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110th Congress                                                  S. Prt. 
 1st Session                COMMITTEE PRINT                      110-33 
______________________________________________________________________ 
 
                           EMBASSIES GRAPPLE 
                          TO GUIDE FOREIGN AID 
                               __________

                          A Report to Members

                                 of the

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

               Richard G. Lugar, Ranking Minority Member

                       One Hundred Tenth Congress

                             First Session

                           November 16, 2007

                                     


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                     COMMITTEE ON FOREIGN RELATIONS

                JOSEPH R. BIDEN, Jr., Delaware, Chairman
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
JOHN F. KERRY, Massachusetts         CHUCK HAGEL, Nebraska
RUSSELL D. FEINGOLD, Wisconsin       NORM COLEMAN, Minnesota
BARBARA BOXER, California            BOB CORKER, Tennessee
BILL NELSON, Florida                 JOHN E. SUNUNU, New Hampshire
BARACK OBAMA, Illinois               GEORGE V. VOINOVICH, Ohio
ROBERT MENENDEZ, New Jersey          LISA MURKOWSKI, Alaska
BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   JOHNNY ISAKSON, Georgia
JIM WEBB, Virginia                   DAVID VITTER, Louisiana
                   Antony J. Blinken, Staff Director
            Kenneth A. Myers, Jr., Republican Staff Director

                                  (ii)

  






























                            C O N T E N T S

                              ----------                              

                                                                   Page

Letter of Transmittal............................................     v

Overview.........................................................     1

    Findings.....................................................     1

    Recommendations..............................................     3

Introduction.....................................................     8

    Purpose of Study.............................................     8

    The Dilemma..................................................     8

    A Strategic Approach.........................................     9

Developments in U.S. Embassies...................................    10

    The ``F'' Process............................................    11

    Multiple Programs............................................    14

         MCC.....................................................    14

        PEPFAR...................................................    16

        President's Malaria Initiative...........................    17

        MEPI.....................................................    17

        FSA/SEED.................................................    18

        Democracy Fund...........................................    19

        DOD Activities...........................................    19

    USAID........................................................    21

Additional Observations..........................................    23

    The Role of Ambassadors......................................    23

    Staff Challenges.............................................    24

    USAID Administrator..........................................    25

Regional and Country Findings....................................    25

    Sub-Saharan Africa...........................................    25

        Botswana.................................................    26

        Ethiopia.................................................    27

        Ghana....................................................    27

        Liberia..................................................    28

        Mozambique...............................................    29

        Rwanda...................................................    30

        South Africa.............................................    31

        Tanzania.................................................    32

        Zambia...................................................    34

    Latin America................................................    35

        Bolivia..................................................    35

        Honduras.................................................    36

        Nicaragua................................................    37

        Peru.....................................................    38

    East and South Asia..........................................    39

        Bangladesh...............................................    39

        Indonesia................................................    40

        Mongolia.................................................    41
Regional and Country Findings--Continued

    East and South Asia--Continued

        The Philippines..........................................    41

    Middle East and North Africa.................................    42

        Jordan...................................................    42

        Lebanon..................................................    44

        Morocco..................................................    44

    Europe and Central Asia......................................    45

        Armenia..................................................    45

        Georgia..................................................    46

        Kazakhstan...............................................    47

        Ukraine..................................................    48

Appendixes.......................................................    51

    Administration Responses to Questions from SFRC Members......    51

    Framework for Foreign Assistance: Country Categories and 
      Objectives.................................................    71

    Distribution of U.S. Official Development Assistance by 
      Agency.....................................................    73

    Reports Prepared by Embassy Staff............................    75

    Operational Plan Program Matrix..............................    79

    Acronyms.....................................................    85
                         LETTER OF TRANSMITTAL

                              ----------                              

                                                 November 16, 2007.

    Dear Colleagues: Americans have long supported their 
government's work to save lives and alleviate human misery 
around the world. Since 9/11 and the harboring of terrorists in 
Afghanistan, we have acquired new insights into how failing 
states can provide fertile ground for global terrorism. The 
Bush administration has taken on the challenge by making new 
commitments to international economic development. It has 
increased foreign aid spending and created new funding 
mechanisms. It has boosted America's focus on crises, such as 
the HIV-AIDS epidemic, that can set developing societies back 
decades. It is preparing a response capability to rush 
civilians and reconstruction expertise to countries devastated 
by conflict. And it has sought to promote good government, 
sound economic policies, and strong social programs focused on 
human development in poor nations around the world.
    Secretary Rice's instinct to seek greater coordination and 
provide clarity in the new firmament of foreign assistance is 
on the mark. We need to meld new activities in a constructive 
way with our traditional approaches. We need to prioritize our 
goals and design our strategies in a way that is transparent to 
policymakers, legislators and recipients alike. We need to be 
able to measure, analyze and assess outcomes so that we can 
tell when we are making a difference.
    The policy community naturally focuses on developments and 
debates here in Washington, D.C. But an equally important focus 
is the field where foreign aid programs are actually carried 
out. Are our embassies up to the task of managing new programs 
and increased funding? Are we striking an appropriate balance 
between the need for strategic direction from headquarters and 
operational flexibility in the field? Are we addressing the 
unique challenges presented by each recipient country as we and 
they search for common solutions to poverty, political 
instability, and violent extremism?
    To inform our views, I recently sent Senate Foreign 
Relations Committee minority staff to 24 countries in Latin 
America, Africa, Eastern Europe, Asia and the Middle East to 
examine how increased funding and new programs are being 
implemented in the field. I asked our staff to pay particular 
attention to how Secretary Rice's new coordination process run 
by a senior official dual-hatted at State and USAID is mirrored 
in the field.
    This report contains findings and recommendations that form 
the basis for continuing committee oversight. I look forward to 
working with committee members, executive branch officials, and 
experts in the development field as we collectively work to 
help design and support a foreign assistance effort that 
reflects our humanitarian instincts and furthers our interests 
around the world.



                                          Richard G. Lugar,
                     Ranking Member, Committee on Foreign Relations


                           EMBASSIES GRAPPLE 
                          TO GUIDE FOREIGN AID

                              ----------                              


                                Overview

    Since September 11, 2001, the United States has created a 
number of new mechanisms for the delivery of foreign 
assistance. For example, the Middle East Partnership Initiative 
(MEPI) was created in 2002, the President's Emergency Plan for 
AIDS Relief (PEPFAR) was announced in January 2003, and the 
Millennium Challenge Corporation (MCC) was established in 
January 2004. In June, 2005, the President's Malaria Initiative 
(PMI) was launched. In January 2006, the State Department 
initiated a new foreign assistance decision-making process and 
created the position of Director of Foreign Assistance (DFA), 
nominating the same person to serve concurrently as USAID 
Administrator. The process was designed to provide strategic 
focus and priorities for foreign assistance and was 
subsequently called the ``F process,'' named after the new 
foreign assistance function headed by the DFA. The purpose of 
this study is to see how the proliferation of programs and the 
``F process'' is affecting operations overseas and to gather 
new perspectives from the field.


                                findings


    (1) From the field, it is clear that we have failed as a 
government and as a community of international development 
supporters to agree on either the importance or the content of 
a foreign aid strategy. Field-headquarters disconnects, NGO 
criticisms and complaints, and sporadic and narrow 
congressional attention to foreign aid illustrate this dearth 
of common purpose.

    (2) Overall agreement between headquarters and the field on 
foreign assistance is at low ebb and communications have been 
complicated rather than improved by the State Department's 
efforts to provide strategic direction. From the field, 
policymakers in both the executive and legislative branches can 
appear demanding, deaf and sometimes schizophrenic. New 
enthusiasms from democracy promotion to HIV/AIDS prevention 
erupt regularly even though, from the field perspective, they 
have long been a priority. Headquarters talk of ``listening to 
the field expert,'' ends in greater central control of ever 
more tactical decisions. Requests for information are reversed, 
reordered, continuously revised and, in the end, information 
provided by the field can appear unread and overlooked as 
decisions contrary to field advice go unexplained. 
Congressional cuts to executive branch requests for foreign aid 
funding reinforce the field view that Washington provides too 
few resources to do too many jobs.

    (3) Field complaints about the ``F process'' at State focus 
on the lack of transparency, the weeks of extra paperwork, the 
differing priorities between post and headquarters, as well as 
inconsistent demands, but the underlying, only sometimes 
unspoken, fight is about money. The initial implementation of 
the ``F process,'' which was done hurriedly and could have been 
better thought through, reinforced the perception that it was a 
State Department grab for expenditures from foreign assistance 
coffers at the expense of USAID and State geographical bureaus 
running individual programs.

    (4) Despite what the field sees as uneven leadership and 
communications from Washington, embassies believe they are 
coping well with the management difficulties caused by the 
proliferation of new foreign assistance programs. For the most 
part, we agree. Embassy coordination of foreign aid succeeds as 
long as all actors work as team players under the leadership of 
a strong and well-informed ambassador. In every embassy where 
ambassadors were present, they were judged by staff reporters 
to possess a good grasp of the foreign assistance programs in 
country. But in five of the 24 embassies visited, staff 
reported that a good mechanism for coordination was lacking.

    (5) New programs that bring additional funding to the host 
country are welcomed by ambassadors despite the management 
challenges they present. The MCC and PEPFAR have brought 
significant new funding into the field. Less welcome is the 
decline of traditional programs as new programs open. Staff 
found that as MCC programs in Mongolia and Honduras got 
underway, USAID core programs declined. In Mozambique, both 
PEPFAR and MCC programs promise new money while USAID 
traditional programs are closing down. In Zambia, PEPFAR has 
taken over USAID's traditional HIV/AIDS portfolio and USAID is 
implementing a significant proportion of PEPFAR programs.

    (6) USAID may be viewed as the neglected stepchild in D.C. 
but in the field it is clear that USAID plays either the 
designated hitter or the indispensable utility infielder for 
almost all foreign assistance launched from post. In addition 
to running its core programs, USAID staff provides advice, 
contacts, and implementation support for other programs. For 
example, in Ghana, the MCC is building on a USAID project as 
one of the major components of its compact. USAID implements 
all MCC threshold programs and was doing so in six of the 
countries visited. In Ethiopia, Tanzania, Rwanda, South Africa, 
Mozambique and Zambia, USAID is either the main or supporting 
implementer of PEPFAR program funds. In many countries, it is a 
USAID officer who acts as the ambassador's right-hand foreign 
aid adviser. In Georgia, the USAID mission director steps in as 
acting Deputy Chief of Mission when the ambassador is away. And 
it is USAID that ambassadors turn to when ``feeding the 
beast,'' i.e. writing and submitting the many reports on in-
country foreign assistance required by headquarters and the 
Congress. While such work has increased in the past five years, 
staff found that in 13 embassies visited, the number of USAID 
staff has decreased. USAID staff had increased in seven 
embassies, although not to the level country teams considered 
adequate to address increased foreign aid demands.

    (7) Agency rivalry for recognition has diminished public 
understanding that programs are funded by the United States. 
Posted outside each assistance project are now numerous logos 
from sponsors who want to claim credit for the activity and 
reinforce that the funding comes from the United States. These 
are understandable goals but the best known of these 
``brands''--the USAID ``handshake'' logo--now competes with a 
plethora of others from the Centers for Disease Control, Health 
and Human Services, the MCC, the Office of the Global AIDS 
Coordinator, as well as some of the contractors and NGOs that 
work as implementing partners. Several are difficult to read 
and sometimes they all appear next to one another on the same 
wall or on the same letterhead. It makes for confusion when one 
clear and simple message would suffice to let recipients know 
that the program is sponsored by the American people.

    (8) Some new programs such as the Middle East Partnership 
Initiative (MEPI) run by the State Department and the foreign 
assistance programs run by the Department of Defense and by the 
non-foreign affairs agencies are in need of strong guidance 
from the embassies if they are to be coordinated with other 
programs the U.S. Government is supporting and are to be 
consistent with U.S. foreign policy priorities.

    (9) Throughout the countries visited, hundreds of Americans 
working for non-governmental organizations spend years of their 
lives working to save lives and promote development. Many of 
their organizations receive grants or contracts from the U.S. 
Government, sometimes from several different spigots. Those 
interviewed expressed strong though often contradictory views 
about how to run and how to prioritize foreign assistance. They 
are dedicated to their expertise, whether it is water, health, 
housing, education, effective governance, refugees, women's 
advancement, human trafficking, religious freedom or democracy 
promotion. When their funding is threatened for whatever 
reason, they see their investments made in local people, 
processes, and programs foundering. Inevitably, they protest. 
Sometimes, their voices carry all the way to Washington, D.C., 
to the ears of sympathetic Members of Congress where they end 
up as mandated earmarks. Such earmarks often mean that other 
programs will not receive funding that the administration or 
post believes are necessary. No matter how intent the executive 
branch is on developing a worldwide strategic planning 
capability and mission focus in recipient countries, this 
phenomenon is part of the democratic process and will continue 
to create rigidities and hurdles, complicating the endeavor.


                            recommendations


    (1) The President should design a national foreign 
assistance strategy that explains both the national security 
requirement and the humanitarian imperative that drive our 
government's investments in foreign aid. Such a strategy should 
be designed to put to rest lingering and out-of-date distrust 
between security advocates and those who focus on humanitarian 
concerns.

    (2) The President should task the Secretary of State to 
work closely with the Administrator of USAID to implement the 
President's foreign assistance strategy, giving the Secretary 
explicit authority to ensure that all foreign aid to individual 
countries and regions, including those from the State 
Department, USAID, the MCC, PEPFAR, the Department of Defense, 
and other U.S. Government agencies, are in the foreign policy 
interest of the United States and conform to the strategic 
goals determined by the President. The goal is not to 
micromanage budgets of individual programs and other agencies 
but to provide leadership and coordination and have the 
authority to weigh in with adjustments when necessary.

    (3) The Secretary of State, working closely with the 
Administrator of USAID, should work within the executive branch 
and with the legislative branch to garner the foreign 
assistance funds necessary to carry out the President's 
strategy. Efforts to achieve a sound and balanced foreign 
assistance budget that includes all foreign aid spigots should 
equal the Secretary's commitment to securing a strong State 
Department budget.

    (4) The Secretary of State should provide strategic 
direction, transparency, and overall accountability to foreign 
assistance. Her efforts to do so through the ``F process'' were 
long overdue but flawed in implementation. The process should 
be redesigned to garner understanding and support from within 
and outside government. Specifically:

          a. The Director of Foreign Assistance (DFA) should 
        effectively break funding decisions into strategic, 
        tactical and operational components and find ways to 
        bring appropriate actors into decisions, as well as 
        make clear who the appropriate decision maker is at 
        various stages.

          b. The DFA should be made a confirmable position as a 
        second Deputy Secretary of State commensurate with the 
        importance economic development has in national 
        security.

          c. The DFA should referee funding disputes that take 
        place at the strategic level. It is important to assert 
        the Secretary's role in determining funding priorities 
        and making trade-offs but it is equally important for 
        there to be flexibility in the field and communications 
        and shared decision-making among all actors. Otherwise, 
        implementation will be flawed and the most sensibly 
        designed strategy will, in the end, fail.

          d. The DFA must not attempt to become another USAID 
        nor should it become another layer of bureaucracy that 
        slows rather than speeds decision-making. As one 
        interviewee put it, DFA should be ``management light 
        and transparency heavy.'' The DFA should collect and 
        analyze data in a way that gives policymakers and 
        others in the development community information on 
        where U.S. taxpayer dollars are being spent overseas 
        and to what ends. The DFA should prepare with USAID a 
        unified budget for State and USAID expenditures after 
        extensive consultation with interested parties 
        including country ambassadors.

          e. The DFA's responsibilities should be expanded to 
        include oversight of all government agencies' foreign 
        aid programs so that inconsistencies or gaps can be 
        brought to the attention of the Secretary of State and, 
        if necessary, the President. The Department of Defense 
        (DOD) and the domestic agencies should be involved in 
        ``F process'' deliberations of country-level goals and 
        funding. Disagreements that cannot be resolved by the 
        Secretary of State should be taken to the President.

          f. The Secretary of State would be better served by 
        the replication of the office of the U.S. Assistance 
        Coordinator for Europe and Eurasia (EUR/ACE) for each 
        regional bureau, perhaps in the form of ``deputy 
        assistant secretary for programs.'' DFA's macro-
        decisions as to regional and thematic priorities can, 
        thus, flow down to assistance coordination offices 
        within the regional bureaus, where country-specific 
        expertise is vastly superior and decisions would be 
        better informed. The regional coordinators at State 
        should partner with Assistant Administrators at USAID 
        to ensure the most effective use of foreign assistance 
        funds in the region.

