[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
           THE FY 2014 BUDGET REQUEST: U.S. FOREIGN 

            ASSISTANCE PRIORITIES AND STRATEGY
=======================================================================


                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 25, 2013

                               __________

                           Serial No. 113-62

                               __________

        Printed for the use of the Committee on Foreign Affairs


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




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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
TREY RADEL, Florida                  GRACE MENG, New York
DOUG COLLINS, Georgia                LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina         TULSI GABBARD, Hawaii
TED S. YOHO, Florida                 JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Rajiv Shah, Administrator, U.S. Agency for 
  International Development......................................     5
The Honorable Daniel W. Yohannes, Chief Executive Officer, 
  Millennium Challenge Corporation...............................    13

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Rajiv Shah: Prepared statement.....................     7
The Honorable Daniel W. Yohannes: Prepared statement.............    15

                                APPENDIX

Hearing notice...................................................    56
Hearing minutes..................................................    57
The Honorable Eliot L. Engel, a Representative in Congress from 
  the State of New York: Prepared statement......................    59
Questions submitted for the record by the Honorable Edward R. 
  Royce, a Representative in Congress from the State of 
  California, and chairman, Committee on Foreign Affairs, and 
  responses from:
  The Honorable Rajiv Shah.......................................    62
  The Honorable Daniel W. Yohannes...............................    94
Responses from the Honorable Rajiv Shah to questions submitted 
  for the record by the Honorable Eliot L. Engel, a 
  Representative in Congress from the State of New York..........    97
Responses from the Honorable Daniel W. Yohannes to questions 
  asked during the hearing by the Honorable Ileana Ros-Lehtinen, 
  a Representative in Congress from the State of Florida.........   103
Responses from the Honorable Rajiv Shah to questions submitted 
  for the record by the Honorable David Cicilline, a 
  Representative in Congress from the State of Rhode Island......   106
Responses from the Honorable Rajiv Shah to questions submitted 
  for the record by the Honorable Luke Messer, a Representative 
  in Congress from the State of Indiana..........................   110
Questions submitted for the record by the Honorable Joseph P. 
  Kennedy III, a Representative in Congress from the Commonwealth 
  of Massachusetts, and responses from:
  The Honorable Rajiv Shah.......................................   113
  The Honorable Daniel W. Yohannes...............................   115


  THE FY 2014 BUDGET REQUEST: U.S. FOREIGN ASSISTANCE PRIORITIES AND 
                                STRATEGY

                              ----------                              


                        THURSDAY, APRIL 25, 2013

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 9:49 a.m., in 
room 2172 Rayburn House Office Building, Hon. Edward Royce 
(chairman of the committee) presiding.
    Chairman Royce. This hearing on the Committee on Foreign 
Affairs will come to order.
    Today, we hear from the heads of the U.S. Agency for 
International Development and the Millennium Challenge 
Corporation, and together these agencies account for $21.3 
billion or 41 percent of the President's $52 billion 
international affairs budget request. Especially given our 
chronic Federal deficit, we must be rethinking how, where, and 
why we provide foreign aid. To be justified, the bar is high. 
Aid must support our national security, it has to support our 
economic interests, it must be efficient, and it has to be 
effective. It must advance democratic principles and develop 
reliable trade partners. And it must be implemented in a way 
that breaks the cycle of dependency.
    Over the past decade, USAID has seen its mission chipped 
away. The global AIDS coordinator who manages the largest U.S. 
global health program in history is housed in the State 
Department. The MCC has been created as an independent agency 
with a mandate to reduce poverty through economic growth. So it 
has been a challenging time for USAID. Indeed, the Bush 
administration stood up MCC, Millennium Challenge, as an 
alternative, a way to break with the tired, old development 
approaches that for decades have failed. But MCC has had its 
challenges, too. So-called compacts in the early days were big. 
They were complicated. They were overly optimistic. This has 
improved some, but MCC must stay true to itself. Getting pulled 
into countries where you don't belong could ruin MCC's recipe 
for success.
    By demanding that countries we are aiding have good 
policies in place and by strictly monitoring and elevating 
impact, MCC has served as a lab for what does and does not 
work. It is getting countries on a path toward graduation from 
foreign assistance. And that is why many of the 
administration's new initiatives are borrowing from the MCC 
model. This is progress if it is well implemented.
    The President's proposal to reform the International Food 
Program, helping more at less cost, is a bright spot in the 
budget request. For much of our food aid, this proposal would 
remove conditions that commodities be U.S. bought and U.S. 
shipped. Studies have shown that these conditions only make for 
a slow and inefficient program and I will add that in terms of 
being U.S. flagshipped, those ships are owned by foreign 
carriers in Scandinavia anyway.
    It is elementary that buying food closer to where the 
humanitarian crisis is taking place is faster, it is cheaper, 
and it helps save more lives. Only in recent years has the U.S. 
been able to experiment with a small pilot program to buy food 
close to the crisis. This local and regional purchase effort 
has been found to be 11 to 14 weeks faster. It has also been 
found to be 25 to 50 percent cheaper. Essentially, the 
administration's proposal would end a process called 
monetization. This is when Washington buys American grain, 
gives it to international charities who, in turn, sell it in 
poor countries. Congress' investigative arm called this process 
inherently inefficient and found that it resulted in the loss 
of $219 million over 3 years. That is an average of 25 cents on 
every taxpayer dollar. It is not just the waste that should 
bother us, but the harmful impact of dumping such commodities 
which can destroy local farming and, in turn, increase the 
dependency on aid that we would like to see end.
    So I look forward to working with Ambassador Shah, as well 
as the ranking member, to advance this ambitious and timely 
program. And I will now turn to Mr. Sherman of California to 
recognize him for his opening remarks.
    Mr. Sherman. Thank you, Mr. Chairman, and I don't know if 
any of my Democratic colleagues would like me to yield 1 minute 
to them, but if they indicate that, I will. If not, I will give 
a hastily created opening statement.
    Chairman Royce. In the absence of Mr. Engel, that opening 
statement is appreciated.
    Mr. Sherman. And its quality will reflect the number of 
seconds I have had to prepare it. Our development aid is the 
right thing to do and that is reason enough for us to pay for 
it. But the American people are also told that it achieves our 
foreign policy objectives. One of those objectives is to lift 
all the boats in the world because it is in our foreign policy 
and economic interest that the countries of the world be able 
to afford our products. It is said often by the proponents of 
foreign aid that it is the most poor and dispossessed that 
become terrorists and wage war against us. But the vast 
majority of the 9/11 hijackers came from one of the wealthiest 
countries in the Middle East.
    One element of improving our image in the world is whether 
we tell people who are getting our aid that it is, in fact, 
American aid. One thing that disturbs me with our aid with 
regard to Syria, but also other places, is that we are 
deliberately obscuring the fact that the aid comes from the 
United States. The American people will occasionally face a 
Hobson's choice, do you provide aid to people who live in 
communities where there is such antagonism to America that if 
they knew the aid came from the United States they may not want 
it? And yet, Syria is, of course, a difficult situation for us. 
So I will be asking our witnesses what we are doing to make 
sure that the recipients of the aid know that this comes from 
the generosity of the American people and where there are 
circumstances where in order for the aid to be accepted, in 
order for people to be willing to work with us, or in order for 
aid workers to be safe, we have to obscure that fact.
    Picking up on the chairman's comments about local sourcing, 
I will want to hear your comments there. One thing to keep in 
mind is that one element of the coalition in support of 
American food aid is American agriculture. Do we give up some 
of that support in order to be more efficient, perhaps spending 
a few less dollars a lot more efficiently to provide food aid 
around the world?
    As Mr. Royce points out, selling our commodities in Third 
World countries as part of a U.S. Government program may drive 
prices down and disrupt local markets.
    There are also circumstances, particularly where there is 
disaster nearby, where we have to buy food where buying a lot 
of food, which might seem to help the local economy, can 
disrupt it and bid up the cost of food. Those analyzing the 
Arab Spring have pointed out that it may have been caused as 
much as anything by the increase in food prices in the Arab 
world that occasioned world-wide increase in commodity prices.
    I yield the remainder of my time to Mr. Bera from 
California.
    Mr. Bera. Thank you, Mr. Sherman, and thank you, Mr. 
Chairman, for calling this hearing. I look forward to the 
testimony. Obviously, USAID supports the moral values of our 
country. As a nation of abundance, one of our best approaches 
to diplomacy is sharing that abundance with the rest of the 
world. The Food for Peace program obviously has been a 
wonderful program, not only for the agriculture sector, not 
only for our farmers, but for the good will of the United 
States.
    And I look forward to the testimony. I look forward to 
looking at how to make this the most efficient program 
possible, as well as continuing to support American diplomacy 
through the USAID program. So I am very interested in the 
testimony and looking for ways that Congress continues to 
partner with USAID. So with that, I will yield back.
    Ms. Ros-Lehtinen [presiding]. Thank you. Thank you so much. 
And the chair is pleased to yield 2 minutes for an opening 
statement from Mr. Smith, the chairman of the Global Health 
Subcommittee.
    Mr. Smith. Thank you very much, Madam Chair. I would like 
to express my deepest appreciation to you, Dr. Shah, for your 
extraordinary leadership on so many fronts and the emphasis 
that USAID is giving to nutrition and food security and in 
particular our foreign assistance to ensure proper nutrition in 
the first 1,000 days of children's lives--from conception to 
the second birthday--to reduce the impact of malnutrition that 
leads to a myriad of health problems including the stunted 
growth in development of an estimated 165 million under the age 
of 5 in the world today.
    In September 2010, I joined seven African first ladies in 
New York City at a roundtable launch of this initiative. What 
was abundantly clear then has only been reinforced by empirical 
data that shows that the first 1,000 days of life is a unique, 
once in a lifetime window of opportunity for better health and 
it is without parallel. Much has been achieved. Obviously, must 
more needs to be done.
    UNICEF just issued a landmark report, an extraordinary call 
for further action, called ``Improving Child Nutrition, the 
Achievable Imperative for Global Progress.'' UNICEF's Executive 
Director Anthony Lake says, ``The legacy of the first 1,000 
days of a child's life can last forever. The right start in 
life is a healthy start and it is only the start from which 
children can realize their promise and potential.'' He says, 
``We owe it to every child everywhere.''
    The report further reinforces a growing international 
consensus that this nutritional focus deserves a much higher 
priority in international development initiatives than was 
generally or previously realized. The UNICEF report emphasized 
and I quote it here,

        ``Ensuring adequate micronutrient status in women of 
        reproductive age, pregnant women and children, 
        improving the health of expectant mothers, the growth 
        and development of unborn children, and the survival 
        and physical and mental development of children up to 5 
        years of age.''

    USAID's Feed the Future's strategic focus on improving 
nutrition during the first 1,000 days of life is one of the 
most important contributions that our foreign assistance can 
make to global health and it works synergistically with 
initiatives to mitigate malaria, HIV/AIDS, TB, and other 
devastating diseases around the world, but including and 
especially on the subcontinent of Africa. I thank you, Madam 
Chair.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Smith, and our 
last opening statement will be made by Mr. Cicilline of Rhode 
Island for 1 minute.
    Mr. Cicilline. Thank you, Madam Chair, and thank you to our 
witnesses and welcome to the committee. I just want to begin by 
thanking you for your leadership and work. And as we all know, 
our investments in development and aid are not only important 
for us to do in terms of our national security, but they are 
important because the American people benefit when we help to 
create a more stable and more democratic world.
    I particularly want to compliment you on the work that is 
being done to reform our food aid, the whole USAID Forward, 
which I am anxious to hear more about, and the great work that 
the MCC has done in Cape Verde and in other places around the 
world. And this is an opportunity, I think, for us to really 
reinforce our responsibility to make these kinds of investments 
around the world, which is one of the great strengths of 
America that we bring these values and the democratic values 
that we all share. And I just want to compliment both of our 
witnesses for your outstanding work and look forward to your 
testimony. I yield back.
    Ms. Ros-Lehtinen. Thank you very much. And this morning we 
are joined by Rajiv Shah, the Administrator of USAID; and 
Daniel Yohannes, the Chief Executive Officer of the MCC. Dr. 
Shah is the 16th Administrator of USAID. Previously, he served 
as Under Secretary of Research, Education, and Economics at 
USAID and Chief Scientist at the U.S. Department of 
Agriculture. Welcome, Dr. Shah.
    Then we will hear from Dr. Yohannes, who was confirmed as 
the CEO of the MCC in 2009. Prior to his appointment, he held 
positions in the financial services sector, including as the 
vice chair of the Management Committee of the U.S. Bank.
    Welcome to both of our witnesses. Without objection, the 
witnesses' full prepared statements will be made part of the 
record, and members may have 5 days in which to submit 
statements, questions, and extraneous material for the record.
    Gentlemen, please feel free to summarize your statements 
and we will begin with Dr. Shah.

