[Senate Hearing 113-137]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-137

                 INTERNATIONAL DEVELOPMENT PRIORITIES 
                     IN THE FISCAL YEAR 2014 BUDGET

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

                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 24, 2013

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

             ROBERT MENENDEZ, New Jersey, Chairman        
BARBARA BOXER, California            BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire        RON JOHNSON, Wisconsin
CHRISTOPHER A. COONS, Delaware       JEFF FLAKE, Arizona
RICHARD J. DURBIN, Illinois          JOHN McCAIN, Arizona
TOM UDALL, New Mexico                JOHN BARRASSO, Wyoming
CHRISTOPHER MURPHY, Connecticut      RAND PAUL, Kentucky
TIM KAINE, Virginia
               Daniel E. O'Brien, Staff Director        
        Lester E. Munson III, Republican Staff Director        

                              (ii)        













                            C O N T E N T S

                              ----------                              
                                                                   Page

Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement.     3
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening 
  statement......................................................     1
    Prepared statement...........................................     2
Shah, Hon. Rajiv, Administrator, U.S. Agency for International 
  Development, Washington, DC....................................     4
    Prepared statement...........................................     7
    Responses to questions submitted for the record by the 
      following Senators:
        Robert Menendez..........................................    41
        Bob Corker...............................................    57
        Barbara Boxer............................................    69
        Ron Johnson..............................................    72
        Christopher A. Coons.....................................    75
        Jeff Flake...............................................    77

                                 (iii)



 
  INTERNATIONAL DEVELOPMENT PRIORITIES IN THE FISCAL YEAR 2014 BUDGET

                              ----------                              


                       WEDNESDAY, APRIL 24, 2013

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Robert 
Menendez (chairman of the committee) presiding.
    Present: Senators Menendez, Cardin, Casey, Coons, Udall, 
Murphy, Kaine, Corker, and Rubio.

          OPENING STATEMENT OF HON. ROBERT MENENDEZ, 
                  U.S. SENATOR FROM NEW JERSEY

    The Chairman. Good morning. This hearing of the Senate 
Foreign Relations Committee will come to order.
    Today we welcome Administrator Shah of the USAID before the 
committee. We look forward to your perspective on making 
certain that U.S. development assistance is carefully 
calibrated with our overall U.S. foreign policy priorities.
    We all know the rapidly evolving landscape in the Middle 
East and Africa and the Asia-Pacific region demands that we 
continue to invest in programs and relationships that advance 
our strategic interests and basic values. Even in this age of 
fiscal austerity with the significant budgetary limitations we 
face, it is my view that the benefits of such investments far 
outweigh the costs, and it is the men and women at USAID who 
see the results of those investments firsthand every day.
    In 2011, you described ``having seen famine for the first 
time in the world's largest refugee camp 50 miles from the 
Somali border after the worst drought in 60 years,'' as you 
described, ``had thrown 13.3 million people into crisis and 
bought more than 750,000 people, mostly women and children, to 
the brink of starvation.''
    You mentioned meeting mothers who had carried their 
children for weeks across famine-stricken and terrorist-held 
lands, and a young Somali mother named Habida who walked 100 
kilometers to the nearest camp and had to decide which of her 
two children she would leave behind because she could not carry 
both, a heartbreaking image that leaves no one unmoved by the 
suffering. And we commend you and all the men and women at AID 
for working very hard every day around the world to end it.
    Today I hope to hear from you about how we can do even more 
with the limited funds we have to maximize the effectiveness of 
development aid and what more we can do to reform programs that 
enhance relationships that will advance U.S. interests and 
values around the world.
    Your creativity and energy has been essential to the reform 
process, but it is also important, however, that Congress 
remain a working partner with you to establish our 
international development priorities and ensure that all 
reforms focus on best practices and results as well, that they 
be well crafted, and will have the hoped-for effects.
    I am looking forward to an ongoing conversation with you 
about how to get the best results for USAID for our foreign 
assistance, for donors, for NGOs, and for the taxpayers.
    USAID Forward is an example of a reform that has achieved 
results. It aligns resources with priorities, builds capacity 
through sustainable development, and identifies new innovations 
to help meet the President's goal of ending poverty in the next 
two decades. I applaud the progress USAID Forward is making, 
but more needs to be done to institutionalize reforms in 
cooperation with the Congress to make certain they reflect our 
overall foreign policy, our international development 
priorities, and pay dividends around the world in every region.
    And so I look forward to your testimony. I will have the 
rest of my statement entered into the record.
    Having said all of those great, positive things, I do not 
want you to believe that there are not some issues that I have 
some concerns about, as I expressed to you. But certainly the 
work at AID has been exceptional, and we applaud your for it.
    [The prepared statement of Chairman Robert Menendez 
follows:]

             Prepared Statement of Senator Robert Menendez

               introduction--praise for the work of usaid
    Thank you, Administrator Shah, for coming before the committee. We 
look forward to your perspective on making certain that U.S. 
development assistance is carefully calibrated with our overall U.S. 
foreign policy priorities.
    We all know that the rapidly evolving landscape in the Middle East, 
Africa, and the Asia-Pacific demands that we continue to invest in 
programs and relationships that advance our strategic interests and 
basic values.
    Even in this age of fiscal austerity--with the significant 
budgetary limitations we face--it is my view, that the benefits of such 
investments far outweigh the costs . . . and it is the men and women at 
USAID who see the results of those investments firsthand, every day.
    In 2011, you described ``having seen famine for the first time at 
the world's largest refugee camp--50 miles from the Somali border--
after the worst drought in 60 years had . . .''--as you described--``. 
. . thrown 13.3 million people into crisis and brought more than 
750,000 people--mostly women and children--to the brink of 
starvation.''
    You mentioned meeting ``mothers who had carried their children for 
weeks across famine-stricken and terrorist-held lands . . .'' and a 
young Somali mother named Habiba who walked 100 kilometers to the 
nearest camp and had to decide which of her two children she would 
leave behind because she could not carry both.
    A heartbreaking image that leaves no one unmoved by the suffering--
and we commend you and all of the men and women at USAID for working 
hard every day--round the world--to end it.
    Today, I hope to hear from you how we can do even more--with the 
limited funds we have--to maximize the effectiveness of development aid 
and what more we can do to reform programs and enhance relationships 
that will advance U.S. interests and values around the world.
                             usaid reforms
    Your creativity and energy has been essential to the reform process 
. . . but it is also important that Congress remain a working partner 
with you to establish our international development priorities and 
assure that all reforms focus on best practices and results, are well-
crafted, and will have the hoped-for effects.
    I look forward to an ongoing conversation with you about how to get 
the best results for USAID, for our foreign assistance, for donors, for 
NGOs, and for the taxpayer.
    USAID Forward is an example of a reform that has gotten results--it 
aligns resources with priorities, builds capacity through sustainable 
development, and identifies new innovations to help meet the 
President's goal of ending poverty in the next two decades.
    I applaud the progress USAID Forward is making, but more needs to 
be done to institutionalize reforms--in cooperation with Congress--to 
make certain they reflect our overall foreign policy, our international 
development priorities, and pay dividends around the world--in every 
region.
                       conclusion--we can do more
    In my view, even within the confines of our budgetary limitations, 
we can do more in Syria--though we're already the world's largest donor 
nation--to increase the level of humanitarian support because--
clearly--we have to do more to address the world's most pressing 
humanitarian crisis--with 4 million displaced and 700,000 dead.
    We can do more in the Sahel to mitigate the suffering . . . more to 
alleviate horrific conditions in the long-suffering communities of 
Somali refugees, displaced Congolese . . . more to combat AIDS, 
tuberculosis, polio, and malaria . . . more to provide simple tools 
that can prevent millions of childhood deaths . . . critical to our 
global health strategy . . . more to help others take the reigns of 
leadership in their own countries . . . And--I believe--we can reach 2 
to 4 million more hungry people if we maximize efficiency in how we 
provide food aid.
    It seems to me that a common sense, achievable approach to Food Aid 
Reform is to work with U.S. farmers, labor, and experts in the field to 
improve not only how we deliver resources in times of crisis, but how 
we promote food security and resilience in mitigating emergencies.
    Again, let me commend the men and women at USAID for their service 
to the Nation and for meeting our international development priorities 
by doing so much for so many around the world.
    Thank you, Administrator Shah.

    The Chairman. Let me turn to the ranking member, Senator 
Corker, for his comments.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Corker. Thank you, Mr. Chairman, and thanks for 
having the hearing. Mr. Shah, thank you for being here and for 
your openness in dealing with our office and others.
    In this fiscal environment, obviously looking at how we 
deliver aid is very important, and I know you have done so.
    And I appreciate the time, again, that your staff has spent 
with ours.
    I do applaud you, as the chairman just did, on your 
movements in the food assistance areas. It looks like, if I 
read correctly, about 55 percent of our programs are being 
transferred over to this new approach. I would love to see you 
go to 100 when it is appropriate. I know you have political 
considerations back home relative to that, but I do applaud 
those efforts.
    And I will say that at the same for decades, we have been 
providing food assistance, and we still are in the mode of, you 
know, day-to-day assistance. And so I do hope either today or 
over time you will cause us to explain why after so many 
decades of doing what we are doing we are still in the 
situation in so many countries where, you know, we are still 
having to provide day-to-day assistance, and they do not have 
the capacity themselves to do what needs to be done there.
    But again, I think you have taken a very positive step.
    I thank you for that and looking forward to working with 
you toward that end.
    Another area we have talked with you and your staff about 
is just development, which takes place in areas which are not 
secure. I know we had a huge amount of problems in Iraq. We are 
going to have probably even greater problems once people get 
through looking at what we did in Afghanistan. And I know that 
it is very difficult for civilians to be out with development 
projects in areas that are not secure. We understand that.
    My sense is that we are going to be very soon at some point 
dealing with the same kind of issues in Syria, and I do hope 
that we will continue discussions about the best way to make 
sure that those kinds of development programs are monitored 
properly when it is so difficult for your outstanding staff to 
be able to get in and deal with that. So a big issue.
    I also welcome the fact that your agency talked about most 
Caribbean and Latin American countries graduating from aid by 
the year 2030. I do hope that that is not just a rhetorical 
statement, but there is a plan to make that happen. And again, 
I thank you for having that type of goal, but we would like to 
see the backup and the vision that is going to cause that to 
occur.
    And then I will close with this, which is the same thing we 
talked to Secretary Kerry about. Look, a lot of money is going 
out of USAID. I know compared to our overall budget, it is not 
as much as people in our country think. But we need a permanent 
inspector general, OK? I do expect you very soon to send up a 
highly qualified, capable inspector general. Acting inspectors 
general do not have the clout that permanent inspectors general 
do, and it is just not responsible. So I hope very soon that 
the status on this will change.
    Again, thank you for being here, and thank you for your 
service to our country.
    The Chairman. With that, Administrator, we welcome your 
remarks.

 STATEMENT OF HON. RAJIV SHAH, ADMINISTRATOR, U.S. AGENCY FOR 
           INTERNATIONAL DEVELOPMENT, WASHINGTON, DC

    Dr. Shah. Thank you, Chairman Menendez, and thank you, 
Ranking Member Corker. I am personally very appreciative for 
the opportunity to be here to discuss the President's fiscal 
year 2014 budget. And I am very grateful for the counsel, 
guidance, and oversight that you have offered and continue to 
offer on a personal basis, and from your team and your staff. 
So I appreciate this unique opportunity.
    I would ask that my formal remarks are entered for the 
record, and will just briefly summarize a few topline points.
    This is an important moment for development, and I was 
eager to hear in both of your statements that basic reflection 
as we draw down from a decade of war. We are rethinking how we 
project power and American values around the world in a manner 
that keeps us safe and improves our own domestic and economic 
opportunities.
    President Obama and Secretary Kerry, like Secretary Clinton 
before him, have talked about elevating development as part of 
our national security and foreign policy strategy, including 
with a real focus on America's economic competitiveness over 
time.
    I was grateful, Senator Menendez, for your mention of the 
reference and the visit to the Somalia refugee camp. That was 
an eye-opening experience and one that I will never forget. I 
was a few months ago back in Somalia, and this time instead of 
seeing the devastating human consequences of a famine with 
children literally dying in front of our eyes, we saw a much 
more hopeful picture. We saw American investments in a new 
government and a new flourishing civil society start to yield 
some results as street lights came on in Mogadishu for the 
first time in several decades and citizens celebrated 
peacefully for the first time that most could remember.
    We noted that we were helping more than 400 local 
communities improve their agriculture and helping people leave 
the displacement camps that were formed around Mogadishu during 
the famine, to go back to their communities, start growing 
their own food, and start rebuilding their own lives, because 
the purpose of our partnership should not be to perpetuate 
dependence, but to build self-sufficiency and human dignity.
    We are helping in more than 40 small-scale fishing ports to 
replace piracy with transparent and legal small-scale fishing 
activity. And those are the types of partnerships that will 
help establish stability, security, and peace in that critical 
region.
    Those examples are emblematic of what we believe is an 
approach that focuses on ensuring that development builds self-
sufficiency and dignity and replaces dependency. It is an 
approach that we believe is delivering real results. Our Feed 
the Future Program and partnership involved us making tough 
decisions. We cut agricultural programs in 23 countries in 
order to focus in 19 that were willing to make reforms and 
expand their own investment.
    We are now beginning to see the results. In those 19 
countries, poverty has been reduced by 5.6 percent on an annual 
basis. Seven million farm households directly benefit from 
American investments in their agriculture, science, and 
technology. More than $3\1/2\ billion have been committed to 
invest in a subset of these countries so that private and 
commercial interests can help transform and end hunger in those 
settings. And all of this has been coupled with real policy 
reforms that require our country partners to invest more 
resources to fight corruption and to establish policies that 
are friendly to business investment.
    We are seeing similar results in our efforts to end 
preventable child death. Again, we made tough decisions to cut 
22 country programs in global health in order to focus in those 
countries that have the greatest burden of disease. This effort 
is seeing a real reduction in the rate of child death as it is 
reduced from 7.6 million kids under the age of 5 to 6.9 million 
today. We believe we can end preventable child deaths within 
two decades, and are committed to that model.
    We are also seeing that effort take hold in our citizen 
security efforts in our own hemisphere. In El Salvador, we 
recently launched the largest public-private partnership in the 
region where we made a $20 million investment, but that 
unlocked more than $22 million of investment from local 
foundations and local businesses because it is those local 
institutions that believe that addressing citizen security is 
the key to unlocking greater business investment and growth in 
that critical part of the world.
    These new efforts have been possible because of your 
support; your support for USAID Forward and a new model of 
partnering with local partners, a new model of innovating with 
scientists and technologists who can help bring the costs down 
and help us aspire to achieve bigger outcomes, and your 
partnership in measuring and reporting on results.
    I am pleased to note that today the United States has 
joined the International Aid Transparency Initiative and our 
aid data is increasingly transparent and accessible to 
everyone. You can go to the App store and download an 
application that has much of our evaluation data, easily 
accessible and unadulterated, so we can all learn together from 
an evidence base that defines what works and what does not as 
we make these critical investments abroad.
    As part of this transition, this year's budget includes an 
important proposal to reform the way we provide food assistance 
around the world. The President's proposal is designed to help 
us reach 4 million additional hungry children with basic 
nutrition interventions, and to target those feeding programs 
to those kids when they need it most and when it can have the 
most impact on improving their ability to grow and thrive.
    The approach will expand the flexibility we need to meet 
needs in a changing world, a world where increasingly 
humanitarian catastrophes happen alongside security challenges, 
whether it is in opposition controlled parts of Syria or al-
Shabaab controlled parts of Somalia. And it is an approach that 
maintains and, in fact, renews a partnership, an important 
partnership, with American agriculture that will allow us to 
refocus on creating new high nutrition and modern agricultural 
products and foods that can be targeted to kids in a way that 
saves their lives. We thank you for your reflections on this 
proposal and your consideration.
    Finally, I would like to thank our staff. Around the world 
we now have 9,600 staff, many of which carry different types of 
acronyms or hiring authorities, but all of whom bring passion 
and a commitment to this incredible mission; a mission of 
representing our country around the world and working to end 
extreme poverty and to protect those who are most vulnerable.
    In this past year, cognizant of the risks that many of our 
staff do take, as Senator Corker highlighted, we lost one of 
our own, Ragaei Abdelfattah, in Afghanistan. And one of our 
toughest moments as an agency was getting through that very 
trying period, and we reflect on and thank Ragaei and his 
family for their service.
    At a time when cuts across our Government are significant 
and having real impacts, the fiscal year 2014 request reflects 
a 6-percent decrease compared to the fiscal year 2012 enacted 
budget. We are making very tough tradeoffs around the world in 
order to focus on delivering results and are cognizant of the 
economic and budget times that we live in.
    But we are also focused on doing things differently, on 
demanding more of others, and on partnering better to achieve 
better results. And it is our belief that with this new 
approach taking hold, we can still have big aspirations, and 
that is why the President highlighted our capacity to help end 
extreme poverty in two decades. It is why we believe by 
projecting American values effectively around the world we can 
support transitions in the Middle East, help bring our troops 
home from Afghanistan, help improve trade and economic ties in 
Latin America, and help expand on our engagements in Africa, 
including connecting American businesses to real growth 
opportunities there, while simultaneously working to do things 
like ending preventable child deaths.
    I thank you and look forward to your questions, comments, 
and thoughts as we go forward. Thank you.
    [The prepared statement of Dr. Shah follows:]

                  Prepared Statement of Dr. Rajiv Shah

    Thank you, Chairman Menendez, Ranking Member Corker, and members of 

the committee. I am pleased to join you to discuss the President's 
fiscal year 2014 budget request for USAID.
    In his State of the Union Address, President Obama called upon our 
Nation to join with the world in ending extreme poverty in the next two 
decades. Today, we have new tools that enable us to achieve a goal that 
was simply unimaginable in the past: the eradication of extreme poverty 
and its most devastating corollaries, including widespread hunger and 
preventable child and maternal deaths.
    The President's fiscal year 2014 budget request responds to this 
call and the most critical development challenges of our time. It 
supports important global partnerships, including the New Alliance for 
Food Security and Nutrition and the Child Survival Call to Action, by 
increasing and focusing investments in food security and maternal and 
child health. It builds resilience in areas besieged by recurrent 
crisis and natural disaster, with a focus on the Horn of Africa and 
Sahel regions. And it advances a comprehensive food aid reform package 
that will enable us to feed 2 to 4 million additional people each year.
    The President's request enables USAID to strategically advance our 
national security priorities by implementing critical economic growth, 
democracy, human rights, and governance programs in the Middle East and 
North Africa, as well as in support of the administration's Asia-
Pacific Rebalance. It also focuses activities in Afghanistan, Pakistan, 
and Iraq at an appropriate level to sustain the gains we have made in 
those countries over the last decade. And it strengthens economic 
prosperity, both at home and abroad.
    The President's request also makes important investments in Latin 
America by expanding economic opportunity and social equity and 
strengthening citizen security by promoting effective judicial systems 
and investing in communities and at-risk youth to address the root 
causes of crime. Some of USAID's most exciting examples of fostering 
innovation are in this region, where, through groundbreaking public-
private partnerships, we have broadened local investment for 
development.
    I want to highlight how the investments we make in foreign 
assistance, which represents just 1 percent of the Federal budget, help 
our country respond to the global challenges we face and how we have 
modernized our Agency to deliver results that shape a safer and more 
prosperous future.
   a new model for development: partnerships, innovation, and results
    The FY 2014 request for USAID managed, or partially managed, 
accounts is $20.4 billion, 6 percent below the total enacted funding 
for FY 2012. In this tough budget environment, USAID is committed to 
maximizing the value of every dollar. We have made tough choices so 
that we are working where we will have greatest impact, and shifting 
personnel and funding resources toward programs that will achieve the 
most meaningful results. Since 2010, regional program areas have been 
reduced by 29 percent, Feed the Future agriculture programs have been 
phased out of 22 countries, and USAID global health program areas have 
been phased out of 23 countries.
The President's FY 2014 request continues to build on gains we have 
made over the past year to work smarter and more effectively through a 
suite of ambitious reforms called USAID Forward. Through USAID Forward, 
the Agency has fostered new partnerships, placing a greater emphasis on 
innovation, and a relentless focus on results. These reforms have 
formed the foundation of a new model for development that continues to 
define the way we work around the world.
    The FY 2014 budget provides funding to mobilize a new generation of 
innovators and scientists. Through our Development Innovations 
Ventures, we invite problem-solvers everywhere to contribute a cost-
effective and cutting-edge idea that could scale to reach millions.
    It provides funding for Grand Challenges for Development, 
capitalizing on the success of previous challenges to accelerate 
reductions in maternal and child mortality, promote childhood literacy, 
power agriculture through clean energy, and raise the voices of all 
citizens through technology. We have received more than 500 
applications per challenge, with almost 50 percent of innovations 
coming from developing and emerging economies. For example, through 
``All Children Reading: A Grand Challenge for Development,'' nearly 
three dozen organizations--half of them local--are pioneering a range 
of novel approaches to education, from helping children in India learn 
to read with same language subtitling on movies and TV to bringing 
fully stocked e-readers to rural Ghana.
    The request accelerates advances of USAID's Higher Education 
Solutions Network, a constellation of seven development innovation labs 
on university campuses that work with a global network of partners to 
provide solutions for key development challenges, leveraging tens of 
millions of dollars of university and private-sector financing.
    The 2014 request also allows us to work more effectively with a 
range of partners, from faith-based organizations to private sector 
companies. A new focus on leveraging private sector resources has 
enabled us to dramatically expand our Development Credit Authority--
unlocking a record $524 million in FY 2012 in commercial capital to 
empower entrepreneurs around the world. Last year alone, we increased 
our contributions to public-private partnerships by almost 40 percent, 
leveraging an additional $383 million.
    This funding also allows us to rigorously measure and evaluate our 
work so we know which of our development efforts are effective and 
which we need to scale back or modify. Since the launch of our 
evaluation policy, 186 high-quality evaluations have been completed and 
are available on our Web site or through a mobile ``app'' that is 
easily downloaded. Half of these evaluations have led to mid-course 
corrections and one-third has led to budget changes.
    A new emphasis on supporting local solutions has enabled us to 
shift $745 million in funding to local institutions, firms, and 
organizations in the last year alone--helping replace aid with self-
sufficiency. When we partner with developing country institutions, we 
use sophisticated tools to assess their financial management capacity 
and safeguard U.S. resources.
    As part of our new model, we're insisting our partners make policy 
reforms and fight corruption in order to meet the conditions of our 
assistance. Through new models of partnership that demand mutual 
accountability--including the New Alliance for Food Security and 
Nutrition and the Tokyo Mutual Accountability Framework for 
Afghanistan--we are creating incentives for governments to strengthen 
their own institutions.
    Across our work, we are moving from a traditional approach of top-
down development to a new model that engages talent and innovation 
everywhere to achieve extraordinary goals. In education, a core 
development objective, we are harnessing this new approach to help 
close the gaps in access and quality of education. We know that 
globally 171 million people could be lifted out of poverty if all 
students in low-income countries gained basic literacy. Our strategy 
for basic education is focused on improving reading skills for 100 
million children in primary grades by 2015 and increasing equitable 
access to education in crisis and conflict environments for 15 million 
learners by 2015.
                            food aid reform
    At its foundation, our new model of development shares the bedrock 
principles of effectiveness and efficiency that serve as the clarion 
call for government today.
    There is perhaps no better example of this fundamental imperative 
than the food aid reform package proposed in this year's budget 
request, which would enable us to feed 2 to 4 million more hungry men, 
women and children every year with the same resources, while 
maintaining the valuable contribution of American agriculture to this 
mission.
    Through P.L. 480 Title II, or Food for Peace, America's 
agricultural bounty and generosity have fed well over a billion people 
in more than 150 countries since 1954. But while the world has changed 
significantly since Title II was created, our hallmark food assistance 
program has not. The current program limits our ability to use the 
appropriate tools for each humanitarian situation--tools we know will 
help people faster and at a lesser cost.
    Buying food locally can speed the arrival of aid by as many as 14 
weeks--making up precious time when every day can mean the difference 
between life and death. It can also cost much less--as much as 50 
percent less for cereals alone. In complex environments such as Syria 
and Somalia, which are increasingly the kind of crises where we need to 
provide assistance, these more flexible tools are invaluable.
    The more agile, flexible, and modern approach laid out in the 
President's budget request pairs the continued purchase of the best of 
American agriculture with greater flexibility around interventions such 
as local procurement, cash transfers, and electronic vouchers. The 
President's proposal maintains the majority of our emergency food aid 
funds--55 percent in 2014--for the purchase and transport of American 
commodities. That means we're going to keep working with soy, wheat, 
pulse, and rice farmers and processors across America who help feed 
hungry children from Bangladesh to the Sahel--often in the form of 
specialized high nutrition products.
    At a time of urgent human need and budget constraints, we can save 
more lives without asking for more money.
    The proposal also reaffirms our commitment to development partners 
who receive Title II funding, enabling them to provide the same types 
of development programs at a lower cost. These programs strengthen our 
ability to reduce chronic poverty, build resilience, and help prevent 
future crises.
                            feed the future
    Ending hunger and creating a food secure world are vital components 
of the fight to end extreme poverty. Launched in 2009 by President 
Obama, Feed the Future is unlocking agricultural growth, helping 
transform developing economies and ending the cycle of food crises and 
emergency food aid. Although the initiative is still in its early days, 
we are beginning to see significant results.
    In Rwanda, we have reached 1.6 million children under 5 with 
nutrition programs that reduced anemia, supported community gardens, 
and treated acute malnutrition. In Bangladesh, we helped more than 
400,000 rice farmers increase yields by 15 percent through the more 
efficient use of fertilizer, which led to the first-ever rice surplus 
in the country's poorest state. In FY 2012, we helped more than 7 
million farmers across the world apply these kinds of new technologies 
and practices, four times the number we reached the previous year.
    The FY 2014 request provides $269 million for the President's G8 
commitment to the New Alliance for Food Security and Nutrition, which 
aims to lift 50 million people in sub-Saharan Africa out of poverty in 
the next decade. Since its inception at last year's G8 summit, we have 
helped leverage more than $3.75 billion in commitments from more than 
70 global and local companies. In Tanzania, Yara International is 
constructing a fertilizer terminal at the nation's largest port, and, 
in Ethiopia, DuPont is expanding seed distribution to reach 35,000 
smallholder maize farmers and increase productivity by 50 percent.
    At the same time, participating African governments have committed 
to serious market-oriented reforms. Tanzania has removed its export ban 
on staple commodities, Mozambique eliminated permit requirements for 
interdistrict trade, and Ethiopia no longer imposes export quotas on 
commercial farm outputs and processed goods.
                             global health
    Thanks to strong bipartisan support we are on track to provide 
life-saving health assistance to more people than ever before. The FY 
2014 Global Health request supports our goals of creating an AIDS-free 
generation, ending preventable child and maternal death, and protecting 
communities from infectious diseases.
    Across our global health portfolio, we are aligning our budgets to 
the areas of greatest need. Now, 90 percent of USAID bilateral maternal 
and child health funding is in the 24 USAID priority countries that 
account for three-quarters of maternal and child deaths.
    The request supports the continuation and scale-up of high-impact 
HIV/AIDS prevention, care, and treatment tools in pursuit of an AIDS-
free generation. The request also provides $1.65 billion under PEPFAR 
for the U.S. contribution to the Global Fund to Fight AIDS, 
Tuberculosis, and Malaria.
    In June, USAID cohosted a Call to Action to accelerate progress and 
end preventable child death. A powerful example of how our new model of 
development can rally diverse partners behind ambitious but achievable 
goals, the Call to Action has encouraged more than 170 countries, 200 
civil society organizations, and 220 faith-based organizations to sign 
a pledge to help reduce child mortality. This global effort builds on 
an 8-percent reduction we have seen from 2008 to 2011 in child 
mortality in countries where the U.S. Government provides assistance.
    We will continue to fund critical efforts in voluntary family 
planning, immunizations, nutrition, malaria, tuberculosis, and 
neglected tropical diseases--cost-effective interventions that save 
lives, while preventing the spread of disease.
  supporting strategic priorities and strengthening national security
    Across the world, we are strengthening democracy, human rights, and 
governance, with a special emphasis on marginalized populations, 
including women and youth. Support for democratic and economic 
transitions enables the rise of capable new players who can help solve 
regional challenges and advance U.S. national security.
    Since January 2011, the State Department and USAID have allocated 
more than $1.8 billion to support democratic transitions in the Middle 
East and North Africa and respond to emerging crisis needs in the 
region. The President's Request of $580 million for the Middle East and 
North Africa Incentive Fund provides support to citizen demands for 
change, improves our ability to respond adroitly to new challenges and 
opportunities, and begins to address the imbalance between our security 
and economic assistance in the region.
    The budget request supports our humanitarian assistance work around 
the globe in places where the need is greatest. This is particularly 
true in Syria, where at least 4 million people are in need of 
humanitarian assistance and 2 million are displaced. To date, State and 
USAID have provided nearly $385 million in humanitarian relief to the 
Syrian people.
    In Iraq, Afghanistan and Pakistan, USAID continues to work closely 
with interagency partners including the State and Defense Departments, 
to move toward long-term stability, promote economic growth, and 
support democratic reforms, including the rights of women. Despite the 
challenges, we have seen a number of positive gains. For example, over 
the past decade in Afghanistan, we have increased access to education, 
resulting in dramatic increases in primary school enrollment from 
900,000 boys in 2002 to 8 million students in 2012, 37 percent of whom 
are girls. In Iraq, USAID-funded legal clinics have supported over 
1,700 legal cases on behalf of vulnerable individuals, including 
internally displaced persons and ethnic and religious minorities.
    The President's budget request supports the administration's Asia-
Pacific Rebalance by increasing funding for the region to address 
critical gaps in core programs to renew U.S. leadership, deepen 
economic ties, promote democratic and universal values, and strengthen 
diplomatic engagement. In addition, we are seizing new opportunities 
for partnership in Asia, including in Burma, a nation undertaking 
political and economic reform.
             global climate change and building resilience
    As a result of global climate change, natural disasters are 
becoming more frequent and more severe. With a new emphasis on helping 
vulnerable communities build resilience to disasters, the Global 
Climate Change Presidential Initiative invests in developing countries 
to accelerate transitions to climate-resilient, low-emission economic 
growth, while incentivizing private sector investment to scale impact 
and sustain progress. For example, we are partnering with the Consumer 
Goods Forum--which represents about 400 companies and $3 trillion in 
market value--to reduce tropical deforestation from key commodities, 
like palm oil and timber.
    Drawing on lessons learned during last year's food crisis in the 
Horn of Africa--as well as decades of experience responding to 
disasters--USAID is pioneering a fundamental new approach to help 
communities strengthen their resilience in the face of crises. In 
Ethiopia, for instance, we're working with international firms like 
Swiss Re and local businesses to develop index-based livestock 
insurance--a new product that uses satellite data to protect 
pastoralists from drought-related losses.
                               conclusion
    When people around the globe cannot feed their families, when young 
adults find themselves without education or a source of income, and 
when parents watch their children die of preventable illnesses, the 
world is inherently less secure. The FY 2014 budget request will 
continue our work to combat these causes of instability and end extreme 
poverty.
    These investments aren't just from the American people; they're for 
the American people. By promoting sustainable growth in the developing 
world, we spur new markets abroad and energize our economy here at 
home. By driving innovations in agriculture, education, and global 
health, we strengthen global stability and advance our national 
security. And by delivering aid in the wake of natural disasters and 
humanitarian crises, we express the generosity and goodwill that unite 
us as a people.