    (5) USAID should be recognized for the indispensable role 
it plays in the effectiveness of U.S. development policy. The 
agency should hone its development expertise and work to make 
its operations as flexible and practical as possible. It should 
be strengthened and provided resources to achieve the ultimate 
goal of creating a streamlined agency that can keep and attract 
the most experienced, technically proficient, and worldwide 
savvy development experts in the world. Specifically:

          a. The position of Administrator of USAID should be 
        restored to its former status as a position separate 
        and distinct from the DFA. The jobs are substantively 
        different, with the DFA providing strategic direction 
        to all foreign assistance and the Administrator 
        responsible for the USAID budget and its programs and 
        personnel. Each job is highly demanding and they cannot 
        be filled by one person.

          b. Just as the uniformed military's judgments on 
        capacity and feasibility bring them to the tables where 
        strategic decisions are made, USAID must be part of the 
        high-level decision-making on U.S. development 
        directions and policy. The Administrator should 
        continue, as previously, to report to and serve under 
        the foreign policy guidance of the Secretary of State 
        but, as the President's top advisor on the operational 
        aspects of economic development, the Administrator 
        should have an independent presence on the President's 
        highest level inter-agency councils on foreign aid 
        issues.

          c. USAID Assistant Administrators bring unique 
        regional, country, and functional expertise to the 
        decision-making. They should be an integral part of the 
        planning, execution and oversight of all foreign 
        assistance in the region.

          d. Career paths that include ambassadorships should 
        be created for USAID professional staff and USAID 
        personnel should be considered for more 
        ambassadorships. This is particularly appropriate in 
        countries where the major U.S. mission is economic 
        development.

          e. The operating budget of the agency and its 
        staffing levels should more accurately reflect the high 
        priority that the President places on international 
        economic development in his overall national security 
        strategy. Cuts to operating budgets and reductions in 
        staff undermine the efficiency of almost all foreign 
        assistance programs run from embassies.

    (6) Ambassadors are the President's representatives 
overseas. They should take personal responsibility in their 
countries of assignment for the implementation of the 
President's foreign aid strategy, making certain that the 
assistance is balanced and spent effectively, in coordination 
with the host country and with other donors. Internal embassy 
coordinating mechanisms, whether one point person, working 
groups, or direct front office supervision, should be set up to 
share information, seize opportunities, and to rein in those 
who intentionally or inadvertently skirt embassy oversight.

          a. Training for ambassadors and prospective DCMs, 
        particularly for those with no inter-agency government 
        experience, should include the full spectrum of foreign 
        assistance functions undertaken by the U.S. Government 
        and the ambassador's role in overseeing them.

          b. Training for all Foreign Service Officers, 
        including ambassadors and DCMs, should include course 
        material that prepares them for effective interaction 
        with the military. A variety of judgments--from the 
        level of security assistance, the most effective 
        counterterrorism cooperation, the role of military 
        psychological operations, and communications and 
        cooperation with combatant commands--are dependent upon 
        experience or the training one has received prior to 
        assignment at post.

    (7) The executive branch should request and the legislative 
branch should fund security assistance in the foreign affairs 
budget, as has traditionally been the case, with some security 
assistance continuing to be implemented by the Department of 
Defense. Foreign assistance functions and authorities should 
not be migrating to the Department of Defense due to inadequate 
executive branch requests for funding in the proper budget 
account. The Secretary of State should streamline security 
assistance decision-making to make certain that there is ready 
flexibility and means to address emerging threats and 
unexpected opportunities.

    (8) Congress has an important role to play in making 
certain that foreign aid is well spent. It is a Congressional 
prerogative and, indeed, responsibility to provide robust 
oversight, policy guidance, and a sense of the American 
people's collective judgment on important foreign assistance 
decisions. The Congress should work to bolster its own positive 
impact. Specifically:

          a. Ambassadorial and other nominations should be 
        dispensed with quickly, either through confirmation or 
        timely rejection when deemed appropriate. The holds of 
        individual Senators should not prevail indefinitely; 
        votes should be taken after a period sufficient for any 
        engaged Senator to inform his or her vote. Many 
        formerly quiet embassies have jumped to the forefront 
        of U.S. interests and must be led appropriately. The 
        need was clear in Mozambique where there has not been 
        an ambassador for nearly 14 months. It took the 
        executive branch seven of those months to name a 
        replacement, and the nomination has languished in 
        Congress since January of 2007. At the time of the 
        staff visit, the DCM had just arrived, the MCC and PMI 
        were just ramping up, and PEPFAR funding was increasing 
        substantially. Keeping track of all these moving and 
        evolving parts required ambassadorial leadership.

          b. The Congress should fund the President's foreign 
        aid budget, at a minimum, at the overall level 
        requested. During this administration's period in 
        office, the Congress has denied some $7.6 billion that 
        the President requested in his regular foreign aid 
        budget. Too little money to do too many jobs, all 
        coming at the last minute in an omnibus appropriation, 
        creates havoc with field planning, coordination, and 
        ultimately undermines the entire foreign aid effort. 
        Equally damaging, insufficient funding for foreign 
        assistance in the civilian agency budgets reinforces a 
        migration of foreign aid authorities and functions to 
        the Department of Defense.

          c. Congress, in cooperation with the executive 
        branch, should undertake an overhaul of the Foreign 
        Assistance Act, which has not been rewritten since its 
        inception in 1961, to reflect the new structure of the 
        foreign aid apparatus and to give cohesion to foreign 
        assistance strategy.

          d. Too often, Members of Congress narrow their 
        foreign aid focus to favorite or least-favorite 
        countries, specific NGOs or programs, and other unique 
        enthusiasms that end in earmarks or reporting 
        requirements in appropriations bills. Dialogue between 
        the two branches in hearings, Member and staff 
        briefings, and oversight travel--in essence, steady, 
        transparent and firm oversight--are much preferable to 
        the unanticipated rigidities of earmarks and the 
        massive reports that nail embassy staff to their desks 
        when they should be out overseeing projects and 
        interacting with the people we are paying them to 
        assist. On the other side, the executive branch must 
        provide detailed justifications for its requests and a 
        sound strategic rationale for its priorities in order 
        to stave off congressional directives.

          e. Congress has a critical role to play in balancing 
        broader executive branch decisions. For example, this 
        year, the administration requested funding for the 
        Global Fund to Fight HIV-AIDS at approximately half the 
        level Congress appropriated last year. Such funding is 
        a significant and strongly supported priority in both 
        houses of Congress, something the administration should 
        recognize and accommodate in its own budget requests.

          f. Authorizing committees should consider and pass, 
        and congressional leadership should find floor time 
        for, a foreign aid authorization bill as a routine 
        matter at least every two years. Committee and floor 
        deliberations and debate on foreign assistance would 
        give Members the opportunity to offer amendments, set 
        broad legislative priorities and develop better 
        understanding of strategic goals and individual 
        programs.

          g. Members of Congress should agree on reprogramming 
        levels below which decisions can be made at the embassy 
        level without requiring legislative branch 
        notifications. If this were undertaken as a three-year 
        pilot program, it could be closely monitored to 
        determine whether it should be made permanent.

                              Introduction


                            purpose of study


    The study is intended to gather perspectives on foreign aid 
from government experts in the field and to examine how 
embassies are organizing and responding to recent developments 
in foreign assistance programs and their management. Efforts 
were also made to interview non-government organization (NGO) 
experts who design and carry out projects in the countries 
visited. The purpose is to provide insights to SFRC Members 
into how new funding, new programs, and a new strategic 
approach in Washington is affecting foreign assistance 
implementation in the field.
    It should be noted straightaway that resource and time 
constraints limited minority staff visits to only 24 countries, 
whereas U.S. foreign assistance is provided to some 140 
countries around the world.\1\ Travel took place over a period 
of four months. Pre-travel briefings and interviews in 
Washington provided information on overall purpose and 
management of individual programs and processes. The 
Congressional Research Service supplied excellent background 
papers and individual country aid tables that gave context to 
the information gathered.
---------------------------------------------------------------------------
    \1\ Countries visited were Botswana, Ethiopia, Ghana, Liberia, 
Mozambique, Tanzania, Rwanda, South Africa, Zambia, Bangladesh, 
Indonesia, Mongolia, the Philippines, Armenia, Georgia, Kazakhstan, 
Ukraine, Bolivia, Honduras, Peru, Nicaragua, Jordan, Lebanon, and 
Morocco.
---------------------------------------------------------------------------
    Findings and recommendations are offered as a best effort 
to draw commonalities and themes from the hundreds of 
interviews conducted and to suggest ways in which obstacles 
that are being encountered in the field could be overcome.
    This work follows and builds on a related Committee staff 
effort published under the title ``Embassies as Command Posts 
in the Anti-Terror Campaign'' in December 2006.


                              the dilemma


    The dilemma inherent in formulating foreign assistance 
policy becomes obvious when spending any time in developing 
countries. The need seems infinite and the resources to address 
them are finite.
    American generosity and hope for a better world as 
expressed through both public and private giving has been 
growing. The Bush administration has not only increased the 
number of programs but it has also increased overall funding 
for development. Its requests for significant boosts have not 
been fully embraced by the Congress. Over President Bush's term 
in office, the Congress has denied $7.6 billion that he 
requested in non-supplemental foreign assistance. Even so, 
excluding emergency war supplementals, the foreign aid budget 
grew from $14.9 billion in 2001 to a record executive branch 
request this year of some $24.5 billion.\2\ American private 
giving to international causes has also been rising. 
International giving from private sources increased 147 percent 
from $4.6 billion ten years ago to $11 billion in 2006.\3\
---------------------------------------------------------------------------
    \2\ Source: Congressional Research Service.
    \3\ Center on Philanthropy, Indiana University, Bloomington, 
Indiana.
---------------------------------------------------------------------------
    Of course, assistance is not the only way America touches 
the developing world. Generosity of purse, unfortunately, can 
abide side-by-side with policy incongruities. For example, we 
are spending the largest amount of money ever to address health 
needs in developing countries while we recruit doctors and 
nurses from those same countries to work in U.S. hospitals and 
clinics. We provide food aid that undercuts the livelihood of 
poor farmers because we want to send our farm surpluses on U.S. 
ships instead of buying food locally. We subsidize our own 
farmers while trying to convince governments in other countries 
to let the market system work, and those same subsidies reduce 
the income of farmers in poor countries who would otherwise be 
able to export to America. We send some $143 million in 
assistance to Peru while the U.S. Congress stalls ratification 
of a free trade agreement that would give a bigger boost to the 
economy and do more to create jobs.
    The news from abroad, however, is not always bad. UNICEF 
reports that for the first time since record keeping began in 
1960, the number of deaths of young children around the world 
has fallen below 10 million a year, a number much too large but 
moving in the right direction. In Liberia, a former economist 
with the UN Development Program holds promise to be a 
successful President after free and fair elections in this war 
torn country. Likewise, Sierra Leone and Mozambique seem to 
have turned the corner toward peace. And a recent poll in 
Africa shows a plurality saying they are better off today than 
they were five years ago and they are optimistic about the 
future and that of their children.\4\
---------------------------------------------------------------------------
    \4\ ``Poll Shows Africans Wary, But Hopeful About Future,'' Lydia 
Polgreen and Marjorie Connelly, New York Times, July 25, 2007, p. A6.
---------------------------------------------------------------------------
    Nonetheless, it is clear that the number of taxpayer 
dollars that can go to international development, as needed as 
they may be, is finite. The United States has its own economic 
challenges. Developing strapped urban neighborhoods, rebuilding 
in the post-Katrina south, and strengthening health care 
delivery to both the rural and urban poor are just a few among 
the many priorities we have for our own citizens. So how does a 
country decide how to spend finite amounts of money in a world 
with infinite needs?


                          a strategic approach


    The United States is motivated to provide foreign 
assistance by both serious security challenges and a deep 
humanitarian commitment to alleviate suffering, save lives, and 
fight endemic poverty. Since September 11, 2001, these two 
instincts--self-defense and humanitarian--are seen as more 
mutually reinforcing than in the past. Good governance, 
sustainable and equitable economies, and just societies are 
worldwide objectives that all Americans can support.
    Protecting American citizens from harm in the face of an 
aggressive worldwide movement intent on violent action against 
Westerners and their interests is a strategic priority for the 
U.S. Government. The June 2007 National Intelligence Estimate 
judged that the United States ``will face a persistent and 
evolving terrorist threat over the next three years.'' \5\ Al 
Qaeda is seen as enhancing its capability through greater 
cooperation with regional terrorist groups and continuing to 
try to acquire and employ chemical, biological, radiological or 
nuclear material for attacks. Beyond Al Qaeda, the report 
assesses that ``globalization trends and recent technological 
advances will continue to enable even small numbers of 
alienated people to find and connect with one another, justify 
and intensify the anger, and mobilize resources to attack.''
---------------------------------------------------------------------------
    \5\ National Intelligence Estimate, National Intelligence Council, 
released in July 2007.
---------------------------------------------------------------------------
    The danger is being addressed both short-term and long-
term. The immediate effort is a worldwide attempt to detect and 
expose individual terrorists and their cells. Akin to finding 
hundreds of needles in millions of haystacks, it requires 
government-to-government cooperation, local intelligence, and 
effective law enforcement. Governments with extremist elements 
in their populations are especially important in this effort. 
Post-conflict countries, such as Iraq and Afghanistan, that are 
slow to stabilize and where reconstruction falters are clear 
magnets for terrorists. Poorly patrolled border areas, remote 
regions in otherwise well-governed countries, or failed states 
such as Somalia can be sought out by terrorists looking for 
freedom to gather, plan, and train without detection. To be 
successful, the United States needs governments to be convinced 
that they should help undercut and expose the designs of 
terrorists who may be transiting or residing in their 
countries.
    In the long term, a Middle East, where neighbors respect 
each other's search for the right balance between modernity and 
tradition and favor tolerance over violence, will dampen the 
flames that fuel terrorism. Over time, in the Middle East but 
elsewhere too, economic development is seen as an antidote to 
violent extremism. The executive branch has placed development 
along with defense and diplomacy as one of the three pillars of 
U.S. national security strategy:

          Development reinforces diplomacy and defense, 
        reducing long-term threats to our national security by 
        helping to build stable, prosperous, and peaceful 
        societies. Improving the way we use foreign assistance 
        will make it more effective in strengthening 
        responsible governments, responding to suffering, and 
        improving people's lives.\6\
---------------------------------------------------------------------------
    \6\ The National Security Strategy of the United States, Fact 
Sheet, Office of the Press Secretary, The White House, March 16, 2006.

    Standing on the side of a better future for all the world's 
people is increasingly viewed as an important aspect of our 
long-term counterterrorism policy. Societies that are able to 
raise their children to be healthy and broadly educated are 
less likely to foster extremism. Young adults who see a wide 
array of open opportunities for advancement and fulfillment are 
less likely to be recruited as foot soldiers by terrorists. And 
governments that are just, democratic, and inclusive are less 
likely to see their citizens abide the pursuit of political or 
religious agendas through violence.

