia illustrates.
    In our interactions with our partners, we have explained the core 
principles guiding us in the region, emphasized our conviction that 
stability in the Middle East will be enhanced by respecting the rights 
and aspirations of the people of the region, and reiterated our strong 
commitment to supporting a more peaceful and prosperous Middle East in 
close consultation with all our regional partners. We will continue to 
engage our colleagues along these lines in an effort to secure greater 
participation and prosperity for all.
    Question. As corrupt dictators are being deposed in North Africa 
and the Middle East, and Great Britain, Switzerland, France, and the 
United States are seizing property and freezing bank accounts, as they 
should. But it was long suspected, and could have been readily 
verified, that those corrupt officials had foreign bank accounts, as 
well as extravagant estates, private jets and yachts--paid for with 
money stolen from their people. By amassing vast fortunes, they are 
that much more determined to hold onto power even if it means using 
violence. Do you agree that we should go after these ill-gotten gains 
long before things get to this point, and if so, what changes in law or 
policy would that require?
    Answer. Foreign corruption adversely affects the United States; 
including our pursuit of U.S. national security interests, foreign 
assistance goals, and the security of the United States from 
transnational crime and terrorism. High-level corruption, or 
kleptocracy, perpetuates the cycle of poverty, instability, and crime 
that denies the most vulnerable nations and people prosperity. 
Addressing corruption, including kleptocracy, is an important foreign 
policy objective of the Department of State.
    With respect to specific legislative and/or policy recommendations 
for strengthening U.S. law to guard against corrupt officials hiding 
assets in the United States or abusing our financial system, the 
Department of State defers to the Justice Department (DOJ). The 
Criminal Division's Asset Forfeiture and Money laundering section (DOJ/
AFMLS) leads DOJ's Kleptocracy Asset Recovery Initiative, which is 
designed to target and recover the proceeds of kleptocracy that find 
their way into our banking and financial systems. DOJ/AFMLS is 
currently litigating civil forfeiture cases involving assets stolen 
from countries victimized by high-level corruption and is developing 
legislative proposals to strengthen U.S. law in this area.
    While operational authority to pursue proceeds of corruption (so-
called ``stolen assets'') resides with other agencies of the U.S. 
Government, the State Department promotes a wide variety of diplomatic 
and programmatic initiatives to prevent proceeds of corruption from 
being stowed abroad in the first place.
    Since 2003, the United States has worked with the international 
community to deny kleptocrats and their assets any safe haven in the 
territories and financial systems of other countries. In 2003, at the 
G8 Summit in Evian, France, the United States strongly promoted 
adoption of the No Safe Haven policy, aimed specifically at senior 
corrupt public officials. We successfully advocated for adoption of 
similar principles in the Summit of the Americas and Asia-Pacific 
Economic Cooperation fora. Most recently, the United States was able to 
secure adherence to the No Safe Haven principle in meetings of the G-20 
leaders. The United States is working assiduously to promote 
implementation of this commitment. The United States implements No Safe 
Haven for corrupt officials through Presidential Proclamation 7750 and 
section 7084 of the 2010 appropriations act and its predecessors.
    The U.S. Government also supports the development and 
implementation of standards to prevent money laundering, including of 
proceeds of corruption. The Departments of State, the Treasury, and 
Justice act as leaders in the Financial Action Task Force (FATF) and 
provide support to many of the FATF-Style Regional Bodies. The United 
States supports the FATF's current work to clarify and strengthen, 
where appropriate, relevant standards, including for beneficial 
ownership related to customer due diligence and legal persons, and the 
identification and application of enhanced due diligence for 
``politically exposed persons'' (PEPs). The United States was a pioneer 
in providing due diligence requirements in the PATRIOT Act to assure 
that transactions for private banking accounts of senior foreign 
political figures, close family, and associates did not involve the 
proceeds of corruption.
    Additionally, the United States led the development of, 
participates in, and strongly supports many global instruments that 
target issues such as corruption and kleptocracy, including the UN 
Convention against Corruption (UNCAC), the Convention on Combating 
Bribery of Foreign Public Officials in International Business 
Transactions, and other regional treaties and initiatives such as the 
Inter-American Convention against Corruption and the Council of 
Europe's Group of States against Corruption. These legal instruments 
lead parties to take measures to prohibit bribes to foreign public 
officials in the conduct of international business, and they require 
governments to adopt the strong preventive measures and robust criminal 
justice tools that are necessary to prevent, deter, and prosecute 
corruption domestically. In some cases, these treaties also require 
parties to establish anti-money laundering regimes including measures 
requiring enhanced scrutiny of PEPs.
    Further to the 2006 Strategy to Internationalize Efforts against 
Kleptocracy: Combating High-Level Public Corruption, Denying Safe 
Haven, and Recovering Assets, the United States has sought to encourage 
other countries to adopt and apply tools against kleptocracy, including 
tools for the recovery of stolen assets. The United States led 
negotiation of the novel Asset Recovery chapter of UNCAC, which 
provides tools for intergovernmental cooperation to trace, freeze, 
seize, and return proceeds of corruption. The United States continues 
to work with partners to raise and discuss approaches for further 
concrete implementation of the UNCAC asset recovery provisions. The 
Departments of State and Justice worked together in the last UNCAC 
Conference of States Parties to secure agreement by the 143 parties to 
recommit to action on asset recovery and to set the road map for 
further cooperation. The United States also collaborates with other 
leading organizations and initiatives that are promoting best practices 
and facilitating asset recovery capacity building, such as the Camden 
Asset Recovery Information Network, INTERPOL, and the Stolen Asset 
Recovery (StAR) Initiative.
    To recover stolen assets, countries need capacity to investigate 
and substantiate requests for international legal cooperation. A range 
of ongoing U.S.-sponsored technical assistance is targeted to build 
capacity to recover corruption proceeds. The United States has posted 
asset recovery country advisors in pilot countries to build capacity 
related to mutual legal assistance. The United States has also provided 
financial and expert support to asset recovery workshops in various 
regions.
    U.S. law enforcement and prosecutorial authorities work closely 
with counterparts in other governments on investigations and mutual 
legal assistance to support recovery of assets, with the support of the 
State Department where appropriate. The United States has repatriated 
corruption proceeds in several significant cases in recent years. For 
example, the United States has confiscated and repatriated to Peru 
corruption proceeds worth more than $20.2 million connected to the 
criminal conduct of former Peruvian intelligence chief Vladimiro 
Montesinos and his associates. Similarly, as a result of close 
investigatory cooperation, the United States was able to forfeit and 
repatriate to Nicaragua more than $2.7 million connected to the 
criminal conduct of former Nicaraguan Tax and Customs Minister Byron 
Jerez.
    Question. From everything I read and hear, the Middle East peace 
process--as it has traditionally been called--is going nowhere. Last 
week The Wall Street Journal quoted a member of the Palestinian 
Liberation Organization's Executive Committee saying: ``If negotiations 
are not an effective tool of peacemaking, what do we need them for? '' 
Other accounts describe U.S. officials declaring the Roadmap dead. 
Meanwhile, the Palestinian Liberation Organization disbanded the 
cabinet and there is talk of creating a unity government with Hamas. 
Iran is becoming more threatening, Israel is more isolated than ever, 
and settlement construction and the demolition of Palestinian homes in 
the West Bank continue.
    Does the Roadmap still reflect the administration's policy? Does a 
two-state solution still have viability, or is it just a talking point? 
What is the alternative?
    Answer. Our goal is to pursue and achieve comprehensive peace in 
the Middle East, central to which is a resolution of the Israeli-
Palestinian conflict based on the two-state solution. Ending the 
conflict through the two-state solution is the only way to achieve long 
term security, preserve Israel as a Jewish and democratic state, and 
realize the legitimate aspirations of the Palestinian people to a 
viable, contiguous, and democratic state of their own.
    The Obama administration has joined the Quartet in underscoring the 
need of both parties to adhere to previous agreements and obligations, 
including adherence to the Roadmap. We have reaffirmed that unilateral 
actions taken by either party cannot prejudge the outcome of 
negotiations and will not be recognized by the international community. 
The tough issues between Israelis and Palestinians can only be solved 
through a negotiated agreement.
    That is why we continue to pursue a dual track approach, both 
elements of which are key to peace and stability for Israel and the 
region: serious and substantive negotiations on permanent status issues 
and an equally vigorous institution building track that supports 
Palestinian Authority efforts to build, reform, and sustain critical 
institutions so that they are prepared for statehood.
    Question. What is the State Department doing to control the cost of 
Embassy construction and operations and maintenance, and what are you 
doing to be sure you are achieving the right balance between security 
and public access to our Embassies?
    Answer. Embassies and consulates are more costly to design and 
build as compared to traditional office buildings because the 
Department must comply with very strict security standards. The 
Department is working to develop and use every possible mechanism to 
control costs while building to comply with statutory requirements and 
respond to the realities of a dangerous world. Our new diplomatic 
facilities are designed and constructed in accordance with U.S. 
building codes, using American-made materials and industry best 
practices to the greatest extent possible.
    Going forward, our Bureau of Overseas Buildings Operations (OBO) is 
undertaking a Design Excellence program to ensure that the next 
generation of facilities will incorporate best-value practices through 
the use of systems and materials that are easier to maintain and 
operate in the long term. In addition, all new construction projects 
are designed and constructed to achieve a minimum LEED Silver 
certification from the U.S. Green Building Council. Given the added 
sophistication of these modern platforms, we have also undertaken 
several initiatives to improve the cost-effectiveness of operation and 
maintenance at these facilities.
    The Department, and other overseers of major construction work, is 
subject to the vagaries of the market, especially the rising costs for 
petroleum, steel, and concrete. The Department works to control 
construction, operations, and maintenance costs through:
      Value Engineering.--Use of construction industry best practice 
        review of each project to ensure optimum function of each 
        building component.
      Constructability Reviews.--A review of the project to identify 
        planning modifications that will make it less expensive/easier 
        to construct.
      Preventative Maintenance.--Use of a significant portion of 
        limited maintenance funding to perform preventive maintenance, 
        thus avoiding larger repair costs in the future.
      Competitive Bids.--Construction projects are awarded through a 
        competitive bidding process which ensures fair market value.
      Management Reviews.--Monthly project performance reviews with 
        senior managers to ensure that project budgets and schedules 
        are maintained.
      Sustainability.--Green building initiatives hold down operation, 
        maintenance and utility costs, including exploiting renewable 
        energy sources such as photovoltaics, geothermal heating and 
        cooling, natural daylighting, LED lamps, solar hot water 
        heating, and automated controls. Water conservation is 
        addressed through rainwater harvesting, waterless urinals, dual 
        flush toilets, and other low-flow fixtures.
      Maintainability Reviews.--Reviews of all construction designs 
        prior to contract award to identify inefficient operational 
        features.
    Unfettered public access to our Embassies is, unfortunately, 
impossible in today's security environment. Nonetheless, the Department 
designs facilities to separate public areas such as consular and public 
diplomacy from more sensitive functions. The Department also works to 
integrate protective security features into the general architecture of 
our buildings and use unobtrusive surveillance and detection equipment 
throughout. Going forward, through our OBO Design Excellence 
initiative, we are working to improve the design of our overseas 
facilities in a number of different ways to ensure that they are 
welcoming and physically represent the U.S. Government to the host 
nation in a positive way.
    In addition, in some locations the Department is working to enhance 
U.S. Government outreach to foreign publics through American Centers 
that are physically separated from our Embassy or consulate, as well as 
maintaining existing centers. This past year, we successfully 
established a new center in Jakarta, with another American Center in 
the works for Rangoon.
    Question. Your fiscal year 2012 request includes $3.7 billion for 
Department of State operations in Iraq, including buildings, personnel, 
security, and helicopters. This does not include the cost of the State 
Department's programs there, which are also rising sharply.
    While we understand that the United States military costs in Iraq 
are going down, this is a 72 percent increase more than the State 
Department's fiscal year 2010 operations in Iraq, and represents almost 
one-third of the fiscal year 2012 budget request for Department of 
State operations worldwide. I am concerned that the civilian transition 
envisioned by the administration may be financially unsustainable.
    What steps has the Department of State taken to prioritize the 
goals of the transition from a United States military to a civilian 
presence in Iraq, and what are the goals?
    The Department of State has identified $3.2 billion of its fiscal 
year 2012 Iraq operations costs as ``temporary and extraordinary.'' 
What does temporary mean in this context? Two years? Five years? Ten 
years?
    Answer. The fiscal year 2012 budget request for programs in Iraq 
will continue to help the Government of Iraq, and the Iraqi people, 
bridge economic and security gaps. Our consulates in Basrah and Erbil, 
though located in temporary facilities, are permanent. We expect our 
consulate in Kirkuk, which is along the Arab-Kurd fault-line, as well 
as our significant Iraq-wide security assistance programs and our 
Police Development Program (PDP), to last approximately 3-5 years. We 
will continue to reduce our presence as our programs are transferred to 
other U.S. Government entities, Government of Iraq ministries, or 
participating international organizations.
    Planning.--The magnitude of this transition is unprecedented, and 
the security environment is very challenging. In anticipation of the 
planned U.S. military drawdown, we have sustained an intensive, 2-year 
effort both within the Department of State and with our partners across 
the U.S. Government. This process has included daily involvement of 
both Deputy Secretaries of State and close coordination with United 
States Forces-Iraq and the Department of Defense (DOD). In addition, 
DOD and the Department of State have created Iraq Transition 
Coordinator positions, in order to lead our respective departments in 
the final planning and implementation of the transition. We continue to 
work daily with DOD and other agencies to implement and, as necessary, 
adjust our planning, and resolve any issues that may arise. We are on 
track to complete the transition successfully.
    In planning for continued engagement following the withdrawal of 
U.S. forces, the Department of State has worked hard to include only 
essential elements. There are currently 14 planned sites:
  --the Embassy;
  --two permanent consulates in Erbil and Basrah;
  --a temporary consulate in Kirkuk;
  --air hubs at Sather Air Base, Basrah, and Erbil;
  --police training centers at Contingency Operating Station (COS) 
        Erbil and Joint Security Station (JSS) Shield (the third 
        International Narcotics and Law Enforcement [INL] site is 
        collocated with consulate Basrah); and
  --four OSC-I sites at Forward Operating Base (FOB) Union III, 
        Besmaya, Taji, and Um Qasr.
    We need secure, centrally placed locations to conduct the broad 
engagement required to achieve our policy goals.
    Baghdad.--In Baghdad, JSS Shield will serve as the main hub for 
INL's PDP. This site is located adjacent to the Ministry of Interior 
and Baghdad Police College, where INL will conduct substantial 
mentoring, training, and advising.
    Erbil.--Erbil will serve as a platform for United States economic 
programs in the Kurdistan region of Iraq. Erbil will also be our focal 
point for engagement with the Kurdistan Regional Government (KRG). KRG 
participation in the coalition government is critical to foster 
national unity, political reconciliation, and stability. Consulate 
Erbil will also provide a platform for engagement by U.S. Agency for 
International Development (USAID), DOJ, INL, and other government 
agencies.
    Not all personnel and operations can be housed at the existing 
consulate site in Erbil. Therefore, INL's PDP hub in the north, a small 
number of DOJ personnel, all Embassy air aviation personnel, and 
logistics and management personnel will be housed at COS Erbil.
    Basrah.--Development of Iraq's hydrocarbon industry is essential to 
providing revenues to improve basic services like power, water, 
security, and education. Our consulate in Basrah will continue to 
assist development efforts of reserves in Southern Iraq. Consulate 
Basrah will also house DOS, USAID, DOJ, INL (including the PDP), and 
Department of Homeland Security personnel.
    Kirkuk.--The status of Kirkuk remains one of the most volatile 
issues in Arab-Kurd relations. Consulate Kirkuk, along with the United 
Nations, will continue to address political, economic, and governance 
issues designed to support a political agreement on the status of 
Kirkuk. Consulate Kirkuk will also provide a platform for engagement by 
INL, DOJ, and other agencies.
    OSC-I.--The four OSC-I sites will provide engagement on critical 
security cooperation and security assistance programs at strategic 
centers where key FMS cases continue. The OSC-I headquarters is planned 
for FOB Union III across from the Embassy and close to the Ministry of 
Defense. It will manage security cooperation and assistance activities 
throughout Iraq. The Besmaya OSC-I site will be located within the 
Iraqi Army's Besmaya training complex--the primary center for Iraqi 
ground forces training and delivery location for several major FMS 
cases.
    The OSC-I Taji site is at the Iraqi Army's logistics center, and 
will facilitate the development of the ISF's logistical and sustainment 
capability and manage rotary-wing FMS cases. Finally, the OSC-I site at 
Umm Qasr is in Iraq's only naval base, which is critical to protecting 
Iraq's oil infrastructure. The site will support security cooperation 
activities with the Iraqi Navy as well as manage FMS naval cases.
    Aviation.--Three aviation hubs (Baghdad, Erbil, and Basrah) are 
being established to provide transportation of personnel to and from 
the sites listed above and to other sites (including PDP visits). Air 
operations will also provide security for Chief of Mission personnel, 
quick reaction capabilities, and medical evacuation. The three sites 
are required to provide coverage based on locations supported and range 
of aircraft, using a hub and spoke concept that employs fixed- and 
rotary-wing aircraft for maximum efficiency.
    Question. Pakistan cannot feed or educate many of its people who 
live in poverty. Yet on February 1, the New York Times reported that 
Pakistan's nuclear weapons program has continued to grow, and that it 
now has about 100 nuclear weapons and enough nuclear material for 40-
100 additional weapons, including plutonium bombs. It is on course to 
becoming the fourth-largest nuclear power, ahead of France. In the past 
decade American taxpayers have provided $10 billion in aid to Pakistan, 
much of it for the military, but also for education, health, electric 
power, and other needs that the Pakistani Government should be paying 
itself. Since money is fungible, are we, in effect, indirectly 
subsidizing their nuclear program?
    You have indicated that the Department of State will press Pakistan 
on tax reform and corruption to ensure that American taxpayers are not 
footing the bill for Pakistan's poor when its own elite pay little or 
no taxes and widespread corruption may interfere with USAID goals. How 
has the State Department improved monitoring of United States aid to 
ensure it achieves the intended purposes? What reforms, if any, has 
Pakistan undertaken to improve the lives of its people?
    The administration has vowed to channel most United States aid 
through Pakistani Government agencies and local contractors. What 
portion of all United States aid to Pakistan is distributed this way?
    Answer. United States assistance to Pakistan is aimed at building 
partnership based on mutual goals and values, fostering long-term 
stability, and improving the daily lives of Pakistanis. As such, the 
funds we provide are used to improve the security, prosperity, and 
stability of Pakistan. We work together with the Government of Pakistan 
to identify and pursue initiatives that are aligned with our shared 
objectives, while ensuring accountability and oversight of United 
States funding. When we choose to provide assistance to a particular 
sector in Pakistan, we negotiate with the government to ensure that our 
funding is in addition to, rather than replacing, the Government of 
Pakistan's intended investment in that sector.
    A robust set of accountability mechanisms is also an integral part 
of our civilian assistance program, to ensure the funds are used to 
improve the lives of Pakistanis, as the funds were intended. USAID 
conducts pre-award assessments to ensure systems are in place to ensure 
the proper and transparent use of funds, and INL uses extensive 
inspections and end-use monitoring. The State Department Office of the 
Inspector General and its USAID counterpart have been able to conduct 
audits on a number of Pakistani organizations. Also, Pakistan's Supreme 
Audit Agency, the equivalent of our General Accountability Office, has 
been cooperative in reviewing and auditing programs. All of our 
programs must have appropriate accountability and transparency measures 
in place before we release any funding.
    We remain concerned about Pakistan's continued development of its 
nuclear arsenal, and this is a topic that we regularly discuss with 
them, including in the Security, Strategic Stability, and 
Nonproliferation Group, 1 of the 13 working groups that meet under the 
U.S.-Pakistan Strategic Dialogue framework.
    The Government of Pakistan has recently taken steps to expand its 
revenue base and improve its ability to provide the services its people 
need. Three new tax ordinances and the rescission of several sales tax 
exemptions are expected to generate $620 million in the fourth quarter 
of Pakistan's fiscal year 2011 (March-June). Pakistan has also taken 
steps to adjust fuel prices and electricity tariffs to reflect more 
accurately the costs of providing fuel and electricity. We must 
continue to work with Pakistan to encourage the adoption of permanent 
and more comprehensive reforms to help put Pakistan on a path to fiscal 
stability and economic prosperity.
    We believe that implementing a portion of United States assistance 
through Pakistani institutions is critical to building capacity, 
strengthening our partnership, and fostering long-term development. 
This year, we expect that roughly one-half of the civilian assistance 
provided to Pakistan will be implemented through Pakistani Government 
agencies, whether Federal or provincial, and about 12 percent of USAID-
managed funding is implemented through Pakistani non-governmental 
organizations. We are working to ensure that United States assistance 
is aligned with Pakistani priorities and has accountability mechanisms 
in place to ensure proper use of the funds.
    Question. The U.S.-Colombia Free Trade Agreement was signed 6 years 
ago. From what I understand, U.S. exporters have a lot to gain from 
this agreement. One of the biggest problems for passage of the 
agreement is the history of assassinations and threats against 
Colombian trade unionists, which the former Colombian Government never 
treated as a priority. President Santos and Vice President Garzon--a 
trade unionist himself--say they are trying to investigate and punish 
those responsible for these crimes, but they have been in power less 
than 7 months so it is too soon to know if they will succeed. Is the 
Colombian Government doing all it can to investigate and prosecute 
these crimes? What more needs to happen before the administration sends 
the agreement to the Congress and fights for its passage
    Answer. President Santos has made great progress in improving the 
environment for labor rights in Colombia. The Santos administration 
has:
  --denounced threats to labor and human rights leaders;
  --increased penalties for violence against human rights defenders;
  --made clear it respects the role of labor and human rights groups; 
        and
  --increased funding for its protection program, which now covers more 
        than 11,000 at-risk individuals.
    Additionally, Colombia's Prosecutor General's Office reports that 
it is investigating more than 1,300 labor-related cases, and has 
obtained 344 convictions.
    Despite this progress, the Colombian Government realizes it must do 
more to address lingering concerns over labor violence. The Santos 
administration will continue to work closely with the Prosecutor 
General's Office to remedy the shortfalls that Office is currently 
facing and develop a strategy to resolve the backlog of labor homicide 
cases.
    The U.S. Government has made clear to Colombia that three areas of 
concern must be addressed:
  --the protection of internationally recognized labor rights;
  --prevention of violence against labor leaders; and
  --the prosecution of the perpetrators of such violence. We understand 
        these concerns are shared by the Santos administration, and we 
        are encouraged by their recent actions, but more needs to be 
        done.
    On February 9, U.S. Trade Representative Kirk announced the 
President had directed him to intensify our engagement with Colombia to 
resolve the outstanding issues as quickly as possible this year. As we 
work with Colombia to address remaining issues, we will reinforce the 
significant progress Colombia has made in addressing human rights and 
labor issues.
    Question. It would be hard to think of any higher priority for our 
Embassies than protecting Americans abroad, and helping them when they 
are in trouble. Thousands of Americans are victims of crimes in foreign 
countries every year, including murder. We try to help the families get 
justice where investigations are cursory, the justice system is 
corrupt, and convictions are rare--cases like Bradley Will, a 
journalist who was killed in Mexico; Kate Puzey, a Peace Corps 
volunteer killed in Benin; and Rachel Corrie who was killed in Gaza. 
Years have passed and their families are still waiting for justice. 
What is the Department's policy when an American is killed, the 
investigation is flawed, and there is no justice? Shouldn't there be a 
consequence? At what point do we withhold aid?
    Answer. The provision of services to U.S. citizens who have been 
victims of crimes overseas is one of the highest priorities of U.S. 
Embassies and consulates. When U.S. citizens are killed overseas, and 
specifically in the cases cited above, the U.S. Embassy requests on a 
regular and recurring basis that the host government provide status 
updates on the criminal investigation. We make these requests in the 
form of diplomatic notes, and in meetings between Embassy officials and 
foreign government contacts at all levels, which serve both to 
communicate our on-going interest in the case and push for thorough, 
credible, and transparent investigations.
    Bilateral foreign aid is developed on the basis of overall good 
relations and our goals with a country and may or may not be influenced 
by a judicial failure--depending on the role and responsibility of the 
host government. Often our foreign assistance includes support to 
improve and strengthen the capacity of partner country law enforcement 
and judicial institutions as well as support for civil society and 
independent media to hold government institutions accountable to 
citizens.
    Personnel at our posts overseas receive training on how to 
communicate effectively with victims of crime and understand their 
reactions to trauma. Embassy employees identify local resources 
available to victims of crime in their district, and keep friends and 
family back home informed of the situation in accordance with the 
victim's wishes. While we cannot provide legal services to the victims, 
we do assist victims of crime and their families in managing the 
practical consequences of overseas crime by providing information about 
the local criminal justice system, explaining how it might differ from 
our judicial system, and providing a list of local attorneys. We 
continue to provide assistance as appropriate during their time 
overseas and help identify resources available to them at home if they 
choose to return to the United States.
    Question. In 2009, the administration made ``Afghanization'' of aid 
a major goal. Did the administration meet its goal of 40 percent of 
assistance delivered through the Afghan Government or local 
nongovernmental organizations by December 2010? What proportion was 
delivered through the government?
    Answer. In fiscal year 2010, USAID provided 35 percent of its 
assistance on-budget through the Afghan Government. In fiscal year 
2011, we estimate that between 37 and 45 percent of State and USAID 
development assistance--distinct from stabilization programs--will be 
on-budget, based on our fiscal year 2011 base appropriation request 
level.
    In 2012, State and USAID aim to meet the London Conference goal of 
channeling at least 50 percent of development aid through the Afghan 
Government's core budget. The 50 percent goal is a shared 
responsibility, however, in that it requires the Government of 
Afghanistan to take critical steps to ensure its ministries and 
agencies are prepared to effectively and accountably implement 
assistance.
    Question. Corruption remains a real problem. How confident are you 
that United States assistance provided directly to the Afghan 
Government or contracted to Afghan businesses is being used effectively 
and not being diverted to illicit purposes?
    Answer. A major ongoing focus of our anti-corruption efforts is 
safeguarding U.S. assistance funds. The United States Government has 
only provided funding directly to the Afghan Government in instances 
where the capacity for oversight and accountability at a Ministry has 
been determined to meet our standards or when the funds can be 
administered through trustworthy mechanisms, such as the Afghanistan 
Reconstruction Trust Fund. To further strengthen U.S. assistance 
against corruption, we have systems in place to examine civilian and 
military contracting practices and establish better oversight of our 
funds. The military Task Force Shafafiyat (``Transparency'' in Dari), 
which includes within it Task Forces 2010, Spotlight, and Nexus, is 
working along with the Embassy to identify the scope of the corruption 
problem and develop solutions in the areas of U.S. contracting 
practices, personal security contracts, and counternarcotics. There are 
provisions built into our civilian and military contracts to counter 
opportunities for corruption, both high- and low-level. Civilian and 
military agencies are sharing information about contractors, improving 
contractor and sub-contractor vetting and supervision, and blacklisting 
companies which violate United States or Afghan laws.
    Question. What success has the civilian aid effort had in 
establishing effective programs in areas being opened up by U.S. 
troops--for example, in Helmand and Kandahar provinces? How has 
insecurity in these areas affected the ability of aid workers to move 
about and deal directly with the Afghan people they are there to help?
    Answer. Over the past year in Southern Afghanistan, the 
insurgency's capability and scope in Kandahar and surrounding districts 
have been curbed and its momentum slowed. There is cause for cautious 
optimism. USAID has played a critical role as part of the United States 
Government strategy to help elevate civilian Afghan leadership, to hold 
security gains through the fighting season, and to lay the ground for 
longer-term development.
    Some examples of successes:
  --Under USAID's RAMPUP project, a debris removal program in Kandahar 
        City was rolled out in Districts 1, 2, 3, and 9 in February 
        2011. The program will eventually employ approximately 1,200 
        people each week to remove accumulated debris in 10 districts 
        of the Kandahar municipality.
  --Under the Afghanistan Stabilization Initiative (ASI), a pomegranate 
        project benefited nearly 600 people, including farmers, traders 
        and their assistants, who received training and quality-control 
        monitors. Branded ``Kandahar Star'', 25 metric tons of the 
        fruit were shipped to Dubai and sold to upscale retailers such 
        as Carrefour. An additional 16 metric tons were shipped to 
        Canada, and more than 4 metric tons were shipped to India. From 
        these shipments, Afghan farmers realized significantly higher 
        payments for their fruit than they would have received on local 
        markets. The ASI has also procured essential equipment for FM 
        radio stations to be set up at several forward operating bases/
        PRTs in Southern Afghanistan. The new stations will serve as a 
        vital communication tool for Afghan Government institutions to 
        solicit community feedback and input regarding government 
        performance, services desired, and other important issues for 
        the population. Providing local citizens with improved access 
        to information will counter the Taliban's message of violence 
        and allow for participation in the governance process.
    Due to the security situation in these areas, prudent and judicious 
measures must be taken to ensure staff safety. Leaving compounds or 
private residences in high-threat environments requires a great deal of 
coordination with the local security contingent as well as approval 
from the regional security officer (RSO), who sets security practices 
for Chief of Mission personnel. Under Public Law 99-399 (Omnibus 
Diplomatic Security and Antiterrorism Act of 1986), Chiefs of Mission 
(COMs) and Embassy RSOs can be held personally accountable when there 
is serious injury or loss of life of COM personnel. Due to the nature 
of the security situation in areas of Afghanistan, USAID currently 
relies extensively on dedicated Quality Assessment/Quality Control (QA/
QC) contractors, along with the military, implementing partners, and 
foreign service nationals to help monitor programs.
    Question. Last year, in response to a request from this 
subcommittee, the State Department provided a preliminary report on 
crimes against humanity and war crimes in the final months of the 
internal conflict in Sri Lanka. I and other Senators would like to 
receive an updated report on this subject, including an assessment of 
investigations by the Sri Lankan Government and the United Nations, and 
whether the people responsible for these crimes have been appropriately 
punished. Will you ask the Office of the Ambassador for War Crimes to 
provide us such a report?
    Answer. In response to your request, the Department of State will 
provide an update of our previous reports of October 22, 2009, and 
August 11, 2010.
    Question. The administration proposes to reduce the Assistance to 
Europe, Eurasia, and Central Asia account by more than 15 percent in 
fiscal year 2012. Given the number of important U.S. interests in the 
region--stability in the Balkans, preventing conflict in the Caucasus, 
supporting groups fighting for human rights and the rule of law in 
authoritarian societies from Russia to Azerbaijan to Uzbekistan--
doesn't such a large cut signal that we are disengaging from a region 
where we need to continue working to solidify our relations?
    Answer. The U.S. commitment to the region has not changed. 
Southeastern Europe, Eurasia (including the Caucasus) and Central Asia 
remain vitally important in terms of United States foreign policy 
interests. Reductions in assistance to the region have been driven by 
the difficult budget environment. Within that context, the President's 
request reflects a reallocation of resources to other global demands, 
weighing factors such as progress made, the work of other donors and 
U.S. assessments of the key remaining challenges in the region.
                                 egypt
    Question. ABC television reported on February 11 that the United 
States paid for executive jets for President Mubarak and top members of 
his government. I have tried to get more information about this. Do you 
know if this happened and what funds were used? Can you assure us that 
we are not buying planes like that for other governments?
    Answer. Egypt has used Foreign Military Financing (FMF) to enhance 
airlift capability for its National Command Authority. The Egypt VIP 
Aircraft Program (Peace Lotus) has provided the Government of Egypt 
with Gulfstream (GIII and IV) executive jets via Foreign Military Sales 
and Direct Commercial Sales. The first of these aircraft was acquired 
in 1984 and the last was purchased in 2002. Some aircraft were acquired 
using solely national funds while others were acquired using a 
combination of national funds and FMF funds. Egypt partly covers the 
cost of maintenance of the aircraft with national funds. Egypt's FMF 
share of the acquisition and maintenance of these aircraft was 
approximately $333 million, out of a total cost of approximately $378 
million.
    In addition to Egypt, the Israeli Air and Space Command has 
acquired, via FMF a number of the Gulfstream aircraft.
    Questions. Another report that triggered many concerns was that 
tear gas used against peaceful protesters by Egyptian police came from 
the United States. Are we providing this type of ``crowd control'' 
equipment to the security forces of other repressive governments that 
might use it against their citizens, and if so, can we be confident 
this will stop?
    Answer. Tear gas and similar equipment are manufactured and sold to 
provide nonlethal options to disperse large crowds and prevent 
violence. There is currently no blanket restriction on the sale of 
nonlethal crowd-control items to countries that are otherwise not 
subject to United States or United Nations Security Council arms 
embargo. However, as a matter of policy we can deny export licenses for 
tear gas on a case-by-case basis if we believe the tear gas will be 
misused by the end user.
    All recipients of U.S.-origin defense articles or services are 
required to comply with numerous end-use restrictions and conditions, 
as specified in the foreign military sales Letters of Offer and 
Acceptance and direct commercial sales licenses. Most importantly, 
these conditions require full U.S. access to equipment provided so that 
we may monitor how it is being used.
    Question. Will you do a full Supplemental Environmental Impact 
Statement (SEIS) for the Keystone XL tar sands pipeline project, as 
requested by the Environmental Protection Agency and by many Members of 
Congress, which addresses in detail the issues I and other Senators 
wrote to you about in our letter to you on October 29, 2010?
    Answer. The Department of State expects to release a Supplemental 
Draft Environmental Impact Statement (SDEIS) for the proposed Keystone 
XL pipeline project in mid-April. The SDEIS contains information that 
the State Department feels would benefit from further public input, 
including issues addressed in your letter such as life-cycle greenhouse 
gas emissions, pipeline safety, environmental justice, and petroleum 
market impacts. The public will have 45 days to comment on the SDEIS 
after a Federal Register notice is published. Following issuance of a 
Final EIS, the State Department will solicit public comment and host a 
public meeting in Washington, DC, before it makes a determination under 
Executive Order 13337 on whether issuance of this permit is in the U.S. 
national interest.
    Question. The Commission on Wartime Contracting released its second 
interim report on February 24, 2011. This report included a number of 
recommendations to address the underlying causes of poor outcomes of 
contracting and to institutionalize the changes to the Federal 
contracting processes in contingency operations such as Iraq, Pakistan, 
and Afghanistan. Two key findings are the lack of the agencies' 
internal capacity, including senior managers' ability, to oversee 
contracts, manage contractors, and control contract costs; and the 
over-reliance on contractors, particularly in contingency operations.
    What specific steps is the Department of State taking to reform its 
procurement process and improve the managers' ability to manage 
contracts, particularly in areas of contingency operations? Also, it 
has been several years since the Department instituted the 1 percent 
procurement fee for all procurement awards. What improvements and 
changes have been instituted by the Department of State as a result of 
this fee? What evidence does the Department of State have that it is 
cost effective and meeting the procurement needs of the Department?
    Answer. The Department experiences continuous contingencies in our 
daily operations around the world under challenging conditions. As 
needed, the Department creates task forces and working groups to deal 
with these situations. The Department of State continues to centralize 
procurement operations in the Bureau of Administration's Office of 
Logistics Management (A/LM), and its branches, the Regional Procurement 
Support Offices (RPSO); we find this model to be most effective in 
supporting contingency situations during natural disasters such as the 
Haiti earthquake, as well as during ongoing stabilization and 
reconstruction as in Afghanistan and Iraq.
the quadrennial diplomacy and development review (qddr) and contracting
    Question. In December 2010, the Department of State issued its 
first ever QDDR, which provides a blueprint for elevating American 
``civilian power'' to better advance our national interests and to be a 
better partner to the U.S. military. The QDDR sets out four key 
outcomes for the State Department and USAID, one of which is working 
smarter to deliver results for the American people, including managing 
contracting and procurement to achieve our mission effectively and 
efficiently.
    We have begun implementing the QDDR to improve contracting 
oversight; some specific examples are as follows:
      Elevate the Status of Contract Oversight Personnel.--As initial 
        steps, this summer we plan to create a Contracting Officer 
        Representative (COR) Award to highlight contract administration 
        achievements by the COR, and publish an article in State 
        Magazine highlighting the importance of contract administration 
        and the valuable role of the COR.
      Link Oversight Duties to Performance Evaluation.--In January 
        2011, we issued Department notices reminding staff of work 
        elements for CORs and Government Technical Monitors (GTMs).
      Expand Training.--Training will be expanded by launching a 
        skills-based COR class, expected no later than May 2011. The 
        Department also adopted the Federal Acquisition Certification--
        Contracting Officer Representative (FAC-COR) requirements for 
        initial and continuous training in the business and technical 
        skills of contract administration; additional information is 
        presented below.
      Elevate Accountability for Planning and Oversight of Large 
        Contracts.--As part of the QDDR process, the Department of 
        State instituted a requirement for the Assistant Secretary of a 
        Bureau with a service contract with expenditures exceeding $25 
        million per year to certify that adequate contract 
        administration resources have been identified to manage the 
        contract.
    As a fee-for-service organization, charging bureaus a 1 percent fee 
on all Department of State procurements, we have the resources to 
surge. Since the fee was implemented in 2008, we have hired 102 
additional staff for contract administration.
    The Department of State uses very few cost-reimbursement contracts. 
Embassy construction and most major programs are fixed price. The 
Department of State uses competition to drive cost conscious 
operations, as with our Worldwide Protective Services (WPS) contract, 
where task orders are competed among the eight contract holders.
              increased contract management and oversight
    Question. The Department of State has increased contract management 
and oversight both by its professional acquisitions staff, and by 
program offices that utilize contract support.
    Acquisitions/Training.--As noted above, we have increased our 
training to enhance the skills of our contracting personnel. The Office 
of Federal Procurement Policy (OFPP), Letter 05-01, Developing and 
Managing the Acquisition Workforce, requires that the Federal 
Acquisition Institute (FAI) develop a certification program for 
contracting professionals in civilian agencies that reflects common 
standards for education, experience, and training.
    In general, for contracting officers series GS-1102, the Department 
of State requires each acquisition professional to complete FAI's 
certification program, consistent with the OFPP letter, which reflects 
common standards of education, experience, and training among civilian 
agencies. These common standards serve to improve the workforce 
competencies and increase career opportunities. They are being 
implemented by the Office of the Procurement Executive and Head of 
Contracting Activity at the Department of State. The full training 
requirements for FAC-COR certifications for GS-1102 can be found at 
www.dau.mil or www.fai.gov. For complex contracts such as the WPS, all 
CORs are required to be level II- or level III-certified.
    Program Offices.--We agree with the Wartime Commission's 
observation that the Department's program offices need to plan 
effectively for COR support. INL and the Bureau of Diplomatic Security 
(DS), the two bureaus most heavily involved in overseas contingency 
contracting, are both significantly increasing resources to support 
contract administration.
    In general, all Department of State CORs, per the Procurement 
Executive Bulletin No. 2010-20 are required to obtain FAC-COR 
certification, which entails completion of Foreign Service Institute 
Course No. PA 178 Contracting Officers Representative (40 hours); or PA 
296 How to Be a Contracting Officers Representative (online version); 
or equivalent other agency commercial COR training as approved by the 
Office of the Procurement Executive.
    Diplomatic Security.--The private security contractors (PSCs) who 
protect our diplomats in high-risk environments perform an essential 
function that enables the conduct of American diplomacy in the places 
where it is needed the most. The Department of State has worked hard to 
enhance oversight of PSCs, and DS has further developed its plan for 
oversight and operational control of PSC personnel. For the DS WPS 
contract issued in September 2010, DS has increased staffing to 
administer the contract and its task orders to ensure contract 
compliance. Key oversight elements for the WPS contract are listed in 
Attachment A.
    INL Improvements.--INL has taken steps since 2006 to improve 
contract administration and program management, including for 
operations in conflict areas, in response to a variety of oversight 
community recommendations as well as INL's own managerial initiatives. 
Among the improvements are enhanced financial management, contract 
administration and oversight standard operating procedures and 
additional education for our personnel that strengthen INL's management 
and operations in those venues. Beginning in 2006, INL used the 
findings from three internal reviews of our Iraq and Afghanistan 
contract administration processes and controls to develop a new 
contract administration framework, with tougher contract oversight, 
invoice reviews, and reporting requirements. Key among the improvements 
was the establishment of an office that provides contract oversight and 
supports program management for Afghanistan and Iraq as well as 
increased staffing for contract administration and program management 
at headquarters and in the field. Specific INL improvements are listed 
in Attachment B.
    In conclusion, the Department of State has implemented many 
improvements in its contract oversight and management, and will 
continue to do so as we execute the QDDR initiatives. The Department of 
State has taken very seriously the recommendations of the Wartime 
Commission as well as other oversight organizations to increase our 
contract oversight staff and elevate this function to the status that 
it deserves. We will continue our efforts to improve our contracting 
administration and oversight.

