U.S. Information Agency: Options for Addressing Possible Budget
Reductions (Chapter Report, 09/23/96, GAO/NSIAD-96-179).

Pursuant to a congressional request, GAO reviewed the U.S. Information
Agency's (USIA) reform and cost-cutting efforts and options that could
enable USIA to adjust to reduced budgets.

GAO found that: (1) USIA believes that its mission is critical to U.S.
foreign policy goals and that further significant budget cuts would
hamper that mission; (2) in response to administration and congressional
directives, USIA has cut 2,000 staff positions, consolidated all
nonmilitary international broadcasting activities, eliminated
non-cost-effective regional magazines and exhibits, and developed a
multiyear strategy to reengineer its operations and incorporate new
technologies to reduce costs; (3) since fiscal year 1995, USIA has
closed operations in four countries and shut down 13 overseas posts, but
USIA may have to discontinue or close more posts and activities than
originally planned because of further budget cuts; (4) USIA needs to
assess the relative merits of its programs so it can better target its
funds; (5) USIA could reduce costs by reconfiguring its overseas
presence, which consumes more than one-quarter of its budget; (6)
expansion of innovative management approaches could help USIA to absorb
additional budget reductions; (7) USIA could reduce the number of
exchanges it supports or solicit increased foreign government and
private-sector support for academic and cultural exchanges; (8) USIA
could reduce some language services and broadcast hours, but eliminating
a language is a difficult process; (9) USIA has had little success in
privatizing its broadcasting activities; and (10) USIA cannot
unilaterally cut funding to certain grantees because of congressional
mandates.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-96-179
     TITLE:  U.S. Information Agency: Options for Addressing Possible 
             Budget Reductions
      DATE:  09/23/96
   SUBJECT:  International relations
             Information dissemination operations
             Radio broadcasting
             Television broadcasting
             Federal agency reorganization
             Privatization
             Cost control
             Cultural exchange programs
             Budget cuts
             Public diplomacy
IDENTIFIER:  Germany
             USIA Radio Marti Program
             USIA TV Marti Program
             USIA Worldnet Program
             Fulbright-Hays Exchange Program
             Czech Federal Republic
             USIA Edmund S. Muskie Fellowship Program
             USIA Mike Mansfield Fellowship Program
             Europe
             Soviet Union
             USIA Student Advisory Program
             USIA English Language Training Program
             Singapore
             USIA Hubert H. Humphrey Exchange Program
             Japan
             USIA International Visitors Program
             USIA Citizens Exchange Program
             USIA Congress-Bundestag Youth Exchange Program
             USICA Arts America Program
             Freedom Support Act Program
             Iran
             Haiti
             China
             Poland
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on the Budget, House of
Representatives

September 1996

U.S.  INFORMATION AGENCY - OPTIONS
FOR ADDRESSING POSSIBLE BUDGET
REDUCTIONS

GAO/NSIAD-96-179

U.S.  Information Agency

(711140)


Abbreviations
=============================================================== ABBREV

  BBG - Broadcasting Board of Governors
  FSN - Foreign Service National
  OMB - Office of Management and Budget
  RFE/RL - Radio Free Europe/Radio Liberty
  USAID - U.S.  Agency for International Development
  USIA - U.S.  Information Agency
  VOA - Voice of America

Letter
=============================================================== LETTER


B-272315

September 23, 1996

The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives

Dear Mr.  Chairman: 

As you requested, this report discusses streamlining efforts at the
U.S.  Information Agency (USIA) and identifies options that could
enable USIA to adjust to additional budget reductions.  These
adjustments would be in addition to those that USIA has taken to
reduce costs. 

We are sending copies of the report to the Director of the U.S. 
Information Agency, the Broadcasting Board of Governors, and to other
appropriate congressional committees.  We will make copies available
to others upon request. 

This report was prepared under the direction of Benjamin F.  Nelson,
Director, International Relations and Trade Issues, who may be
contacted on (202) 512-4128 if you or your staff have any questions. 
Other major contributors to the report are listed in appendix VI. 