    The Chairman. Thank you, Administrator, and your full 
statement will be entered into the record.
    Let me start off. You know, I took my first trip as 
chairman to Afghanistan and Pakistan because I believe it is 
still obviously a vital national security interest to the 
United States. And the region is in the midst of economic 
security and political transition. And during our trip there, I 
spent time with our aid missions and conducted a couple of 
field visits to visit some of our programs. And I am incredibly 
impressed with the dedication and drive of our teams there.
    But I also have concerns as to how we conduct oversight in 
the field given the security conditions, so my questions are in 
this regard. Are we right sizing our aid presence in both 
countries to reflect our diminishing footprint or our security 
concerns and implementation challenges? And specifically, what 
steps are taken to ensure that our aid is necessary, 
achievable, and sustainable, which are steps that this 
committee called for in its June 2011 oversight report?
    Dr. Shah. Thank you, Senator, and I want to thank you 
personally for your leadership on this issue and for taking the 
time to meet with our staff when you were there. That meant a 
lot to them and was very encouraging for them to personally get 
the chance to meet with you.
    As you note, the gains in Afghanistan that we believe have 
resulted from our collective international investments have 
been real and significant, and now create the opportunity for 
some degree of stability as our troops start to come home. We 
have seen 9 percent annualized growth rates year on year for 
the past decade. The largest increases in human longevity and 
reductions in child and maternal mortality anywhere in the 
world have been experienced in Afghanistan in part due to our 
investments in health.
    We have 8 million kids in school, nearly 35 percent of whom 
are girls compared to no girls in school under the previous 
Taliban regime. And energy access has more than tripled as a 
result of collective investments we have made, and we have put 
down more than 1,900 kilometers of new road in partnership with 
the people and businesses and governments of Afghanistan.
    But it has taken a lot to make sure that this program has 
become more accountable and more transparent in the last few 
years. When we took office, we launched an effort called the A-
3 Initiative, Accountable Assistance for Afghanistan, which 
included a full partner vetting of all of our partners and 
subcontractors. It included getting eyes and third-party 
monitors on most major programs and investments. It included a 
local cost auditing system that allowed us to understand where 
resources were going and how performance was improving.
    We believe that some of those efforts will be at risk as we 
see a transition that will limit, to some degree, our capacity 
to be physically present and out in all parts of Afghanistan, 
seeing and engaging on these projects and programs. I spoke to 
General Dunford earlier this week by videoconference, and it is 
part of our coordinated civilian military plan to make sure 
that we have a capacity to continue to oversee these programs 
effectively. But we know we will be doing it with some degree 
of reduced staffing, with more local staff, with more support 
from the Afghan Public Protection Force, and with other forms 
of ensuring accountability for our resources.
    So I thank you for asking that question. It is something 
that we are working on aggressively right now.
    The Chairman. So do you believe that the programs moving 
forward in that region will continue to be able to follow those 
three criteria that the committee set, particularly 
sustainability?
    Dr. Shah. Absolutely, and, in fact, those criteria become 
more important, not less important, going forward. If programs 
cannot sustain themselves anymore, they are really not worth 
doing because we know that we are not going to be there 
endlessly.
    We did, in fact, pull together the international community 
in Tokyo last year, and we got the international community to 
commit $16 billion of development investment for Afghanistan 
over the next 4 to 5 years. As part of that, we introduced a 
mutual accountability framework with the Government of 
Afghanistan, and so they have to show real progress on 
corruption, on asset recoveries from Kabul Bank, on pursuing 
with clarity and transparency fair and free elections in order 
for those resources to take hold and for those pledges to be 
met.
    We are doing that not unilaterally, but in concert with 20 
other international partners. And we believe that sort of 
approach--real mutual accountability on behalf of ourselves and 
our Afghan partners--will be critical if we are going to 
effectively over time replace aid and assistance with business 
and investment.
    The Chairman. Which brings me to the question of 
capability--USAID went through, in my view, a 20-year decline 
in personnel and dispersion of development responsibilities to 
other entities, such as the Millennium Challenge Corporation, 
the State Department AID's coordinator, and in 2006, the loss 
of budgeting and policy capabilities. How would you assess your 
agency's progress in restoring its capacities under USAID 
Forward and the development and leadership initiative? And, you 
know, describe for me your goals--the end goals of these 
efforts as you move forward, because one of the things I want 
to understand I have been an advocate of is making sure that 
USAID has the wherewithal, and the ability, and the personnel 
to carry out its mission. And I think the dispersal that we 
have seen, particularly including Defense Department engagement 
in what, in essence, was development activities, undermine the 
capacity.
    Dr. Shah. Thank you, Senator, and thank you for your 
personal advocacy on behalf of those objectives.
    Our end goal very clearly is to be the world's premiere 
development enterprise, and I believe we are well on the way to 
accomplishing that. Our focus on public-private partnerships 
has been unique and extraordinarily effective in many parts of 
the world.
    We have been able to rebuild our budget authority, our 
policy capacity. We have hired 1,100 new staff because of the 
Development Leadership Initiative on which you commented. And 
we believe these investments, deployed accurately, particularly 
on contract oversight and accountability, are saving taxpayer 
dollars on the program side of our budget.
    So we believe these are important investments that need to 
continue to be made. They are put at real risk and threatened 
by current sequestration realities. The fiscal year 2014 budget 
includes an investment in our operating expenses that will 
allow us to continue on this path of rebuilding this agency. 
But we have had real success in the last 3 years with strong 
support from President Obama and Secretary Clinton, and now 
Secretary Kerry.
    The Chairman. All right. I will come back to some of my 
concerns in the next round.
    Senator.
    Senator Corker. Thank you, Mr. Chairman. Again, Mr. Shah, 
thank you for being here and for your work in bringing some of 
the private sector, Gates Foundation, thinking to USAID. It is 
much appreciated.
    Will you go ahead and tell me what you plan to do on the 
inspector general? I would imagine in the next 2 weeks you plan 
to send up a permanent nominee.
    Dr. Shah. Well, we have had a very good working 
relationship with our acting inspector general, and the White 
House, of course, has responsibility for putting forward a 
Presidential nomination. We know that that process is, and has 
been, well under way, and do expect very soon for the White 
House to make that nomination.
    Senator Corker. I noticed you and the administration have 
decided that 55 percent of our food aid is going to be spent 
here in the United States. How did you decide on that number?
    Dr. Shah. Well, first, thank you for your leadership and 
comments on food aid specifically.
    As we look around the world, we note that over the last few 
years, the program has had essentially about 81 percent of the 
program tied to the purchase and distribution on U.S.-flag 
vessels of American commodities, which gives us a little bit of 
flexibility, about 19 percent, every year. That flexibility has 
been deployed in different places.
    This year, with the challenges of providing humanitarian 
assistance in and around Syria, that flexibility is being 
absorbed almost completely in that setting and in that region. 
As a result, there are a number of other countries--the 
Democratic Republic of Congo, Somalia, and Pakistan--where we 
actually have to take children off of nutrition support, often 
in post-famine or post-hunger situations, because we are 
reverting from a more efficient locally procured program to the 
more traditional U.S.-based program. And there are 155,000 kids 
in Somalia that this year will be subject to that.
    So we basically looked at how do we avoid that outcome, how 
can we build maximum flexibility and efficiency? And we want to 
also have a renewed partnership with American agriculture, a 
partnership that prioritizes high nutrition food products that 
America ought to have the scientific and technical lead in 
producing, a partnership that is flexible and efficient in how 
we get those products to people quickly in times of great need, 
and a partnership that continues to benefit from the engagement 
from the agricultural communities in this country that sustain 
this effort over time.
    So that is how we ended up with the proposal we have. We 
believe the proposal will allow in the first year to reach 4 
million additional children.
    Senator Corker. And so your goal, though, still over time 
is self-sufficiency. Is that correct?
    Dr. Shah. Absolutely. The goal--as the President has said 
over and over since 2009 when he first launched Feed the 
Future, our goal is to move people from food aid to self-
sufficiency so they can be trading and commercial partners with 
us. As we have seen, our largest recipient of American food aid 
in the 1960s and 1970s was South Korea, and today they are 
obviously a major trading partner.
    Senator Corker. Do you plan on working with this committee 
to get the reforms you are putting in place into code, or are 
you just going to do the easy route of going and talking with 
an appropriator and getting it done in that manner?
    Dr. Shah. Absolutely, sir; we would be eager to work with 
this committee to have as much structure and longevity and 
commitment to this renewed vision of an efficient, effective, 
and more high-impact results-oriented program.
    Senator Corker. Really the only way to lock in the reforms 
is to get us to get it into code, right? And you know that it 
is going to be there when you go off to do other things, some 
other place?
    Dr. Shah. Yes, sir.
    Senator Corker. Let me talk to you a little bit about 
Syria. I wrote an op-ed this morning that was about our role in 
Syria. And obviously there are multiple things that need to be 
done there to change the balance of power. What do you think, 
briefly, USAID can do to change the balance right now to favor 
the more moderate secular opposition groups that are inside 
Syria?
    Dr. Shah. Well, thank you, Senator, for your leadership on 
Syria and articulating that as the central challenge. I think 
Secretary Kerry also has acknowledged that that is our goal.
    And I would point out that with 4\1/2\ million internally 
displaced and 1\1/2\ million refugees already, that we have a 
major humanitarian and political crisis on our hands.
    In terms of your specific question of how can we tip the 
balance toward what we think of more moderate and more 
responsible within the framework of the opposition, Secretary 
Kerry announced this past weekend a doubling of our aid and 
assistance to the Syrian Opposition Council. As part of that 
commitment to them, which is now up to $250 million, we will 
request from them, and they have already made public assurances 
of their commitments to protect human rights, to protect the 
rights of women in both transitional and security challenged 
environments and over the long term, and their openness to 
working with the international community on a range of issues 
like that.
    We believe this effort, which we support through a number 
of our partners and through the Office of Transition 
Initiatives, will be a critical part of helping the Syrian 
Opposition Council provide services in opposition controlled 
areas. A large part of this effort is already taking place. 
There is tight coordination through an organization called the 
Assistance Coordination Unit of the SOC. And we recognize that 
our own people and our partners are taking real risks, but are 
providing significant support in many different ways, 
specifically in opposition controlled areas.
    Senator Corker. You know, the special investigator 
inspector that we had in Iraq talked about just recently that 
he does not see us as any more prepared to do development in 
similar circumstances today than we were in 2003. That has not 
worked so well for us. And I wonder if you would just briefly--
I want to get on--I know there are other folks who have 
questions, and I do want to talk to you about USAID Forward and 
how that affects us dealing with other countries and some of 
the problems that may exist. I want to talk to you a little bit 
about some of the trade issues to help countries toward self-
sufficiency.
    But could you briefly talk to us and give us some assurance 
that something is different as it relates to how we deliver 
assistance in places like Syria that are very troubled and 
obviously have security problems?
    Dr. Shah. Absolutely, Senator. I believe there has been a 
significant shift in how we do this work. If you look even just 
in Afghanistan over the last 3 or 4 years, we have more than 
tripled our civilian presence across the State Department, 
USAID, and a number of other partners. We have implemented data 
systems and accountability processes, vetting systems, that 
have not only established a program to audit 100 percent of 
locally incurred costs, but with a real rejection rate for, I 
believe, 21 projects or programs, contracts that were cancelled 
or not awarded because they failed to pass the vetting system, 
that is, positives, or hits, that came through the vetting 
system.
    Those are mechanisms that simply did not exist before. They 
do exist now, and they are highly effective at allowing us to 
have tighter coordination with our military colleagues, more 
eyes on effectiveness in our programs, and a more results 
oriented orientation.
    We are seeing the benefits of that today in opposition 
controlled parts of Syria where more than 65 percent of our 
humanitarian support goes into those areas through a broad 
range of partners, and where we are now the primary partner of 
the Syrian Opposition Council in trying to get everything from 
generators and fuel to hospitals and facilities, all the way to 
some form of media and communication and ability for that 
organization to communicate with its population.
    These are capabilities that we have built over the last 
several years that we did not previously have when the 2003 
situation was made reference to.
    Senator Corker. Thank you.
    The Chairman. Thank you.
    Senator Cardin.
    Senator Cardin. Thank you, Mr. Chairman. Administrator 
Shah, first of all, thank you for your leadership. It has been 
very, very effective in bringing together international 
development assistance in our security budget, recognizing the 
returns that we get in our involvement in other countries on 
our national security front.
    I also want to thank you for your commitment to 
transparency, to gender equity, to dealing with good 
governance, and dealing with corruption issues to make sure 
that our aid is actually furthering the stability of a country 
and not adding to the corruption of certain officials. We have 
talked about all these issues, and I very much applaud the 
manner in which you have moved forward in these areas.
    Senator Corker has talked about the changes in our Food for 
Peace Programs. We have a lot of programs that deal with 
nutrition and food, but perhaps the No. 1 initiative that the 
Obama administration moved forward with was Feed the Future. So 
can you just quickly tell us how the reforms that you see in 
the Food for Peace Program works with the other programs we 
have, particularly Feed for the Future?
    Dr. Shah. Absolutely. Thank you, Senator, and thank you for 
your extra investment of time on issues ranging from gender to 
science, technology, and innovation as we have tried to focus 
on and accelerate those as core parts of our portfolio. We are 
very appreciative of that.
    With respect to Feed the Future, as I noted, that is 
intended to be a model program that focuses in 19 countries, 
many in sub-Saharan Africa, some in Latin America, and south 
Asia, that are making their own commitments to reform their 
policies, increase their investments, and move people from a 
condition of hunger and ongoing need for social support and 
protection to self-sufficiency and ultimately commercial market 
success by building their agricultural capabilities.
    We have seen incredible success stories from Bangladesh, to 
Tanzania, to Guatemala, and often those success stories are 
tied to either new technologies, like deep fertilizer placement 
in Bangladesh, which has transformed an entire state in that 
country, to our partnership with Wal-Mart in Guatemala, which 
is helping tens of thousands of farm households connect to 
modern international supply chains and improve their 
livelihoods. That to us is the vision of success.
    I visited Guatemala and had a chance to see in the same 
community where we had a Feed the Future Program, farmers 
connecting to Wal-Mart and doubling or tripling their incomes. 
There had been a 35-year Food for Peace Program that provided 
food to those communities.
    What we have been trying to do with that program is shift 
from giving them bulk grains to giving them high-nutrition 
foods focusing particularly when kids are in the first 2 years 
of life where we know nutrition intervention at that point in 
time has the biggest difference in terms of their livelihoods 
and their ability to learn and thrive over time. And then 
connecting those families to these Feed the Future efforts that 
help them transition from requiring that kind of assistance to 
being self-sufficient because they are part of a larger effort.
    What was tremendous about the Wal-Mart partnership was in 
that setting, when I asked those families what do you need 
next--and I thought they would say a new form of agricultural 
technology or farm implements. Instead, they all said they want 
schools because now that kids are not working on the farm and 
they are earning more income, they want to send their kids to 
school. And that is the path to sustained development that we 
believe is taking hold in parts of western Guatemala, or 
southern Tanzania, or eastern Bangladesh, and it is making a 
huge difference.
    Senator Cardin. Thank you. You mentioned the Office of 
Science and Technology. You have requested additional funding, 
for a total of $85 million. Could you just briefly tell us what 
those additional funds would be used for if it is appropriated 
by Congress?
    Dr. Shah. Yes, sir. If appropriated, we believe that these 
investments will help engage our American universities and 
American businesses and entrepreneurs in helping to bring new 
scientific and technical breakthroughs to our mission around 
the world.
    This past year, we created what we call the Higher 
Education Solutions Network with seven universities in the 
United States. They include development innovation 
laboratories, such as one at University of California, 
Berkeley, where students have developed, for example, what they 
call a cell scope that is an iPhone that connects to a 
microscope that takes a photo of a blood smear, and can 
automatically diagnose malaria and potentially TB without 
requiring going back to a laboratory.
    Those kinds of breakthroughs can tremendously change the 
cost structure of the global health programs that we implement 
around the world, allowing us to eliminate or eradicate 
diseases at lower cost. And that is what we are going for. And 
American technological breakthroughs have been at the core of 
many of our biggest successes in development around the world.
    Senator Cardin. I think it is very exciting, and I want to 
just underscore what Senator Corker said. It would be helpful 
if we had the statutory authority to make sure that, in fact, 
is done the way that you are suggesting it rather than just 
rely upon the appropriation process. I think it would be 
helpful for this committee to weigh in on that initiative, 
because engaging our private universities, being 
transformational, and reducing the number of countries 
requiring direct assistance is exactly what our international 
development assistance program should do.
    One last point on transparency, we have talked about that 
frequently. And Senator Corker raises the issues of Syria and 
whether the significant investment that we are making in Syria 
will get to its intended recipients, and whether the United 
States will get the benefits of that aid directly as it relates 
to our security concerns.
    There is concern here because we do not control all the 
terrain on which this aid is going, so I really would 
appreciate you keeping this committee closely advised as to the 
accountability and transparency issues as it relates to the 
funds going into Syria and the help going into Syria so that we 
have confidence that the significant investments we are making 
there are fulfilling their purpose.
    Thank you, Mr. Chairman.
    Dr. Shah. Thank you, Senator.
    The Chairman. Thank you.
    Senator Rubio.
    Senator Rubio. Thank you, and thank you for being here 
today and for your service to our country.
    I wanted to ask you about a program that I think enjoys 
incredible bipartisan support and has been incredibly 
effective, and that is PEPFAR, the President's Plan for AIDS 
Relief. And I am sure you have heard this; I have, from many 
advocates who are concerned about ongoing cuts to the program 
that have been phased in over the last few years.
    I understand the concept that some of the funds have been 
moved to the Global Fund and so forth to fight AIDS, and that 
is worthy as well. But these two programs are synergistic.
    I wanted to get your take on truly what is going to be the 
impact of this continuing reduction of spending on this 
program, and what it would mean to undermining the goal that 
the President himself has stated of an AIDS free generation?
    Dr. Shah. Thank you, Senator. The President is very 
committed to the goal of an AIDS-free generation, and I 
appreciate your advocacy and leadership on this issue as well.
    America has played a unique role in starting and helping to 
accelerate the fight against HIV/AIDS, and today the United 
States spends more than $8 billion a year in global health, the 
majority of which is focused on our efforts to control and 
reverse the trends around HIV/AIDS. It is by far the largest 
category of our foreign assistance and the largest single item 
within the entire 150 Account budget.
    With respect to PEPFAR specifically, the President's fiscal 
year 2014 request includes $1.65 billion for the Global Fund. 
This is an important year. The Global Fund has been through a 
tremendous restructuring, and through that restructuring, they 
are going to be working very closely with our bilateral 
program. And we see the Global Fund as a mechanism to 
accelerate other donors' commitments to maintain and accelerate 
this fight.
    I would say with respect, I think in the countries where we 
work, we are seeing more, not less, resources go to HIV/AIDS 
control and treatment. In South Africa, as we modulate our own 
investment, the government is more than making up for gaps, 
and, in fact, that transition is one that has been carefully 
negotiated with them and one they are eager to pursue. So they 
have ownership and responsibility for what I believe is the 
more than 4 million South African AIDS patients, some of which 
I have had a chance to meet and that are partners, and we 
proudly work to serve.
    So our goal is to reach 15 million global AIDS patients on 
treatment. That is a global number that we have all agreed to. 
I believe the current global effort is at 8 billion. And the 
way we believe we will get there is by crowding in investments 
from, first, the countries in which we work, second, other 
donors and other partners, and, third, by maintaining very 
strong American budgets for global health and HIV/AIDS.
    Senator Rubio. So just the takeaway then is that even 
though our investment into PEPFAR particularly has eroded over 
the last few years, the difference is being made up by local 
countries' own investment in these programs, and that that will 
more than adequate to continue to meet the benchmarks that we 
have set?
    Dr. Shah. Absolutely. In fact, we have accelerated and have 
met every benchmark we have set earlier than the time 
indicates. And I think that will continue to be the case 
through this second term.
    Senator Rubio. So you are confident in saying that this 
reduction in spending on PEPFAR will not lead to erosion in the 
gains that have been made and in the progress that is being 
made?
    Dr. Shah. Absolutely not. In fact, I am confident that our 
approach of bringing together our global health investments 
around the world and bringing other partners to do more will 
actually accelerate impacts. We genuinely believe we will see 
twice as many AIDs patients, supported by the global 
partnership, not just the United States. And we are absolutely 
committed to and very confident that we will achieve an AIDS-
free generation largely by targeting pregnant women with 
antiretroviral therapy, early testing, and diagnostics.
    Senator Rubio. OK. Just to another part of the world 
quickly, and it is an article that came out on March 4 and 
talked about, ``Dam and Other Afghanistan Projects Being Scaled 
Back as United States Picks Up Its Pace of Withdrawal.'' The 
concern is that the United States is investing a tremendous 
amount of treasure and obviously lives and blood and otherwise 
in this region, and scores of people have lost their lives to 
secure, for example, this area around Kajaki Dam in southern 
Afghanistan so that the USAID could safely manage a major 
construction project.
    But now it appears that we have decided not to complete the 
project, and instead leave it to an Afghan electricity company 
that our own special inspector general has criticized for 
lacking the necessary expertise.
    Obviously the decision to move from Afghanistan is one that 
enjoys popular support, and it is a decision that is not in 
your agency per se. But can you talk about the impacts of these 
projects that we have invested so much money in, that now we 
are either turning over to Afghan institutions that are 
documented as having very little accountability, unless you 
disagree, and then we can talk about that. But more 
importantly, there is this notion that these major projects 
that we are on the verge of completing or what have you and 
have already invested a lot of money in, we are either not 
going to complete and turn it to others to do or not do at all 
because of the eroding security situation in some of these 
regions, and the challenge that that poses.
    Dr. Shah. Well, I thank you for the question, and I would 
note also that American investment in Afghanistan has already 
allowed for a more than tripling of energy access for Afghan 
citizens, including in Kandahar City, which is what the Kajaki 
Dam is intended to improve upon.
    We saw that article, and it inaccurately reflected a sense 
that we were cutting back or scaling back our commitments 
there. In fact, I just spoke with General Dunford earlier this 
week who spoke specifically about his recent visit to Kajaki 
where the USAID military partnership to refurbish and expand 
its capacity to produce electricity is proceeding at pace. We 
think we will be successful.
    The partnership is with Black & Veatch/Louis Berger, which 
is a firm that has been doing the project. And it is also with 
the Afghan Electricity Company. The reason they are part of the 
partnership is they have to ultimately collect the revenue to 
sustain that effort, and we have been working with them, in 
some cases using new technology, like mobile-phone-based 
electricity payments, which has allowed them to increase by 
more than 300 percent their revenue collection from Afghans who 
benefit from this electricity.
    And that is what will be required to sustain these efforts 
over time, so we do have to work in a responsible, transparent 
way with our Afghan partners. I think that is a good example of 
how we believe we can be successful. And Kajaki remains a 
priority within our shared military-civilian campaign plan 
there.
    The Chairman. Thank you.
    Senator Kaine.
    Senator Kaine. Dr. Shah, great to be with you today.
    When the President in his State of the Union talked about 
the big goal, the eradication of extreme poverty in the world 
over two decades, the United States in tandem with others, you 
know, I applauded because I love the big goals, and I think we 
are sent here to do big things, and we ought to be looking for 
the big goals. But at the same time, I find myself wondering a 
little bit.
    Sometimes there is a hubris that we have if something goes 
wrong in Syria or North Korea, and we kind of get into what did 
we do wrong, or what is our responsibility. And as I read some 
of the development literature about why the bottom billion or 
the bottom million, you know, the United States not doing 
enough usually is not one of the reasons why cultures or people 
get locked into extreme poverty. So clearly, a goal like that 
of extreme poverty eradication in two decades is one that has 
to be done in partnership, and it also has to be one around 
which there are some pretty clear metrics.
    I just would like it if we have talked about this in 
Senator Cardin's office, a little bit about hunger and 
preventable child death. But let us talk sort of about metrics, 
and let us talk about partnerships that you intend to leverage, 
both NGO partnerships, but also, you know, how are we 
incorporating other nations into this goal?
    Dr. Shah. Well, thank you, Senator, and thank you for your 
extra commitment to this particular issue because I think it is 
an issue where real significant political leadership will, in 
fact, make a huge difference.
    The President claimed and put forward the goal of ending 
extreme poverty within two decades because we believe for the 
first time in human history that it is achievable. We have seen 
between 2005 and 2008, for the very first time in our history, 
extreme dollar and a quarter a day poverty fall in every region 
of the world for the first time. And we believe we are on that 
path today. We know that there are about 1.2 billion people 
that live in that sort of excruciatingly difficult situation, 
and we know that bringing them into a more connected global 
economy will be the path that gets them out of extreme poverty.
    So the question then, as you point out, becomes, what are 
the right metrics to measure? We believe the dual goals of 
ending hunger and ending preventable child death are the areas 
where America can make the biggest contribution toward that 
outcome specifically. We measure our efforts in food and hunger 
by looking at incomes of farm households, by looking at the 
number of farm households we reach, by looking at agricultural 
development and agricultural GDP growth specifically in 
countries where we focus, and then by correlating that to 
reductions in extreme poverty.
    We know agricultural GDP growth is three to six times more 
likely to reduce extreme poverty, and we have seen that trend 
play out in the 19 Feed the Future countries that have had on 
average a 5.6-percent annualized reduction since joining the 
program.
    On child death and on global health in particular, we can 
measure a number of specific things, but under-5 child 
mortality is the core measure of how many children are dying. 
And it is actually a pretty good correlate for other morbidity 
related measures about disease and loss of productivity related 
to child death, meaning if a lot of kids die, then a lot of 
kids are also getting sick and not going to school and other 
negative consequences.
    So those are the two things. We measure them. You can 
actually download an iPhone app that we have that shows you the 
health statistics and under-5 mortality statistics elsewhere.
    Going forward, as part of achieving this goal, we will also 
expand our efforts in energy access because that is such an 
important driver of helping families move out of poverty, and 
believe it is possible to double energy access in sub-Saharan 
Africa from 30 to roughly 60 percent, and to achieve that in a 
very highly leveraged way with strong partnerships with 
American businesses that help bring energy to many parts of the 
world.
    So we believe that these objectives are possible, but they 
are only possible with setting a big goal, bringing other 
countries and international institutions to bear. The United 
Nations will in the next 18 months identify a new set of global 
millennium development goals, and John Podesta is our 
representative to that process and has also advocated for 
setting the goal of ending extreme poverty within two decades.
    And quite frankly, the United States makes outsized and 
critically important investments in those places where extreme 
poverty will be concentrated 4 or 5, 6 years from now, places 
like Afghanistan, Pakistan, Somalia, and with a results-
oriented public-private partnership approach, we believe it is 
achievable.
    Senator Kaine. The public-private partnership approach, the 
data I see suggests now, you know, foreign aid dollars, if you 
look at a public-private, 10 to 15 percent is public, and 80 to 
85 percent is private--philanthropic, NGO. Talk a little bit 
about the leveraging you do in tackling a big challenge like 
this with the NGO community.
    Dr. Shah. Absolutely, and, in fact, that is the exact 
opposite from 40 years ago. Forty years ago, flows into these 
countries were largely public investments, and private 
investments were the 15 percent. Now that has been flipped on 
its head, and that is why we have pursued USAID Forward as a 
reform agenda that allows us to partner differently with 
companies all around the world. When we engage, for example, in 
ending preventable child death in India, we are not spending 
more money in India by any stretch, but we are working with 
Unilever and other partners that can get improved technologies 
and start businesses that reach some communities that can be 
profitable businesses, and also can work toward the objective 
of saving children's lives and ending extreme poverty.
    And that increasingly is defining a broad range of 
partnerships. USAID has been recognized by its peers as leading 
in this area, and we have now completed almost 1,100 of these 
public-private partnerships around the world, many of which I 
think are a genuine model of how we can achieve the end of 
extreme poverty.
    Senator Kaine. Great. Thank you.
    The Chairman. Thank you.
    Administrator, let me just follow up a moment on Syria 
before I go to one area of concern that I have in the budget. 
Have you been approached or has there been any discussion in 
any interagency process about the need to achieve credit with 
the Syrian people for our assistance, balancing obviously 
protecting our aid provided by not marking everything so that 
it says U.S.--delivered by the people of the United States, but 
still trying to develop some foundation of having them 
understand who is being supportive here.
    Has there been any talk about changing the current 
approach, going primarily through the United Nations and 
possibly filtering some of this assistance through the 
opposition that we have vetted as opposition that we believe 
share our values?
    Dr. Shah. Yes, Senator; there have been precisely those 
conversations. I would note that of the $385 million of 
humanitarian assistance that we provide, we use the United 
Nations as core partners in delivering that assistance, but 
also a sizable proportion goes to NGOs and other private 
organizations that are able to sometimes more effectively and 
with U.S. branding reach opposition controlled areas and 
settings. And we believe more than 60 to 65 percent of our aid 
and assistance actually goes into opposition controlled areas 
and targets specifically those communities. And we make every 
effort to not only brand and publicize when we can and when 
that is safe, but we also have in parallel, TV and media 
efforts to try to communicate what the United States is doing.
    In addition to that, on the services side, we are working 
directly with the Syrian Opposition Council to help them 
provide that support and do this together, and that was the 
additional $250 million that Secretary Kerry announced this 
weekend that is separate and apart from the basic humanitarian 
aid, but often will provide water services, or diesel 
generators and fuel, or other things that are critically needed 
essential services, as an economy is going through that very 
difficult time.
    I would say one last thing about this, sir, is the extent 
to which we believe there has been specific targeting by the 
Assad regime of our humanitarian partners. We know there have 
been 143 deaths of doctors and nurses and other medical 
personnel that have worked with and at our various supported 
field hospitals or hospital sites. We know that more than eight 
U.N. international staff have been killed as part of efforts to 
provide services. We have very clear data that bakeries and 
hospitals are preferentially targeted by regime forces in 
opposition controlled areas, for example, in parts of Aleppo.
    The safety and security concerns are very real, and we do 
respect our partners, some of whom are working with Syrian-
American doctors, for example, that do some extraordinarily 
courageous things, but they do it with a real concern for their 
own safety.
    The Chairman. Well, I am not surprised about Assad, and I 
am concerned, having seen the most recent reports about 
chemical weapon usage, if that is verified, it makes all the 
more case that we have to change our dynamics there and the 
tipping point.
    Let me go to an area of the world that I am confounded by 
the administration as well as previous administrations' views. 
We have seen a continuing significant decline in our assistance 
to the Western Hemisphere, particularly to Latin America and 
the Caribbean. And I am amazed because all the things that we 
debate here in the--or many of the things, I should say, not 
all the things, but many of the things we debate here in the 
Congress are, in fact, emanating in our front yard.
    If I do not want to see undocumented immigration in this 
country, there are push factors--people leave their countries 
for only two reasons: civil unrest or dire economic 
circumstances. Otherwise they would stay. So it is in our 
interest through our development programs to try create greater 
economic growth in our own hemisphere.
    If we want to help governments stop transnational crime and 
narcotics trafficking, you have to give poor growers who have 
to sustain their families, alternative crops so that they are 
not growing coca at the end of the day. That is in our national 
interest because the last thing we want to see is those 
narcotics end up in the streets of our cities.
    If you want to open up greater markets for U.S. products 
and services for which there is an affinity by Latin Americans 
to U.S. products and services, you want to create economies 
that are ultimately going to buy more U.S. products and 
services. If you want to look at some of the incredibly 
important biodiversity issues that affect us collectively, you 
want to think about how you change the dynamics of eviscerating 
a rain forest. If you want to stop some of the diseases that 
had been largely eradicated and now begin to rise again, such 
as tuberculosis, they know no boundaries.
    So I am amazed that with all of those realities and with 
the unrest and the movement away from democracy in the region 
toward dictatorships and totalitarianism, that we continue to 
cut--this is like a 6-percent cut, but if you compound it over 
the last several years, you are looking at a very enormous cut. 
And we just finished talking about poverty. Well, about 30 
percent of all of the region's population is below the poverty 
level, and of those, 66 million are in extreme poverty. This is 
in our own neighborhood.
    So I do not understand the cuts that we are seeing. I know 
that we are going through programmatic changes with Mexico and 
Colombia. We are moving away from hardware to institution-
building. But when I look at the totality of these cuts, I just 
do not get it, and that is why we create a void in which people 
like Chavez when he was alive ultimately filled the void, where 
the Chinese are coming in our own hemisphere, where the 
Iranians have been promoting diplomacy in the hemisphere. I 
just do not get it.
    So I look at that. I look at in another context--a cut on 
Cuba's democracy program at a time in which, in fact, we had 
6,000 arrests and detentions last year. We had the Ladies in 
White, a group of women whose husbands or sons sit in Castro's 
jail simply because they sought peaceful change in their 
country, get attacked brutally every week. We saw Oswaldo Paya 
assassinated, one of the leading human rights individuals 
inside of Cuba. His daughter was here not too long ago and made 
it very clear to us, from all the information, that he was 
assassinated. And yet we see a cut in that program.
    So I look at the totality of this, and it certainly does 
not make public policy sense to me. So I am going to be looking 
to try to change this because I just think we have created--and 
it is not until we have a major problem in the hemisphere that 
everybody will run, and we will spend a fortune instead of 
doing the right thing now that can ultimately create the seeds 
of democracy in open markets within the hemisphere.
    If there is one bright spot here, it is CARSI, which 
obviously is one of my critical concerns, and I will be 
traveling on the break to this region, in terms of preventing 
violence, combating narcotics trafficking, increasing citizen 
security. And I look forward to hearing how you are going to 
use the funding for 2014 there, as well as how do we create in 
these countries fiscal and policy reforms that can sustain us 
moving forward.
    So, I have gone over my time, but this is one of my 
passions and no one else seems to have a greater passion for 
it. But it just does not make a lot of sense in my mind in 
terms of the national interests and security of the United 
States.
    Dr. Shah. Thank you, Senator. We had the chance to discuss 
this, and I very much appreciate and recognize your strong and 
consistent leadership here. We, too, believe the region is 
critical and important. We have had to present a budget that 
conforms to an overall 6-percent reduction, which has forced a 
lot of difficult tradeoffs at a time when the actual number of 
humanitarian disasters around the world is doubling what we 
need to respond to in terms of case loads.
    There have been, as you point out, some critical areas, 
like CARSI, where we are presenting in this budget a 23-percent 
increase in our investment and our focus on that critical 
security program for the Northern Triangle. We know that our 
efforts have been delivering real results. In Mexico, where we 
have worked on prosecution-related partnerships, we have seen 
the rates in participating cities go up significantly and 
delays go down significantly. We built a new partnership with 
Los Angeles to bring some of the crime control measures that 
have been effective and proven in that setting to other 
countries in the region. We know that the alternative crop 
program, to which you made reference, in Peru has been 
successful there and a model for work in other parts of the 
world.
    And we also see across regions--Latin America has been by 
far the most successful with public-private partnerships. For 
every dollar we put into a public-private partnership in that 
region, we are able to attract $2.53 dollars from private 
sector, local partners. And we believe that that serves as an 
engine of sustaining significant development, investment, and 
partnership.
    But we recognize that this is a very important region, and 
we have had to make tough tradeoffs in a budget that we 
certainly wish was larger.
    The Chairman. I will just close on this, Administrator. For 
several years now, whether you were the Administrator or 
previous ones, I have heard that there are always tough 
tradeoffs. And where the tough tradeoff goes always is Latin 
America and the Caribbean. That is always where it ends up 
being cut. And I just think that that is foolish at the end of 
the day. We are going to have a problem, and then when we have 
the problem, we will spend a fortune.
    We did the same thing with Central American wars, and then 
after we spent a fortune in Central America providing 
democracy, we got out, and we did not lay the foundation of the 
seeds that would have provided long-term growth and prosperity.
    Senator Corker.
    Senator Corker. Thank you, Mr. Chairman. I am glad to hear 
you talk about a topic you care deeply about. Thank you.
    Mr. Administrator, I want to talk to you this round of 
questions about USAID Forward. And, again, I want to say I 
really appreciate the thrust that you have had toward self-
sufficiency. I know what you are trying to do is move away from 
NGOs that are not necessarily based in the area or based in the 
country, and try to build capacity with governments that are 
there.
    And obviously, you know, foreign aid is under criticism 
right now. A lot of people here in our country see needs here 
and wonder why we are doing things in other places, and so I do 
think that the move toward self-sufficiency is a good one. On 
the other hand, dealing in that manner can create a lot of 
political risk. You end up dealing with governments that 
sometimes commit fraud and are involved in corruption. It does 
mean probably that we move toward more direct involvement with 
them.
    And I just wondered if you might talk a little bit about 
your concerns there and your plans to alleviate those, and also 
comment on whether--if you were moving ahead with this effort, 
which I hope you will, if you see countries where corruption 
and other kinds of things are taking place--you will withdraw 
due to their lack of accountability and responsibility.
    Dr. Shah. Thank you, Senator, and I appreciate the 
opportunity to discuss with you USAID Forward. This has been 
our signature agency reform effort and has covered three major 
areas of transformation. One is how we partner around the world 
to which you have asked that question.
    But there have been other areas of focus within USAID 
Forward as well, a real focus on science, technology, and 
innovation, and making sure we bring the best of what America 
has to offer to our work has been a core element, as well as an 
absolute focus on measurement, results, evaluation, and 
transparency, which has been an important part of this.
    But going to your question specifically, a core part of our 
thinking is using and partnering with those who represent real 
local solutions. We can bring the cost structure of our work 
down and create the kind of institutional strength that can 
sustain these efforts and activities after American aid and 
assistance goes away. And that is the basic theory.
    Nearly every one of our peer countries spends somewhere 
between 60 and 80 percent of their total budget on these types 
of local institutions. When I started at USAID, we spent 9 
percent in that space. So we have had a focused effort to 
increase that percentage to something that we think is 
responsible, and we have asked every mission to identify what 
that responsible level might be, taking in account for all 
kinds of considerations, including corruption and weak 
institutions locally.
    The result of this has been a process where we have moved 
more resources to local partners. But in all of those cases, we 
have conducted careful and rigorous country assessments. If we 
are going to work with a local government, we assess their 
capacity to be transparent. If they are not, we say, sorry, we 
cannot work with you. And in some cases, they will come back 
and say, OK, well, what can we do differently as they have in 
Malawi and Liberia, where, as a result of receiving our 
assessments, they said, OK, we will embed an international 
auditing operation within our Ministry of Finance, or we will 
build a strong public financial management system that gives 
you the confidence. And then, by the way, you can work with us, 
and then other partners can also work with us because we are 
committed to fighting corruption as best we can with your 