  STATEMENT OF THE HONORABLE RAJIV SHAH, ADMINISTRATOR, U.S. 
              AGENCY FOR INTERNATIONAL DEVELOPMENT

    Mr. Shah. Thank you. Thank you, Chairman Emeritus Ros-
Lehtinen. We appreciate your leadership and your guidance over 
the past several years as we have conducted our reforms and 
improved our performance. I just want to take this moment to 
thank Chairman Royce and Ranking Member Engel for their 
leadership and support and Representatives Sherman, Smith, and 
others, Cicilline and Bera, who have made important opening 
comments.
    I want to thank you for the continued partnership to ensure 
that America has the capacity to effectively project its values 
around the world through our development and humanitarian 
activities and to do so in a manner that advances our national 
interests while delivering real results. We believe this is an 
important moment for development. We are drawing down from a 
decade of war and have the ability to rethink and reimagine how 
America projects itself and its values around the world.
    President Obama and Secretary Kerry, like Secretary Clinton 
before him, have repeatedly commented on the importance of 
elevating development as part of our national security strategy 
and as part of our foreign policy, including as part of our 
economic competitiveness strategy.
    I note that perhaps the most significant moment I have had 
in this role was an opportunity to visit a refugee camp in 
Dadaab, Kenya on the border of Somalia during last year's 
tragic famine. In that context, I had the opportunity to meet 
women who had been through extraordinary challenges in efforts 
to bring their literally starving children to safety. Some made 
it. Some were able to bring their children. Others were not. 
But in that context, I had the chance to see firsthand that 
when they walked through the camp and got into a place that was 
safe, it was American humanitarian effort and American 
development partnerships that, in fact, gave them hope.
    And as tragic as that moment was, just a few months ago I 
had a chance to visit Mogadishu. And I got a chance to see the 
other side of the hope that is taking fruit there. I noted that 
the day before my visit USAID had worked with the local 
partners to install more than 600 solar street lights and for 
the first time in two decades, people were able to come out 
peacefully and celebrate in the evenings.
    We are replacing piracy on the coast with small-scale 
fishing infrastructure and helping people leave IDP and refugee 
camps to go back to their communities supporting the 
revitalization of their own agriculture in more than 400 
communities in that country. That path from dependency to self 
sufficiency, and ultimately dignity and growth, is what our aid 
and assistance should be about. And I hope we get to discuss 
today whether this approach is delivering results. We believe 
it is.
    Our signature Feed the Future program, which started when 
we cut back on agricultural investments in 23 countries to 
focus on 19 where we thought we could make the biggest impact, 
has reached more than 7 million farm households and is helping 
to reduce stunting, as Chairman Smith noted, in more than 12 
million children who previously lacked effective nutrition.
    In our Feed the Future countries, we are seeing extreme 
poverty being reduced at an average annual rate of 5.6 percent, 
significantly higher than in counterpart nations. We are 
working with the private sector to motivate $3.5 billion of 
private investment to become complementary to our investments, 
including having raised more than $500 million through the 
Development Credit Authority to this purpose. And we are 
implementing real policy reforms along the way.
    This is just one example of how large scale, modern, 
results-oriented efforts can work and deliver critical 
outcomes. It is the result of a reform effort we call USAID 
Forward which I am eager to describe to you in terms of our 
progress today. Thanks to the support of this committee, we 
have been able to rebuild our staff, bringing in more than 
1,100 Foreign Service Officers to USAID over the course of my 
tenure. We have been able to implement an evaluation policy 
that is recognized as best in class. And today, you can go to 
the Apple app store and download an application on your iPad or 
iPhone and pull down more than 180 high-quality evaluations 
that describe, in an adulterated, independent manner, how our 
programs are working or not working and what we are learning as 
we seek to make improvements.
    We have expanded our investments in local solutions that 
can at times be less costly and more sustainable in delivering 
these results. And I am very eager to discuss with you today 
our efforts to reform food aid to bring this approach about 
efficiency and effectiveness to efforts to reach an additional 
4 million children without spending additional resources and to 
do a better job of savings lives while renewing the partnership 
with American agriculture.
    So I thank you for the chance to be here today and look 
forward to this dialogue, learning from you and continuing this 
important partnership.
    [The prepared statement of Mr. Shah follows:]
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Ms. Ros-Lehtinen. Thank you so much, Dr. Shah.
    Mr. Yohannes.