                     Developments in U.S. Embassies

    Since September 11, 2001, the United States has created a 
number of new mechanisms for the delivery of foreign 
assistance. The multiplicity of new programs and new funding 
has complicated but not overwhelmed embassy management. Rather, 
it is the headquarters effort to organize itself and provide 
strategic focus to both the new and old programs that has 
thrown embassy operations into fits of frustration and 
bureaucratic agony.


                           the ``f process''


    With the new focus on development as a strategic goal, it 
made sense for the executive branch to better come to grips 
with the quality and quantity of U.S. foreign assistance. An 
ability to set strategic goals and to shift resources to first 
priority regions, countries, and purposes is dependent on a 
clear knowledge of current expenditures. What are we spending 
now and to what purpose? It also depends on an ability to 
understand how successful we are in pursuing those goals. What 
works best and how can that be measured?
    The Secretary of State set out to reform the foreign aid 
process in order to answer what seemed to be fairly simple 
questions as part of an effort to make the most strategic use 
of limited resources. In January 2006, the State Department 
announced the new foreign assistance reform plan, appointing 
Randall Tobias to serve as the Director of Foreign Assistance 
(DFA) with Deputy Secretary rank. He was nominated to serve 
concurrently as USAID Administrator and was assigned authority 
over all Department of State and USAID foreign assistance 
programs, as well as responsibility to provide guidance and 
coordination for all assistance delivered by other U.S. 
Government agencies. The office that Mr. Tobias headed was 
called the ``F bureau'' and the process that he designed is 
called the ``F process.''
    The DFA designed a Strategic Framework for Foreign 
Assistance within which foreign aid was to be planned and 
organized. \7\ It designated five strategic objectives: peace 
and security; governing justly and democratically; investing in 
people; economic growth; and humanitarian assistance. Countries 
were grouped according to the development challenges they face 
and the reasons why U.S. assistance could make a difference. 
The five categories are:
---------------------------------------------------------------------------
    \7\ See Appendix II.

          1. Rebuilding--countries emerging from internal or 
---------------------------------------------------------------------------
        external conflict;

          2. Developing--poor and lower-middle income countries 
        that are not meeting key performance criteria;

          3. Transforming--poor and lower-middle income 
        countries that are meeting important performance 
        criteria and seem poised for strong economic progress;

          4. Sustaining--upper middle or above income countries 
        where U.S. assistance supports progress in partner 
        countries important to peace; and

          5. Reforming--countries where there are serious 
        governance issues that have led to legislative 
        restrictions or prohibitions against assistance.

    Institutional resistance to any reform touching on programs 
and money that some offices and bureaus had come to see as 
their own was to be expected. But, as the process was 
accelerated to meet budget deadlines, there never developed a 
sense of common purpose. Pitched battles ensued on just about 
everything. The rushed and muddled start, including the 
uncertainty due to congressional appropriations delays and the 
need for a continuing resolution, and the abrupt departure in 
April 2007 of the first Director, has added to the impression 
that the effort may be doomed, no matter how much sense it may 
make from a strategic point of view.
    In already strapped embassies, demands from headquarters 
and the time required to respond were met with disbelief. As 
professionals, all staff appeared to make best efforts to be 
responsive and many agreed that a more organized and strategic 
approach to foreign assistance is necessary. But that 
recognition did not keep the prospect of mutiny entirely from 
their minds. The complaints are numerous:

   DFA appeared to be staffed by a hodge-podge of detailees 
        and temporary staff rotating in and out at a dizzying 
        pace. The result was muddled directions, constantly 
        changing requests and unclear or constantly shifting 
        points of contact. When the embassy staff from 
        Honduras, for example, called the ``F'' Bureau to query 
        cuts in two categories, the official in Washington was 
        mystified. She said that according to her notes both 
        areas were to have received plus-ups.

   There was little opportunity for field input into decision-
        making. The field is theoretically represented in 
        headquarters discussions by their respective State and 
        USAID bureaus, but this is clearly seen as inadequate. 
        In the case of Bangladesh, the USAID staff happened to 
        be in Washington at the time of the DFA country meeting 
        and was invited to attend, a development viewed very 
        positively in the embassy in Dacca.

   With the embassy under-represented, host country input is 
        also slighted. The field's efforts to respond to 
        priorities set by the countries themselves and their 
        citizens are undermined when goals for development seem 
        to be determined from afar. It is the wrong message to 
        be sending when country buy-in is essential for 
        progress.

   What was once only a complicated matter of shifting 
        resources toward an unexpected opportunity or away from 
        a suddenly less promising endeavor became virtually 
        impossible, as all requests needed the DFA's personal 
        approval which was months in coming if it ever came at 
        all. For example, in Armenia, an embassy-initiated 
        shift in funding in favor of democracy promotion prior 
        to the ``F process'' was quickly approved by 
        headquarters. Today, the embassy official involved said 
        he would not have any idea how to get such a request 
        approved by ``F,'' nor even whom to contact there.

   The Operational Plans (OP) required by DFA come in for 
        especially heavy criticism. OPs are detailed 
        descriptions of every assistance project, including 
        purpose, vendor and budget. They differ from Mission 
        Strategic Plans (MSPs) that set goals and describe 
        embassy plans to reach such goals over several years. 
        The new OPs are disparaged for covering both too much 
        and too little. Some specifics:

          --The OP's required too much detail at too great a 
        length. Reports ended up having to be huge-- for 
        example, some 233 pages from Ghana, 287 pages from 
        Liberia, and 450 pages from Jordan.

          --The OP's do not include funding provided by DOD, 
        MCC, PEPFAR or other U.S. Government agencies, thereby 
        creating an incomplete picture of what was going on in-
        country. For example, in Liberia the OP did not include 
        a Department of Labor child labor program that sought 
        to keep children in school. Neither did it include a 
        rice importation program run by the Department of 
        Agriculture. In Zambia, the OP covered only 17 percent 
        of the foreign assistance coming into the country, as 
        PEPFAR had brought in resources that surpassed other 
        programs by multiple amounts.

          --The OP focuses on a one-year outlook as preparation 
        for the budget. As a result, its preparation sapped 
        time and energy from the embassy's long-term planning, 
        an essential component of coordination with other 
        bilateral and multilateral donors.

          --The deadlines did not permit, nor did DFA seem 
        interested in, embassy consultation with trusted NGOs 
        and other private non-profit partners who are 
        implementing many foreign assistance programs.

   In a number of embassies, both government officials and 
        NGOs warned against the DFA's reliance on what they saw 
        as the false clarity of numbers. Such a focus can be 
        self-deceiving, they argue, when economic development 
        spurts and lags in an intricately complex web of 
        related but independently moving parts. New indicators 
        and tracking mechanisms, databanks, and scorecards 
        where countries can compare their performance with each 
        other are all useful. But incomplete or obsolete data 
        can skew the numbers. Also, some measurements give a 
        false sense of certitude. While the number of children 
        vaccinated or graduating from eighth grade is 
        illuminating, the number of those trained to teach or 
        vaccinate does not measure the quality of the training, 
        whether the most qualified people are chosen, or 
        whether good medical personnel or teachers are 
        retained. In Armenia, for example, an NGO was asked to 
        provide the number of female first-year journalism 
        students in a program designed for experienced 
        journalists. ``Zero'' was the correct answer provided, 
        an inaccurate reflection of the program's success in 
        the eyes of the NGO. Such critics urged a measurement 
        of outcomes rather than outputs.

   Glitches in the software and operating systems added to the 
        onerous task of collecting, reorganizing, and reporting 
        information. In Honduras, data was deleted due to 
        program fault after it was entered and some data could 
        not be easily saved. Re-entering data multiple times 
        became a routine part of the ``F process'' experience. 
        In Jordan, the systems were so overloaded that data 
        could be entered only between midnight and 6 a.m.

   DFA-assigned country categories are questioned. In both 
        Nicaragua and Honduras, embassy staff questioned 
        whether two countries with such systemic poverty and 
        underperforming economies should be classified as 
        ``transforming.'' Embassy officials questioned whether 
        it was an unintended consequence of their MCC status: 
        because they had been designated MCC countries, they 
        were automatically kicked up a level. If consulted, 
        embassy officials would have recommended the 
        ``developing'' category for both countries.

   From the field, DFA's decision-making seemed arbitrary and 
        was never explained. The embassy in Tanzania, for 
        example, requested more money for peace and security 
        and instead received $4 million for a water project, 
        even though Tanzania had just negotiated a huge MCC 
        compact with water as a priority. The budget for a new 
        counterterrorism center, a top priority for the 
        embassy, was cut. The mission also received an extra $9 
        million for education at the last minute after being 
        told its education funding was being cut. It had just 
        passed up hiring an excellent candidate to work in the 
        education sector and then had to scramble to hire a new 
        person and design good programs with this last minute 
        plus-up.

   In sum, the ``F process'' was seen as painfully time 
        consuming and generally viewed as adding no value to 
        field operations, planning, or coordination.