                              Attachment A

            diplomatic security--oversight for wps contract
    Key elements of oversight under WPS, currently deployed in Iraq 
include:
  --Ensuring appropriate levels of professionalism and responsive 
        operational responsibility through direct operational control 
        and oversight of security contractor personnel:
    --DS Special Agents at each post serve as managers for the Static 
            Guard and Personal Protective Security programs;
    --DS Special Agents at each post serve as CORs and Assistant CORs 
            (ACORs) for the direct management and oversight of the WPS 
            contract to assist the Contracting Officer;
    --DS personnel at each post are assigned as GTMs to assist the COR 
            and ACOR in the oversight of the WPS contract.
    --Direct-hire DS personnel (DS Special Agents or Security 
            Protective Specialists) provide operational control of 
            protective motorcades.
    --Collocation of contractor life-support areas on Embassy, 
            Consulate, or Embassy branch office compounds will enhance 
            after-hours oversight of contractor personnel;
    --Revised mission firearms policies further strengthen post's rules 
            on the use of force, and less-than-lethal equipment has 
            been fielded as a means to minimize the need to employ 
            deadly force;
    --Video recording and tracking systems are installed in each 
            motorcade;
    --All incidents involving a weapons discharge or other serious 
            incidents are thoroughly investigated by the Regional 
            Security Officer (RSO); and
    --The Office of Acquisitions Management has a dedicated, qualified 
            team of contracting officers and contract specialists 
            assigned to administer PSC contracts. They will make 
            regular field visits to each post to conduct reviews of PSC 
            contracts.
  --Improving the image of the security footprint through enhanced 
        cultural sensitivity:
    --Mandatory country-specific cultural awareness training for all 
            security contractors prior to deployment to Iraq;
    --Revised standards of conduct, including a ban on alcohol; and
    --Interpreter support provided for protective security details.
  --Achieving greater efficiencies through new contract terms:
    --One set of terms and conditions enhances the ability to provide 
            uniform, appropriate, and consistent oversight;
    --Reduced acquisition timelines;
    --Larger number of qualified base-contract holders, thereby 
            increasing competition for each task order while 
            controlling costs;
    --Timely options in the event a company fails to perform;
    --More efficient program management compared to multiple, stand-
            alone contracts;
    --Computerized tracking of contractor personnel to aid in reviewing 
            personnel rosters used to support labor invoices; and
    --Regional auditors from the Defense Contract Audit Agency (DCAA) 
            will be assigned to each company receiving a WPS task 
            order.

                              Attachment B

                       inl oversight improvements
    Since 2006, INL has implemented a variety of contract oversight 
improvements:
  --Instituted more precise Statements of Work (SOWs) and more specific 
        interagency agreements;
  --Employed the use of Quality Assurance Surveillance Plans (QASPs) to 
        more closely monitor contract performance;
  --Required the use of a credible inventory system for use by foreign 
        assistance contractors, which meets Defense Contract Management 
        Agency (DCMA) requirements; and instituted an annual inventory 
        system for contractor purchased property to reinforce 
        accountability measures already employed through INL's end-use 
        monitoring procedures;
  --Increased the number of program officers and contract 
        administration personnel in the field and at headquarters;
  --Defined specific roles and responsibilities for contract 
        administration staff which includes greater specificity in 
        defined standard operating procedures for invoice validation 
        and review;
  --Improved the accessibility of contract management staff to COR 
        files by instituting remote electronic access from the field to 
        headquarters;
  --Engaged the Defense Contract Audit Agency (DCAA) to conduct 
        incurred cost audits of our task orders for Iraq and 
        Afghanistan; and
  --Required contractors to provide more frequent and detailed cost 
        reporting and detailed work plans prior to the commencement of 
        work.
                   conflict stabilization operations
    Question. The fiscal year 2012 request includes a proposal to 
change the name of this program from Civilian Stabilization Initiative 
(CSI) to Conflict Stabilization Operations (CSO). Besides a proposed 
name change, what substantive changes are proposed for this program? 
What evidence does the Department of State have that the CSO 
deployments to date have been successful in responding to countries in 
conflict or crisis? Why does the program require 200 active and 2,000 
stand-by corps members?
    Answer. CSO is more than a name change; it reflects the increased 
emphasis on conflict prevention as a core mission and as a distinct 
discipline within the Department of State and USAID. It builds on the 
accomplishments and experience of the CSI, which currently funds the 
Civilian Response Corps (CRC), the Office of the Coordinator for 
Reconstruction and Stabilization (S/CRS) and their critical work in 
Afghanistan, Sudan, Kyrgyzstan, and many other fragile and conflict 
areas around the world. CSI was originally envisioned primarily as a 
means to support rapid response to countries already in conflict. CSO 
recognizes that preventing and mitigating conflict early is more cost 
effective and beneficial. Indeed, since most current conflicts are 
recurring, prevention and response cannot be treated separately.
    For example, Sudan risked a return to civil war if key elements of 
the Comprehensive Peace Agreement were not implemented. We sent CRC 
members to Southern Sudan to help ensure the referendum on self-
determination took place on time and in a credible fashion. CRC members 
have facilitated resolutions to local violent disputes that threatened 
to vastly complicate Southern Sudan's move to independence. At the 
request of Embassy Bishkek, S/CRS established a temporary assistance 
facility in the southern city of Osh after an outbreak of violence 
between the Uzbek and Kyrgyz communities. Not only did it give the 
Embassy a better understanding of the situation, but the platform put 
the United States in much better position to support Kyrgyz efforts to 
maintain stability and rebuild community relations. The value of these 
deployments--in lives and money saved--is immeasurable when compared 
with the alternative of violent conflict.
    We are strengthening the CRC, using the recently completed force 
review, to ensure that we have the right skills and experience among 
responders, to include both generalists with skills in conflict 
assessment, mitigation and resolution and strategic planning, and 
specialists who bring sectoral expertise in such areas as rule of law, 
public health, and border controls. The CRC are deployed in 
Afghanistan, Sudan, Kyrgyzstan, Pakistan, Iraq, the Democratic Republic 
of the Congo, and the Central African Republic. In order to respond to 
these and other priorities of the United States, we need to have enough 
Active responders so that a portion are in the field, others are in 
training, and others are developing and disseminating lessons from the 
field and otherwise supporting deployments. The Standby Component 
provides needed depth and flexibility and, because they are already 
Federal employees, come at no cost to the CSO until they are deployed.
                                 ______
                                 