STATEMENT OF THE HONORABLE DANIEL W. YOHANNES, CHIEF EXECUTIVE 
           OFFICER, MILLENNIUM CHALLENGE CORPORATION

    Mr. Yohannes. Thank you, Madam Chairman, and members of 
this committee for the opportunity to appear today with my 
friend and colleague, Dr. Shah, to discuss the Fiscal Year 2014 
budget request.
    I would like to summarize my statement and submit the full 
version for the record.
    Ms. Ros-Lehtinen. Without objection.
    Mr. Yohannes. Thank you. The present request of $898.2 
million would allow the Millennium Challenge Corporation to 
continue advancing prosperity, stability and American values 
around the world. MCC does this by reducing poverty through 
sustainable economic growth. Our partners are rigorously 
selected countries that have a track record of sound democratic 
and economic governance. We ask them to prioritize their 
economic needs and to develop and implement cost-effective 
solutions that make a measurable difference.
    We are selective about which investments we make because 
Americans deserve to see their tax dollars deliver a high rate 
of return. We sign compacts with our partner countries spelling 
out the terms of our assistance. During compact implementation, 
we monitor and evaluate progress and require that programs be 
completed in 5 years. We will stop the flow of development 
dollars if countries fail to respect human rights or democratic 
values. Lastly, we measure program effectiveness to see what 
did and did not work. This is part of our evidence-based 
approach, and because we are committed to transparency and 
accountability we make our findings public.
    Madam Chairman, MCC is delivering real achievements for the 
world's poor. Transportation networks are stimulating trade 
with regional impact. Projects in land security, food security, 
energy security and water security are connecting the poor to 
economic growth and opportunity. And MCC-inspired reforms are 
empowering women, advancing civil rights, and promoting 
democratic principles.
    Your constituencies are also benefitting as policy reforms 
and targeted investments foster an enabling environment for 
American businesses to succeed. Last fall, MCC released the 
first set of independent impact evaluations. These use rigorous 
statistical methods to measure changes in farm and household 
incomes of project participants. In El Salvador, for example, 
evaluators found that dairy farmers doubled their farm incomes. 
In Ghana, the annual crop income of farmers in the northern 
region increased significantly relative to the control group 
over and above any impacts recorded in other zones. Even when 
the findings are not all positive, this helps us improve the 
design and evaluation of future projects as we continue to 
learn and hold ourselves and our partners accountable.
    In December 2012, MCC's Board of Directors selected five 
countries as eligible to develop a compact: Liberia, Morocco, 
Niger, Sierra Leone, and Tanzania. Our request also includes 
funding for threshold programs with Guatemala and Nepal to help 
them reform policies and institutions that will move them 
closer to qualifying for compacts. The five newly eligible 
countries are home to over 100 million of the world's poorest 
people. They represent an opportunity to reduce poverty and 
advance U.S. interests. These countries have taken concrete 
steps to reform, improve governance, and qualify for MCC 
compacts. This is what many call the MCC Effect. In fact, a 
recent study of government officials in developing countries 
worldwide ranked the influence of MCC's policy performance 
scorecards greater than any other external measurement system.
    MCC's modest request for Fiscal Year 2014 will not allow us 
to fund compacts with all five countries, so some will have to 
compete for future funding. It is important to note, however, 
that the MCC Effect depends on having sufficient resources to 
incentivize and sustain policy changes. If our funding is cut, 
that effect is diminished.
    Madam Chairman, with the committee's support, MCC and our 
partner agencies will continue to play a key role in fighting 
global poverty.
    Thank you, and I welcome your questions.
    [The prepared statement of Mr. Yohannes follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Ms. Ros-Lehtinen. Thank you to both gentlemen for excellent 
testimony. And I thank Chairman Royce and Ranking Member Engel 
for calling this important and timely hearing.
    Once again, we are having this hearing amidst the backdrop 
of economic uncertainty, both here and abroad. But here, it is 
incumbent upon us to be responsible stewards of the tax dollars 
of hard-working Americans. We want to ensure that these hard-
earned dollars are spent wisely and strategically, while 
advancing our national security interests and addressing our 
foreign policy priorities. Which brings me to the 
administration's request of $370 million for West Bank and Gaza 
assistance.
    With Prime Minister Fayyad's resignation casting a greater 
shadow in the future makeup of the PA and with the knowledge 
that corruption is rampant within that body, Dr. Shah, do you 
believe that the PA possesses adequate internal controls to 
effectively deliver any U.S. aid? And what assurances have we 
received that no money will be diverted to Hamas and other 
terrorist organizations?
    In addition, Dr. Shah, I continue to be concerned over the 
administration's attempts to cut much needed democracy programs 
to the Cuban people. Forty pro-democracy activists remain on 
hunger strikes in Cuba to call attention to the dozens of 
Cubans who are being detained by Castro's state security 
forces. These brave heroes are risking their lives, yet we are 
cutting their support, which is not prudent, especially at a 
time when the crackdown by Castro's thugs is actually on the 
rise on the island.
    And Mr. Yohannes, with the Millennium Challenge 
Corporation, we must ensure that the founding principles of the 
MCC continue to be upheld and do not fall under the trap of 
providing more and more assistance without an end in sight. 
Instead, we have got to focus our efforts on economic growth 
and the graduation of countries away from being dependent on 
our assistance.
    As chairman of the Subcommittee on the Middle East and 
North Africa, I note that the MCC compact with Jordan is coming 
to an end this year and I wanted to know if you would comment 
on that. We will be meeting with the leaders of Jordan later 
today. Also, Morocco continues to be an important ally to the 
United States and is a strategic partner in the region. We must 
further seek ways to reiterate the strong bonds that tie our 
two nations and promote our shared values and vision for 
stability in that region.
    With that in mind, and shifting to another region, Mr. 
Yohannes, I am concerned about the MCC's attempt to seek a 
second compact with El Salvador. American investors continue to 
have problems accessing their assets. There is a lack of 
public-private partnerships and endemic corruption issues are 
still prevalent in El Salvador. According to reports, the 
current Presidential candidate for the FMLN celebrated the 
terrorist attack on 9/11 and burned an American flag. So I 
believe that the MCC compact should not be used as a political 
tool as Presidential elections draw near. I would urge the MCC 
to wait until after the elections before proceeding with that 
compact.
    So, Dr. Shah, if you could address the PA assistance issue 
and the Cuba issue.
    Mr. Shah. Certainly. Thank you. And thank you for your 
strong leadership on the range of issues here. On West Bank/
Gaza, the goals of our effort there are very specific. They are 
about creating economic opportunities to underpin a peace 
process to support basic social services and we have been able 
to reach more than 200,000 people with food and more than 
75,000 connected to improved water systems and some core 
humanitarian priorities as needs arise.
    We do have very strict controls in how any specific 
transfers to the Palestinian Authority are conducted and we are 
confident that that will continue to go forward as we have run 
it in the past, very strict.
    Ms. Ros-Lehtinen. Thank you. And on Cuba?
    Mr. Shah. And on Cuba, again, the goals there are support 
for civil society and democracy with some small humanitarian 
efforts and we have worked closely with our partners. We 
believe the President's budget of $15 million reflects an 
appropriate investment that they have the capacity to 
implement. We recognize and take some faith in the fact that 
GAO reviewed our approach to implementing this program and very 
strongly commented on the effective reports we put in place to 
have a clear and compelling implementation strategy for this 
effort.
    Ms. Ros-Lehtinen. Thank you. And Mr. Yohannes, I have not 
left you much time for Morocco, Jordan, and El Salvador, but 
maybe you could reply in writing. I don't wish to rush those 
answers because they are important. Thank you very much.
    I am pleased to yield 5 minutes to our substitute ranking 
member for the substitute chair, Mr. Sherman.
    Mr. Sherman. Thank you and thank you, Chairman Emeritus, 
for your questions particularly with regard to the Palestinian 
Authority and democracy in Cuba. I want to associate myself 
with your concerns.
    NGOs just are there to try to provide relief for 
development. USAID focuses also on our foreign policy 
objectives.
    Administrator Shah, how do you coordinate with the State 
Department to get--to have our foreign policy and a foreign 
policy and national security objectives affect what you do?
    Mr. Shah. Well, thank you, Representative Sherman. I guess 
I will offer a general point and a specific one. In terms of 
coordination, I think under the Obama administration, under 
Secretary Clinton, and now under Secretary Kerry, it has been 
both very transparent and much improved. We develop country 
assistance strategies for each country. They are carefully 
vetted through USAID and State. We jointly approach the 
priorities and define them in a specific way and then measure 
results and make those outcomes as public and transparent as 
possible.
    We have implemented a foreign assistance dashboard that has 
excellent data from USAID, from State, and from MCC that meets 
our International Aid Transparency Initiative commitments and I 
believe that has been very strong coordination. One important 
example of that, I think, that speaks to your opening comment, 
is Syria. We have worked hand in glove to make sure that we 
provide now nearly $400 million of humanitarian support inside 
of Syria. Sixty-five percent of that reaches opposition-
controlled areas. We are reaching 2.4 million people with 
critical services and doing that----
    Mr. Sherman. Administrator, I am going to have to go on to 
a few other things and ask you to supplement your answer for 
the record, although the fact that the flag is not on the bag 
in Syria is of great concern to me.
    I would like you to, for the record, describe what 
regulations or policies you have for your people in the field 
as to when they must emphasize that the aid is coming from the 
United States, literally put a big flag on the bag of food, 
etcetera, and when they are allowed to depart from those 
policies.
    I would also like you to provide for the record some key 
studies or examples to illustrate what is the difference in 
cost between a local sourcing on the one hand and U.S. 
sourcing, U.S.-flag carrier delivery on the other. I am sure 
that there will be a wide variation in the differences in costs 
depending upon where the aid is going.
    As to Pakistan, we have provided $2.8 billion in 
nonmilitary assistance since 2009. The Islamabad Government has 
its own objectives, but we need to win over all of the people 
of Pakistan and I focused my attention on the Sindh Province. 
To what degree does Islamabad determine where our aid is 
focused within Pakistan? And then in writing maybe you could 
provide a description of what we are doing in the Sindh 
Province. Who picks the projects and the locations, you, or the 
Pakistani Government?
    Mr. Shah. Thank you. Let me just say with respect to 
Pakistan first, and Sindh, in particular, we have very 
important partnerships. We design them together. We absolutely 
retain the capacity and authority to both select projects and 
oversee their implementation. One example is we made a 
commitment to help them produce 1,200 megawatts of energy. We 
have already seen through and successfully produced 800 
megawatts and that has been seen as a tremendous success.
    Second, we have invested quite a lot of effort in a 
comprehensive branding strategy for anywhere in the world. 
Pakistan, I think, is a good example where, as a result of our 
efforts, we have data that shows that the awareness of American 
assistance efforts in Pakistan has gone up three-fold. There 
have been 3,000 locally placed----
    Mr. Sherman. I am going to try to sneak in one more 
question, but please give us that analysis of what is going on 
in Sindh. I am somewhat concerned that the administration 
request cuts aid to Armenia. I think you ought to increase that 
instead. And if you are looking for a source of funds, you 
could look at U.S. aid of all types to Azerbaijan, which is 
thwarting our development efforts for the area by threatening 
to shoot down civilian aircraft that go into Stepanakert's new 
airport.
    I have talked to Mr. Yohannes about the Javakheti region of 
Georgia. We provide very substantial aid to Georgia and I hope, 
as I have discussed with him, and now I have a chance to 
discuss with you, that a significant part of our aid would go 
to that otherwise neglected region.
    And I will ask, if I have got a chance, Mr. Yohannes to 
describe what is the status of our second compact with Georgia, 
and will Javakheti be a strong focus if that compact is 
concluded?
    Mr. Yohannes. The investment proposal is proceeding 
extremely well and should be presented to the board sometime in 
June of this year. And Mr. Congressman, please know that there 
is some funding set aside for Armenian language and also for a 
number of schools in that region.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Sherman.
    Mr. Smith is recognized.
    Mr. Smith. Thank you very much, Mr. Chair. Five minutes and 
so many questions to ask but let me just ask you, Dr. Shah, 2 
days ago Dr. Frieden testified before my subcommittee. Of 
course, you work very closely with CDC and he does head up that 
very important agency. We focused on superbugs and the 
parasites as well as antimicrobial resistance, and how this is 
becoming more and more of a problem.
    I would just ask you, if you could to speak to the issue of 
tuberculosis. MDR and XDR TB is becoming, it always has been, 
but even more of a problem. I know it is probably OMB, but 
there is a cut of $45 million in the budget. Hopefully, that 
can be restored and maybe even enhanced because it is so 
important.
    And on the issue of malaria, we had a great discussion, 
disturbing discussion, that artemisinin resistance in Southeast 
Asia portends a very dangerous possibility of that expanding 
into Africa and we also know that bed nets and all the rest of 
the efforts that have been Herculean in combating malaria need 
to be renewed, new bed nets provided. There are 104 malaria-
endemic countries. You might want to speak briefly to that and 
more so for the record.
    Secondly, before you came out, we talked about the issue of 
child survival and the vital importance of ORT, 1,000 days, 
immunizations, all of the important things to save lives. You 
had indicated you had just been in India and you might want to 
speak to the issue.
    A new documentary film was released yesterday. It is 
entitled, ``It's a Girl.'' It notes a U.N. figure that there 
are 200 million missing girls on the planet directly 
attributable to sex selection abortion, and to a lesser extent 
infanticide. China and India are the two most egregious 
violators. These are gender crimes, extermination of a girl 
child in the womb or at birth has not only in and of itself led 
to this destruction of girls, but it led to more sex 
trafficking and that has sky rocketed in India and in China, in 
particular. But you did talk about the nexus with child 
survival with some of the health ministers and if you could 
speak to that very quickly.
    Mr. Shah. Thank you, Chairman Smith, and thank you for your 
strong leadership on these issues for decades in child survival 
in particular.
    With respect to child survival, last year we pulled 
together partner countries from around the world to get 
everyone to make a commitment to end preventable child death 
worldwide. The United States signed the pledge, as did others, 
and today, there are more than 150 countries producing data-
driven report cards and score cards tracking progress. There 
are about 7 million children under the age of 5 who die every 
year. As the President noted in the State of the Union address, 
we are committed to taking that down to as close to zero as 
possible within two decades.