                           multiple programs


    President Bush has created a number of new programs with 
development, security and humanitarian missions. He has 
increased the amount of assistance managed by the State 
Department, increasing it from $2.6 billion in FY2000 to $5.3 
billion in FY2006.\8\ He has requested and received authority 
and funding for new Defense Department foreign assistance 
programs. Previously created programs have received new money 
and non foreign affairs agencies have increased assistance to 
foreign countries from their own budgets.
---------------------------------------------------------------------------
    \8\ GAO report. Department of State: Human Capital Strategy Does 
Not Recognize Foreign Assistance Responsibilities,  September 2007.
---------------------------------------------------------------------------
    Only about half of U.S. bilateral foreign assistance is now 
distributed through USAID. As of 2006, roughly 20 percent of 
bilateral aid was given through the Department of Defense, 12 
percent through the Department of State, 8 percent through 
Health and Human Services and the rest through the Department 
of Agriculture, Peace Corps, Department of Labor, Department of 
Treasury and the Millennium Challenge Corporation.\9\ Of the 
funds disbursed through USAID and the Department of State, some 
are funneled through specific programs such as the President's 
Emergency Plan for AIDS Relief, the President's Malaria 
Initiative and the Middle East Partnership Initiative.
---------------------------------------------------------------------------
    \9\ See Appendix III.
---------------------------------------------------------------------------
    One of the outcomes of all these efforts has been the 
arrival of new actors, new programs, and sometimes new missions 
being undertaken from posts all over the world.
MCC
    The Millennium Challenge Corporation (MCC) mission is to 
reduce global poverty by promoting sustainable economic growth. 
Established in January 2004, the MCC carefully selects 
recipients by evaluating their performance according to 16 
objective indicators. While poor, recipient countries are 
judged to be well governed and on the right track toward 
harnessing the power of markets.
    Appropriations so far have totaled some $6.5 billion and 
compacts worth over $4.8 billion have now been signed with 15 
countries. MCC funding can significantly increase U.S. 
assistance to a country and is a major investment of taxpayer 
money in a small number of countries. The lead time between 
obligation of funding and actual expenditures in country can be 
long, and compacts are carried out over a period of up to five 
years.
    Countries that have fallen short of qualifying for MCC 
assistance by failing one or two policy indicators may be 
eligible for the MCC threshold program. Threshold programs 
provide smaller grants designed to help improve performance on 
specific indicators.
    The hope is that MCC countries can become models, 
showcasing the rewards of sound policies and good government. 
MCC compacts cover the full panoply of economic development 
activities. Staff visited seven countries with MCC compacts 
(Armenia, Georgia, Ghana, Honduras, Morocco, Mozambique, and 
Nicaragua), and seven with MCC threshold programs (Indonesia, 
Jordan, Peru, Philippines, Rwanda, Tanzania and Zambia).
    MCC relies on USAID to organize and implement threshold 
programs. In two countries, Jordan and Tanzania, the decision 
not to wait for the completion of threshold programs before 
announcing compact eligibility were seen by embassy staff as 
unnecessarily undermining the ability to leverage policy 
reforms. It would be better in their view to pursue the 
threshold program goals full throttle and see some improvement 
in targeted areas before deflecting the attention of the 
government into new areas of focus demanded by compact 
negotiations.
    The MCC sometimes builds on programs that USAID and other 
donors have pioneered. In some cases, this causes resentment. 
USAID officials complain that their agency could do such 
projects, particularly in infrastructure, if they only had the 
funding. In other cases, USAID officials seem pleased to see 
their projects picked up by the MCC and boosted with additional 
resources. In still other cases, MCC is investing in important 
new areas and undertaking projects that would otherwise have 
gone unfunded.
    In some countries, MCC and USAID officials have developed a 
division of labor where MCC invests in removing impediments to 
growth while USAID emphasizes policy reform and targeted 
projects. In other countries, coordination between MCC and 
USAID is weak. Problems stem from an MCC desire to have a new 
and different identity. This streak of independence should be 
tempered with the recognition that embassy officials, 
especially USAID personnel, have deep knowledge and experience 
in the country. USAID, on the other side, should recognize that 
MCC brings enormous resources to countries where USAID has been 
working with scarce resources for a long time. A poor 
relationship between the two inhibits the effectiveness of 
overall U.S. Government assistance to the host country. Worse, 
it could actually have a negative impact on compact 
implementation. A strong ambassador who insists on coordination 
and communication between the two agencies should be supported 
by headquarters.
PEPFAR
    During his January 2003 State of the Union Address, 
President Bush proposed that the United States spend $15 
billion over five years to combat HIV/AIDS, tuberculosis (TB), 
and malaria through the President's Emergency Plan for AIDS 
Relief (PEPFAR). With PEPFAR, the United States leads the world 
in its level of support for the fight against HIV/AIDS. PEPFAR 
funds are used for prevention, treatment, and care services in 
15 focus countries where the administration estimates 50 
percent of all HIV-positive people live. PEPFAR funds are also 
channeled as U.S. contributions to the Global Fund to Fight 
AIDS, Tuberculosis, and Malaria.
    The Office of the U.S. Global AIDS Coordinator, responsible 
for PEPFAR coordination, was created in January 2004 within the 
Department of State. USAID and the Department of Health and 
Human Services (HHS) are primarily responsible for implementing 
PEPFAR programs in the field.
    PEPFAR countries visited were Botswana, Ethiopia, 
Mozambique, Rwanda, South Africa, Tanzania and Zambia. PEPFAR 
is welcomed in embassies, as it provides a substantial increase 
in funding. In some countries, however, it is seen as too 
narrowly focused on anti-retrovirals (ARVs) and the prevention 
of only one disease. Some officials are also concerned that the 
sheer size of PEPFAR assistance in some countries causes 
decision makers to cut USAID funding as they try to spread U.S. 
development investments to as many countries as possible. Such 
cuts are inducing embassies to craft USAID projects in such a 
way as to be able to tap into PEPFAR funding. ``USAID is 
turning into the U.S. Agency for Health,'' said an embassy 
official in Tanzania, reflecting a general concern in African 
posts that other pursuits are being crowded out.
    Doctors and nurses in many PEFPAR countries are being 
enticed into HIV/AIDS care at the expense of primary and 
maternal health. A broader definition of use would prevent the 
unintended consequence of weakening a country's overall health 
infrastructure. A broader definition would also allow for 
complementary programs such as food aid. PEPFAR does coordinate 
with the World Health Program and with U.S. PL-480 programs. 
However, staff witnessed a program in Rwanda that provided food 
to only a small fraction of the eligible needy people on 
PEPFAR-provided ARVs. Without food assistance, the benefits 
from medication are wasted.
    Given that PEPFAR is intended as an ``emergency response,'' 
there has been little focus on how to make the interventions 
sustainable. Given that ARVs are a lifetime need and many 
recipients are children who contracted AIDS in utero, the 
United States is committing to a decades-long program. The 
President has requested a follow-on 5-year $30 billion program.
    Whatever problems still need addressing, PEPFAR is clearly 
making a significant impact. PEPFAR has supported: 
antiretroviral prophylaxis for HIV-positive women during 
533,700 pregnancies, thereby averting an estimated 101,500 
infant HIV infections; life-saving antiretroviral treatment for 
approximately 1,101,000 men, women and children through 
bilateral programs; care for more than two million orphans and 
vulnerable children; and over 18.6 million counseling and 
testing sessions to date, through prevention of mother-to-child 
transmission and other counseling and testing activities.
President's Malaria Initiative
    In June 2005, President Bush launched the President's 
Malaria Initiative (PMI) which increases support for 
international malaria programs by more than $1.2 billion 
between FY06 and FY10. PMI's goal is to reduce deaths due to 
malaria by 50 percent in 15 countries by focusing on the most 
vulnerable groups--children under five and pregnant women. PMI 
supports four key areas--indoor spraying of homes with 
insecticides; insecticide-treated mosquito nets; anti-malarial 
drugs; and treatment to prevent malaria in pregnant women.
    PMI is led by USAID and includes efforts from the 
Department of Health and Human Services (Centers for Disease 
Control and Prevention), the Department of State, the White 
House, and other agencies.
    Staff visited three PMI countries: Mozambique, Rwanda, and 
Tanzania. In the field, PMI is considered better coordinated 
than PEPFAR, having had the opportunity to learn from the 
PEPFAR's challenges. PMI provides local communities with a 
health benefit while also supporting employment by hiring 
sprayers from the communities. They support the manufacture and 
selling of bed nets so that, after PMI has concluded its work, 
the local market can continue to supply them.
    PMI has been particularly successful in Tanzania, helping 
to almost eliminate malaria on the island of Zanzibar. 
Sustainability of the effort is important, as malaria was wiped 
out twice before in Zanzibar's history.
MEPI
    The Middle East Partnership Initiative (MEPI) was created 
in December 2002 with the purpose of promoting political and 
socio-economic progress in the Middle East and North Africa. 
Using Economic Support Funds, it works to fund entrepreneurs, 
organizations, and projects that hold promise of providing a 
strong, multiplier effect. It is placing a special focus on 
women, working with lawyers, NGOs, and other women's 
organizations to support candidates and other leaders working 
to strengthen women's voices and participation in public and 
private decision-making. Managed by the State Department's 
Bureau of Near Eastern Affairs, MEPI's funding stream has gone 
from $29 million in FY02 to averaging approximately $100 
million per year since. For FY08, the administration requested 
$75 million.
    MEPI is administered from Washington with embassy input at 
some posts but not others. In Jordan, the MEPI program is 
overseen by the embassy's public affairs office. In Lebanon, 
when the embassy acquired an additional political officer under 
the Global Repositioning Initiative, the ambassador appointed 
the officer as his special assistant and assigned him the task 
of coordinating MEPI programs with USAID and the public 
diplomacy section. In both Lebanon and Jordan, MEPI programs 
are welcomed and seem for the most part well-integrated. It 
should be noted, however, that embassy officials complained 
that some U.S. grantees were attending a MEPI regional 
conference in Amman that the embassy had never heard of, much 
less been invited to attend. It appears that the regional MEPI 
office in Tunis had failed to inform the embassy.
    Across a number of North African posts, MEPI's reputation 
ranges from uneven to abysmal. Embassy officials roundly 
express reservations for the approach, implementation, 
leadership and evolution of the program. In Morocco, MEPI is 
accused of ``sneaking around incognito.'' MEPI programming in 
Morocco has apparently tested the edge of host country 
tolerance and one MEPI media project apparently bordered on 
breaking Moroccan law. The Moroccan government, among others, 
has indicated its distaste for foreign programs that seem to 
have ulterior motives. MEPI programs that the embassy described 
to Washington as weak or worse were sustained through several 
complaints, though most eventually were terminated.
    The regional field offices in Tunis and Abu Dhabi appear to 
make conscious efforts to fly above or below the radar of 
individual U.S. embassies in the region. It is not useful for 
MEPI to be run outside the purview of post oversight.
FSA/SEED
    In response to democratic developments in Eastern Europe 
and Eurasia in the final days of the Soviet Union, the Freedom 
for Russia and Emerging Eurasian Democracies and Open Markets 
(FREEDOM) and Support Act (known as FSA) and Support for 
Eastern European Democracy (SEED) Acts were passed in 1992 and 
1989, respectively.
    In the Europe/Eurasia bureau (EUR) the office of the U.S. 
Assistance Coordinator to Europe and Eurasia (EUR/ACE) was 
created to coordinate virtually all foreign assistance monies 
(excluding certain Department of Defense programs) flowing to 
27 states in the region. A dedicated assistance coordination 
office is unique only to the Europe/Eurasia bureau, and EUR/
ACE, in its bureaucratic structure, served as a mini-DFA for 
assistance to the region, with most foreign assistance funds 
under EUR/ACE's authority.
    In FY06, FSA monies expended totaled $601 million out of a 
total of $1.8 billion in U.S. Government assistance to Eurasian 
countries. Similarly, SEED monies totaled $424.12 million in 
FY2006 out of a total $733.48 million in U.S. Government 
assistance to Central and Eastern European countries. As these 
countries have improved their capacity for democratic 
development, FSA and SEED monies have been on a steady decline.
    Staff reporters visited four countries under EUR/ACE: 
Armenia, Georgia, Ukraine, and Kazakhstan. Compared to non-EUR/
ACE countries, these countries seemed to have a much easier 
transition into the ``F'' process. Posts were accustomed to 
working with a centralized EUR/ACE authority, as opposed to the 
situation in other regional bureaus where disparate keepers of 
smaller pots of money protected funds tenaciously.
    Assistance officers at post reported that they always knew 
exactly whom to contact in Washington for changes in assistance 
disbursements as events at post warranted, and EUR/ACE had the 
ability to quickly move money from one fund to another. For 
example, a senior U.S. official in Armenia recounted that in 
2005, the embassy decided to shift emphasis to democracy 
promotion strategies in response to political developments in 
Armenia. Embassy officials brought this request to EUR/ACE and 
were able to shift money from an assistance account for 
``Economic Growth'' to one for ``Governing Justly & 
Democratically'' very easily.
    Senior U.S. embassy and assistance officials in Armenia 
felt the ``F'' process was already beginning to impact the 
hitherto efficient EUR/ACE process by now making ``F'' the 
final arbiter of assistance, leaving EUR/ACE's role less clear. 
Expectedly, officials insisted that this sort of shift in funds 
would be much more cumbersome, if not impossible, with the new 
layer of bureaucracy from the ``F'' process.
Democracy Fund
    Funding for the State Department's democracy programs 
managed out of its human rights bureau (DRL) has risen from 
$7.82 million in 1998 to approximately $94 million in the 2007 
regular budget for its Democracy Fund and other programs. As 
well, some $260 million has been made available from 
supplemental appropriations largely for Iraq, Lebanon, and 
Somalia. Congress has routinely supported Democracy Fund 
programs well beyond the President's request and has earmarked 
funding to support democracy in China, Iran, and Burma. The 
administration did not request appropriations for the Democracy 
Fund for FY08. Nearly all of DRL's grantees are U.S.-based, 
non-profit organizations. Most grants from the Democracy Fund 
average $500,000 for one to three years, though some grants can 
be as high as $1 million.
    Democracy Fund monies support individuals and groups around 
the world who are working to build civil society, recruit and 
train new leaders, and carry out free and fair elections. There 
is clearly tension in some embassies surrounding Democracy Fund 
projects. Embassy efforts vary in trying to get a handle on the 
kinds of U.S.-funded democracy programs in the host country. 
Termed variously ``the outliers'' and ``the cowboys'' by 
embassy officials, some democracy advocates can be seen as 
single-minded, driven, and not particularly amenable to embassy 
guidance. In Jordan, Democracy Fund implementers appear to make 
decisions without consultation with the embassy. Members of the 
embassy staff often hear about DRL grants after they have 
already been promised and are beginning to be implemented. DRL 
funding is included in the ``F process'' in Washington: it 
needs to be a team player in embassies as well.
DOD Activities
    Department of Defense authorities in the foreign assistance 
field have expanded across the board over recent years. In 
calendar 2001, DOD expenditures represented only 7 percent of 
U.S. economic bilateral assistance. They were estimated to be 
20 percent in 2006.\10\ In Honduras, for example, DOD foreign 
aid is now nearly as large as USAID's program.
---------------------------------------------------------------------------
    \10\ Official Development Assistance (ODA) figures provided to the 
Development Assistance Committee of the Organization of Economic 
Cooperation and Development (OECD) by USAID.
---------------------------------------------------------------------------
    The expansion has taken place in a number of areas, many of 
which were previously funded in the civilian foreign affairs 
budget. Pentagon counterdrug assistance was originally 
authorized to be provided only to Peru and Colombia. It has 
expanded to a total of 14 countries and now includes vehicles 
and aircraft. In addition to some $1 billion expected in FY08 
for humanitarian relief and reconstruction in Iraq, DOD's 
humanitarian assistance is growing in other parts of the world 
as well. For example, the Combatant Commander Initiative Fund 
(CCIF), originally dedicated to supporting military training 
and education, can now be used to provide humanitarian and 
reconstruction assistance. DOD Humanitarian and Civic 
Assistance (HCA) funds supported 320 projects in 43 developing 
countries at a cost of approximately $9.2 million in 2006, up 
from $7 million in 2001. DOD disaster relief was approximately 
$63 million in FY06, with much of that going to provide relief 
in the wake of the earthquake in Pakistan.
    In the area of security assistance, Section 1206 train-and-
equip funding has expanded from a cap of $200 million set in 
2005 to a current cap of $300 million, and the number of 
recipient countries has expanded from a total of 14 the first 
year to an additional 28 countries in FY07.\11\ DOD authority 
to reimburse countries such as Pakistan and Jordan who are 
providing logistical support to U.S. military operations in 
Iraq and Afghanistan in connection with the war against terror 
has grown to $1.2 billion annually.
---------------------------------------------------------------------------
    \11\ Section 1206 refers to the section in the 2006 National 
Defense Authorization Act that gives the Secretary of Defense, with the 
concurrence of the Secretary of State, authority to design and carry 
out programs jointly formulated with the Secretary of State to train 
and equip foreign military forces. This authority previously resided 
solely with the Secretary of State.
---------------------------------------------------------------------------
    With such an increase in funding and programs coming 
directly from the Department of Defense, albeit ostensibly with 
the concurrence of the Secretary of State, even greater embassy 
scrutiny is needed to ensure that the foreign aid is 
coordinated at post. Informed judgments need to be made that 
such assistance is in keeping with overall U.S. Government 
policy toward the host country and U.S. interests therein.
    Findings from country visits for this study confirm the 
need for continued embassy oversight and attentiveness.\12\ In 
one Middle East/North African country, military officials 
focusing on counterterrorism and military training demonstrated 
little sensitivity to anti-American sentiment in the country 
and the level of radicalization among the local populace. With 
significant numbers of American soldiers in country, they said 
they try to address ``a State Department issue'' by having 
soldiers maintain a low profile when off-duty. The team 
stressed its close relationship with the host country's 
military: ``We walk in the Ministry like it's our own,'' one 
defense official declared proudly. Sensitivity to the impact a 
high U.S. military profile can have in a country needs to be 
shared embassy-wide. Even more important, the number of 
military personnel and activities must be reined in when their 
profiles and activities are judged by the ambassador to be 
detrimental to U.S. interests.
---------------------------------------------------------------------------
    \12\ For previous findings, see Embassies as Command Posts in the 
Anti-Terror Campaign, U.S. Senate Committee on Foreign Relations, 
December 2006, S. Prt. 109-52.
---------------------------------------------------------------------------
    Further evidence of the need for a thoughtful approach is 
seen in the reservations that continue to be expressed in 
Africa about the establishment of a new combatant command for 
Africa, AFRICOM. The new command has generally been supported 
by American officials with expertise in Africa. But a number of 
reasonable Africans voice concerns that it portends an 
exclusively military approach to the terrorist threat or a new 
competition between China and the United States to be fought on 
African soil. U.S. foreign policy must continue to be led, and 
be seen to be led, by the diplomats rather than the generals or 
it will create its own resistance.
    Section 1206 funding was established to address emerging 
terrorist threats and is required to be jointly formulated by 
the Secretaries of Defense and State. But this is not always 
the case. In Morocco, for example, Section 1206 proposals are 
generated by the European Combatant Command rather than 
reflecting a bottom-up approach that includes host country 
preferences. A focus on coastal security in the 1206 program is 
being accepted by Morocco but it is clearly not on the 
country's own counterterrorist agenda nor does it appear to 
address an urgent threat. There is far more diplomacy necessary 
in these cases. A lack of country buy-in has caused problems in 
the past. A program in North Africa due to be implemented in 
2007 was terminated at the last minute by the embassy when the 
host countries had negative reactions to the level of regional 
cooperation it entailed.
    EUCOM's interest in battling terrorism across the board in 
North Africa has resulted in a plethora of recommendations, 
briefings, and meetings with senior host country military 
officials. While new resources are always welcome, embassy 
officials cite a certain heavy-handedness and lack of knowledge 
of the local context resulting in ill-informed or poorly vetted 
programming ideas. Humanitarian assistance is an area that has 
embassy staff particularly concerned from a number of different 
angles. ``For one thing, USAID can build a school a whole lot 
cheaper than DOD can,'' an embassy official in Tanzania pointed 
out. EUCOM hosted in Tunisia in 2007 a regional conference on 
humanitarian assistance that was, in name, cosponsored by 
USAID. The conference was called to discuss inter-agency 
issues. EUCOM provided funding and transportation for American 
officials across the region. Without such support, the 
conference might never have taken place but the arrangement 
provided another tangible indication of the resource imbalance 
between the military and civilian agencies. Such meetings are 
helpful and should provide our military with some of the 
knowledge they need to work effectively in the region. 
Nonetheless, they do not and cannot substitute for effective 
embassy oversight with respect to DOD activities in country.
    The expanding role of DOD in foreign aid, if the decision 
is made to sustain it, makes it imperative that it be included 
in the overall strategic plan for foreign assistance. It should 
be part of a reformed ``F process'' and factored into decision-
making on both priorities and planning at headquarters as well 
as in embassies.


                                 usaid


    As other programs have multiplied, USAID traditional core 
programs have become a smaller share of the total, though they 
are still almost 50 percent of bilateral U.S. calendar year 
official development assistance.\13\ In its traditional 
programs, USAID focuses on long-term economic development. The 
agency works with governments to identify and overcome 
development obstacles, strengthening education, health, and 
other public sector activities, and supporting American and 
indigenous NGO's in their social, economic and political 
development activities.
---------------------------------------------------------------------------
    \13\ See Appendix III.
---------------------------------------------------------------------------
    In addition to carrying out its own programs, USAID in the 
field has become the essential ``go to'' agency for 
implementing a number of the new programs. USAID manages MCC 
threshold programs, administers a significant portion of the 
PEPFAR funding, and utilizes Economic Support Fund money to 
carry out programs that in previous times would have come from 
its own budget. USAID officials, with development experience, 
country knowledge, and personal contacts in the host country's 
development community, often serve as advisors to the 
ambassador on all foreign assistance questions.
    USAID's reputation in Washington does not reflect the key 
role its individual experts are clearly playing in the 
countries visited. One of the reasons Washington has turned to 
multiple new programs designed to carry out specific missions 
is precisely because the agency is seen as multi-layered, 
bureaucratic, and slow to react. An ability to adjust to 
quickly moving events, changes in the country or region, or new 
strategic objectives has never been seen by either branch of 
government as USAID strengths. Congressional formal and 
informal tugs at the agency's programs and projects have also 
taken a toll. As a result, the agency's staffing has decreased 
and its operating budget has suffered. In 1980, there were 
approximately 4,000 direct hires in the USAID workforce; today 
there are 2,000.\14\ More recently, since 2001, the operating 
budget has remained essentially flat while the increase in 
programs that the agency is implementing has gone from 
approximately $7.4 billion to some $13 billion today.\15\
---------------------------------------------------------------------------
    \14\ Testimony of USAID Administrator-Designate Henrietta H. Fore 
before the Senate Committee on Foreign Relations, July 24, 2007.
    \15\ Testimony of Sean R. Mulvaney, nominated to be an Assistant 
Administrator of the United States Agency of International Development, 
at his nomination hearing, October 30, 2007.
---------------------------------------------------------------------------
    In embassies too, in the past, USAID has had the reputation 
of ``doing its own thing,'' protecting its long-term programs 
from the ``political interference'' of either headquarters or 
the ambassador. But its reputation in the embassies is now 
changing as USAID officials take on new assignments and provide 
assistance to all the new programs.
    With more assignments in the field than staff to perform 
them, USAID has increasingly turned to contractors, many former 
USAID employees, and NGO's to implement its traditional core 
programs. USAID officials often act as managers of programs 
rather than as hands-on experts in one or two specialized 
fields of development. In some countries, such as Rwanda, all 
USAID assistance is implemented through third parties.

