[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
                  U.S. INTERESTS IN THE ASIA-PACIFIC: 
                         FY 2018 BUDGET HEARING

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


                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 27, 2017

                               __________

                           Serial No. 115-73

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
        
        
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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          AMI BERA, California
MO BROOKS, Alabama                   LOIS FRANKEL, Florida
PAUL COOK, California                TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida                ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida                 DINA TITUS, Nevada
ADAM KINZINGER, Illinois             NORMA J. TORRES, California
LEE M. ZELDIN, New York              BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York     THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr.,         ADRIANO ESPAILLAT, New York
    Wisconsin                        TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                  Subcommittee on Asia and the Pacific

                     TED S. YOHO, Florida, Chairman
DANA ROHRABACHER, California         BRAD SHERMAN, California
STEVE CHABOT, Ohio                   AMI BERA, California
TOM MARINO, Pennsylvania             DINA TITUS, Nevada
MO BROOKS, Alabama                   GERALD E. CONNOLLY, Virginia
SCOTT PERRY, Pennsylvania            THEODORE E. DEUTCH, Florida
ADAM KINZINGER, Illinois             TULSI GABBARD, Hawaii
ANN WAGNER, Missouri



                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Ms. Susan Thornton, Acting Assistant Secretary, Bureau of East 
  Asian and Pacific Affairs, U.S. Department of State............     8
Ms. Gloria Steele, Acting Assistant Administrator, Bureau for 
  Asia, U.S. Agency for International Development................    16

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Ted S. Yoho, a Representative in Congress from the 
  State of Florida, and chairman, Subcommittee on Asia and the 
  Pacific: Prepared statement....................................     3
Ms. Susan Thornton: Prepared statement...........................    10
Ms. Gloria Steele: Prepared statement............................    18

                                APPENDIX

Hearing notice...................................................    42
Hearing minutes..................................................    43
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    44
Questions submitted for the record by the Honorable Eliot L. 
  Engel, a Representative in Congress from the State of New York.    46
Written responses from Ms. Susan Thornton and Ms. Gloria Steele 
  to questions submitted for the record by the Honorable Ami 
  Bera, a Representative in Congress from the State of California    50


                  U.S. INTERESTS IN THE ASIA-PACIFIC: 
                         FY 2018 BUDGET HEARING

                              ----------                              


                        THURSDAY, JULY 27, 2017

                       House of Representatives,

                 Subcommittee on Asia and the Pacific,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2:30 p.m., in 
room 2172 Rayburn House Office Building, Hon. Ted Yoho 
(chairman of the subcommittee) presiding.
    Mr. Yoho. The subcommittee will come to order.
    Members present will be permitted to submit written 
statements to be included in the official hearing record. 
Without objection, the hearing record will remain open for 5 
calendar days to allow statements, questions, and extraneous 
materials for the record subject to lengthen--or to length 
limitations in the rules.
    Good afternoon again. We call this hearing to order 
pursuant to our congressional oversight responsibilities to 
discuss the administration's fiscal year 2018 state and foreign 
operations budget request for the East Asia-Pacific region. On 
behalf of the subcommittee, I thank the panel for joining us 
today to share the insights and expertise they have gained 
over--and I don't want them to be offended--over their lengthy 
diplomatic careers as we deliberate this important topic.
    East Asia and the Pacific represents the opportunities and 
challenges of this century like no other part of the world. 
Just over 30 percent of the world's population lives in this 
region. It accounts for the same share of global GDP and 
continues to lead the world in annual GDP growth. Four of the 
top ten U.S. trading partners are located in this area. Five of 
the United States' seven collective defense arrangements are 
located in the Asia-Pacific region where over 63,000 U.S. 
troops are stationed.
    This region is home to what many believe to be our most 
urgent existential threat, the nuclear belligerence of North 
Korea. We also see rising Islamist militancy and major 
territorial disputes in the South China Sea, the East China 
Sea, and the Sea of Japan. About a third of the world's 
maritime trade passes through these disputed areas, as does 
most of the energy supply of South Korea, Japan, and Taiwan, 
all critical U.S. security partners. This is the same area over 
which China, our chief global rival, seeks hegemony.
    The importance of East Asia to U.S. interests is beyond 
doubt. If the United States is to remain relevant as a global 
leader, we cannot sit out the transformation happening among 
our neighbors across the Pacific. Our diplomatic engagement in 
the region should advance our interests throughout Asia and 
should also be the first line of American defense among its 
many security challenges. As Secretary of Defense Mattis 
famously said, ``When American diplomats don't have the 
resources they need, our military needs to buy more 
ammunition.''
    I applaud the administration for their efforts to move 
toward a more fiscally responsible executive branch, but I am 
concerned that the symbolism of cuts have been given more 
importance than the actual value of individual programs. It is 
worth reiterating that even before this year's foreign 
operations budget was slashed by 30 percent, it accounted for 
just 1 percent of annual Federal outlay. Empty gestures are not 
the way to truly rein in our control, our out-of-control 
government spending, especially if they undermine U.S. 
interests.
    Business logic dictates that we should continue projects 
that deliver a good return on investment, yet I see many 
potentially sound investments that have been left out of this 
year's request. For example, foreign military financing grants 
have been mostly stripped out of this year's budget. In the 
Asia-Pacific theater, these grants have been used to advance 
U.S. national security, for example, by boosting our allies' 
ability to counter China's maritime aggression.
    Similarly, the United States has traditionally supported 
democratic reform, in part because working with friendly 
democracies is better for American peace, security, and 
influence, and it builds stronger relationships with our 
country. But this year's request drops support for democracy 
and governance reforms for Cambodia, which is just 1 year away 
from an election that could help transform it away from an 
autocracy.
    Overall, the most worrying implication of this year's EAP, 
Eastern Asia-Pacific, budget may be that it reflects a 
continuing misalignment of the administration's strategic 
planning with the importance of Asia. Even during the so-called 
pivot to Asia, budgetary commitments to Asia were the smallest 
of any region. This year's request would cut this by a further 
46 percent, the largest percentage cut for any region other 
than Europe.
    This afternoon we discuss the details of this year's state 
and foreign operations request for East Asia and the Pacific. 
We will try to strike a balance between fiscal responsibility 
and sound investments in our national security and other 
strategic priorities. In conducting our oversight of this 
request we will seek to advance the national interests by 
making sure that U.S. diplomatic engagement is up to the 
multitude of challenges and opportunities presented by this 
dynamic region.
    I thank the witnesses for joining us today to discuss this 
important topic. Without objection, the witnesses' written 
statements will be entered into the hearing record.
    I now turn to our ranking member for any remarks he may 
have.
    [The opening statement of Mr. Yoho follows:]
    