    In India, in particular, I think it is a good example of 
this public/private partnership model of work coming together. 
We have private companies making investments to track data and 
report on outcomes. We have private companies expanding zinc 
mining precisely to create zinc syrups and other products that 
can be helpful to children who would die otherwise of diarrhea. 
We know these efforts are generating results as these ministers 
came together to brief me on their progress, but also to 
describe how it is correlated with the sex selection problem to 
which you speak and how that needs to be incorporated into the 
approach.
    Let me just say on that though, I think the most amazing 
thing is we are not driving this process through big, new 
investments of American taxpayer dollars. It is really American 
leadership and a focus on science and technology and 
measurement and results that is allowing us to partner with 
others to achieve that kind of an outcome.
    With respect to tuberculosis, I appreciate your comments 
and we are very focused on multi-drug resistant and also XDR TB 
which I am sure Tom Frieden spoke about. He is one of the 
world's experts on that for many decades now.
    There are three foreign assistance accounts that provide 
our tuberculosis support so we have limited some of our funding 
in one account. We are expanding our efforts in HIV-related TB 
and in using the Global Fund for AIDS, TB, and Malaria to make 
sure that our investments crowd in resources from other donors 
and allow for more sustainability over time.
    Finally, to your point on malaria, I think this with your 
strong leadership, has been one of the big success stories 
America can take great pride in. Independent evaluations by 
Boston University and others have shown that there are, as a 
result of this annual investment we make of less than $700 
million, as many as 200,000 children under the age of five who 
don't die every year in sub-Saharan Africa because we have an 
evidence-based, clearly measured, targeted approach and it 
serves as the basis for our efforts to further reduce 
preventable child death in that region. So thank you for your 
leadership.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Smith.
    Mr. Kennedy is recognized.
    Mr. Kennedy. Thank you, Madam Chair.
    Ms. Ros-Lehtinen. I am so sorry. I am out of touch.
    Mr. Cicilline.
    Mr. Kennedy. I appreciate the thought though.
    Mr. Cicilline. I would yield to Mr. Kennedy, of course.
    Ms. Ros-Lehtinen. Mr. Cicilline is recognized.
    Mr. Cicilline. Thank you, Madam Chairman. I am not sure 
whether the proper way to address is Ambassador or 
Administrator or Doctor. I am not sure which of those is best, 
but I think Ambassador is what I will use.
    I want to first thank you for your great leadership at 
USAID. And the issue I would like to hear a little bit more 
about is that we have seen, and I have certainly learned about, 
the decline in personnel at USAID over the last 20 years or so 
and kind of the breaking up of some of the functions with 
different agencies within the government and the on-going use 
of contracting services. The impact that that has had, I think, 
has been detrimental to our development and aid efforts around 
the world and I think you have recognized that in your forward 
AID initiative.
    And so I would like you to sort of talk a little bit about 
what is the end goal of that, where you are in the 
implementation of that, and whether or not there are things 
that we can do on the legislative side to protect that kind of 
rebuilding of both budgeting policy, and personnel capacities 
of USAID, which I think is reflective in some of the questions 
that people are asking about: People understanding what role we 
are playing in aid and development around the world.
    So I will stop there and you can go first with that 
question.
    Mr. Shah. Thank you, Congressman, and thank you for your 
leadership and that accurate reflection of the situation that 
emerged over 15 years. Between 1990 and 2005, our staffing was 
reduced by more than 40 percent, the policy and budget 
activities ceased to exist, and the Agency did engage, in my 
view, in quite a lot of no-bid contracting with very little 
oversight, often in war zones where that can lead to all kinds 
of unintended consequences. So in response to that, we launched 
USAID Forward. And it was basically an Obama administration 
effort to help USAID rebuild as America's premier development 
humanitarian entity. With your and Congress' strong support, we 
have been able to hire 1,100 new officers into the Agency 
during my tenure. Those officers have helped us fill a 40 
percent staffing gap in Africa.
    We have, in fact, cut a large number going from almost 800 
down to 520 specific programs around the world so we could 
focus our efforts in those places where we deliver the best 
results. We have reshaped and repositioned our staff, closing 
more than 14 missions around the world in order to advance the 
focus and selectivity we think is critical to delivering 
results.
    USAID Forward has three major components: A partnership 
component that says we should be working efficiently and 
effectively with partners that can create the conditions where 
aid is no longer needed. And we released a detailed report 
about 1\1/2\ months ago that shows we have in a thoughtful and 
rigorous way been able to expand our engagements with local 
partners by more than 50 percent over the last few years. We 
have a focus on innovation and science and technology. Last 
year, we opened, in partnership with seven American 
universities, development innovation laboratories. Those 
laboratories are producing new technologies and insights like a 
Cell Scope that Chairman Smith would be interested in, I am 
sure, but it takes an iPhone and connects to a plastic 
microscope. It allows you to take essentially a photograph of a 
blood smear and then run a software algorithm to diagnose 
malaria and hopefully some day tuberculosis. Taking laboratory 
diagnostics out of treatment and care in the context where we 
work would be a major cost reducer and would allow us to add to 
the list of success stories in terms of serious disease 
reductions in difficult parts of the world.
    And finally and most importantly, there has been an effort 
that really attempts to focus on delivering real results. So 
today, you can, as I noted, download an application that would 
show you all of the evaluation data that we put forward. We 
actually produce annual reports on our Feed the Future program, 
on our child survival efforts, and on our malaria program. That 
just came out a few days ago. And we think it is important to 
be transparent with the American people because the capacity to 
support this work, I think, is much stronger when people see 
clear direct results and they are now able to do that.
    Mr. Cicilline. Thank you. I am also very pleased that this 
budget reflects the administration's commitment to political, 
economic, social, and cultural equality for women and girls and 
I would just ask you, maybe in written response, to tell us a 
little more about the progress that you are making with respect 
to those issues and particularly how investing in gender 
equality is helping to reduce poverty and create development 
opportunities around the world. I am particularly interested in 
learning more about our efforts to reduce violence against 
women all over the world and I know that that is work that is 
ongoing and would like to hear more about that in written 
response.
    And just for my last 7 seconds, I wanted to say to Mr. 
Yohannes, thank you for second Millennium Compact for Cape 
Verde which is helping the country improve water delivery and 
sanitation. I know very well the great success that they are 
having in Cape Verde and thank you again for your leadership in 
that area. And I yield back the negative 10 seconds I have.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Cicilline.
    Mr. Chabot of Ohio is recognized. He is the chair of our 
Asia Subcommittee.
    Mr. Chabot. Thank you, Madam Chair. Mr. Sherman has already 
raised the issue, but I want to emphasize something that he 
said, which is the fact that the U.S. is the most generous 
country on earth, by far, in providing aid around the world. I 
find it particularly annoying that we oftentimes have to hide 
the source of that aid which is the American taxpayer because 
we might offend some people who, let us face it, hate America. 
We should proudly and prominently display and, in fact, trumpet 
the generosity and the goodness of the American people. If this 
offends someone and they turn the aid down, fine. We will give 
it to somebody else who would appreciate it.
    Now, as chair of the Asia and Pacific Subcommittee, I have 
a couple of questions; one on Indonesia, one on China, and one 
on Vietnam.
    Mr. Yohannes, I believe the Millennium Challenge account, 
the sustainability, economic growth mission is how all of our 
foreign assistance should be modeled because in a number of 
cases it is proven to be far more successful than many of the 
foreign assistance programs administered through USAID.
    In 2006, Indonesia was named eligible for the MCC threshold 
program which seeks to reduce corruption by bolstering several 
key anticorruption institutions including the Supreme Court and 
the Anti-Corruption Commission. Last year, Indonesia's ranking 
on the corruption perceptions index unfortunately fell from 100 
in 2011 to 118 out of 176 countries polled. Relative to other 
countries polled, Indonesia remains in the ``cluster of 
countries with significant corruption problems.''
    Considering the MCC has been in Indonesia for a few years 
now, could you discuss how the MCC has helped fight corruption 
and some of the challenges you are confronting in meeting your 
program goals? I also understand in this particular case, 
Indonesia has been a reluctant partner in implementation which 
questions the sustainability of the program once the MCC 
leaves. Can you discuss this particular issue and how MCC is 
working to address the problem? Thank you.
    Mr. Yohannes. Thank you, Congressman. Corruption is a major 
obstacle to economic growth and we have absolutely zero 
tolerance for corruption. Let me say that all of the countries, 
including Indonesia, were selected because they passed our 
corruption indicators. We look to see if, in fact, corruption 
is institutionalized. We know that despite efforts to cut down 
on corruption, corruption exists, not only in Indonesia and in 
a lot of our partner countries, but we also know that 
corruption exists in developed countries. But we look in terms 
of is it institutionalized? Do they honor contracts? Do they 
abide by the rule of law? Are the judges independent from the 
executive branch of government? Are they creating the best 
environments for businesses to succeed?
    We look for trends to make sure that they are creating a 
very friendly environment for businesses to succeed. Part of 
our $600 million compact is to help that country to fight 
corruption primarily by helping open procurement opportunities 
in their countries. In fact, they had to do a special decree to 
set up an MCC affiliate in that country because previously all 
aid was funded directly from the government. We don't even only 
give a dime directly to the government. In fact, after the 
President decreed this new MCC entity, it had to be approved. 
This was the first time it was ever done in the country.
    Mr. Chabot. Thank you. Let me cut you off there just 
because I have two other quick questions I would like to 
present to Administrator Shah. One is on China. USAID has 
requested $4.5 million in economic support funds for China. 
Right now they own an estimated $1.7 trillion of U.S. debt and 
they hold over $3.25 trillion in foreign cash reserves. How do 
you justify this, particularly when we have a $16.8 trillion 
debt?
    Finally, relative to Vietnam, we had a staff codel over 
there last month. Their human rights record, unfortunately, is 
not good. And unfortunately, many would argue is getting worse. 
It has been requested an $18 million increase over the past 
year. How do you justify that? And you have got 15 seconds to 
answer both questions.
    Mr. Shah. Thank you. With respect to China, we don't 
provide any support to the Government of China. The $4.5 
million is specifically to help Tibetan communities improve 
livelihoods, promote sustainable development and preserve 
cultural traditions and is absolutely no correlation or flow to 
the Chinese Government whatsoever.
    With respect to Vietnam, I would note that compared to the 
Fiscal Year 2012 real number, the Fiscal Year 2014 request is 
an overall 12 percent reduction in our investment there. And 
our focus there is to maintain our support for the PEPFAR HIV/
AIDS effort as well as to support civil society and in 
particular, people with disabilities in addition to the dioxin 
remediation activities that have been an ongoing commitment of 
the United States.
    Mr. Chabot. Thank you.
    Chairman Royce [presiding]. Thank you. We will go now to 
Mr. Eliot Engel, our ranking member on the committee.
    Mr. Engel. Thank you, Mr. Chairman. I would like unanimous 
consent to insert my statement into the record, but I want to 
just talk about some things. In this difficult fiscal 
environment, some reflexively turn to the foreign assistance 
budget as the first place to make cuts and I think that is 
regrettable. I really wanted to say that because I think it is 
important.
    I want to commend the administration for its food aid 
reform proposal. Our current food aid programs waste millions 
of taxpayers' dollars and often harm agricultural markets in 
the countries we are trying to help. The Secretary of 
Agriculture has said this reform initiative will have little or 
no effect on American farmers. So I would like to, after I say 
a few more words, I would like to ask Dr. Shah to comment on 
the administration's plans to restructure our food aid programs 
to make them more efficient and affordable.
    I want to say in terms of global health, I was pleased to 
see the small overall increase in funding for global health 
programs at USAID, especially for PEPFAR. I think that is very, 
very important.
    Mr. Yohannes, I think it is a testament to MCC that many of 
the reforms being pursued by USAID and the State Department are 
based in large part on the MCC model. I think that is very, 
very good. But I am interested in hearing your thoughts on how 
MCC can address my longstanding concern about how we work with 
countries that lack data on their respective score cards. As 
you know, I have been very disappointed in MCC's handling of 
Kosovo, a country recognized by the United States, but not a 
member of the U.N. because of MCC's dependency on U.N. agencies 
for much of the data it uses. Kosovo was left with multiple, 
empty failed boxes on its score card, essentially keeping it 
from competing for a compact or threshold program. I thought 
this was very unfair to Europe's newest country. And while I 
recognize MCC's willingness to accept supplementary data, it is 
unclear at best how MCC uses this information to calculate a 
country's scores and unlike the rest of MCC's process, there is 
nothing transparent about this approach.
    So, I really hope MCC addresses this problem so that future 
countries in Kosovo's position will be evaluated and able to 
compete the same way as all of the countries. And the last 
point before I ask both of you to answer the questions is that 
Congress has been appropriating unprecedented sums for the 
Palestinians and the Palestinian Authority for the past several 
years. This is important for maintaining a semblance of 
stability in the West Bank in Israeli-Palestinian relations as 
well for humanitarian reasons. But it is no coincidence that 
this increase in U.S. assistance has occurred during Salam 
Fayyad's tenure as prime minister, a man who won great respect 
for his emphasis on budget transparency and other aspects of 
good governance. Fayyad, unfortunately, in my opinion, resigned 
last week and we anticipate a replacement will be named soon.
    And I wanted to take this opportunity to urge President 
Abbas of the Palestinians in considering Fayyad's replacement 
to appoint someone who can continue the positive aspects of 
Fayyad's approach. Without continued budget transparency, 
further U.S. assistance for the Palestinian Authority will not 
be possible.
    So I am wondering, first, Dr. Shah, we have met many times 
and you know I am an admirer of yours. I support the 
administration, like Chairman Royce. I support the 
administration's plans to restructure our food aid programs to 
make them more efficient and affordable. So could you elaborate 
for us the potential taxpayer savings this plan will generate? 
Do you believe it will have any impact on American farm income? 
And has DoD signaled their concerns about the proposal in 
regard to its impact on military readiness and deployment 
capacity?
    Mr. Shah. Thank you, Mr. Ranking Member, and thank you for 