            Questions Submitted by Senator Daniel K. Inouye
    Question. In your congressional budget justification, Madam 
Secretary, I was pleased to see that your ``strategic priority is to 
reinvigorate U.S. economic leadership'' in the East Asia and Pacific 
area. You then describe this November's Asian-Pacific Economic 
Conference (APEC) 2011 leader's meeting as ``an unmatched opportunity 
to demonstrate U.S. economic leadership in the region''. I am pleased 
to see that the State of Hawaii, which will be hosting the meeting, is 
putting considerable effort into showcasing such opportunities on the 
Islands. Could you elaborate on how, specifically, you intend to 
showcase U.S. business opportunities and how they might intersect with 
Hawaii's economy?
    Answer. As we strive to meet President Obama's goal of doubling 
exports by 2015, we are looking to the growing Asia-Pacific region for 
greater export and investment opportunities for U.S. businesses. As 
host of APEC this year, we will exercise our leadership to deliver 
practical, concrete outcomes at the leaders' meeting in Hawaii in 
November that will strengthen and deepen integration in the region by 
addressing barriers to trade and investment. Through this work in APEC, 
we will make it cheaper, easier, and faster to do business in the Asia-
Pacific, putting America's businesses, particularly its small and 
medium-sized enterprises, from Hawaii and the rest of the United States 
in a much better position to trade competitively and invest in the 
region.
    APEC's CEO summit will be held alongside the leaders' meeting, 
providing an unparalleled opportunity for U.S. businesses by drawing 
thousands of economic and business leaders from around the region and 
the world. U.S. CEOs will be able to engage with global leaders and 
other CEOs from around the region and the world, to showcase their own 
products and services and discover additional business opportunities 
through networking during the CEO summit.
    The leaders' meeting will also provide the State of Hawaii with a 
significant opportunity to showcase itself as an investment 
destination, as well as for Hawaii's businesses and industries to 
highlight their products to the large number of leaders, ministers, 
officials, and business leaders gathered in Honolulu. Furthermore, 
Hawaii's economy will benefit from the large scale of the events, which 
will create a significant demand to supply the requirements for the 
meetings themselves and to meet the demands of the large number of 
officials, business leaders, and other visitors the meetings will bring 
to Honolulu.
    Question. With as many as 21 world leaders attending the APEC 2011 
leader's meeting, I remain concerned that ancillary or contingency 
security costs may fall on, and overly burden, State and local budgets 
in Hawaii. Are you comfortable with your Department's level of 
coordination with the White House and the Department of Homeland 
Security (DHS), and do you feel assured that the funding will be fully 
sufficient at all levels?
    Answer. The Department is comfortable with our level of 
coordination with the White House and DHS, specifically the cooperation 
between the Department's Bureau of Diplomatic Security and the U.S. 
Secret Service, which has been productive.
    As you are aware, the funding levels for fiscal year 2012 have not 
been set. At this time the Department of State estimates that the cost 
we will incur to support security for the APEC leaders meeting will be 
approximately $4,525,000. As APEC approaches and the number of 
protective details becomes more certain, the costs will be adjusted 
accordingly.
    Current law does not provide authority for the Department of State 
to reimburse State and local law enforcement entities in Hawaii for any 
costs they may incur as a result of the APEC leaders meeting.
    Question. A good way to demonstrate U.S. economic leadership is by 
showcasing and promoting our leadership in education, if not also 
leadership training. The East-West Center now boasts of a worldwide 
network in excess of 57,000 alumni. Much like Department of Defense 
Regional Centers, the East-West Center has successfully introduced 
students to American values, built expertise and professionalism, and 
established a network that continues to bring together people from 
across a vast region to exchange views on issues of common concern. 
Just 2 weeks ago, more than 130 graduate students from 48 universities 
in 26 nations gathered to present their research at the East-West 
Center's 10th annual International Graduate Student Conference. How, do 
you think, could we build on the success of the East-West Center as a 
model for cost-effective public diplomacy that nurtures long-term 
partnerships between nations?
    Answer. As the importance of United States relations with the Asia-
Pacific region continues to grow--including with China as an emerging 
global power and Indonesia as the world's most populous Muslim nation--
the relevance of the East-West Center's role in promoting better 
understanding among our nations and peoples is clear. Established by 
the U.S. Congress in 1960, the Center serves as a key national resource 
by fostering better relations and understanding among the peoples of 
the United States, Asia, and the Pacific Islands through education and 
dialogue on critical issues of common concern. Its success in bringing 
together people and institutions from multiple sectors--including 
government, academia, journalism, and the private sector--serves as a 
model for promoting regional collaboration, intellectual capacity 
building and the development of effective policy options.
    The East-West Center serves as a forum for meetings between 
officials and leaders of Asia and the Pacific and their U.S. 
counterparts, offering a unique venue and expertise to foster 
cooperation and encourage the sharing of ideas. It continues to provide 
significant support to our efforts to prepare for the United States' 
hosting of APEC's economic leaders' meeting this coming November in 
Honolulu.
    The Center's 58,000 alumni form a significant international network 
of influence in government, international organizations and educational 
institutions, and U.S. Embassies support and benefit from the efforts 
of these alumni overseas. Prime Minister Manmohan Singh of India and 
Prime Minister Najib Razak of Malaysia are among current Asia-Pacific 
leaders with East-West Center experience. Another Center alumnus, 
Chinese Vice Minister of Education Hao Ping, has a key role in 
promoting enhanced educational cooperation with the United States. The 
Center's biannual alumni conferences convene hundreds of alumni, 
testimony to the lasting value of the Center experience.
    In terms of a cost-effective investment in public diplomacy, the 
East-West Center has been successful in its ability to leverage 
significant amounts of nonappropriated sources--40 percent in the 
fiscal year 2010 budget--for its national mission. And the East-West 
Center continues to strengthen and diversify its sources of support, 
including from the private sector.
    As an institution serving the U.S. national interest, the Center's 
programming also benefits from the unique ethnic and cultural diversity 
of the State of Hawaii. We encourage the Center to continue its efforts 
to strengthen its leadership programs for graduate students, young 
professionals and young women leaders. The Center also helps Americans 
improve their understanding of the Asia-Pacific region by working with 
high schools and colleges around the country, strengthening U.S. 
capacity to engage with this critical region in the future. As it 
builds on its legacy of long-term ties, the East-West Center will 
continue to be a vital part of the overall U.S. public diplomacy effort 
in Asia and the Pacific in the years ahead.
    Question. The Asia-Pacific region continues to grow both in terms 
of opportunities as well as challenges. It appears that our imports 
from Asia are increasingly coming from China at the expense not only of 
United States domestic suppliers but perhaps also of our other trading 
partners in the region. As China's business capabilities grow, should 
we be concerned that our erstwhile trading partners in the region might 
be elbowed out of their own domestic and regional markets--if not also 
the United States market? If so, is it a consequence of less than fair 
trade?
    Answer. The Asia Pacific is one of the most dynamic regions in the 
world today, and the growth and prosperity of the United States are 
strongly intertwined with the growth and prosperity of the region. As 
such, the President's National Export Initiative (NEI), which aims to 
help double United States exports within 5 years and support millions 
of American jobs, is focusing on China and other emerging high-growth 
markets. Our policy is to expand the opportunities provided to 
Americans from a growing China.
    As the world's second-largest economy and largest developing 
country, China is an important contributor to global economic growth. 
In 2009, when global output declined for the first time in 60 years, 
China's aggressive stimulus measures supported not only Chinese 
economic growth but that of its trading partners, contributing to a 
fall in China's trade surplus that year from 8 percent to 5.1 percent 
of GDP.
    Indeed, China has become the largest export market for many Asia-
Pacific countries, including industrialized countries such as Japan and 
South Korea. Resource rich countries, such as Australia and Indonesia, 
have benefited from increases in commodity prices brought on by strong 
Chinese demand. Still other Asia-Pacific exporters have become part of 
a globalized supply chain in which products assembled in China are 
increasingly composed of parts produced elsewhere. Indeed, a 
substantial share of the value added in the goods we import from China 
comes from components manufactured in other Asian countries.
    But our trade relations with China are not without problems. To 
ensure a level playing field, we need to address a range of issues, 
including market access, indigenous innovation, currency, and 
intellectual property protection and enforcement. This administration 
is addressing these trade concerns with Chinese authorities at the 
highest levels, including with President Hu Jintao during his recent 
visit to Washington. The United States has worked and will continue to 
work with China to create an open environment for trade with the United 
States and others.
    Question. In your testimony, you claim that you have ``re-engaged 
as a leader in the Pacific . . .'' Could you please give examples of 
your re-engagement?
    Answer. The United States has worked hard to renew its strong 
relationships with and commitment to the Pacific Islands. The region is 
of vital importance to Asia-Pacific regional stability and to our 
shared interests in maritime security, climate change, energy security, 
sustainable fisheries, and protecting biodiversity. Moreover, the 
Pacific nations play an important leadership role on global issues, 
particularly in the United Nations and in supporting international 
peacekeeping missions.
    The United States is strengthening our ties with our Pacific Island 
partners in both multilateral and bilateral arenas, and we are 
constantly looking for ways to increase and better focus our 
cooperation in the Pacific region, particularly in the areas of 
capacity-building, training and technical assistance.
    The new Embassy compound we are about to open in Suva, Fiji, will 
be the largest mission of any country in the Pacific. Embassy Suva's 
expanded regional offices will support better engagement in public 
diplomacy, the environment, science and technology, public health, 
defense, and labor throughout the region.
    In August 2010, Assistant Secretary for East Asian Affairs Kurt 
Campbell attended the Pacific Islands Forum Post-Forum Dialogue in 
Vanuatu with the largest U.S. delegation ever, including key personnel 
from the Pentagon and Pacific Command (PACOM), the Department of the 
Interior, the U.S. Coast Guard, and the U.S. Agency for International 
Development (USAID). We plan to take an even larger delegation to the 
2011 meeting this September in Auckland to demonstrate our whole-of-
government approach to addressing shared concerns in the Pacific.
    The annual meeting I established in 2009 with Pacific Island 
leaders on the margins of the United Nations General Assembly in New 
York demonstrates in a tangible way how much the United States values 
the relationships with the islands. The leaders very warmly embraced 
the effort. I plan to meet with Pacific leaders every year in New York.
    Building on the urgent request for support from the Pacific Small 
Island States, we have committed $12 million in fiscal year 2010 funds 
specifically for climate adaptation projects and related programs, and 
we requested an additional $9.5 million in fiscal year 2011 and in 
fiscal year 2012. To help administer these new programs, USAID is 
finalizing plans for a new office in Port Moresby, Papua New Guinea 
this year. Funding for climate will be an essential component of our 
relationship--and a critical element in the regional effort to meet 
increasingly severe climate-related challenges. The State Department's 
Regional Environmental Office in Embassy Suva, Fiji, is working closely 
with USAID as it increases its engagement in the region.
    The first United States Ambassador to Palau assumed office in 2010. 
We concluded a $215 million economic assistance agreement under the 15-
year review of the Compact of Free Association with Palau.
    The State Department is aggressively pursuing negotiations to 
extend the Multilateral Treaty on Fisheries (also known as the South 
Pacific Tuna Treaty) and the associated Economic Assistance Agreement 
through which we provide $18 million annually in economic support funds 
to Pacific Island countries. We are also the single largest contributor 
to the voluntary Special Requirements Fund for Small Island Developing 
State members of the Western and Central Pacific Fisheries Commission.
    We recently concluded an agreement with Kiribati establishing a 
``Sister Marine Sanctuary Arrangement'' between the two largest marine-
protected areas in the world. Kiribati supports a number of counter-
terrorism and regional security objectives, and the arrangement is a 
model for bilateral cooperation on marine conservation issues.
    We have expanded our cooperative maritime law enforcement through 
``Shiprider'' agreements with the Cook Islands, Kiribati, Marshall 
Islands, Micronesia, Tonga, and Palau, allowing local law enforcement 
officers to embark on select U.S. Coast Guard vessels and aircraft to 
patrol their national waters, looking for trafficking victims, 
contraband, illegal fishing, and weapons. The Coast Guard is looking to 
expand this program this year to other Pacific Island countries.
    We have provided more than $1.5 million in aid for cyclone- and 
tsunami-related disasters in the region since 2009, and we continue to 
build national capacity through ongoing disaster management training 
and disaster preparedness exercises provided by PACOM's Center for 
Excellence and others. USAID has financed the pre-positioning of 
disaster response supplies in warehouses in Micronesia.
    Pacific Island participation in the International Visitor 
Leadership Program rose by approximately 20 percent in 2010, while 
Fulbright scholarships are at the highest level in 10 years. These 
programs build relationships that span generations and target up-and-
coming leaders.
    The U.S. Navy's Pacific Partnership program will deploy its 11th 
annual mission to the Pacific Islands region from March 2011-July 2011 
to perform humanitarian and civic assistance activities in Micronesia, 
Papua New Guinea, Tonga, and Vanuatu. These activities build 
partnerships and strengthen relations.
    The Department of State-led Energy Governance and Capacity 
Initiative embarked upon a wide range of technical assistance in 2010 
to assist Papua New Guinea (PNG) in building institutional capacity and 
financial management capability in their energy sector while meeting 
U.S. foreign policy objectives. This program includes promoting energy 
security as well as furthering political and economic stability in PNG.
    In partnership with the World Bank and the Government of Papua New 
Guinea, the United States will co-host in Port Moresby this May a 
first-ever meeting of Pacific Island regional leaders to discuss 
maternal health and economic empowerment. The United States is also 
supporting new efforts to increase political participation by women in 
the Solomon Islands and Papua New Guinea, particularly in the latter's 
national elections in 2012.
    Next year, pending congressional approval, and based both on need 
and the success of current programs, the United States will double its 
contribution to fight HIV and AIDS in Papua New Guinea, through the 
President's Emergency Plan for AIDS Relief (PEPFAR), from $2.5 million 
in 2010 and 2011 to $5 million in 2012.
    We recently completed a 3-month, $1 million project to clear 
unexploded WW II ordnance on Bougainville, Papua New Guinea. We are 
developing plans for a similar project on Guadalcanal in the Solomon 
Islands this year.
    The United States has increased law enforcement training in a 
number of areas, in collaboration with PACOM's Center for Excellence, 
the Asia Pacific Center for Security Studies, U.S. Immigration and 
Customs Enforcement, Federal Bureau of Investigation, and Drug 
Enforcement Agency. We are working with a number of the Pacific Island 
countries to focus greater efforts toward combating trafficking in 
persons.
    In response to a request from the Department of State, the 
Department of Homeland Security has added all Pacific Island countries 
to the annual list of countries eligible for H-2B visas in order to 
help qualified citizens take advantage of opportunities for which they 
are eligible.
    Our Regional Labor Office in Fiji promotes workers rights and 
vocational training, as well as anti-trafficking of forced laborers. 
This not only improves the lives of working men and women, but it 
increases labor mobility throughout the region.
    As part of the Clinton-Okada agreement, Japan and the United States 
agreed to coordinate through the APEC forum a special climate change 
adaptation initiative focused on the Pacific Islands.
    The United States already supports several regional organizations 
in the Pacific, and the Department of State is considering increasing 
funding this year for the Secretariat of the Pacific Community. We are 
encouraging the World Bank to renew its engagement, and we continue to 
support the Asian Development Bank.
    We appreciate the consistent support we receive from Pacific Island 
countries at the United Nations and the ongoing contributions of many 
in the region to global security efforts. The United States, through 
its various agencies, will continue to support the development and 
welfare of our friends in the Pacific. Enhancing engagement and 
``stepping up our game'' in the Pacific is a foreign policy priority 
for the United States.
    Question. In your testimony, you describe how the State Department 
is leading a major civilian surge in Afghanistan which, alongside the 
military offensive, will set the stage for a diplomatic push by and 
with the Afghans to split the Taliban from al Qaeda. Is this the end 
state--or, for your agency, the performance measure--you seek? Are you 
currently negotiating to end Taliban support for and protection of al 
Qaeda? If the Taliban fully agree and honor such an agreement while 
still waging essentially a civil war against the central government, 
would the United States need to remain in the conflict?
    Answer. As President Obama stated in his December 1, 2009 speech at 
West Point, our overarching goal is to disrupt, dismantle, and defeat 
al Qaeda in Afghanistan and Pakistan, and to prevent it from 
threatening America and our allies in the future. To achieve that goal, 
we must deny al Qaeda a safe haven, reverse the Taliban's momentum, and 
deny it the ability to overthrow the Afghan Government, and increase 
the capacity of the Afghan National Security Forces and government, so 
that they can handle internal and external threats. We must do this 
with the full recognition that our success in Afghanistan is 
inextricably linked to our partnership with Pakistan.
    As articulated in Secretary Clinton's Asia Society speech on 
February 18, the Afghan Government has the lead on peace and 
reconciliation with the Taliban and the other elements of the 
insurgency in Afghanistan, and we strongly support that lead. At the 
same time, we have made clear our own red lines--that in order to 
reconcile and rejoin Afghan society, insurgents must agree to cease 
hostilities, break ties with al Qaeda and its extremist allies, and 
agree to abide by the Afghan constitution. If the Taliban were to agree 
to sever ties to al Qaeda and its allies but without ceasing 
hostilities with the Afghan Government, they would not meet all of 
these red lines.
    Question. Is our new support for Yemen, if not also Somalia, 
essentially a consequence of our success in squeezing out al Qaeda from 
Afghanistan, Pakistan, and Iraq? If our new investments are successful 
in denying safe havens in Yemen and Somalia, could we find ourselves 
expending similar resources for more and more countries as al Qaeda 
pursues future safe havens? At what point do they run out of safe 
havens that we would need to deny?
    Answer. We appreciate your question regarding safe havens and al 
Qaeda. Denying al Qaeda and its affiliates safe haven in some countries 
or regions will continue to be a challenge. We believe, however, it is 
possible to achieve the President's objective to disrupt, dismantle, 
and defeat al Qaeda. The recent success of the operation against Osama 
bin Laden and the Arab Spring both, in their own different ways, are 
signs of progress against the terrorist organization. While we continue 
to face threats and risks, there is reason for hope and genuine 
opportunities for us to make progress against al Qaeda and terrorism 
going forward.
    To provide some additional detail: in recent years, the United 
States and its partners have made progress against al Qaeda in 
Afghanistan, Pakistan, and Iraq. It is premature, however, to suggest 
al Qaeda has been squeezed out of those areas. In Iraq, United States 
and Iraqi security forces have had some success in combating al Qaeda 
in Iraq; however, al Qaeda in Iraq elements remain and networks 
continue to operate in Ninewa, Diyala, and eastern Anbar provinces and 
Baghdad. The same is true for Pakistan and Afghanistan. The Government 
of Afghanistan, in concert with the International Security Assistance 
Force and the international community, continues its efforts to 
eliminate terrorist safe havens and build security. However, many 
insurgent groups, including al Qaeda, continue to use territory across 
the border in Pakistan as a base from which to plot and launch attacks 
within Afghanistan and beyond. Despite the Government of Pakistan's 
increased efforts to combat al Qaeda, the federally Administered Tribal 
Areas (FATA), Baluchistan, Khyber-Pakhtunkhwa, southern Punjab, and 
other parts of Pakistan continue to be used as safe havens for al Qaeda 
terrorists.
    While we have had some success against al Qaeda in Yemen, al Qaeda 
in the Arabian Peninsula remains a significant threat. We are providing 
training, technical assistance, and equipment to strengthen the 
capacity of Yemen's security forces. However, despite increased 
assistance and cooperation and heightened Yemeni operations against al 
Qaeda in the Arabian Peninsula, the group continues to find safe haven 
in Yemen and, given the current political unrest, this is likely to 
continue into the near future.
    In Somalia as well, despite United States Government and African 
Union efforts, the fragile hold on power of Somalia's Transitional 
Federal Government (TFG), a protracted state of violent instability, 
long-unguarded coasts, porous borders, and proximity to the Arabian 
Peninsula, continues to make Somalia an attractive location for 
terrorists. Al-Shabaab, a designated Foreign Terrorist Organization 
whose leadership is supportive and connected to al Qaeda, controls most 
of Southern Somalia. The United States has been a strong supporter of 
the African Union Mission in Somalia (AMISOM). AMISOM plays a critical 
role in supporting the Djibouti Peace Process by protecting 
Transitional Federal Institutions and TFG personnel, and by securing 
critical infrastructure in Mogadishu, including the airport and the 
seaport. The United States has obligated more than $258 million to 
provide equipment, logistical support, and training for AMISOM Ugandan 
and Burundian peacekeepers since the mission deployed in 2007.
    Despite our efforts listed above terrorists enjoy safe haven in 
sparsely populated and ungoverned territories in Africa. Al Qaeda in 
the Islamic Maghreb is based primarily in Northeastern Algeria, but 
factions also operate from a safe haven in Northern Mali. We have and 
will continue to provide assistance and support to these governments in 
order to deny terrorists a safe havens in North Africa.
    Denying safe havens plays a major role in undermining terrorists' 
capacity to operate effectively and forms a key element of U.S. 
counterterrorism strategy. Through technical assistance, training and 
the provision of equipment we aim to improve the capacities of partner 
nations so that they can effectively deny terrorists a safe haven in 
their countries. As this is not solely a law enforcement issue, we have 
also sought to help countries increase their provision of basic 
services, such as healthcare and education. In addition, we will need 
to continue to work to undermine al Qaeda's narrative to deny the group 
a continuing flow of recruits. The challenges we face are considerable, 
but we believe a blend of policies will allow us to achieve our 
counterterrorism objectives and, in particular, to increasingly close 
down safe havens for al Qaeda.
    Question. I appreciate how you have split your ``war expenses'' 
from the Department's ongoing and longer-term needs. I believe it shows 
that you are requesting little more than the 2010 levels for your core 
budget, while putting in context the civilian agency contributions to 
our efforts in Afghanistan, Pakistan, and Iraq. Your example on Iraq 
is, I find, quite vivid. Was your Overseas Contingency Operations (OCO) 
budget developed in full coordination with DOD's OCO budget?
    Answer. The State Department's OCO budget request was closely 
modeled on and informed by the DOD's OCO account. Our two agencies face 
similar types of extraordinary and temporary costs associated with 
Iraq, Afghanistan, and Pakistan. These include higher personnel 
expenses, enhanced security needed to operate in a high threat 
environment, new facilities to support expanded operations and the 
greater logistical demands such as fuel costs and transportation of 
personnel. This approach clearly identifies the additional demands 
these operations place on both agencies, and highlights that they are 
temporary and separate from our base budgets. The administration's 
overall OCO request also reflects coordination between the Department 
and DOD as the frontline states transition from military- to civilian-
led missions. For example, the Department is adopting roles previously 
taken on by the military in Iraq, while also taking over responsibility 
for funding some security forces training in Iraq. By presenting our 
OCO budgets in the same manner, the administration is able to provide a 
more complete picture of the overall costs of these operations. And 
finally, the OCO approach highlights lower costs that are achieved as 
the nature of these missions change. This is especially true in Iraq, 
where lower DOD spending far offsets a much smaller increase in the 
State Department budget in fiscal year 2012.
    Question. Please give a couple of examples of how the leading 
recommendations of your Quadrennial Diplomacy and Defense Review (QDDR) 
will translate into significant savings by your Department and USAID.
    Answer. The President's fiscal year 2012 budget for the Department 
of State and USAID are informed by the overarching direction and 
priorities set by the Presidential Policy Directive on Global 
Development and the QDDR. The budget recognizes that development 
progress is essential to promoting America's national security and 
economic interests, as well as our values. In particular, Secretary's 
Clinton's cover letter to the 2012 congressional budget justification 
highlighted priorities related to our support for diplomatic and 
military engagement in key frontline states (Iraq, Afghanistan, and 
Pakistan); Presidential initiatives in food security, climate change, 
and global health; as well as humanitarian assistance, conflict 
prevention, and crisis response. Within the State and USAID budget, and 
consistent with the QDDR and Presidential Policy Directive on Global 
Development, we are prioritizing these areas in our development agenda, 
as well as economic growth and democratic governance programming that 
are essential for reducing long-term dependence on foreign aid and 
increasing sustainability.
    Efficiency, program evaluation, and fiscal responsibility are major 
components of the QDDR. At the release of the QDDR in December, the 
Secretary noted that ``We are redefining success based on results 
achieved rather than dollars spent.'' We will minimize costs and 
maximize impacts, avoid duplication and overlap, and focus on 
delivering results.
    The cost avoidance from this focus on efficiency and fiscal 
discipline are reflected in the President's fiscal year 2012 budget 
request for the Department and USAID. It is a budget for tight times, 
with core expenses growing just 1 percent more than comparable fiscal 
year 2010 levels. When the Department's $8.7 billion Overseas 
Contingency Operations request is combined with the Pentagon's war 
costs in Iraq and Afghanistan, the total U.S. Government spending on 
these conflict zones drops by $41 billion, highlighting the savings 
that can be reached through a whole-of-government approach to our 
Nation's most difficult challenges. Finally, the budget reflects tough 
choices, including slowing the expansion of the Foreign Service and 
reducing development assistance to more than 20 countries by at least 
50 percent.
    Fundamentally, the QDDR builds U.S. civilian power. This inherently 
creates lasting cost-effective benefits for American taxpayers and 
enhances our national security through preventative measures. It costs 
far less to deploy a diplomat to defuse a crisis than it does to field 
a military division if that conflict is allowed to grow. Civilian power 
is a wise investment for the United States, and through the reforms 
that the Department and USAID have laid out, it will pay dividends for 
years to come.
                                 --____
                                 
           Question Submitted by Senator Barbara A. Mikulski
    Question. With respect to Cyprus, the United States' policy has 
been to support a Cyprus settlement, under the auspices of the United 
Nations, based on a bi-communal, bi-zonal federation with a single 
sovereignty and international personality and a single citizenship, 
with its independence and territorial integrity safeguarded, and 
comprising two politically equal communities as provided by the 
relevant United Nations Security Council Resolutions, and the High 
Level Agreements of 1977 and 1979.
    As such, the fiscal year 2011 budget included the following 
language that recognized the reunification of Cyprus as an opportunity 
to advance United States interests in the region and requested $11 
million in Economic Support Funds (ESF):

    ``The fiscal year 2011 request for Europe and Eurasia is for Cyprus 
and is focused on encouraging the eventual reunification of the island 
by building support for the peace process, increasing the capacity of 
civil society to advocate for reconciliation and reunification, and 
furthering the economic integration of the island.''