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    Mr. Sherman. Thank you, Mr. Chairman.
    We should discuss security, economics, democracy, and human 
rights. As to security, our security interests cover familiar 
and new terrain. We have alliances with Japan, South Korea, 
Australia, Thailand, the Philippines. We have security 
relations with New Zealand and Singapore, and are building 
partnerships with Vietnam, Malaysia, and Indonesia. Of course, 
we are dedicated to the security of Taiwan. These alliances and 
partnerships provide stability in the Asia-Pacific region and 
counter terrorism, piracy, and provide for humanitarian 
assistance in the wake of natural disasters.
    The huge proposed reduction in the Asia-Pacific diplomatic 
and aid budgets sends entirely the wrong message. If we do not 
reassure our partners of our commitment to the region, they'll 
be inclined to go with China. It is especially absurd to have a 
system of slashing our aid and diplomacy and public policy 
outreach to the Asia-Pacific region while massively increasing 
our military, most of that going to the Asia-Pacific region.
    Let us talk about North Korea. We have got a huge threat. 
Assistant Secretary Thornton observed that North Korea has no 
intention of abandoning its nuclear program in the current 
environment. In two hearings this year I mentioned the 
possibility of moderating our objectives to achieve a freeze of 
their nuclear missile program together with in-person 
monitoring. North Korea is believed to have roughly 20 nuclear 
weapons, maybe producing three to seven a year, unless we are 
able to get a freeze.
    Now, of course, that does not meet American political needs 
for politicians and operatives here in Washington. You meet 
those political needs by pounding the table, saying that any 
North Korean nuclear weapons is completely unacceptable. We 
have been doing that for the last 17 years. People say it is a 
complete failure because within a year or two my city will be 
subject to North Korean nuclear weapons. But it is not a 
failure because it has met the political needs of the people 
who keep bleating the same slogans over and over again.
    So, if the objective is to reach a consensus in Washington, 
and all say the same things, and the policy is going well. If 
the, if a goal is to try to keep this country safe from North 
Korean ICBMs, then I suggest we make it clear to China that 
they cannot have access to U.S. markets unabated on the one 
hand, and continue their current policy toward North Korea on 
the other. Of course, a lot of money would be lost by a lot of 
big companies if we were to do that, or even threaten to do 
that, and so we won't. We will continue to meet the political 
needs of Washington and the economic needs of Wall Street.
    Moving on to economics. We have got a $340 billion trade 
deficit with China; $69 billion with Japan; $83 billion with 
the Southeast Asian countries. It is about time that we do 
something about that. Access to the U.S. market should be 
dependent upon fair and balanced trade.
    As to human rights, we see that Laos, Cambodia, and Vietnam 
are not democratic. Democracy has regressed in Thailand. 
Indonesia, Malaysia, and the Philippines are democratic to a 
varying degree. Myanmar, also known as Burma, has made a 
transition from military rule to something that at least seems 
to be civilian government.
    Given the fundamental importance of democracy, human 
rights, and the rule of law why has our FY 2018 budget proposal 
slashed support for these efforts in Asia? We know that 121 
three- and four-star military officers, retired military 
officers have said that if we slash our diplomatic and aid 
efforts this will undermine American security. That is why we 
need a budget that reflects our values.
    Instead, we are being told slash the diplomacy, slash the 
aid, slash the money for communication with the peoples, and 
somehow instead increase the military budget by $50 billion, 
$60 billion, $70 billion, and pivot that military toward Asia. 
I suggest that that is a dangerous and shortsighted approach to 
budgeting. But budgeting is policy.
    And I yield back.
    Mr. Yoho. Thank you for those comments, and very direct. I 
will look forward to an engaging hearing here.
    We next go to Mr. Chabot of Ohio.
    Mr. Chabot. Thank you, Mr. Chairman. Thank you for holding 
this important hearing this afternoon.
    There are just two topics I would like to comment, the 
first being Taiwan. As one of the, as I mentioned before, one 
of the co-founders of the Congressional Taiwan Caucus I have 
been interested in this issue for over 20 years now and 
involved in it. I remember when I first came to Congress back 
then, there were a couple hundred missiles aimed at Taiwan from 
across the Taiwan Straits from the PRC to Taiwan. That has gone 
from a couple hundred now to 1,600 approximately.
    The PRC has been bullying Taiwan for years and years now. I 
would just say that we ought to be very clear that we are 
committed to the Taiwan Relations Act and the six assurances. 
Taiwan needs to beef up their military. The best way to avoid 
conflict is to be strong and not perceived as being weak.
    Very quickly on North Korea, you have got a madman there. 
We have had three administrations that have had the luxury of 
being able to enter into talks about the threat from North 
Korea. Essentially what would happen as a result of these talks 
we would end up giving them stuff--oil, food, other 
necessities--that they couldn't provide themselves because 
everything they have goes to their military. That also freed up 
these things; because we are giving them food, they could give 
food to the military.
    So they would say they would back off from their nuclear 
program but they cheated every time. It was a luxury, I say, 
because they couldn't, they couldn't hit us. They could hit our 
allies. They could hit Japan, they could hit our military 
forces, but they couldn't hit us. Now they can. There is only 
one thing that I think gets China's attention, and that is if 
we seriously discuss a nuclear programs for South Korea and 
Japan. I think that is the only thing that will get China's 
attention to get them to get North Korea to back off.
    I know two people have been saying this for years, myself 
and Charles Krauthammer, I don't know which one of us said it 
first but I have been preaching it a long time, and I think 
that is the only thing that will work.
    I yield back.
    Mr. Yoho. I appreciate your comments. And, again, I think 
this is going to be very engaging.
    We next go to Mr. Connolly of Virginia.
    Mr. Connolly. I yield my time to Mr. Bera.
    Mr. Yoho. Okay. Mr. Bera.
    Mr. Bera. Thank you, Mr. Chairman. Thank you, Ranking 
Member Sherman.
    You know, the countries in East Asia rely quite heavily on 
U.S. assistance for their national and regional security, 
particularly in Southeast Asia. But yet, when we look at the FY 
2018 budget request, that is not reflected in here. In there, 
the rationale for this budget says to reinforce the rules-based 
order in the region by building an international commitment to 
defeat ISIS and defending freedom of navigation in the region's 
maritime spaces, including the South China Sea, with U.S. 
leadership.
    But the budget request proposes eliminating foreign 
military financing altogether for the countries in Asia. U.S. 
foreign assistance to Indonesia is cut by 31 percent; 56 
percent to the Philippines; 26 percent to Vietnam. These cuts 
flatly contradict the administration's statement of commitment 
to the region.
    It is my belief that the budget puts America and our 
standing in the region at risk. While administration officials 
have stated that we remain committed to Asia, our words have to 
be backed up by our deeds. This budget does not reflect that 
commitment. So, I really do worry that we jeopardize our 
relationships in Asia.
    Our support for our allies and partners in Asia increase 
global and regional stability. And better stability there means 
better security here at home.
    I yield back.
    Mr. Yoho. I appreciate my colleague's remarks.
    We will next go to Mr. Connolly from Virginia.
    Mr. Connolly. I thank my friend.
    I want to echo our chairman, Mr. Yoho's, comments about the 
draconian nature of the budget cuts proposed. This isn't a 
reduction, this is gutting. To cut almost half of the aid to an 
entire region, the biggest cut in the world outside of Europe 
and Eurasia, speaks volumes. You don't make a country great 
through retreat; you make a country weak through retreat, and 
you hand over assets and dynamics to China in this region. That 
is the consequence.
    You cannot cut 46 percent and fight terrorism. You cannot 
cut all foreign military financing and fight terrorism. You 
cannot cut huge amounts of money from the Philippines and 
Indonesia when you are worried about ISIS-affiliated 
organizations suddenly resurfacing or surfacing in those 
countries. That is contradictory. It shows a complete lack of 
understanding of what we do through the foreign assistance 
program. And, Ms. Thornton, I hope you will take that message 
back.
    On one final point, Ms. Steele, I saw you went to Maryknoll 
College in the Philippines. I went to Maryknoll College in 
Chicago, Illinois. So you need a promotion.
    Mr. Yoho. The gentleman yields back.
    And with that we are thankful to be joined today by Ms. 
Susan Thornton, Acting Assistant Secretary for the Bureau of 
East Asian and Pacific Affairs at the U.S. Department of State; 
and Ms. Gloria Steele, Acting Assistant Administrator of the 
Bureau for Asia at the U.S. Agency for International 
Development.
    As our meetings in the past, what I encourage you to do is 
be engaging. These guys will be, this panel will be. It is the 
ideas that you give us here that will form policy to help bring 
some, hopefully, some diplomatic responses or actions so that 
we can have peaceful resolve of what is going on in the Asia-
Pacific theater, whether it is North Korea with the threats of 
nuclear weapons, or the aggression of China further creating a 
hegemony in that area.
    So I appreciate it. Ms. Thornton, if you would go ahead and 
just for house cleaning make sure you turn your microphone on. 
You will have 5 minutes. We are going to ask members to 
respectfully try to stay to the 5-minute time limit. I can't 
tell you how much I appreciate you being here and thank you.
    Ms. Thornton, go ahead.