partnership.
    So I believe this effort has really transformed our 
capabilities. Our staff is out and about working with partners. 
We are able to find and support local entrepreneurs. We have 
offered credit guarantees to dozens of local banks that have 
increased their lending to small and medium enterprises in 
Africa, for example, by $530 million last year, at almost no 
expense to us because those credit guarantees do not get called 
down because the people tend to be good for the loans.
    And we have seen external validation from nearly every 
major development entity and expert organization in this town, 
ranging from AEI and Heritage to the Center for American 
Progress and OXFAM.
    So, I know that this is tough. I know in places like 
Afghanistan where corruption can be a very significant endemic 
challenge we have a different approach.
    In that setting, most of our ``on budget assistance'' goes 
to an entity called the Afghan Reconstruction Trust Fund, which 
is managed and operated by the World Bank. And while that is 
not quite what we meant by local solutions, it protects and 
safeguards very significant American investment in that 
country's future, and we will not take undue risks in that 
context.
    Senator Corker. Well, again, I like the thrust that you 
have with ag. I like the thrust that you have with USAID 
Forward. I think the movement toward self-sufficiency and 
dealing with people in their own countries is a great--I like 
the way you are levering PEPFAR, the way you discussed with 
Senator Rubio.
    One area that I think we are not doing a good job in 
leveraging is in trade. In other words, if we want some of 
these developing countries to really move toward self-
sufficiency, something we can do well is really increase the 
ability of those countries to trade internationally and to 
trade with us. And yet if we look at the efforts, there is 
really not a coordinated effort. GAO says there is 18 different 
agencies that focus on trade. We understand when the report 
comes out each year to focus on how much effort toward trade is 
taking place, people just start lumping in things: a roadway in 
Afghanistan, something else.
    I am wondering if you might consider putting some effort 
into a coordinated trade effort so that we can help leverage 
many of the self-sufficiencies you are talking about and move 
away from the day-to-day assistance effort that we continue to 
be involved in.
    Dr. Shah. Well, thank you, Senator. The short answer, sir, 
is absolutely we will. And I believe in this second term, in 
particular, this will be an increased focus, specifically with 
respect to some of our efforts in Africa, but also in context 
ranging from Jordan to Afghanistan to Haiti. In fact, in 
Afghanistan, one of the most important things we can do is help 
clean up the process by which customs are collected and 
revenues are generated and then actually sent back to the 
government. And by cleaning up that process, we think they can 
significantly improve their domestic revenue collection, which 
will be critical to smoothing the reality of less international 
expenditure in that country.
    In Jordan, we have seen a 250-percent improvement in 
customs collections because of our partnerships with them. 
Sometimes it is bringing technology to border posts. Sometimes 
it is just bringing transparency to those settings and helping 
to improve transparent customs collection.
    In parts of east Africa, as coordinated with our Feed the 
Future effort, we are actively expanding the focus on regional 
trade. In Tanzania, for example, as a precondition for being 
part of our partnership, we asked the Tanzanians to forgo the 
export bans they have put on Tanzanian agriculture. Every time 
food prices go up or there is a regional shortage, they use 
those export bans. And that, of course, creates a strong 
disincentive for investment. So they have made that commitment, 
and now we are working with them to clean up the kind of 
checkpoint process as roads cross from one country into 
neighboring countries. The same is true of South Sudan and its 
neighbors.
    So these types of efforts, while they do not get a lot of 
publicity and do not tug at the heartstrings in the same way, 
they do, in fact, improve domestic revenue collection speed, 
local and regional trade and investment, and are often very 
high on the list of what local businesses will ask us to 
advocate for and prioritize. And you are absolutely right, and 
we should do more, and we will try to.
    The Chairman. Senator Casey. On the second round, I go to 
members who have not had an opportunity.
    Senator Casey. I am very happy about that. [Laughter.]
    Mr. Chairman, we often say thank you, Mr. Chairman. I want 
to say it loud and clear. Thank you, Mr. Chairman. We know of 
the seniority rule.
    I wanted to, first, by way of commendation for the work 
that you have done. We appreciate that. You have been stellar 
in a very difficult environment and in a very tough position.
    I wanted to direct your attention to two areas. One is the 
question of food aid. Too often around here, and I point a 
finger of blame at myself and probably could extend that to 
others as well. But we do not talk enough about the impact of 
the international affairs budget on our States and on the 
country, in addition to making the argument about security and 
the important necessity of food aid and aid like that.
    Interestly, in Pennsylvania, three numbers: 3, 223, and 
112. Just looking at these numbers today, and we should have 
them-- 
I should have them memorized by now. The U.S. Export-Import 
Bank financed over $3 billion in exports from 223 companies in 
112 communities in Pennsylvania. We do not say that enough. We 
do not often make that very important and substantial and 
measurable nexus between that support and what happens in a 
State like Pennsylvania.
    We have more than 30,000 international students studying in 
Pennsylvania in 2011, and they brought over $950 million into 
the State's economy. So all these subjects we are talking about 
when it comes to this budget are significant for our States and 
for the country.
    First of all, with regard to food aid, I was struck by--and 
I am sorry I missed your testimony and your personal testimony, 
or the testimony you gave today. But I was noting in your 
prepared testimony, and you may have gotten to this already, 
but I think it bears repeating, that you assert on page 4 that 
pursuant to this year's budget request, it would ``enable us to 
feed 2 to 4 million more hungry men, women, and children every 
year with the same resources.'' You go on to talk about buying 
food locally can speed the arrival of aid by as much as 14 
weeks.
    It can also cost much less. And you go on from there to 
make the case on flexibility.
    I guess I would focus the first question on how do you make 
that happen? How do you ensure that the potential recipients of 
this aid get not just get the kind of food, but in particular, 
the nutritious foods that they need, even if they cannot be 
bought in local markets?
    Dr. Shah. Well, thank you, Senator, and thank you for your 
unique leadership on food and hunger issues at home and around 
the world. The legislation that you have worked on is often 
referenced appropriately as the underpinning of our Feed the 
Future initiative and program. And your leadership on thinking 
through food aid is very important to our aspiration to get 
this done.
    Senator Casey. Thank you.
    Dr. Shah. The reality is that over the last 3 years we have 
an actual database driven by the fact that we have had in the 
international disaster assistance account about $300 million a 
year for a program called Local and Regional Procurement. That 
program provides us with real data about where we have been 
buying food, how long it takes us to take regionally procured 
food to children and women in needy situations.
    It has shown us that we can use new and different kinds of 
tools ranging from local foods and new food formulations to 
vouchers and other card-based systems that empower people in 
settings where we cannot physically reach them with food 
convoys for security reasons. And it has given us the 
confidence that we can use the teams and the organizations we 
have in place to implement this approach in a way that delivers 
real measurable results.
    And I would also add that through that effort, we know that 
when we buy food locally, we put it in a bag that says ``USAID 
from the American People,'' and it has the same brand value as 
anything else. In fact, I have actually been in settings where 
we are feeding children with high nutrition pastes and things 
like that. And I can assure you they are well aware because 
each packet is individually wrapped and labeled and branded, 
that those benefits accrue to them because of American 
commitment, generosity, and humanitarian support.
    So we have a strong database that indicates that this kind 
of flexibility will reach the 4 million additional children. 
And we know that, frankly, this year, the Syria crisis is so 
dramatic and significant that all of our flexibility will be 
absorbed in that setting, requiring us to move children in 
Somalia, DRC, and Pakistan from the LRP program to the Title II 
program. And because of the efficiency differences, we will end 
up moving hundreds of thousands of kids off the support 
programs as we make that transition if we do not do this 
reform.
    Senator Casey. I appreciate that, and I have limited time, 
but I will just raise one more question. You can amplify the 
answer in written form as well. But on Syria, I know you have 
been asked a number of questions today, and I am sorry I was 
not here for that.
    But I think we are still struggling with the best approach, 
and I think it is both a bipartisan struggle, but also a 
bipartisan effort that is being undertaken. Senator Rubio and I 
have legislation. Senator Coons and several others are working 
with us on it. But we are trying to move forward in a way that 
would be constructive and effective in bringing the conflict to 
an end and to be able to deal with the aftermath.
    And I know this may be by way of reiteration, but just 
maybe a couple of words about how you are going to continue to 
make sure that the food aid gets to folks either on the Syrian 
side or the refugee side in places like Turkey?
    Dr. Shah. Well, thank you. On the humanitarian side, we 
have provided at this point nearly $400 million of humanitarian 
support. We know that we are reaching 2.4 million Syrians 
inside of Syria with everything from food to clean water to 
earlier in the season winterization kits and blankets for their 
homes and their living situations. And we know that we are 
providing through a range of partners support to the 1\1/2\ 
million refugees with a real focus on those in Jordan and 
Turkey.
    In addition, we have also provided actual direct support to 
Jordan to help them absorb what is essentially 42,000 children 
who are now joining the Jordanian public school system in the 
neighborhoods along the Syrian border and placing extraordinary 
strains on their domestic situation. It has been difficult. 
Access inside Syria is the biggest challenge, but we work with 
a range of partners, including NGOs, that can focus and work in 
opposition controlled areas.
    In addition to that, Secretary Kerry this past weekend 
noted an additional $250 million commitment specifically to the 
Syrian Opposition Council to support services and governance 
efforts in opposition controlled areas. And we are coordinating 
an international effort to bolster the SOCs capacity to provide 
real services and governance in certain parts of opposition 
controlled Syria. And as Secretary Kerry noted, in making that 
announcement the Syrian opposition has worked with us to also 
make commitments to respect women's rights, gender 
considerations, and to promote openness in their approach to 
governance as this gets off the ground.
    So we are doing everything we can. It is a very difficult 
operating environment as, of course, you are well aware. And 
our people take real risks to do this, but it is in our 
national security interests to be actively engaged here.
    Senator Casey. Thanks very much.
    The Chairman. Senator Rubio.
    Senator Rubio. Thank you. And the chairman brought this up 
earlier, but I wanted to close the loop and just add my own 
thoughts on the Cuban democracy programming. And he may have 
made this point, and so I apologize. I was in the back for a 
few moments.
    But my understanding is that your core budget at USAID has 
taken about a 10-percent reduction, is that correct? But the 
Cuban democracy programs have taken a 25-percent reduction, 
which seems way out of proportion to the general reduction for 
a program of this small scale.
    And a couple of points come to mind. No. 1 is, every time 
some of our colleagues or others visit Cuba, one of the first 
things they get complaints about from the Castro government is 
the democracy programs. They absolutely hate it. That is No. 1. 
And there is a reason for that, because not only are they 
antidemocratic, but apparently they felt these programs in the 
past have been quite effective.
    The second problem then is, over the last few years, and 
this is documented. I am not making this up. Some of our 
colleagues, including the former chairman of this committee 
through staff, held this program up with endless questions 
about it. And so I do not think it is a coincidence that this 
reduced so completely out of proportion from the size and scope 
of the program. And I just hope that this will be reversed 
because I think it is a terrible precedent and a terrible idea.
    Beyond that, I do have concerns that I hope will be 
addressed when the funding does come out, and hopefully it will 
be at a higher level once it goes through this process, that it 
is truly being purposed for democracy purposes. And I have no 
problem, and obviously I do not have anything here to say today 
about the people who are currently receiving the funds and how 
they are using it. I just think it is important that we be 
clear, this is a democracy program, and there are actually 
provisions in law--the Cuban Democracy Act, the Lever Debt 
Act--that actually condition what it can be spent on and what 
it cannot be spent on.
    So I am not claiming that it is being spent on things that 
it should not be. I think it is very important that we be clear 
that this money is being spent on the promotion of democracy, 
not on the creation of grassroots community organizations that 
specialize in, you know, better sewage treatment programs or 
what have you. This is about democracy. That is what this 
program is about. And I hope we will be vigilant in that 
regard.
    And I also think it is important to ask ourselves--and by 
the way, this is not a 1-year cut. My understanding, Mr. 
Chairman, is this has been a steady erosion of this program 
over the last few years. But a 25-percent cut on such a small 
program, combined with we have seen some of the political 
resistance to it over the last few years. I personally do not 
believe it is a coincidence, and I hope that this can be 
reversed.
    On a broader point about foreign aid in particular, in 
general, and I would use Egypt as an example, in particular.
    I am a believer in foreign aid. I think it is an important 
part of our foreign policy. It gives us influence. It allows us 
to impact events around the world. I think it is an important 
tool in furthering our national interest. And I am sure you 
agree--I know you agree--that the primary purpose of foreign 
aid is to further our national interests.
    Americans are concerned, however, when they see foreign aid 
going into places--and I would just use Egypt as an example--
where you have government leaders and others in that society 
that are participating not just antidemocratic things, but just 
systematically violating the rights of religious minorities and 
others. And I think my question is on a broader scale--I am a 
firm believer, and I want to get your thoughts--that our 
foreign aid should be conditioned, and increasingly 
conditioned, on our national interests and on our values, 
particularly when it comes to foreign aid along the lines of 
supporting governments and their economic programs.
    And I just think it is critically important that our 
foreign aid come with strings--quite frankly, not with strings, 
with ropes attached, that ensure that the money is being used 
to further our national interests. It is not a charity. It is 
not paying tribute to a foreign government the way one leading 
cleric in Egypt classified it as. It is something that is 
designed to further our national interests and our values.
    And I just want your general thoughts about what we can do 
to improve on that front. What can we do to ensure that our 
foreign aid is a carrot, and, quite frankly, an incentive for 
governments to move their societies and their economy in a 
direction that is good for them, but ultimately is really good 
for us because it is our money.
    Dr. Shah. Well, thank you, Senator. On both points, I can 
assure you on Cuba, your point is well taken, and we will make 
sure as we have done that the focus of this program sticks to 
the letter of the law and is focused on democracy and civil 
society. And per the recent GAO report, I think those third 
party assessments show that, in fact, that has been how we have 
managed to implement this effort.
    With respect to the general point about foreign aid, I am 
in complete agreement that our foreign assistance advances our 
national interests. Sometimes it advances our national 
interests by seeking and achieving commitments to certain types 
of reforms that can range from sectorial policy reforms to 
larger scale commitments to protect the rights of women and 
minorities in certain situations.
    We would be eager to work with you to articulate different 
forms of conditionality, but Egypt is a good example because 
over the last year and a half, as we have reshaped the program 
in Egypt, we have essentially focused on a handful of 
priorities. The first is the macroeconomic situation, and we 
have, in fact, conditioned our cash transfers and loan 
guarantee support efforts to Egyptian participation and 
negotiations in the IMF program, because that is what is 
required for them to be successful.
    Second, we focus very much on youth employment. As 
Secretary Kerry recently said, that is the core challenge, and 
we know that our efforts help open up the economy, have led to 
3,700 small business starts; 7.9 million loans to local small-
scale businesses that create jobs for young people in those 
settings.
    Third, we focus very much on women and minorities. We 
specifically support the Coptic Evangelical Organization for 
social services, and a range of other minority rights 
organizations, and have conditioned as part of our diplomatic 
dialogue this assistance on ensuring space remains open for 
those civil organizations in respect of those rights.
    Senator Rubio. I am sorry, when you say ``diplomatic 
dialogue,'' we have told them we want you to protect the Coptic 
Christians, or we have actually said----
    Dr. Shah. In every conversation, absolutely.
    Senator Rubio. All right.
    Dr. Shah. And, we do not link everything to precise 
conditionality, but the basic themes of supporting the 
macropackage with the IMF, supporting women and minorities, 
ensuring rights and open space for civil society, and allowing 
private enterprise to flourish and create jobs in areas where 
there is a lot of young unemployment have been the drivers of 
our dialogue and are the basic conditions for this program 
being in place.
    The Chairman. Thank you.
    Senator Coons.
    Senator Coons. Thank you. I want to thank Senator Menendez 
for convening this critically important hearing.
    And I want to applaud you, Administrator Shah, for your 
determination, your vision, your leadership, and your deep 
commitment to development issues. I share the views expressed 
by several of my colleagues that development is absolutely 
essential to America's national interests, and I intend to 
continue to work with you to ensure strong support for the 
appropriate balance between diplomacy, defense, and 
development.
    But in order for me to be true to the concerns of my home 
State, we also need to continue to pursue efficiencies to make 
sure that funds that are being spent on foreign assistance are 
spent wisely and well. And I have been impressed with your 
innovative approach to furthering our development goals, to 
insisting on accountability and to transparency. And so let me 
dive into a couple of things around it if I might.
    I also want to commend the work of this committee in 
partnership with USAID on Syria and Syrian relief, and I 
commend Secretary Kerry's significant increase and support 
through the SOC, something we have discussed before and you 
know I have pressed for.
    Africa trade hubs, if I might first. I have been impressed 
with the work of USAID's regional trade hubs that help build 
regional capacity in Africa and create economic opportunity for 
Americans and Africans. How can they be expanded to promote and 
further interregional trade, and what ways do you think USAID 
can contribute to expanded opportunities for trade investment 
in Africa?
    Dr. Shah. Well, thank you, Senator, and thank you for your 
ongoing support of this agenda and your tremendous personal 
experience and guidance on a range of issues as we go forward.
    Specifically with respect to the African trade hubs, I 
would point out that in both west Africa, eastern Africa, and 
southern Africa, we have had independent evaluations that 
demonstrate that over the period of 7 to 10 years, these trade 
hubs have significantly improved interregional trade, that 
countries depend on them for having clear and transparent 
custom systems and the ability to move goods across borders.
    We are implementing reforms as we speak. We are tying these 
very closely to our agricultural programs and agricultural 
trade efforts, and that has already borne quite a lot of fruit. 
The second way we are informing them by is linking these to 
some of the efforts to fight corruption and improve 
transparency with customs, collection, and informal collections 
of tariffs at border posts. And a third has been tying the 
trade hubs to our efforts to expand access to energy in the 
region. Many of these settings--energy, trade--will be one of 
the next big areas of regional trade and expansion.
    So we are pursuing all of those with respect to these trade 
hubs and obviously maintaining the budget support for these 
efforts has been a challenge, but we think there is strong 
external validation for the effectiveness of these efforts.
    Senator Coons. Well, they are a modest investment that I 
think has seen some real outcomes. I look forward to working 
with you on those. There are so many other things I would like 
to talk about: the Higher Education Solutions Network, which I 
think is a tremendous idea, your, I think, bold reform, USAID 
Forward.
    But let me also talk about food aid reform, which is a 
significant proposal in this year's budget. If you would, 
please discuss the reforms to the Food for Peace Program that 
were included in the Senate version of last year's farm bill, 
what benefits they would bring to the program, and what the 
proposals are in the administration's budget, and how that 
would deal with inefficiencies in the current system. As I 
know, it has already been discussed, but continue to protect 
the vital interests of American farmers and shippers as well. 
How does it strike the right balance?
    Dr. Shah. Well, thank you. We believe this proposal does, 
in fact, strike the right balance. It incorporates many of the 
components of what the Senate bill was moving toward, which is 
giving us more flexibility to use and purchase food locally and 
to do that when it is cheaper, more effective, it does not 
compete with American-produced commodities, and it can help 
save lives in emergency settings.
    And we have a strong database over the last several years 
of examples where we have done precisely that. And we also have 
a strong database that shows that recipients of that type of 
aid and assistance have the same appreciation of it as coming 
from the United States and being branded as such as in the 
traditional programs.
    I would add that this proposal includes a commitment to 
continue to buy the majority of food from American producers 
and shipped on American-flag vessels. But we want to do that in 
a more modern and science-based way. The science tells us that 
traditional commodity gifts are less useful at saving 
children's lives at times of crisis than high nutrition, 
micronutrient enhanced, prepackaged foods that are now being 
developed in Europe and elsewhere in the world. We think they 
should be developed in the United States. We have the best 
agricultural system and the best agricultural companies on the 
planet, and we should be at the forefront of that.
    So our team has created a pipeline of 10 to 12 new products 
and technologies that will be emerging with those types of 
products. We think that is very much the future of a science-
based aid program that can save the most lives at times of 
crises, and we think that will be very effective.
    Finally, I will just say with respect to shipping that we 
have looked very carefully at this and provided a support 
program expansion for the Department of Transportation. We 
believe that most--in fact, there is quite a lot of 
concentration in this industry with our use of a few firms 
really being at issue here, and we have designed that to be 
able to ensure that those partners have a transition path in 
which they receive support and can maintain American jobs. And 
that was the purpose of that part of the proposal.
    Senator Coons. I look forward to working with you on a 
number of these different great challenges of development. I 
have additional questions I would love to ask on Kenya and the 
Democratic Republic of the Congo that I will submit for the 
record.
    Thank you, Mr. Chairman, for the chance to question today.
    The Chairman. Thank you, Senator Coons.
    Senator Murphy.
    Senator Murphy. Thank you, Mr. Chairman. Welcome, 
Administrator Shah. Thank you very much for joining us. Let me 
just associate myself with the comments of Senator Coons and 
others. We are so appreciative of your work, and I think we 
understand now more than ever that this Nation does not remain 
secure unless we have a commitment to foreign aid and an 
understanding that the only way to win the argument as we have 
been talking about on this committee week after week and month 
after month is to make sure that we are a true partner for 
development.
    Administrator Shah, I wanted to talk about recent events in 
Russia for a few moments. I do not know if that has come up 
yet, but we certainly were very disappointed to see the new 
Russian disposition not only on USAID, but also on other 
American NGOs that have been very good work there.
    And it is an open-ended question for you to just give the 
committee an update as to our strategy vis-a-vis Russia going 
forward. To the extent that we do not have a physical presence 
there of USAID, can we still accomplish with respect to our 
development goals there from outside the country, and what do 
you see as our future disposition toward that nation, and is 
there anything left that we can continue to do without a 
presence there?
    Dr. Shah. Thank you, Senator, and thanks for raising that 
particular issue. It has not yet come up.
    Over 20 years of history, the United States development 
partnership with Russia had evolved to be very focused on 
specifically maintaining space for civil society organizations 
and supporting those organizations, primarily Russian-led 
organizations that sought to advance the principles of freedom 
of speech, freedom of civil society, openness, transparency, 
and government and public administration.
    Obviously that specific space has been aggressively 
targeted with those organizations, whether they are USAID 
partners or otherwise, having been the subject of visits and 
raids and document requests and other things that have made it 
very hard for those organizations to continue their mission.
    That said, our Ambassador in Russia and our State 
Department team in Russia is very focused on this element of 
the partnership and dialogue with that country. And, in fact, 
there are a range of mechanisms they can use to continue to 
provide support through international organizations and others 
to advance civil society causes. But at the end of the day, we 
are very concerned and worried about the continued restrictions 
on these organizations.
    By the time what happened last year happened, USAID was a 
very small partner with these organizations that had become 
almost entirely supported through a diversity of sources of 
support, most of which were Russian. So it is not so much a 
targeting of USAID that we are concerned about. It is the space 
and the ability of partners, like GOLOS, to be effective 
operators.
    Senator Murphy. So without the mission presence, will there 
be any presence of USAID dollars in Russia moving forward?
    Dr. Shah. Well, the State Department will continue to 
provide engagement and support in a range of ways to partners. 
USAID will not be part of that.
    Senator Murphy. Just turning quickly to Afghanistan, I want 
to just raise a very specific point. On one of my recent visits 
there, we were taking a look at some, you know, very productive 
programs that you had funded to try to build the agricultural 
sector. And we continued to hear about a persistent problem of 
transport that, though we were doing a better job of getting 
resources to producers and they were producing new crops that 
were not poppy, increasingly they just could not come up with 
an economic rationale to get them out of the country to buyers 
because on average the transport was being stopped 24 different 
times, legally and illegally, by people who required them to 
pay fees. And by the time they got it to a port, it just did 
not make any sense to sell it any longer.
    Can you talk a little bit about this specific problem in 
Afghanistan and how that potentially gets better or worse as we 
decrease our military presence there? We are doing a lot of 
good work with farmers, but it does not do much good if they 
cannot get their product to market because of the difficulty of 
transportation.
    Dr. Shah. Well, thank you for asking about agriculture in 
Afghanistan. I think over the next 5 to 7 years, until some of 
the mining resources come online, that will be the core driver 
of growth and development and employment for the bulk of the 
people of Afghanistan.
    The reality is the central challenge for Afghanistan in 
this setting is sustaining the huge gains that have already 
been made, and ultimately replacing international support and 
military contracting with private activity and private 
investment. And private investment simply cannot thrive in an 
environment that, as you described, has so many erratic points 
of engagement from officials, or otherwise, who effectively 
create a difficult and sometimes corrupt operating environment.
    So we have worked in a number of ways to address that. 
First we have created something called the Tokyo Mutual 
Accountability Framework by which future aid commitments will 
be conditioned on Afghans themselves achieving certain 
benchmarks, one of which is specifically fighting corruption 
and improving the collection of domestic revenue from customs 
and reducing transport bottlenecks.
    Second, we work with them across the board on trying to, in 
a more specific way, implement programs that address these 
things. Things as technical as using mobile-phone-based payment 
systems have been found to be effective at essentially cutting 
out the various layers of middlemen who can sometimes cause 
these types of respective corruption problems that limit 
private activity and investment.
    The third is we are in the process of making sustainable 
agricultural investments and often doing it through local 
Afghan private enterprises, and we think that is going to be a 
very important part of that sector succeeding.
    Senator Murphy. Thank you. Thank you very much, Mr. 
Chairman.
    The Chairman. Senator Cardin.
    Senator Cardin. Thank you, Mr. Chairman.
    Administrator Shah, I want to spend a little bit of time 
allowing you to respond to how the President's budget fits into 
the Rebalance to Asia policies that the administration has 
announced and is moving forward on so many different fronts. So 
I am interested as to how your budget will complement the 
President's initiative on the Rebalance to Asia. First, I want 
to ask about two specific countries, and then I will be glad to 
get a general response if the time remains.
    In Burma, the President has made this a personal priority. 
You opened an office in August of last year, if I am correct. 
Can you just update us as to the progress being made in that 
country? We have gotten mixed reports as to how things are 
going.
    Dr. Shah. Yes, thank you. I will say just in general while 
we have a 6-percent overall reduction in our budget, the fiscal 
year 2014 request reflects a 7-percent increase for Asia to 
capture this Presidential priority of a pivot to a 
prioritization of our Asia partnerships.
    In Burma specifically, when the President was there, he 
both opened the USAID mission and launched a partnership that 
was, in fact, conditional. It delineates the conditions under 
which we are expanding our efforts on a range of fronts. And 
some of those conditions have to do with government 
transparency and openness and continuing on their path of 
reform. And some of them have to do with how they are 
addressing the peace process with ethnic minorities in certain 
border areas.
    We believe there has been effective and significant 
progress in the first area, and we know there are processes in 
place to address the second. But as we have all seen more 
recently in the press, that it is not on the same trajectory as 
the first.
    That said, our efforts are focused on a few things. First, 
we are focused on improving the economic climate, opening up 
the economy, and supporting the kinds of public-private 
partnerships that we launched on a recent visit that I made 
there with a range of American technology companies creating 
higher education partnerships and opportunities for business 
starts in Burma.
    A second is a real focus on health, education, and 
agriculture, which are by indicators some of the lowest in the 
region by far on all of those fronts, and they have a lot of 
potential. But we will have to implement those programs 
effectively and with far more domestic investment alongside our 
commitments and capabilities.
    And then the third is we are active participants in the 
peace process and in the humanitarian services needs that exist 
in areas where there has been ethnic conflict. And so we are 
actively doing that as well.
    Senator Cardin. I would suggest there is no bigger 
spotlight than the President when he visits, but you need to 
keep the spotlight on Burma. Clearly the progress has been 
inconsistent and there is great opportunity there.
    I want you to comment on Vietnam for one moment, and let me 
put this in context. It is one of the PEPFAR countries, and I 
am a strong supporter of PEPFAR. I think it has been incredibly 
successful. But in Vietnam, PEPFAR makes up more than half the 
aid programs we have there, totaling roughly $70 million 
dollars if I am correct. And that is a significant amount of 
money for that one country.
    I believe that the HIV/AIDS rate in Vietnam is less than 
.05 percent. So the question is, Is that the best use of our 
foreign aid resources in a country that has a relatively low 
rate of infection, where the other needs are so great? That 
money, perhaps, could be used for other purposes to advance 
U.S. goals. Your comments.
    Dr. Shah. Well first, thank you for asking the question. I 
think the President's budget, especially in fiscal year 2014, 
reflects some of those tough tradeoffs. While we remain very 
committed to the PEPFAR control effort in Vietnam, the actual 
budget committed to that will decrease significantly by 20 
percent, because of increased domestic investment and 
responsibility for seeing through the ongoing treatment needs 
for Vietnamese patients, but also because we wanted to increase 
resources in a few other areas of investment in order to 
capture opportunities on poverty reduction, and maintain civil 
society rights, and support democratic governance.
    Senator Cardin. You are usually very responsive to my 
questions. I did not find that particularly responsive. We have 
a limited amount of money, and it is wonderful their country is 
making progress on HIV/AIDS, but, are there higher priorities 
that we should be investing in in Vietnam?
    Dr. Shah. Well, let me address it a slightly different way 
by saying I think one of the top priorities we do want to 
capture is Vietnamese participation in the TPP, the trade 
partnership. And we are increasing our investment to encourage 
that participation, and the budget reflects that in that it 
reflects an increase in our economic support resources, but a 
decrease in some of the core global health investments.
    There are other programs we are seeing through, like dioxin 
remediation and support for overall economic governance. But I 
think the direct answer to your question is, yes, we believe 
that there are other priorities that we should be supporting, 
and we are trying to prioritize that within a difficult budget.
    Senator Cardin. And there is strong support for PEPFAR, and 
I think it has been remarkably successful. My point is that if 
there are higher leverage programs available in a country, we 
should be able to talk about that and look at it. Vietnam has 
been in the spotlight a lot for United States relations, and it 
is a country that we have made a lot of progress with, 
including on security issues. I think many of us thought that 
is amazing.
    So we have made progress on all fronts of Vietnam, and we 
have to look at our resources and see if we are using them most 
effectively.
    I will get your response to the other parts of Asia later, 
but thank you very much for your commitment.
    The Chairman. Senator Kaine.
    Senator Kaine. Thank you again, Dr. Shah. I just want to 
follow up on comments that the chairman made about the 
Americas. Senator Rubio made some comments as well. And, you 
know, just to say that any time somebody from USAID or the 
State Department is here before this committee, I think you are 
going to hear a lot of questions about this from, I think, a 
lot of different angles because it is of grave concern.
    I lived in Honduras in 1980 and 1981 when it was a military 
dictatorship. And in that period of time, labor activists, 
human rights activists, clergy were being persecuted, even 
losing their lives. There were civil wars in Guatemala and El 
Salvador that were sending refugees by the tens of thousands 
over the border. The United States was building a military 
presence in Honduras to use as a staging area for a fight 
against Nicaragua.
    It is not a military dictatorship today. It is a democracy 
today, and it is less safe. The people that I lived with then 
in a very oppressive time are less safe in their communities 
today in Honduras, and not just in Honduras, than they were. At 
that point, Honduras, who has been just a spectacular ally of 
the United States--if there is a more pro-U.S. Government in 
Central America than Honduras, I do not know what it is over 
time.
    We pulled the Peace Corps out of Honduras because it has 
the highest murder rate in the world. And so when we see 
budgets that are declining in this part of the world, it is not 
only--all the issues that the chairman mentioned are true. So 
many of the issues that we are wrestling with, they are right 
in our own front yard in the Americas. But we also have a 
little bit to do with this.
    I met with the Honduran Ambassador to the United States 
yesterday. In terms of their internal security situation, you 
know, perceptible reductions in U.S. consumers' demand for 
drugs is the thing that would make them the safest. If we had a 
plant that was on the border of the United States that was 
spewing airborne toxins over Central America and killing 
people, we would do something about it. We would be demanded to 
do something about it. Our committees would demand that we do 
something about it.
    But it is U.S. demand for drugs that is hugely a part of 
the security situation, especially in Central America. So 
whether it is CARSI, whether it is your rule of law, project to 
help Mexico and criminal justice issues, whether it is this 
Partnership for Growth pilot that you are working on in El 
Salvador, and that is something where there is a budgetary 
plus. I was glad to see that, El Salvador and other countries.
    I just think before this committee and before the 
International Development Subcommittee, you know, I think you 
are going to hear a lot of questions about the Americas.
    We may be rebalancing toward Asia because of China. China 
is rebalancing toward the Americas, as you know, with their 
work in resource contracts and so much of what they are doing 
in the Americas. You know, they see it as an opportunity area. 
They see it as an area where they should be more deeply 
involved.
    I would venture to say, you know, it is probably hard to 
get transparent Chinese budgetary figures, but they have a 
development philosophy, too. And I would venture to say that 
their development philosophy, they see the Americas as a growth 
area for the Chinese development philosophy, and it is an area 
of decline for us. And I just think that it is something that 
we need to be very, very concerned about.
    And I suspect that there will be an awful lot of questions 
about that any time State, USAID, other agencies are before 
this committee.
    Dr. Shah. Thank you. I appreciate those comments. I know 
they echo those of the chairman.
    The Chairman. And the chair is happy to have an ally in 
this. [Laughter.]
    Dr. Shah. I will say in this context, we have worked very 
hard to have a dramatic investment in the CARSI Program to 
expand the Partnership for Growth to that region, and to 
enhance the public-private partnerships specifically for El 
Salvador, Guatemala, and Honduras, and even to establish this 
new program with the city of Los Angeles where we are not just 
taking the kind of technical strategies that have worked in 
that setting at crime reduction, but actually asking the 
specific individuals who worked to counter those specific gang 
organizations to go to Central America and work with 
counterparts that are facing, in some settings, the same gang 
organization.
    You are absolutely right that there is a very close and 
compelling tie to what happens in this country and citizen 
security in that region. It is also very clear that the 
fundamental outcome of the Partnership for Growth is that the 
No. 1 constraint to growth is citizen security. That is far and 
away No. 1, and that is why we are trying to do everything we 
can against those challenges. And we have also expanded our 
efforts to do this in a coordinated way with the military and 
with the mapping exercises that SOUTHCOM has really taken 
leadership on.
    We appreciate those comments, and I hear you, and I 
certainly hear the chairman as well.
    The Chairman. Thank you. Let me just piggyback a moment so 
we can close the loop on this. I gave it to you in a long list 
of things, so I just want to mention specifically--on CARSI, 
how are you intending to use the additional funding for 2014? 
And in addition to what specifically are you using the 
additional funding for, what are we doing about helping or 
engaging the Central American governments in their fiscal and 
policy reforms that would be necessary to sustain these types 
of programs that were supported by AID?
    Dr. Shah. Well, thank you, Senator. I have had the chance 
to visit and see some of these efforts in practice, and our 
funding goes to specific elements of CARSI. CARSI obviously 
also includes core State investments. But some of the things we 
have supported include mapping, community crime--mapping using 
new technologies and identification of crime rates, areas, hot 
spots, community crime prevention strategies that have borne 
out with real data that they have been far more effective than 
what those communities were trying before.
    We have been the lead partner within that program for some 
of the youth programs that reach at-risk youth and have engaged 
some American partners to help advance those efforts as well. 
And then we work in partnership to track both the international 
gang relationships and otherwise to be able to provide data and 
information to our partners in the region. Those are just some 
of the things that CARSI does overall, and we have one part of 
that program in terms of our responsibility.
    On the very good question of what are we doing on the 
fiscal policy side, while I know there are some activities to 
support that, I would rather get the right answer for you and 
send that out.
    The Chairman. I will look for that answer. So basically, is 
your answer that you are just plussing up the activities you 
are already pursuing under CARSI, or is there something new 
that you are doing with the additional money?
    Dr. Shah. No. Well, I think the things that we believe have 
the most evidence of being really effective are the areas where 
we will focus the increased resources. And this mapping effort 
that has offered a lot of data and information has been very 
closely correlated to improving outcomes is one of the examples 
of that.
    The Chairman. Senator Murphy.
    Senator Murphy. Thank you, Mr. Chairman. One additional 
question. I wanted to bring you back to Russia's zone of 
influence again, talk about the Ukraine for a moment.
    You know, obviously a pivotal moment right now in the 
Ukraine as they are making some fundamental decision as to 
which they orient. It is not a choice for them necessarily, but 
there is certainly a lot of leverage that we have at our 
disposal to try to make their turn to the West slightly more 
attractive than a turn to the east. The Peace Corps, for 
instance, has one of its largest presence in the world in the 
Ukraine. We have had enormous success there.
    Can you just talk for a moment about the tools at our 
disposal at USAID over the next several years as we talk with 
Yanukovych and others about their opportunity to orient 
themselves toward Europe, to have greater partnership with the 
United States amidst obviously growing pressure Russia to look 
in a different direction.
    What are the tools that we have at our disposal to try to 
help them make that decision?
    Dr. Shah. I think we have a few. We have helped to expand 
the Peace Corps presence as one example. We have supported 
democratic governance and civil society programming and have 
been probably the lead international supporter, and thereby 
have some very longstanding relationships and partnerships with 
organizations in that community. And many of them have 
matriculated into government and have taken with them a 
capacity to work with us and partner with us.
    Traditionally, we have had a larger health investment in 
the Ukraine. Part of that was focused on the control of TB and 
helping them manage, in particular, multidrug resistant 
tuberculosis, which was more challenging. And more recently we 
are focused on establishing partnerships that can attract more 
private investment.
    We do not have the kind of resourcing to allow for sort of 
large sale infrastructure, but we also do not think that is 
what is required given their economic standing. It is more 
helping them with policy reforms, domestic administration, and 
attracting private investment through our partners, including 
OPIC and Ex-Im and some of the other U.S. agencies that can 
bring resources to bear.
    Senator Murphy. Well, as you know, we are at a critical 
moment in terms of the decisions that are being made there, and 
I think you are right. At this point they are looking for 
opportunities for the United States to allow them to attract 
some private money that they right now do not have an 
availability to other than through partnerships with Russian 
industry. And I think you are along the right track.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Well, Mr. Administrator, thank 
you. You have exhibited a breadth and depth and scope of 
knowledge of your agency, and that is tremendously reassuring 
to the committee. We look forward to working with you on some 
of these issues that we think we can enhance. And as I visit 
abroad, I always like to stop by AID projects and see our men 
and women in action, and always impressed by them.
    With the thanks of the committee, the record will be remain 
open until Friday.
    The Chairman. And this hearing is adjourned.
    [Whereupon, at 11:58 a.m., the hearing was adjourned.]
                              ----------                              