    That request previously has been supported by the Congress through 
the appropriations process for years now. However, language on Cyprus 
is not included in the President's budget proposal for fiscal year 
2012. Will you continue to illustrate U.S. promotion of reunification 
of the island through the Economic Support Fund?
    Answer. The United States goal in Cyprus is to build regional 
stability through a comprehensive settlement of the Cyprus dispute. In 
fiscal year 2012, the administration is requesting $3.5 million for 
Cyprus. This foreign assistance will allow the administration to 
continue to support programs focused on encouraging the eventual 
reunification of the island by building support for the peace process, 
increasing the capacity of civil society to advocate for reconciliation 
and reunification, and furthering economic integration.
    Despite the administration's continued belief in the importance of 
a settlement and in the value of United States programs, the request 
for Cyprus has been reduced from previous levels in order to allow for 
the distribution of assistance resources to other global priorities. If 
the ongoing peace process yields results in 2011, the administration 
will reassess its approach to ensuring a smooth transition and 
demonstrate U.S. support for implementation of a sustainable 
settlement.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
    Question. Last year's supplemental appropriation included $25 
million specifically for reforestation in Haiti. However, it appears 
that such funds may instead be being used by United States Aid for 
International Development (USAID) for loosely defined reforestation 
programs that do not include the actual long-term replanting of 
sustainable trees.
    Can you please elaborate on how USAID is using these specific 
supplemental Haiti reforestation funds, including how much of the $25 
million is being spent on the actual replanting of sustainable tree 
cover?
    Answer. Thank you for your continued interest in Haiti. Like you, 
USAID is concerned about deforestation, and we are committed to an 
appropriate and sustainable natural resources management program. 
Through the use of funds provided in the fiscal year 2010 Supplemental 
Appropriation Act, we will be better able to address the underlying 
causes of deforestation:
  --acute poverty;
  --rapid population growth; and
  --unplanned urbanization.
    Your concern about deforestation in Haiti is well placed. USAID has 
learned from past experience working in Haiti that classic 
reforestation approaches, in which planting begins at the bottom of a 
hillside and continues until the entire hillside has been planted with 
seedlings, are not the best means of mitigation, especially when those 
trees planted have no value to the farmers. For successful 
reforestation to occur, it is critical to improve soil conservation by 
converting hillsides to tree-based perennial agriculture. Because of 
the heavy pressure on Haiti's hillsides, trees that have no value are 
typically replaced with a crop that does. In contrast, trees that have 
value are frequently managed like a crop.
    While tree cover in three major Haitian forests stands at 1 
percent, if trees that are grown for crop export (e.g., mango and 
cacao) are taken into account, the tree cover estimates increase to 10-
15 percent. This is because the value of the tree grown for export is 
greater than the value of the trees that can be cut down for charcoal. 
Farmers will maintain these trees that provide sustained and higher 
economic value. This analysis indicates that a solution driven by 
changing the market dynamics that strengthens tree crop value chains is 
a more effective avenue to encourage reforestation in Haiti.
    USAID-funded projects have in recent years increased tree crop 
cover by strengthening tree crop value chains (e.g. mango, cacao, 
coffee, and avocado). These include efforts by the Pan American 
Development Foundation (PADF) and the Haiti Hillside Agricultural 
Program, both now completed, and two ongoing projects, Economic 
Development for a Sustainable Environment (DEED) and Watershed 
Initiative for National Natural Environmental Resource (WINNER). For 
example, USAID's WINNER agro-forestry activities expand perennial cover 
on hillsides to reduce erosion and improve soil conservation, while 
promoting alternative energies to lower the demand for charcoal and 
fuel wood. WINNER strengthens value chains for tree crops and focuses 
on those crops with high-value yields (such as mango) that act as an 
effective incentive to hillside farmers to plant and manage perennial 
crops. During fiscal year 2010, the first full year of operations, 
WINNER helped 131 farmer associations to set up 133 tree nurseries and 
transplant a total of approximately 1 million trees, of which 30 
percent were fruit trees and 70 percent were multi-purpose trees. 
Please reference below chart for details.
    Reforestation programs funded by the fiscal year 2010 Supplemental 
Appropriation Act will contribute over the long term to replanting 
sustainable trees for mango and cacao in Haiti by using a value-based 
approach that strengthens tree crop value chains and assists in 
producing seedling stock. USAID projects have provided the critical 
proof-of-concept for a market-led approach to reforestation, an 
approach that incentivizes farmers to take care of high-value trees, 
ensuring long-term impact. This is the approach that USAID has taken 
with its ongoing programs (WINNER and DEED) and will continue to apply 
in projects currently under design, including those to be funded by the 
supplemental appropriation.

               NUMBER OF TREE PLANTS PRODUCED DURING WINNER'S TWO AGRO-FORESTRY CAMPAIGNS IN 2010
----------------------------------------------------------------------------------------------------------------
                                                                  Number of tree     Number of       Number of
                                                     Number of     seedlings to   tree seedlings       local
                     Region                          nurseries    produce  (life     actually      organizations
                                                                    of project)      produced        involved
----------------------------------------------------------------------------------------------------------------
First agro-forestry campaign:
    Cul-de-Sac plain............................              11         220,000         138,093               1
    Kenscoff/Petion-ville.......................               9         155,000         144,479               9
    Gonaives....................................               7         132,000         140,086               7
                                                 ---------------------------------------------------------------
      Total campaign 1..........................              27         507,000         422,658              17
                                                 ===============================================================
Second agro-forestry campaign:
    Arcahaie/Cabaret............................              12         400,000         105,452              12
    Gonaives....................................              27         540,000         438,492              27
    Kenscoff/Petion-ville.......................              63       4,638,000         401,068              19
    Mirebalais/Saut d'Eau.......................              27       1,020,000         353,757              72
    Cul-de-Sac plain............................               4         120,000         109,470               1
                                                 ---------------------------------------------------------------
      Total, campaign 2.........................             133       3,718,000       1,408,239             131
                                                 ===============================================================
      Total, campaigns 1 and 2..................             160       4,225,000       1,830,897             148
----------------------------------------------------------------------------------------------------------------

    USAID anticipates that a minimum of 50 percent, or $12.5 million, 
of the $25 million in natural resources management funds provided by 
the supplemental appropriation will support activities related to tree 
planting, including agro-forestry, reforestation, shade-grown cacao, 
and mango, and other related programs designed to increase forest cover 
in Haiti, in accordance with the intent of the Congress and as 
specified by legislation. The use of increased tree cover to reduce 
soil erosion will strategically protect agricultural investments made 
in targeted lowland plains, provide sustainable sources of income for 
rural households, and serve as incentive to expand area under tree 
cultivation in the future.

                          SUBCOMMITTEE RECESS

    Senator Leahy. Thank you, the subcommittee is recessed.
    [Whereupon, at 4:05 p.m., Wednesday, March 2, the 
subcommittee was recessed, to reconvene subject to the Chair.]


  STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 
                            FISCAL YEAR 2012

                              ----------                              


                        TUESDAY, APRIL 12, 2011

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:02 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Patrick J. Leahy (chairman) 
presiding.
    Present: Senators Leahy, Mikulski, Kirk, and Tim Johnson.

               U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

STATEMENT OF DR. RAJIV SHAH, ADMINISTRATOR

             OPENING STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. Good morning.
    Today we are going to hear testimony from Dr. Rajiv Shah, 
Administrator of the United States Agency for International 
Development (USAID), on the Agency's fiscal year 2012 budget 
request. Most of us know Dr. Shah well, and welcome him here.
    About 15 months ago the Administrator took charge of an 
agency that has struggled for many years with serious 
management and programmatic weaknesses. At the time, I offered 
him congratulations and condolences, but I was delighted he 
accepted the challenge.
    When he first testified here, last April, I said that too 
often this subcommittee and others had encountered at USAID 
instances of arrogance and detachment from the impoverished 
reality of the people in countries where USAID operates, and 
we'd encountered poorly designed projects, mega-contracts that 
were touted as success stories, but which enriched the 
contractors more than they helped the intended beneficiaries, 
and taxpayer money was wasted.
    If you want to change the bureaucracy--any bureaucracy, 
changing the culture takes time. I continue to believe strongly 
that USAID needs to become a more efficient, accessible, 
flexible, and less risk-averse agency that rewards creativity 
and focuses on building the capacity of local people and 
governments in countries where the United States has interests. 
That's just about everywhere in the world. But I have seen 
steady process under Administrator Shah. And I compliment you 
for that. I mentioned out back when we were talking, I've read 
your speeches. You have not whitewashed problems the way some 
others did in the past. You've talked about them, you've 
addressed them directly, and I think that's why we see 
improvements. But USAID still has a long way to go.
    As long as I've been either chairman or ranking member of 
this subcommittee I have said that, contrary to what some say, 
USAID has an essential role to play in projecting U.S. global 
leadership and helping to protect U.S. interests around the 
world. I hear that from people in business and from our 
military. Anyone who doubts that has not seen what I've seen, 
whether it's when President George H. W. Bush asked me to go to 
Vietnam and see whether we could use the Leahy War Victims Fund 
there, or to the West Bank, or to Afghanistan, to so many other 
places. There are countless examples where USAID has had a 
profound, positive impact in ways that directly advance United 
States interests.
    Recently I was in Haiti. That country's going to face 
daunting challenges for years to come and no one can dispute 
that USAID is helping to save lives and helping the Haitian 
people of the country recover.
    So, it's not a question of whether your mission is integral 
to our national security--everyone from President Reagan to 
General Petraeus has recognized it is. But I want to know, Dr. 
Shah, how you're making the changes to ensure that USAID 
carries out that mission in the most cost-effective way.
    Senator Graham's staff, my staff, and their counterparts in 
the House have been working extraordinarily hard to try to, 
one, stay within our budget constraints, but also make sure we 
spend the money wisely. More than one-half of fiscal year 2011 
is past. We're only now finalizing the budget, which is going 
to require USAID, like other agencies, to scale back.
    The President has requested significant increases in 
funding for USAID in fiscal year 2012 because of our security 
interests around the world. I believe much of what he requested 
is justified. I believe it is in our national interest to do 
more to help build stable democracies and vibrant economies 
around the world. But, I don't see those increases coming.

                           PREPARED STATEMENT

    Senator Blunt regrets he could not be present, but has 
submitted a prepared statement for the record. Senator Kirk is 
here. Senator Graham's schedule suddenly changed, and I 
understand that. I'll yield to Senator Kirk, and then we'll go 
to questions.
    [The statement follows:]
                Prepared Statement of Senator Roy Blunt
    Thank you Mr. Chairman, and thank you Director Shah for being here 
today. You and I had a chance to visit last week in my office and I 
appreciated the chance to hear from you directly on some of these 
topics.
    Obviously your organization's mission to promote development and 
provide aid of all kinds to areas of the world in need is something 
that is both morally right and helps improve America's image in the 
world.
    Unfortunately our budget realities mean that we just can't do as 
much for as many people as we would like to.
    I appreciate hearing about your efforts to bring greater efficiency 
to United States Agency for International Development (USAID) and 
implement policies you've witnessed firsthand while working in the 
private sector and with private sector partners. I've always said that 
government is the last place where you measure how much you care about 
something by how much money you spend on it instead of the results you 
see. I believe USAID should be focused on results and I hope that's the 
direction you're taking the agency.
    I mentioned this during our meeting the other day, but I want to 
get it in the record. There's a program at USAID called Scholarships 
for Education and Economic Development and it has a partnership with 
St. Louis Community College. I believe this partnership has been 
successful and I believe the leaders of that community college want to 
see it continue. So I'm hopeful it will and that these students from 
Latin America will continue to benefit from spending time in the St. 
Louis community learning from my constituents about a lot of very 
practical skills that they can take back to their own communities.
    I encourage you to continue working closely with other U.S. 
Government agencies. We hear a lot from our military and security 
leaders that USAID programs are a real added value to our efforts 
wherever U.S. troops are engaged. I believe that when our diplomatic, 
aid, and military agencies operate jointly and seamlessly, that is the 
best way to ensure that taxpayer dollars are being well-spent and with 
the maximum input of leaders with all kinds of experience. I know that 
bureaucratic challenges await every effort to integrate these agencies 
and I want to emphasize that the Congress should be doing everything it 
can to back up leaders who want to see these agencies better cooperate.
    I also hope you'll continue to keep the Congress apprised of your 
programs in parts of the world that we need to be paying a lot of 
attention to. I know you've already briefed me personally on ongoing 
efforts in some particularly challenging places like Egypt, Yemen, 
Afghanistan, and Iraq. I appreciate that and will look forward to your 
feedback as those programs and many others are implemented in the 
months and years ahead.
    Thank you again for your time today and I'm looking forward to 
hearing from you and asking some questions.

                     STATEMENT OF SENATOR MARK KIRK

    Senator Kirk. Thank you, Mr. Chairman. And we're looking 
forward to Senator Graham leading our side.
    I'm new to this subcommittee, but not to this bill. I think 
the first foreign operations bill I worked on was the fiscal 
year 1984 supplemental 27 years ago, and remember USAID 
administrators who have come and gone--I think my first one was 
Peter McPherson that I worked with as a staffer with the House 
International Relations Committee, helped to draft the 
legislation that made you part of the State Department. And I 
think that was because of critical problems that USAID 
basically told the State Department in critical moments in our 
history, like in El Salvador, that they could jump off our 
cliff, and, it was not in our budget, it was not part of the 
development goals, and so we weren't going to provide critical 
assistance needed to help the El Salvador peace process. And I 
think for leaders of the Congress at the time, that's why we 
rolled you into the State Department--to make you a tool of the 
Secretary of State, rather, sort of, as a lone ranger out there 
in bureaucracy land, which is what USAID had been.
    We're pretty proud of the USAID team in Benghazi right now 
and the support that you're giving, although I'm very worried 
about the sustainability of your effort. Should Ajdabiya fall, 
my guess is that you guys are going to bug out, and then the 
question is, what happens to everyone else? I think that's 
because of a critical lack of United States air power that will 
be unable for us to protect the humanitarian mission, which, as 
my understanding was, the whole point of this operation in 
Libya.
    I've also been worried about sustainability of USAID 
efforts elsewhere. The heart and soul of USAID is its immediate 
disaster response and support for the enabling environment 
around U.S. troops. And oftentimes we've seen that when the 
security environment gets robust, as we would say, USAID and 
its partners bug out. We saw the collapse of alternative 
development programs in Helmand province, which was the central 
core of the effort for the U.S. military, and the lack of USAID 
and its partners being able to hang in there with U.S. troops 
was disturbing.
    We also saw USAID trying to electrify Western Afghanistan--
a key part of the effort--with a project at Kajaki Dam, but 
they've been unable to actually carry that out. And I think we 
have largely abandoned the last turbine that was supposed to go 
in there. And it's been a very long and tortured effort to get 
power to Kandahar, which, as General McChrystal and General 
Petraeus have said, is the central focus of our efforts in 
Afghanistan, and I've been worried about just how slow USAID 
has been in providing that effort.
    But I'm most worried about USAID abandoning, apparently, a 
Partner Vetting System (PVS) to make sure that funds stay out 
of terrorist hands in the West Bank in Gaza. We have the 
distinct possibility, according to USAID inspector general 
audits at West Bank in Gaza, that we may be funding both sides 
of this conflict, and I will be asking you later why you have 
failed to meet commitments and timelines that you set before me 
when I was a House Member, and look very much forward to your 
answers on that.
    And, Mr. Chairman, back to you, thank you.
    Senator Leahy. Thank you.
    Dr. Shah, please feel free to go ahead, Sir.

                  SUMMARY STATEMENT OF DR. RAJIV SHAH

    Dr. Shah. Thank you, Mr. Chairman, and members of the 
subcommittee. I appreciate the chance to be here today, and I 
want to thank you all for your commitments to U.S. engagement 
efforts around the world, and to USAID in particular.
    As the chairman noted, I've been in this role now for more 
than 15 months. The first 2 to 3 of those months were certainly 
consumed by managing an interagency response to the tragic 
earthquake in Haiti. While that was an all-consuming exercise 
for me, it was also an opportunity for me to see what Senator 
Kirk just referred to as the heart and soul of our efforts--our 
ability to move quickly in times of humanitarian crises, and 
our willingness to take on risks in order to serve some of the 
most vulnerable people around the world.
    Following that experience we launched two major efforts 
last year--a Presidential Study Directive on development and a 
Quadrennial Development and Diplomacy Review (QDDR), both of 
which were designed to evaluate and assess how we could do a 
better job executing our mission abroad.
    The Presidential Study Directive set some clear strategic 
guidelines for us to build on the development of sustainable 
systems, build local capacity around the world, and move away 
from service delivery that just requires ongoing investment 
without building that kind of sustained local capacity. It also 
directed us to be more focused on growth and good governance as 
major underlying factors for successful development, and 
encouraged us to make science, technology and innovation a 
major focus of how we try to bring the cost of achieving 
results down on a sector-by-sector basis.
    The QDDR resulted in part in endorsing a set of reforms 
I've called USAID Forward. Those reforms cover budget, policy, 
human resources, procurement, science and technology, and 
evaluation. And in each of those areas I think we've made real 
progress in implementing a new strategic direction and new 
operating principles for our Agency and our teams around the 
world.
    I look forward to discussing them with you, and I recognize 
that this kind of complete reform of a Federal bureaucracy is a 
difficult task to undertake.
    I want to take this opportunity to thank the staff at USAID 
which has across the board been supportive of the efforts we're 
undertaking--especially certain members of our teams, both here 
in Washington and around the world, that have really become 
champions for the USAID Forward reform agenda, and taken it 
upon themselves to be creative and use their insights in 
implementing these guidances in case after case after case.
    Ultimately, the purpose of these efforts is to drive better 
results, and to drive them in areas such as our Feed the Future 
program. I had the chance to visit a new partnership we've 
developed with Walmart that is allowing communities in the 
Guatemalan highlands in the western part of that country to 
escape a decades-long situation of poverty and child hunger and 
malnutrition.
    I've had a chance to see our Global Health Initiative in 
action. We are now looking at data coming back from the 
President's malaria initiative that shows a 30 percent 
reduction in the number of children under the age of 5 who die 
from all causes because of our efforts to get a low-cost, 
insecticide-treated bed net, some indoor residual insecticide 
spraying, and improved treatments to hospitals and communities 
where kids get malaria and often die.
    And I've had the chance to deeply engage with our 
Afghanistan, Pakistan, Haiti, and other missions. My most 
recent trip was to Afghanistan. While I was there I had the 
chance to sit with a group of women who had come together in a 
shura that was part of a program called the National Solidarity 
Program of which USAID has been a strong supporter. They 
represented many of the positive attributes of our new gender 
policy across the Agency and in that country.
    I understand that our reforms are critical because our 
mission is critical. We need to be an ever-improving partner to 
the United States military in national security operations. We 
want to be continually more effective in places around the 
world, like El Salvador, which has become one of the 
Partnership for Growth countries where we are essentially 
coordinating the interagency partnership with El Salvador to 
help build on the track record of building local institutions 
and allowing that country to have a more dynamic, growth-
oriented economy that can serve as a pillar for the region of 
Central America.
    And I recognize that these reforms will not happen 
overnight. It takes a lot of hard work. It takes people being 
willing to try things differently. It takes wonderful and 
committed partners in the Congress in both the Senate and the 
House to both give the reforms a chance and to continue to 
encourage us with your guidance and your support and your 
specific comments regarding issues upon which we need to take 
action on in order to accelerate our reform agenda.