 STATEMENT OF MS. SUSAN THORNTON, ACTING ASSISTANT SECRETARY, 
 BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF 
                             STATE

    Ms. Thornton. Thank you very much, Mr. Chairman. I am very 
happy to be here with you today to discuss the budget situation 
for FY 2018----
    Mr. Connolly. Excuse me, Mr. Chairman. Could I ask Ms. 
Thornton to pull the microphone closer to her so we can all 
hear?
    Mr. Yoho. Thank you.
    Ms. Thornton. Is that better? Can you hear me now? Okay.
    Well, thank you again, Mr. Ranking Member, members of the 
subcommittee. Thank you for the opportunity to appear before 
you today to testify regarding the President's fiscal year FY 
2018 budget request for East Asia-Pacific.
    The Bureau of East Asian and Pacific Affairs is responsible 
for engaging a region that represents a quarter of the world's 
population in GDP, some of the world's fastest growing markets 
and, as you said, Mr. Chairman, four of our top ten trading 
partners. Despite all of its dynamism and promise, we do, 
however, face serious challenges to our security interests and 
we must address these to keep the United States, our allies, 
and our partners safe.
    The FY 2018 budget request supports the President's vision 
to meet four key challenges: Addressing the North Korea threat, 
maintaining American leadership and influence in the East Asia 
region, defeating ISIS and combating transnational crime, and 
creating jobs and other economic opportunities for Americans.
    The most pressing threat that we face today, of course, is 
North Korea. The DPRK's continued pursuit of nuclear weapons 
and the means to deliver them is not new, but the regime has 
accelerated its development of new capabilities over the past 2 
years. To address this growing threat we are stepping up our 
global pressure campaign in coordination with allies and 
partners around the world to convince the DPRK regime to return 
to serious denuclearization talks.
    Maintaining American leadership in Asia requires us to work 
with our allies and partners on a range of challenges. Our 
budget request allows us to bolster Southeast Asian cooperation 
on maritime security and the rule of law which underpin 
regional security and economic stability.
    We support peaceful resolution of the contested maritime 
claims in the South China Sea. Destabilizing actions such as 
Chinese land reclamation, construction, and militarization of 
disputed features makes it harder for the region to resolve 
these disagreements peacefully.
    Effective public diplomacy is another key ingredient for 
American leadership in the region. We use educational, 
cultural, and digital exchange programs to communicate U.S. 
policy perspectives to foreign governments and influential 
members of their publics, including media, emerging leaders, 
thought leaders, legislators, and civil society across Asia.
    Our FY 2018 request requires improved efficiencies in U.S. 
public diplomacy that will enhance our ability to remain this 
dynamic region's partner of choice on a wide range of shared 
challenges. Even as ISIS faces battlefield losses in the Middle 
East, the siege of Marawi City by an ISIS-affiliated group in 
the Southern Philippines demonstrates the group's lingering 
appeal in Southeast Asia.
    Our FY 2018 EAP foreign assistance request includes 
resources to support efforts to defeat ISIS and to counter 
transnational crime--a funding source for ISIS, of course--
across Southeast Asia. Our law enforcement and judicial sector 
programs have enhanced recipient countries' capacities to 
identify, prosecute, and effectively isolate terrorists and 
other criminals.
    Regionally, our border security and information sharing 
programs prevent foreign terrorist fighter transit, trace 
illicit financing, and counter trafficking in goods and people.
    These programs help to ensure that Southeast Asia's 
economic integration does not leave it more vulnerable to 
terrorism, cyber attacks, or other transnational crimes.
    Finally, the FY 2018 EAP foreign assistance request will 
support economic diplomacy to level the playing field and 
reduce trade barriers for U.S. businesses. Multi-lateral work 
with APEC and ASEAN will lead to truly free and fair trade with 
the region's more than two dozen economies, while bilateral 
U.S. economic programs in Vietnam, Indonesia, the Philippines, 
and Burma will hopefully lay the groundwork for high quality, 
free and fair trade with these key partners. We will take the 
lead in setting and raising trade standards across the region, 
supported by the negotiation of bilateral trade agreements, as 
appropriate.
    Thank you for inviting me today to testify. And I look 
forward to your questions.
    [The prepared statement of Ms. Thornton follows:]
    
    
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    Mr. Yoho. Ms. Thornton, thank you.
    And, Ms. Steele, if you would go ahead. And don't forget to 
push the red button. Thank you, ma'am.

STATEMENT OF MS. GLORIA STEELE, ACTING ASSISTANT ADMINISTRATOR, 
   BUREAU FOR ASIA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

    Ms. Steele. Chairman Yoho, Ranking Member Sherman, 
distinguished subcommittee members, thank you very much for 
inviting me to testify today to talk about USAID's role in 
advancing U.S. foreign policy priorities in East Asia and the 
Pacific Islands.
    Asia-Pacific economies are deeply intertwined with our own. 
Asia is a leading destination for American exports, which 
support some 3.4 million jobs here in the U.S. By 2030 Asia 
will become home to more than half of the world's consumer 
class. Asia's growing market potential presents tremendous 
opportunities to create U.S. jobs and support regional and 
global prosperity. However, complex development challenges 
threaten to derail this trajectory.
    Asia's income inequality gap has drastically widened over 
the past two decades. Asian countries are under pressure to 
provide essential services on an unprecedented scale. And, as 
mentioned earlier, ISIS is increasing local attacks and 
recruiting foreign fighters. A host of other development 
challenges hold the region back, ranging from pandemic threats 
to human trafficking.
    The President's fiscal year 2018 budget request for USAID's 
foreign assistance in this region is approximately $235 
million. This request will enable USAID to continue its vital 
role in addressing key development challenges in the region 
while strengthening our national security, advancing U.S. 
economic interests, and asserting U.S. global leadership and 
influence.
    On national security, USAID helps to counter threats to the 
U.S. before they mature, then keep a focus on preventing 
radicalization to violence by addressing its underlying 
drivers. It also includes leading regional efforts to combat 
human and wildlife trafficking. It includes working to prevent 
health threats from reaching our country by addressing them 
abroad.
    We help to reduce non-tariff trade barriers, protect 
intellectual property rights, and support the emergence of a 
consumer class that can buy American goods and services. We 
also support ASEAN and APEC in achieving these objectives.
    We are leading the world in improving global health, 
particularly maternal and child health, malaria, and 
tuberculosis. We are also demonstrating leadership that 
reflects our core American values through lifesaving 
humanitarian assistance.
    Next I would like to provide a brief overview of our 
programs in key countries.
    Indonesia. Indonesia shares our concern about evolving 
threats from extremists. In response, we are reorienting our 
programs and designing new ones. Our focus is on strengthening 
moderate voices, bolstering community resilience to 
radicalization, and developing the capacity of Indonesian 
institutions to break the link between corruption and 
extremism. We are also improving access to justice for 
marginalized communities.
    Our work in Indonesia strengthens democratic governance and 
improves market access for American businesses, including 
Indonesia's $16 billion renewable energy market. Our efforts 
also include reducing maternal and child deaths and 
strengthening Indonesia's ability to contain infectious 
diseases.
    In the Philippines, where I grew up, the budget request 
supports programs to counter violent extremism, foster 
inclusive growth, and control tuberculosis. USAID is 
intensifying ongoing programs to address the threat of ISIS in 
Mindanao. In addition, we are helping citizens engage with 
government and bolster economic opportunities, especially among 
the youth. We will intensify our efforts to improve the court 
system's efficiency in order to strengthen the rule of law.
    The request supports our continued partnership with the 
Philippines to stimulate inclusive economic growth. USAID has 
helped advance reforms that benefit the Philippines, as well as 
the U.S., including liberalizing foreign investment laws, 
establishing an antitrust body, and modernizing customs 
procedures.
    The Philippine budget also includes assistance that we 
provide to the Pacific Island countries, 12 of them. And they 
are focused on disaster preparedness.
    In Burma, USAID will continue efforts to foster national 
peace and reconciliation, and maintain the momentum for 
democratic and economic reforms, as well as improve the lives 
of the people of Burma. We will continue to respond to 
humanitarian needs of vulnerable populations, including the 
Rohingya, and will continue working toward a solution to 
violence in Rakhine.
    In Vietnam, our assistance focuses on strengthening the 
U.S.-Vietnam partnership. We are also helping to level the 
playing field for U.S. businesses in Vietnam by helping it to 
become more market-oriented and committed to good government.
    And, finally, in Cambodia we have helped to significantly 
drive down malaria, TB, infant and child mortality. The budget 
request supports our efforts to build on these gains.
    We have a regional program that is based in Bangkok which 
will focus on activities that combat human and wildlife 
trafficking, and illegal and unregulated fishing.
    Mr. Chairman and committee, investing in development in the 
East Asia-Pacific is not only good for our allies and friends 
in Asia, but it remains in our national interest. In helping 
build more stable, open, and prosperous societies overseas we 
enhance our own prosperity and strengthen our security.
    Thank you. And I look forward to your counsel and 
questions.
    [The prepared statement of Ms. Steele follows:]
    