       Additional Questions and Answers Submitted for the Record


     Responses of Administrator Rajiv Shah to Questions Submitted 
                       by Senator Robert Menendez

                                 syria
    I understand that the United States has been the largest provider 
of humanitarian aid to Syria and I commend the administration on all it 
has done on this front. But given the scale and scope of the crisis and 
the exponential growth in the number of refugees, I believe we should 
be doing more and we should also be ensuring that we receive credit for 
the contributions we are making.

    Question. Do you expect a dramatic increase in the level of support 
for Syrian humanitarian assistance over the next few months?

    Answer. For the past 2 years, the U.S. Government has continuously 
programmed humanitarian funds in Syria and the neighboring countries to 
respond to evolving needs on the ground, targeting any available 
opportunities to get assistance to people in need. Given the protracted 
conflict and continuously growing needs, the Syria response will remain 
one of the USG's highest humanitarian priorities. USAID anticipates 
that emergency food requirements in Syria and neighboring countries 
will double by October, requiring a commensurate increase in support 
from the USG and other donors. For example, the U.N. World Food 
Programme (WFP) is currently reaching approximately 2 million people in 
Syria with emergency food assistance, with plans to expand 
distributions to 4 million people. USAID and the U.S. Department of 
State's Bureau of Population, Refugees, and Migration (State/PRM) are 
in the process of programming additional funds, which will be announced 
be in the coming months.

    Question. How can we ensure that we receive credit for all the 
contributions we are making? How do we balance the need to receive 
credit from the Syrian people, with the imperative of protecting aid 
providers by not labeling everything as ``made in the USA?''

    Answer. Though recognition of U.S. humanitarian efforts inside 
Syria are severely constrained by safety and security concerns we are 
working to make our aid more visible. The U.S. Government requires NGO 
partners to brand our assistance unless doing so would imperil the 
lives of aid recipients and the humanitarian workers delivering 
assistance. In the majority of Syria it remains too dangerous for wide-
scale branding activities. In areas where it is safe to do so, 
including opposition held areas in the north, we are able to inform 
local leaders and recipients about where the aid is coming from.
    We work with international organization partners to highlight U.S. 
Government support wherever possible. For example, nearly all of the 
bakeries receiving U.S. Government flour in Aleppo governorate are 
informed that it is U.S.-donated flour. A USG partner recently 
delivered heavy-duty plastic sheeting branded with the USAID logo to 
Atmeh camp in Idlib governorate. The plastic sheeting will be used to 
construct community structures in the camp, which houses more than 
26,500 IDPs. The USG continues to work with partners to evaluate 
appropriate opportunities to increase the visibility of USG assistance 
without endangering the lives of both partners and beneficiaries.
    Because wide-scale branding is not an option at this time, we are 
seeking to get the word out in other ways that do not undermine the 
operation: U.S. Government staff in D.C. regularly meet with the Syrian 
diaspora community to utilize its connections inside Syria and spread 
the message of USG support. We also continue to heavily engage with 
local, regional, and international media, both traditional and digital, 
to illustrate the extent to which USG humanitarian assistance is 
reaching a wide range of areas inside Syria.
    U.S. Government officials use every public opportunity to highlight 
our humanitarian assistance to the region, including speaking 
engagements, social media, and regional, national, and international 
media interviews.

    Question. Should we be providing more of the humanitarian aid 
through the Syrian opposition as some have suggested? Or are you 
satisfied with the current approach of going primarily through the 
United Nations?

    Answer. As policy, the USG does not channel humanitarian assistance 
through political organizations and institutions, such as the Syrian 
Coalition or the Syrian Arab Republic Government (SARG). To reach all 
populations in need, the USG and all other humanitarian donors must 
work with relief organizations that strictly adhere to the humanitarian 
principles of neutrality and impartiality of aid. This is particularly 
essential in a war zone, to ensure access to beneficiaries as well as 
the safety of beneficiaries and the relief workers who are delivering 
the aid.
    The USG continues to closely work with the Syrian Coalitions' 
Assistance Coordination Unit (ACU) on humanitarian activities and is 
currently funding a humanitarian advisor for 3 months to improve the 
ACU's capacity to better coordinate and manage the humanitarian 
response in Syria.
    While the USG is delivering approximately 56 percent of its 
assistance in Syria through U.N. agencies, the USG also provides a 
significant portion of funding to international NGOs that are 
delivering assistance through networks of local NGOs. The USG's 
strategy is based on the ability of relief organizations, whether U.N. 
agency or NGO, to respond to needs quickly and effectively.
    To date, USG humanitarian assistance has reached all 14 
governorates, including contested and opposition-controlled areas. The 
World Food Programme (WFP), which receives significant support from the 
USG, is working in coordination with the Syrian Arab Red Crescent and 
its vast network of volunteers, as well as NGOs, to reach nearly 2 
million people during each distribution cycle. In addition, USG support 
through international NGOs has reached more than 1 million people in 
some of the hardest hit areas of Syria. The USG will continue its 
funding strategy, while also working to identify potential new partners 
that can reach underassisted areas or respond to unmet needs.
                         latin america general
    Our international affairs budget should more accurately reflect the 
importance of relationships, opportunities, and challenges in our own 
hemisphere. Latin American and Caribbean nations are our neighbors, and 
our actions in the hemisphere have a direct, often magnified, impact at 
home.

    Question. What are USAID's objectives for foreign assistance in the 
region? How will reductions in funding affect USAID's ability to 
achieve those objectives?

    Answer. Impressive progress in the Latin America and Caribbean 
(LAC) region in the past several decades has enabled USAID to adjust 
its mission in the region away from providing direct assistance--like 
vaccinations and food aid--and toward strengthening the capacity of LAC 
governments, the private sector and civil society to propel their own 
development.
    We are prioritizing investments in four areas: (1) rebuilding Haiti 
through investments in agriculture, infrastructure, energy, health and 
economic growth; (2) reducing crime and violence--particularly among 
youth in Mexico, Central America, and the Caribbean--and reducing drug 
production in Colombia and Peru; (3) promoting democracy and protecting 
fundamental freedoms in Cuba and other countries where restrictions on 
press and civil society and flawed electoral processes continue, and in 
some cases worsen; and (4) reducing greenhouse gas emissions and 
adapting to the impacts of global climate change.
    To accelerate progress in these areas, we are embracing a new way 
of doing business by: (1) channeling more resources through local 
entities; (2) testing novel ways to help local governments generate 
revenues for development; (3) partnering with private companies (U.S., 
multinational, and local) to supplement our assistance, create durable 
local enterprises and deliver long-term development dividends; (4) 
opening USAID to innovators from LAC and the world in search of the 
most effective and efficient development solutions; and (5) tapping 
into the home-grown development expertise of LAC leaders like Brazil, 
Chile, Colombia, and Mexico.
                                  cuba
    I have long-supported a strong budget allocation for U.S. democracy 
promotion funding in Cuba. Our efforts on this score provide critical 
support to Cuba's civil society such as access to communication 
technology, humanitarian assistance for the families of political 
prisoners, and training for independent journalists. It is essential 
that we uphold the historical funding level of $20 million to 
demonstrate our strong support in Cuba for democracy, freedom of 
expression and assembly, and human rights. This year's request is only 
$15 million.

    Question. What are the reasons for these cuts?

    Answer. The U.S. commitment to human rights and democracy in Cuba 
remains strong. We will continue our robust program providing 
humanitarian support to political prisoners and their families, 
building civil society and expanding democratic space, and facilitating 
the information flow in, out, and within the island.
    The FY14 request for $15M is based on our assessment of needs on 
the ground, and on-island and off-island capacity to carry out 
programs. In addition, the combined pipeline (FY09 to FY12) for 
Department of State and USAID implementers is about $44 million, 
sufficient funding ($74 million total) to carry out the purposes of the 
program over the next 3 years.
                                 mexico
    I understand that the nature of our assistance delivery to Mexico 
has changed. Whereas in the early stages of the Merida Initiative, we 
delivered a good deal of expensive equipment, we are now working to 
support the Mexican Government's efforts to strengthen institutions. 
However, I want to make certain that--as we reduce our assistance 
budget to Mexico by almost 40 percent--we are not constraining our 
ability to flexibly respond to any strategy shifts that may come down 
under the new Mexican administration.

    Question. Do we have the flexibility to respond to policy shifts 
that may emerge under President Pena Nieto? USAID is also supporting 
municipal level crime prevention programs in Mexico for the first time. 
What lessons can be learned from similar efforts that have been going 
on in Central America for several years?

    Answer. Yes, USAID has the flexibility to respond to potential 
policy shifts from the new Pena Nieto administration. In fact, the Pena 
Nieto administration expressed support for USAID's primary areas of 
Merida Initiative programming--criminal justice reform, crime and 
violence prevention, and human rights. Closely aligned with the 
priorities of the new administration, USAID continues to emphasize 
crime prevention and community resiliency under Pillar IV of the Merida 
Initiative. While the geographic and technical focus may change as the 
Government of Mexico (GOM) develops its new approach to crime 
prevention, USAID and our counterparts are currently working together 
to align strategic priorities and activities.
    USAID has incorporated lessons learned from crime prevention 
programs in Central America to its programming in Mexico, where USAID 
supports the GOM and local communities to plan and implement community 
development strategies aimed at reducing crime and violence and 
providing youth with alternatives to crime. The Pillar IV strategy and 
current programs relied heavily on lessons learned from Central 
America, in particular the need to improve coordination and planning at 
the local level through the development of municipal crime prevention 
committees and plans. USAID is also incorporating experience in crime 
data collection and analyses, as well as in establishing alliances with 
the private sector to reduce crime and violence.
                                colombia
    Colombia is working toward implementation of some ambitious but 
necessary reforms and I am glad that USAID is supporting them in these 
efforts. The Land Restitution and Victims Law, in particular, is 
essential for sustainable peace in Colombia. Colombia is taking on a 
greater share of the counternarcotics burden. I am happy to see that. I 
understand, also, that Colombia is increasingly involved in training 
and assistance delivery elsewhere in Latin America. Years of U.S. 
training has prepared Colombian security officials for the task of 
assisting their neighbors--a sound U.S. investment. Colombia and the 
FARC are in the middle of a peace process right now. We all long to see 
lasting peace in Colombia and are hopeful for an accord.

    Question. Will this budget request allow us to respond if the 
Colombians call on us for assistance? For help implementing a peace 
accord?

    Answer. USAID is supporting many Government of Colombia (GOC) 
efforts that lay the groundwork for peace. Our current programs are 
focused on bringing state presence and services to marginalized, high-
conflict areas of the country; supporting victims and land restitution; 
and promoting access to justice. Many of these programs directly 
support GOC initiatives related to the five agenda items (rural 
development, guarantee of functional political opposition and civic 
participation, end of conflict, drug trafficking, and rights of 
victims) to be negotiated by the FARC and Colombian Government as part 
of a possible peace accord.
    Without knowing what the GOC may or may not request in terms of 
additional or modified support in light of a possible peace agreement, 
we have worked to increase flexibility in our programs in order to 
quickly adjust our assistance if need be.
                            central america
    CARSI is a top priority. I am glad to see the President's request 
includes an addition $27 million for security in Central America. 
However, I believe our efforts in this region could benefit from more 
robust assistance levels. Central American nations face grave 
challenges--Honduras' homicide rate is among the highest in the world. 
The U.S. Government is partnering with governments in Central America 
to prevent violence, strengthen state institutions, combat narcotics 
trafficking, and increase citizen security. Failure to adequately fund 
these efforts will result in continued high levels of crime and 
violence, and an inability to dismantle criminal organizations. U.S. 
investments in the region expand markets for American businesses and 
connect high quality Latin American goods to the U.S. market. Stable 
Central American countries diminish the push factors for illegal 
immigration.

    Question. To what extent are the governments of Central America 
implementing fiscal and policy reforms necessary to sustain and 
replicate programs currently supported by USAID? How does USAID intend 
to use the additional CARSI funding requested for FY 2014? Is the 
additional funding sufficient to meet the challenges we face in Central 
America?

    Answer. Central American nations are making progress toward raising 
more of their own resources to improve the rule of law and address the 
root causes of crime and insecurity in their countries.
    For example, El Salvador has improved its tax collection system, 
which should generate additional funding for citizen safety 
initiatives. Similarly, Honduras passed an emergency ``security tax'' 
measure in June 2012 that established a temporary levy on a range of 
financial transactions with the proceeds set to support security sector 
needs.
    In addition to continuing to implement programs for at-risk youth, 
municipal crime prevention, and rule of law, USAID intends to use 
additional FY14 CARSI funding to further target the most vulnerable, 
at-risk populations.
    For example, USAID is partnering with the city of Los Angeles to 
adapt a tool designed to identify those youth most at risk of joining a 
gang. Using this tool, USAID will provide mentoring and family support 
services on those most vulnerable to joining gangs and criminal 
activity.
    Further, USAID will continue to pursue public-private partnerships 
on social prevention to engage local actors and maximize private sector 
contributions. For example, USAID recently signed a partnership with 
five Salvadorian foundations to combat citizen insecurity and 
strengthen municipal responses to crime and violence in 50 dangerous 
communities in El Salvador.
    Finally, USAID works actively to incorporate best practices and 
lessons learned in other parts of the region and world into our citizen 
security portfolio. FY14 funding will help USAID develop and nurture 
best practices among citizen security technical experts and 
practitioners from various cities across the Western Hemisphere.
    CARSI assistance is meant to supplement--not supplant--the need for 
host nations to develop, fund, and implement national strategies to 
reverse their deteriorating citizen safety environments.
    USAID has effectively coordinated our programming with other donors 
and multilateral and international financial institutions to reduce 
duplicative programs and identify leveraging opportunities to enhance 
the impact of our funding. Together with other donors and the host 
country governments, the nearly $132 million appropriated for USAID-
specific CARSI programs in Central America from FY08 through FY12 has 
been able to achieve results in targeted municipalities and provide the 
host countries with blueprints for successful interventions to address 
the underlying drivers of crime and violence.
                               caribbean
    The Caribbean is a transshipment point for drugs en route to the 
United States. The Caribbean Basin Security Initiative aims to improve 
local capacity to combat the flow of illicit drugs. However, I worry 
that we are not doing enough. The sequester is reducing our military's 
presence in the Caribbean, certain interagency interdiction programs 
were grounded for off the coast of Central America for other reasons, 
and this budget request, instead of compensating for these losses, 
decreases funding for Caribbean security.

    Question. Are our development and crime prevention activities in 
the hemisphere well-coordinated, strategic, and forward-looking?

    Answer. Since 2010, various USG agencies, including USAID and the 
State Department, have been jointly implementing Caribbean Basin 
Security Initiative (CBSI) programs to reduce illicit trafficking, 
increase citizen security and address the causes of crime and violence. 
In an interagency effort, we have drawn on each other's comparative 
advantage to provide assistance on maritime and aerial security 
cooperation, law enforcement capacity building, border and port 
security and firearms interdiction, justice sector reform, and crime 
prevention and at-risk youth. In addition, the Department of State 
convenes an Inter-Agency Working Group including representatives from 
USAID, DHS, DOJ, ATF, DEA, OSD, SOUTHCOM, NORTHCOM, and USCG to discuss 
CBSI programs and related strategies.
    USAID has taken a strategic and coordinated approach to addressing 
the security and development needs in Latin America and the Caribbean. 
The CBSI programs complement the Central America Regional Security 
Initiative (CARSI) and the Merida Initiative in Mexico. As trafficking 
activities are being prevented in one area, traffickers seek 
alternative routes, so there is a need to preemptively deter 
trafficking activities from taking root in other areas. One mechanism 
to help ensure that these initiatives are effectively coordinated is 
the Executive Committee for citizen security in the Western Hemisphere. 
This interagency group includes key interagency stakeholders in each of 
the initiatives and brings them together periodically to discuss 
lessons learned, opportunities for enhanced implementation, and 
opportunities for coordination across the initiatives.
    USAID missions in El Salvador, Guatemala, Honduras, Jamaica, the 
Dominican Republic, and Barbados and the Eastern Caribbean are 
developing strategies that include citizen security as a key focal 
point for the planning of long-term development activities. The idea of 
cross-sectoral responses to the security environment is woven 
throughout and integrated into these programs with the goal of 
improving citizen security. For example, at-risk youth who participate 
in USAID's workforce development programs benefit from life skills and 
vocational training that are interconnected with broader health 
programs. All of these activities work in concert to ensure that youth 
who are at risk of engaging in criminal activities are receiving 
critical services and have opportunities to engage productively in 
society.
                          afghanistan/pakistan
    Question. I took my first trip as chairman to Afghanistan and 
Pakistan because I believe this region remains critical to our national 
security interests. The region is in the midst of an economic, 
security, and political transition. During my trip there, I spent time 
with our USAID missions and conducted field visits to review some of 
our aid programs. I came away impressed with the dedication and drive 
of our USAID teams there. But I also had concerns about how well we can 
conduct oversight in the field, given the security conditions.