                           PREPARED STATEMENT

    At the end of the day this country deserves an outstanding 
and premier development Agency that needs to be aligned 
absolutely with the Secretary of State and our State 
Department's diplomatic priorities. It needs to work in a 
spirit of partnership with the military. And I think in all of 
those areas we've improved our performance significantly. But 
ultimately we want to deliver real results for the American 
people. We think we're on that path. And I look forward to your 
continued guidance and support.
    Thank you.
    [The statement follows:]
                  Prepared Statement of Dr. Rajiv Shah
                              introduction
    Thank you very much Chairman Leahy, Ranking Member Graham, and 
members of the subcommittee. I am honored to join you here today in 
support of the President's fiscal year 2012 budget request.
    Before beginning my testimony, I want to briefly comment on the 
U.S. Agency For International Development's (USAID) response to the 
devastating earthquake and subsequent tsunami in Japan and the 
remarkable events taking place in the Middle East.
    In Japan, USAID is leading the United States Government's response, 
coordinating an interagency effort with the Nuclear Regulatory 
Commission, and the Departments of State, Energy, Defense, and Health 
and Human Services. We also have deployed a Disaster Assistance 
Response Team--including urban search and rescue specialists and 
nuclear experts--to support Japanese emergency response efforts. I'd 
like to thank the brave men and women on these teams for their enormous 
courage. USAID has provided 10,000 personal protective equipment sets--
including suits, masks, gloves, decontamination bags, potassium iodide, 
and other supplies--to help those working near the contaminated zone in 
Fukushima Prefecture.
    Our thoughts and prayers are with the Japanese people at this time, 
and we will continue to work closely with the Government of Japan to 
respond to their requests for assistance as quickly as possible.
    USAID also has led the humanitarian response to recent events in 
the Middle East. As we speak, USAID teams are working on the Tunisian 
border with Libya and in Egypt, helping deliver assistance to those 
affected by conflict. In Eastern Libya, we have delivered health kits 
capable of providing basic care to 40,000 people, with more en route. 
We have also provided key support to the World Food Programme, which 
has moved more than 10,900 tons of food in and around Libya, enough to 
feed more than 650,000 people.
    We will work with counterparts to help the people of the region 
realize their democratic aspirations through a credible transition. 
Drawing on experience USAID has gained over decades, we will help 
countries strengthen civil society, extend the rule of law, and create 
more transparent and accountable democratic governance.
                                results
    Both the President and Secretary Clinton have emphasized that 
development is as important to our Nation's foreign policy as diplomacy 
and defense, and as a result have actively championed the goal of re-
establishing USAID as the world's premier development agency.
    Representing less than 1 percent of the Federal budget, the 
President's fiscal year 2012 request balances difficult trade-offs with 
a clear-eyed assessment of where we can most effectively achieve 
dramatic, meaningful results for the American people and the developing 
world.
    The President's request includes significant investments in 
bipartisan initiatives promoting global health and food security, the 
foundations of which were laid by the previous administration and 
bipartisan supporters in the Congress.
    Representing the largest portion of the President's budget request 
for foreign operations, the $8.7 billion USAID and State are requesting 
for the Global Health and Child Survival account will allow us to 
transform HIV/AIDS from a death sentence to a manageable disease for 
more than 4 million HIV-positive patients, reduce the burden of malaria 
by one-half for 450 million people and prevent hundreds of millions of 
child deaths from preventable diseases by providing them vaccines and 
bed nets.
    Our Global Health Initiative is designed to efficiently deliver 
these results. Rather than create separate facilities to treat separate 
diseases, we will save money and expand the reach of coverage by 
integrating treatments into single points-of-care. In Kenya, we worked 
with President's Emergency Plan for AIDS Relief to couple HIV/AIDS 
treatment with maternal and child health services. As a result, we've 
extended the availability of reproductive health services from two to 
all eight of the country's districts, at no increase in cost.
    We can also help countries develop their own agricultural sectors, 
so they can feed themselves. For the $1.1 billion we are requesting for 
bilateral agricultural development programs, we will be able to help up 
to 18 million people in up to 20 countries--most of them women--grow 
enough food to feed their families and break the grips of hunger and 
poverty.
    We chose these potential countries for our Feed the Future 
initiative selectively, based on their own willingness to invest in 
agriculture, undertake reforms, and encourage coordinated investment 
from other donors, foundations and private companies, leveraging our 
investments several-fold. We have worked closely with these countries 
to develop rigorous agricultural strategies that will bolster the 
success of our initiative.
    But our foreign assistance will not just assist people abroad; it 
will benefit us here at home.
           from the american people, for the american people
    Our assistance represents the spirit of our country's generosity; 
captured in USAID's motto: ``From the American People''. Recent events 
underscore the critical importance of our humanitarian assistance 
request.
    But now more than ever, it is critical that the American people 
understand that our assistance also delivers real benefits for the 
American people: it keeps our country safe, and develops the markets of 
tomorrow.
Keeping America Safe
    By elevating the role of democracy, human rights and governance, we 
help to consolidate freedom in new and fragile democracies and expand 
liberty in authoritarian and semi-authoritarian countries. We also 
support the rebuilding of failed and fragile states during and after 
conflict, forging new compacts between State, civil society and the 
private sector that lead to increased stability and ultimately keep 
Americans out of harm.
    As Secretary of Defense Gates, Joint Chiefs Chairman Admiral 
Mullen, and General Petraeus have all emphasized, we need a fully 
engaged and fully funded national security presence, including the core 
components of our Nation's civilian power: the State Department and 
USAID.
    This year, for the first time, the President's budget designates 
$1.2 billion of USAID funding for Afghanistan to a separate account 
called the Overseas Contingency Operation account. This transparent 
approach, modeled upon the Defense Department's well-established 
example, distinguishes between temporary costs and our existing budget 
in an effort to consistently budget for Defense, State, and USAID 
spending.
    In the most volatile regions of Afghanistan, USAID works side-by-
side with the military, playing a critical role in stabilizing 
districts, building responsive local governance, improving the lives of 
ordinary Afghans, and--ultimately--helping to pave the way for American 
troops to return home.
    For example, we are helping to improve agricultural yields in the 
Arghandab Valley. As a result, farmers shipped the first agricultural 
exports out of Kandahar in 40 years. We have also helped rebuild the 
civil service in the Southeast and helped fuel a 40 percent reduction 
in the growth of opium poppies that fund Taliban operations.
    In Northwest Pakistan--the current base of operations for al Qaeda 
and the Pakistani Taliban--USAID staff and partners undertake enormous 
personal risk administering more than 1,400 small-scale development 
projects. In the Malakand province, they have helped rebuild 150 
schools so children there can become productive members of their 
economy, instead of turning to extremist madrassas.
    Our work in promoting national security is not just limited to 
active zones of conflict. Throughout the world, USAID is deploying 
development specialists today to strengthen democracies, rebuild 
livelihoods and build strong health and educational systems so that we 
do not have to deploy our troops tomorrow. As Secretary Gates has said: 
``Development is a lot cheaper than sending soldiers.''
    In Southern Sudan, the USAID mission worked with partners to 
design, procure, and pre-position ballots and supplies months before 
the recent referendum on independence. That foresight helped ensure the 
referendum, which many predicted would never occur, proceeded 
peacefully and successfully, but also left us prepared in the event it 
would not.
Developing the Markets of Tomorrow
    In addition to strengthening our national security, USAID's work 
also strengthens America's economic security.
    Today, long-time aid recipients like India, Indonesia, Poland,South 
Korea, and other emerging economies have become America's fastest 
growing markets. Exports to developing countries have grown six times 
faster than exports to major economies and today they represent roughly 
one-half of all U.S. exports.
    In 2009, we exported more than half-a-trillion dollars in American 
goods and services to those countries, and 97 percent of those 
exporters were small-and-medium sized U.S. companies. That is why for 
every 10 percent increase we see in exports, there is a 7 percent 
increase in the number of jobs here at home.
    We need to accelerate the economic growth of tomorrow's trade 
partners, ensuring those countries grow peacefully and sustainably.
    But beyond these impacts, winning the future will depend on 
reaching the 2-3 billion people currently at the bottom of the pyramid 
who will come to represent a growing global middle class. By 
establishing links to these consumers today, we can effectively 
position American companies to sell them goods tomorrow.
    Make no mistake: our success is intertwined with the progress of 
those around us. By fully funding the $2.9 billion USAID is requesting 
for its Development Assistance account, we will save lives, expand 
global freedom and opportunity and crucially strengthen America's 
national and economic security.
                                 reform
    Because development is critical to our national security and future 
prosperity, USAID has worked tirelessly to change how we work with all 
of our partners.
    Consistent with the President's Policy Directive on Global 
Development and the Quadrennial Diplomacy and Development Review 
(QDDR), we have launched a series of reforms we call USAID Forward.
Learning, Monitoring, and Evaluation
    To ensure our assistance is effective, we are taking monitoring, 
evaluation, and transparency seriously. In 1994, USAID conducted nearly 
500 independent evaluations. By the time I arrived, only 170 
evaluations were submitted to Washington, despite a threefold increase 
in programs managed. In many instances, these evaluations were 
commissioned by the same organizations that ran the programs.
    To end this practice, we introduced a new evaluation policy that is 
quickly setting a new standard in our field. We are requesting $19.7 
million to implement this policy and provide performance evaluations 
for every major project, conducted by independent third parties, not by 
the implementing party themselves. And we will release the results of 
all of our evaluations within 3 months of their completion, whether 
they tell a story of success or failure.
Combating Fraud, Waste, and Abuse
    We are fighting vigorously to prevent and respond to fraud, waste 
and abuse, and to ensure a culture of vigilant oversight. I have 
created a new suspension and debarment task force led by our Deputy 
Administrator Don Steinberg and staffed with talent across our agency. 
This task force will provide a coordinated effort to closely monitor, 
investigate and respond to suspicious activity.
Private Sector Partnerships
    We are also placing a renewed emphasis on economic growth, driven 
by private sector investment. In all aspects of our work, we are 
relying much more on leveraging private sector investment and building 
public-private partnerships in countries committed to good governance 
and pro-business reforms.
    For example, through the Feed the Future initiative, we have 
launched groundbreaking new partnerships with Kraft, General Mills, and 
Wal-Mart in Ghana, Tanzania, El Salvador, and Guatemala to connect poor 
farmers to local and international food markets. And in Haiti, we are 
supporting Coca-Cola's initiative to promote the Haitian mango juice 
industry.
    These efforts strengthen the sustainability of our economic growth 
work, while also improving the bottom line for American companies.
Science, Technology, and Innovation
    Across our portfolio, we are seeking new ways to harness the power 
of science, technology and innovation. For our request of $22.1 
million, we will recapture USAID's legacy as the leader in applying 
scientific and technical solutions to the challenges of development.
    We have developed a new venture capital-style investment fund--the 
Development Innovation Ventures Fund--so we can support start-ups, 
researchers, and nonprofits focused on the problems of the developing 
world. We are requesting $30 million to continue using this simple, but 
highly competitive business model to sustainably scale innovative 
solutions to development challenges.
    By providing seed capital to incentivize the emergence of these 
innovations, we practice development with an exit strategy. This fund 
has already funded several projects, including an easy-to-use self-
administered test for pre-eclampsia, the leading cause of maternal 
mortality in the world.
    In Haiti, instead of 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. By allowing Haitians to 
save money and make transactions on their cell phones, we are 
encouraging local wealth creation and cutting back on corruption and 
wage-skimming.
    This approach forms the foundation of a new series of grant 
challenge partnerships USAID introduced just last month. Rather than 
building hospitals and power plants throughout the developing world, 
USAID will partner with foundations, foreign governments, inventors and 
engineers to generate new, low-cost innovations that can help countries 
skip the need for some of this physical infrastructure.
Procurement
    Fundamentally, all of the reforms I have outlined are designed to 
achieve the same result: to create the conditions where our assistance 
is no longer necessary.
    The President's budget request puts this approach into practice. It 
cuts development assistance in at least 20 countries by more than one-
half, including 11 countries where all bilateral Development Assistance 
has been eliminated. It also terminates USAID missions in three 
countries. And it reallocates almost $400 million in assistance and 
shifts 30 Foreign Service positions toward priority countries and 
initiatives.
    USAID must continue to do its work in a way that allows our efforts 
to be replaced over time by efficient local governments, thriving civil 
societies and vibrant private sectors. That is why we have launched the 
most aggressive procurement and contracting reforms our agency has ever 
seen. Instead of continuing to sign large contracts with large 
contractors, we are accelerating our funding to local partners and 
entrepreneurs, change agents who have the cultural knowledge and in-
country expertise to deliver lasting, durable growth.
    These procurement reforms are crucial to delivering assistance in a 
much more effective and evidence-based way, generating real results 
faster, more sustainably and at lower cost so more people can benefit.
    To implement the QDDR and USAID Forward, implement our procurement 
reforms and deliver development gains more cheaply and efficiently for 
the American people, it is crucial that USAID's fiscal year 2012 
operational request of $1.5 billion is fully funded.
    We can only make these reforms meaningful if we can bring in the 
contracting officers, controllers, and technical advisors who can 
provide accountability and oversight over our contracts and grants and 
safeguard taxpayer funds.
    As we continue the Development Leadership Initiative begun under 
President Bush, with strong support from the Congress, we plan on 
filling key staffing gaps in priority countries and frontline States. 
By bringing in experts in conflict and governance, global health, 
agriculture, education, economics and engineering, we can restore the 
technical capacity our agency has lost over time, and has had to 
contract at far greater expense.
                               conclusion
    The evidence is clear: development saves lives, strengthens 
democracies and expands opportunity around the world. It also keeps our 
country safe and strengthens our economy. But our development 
assistance also expresses our American values.
    When we protect girls from sex trafficking in Asia, stop 
deforestation in Latin America or help Afghan girls return to school, 
we express American values.
    When Americans see a neighbor in need, or witness suffering and 
injustice abroad, we respond; we mobilize; we act. We are a generous 
people. That fact was never clearer than when 20 million American 
families donated money to Haiti relief; more than watched the Super 
Bowl.
    USAID is proud to put American values into action--distributing 
antimalarial bed nets donated by school children, supporting faith-
based organizations that help ease suffering abroad, and engaging all 
Americans in solving the greatest global challenges and generating 
results.
    Right now is a critical moment in our country's history. As a 
Nation, we are making a lasting determination about the future of our 
country, and the future of our global leadership.
    Now is the time when America must decide whether it will engage and 
lead the world, actively using its tools of development, diplomacy, and 
defense to improve human welfare and freedom across the globe . . . or 
whether it will retract, leaving many of its poorest, most fragile 
global partners without assistance, and leaving other emerging global 
powers like China to promote alternative economic and political models.
    Budgets are an expression of policy; they are an expression of 
priorities. But fundamentally, they are an expression of values.
    Thank you.

    Senator Leahy. Thank you very much, Dr. Shah.

                        CUTBACKS IN FOREIGN AID

    You'd mentioned that some people are misinformed about what 
foreign aid is. A recent national poll said that most Americans 
think it accounts for between 20 percent and 40 percent of our 
budget. Of course, it's less than 1 percent. And they assume 
that it's a form of charity, a giveaway. But USAID spent $1.6 
billion on goods manufactured in the United States--100 times 
more than it spent on goods manufactured outside the United 
States. That's why everybody--Presidents, Republicans and 
Democrats, and our military leaders--have supported it. But 
there is going to be, there will be cutbacks, I assume. There 
will be programs eliminated.
    Give me a couple of good reasons to support foreign aid, 
and what you think may be cut.

            NATIONAL SECURITY AND JOBS IN THE UNITED STATES

    Dr. Shah. Well, I appreciate the comment and the question. 
I believe our performance in places like Afghanistan and 
Pakistan are central to our national security priorities. Over 
the last 15 months we have dramatically increased our oversight 
capabilities and operational presence in those places, 
consistent with an integrated civilian-military plan that we 
are enacting with General Petraeus in Afghanistan and with our 
colleagues in Pakistan.
    We have pursued--I think to great effect--a strategy and an 
approach in Southern Sudan that enabled our diplomatic efforts 
to be successful by supporting a peacefully conducted 
referendum. We now keep our fingers crossed and continue to 
work in partnership to ensure an effective and nonviolent 
resolution to the succession of South Sudan.
    And I think in Haiti we're making real progress in certain 
areas. I'm proud of our efforts in mobile banking that I think 
are going to develop an innovative and important mechanism for 
banking and financial transactions based on mobile phones that 
will reach many, many more clients than older traditional 
systems. We've seen our efforts to get clean water to people, 
and to build basic systems that do that generate real results 
and help prevent the further spread of critical diseases like 
cholera. And we know we are making progress on efforts like the 
industrial park in the North that will create 20,000 jobs and 
bases for improved housing and economic opportunity.
    In all of these settings, our work contributes to and is a 
critical part of our national security. And it is how we 
project our values abroad. It is enabling our economy to be 
more vibrant and dynamic, and it's helping to create jobs at 
home.

             EXAMPLES OF BUSINESS--CORPORATE--PARTNERSHIPS

    I was with the President in India when we were launching a 
unique partnership as part of our Feed the Future Program, and 
we visited a micro-irrigation provider who was selling small-
scale farmers a very cheap micro-irrigation plastic piping 
technology that was powered by a solar panel, and they've sold 
hundreds of thousands of those in India. Well, the solar panels 
are made in Georgia, and now they're building a plant in 
Michigan. And it allows us to reach a market of very poor 
farmers throughout rural South Asia, while creating hundreds of 
jobs here in the United States.
    That's just one example. Across the board, our businesses 
are telling us that they want to engage in real partnerships so 
that they can cultivate the markets of the future and they can 
be active participants. And they find our partnerships ever 
more streamlined and efficient in helping them make those 
engagements--businesses like Walmart, PepsiCo in Ethiopia, and 
a number of other major firms in the southern part of----

                    USAID'S RESPONSE TO BUDGET CUTS

    Senator Leahy. But, what are some of the things that will 
have to be cut if your budget falls short?
    Dr. Shah. Well, they're really in two categories. One is, 
we've proposed a set of reallocations and we've used our new 
budget capability to really identify tough tradeoffs that we've 
made in order to move money to better-performing efforts. We've 
proposed in the fiscal year 2012 budget request a series of 
investments that continue to build on the most results-oriented 
programs.
    The ones I'm most focused on with respect to your question 
are programs like the President's malaria initiative, which has 
shown a tremendous capability to reduce child death in Africa. 
That program will expand into new countries like Ethiopia and 
the Democratic Republic of Congo, really going after big 
reservoirs of high-malaria-prevalence communities. And we would 
not be able to expand a program that works and generates 
results without that.
    The other area would be our Feed the Future initiative. 
We've seen how high food prices in 2008 led to more than 36 
food riots around the world and real instability in countries 
where people spend a huge percentage of their income securing 
food and feeding their families. Feed the Future is a program 
that works. It's targeting 18 million people, to move them out 
of poverty and hunger, in 20 countries. But we simply won't be 
able to continue the program and the investments in those 20 
countries if we're not able to secure the fiscal year 2012 
budget as the President has proposed.

                   PROCUREMENT REFORMS AND MONITORING

    Senator Leahy. In your congressional budget justification 
there is a statement that USAID is conducting a series of 
business process reviews; key management processes and 
functions to support the Agency's development outcomes more 
effectively; to accomplish this, USAID is utilizing a 
systematic repeatable approach, including diagnosis, 
optimization, implementation, and assessment--this bureaucratic 
gobbledygook doesn't tell us anything.
    I tried to find a coherent description of these reforms. I 
couldn't. Now, I was not an English major in college, but I do 
read a lot and I wish you would just tell us in English--what's 
your most important procurement reform?
    And then when you talk about monitoring--we had the 
problem, of course, at Afghanistan's central bank prior to your 
being here--USAID had a $92 million, 5-year contract with them, 
with Deloitte. And, I assumed that they would tell us if they 
saw fraud. They never did. The inspector general said USAID 
found out about the fraud when The Washington Post ran an 
article about it. They issued $850 million in fraudulent loans.
    If we're going to be doing this, how do we make sure the 
contractors are honest? How do we--I don't want 
``optimization'' and ``robustibadation'', and the rest of the 
stuff. I want to know who's there with the green eyeshades 
keeping track of things?
    Dr. Shah. Senator----
    Senator Leahy. It's a general question.
    Dr. Shah. On your----
    Senator Leahy. Good luck.
    Dr. Shah. Thank you, Sir.
    On your point on congressional budget justifications, 
you're absolutely right. I have myself struggled greatly with 
the way they read. And we are taking the guidance from your 
team very seriously and will in future submissions have a more 
plain-English approach to that--which is something I'm seeking 
across every effort in our bureaucracy and across the Federal 
Government.

                EXAMPLES OF REFORMS USAID HAS UNDERTAKEN

    With respect to procurement reform, we've really taken on 
some very fundamental reforms. The first is building local 
capacity development teams in our missions around the world. We 
have a plan for expanding the numbers that we do. But what we 
do is we build a team that includes a first tour officer, a 
more seasoned Foreign Service officer, local staff that 
understand the context and institutions locally; have them 
develop a game plan for getting a higher percentage of total 
USAID commitments directly to local institutions and 
organizations. And that's making a big difference.
    I had a chance personally to meet with the first 50 or so 
members of these teams, and I really believe, I mean, they have 
a huge amount of passion and commitment to this. They're doing 
important work and innovative work. We've made a number of 
specific policy changes in order to enable them to be 
successful. And----
    Senator Leahy. I want that work to show. I mean, I don't 
want it to get----
    Dr. Shah. Absolutely. Yes.
    Senator Leahy [continuing]. Consumed in this.
    Dr. Shah. As another example, we've been breaking down 
these Indefinite Quantity Contract (IQC), which are these very 
big contracts, into smaller chunks and into things that are 
more broadly competed and allow for more firms to be 
essentially winners within an IQC. There's a good example of 
that with respect to our construction and vertical structures 
programs in Afghanistan, where they worked hard to break a big 
IQC into four smaller components--three or four smaller 
components--that have a greater amount of competition to get 
you better results for American taxpayers.
    Third, we've created a board on acquisition and review of 
large contracts, and a suspensions and debarments task force. 
And we have been aggressive about pursuing enhanced 
accountability across all kinds of partners--public and private 
sector.

                   MONITORING PROGRAMS IN AFGHANISTAN

    With respect to Kabul Bank, we have canceled the component 
of the contract that I believe you were referring to. We do not 
believe that Deloitte, or USAID, or the U.S. Government writ 
large could have stopped the massive fraud that existed there. 
But, the concern that I had was that the structure of the 
project----
    Senator Leahy. But nobody knew about it. That's the 
problem.
    Dr. Shah [continuing]. Precluded--exactly--precluded 
information from coming to sources it should have been coming 
to. And that's just wrong. So, we're reviewing a broad range of 
our efforts there.
    In Afghanistan, we've launched a project that we call A-
cubed, or, Accountable Assistance for Afghanistan, and I look 
forward to talking a little bit more about the different 
programs within that.
    But I think over the past 15 months the progress and the 
improvement in contract management and oversight in Afghanistan 
has been tremendous. I believe there's still a long way to go, 
and I welcome the cases where we find things that we can then 
go after or cancel, so that we can keep the teams really 
focused on implementing the A cubed initiative and doing that 
aggressively. Thank you.
    Senator Leahy. Thank you.
    Senator Kirk, I've gone way over my time and I apologize. 
Please go ahead.
    Senator Kirk. No. Thank you, Mr. Chairman.

                      PVS--SENATOR KIRK'S INQUIRY

    In November 2007, the USAID Office of Inspector General 
said that ``our audit determines that USAID's policies, 
procedures and controls are not adequate to ensure against 
providing assistance to terrorists on the West Bank.'' USAID 
properly responded in July of that year with a PVS, and you 
spent $2.5 million taxpayer dollars on setting that system up.
    In September--or, I'm sorry. Then you, in January 2009, 
USAID published its final rule on the vetting system. In May, 
Jacob Lew testified before my old committee that this PVS is in 
the rulemaking process, and it's our intent to become final.
    In June 2009, the PVS rule was made final. In March 2010, 
you appeared before me when I was a House Member and you said, 
``We are prepared for USAID programs, for the PVS to roll out 
this year''--that was 2010--``and we will come out with very 
specific plans on March 16.'' That was March 16, 2010.
    On April 2, then, in a response to a letter from me, you 
said, you wrote in writing to me that ``We will be putting this 
out within 1 month, and should be ready to launch the program 
by the end of the summer.'' Meanwhile, you've just been getting 
pounded by your own inspector general, who says that ``We have 
no way to ensure compliance in March 2011.'' Your inspector 
general said that the program was vulnerable to inadvertently 
providing material support to organizations for persons who 
commit, threaten--or, threaten to commit or support terrorism 
without the knowledge of USAID in the West Bank and Gaza. You 
also--the inspector general also said that, ``Our Office of 
Compliance specialists provided mission management summary 
reports of instances of noncompliance with vetting 
requirements. However, the position now has been vacant since 
March 1, 2010. Mission management no longer receives any of 
these reports.''
    Boy, this is not looking good for your running of this 
program--like, really terrible. How do you answer?