your leadership across the range of these issues and for the 
extra efforts you have put in to help us do our work better and 
more effectively.
    With respect to the food reform proposal, it is geared 
around the absolute intention to reach 4 million additional 
children without spending additional resources. We recognize 
these are very difficult budget times and the Fiscal Year 2014 
request is actually in total 6 percent lower than the Fiscal 
Year 2012 request.
    With respect to what is happening right now, why this is 
urgent, because of the incredible commitment to Syria, Syrian 
refugees, and the food needs in that context, what limited 
flexibility we have had in this program has been absorbed in 
that context. As a result, there are many other parts of the 
world--post-famine Somalia, the DRC, Pakistan--where we are 
reverting kids from programs that have been supported through 
the more flexible local and regional procurement program back 
to the more restrictive Title 2 program. And in the context of 
doing that, we are having to reduce services to hundreds of 
thousands of beneficiaries.
    We believe we need the flexibility embedded in the proposal 
and have studied carefully the impact on American agriculture. 
The truth is over the last decade this program has been 
shriveling up because of the changing cost structure of the 
effort. We used to ship 5.5 metric tons, now we ship 1.8 
million metric tons. As Secretary Vilsack has noted, this is 
less than \1/2\ of 1 percent of the total value of U.S. 
agricultural exports and we are only proposing a diminishment 
from 85 percent to 55 percent in terms of tied U.S. commodities 
as part of the program. There have been more than a dozen 
studies that have validated the efficiency gains of taking this 
approach in a number of respects and we believe this will help 
us renew the partnership between American agriculture and 
American humanitarian communities to maintain American food 
security and hunger leadership around the world. Thank you.
    Mr. Engel. Thank you. And if the chairman will indulge me.
    Mr. Yohannes, I mentioned that it is really a testament to 
MCC that many of the forms being pursued by USAID are doing it 
in large part based on the MCC model because clear metrics and 
transparent benchmarks should be the hallmark of all of our 
foreign assistance programs, so I commend you for that.
    I would like your comments on Kosovo. It has been a long-
stranding frustration of mine.
    Mr. Yohannes. Congressman, thank you. When Kosovo became 
independent in 2008, it presented a different challenge for us. 
We simply did not have a lot of the indicators from the 
indicator companies, but since 2008 we have worked very closely 
with all the indicator organizations that provide us with that 
information. And today, we have more information about Kosovo 
than we ever had in the past. The only agency that is not 
providing this information is the United Nations, but we have 
been able to get supplemental information directly from them. 
We have been actively engaged. I sent one of my best economists 
to that country last year and today, they only passed 8 out of 
the 20 indicators.
    Having said that, we are working with them very closely to 
make sure that they understand what needs to be done. And the 
good news and the bad news, Congressman, is that they have 
graduated to the higher income bracket in the last 2 years and 
if they continue to make that progress, they may not be 
eligible for our program. But we work with them and I would be 
more than happy to work with you, Congressman, on what we need 
to do in the future in cases like this one.
    Mr. Engel. Thank you. I want to work closely with you on 
that. And finally, before I relinquish, I would like to just 
add my voice to Mr. Smith's comments about cutting TB funding 
by $57 million. It is really extremely short sighted. And I 
really think that we have to sufficiently fund our efforts to 
treat and eliminate tuberculosis. And I just wish you would 
take that into consideration. Thank you very much. Thank you, 
Mr. Chairman.
    Chairman Royce. Thank you, Mr. Engel. I wanted to go just 
for a minute to this issue of food aid reform. And Ambassador 
Shah. I am very encouraged by this reform proposal. It is one 
that had been made in the prior administration as well or had 
been suggested. And I remember talking to Andrew Natsios about 
your predecessor in your position about some of the challenges 
that he had and his feeling that both hands were tied behind 
his back. As he shared with us at one point when we had a 
devastating food crisis in Africa and in Asia, he said food aid 
often gets there after everyone is dead. He was clearly very, 
very perturbed by the circumstances and the delays.
    And one of the things that he said is that people can't eat 
shipping costs as he was commenting on the reality of the 
burdensome way that the system operated. When it takes months 
for food aid to arrive or when you have a situation where you 
have seen the United States dump food into markets that 
undermine local production, and drive the population into 
deeper poverty, it really gives you pause in terms of our 
current method of operation.
    When I chaired the Africa Subcommittee, we had the 
President of Mali here. This was probably about a decade ago. 
He testified how it was undermining his farmers and how 
agricultural subsidies were undermining his society. There is a 
negative impact our western agricultural subsidies have on 
African farmers and we need to be responsible here. And the 
framework for your proposal, I think, has been found to save 
time, money, certainly lives, and I think it promises to reduce 
the deficit going forward over the next 10 years by about $\1/
2\ billion.
    I was going to ask you a question and this goes to the 
issue of aid to refugees from Syria. I understand that the 
requirement of a U.S. ship recently delayed a food shipment to 
Syria and I was going to ask you about that, Mr. Shah.
    Mr. Shah. Thank you, Mr. Chairman. And thank you for your 
very strong and effective leadership on this topic in 
particular.
    The Syria crisis has, in fact, precipitated an urgency 
around the need for this reform because, in opposition-
controlled parts of Syria traditional food convoys would be 
targeted. We have had more than 150 deaths across humanitarian 
workers in that context and because, as we have used what 
limited flexibility we have had in and around Syria and it has 
been effective in that context, we have eliminated our capacity 
to use that same flexibility in places like Somalia and the 
DRC.
    So all of the basic points you have made, I think, are the 
core rationale for this effort and we know that we can get a 30 
to 50 percent cost reduction on natural product purchases. We 
know there is an 11- to 14-week shipping delay in pursuing the 
traditional model. We know that shipping costs have increased 
by a factor of more than three over the last decade, which is, 
in part, why the metric tons of food that we buy and ship have 
fallen from 5.5 million metric tons to 1.8 million metric tons. 
And as a result, American leadership on this issue around the 
world has also fallen. And today, we service less than half of 
the beneficiaries we did when President Bush and Andrew Natsios 
made a version of this proposal 10 years ago.
    I also want to validate and highlight the challenges of the 
practice of monetizing food assistance. When we try to support 
a wonderful partner like CARE or World Vision or Catholic 
Relief Services in the Democratic Republic of Congo by shipping 
food from here to there, giving them the food, asking them to 
sell it in precisely the markets where they are then turning 
around and using the cash to help farmers produce value, they 
both create strong disincentives and frankly lose 50 percent of 
the value in that case of the resource compared to what we 
spent buying the food on this end of the world. So there is a 
strong consensus around a data-driven approach here and we are 
trying to put this proposal forward in a way that manages and 
maintains the important coalitions required to renew American 
leadership on hunger.
    Chairman Royce. Let me bring up one other issue. I am 
deeply concerned about the growing number of land seizures 
taking place in the Philippines. Property rights are essential 
to an individual's personal and economic security, but it is 
also essential in terms of economic growth.
    And Mr. Shah, I see the request for development assistance 
in the Philippines includes an increase up $6.6 million for a 
total of $87.7 million. Will any of these funds be directed 
toward securing and protecting property rights and if not, why 
not?
    Mr. Shah. Our intention is to ensure that we work on the 
range of those types of issues in the context of these 
programs. I would have to provide more specific details perhaps 
in writing.
    Chairman Royce. I will be in consultation with you 
afterwards.
    Mr. Shah. Thank you.
    Chairman Royce. Mr. Yohannes, MCC has $434 million in its 
compact with the Philippines and that is nearly 2 years into 
implementation. And I appreciate your commitment to raising the 
land seizure issue with the government there. Is this not an 
issue of commitment to rule of law that is central to your 
mission?
    Mr. Yohannes. Mr. Chairman, it is very important, the rule 
of law. And we have communicated our concerns to the 
government. I think it is also extremely important for economic 
growth, and I know they are very committed in the fight against 
corruption. But also, they need to do something different on 
this one; and based on the conversations we have had with them, 
they understand the problems and they are willing and committed 
to finding solutions for this problem.
    Chairman Royce. Mr. Yohannes, thank you for your efforts. 
And Mr. Shah, we appreciate it. We are going to go now to Dr. 
Bera.
    Mr. Bera. Thank you, Mr. Chairman. And thank you, Dr. Shah, 
and Mr. Yohannes, for being here.
    As a doctor, I recognize the important work that USAID does 
in global health including seeking to prevent child and 
maternal death through the transmission of AIDS, particularly 
in the Global Health Initiative and through their PEPFAR 
funding, very important programs that have really relieved 
human suffering.
    Obviously, one of the goals of both the MCC and USAID is to 
help the countries that we are interacting with become self 
sufficient. That is always one of our goals. In my 
conversations with the Government of India and with the State 
of California, as we are looking at the issue of food security 
and helping India feed its own population, I was astonished at 
the amount of food loss that occurs in India. It is upwards to 
40 percent of the food gets lost in a nation where hundreds of 
millions go to bed hungry every night. A lot of this is around 
issues of cold storage and issues of lack of infrastructure for 
taking the food and moving it to market.
    I would be interested in hearing from either one of you on 
some effort working with the Government of India to improve 
both the storage issue and then the movement issue.
    Mr. Shah. Thank you. I will just address a few of those 
points. I think with respect to food security in India, when 
President Obama visited during his state visit, he launched a 
Partnership for an Evergreen Revolution with Prime Minister 
Manmohan Singh. And that partnership was really designed to 
have both countries partner along technical and other lines as 
opposed to having the United States make significant 
investments in India because India has plenty of resources in 
its agricultural sector. As a result of that, three things have 
happened. One is there has been a much expanded technical 
exchange across universities, some from California, like Davis, 
along with partner universities in India, many of which we had 
a strong role in helping to develop decades ago.
    Second, the Indian Government has tried to pass legislation 
to allow for American companies like Wal-Mart and others to be 
involved in essentially professionalizing the food chain and 
creating and bringing the technologies and logistics 
capabilities of those companies to address exactly the issues 
you raise like cold storage and reducing post-harvest losses. 
We have been a technical partner in that effort and between 
USAID, USDA, and the Government of India that is moving 
forward.
    So those types of activities have been very important.
    The third and final thing I would note is there are a range 
of technology partners in India that have joined this effort 
and are now actually partnering with the United States, 
investing their own resources in tackling hunger in sub-Saharan 
Africa through our Feed the Future partnership. And we think 
that is emblematic of a new model where India places a larger 
role bringing some of its technology and businesses to partner 
with us on this challenge in sub-Saharan Africa.
    Mr. Bera. Mr. Yohannes, would you like to respond?
    Mr. Yohannes. About 40 percent of MCC's investments are 
tied primarily to help many of our partner countries become 
food secure. So for example, in agriculture, we not only are 
training farmers how to become self sufficient, but also 
providing them with a lot of opportunities. We are building 
roads so that communities will have access to markets. We are 
building cold storage facilities for the foods that have been 
produced by those farmers are not spoiled before they ship 
overseas. And last year, we just completed five impact 
evaluations with five of our countries, which relate to farmer 
training. And we are seeing great results.
    In the past, most development agencies measured outputs and 
outcomes as a result of farmer training. But what we are 
learning is to take this one step further. For example, in El 
Salvador, dairy farmers doubled their income as a result of our 
investments. In Nicaragua, they increased their income by 30 
percent. In Ghana, they increased their income significantly, 
by 40, 50 percent. And what we do next is we know it is very 
difficult to see if our investments are increasing household 
incomes, which is very difficult to do, but we will know more 
in the next 2, 3 years. But we have seen great results from our 
investment with the program.
    Mr. Bera. Great. Well, Dr. Shah, Mr. Yohannes, I think that 
is exactly what we should be doing. As we help people become--
and countries become more self-sufficient, obviously we help 
save lives or governments. We help promote our democratic 
values. It also is good business sense. Dr. Shah, as you 
pointed out, we have technologies. The university to university 
partnerships that are occurring with my home university at UC-
Davis, as well as with our entrepreneurs and innovators, 
certainly we can take what we are doing here and export that 
and help other countries. So I look forward to working with 
both of you. I yield back.
    Chairman Royce. We will go now to Mr. Rohrabacher of 
California.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman. Let us 
before we can have an honest discussion about this, people need 
to face the reality of what our fundamentals are right here in 
the United States. Dr. Shah, do you know what the proposed 
level of deficit spending is by the administration in their 
budget? Not foreign aid, but the overall, no, you don't.
    And Mr. Yohannes, do you know? Well, we are going to at 
least expend $1 billion more than we are taking in and we have 
been doing this for 5 years. If that is not corrected within a 
very short period of time we won't be able to do any of these 
noble things that you are talking about. So in order to do our 
responsibility here, we need to be confronting that basic 
truth. And so how do we do that? Yes, it is a trillion, not a 
billion, excuse me. A trillion, billion, billion.
    So before every expenditure that we are talking about, we 
need to put in front of this, is this worth the United States 
borrowing this money from China in order to expend it; wherever 
we are going to do it. Because that is what we are talking 
about. We are talking about borrowing money from a foreign 
power, probably China or Japan, in order to give it to someone 
else. And if we can't answer, honestly answer that, we should 
not be doing that project. That is for sure.
    I personally believe that we need to restructure aid 
considering this so that our aid is no longer developmental 
aid. And Mr. Yohannes is doing a great job in that; he is 
insisting on, with his organization, changes in the fundamental 
status quo that has created the hardship in those countries, 
rather than just giving aid which will then not do any good at 
all because if they are not changing the status quo in the way 
you do things, it will go right back to what it was. But we 
need to basically restructure our whole concept into 
developmental aid; it is no longer our responsibility because 
we can't afford it. Borrowing from someone else in order to 
help another country develop is not right. And our aid should 