    
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    Mr. Yoho. Thank you both for your great testimony. We will 
look forward to talking with you.
    Ms. Thornton, you were talking about North Korea is 
probably the most urgent thing. I think we are all in 
agreement. I think we are all in agreement that the expansion 
and the aggression of what we see with China in the South China 
Sea, declaring the South China Sea as sovereign, building 
islands initially as peaceful navigational purposes that have 
morphed into militarized islands with weapon systems on there, 
radar systems, landing strips. So, the rhetoric doesn't match 
the actions.
    And we have seen this over and over again. If we can go 
back to the agreement between Great Britain and Hong Kong when 
they made the agreement and passed the control of that back, 
there was a 50-year plan. In that 50-year plan there was 
supposed to be freedom of speech, democracy, and all those 
things were supposed to be left in place. Yet, here we are 20 
years and we see it is not true.
    So we have kind of seen this story over and over again. 
And, you know, with us cutting the budgets at State to save 
money--and we do, we need to be fiscally responsible because we 
have our own tsunami coming if we don't change course in this 
country and focus on the things that are the drivers of the 
out-of-control spending--but to cut the budget to State to save 
money in the hopes of strengthening our presence and growing 
strategies, and make stronger alliances in that area reminds me 
of the old veterinarian who was a cow rancher. He would 
always--he never had the best gates or the best fences, but 
would say you can't starve a profit into your cattle. But he 
would feed them and he would take care of them, he would 
nurture them.
    It would be like planting a garden and hoping to have a 
bountiful crop or harvest, but you don't want to fertilize it. 
We need to make sure that what we do we get the biggest bang 
out of our buck for the American people so that we can have 
peace in that area, we can have strong alliances, we can focus 
on economics, on national security, on trade, and cultural 
exchanges.
    My question to you, an America-first foreign policy is the 
goal, but I fear it will become increasingly difficult to 
obtain if we lose our influence in the Asia-Pacific to China. 
How does the administration plan to adapt to ensure that the 
United States remain a regional power?
    I have a follow-up question if you guys would tackle that 
one.
    Ms. Thornton. Thank you, Mr. Chairman.
    I think what I would say first is that the budget that we 
have presented does reflect hard choices. But we should also 
remember that for the East Asia-Pacific region we have 
traditionally been less than 2 percent of foreign assistance 
spending globally. That means in the East Asia-Pacific region 
we have always gotten a lot of bang for our buck on what we 
have spent in the region.
    I think one of the ways that we do that is whether it is an 
America-first foreign policy, we are always doing it with 
America not alone. We are leveraging our money with other 
partners in the region, with the private sector. And what we 
are going to be doing and what we are going to be having to do 
with this budget is to be doing that even, even more 
efficiently and effectively going on in the future.
    One of the things that many of the members raised was the 
issue of security in East Asia. The U.S. has traditionally 
provided a lot of the security and stability in this region, 
which we have all come to treasure, and which has underpinned 
the economic dynamism and prosperity of the region. Of course, 
our U.S. military contributes a lot to that security. We have 
over the years built up great partnerships with our five treaty 
allies in the region and with a number of other partners that 
were mentioned by the Mr. Congressman Sherman.
    So, I think what we want to do is continue those 
partnerships, continue to work with others in the region to 
build up this network. We have invested a lot in these 
relationships already. We are working with the Department of 
Defense to make sure. We have a steering committee that has 
been set up at the direction of Secretary Mattis and Secretary 
Tillerson to make sure that we are well coordinated on all of 
the needs that we see out there for security assistance, for 
example, and that we are working together, both departments, to 
come up with the necessary funding for that.
    Mr. Yoho. Okay. And I appreciate that. I look forward to 
getting more of that out.
    Ms. Steele, if you have got--would like to weigh in, you 
have got about 40 seconds.
    Ms. Steele. I would just----
    Mr. Yoho. Your microphone.
    Ms. Steele. I would just like to add that over the years 
what we have done is work with our partner governments to make 
sure that they begin to mobilize their own resources to 
contribute and provide leverage to ours.
    Mr. Yoho. And I appreciate you saying that because, you 
know, I came up here, I was one of the guys that wanted to get 
rid of foreign aid. But when you learn the process, I agree 
with General Mattis, cut foreign aid, buy more bullets; there 
is a balance in there.
    So our goal, and the mantra that comes out of our office, 
is go from aid to trade. If you look at historically our top 15 
trading partners, 12 of those were recipients of foreign aid. 
That is what we want to do. I think you guys have done a good 
job if you are only getting 2 percent of the foreign aid 
budget.
    I look forward to the suggestions that come out. I am out 
of time and we now turn to the ranking member Mr. Sherman from 
California.
    Mr. Sherman. I agree with Mr. Chabot that the key on North 
Korea is to persuade China to change its policy. The easy way 
to meet our political objectives here in Washington is to say 
we can get China to change its policy without doing anything we 
don't feel like doing. All we have to do is fly over to China, 
show them a picture of Kim Jung Un, show them a picture of his 
dead uncle, show them a picture of his dead half-brother, and 
persuade them to change their policy because, after all, China 
doesn't understand Asia near as well as we do. And if they just 
listen to us they will change.
    This is absolutely absurd. China is not going to change its 
policy toward North Korea till we change our policy. We have 
one of two choices: Either make it plain to China that they 
cannot have access to our markets and continue their current 
policy toward North Korea, or we can build civil defense 
starting in Los Angeles.
    Ms. Thornton, back in the day, North Korea wanted a non-
aggression pact with the United States. Chaney vetoed it 
because he wanted to invade and then commit to Russia against 
North Korea. I realize this isn't a hot issue now, but what is 
the official U.S. position whether we should have a non-
aggression pact with North Korea?
    Ms. Thornton. I think what, what we are doing on North 
Korea, and I think it is----
    Mr. Sherman. If you don't know, if we don't have an 
official policy just let me know.
    Ms. Thornton. Well, on a non-aggression pact----
    Mr. Sherman. Yes.
    Ms. Thornton [continuing]. I mean I think----
    Mr. Sherman. Are we interested in negotiating a non-
aggression pact with North Korea?
    Ms. Thornton. Not----
    Mr. Sherman. Yes, no, or?
    Ms. Thornton. Well, we are not interested, yeah, we are not 
interested--I mean we are interested in peacefully resolving--
--
    Mr. Sherman. Okay. But----
    Ms. Thornton [continuing]. The issue on North----
    Mr. Sherman. But we don't have a specific strategy on a 
non-aggression?
    Ms. Thornton. Well, we are not, we are not going for regime 
change, and we are not trying to have a collapse.
    Mr. Sherman. Okay.
    Ms. Thornton. And we don't want military conflict with 
North Korea, so.
    Mr. Sherman. Okay. I believe that Ms. Steele has commented 
on the trade relationship. We have trade deficits with China of 
340; Japan, 69; 83 billion with Southeast Asia.
    Now, people often come here and they say things are 
wonderful because we have exports. But, of course, the exports 
are dwarfed, and increasingly dwarfed by the imports. What 
matters is the net trade. Getting 5,000 jobs while you are 
losing 10,000 jobs is not the way to build the U.S. economy.
    Ms. Thornton, does the administration have a policy that 
you are confident will reduce our trade deficit with East Asia 
by a significant amount over the next few years?
    Ms. Thornton. Well, I think what we are trying to do is----
    Mr. Sherman. Do we have a policy that will----
    Ms. Thornton. Yes.
    Mr. Sherman [continuing]. Achieve those objectives?
    Ms. Thornton. I think we do have a policy.
    Mr. Sherman. So you are confident that when you come back 
here 3 years from now our trade deficit is going to be 
substantially less than it is now?
    Ms. Thornton. I am, I am confident that we are working in 
that direction, yes.
    Mr. Sherman. Working in. But and how is this direction 
different from the last 3 years?
    Ms. Thornton. Well----