             USAID'S PVS AND OTHER ANTI-TERRORIST PROGRAMS

    Dr. Shah. Well, the PVS in West Bank and Gaza has been up 
and running. It has not stalled. We are seeking a new person to 
fill the position, but we're able to continue to implement the 
program with respect to that point.
    The point that you referred to about our prior conversation 
on this I can speak to. As you know all of our missions 
complete antiterrorism risk-based assessments on an annual 
basis, and----
    Senator Kirk. No, I----
    Dr. Shah [continuing]. We check our partners----
    Senator Kirk [continuing]. Don't--I'm asking----
    Dr. Shah [continuing]. Against lists maintained by the 
Office of Foreign Asset Control. And before awards are made, 
nongovernmental organizations (NGOs) are required to certify 
that they do not provide any material support to terrorists. In 
addition, we require partners to adhere to basic U.S. law 
which, of course, forbids furnishing of assistance to terrorist 
entities. And we've established the mechanism that you 
described in the West Bank and Gaza, which we feel is 
effective, and the inspector general has supported that. We've 
also applied that mechanism in different forms to Somalia, 
Yemen, and Afghanistan.
    At the beginning of this administration, USAID had 
developed--and in the context of those conversations--a very 
specific PVS program to test out more broadly. At approximately 
that time, the Congress passed an annual appropriations bill 
which directed us to apply the program equally to State and 
USAID, and Jack Lew, who was the Deputy Secretary at the State 
Department at the time, and I worked through carrying out that 
directive for many, many months.
    Since that time, we've worked to develop a very specific 
joint pilot program with the State Department. We propose to 
roll it out in five or so countries. We've tried to assess a 
range of threat environment----
    Senator Kirk. So, wait a minute. So, after promising me 
that you would roll it out as of May 16, 2010, you're now 
promising to re-roll it out a year later?
    Dr. Shah. Well, I'm, well, what I wanted to suggest is, we 
have the pilot designed, ready to go with the State Department 
as we were directed to do. And we would like to----
    Senator Kirk. Well, let me go back. Why----
    Senator Leahy. Let him finish.
    Senator Kirk. Yes.
    Senator Leahy. I'll give you a chance to go back.
    Dr. Shah. And we would at this point like to consult with 
the Congress. But the specific congressional directive around 
this particular pilot is something we are committed to do in a 
manner that covers both State and USAID, and covers similar 
types of projects and programs in a range of threat 
environments as is our interpretation of the guidance.
    That has not stopped us from being ever more aggressive 
about partner vetting--especially in specific high-threat 
environments in Afghanistan, Yemen, and Somalia where the West 
Bank, Gaza PVS approach has been one that we've been more 
aggressively pursuing in those places.
    And frankly in Afghanistan in particular, where through the 
terrorist threat financing cell task force 2010 and the 
Accountable Assistance for Afghanistan program, we have a very 
robust effort that identifies individuals, brings in the U.S. 
intelligence community, as well as the military, in that 
process. And that's been a real priority for us over the last 
15 months.
    So I just want to make the distinction between the pilot 
congressional directive, which we are trying to meet in a joint 
State-USAID manner, and the efforts in Afghanistan and other 
places, where we're trying to be very robust on our own in the 
context of accountable assistance for these particular 
environments there.
    Senator Kirk. I didn't ask about Afghanistan.
    Dr. Shah. Okay.
    Senator Kirk. So let's go back to May 16. Why did you miss 
the target?
    Dr. Shah. Well, I did not mean to mislead in any context. 
My understanding at that point in time was we had a pilot ready 
to go. I didn't know what it would take to turn that into a 
joint State-USAID pilot. It took longer than I think any of us 
would have liked. But we're at that point now where we have it. 
It's ready. It's designed. And we seek congressional 
consultation before rolling it out.
    Senator Kirk. So can you give me a date now that's more 
valid than the date you gave me?

          ANTICIPATING THE ROLL-OUT DATE OF THE PILOT PROGRAM

    Dr. Shah. Sir, I have learned from this exercise not to 
pick a date here. But we certainly have a----
    Senator Kirk. Just let me----
    Dr. Shah [continuing]. A proposal that we'd like to have 
feedback on.
    Senator Kirk. So you are unable to give a date to assure--
you've got a $495,000--or $95 million funding request, and you 
are unable to say that you will put in a previously designed 
and paid-for system in place to ensure--or let me ask you this. 
How many UNRWA unions are controlled by Hamas right now?
    Dr. Shah. Well let me answer--I can't answer the second 
question. Let me try to answer the first. I would like us to 
implement this pilot as has been directed as quickly and 
efficiently as possible.
    Obviously, my desire to get there was delayed by the 
efforts we undertook to make this a joint State and USAID 
pilot, and we do want to do this in a manner that has 
appropriate congressional consultation so that we know that the 
countries we've selected and the range of threat environments 
and the data that come back from the pilot meet all of the 
needs, and help us learn about how to then roll this out in a 
broader way. So----
    Senator Kirk. So it could be another year.
    Dr. Shah. I don't think it will be another year. I think we 
can come up here right away with the actual consultation on the 
pilot plan, and based on feedback from our partners in the 
Congress, then roll it out.
    Senator Kirk. Thank you, Mr. Chairman.
    Senator Leahy. Okay. Thank you, Senator Kirk.
    Senator Mikulski.
    Senator Mikulski. Thanks, Mr. Chairman. And really thank 
you and your staff for your, just, steadfast work, not only in 
this budget, but in all others, really, to look out for the 
poor and marginalized in the world.
    Dr. Shah, I'd like to first of all welcome you to the 
Agency.
    Dr. Shah. Thank you.
    Senator Mikulski. You have a unique background with your 
M.D., your work with the Gates Foundation, your initiatives in 
global health, and now this very hands-on experience. So we're 
glad to see you.
    During this time when Federal employees are being so bashed 
and trashed, I would like to thank the staff of USAID, both 
here and those who serve abroad, for, really, what they do. 
Many serve in harm's way. If you're an USAID worker you're 
always in a place that's either dirty or dangerous or both. And 
I just want to--I'm going to express my appreciation to them.
    As the Senator from Maryland, I represent many faith-based 
organizations that are deeply involved with USAID--Catholic 
Relief, Lutheran Refugee Services, and others. So we know what 
you do, and we know what you're supposed to do. And I'm going 
to make sure you have the right resources to really do the job.

 THE IMPACT OF BUDGET CUTS ON USAID'S PROGRAMS, ESPECIALLY IN NICARAGUA

    I want to get right to the impact of cuts in foreign aid. I 
just mentioned Catholic Relief, and I know that they operate a 
$7 million program in Nicaragua, helping close to 6,000 women 
participate in growing coffee. They actually cultivate hundreds 
of acres, and they even signed a U.S. Fair Trade deal or a 
United States--there's this whole one group that's a United 
States, United States Fair Trade-certified company. They, 
themselves, have been empowered. They're now creating jobs in 
Nicaragua, and they're also helping create jobs in this 
country.
    Could you tell us, with the impending cuts, will you be 
able to sustain the Nicaraguan Empowerment Initiative--not only 
the Catholic Relief, but--there? And also, how do these cuts 
focus particularly on these empowerment initiatives that lead 
to economic self-sufficiency, which is one of the, is always 
one of the most potent forces in a country?
    Dr. Shah. Thank you, Senator. And I want to thank you 
specifically for your comments about our staff and our and 
their efforts around the world at this challenging time.
    With respect to how these cuts would affect us, and your 
specific question about Nicaragua, we really would not be in a 
position to, at this point, suggest any program could be 
protected. We don't, of course, know what the range of the cuts 
might look like, and we don't know exactly where our fiscal 
year 2011 reality will put us. So we will work through that in 
the coming days and weeks.
    But it is certainly fair to say that the things that are 
most at risk are the initiatives that have been started or 
expanded, really, over the last 3 to 5 years, since much of 
this discussion does seem to start with a 2008 baseline 
conversation. And in that respect the programs that would be 
most vulnerable are unfortunately some of the most efficient 
programs because, on a bipartisan basis, starting with 
President Bush and continued by President Obama, we have 
proposed increases in specifically those areas where we believe 
we get the most bang for our buck, and where, as you put it, we 
are able to get real economic empowerment that allows us to 
have an exit strategy on our assistance.

                         FTF AND FOOD SECURITY

    The, perhaps the most important example of that is the Feed 
the Future initiative, which builds on President Bush's 
significant budget proposal between fiscal year 2008 and fiscal 
year 2009 to really re-energize American assistance in the area 
of agriculture and food security around the world--the project 
you mentioned sounds like it's one of those--and was in 
response to the 2008 food price crisis that moved 100 million 
people back into a state of chronic daily hunger.
    Today we face a similar issue with food prices and with the 
consequence of it, and we've structured, I think, a very 
effective program in 20 countries, where countries, in order to 
participate, have made their own commitments to dramatically 
expand their investment, have committed to reform their laws to 
allow for improved foreign direct investment and local private 
sector investment, and where our dollars leverage other donors 
and the private sector quite dramatically. And it's precisely 
those efforts, efforts like our major WalMart partnership in 
Central America that will reach tens of thousands of farm 
households and allow for real sustained economic development at 
very high leverage to the U.S. taxpayer, because we only pay to 
help the farmers plug into the WalMart purchasing agreement.
    You know, that's, those are the types of programs that----
    Senator Mikulski. Well, I want to come back and talk 
about----
    Dr. Shah [continuing]. Will unfortunately be at risk.

             USAID'S RELIEF AND ASSISTANCE EFFORTS IN HAITI

    Senator Mikulski [continuing]. Partnerships in a minute. 
But I'd like to go now--first of all, I think, I appreciate 
that answer. I'd like to go to Haiti. You know, there are so 
many headline issues, my gosh, the Jasmine Revolution, the 
terrible tragedy unfolding in Japan. But there is Haiti that 
had a tremendous response of the United States of America. Our 
Government's involved, we are working through these fantastic 
faith-based NGOs.
    Could you tell us where you see in 2012 the sustained 
effort in Haiti and what you think, in order to keep that 
commitment to a country in our own hemisphere, what we need to 
ensure?
    Dr. Shah. Certainly, we have a, we've had a very structured 
and focused effort in Haiti. We have spent considerable time 
designing an international development strategy for Haiti that 
is Haitian-led and that is implemented in tight coordination 
with an institution called the Interim Haiti Reconstruction 
Corporation that essentially helps integrate and ensure 
coordination is effective across international partners.
    Our efforts focus in areas like agriculture, an industrial 
park in the North, expanding access to energy to create the 
basis for economic growth, and health and education.
    You know, all of these efforts are pretty fundamental to 
the future of Haiti being able to be a more dynamic, more 
viable, more economically self-sufficient country. And in many 
of these areas we're starting to see some early results--like 
in agriculture, where our efforts have, in certain areas, 
demonstrated the doubling of total productivity for a country 
that is still very much an agrarian economy. And we've worked 
with partners like Coca-Cola to help them engage in Haiti and 
create a real supply chain, especially around mango juice and 
products like Haiti Hope, which get us more leverage on our 
dollars.
    Senator Mikulski. Well, first of all, my time is up and 
thank you for that answer. We want to have ongoing 
conversations with you. I'll be meeting with these NGOs next 
week.

                  PARTNERSHIPS FOR FUTURE CONVERSATION

    Mr. Chairman, I know my time is up, but there, you should 
know there are two partnerships on, you know, that I want to 
have further conversation.
    First of all, the women of the Senate on a bipartisan basis 
are going to be getting together, working with the Secretary, 
then back to you with ideas on, really, what's going on in the 
Middle East, and that we don't lose ground with women. So we're 
doing that on a bipartisan basis, led by Senator Hutchison and 
myself.
    The second thing is, will be these private sector 
partnerships. That's another conversation.

                    PROGRAMS TO AID HAITIAN AMPUTEES

    But, Mr. Chairman, on Haiti, you'd be interested to know, 
under your good work we took an idea that you're known for--so 
many of the problems that happened in Haiti led to the building 
collapses, led to the horrific amputations of people. You 
remember when we were in Africa together, so many years ago, 
and I saw the outstanding job you did by creating a local 
facility where people had lost their legs and ankles due to 
land mines. Under Senator Leahy's leadership--he'll be too 
modest to tell you--we actually--he actually helped fund, 
creating a factory where they made low-cost limbs to put people 
literally back on their feet again.
    We took that idea, and through the advice of the John 
Hopkins School of Public Health found out who else was doing 
that, and we're now doing that in Haiti. So I took your idea, 
went to the Bloomberg School of Public Health to see what 
others were working on it, and we're doing that. And 
literally--it's not a big initiative, Sir, but, you know, your 
idea, I think, had such great impact, and, my God, to lose a 
leg, and not being able to work or farm or whatever.
    So I just wanted to mention that to you because of your 
leadership in this area.
    Senator Leahy. Well, I would thank you.
    And I might say to Senator Johnson, too, I was just down in 
Haiti a couple weeks ago and visited one of the areas where 
they give prosthetics to amputees. I saw children the age of my 
grandchildren who've lost arms and legs and learning how to 
walk and then people my age who've lost arms and legs and 
learning how to walk.
    But I mentioned, Dr. Shah, one of the--basically a 
volunteer, a doctor from Belgium who's there, so we could speak 
in French--and when I thanked him for what he was doing he 
grabbed my arm and he said, ``Pour les enfants''--For the 
children.
    And it's a very difficult, very difficult time. Johns 
Hopkins is, of course, I can't--I stand behind nobody in my 
admiration of Johns Hopkins. I'm glad we've done that.
    Senator Johnson, you've been waiting patiently. Please go 
ahead, Sir.
    Senator Tim Johnson. Thank you, Mr. Chairman.
    Dr. Shah, thank you for coming before the subcommittee here 
today.
    I'm pretty new here in town. But I guess I'd first of all 
like to second Senator Mikulski's comments regarding USAID 
workers. On a recent trip to Pakistan and Afghanistan I met 
some USAID workers, and they're just fine individuals. They're 
working hard to try and do good things, and I certainly believe 
that U.S. foreign aid can be a real positive influence 
throughout the world, enhance the reputation of the United 
States.
    But I think it's unfortunate with our fiscal situation, 
where we're running $1.5 trillion or more annual deficits, 
money's extremely tight. So, it's just critically important 
that any funds that we do expend are done in an incredibly 
efficient and effective manner.
    So, I guess the first question I have is, your total budget 
is about $24 billion, is that correct? Just, you----
    Dr. Shah. Yes.

           REALLOCATIONS OF FUNDS AND THE NEED FOR EFFICIENCY

    Senator Tim Johnson. Okay. Do we have any sense for how 
much of that money really is siphoned off, that really is not 
going for what it's intended?
    Dr. Shah. Certainly. I would step back a moment and say, 
across our requests, especially in fiscal year 2012, we've 
tried to be very rigorous about finding reallocations within 
our portfolio. So instead of asking for additional resources 
for core priorities and for the types of results we've been 
talking about, we've really looked hard at the things we do, 
things we can stop doing, and areas we can get efficiencies.
    Examples of that include eliminating a number of positions 
in Western Europe and Japan and places where we have 
development counselors working with other donor countries--not 
to say their activities weren't important, but the costs of 
keeping them there were very high, and we think we can do that 
work virtually based out of our team in Washington.
    We have proposed shutting down a number of our missions 
around the world in order to lower the overall cost basis of 
our operating expenses, and we've proposed major reductions--
more than 50 percent programmatic reductions--in a range of 
small programs and smaller missions in order to really be more 
focused and selective in how we apply our investment and our 
resources.
    In addition to that, we've proposed $400 million of 
specific cuts and reallocations in the fiscal year 2012 budget, 
and I could walk through examples of that. But they are all 
designed to allow our portfolio to be more optimized against 
the results we seek in terms of reduction of hunger, promotion 
of child survival, improving democratic governance and 
opportunities for that, especially in the Middle East, and 
fulfilling our core national security priorities in places like 
Afghanistan and Pakistan.

                   OVERSIGHT OF FUNDING REALLOCATION

    Senator Tim Johnson. Okay. But, again, that's speaking to 
efficiency, which is extremely important. But the question I 
asked really had to do with just funds going to--like Senator 
Kirk was talking about--potentially, foreign terrorists. I 
mean, going to uses for which they're not intended. I mean, 
have you, do you have any estimate on that at all? Is there any 
study that's been prepared within your agency to try and figure 
out what that potential number might be out of $24 billion?
    Dr. Shah. Well, I'll say, when we identify those cases we 
go aggressively into canceling those programs, seeking 
prosecution, as we have done in a number of instances this past 
year and as we are doing more aggressively now that we've 
implemented some of the aspects of our procurement reform and 
contract oversight efforts. So, we don't have an aggregate 
number if we knew a certain amount of money was going for an 
inappropriate and illegal purpose, we would immediately cancel 
that project or program and immediately seek restitution and 
prosecution, no matter who the partner was, in terms of 
exploring that.
    I've told the teams this. In Federal Government in general, 
I think, there's sometimes a reluctance to have bad news 
highlighted. I've said I want to see these examples because the 
more of these we find and the more we can ferret out, and the 
more we can seek restitution, prosecution--whatever is most 
appropriate--is part of our measure of success in improving our 
accountability. And that's what we're trying to do with our 
procurement reforms and our Accountable Assistance for 
Afghanistan program.

                   CONSEQUENCES OF CONTRACT VIOLATION

    Senator Tim Johnson. So, have your team, or has your team 
brought you, brought to your attention those types of 
instances? And give us a couple examples.
    Dr. Shah. Well, they certainly have this past year. Some of 
what is currently under consideration are ongoing suspensions 
or legal cases that I, perhaps, can't really speak to in a 
public setting. But some of them are publicly acknowledged. We 
had malfeasance in certain programs in Afghanistan and 
Pakistan. We shut down those contracts and programs, and 
together with the Department of Justice, sought restitution 
from a number of partners. We have changed the way accounting 
and reporting takes place with respect to partners in those 
settings, so that we have more visibility on subcontracts and 
subcontracts of subcontracts, and tried to collapse the number 
of layers in our contracting so that we simply have more 
visibility. That has helped us identify even more cases where 
we are actively seeking actions against them.
    I don't know if it would be appropriate for me to describe 
them in this setting, but I'm happy also to speak privately or 
come back to your office with some of the cases----
    Senator Tim Johnson. Okay.
    Dr. Shah [continuing]. And how we've tried to handle them.
    Senator Tim Johnson. Fair enough.

            SPENDING PRIORITIZATION AND ALLOCATION OF FUNDS

    With a $24 billion a year budget, what method do you use, 
or, how do you prioritize your spending? I mean, are you 
familiar with Bjorn Lomborg's work in terms of, you know, cost 
benefit and actually putting dollars to where it has the most 
benefit?
    Dr. Shah. I am. In fact I worked very closely with Bjorn 
when I was at the Gates Foundation because our basic approach 
was about allocating resources against where you get the best 
results. I think you've seen that in how we've structured our 
food security program, where we find it is more efficient, more 
results-oriented and more sustainable for us to invest in 
agricultural development in low-income countries than in 
either, you know, basic food aid--although we need to be able 
to respond to emergencies in that context--or in dealing with 
the consequences of large-scale hunger and famine. So, we've 
focused on 20 specific countries where our money gets leveraged 
by others, and where we can document very specific results in 
terms of people moved out of poverty, and children who are 
moved out of a state of hunger and stunting.
    In health we've done the same thing. We've looked across 
every business line in our global health portfolio, identified 
where we not only save the most lives, but where we do it at 
the lowest unit cost, and proposed a strategic approach forward 
that prioritizes immunization, malaria, HIV prevention, and a 
number of other areas where we think we can bring the cost 
structure of getting the outcomes down significantly. And in 
areas like tuberculosis, for example, we've restructured our 
efforts to invest in new diagnostic technologies, because 
that's part of getting the whole cost structure to be more 
effective in that space. So, those are just examples. We're 
doing that across all of our areas, like water and education, 
and a number of other priorities.
    But, I'd be remiss if I didn't also note that some of our 
budgeting at a macro level is, of course, tied to national 
security priorities, and so it's a combination. In certain 
accounts we can be very focused on sheer numbers and unit 
costs, and in other accounts there are a broader set of 
considerations that are taken into account that define 
allocation.
    Senator Tim Johnson. Okay. Thank you, Dr. Shah.
    Thank you, Mr. Chairman.
    Senator Leahy. Thank you, Senator.

                 EFFICIENCY AND EFFECTIVENESS IN HAITI

    We talked about Haiti, we talked about overhead. I was in 
Haiti a couple of weeks ago and one of the things I looked at, 
because we'd seen a New York Times article was the fact that 
Sean Penn's organization, which manages one of Haiti's largest 
camps of displaced persons, is doing rubble removal and home 
reconstruction, and spends only 3.2 percent on overhead. You 
have an area where there's been a flood--you walk through a few 
days later and they can point to the mark where the water was, 
but the water's gone. The rubble, in a lot of these streets, 
was way over my head and had to be removed with picks and 
shovels and wheelbarrows and they've cleared street after 
street.
    Now, if they can do that with only 3.2 percent overhead, 
why can't other USAID grantees and contractors operate like 
that in Haiti and other countries?
    I say this because I know a lot of people, well-known 
people, go to Haiti for a day or so and say, ``Oh, we've got to 
do something'', and talk about it and leave, but Mr. Penn has 
lived in those camps for months. He's out there working every 
day with the people, and they're actually getting things done. 
Why can't that be replicated? Of course, it would help if you 
had a government that cared more about the Haitian people than 
about itself.
    Dr. Shah. Well, you know, with respect to Haiti in 
particular we have been trying to assess--as a criteria for 
letting contracts and exercising programs--overhead costs, and 
using that as a core criteria for resource allocation. It's 
hard----
    Senator Leahy. Yes, but it's been 2 years. It's time to get 
it done. I mean they----
    Dr. Shah. Well, and we are. And we are. We're able to do 
that.
    Senator Leahy. Cholera season is coming.
    Dr. Shah. I will say that it's hard to know. What different 
people count in overhead is very different, and I have found 
that the biggest disparities are often not quite as large as 
they appear.
    That said----
    Senator Leahy. Was the New York Times wrong in that 3.2 
percent?
    Dr. Shah. I don't know the details of----
    Senator Leahy. Okay.
    Dr. Shah [continuing]. Sean Penn's organization. I give him 
a huge amount of credit for both his efforts and what J/P 
Haitian Relief Organization is doing, and we've been partnering 
with them, as you know, Sir, in a number of different effective 
efforts.

                  USAID'S APPROACH TO CONTRACT REFORM

    But overall, you're absolutely right to highlight this. And 
what we've done is, we've actually mapped out the flow of a 
development dollar through different systems--the contract 
system, the grants assistance system, cooperative agreements, 
tools like our Development Credit Authority that get us more 
private sector leverage from the spending of our resources. And 
in our budget allocations, we're now using the basic cost of 
doing business as criteria to propose reallocations.
    The other thing we're doing in our contracting reform is 
basically setting guidelines to reduce the overheads that are 
embedded in contractors. We're able to do that more generally 
in some specific contexts. It's harder to do in security threat 
environments where those overheads can be very large, but are 
required to be able to conduct the work in insecure settings.
    Senator Leahy. Everybody wants to help out in a tragedy. I 
just want to make sure that it's the people that get helped 
out.
    Dr. Shah. Sir, and I----

                          GOVERNMENT IN HAITI

    Senator Leahy. In Haiti, where I see a lot of expensive 
vehicles and operations, I also see a lot of people living 
under tarps and trying to bathe in polluted streams and it's 
almost overwhelming. It was a poor country to begin with, and 
now it's worse. Do you think with a new government things will 
improve? Do you have any early sense about that?
    Dr. Shah. Well, it undoubtedly is too early to tell, and I 
should probably leave it at that, in the sense that we're at a 
provisional result at this point.
    Senator Leahy. Will you be working--when the new government 
is sworn in, will you be working--will USAID be working with 
them?
    Dr. Shah. Absolutely.
    Senator Leahy. Okay.
    Dr. Shah. And we have been working through the Interim 
Haiti Recovery Commission with the Prime Minister, with the 
government very, very closely. And we do that, of course, hand-
in-glove with the State Department to manage that relationship 
and to make sure that it's effective.
    I will just validate your point that on case after case, we 
achieved big breakthroughs in things like rubble removal when 
the government stepped in and made some decisions. Sometimes 
that took time to get there, but we do see real progress once 
those decisions are made and once they enable that.
    So the point about working in partnership not only applies 
in Haiti, but applies everywhere we work, and we've really 
changed--frankly, we've changed our promotion precepts and how 
we allocate our senior managers to different mission director 
posts, and made the number one criteria for both promotion and 
for how we allocate our people, a criteria we call ``inclusive 
leadership,'' but, essentially, a measure of whether people are 
effective at working well in the interagency, and being good 
partners with NGOs and private firms and local governments.