be basically emergency humanitarian aid in cases of natural 
disasters. That is what we can afford. That is it. Maybe that 
is worth borrowing from another country in order to save people 
who are in a desperate situation. Otherwise, we are going to 
put our own people in a desperate situation.
    A couple questions on specifics about your request this 
year. Dr. Shah, you visited China last week. We were involved 
in a new working group on climate change that was announced, 
that U.S. was going to cooperate in developing these new 
technology, clean technology projects. We have been borrowing 
money in order to give to China for these technologies. Is that 
over or does your announcement mean we are going to continue 
giving aid to China that we are actually borrowing from China?
    Mr. Shah. Thank you, Congressman. Just to clarify, sir, I 
was not in China and I am certainly not a part of that.
    Mr. Rohrabacher. Thank you.
    Mr. Shah. But I would also highlight that our request with 
respect to China is solely focused on Tibetan communities and 
it is the----
    Mr. Rohrabacher. Okay, thank you very much. Good answer. 
Let me just announce right here that we should not be giving 
aid to countries that are hostile to the United States or can 
be seen that their governments have committed actions that have 
supported international terrorism.
    That is why, Mr. Chairman, I would announce today that I 
plan to offer an amendment to whatever foreign aid bill comes 
to the floor that suggests that Pakistan should get not one 
penny of support for anything until Dr. Afridi, the man who 
helped us bring to justice Osama bin Laden, is freed from a 
Pakistani dungeon. The American people need to be outraged that 
Pakistan is holding Dr. Afridi in the first place after giving 
safe haven to Osama bin Laden, the murderer of 3,000 of our 
citizens. But for us then to give them aid on top of that is 
absolutely unconscionable and so, Mr. Chairman, I will be 
offering an amendment. And until Dr. Afridi is freed, we 
shouldn't even consider giving them one penny. There are other 
countries that are hostile to us and we should not be giving 
money to those countries while their governments are hostile to 
the United States. Thank you very much.
    Chairman Royce. Thank you, Mr. Rohrabacher. Now we go to 
Ms. Lois Frankel from Florida.
    Ms. Frankel. Thank you very much. I want to just first of 
all thank the panel for being here. I want to preface my 
remarks first by saying that I do believe that foreign aid is a 
good purchase when it is spent correctly. And so with that said 
I do want to talk to you about Afghanistan because from what I 
have read and what I have heard, is that much of the aid that 
we have given, and I am not even talking about military now, 
has just been very wasteful. It has lined the pockets of bad 
actors. It has been used for bribery. It has made folks there 
more reliant on the United States and less reliant on 
themselves.
    In that regard, I would like you to comment on that, but I 
want to ask you some questions to go along with that that you 
could also comment on. Who is in charge of development in the 
world? You can use Afghanistan as the example. Is it the 
military, who seems to be doing similar functions? Is it USAID? 
Is it the State Department? What do you measure your outputs, 
if you build a school, do you actually determine whether 
anybody is getting educated? And how would you avoid the kind 
of waste that we have heard about in Afghanistan in the future?
    Mr. Shah. Thank you, Congresswoman, and thank you for your 
preface because foreign aid is less than 1 percent of our 
budget and for that we believe we deliver critical and national 
security results and economic opportunities that sustain 
American leadership around the world and will for decades.
    With respect to Afghanistan, I just want to step back for a 
moment and articulate that I believe the collective development 
investment in Afghanistan has created some basic conditions 
that allow our troops to come home and allow us to aspire for a 
stable and secure country that is not a terrorist threat to us 
in the future. We have seen annualized rates of growth of 9 to 
10 percent over the last several years. We have seen a more 
than tripling of electricity access due to large part because 
of our specific investments, including helping the Afghan 
utility company use mobile payments to increase their own 
generation of revenues by more than 300 percent. We have helped 
build 1,900 kilometers of road that has contributed directly to 
improve economic activity and business investment. And today, 
there are 8 million kids in school, including 3 million girls, 
when there were zero girls in school under the Taliban. The 
fastest and most significant reductions in child death and 
maternal death during childbirth anywhere in the world over the 
last decade have been in Afghanistan, have been verified by 
independent studies that were released last year, and create a 
basis for some degree of stability as we look ahead.
    That said, sustaining these gains in the context we are in 
and fighting corruption are absolutely our priorities. I was on 
the call earlier this week with General Dunford and we have a 
very close, tightly integrated, civilian-military plan. And we 
need to have that kind of tight integration. The military has 
matched any civilian development investment and far exceeded 
that investment. So doing it together is critical to being able 
to deliver those results and being able to fight corruption.
    We last year brought together the international community 
to pledge sustained support for Afghanistan, but also to 
implement what we created as the Tokyo Mutual Accountability 
Framework. And if Afghanistan does not meet clear criteria on 
free and fair transparent elections on fighting corruption and 
recovering assets from the Kabul Bank crisis, on efforts to 
provide rights for women and girls, including the 25 percent 
quota for women in the Parliament, then we will pull back our 
aid and assistance and we will do that in concert with more 
than a dozen other international partners. And it is that kind 
of serious conditional accountability framework that we believe 
is the best way to make sure that we sustain the gains, allow 
our troops to come home, and recognize that 2 percent of the 
total Afghanistan investment that is represented by development 
will ultimately play a much larger percentage impact on whether 
there is a stable future for that country and a terrorist 
threat to us.
    Ms. Frankel. Thank you and I yield, Mr. Chair.
    Chairman Royce. We go to Mr. Ted Poe of Texas.
    Mr. Poe. Thank you, Mr. Chairman. Thank you, both, for 
being here.
    Dr. Shah, after sequestration took place, the 
administration notified the military that they were going to 
cut the military tuition assistance program. Congress rectified 
that in the Continuing Resolution. The military assistance 
tuition program, as you know, helps military who are currently 
on active duty to finish their education. It helps them. It 
helps the military, and of course, it helps the state of 
readiness. But at the same time, after sequestration took 
place, USAID notified Congress that $41 million would be sent 
to Pakistan to help pay for scholarships for Pakistani 
students. So it just seems to me, we don't have money to help 
our own military go to school because of sequestration, after 
sequestration takes place. We do have the money to help 
Pakistani kids go to school. I can tell you that has not sat 
well for a lot of folks.
    Can you walk me through this decision and why it was made 
and if we are still going to help those students in Pakistan?
    Mr. Shah. Thank you. Thank you, Representative, and I 
appreciate your comments and leadership on these issues and on 
transparency and results reporting in our portfolio work as 
well.
    I will just say that sequestration has affected USAID and 
foreign assistance as severely as any other part of the budget. 
And we are recognizing and feeling that every day. There has 
been more than $70 million reduction to our food aid and 
assistance, more than $400 million reduction to our economic 
and development assistance, and nearly $470 million reduction 
to our operating expenses. And we, like many other parts of the 
government, are putting in place strict measures to achieve 
those forced and required savings in the context where 75 
percent of our staff are in international context.
    Mr. Poe. Excuse me, Dr. Shah, I understand sequestration 
has affected USAID, but zero in specifically on the money we 
are sending to Pakistan for their students to finish their 
education. If you could just zero in on why that decision was 
made?
    Mr. Shah. I would have to go back and get you a specific 
answer, but my understanding would be that the Fiscal Year 2013 
budget has been reduced significantly in Pakistan, in fact, far 
more than the sequester amount, as well as in many other parts 
of the world. I would presume that that was well before maybe 
Fiscal Year 2011 or 2012, but let me come back to you on that, 
sir.
    Mr. Poe. I would appreciate that. As you know, Dr. Shah, I 
filed a bill called the Foreign Aid Transparency and 
Accountability Act. What it does is have us, the government, 
USAID, evaluate foreign aid to see if it is actually working. I 
was surprised to learn until I filed that legislation that 
generally over the years of foreign assistance we have never 
evaluated programs that work and help and programs that don't 
work and are still not working. But we are still giving them 
money, in some cases because none of this has been evaluated.
    The legislation did pass the House last year. The Senate 
blocked it. It didn't come up for a vote before the end of the 
year.
    Could you weigh in on transparency, maybe the bill, maybe 
not, but the whole concept of Americans sending money to other 
nations, Americans want to see if the money that we are sending 
to NGOs and governments, etcetera, is working or not working. 
Would you just weigh in on that whole concept of transparency 
and accountability?
    Mr. Shah. Absolutely, sir. It is essential and I want to 
congratulate you on your leadership on that and also express 
our very strong support for the bill and in particular the 
version that passed in the House.
    The administration has made the first ever commitment to 
the International Aid Transparency Initiative and Daniel and I 
are leading the charge to ensure that all of our assistance is 
very transparent in that context. Both of us publish all of our 
financial data on the Foreign Assistance Dashboard, which is an 
online Web site. The MCC this year published a series of very 
important impact evaluations. We at USAID put more than 180 
high-quality evaluations on a site where you can download it on 
an app and look at the projects. In both cases, the data shows 
real, significant, important results in many cases and in some 
cases show the programs did not work. In our case, more than 50 
percent of the programs were adjusted based on the initial 
evaluation data and I know the MCC has the same kind of 
learning approach that allows us to be better and more 
effective in how we do our work. And so we are all very 
supportive of this move. This administration has tried to lead 
in this space and I think we have used modern technology to 
help to be more transparent than any prior administration ever 
has on development and humanitarian investments.
    Mr. Poe. Thank you, Dr. Shah. Mr. Yohannes, I was going to 
have you weigh in on that, too, but my time is up. So thank 
you. I yield back, Mr. Chairman. Thank you.
    Chairman Royce. Thank you. We are now going to Mr. 
Schneider of Illinois.
    Mr. Schneider. Thank you, Mr. Chairman. Thank you, Dr. Shah 
and Mr. Yohannes, for joining us and sharing with us your 
experience, insights, and priorities.
    Let me add the emphasis of the importance of the work you 
do, the fact that you are focused on mission, the selectivity 
in deciding where to apply our resources, and the 
accountability. It is very much appreciated.
    One of my areas of concern we see in the Middle East, the 
region is having a lot of challenges, in particular between the 
Israelis and the Palestinians with the announced resignation of 
Prime Minister Fayyad, which in many ways is related to the 
support and aid we give.
    Moving forward, as Mr. Fayyad moves on or wherever he goes, 
I would be interested in your sense of the impact that is going 
to have in our aid in the region.
    Mr. Shah. Well, thank you for that question. Secretary 
Kerry spoke to this specifically and indicated that we are 
moving forward with a process that he believes can deliver a 
positive outcome over time and our aid and assistance in this 
region is very tied to that process. Currently, the priorities 
are building the kind of public/private investment partnerships 
that can create economic activity and some hopefulness in an 
alternative path forward for many in the region.
    We continue to pursue both humanitarian assistance in the 
West Bank, as well as support for the Palestinian Authority. 
The way we structure that program has very careful partner 
vetting, so we know who we are giving resources to and who we 
are not. It has a very specific degree of financial flows that 
Mr. Fayyad help put in place with us where the resources 
essentially go to Israeli Bank and first pay off debts that the 
Palestinian Authority has with those Israeli banks. So we have 
a high degree of confidence, but we will be vigilant about 
making sure that the protections we built with Fayyad continue 
on and, of course, that will continue to be a condition on our 
continued assistance there.
    Mr. Schneider. What is the plan moving forward with Fayyad 
moving on? The institutions he has started to build, the 
frameworks that we are going to provide for potentially a 
future state, that those continue to get the development 
support they need in the ways you outlined holding people 
accountable?
    Mr. Shah. Absolutely, and in fact, while we do have a lot 
and have had a lot of confidence in Fayyad specifically, these 
have been institutional efforts. Every year we go through a 
very rigorous process to ensure that these institutional checks 
are in place, that we are building these institutions in a 
rigorous way, and that we can track and trace our resources. So 
it is important that his replacement abides by those principles 
and stands for those principles, but if they can't, then we 
won't be able to go forward with what we do. But we have every 
reason to believe that this focus on building strong, 
transparent credible institutions, paying off debts that are 
accrued, and doing it in a transparent way will continue to be 
the sort of hallmark of this relationship.
    Mr. Schneider. Great. Thank you. Shifting gears, Mr. 
Yohannes, I am going to my colleague's former question because 
what you are doing with MCC, the emphasis on accountability, 
help us understand a little more the impact that is having and 
looking forward how we will make decisions to maintain 
effectiveness in the high return on the investment you guys are 
making?
    Mr. Yohannes. Our approach to development is like a 
business. We use evidence-based, decision-making processes for 
how we select countries, how we do constraint analysis, how we 
make investment decisions; we primarily invest in those 
countries that really accept American values. And also the 
investment I expect to have the best return for American 
taxpayers.
    And once investments are made, we have the most rigorous 
evaluation and monitoring to make sure that the investments are 
producing the desired results. In addition to what has been 
done traditionally by most aid agencies, we go one step further 
and do a very thorough impact evaluation by independent 
parties. That tells us if, in fact, the investments that have 
been made have increased income. And we have seen a lot of 
successes. We have also seen what needs to be changed as a 
result of what we have seen from the independent impact 
evaluations.
    I think the most beautiful part of the whole process is we 
are learning and building evidence about what needs to be 
changed and what is working; what is not working informs in 
terms of how we should design and implement future programs as 
a result of these rigorous impact evaluations, we are learning, 
and we hold our partners accountable. All the programs are 
country owned. We only have two American hires on the ground. 
They are responsible. They want to replace aid investment with 
the private sector. We help them to become self sufficient.
    And let me tell you, I was in Tanzania last week and I saw 
many of the works that have been completed. Even by American 
standards, those are very complex projects. But you know what? 
They have been done on time and they want to prosper. And we 
are creating commercial and investment opportunities because 
these countries are also creating an investment climate that is 
very conducive for American companies to invest in those 
countries.