                        Additional Observations


                        the role of ambassadors


    A good ambassador has a keen sense of the landscape, 
figuratively and literally. The ambassador knows what tactics 
fit best into the puzzle of the country and its economy, 
maintains a strong working relationship with the host 
government, and keeps a firm hand on all U.S. Government 
activities in country. In the foreign aid area, ambassadors 
have addressed the need for coordination in a number of ways. 
Some have appointed economic officers to lead, others have 
established working groups with leadership varying depending on 
the specific function, and still others have put USAID 
officials in charge. In Lebanon, the ambassador took advantage 
of the increase of staff under the Global Repositioning 
Initiative to give the job to his new special assistant. In 
Bolivia, the Ambassador named the USAID country director the 
acting Deputy Chief of Mission to fill a staffing gap. In 19 of 
the 24 embassies visited, there did seem to be an adequate 
coordination mechanism with strong oversight by the ambassador.
     Domestic agencies that enter the foreign assistance arena 
need to be convinced both in Washington and in the field to 
consult with the embassy team. Embassy officials had to set 
things right after the Department of Homeland Security 
organized a border security program with Lebanese officials 
that competed with a German effort already agreed to by 
international donors. In Liberia, a domestic U.S. agency 
contracted with a proscribed vendor to import rice for a child 
feeding program without first consulting with the Ambassador or 
the country team. It was the embassy who had to explain to the 
Liberian government and extricate the agency from the contract. 
On the other hand, good results can emerge when domestic 
agencies are looped into embassy activities and deliberations. 
The Department of Agriculture has provided two American 
forestry experts to assist the Liberian government in the 
creation of a more transparent and accountable system of 
logging rights. Working with USAID, the agriculture experts 
have made an important contribution to helping sort out timber 
concessions, a major source of income for this very poor 
country. Zambia is another example where embassy coordination 
has worked. A high-level Zambian official approached the U.S. 
Treasury while on official business in Washington and 
identified financial sector reform as a much needed component 
in the country's anti-corruption program. Treasury responded by 
providing technical staff to work in the Zambian ministry and, 
at the time of the staff visit, funding issues were being 
resolved to send an additional resident advisor from Washington 
to work with the Zambian government.
    In one of the two embassies staff visited that have been 
without an ambassador's leadership for more than a year, 
coordination efforts were much more fractious than in embassies 
with ambassadorial leadership. USAID complaints were more 
numerous, newcomers were more likely to be resented than folded 
into the embassy team, and there was a greater likelihood of 
different programs pursuing separate agendas. In every embassy 
visited, Ambassadors leading a strong front office were seen as 
clearly indispensable to a coordinated foreign aid program.
    Not only is the ambassador's leadership important. It is 
also the ambassador's judgment that should be brought to bear. 
Ambassadors must have a sophisticated understanding of the 
tensions that can exist among competing U.S. goals. When a U.S. 
funded activist group is using tactics that are sure to create 
a backlash and set back the cause of democracy, the ambassador 
needs to know about it and curtail the activity. Likewise, the 
ambassador needs to take action when the U.S. military profile 
is becoming too large or U.S. assistance is becoming imbalanced 
or when it is unwise to further strengthen the security sector. 
In all of these sensitive judgments, the ambassador is not 
always guaranteed to be right. But it is only the ambassador 
who represents the President of the United States in country 
and who has the broadest view of American interests.


                            staff challenges


    In a perfect embassy, the professionalism of the foreign 
aid staff always wins out. The new PEPFAR program builds 
seamlessly on the success of USAID health programs. USAID 
provides a long-term grant to a highly worthy and successful 
MEPI recipient. The MCC brings an astounding amount of 
resources to an agricultural project that was designed by USAID 
but could never go beyond a pilot project due to lack of 
resources. Economic Support Funds (ESF) funding is amicably 
divided up among programs competing for the ambassador's 
approval.
    There are, of course, no perfect embassies. Inter-agency 
rivalries are easily apparent to visitors interested in hearing 
the complaints. It is the long-term USAID staff that is most 
unhappy. They see themselves doing a lot of the backstopping 
for the new programs and getting none of the credit. They 
question the experience of the newcomers, whether projects are 
being successfully vetted and evaluated, and whether, in the 
end, they will be successful. For example, a young staffer with 
PEPFAR flew into a conference in Rwanda and reportedly brought 
a host country foreign expert to tears with some insensitive 
and rigid pronouncements. In Mozambique, USAID has been 
directed by PEPFAR at headquarters to implement programs that 
the embassy team had recommended against as inappropriate and 
ill-suited to the country. Such episodes are galling to U.S. 
aid professionals who are working to craft appropriate local 
programming. Overall, USAID officials see the new programs 
getting the funding and their own programs struggling and 
sometimes losing in the competition for resources.
    In the best run embassies, the underlying disgruntlement is 
not all-consuming. There is clearly plenty of work for everyone 
in the new foreign aid firmament. USAID professionals should 
see their work as the important contribution it is, whether or 
not their agency is getting proper credit. But employee morale 
is an issue that needs to be addressed over the long term. 
Losing our most experienced foreign aid professionals or our 
most promising recruits to other endeavors at a time when we 
have raised development to the highest level priority would be 
self-defeating.


                          usaid administrator


    Discontent in USAID with the current situation has led some 
non-governmental and other experts to argue that the 
Administrator of USAID should be raised to a cabinet-level 
position.\16\ The preponderant view on this staff is that such 
a change would weaken rather than strengthen U.S. foreign 
assistance. The perception that development is intrinsically 
linked to national security would fade and Congressional 
support for funding would diminish still further. A foreign aid 
cabinet minister would be no match for the Department of 
Defense, the Department of the Treasury, or other cabinet 
departments in the effort to coordinate foreign aid. Equally 
important, at a time when the civilian side of the national 
security team needs strengthening, it would be split in two, 
with all the potential for rivalry and division of purpose that 
two cabinet agencies in foreign policy implies.
---------------------------------------------------------------------------
    \16\ Lael Brainard, ``Organizing U.S. Foreign Assistance to Meet 
Twenty-First Century Challenges,'' pp. 62-63 in Security by Other 
means: Foreign Assistance, Global Poverty and American Leadership, The 
Brookings Institution, 2007.
---------------------------------------------------------------------------
    When the DFA position was created, it was dual-hatted as 
both a State Department position with rank comparable to the 
level of Deputy Secretary and as the USAID Administrator. In 
the view of most but not all staff working on this project, 
this arrangement has not worked. The DFA has been too consumed 
with the coordination process to manage USAID and its programs 
and USAID has lost a prominent and high-level spokesperson to 
argue its case when there are differences between State and 
USAID. As a result, this report contains the recommendation 
that the USAID Administrator should revert to its previous 
status as a separate position.
    Some members of the staff working on this report disagreed. 
They favored continuing the dual-hatting of the Administrator 
of USAID and DFA. The argument rests on the view that such 
duality is the best way to preserve a USAID role in the 
coordination of all foreign assistance provided by U.S. 
Government agencies. The insights and experience of USAID staff 
are indispensible in formulating development policy. It was 
argued that a separation of the two positions would effectively 
relegate USAID to operations-only, diminishing the policy 
impact of development experts. To complement the dual-hatting 
of DFA and USAID at headquarters, it is also argued that other 
agencies should be required to obtain approval from USAID in 
the field before proceeding with their development projects. 
That opinion rests on the observation that USAID staff 
generally has a better sense of the opportunities and 
limitations on the ground than do other officials who are 
developing projects from Washington.