    Mr. Sherman. Because if we didn't achieve that in the last 
3 years, what are we doing different now?
    Ms. Thornton. Well, we are trying to grow the entire Asian 
economy but cut, enforce better the trade mechanisms that are 
in place and pursue agreements with countries where we have 
trade imbalances to try to write restrictions on market access 
and also try to fight----
    Mr. Sherman. And you are saying that wasn't true in 2014?
    Ms. Thornton. We have been doing----
    Mr. Sherman. We did it then, we are doing it now, we are 
going to keep doing it. The definition of insanity is to keep 
doing the same thing we did then and expect a different result.
    The budget that the administration has proposed, does it 
save from the axe those diplomats that are working to push 
American exports, agriculture, and manufacturing? Or does it 
cut our efforts in the State Department to promote our exports?
    Ms. Thornton. I don't think that the budget that we have 
presented reflects those kinds of cuts to our personnel, no. 
And we are certainly, one of our----
    Mr. Sherman. So we are going to slash the State Department 
but those officers that are promoting exports are not going to 
be slashed? Everybody else is going to be slashed a little bit 
more?
    Ms. Thornton. So I think, are you talking about the cuts to 
ops? Cuts to our operations----
    Mr. Sherman. Yeah.
    Ms. Thornton [continuing]. That have been proposed are not 
that significant actually, so to personnel and things like that 
there is not a major reduction there.
    Mr. Sherman. Islands----
    Ms. Thornton. Not in the commercial promotion area.
    Mr. Sherman. Ms. Steele, why are we slashing our aid to 
islands that are so incredibly strategic and have received 
almost no aid but now we are going down to zero for the 
Marshall Islands and Micronesia? Why do--why shouldn't we at 
least continue our $500,000 a year aid to those two?
    Ms. Steele. The President's budget request includes--we 
support the Pacific Island countries, which includes Marshall 
Islands and Micronesia, through a regional program that is run 
out of the Philippines. And we--the President has requested $5 
million to support the countries in the Pacific. So we will 
continue supporting them.
    Mr. Sherman. Is that a higher or lower rate of support than 
we had last year?
    Ms. Steele. It is lower.
    Mr. Sherman. In spite of their strategic significance.
    So we are going to spend hundreds of billions of dollars to 
fight with China over little islets that we claim have 
strategic significance but really don't, and we are going to 
ignore the chance to spend a tiny, tiny fraction of that on the 
islands that are in the middle of the Pacific and dominate that 
area.
    I yield back.
    Mr. Yoho. We will next go to Mr. Dana Rohrabacher of 
California.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman. And 
congratulations on your assuming the chairmanship. We 
appreciate it, look forward to working with you in the years 
ahead.
    Let me just note that we have just ended 8 years of 
disintegration of major western bulwarks throughout the world 
against various elements that are hostile to the United States, 
whether we are talking about what is going on in Turkey, the 
Philippines, or what is happening in North Korea where it 
didn't start off as one of our bulwarks but now is threatening 
one of our bulwarks, which is South Korea and Japan.
    As far as American foreign aid, there are many people who 
believe that just giving money to people or trying to provide 
money and resources to promote various cultural elements of our 
society is a waste of American resources.
    I know that if we take a look very closely at some of the 
expenditures that we have left that has been described, I don't 
necessarily believe that they are going to make things safer 
for us or better for those countries. So, I am pleased that 
President Trump has kept his promise and is moving forward with 
a theories based on what he believes and what some of us 
believe are--is best for the American people rather than trying 
to buy off other people in other countries.
    In terms of North Korea, I was disappointed in your answer, 
but I do believe your answer reflects a policy that we don't 
have. I would just suggest that the little, I will refrain from 
using a pejorative phrase to describe the leader of North 
Korea, is so, so much--is easy to make fun of, but the fact is 
that this human being is a murderous, treacherous man who has 
murdered his own friends and family. We cannot afford to have a 
nuclear weapon at his disposal that could hit the United 
States.
    I would suggest that we owe Ronald Reagan a great debt 
because Ronald Reagan insisted on moving forward in an 
aggressive way to build a missile defense system. I remember 
him being belittled for saying that we can have a rocket that 
can--a bullet that can hit a bullet. Oh, it is impossible. He 
was belittled for that. The fact that we went ahead, full steam 
ahead and have developed such systems now gives us some 
leverage in dealing with this maniac. It was never intended to 
try to prevent us from preventing a major exchange between 
major powers of nuclear weapons, but it was just specifically 
for a case like this. And thank God he had the vision to move 
forward over and above being ridiculed for doing that.
    My recommendation to this administration is our policy in 
North Korea should be that if indeed it appears that, again, 
this unstable--and that is a generous way of describing this 
dictator's personality--an unstable character like this looks 
like he is going to launch a rocket, again, another missile 
with capabilities of threatening the United States, we should 
shoot that missile down. If it continues, we should use our 
cyber capabilities to basically turn everything off in North 
Korea.
    That is what I would recommend. I hope we have a President 
now that instead of trying to buy loyalty or thinks he is going 
to buy peace, that we have one who I think will step up to the 
plate. And we will wait and see.
    In terms of--let me ask one question. It seems that I gave 
my spiel here.
    Is there any indication, we have Burma and Vietnam, which 
Burma has supposedly made some progress. We have Aung San Suu 
Kyi now in a place where no one would have dreamed about 10, 15 
years ago. We all worked so hard to get her there. I was part 
of that team. But in Vietnam, is there anything in Vietnam that 
would suggest to us that there is a democratic liberalization 
going on at all? If not, why the heck are people so anxious to 
set up a trade treaty with a country that hasn't had that 
progress?
    Whoever wants to answer is fine with me.
    Ms. Thornton. Okay. Thank you very much.
    On Burma I would say, yes, we are working very hard to 
consolidate the gains there and to support governance in Burma. 
There are some issues still to work on there. Obviously, a lot 
of ethnic problems and unrest. There is a peace process which 
Aung San Suu Kyi has sponsored and which we have supported and 
that we want to see continue to be successful.
    We also are working very hard to make sure that the 
continued civilian governance over the military is proceeding 
in that country.
    On Vietnam, Vietnam is the fastest growing U.S. export 
market in the world. They are a significant economic partner of 
the United States. We have had a growing partnership and 
relationship with Vietnam on security in the East Asia region, 
particularly in Southeast Asia, and have found them to be 
partners in various areas of U.S. interest.
    We have not, unfortunately, made the gains that we would 
have hoped to in the human rights situation in Vietnam. But we 
do continue to work on that and have had a human rights dialog 
going with them and continue to press them on those issues.
    I will let maybe Gloria Steele respond as well.
    Mr. Rohrabacher. Let me just note that the fact that you 
were unable to really specify any real progress toward 
democratic government in Vietnam indicates that the first 
things that you mentioned are not in our interest to start 
opening up. I do not believe, as I never believed with China, 
that just as we were going to open up our markets and have an 
economic relationship, which has built this monster that China 
is today, that that is in the interests of the United States if 
it does not couple with democratic reform.
    And we were promised it would be, but it never happened in 
China. There has been no democratic reform. Now we have created 
a monstrous threat to democracy.
    Mr. Yoho. The gentleman's time has expired.
    Ms. Steele, I will come back to you. But we want to go on 
to Mr. Connolly right now.
    Mr. Connolly. I thank the chair. And my friend, who also 
worked for Ronald Reagan when I was here on the Hill during the 
Reagan years, and my job was to authorize the foreign aid 
budget, let me just say I knew a little bit Ronald Reagan. 
Donald Trump is no Ronald Reagan.
    Ronald Reagan never cut the foreign aid budget by 46 
percent. Ronald Reagan understood strength meant you go 