    So they are great partners and they are the future. And 
investments in those countries also will be able to help here 
at home for American companies to create more jobs, and they 
are our future. Thank you.
    Mr. Schneider. Great. Thank you very much. I yield.
    Chairman Royce. Go now to Mr. Tom Marino of Pennsylvania.
    Mr. Marino. Thank you, Chairman. Gentlemen, thank you for 
what you do. You are both extraordinary men. I appreciate that.
    Doctor, if I could for a moment, as a prosecutor handling 
cases, my theory was follow the money. And it always ended up 
in convictions. Would you explain to the taxpayers how 
specifically you follow the money to see how it is spent? 
Because there is a perception out there that we wire millions 
of dollars over to the government into their account and then 
we do not see it any more.
    Mr. Shah. You know, I very much appreciate both your 
prosecutorial background in that question because I think it is 
very, very important. The United States, when I started, the 
amount of money we provided to foreign governments was 9 
percent of our total expenditure. That compares to all of our 
peer organizations around the world where they are somewhere 
between 60 and 80 percent in terms of how they do that.
    We have since moved up to 14.8 percent, still orders of 
magnitude behind other partners, but in a more direct and 
specific way.
    When we do that, we do very careful assessments of 
countries that are receiving resources. Often the assessments 
will result in us not being able to move forward with 
partnering directly with the country. But even more importantly 
most of the resources we provide are provided on what we call a 
``fixed amount reimbursement agreement,'' which means countries 
have to implement a program, invoice the costs they incur, and 
send the invoices in. We do a third-party monitoring of ``has 
the activity been conducted effectively?'' And then pay the 
bill for it per an initial agreement we may have made.
    In addition to that, in some difficult to work in settings 
like Afghanistan or elsewhere, if we do that, we will also use 
geospatial monitoring and data and third party monitoring to 
further verify that the resources are being shepherded in an 
effective way.
    I would also point out because I think there is a 
misperception that we provide a lot of direct assistance to the 
Governments of Afghanistan and Pakistan. In Afghanistan, almost 
the great majority of our investment that is labeled that way 
goes to a World Bank trust fund called the Afghan 
Reconstruction Trust Fund that has been studied by any number 
of partners including Harvard and MIT and found to be very, 
very effective at both tracing and tracking resources and 
ensuring that it delivers real results.
    Mr. Marino. Mr. Yohannes, I know you touched on that a 
little bit. Do you care to elaborate on that, please, for me?
    Mr. Yohannes. A couple of things. Number one, we don't 
transfer a single dime to the government directly. And all 
payments are made directly to vendors. We have international 
procurement agents. We have international fiscal agents, and we 
pay the vendors after all the projects have been completed.
    We are very careful with American taxpayers' money. We 
don't want to spend even a dime on corruption or on corrupt 
practices. So we do have a workshop that we teach to a lot of 
our affiliates on how to detect fraud and corruption, and we 
have an open line, an anonymous line, that comes directly to 
the IG if, in fact, they smell some kind of corruption. But we 
have control after control to make sure that American 
taxpayers' funds are not spent on corruption or corrupt 
practices.
    Mr. Marino. And Mr. Yohannes, I believe I read or through a 
conversation learned that you have a process whereby you inform 
the respective countries or entities that there is a time 
period by which the proceeds or the aid may stop because there 
is not improvement and because there is not an initiative on 
the part of the government. Would you explain that a little 
bit, please?
    And Doctor, if I have time, I am going to ask you to touch 
on that, please.
    Mr. Yohannes. We hold our partners accountable. A lot of 
the commitments are made for 5 years. And if they don't get it 
done within 5 years, then definitely they lose the funding. But 
during that 5 years, we expect partners to continue to commit 
to good economic governance, continue to be committed to 
democratic governance. And in some cases, for example, in 
Malawi, about 1\1/2\ years ago, they did not abide by the same 
commitment that helped them to qualify for a compact and the 
project was suspended.
    Mr. Marino. Good.
    Mr. Yohannes. And after the new President came in and she 
complied with many of our requests, including the request from 
her constituencies, the Board lifted the suspension.
    Mr. Marino. Thank you. I am going to move on to the Doctor. 
Does USAID have such a program?
    Mr. Shah. Absolutely. We have actually increased 
suspensions and debarments of partners of all kinds by more 
than fivefold relative to the prior administration. We have 
been very, very focused on accountability in that context and 
in fact, just this past weekend, we pulled together all of the 
international partners for Afghanistan to use the Afghan 
accountability framework to make joint judgments about should 
we be continuing to invest or pulling back some resources if 
the Afghans do or don't do a certain number of things. And we 
think that is a hallmark of good aid effectiveness.
    Mr. Marino. Thank you, gentlemen. I yield back.
    Chairman Royce. We will go to Mr. Ted Deutch of Florida.
    Mr. Deutch. Thank you, Mr. Chairman. Dr. Shah and Mr. 
Yohannes, thanks for being with us today and answering all 
these questions.
    Dr. Shah, I want to thank USAID and State as well for the 
vital and often underappreciated role of providing humanitarian 
relief to the Syrian people. I agree that the administration 
should remain focused on helping those in need and protecting 
our aid workers. Obviously, and you have heard here today, the 
concern about extremist organizations is growing and there is 
some frustration that despite our efforts we still hear that 
the Syrian people don't always feel that the U.S. with them.
    I would point out the article that sparked much of this 
debate included some other important details that haven't been 
getting that much attention: The feeding of 210,000 people a 
day by flour purchased by the United States, which has helped 
resolve the acute shortage of bread. Extra food rations have 
been distributed to more than 400,000 people. One hundred 
sixty-eight thousand people sleep under U.S.-provided blankets. 
One hundred forty-four field hospitals funded by the United 
States--this is something we should be proud of. It is the 
right thing to do. Can you tell us how you are working to 
strengthen our relationship and enhance our reputation with the 
Syrian people?
    Mr. Shah. Thank you. Thank you very much for asking that 
question and referencing that data and information that I think 
is critical.
    We are addressing those needs in three primary ways. First, 
we do try to brand and make visible our humanitarian assistance 
wherever possible. In fact, in this context, and one thing the 
article did not capture is, we have actually worked with the 
Syrian Opposition Council to create television content and 
radio content that we use and communicate throughout 
opposition-controlled areas, highlighting the efforts. We are 
not at all concerned about highlighting the extent to which 
America is providing this assistance. In fact, we are seeking 
to do that.
    What we are trying to do is avoid consequences and attacks 
on our humanitarian partners. Many of these NGOs, including 
people like Syrian-American trauma surgeons, are taking 
tremendous personal risks and we know they are being targeted. 
Bakeries in opposition-controlled parts of Aleppo are targeted. 
There have been 143 deaths among medical personnel in and 
around hospitals who are trying to provide surgical support to 
people that have been harmed because of the brutality of the 
Assad regime. There have been other deaths of U.N. workers and 
others. So with that safety consideration in mind, we are doing 
absolutely everything we can.
    Furthermore, Secretary Kerry announced this past weekend an 
acceleration of our direct support to the Syrian Opposition 
Council of $250 million. That investment is designed to help 
the SOC with our co-branded partnership deliver basic services 
in opposition-controlled areas: Provide everything from garbage 
and trash removal to helping to restart electricity grids and 
provide generators and fuel. And those are the types of things 
that we also believe ought to be co-branded so America is 
recognized as standing with people in opposition-controlled 
areas in Syria.
    Mr. Deutch. Absolutely, right. I appreciate your 
highlighting that. In the short time I have, it gets 
frustrating sometimes, frankly, to hear some of the criticism 
of foreign aid, this false choice that we are given, that we 
can invest in schools abroad or we can invest in schools here. 
We can invest in infrastructure abroad; we can invest in 
infrastructure here. It is a false choice. You rightly pointed 
out that our entire foreign aid budget is less than 1 percent 
of the overall budget. Both of you, Mr. Yohannes, you are a 
good example, too. You work with the poorest countries in the 
world, right? Dr. Shah, you are involved--I went to that app 
that you referenced and the thousands of projects all around 
the world. Tell me in the short time I have left, put the 
papers aside, why do you do this? Why does it matter so much 
for us to be engaged the way we are every place in the world?
    Mr. Shah. I will just say very briefly, this is in our core 
national security interest and we have seen this over and over 
again. It is in our national security interest in Pakistan 
which is a nuclear power about to go through what we believe 
will be the first civilian election and hopefully peaceful 
transition of power. They have experienced post-independence. 
It is in our national security interests in Afghanistan where 
it brings our troops home. And as Daniel has spoken about, it 
is in our national interest in Africa----
    Mr. Deutch. Dr. Shah, I am sorry, I only have a couple of 
seconds left.
    Mr. Yohannes, speak to that, please.
    Mr. Yohannes. The same thing. It is in our national 
interest. If you look in terms of many of the countries that 
were assisted by us, whether South Korea, Thailand, and Taiwan, 
they have now become our major trading partners. We are doing 
the same thing. Many of the countries that we are helping today 
are going to be our major trading partners in the next 15, 20, 
30 years. It is about creating jobs here. It is also about 
increasing the dividends, at that same time also helping those 
countries and really creating the best trading partners for us 
in the future. So it is in our national interest. It is about 
our security. It is about our prosperity.
    Mr. Deutch. Thank you, both. Thank you, Mr. Chairman.
    Chairman Royce. Let us go to Mr. Yoho of Florida.
    Mr. Yoho. Thank you, Mr. Chairman, and I appreciate you 
gentlemen being here. Thanks for your input. My question, I 
guess, is coming from a representative of the people of the 3rd 
Congressional District of North Central Florida and I 
appreciate Mr. Deutch's comments, that it is only 1 percent.
    When I go back to the district, you know, I come from a 
district that has 85 percent of the people say they want to end 
all foreign aid period. I have got to sell this to them and I 
can tell them it is only 1 percent. What difference does it 
matter? When I have the mother struggling to send her child to 
school at a university, or they have to pay out of state 
tuition and she says they can't do it and we have got $41 
million going to Pakistan, it is a hard sell. To ask people in 
this time and this economy in our country that we are going to 
give this aid to them, but yet, you are getting laid off 
because of sequestration in our country.
    I think of the words of Ronald Reagan, ``Unless a nation 
puts its own financial and economy house in order, no amount of 
aid will produce progress.'' We have been doing this--I don't 
want to say a game--but our policies have been going on for 
over 30, 35, 40 years, longer than that, but I have been paying 
attention to that. And I see some improvement, but I see a lot 
of stuff going in the wrong direction. When you see countries 
and I kind of resonate the words of Mr. Chabot that we send 
aid, but yet we don't want to tell it where it is coming from. 
I stand with him in putting a big red, white, and blue flag on 
any aid that goes over there, whether it is a bushel of wheat 
or a bushel of corn. That says this product was produced by, 
paid for by, and sent by the American people. Because to go 
down the path that we are going down it is a hard sell when I 
go back and face the people at home.
    I know you guys are doing a job that you talk about and you 
are putting forth the effort to expand economic development. 
You were talking about the economic development in El Salvador, 
it is growing 9 percent, or in Nicaragua, yet our economic 
development in this country is not going really well. I am 
reverberating the frustration that I hear at home.
    And you talk about the transparency and the accountability 
in these programs and you were saying, Mr. Yohannes, that you 
run your organization like a business. And Dr. Shah, you talk 
about how you are at the top of your organization. Who holds 
the person at the top of those accountable when we come up with 
the fraud, the waste, or the abuse? Who answers to that? That 
really wasn't a question that you can answer. It is more of a 
rhetorical. I guess my question is, what direction do you see 
the American Government going as far as foreign aid? And what 
should our role really be? Are we looking at economic 
development or are we looking at just giving foreign aid that 
becomes more of a foreign welfare in which case it does no 
good?
    Mr. Shah. I believe and the President has spoken about this 
very consistently and this budget reflects that these are tough 
times. We have presented a budget that is 6 percent lower than 
it has been for that purpose.
    We also believe that foreign assistance should be about 
creating the conditions where aid is no longer needed. This 
pathway from dependency to self sufficiency and dignity should 
be at the core of what we do. The single most important 
reflection of that principle in this budget that has been sent 
to Congress by the President is the food aid reform proposal. 
It has bold and important reforms embedded in it to allow us to 
reach 4 million additional people while also achieving $500 
million of mandatory budget savings. It allows us to actually 
expand the effectiveness of our effort, saving more lives and 
difficult situations, while moderating and having as Secretary 
Vilsack has noted, no significant perceptible impact on 
American agricultural produce and value.
    We know that we can do a better job and when we can, some 
of these programs are six decades old, we want to work with you 
to have a reform approach that allows us to be more effective 
and efficient because I think we all want to be able to go back 
to the American taxpayer and say, however, we conducted our 
mission, our priority was getting the most value for money we 
possibly could.
    Mr. Yoho. I am going to cut you off there and I appreciate 
that. I do hope you pare those programs down. And Mr. Yohannes, 
if you can jump in there for the next remaining few minutes, 
seconds?
    Mr. Yohannes. My colleague Raj and I have two different 
purposes and we both promote U.S. Government interests 
worldwide. We work with countries that are poor, but well 
governed, countries that have embraced American values, 
countries that have taken responsibility for their own growth.
    These are countries, we believe, that will be our future 
trading partners because they want to replace aid with the 
private sector. Countries that are really committed to reform, 
which is very difficult to do, but countries that are creating 
the best investment climate that will help American businesses 
in the long term because we need some trading partners. Like I 
said earlier, many of the countries that we supported in the 
past are now our major trading partners. With South Korea, we 
do over $100 billion in trade investment-related activities.
    Mr. Yoho. I appreciate your time. My time has expired and I 
will yield what time I don't have back. Thank you.
    Chairman Royce. Okay, we will go to Ms. Karen Bass of 
California.
    Ms. Bass. And thank you, Mr. Chair, for holding this 
hearing today. I appreciate it very much. And I want to thank 
both of you for your excellent work from your organizations. I 
wanted to take issue with my good colleague from California who 
says that we shouldn't use tax dollars for development, but 
only for emergency aid. And both of you, I think, have been 