                SUSTAINABLE DEVELOPMENT AND AFGHANISTAN

    Senator Leahy. I think USAID is being asked to do the 
impossible in Afghanistan. I've talked to General Petraeus. 
I've talked to others about this. That's a country with every 
imaginable problem. The ingredients for sustainable development 
really don't exist. You're being pressed to spend money as fast 
as possible. I think in a few years there may be little to show 
for the huge amount of money spent there.
    I'm for helping Afghanistan, but the government's not a 
reliable partner. I've visited there. I've talked with our men 
and women in uniform. They're trying to do the impossible. 
They're doing it bravely. But I wonder if their short-term 
goals are really compatible with long-term sustainable goals.
    What are USAID's long-term goals? Ten years after 9/11, 
having borrowed for the first time in American history, for a 
war, we borrowed the money--instead of having a surtax or 
something to pay for it--we borrowed the money for two $1 
trillion wars, and we've not got an awful lot to show for it. 
What are we going to see 5 years from now in Afghanistan?
    Dr. Shah. Well, Sir, I would start with the findings of 
this year's Afghanistan and Pakistan annual review that the 
President conducted, and concluded that our core area where we 
need to improve our progress in Afghanistan is in making the 
gains that have been realized in security, development, and 
governance more sustainable and more durable.
    Senator Leahy. How are you going to do that when a 
government in Kabul turns power over to warlords, and 
oftentimes corrupt groups in other parts of the country, and 
say, ``Here, go ahead and have Sharia law. Do whatever you 
want.''
    Dr. Shah. So, to implement----
    Senator Leahy. ``But we're living well in Kabul.''

      IMPLEMENTATION OF AFGHANISTAN PROGRAMS--GOALS AND CHALLENGES

    Dr. Shah [continuing]. This approach, we've been more 
focused on accountability in our assistance--and I talked 
through our A-cubed effort. We are also working in closer 
partnership with the government on improving delivery of 
assistance into districts and into provincial implementation 
mechanisms. And some examples of that are areas like 
agriculture, where I think we've seen real progress since we've 
made a strategic shift to invest more in that area. We're 
seeing improved yields, and we're seeing improved aggregate, 
economic activity in the agriculture sector, and we're starting 
to see real exports in that sector. I just visited a program 
that will have lasting, decades-long benefit where entire 
regions of Nangarhar province are developing vegetables, and 
now they're meeting higher processing and packaging standards, 
and selling to----
    Senator Leahy. And they were a huge export market for much 
of that part of the world. But the transmission lines aren't 
there. I mean, is it going to continue, that the water can be 
shut off if bribes aren't paid? It worries me that----
    Dr. Shah. Well, look, I would just say--we know that this 
is a difficult environment in which to work. We've implemented 
what we call a sufficiency audit, or a sustainability audit, 
across all our programs to be able to prioritize those that 
meet the President's guidance of sustainability and durability 
in benefit.
    The areas where we're optimistic we'll have strong programs 
include agriculture, power and roads, health and education, a 
mobile payment system that will improve the way the civil 
servants are paid and reduce graft and corruption, and programs 
like the National Solidarity Program that just went through a 
pretty rigorous third-party review and showed good results.
    So, we are doing this as part of an integrated civilian-
military plan. The goal is to resource transition--and we know 
that USAID and the civilian side of this is an important 
partner to the military in achieving that goal. And we're 
trying to be the voice for effective sustainability of 
programs.
    Senator Leahy. I think with our diplomats and our military 
you have very good partners. I don't see it on the other side. 
I hope you're right. I must admit that I'm virtually at the end 
of being willing to support activities in Afghanistan when 
we're not getting the support we should from the Afghan 
Government.
    I look at what's happening in Pakistan. They tell the 
Central Intelligence Agency yesterday--don't attack those 
people who are out there killing you, or we'll allow people to 
kill those who are bringing oil to your soldiers who are 
risking their lives, and we'll just kill the truck drivers, as 
they have several times.

                     ACCESS TO SAFE DRINKING WATER

    I mean, my frustration level is very, very high, and that's 
a New England understatement. But we also have, I hear about 
cutting funding for international family planning, and I think 
about safe drinking water. You may wonder how those go 
together. The world's population is destined to go to 9 billion 
or higher. Millions of people have no safe water. Many others, 
usually women and children, have to walk long distances to get 
small amounts of it, sometimes through minefields. I think 
you're going to find wars being fought over water within a 
decade, just as they now fight over oil. I think you're going 
to find--and we already have regional conflicts over water. 
Anything you can do to stop that? We are just tossing all the 
problems of the world on you, Dr. Shah, so tell us how we 
approach that one.
    Dr. Shah. Well, first, I very much appreciate your raising 
that issue. It is very important to us, and the Secretary in 
particular has issued a number of statements on the subject of 
safe drinking water and available water.
    The way we are approaching it is really through a new 
approach. We're in the process of developing a new strategy 
that more closely ties investments in clean drinking water and 
water that's available for productive uses--agriculture and 
others--to core goals around saving lives, reducing labor spent 
collecting water--mostly women and girls' labor--and improving 
economic productivity, mostly in the agriculture sector. And we 
think by tying our programs to those three specific outcomes, 
we will be more effective at both implementing programs, 
getting results, reporting those results, and building support 
for a more effective effort there.
    Senator Leahy. Well, the implementation--that's not a one-
size-fits-all thing. I mean, the implementation might be 
different in Southern Africa than it might be in the Middle 
East. It might be----

  SAFE DRINKING WATER--APPLICATION OF TECHNOLOGY AND ENTREPRENEURSHIP

    Dr. Shah. Absolutely. And in fact, this is an area where 
our new focus on science and technology, which frankly is not 
new for the Agency--this was an agency that did a lot of work 
in science and technology decades ago--but our new focus there 
has real potential and real promise.
    I have just recently reviewed a series of clean water 
purification strategies that would lower the costs of some of 
our programs significantly if we could validate and get those 
technologies out there--everything from a low-cost ceramic 
filter that can be locally developed, to UV water purification 
systems where local communities can install them and they can 
be self-sustaining over time.
    And I think you, in our prior hearing highlighted an 
article about entrepreneurship in development. And this is an 
area in particular--since the poor tend to pay, frankly, more 
than the middle class pays per unit of clean drinking water in 
most developing countries--this is an area that's very ripe for 
the kind of entrepreneurship you've championed. And we took 
your guidance seriously and have developed a series of 
programs, like the Development Innovation Venture Fund and 
others, that we think will meet that gap and enable more 
experimentation, but also better outcomes at lower costs in 
this particular field.
    Senator Leahy. Thank you.
    Senator Johnson.
    Senator Tim Johnson. Thank you again, Mr. Chairman.
    I'd first like to say, I believe the United States on the 
whole has a very positive impact on the world. We're extremely 
compassionate people, so the purpose of the foreign aid is 
certainly, first of all, to help people in a very meaningful 
way hopefully to have very long-term consequences on their 
countries and on their lives.

           PROMOTION OF AMERICAN IMAGE THROUGH USAID EFFORTS

    I think the question I have is, you know, it's, definitely 
a secondary purpose, though, of U.S. foreign aid is so the 
United States gets credit for it--so it enhances our 
reputation; so that people around the world think kindly of the 
compassion that the American people share with them. So, I 
mean, we spend $24 billion a year through your agency. That 
doesn't even count the amount of money we spend through our 
military help when disaster strikes.
    So I guess that's the first question I have, is, what are 
we doing within your Agency to make sure that we do obtain 
maximum credit for what our efforts are, and for, really, the 
sacrifice the American people are making in providing that 
foreign aid?
    Dr. Shah. Well, you know, we believe that that secondary 
purpose is important. And we need to be focused on how to make 
that real, as a realized benefit of our investments abroad. 
Sometimes the strategy prioritizes branding and clear 
visibility for specific projects, commodities, individuals that 
are part of large-scale relief efforts--most notably after, for 
example, the Pakistan floods where we saw, because of a very 
strong United States response where we were the first partner 
with the most capability, but also a real spirit of history and 
partnership with the Pakistani relief agencies, that we 
actually saw significant increase in the Pakistani people's 
appreciation for the United States Government role there. And 
so we understand that and take that seriously.
    I personally believe that a big part of what will 
ultimately garner the credit that we seek is the sincerity and 
the way in which we conduct the work. And that is why we've 
taken the Secretary's guidance, the President's guidance to be 
good partners pursuing mutual accountability far more 
seriously. And, you know, just around the world in our projects 
and programs, we're consulting with heads of state, we're 
consulting with local communities, we're consulting with small-
scale farmers and local civil society organizations.
    That sometimes slows down the implementation of programs. 
But, frankly, it helps us build the kind of partnership, and 
helps us learn in a way that improves, I think, the 
effectiveness of those programs and the sustainability over 
time of those efforts. So in general, that's a trade-off we've 
been willing to make in order to get a better outcome over 
time. And I think where we've done that, the feedback I've 
gotten, certainly, has been that that has been appreciated and 
that people see this as a different way of working that is 
something that garners us more recognition and more value.

                     LONG-TERM GOALS OF FOREIGN AID

    And then the final thing I'd say is, I think you get more 
credit by taking on big things and leaving benefits that are 
lasting that people can point to. South Asia certainly 
remembers that the United States was the primary partner in the 
Green Revolution, helped build universities and train hundreds, 
if not thousands, of fellows and technical experts, and build 
those rich university partnerships with the United States.
    We're re-casting ourselves, and doing that again in the 
context of our Feed the Future program, so that we can leave 
the kind of human capital and local leadership that can sustain 
over time and have all of these really capable, well-educated 
technical leaders that can say they were the beneficiaries of 
concrete U.S. investments. And that's something that we've have 
more focused on--especially in areas like food and health, but 
also in terms of our science and technology partnerships with a 
number of countries around the world. So, to me that's how you 
sort of live out good practice, and then get credit and 
attribution for those felt behaviors.
    Senator Tim Johnson. I would just encourage you to make 
that a priority, because I think from the American people's 
standpoint probably their greatest frustration--in addition to 
the fact that it's getting more and more difficult to afford 
this--but, the fact that we're not liked very well around the 
world, even though we expend so much money trying to help 
people out.
    So--and speaking of frustration, let me have that be my 
final question here, is, you've been on the job now for 15 
months. I mean, what's your greatest frustration trying to work 
within USAID to accomplish your objective?
    Senator Leahy. Now, here's your chance to give a very 
straightforward question--or, very straightforward answer. It 
may get you fired, but go ahead. Let loose.
    Dr. Shah. Can I give you two?
    Senator Tim Johnson. It's on your nickel here.
    Dr. Shah. Well----
    Senator Tim Johnson. What I want you to be is honest.

                   COMPLEXITY OF PROCUREMENT SYSTEMS

    Dr. Shah. Well, personally, I've found, the two 
frustrations I've found are--the procurement system and the way 
it operates I think is far more complex than it needs to be. 
And at first, I thought, well that's about efficiency, so one 
of those business process reviews generated this report that is 
our game plan for cutting our procurement cycle time by almost 
one-half. And they're all actions that we can take without 
congressional activity, et cetera.
    But what I realized over time is the complexity of the 
system doesn't cost more and lengthens the time from idea to 
action, and therefore impact. It actually pushes off some of 
the most creative and innovative partners--whether they are 
large businesses, or small entrepreneurs, or local NGOs, or 
government ministries--that, we really should be thinking about 
how we're building capacity so that we can achieve the 
President's goal of leaving a vibrant civil society, effective 
private sector, and real capable local governments, and we 
have, over time, an exit strategy.
    So I realize it's a much more fundamental thing than 
procurement reform--and I almost regret that I called it 
``procurement reform'', because it's really about how we 
deliver assistance and how partners around the world that 
either work with us or don't, feel who we are, what we value, 
what we care about.
    Our teams have made some real progress and done some really 
courageous things to create new procurement tools that are more 
like results-based payment systems for small grants and small 
projects, as opposed to the kind of, do a big contract and then 
count every single process input, which costs a huge amount of 
money and doesn't tell you if you're necessarily getting the 
result you seek.
    So I think the reform of our procurement system to me has 
been probably the most exciting opportunity born out of the 
greatest frustration.

 HUMAN RESOURCE MISMANAGEMENT AND CREATION OF INCENTIVES FOR INNOVATION

    On the second thing I would just say--and this might get me 
fired--it's just, the way human resources are managed in the 
Federal Government is a very complex, challenging issue. And 
you really want to reward performance; you want to reward 
people who've taken real risks. We have really innovative 
leaders who've gone out to Afghanistan, who've gone to Haiti 
and, in very difficult environments, have done very creative 
things. And we're trying to come up with ways to recognize that 
kind of leadership and reward it and to incentivize that kind 
of leadership in our junior officers--who frankly bring a lot 
of their own creative non-Government experience to the task. 
And I've worked hard to create systems that get them more 
exposure and more ability to connect their ideas to impact.
    But those are two things that I find challenging, but also 
as big fundamental opportunities. And I thank our teams in 
those areas for time and again coming up with creative 
solutions to help us do some of the more innovate things we've 
done. For example, we just launched this great partnership 
called Saving Lives at Birth with five other partners, where 
for every $1 we spend, we get $3 of theirs, and we're really 
targeting the 1.6 million women and children who die either 
during childbirth or in the first 48 hours. And it's going to 
be a fantastic lifesaving effort at very low cost. And our 
procurement and general counsel and acquisition teams came up 
with creative solutions to allow us to do that. So, we've just 
got to keep working at it and we'll stay very focused on that.
    Senator Tim Johnson. Well, I've been here a little more 
than 3 months--that's a pretty common theme. You're not--
unfortunately you're not alone in your frustration.
    Thank you, Mr. Chairman.
    Senator Leahy. Thank you.

               SMALL-SCALE IMPACT OF AMERICAN AID EFFORTS

    Certainly, Senator Johnson raises a question about whether 
we're liked or not liked. I was struck by what you're saying 
about things that people can really see, and sometimes it's a 
small thing. I complimented you earlier on one that did that 
will have a real impact. You worked with the Smithsonian to 
save some treasured murals, which they thought were lost when 
one of the cathedrals collapsed in Haiti. These will be--that's 
part of their patrimony. It's a relatively small amount of 
money, but a generation from now people will still talk about 
the fact the Americans saved it.
    When I was first in the Senate, 30 years after World War II 
was over, and going through Europe and elsewhere, and having 
people come up and say, ``You know, the Americans came in and 
they helped us plant gardens, they did--I mean, some were 
spectacular things like the Berlin airlift, but others were 
smaller ways of helping us.'' This is in countries that we had 
fought against. And now these are the same people whose sons 
and daughters are in the government and we have to work with, 
and who created a NATO alliance that eventually saw the 
collapse of the Warsaw Pact.
    Sometimes its small things. You don't necessarily get your 
return that year, or 20 years, or 30 years. But it's like 
Fulbright scholarships. I find so many times in other parts of 
the world, you find that the finance minister, or the deputy 
defense minister, or others had studied, or members of their 
families had studied here, and they have personal ties.
    I know there have been several times recently in some very 
tough spots in the world--and you can imagine which they are--
where people here in the United States were having private 
conversations with either their counterparts, or others in 
these countries, lowering the tension because of the exchange 
programs that we've done.

                     IMPORTANCE OF SMALL PROPOSALS

    I'll finish with this on the small issues. One complaint I 
get about USAID is that an individual, or a small organization 
may have a very creative, unsolicited proposal. It comes in, 
and USAID looks at it, redesigns it, requests more proposals, 
and bigger contractors come in. The big contractor comes in, 
``Oh, yes, you wanted to do a whiz bang 1, but I can do a whiz 
bang 5, which is 10 percent better--it's going to cost you 300 
percent more and take longer to implement'', and so on.
    And we talked about the War Victims Fund with prosthetics 
and all. They wisely kept that small, using local materials, 
not going to people who make the $300,000 prosthetics, but 
something that could be made locally, and it worked.
    President George H.W. Bush had wanted to do something in 
Vietnam, and he had asked me about using it there. We worked it 
through an NGO--the Vietnam Veterans of America Foundation. And 
I'll just tell one story that's always stuck with me. My wife 
and I, John Glenn and his wife, and a couple of others went 
outside Saigon to where they were building prosthetics and 
wheelchairs. Not buying them, but building them there, hiring 
the people. You'd pay a couple thousand dollars for a 
wheelchair in a hospital but here they were making them 
probably for under $100.
    The thing that struck me, there was a small man, he had 
lost his legs and had been crawling for decades. He was sitting 
there and he was going to get one of the wheelchairs. And he 
just stared at me as they explained the Leahy War Victims Fund 
and so on--and I remember going back and telling President Bush 
about this after. When they finished the speeches, they asked 
me to pick him up and carry him to his wheelchair. He just 
stared at me. And I thought he must hate me--my size, 
everything else, an American. I picked him up. I carried him to 
the wheelchair. I put him down in it. I was wearing an open-
necked shirt. I started to get up. He grabbed my shirt, pulled 
me down and kissed me.
    You know, there are things that can be done, that can make 
a difference.