                     Regional and Country Findings


                           sub-saharan africa


    Foreign assistance to Africa has swelled significantly over 
recent years due to increases in HIV/AIDS funds, the 
President's Malaria Initiative, Millennium Challenge Account 
grants and humanitarian needs in conflict countries, including 
Darfur, Sierra Leone, and Liberia. Africa's share of bilateral 
aid was 8.8 percent in FY01 and will be some 30 percent in FY08 
if the administration's request is granted. Responding to the 
AIDS epidemic has been a critical focus, with funding in the 
health sector going from $344 million in 2001 to a proposed 
$3.9 billion in 2008. Traditional USAID programs funded under 
the Development Assistance account have been increasing, going 
from $424 million in 2001 to $490 million requested for 2008.
Botswana
    Botswana, with a population of 1.8 million people in an 
area almost the size of Texas, has had the fastest income 
growth in the world since its independence in 1966. Per capita 
income now stands at $5,530. Botswana's progress has been 
achieved through conservative fiscal policy and sound 
management of resources. Botswana has essentially transformed 
itself from a poor country to a middle-income country. Some of 
its success is due to its wise use of diamond mine revenues to 
fuel economic development. Mining, mainly diamonds and copper, 
is an important economic activity in the country, accounting 
for about 33 percent of the GDP. Financial services, 
subsistence farming, and cattle raising are also important. 
Tourism is quickly becoming one of the most important economic 
activities. Much like South Africa, Botswana must also deal 
with high unemployment and income disparity.
    Botswana has one of the highest HIV/AIDS rates in the 
world. There are an estimated 350,000 people living with HIV or 
AIDS, approximately one-sixth of the population. Botswana is 
fighting the disease with one of the most progressive and 
comprehensive programs in the region. Regardless of the 
progress made in treatment, however, the number of infected 
people continues to escalate.
    The U.S. Government considers Botswana to be a sustaining 
partnership country. For FY07, Botswana received $38.19 million 
in U.S. foreign assistance, of which $37 million is for HIV/
AIDS ($35.54 million through PEPFAR and $1.46 for the Peace 
Corps which is solely focused on HIV/AIDS). Smaller sums 
included $500,000 allocated for Foreign Military Financing, and 
$690,000 for International Military Education and Training 
under Peace and Security. The International Law Enforcement 
Academy (ILEA) has a branch in Gaborone that opened in 2003. 
The Government of Botswana has invested $5 million in the 
facility. The United States spends approximately $1.2 million 
on training elite police officers from 23 African and Indian 
Ocean nations.
    The Department of Defense has contributed to infrastructure 
needs by committing to build ten HIV/AIDS voluntary counseling 
and testing sites and a number of daycare centers for orphans 
and vulnerable children. Funding comes through DOD Humanitarian 
Assistance and is not represented in the ``F-process,'' the 
Operational Plan (which is a very small document due to lack of 
USAID presence), nor the Country Operational Plan (COP) which 
is a 580-page document.
    A major problem in the country is the lack of health care 
professionals. Botswana does not presently have a medical 
school and, since it is a relatively new country, there are no 
generational lineages of doctors. Botswana, unlike many other 
countries, does have the ability to pay doctors that come into 
the country, but immigration doesn't come close to meeting the 
demand. Language barriers and cultural differences with foreign 
doctors has also posed some problems. A number of U.S. 
hospitals and medical schools have collaborative programs in 
the country to not only treat patients, but also to help train 
medical personnel.
    Another hurdle to progress is the increase in the number of 
orphans. The United Nations Development Program (UNDP) 
estimates that by 2010, more than 20 percent of all the 
children in Botswana will be orphaned due to HIV. Staff members 
were consistently informed that a future HIV/AIDS 
reauthorization should be clean of earmarks, with the exception 
of the 10 percent set aside for orphans and vulnerable children 
(OVC).
    Overall, it appears that U.S. resources are making a 
difference in the country. However, in the long run, with 
technical assistance from the United States, Botswana should be 
able to maintain its HIV/AIDS program independently and should 
no longer need to be a PEPFAR Focus Country.
Ethiopia
    Ethiopia is a poor country with a per capita income of 
$160, and a population of 77 million people in an area larger 
than the states of Texas, Oklahoma and New Mexico combined. 
Unique among African countries, Ethiopia maintained its freedom 
from colonial rule with the exception of the 1936-41 Italian 
occupation during World War II. A constitution was adopted in 
1994, and Ethiopia's first multiparty elections were held in 
1995 with Prime Minister Meles Zenawi elected as Prime 
Minister. Meles has served as Prime Minister since then. A 
border war with Eritrea late in the 1990's ended with a peace 
treaty in December 2000 monitored by a UN peacekeeping mission 
(UNMEE). Elections in 2005 saw widespread violence in the 
capital Addis Ababa after parties opposing Meles accused the 
government of fraud. In the ensuing demonstration, government 
security forces opened fire on protestors, killing some 200 
people.
    Access to sufficient food is a major day-to-day issue for a 
vast number of Ethiopians. In an effort to meet the challenge, 
USAID is targeting assistance toward improving agricultural 
productivity and marketing capabilities.
    Policy makers must decide how to balance Ethiopia's 
generally supportive and productive efforts in the Global War 
on Terrorism (GWOT) with its deficiencies in democracy and 
governance. Whether the United States can effectively use 
mutual interests in GWOT activities and stability in the Horn 
of Africa as entree and leverage to improve the domestic 
political environment in Ethiopia is an open question. As a 
result of the government's repression of political opposition, 
little U.S. assistance has been targeted towards the military 
for either equipment or training.
    The U.S. Government considers Ethiopia to be a developing 
country. The bulk of U.S. assistance has been for the treatment 
of HIV/AIDS. It will top $409 million in FY08.
Ghana
    Ghana is a country of 23 million people in an area slightly 
larger than the states of Indiana and Illinois combined. Well 
endowed with natural resources, Ghana has roughly twice the per 
capita income of the poorest countries in West Africa at $450. 
Even so, Ghana remains heavily dependent on international 
financial and technical assistance. Gold, timber, and cocoa 
production are major sources of foreign exchange. The domestic 
economy continues to revolve around subsistence agriculture, 
which accounts for 37 percent of GDP and employs 60 percent of 
the work force, mainly small landholders.
    The United States hopes to help Ghana solidify democratic 
gains. Beginning in the 1990's, successful elections have 
established a trend toward peaceful and democratic transitions 
of government. Because of such strides, the country has 
received an MCC compact valued at over half a billion dollars 
over five years. This funding is focused on improving 
agriculture, infrastructure, and education. Such efforts, if 
successfully managed, will go far toward achieving Ghanaian 
goals of greater ``democratic dividends.''
    U.S. non-MCC assistance decreased after the announcement of 
the $547 million MCC compact signed in August 2006. Total U.S. 
assistance, exclusive of MCC funding, peaked in FY06 at some 
$70 million, dropped to $60 million in FY07, and dropped to a 
request of $41 million in FY08. The bulk of the FY08 drop 
results from a significant decrease in PL-480 food aid. Ghana 
is considered by the U.S. Government to be a transforming 
country.
    MCC funding will focus on improving Ghana's agricultural 
output and infrastructure related to transporting crops to 
Accra for export. In the area of rural development, the compact 
assistance is intended to bolster basic community services and 
service delivery. This will be done with, among other things, 
construction and rehabilitation of educational facilities, 
water sanitation and rural electrification. There is some 
concern that the five year time-line for the compact may be too 
short to complete the proposed projects, in particular the 
infrastructure improvements. In the area of education, USAID 
officials expressed the view that the MCC's focus on facilities 
is somewhat misplaced as the more serious problem is low 
teacher salaries, causing recruitment, attendance, and 
retention problems. They lacked full confidence in what they 
called the MCC's ``build it and they will come'' approach.
Liberia
    Liberia was founded as a republic in 1847 by freed slaves 
from the United States, thus establishing the close historical 
links between the two countries. The country of 3.8 million 
people is slightly larger than the state of Ohio.\17\
---------------------------------------------------------------------------
    \17\ Per capita income comparable to data supplied for other 
countries, via the World Bank Atlas Method, is not available.
---------------------------------------------------------------------------
    After more than a decade of authoritarian rule and civil 
war, democratic elections in late 2005 brought President Ellen 
Johnson Sirleaf to power. A former World Bank staffer and 
United Nations Development Program director, she is the first 
woman elected to lead any African country. Civil war and 
government mismanagement have destroyed much of Liberia's 
economy, especially the infrastructure in and around the 
capital, Monrovia. Following the destruction and looting of the 
hydro-electric plant, electricity is virtually non-existent and 
supplied only by individual generators. The lack of hydro-power 
is particularly appalling given that Monrovia is the world's 
wettest capital, with some 200 inches of rain falling each 
year. Many businesses have fled the country, taking capital and 
expertise with them. The country is heavily dependent on 
international support and remittances. The unemployment rate is 
roughly 85 percent.
    The U.S. Government considers Liberia to be a rebuilding 
country. U.S. policy in Liberia is to help create a stable, 
functioning democratic state on the ashes of a country rent by 
civil war. The United States, working closely with the United 
Nations and the 15,000 UN peacekeepers in the country, seeks to 
create viable government institutions. As such, U.S. assistance 
addresses all aspects of Liberian civil society from the 
judiciary to the police force to rebuilding Liberia's military. 
It is also aimed at Liberia's shattered economy and is 
logically focused on those areas where the country can produce 
revenue the fastest--through diamond and timber exports.
    U.S. assistance is fully in line with Liberia's own goals 
and has risen dramatically since the demise of Charles Taylor. 
In FY06, Liberia received $126 million and in FY07 $138 
million, a ``democracy dividend'' intended to help rebuild the 
country. Economic assistance is two-thirds of the total with 
military assistance as the remainder being spent on the 
professionalization of the armed forces.
Mozambique
    Mozambique has emerged from a debilitating thirteen-year 
civil war to become a recipient of significant amounts of U.S. 
and international assistance. It is a country of 20 million 
people who live in an area almost twice the size of California. 
The per capita income is $310. Despite strong economic growth 
since the end of the civil war in 1992, 54 percent of the 
population lives at or below $1 a day, while agriculture 
supports 80 percent of the population. Following three decades 
of conflict, Mozambique has remained among the poorest of 
countries but has shown economic dynamism in the last decade, 
averaging 8 percent annual growth. A severe, generalized HIV/
AIDS epidemic, with 16 percent prevalence rate among adults, is 
an overwhelming challenge for the country's limited health 
system and constrains further economic growth. \18\ With a 
1500-mile coastline, Mozambique has also been identified as a 
significant strategic partner on regional security issues.
---------------------------------------------------------------------------
    \18\ Mozambique ranks 168 out of 177 countries on the 2005 United 
Nations Development Program Human Development Index.
---------------------------------------------------------------------------
    The country and people of Mozambique face challenges 
similar to their African neighbors, including poverty, 
joblessness, and weak institutions, as well as occasional 
humanitarian emergencies, including the threat of refugee flows 
from Zimbabwe. Mozambique lacks the capacity for coastline 
policing and patrols and cannot contend with the challenges 
posed by illegal fishing and transit of vessels suspected of 
carrying illegal immigrants, drugs and weapons.
    Vestiges of the violent civil war remain as barriers to the 
fiscal and bureaucratic reform necessary following decades of 
colonial and socialist mismanagement. The government's 
limitations in effectively responding to social, political, or 
economic upheaval or natural disaster are evident. This was 
seen most recently in the massive explosion in the capital 
Maputo of a remnant weapons stockpile, igniting shells and 
rockets that rained down across the city killing dozens of 
people and destroying scores of buildings. Reflecting past 
suspicion and insecurity, initial international offers of 
assistance were rebuffed before the government finally allowed 
a degree of technical support to arrive from abroad.
    Three of the newer programs--PEPFAR, MCC, and PMI--are all 
present in Mozambique. In FY2006, Mozambique received 
approximately $143.3 million in U.S. assistance, an approximate 
doubling of U.S. assistance since FY01. These FY06 funds 
included $94.4 million for PEPFAR; $17.3 million in Child 
Survival and Health; $13.4 in Development Assistance; $2.34 in 
Non-Proliferation, De-Mining, Anti-Terrorism, and Related 
Programs (NADR); $250,000 in International Military Education 
and Training (IMET); $15.6 million in P.L. 480 Food Aid. In 
FY07, in addition to signing a 5-year, $506.9 million Compact 
with MCC, Mozambique received U.S. foreign assistance of $174 
million, including $17 million in anti-malaria assistance 
through PMI.
    In FY08, Mozambique is expected to receive nearly $300 
million in addition to MCC funds. Other U.S. Government funding 
includes State Department, a Treasury Department program 
training local police, Peace Corps, and occasional funding from 
the Departments of Justice and Labor. The U.S. Government 
considers Mozambique to be a transforming country.
Rwanda
    Rwanda is a poor landlocked country with rolling hills in 
east-central Africa. It is Africa's most densely populated 
country with almost 10 million inhabitants and a per capita 
income of $230 in an area roughly the size of Maryland.\19\ The 
primarily Catholic country is still recovering from a civil war 
and an eruption of genocidal rage in 1994 that killed nearly 
one million people and created close to two million refugees 
and thousands of orphans. Many women who were raped in the 
course of the civil war and genocide are now living with HIV/
AIDS.
---------------------------------------------------------------------------
    \19\ http://www.cia.gov/lirary/publications/the-world-factbook/
geos/rw.htm
---------------------------------------------------------------------------
    Despite substantial international assistance, the country 
continues to struggle to boost investment and agricultural 
output. Ethnic reconciliation is complicated by the real and 
perceived minority political dominance.\20\ Despite the 
government's attempt to create a new Rwanda that sees the 
population as ``Rwandans first,'' ethnic divisions and the 
psychological scars of the genocide still undermine progress.
---------------------------------------------------------------------------
    \20\ Ibid.
---------------------------------------------------------------------------
    The main U.S. foreign aid objective for Rwanda is helping 
the country overcome the legacy of its civil war and genocide. 
The country's under-five mortality is among the worst in 
Africa, with malaria the primary cause of death. Life 
expectancy for Rwandans is approximately 40 years. The country 
has a 3 percent HIV/AIDS prevalence rate, lower than was 
initially estimated by the international community.
    Rwanda is a PEPFAR focus country, a PMI focus country, and 
is being considered for an MCC threshold program. Under the new 
Strategic Framework, Rwanda is characterized as a developing 
country, a low- to lower-middle income country that is not yet 
meeting certain political and economic performance criteria.
    The ambassador maintains a table of all the assistance that 
U.S. agencies provide Rwanda. The total figure is $179.7 
million. His staff noted that it is difficult to track down 
some numbers as not all agencies are required to report the 
amounts directly to the ambassador. Ideally, every embassy 
should be tracking all U.S. foreign aid disbursed in country. 
At headquarters, the ``F process'' should be providing 
transparent, worldwide comparisons of such country-based 
information. It is difficult to obtain such information now. 
For example, a CRS estimate of U.S. foreign aid spending for 
Rwanda came up some $35 million short of the ambassador's 
accounting.
    Of the total, PEPFAR/Global HIV/AIDS Initiative (GHAI) 
funding totals $116 million for FY08. Economic Growth programs 
are to receive $10.3 million, Governing Justly and 
Democratically $2.3 million, and Peace and Security $0.4 
million.
    U.S. policy goals for Rwanda are clear but do not match 
U.S. funding priorities. The overall U.S. priority for Rwanda, 
as stated by the embassy, is to move the country from genocide 
recovery to peaceful growth. This was broken down into sub-
priorities: infrastructure, rural development, education, and 
health.

    Rwanda was reportedly designated a PEPFAR country without 
being consulted. However, the Rwandan government does not want 
to turn away U.S. assistance just because it doesn't address 
its priorities, because needs also exist in non-priority areas.
South Africa
    South Africa is almost the size of Texas, California and 
Michigan combined. It has been inhabited for thousands of years 
and has attracted immigrants from all over Africa, as well as 
Europe, China and South Asia. Apartheid, which assured that the 
white minority would control political power, dominated the 
political system until 1991. In April 1994, the first nonracial 
elections were held, and Nelson Mandela was elected president 
of the interim government.
    After Mandela stepped down in December 1997, his successor, 
Thabo Mbeki, began switching the government's focus from 
reconciliation to transformation, especially on the economic 
front. South Africa is now considered a middle-income country. 
It has an emerging market with abundant natural resources, a 
modern infrastructure, the tenth largest stock exchange in the 
world, and well-developed transportation, legal, financial, 
communications, and energy sectors.
    Nonetheless, South Africa still struggles with several 
economic problems which stem from the apartheid era. Per capita 
income is $4,820. Unemployment and poverty among disadvantaged 
groups are two of the biggest contemporary problems. Rampant 
crime, high HIV rates, and uneven access to basic services add 
to the development challenge.
    There are two South Africas. The first segment of the 
population has satellite television, goes to shopping malls, 
and uses the internet. A second larger segment lives in shanty 
towns with limited electricity and running water. The official 
unemployment rate is 26 percent, but is realistically closer to 
40 percent. The crime rate in South Africa is one of the 
highest in the world.
    South Africa is deeply afflicted by the AIDS epidemic. 
Around the millennium, President Mbeki denied that HIV/AIDS was 
a problem in South Africa. He started to acknowledge the 
presence of the disease among his people only three or four 
years ago. Currently, more than 5.5 million South Africans are 
infected with HIV, some 12 percent of South Africa's total 
population of 43 million, one of the highest concentrations in 
the world. An estimated 40 percent of all deaths are AIDS 
related. The long term economic stability of the country 
depends on getting the HIV infection rate under control, 
working out a treatment strategy to eventually take care of 
those infected, and establish a comprehensive plan to care for 
1.2 million orphans.
    The United States considers South Africa to be a sustaining 
partnership country. For FY07, South Africa received $362.94 
million in U.S. foreign assistance. Of this amount, $336.38 
million is allocated for the Global HIV/AIDS Initiative 
(PEPFAR). Development Assistance was $19.28 million in FY07 and 
ESF funding $980,000. Much of the focus is on economic growth 
among small and medium business enterprises that boost 
employment. Counternarcotics funding is $500,000 and the 
Nonproliferation, Anti-Terrorism, Demining, and Related Program 
will spend $100,000 for FY07. Military aid is only $50,000 from 
the International Military Education and Training program. As 
of now, South Africa has not signed an Article 98 agreement to 
allow for military assistance. Until there is legislative 
relief from the requirement that countries sign pledges that 
U.S. military personnel will not be referred for prosecution to 
the International Criminal Court, South Africa is prohibited 
from receiving U.S. security assistance to improve its 
military's strategic airlift, disaster response, and 
peacekeeping capabilities.
Tanzania
    Tanzania is a country in East Africa twice the size of 
California with roughly the same population, 37 million people. 
The large country has a primarily agricultural economy with 
coffee, cashews and spices (cloves) comprising the main 
exports. Per capita GDP is $340 and average life expectancy 
hovers around 50 years of age.\21\ Over one-third of the 
population lives in abject poverty.
---------------------------------------------------------------------------
    \21\ Ibid.
---------------------------------------------------------------------------
    Comprised of mainland Tanganyika and the island of Zanzibar 
(actually made up of two different islands--Unguja and Pemba), 
the country has a unique political framework with a President, 
Prime Minister and Parliament that governs the United Republic 
of Tanzania. Zanzibar has its own President and Parliament that 
make policy independently of the United Republic on such 
domestic issues as education, social policy, and taxes, while 
leaving foreign policy and defense to the central government.
    The U.S. Government considers Tanzania to be a transforming 
country. Currently, the U.S. is giving Tanzania roughly $300 
million in aid for FY07 and the FY08 request is $393 million. 
Tanzania is a unique recipient of U.S. foreign assistance in 
that it currently receives funding from USAID, the PEPFAR, PMI, 
and the Department of Defense. Tanzania is an Millennium 
Challenge Corporation (MCC) threshold country and recently 
finalized an MCC compact of almost $700 million, making it one 
of only two countries to concurrently have an MCC threshold 
program and an MCC compact. The Ambassador provided a table 
summarizing all U.S. Government assistance.
    Tanzania is an important U.S. partner in the war on terror. 
The 1998 bombing of the U.S. embassy demonstrated the impact 
only small numbers of extremists can have against U.S. 
interests. The number one mission priority in the FY09 Mission 
Strategic Plan (MSP) is enhancing Tanzania's counterterrorism 
capabilities.
    Significant challenges facing Tanzania include corruption, 
access to clean water, provision of electricity/energy, weak 
infrastructure, inflation and food shortages. In addition, the 
country faces problems in the area of health with a 7 percent 
HIV/AIDS prevalence rate. Tanzania has made major strides in 
the fight against malaria, bringing the malaria prevalence rate 
in Zanzibar to under 1 percent. Although it has enjoyed 
democratic elections, the most recent election in Zanzibar was 
marred by charges of irregularity and fraud from international 
election observers.
    U.S. policy goals for Tanzania are complex given the 
variety of competing organizations and actors. The bulk of U.S. 
assistance (over 80 percent) is going to fund health related 
projects, predominantly HIV/AIDS via PEPFAR with a significant 
amount also going toward malaria eradication programs under 
PMI. However, U.S. funding levels do not match up with the 
priorities as laid out under the Ambassador's mission plan:

   enhancing counterterrorism capability;

   improving health and education;

   strengthening democracy;

   promoting regional stability;

   spurring economic growth;

   influencing public opinion among Muslims; and

   efficient resource management.