doing a great job today explaining the work of your 
organizations, but I am going to ask you in a minute to give 
examples of specific projects instead of the 10,000-foot level.
    I disagree with the part that says that we should only 
focus on emergency aid because I believe that the work of both 
of your organizations really leads to us--well, really leads to 
preventing the type of emergencies that take place. And I think 
that Mr. Yohannes was just referencing that and I think the 
example of Korea is a wonderful example. And I see that future 
in Africa.
    Dr. Shah, I would love for you to talk about Feed the 
Future and Africa's long-term goal, our long-term goal.
    And Mr. Yohannes, I first want to thank you for sending 
Cassandra Butts to Los Angeles. She did a wonderful job 
speaking with small businesses in my district about how this is 
about business relationship between the United States and 
Africa. So if you could both give an example of how the work of 
your organization leads to us in the long term not needing to 
have the level of foreign aid that we do now, how development 
leads to that with a specific Feed the Future example.
    And then Mr. Yohannes, if you could talk about Benin and 
the port and regional integration in Africa.
    Mr. Shah. Thank you. With respect to Feed the Future, this 
was a program that President Obama asked us to create and 
implement in order to move people from dependency to self 
sufficiency using agriculture to address extreme poverty. We 
have implemented the program in 19 countries. We have actually 
focused our efforts to cut and eliminate agriculture programs 
in 23 other countries. In each country we work in, they adhere 
to a set of commitments and reforms, some of which are to 
increase domestic expenditure on agriculture by 10 percent, 
some of which are to avoid export bands in the sector so that 
there can be more trade in investment.
    As part of this effort, last year at Camp David, President 
Obama brought together the American industry along with this 
and said what we can do to accelerate the partnership with 
private investment and get companies to commit $3.5 billion of 
agricultural investment to these countries. And today, we are 
seeing the results. In Ethiopia, in a partnership with USAID 
and DuPont and the people of Ethiopia, we are doubling maize 
yields and significantly improving access to improved crop 
varieties.
    Ms. Bass. Thank you. I saw an example in Kenya of U.S. 
companies that were essentially lending their scientific 
expertise as well as products that was helping Kenya move 
forward.
    Mr. Yohannes?
    Mr. Yohannes. Thank you, Madam Congressman. About 70 
percent of our investments is concentrated in the continent of 
Africa. We are building the infrastructure for those countries. 
We are building the roads, the bridges. Like in Benin, we were 
able to spend about $180 million to expand the port. That port 
has been able to get additional investment from the private 
sector for $20 billion. That port is a lifeline for Benin and 
for many of the countries in that region. And as a result of 
our investment in Benin, we have seen commerce increase 
significantly in the region.
    I just came back from Tanzania where we inaugurated a major 
road that links Tanzania with Kenya. The same road has also 
been used by other countries in the region that are simulating 
trade and investment activities. So unless you build the 
infrastructures of those countries, the water, the energy, the 
roads and so forth, it becomes extremely difficult for some of 
those countries to compete globally. And they are competing 
today. And again, we are working with my good friend Raj to 
help some of those countries to become food secure.
    To give an example, in Senegal, where we are building the 
infrastructure for irrigation, USAID is providing the training. 
In Ghana, where we are building many, many schools, the teacher 
training is also being provided by USAID. So we are working in 
partnership to make sure that many of those countries become 
self sufficient, wending my way from aid to major policy 
reforms by creating the best environments for businesses to be 
invested in those countries.
    So we are complementing AGOA. I know, Madam Congressman, 
you have been very much involved in AGOA, and we are a good 
complement for AGOA. Without infrastructure, it is very 
difficult for many African countries to take advantage of the 
opportunities that exist.
    Ms. Bass. I appreciate that and we actually just had a 
breakfast earlier this morning talking about AGOA. And one of 
the things we consistently hear from African countries is that 
they want to move beyond aid. It is about trade. To the extent 
that the countries are developed around the world, that is more 
business for our companies in the United States. Thank you very 
much.
    Chairman Royce. Thank you, Ms. Bass. We now go to Mr. Cook 
of California.
    Mr. Cook. Thank you, Mr. Chairman. A previous question was 
asked about the corruption of Afghanistan. I went on a visit 
over there and I was impressed with actually the military, 
impressed with the Afghan Army and some of the aid programs 
that had been done. Corruption is a big problem and I know 
there is kind of a wink-wink, nod-nod when you start talking 
about the poppy and the drug situation, which is almost 
analogous to Colombia. I am kind of a cynic on this and I am 
very surprised the way things have turned out in Colombia.
    Because of the political situation there and this variable, 
can you address that, the poppy? Because they are talking about 
this year is going to be a bumper crop over there again and 
whether money that might be intended for other programs is 
going to go to support that underground economy, which is 
obviously very, very successful.
    Mr. Shah. Thank you. Thank you for your visit to 
Afghanistan and for taking the time to engage with our USAID 
team and look at those projects. This is part of an important 
shared civilian-military effort to help establish a degree of 
stability, both economically, socially, and from a military 
perspective to allow our troops to come home and to reduce the 
long-term national security threat.
    Poppy is a huge challenge. We have seen big ups and downs. 
The core drivers and we have learned this, from Peru, from 
Colombia, from other areas where we have had successful 
alternative agriculture or alternative development programs, 
the core drivers of getting people out of that illicit economy 
into the licit one is making the opportunities in the licit 
economy more productive and more economically rewarding.
    So one of our major areas of partnership and investment has 
been in agriculture in Afghanistan. We help with improving 
wheat yields, for example, bringing more high-value 
agriculture, working for export opportunities to the Gulf and 
to other countries in the area. And really one of the few 
things that has been really effective at getting people out of 
poppy and these other areas is creating those market and 
economic opportunities that are safe and legal and financially, 
fiscally rewarding to small-holder producers and to small 
businesses there.
    And we have seen some real progress in that setting, but it 
continues to be a major challenge.
    Mr. Cook. And thank you for that answer, but can you also 
address the fact that, I was under the assumption, which is 
always dangerous, that the poppy was going to the Western 
countries, but now the big market or part of it is Russia and 
that avenue is somewhat open. If you could just address that 
very briefly, too.
    Mr. Shah. Sure. That is accurate and part of our approach 
is to help manage and bring much more transparency to--and 
fight corruption at trading posts and border crossings, both 
for combating poppy trade and revenue flow from that. But also 
just to help the Afghan Government collect real Customs revenue 
in a transparent way so they can have domestic revenue replace 
aid over time as they really take on the sustainability efforts 
on their own. So all those things go together and cause a real 
focus on regional trade and that brings you quickly to trade 
and Customs posts.
    Mr. Cook. Thank you very much for answering my questions. I 
yield back.
    Chairman Royce. We will go now to Gerry Connolly of 
Virginia.
    Mr. Connolly. Thank you. Thank you, Mr. Chairman, and 
welcome to both of our panelists. It is a great honor to be the 
very last questioner out of 18.
    Mr. Shah, the Foreign Assistance Act was written in 1961. 
It is 52 years later. I heard you talk about the need to sort 
of revisit the way we do business. The goals that maybe were 
relevant half a century ago, but maybe less so today. I assume 
by extension from those remarks you would be amenable to a 
rewrite of that Act?
    Mr. Shah. Absolutely. Secretary Kerry in front of the panel 
also implied an enthusiasm to see new authorizing legislation 
go forward. We would be eager to work with you on that.
    Mr. Connolly. You are familiar with the effort our former 
ranking member and former chairman of this committee, Mr. 
Berman, and I undertook and in fact introduced legislation in 
the previous Congress.
    Mr. Shah. Yes.
    Mr. Connolly. And do I understand from your remarks that 
you are committing the agency and yourself to working with us 
on that reform legislation as we get ready to reintroduce it in 
this Congress.
    Mr. Shah. Yes.
    Mr. Connolly. We really want to work with you. We see it as 
something we hope will streamline efforts and more logically 
align the goals and directives. I have the privilege of, if you 
can call it that, having been one of the only surviving human 
beings who wrote the last foreign aid authorization bill that 
became law, 1986. I was a staffer in the Senate. If I were the 
aid administrator, I might like the existing law because there 
were over 250 objectives and priorities and goals and 
everything else because we just added to it over the 50 years. 
But I am not sure it is a good way to really go forward.
    And so I very much welcome your statement because we want 
to make sure aid is part of the process; and it is my 
understanding that, in the past, aid has maybe been sidelined 
or stayed on the sideline. I don't want to see that. We are 
trying to be partners with you on the legislative end to enable 
the agency to go forward. So thank you.
    Mr. Shah. Thank you.
    Mr. Connolly. I look forward to working with you and your 
team as we move forward. We are getting ready to reintroduce 
the bill and I have already talked to the chairman about 
hopefully at least having some hearings perhaps about aspects 
of it and see if we can't try to do this on a bipartisan basis.
    Let me ask, what is your understanding, Dr. Shah, and Mr. 
Yohannes, yours as well. You and I had a private conversation 
about this, but I have to admit I am not quite sure I fully 
understand the different missions between your two 
organizations. So very briefly if you can share that with us 
and then tell us how you coordinate. How do you make sure that 
if you are pulling out of a country, they are not getting in 
it, if there is a substantive reason for withdrawal and how do 
you make sure that we don't have resources competing against 
each other or contradicting each other in a structural way?
    Mr. Shah. Let me echo Secretary Kerry on this one. As 
Secretary Kerry has noted publicly and privately, we have the 
same mission. Our mission is to elevate the role of development 
and humanitarian assistance in the context of our foreign 
policy and in advancing our national security agenda. To do 
that, we have to have a broad range of tools and capabilities 
that can be applied in setting those as diverse as Cape Verde 
and Afghanistan. And so, the MCC, the broad range of 
capabilities that USAID has through different programs 
including Food for Peace, which has been an important part of 
today's conversation; OPIC, the Overseas Private Investment 
Corporation; the Export-Import Bank, which are playing a 
critical role on energy efforts in sub-Saharan Africa, are all 
important components of that and we all seek to work together 
toward that ultimate and singular and the exact same mission.
    Daniel can speak to some really good examples where we have 
worked hard to make sure that we have an integrated approach in 
the field as well.
    Mr. Yohannes. We both work to promote the government's 
interest. We have a very specific, narrow mission, which is, we 
work with countries that are poor, but those that are well 
governed, countries that have embraced our American values, 
that are committed to good governance, economic governance, 
democratic governance, and countries that are committed to 
investing in their constituencies. These are countries we want 
to be the next emerging markets. So we have a scorecard system 
they have to pass--many of those scorecard indicators in three 
buckets--in order to be considered for our program.
    In terms of coordination, Raj and I work very closely. We 
talk almost on a weekly basis. A lot of our people speak on a 
weekly basis, or daily, and many of our projects are well 
coordinated. Like I talked about earlier in Ghana, we are 
building a school, they are providing teacher training. And in 
some cases like in Jordan, the water project that was begun 
earlier by USAID, is now a scale-up from what they have begun. 
Moldova, the same thing. We are doing the infrastructure for 
water and they are providing the department training. So, we 
work very closely making sure that we don't duplicate each 
other but rather complement each other.
    Mr. Connolly. Thank you, and Mr. Chairman, if you will 
allow me just 30 seconds since I am the last----
    Chairman Royce. Mr. Connolly, I will allow you several 
minutes.
    Mr. Connolly. You are wonderful, Mr. Chairman. Thank you. 
Two points I would like to share with you, Mr. Shah. One is the 
enthusiasm expressed by the chairman and the ranking member for 
your Food for Peace reform, notwithstanding, a word of caution 
as somebody who has been writing and supporting foreign 
assistance for over 30 years. The coalition for foreign aid is 
very fragile. And there are political aspects to what you 
propose that with the best of intentions could actually damage 
that fragile coalition. And I strongly urge you and the 
administration to carefully vet that as you move forward 
because you may win the battle and lose the war. You heard on 
this committee people express well, we just can't afford 
foreign aid. I agree with Ted Deutch, it is a false choice, but 
there are lots of people here and back home, a lot of Americans 
are under the impression that we can balance the budget just by 
cutting foreign aid. You hear it all the time at town hall 
meetings.
    It is a fragile coalition getting votes up here to support 
what you are both doing and we must be cognizant of the impact 
of reforms that may do good, but that also fracture that 
coalition.
    And the second thing I would commend to you both is we have 
to have a better narrative on success. Surely we have more to 
talk about than Taiwan and South Korea after a half century, 60 
years of actually making these investments. What works? What 
doesn't? Give us some success stories that we can talk about. 
That is why we have got to do it.
    It isn't always self evident that it is in our national 
interest. We can repeat that, but there is certainly a strain 
of isolationism that has always been with us in the United 
States that does not accept that rationale. The more we can 
point to efficacy, ``here is what we were able to do in 
reducing poverty and improving food production, extending 
lifespan and ending this disease or that disease and actually 
creating a market economy that is now a full-fledged member of 
the international community.'' Those are very important success 
stories, especially if we can tie them to the investments we 
make in your respective agencies.
    Thank you, Mr. Chairman. I really appreciate your 
graciousness.
    Chairman Royce. Thank you, Mr. Connolly. I will remind you 
it is only 45 percent of the Food for Peace account that they 
are talking about, so it is a compromise that these gentlemen 
are suggesting and that is in the budget, a compromise which 
will make that 45 percent far more costly to the overall 
budget. So again, your other point was those who are concerned 
about the cost, this is a reduction in cost, but those who are 
concerned about the humanitarian impulse here, it gets the aid 
there faster, more efficiently and does not depress the local 
markets that impacts the local farmers.
    I just wanted to take a moment and thank both of our 
witnesses and indicate to you both we look forward to working 
together, not only on food aid reform, but also on greater 
transparency, greater effectiveness and we thank you again for 
your willingness to come up and testify and we stand adjourned.
    [Whereupon, at 11:58 a.m., the committee was adjourned.]
                                     

                                     

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