   How are we right-sizing our aid presence in both countries 
        to reflect our diminishing footprint, security concerns, and 
        implementation challenges we face? What steps are we taking to 
        ensure that our aid is ``necessary, achievable, and 
        sustainable,'' steps this committee called for in its June 2011 
        oversight report?

    Our relationship with Pakistan has been rocky these past couple of 
years, despite efforts to build a strategic partnership based on mutual 
interests and trust. Efforts such as the historic Kerry-Lugar-Berman 
aid legislation have faced an array of political and implementation 
problems.

   What is your vision for improving this relationship, and 
        how can Congress best support this effort given all the 
        challenges we face?

    Answer. Afghanistan: USAID has identified three priority areas for 
continued investment leading up to and beyond transition: sustainable, 
inclusive economic growth; credible, effective, and legitimate 
governance; and consolidation of gains, particularly in health, 
education, and women's rights. All programming will reflect the four 
principles of Results, Partnership, Sustainability, and Accountability, 
and USAID has adjusted its operating model to facilitate an Afghan-led 
and hence, more sustainable transition:

   First, USAID has increased the percentage of our programming 
        provided on-budget to the Afghan Government, with an emphasis 
        on building Afghan capacity to effectively manage and oversee 
        this assistance. We will also continue to employ multilateral 
        funds like the Afghanistan Reconstruction Trust Fund to 
        consolidate programming and share monitoring responsibilities 
        with other donors and the Afghan Government.
   Second, USAID is focusing more of its assistance on Regional 
        Economic Zones (REZs) that cover major population centers and 
        are linked with regional trade routes to generate more 
        investment opportunities.
   Third, USAID is expanding the number and type of tools in 
        our monitoring capacity to ensure we have access to all 
        appropriate techniques necessary to provide continued oversight 
        of our projects in the field, even as we decrease field staff 
        and have potentially less direct hire access to project sites. 
        This remote monitoring program will employ a number of methods 
        in a multilayered approach to obtaining necessary information, 
        including expanded partner reporting, remote sensing with 
        aerial and satellite imagery where applicable, third-party 
        monitors, community-based reporting, and collection/sharing of 
        data gathered by other donors.
   Finally, in keeping with the principles of Busan, the New 
        Deal for Fragile States, and the Tokyo Mutual Accountability 
        Framework, USAID is transforming its investment approach in 
        Afghanistan to one of mutual accountability, working in close 
        partnership with the Afghan Government and its people and 
        closely monitoring progress on reform. In July, we announced 
        the creation of an incentive mechanism that will provide up to 
        $175 million of current funding for the achievement of specific 
        economic and democratic reforms before those funds are made 
        available to the Afghan Government.

    In addition to adjustments in USAID's operating model in 
preparation for transition, USAID has incorporated sustainability 
analysis into its project design process as part of the Administrator's 
Sustainability Guidance issued in 2011. Each project must develop a 
thorough sustainability plan during the design phase. To ensure that 
current and planned projects are consistent with the Sustainability 
Guidance, USAID also conducts internal portfolio reviews twice a year 
and once a year with the Afghan Government.

    Answer. Pakistan: USAID agrees that programs in Pakistan must have 
the ownership of the Pakistanis to be fully successful and sustainable. 
USAID constantly monitors and evaluates our activities in Pakistan to 
ensure resources are used strategically and appropriately to achieve 
program goals and sustainability.
    In 2011, USAID and the State Department jointly reviewed the 
program portfolio, streamlined the number of programs, and narrowed the 
focus to five priority sectors that represent mutual U.S. Government 
and Government of Pakistan priorities: energy, economic growth and 
agriculture, stabilization, education, and health. This more-focused 
portfolio of activities ensures that our investment:

   Advances U.S. foreign policy objectives;
   Defines ambitious, measurable, and achievable results and 
        manages to these results;
   Builds local capacity in Pakistani governmental and 
        nongovernmental organizations;
   Creates a network of public-private partnerships that makes 
        gain sustainable;
   Safeguards U.S. Government resources; and,
   Communicates impact to a broad Pakistani audience to ensure 
        visibility and awareness of our efforts.

    USAID takes a multilayered approach to monitoring and evaluation in 
Pakistan, to include a missionwide third party contract for evaluations 
to ensure robust program management. Also, the number of locally 
employed staff has increased over the past year, although challenges 
continue. For example, earlier this year, USAID made the decision to 
relocate local staff operating out of our Peshawar office to Islamabad 
in response to the deteriorating security situation in Peshawar. 
Nevertheless, we believe we are able to continue effective monitoring 
of our projects in FATA using third parties, aerial and satellite 
imagery, and other methods.
                              usaid reform
    USAID Reform USAID went through a period of 20 years of decline in 
personnel, dispersion of development responsibilities to other agencies 
such as the Millennium Challenge Corporation (MCC) and the State 
Department AIDS Coordinator's office, and in 2006, a loss of budgeting 
and policy capabilities.

    Question. How would you assess your agency's progress in restoring 
its capacities under USAID Forward and the Development Leadership 
Initiative? What further reforms are you planning on making? What is 
the end goal of these efforts?

    Answer. USAID Forward: USAID Forward, initiated in 2009, is 
designed to change the way the Agency does business--with new 
partnerships, an emphasis on innovation, and a clear focus on results.
    The USAID Forward reform agenda identifies seven areas of 
concentration. They are: (1) implementation and procurement reform; (2) 
talent management; (3) rebuilding policy capacity; (4) strengthening 
monitoring and evaluation; (5) rebuilding budget management; (6) 
science and technology; and (7) innovation.
    With these areas of priorities foremost, USAID established the 
Bureau of Policy, Planning and Learning to drive policy, and to restore 
and deepen the discipline of development across the Agency. 
Concurrently, USAID reestablished Agency-level budget and resource 
planning capability with the creation of the Office of Budget and 
Resource Management (BRM). USAID is responsible for the development and 
humanitarian assistance budget for USAID-managed programs, which is 
annually reviewed by the State Department and OMB. BRM has been 
instrumental in USAID's efforts to focus and concentrate development 
and humanitarian assistance in a difficult budget environment and 
strengthen budget capacity within all levels of USAID.
    A cornerstone of USAID Forward has been the reestablishment of 
USAID strategic planning, including 5-year, country/regional based 
strategic plans, and project design capabilities. Under USAID Forward, 
the Agency established seven policies (ranging from education to gender 
equality to resilience) to support an evidence-based reform process and 
tighten and align Agency planning, budgeting, and reporting around the 
globe.
    To date, USAID has conducted 21 design and 18 strategic planning 
workshops in the field. USAID missions are carrying out intensive and 
data-driven strategic planning. By the end of 2012, 20 USAID missions 
have approved strategic plans, Country Regional Development Cooperation 
Strategies. A total of 70 USAID missions are scheduled to complete 
their strategic plans by the end of the 2014. To better measure the 
effectiveness of programs and help to inform the next phase of 
programming, USAID field missions completed 186 quality program 
evaluations. These are driving USAID's evidence-based decisions.
    The Agency has built several global platforms to capture results 
and leverage this knowledge so that it is shared transparently to 
further support and catalyze Agencywide learning capacities. Last, 
USAID has put in place structures to foster innovative development 
solutions (e.g., Grand Challenges, competitions, university 
partnerships) that create opportunities to connect staff to leading 
innovators in the private sector and academia. This will fortify new, 
effective partnerships across the globe to transform our collective 
efforts and help solve the most difficult development issues of today.
    Taken together, these reforms are forming the foundation of a new 
model for development and will continue to define the way we work. It 
is a model that recognizes that the problems we face are solvable, but 
that solving them requires continued commitment and partnerships across 
the private sector, with NGOs, governants, universities, and others. 
Our ultimate goal remains to work ourselves out of business and replace 
our efforts with those of responsible institutions, vibrant private 
sectors, and thriving civil societies.

    The Development Leadership Initiative: The Development Leadership 
Initiative (DLI) program was launched to increase USAID's total Foreign 
Service staffing by 1,200 with particular emphasis on rebuilding the 
technical cadre of agriculture, education, engineers, and economists, 
and expanding language capabilities and USAID's overseas presence. 
USAID's on-board Foreign Service Officer (FSO) career staff at the 
beginning of FY08 was 1,029, with about 640 of these deployed overseas. 
Cumulatively, with DLI funding from FY08 to FY10, USAID hired 720 new 
FSOs over attrition, averaging one new group of FSOs approximately 
every 8 weeks. FY11 funding supported an additional 100 new FSOs, 
bringing the total DLI hiring to 820 since its inception. No funds were 
appropriated for additional increases in FSO staff in FY12.

    Recruitment and Hiring: DLI hiring is designed to rebuild USAID's 
technical capabilities as well as provide resources to enhance the 
Agency's stewardship functions. USAID has had a broad and rich 
applicant pool since its inception. Between 2008 and 2011, USAID 
received over 35,000 applications. The selection process is rigorous 
and highly competitive and approximately 15 percent of basically 
qualified applicants are invited for the three-stage interview process. 
Approximately 4 percent of applicants receive offers. While not 
required for all positions, most require a master's degree as a minimum 
qualification. On average, selected applicants have 5 to 7 years of 
prior international experience before joining USAID; most speak at 
least one other language; and about 28 percent are former Peace Corps 
Volunteers or staff.
    Individuals hired through the DLI program now constitute 45 percent 
of the USAID Foreign Service. With a current cadre of 1,790 career 
FSOs, USAID has now reached almost 70 percent of its original hiring 
target.
    Continued reform efforts are planned to build the capacity among 
the staff hired under the DLI program. These officers will need to have 
a strong foundation in core technical competencies relevant to their 
functions in the Agency to implement effective projects and to elevate 
development as an evidence-based discipline. Efforts are also underway 
to strengthen the alignment of staff globally with mission needs to 
advance USAID Forward reforms.
                         global health programs
    U.S. global health programs are literally saving millions of lives. 
Over 5 million people with HIV are on treatment. We are well on the way 
to cutting malaria deaths in half in Africa by 2015. And USAID is 
rightly focused on preventing the preventable, namely helping countries 
save many of the nearly 7 million children under 5 who die every year, 
over 40 percent within that first vulnerable month of life. But, as 
effective as these programs are, efforts like the Global Health 
Initiative have struggled with interagency differences and tensions.

    Question. Please explain to us the current status of the Global 
Health Initiative. How can USAID, CDC, and PEPFAR most effectively work 
together while each brings their comparative advantage to bear on some 
of the world's most pressing problems?

    Answer. Leadership of USAID, CDC, and the Office of the Global AIDS 
Coordinator continue to meet on a regular basis to discuss policy 
issues related to our collective work in the field. In addition, there 
are technical committees that address cross-cutting issues, such as 
monitoring and evaluation, which are structured around the comparative 
advantages of the three agencies to produce the greatest results. Over 
40 USG-supported countries have written strategies for operationalizing 
the Global Health Initiative and in-country teams work together to 
achieve the goals outlined in these strategies.
                   food aid reform and food security
    The administration has proposed some dramatic changes to the way we 
provide emergency food assistance.

    Question. While there are many reforms proposed for food aid, the 
budget still continues to draw a pretty bright line between emergency 
assistance and programs to relieve chronic food insecurity. Is this 
something of a false dichotomy? Could we do more to promote resilience 
while helping address emergencies?

    Answer. Emergency food assistance is provided first and foremost to 
save lives. Emergency resources can play a significant role in laying 
the foundation for greater resilience. The flexibility provided by 
having a range of tools for emergency response (cash, vouchers, or in-
kind) greatly increases our ability to reach people before their 
ability to recover has been eroded. If a household receives assistance 
before losing all productive assets (thereby losing any source of 
future income), it is much more likely to be able to recover and move 
forward.
    Emergency assistance is rarely enough to ensure the future 
resilience of vulnerable households. By layering, sequencing, and 
integrating our programming to build resilience, relieve chronic food 
insecurity, and help vulnerable populations recover from recurrent 
shocks and stresses. USAID's Annual Program Statement amendment issued 
at the height of the Sahel food crisis last year reflects just that--by 
focusing on resilience building across the Sahel, giving priority to 
emergency food assistance applications that supported recovery 
activities targeting the most vulnerable populations.
    The emergence of resilience as an organizing concept helps bridge 
the historical divide between humanitarian and development programming. 
Emergency assistance, including both relief and recovery programs, 
provides a foundation upon which resilience and development investments 
can build, particularly in places such as Northern Kenya where 
emergency and recovery assistance is required year after year. There, 
new resilience programs have been designed to anticipate and 
incorporate emergency resources as a proactive way of protecting social 
and economic gains in in the face of inevitable droughts and other 
shocks in the future. Over time, these programs aim to sustainably 
reduce humanitarian assistance needs--building community, local and 
national capacities to manage through drought without humanitarian 
crisis.
    The goal of all USAID food assistance programming is to eventually 
eliminate the need for food assistance. USAID expects that its funds, 
whether emergency or development, will be used in complementary ways.
    There is inherent complementarity between title II nonemergency 
programs--which aim to provide a ``hand-up'' to particularly vulnerable 
households and communities, and Feed the Future's (FTF) agriculture 
programs--which help countries and communities use agriculture to 
``move out'' of poverty. Real progress is being made to fully leverage 
this complementarity. For example, in Bangladesh and Guatemala, new FTF 
projects are completely or partially colocated with title II 
nonemergency programs that are targeting the more vulnerable in the 
region with foundational support to improve their health and food 
security. In some cases, FTF is using the same international and local 
partners as Food for Peace (FFP). In these cases title II programs now 
can aim to ``graduate'' vulnerable but viable households who can 
benefit from value chain interventions being implemented by FTF. In 
several other countries, USAID has taken a ``division of labor'' 
approach, targeting agriculture development assistance resources in 
higher productivity areas, and title II development programs in more 
food insecure, disaster-prone areas (e.g., Haiti and Uganda). The aim 
in these countries is to ramp up agricultural productivity where 
potential is greatest, while building resilience and increasing 
economic opportunity in crisis-prone areas to lay the foundations for 
sustainable growth.

    Question. Under your leadership, USAID has emphasized its identity 
as a learning organization. You have worked on the challenges of food 
security for a number of years. What have you learned from Feed the 
Future (FTF) and from your efforts to promote food aid reform? What has 
surprised you?

    Answer. FTF and Food Aid Reform are both examples of the integrated 
and innovative approaches that USAID and the U.S. Government as a whole 
employ to address the complex challenges facing the world. Natural 
disasters are becoming more frequent, resulting in greater shocks and 
threats to food security worldwide.
    USAID has seen firsthand how greater flexibility in food assistance 
programming can help us save lives in places where traditional food aid 
cannot go. Our FFP teams have put together smart, creative solutions to 
meet urgent needs in some of the toughest emergencies globally, and 
with greater flexibility, they can do even more.
    This year, in particular, we have committed a large portion of our 
funding available for flexible use to respond to the crisis in Syria. 
That means we do not have the flexibility to reach tens of thousands of 
children in places like Somalia, Kenya, Pakistan, and the Democratic 
Republic of Congo.
    FTF coordinates closely with FFP. In general, FFP food aid programs 
are community-based programs targeted to very poor or extremely poor 
households--``the poorest of the poor.'' Many of these households 
depend on agriculture for livelihoods--either from farming their own 
land or working on someone else's land. We have learned that many of 
these households are often unable to meet their family's basic food and 
nonfood needs for 12 months of the year. Constraints, such as limited 
land size and labor availability, reliance on less productive 
technologies and practices, and poor access to markets and inputs, make 
it very difficult for these communities and households to break out of 
poverty. FFP programs work at a local level, providing a safety net for 
these extremely vulnerable households and have a proven success record 
in many underserved communities around the world. Meanwhile, many FTF 
programs focus on value chains and aim to address constraints to 
agricultural productivity both within targeted geographic areas and, in 
terms of policy, at a national level. For example, if a lack of access 
to fertilizer and improved seed is a significant constraint to 
productivity, FTF engages the host government and other interested 
partners to identify key challenges and develop solutions.
    As a result, FTF and FFP have learned to work in tandem to allow 
for an expanded focus on the resilience of vulnerable communities to 
the shocks that exacerbate food insecurity. For example, in order to 
combat the recent crises in the Horn of Africa and the Sahel, FTF 
programs include both longer term investments like increasing the 
commercial availability of climate-resilient crops and reducing trade 
and transport barriers, as well as Community Development Funds (CDF). 
CDF plays a catalytic role in bridging humanitarian and development 
assistance. CDF investments fund community-based interventions aimed at 
increasing the economic and nutritional resilience of the rural poor 
and accelerating their participation in economic growth. These programs 
bridge humanitarian and development objectives through expanded support 
for productive rural safety nets, livelihood diversification, 
microfinance and savings, and other programs that reduce vulnerability 
to short-term production, income, and market disruptions.
                           violent extremism
    Question. In 2011, USAID came out with a policy regarding the 
development response to violent extremism and insurgency.

   To what extent are you now able to measure the 
        effectiveness of programming that targets drivers of violent 
        extremism?
   What are some successful examples of USAID's work in 
        countering violent extremism and what have been some key 
        lessons learned?

    Answer. To support our monitoring and evaluation (M&E) learning for 
countering violent extremism (CVE), USAID commissioned a review of 
program monitoring and reporting systems that track progress in 
addressing violent extremism and insurgency (VE/I). The report, which 
reviewed M&E systems across a number of countries including Iraq, 
Kenya, the Sahel, Afghanistan, Pakistan, and Yemen, provided a series 
of recommendations for the Agency's VE/I Steering Committee as part of 
a larger endeavor to produce an operational guide and/or field handbook 
to assist USAID practitioners. The report concluded that indicators 
developed for USAID CVE programs have shown steady improvement and 
increasing sophistication over the period 2006 to 2012. Though 
measuring the effectiveness of programming in insecure environments is 
often costly and burdensome, USAID's experience and expertise in this 
area has improved dramatically. Our impact evaluation techniques now 
include randomized control trials, baseline surveys, household surveys, 
mobile technology, and focus group discussions among others. In global 
forums, USAID has been identified as an early leader in developing 
approaches for CVE program measurement.
    Evidence shows that drivers of extremism are generally related to 
the enabling environment (e.g., poorly governed areas and weak security 
services), pull factors (i.e., social networks, group dynamics, and 
existence of radical institutions), and push factors (i.e., societal 
discrimination, economic exclusion, and frustrated expectations). USAID 
CVE programming is designed to mitigate those factors. Therefore, 
measuring the effectiveness of our programming often involves measuring 
the change in community perceptions vis-a-vis those drivers. In this 
way, programs are developing more systematic approaches to credibly 
document progress and impact, beyond just anecdotal evidence.
    Typical CVE programming focuses on livelihoods, governance and 
civic participation, functioning state services, government legitimacy, 
security, youth engagement, attitudes of tolerance and moderation, 
among others. Each of those programs will have tailored indicators to 
measure if they reached the desired impact and, by proxy, mitigated the 
drivers to radicalization and violence.
    Investments in M&E at USAID have increased significantly, and 
indicators of progress have shifted toward more complex, abstract, and 
meaningful concepts like youth empowerment, community outlook for the 
future, attitudes toward violence, and stabilization. Indicator sets 
are more likely to capture citizen experience, behavior, and perception 
as well as on-the-ground reality. There is a recognition that citizen 
perception can be volatile in uncertain, high-risk environments and 
that much-surveyed populations are likely to deliver set responses to 
frequently asked questions. Much more effort is being invested in 
trying to capture concepts that are difficult to measure and may have 
indirect causal links with preventing extremist recruitment, such as 
the provision of justice (believed to be a vital factor in stability 
and resiliency in Pakistan and Afghanistan). In these M&E efforts, 
USAID collaborates with other agencies, such as the Department of 
Defense, in sharing indicators and data.
    USAID programs incorporate a mixed-methods approach to data 
collection, which allows M&E specialists to validate or cross-check the 
reliability of data from any given source and which also affords richer 
and more nuanced information for learning than reliance on any one 
quantitative or qualitative method.
    In Pakistan, USAID's Karachi Youth Initiative and Youth in Southern 
Punjab programs were developed in 2012 to enable the U.S. Government to 
respond to the massive amounts of at-risk youth in areas vulnerable to 
recruitment by violent extremist groups. Covering specific geographic 
neighborhoods and regions, USAID's Office of Transition Initiatives in 
the Bureau for Democracy, Conflict, and Humanitarian Assistance is 
developing an innovative system to measure whether the desired outcomes 
of each activity are achieved. Utilizing its independent monitoring 
unit (IMU), USAID is surveying the participants of each activity using 
relevant portions of a standardized ``question bank.'' Comparing before 
and after responses, USAID aims to determine whether participants' 
perceptions, attitudes, and beliefs have changed during the course of 
the activity, as well as whether any intended developmental outcomes 
were achieved. By using a standardized set of questions, USAID will be 
able to determine which types of activities are more effective at 
yielding the desired outcomes. In addition, participants will be 
interviewed 6 and 12 months following project completion to determine 
whether there are any long lasting effects to activities there.
    In Karachi and southern Punjab USAID has helped lead interagency 
efforts to pilot small activities at the community level in order to 
test out a variety of ways to target neighborhoods and communities. 
Some of these activities support vocational training, youth clubs, 
leadership conferences, sport tournaments, schools. All activities seek 
opportunities for ways to disseminate ideas of peace, tolerance, and 
positive relations within the community. In both Karachi and southern 
Punjab, the drivers of violent extremism are manifold and vary widely. 
In Karachi, the neighborhood of Lyari is plagued with gang violence 
whereas violence in the Sultanabad neighborhood adjacent to the U.S. 
consulate is driven primarily by religious extremism. There is no ``one 
size fits all'' approach that would be effective across the country so 
interventions must continually adapt to the changing local dynamics.
    USAID's Kenya Transition Initiative in Eastleigh (KTI-E) was 
established in August 2011 to enable at-risk youth to reject extremism, 
which has become a growing threat to Kenya's stability. The Partner 
Performance Management Plan (PPMP) was developed to clarify 
expectations, ensure alignment with program goals and effectively use 
current program information. Indicators of the PPMP were selected based 
on KTI-E's overall strategic approach while assessing the main 
activities of the project. By assigning indicators at each level of the 
Results Framework, KTI-E is able to monitor whether the developmental 
hypothesis is being achieved. Each of KTI-E's activities is assessed 
and analyzed at multiple stages including at the concept phase, during 
implementation, and at activity closeout.
    KTI-E has focused on supporting moderate views and nonviolence 
amongst youth. Areas of action have included sponsoring public debates 
on issues related to extremism, interfaith dialogue, training for youth 
in financial literacy and entrepreneurship, support for local 
government townhall style meetings, and support to the Ministry of 
Youth to bridge the gaps in services for Somali youth.
    One set of activities supported ``Weekly Youth Debates'' 
implemented by the Nabad Doon (Peace Seeking) Youth Alliance. The 
grantee held weekly debates among Somali youth in which participants 
discussed issues related to extremism facing youth in Eastleigh. This 
created a constructive and peaceful environment for youth to express 
themselves on sensitive topics. Each debate had between 180 to 200 
attendees and one debate was televised on the ``Somali'' television 
channel. Building on the success of the first two debate activities, 
KTI-E supported a grantee to expand an existing Web site to carry out 
an enhanced interactive platform engaging youth in positive online 
activities that reject extremism. Through these activities, KTI-E has 
found that participants involved with the youth debates have been 
highly engaged in their communities, particularly with advocating 
against violent extremism.
                                 sudan
    Question. Sudan today is at a crossroads, not so much in terms of 
its relationship with South Sudan but in terms of its own future. Its 
economy is in dire straits. It is waging war in South Kordofan, Blue 
Nile, and Darfur. And, as in many countries, its youth are increasingly 
willing to take to the streets to announce that the status quo is no 
longer acceptable. There are those who look at the operating 
environment in Sudan and argue that we should not have a full USAID 
mission until we can have full-scale development programs. I look at 
Sudan and think the opposite, as long as security assessments permit. 
We have massive humanitarian programs there that demand oversight. We 
want to find ways to help the Sudanese people have free and fair 
elections and hold their government accountable. We want to find ways 
to help bring peace to Sudan and promote good economic as well as 
political relations with Sudan.

   What is your vision for the USAID mission in Khartoum, 
        including plans for staffing and how to pursue democracy and 
        governance goals?

    Answer. USAID is committed to a partnership with the Sudanese 
people and to ongoing development programming and humanitarian 
assistance for conflict-affected communities. We are working to 
increase the engagement and participation of citizens in Sudan's 
governance and vision for its future, and to prevent the escalation of 
local conflicts in flashpoint areas, strengthen the foundations for 
peace in Darfur, and enhance Sudan-South Sudan cross-border dialogue. 
USAID operates under multiple layers of executive and legislative 
restrictions that limit the extent of our engagement.
    Since the period leading up to the historic January 2011 referendum 
on self-determination for southern Sudan and the subsequent 
independence of South Sudan, the international community, including the 
United States, has seen an increasingly restrictive and difficult 
operating environment in Sudan. The scope of USAID's programs has 
diminished since the Sudan mission reopened in 2006 to support 
implementation of the 2005 Comprehensive Peace Agreement (CPA).
    Despite this challenge, USAID is supporting efforts among the 
Sudanese people to raise their voices in the public sphere and engage 
with the government in constructive ways. For example, USAID supports 
civic participation through consultations in Khartoum on the 
development and adoption of a permanent constitution, which was 
mandated by the CPA and committed to by President Bashir. Though the 
process has been slow and our assistance has been limited in scope, 
USAID has partnered with respected Sudanese partners, such as Ahfad 
University for Women, to conduct open discussions about constitutional 
issues.
    Sudan is still plagued by internal conflict of varying severity 
throughout the country's peripheral areas, as well as simmering 
tensions between Sudan and South Sudan that have continued since the 
independence of South Sudan. In response, USAID is helping to 
strengthen Sudanese NGO and civil society capacity to address the 
causes and consequences of political conflict, violence, and 
instability. In addition, recognizing the importance of women and youth 
in Sudanese society, USAID consistently looks for ways to increase 
their capacity to engage in peace-building and strengthen civil society 
at local and national levels. For example, USAID has supported training 
for culturally influential women artists (called Hakamat) from Southern 
Kordofan and Darfur to become peace activists. A USAID grantee, the 
Human Security Initiative (MAMAN), has worked with these female artists 
to spread messages of peaceful coexistence and tolerance in their 
communities. In addition, USAID is committed to building the capacity 
of youth and civil society organizations nationwide to more effectively 
represent the interests and preferences of citizens. USAID is also 
supporting health clinics, schools, and water yards for livestock in 
the disputed Abyei Area to engage all communities in the area and to 
help reduce competition and potential conflict over scarce water 
sources.
    Despite significant humanitarian needs in Sudan, humanitarian space 
has also been steadily shrinking further over time, with restrictions 
in Darfur broadened to other areas of Sudan, most recently in Blue Nile 
State and Southern Kordofan State. The recently issued Sudanese 
Directive on Humanitarian Assistance codifies restrictions on access 
and operations that USAID and its implementing partners have faced for 
many years. These policies and procedures severely constrain USAID's 
ability to fund and ensure effective implementation of assistance 
programs. Restrictions have been imposed on programs that the 
Government has itself repeatedly appealed to donors to support, such as 
for early recovery in Darfur. Despite these challenges, USAID continues 
to be the largest donor of humanitarian assistance in Sudan, providing 
support to those in need through health, nutrition, and water 
interventions. Where conditions of access and security permit, USAID 
strengthens local markets, livelihoods, and food security through early 
recovery initiatives. However, increased fighting throughout Darfur has 
undermined opportunities and prospects for sustained early recovery in 
many areas and USAID continues its focus on meeting emergency needs as 
a result of displacement and violence in Darfur.
    Regarding staffing in Sudan, USAID has assigned the next Mission 
Director to Khartoum and is in the process of filling other staff 
vacancies with U.S. Foreign Service personnel. Unfortunately, as a 
result of a 180-day Ordered Departure (OD) from Sudan, which lasted the 
maximum limit of 6 months for ODs (from September 2012 until March 
2013), a number of American Foreign Service officers based in Khartoum 
curtailed their assignments. We are working to recruit experienced U.S. 
staff to fill critical positions so that we can move forward with more 
effective program implementation and oversight. We also continue to 
implement a staffing plan to gradually restructure the Sudan mission as 
part of a larger, global effort to consolidate functions that USAID and 
State Department share. As part of this process, we continue to 
transfer responsibility for some administrative support and financial 
functions to the State Department and to other USAID missions in the 
region in alignment with the U.S. Government's consolidation process.
    USAID looks forward to collaborating with Congress on charting the 
way forward for our assistance to Sudan.
                                   tb
    Question. Particularly given the rising levels of resistance and 
the global threat posed by multi and extensively drug resistant 
tuberculosis, please explain the proposed decrease in funding for 
bilateral tuberculosis programs and how that reduction would be carried 
out in terms of altered activities.

    Answer. It is important to clarify that the U.S. Government (USG) 
commitment to reducing the burden of tuberculosis (TB) is unwavering. 
When taking into consideration the overall FY 2014 funding request for 
TB--made up primarily of funding from the U.S. Agency for International 
Development (USAID), and supported by the annual contribution to the 
Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund)--we 
can continue to leverage and maximize those investments to achieve 
greater impact. The concern in the global health community appears to 
center on the structure of the FY 2014 Congressional Budget Request, 
which identified the USAID FY 2014 budget request that is a reduction 
over FY 2012 but did not fully capture additional investments made 
through the Global Fund. The Obama administration has demonstrated its 
strong support for the Global Fund with a request for $1.65 billion in 
FY 2014, maintaining the same level requested in FY 2013, which is a 
$350 million increase over FY 2012.
    The USG's important role in TB is maintained within the aggregate 
request, as is our longstanding leadership role. The response to global 
health problems is a shared responsibility, and USAID is striving to 
maintain our leadership while strongly encouraging countries that have 
the ability to do more to increase their commitments.
    It is also important to point out that we are on track to achieve 
the Millennium Development Goal (MDG) of halving TB mortality rates by 
2015, and USAID is on track to meet the Global Health Initiative TB 
goals for reducing TB prevalence and diagnosing and initiating 
treatment for 57,000 new multi-drug-resistant TB (MDR-TB) cases. This 
outcome is a result of decades of collaboration between the USG, 
developing countries, and public and private partners. This achievement 
is notable and will be one of the only health-related MDGs met by 2015.
    USAID is working diligently with developing countries to increase 
the amount of TB funding within their national health budgets. As 
examples, the Government of South Africa recently committed to increase 
domestic funding for TB and has committed to fully funding the national 
scale-up of GeneXpert by investing over $27 million on equipment and 
consumables. In addition, the Government of India has expressed 
willingness to increase TB funding by over 40 percent over the next 4 
years to scale-up case detection and management of MDR-TB. The nature 
of our assistance is evolving, and as these countries increase their 
resources, USAID resources will direct technical assistance to scaling-
up quality interventions and piloting innovative approaches, while 
building national and local capacity in partnership with the ministries 
of health.
    USAID's leadership in TB has contributed to impressive gains--with 
worldwide mortality from TB falling 41 percent since 1990. In 
particular, USAID has been instrumental in making available key 
innovations, such as GeneXpert, as well as new drug regimens, and 
enhanced diagnosis and treatment. For example, USAID is funding 
clinical studies to develop shorter TB drug regimens, and if 
successful, would reduce the treatment of MDR-TB from 24 months to 9 
months, thereby, improving treatment outcomes, and significantly 
lowering the cost of treatment. Additionally, USAID is introducing the 
newly approved drug Bedaquailine, supporting the development of a 
second-line drug market for MDR-TB, and investing in research for new 
drug development.
                             climate change
    Question. I was pleased to see that USAID's Climate Change and 
Development Strategy includes as the third strategic objective, 
strengthening ``development outcomes by integrating climate change in 
USAID programming, learning, policy dialogues, and operations.'' This 
integration is important to the overall efficiency and success of the 
strategy.