    Counterterrorism assistance is the top priority under the 
mission plan but receives a negligible amount of total funding. 
The mission's primary objective for FY09 is to establish a 
national interagency counterterrorism center that will work 
closely with Washington but as of yet there are no specific 
plans in motion for breaking ground on such a center. The vast 
majority of Tanzania's aid through USAID for FY08 was 
concentrated in Investing in People that funds health and 
education programs. Peace and Security, Economic Growth and 
Governing Justly and Democratically received small amounts of 
funding. Tanzanian officials and residents most often cite 
education, economic growth, lack of educated workers and poor 
infrastructure as the main challenges facing their country. 
Health, however, was never mentioned as the number one problem 
facing the country and yet this is where over 80 percent of 
U.S. funding is going.
Zambia
    Zambia is a southern Africa country of 11.5 million people, 
roughly the size of Texas. It is a recipient favored by the 
United States and other donors because of its stability and 
moderate, reform-minded government. Since independence in 1964, 
its economic development has been limited, barely surpassing 
that of even its most unstable or war-torn neighbors. Its per 
capita income is $500.
    Apart from America's interest in fostering economic growth 
and political stability in sub-Saharan Africa, the United 
States has limited strategic interests in Zambia. Zambia is a 
well-regarded voice in the region, however, on issues of 
particular interest to the United States and continues its 
helpful role as a regional arbiter. Zambian President Levy 
Mwanawasa's posture towards Zimbabwean President Robert 
Mugabe's economic mismanagement has been cautious, though he 
has compared Zimbabwe to the ``sinking Titanic whose passengers 
are jumping out to save their lives.'' Zambia has also issued 
one of the strongest statements from an African country against 
the mass killing in Darfur.
    Zambia has become one of the largest recipients of U.S. 
assistance in Africa due in large part to the emergency 
response to the devastating AIDS epidemic. Recent high level 
U.S. official visits, including that of First Lady Laura Bush 
and former President Bill Clinton, have highlighted efforts to 
combat AIDS as well as the increased interest in warm relations 
between our countries. Additional assistance is flowing 
following significant debt relief through the Highly Indebted 
Poor Country (HIPC) program in 2005-2006. Zambia hopes to 
become eligible for a Millennium Challenge Compact in the near 
future.
    As with its neighbors, Zambia's greatest challenge is HIV/
AIDS. It infects 16 per cent of the population and has caused 
average life expectancy at birth to plummet to 32.7 years. 
Corresponding to the challenge, U.S. assistance to Zambia's 
health sector comprised over 83 per cent of total U.S. 
assistance to Zambia for FY07; for FY08, this proportion is 
expected to increase to 91 per cent. Total U.S. assistance to 
Zambia has swelled over 380 per cent between FY01 and FY07; if 
the FY08 request is approved, assistance will have expanded by 
770 per cent over the same period.
    The United States considers Zambia to be a developing 
country. Total U.S. Government assistance obligated for Zambia 
in 2006 was approximately $268 million. These funds provided a 
variety of technical assistance and other support that is 
managed by the Department of State, U.S. Agency for 
International Development, Millennium Challenge Corporation 
(MCC) Threshold Program, Centers for Disease Control, 
Department of Treasury, Department of Defense, and Peace Corps. 
The majority of assistance was provided through PEPFAR. In 
addition to supporting development projects, the United States 
has provided considerable emergency food aid during periods of 
drought through Title II.
    USAID administered more than $141 million in obligated 
funding for 2006. This included the management of over $70 
million for PEPFAR and $22 million for the MCC threshhold 
program assistance to Zambia to fight corruption, reduce 
administrative barriers, and make customs clearance more 
efficient to improve trade. During 2006, in addition to PEPFAR 
and MCC, USAID focused on the following:

   Increasing private sector competitiveness;

   Improving quality of basic education for more school-aged 
        children;

   Improving health status of Zambians; and

   Mitigating the impact of HIV/AIDS through a multi-sectoral 
        response.


                             latin america


    Foreign assistance for Latin America can vary from year to 
year depending on budgets for large programs. With such 
variations along the way, it has risen since the start of the 
administration, increasing from $862 million in FY 2001 to a 
requested $1.4 billion in FY 2008.\22\ Assistance to Colombia 
has been a critical focus as the U.S. Government tries to help 
the country work toward lasting peace and counter the role of 
narcotics. The MCC is working with seven countries in Latin 
America and has compacts with El Salvador, Honduras, and 
Nicaragua and threshold programs in Guyana and Paraguay. Haiti 
and Guyana are PEPFAR focus countries. There has been a modest 
shift away from traditional USAID programs in education, 
environment and humanitarian assistance, with the 2008 request 
showing a 4 percent decline in such programs from the previous 
year.\23\ The administration defends a gradual reorientation of 
foreign assistance to some Latin American countries, arguing 
that progress in those countries warrants a more intense focus 
on economic growth and the creation of jobs to help consolidate 
democratic gains.
---------------------------------------------------------------------------
    \22\ USAID Administrator Tobias statement, House Appropriations 
Committee, Subcommittee on State, Foreign Operations, and Related 
Agencies, March 8, 2007.
    \23\ Congressional Research Service Report RL32487 U.S. Foreign 
Assistance to Latin America and the Caribbean, March 28, 2006, Connie 
Veillette, Clare Ribando Seelke, and Mark P. Sullivan, Foreign Affairs, 
Defense and Trade Division, CRS.
---------------------------------------------------------------------------
Bolivia
    Bolivia is one of the poorest countries in the Western 
Hemisphere with a per capita income slightly more than 
$1,000.\24\ It has a population of 9.8 million people in a 
country the size of Texas and California combined. For the past 
several decades, Bolivia has progressed significantly on both 
political and economic fronts. In the last 5 years, however, 
social and economic divisions have become more prominent, coca 
cultivation has proceeded apace, and longstanding ethnic and 
regional tensions are now occupying center stage.
---------------------------------------------------------------------------
    \24\ GDP data in this section is from World Bank, Atlas Method.
---------------------------------------------------------------------------
    U.S. priorities in Bolivia are: strengthening institutions 
of government and the consolidation of democracy; reducing 
narcotics production and trafficking; and improving the climate 
for private investment and making sure that the Andean Trade 
Preference and Drug Eradication Act (ATPDEA) is extended. U.S. 
assistance is generally in line with the Bolivian government's 
stated priorities, as projects are formulated with transparency 
and host government consent.
    The United States Government considers Bolivia a 
transforming country and is providing economic and military 
assistance totaling approximately $120.77 million during FY07. 
The level of assistance has been going down for the past three 
years. The USAID budget in Bolivia accounts for the majority of 
U.S. bilateral assistance totaling approximately $85.7 million 
in FY07. It supports activities that consolidate democracy, 
help achieve broad-based equitable and sustainable development, 
and reduce narcotics production and trafficking. USAID's 
programs are intended to address the key issues of poverty and 
social exclusion by focusing primarily (but not exclusively) on 
the rural population.
    For the last three years, MCC has selected Bolivia as 
eligible to compete for funding, but no compact has yet been 
signed. The Bolivian government is now in the process of 
revising its 2005 proposal and hopes to have plans approved 
soon so that compact negotiations with the MCC can begin.
Honduras
    Honduras has a population of 7.3 million people with a per 
capita income of $1,120 in an area slightly larger than the 
state of Tennessee. It is one of the poorest and least 
developed countries in Latin America with a GNP of $894 million 
and nearly two thirds of the population living in poverty.
    The country has enjoyed a relatively long history of stable 
democracy compared to its neighbors. Unfortunately the country 
is plagued by the same problems facing much of the region: 
rampant and pervasive corruption at all levels of government, 
malnutrition, poverty, high infant mortality and school drop 
out rates, escalating crime, and drug trafficking. Arguably the 
most violent country in the region with a murder rate more than 
nine times that of the United States, Honduras is facing a 
rapid rise in gang-related crime that threatens to undermine 
progress made toward improving the climate for private 
investment. The gangs are also increasingly linked to narco-
trafficking. Honduras is currently classified as a transit drug 
country rather than a production country, but its geographic 
location and port make it a critical link in the drug trade.
    Honduras has been a long-time U.S. ally with a relationship 
that dates back to the early 1900's when U.S. banana companies 
began building up a sizable presence in the country. U.S. 
influence in Honduras expanded in the 1980's when the U.S. 
sought to leverage the positive relationship between the two 
countries against the Sandinista government in Nicaragua. Total 
U.S. assistance to Honduras during the 1980's reached almost 
$1.6 billion. This amount of consistent, substantial foreign 
assistance clearly did not boost economic progress to the 
extent that might have been hoped. By the early 1990's, at the 
end of the contra war, U.S. foreign aid began to decline. Peace 
in the region diminished the attentiveness of U.S. policymakers 
as other regions of the globe received higher priority for 
funding. However, the devastation caused by Hurricane Mitch in 
1998 resulted in almost $300 million in U.S. recovery 
assistance to Honduras. In addition, the United States has 
provided substantial support through debt forgiveness: in 
September 1991, it forgave $434 million in official bilateral 
debt. In 2005, Honduras reached the completion point under the 
HIPC initiative and qualified for multilateral debt relief.
    U.S. Government priorities in Honduras are:

   Regional security: focus on controlling the increase in 
        violence (mostly gang related) as well as using Soto 
        Cano military base as a way of coordinating security in 
        the region, specifically in terms of counter narcotics.

   Good governance: focus on rule of law and critical judicial 
        reform in an attempt to combat rampant corruption. Also 
        increase accountability of public institutions.

   Poverty reduction/economic development: specifically 
        relating to implementing and maximizing the impact of 
        the CAFTA and building trade capacity.

   Investing in people: specifically education and health 
        related programs. Focus on expanding access to 
        education for all levels as well as developing 
        accountability systems such as standardized testing and 
        evaluations.

    The U.S. Government considers Honduras to be a transforming 
country. Honduras signed a compact with the MCC in June 2005. 
The MCC program totals $215 million and is focusing on building 
roads and developing the agricultural sector. The total USAID 
budget for FY07 in Honduras was $46.8 million, down from $53.7 
million in FY05 and $53.1 million in FY06. The request for FY08 
is $42.5 million.
Nicaragua
    Nicaragua is the second poorest country in the hemisphere 
after Haiti, with a GNP per capita of $950 and a population of 
5.1 million. Slightly larger than the state of Michigan, it is 
a major transit point for drugs coming from Colombia and 
elsewhere in South America. Democratic roots remain shallow 
following the Sandinista government's war against the U.S-
backed contras in the 1980's, a conflict that devastated the 
economy as well as many political institutions. Corruption is 
endemic, especially in the court system. Malnutrition is a 
serious problem, the literacy rate is 67 percent and the 
educational system is considered weak. Electricity is 
unavailable for about eight hours a day in the capital. The 
nation faces a fresh political challenge with the election as 
president last November of former Sandinista rebel leader 
Daniel Ortega.
    Nicaragua has made enough progress according to MCC 
indicators to qualify in the first wave of MCC countries. As a 
result, the country entered into an MCC compact in 2006 which 
will provide $175 million for a regionally concentrated 
economic development project, including infrastructure 
development, land-titling and property rights and crop 
diversification.
    Given the political, economic, social and drug trafficking 
concerns, U.S. assistance has included military, education, 
nutrition and health, democracy and governance, and economic 
development programs. Developed prior to MCC eligibility, a 
USAID five-year plan, 2003-2008, called for $279 million in 
total assistance, but in the end the money received fell short 
by $42 million. All the cuts came in the economic growth 
program.
    The U.S. Government considers Nicaragua to be a 
transforming country. Last year, owing to the elections, about 
30 percent of USAID's budget for the country went for democracy 
and election efforts, but that is now being scaled back to a 
more normal 20 percent. The USAID budget for FY 2006 was $48.5 
million, the planned FY07 figure is $35 million, and the 
projected FY08 figure is $27.2 million. Embassy officials 
attribute this drop in traditional USAID assistance to the MCC 
and to the F-process classification of Nicaragua as a 
``transforming'' country, better off than a ``developing'' 
country. Embassy officials said the halving of AID money and 
staff could cause political problems for U.S. policy if 
President Ortega chooses to make an issue of it. President 
Ortega does support the MCC work in Nicaragua.
    U.S. military assistance to Nicaragua is expected to be 
$10.2 million in 2007 and was $4.4 million in 2006, much of 
which went towards training and equipment in counter-narcotics. 
Nicaragua has earned high marks for its drug seizure 
operations, and the army is considered apolitical and a source 
of stability. Its approval rating is around 90 percent.
Peru
    Peru has a population of almost 28 million people with a 
per capita income of about $2,640 in a country three times the 
size of California. Between 2001 and 2006, the Peruvian economy 
grew by an average of six percent, one of the highest growth 
rates in Latin America. Though Peru has benefited from 
sustained economic growth, almost half of Peruvians still live 
in poverty and 18 percent live in extreme poverty. President 
Alvaro Garcia is trying to lead Peru toward prosperity by 
consolidating democratic gains and by tying the country's 
economy to free markets and free trade.
    U.S. Government priorities in Peru are: (1) Counter-
narcotics and alternative development; (2) Spreading the 
benefits of economic growth, including improvements in the 
public health and education systems, to the long-neglected 
majority of Peruvians; and (3) Strengthening national 
government institutions to address low levels of confidence in 
democracy.
    The U.S. Government provides assistance to the Government 
of Peru totaling in FY07 approximately $143 million in economic 
and military aid. Such assistance was $159 million in FY05 and 
$142 million in FY06. The request for FY08 is only $90 million, 
reflecting a drop in the narcotics control and Andean 
counterdrug initiative account. The U.S. Government considers 
Peru to be a developing country.
    The USAID budget in Peru accounts for the most significant 
portion of U.S. bilateral assistance. It totaled $80 million 
for FY07 and is used for activities that emphasize trade-led 
economic growth and increased market access for micro, small 
and medium enterprises. Limited government presence in the 
highlands and jungle allows illegal coca cultivation, drug 
trafficking, and illegal logging. Remnants of the Shining Path 
terrorist group continue to threaten and intimidate some 
communities, and remote areas suffer from poor health care. 
USAID programs offer alternatives to illicit coca and 
strengthen government effectiveness to provide services in 
health, education, and environmental management in areas most 
affected by illegal drug cultivation. In the governance sector, 
perceptions of unresponsiveness to citizens' demands and an 
inability to deliver services effectively and transparently 
result in a continuing low level of confidence in democratic 
institutions. USAID works to improve the accountability and 
effectiveness of selected regional and local governments and to 
encourage constructive dialogue with citizen groups. A free 
trade pact with Peru is still awaiting action in the U.S. 
Congress.


                          east and south asia


    The United States has raised military, economic, and 
development assistance primarily for counterterrorism 
objectives in the East Asia-Pacific (EAP) and South Asia 
regions, with Pakistan, India, the Philippines, and Indonesia 
receiving the bulk of the increases. Average annual funding for 
the EAP region (excluding North Korea) during 2002-2006 was 
$494 million compared to $368 million in 2001. Annual foreign 
aid spending for South Asia (excluding Afghanistan) during 
2002-2006 averaged $953 million compared with $201 million in 
2001.\25\
---------------------------------------------------------------------------
    \25\ Congressional Research Service Report RL31362 U.S. Foreign Aid 
to East and South Asia: Selected Recipients, August 22, 2007, Thomas 
Lum, Specialist in Asian Affairs, Foreign Affairs, Defense, and Trade 
Division.
---------------------------------------------------------------------------
    For FY08, South and Central Asia would see an increase of 
nearly 7 percent, largely due to assistance to Afghanistan and 
Pakistan. The Near East would receive a 5 percent increase, 
mainly due to Iraq assistance. Funding to the East Asia and the 
Pacific region would increase by 2 percent.
Bangladesh
    Bangladesh, a primarily Muslim country, is one of the 
world's most densely populated with 147 million inhabitants in 
an area roughly the size of Wisconsin. Given the location of 
the country on a flood plain, the nation is vulnerable to 
repeated floods, droughts, and cyclones which routinely 
devastate the largely agricultural economy. Infrastructure is 
very poorly developed and only about 30 percent of the 
population has access to electricity. It is one of the poorest 
counties in the world with a per capita income of $470 per 
year.\26\
---------------------------------------------------------------------------
    \26\ http://www.devdats.worldbank.org/AAG/bgd


                              ----------                              

                              Appendix IV

                              ----------                              


                   Reports Prepared by Embassy Staffs

    Upon request, one embassy compiled a one-year snapshot of 
the time and staffing needed to prepare reports required by 
headquarters or by Congress. The following table was submitted 
by Embassy Maputo to illustrate its workload in preparing such 
reports. The post in Mozambique has a 308-person staff, 
including 242 employees hired locally, and is considered a 
medium-size embassy. According to the embassy, the reports 
require staff to collect and analyze a broad range of 
information on a number of different topics from a variety of 
different country sources. The reports vary in size. Several 
are hundreds of pages and one exceeded a thousand pages. Report 
preparation obviously reduces time available for such other 
embassy activities as staff interaction with host country 
nationals, U.S. development partners, and other international 
donors. The table illustrates at least one reason why 
additional reporting requirements are resisted at post.