                     ADDITIONAL COMMITTEE QUESTIONS

    So look at those small proposals. This was one of them. If 
you or I lost a leg, it would be a bad thing, but we'd go and 
our insurance company would pay part of it, and they'd say, 
``Well, you know, a couple thousand dollars more and you can 
get even a better one.'' We'd take out our checkbook and pay 
for it.
    Here, we're talking about people with a few hundred dollars 
a year in income. Let's do the things that work, because that 
builds respect for our country. But more than just building 
respect--let's be altruistic. We're the wealthiest, most 
powerful nation on earth. We have certain moral 
responsibilities and we sometimes forget about that.
    Dr. Shah, thank you very much for being here.
    Dr. Shah. Thank you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
            Questions Submitted by Senator Daniel K. Inouye
                              afghanistan
    Question. It is my understanding that the Karzai government's 
threat to impose back taxes on private security firms has many of those 
contractors threatening to withdraw from Afghanistan. I am concerned by 
reports from aid workers in the country about observed empirical 
increases in the number of kidnappings in areas like Kabul. Could you 
please explain what U.S. Agency for International Development (USAID) 
is doing to ensure the safety of foreign and Afghan locals working on 
development projects? Also, would you please explain what steps, if 
any, are being taken by USAID in conjunction with the Department of 
State to address the matter of alleged criminal involvement by Afghan 
Government officials?
    Answer. Over the first 5 months of calendar year 2011, there has 
been an average of 30 security incidents per month involving USAID 
implementing partners, making 2011, to date, the second most active 
year since 2003 when incidents were first collected. During calendar 
year 2010, the monthly security incidents involving USAID implementing 
partners almost doubled from 2009, to 57 from 29, respectively.
    With the increase of attacks, USAID has taken steps to improve the 
security of our implementing partners. Our goal is to provide rapid and 
accurate security assistance information to implementing partners, 
improve the ability of United States Government and International 
Security Assistance Force (ISAF) personnel to respond effectively to 
emergency situations, and raise the confidence and preparedness of 
implementing partners so they can continue to operate in higher-risk 
environments.
    USAID issued a data call, and our security unit is now maintaining 
a database of approximately 250 implementing partner locations 
throughout Afghanistan to facilitate communication. We have placed a 
Regional Security Safety Officer (RSSO) in RC-South, and are in the 
process of assigning RSSOs to the other regional commands. These 
officers will help coordinate with ISAF/USFOR-A and partners at the 
field level to improve responsiveness to implementing partner requests 
for assistance. On May 9, 2011 Mission Director Earl Gast issued a 
mission order, establishing a Vetting Support Unit that will screen 
non-U.S. parties, and will actively engage with the Afghan Finance 
Threat Cell and CENTCOM vetting systems. This system will help us 
identify potential malignant actors, and prevent them from gaining 
access to USAID assets.
    Question. I commend you for your efforts to reform USAID's business 
processes and systems. Implementing reforms and a change in culture is 
always a challenging endeavor. What is your vision for, and where do 
you hope to see, USAID in 5 years?
    Answer. My vision is that USAID will be among the world's premier 
development agencies playing a critical role in our Nation's prosperity 
and security as we contribute to a more secure and prosperous world for 
all. I recognize this is a broad goal and, as always, success is in the 
details. Here is how we will move forward on those details in the next 
5 years:
  --We will hire and retain the most talented foreign service officers, 
        training them to work in a world that presents new challenges 
        and demands the best from all of us.
  --We will focus on investing in sustainable solutions including 
        strengthening host country systems and local institutions so 
        that the U.S. taxpayer reaps the benefits of countries that are 
        excellent trading partners and allies.
  --We recognize that development has become a high priority for many 
        small and large companies, philanthropists, and nongovernmental 
        organizations. We will broaden and deepen our partnerships with 
        them, leveraging their expertise and financial resources to 
        drive the most cost effective and sustainable results for our 
        foreign policy objectives.
  --We will work seamlessly with all United States Government agencies 
        deployed abroad as the principal voice for the importance of 
        development as a way to demonstrate our values and support the 
        growing number of emerging democracies and markets.
  --We will report regularly and transparently on the results we 
        achieve, dollar for dollar, and talk openly about those 
        failures or shortfalls that we must learn from and remedy. To 
        achieve this ambitious goal, we will streamline our reporting 
        systems to make them more understandable to the lay person 
        whose tax dollars support our efforts abroad.
  --And last but not least, we will be recognized for our cutting-edge 
        activities and tools that mobilize the best solutions the 
        United States can bring to the world in solving problems such 
        as fragile democratic governments, malnutrition, illiteracy, 
        endemic illness, climate change, as well as other challenges.
                             pacific basin
    Question. The Pacific Basin, particularly countries in the Western 
Pacific were cited as an area that the United States would like to re-
engage in a meaningful way. The Western Pacific is of significant 
strategic importance to the United States in a manner that may have 
been forgotten toward the end of the cold war.
    From a national security point of view the Western Pacific is a 
counterbalance to China's growing influence in the region particularly 
with respect to sea lane access. With the emphasis on leveraging both 
hard power, force projection by the Department of Defense (DOD), and 
soft power, diplomatic and foreign assistance, please elaborate on 
plans, if any, for USAID activities in this area of the Pacific.
    Answer. USAID plans to open an office in Port Moresby, Papua New 
Guinea in 2011 under the authority of USAID's mission in Manila, 
Philippines to oversee programs in the Pacific region.
    One program-funded staff will manage USAID's regional environmental 
programs and the HIV/AIDS program in Papua New Guinea.
    USAID programs in the Pacific are regionally focused, but target 
Western Pacific countries, including Papua New Guinea, Republic of the 
Marshall Islands, Federated States of Micronesia, Kiribati, Samoa, 
Solomon Islands, Fiji, and Tonga.
    Environmental degradation threatens the existence of some Pacific 
island-nations and is the top priority for the region in this century. 
USAID's environmental programs will mitigate the effects of weather-
related disasters, support climate change adaptation strategies, reduce 
greenhouse gas emissions and protect tropical forests in the Pacific 
islands.
    USAID funding will also develop the technical capacity and 
coordination of two key regional organizations: the Secretariat of the 
Pacific Community and the Pacific Regional Environmental Program.
    Papua New Guinea is the most populous country in the South Pacific 
and has the highest rate of HIV/AIDS in East Asia and the Pacific. 
USAID's HIV/AIDS programming will strengthen Papua New Guinea's health 
system, promote awareness and prevention activities, and provide 
treatment for HIV-positive individuals.
                              coordination
     Question. I truly appreciate your initiative and efforts to ensure 
me and my staff are kept informed of USAID's activities following the 
devastating earthquake and tsunami in Japan. As the lead agency on 
coordination of the U.S. response to international disaster assistance, 
I am curious to learn your thoughts on how that coordination went in 
the immediate aftermath. In addition, I am interested to find out how 
you believe coordination may be improved, and any lessons learned from 
Haiti and Japan.
     Answer. The U.S. Government response to the recent earthquake and 
tsunami in Japan required immediate and close coordination between 
United States Government agencies and the Government of Japan. The 
United States typically would not be requested to assist in a country 
with significant domestic response capacity. The magnitude and nature 
of the disaster in Japan (earthquake, tsunami, and nuclear crisis), 
coupled with the United States Government's unique capabilities, led to 
a robust, well-coordinated multi-agency response tailored to the unique 
circumstances presented by this crisis.
    Just more than 1 hour after the earthquake struck, USAID's Office 
of Foreign Disaster Assistance (USAID/OFDA) activated a Response 
Management Team (RMT) in Washington, DC, and two Urban Search and 
Rescue Teams and a Disaster Assistance Response Team (DART) for 
deployment to Japan to coordinate the response efforts. At the same 
time as the United States Government and the Government of Japan were 
focused on the immediate lifesaving response, the potential nuclear 
disaster quickly became a main focus. USAID augmented the DART and RMT 
with experts from the U.S. Nuclear Regulatory Commission (NRC), the 
U.S. Department of Energy (DOE) and the U.S. Department of Health and 
Human Services (HHS) Federal Occupational Health to provide urgent 
technical assistance. The DART, including the team of nuclear experts, 
coordinated daily with their counterparts in the Japanese Government.
    In addition to coordinating the nuclear issues, USAID's DART 
conducted assessments and worked to ensure that essential relief items 
reached those most in need. This required coordination between the 
Government of Japan, USAID and the DOD. While most of the supplies for 
the relief effort were already in the country, there were logistical 
problems in transporting relief supplies due to fuel shortages and 
damaged roads. The DART, which included three USAID military liaison 
officers, utilized the Mission Tasking Matrix system to confirm 
humanitarian needs and or requests, identify organizations that had 
supplies to transport and task DOD with transport of goods utilizing 
their extensive lift capacity in the region. The speed and efficiency 
of this coordination was essential not only to ensure that needed 
supplies quickly reached affected areas, but also to avoid a flood of 
well-intended, but poorly coordinated material aid from outside Japan, 
which would have overwhelmed an already strained transport system in 
the early days of the response.
    Very early in the response, multiple Japanese ministries requested 
support from numerous United States Government entities on an ad hoc 
basis, which created a risk that urgent requests for relief or 
technical assistance could be missed and not reach those most in need. 
USAID met daily with DOD, DOE, HHS, NRC and other agencies, as well as 
the Government of Japan, to share information and reinforce the DART as 
the central coordinating body through which all requests to the United 
States Government were evaluated. The DART also worked with the Embassy 
to establish a single point of contact to receive requests from the 
Government of Japan.
    As assistance to the earthquake, tsunami, and nuclear events 
transitioned from emergency response to the current phase, USAID 
collaborated with the United States Embassy in Tokyo to form the 
Bilateral Assistance Coordination Cell (BACC), the current United 
States Government focal point for receiving, vetting, and responding to 
the Government of Japan requests for continued technical assistance to 
respond to the nuclear issues. The BACC systematized the coordination 
of the response to the Fukushima Daiichi nuclear power plant crisis 
through the formation of technically oriented working groups, such as 
radiation monitoring, data sharing, stabilization of the reactors, and 
broader strategy for joint nuclear response. These groups meet 
regularly with the Government of Japan counterparts. The meetings occur 
at the political, working, and technical levels to coordinate the 
nuclear response activities. The United States Government has provided 
the Government of Japan with data and specialized monitoring equipment 
and training that demonstrate our ongoing commitment to Japan and 
provide the United States Embassy continued access to critical 
monitoring data with potential implications for the people of Japan, 
including United States citizens.
    As seen in the response to the earthquake in Haiti, the United 
States Government responses to significant disaster events are 
increasingly interagency in nature. The United States Government 
learned from the Haiti response that we must develop a flexible and 
clearly articulated United States Government response strategy that 
assigns responsibilities to appropriate participating agencies based on 
the unique circumstances presented in a given crisis. The Japan 
response demonstrated the effectiveness of the interagency approach 
where host country requests and United States and international offers 
of assistance are channeled through a central coordinating body.
                   research and development programs
    Question. There are many people who may not know about USAID's 
research and development programs. I am curious to learn of USAID's 
current efforts in research and development, and where you hope to 
steer them in 5 years.
    Answer. USAID has a strong history of transforming development 
through science and technology--from the successful use of oral 
rehydration therapies to the Green Revolution. As USAID expands and 
deepens its internal science and technology capabilities, the agency 
will support and expand technical expertise through access to 
analytical tools like Geospatial Information Systems (GIS). Over the 
next 5 years, the agency will continue to build science and technology 
capacity in developing countries through cooperative research grants, 
by improving access to scientific resources, by providing expanded 
opportunities for higher education and training, and by enabling 
entrepreneurs in the public and civil sectors to use technology to 
reach rural populations that have previously been difficult to reach. 
Several key efforts are outlined below.
    An investment in agricultural research today contributes to the 
growth and resilience of the food supply tomorrow. USAID's Feed the 
Future initiative is launching an agricultural research strategy this 
summer that will focus on ways to improve long-term yields, transform 
production systems, and enhance nutrition and food security. Combined 
with other agricultural investments, improved technologies and 
practices will help feed an ever growing global population despite 
depleted land availability, threatened water supplies, and a highly 
unpredictable climate.
    USAID's Grand Challenges for Development (GCD) provide a framework 
to focus the agency--and development community--on solvable problems 
with key scientific and technical barriers to their solution. This is a 
multi-year approach that incorporates and encourages innovative science 
and technology-based answers to both newly emerging and age-old 
questions. USAID issued the first Grand Challenge for Development in 
Global Health--``Saving Lives at Birth'', which was launched on March 
9, 2011, in partnership with a host of other bilateral and multilateral 
donors. More information on the Grand Challenges can be found at: 
http://www.savinglivesatbirth.net/. Over the next several years, USAID 
will expand GCD, leveraging the resources of other development partners 
around other solvable development challenges.
    Through the Partnerships for Enhanced Engagement in Research (PEER) 
program, USAID will provide grants to developing country researchers 
collaborating with NSF-funded researchers in the United States. Funds 
will help equip laboratories, provide stipends for graduate students, 
and support training and other activities associated with research. 
Projects will focus on topics of interest to USAID, such as food 
security, water, biodiversity, and climate change adaptation. The 
program intends to build relationships between researchers and 
institutions that will endure over time. This program will leverage 
more than $100 million of NSF research funding in developing countries.
    USAID assesses health conditions in developing countries and 
develops, tests, adapts, and introduces appropriate products and 
interventions within the context of strengthening local health systems. 
Key highlights of USAID's current health research and development 
activities include:
  --Support for the Center for the AIDS Program of Research in South 
        Africa, which in 2010 provided the first proof of concept that 
        a microbicide could safely and effectively reduce the risk of 
        heterosexual transmission of HIV from men to women.
  --The USAID-supported International AIDS Vaccine Initiative study 
        which provided the first evidence that a new vaccine technique 
        could effectively control viral replication in vaccinated 
        animals.
  --The development of new antimalarial drugs, and their subsequent 
        submission for regulatory approval.
  --Support for research that improves, reduces costs, and speeds up 
        diagnostics for tuberculosis.
  --Support for a clinical trial of a female-controlled, long-acting 
        contraceptive that does not require daily attention from women 
        or the availability of trained health providers.
  --Research on the most effective lifesaving postnatal practices in 40 
        high-mortality countries.
  --Studies that demonstrated the effectiveness, cost-effectiveness, 
        and feasibility of community-based care in promoting neonatal 
        health and survival.
  --Applied research to increase the availability and uptake of oral 
        rehydration solution treatment to reduce diarrhea-related 
        morbidity and mortality in more than one dozen countries.
  --Studies on the effectiveness of community-based treatment of severe 
        pneumonia in Pakistan.
  --The establishment and strengthening of surveillance systems to 
        sample and test the quality of medicines throughout the world.
                                 ______
                                 
            Question Submitted by Senator Richard J. Durbin
                   haiti reforestation--supplemental
    Question. Last year's supplemental appropriation included $25 
million specifically for reforestation in Haiti. However, it appears 
that such funds may instead be being used by United States Agency for 
International Development (USAID) for loosely defined reforestation 
programs that do not include the actual long-term replanting of 
sustainable trees. Can you please elaborate on how USAID is using these 
specific supplemental Haiti reforestation funds, including how much of 
the $25 million is being spent on the actual replanting of sustainable 
tree cover?
    Answer. USAID shares your concern about deforestation, and we are 
committed to an appropriate and sustainable natural resources 
management program. Through the use of funds provided in the fiscal 
year 2010 supplemental appropriation, we plan to address the underlying 
causes of deforestation:
  --acute poverty;
  --rapid population growth; and
  --unplanned urbanization.
    USAID has learned from experience in Haiti that classic 
reforestation approaches are not effective. When planted trees provide 
little or no economic incentive to farmers they are typically replaced 
with a crop that does. In Haiti, successful reforestation has occurred 
where hillside farming is replaced by tree crops or improved pasture 
that provide income while improving soil conservation and controlling 
erosion.
    USAID-funded projects have in recent years increased tree crop 
cover by planting high-value trees, such as mango, cacao, coffee, and 
avocado. For example, a USAID initiative, known as the Watershed 
Initiative for National Natural Environmental Resource (WINNER), has 
expanded perennial cover on hillsides to reduce erosion and improve 
soil conservation, while promoting alternative energy sources to lower 
the demand for charcoal and fuel wood. During fiscal year 2010, the 
first full year of operations, WINNER planted about 1 million trees, of 
which 30 percent were fruit trees and 70 percent were multi-purpose 
trees.
    Reforestation programs funded by the fiscal year 2010 supplemental 
appropriation will contribute over the long term to replanting 
sustainable trees for mango and cacao in Haiti by using a value-based 
approach that strengthens tree crop value chains and assists in 
producing seedling stock.
    USAID anticipates that at least 50 percent, or $12.5 million, of 
the $25 million in natural resources management funds provided by the 
supplemental appropriation will support activities related to tree 
planting, including agro-forestry, reforestation, shade-grown cacao, 
and mango, and other related programs designed to increase forest 
cover.
                                 ______
                                 
                Questions Submitted by Senator Mark Kirk
                         ninevah plains region
    Question. The U.S. Congress has appropriated around $30 million 
since fiscal year 2008 to assist vulnerable religious communities in 
Iraq, especially in the Nineveh Plains region. As you may know, last 
November, a bipartisan group of Members of Congress and Senators 
requested that the Government Accountability Office (GAO) conduct an 
audit of these funds, following concerns from community leaders that 
the funds designated by the Congress have either not reached their 
intended recipients or they were unaware of funding and grant 
opportunities. How have United States Agency for International 
Development (USAID) efforts to date been successful in reaching the 
objectives set out by the Congress to assist vulnerable communities in 
the Nineveh Plains in a transparent and effective manner? Has USAID 
engaged directly with these minority groups in rendering decisions on 
relevant grants and their recipients?
    Answer. USAID has posted a representative at the Provincial 
Reconstruction Team (PRT) in Mosul and in Erbil since 2007 and will 
have a representative at the consulate in Erbil who will provide 
coverage for Ninevah after the PRTs close down at the end of June 2011. 
USAID PRT representatives meet with Iraqi counterparts and 
beneficiaries whenever possible and work through our implementing 
partners to ensure effective assistance to all Iraqi beneficiaries 
including ethnic and religious minorities and other vulnerable 
populations. The Iraq Rapid Assistance Program (IRAP) which was 
completed in September 2010 provided grants to local Iraqi 
nongovernmental organizations implementing community development 
programs including in Ninevah. The process of grant making included 
formal explanations to organizations whose proposals were turned down.
                    fiscal year 2008 base directive
    The Congress inserted its first $10 million funding directive for 
Iraq's religious and ethnic minorities in the fiscal year 2008 base 
appropriations. USAID/Iraq agreed to meet this directive through 
existing programs. These included:
  --the Community Stabilization Program (CSP);
  --Community Action Program (CAP);
  --Provincial Economic Growth (Tijara);
  --Agribusiness (Inma); and
  --the Iraq Conflict Mitigation Program.
    The CSP worked to achieve economic and social stability in urban 
Iraqi communities. The CSP program helped meet the fiscal year 2008 
base directive through activities that achieved:
  --More than 51,900 long-term jobs;
  --Disbursing grants than totaled $78.6 million for nearly 10,300 
        businesses;
  --Graduated nearly 41,500 Iraqis from vocational training courses;
  --Created 9,930 apprenticeships; and
  --Assisted 339,000 young people through sports and arts programs.
    This project activity was focused in urban areas where religious 
and ethnic minorities coexisted.
    CAP worked at the grassroots level to foster citizen involvement 
and assist local communities to clearly identify their priorities, 
develop local solutions, and use their skills to mobilize their 
resources to meet their needs. For the fiscal year 2008 base directive, 
CAP worked with religious and ethnic minority communities to improve 
health and education, small-scale infrastructure, and income generation 
through local apprenticeships in local communities where religious and 
ethnic minorities exist.
    The Provincial Economic Growth (Tijara) program supported the 
directive and continues to provide loan capital through microfinance 
institutions, as well as training and technical assistance which 
benefit all Iraqis, including ethnic and religious minorities. 
Previously, the Al-Tadhamun institution in Northern Iraq dedicated 
funds to ethnic and religious minorities from a $2 million grant. USAID 
helped Al-Tadhamun establish its office and recruit its staff and board 
of directors.
    USAID/Iraq's Agribusiness Program (Inma) worked to increase the 
competitiveness and profitability of the Iraqi agricultural sector by 
raising productivity and lowering costs. Some 175 members of the 
minority community living near the Bartilla and Al-Qosh feedlots in 
Northern Iraq benefited from training in record keeping, animal health 
and selection, red meat production, and ruminant nutrition.
    Through USAID Inma's microcredit initiative with Al-Thiqa in 
Northern Iraq, more than 562 people were trained to provide additional 
credit for minority borrowers. Some 240 people were trained in hay and 
alfalfa production at the Elya forge production facility in Ninawa 
Province. Other minority groups were trained in olive oil production 
and marketing by the Zayton Olive Association in Northern Iraq.
    The Iraq Community-based Conflict Mitigation Program (ICCM) focused 
on assessing local communities throughout Iraq where conflict existed 
and then worked with the community on projects that would help mitigate 
tensions.
    In fiscal year 2008, ICCM completed conflict assessments in 
Bartilla and Tal Kayf communities where religious and ethnic minorities 
were under pressure. Based on the assessments' results, ICCM designed 
projects to mitigate the primary conflict factors in these and other 
communities, with a special focus on youth programs which helped to 
create tolerance in the community for all religious groups.
    USAID continues to track funding for this directive through the 
CAP. As of May 2010, USAID has tracked more than $17 million in funding 
to the fiscal year 2008 base appropriations directive, which is $7 
million more than the requirement.

------------------------------------------------------------------------
                      USAID program                           Funding
------------------------------------------------------------------------
Community Stabilization Program.........................      $2,500,000
Community Action Program II.............................       2,000,000
Community Action Program III............................       7,063,072
Provincial Economic Growth--Tijara......................       2,000,000
Agribusiness--Inma......................................       3,115,000
Community-based Conflict Mitigation.....................         500,000
                                                         ---------------
      Total.............................................      17,178,072
------------------------------------------------------------------------

                fiscal year 2008 supplemental directive
    The Congress inserted an additional $10 million directive for 
Iraq's religious/ethnic minorities in the fiscal year 2008 supplemental 
appropriations bill. The Department of State and USAID agreed to 
support this directive together. The Department of State and USAID met 
the fiscal year 2008 supplemental directive of $10 million for 
religious and ethnic minorities by programming through the Provincial 
Reconstruction Teams' (PRT) Quick Response Fund (QRF)/Iraq Rapid 
Assistance Program (IRAP). The remainder of the directive was fulfilled 
through the U.S. Office for Foreign Disaster Assistance (USAID/OFDA) 
and through USAID's Civil Society and Conflict Mitigation program.
    USAID's IRAP program supported economic and social development 
programs and civil society conflict-mitigation efforts country-wide 
through regional centers. IRAP assistance to Iraqi minorities focused 
on the Ninawa Plain which is home to many minority groups including the 
Shabaks, Turkmens, Christians, and Yazidis.
    IRAP support included the establishment of water networks, road 
repairs, school buildings, microfinance programs, income generation 
initiatives, health awareness, and agricultural support for minority 
farmers. Examples of assistance include:
  --water network projects in Tal Keif and Tal Usqof districts of 
        Ninawa;
  --primary schools in predominantly Christian, Turkmen, and Shabak 
        communities; and
  --the restoration of a destroyed Shabak village in Ninawa Province.
    Since 2003, USAID's OFDA has provided humanitarian assistance 
throughout Iraq, mainly supporting conflict affected Internally 
Displaced Persons (IDPs) and other vulnerable populations with disaster 
relief. In fiscal year 2009, USAID/OFDA in the Northern Iraq districts 
of Tal Kayf and Hamdanya, distributed nonfood items (blankets, etc.), 
food Items and hygiene kits to about 2,000 Iraqi minority families.
    USAID's Civil Society and Conflict Mitigation (CSCM) program helped 
provide grants to minority communities for conflict mitigation projects 
such as providing human rights and rule of law education, community-
building activities focusing on religious tolerance, and promoting 
religious tolerance through youth activities in minority communities.

------------------------------------------------------------------------
                      USAID program                           Funding
------------------------------------------------------------------------
Iraq Rapid Assistance Program...........................      $8,367,329
Civil Society and Conflict Mitigation...................         314,032
U.S. Office of Foreign Disaster Assistance..............         629,000
                                                         ---------------
      Total.............................................       9,310,361
------------------------------------------------------------------------

                            fiscal year 2010
    In the fiscal year 2010 base appropriations the Congress again 
inserted a $10 million directive for Iraq's religious/ethnic 
minorities:
    The Department of State is planning to meet this $10 million 
directive through its QRF program. The PRT in Ninawa is working with 
local minority community organizations to develop project proposals for 
funding.
                            fiscal year 2011
    USAID/Iraq continues to assist communities where religious and 
ethnic minorities exist through the Community Action Program III (CAP). 
As mentioned earlier, the CAP program works with local communities to 
help identify needs and build their capacity by working with their 
local councils. In Ninawa and Kirkuk, the CAP program continues to work 
with local communities on small-scale infrastructure projects such as 
educational facilities and other public spaces, improving health, water 
and electricity services, and apprenticeships that offer income-
generation skills.
    In addition, USAID's new Access to Justice Program will assist 
Iraq's religious and ethnic minorities. The Access to Justice program 
will assist professional legal associations, nongovermental 
organizations (NGOs) offering legal assistance, civic education and 
advocacy, law schools and government institutions improve their support 
and services to vulnerable and disadvantaged Iraqis, including women, 
widows, orphans, religious and ethnic minorities, the impoverished, 
internally displaced people and refugees, detainees, and the 
incarcerated (including juveniles).
    In November and December 2010, OFDA assisted 331 of 762 Christian 
families displaced from Baghdad and Mosul with nonfood relief items 
including blankets, stoves, mattresses, and kitchen sets. OFDA assisted 
143 families in Ninawa, 80 families in Erbil, 59 families in 
Sulaymaniyah, and 49 families in Dahuk.
                            nagorno-karabakh
    Question. As you know, Nagorno-Karabakh continues to face serious 
humanitarian and economic development challenges. Since 1998, USAID has 
spent $35 billion in assistance to Nagorno-Karabakh to address these 
challenges, which represents around 60 percent of what the U.S. 
Congress has authorized you to spend over this period. What are the 
notable achievements of USAID efforts to aid Nagorno-Karabakh since 
1998? Does the discrepancy between the amounts authorized and spent 
represent that USAID efforts have been able to ``do more with less'' ? 
If not, how can the U.S. Government more effectively aid the people of 
Nagorno-Karabakh?
    Answer. Since 1998, the United States has provided more than $35 
million in humanitarian assistance to victims of the Nagorno-Karabakh 
(NK) conflict, including food, shelter, emergency and medical supplies, 
access to quality healthcare and water, and demining projects.
    United States Government assistance in Nagorno-Karabakh has 
achieved notable impact in targeted areas of support.
    Health.--108 health facilities were renovated and supplied with 
basic medicine, equipment, and furniture, including 5 Regional 
Maternity Houses; training was provided to medical professionals 
throughout Nagorno-Karabakh; and mobile medical teams visited 16 
communities to provide basic health services benefiting 6,200 people.
    Infrastructure/Shelter.--1,533 shelters, 3 community centers, and 5 
schools were renovated.
    Microfinance.--More than 3,000 women received loans to support 
subsistence agriculture.
    In Water.--60 potable water systems were renovated and upgraded, 
including 4 irrigation canals. Currently, the United States Government 
is supporting a new potable water project that is helping to expand 
access to clean water in the city of Stepanakert.
    Demining.--The ongoing demining activity has resulted in the 
clearance of 72 percent of the battle area and 93 percent of anti-
personnel and anti-tank mines, returning lands to the rural population 
for agricultural use.
    Programs in Nagorno-Karabakh are funded through a Eurasia Regional 
budget line within the overall Assistance to Europe, Eurasia and 
Central Asia (AEECA) account; this budget line funds a number of other 
regional priorities, including the U.S. contribution to the 
Organization of Security and Cooperation in Europe. Since 2001, there 
has been more than a 60 percent decline in the overall AEECA account, 
as well as a sharp decline in the Eurasia regional budget. Despite the 
budget decreases and competing priorities, the level of U.S. support to 
Nagorno-Karabakh has remained constant, and the programs continued to 
achieve notable accomplishments during that period as noted above.

                         CONCLUSION OF HEARINGS

    Senator Leahy. Without anything further, we'll stand in 
recess.
    [Whereupon, at 11:26 a.m., Tuesday, April 12, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]

       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------                              
                                                                   Page

Blunt, Senator Roy, U.S. Senator From Missouri, Prepared 
  Statement of...................................................    60

Clinton, Hon. Hillary Rodham, Secretary, Department of State.....     1
    Summary Statement of.........................................     5

Durbin, Senator Richard J., U.S. Senator From Illinois, Questions 
  Submitted by management and Creation of Incentives for Innovation 


Implementation of Afghanistan Programs_Goals and Challenges 

Importance of Small Proposals 



Long-term Goals of Foreign Aid 



Monitoring Programs in Afghanistan 



Nagorno-Karabakh 

National Security and Jobs in the United States

Ninevah Plains Region 



Oversight of Funding Reallocation 



Pacific Basin 

Partner Vetting System_Senator Kirk's Inquiry 

Partnerships for Future Conversation 

Procurement Reforms and Monitoring 

Programs to Aid Haitian Amputees 

Promotion of American Image Through USAID Efforts 



Reallocations of Funds and the Need for Efficiency 

Reform 

Research and Development Programs 
MS Run-Time Library - Copyright (c) 1990, Microsoft Corp Safe Drinking Water_Application of Technology and Entrepreneurship 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