   Therefore, please provide at least two examples how the 
        Agency has been integrating the strategy within the following 
        areas: programming, learning, policy dialogues, and operations.

    Answer. One of the ways that climate change is being integrated 
into USAID programming is through the strategic planning process; all 
USAID missions are required to fully consider climate change as they 
develop their 5-year Country Development and Cooperation Strategies 
(CDCSs). USAID developed supplemental guidance that provides 
information to missions on requirements to integrate climate change 
programming into the CDCS planning process. Through this guidance and 
additional technical support, missions have been able to successfully 
integrate climate change into their CDCSs. The Southern Africa Regional 
CDCS, for instance, integrates climate change into policy and 
decisionmaking as a part of an objective to increase sustainable 
economic growth in targeted areas. As another example, the Bangladesh 
CDCS establishes improving responsiveness to climate change as interest 
to an overall goal of becoming a knowledge-based, healthy, food secure, 
and climate resilient middle-income democracy.
    USAID is also working to develop results frameworks and targeted 
outcome indicators that measure climate change and development outcomes 
for work in sectors throughout the agency, drawing on expertise from 
many sectors including energy, water, food security, democracy and 
governance, and humanitarian assistance. By tracking these indicators, 
we will be able to learn more about the impacts that development 
efforts across the agency are having on climate change. In this vein, 
USAID is implementing 10 Integration Pilot Projects to examine 
innovations on how to integrate climate change mitigation and 
adaptation across Agency development priorities. We are now planning 
evaluations that will help us draw rigorous lessons learned from those 
experiences.
    In December, USAID released policy and program guidance on 
``Building Resilience to Recurrent Crisis.'' This policy recognizes 
that climate change is a critical factor contributing to the shocks and 
stresses that can produce recurrent crises and undermine development 
gains. Integration of climate change considerations in USAID's 
Resilience Policy is just one example of how USAID is integrating 
climate change into its policy dialogues.

    Question. As the USAID Climate Change and Development Strategy 
notes, climate change impacts in the form of rising temperatures and 
increasingly variable rainfall (to name just a couple) are likely to 
undermine livelihoods and threaten food security in developing 
countries, including where USAID operates. At the same time, the U.S. 
Government has undertaken a significant global hunger and food security 
initiative known as ``Feed the Future.''

   Please provide three examples of how USAID has been 
        integrating climate change into the Feed the Future program and 
        how this integration promotes their mutual benefit.

    Answer. Climate change is inextricably linked to food security 
because of its wide-reaching impact on agriculture and landscapes. The 
Feed the Future Initiative has integrated indicators related to natural 
resources management and climate resilience into its monitoring and 
evaluation system so that we can track the effectiveness of our 
programs. In addition, many of the USAID staff working on food security 
and climate change are colocated in the same field offices and work 
together to build sustainable economic growth. Programs are being 
designed in partnership in order to build stronger capacity among our 
partner countries to address these critical issues. Some specific 
examples of how climate change is being integrated into the Feed the 
Future program follow.
    One key component of building climate change adaptation into food 
security and other development efforts is the development of 
vulnerability assessments, which assess expected climate impacts 
enabling necessary adjustments in development planning and 
implementation. The Uganda mission recently completed a comprehensive 
climate change vulnerability assessment for the agriculture sector. The 
assessment is generating insights for use in food security policy, 
programming, and investment decisions. The climate analysis showed 
average temperatures have already risen and that they will continue to 
rise. The analysis also points to changes in precipitation patterns and 
an increase in extreme weather events. Of the eight crops assessed, 
coffee, matooke, maize, and beans were determined to be the most 
vulnerable. The livelihood analysis found that 73 percent of households 
surveyed were highly vulnerable to climate change impacts. The most 
vulnerable households are at risk partly because they rely on crops 
like coffee, matooke, maize, and beans for income and food security, 
and partly because they lack the assets, financial capital, and 
nonagricultural sources of income that can help households endure times 
of stress. To ensure local decisionmakers are aware of the assessment, 
USAID's Uganda mission organized a week of meetings and workshops for 
more than 150 government, donor, research, and civil society 
stakeholders. A total of 50 stakeholders joined a 1-day Options 
Analysis Workshop where cross-sector teams identified specific 
adaptation options for the agriculture sector. Within the mission, the 
vulnerability assessment is already being used to design programs and 
interventions that increase adaptive capacity under the Uganda Feed the 
Future Value Chain Project. The assessment is also being used to ensure 
existing Feed the Future interventions are planning for potential 
climate change impacts.
    Another way Feed the Future is supporting the development of 
resilient agricultural systems is by helping farmers cope with extreme 
weather events. For example, with the help of climate change adaption 
techniques taught by Feed the Future, a Cambodian fish farmer was able 
to save her pond when record seasonal floods hit in 2011. As the water 
levels started rising, aquaculture technicians from Feed the Future 
showed her how to install a tall netting fence to keep her fish from 
escaping the pond and to keep unwanted predators out. They also advised 
her on how to protect the fence so crabs and debris wouldn't cut holes 
in it. This farmer is now sharing the techniques she learned with her 
neighbors, who lost their ponds during the floods.
    The Feed the Future Initiative is investing in multiple safeguards 
and adaptation strategies to prepare for and respond to a changing 
climate in Ethiopia. Ethiopia, one of the most food insecure countries 
in the world, sits in the cross-hairs of climate change patterns, and 
is endeavoring to cope with the multiple threats to food security, 
access to water, and even certain livelihoods. The productivity--and 
soon, even the basic viability--of its long-cycle crops is at risk. 
These crops, which provide up to 85 percent of the food grown in 
Ethiopia, have already seen 15-percent declines in rainfall, setting up 
a potentially dangerous and costly interaction between drought and 
declining agricultural capacity. Under the most likely climate change 
scenarios, cereal production in Ethiopia--and, indeed, much of east 
Africa--may drop 30 percent by 2030. During that period, food aid to 
the region would have to triple to make up for the shortfall.
    For example, USAID is investing $5 million to carry out global-
level research on making livestock more climate resilient in order to 
help people that raise livestock better adapt to climate change 
impacts. USAID will support research on the development, 
identification, and introduction of livestock that are disease 
resistant and heat tolerant, and capable of living on low quality 
forages and feeds without experiencing a decrease in meat and milk 
production.
    Additionally, USAID's Ethiopia Mission's Capacity to Improve 
Agriculture and Food Security (CIAFS) program supports Ethiopia's 
efforts to transform its agricultural sector and improve food security 
for the Ethiopian people by providing targeted training on and raising 
awareness of best practices in agricultural development. The project 
strives to empower leaders to catalyze change, drive growth, and reduce 
poverty. During this reporting period CIAFS organized study tours for 
Ethiopians to learn innovative practices and technologies in 
agriculture and natural resource management, targeting technologies for 
adapting to climate change. CIAFS also promoted peer-to-peer learning 
on an organized a study tour to Mali and Niger pastoralist areas for 
Ethiopian pastoral stakeholders including representatives of 
pastoralist organizations, parliamentarians, and relevant ministry 
leadership and staff.

    Question. I understand that as part of USAID Climate and 
Development Strategy, USAID is helping developing counties move toward 
low-carbon emission economic growth by promoting low emission 
development strategies (LEDS). As part of LEDS, please describe how 
USAID is working to increase access to renewable and sustainable 
energy.

   Please provide examples of this work in Africa and Asia. In 
        addition, in cases where energy is considered a constraint to 
        growth, please describe how is USAID working to promote access 
        to renewable and sustainable energy?

    Answer. A LEDS is a planning and implementation framework that 
helps a country achieve its economic and social development objectives 
while reducing greenhouse gas emissions and building greater climate 
resiliency. USAID'S Enhancing Capacity for LEDS (EC-LEDS) program 
integrates economywide analysis and climate change mitigation 
considerations into long-term country-level planning and decisionmaking 
and assists countries to implement the clean and renewable programs 
that are identified as part of these strategies.
    In Africa, USAID's LEDS work is just getting started. Negotiations 
on government-to-government Memorandum of Understandings (MOUs) have 
established jointly agreed work programs under EC-LEDS with Gabon, 
Zambia, Malawi, Kenya, and South Africa. As these work programs are 
being negotiated, our teams in-country have been working to put in 
place the necessary technical assistance mechanisms to provide targeted 
assistance to our partner countries in Africa that responds to the 
needs and actions outlined in the work programs. Examples of our clean 
energy-related work through EC-ELDS in Africa follow.
    In Gabon, we are working with the Department of Energy's National 
Laboratories to build capacity for carbon footprint analysis of 
economic development and infrastructure projects, for public sector 
energy efficiency, and for cross-sectoral modeling. These efforts will 
enhance capacity for carbon footprint analysis of economic development 
and infrastructure and improve investment decisions that provide 
economic, social, and environmental value, backed by business cases 
that are sustainable, transparent, and accountable to society. This 
work will also build capacity to assess energy efficiency opportunities 
in the public sector and pilot demonstration projects with the goal of 
transferring analysis and implementation capabilities to the Ministry 
of Energy.
    In South Africa, the principal objective of the EC-LEDS partnership 
is to strengthen public sector-related development planning and project 
development capacity for low emission projects, including the 
mobilization of development finance and private sector participation in 
such projects. This collaboration will provide support for the 
preparation and development of approximately 20-30 identified projects 
over the initial 3-year period. This will enable low emission projects 
to leverage potential development financing, cofunding and private 
sector participation opportunities that exist or are emerging within 
the South African development agenda.
    In Kenya, our work is early in the design phase as we work out 
concrete details of technical assistance in support of our joint MOU 
with the Government of Kenya. Possible work may focus on support for 
the development of the renewable energy and energy efficiency master 
plan, support for design of policies that encourage adoption of 
renewable energy technologies including GOK feed in tariffs, 
assessments of grid reliability and ancillary services and requirements 
necessary for the Kenyan electricity grid to accept a greater share of 
variable renewable energy generation sources, and assistance to reduce 
barriers and increase private sector investment in renewable energy 
projects.
    In Asia, the United States has established joint EC-LEDS work 
programs with Vietnam, Bangladesh, Indonesia, and Philippines. They are 
all in various stages of implementation, but the Philippines program is 
especially noteworthy for the speed at which it has advanced and the 
explicit links to constraints to economic growth.
    The U.S. Government and the Philippines Government have agreed to a 
Partnership for Growth, which mobilizes the resources of both 
governments to address the most serious constraints to economic growth 
and development in the country, including hurdles in the energy and 
environment sectors. Building on this partnership, EC-LEDS will address 
two fundamental, constraints to growth: a pressing need for improved 
land use and resource planning that is integrated with both climate 
resiliency and development priorities; and, the lack of a consistent 
policy framework and reliable data for accelerating investment in 
domestic energy resources to ensure reliable, sustainable, and 
affordable energy access nationally.
    The U.S. Government trained 29 Filipino technical experts on using 
the Long Range Energy Alternatives Planning System (LEAP) model to 
identify and prioritize climate change mitigation options. The next 
step is to develop and incorporate LEAP scenarios into the 2013 update 
of the Philippines Energy Plan. Another 35 transport and fuels analysts 
have been trained on tools and databases to analyze sustainable 
transport and fuel alternatives. Moving forward, USAID will support the 
development of high-quality that is essential to increasing wind 
development and private sector investment in utility-scale wind energy. 
This effort will benefit local industry, help to meet the country's 
clean energy growth target, and leverage 5MW of new RE generation in FY 
2013.
    USAID will also work to increase investment in wind and other 
renewable energy development by joining with the Asian Development Bank 
and the wind industry to provide training on overcoming barriers for 
wind development. This activity will result in increased investment in 
wind and other renewable energy development leading to $16M of new 
investment leveraged.
    The U.S. Government is also helping the Government of Bangladesh 
integrate climate change goals with the country's broader economic 
development goals. For example, the USG is capitalizing on the linkages 
between climate change programming and the Feed the Future Initiative, 
which is promoting climate change adaptation through, for example, 
improved seeds and farm diversification, and greenhouse gas mitigation 
through techniques like improving fertilizer application techniques to 
reduce nitrogen emissions. Through the EC-LEDS program, the United 
States and Bangladesh are also partnering to help design and implement 
a low emission development strategy for Bangladesh. USAID specifically, 
is collecting data on wind energy potential and information on siting 
in order to unlock private investment in wind energy. We are also 
working with the Government of Bangladesh to build their capacity to 
manage and measure their own GHG emissions.
                                 ______
                                 

     Responses of Administrator Rajiv Shah to Questions Submitted 
                         by Senator Bob Corker

                            food aid reform
    Question. Given USAID's statement that food aid reform will save an 
estimated $500 million over the next 10 years, are the savings 
identified by USAID going toward deficit reduction or toward other 
programming?

    Answer. The President's proposal would use $500 million in savings 
generated from food aid reform to reduce the deficit. The shift of 
funding from title II to foreign assistance accounts eliminates 
mandatory funding for cargo preference reimbursements to title II, 
reducing the deficit by an estimated $50 million per year--$500 million 
over the next decade--based on recent data.

    Question. How did the administration determine that 55 percent of 
the $1.4 billion food aid in guarantees will be spent in the United 
States? Why was that the final percentage?

    Answer. The administration is committed to continuing a strong 
partnership with American farmers through the Food for Peace program. 
For that reason, the President's proposal maintains the majority of 
U.S. funds--55 percent in 2014--for the purchase, transport, and 
related costs of American commodities. This level is also based on our 
estimation of need and global market supply, taking into account the 
level of procurement local and regional markets can reasonably bear. 
That means the United States will keep working with farmers and 
processors across America who help feed hungry children from Bangladesh 
to the Sahel, where American commodities are the best possible tool. 
American farmers are vital to transforming the food aid basket with 
ready-to-use therapeutic foods, better fortification of blended foods, 
improved micronutrient reformulation for milled grains and vegetable 
oil, and emergency food bars and paste.
                             usaid forward
    Question. What controls has USAID established over its direct 
funding to local institutions to ensure accountability?

   Describe the mechanisms in place to respond to cases of 
        inappropriate or inefficient use of funds.
   Have there been any cases where USAID has had to stop or 
        pull back funding provided directly to local institutions? If 
        so, please describe and provide some specific examples.
   Are the audit mechanisms and accountability standards for 
        direct assistance to foreign governments the same as they are 
        for U.S. recipients and other nongovernmental recipients? If 
        not, how do they differ?

    Answer. USAID is committed to accountability, transparency, and 
oversight of USG funding and we have a number of mechanisms for 
ensuring that resources are not lost to waste, fraud, or abuse 
throughout development assistance implementation, as follows:

   Pre-Award: Contracting and Agreements Officers (CO/AO) make 
        a determination whether a contractor/recipient is sufficiently 
        responsible in terms of financial capabilities to account for 
        funding, and have the ability to carry out or perform the work, 
        under an award. This process is known as ``a pre-award 
        responsibility determination.'' As part of the Request for 
        Proposal/Application process, CO/AOs also ensure that 
        regulatory language enabling oversight and performance 
        monitoring is included in each award. This language comes from 
        the Federal Acquisition Regulation, the Office of Management 
        and Budget (OMB) Circulars and/or Agency operational policy. 
        Finally, performance indicators and metrics linked to the 
        desired results are also included in the awards.
   Post-Award: During the period of performance for an award, 
        USAID performs myriad activities to ensure award compliance. 
        Contracting/Agreement Officer's Representatives COR/AORs review 
        and approve awardee vouchers for invoices submitted, conduct 
        site visits, and enable third-party program and project 
        evaluations. They also monitor performance through reporting, 
        meetings, and general oversight of the work being performed. 
        COR/AORs formally document any material deficiencies in 
        performance. This documentation triggers immediate action by an 
        Agency CO/AO which may ultimately include recommending that the 
        vendor not be paid. Additionally, we use financial systems and 
        controls, as well as internal and independent audits to enable 
        the Agency to effectively manage, track, and safeguard funds 
        before they are disbursed.
   Award Close-out: Like other federal agencies, USAID uses the 
        Contractor Performance Assessment Reporting System (CPARS) to 
        formally record data about contractor performance. CORs are 
        responsible for compiling and entering past performance data 
        into CPARS annually. Additional USAID mechanisms are also in 
        place to evaluate contractor performance including the post-
        performance audit process and the Office of the Inspector 
        General to whom any instances of suspected waste, fraud, or 
        abuse are promptly referred.

    In February 2011, USAID stood up a Compliance Division within the 
Bureau for Management's Office of Acquisition and Assistance (M/OAA) to 
serve as the central repository for any and all referrals of 
administrative actions, including suspension and debarment actions. In 
just its first year the Division issued 102 administrative actions and 
recovered nearly $1 million. For this achievement the Agency was 
recognized by the Office of Management and Budget in 2012 as a success 
story:

          ``The Agency debarred 16 people in 2012 for their 
        participation in a scheme to submit fraudulent receipts for the 
        administration of federal foreign assistance to support public 
        health, food aid, and disaster assistance in Malawi. By working 
        with its recipient organization to assure that the unlawfully 
        claimed funds were not reimbursed, USAID was able to avoid 
        waste and abuse of taxpayer funds designed to provide vital 
        assistance to a developing country.''--``Taking Contractor 
        Accountability to the Next Level,'' September 18, 2012 (http://
        www.whitehouse.gov/blog/2012/09/18/taking-contractor-
        accountability-next-level).

    With respect to audit mechanisms and accountability standards, 
U.S.-based grantees are subject to OMB Circular A-133 and U.S. 
contractors are subject to FAR 52.1215-2 and 52.216-7.
    For all foreign-based recipient entity types, including 
contractors, grantees, and host government entities, audits are 
conducted in accordance with USAID Inspector General (IG) guidelines. 
The USAID IG guidelines were derived directly from U.S. Government 
auditing standards for implementation in the overseas, developing 
country context in which USAID financed performance takes place. The 
most notable difference between USAID audits on non-U.S. entities and 
U.S. entities is that a lower annual audit threshold is used for non-
U.S. recipient entities--$300,000 in annual expenditures instead of the 
$500,000 threshold applicable by OMB to U.S. entities. Also, in most 
cases, foreign contractors and grantees and host governments are 
audited by independent, private sector auditors using the USAID IG 
guidelines. However, pending USAID IG concurrence, audits on host 
government implementing entities may also be carried out by host 
government Supreme Audit Institutions. Such audits must comply with one 
of the following standards: (1) Comptroller General of the United 
States; (2) International Organization of Supreme Audit Institutions 
(INTOSAI); (3) International Auditing Practices Committee of the 
International Federation of Accountants (IFAC).

    Question. According to the 2013 USAID Forward Progress Report, 
USAID increased the percentage of funding provided directly to local 
institutions from about 10 percent in FY 2010 [sic] \1\ to about 14 
percent in FY 2012, with half going to partner country governments. 
Please describe what types of funding are included in this figure. For 
example, does the figure include funding provided through all 
assistance awards? Subawards?
---------------------------------------------------------------------------
    \1\ USAID has corrected the baseline year from 2012 as stated in 
the original QFR sent by Senator Corker, to 2010, to track the baseline 
year, FY 2010, established in USAID Forward Progress Report 2013.

    Answer. The 14.3 percent figure referenced above (and from page 20 
of the USAID Forward Progress report) represents the dollar value of 
cumulative mission program allocations\2\ that were obligated through 
local systems during fiscal year 2012.
---------------------------------------------------------------------------
    \2\ The term ``annual program allocation'' includes the missions' 
new obligating authority (NOA), carry-over funds, and transfers from 
other agencies (e.g., PEPFAR funds implemented by the mission; 
interagency transfers from State/DRL, State/INL).
---------------------------------------------------------------------------
    The figure includes all obligations at the mission level to partner 
country governments for direct implementation of assistance (projects) 
that involve direct use of previously assessed\3\ partner country 
public financial management (including audit) and partner country 
procurement systems.
---------------------------------------------------------------------------
    \3\ USAID's detailed assessment process for consideration of awards 
to partner country governments is described in QFRs 3, 5, and 8.
---------------------------------------------------------------------------
    The figure also includes all direct funding through grants, 
cooperative agreements, contracts and Development Credit Authority 
mechanisms, to local, nongovernmental, nonprofit, educational, and 
commercial organizations. It does not include subawards such as 
subcontracts or subgrants. Local organizations are defined as entities 
organized and having a principal place of business in the recipient 
country, and majority owned or controlled by recipient country 
citizens, with less than a majority ownership or control by foreign 
entities or individuals.

    Question. According to the 2013 USAID Forward Progress Report, 
USAID uses various tools to assess capacity and weaknesses of partner 
country government institutions and, in some cases, provides funding 
and assistance to these institutions. How many such assessments have 
been completed and in which countries?

    Answer. As of March 2013, a total of 35 countries, listed below, 
have completed initial (``Stage One'') Public Financial Management Risk 
Assessment Framework (PFMRAF) assessments.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Armenia        El Salvador    Jamaica        Moldova        Rwanda
Bangladesh     Ethiopia       Jordan         Morocco        Senegal
Barbados       Georgia        Kenya          Mozambique     Serbia
Benin          Ghana          Kosovo         Nepal          South Africa
Colombia       Haiti          Liberia        Paraguay       Tanzania
Dominican      Honduras       Malawi         Peru           Trinidad and
 Republic                                                    Tobago
East Timor     Indonesia      Mali           Philippines    Zambia
------------------------------------------------------------------------


    Question. In how many (and which) countries is USAID providing 
funding directly to government institutions?

    Answer. USAID is providing Direct Government-to-Government 
Assistance to the following 22 countries: Afghanistan, Kosovo, Armenia, 
Liberia, Benin, Mozambique, Bolivia, Nepal, Egypt, Pakistan, El 
Salvador, Peru, Ethiopia, Rwanda, Ghana, Senegal, Honduras, South 
Africa, India, Tanzania, Jordan, and Zambia.

    Question. How do these assessments translate into USAID country 
assistance strategies and/or activities to build partner countries' 
public financial management capacity?

    Answer. USAID's Country Development Cooperation Strategies (CDCS) 
are based on evidence and analysis, including that provided by the 
Public Financial Management Risk Assessment Framework (PFMRAF). At the 
strategy stage, the CDCS Guidance requires that the focus and 
selectivity principle be applied in selecting institutions and 
institutional levels (national, regional, local) which are most 
promising. Such a decision would be informed by a PFMRAF or other 
preliminary analysis.
    After strategy approval, USAID's Project Design guidance requires a 
sustainability analysis to be performed. Missions are asked to analyze 
key sustainability issues and considerations around a host of issues 
including economic, financial, social soundness, cultural, 
institutional capacity, political economy, technical/sectoral, and 
environmental. Where appropriate, the analysis should discuss generally 
how funding local actors and supporting government-to-government 
objectives could help achieve sustainability goals. Further follow-on 
PFMRAF analysis of specific activities to support building country 
public financial management capacity may be conducted based on findings 
of the preliminary analysis.
    For additional information regarding the Agency's CDCS guidance, 
please see: (http://www.usaid.gov/results-and-data/planning/country-
strategies-cdcs).

    Question. In 2012, GAO recommended that USAID develop a process to 
track assistance provided through local financial systems--in part to 
help monitor progress toward providing 30 percent of its assistance 
through these systems by 2015. Please update the committee on the 
status of USAID's efforts to develop such a process, including any 
changes made to USAID's accounting systems to capture this type of 
assistance.

    Answer. While no changes were necessary to Agency core accounting 
or procurement systems, a process was developed by the Agency to track 
progress of providing assistance through local systems toward the goal 
of 30 percent of all country assistance programs by 2015. The process 
was part of a broader effort to track progress of all USAID Forward 
components which resulted in the publication of the USAID Forward 
Progress Report 2013. Annex 1 of the report, ``Scorecard of 
Indicators,'' provides data for each goal reflecting the progress 
measure and 2012 milestone achieved. The report may be found at (http:/
/www.usaid.gov/sites/default/files/documents/1868/2013-usaid-forward-
report.pdf). Further, the Agency is working to refine and strengthen 
our reporting procedures to better integrate data collection with 
Agency standard business practices, improve data quality and more 
efficiently utilize existing technology.

    Question. How did USAID determine that 30-percent target was a 
reasonable near term goal?

    Answer. One of the key objectives of the Agency's reform effort, 
USAID Forward, is to increase the amount of work we do with more and 
varied local partners, so we can create true partnerships; build local, 
sustainable capacity; and begin to create the conditions where aid from 
the United States is no longer necessary.
    The 30-percent ``topline indicator'' is an Agencywide aspirational 
target, not a mission-by-mission or country-by-country hard 
requirement. Every country in which USAID is operating has different 
levels of ministerial and local capacity, governance challenges, civil 
society participation and commitment to fight corruption, as well as a 
varying commitment to strengthen its systems and provide opportunities 
for local NGOs and private businesses.
    USAID determined that the 30 percent overall target was a 
reasonable near term goal on the basis of USAID mission estimates 
(averaged to establish the overall target) of what progress toward 
localizing and increasing sustainability of assistance would be 
appropriate and prudent given the local context.
    The selection of the implementing partner--whether a local 
government or nongovernmental organization, U.S. or international 
contractor or grantee, or other donors--is driven by country context 
and development needs, not by the 30 percent target.
    For government-to-government assistance, USAID has an extensive 
assessment process in place that analyzes fiduciary risks and technical 
capacity, as well as the partner government's democracy, human rights, 
and governance record and capacity, before any decision is made to 
provide funding. Where manageable risks are identified, USAID 
implements a risk mitigation plan. If risk is too great, USAID chooses 
another approach.
    For awards to local nongovernmental organizations, including local 
not-for-profit and commercial organizations, we also have an extensive 
process in place before any award to review a potential recipient's 
administrative, financial management and technical capacities to manage 
USAID funds and deliver results. USAID Agreement and Contracting 
officers must make a responsibility determination covering these 
factors before we provide funding or other resources.
    Further, missions are instructed that partnership with local 
government entities or local organizations is not an end in itself. 
Rather, such partnerships should be the result of strategic planning, 
project design, identification of a development objective, and a 
determination of which modality among several--contracts and grants to 
U.S. or international organizations included--are the best fit for the 
project design and to achieve the development objective.
    Whether it is government-to-government assistance or awards to 
local nongovernmental organizations, USAID always retains the 
unilateral right to suspend or terminate such assistance if any issues 
arise, and when necessary, USAID will seek to recover unallowable 
costs.

    Question. How does USAID plan to measure performance [of awards to 
local organizations]? How does this differ from existing performance 
evaluation processes?

    Answer. USAID has recently revised Agency guidance (the Automated 
Directive System) to the chapters covering strategic planning, project 
design, performance monitoring, and use of reliable partner government 
systems. An important reason for these updates was to ensure that USAID 
support for activities undertaken by partner governments or by local 
nongovernmental organizations were fully integrated into the Agency's 
established procedures for rigorous strategic planning, project design, 
and performance monitoring. Hence, awards to local organizations are 
subject to the same requirements for good project design and 
performance monitoring that applies to other awards that USAID makes. 
Good project design for all USAID projects includes development of a 
logical framework and associated performance indicators while good 
performance monitoring includes establishing a performance monitoring 
plan and conducting regular reviews.

    Question. In 2012, GAO also recommended that USAID improve 
monitoring and evaluation of public financial management assistance 
programs. How is USAID monitoring and evaluating the effectiveness of 
efforts to use local systems, including identifying indicators and 
collecting data?

    Answer. USAID Forward introduced two complementary reforms to 
address GAO's recommendation. The first effort reinvigorates strategy 
development and project design into USAID's development assistance 
programs. For the design of new projects, Agency requirements now 
include detailed preobligation analysis and indicative plans for 
monitoring progress and evaluation. This incorporates defining 
indicators, collecting baseline data, ensuring reliable results and 
planning for independent evaluations. Second, new guidance requires 
that final monitoring and evaluation plans include refined indicators 
and agreement on independent approaches to evaluation. These reforms 
are being incorporated into USAID's policy and directives systems for 
continuing use.
    An important reason for updating the Agency's guidance is to ensure 
that activities undertaken by partner governments or by local 
nongovernmental organizations receiving USAID support are fully 
integrated into the Agency's established procedures for rigorous 
strategic planning, project design, performance monitoring, and 
evaluation. As such, all directly funded activities will be subject to 
the same requirements for good project design, performance monitoring 
and evaluation that apply to any other award that USAID would make. 
Good project design for all USAID projects includes development of a 
logical framework and associated performance indicators while good 
performance monitoring includes establishing a performance monitoring 
plan and conducting regular reviews.

    Question. How does USAID coordinate its public financial management 
assistance activities with other USG agencies? With other donors?

    Answer. USAID coordinated with the US. Department of the Treasury, 
the Millennium Challenge Corporation, other bilateral and multilateral 
donors, and international financial institutions before devising 
USAID's Public Financial Management Risk Assessment Framework (PFMRAF) 
assessment process. USAID's PFMRAF policy, set forth in our Automated 
Directives System Chapter 220, Use of Reliable Partner Country Systems 
for Direct Management and Implementation of Assistance, ordains a five 
stage assessment process to ensure that partner country government 
entities being considered as direct recipients of USAlD funding have 
the appropriate financial, administrative, and technical capacities in 
place before USAID entrusts U.S. taxpayer funds to them.
    USAID conducts these appraisals and assessments in person and in 
country, and invites and coordinates the participation of 
representatives of other executive branch agencies, other donors, and 
where appropriate, the potential partner country government. We also 
coordinate the provision of any technical assistance directed at 
enhancing public financial management capabilities of the partner 
governments via a country level interagency and donor coordination 
process. Finally, USAlD has entered into interagency agreements with 
the Department of the Treasury and other U.S. Government agencies to 
provide technical assistance in the public financial management realm 
when these agencies have the resources and comparative advantage to do 
so, and when provision of such assistance furthers USAID's development 
objectives and project designs.

    Question. What plans do you have to make available programmatic and 
expenditure data about assistance to host-country grantees and 
governments?

    Answer. USAID intends to start publishing disaggregated program and 
expenditure data, including data fields at implementation level, on the 
Foreign Assistance Dashboard (FAD) after the close of the third quarter 
of FY 2013. The FAD provides a wide variety of stakeholders, both 
internal and external, with the ability to examine, research, and track 
U.S. Government foreign assistance investments in an accessible and 
easy-to-understand format. The disaggregation will also be applied 
retroactively to previously posted FY 2013 Quarters 1 and 2 data. Data 
fields that will be displayed include the name of the implementing 
agent (i.e., the organization, host country government or other entity 
that received the funding) and the implementing agent's country of 
origin.
                             trade capacity
    Question. U.S. development assistance should focus on helping 
developing nations achieve economic independence and graduate from U.S. 
assistance. Helping these countries attract investment and trade with 
the world is a critical part of achieving that goal. With respect to 
trade capacity-building (TCB), I am interested in (1) the 
administration's overall goals on trade capacity-building and (2) the 
specific strategy to coordinate the efforts of all the differing 
agencies providing trade capacity-building assistance.