          Reporting Requirements and Associated Staff/Workload
------------------------------------------------------------------------
                                 Number of Staff     Number of Work Days
       Type of Report               Involved         to Complete Report
------------------------------------------------------------------------
                   DEPARTMENT OF STATE (EMBASSY-WIDE)
------------------------------------------------------------------------
Mission Strategic Plan......                    15                    12
Operational Plan--                              15                    55
 Performance Report.........
Operational Plan--Fiscal                        15                    65
 Year Planning..............
========================================================================
            DEPARTMENT OF STATE (ECONOMIC/COMMERCIAL SECTION)
------------------------------------------------------------------------
Human Rights Report.........                     5                    20
Trafficking in Persons                           5                    15
 Report.....................
International Religious                          5                     7
 Freedom Report.............
Worst Forms of Child Labor                       5                     7
 Report.....................
International Narcotics                          5                     7
 Strategy Report............
International Narcotics                          5                     7
 Strategy Report II.........
Country Commercial Guide....                     5                    12
AGOA Eligibility Report.....                     5                     5
527 Report (Investment                           5                     2
 Disputes Report)...........
AGOA--President's Report....                     5                     3
Investment Climate Statement                     5                     4
USITC Information Requests/                      5                   1-2
 sector reports (various)...
957 Report..................                     5                     1
========================================================================
         DEPARTMENT OF STATE (MANAGEMENT/ADMINISTRATIVE SECTION)
------------------------------------------------------------------------
Chief of Mission Statement..                     5                     2
Mission Strategic Plan (MSP)                    20                    14
 (Administrative Section
 time/resources)............
Input into Other Post                            5                     6
 Strategic Plans (Foreign
 Assistance Plan,
 Operational Plan, Country
 Operational Plan, Mission
 Operation Plan for other
 Foreign Assistance)........
Post Report.................                     2                     2
Staffing Pattern Report.....                     1                     2
Post Profile................                     1                     2
Education Allowance Report..                     1                   0.5
Overseas Childcare Report...                     1                    10
Family Member Employment                         1                    10
 Report.....................
Office of Overseas School                        1                    10
 Summary Information Report.
CLO Activity Report.........                     1                     2
Retail Price Schedule.......                     1                     5
Cost of Living Allowance                         2                    20
 Survey.....................
Inventory Report of                              1               ongoing
 Expendable and Non-
 Expendable Supplies........
Real Estate Report..........                     1               ongoing
Vehicle Report..............                     1                     5
Prompt Pay Act Reporting &                       3                     2
 Certification..............
Certification of                                 5                     3
 Unliquidated Obligations...
Procurement Activities                           1               ongoing
 Reporting..................
Right-sizing Reports........                    10                     6
Monthly Medical Statistics                       1                     1
 Reports....................
Monthly Medical Utilization                      1                   0.5
 Review.....................
========================================================================
                                  USAID
------------------------------------------------------------------------
Operational Plan--                              38                    55
 Performance Report (USAID
 time/resources)............
Operational Plan--Fiscal                        38                    65
 Year Planning (USAID time/
 resources).................
Performance and                                 11                    10
 Accountability Report......
Environmental Compliance                         5                     4
 Report.....................
Disability Report...........                     2                     3
Global Development Alliances                     8                     2
 Report.....................
Initiative to End Hunger for                    11                    15
 African Report.............
Evaluation List Report......                     5                     3
Closeout Report.............                    15                    25
Congressional Budget                            38                    20
 Justification..............
Congressional Notification..                     5                     8
Earmark Reports.............                    38                    15
PEPFAR--Country Operational                     55                    65
 Plan (USAID time/resources)
PEPFAR--Annual Report (USAID                    55                    35
 time/resources)............
PMI (Malaria Operational                         7                    25
 Plan) (USAID time/
 resources).................
Micro-enterprise Report.....                     5                    10
Mission Strategic Plan                          15                    12
 (USAID time/resources).....
PL 480 Reporting Cable......                     4                    10
FMFIA (Mission-wide                             45                    15
 reporting).................
Environment Reporting IEE...                    38                    30
Program Audit Reporting.....                    12                    15
Report on Reports                                3                     2
 (individual taskings)......
Global Climate Change                            5                     3
 Reporting..................
Biodiversity Reporting......                     5                     3
Water Report for Congress...                     2                     3
Country Strategic Plan                         152                   150
 (every other year or so)--
 Mission Wide...............
Donor Reporting.............                     4                    15
========================================================================
                                   CDC
------------------------------------------------------------------------
COP Development.............                    21                    30
Response to Core Team                           10                     3
 comments--COP review.......
Reprogramming COP (due to CR                     5                    15
 for 2007)..................
Plus-ups (OGAC).............                    21                    10
Reprogramming (OGAC and                         13                     5
 headquarters)--each time...
Reprogramming/Carryover (CDC                    17                     5
 or MOH)....................
SAPR (Semi-Annual Report)...                    10                    15
APR (Annual Report).........                    10                    15
========================================================================
                          DEPARTMENT OF DEFENSE
------------------------------------------------------------------------
Congressional Report on                          1                     2
 International Military
 Training (CRIMT)...........
------------------------------------------------------------------------


USG Agencies Operating in Mozambique:

Department of State, Department of Defense, U.S. Agency for 
        International Development, Center for Disease Control, 
        U.S. Trade and Development Agency, Department of Labor, 
        U.S. Trade Representative, Department of Commerce, 
        OPIC, Millennium Challenge Corporation, Ex-Im Bank, 
        Department of Justice, Department of Agriculture, Peace 
        Corps, Department of Interior.
                               Appendix V

                              ----------                              


                    Operational Plan Program Matrix

    The Standardized Program Structure table below is used in 
each embassy's OP to demonstrate how foreign assistance is 
being distributed in the host country. Only State and USAID 
funding is included in the OP. MCC, PEPFAR, DOD foreign 
assistance, and U.S. domestic agency foreign aid activities are 
not included.

                          PEACE AND SECURITY A1
------------------------------------------------------------------------
          Program Area                       Program Elements
------------------------------------------------------------------------
Counter Terrorism A01             1.1 Deny Terrorist Sponsorship,
                                   Support and Sanctuary--A001
                                  1.2 De-Legitimize Terrorist Ideology--
                                   A002
                                  1.3 Governments' Capabilities--A003
                                  1.4 Program Support--A004
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Combating Weapons of Mass         2.1 Control WMD Proliferation and
 Destruction (WMD) A02             Combat WMD Terrorism--A005
                                  2.2 Program Support--A006
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Stabilization Operations and      3.1 Operations Support--A007
 Security Sector Reform A03       3.2 Disarmament, Demobilization &
                                   Reintegration (DDR)--A008
                                  3.3 Destruction and Security of
                                   Conventional Weapons--A009
                                  3.4 Explosive Remnants of War (ERW)--
                                   A010
                                  3.5 Immediate Protection of Civilians
                                   in Conflict--A011
                                  3.6 Defense, Military, and Border
                                   Security Restructuring, Reform and
                                   Operations--A012
                                  3.7 Law Enforcement Restructuring,
                                   Reform, and Operations--A013
                                  3.8 Program Support--A014
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Counter-Narcotics A04             4.1 Eradication--A015
                                  4.2 Alternative Development and
                                   Alternative Livelihoods--A016
                                  4.3 Interdiction--A017
                                  4.4 Drug Demand Reduction--A018
                                  4.5 Program Support--A019
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Transnational Crime A05           5.1 Financial Crimes and Money
                                   Laundering--A020
                                  5.2 Intellectual Property Theft,
                                   Coporate Espionage, and Cyber
                                   Security--A021
                                  5.3 Trafficking-in-Persons and Migrant
                                   Smuggling--A022
                                  5.4 Organized and Gang-related Crime--
                                   A023
                                  5.5 Program Support--A024
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Conflict Mitigation and           6.1 Conflict Mitigation--A025
 Reconciliation A06               6.2 Peace and Reconciliation
                                   Processes--A026
                                  6.3 Preventive Diplomacy--A027
                                  6.4 Program Support--A028
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
                                  SUBTOTAL
------------------------------------------------------------------------


                  GOVERNING JUSTLY & DEMOCRATICALLY A2
------------------------------------------------------------------------
          Program Area                       Program Elements
------------------------------------------------------------------------
Rule of Law and Human Rights A07  1.1 Constitutions, Laws, and Legal
                                   Systems--A029
                                  1.2 Judicial Independence--A030
                                  1.3 Justice System--A031
                                  1.4 Human Rights--A032
                                  1.5 Program Support--A033
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Good Governance A08               2.1 Legislative Function and
                                   Processes--A034
                                  2.2 Public Sector Executive Function--
                                   A035
                                  2.3 Local Government and
                                   Decentralization--A036
                                  2.4 Anti-Corruption Reforms--A037
                                  2.5 Governance of the Security Sector--
                                   A038
                                  2.6 Program Support--A039
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Political Competition and         3.1 Consensus-Building Processes--A040
 Consensus-Building A09           3.2 Elections and Political Processes--
                                   A041
                                  3.3 Political Parties--A042
                                  3.4 Program Support--A043
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Civil Society A10                 4.1 Civic Particiaption--A044
                                  4.2 Media Freedom and Freedom of
                                   Information--A045
                                  4.3 Program Support--A046
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
                                  SUBTOTAL
------------------------------------------------------------------------


                         INVESTING IN PEOPLE A3
------------------------------------------------------------------------
          Program Area                       Program Elements
------------------------------------------------------------------------
Health A11                        1.1 HIV/AIDS--A047
                                  1.2 Tuberculosis--A048
                                  1.3 Malaria--A049
                                  1.4 Avian Influenza--A050
                                  1.5 Other Public Health Threats--A051
                                  1.6 Maternal and Child Health--A052
                                  1.7 Family Planning and Reproductive
                                   Health--A053
                                  1.8 Water Supply and Sanitation--A054
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Education A12                     2.1 Basic Education--A055
                                  2.2 Higher Education--A056
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Social Services and Protection    3.1 Policies, Regulations, and
 for Especially Vulnerable         Systems--A057
 Populations A13                  3.2 Social Services--A058
                                  3.3 Social Assistance--A059
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
                                  SUBTOTAL
------------------------------------------------------------------------


                           ECONOMIC GROWTH A4
------------------------------------------------------------------------
          Program Area                       Program Elements
------------------------------------------------------------------------
Macroeconomic Foundation for      1.1 Fiscal policy--A060
 Growth A14                       1.2 Monetary policy--A061
                                  1.3 Program Support--A062
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Trade & Investment A15            2.1 Trade and Investment Enabling
                                   Environment--A063
                                  2.2 Trade and Investment Capacity--
                                   A064
                                  2.3 Program Support--A065
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Financial Sector A16              3.1 Financial Sector Enabling
                                   Environment--A066
                                  3.2 Financial Services--A067
                                  3.3 Program Support--A068
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Infrastructure A17                4.1 Modern Energy Services--A069
                                  4.2 Communications Services--A070
                                  4.3 Transport Services--A071
                                  4.4 Program Support--A072
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Agriculture A18                   5.1 Agricultural Enabling Environment--
                                   A073
                                  5.2 Agricultural Sector Productivity--
                                   A074
                                  5.3 Program Support--A075
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Private Sector Competitiveness    6.1 Business Enabling Environment--
 A19                               A076
                                  6.2 Private Sector Productivity--A077
                                  6.3 Workforce Development--A078
                                  6.4 Program Support--A079
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Economic Opportunity A20          7.1 Inclusive Financial Markets--A080
                                  7.2 Policy Environment for Micro and
                                   Small Enterprises--A081
                                  7.3 Strengthen Microenterprise
                                   Productivity--A082
                                  7.4 Inclusive Economic Law and
                                   Property Rights--A083
                                  7.5 Program Support--A084
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Environment A21                   8.1 Natural Resources and
                                   Biodiversity--A085
                                  8.2 Clean Productive Environment--A086
                                  8.3 Program Support--A087
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
                                  SUBTOTAL
------------------------------------------------------------------------


                       HUMANITARIAN ASSISTANCE A5
------------------------------------------------------------------------
          Program Area                       Program Elements
------------------------------------------------------------------------
Protection, Assistance and        1.1 Protection and Solutions--A088
 Solutions A22                    1.2 Assistance & Recovery--A089
                                  1.3 Program Support--A090
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Disaster Readiness A23            2.1 Capacity Building, Preparedness,
                                   and Planning--A091
                                  2.2 Mitigation--A092
                                  2.3 Program Support--A093
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
Migration Management A24          3.1 Protection and Assistance--A094
                                  3.2 Institutional Support and Capacity-
                                   building--A095
                                  3.3 Program Support--A096
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
                                  SUBTOTAL
========================================================================
Cross-Cutting Management and      6.1 Program Support--A097
 Staffing A25
                                 ---------------------------------------
                                  Subtotal
------------------------------------------------------------------------
                                  TOTAL
------------------------------------------------------------------------

                              Appendix VI

                              ----------                              


                                Acronyms

    ACI--Anti-Corruption Initiative

    AFRICOM--African Command

    AGOA--African Growth and Opportunity Act

    AIDS--Acquired Immune Deficiency Syndrome

    APR--Annual Program Results

    ATPDEA--Andean Trade Preference and Drug Eradication Act

    ARV--Anti-retrovirals

    CAFTA--Central America Free Trade Agreement

    CCIF--Combatant Commander Initiative Fund

    CDC--Center for Disease Control

    CERP--Commanders Emergency Response Program

    CLO--Community Liaison Office

    COP--Country Operational Plan

    COM--Chief of Mission (ambassador)

    CR--Continuing Resolution

    CRIMT--Congressional Report on International Military 
Training

    CRS--Congressional Research Service

    CSH--Child survival and health account

    DA--Development assistance account

    DCM--Deputy Chief of Mission

    DF--Democracy Fund

    DFA--Director of Foreign Assistance

    DOD--Department of Defense

    DRL--Democracy Human Rights and Labor Bureau, State 
Department

    EAP--East Asia/Pacific Bureau, State Department

    ERMA--Emergency Refugee and Migration Assistance

    ESF--Economic Support Funds account

    EU--European Union

    EUCOM--European Combatant Command

    EUR/ACE--U.S. Assistance Coordinator for Europe and Eurasia

    FMF--Foreign Military Financing

    FMFIA--Federal Managers Financial Integrity Act

    FSA/SEED--Freedom and Support Act/Support for Eastern 
European Democracy

    GHAI--Global HIV/AIDS Initiative

    GDP--Gross Domestic Product

    GNP--Gross National Product

    GWOT--Global War on Terrorism

    HCA--Humanitarian and Civic Assistance

    HHS--Health and Human Services Department

    HIPC--Highly Indebted Poor Country

    HIV--Human Immunodeficiency Virus

    IDFA--International Disaster and Famine Assistance

    ILEA--International Law Enforcement Agency

    IMET--International Military Education and Training

    INCLE--International Narcotics Control and Law Enforcement

    MCA--Millennium Challenge Account

    MCC--Millennium Challenge Corporation

    MEPI--Middle East Partnership Initiative

    MOH--Ministry of Health

    MRA--Migration and Refugee Assistance

    MSP--Mission Strategic Plan

    NADR--Nonproliferation, Anti-Terrorism, Demining, and 
Related Programs

    NATO--North Atlantic Treaty Organization

    NGO--Non-Governmental Organization

    ODA--Official Development Assistance

    OGAC--Office of the Global AIDS Coordinator

    OP--Operational Plan

    OPIC--Overseas Private Investment Corporation

    OSCE--Organization for Security and Cooperation in Europe

    OVC--Orphans and Vulnerable Children

    PEPFAR--President's Emergency Plan for AIDS Relief

    PFP--Partnership for Peace

    PKO--Peacekeeping Operations

    PL 480--Food for Peace

    PMI--President's Malaria Initiative

    PRT--Provincial Reconstruction Team

    SAPR--Semi-Annual Program Results

    SFRC--Senate Foreign Relations Committee

    TB--Tuberculosis

    TI--Transition Initiative

    UN--United Nations

    UNDP--United Nations Development Program

    UNICEF--United Nations International Children's Emergency 
Fund

    UNMEE--United Nations Mission in Ethiopia and Eritrea

    USITC--United States International Trade Commission

    USAID--United States Agency for International Development

    WMD--Weapons of Mass Destruction

                                    

      
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