forward, you don't retreat. You don't create a vacuum in which 
your adversary can readily and smartly and enthusiastically 
step in.
    There is an Orwellian quality to this hearing. And I am 
going to challenge both of you. Let me stipulate for the record 
in case, so you don't get in trouble. You're loyal officials of 
the United States Government defending the indefensible, the 
Donald Trump foreign aid budget and State Department budget. 
But, okay, we will stipulate you have done that.
    Ms. Thornton, you said to Mr. Sherman that there weren't 
really going to be significant personnel cuts. So let me talk 
about your boss. Your boss said otherwise. Your boss said, Mr. 
Tillerson, Secretary of State, 2,300 jobs will be cut. He even 
specified how they will be cut: 700 through buy-outs, and 1,600 
through attrition. You, you think that is not significant? 
Because that is how you answered Mr. Sherman.
    Ms. Thornton. I think I was speaking to the operational 
budget----
    Mr. Connolly. Well, how do you know,----
    Ms. Thornton [continuing]. For the East Asia----
    Mr. Connolly [continuing]. If there was that level of cuts, 
Ms. Thornton, how could you possibly sit here and testify that 
you don't, that that won't affect operations? How would you 
know that?
    Ms. Thornton. I only know what is happening in the East 
Asia-Pacific Bureau fixed----
    Mr. Connolly. Have these cuts happened yet?
    Ms. Thornton. Not that I am aware of.
    Mr. Connolly. No. So you don't know what the impact is 
going to be. And, frankly, your answer to Mr. Sherman is 
nullified. You don't know whether in fact it would affect 
people who are in charge of exports from running U.S. exports. 
It could, in fact, have an appreciable effect, couldn't it? We 
don't know yet.
    I assume by your silence you acquiesce.
    Ms. Thornton. I mean that is not an area that we are--I 
mean that is a priority area that we would look to.
    Mr. Connolly. When this----
    Ms. Thornton. Because I would look to----
    Mr. Connolly. If Secretary Tillerson isn't understating the 
number of cuts, you don't know the impact yet. That is really 
the answer to Mr. Sherman's question. It is not a gratifying or 
reassuring answer.
    Ms. Steele, you talked about $235 million that will 
strengthen our vital programs. Now, I went to Maryknoll, too, 
so I read George Orwell and I think you did too. That is a 46 
percent cut.
    Have you in AID notified all of your contractors, all of 
your non-profits, and your own hands-on work to prepare for a 
46 percent cut? And are they doing that? Are they developing 
plans to absorb that cut?
    And, oh, by the way, did you tell them by doing this we 
will strengthen our vital programs?
    Ms. Steele. Yes, we are in constant discussions with our 
implementing partners.
    Mr. Connolly. I am sure you are. But I didn't ask that 
question.
    Have you given them instructions to absorb a 46 percent 
cut? And have you told them, by the way, that will make you 
stronger, not weaker?
    Ms. Steele. We have been talking to them about coming up, 
coming up with their share of the program budget.
    Mr. Connolly. You mentioned the progress--I am sorry I am 
being, but I only----
    Ms. Steele. Sure.
    Mr. Connolly [continuing]. Have 1 minute and 40 seconds.
    Ms. Steele. Sure.
    Mr. Connolly. You mentioned Cambodia. I have been to 
Cambodia. And malaria is a huge problem in Cambodia. Getting it 
under control, wonderful thing for them in terms of 
productivity, tourism, and the like. Are we a 2 percenter in 
the malarial prevention and eradication program in Cambodia or 
are we a major player?
    Ms. Steele. We are a major player.
    Mr. Connolly. Yes.
    Ms. Steele. And have helped them significantly.
    Mr. Connolly. Right. So we are not, this isn't like, well, 
we are kind of a bit, you know, bit player. In malaria in 
Cambodia we are actually a big player.
    Ms. Steele. Right.
    Mr. Connolly. And to absorb a 46 percent cut, I mean, the 
Cambodian Government said, great idea, that will make us 
stronger; we like that?
    Ms. Steele. Actually, Congressman Connolly, we told them 
right from the start, and they have agreed, that they will 
begin to assume the costs of our supporting them.
    Mr. Connolly. Begin to assume.
    Ms. Steele. In 2020----
    Mr. Connolly. This 46 percent cut doesn't phase in, it 
happens in this fiscal year if it is adopted.
    Ms. Steele. And there will be--they have significantly 
achieved, they have achieved significant gains.
    Mr. Connolly. So your testimony to this committee, you are 
absolutely going on record reassuring us that there will be no 
step backward in the malaria eradication program in Cambodia, 
or anywhere else in the region for that matter?
    Ms. Steele. Our, our studies have shown that they will be 
able to eradicate malaria.
    Mr. Connolly. But you do understand the other side of your 
testimony is, therefore we have been over-paying and over-
appropriating USAID all these years because apparently we could 
have done with almost half of what we have been doing with no 
material effect. And these countries really could have been 
picking up the slack, they just didn't do it because we didn't 
cut it in half?
    Ms. Steele. No, sir. The costs are up front. We are 
developing their capabilities and their institutions. And right 
from the beginning we tell them we will be phasing out; they 
have to be able to assume the costs.
    Mr. Connolly. Ms. Steele, I understand that.
    Ms. Steele. And they have agreed to do so.
    Mr. Connolly. But that begs the question of an abrupt and 
draconian cut as is proposed that the chairman pointed out to 
us. To try to absorb that is massive, just I have to assume 
disruptive, as someone who managed programs myself. And for 10 
years had oversight responsibility for AID in the United States 
Senate Foreign Relations Committee. I have never heard 
testimony like that. Never from the Ronald Reagan 
administration.
    My time is up, Mr. Chairman. I yield back.
    Mr. Yoho. Thank you and I appreciate it.
    But I want to add in here before we go to the next--Ms. 
Gabbard, if you will indulge me just a minute.
    Austerity cuts are coming to this country. We know that. I 
thought it was very pertinent of what you said that they 
realize that they are going to have to step up.
    I was in the Congo about a year-and-a-half ago and we were 
sitting at the foreign ministry cabinet. The President of the 
DRC would not meet with us. And we have given them hundreds of 
billions of dollars for years. I asked very pointedly, what do 
you do for social programs? And their eyes kind of widened, 
they were like, what do you mean? I said, for housing, for 
education, for medicine, insurance?
    And they said, we have you.
    That is not a good foreign policy. And we have spent all 
that money in the past so things have to change. We are being 
forced into a situation. I think some of those times tough 
love, it may--and I am not saying it is the best way--but in 
certain situations, especially in our economic downturn that we 
have, we need to make some changes.
    I am going to go to Ms. Gabbard from Hawaii right now.
    Ms. Gabbard. Thank you, Mr. Chairman. Thank you both for 
being here.
    The administration has come before our committee and spoken 
publicly about their focus and efforts on a diplomatic solution 
and resolution to the North Korea threat and crisis. With China 
mobilizing its military along the North Korea border, stepping 
up its surveillance, it does not appear that serious diplomatic 
efforts are either working or continue to be underway beyond 
saying, well, we think Russia and China need to comply with 
sanctions.
    I wonder if you can talk about how this budget actually 
supports a serious diplomatic strategy in resolving the threat 
from North Korea and, if so, what is it?
    Ms. Thornton. Thank you very much.
    Yes, I think the budget, obviously we don't have assistance 
programs in North Korea, but it reflects the operational costs 
of our prioritization of the North Korea issue in our Bureau. I 
think what our strategy is looking like at the moment, we have 
made this the highest foreign policy priority of the 
administration. I think it is, that is a change from previous 
practice.
    We have opened up a global pressure campaign in which we 
are asking other countries to step up to the plate and do more 
on pressuring North Korea. What happens when you try to squeeze 
off North Korea's proliferation networks, and economic and 
financial networks, is they go, they go elsewhere. They go to 
Africa. They go to Southeast Asia. They go maybe to Latin 
America.
    And we are trying to have a global network and a global 
consciousness-raising surrounding upping the pressure of both 
sanctions but also diplomatic isolation vis-a-vis the North 
Korean regime, trying to build up a pressure campaign so that 
they can change the calculation that they have made surrounding 
the cost-benefit analysis of their weapons programs and their 
missile programs. And----
    Ms. Gabbard. So what happens, what happens next beyond 