   (a) What are the administration's top three goals with 
        respect to trade capacity-building?

    Answer. Through ``aid for trade,'' the United States focuses on 
partnering with countries, particularly those countries that are least 
integrated into the global trading system, on training and technical 
assistance needed to: inform decisions about the benefits of trade 
arrangements and reforms; implement obligations to bring certainty to 
trade regimes; and enhance countries' ability to take advantage of the 
opportunities of the multilateral trading system and compete in a 
global economy. These goals are articulated in USAID's strategy 
document ``Building Trade Capacity in the Developing World.''

   (b) Please describe the interagency process by which all of 
        the U.S. Government's agencies collaborate to set those goals 
        and to construct a comprehensive strategy to implement those 
        goals.

    Answer. In the Presidential Policy Directive (PPD) on Global 
Development, the President laid out a modern architecture to raise the 
importance of development in our national security policymaking and to 
generate greater coherence across the U.S. Government. The PPD 
highlighted that ``through existing policy mechanisms (e.g., trade 
policy through the United States Trade Representative's Trade Policy 
Review Group, etc.), an assessment of the ``development impact of 
policy changes affecting developing countries will be considered.'' 
USTR chairs the interagency coordination process through the Trade 
Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC). 
USAID has been using its position as a statutory member of this 
interagency process to inject the development impact and ``on the 
ground'' input from USAID field personnel into the trade policy 
decisionmaking apparatus, which includes discussions on the need for 
trade capacity-building interventions.

   (c) How does the interagency process identify and eliminate 
        nontariff trade barriers?

    Answer. USTR is responsible for annually publishing a National 
Trade Estimate Report on Foreign Trade Barriers (NTE). Information in 
this report is the result of input provided through the interagency 
TPSC process and supplemented by input in response to a notice 
published in the Federal Register, and by members of the private sector 
trade advisory committees and U.S. embassies abroad.
    While the NTE identifies foreign trade barriers--efforts to 
eliminate them are led by USTR through a variety of negotiating 
avenues: bilaterally in direct discussion with trading partners; 
through regional bodies when they can play a significant role in 
addressing barriers across their member states; in multilateral 
negotiations; and, in some cases, through dispute settlement. USAID and 
other agencies which provide TCB often augment USTR's efforts by 
providing technical assistance in support of the policy changes 
necessary to eliminate nontariff barriers.

   (d) With respect to the administration's goals and the 
        strategy on trade capacity-building, how do you define success?

    Answer. The goal is to graduate countries from requiring U.S. 
foreign assistance. A number of former USAID-assisted countries have 
achieved that measure of success based on their strong economic and 
trade performance. Until that is achieved, the Department of State and 
USAID have worked together to develop standard indicators to measure 
what is being accomplished with foreign assistance resources, including 
indicators related to measuring the success of trade programs.

   (e) What are your criteria for success and how do you 
        determine or measure your progress toward success?

    Answer. A primary criterion for success of TCB programming is to 
expand the number of people that benefit from trade. This is 
accomplished through reducing the barriers that inhibit the flow of 
goods and services and working to integrate countries and businesses 
into the global trading system. In a 2005 study, the GAO raised 
questions about USG trade capacity-building efforts and the need for a 
more disciplined assessment of TCB interventions. As a result of that 
report, USAID undertook an extensive evaluation of TCB interventions 
and published a report of its findings in 2010. The study, ``From Aid 
to Trade: Delivering Results'' found that trade capacity-building had 
contributed substantially to achieving the goals of TCB. Individual 
USAID TCB projects also contain performance management plans which 
measure progress achieved under their respective programs. Evaluation 
of TCB programs and projects continues pursuant to USAID's evaluation 
policy.

   (f) What does a successful comprehensive trade capacity-
        building effort look like?

    Answer. Integration into the global economy is a powerful force for 
economic growth and poverty reduction. The results of USAID trade 
capacity-building include more active and better informed participation 
by developing countries in a range of international trade negotiations, 
greater compliance with trade commitments and obligations, tangible 
improvements in the effectiveness of commercial laws and institutions, 
reduction in the time and cost to export and import goods, and 
improvements in the quantity and quality of individual developing 
country's exports, imports, and foreign investment. USAID has assisted 
more than 28 countries in acceding to the WTO. USAID assistance 
includes supporting the government in conducting analysis and preparing 
technical documents required for accession, as well as advice in 
undertaking required legal and regulatory reforms, and supporting 
effective implementation of those reforms.

   (g) Is there a specific country that you would describe as 
        a success story?

    Answer. Many countries which have received USAID trade capacity-
building are considered success stories. For example, significant 
technical assistance and trade capacity building was provided as an 
integral part of the trade negotiations that led to the Dominican 
Republic-Central America-United States Free Trade Agreement (CAFTA-DR) 
with five Central American countries (Costa Rica, El Salvador, 
Guatemala, Honduras, and Nicaragua) and the Dominican Republic. U.S. 
TCB support to Vietnam over many years led to the successful 
implementation of the U.S.-Vietnam Bilateral Trade Agreement and 
subsequently, to Vietnam's accession to the World Trade Organization. 
USAID provided substantial assistance to Laos and Tajikistan to accede 
to the WTO in 2013.

    Question. Our current budget environment demands that we spend 
scarce resources well. Please explain the administration's decision 
process to direct TCB aid to countries with the best chance of success. 
How do you decide where to spend TCB money to ensure it will do the 
most good? For example, under your comprehensive strategy, do you 
prioritize certain countries as being best positioned to implement the 
trade capacity-building aid we provide?

    Answer. USAID works closely with USTR to identify U.S. trade policy 
priorities and to align USAID activities in support of those trade 
policy objectives. For example, USAID has implemented significant TCB 
programming to support implementation of U.S. trade agreements (CAFTA-
DR, Peru, Colombia, Jordan, and Morocco) and utilization of trade 
preference programs such as the African Growth and Opportunity Act. In 
addition to working closely with USTR, USAID determines the need for 
trade capacity-building for individual countries through a Country 
Development Cooperation Strategy (CDCS) process that includes input 
from both U.S. and host country stakeholders and regional strategies 
that are developed through a Regional Development Cooperation Strategy 
(RDCS) process.

    Question. A July 2011 GAO report notes that as many as 18 agencies 
provide trade capacity-building assistance. For example, the report 
identified that the Millennium Challenge Corporation and the Department 
of the Army as two of the largest providers of trade capacity-building 
assistance. Please describe the interagency process for coordinating 
decisionmaking with these other agencies and USAID's role in that 
process.

    Answer. With respect to the Millennium Challenge Corporation, USAID 
serves on the MCC Board of Directors, along with the Departments of 
State and Treasury, and USTR. The Board is responsible for the 
identification and selection of MCC Threshold and Compact countries.
    The Department of Defense is also a statutory member of the TPSC 
process led by USTR, through which trade-related policies are 
coordinated within the executive branch.

   (a) Does USAID lead the process?

    Answer. The coordinating process for trade-policy-related issues is 
led by USTR. USAID works with USTR to identify TCB-related activities 
which complement U.S. trade policy goals. USAID is also part of the 
country team in U.S. embassies around the world. USAID works within the 
country team and with host country counterparts to identify and 
implement country specific trade capacity-building activities 
consistent with the partner country's development plan.

   (b) Can USAID direct the Army's efforts on where and how to 
        spend trade capacity assistance?

    Answer. USAID cannot direct the Army on where and how to spend 
trade capacity building assistance.

    Question. The GAO has identified 18 agencies as providing trade 
capacity-building aid. Which U.S. Government agency is ultimately 
responsible to the President for ensuring that TCB aid is spent wisely 
and achieves the administration's goals as defined by the 
administration's overall trade capacity-building strategy?

    Answer. USAID works with USTR and other agencies as appropriate to 
align USAID TCB programs to support trade policy and broader USG 
objectives.

   (a) Which agency and which official is in charge of the 
        process that decides where U.S. trade capacity-building money 
        will be directed?

    Answer. There is no single coordinating agency, official, or 
process specific to TCB activities. USAID, as the largest provider of 
TCB assistance, coordinates closely with USTR, State, Treasury, 
Agriculture, Labor and other trade related agencies in prioritizing TCB 
efforts. USAID programs identify TCB needs through a Country 
Development Cooperation Strategy (CDCS) process that includes input 
from both U.S. and host country stakeholders and regional strategies 
that are developed through a Regional Development Cooperation Strategy 
(RDCS) process. These strategies are approved by the cognizant USAID 
regional Assistant Administrator with input from USAID policy, budget, 
and technical bureaus.

   (b) Can that agency and that official direct how resources 
        are spent?

    Answer. There is no single agency or individual that directs how 
all TCB resources are spent.

   (c) Which of the 18 agencies officially participate in that 
        process?

    Answer. Most of the USG entities that provide TCB are statutory 
members of the TPSC interagency process led by USTR such as the 
Departments' of Agriculture, Commerce, Defense, Energy, Health and 
Human Services, Homeland Security, Interior, Justice, Labor, State, 
Transportation, Treasury, the Environmental Protection Agency and 
USAID.

   (d) According to the President's Congressional Budget 
        Justification, some of this money is being spent to help 
        foreign governments modernize customs procedures at foreign 
        ports. For example, is reducing delays and paperwork at ports 
        one of the established benchmarks for success?

    Answer. USAID focuses significant attention to the issue of trade 
facilitation, particularly reducing the time and cost to move goods. 
USAID trade facilitation activities include active support for customs 
and border management reforms at border crossings, ports, and along 
major transit corridors. In addition, USAID has worked closely with 
USTR to support the WTO negotiations on a Trade Facilitation Agreement. 
In particular, USAID recently launched the Partnership for Trade 
Facilitation, which is working with 17 countries to respond quickly to 
requests for assistance from trade and customs authorities for help 
with implementing aspects of the proposed WTO agreement on trade 
facilitation. Additional efforts to improve trade facilitation are also 
being carried out by USAID's Africa trade hubs to promote both United 
States-Africa trade as well as intra-African trade. Specific indicators 
tracked in many USAID trade facilitation projects include the time, 
number of procedures and cost (including informal payments) to clear 
goods through customs and border agencies or to move goods along major 
transit corridors.

   (e) How do you identify, with the help of the business 
        community, specific areas where aid could be best applied?

    Answer. USAID's country and regional development strategies are 
primarily developed by its field missions, which seek input from host 
country private sector stakeholders. USAID/Washington also plays an 
active role in the development of these assistance strategies and 
contributes input that reflects U.S. private sector views and concerns 
as identified by USTR through its statutory private sector consultative 
process--the Trade Advisory Committee system.

   (f) What is the process for seeking their input?

    Answer. In 1974, Congress created the trade advisory committee 
system to ensure that U.S. trade policy and trade negotiating 
objectives adequately reflect U.S. public and private sector interests. 
The advisory committee system consists of 28 advisory committees, with 
a total membership of approximately 700 citizen advisors.
    USTR's Office of Intergovernmental Affairs & Public Engagement 
(IAPE) manages the advisory committees, in cooperation with other 
agencies, including the Departments of Agriculture, Commerce, and 
Labor, and the Environmental Protection Agency.
         afghanistan/development in war zones and contingencies
    Question. The Special Inspector General for Afghanistan 
Reconstruction (SIGAR) estimates that there is about $10 billion in 
assistance given to Afghanistan annually, yet the government raises 
only about $2 billion in revenue. In your estimate, what is the gap 
between foreign assistance flowing into Afghanistan to start and 
maintain reconstruction and stabilization projects and the revenue the 
Government of Afghanistan can be expected to accumulate in a given 
year? What is the plan to overcome this challenge going forward?

    Answer. The World Bank estimates the financing gap could reach as 
high as 40 percent of the Afghan Government's budget in 2017 (including 
security costs), then drop to around 25 percent in 2021 assuming an 
increase in mining revenues. The current financing gap is estimated at 
5.3 percent of GDP (2012), which continues to be financed entirely by 
donor grants. The fiscal sustainability ratio, defined as the 
percentage of operating expenses covered by domestic revenues--was 59 
percent for FY 2012. Domestic revenues financed approximately 40 
percent of the operating budget and the development expenditures.
    In 2011, the Ministry of Finance reported that the Government of 
Afghanistan collected more than $2 billion in revenues for the first 
time ever, representing more than a 140-percent increase since 2008. 
Customs accounted for about 48 percent of the revenues. Domestic 
revenues increased by 7 percent in 2012, reaching US$2.15 billion. The 
World Bank reported that the Afghan Government expects domestic 
revenues to increase to US$2.5 billion (11.6 percent of GDP) this year, 
with increases in all sources of revenue. This could finance 
approximately 65 percent of the operating expenditures, with the 
remainder to be financed through donor grants.
     Donors have committed to cover the financing gap for several 
years. Pledges from all donors at the July 2012 donor meeting in Tokyo 
totaled $16 billion in development aid to Afghanistan over 4 years. 
Together with earlier pledges on the security side, annual aid would 
amount to about $8 billion--divided roughly equally between civil and 
security aid.
    USAID is continuing to work with the Government of Afghanistan and 
the international donor community to improve trade, strengthen customs, 
and support the Ministry of Mines in managing natural resource 
extractions. In addition, USAID's agriculture strategy is focused both 
on food security and high-value exports. These efforts are supporting 
the Government of Afghanistan in growing its public revenue and manage 
expenditures so it can better manage its own financing needs.

    Question. In its final report, the Special Inspector General for 
Iraq Reconstruction concluded that: ``The U.S. Government is not much 
better prepared for the next stabilization operation than it was in 
2003.'' Do you agree with that assessment? If not, why not?

   (a) As a government, do we require a different approach to 
        planning and implementation in reconstruction and stabilization 
        circumstances?
   (b) Are structural changes needed at USAID, in the 
        interagency coordination structures, or within specific 
        programs?

    Answer. We respectfully defer to the Department of State's Office 
of Civilian Response (CSO) to address the broader question of the U.S 
Government's ability to respond to a stabilization initiative. CSO, 
formerly known as the Civilian Reconstruction and Stabilization Office 
(S/CRS), was specifically created in 2004 in the aftermath of Iraq.
    As to USAID's readiness, since 2004 a number of structural changes 
have better positioned the Agency to successfully support stabilization 
type operations. One such change includes the creation of USAID's 
Office of Conflict Management and Mitigation which, among other things, 
developed a Conflict Assessment Framework (CAF) in 2005 to better 
understand the underlying causes of conflict and instability in a 
country or region. The CAF has been updated to reflect a more nuanced 
understanding of these causes and has been used repeatedly by our 
missions in the development of new projects and strategies. Agency 
staff has been trained in the use of the CAF as well as other conflict-
related subjects, making USAID staff both in Washington and in the 
field, more capable of designing programs and applying our development 
assistance support to stabilization objectives.
    In 2005, USAID launched a comprehensive human capital strategic 
planning process which identified the lack of depth in critical core 
areas such as education, health, and agriculture, and concluded that 
this was severely constraining the Agency's ability to ``surge'' staff 
in support of pre- and post-conflict programs in Iraq and other 
Critical Priority Countries around the world. Staffing shortages were 
limiting USAID's direct engagement with foreign government agencies and 
local partners. Subsequently, USAID implemented an ambitious hiring 
effort, the Development Leadership Initiative (DLI), paralleling the 
Department of State's Diplomacy 2.0 Initiative, with bipartisan 
congressional support and increased funding. Since 2008, USAID has 
recruited approximately 800 additional Foreign Service officers through 
the DLI program who now constitute part of USAID's ranks of technical 
specialists. Since 2010, eight DLIs have served or are serving in Iraq 
and 50 DLIs have served or are serving in Afghanistan. An increase in 
Foreign Service officers has better positioned USAID to meet our 
technical staffing needs abroad.
    Many lessons learned from the Iraq have been incorporated into 
USAID's development assistance, including:

   Define what is needed for sustainability from the start by 
        ensuring that the host country beneficiaries are involved in 
        setting priorities and developing the capacities within their 
        societies to lead their own development. In some cases, the 
        host country was not involved in the planning stage of an 
        activity and the activity was less successful.
   Ensure that people sent overseas to support a mission or 
        program possess the appropriate skills and experience.
   The duration of the tour is critical to ensuring the 
        sustainability and continuity of programs.

    An example of where USAID has incorporated sustainability into its 
programming is Iraqi Government cost-sharing. Over the past year, the 
Iraqi Government, through several Memoranda of Understanding, has 
committed to cost share important USAID activities. This demonstrates 
both the Iraqis' willingness to pursue critical development objectives 
and invest their own resources into their own development. This has 
enabled USAID to redirect resources to strengthen Iraqi governing 
institutions, promote private sector development, and assist vulnerable 
populations such as ethnic and religious minorities, internally 
displaced persons, female-headed households and youth.
    In Afghanistan, all projects, both current and planned, must 
undergo an analysis to determine (1) Afghan ownership; (2) cost/program 
effectiveness; and (3) contributions to stability. Through the 
Accountable Assistance for Afghanistan (A3) initiative, USAID is 
carrying out a 100-percent audit of all locally incurred costs, 
expanding monitoring and evaluation capacity to include hundreds of 
USAID onsite monitors in the field, and has placed limits on the number 
of subcontractor tiers.
        host nation reconstruction/infrastructure sustainability
    Question. How does USAID collect and record information from 
nations receiving U.S. foreign aid about their abilities to pay for the 
maintenance or expansion of infrastructure we have funded?

    Answer. USAID receives and analyzes information regarding recipient 
nations' ability to pay for the maintenance or expansion of U.S. 
foreign aid funded infrastructure construction activities through the 
completion of a Foreign Assistance Act of 1961 Section 611(e) 
certification process. When a capital assistance project is proposed, 
and total U.S. assistance for it will exceed $1 million, the Mission 
Director must review and certify a country's capability to effectively 
maintain and utilize the assistance. Pursuant to section 611(e), the 
certification is then forwarded to the cognizant Assistant 
Administrator, as delegated by the Administrator, for consideration. 
During project design, an analysis of the capital cost and operation 
and maintenance costs along with an analysis of host country technical 
and financial capability to operate and maintain capital projects is 
undertaken. The project design includes training and institutional 
reform components to increase the capability of the host country to 
operate and maintain the facility that is being financed, and often 
continues after the facility is constructed.

    Question. What policies and procedures does USAID have in place to 
prevent the funding of projects that, when added to the aggregate of 
USAID projects in the same country, would be beyond the capability of 
the host nation to raise sufficient resources domestically to maintain 
the work that we have funded?

    Answer. As part of USAID Forward reform efforts to strengthen the 
Agency's project design process, all missions must complete a mandatory 
sustainability analysis that assesses the host country's ability to 
sustain the development gains that would be achieved through the 
project. The sustainability analysis should include a review of the 
financial implications of the project. For any organization to be 
sustained following completion of the project (whether governmental or 
nongovernmental), a recurrent cost analysis must be undertaken that 
estimates the costs of operations during the project and of continuing 
expected functions at the end of the project and estimated sources of 
revenue. The recurrent cost analysis should take into consideration 
maintenance capability and all other costs anticipated to implement the 
project activities, business operations or infrastructure on a 
continuing or recurring basis.
                              hiring vets
    Question. The most recent version of the Office of Personnel 
Management report on federal veteran employment claims that just 7.2 
percent of USAID employees are veterans, making the agency the third-
lowest in the executive branch for percentage of veterans on staff. 
Given that many of our veterans' experience in contingency environments 
seem to match exactly with the current needs of USAID programs still 
ongoing in contingency environments, what do you think contributes to 
such low levels of veterans in the ranks of USAID employees?

    Answer. Veterans have greatly contributed to the Agency and work in 
myriad professional and administrative positions in the United States 
and overseas. There has been a significant increase in USAID's data on 
veterans since the issuance of the OPM report. Currently, there are 356 
veterans employed at USAID (9.3 percent of the Agency's total 
workforce). Indeed, veterans account for 14.6 percent of the Agency's 
Civil Service employees (251 veterans) and 4.9 percent of our Foreign 
Service staff (105 veterans). In addition, the Agency is trending well 
above its FY 2013 veteran hiring goals of 15.3 percent for veteran new 
hires and 4.7 percent for disabled veterans. As of May 2013, 24 percent 
of USAID's new hires were veterans and 6 percent have been disabled 
veterans. As discussed in response to the Question below, the Agency 
will continue its efforts to increase the number of veterans in the 
Agency.

    Question. Beyond that mandated by the President's Veterans 
Employment Initiative, has USAID implemented any additional programming 
for veterans?

    Answer. USAID has implemented a number of aggressive strategies to 
increase the number of veterans in the Agency. We began by hiring a 
full-time employee as our Veteran Employment Program Manager. The 
Program Manager has initiated a robust referral program that targets 
veterans for vacancies as soon as they occur. The referral program has 
allowed veterans to be referred for consideration prior to the posting 
of a job announcement. As a result, 30 percent of all veterans hired in 
FY12 were referred from this highly successful program. In addition, 
USAID sponsors quarterly Federal Employment Workshops at our 
headquarters, at no cost, for separating and retiring military members 
and spouses. We have also increased the number of veterans hired 
through our formal Student Internship Program, as well as by partnering 
with a wide variety of Military Transition Assistance Programs and 
Veterans Rehabilitation Organizations.

    Question. As USAID continues to have significant involvement in 
contingency zones, its projects demand exceptional leadership and 
character on the part of USAID personnel. Have veterans enabled USAID 
to more effectively carry out contingency missions?

    Answer. Our veterans' previous military experience has allowed them 
to transition directly into positions conducting development and 
diplomacy in contingency zones and other locales. For example, during 
FY12, USAID hired 13 veterans as Foreign Service Limited Officers to 
work on critical priority programs in Afghanistan, Pakistan, and Yemen. 
Their work has indeed enabled the Agency to be effective in carrying 
out its mission.

    Question. By virtue of their service, veterans bring a unique and 
valued perspective to any government agency. In what ways do you think 
an increase in veteran employment at USAID would have on the culture of 
USAID?

    Answer. Veterans hired by USAID have contributed greatly to our 
mission. Their discipline, work ethic, and leadership skills, coupled 
with the USAID-specific technical skills they have learned, make them 
well suited for a variety of positions at USAID. Veterans at the Agency 
are currently working in occupations such as acquisition, information 
technology, communications, security, human resources, engineering, 
public policy, finance, and education.

    Question. Please describe any specific plans you have to increase 
the hiring of veterans by USAID.

    Answer. USAID will continue to implement a number of strategies to 
increase the number of veterans in the Agency. Specifically, we will 
continue to increase veteran hiring by improving the following:

   Continue to sponsor USAID Federal Employment Workshops 
        onsite at no cost for separating/retiring military and spouses;
   Support the Operation Warfighter and Wounded Warrior 
        Programs;
   Continue to develop our partnership with the Department of 
        Veterans Affairs Vocational Rehabilitation & Employment 
        Program;
   Increase the number of veterans hired as interns through the 
        Pathways Program;
   Expand the Agency Veterans Hiring Database and usage of 
        OPM's Shared Database of People With Disabilities
   Continue to participate in Military Transition Assistance 
        Programs (TAP); and
   Increase hiring of veterans through the Foreign Service 
        Junior Officer Program. This vital program brings qualified 
        applicants into the Agency's Foreign Service to assume 
        positions of increasing responsibility for planning, 
        implementing, and managing USAID's economic and humanitarian 
        assistance programs.
                             climate change
    Question. USAID's budget fact sheet states that $481 million is 
requested for the Global Climate Change Initiative ``implemented in 
partnership with the Department of State.'' Of this, how much funding 
is requested for USAID?

    Answer. Of the $481 million request for the Global Climate Change 
Initiative in partnership with the Department of State, $349 Million is 
being requested for USAID.

    Question. What dollar amount of FY 2014 USAID climate change 
funding is going to the United Nations and affiliated agencies? How 
much was provided in FY 2012?

    Answer. It is too early to tell how much USAID climate change 
funding may be implemented through United Nations (U.N.) programs in FY 
2014. In FY 2012, USAID did not provide direct climate change funding 
to United Nations agencies or programs.

    Question. In the past 10 years, how much climate change funding has 
USAID spent on programming for peer-to-peer interaction and 
information-sharing (e.g., conferences, Web sites, exchanges, 
fellowship, etc.)? What specific advances have been made in U.S. 
development goals through these types of initiatives?

    Answer. Addressing climate change depends on having the best 
available data and tools and knowing how to apply them. USAID has made 
this type of assistance a priority to help expand the knowledge base 
and more broadly and effectively share information. Several of our 
approaches to climate assistance have been delivered through the types 
of mechanisms that you reference, particularly peer-to-peer knowledge-
sharing and information-exchanges.
    For example, SERVIR Global, USAID's partnership with NASA, works 
with scientists and decision makers around the world to provide 
training and access to satellite and geospatial data and applications. 
These applications are being used to predict a range of natural 
hazards, from red tide blooms in El Salvador to stream flows in Kenya 
to forest fires in the Himalaya region. Over the past 10 years, USAID 
has programmed approximately $29 million, with NASA also providing 
approximately $22.4 million, to develop and sustain this information 
sharing tool. In 2011, the Environment Minister for El Salvador 
estimated that the red tide information available from SERVIR averted 
$14 million in losses. In Africa, SERVIR has developed early warning 
tools for Rift Valley Fever, a vector-borne disease. In an effort to 
increase evidence-based decisionmaking among countries, USAID is 
expanding this partnership in west Africa and Central Asia in FY 2013.
    USAID does not distinctly capture these approaches collectively as 
an indicator or reporting category within climate funding.

    Question. What are the overall objectives of the climate change 
programs? What are specific outcomes (not outputs) USAID aims to 
achieve? How will you measure progress and determine success or 
failure?

    Answer. USAID's 2012 Climate Change and Development Strategy 
defines three objectives: (1) reducing greenhouse gas emissions by 
accelerating targeted countries' transition to low emission development 
through clean energy and sustainable landscape use (mitigation); (2) 
increasing the resilience of people, places and livelihoods to climate 
change (adaptation); and (3) integrating climate change considerations 
into USAID's programs, policies and operations (integration).
    Regarding outcomes and related measures, USAID assistance is 
refining the development of a series of indicators against which we 
will assess the success of our climate change programming. For example, 
USAID will assess: (1) whether assisted countries prepare greenhouse 
gas inventories and sustain the quality of those inventories; (2) 
whether partner countries' national and subnational development plans 
are informed by climate change analysis and include mitigation and/or 
adaptation actions; (3) the extent to which stakeholders are using 
climate information in their decisionmaking; and (4) tracking increased 
leverage of public and private sector investment devoted to climate 
change mitigation and adaptation as a result of USG assistance.
    USAID is engaging in an organized effort with other donor and 
implementing agencies to explore ways to assess the capacity of 
individuals, households, and institutions to adapt to climate change. 
With the help of evaluations, such analysis will allow for the 
assessment of impact of adaptation assistance in post-disaster 
situations, as well as create opportunities to strengthen the 
predictive quality of the outcome measures outlined above.
                                 ______
                                 

     Responses of Administrator Rajiv Shah to Questions Submitted 
                        by Senator Barbara Boxer

                gender-based violence strategy and india
    Question. It is my understanding that you traveled to India last 
month to focus, at least in part, on violence against women. So I am 
certain that you are aware of the heartbreaking stories that have 
emerged out of India recently, including the gang rape of a 23-year-old 
woman on a bus last December. Her injuries were so horrific that she 
later died of them. A Swiss tourist was also gang raped by five men 
while traveling with her husband. And just last week, a 5-year-old girl 
was kidnapped, repeatedly raped, and nearly killed. These cases--as 
well as others--have garnered significant international attention and 
sparked protests within India.

   How is USAID working in India to help address rape and 
        other forms of gender-based violence?
   Is there more that we could be doing, especially in light 
        of the recently announced U.S. Strategy to Prevent and Respond 
        to Gender-Based Violence Globally?

    Answer. USAID shares your strong concern about gender-based 
violence and violence against children in India.
    Our approach in India and other countries around the world is to 
work across sectors to identify and close gender gaps wherever they 
exist, because we recognize the broader benefits that arise when women 
are able to realize their rights and determine their own outcomes. 
USAID/India's goal is to enhance women's leadership and gender equality 
in all program sectors in which we work, including health, clean 
energy, and agriculture programs, and identify entry points in each of 
these sectors to address gender-based violence and other barriers to 
gender equality.
    In India, we are working through a variety of partnership 
mechanisms to identify innovative approaches to combating gender-based 
violence (GBV) that build on local knowledge, Indian innovation, and 
show the potential for scale and replication in India and around the 
world.
    USAID is partnering with Care, ITVS--the independent television 
station, and the Ford Foundation to support Women and Girls Lead 
Global. In India, this program is working to engage men and boys and 
change their attitudes and behaviors related to GBV. USAID is 
partnering with U.N. Women to implement the Safe Cities program in New 
Delhi--an innovative program that employs a gender empowerment approach 
to the issue of urban planning and infrastructure development. The goal 
is for girls and women to reclaim their right to public spaces. 
Further, we are working through our health programming in India to 
identify entry points in patient care where front line health workers 
are equipped in a systematic way to identify GBV in patients as well as 
counsel them and refer them for care.
    The U.S. Strategy to Prevent and Respond to Gender-Based Violence 
Globally is a milestone in solving this critical problem and USAID has 
developed an implementation plan to realize the goals of the strategy, 
yet there is always more to be done. USAID appreciates the efforts and 
coordination of many U.S. Government agencies at home and abroad to 
implement this strategy as well as the advocacy from senior leadership 
across the government.
                     malala yousafzai and pakistan

    Question. Earlier this year, I introduced the Malala Yousafzai 
Scholarship Act with Senator Landrieu. Specifically, it would build 
upon an existing USAID-funded scholarship program for disadvantaged 
Pakistani students by increasing the number of scholarships awarded 
each year by 30 percent and requiring that all of these new 
scholarships be awarded to women. To date, only 25 percent of the 
program's scholarships have gone to women.

   Will you commit to working with me to ensure that Pakistani 
        women are given full and equal access to USAID scholarship 
        programs?
   What more can the United States do to expand educational 
        opportunities for women and girls in Pakistan and around the 
        world?

    Answer. USAID is committed to ensuring that Pakistani women are 
given full and equal access to USAID-funded scholarship programs. USAID 
specifically supports the goal of increasing the number of scholarships 
available to Pakistani women under USAID's Merit and Needs-Based 
Scholarship Program (MNBSP). The MNSBP provides scholarships for 
Pakistani students to attend bachelor's and master's degree programs at 
Pakistani universities, targeting underserved populations, including 
women.
    Based on an overall positive independent evaluation of the MNBSP 
issued in August 2012, USAID is making several programmatic adjustments 
to reach that goal. These adjustments are scheduled to take effect for 
university enrollment in September 2013. Among these adjustments are 
targeting of the distribution of scholarships to women for entrance 
into the fall 2013 matriculation at 50 percent; this is 4 percent above 
the ratio of women attending university as a percentage of the 
university-going population (46 percent). In order to reach the 50 
percent target, USAID is expanding disciplines of study from 
agriculture and business to a wide variety of fields popular with women 
from chemical engineering to journalism. USAID is also expanding the 
university pool to include five women's universities. In addition, in 
our other scholarship programs in Pakistan, we have set a 50 percent 
target for scholarship awards to women.
    Scholarship programs are only one aspect of USAID's education 
initiative in Pakistan. In many areas parents will only send their 
girls to schools with an all-female teaching staff, so increasing the 
number of women teaching will expand access to education for girls. To 
ensure more girls have the opportunity to pursue basic education, USAID 
is working to mobilize communities to increase girls' enrollment in 
school and training female teachers, which encourages families to send 
their girls to school. USAID is also constructing or rehabilitating 
over 185 girls' schools in Sindh, FATA, Khyber Pakhtunkhwa, and 
Balochistan. To address the challenges of educational quality, which 
impacts access, USAID will be transforming the way classroom teachers 
teach and assess reading over the next 5 years by working with 
universities and colleges on new degree programs in preservice teacher 
education as well as working with in-service teachers.
    Similarly, USAID is working to expand opportunities for women and 
girls worldwide. In 2012, the Agency adopted a new policy on Gender 
Equality and Female Empowerment, which includes equal access to 
education as part of its vision. Among the requirements under this new 
policy are that gender equality and female empowerment must be 
integrated throughout the program cycle: in policy and strategy 
formation, project design and implementation, and monitoring and 
evaluation. USAID's Automated Directives System, which dictates 
operational policy, also requires gender analyses to guide long-term 
planning and project design so that men and women experience an equal 
opportunity to benefit from and contribute to economic, social, 
cultural, and political development; enjoy socially valued resources 
and rewards; and realize their human rights.
    Taken together, these efforts along with those that the Agency has 
undertaken around the National Action Plan on Women, Peace and 
Security, preventing Gender-Based Violence, ending Child Marriage and 
Countering-Trafficking in Persons, provide a global approach for the 
empowerment of women.
                             climate change
    Question. Numerous statements and studies from the defense and 
national security communities have warned that climate change and its 
impacts--from extreme events to sea-level rise to water and food 
scarcity--will create political instability, especially in the poorest 
and least able to adapt countries.

   How will funding the President's budget request for the 
        Department of State and USAID's efforts on global climate 
        change help prevent and mitigate such impacts and assist U.S. 
        national security priorities?

    Answer. Global climate change has the potential to significantly 
alter the relationships between people and their environment. It could 
undermine the resource base upon which people have built their 
livelihoods and sociopolitical institutions. However, there remains 
little certainty over exactly how these changes will be manifested in 
specific events and locations and what the consequences will be in 
terms of economic development, political stability, peace and security. 
It has therefore become a priority for USAID to help build an evidence 
base about the relationship between climate, resources, and conflict 
and to be able to knowledgeably inform both development policy and 
programming, especially when working in fragile and conflict affected 
areas.
    USAID recognizes at least three ways by which climate change could 
potentially contribute to armed conflict or violent social unrest: (1) 
climate change could intensify existing environmental or resource 
problems (whether due to scarcity or abundance); (2) climate change 
could create new environmental problems that contribute to instability; 
and (3) the introduction of climate-related resources and financing 
could interact with existing grievances and fault lines in 
counterproductive or destructive ways.
    USAID and other development organizations have recognized these 
risks and have widely accepted the need to be ``conflict-sensitive'' in 
climate-related interventions. The FY14 foreign assistance request 
includes funds for the collection of needed data and for adaptation 
funding as a critical component of the climate change program.
    We believe our adaptation programs will play a critical role in 
helping prevent and mitigate instability caused by the impacts of 
climate change. USAID adaptation programs seek to make early and smart 
investments to build the resilience of vulnerable communities and 
reduce many of the negative impacts of climate change. Adaptation funds 
are targeted at the poorest and most vulnerable countries, both in 
terms of exposure to physical impacts of climate change and 
socioeconomic sensitivity to those impacts. USAID's Climate Change and 
Development Strategy prioritizes small island developing states, 
glacier-dependent nations, and least developed countries, especially in 
Africa, for adaptation investment. The Global Climate Change Initiative 
is a critical component of USAID's Resilience Strategy; considering the 
current and future effects of climate change allows us not only to 
better predict, prepare for, and respond to shocks and stresses (e.g., 
hurricanes, flooding, and droughts) but also to improve planning for 
the long-term stresses of climate change.

    Question. As we have seen here in the United States, extreme 
weather events associated with climate change are increasing in their 
number and impact. The frequency and intensity of these events will 
only increase. The poor and countries least able to adapt are the most 
vulnerable to extreme events and other climate change impacts such as 
sea-level rise, water and food scarcity, and shifting seasons and 
disease vectors.

   How will funding the President's budget request for the 
        Department of State and USAID's global climate change efforts 
        help prevent and mitigate the impacts of climate change on the 
        world's most vulnerable people and nations?

    Answer. FY 2014 adaptation funding will bolster the Global Climate 
Change Initiative's efforts to increase the resilience of vulnerable 
communities to climate threats, and preserve hard-won development gains 
in democracy, food security, health, economic growth, and natural 
resource management. Through adaptation programming, the United States 
is contributing to stability and sustainable economic growth in 
developing countries, preventing loss of life, and reducing the need 
for post-disaster assistance.
    With FY 2014 resources, USAID will support on-the-ground programs 
that rigorously test the effectiveness of adaptation actions, 
disseminate lessons learned and catalyze their widespread adoption to 
build resilience across communities, countries, and regions. Adaptation 
funding will also be used to support strategic investments in science 
and analysis for decisionmaking, and tools and platforms that can be 
used in multiple countries around the world. For example, USAID will 
continue to extend climate forecasting technology systems, such as the 
Famine Early Warning System and SERVIR, to help vulnerable countries 
adapt and respond to shocks.

   The USAID-supported Famine Early Warning System Network 
        (FEWS NET) is an information system designed to identify 
        problems in the food supply system that potentially lead to 
        famine or other food-insecure conditions in sub-Saharan Africa, 
        Afghanistan, Central America, and Haiti. The USGS FEWS NET Data 
        Portal provides access to geospatial data, satellite image 
        products, and derived data products in support of FEWS NET 
        monitoring needs throughout the world. This portal is provided 
        by the USGS FEWS NET Project, part of the Early Warning and 
        Environmental Monitoring Program at the USGS Earth Resources 
        Observation and Science (EROS) Center. (http://early.warning-
        usgs.gov/fews/index.php) FEWS NET predicted a recent drought in 
        Africa and allowed donors to take quick action before the worst 
        conditions set in. In those areas that were expected to be hit 
        the hardest, USAID helped households with ``commercial 
        destocking''--selling off some livestock while the prices were 
        still high, which helped families bring in enough income to 
        feed themselves and their remaining livestock. USAID also 
        prepositioned significant amounts of food and nonfood 
        commodities and worked to rehabilitate wells before the worst 
        drought conditions, preventing the need to launch expensive 
        water trucking efforts in those regions.

    In Mozambique, USAID will help vulnerable coastal cities 
incorporate climate change projections into their planning processes 
and implement adaptation measures to reduce risks associated with sea-
level rise, flooding, storms, and erosion; direct beneficiaries will 
include municipal governments, local communities, nongovernmental 
organizations, and faith-based organizations. In the Dominican 
Republic, USAID will build on a new partnership with reinsurer Swiss Re 
to make an affordable tailored weather index insurance product 
commercially available to small farmers who are currently unable to 
make optimal productive investments due to increasing risks of drought 
or flooding. Hundreds of Dominican farmers will also receive training 
and technical assistance on climate change, financial management, and 
the design and application of farm-level risk reduction measures. USAID 
has built an impact evaluation around this project in the Dominican 
Republic, and will be gathering evidence of the effectiveness of this 
holistic risk management approach over the next 2 to 4 years.
    USAID programs will also promote effective governance for climate 
change adaptation, by helping governments integrate climate resilience 
into development planning, and building the capacity of civil society 
organizations and the private sector to engage in policymaking 
processes.
    Adaptation resources will be spent in the vulnerable countries and 
communities that need them most. The Global Climate Change Initiative 
prioritizes adaptation funding for least developed countries, 
especially in sub-Saharan Africa, small-island developing states, and 
glacier-dependent countries.
                                 ______
                                 

     Responses of Administrator Rajiv Shah to Questions Submitted 
                         by Senator Ron Johnson

    Question. Foreign assistance is an important component of America's 
foreign and defense policy. I am proud of the fact that we portray 
American values around the world, and when done effectively and 
strategically, it is money well spent. At the same time, however, we 
have a responsibility to ensure that taxpayer funds are being spent in 
the national interest, and our allies and partners have not always been 
reliable. The American public has become more skeptical of aid, and in 
some cases, with good reason.

   In your opinion, what is the best way of holding 
        accountable recipients of U.S. assistance, while also 
        understanding the reality of difficult situations, whether 
        discussing Egypt, Pakistan, Syria or others?

    Answer. USAID is committed to accountability, transparency, and 
oversight of USG funding and we have a number of mechanisms for 
ensuring that resources are not lost to waste, fraud, or abuse 
throughout development assistance implementation, as follows:

   Pre-Award: Contracting and Agreements Officers (CO/AO) make 
        a determination whether a contractor/recipient is sufficiently 
        responsible in terms of financial capabilities to account for 
        funding, and have the ability to carry out or perform the work, 
        under an award. This process is known as ``a pre-award 
        responsibility determination.'' As part of the Request for 
        Proposal/Application process, CO/AOs also ensure that 
        regulatory language enabling oversight and performance 
        monitoring is included in each award. This language comes from 
        the Federal Acquisition Regulation, the Office of Management 
        and Budget (OMB) Circulars and/or Agency operational policy. 
        Finally, performance indicators and metrics linked to the 
        desired results are also included in the awards.
   Post-Award: During the period of performance for an award, 
        USAID performs myriad activities to ensure award compliance. 
        Contracting/Agreement Officer's Representatives COR/AORs review 
        and approve awardee vouchers for invoices submitted, conduct 
        site visits, and enable third-party program and project 
        evaluations. They also monitor performance through reporting, 
        meetings, and general oversight of the work being performed. 
        COR/AORs formally document any material deficiencies in 
        performance. This documentation triggers immediate action by an 
        Agency CO/AO which may ultimately include recommending that the 
        vendor not be paid. Additionally, we use financial systems and 
        controls, as well as internal and independent audits to enable 
        the Agency to effectively manage, track, and safeguard funds 
        before they are disbursed.
   Award Close-out: Like other federal agencies, USAID uses the 
        Contractor Performance Assessment Reporting System (CPARS) to 
        formally record data about contractor performance. CORs are 
        responsible for compiling and entering past performance data 
        into CPARS annually. Additional USAID mechanisms are also in 
        place to evaluate contractor performance including the post-
        performance audit process and the Office of the Inspector 
        General to whom any instances of suspected waste, fraud, or 
        abuse are promptly referred.

    In February 2011, USAID stood up a Compliance Division within the 
Bureau for Management's Office of Acquisition and Assistance (M/OAA) to 
serve as the central repository for any and all referrals of 
administrative actions, including suspension and debarment actions. In 
just its first year the Division issued 102 administrative actions and 
recovered nearly $1 million. For this achievement the Agency was 
recognized by the Office of Management and Budget in 2012 as a success 
story:

          ``The Agency debarred 16 people in 2012 for their 
        participation in a scheme to submit fraudulent receipts for the 
        administration of federal foreign assistance to support public 
        health, food aid, and disaster assistance in Malawi. By working 
        with its recipient organization to assure that the unlawfully 
        claimed funds were not reimbursed, USAID was able to avoid 
        waste and abuse of taxpayer funds designed to provide vital 
        assistance to a developing country.''--``Taking Contractor 
        Accountability to the Next Level,'' September 18, 2012 (http://
        www.whitehouse.gov/blog/2012/09/18/taking-contractor-
        accountability-next-level).

    With respect to audit mechanisms and accountability standards, 
U.S.-based grantees are subject to OMB Circular A-133 and U.S. 
contractors are subject to FAR 52.1215-2 and 52.216-7. For all foreign-
based recipient entity types, including contractors, grantees and host 
government entities, audits are conducted in accordance with USAID 
Inspector General (IG) guidelines. The USAID IG guidelines were derived 
directly from U.S. Government auditing standards for implementation in 
the overseas, developing country context in which USAID financed 
performance takes place. The most notable difference between USAID 
audits on non-U.S. entities and U.S. entities is that a lower annual 
audit threshold is used for non-U.S. recipient entities--$300,000 in 
annual expenditures instead of the $500,000 threshold applicable by OMB 
to U.S. entities. Also, in most cases, foreign contractors and grantees 
and host governments are audited by independent, private sector 
auditors using the USAID IG guidelines. However, pending USAID IG 
concurrence, audits on host government implementing entities may also 
be carried out by host government Supreme Audit Institutions. Such 
audits must comply with one of the following standards: (1) Comptroller 
General of the United States; (2) International Organization of Supreme 
Audit Institutions (INTOSAI); (3) International Auditing Practices 
Committee of the International Federation of Accountants (IFAC).

    Question. The issue of branding--making sure recipients know who is 
sending the assistance--has been discussed several times before this 
committee, most recently regarding aid to Syrians.

   What is your assessment of the branding of American aid to 
        Syria? Also, please explain our branding efforts globally, 
        including where there are areas for improvement.

    Answer. The U.S. Government requires NGO partners to brand our 
assistance unless doing so would imperil the lives of aid recipients 
and the humanitarian workers delivering assistance. Recognition of U.S. 
humanitarian efforts inside Syria is severely constrained by safety and 
security concerns, but we continue to work to make our humanitarian aid 
more visible, including some small-scale branding of our assistance. In 
areas where it is safe to do so, including opposition-held areas in the 
north; we are able to inform local leaders and recipients about where 
the aid is coming from. For example, nearly all of the bakeries 
receiving U.S. Government flour in Aleppo governorate are informed that 
it is U.S.-donated flour.
    Because wide-scale branding is not an option at this time, we are 
seeking to get the word out in ways that do not undermine the 
operation: U.S. Government staff in D.C. regularly meet with the Syrian 
diaspora community to utilize its connections inside Syria and spread 
the message of USG support. We also continue to heavily engage with 
local, regional and international media, both traditional and digital, 
to illustrate the extent to which USG humanitarian assistance is 
reaching a wide range of areas inside Syria.
    In addition, we work with our international organization partners 
to highlight U.S. Government support wherever possible, and U.S. 
Government officials use every public opportunity to highlight our 
humanitarian assistance to the region, including speaking engagements, 
social media, and regional, national, and international media 
interviews.
    More broadly, since 2004, USAID has significantly improved its 
branding and marking efforts in order to drive greater awareness of 
America's support in countries that receive aid ``From the American 
People.''
    Over the past 8 years, we have seen concrete results from our 
efforts to brand and market USAID's assistance. USAID now has the 
strongest and most robust branding and marking efforts of all bilateral 
donors, and we have integrated our branding efforts across our project 
design and award process to ensure consistency and effectiveness.
    USAID's marking requirements, as outlined in the Code of Federal 
Regulations (22CFR226) and ADS 320 policy guidance, ensure that USAID's 
visual identity is represented or ``marked'' on all appropriate 
products: food aid, clinic signs, schools, hospitals, training 
materials, and other program materials. These federal marking 
regulations are complemented by our work to ``brand'' USAID 
assistance--a phrase that broadly encompasses all of our efforts to 
advance America's strategic priorities abroad by communicating our 
mission and the investments of the American people around the world.
    To put our branding and marking regulations into practice, USAID's 
overseas communications officers create strategies to tailor messages 
and information according to each country's specific needs and 
opportunities. Branding and marking plans, which are required of every 
USAID contract and grant agreement, further these strategies by 
outlining how each project will specifically apply federal marking 
requirements and communicate the message that the assistance is from 
the American people.
    Our communications officers also occasionally direct in-country 
polling surveys both before and after the communications efforts. 
Polling data results by region from these surveys offer an important 
evidence-based review of the impact that can be generated with the 
consistent application of the USAID brand. The results show that 
USAID's branding and marking have garnered returns for the United 
States in terms of awareness and support of our efforts and policies.
Challenges and Solutions to Improving Branding Impact
    Despite the progress made by the Agency, challenges remain in our 
branding and marking efforts and USAID continues to undertake a 
proactive stance in ensuring branding guidelines are followed. In some 
parts of the world, the security situation makes marking inherently 
dangerous to our employees, grantees, and program beneficiaries. In 
these cases, waivers are sought and granted when situations merit this 
action.
    When USAID observes implementing partners not adhering to branding 
and marking requirements, we notify these partners in writing of their 
noncompliance and reiterate the mandatory requirement to observe and 
apply branding standards. USAID also retains the right to terminate 
agreements for noncompliance.
    Finally, regular polling and surveys of local populations are 
important tools to understanding the impact and management of our 
assistance programs in country. Missions also may monitor the local 
media, and coordinate closely with their respective Embassy Public 
Affairs Sections, to assess the general sentiment toward USAID's 
ability to improve host country perception of U.S. political, 
diplomatic, economic, and security goals in country.
    USAID recognizes that effective branding and marking of American 
assistance abroad can help our Nation achieve its diplomatic, 
political, economic, and security goals. USAID also works proactively 
to strengthen efforts to communicate directly to governments, our 
beneficiaries, and their communities that aid is from the American 
people.
                                 ______
                                 

     Responses of Administrator Rajiv Shah to Questions Submitted 
                    by Senator Christopher A. Coons

                                 kenya
    Question. I am convinced that USAID's long-term commitment in 
support of democratic and electoral reform in Kenya made a significant 
contribution to the largely credible and peaceful election, but the 
reform process is far from complete and accountability must be strongly 
enforced.

   How will USAID programs help ensure that Kenya continues to 
        implement critical reforms such as devolution, accountability, 
        and land reform?

    Answer. Support to the implementation of hard-won reforms will be 
central to assistance programs in post-election Kenya. USAID programs 
will continue to assist Kenyans by providing responsive programs which 
build upon years of partnership. Devolution and accountability will 
cross-cut all programs, and support for land reform will continue as an 
integral part of the mission's agriculture programming.
Devolution
    Kenya's decision to devolve government systems to the county level 
will bring governance and service delivery closer to the people served. 
It will also make decisionmakers more accessible to their constituents. 
Devolution represents a new operational environment. All of USAID's 
programming is being adjusted to work with traditional national 
ministries, new county systems and governance structures, and civil 
society. The Kenyans are making the adjustments needed across 47 new 
counties. Most health and education programs were already being 
implemented by devolved institutions, and the mission is reviewing how 
it can facilitate the adjustment to county decisionmakers by engaging 
with the new county governments. This is also true of agriculture 
programs under Feed the Future. In a targeted governance effort, 
USAID's democracy, human rights, and governance programs support 
Kenyans with devolution by assisting national entities facilitating 
this reform process and providing comprehensive capacity-building for 
appointed and elected officials. Initial capacity-building has focused 
on all 47 counties and included training for Governors, Senators, and 
local assembly representatives. Over the long term, USAID will 
concentrate resources in 15 to 20 of the newly formed counties--
focusing especially on strengthening new women leaders, enhancing 
public financial management, and combating corruption. Assistance will 
also target 100 different county-level civil society organizations to 
strengthen their capacity to oversee local service delivery, ensure 
accountability, collaborate together, and effectively represent citizen 
interests (especially those of marginalized groups) in county-level 
decisionmaking.
Accountability
    Because of the high level of corruption in Kenya, USAID strives to 
build into all of its programs support for transparency and 
accountability. This is something that relies heavily on both how one 
does business and what is done. Thus, USAID adheres to regular high 
standards in program management and oversight through monitoring, 
evaluating, and auditing. The USAID-funded program, ``Strengthening 
Institutions of Governance and Service Delivery to Entrench 
Transparency and Accountability,'' advances the implementation of 
anticorruption reforms enumerated in Kenya's new constitution, 
including laws and policies that will reduce corruption throughout the 
political, electoral, and governance systems in the country. The 
program increases participation of the various stakeholders in the 
anticorruption agenda in Kenya by promoting networking among like-
minded organizations and state institutions, policy advocacy, and 
research and documentation. The program also supports research, 
including institutional systems and practices audits, and systematic 
monitoring of the performance of key institutions. Central to the 
program's research work is the annual East African Bribery Index, which 
documents citizens' experiences with corruption. Research findings are 
widely disseminated, through stakeholder organizations, the mass media, 
and social media. The formation of a more effective policy and legal 
framework has promoted accountability and transparency, resulting in a 
number of corruption cases that have been investigated, and public 
resources recovered. For example, recent engagement by Transparency 
International with the courts helped to clarify that Members of 
Parliament are constitutionally required to pay taxes and cannot exempt 
themselves from this responsibility.
    USAID's future devolution program also contains several major 
components that focus on accountability, transparency, and 
anticorruption. Technical assistance will be provided to county 
governments to help them set up transparency mechanisms such as the 
adoption of freedom of information policies and ensuring that 
government proceedings are shared with the public. The program will 
also support the adoption of strong procurement, public financial 
management, and public engagement mechanisms. On the demand side, the 
program supports civil society and the media to advocate for reform, as 
well as to monitor county governments through instruments such as 
citizen scorecards and investigative journalism.
Land Reform
    USAID engaged in land reform after the 2007 post-election violence, 
when no other donor viewed it as feasible. USAID established a pilot 
community land rights recognition model on the island of Lamu that the 
Ministry of Lands (MoL) adopted as part of its drafting of the new land 
laws. After the passage of the 2010 constitution, USAID supported the 
MoL and the Attorney General's office to draft three new pieces of land 
legislation that passed in 2012. After executive branch delays, members 
of the new, constitutionally mandated National Land Commission, which 
was established by one of the pieces of legislation, were named. In 
addition, USAID supported women's land rights in the contentious Mau 
Forest region, helping to empower women in that community and securing 
better livelihood options for them and their families. USAID continues 
to support the establishment of the National Land Commission, as well 
as drafting of the important Community Land Rights Recognition Act, 
because it will bring transparency to the regulations that govern over 
60 percent of Kenya's lands. USAID will also continue to support 
community-based wildlife conservation, since 60 percent of Kenya's 
wildlife resides on these communal lands.
    USAID's Kenya Civil Society Strengthening Program works with 
hundreds of civil society organizations to help them effectively 
advocate for governance reforms, conduct civic education and peace-
building activities, and improve management of natural resources. The 
program provided subgrants, totaling over $27 million, to 260 
organizations working to advocate for and monitor progress on important 
issues, including: elections; ethics and anticorruption; land; human 
rights; devolution; the police; judiciary; rights for women, youth and 
persons with disabilities; peace-building; and natural resource 
management. The program also assisted civil society to provide input 
and advocacy on key pieces of reform legislation. Legislation 
successfully enacted include: Truth, Justice and Reconciliation Bill; 
National Land Policy; Political Parties Bill; Elections Bill; Forest 
Act; and Wildlife Policy Bill. Partners continue to monitor 
implementation of these new laws. More than 5,000 people benefited from 
the improved management of more than half a million hectares of land. 
The program has created viable, profitable nature-based enterprises and 
natural resource management activities.
    In addition, USAID's Land and Conflict Sensitive Journalism 
activity has trained dozens of news media representatives on more 
conflict-sensitive and objective reporting. Land reform, as a major 
source of livelihoods and of conflict in Kenya, has been a recurring 
theme covered by the activity.
                   democratic republic of congo (drc)
    Question. Recent developments in the DRC--such as the signing of a 
multilateral Framework Agreement, appointment of a U.N. envoy, and the 
expanded mandate of MONUSCO with an intervention force--present an 
opportunity to make meaningful progress toward sustainable peace.

   What is USAID's role and to what extent is the DRC able to 
        effectively absorb more U.S. assistance in light of its 
        significant governance challenges?

    Answer. As it becomes clearer how the Peace, Security and 
Cooperation (PSC) Framework Agreement and authorization of the 
Intervention Brigade will influence the situation in eastern DRC, USAID 
will be ready to assist the Congolese people through humanitarian 
assistance, recovery and development programs specific to eastern DRC, 
and programs with a broader national coverage that includes, but are 
not limited to, the east. In FY 2012, USAID programmed approximately 
$168 million dollars in the region. USAID can also provide strategic 
analysis of drivers of conflict. Such analysis would help inform the 
design of strategies and activities to address the root causes of 
conflict.
    It is our judgment that the DRC is able to absorb all of the 
assistance that the United States has requested. USAID will 
increasingly implement its programs in alignment with DRC Government 
priorities and in concert with Congolese partners. This will be a means 
to build local and national government capacity, strengthen civil 
society, and foster communication with and accountability to citizens, 
thus promoting the sustainability of service delivery and building 
state legitimacy.
    We will continue to press the DRC to undertake much-needed domestic 
reforms, including comprehensive security sector reform, as it 
committed to do in the PSC Framework. USAID will increase efforts to 
help the Government of the DRC (GDRC) implement decentralization, as 
envisioned in the 2006 constitution. Much remains to be done, including 
putting in place enabling legislation, establishing new institutions, 
and training officials. USAID and State will coordinate with 
stakeholders to promote electoral reform and support the GDRC to 
undertake credible, transparent, and peaceful elections--provincial and 
local as soon as feasible, and national in 2016.
    In eastern DRC, USAID already works with communities to reconcile 
underlying causes of political and socioeconomic disputes; helps extend 
state authority through work with local governments; and increases 
communities' capacity to respond to insecurity. USAID also focuses on 
sexual and gender-based violence preventative programs and reinforcing 
communities' capacity to combat sexual violence themselves. In 
addition, USAID projects provide psychosocial and economic support to 
allow victims to reenter society.
    USAID is helping to develop a mineral traceability program that 
monitors minerals from the mine to the manufacturing user, ensuring 
that the minerals do not help fund conflict. USAID and the Department 
of State will build on recent successes and continue working with 
private sector partners to demonstrate that legal, responsible, and 
economically viable trade in natural resources is not only possible but 
can be beneficial to all stakeholders in a given supply chain. As 
security in the east increases, these efforts can be expanded to 
benefit more communities and miners. This expansion will give the 
diverse actors who currently exploit the absence of state authority a 
vested interest in supporting improvements to the DRC's stability.
                                 ______
                                 

     Responses of Administrator Rajiv Shah to Questions Submitted 
                         by Senator Jeff Flake

    Question. A school of thought exists which posits that U.S. foreign 
assistance is only effective for countries that want to change.

   To what degree do the programs administered by USAID take 
        this into consideration?
   The Millennium Challenge Corporation (MCC) has a pretty 
        good success record, and is an organization that firmly 
        subscribes to this school of thought. Can you tell me whether 
        USAID collaborates with MCC on the lessons it has learned in 
        administering foreign assistance?

    Answer. USAID subscribes to the view that foreign assistance is 
most effective when it is given in the context of a full collaboration 
between the United States and a strong democratic government that is 
effective on behalf of all its citizens. However, it would not be in 
the U.S. national interest or comport with American morality to only 
provide assistance to people fortunate enough to live in countries with 
such governments. We cannot afford to restrict our fight against global 
public health threats like HIV/AIDS and multi-drug-resistant 
tuberculosis to countries that have the best governments, or ignore the 
plight of sick and starving children because they are not well 
governed.
    USAID has developed effective ways of providing assistance through 
civil society, NGOs and implementing partners when governments are not 
the most effective at, or interested in, promoting the welfare of all 
their citizens, and of promoting improvements in democratic rights and 
governance that over time will produce better development prospects as 
well as a more secure world. MCC fills an important niche in U.S. 
Foreign Assistance. There is a healthy interchange between MCC and 
USAID on issues of aid effectiveness, and USAID and MCC perform 
complementary roles in the countries where both operate.
                            use of oco funds
    Question. FY 2012 was the first year that OCO funds were requested 
for State & Foreign Operations. In that year, Congress provided an 
additional $2.5 billion in OCO funds above what the administration 
requested for things like USAID operating expenses, and international 
development assistance.

   Given that OCO funds are extra-budgetary and do not count 
        toward overall spending caps set forth by the BCA, does the 
        addition of funds help or hinder USAID's future years budgeting 
        process?
   Is it common that USAID would try and expend all these 
        dollars to demonstrate a need for them in the next budget year?
   How does USAID define ``Overseas Contingency Operations?''
   Does USAID plan to cease the request of OCO funds, 
        commensurate with the timetable for withdrawal from 
        Afghanistan?

    Answer. The FY 2014 OCO request funds the extraordinary, but 
temporary, costs of the Department of State and the U.S. Agency for 
International Development (USAID) operations in the Frontline States of 
Iraq, Afghanistan, and Pakistan. This approach to funding extraordinary 
but temporary costs, which is similar to the approach taken by the 
Department of Defense, allows USAID and the Department of State to 
clearly identify the exceptional costs of operating in these countries 
that are focal points of U.S national security policy and require a 
significant U.S. civilian presence.
    The administration continues to propose a multiyear cap that limits 
governmentwide OCO funding to $450 billion over the 2013 to 2021 
period. FY 2014 OCO funding will provide resources for the United 
States continuing diplomatic platform and foreign assistance programs, 
including assistance focused on foundational investments in economic 
growth, support of the military, political and economic transitions, 
and continuing the capacity-building within the Afghan Government to 
sustain remarkable gains made in the past decade.
    It is certainly not USAID's practice to seek to expend all OCO 
funding to demonstrate a need for such funding in the next budget year. 
USAID's assistance programs in Afghanistan, particularly those funded 
by OCO, are designed through close civilian-military cooperation to 
ensure collaboration and coordination and a cohesive effort in support 
of overarching stabilization and development objectives in Afghanistan. 
They are also designed and implemented in accordance with the 
Administrator's Sustainability Guidance for USAID in Afghanistan: 
http://transition.usaid.gov/locations/afghanistanpakistan/documents/
afghanistan/sustainability_guidance_ 
final.pdf.
                          contracting at usaid
    Question. An October 2012 memorandum from the Office of the 
Inspector General at USAID to your office noted some ongoing issues 
with projects USAID has been managing. For example, in Afghanistan, 
``forty percent of the reports issued from October 1, 2010, through 
June 30, 2012, have identified contract or project management 
deficiencies and noncompliance with relevant procedures or 
regulations.'' In Pakistan, ``more than 40 percent have found internal 
control weaknesses and noncompliance with relevant procedures or 
regulations.'' In light of these persistent performance management 
issues:

   If a project does not meet specific criteria within its 
        first year, what is USAID's plan for course correction?
   What are the baselines that Congress should use when 
        evaluating whether USAID is meeting the goals set out for 
        particular projects?
   How heavily is performance history weighed when USAID is 
        considering awarding a contract to a particular entity?

    Answer. USAID staff develop detailed monitoring and evaluation 
plans as part of their project design process. The targets set in the 
project monitoring and evaluation plans are the basis for portfolio 
reviews of progress or lack thereof against targets, during which 
mission staff make appropriate course correction according to the 
context.
    USAID continues to make strides in its ability to effectively 
monitor and evaluate its development assistance programs. The Agency 
has many mechanisms through which it sets targets and collects 
performance information against those targets. The Agency has revised 
its guidance on performance monitoring, requiring that missions develop 
a Project Monitoring and Evaluation (M&E) Plan during the design of new 
projects. This Project M&E Plan provides a framework for collecting 
baseline data as well as monitoring project performance during 
implementation. It is the baselines established for various project 
level indicators that missions then use during periodic reviews of 
project implementation to determine whether projects are meeting the 
targets that have been set against their baselines.
    USAID recently updated guidance on past performance tracking as a 
mandatory reference document to the Automated Directives System (ADS) 
Chapter 302 with a suggested weight of 20-30 percent.

                                  
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