that? What happens next after you pick up the pressure?
    Ms. Thornton. So we have just started building the global 
pressure campaign in, basically in April. We have been talking, 
of course, to the Chinese and the Russians and other major 
players.
    The third change from previous practice is that we have 
really put the onus on China to do a lot more than they have 
ever done before.
    Ms. Gabbard. And are they?
    Ms. Thornton. And they are doing more than they have ever 
done before. They have----
    Ms. Gabbard. It seems like they are preparing for something 
other than a diplomatic solution at this point.
    Ms. Thornton. I would, I would not necessarily go quite 
that far. I think they are very much focused on a peaceful 
resolution. They do agree that there needs to be an increase in 
pressure on the North Korean regime. And they want that to 
happen in a way that brings the north back to the negotiating 
table as quickly as possible.
    The problem is that right now the north doesn't seem to be 
very inclined to come back to the negotiating table with any 
kind of serious attitude or proposal. So, what we are doing is 
continuing to sort of squeeze and close the vise, and hope that 
that brings about a reckoning----
    Ms. Gabbard. Thank you.
    Ms. Thornton [continuing]. And fear that they are paying 
too much for their weapons programs.
    Ms. Gabbard. Thanks.
    I would like to get one more question in here specifically 
about organizations like the Asia Foundation, the East-West 
Center, both of which have for decades provided great 
contributions to engagement, formation of policy, building 
relationships within the region.
    This year the administration's budget completely zeroes out 
funding for both of those organizations. We have been told that 
this was done because the administration believes they receive 
outside funding and no longer need any assistance from us. I am 
wondering what specific evidence went into making that decision 
making process. Specifically, were these organizations engaged 
directly? Did you hear directly from them?
    Because I can tell you I have met with them year after year 
after year, and while they are making progress on leveraging 
the funding that they are getting, they are not able to 
continue to function if this administration continues to 
eliminate and zero their funding completely.
    Ms. Steele. I have not been involved in the analysis that 
went into deciding whether Asia Foundation or the East-West 
Center gets funding. We do know, though, that we have had to 
make tough prioritization of the programs that we would be 
funding.
    Ms. Gabbard. So the justification that we got, though, was 
the administration's assessment that they could operate, 
continue to function purely on outside funding. But you don't 
know how that conclusion was reached or if there was any input 
or engagement with these organizations?
    Ms. Steele. I was personally not involved in the 
discussions on funding for Asia Foundation.
    Ms. Gabbard. So this is, I mean you, but you guys are the 
people to talk to in the State Department about the Asia-
Pacific where these organizations are focused. So if it wasn't 
you then--and your input was not sought in this direction, then 
whose was?
    Ms. Thornton. Well, we engage regularly in the Bureau with 
both Asia Foundation and the East-West Center. And so I think 
we have been keeping up a constant communication with them in 
recent years about the need to do more to wean themselves off 
of government funding. I know that in particular East-West has, 
has changed its management and raised their capital campaign, 
et cetera. So we are aware of all of those activities.
    The Asia Foundation, we also talk frequently with them. We 
are well aware of their programs in various countries. But I 
think in the prioritization this year, I think that was one of 
the hard choices that was made.
    Ms. Gabbard. Okay. Again, I have had these same 
conversations encouraging them to continue to build their 
outside support. But to go from I think it was East-West Center 
had $16 million or $17 million last year to zero, you are 
setting up these organizations up for failure.
    Thank you.
    Mr. Yoho. I thank the lady's questions and the responses 
you guys are giving.
    I would like to move on to a second set of questions, if it 
is all right with you, if you guys can tolerate us.
    You know, I guess one of the biggest things I see is we are 
going to go through these cuts. And how many people are in 
State? Do you have a number of how many people are in the State 
Department total around the world?
    Ms. Thornton. I think the total number is, that I have 
heard the Secretary mention recently, something like 70,000.
    Mr. Yoho. Seventy thousand. So a 10 percent cut would be 
7,000; 5 percent would be 3,500. So we are looking at less than 
a 5 percent cut if we cut 2,300.
    We don't want to be forced to cut but I think sometimes we 
do need to shrink down some things. And, again, going into 
austerity measures that we see, we are teetering on them, we 
need to make sure that we are getting the most out of the money 
we are giving and the most results.
    Saying that, did you know how the process went where they 
decided what programs they were going to cut? You guys have 
said in the beginning a lengthy career between you. So you have 
had a lot of experience. Were you able to weigh in and say 
these programs are good, these are bad?
    Ms. Thornton. Yes, very much so. We have a very elaborate 
budget development process that takes in all levels of the 
State Department and AID, input from the field, built up from 
there, that we have sort of our top level officials that have 
to make some hard decisions in consultation with us. And we 
have to make some choices.
    Mr. Yoho. All right. So you do get to weigh in on that?
    Ms. Steele. Yes, we do, sir.
    And, in addition, we look at where they are in the 
implementation, what progress they have made, what achievements 
they have made. And in making selections we look at those that, 
those that have been successful and no longer need any support 
from us because either someone else in their country will pick 
it up or the government itself will, as in the case of the 
health sector in Cambodia. Then, you know, we begin to phase 
out.
    But we do have involvement. It is data-based. We monitor 
and evaluate our programs. And I will get rid of programs that 
are not producing and continue those that are showing a lot of 
progress. Then those that have achieved what they have to 
achieve, then we then phase them out.
    Mr. Yoho. When I was practicing as a veterinarian we had 
the economic downturn in the 2007 roughly, we had to go through 
and we had to trim budgets, we had to, you know, cut back 
overhead. And it is good to see that you guys are doing that, 
that you get to weigh in and you get to say these are the 
effective programs, these aren't.
    I think that is a lesson to be learned. That is one of the 
ways that we are going to have to make these changes so that we 
can get a hold of our spending so that we are not forced in 
really draconian cuts that would be much worse than this that 
we have seen in other countries.
    Saying that, knowing that Cambodia has got an election 
coming up in this next year, to assure free and fair elections 
we have heard time and again that the robust election 
monitoring is needed. Will this budget support these needs, in 
your opinion? Because I see a 74 percent cut in the change for 
Cambodia between 2016-2018.
    Ms. Steele. Yes, sir. We still have funds that are 
available. We are supporting two organizations in Cambodia. One 
is focused on working with civil society organizations to 
increase the participation of the youth and women. And the 
other organization is working with the National Election 
Commission to improve their performance so that they can be 
more transparent and credible.
    We do have funds at this moment, at this time to support 
them.
    Mr. Yoho. All right. That's good to know.
    I want to move on to when it comes to countering China's 
growing influence--and this is something, if anything keeps me 
up late at night, this is something I worry about probably more 
than anything, or am more concerned about and I think we really 
need to pay more attention to--but when it comes to countering 
China's growing influence, what programs do you believe give us 
the most bang for our buck in terms of empowering our partners 
in the region to defend their territorial claims against 
China's growing aggression? Would it be the foreign military 
financing, support of governments? What are your thoughts on 
that, if I could hear from both of you?
    Ms. Thornton. Yes. I will just speak very briefly on this.
    But I think that the most important programs are 
diplomatic, economic, and security programs, mostly the 
capacity building that we do in Asia, with all of our Asian 
partners to improve governance, to improve their capacity to 
conduct international trade, to promote their integration with 
other partners in the region, to support regional organizations 
like APEC and ASEAN, and also to make sure that they have the 
capabilities that they need, of course, military and else, 
otherwise, law enforcement, et cetera, to protect their borders 
and defend their sovereignty, so.
    Mr. Yoho. Let me get Ms. Steele to weigh in on that.
    Ms. Steele. In the development area we work with them to 
strengthen their democratic institutions, work with them on 
fighting corruption in order to level the playing field, and 
which China would have a hard time dealing with.
    And then we provide a real, much better, more responsible 
and sustainable alternatives in all the other areas: In health, 
and in the area of trade, looking at the regulations and making 
them more transparent.
    Mr. Yoho. All right, thank you.
    Now we will turn to Mr. Sherman for another round.
    Mr. Sherman. Ms. Thornton, this is really kind of a 
worldwide question, so a step above your pay grade, but does 
the President's budget involve a cut in broadcasting and other 
Internet, other Voice of America and similar activities?
    Ms. Thornton. I can't speak to the worldwide budget for 
that. But we do have money for broadcasting in Asia. And----
    Mr. Sherman. And how much money would you have under the 
President's budget versus how many you spent in the most recent 
year?
    Ms. Thornton. Well, I think we are actually continuing and 
maybe even enhancing some of our broadcasting area in Asia, 
specific to the North Korea challenge.
    Mr. Sherman. But overall, for the entire region that you 
are here representing, your Bureau, up or down?
    Ms. Thornton. Probably----
    Mr. Sherman. Or if you just want to furnish the----
    Ms. Thornton. Yes, I can take the question and get back to 
you. I am not totally----
    Mr. Sherman. Okay.
    Ms. Thornton [continuing]. Sure about the overall.
    Mr. Sherman. In particular we have an ideological battle in 
the Muslim world. ISIS is reaching out, trying to recruit 
terrorists in the Philippines, Indonesia, Malaysia, Myanmar. I 
would like you to specifically provide answers on whether your 
budget is going up or down in those Muslim majority or signi--
or Muslim minority countries.
    Now, one issue that comes before us is this whole 
ratcheting up, war fever almost, regarding these little islets 
off the shores of China. We are told that we either should 
perhaps just spend hundreds of billions of dollars over the 
next few years gearing up our whole military and spending more 
on our military to confront China, or maybe we should go to 
war. I mean, if we avoid an actual fighting war, we will at 
least have a cold war over these islets.
    We are told these islets are of critical significance, 
first because trillions of dollars of trade go close to those 
islands. Yes, it is all in and out of Chinese ports. So if the 
Chinese control these islands they would be in a position to 
blockade their own ports. There is some trade that is oil 
tankers from the Gulf to Japan that could get close to these 
islands or could just as easily stay hundreds of miles away.
    So, the other reason we are given that we have to deploy 
our military and increase it is that we are incredibly, 
intensely concerned about maritime disputes, making sure that 
they are handled fairly. But there is no islet--there is no oil 
under these islets. They are so useless that no one has chosen 
to live there in all of recorded history.
    But there is a maritime dispute that is significant, that 
is the one between Australia and East Timor. Ms. Thornton, do 
we spend much time at the State Department worrying about that 
dispute?
    Ms. Thornton. Well, we actually, we actually have worked on 
the East Timor-Australia dispute----
    Mr. Sherman. I know you have worked. But I mean compare the 
national obsession with the islets I talked about to the level 
of staffing that goes on in your Bureau with regard to this 
dispute.
    Ms. Thornton. But the difference is that they are in 
dispute resolution mechanism and have peacefully agreed to do 
that, willingly by both sides. Whereas, the disputes in the 
South China Sea are actually----
    Mr. Sherman. Well, I mean it will obviously be peaceable 
because East Timor could not go to war against Australia. But 
whether they agree to a new dispute resolution or not depends 
upon, depends upon Australia. So it is these islet--well, I 
have taken enough time. We were just going to do a short, a 
short second round.
    So I will yield back. I will say simply that there are 40, 
at least 20, perhaps as many as 40 maritime disputes around the 
world. We don't have our ships going eyeball to eyeball with 
the second most powerful nation in the world over any of these. 
I couldn't even name for you the third most significant 
maritime dispute in the world. I give myself credit for knowing 
of the East Timor one, which I believe is the second if you 
skip oil matters.
    So the idea that the United States always must spend 
hundreds of billions of dollars to involve itself in each and 
every maritime dispute is not always true.
    And I yield back.
    Mr. Yoho. I thank the gentleman and I thank your responses 
on this.
    But I am going to comment on that because there are a lot 
of maritime disputes around the world, but how many of them 
have 10,000 foot runways? How many have military barracks? How 
many of them are militarized with both offensive and defensive 
weapons and radar systems?
    I will agree there is a lighthouse on there for peaceful 
navigational purposes. I think this is something, because we do 
see an aggressive China. We have seen what they have done with 
Taiwan; they are boxing them in. We have seen what they have 
done with Hong Kong. I think this is something, it is like 
anything else in life, if you have got a problem, if you ignore 
it it is not going to go away, it will get worse, and it is 
going to be worse to deal with and more expensive and more 
costly.
    And we know----
    Mr. Sherman. Mr. Chairman, if you will yield.
    The disputes involving Cyprus, its offshore natural gas 
fields, islands between Greece and Turkey, have also involved 
military preparations involving two NATO countries we might 
have an even greater interest in. And, yet, we are not pivoting 
toward the eastern Mediterranean in an effort to prove to 
Turkey or Greece that we are going to be involved in that 
dispute.
    But I realize that not only has the United States wildly 
exaggerated the importance of these islands, it also meets 
political needs in Beijing to wildly exaggerate their 
importance. And building an air field is just one way of 
pandering to excessive nationalism in China.
    Mr. Yoho. I will look forward to having more debates on it 
because what I see is a nation like China has claimed 
sovereignty to areas that the rest of the world says is not 
yours. And they went to the World Court. Vietnam challenged 
them. They lost the case. They ignored that.
    And we see them doing what they are doing. We have seen 
also some of their trade practices that are not conducive to 
open trade and honest trade. And I think it is something that 
we need to pay attention to.
    And I agree, I am not willing to--hang on just a minute--I 
am not willing to enter another conflict. I don't want to. I 
don't know anybody that wants that. And I am not wanting to 
bolster this by ourselves or try to offset this by ourselves. 
But when you look at the ASEAN nations, there are ten, the ten 
ASEAN nations, that is 633 million people roughly, $2.5 
trillion in GDP, if we create a vacuum we know the rules of 
nature--nature abhors a vacuum--it will be filled by somebody.
    And it is something we need to come together. And that is 
why it is so important that the cuts in foreign aid through 
State Department that you guys redirect the aid that you do 
have so that we form those strong alliances, as we said in the 
beginning of this meeting, that we form those strong 
partnerships in economic and trade, and we focus on aid not 
trade--I mean trade not aid, so that we can wean countries off 
and so that they can enter that realm of those countries. Those 
top 15 countries that we trade with today, the 12 of them that 
were recipients of foreign aid, so that these other countries 
can move into that and that we can wean these off, creating 
stronger alliances.
    Do you have anything else you want to add, Mr. Sherman?
    Mr. Sherman. Just that if instead of deploying the U.S. 
Navy to worry about these islets you want to deploy it to 
protect our ports from unfair Chinese imports, you may have a 
partner in that.
    Mr. Yoho. I look forward to having that discussion. And I 
think we could agree on that.
    Ms. Thornton, I thank you for your testimony, for the 
questionings you went through. Ms. Steele, I thank you for your 
time here. I thank you for your service to our nation.
    And with that--with no further comments or questions, this 
meeting is adjourned.
    [Whereupon, at 4:11 p.m., the subcommittee was adjourned.]

                                     

                                     

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