Sincerely yours,

Henry L.  Hinton, Jr.
Assistant Comptroller General


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

The U.S.  Information Agency (USIA) received $1.407 billion in fiscal
year 1995 and $1.077 billion in fiscal year 1996 for the conduct of
public diplomacy.  Fiscal year 1996 funding is approximately $200
million less than requested.  Bipartisan efforts to balance the
budget could result in further decreases by the year 2000. 

The Chairman, House Committee on the Budget, asked GAO to examine
USIA's reform and cost-cutting efforts and identify options that
could enable USIA to adjust to reduced budgets.  GAO did not attempt
to evaluate the importance and relevancy of public diplomacy as a
foreign policy tool or assess the amount of funding that would be
appropriate. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

USIA's missions are to explain and advocate U.S.  policy to foreign
publics, provide them information about the United States, build
lasting relationships and mutual understanding, and advise U.S. 
decisionmakers on foreign public opinion and its implications for the
United States.  This direct communication to the public of another
country, or public diplomacy, is recognized by U.S.  ambassadors and
State Department officials as an important tool in carrying out U.S. 
foreign policy. 

To accomplish its goals, USIA (1) maintains 199 posts in 143
countries to ensure that information on U.S.  policy and way of life
reaches the countries decisionmakers, to support the ambassadors'
public affairs needs, to facilitate the exchange of people, and to
handle foreign press relations; (2) manages a variety of educational
and cultural exchanges; (3) conducts international broadcasting in
over 50 languages; and (4) awards grants to several organizations to
carry out related functions.  Within USIA, the Broadcasting Board of
Governors is responsible for the management and oversight of
international broadcasting operations.  Many USIA programs and its
overseas structure and infrastructure were established after World
War II as the United States sought to encourage democratic
development. 

Both the Congress and the administration have been instrumental in
decreasing funding for USIA and encouraging more efficient
operations.  The Congress has reduced appropriations for
broadcasting, individual exchanges, salaries and expenses, and the
private grantees that receive funding through the USIA account. 
Additionally, Vice President Gore's National Performance Review
recommended the consolidation of all nonmilitary international
broadcasting to save over $400 million, which subsequent legislation
directed USIA to implement.  Further budget reductions are likely
given the degree of budgetary stringency the federal government is
projected to face in the next few years.  If total discretionary
spending is held to levels envisioned in this year's congressional
budget resolution, it will fall by almost 6 percent by the year 2002. 
Office of Management and Budget guidance indicates that in fiscal
year 2000, funding for USIA could be approximately $400 million less
than needed to fund current services.  Furthermore, the fiscal year
1997 House budget resolution assumes that much of USIA will be
gradually privatized or eliminated. 

To respond to the potential that USIA might have to withstand cuts of
the magnitude suggested by the Office of Management and Budget or
congressional budget projections, GAO analyzed each of the major
components within USIA for potential areas to reduce.  USIA
activities in fiscal year 1996 comprise overseas posts (costing $310
million); academic and nonacademic exchanges ($210 million);
international broadcasting ($405 million); headquarters salaries and
operating expenses, information services, and the technology fund
($109 million); and grants to the National Endowment for Democracy,
the East-West Center, and the North/South Center ($44 million), which
are not under USIA's operational control and which GAO did not
include in its analysis. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

USIA believes that reaching out to foreign publics and telling
America's story remains critical to U.S.  foreign policy goals. 
Agency officials believe that further significant reductions could
greatly hamper USIA's mission.  Moreover, USIA believes it has
undergone an extensive reorganization and downsizing, responsive to
both U.S.  foreign policy priorities and needs, as well as budget
constraints.  In response to executive branch and congressional
direction to reduce costs and adjust to the new world environment,
USIA, including all international broadcasters, has cut approximately
2,600 staff positions from its 1994 level; consolidated all
nonmilitary international broadcasting; and developed a multiyear
strategy to downsize, reengineer its operations, and incorporate new
technologies. 

New fiscal realities may force USIA to make additional choices about
resource priorities for the number and size of its locations and its
wide range of programs and activities.  Decisions on cutting
activities and programs would be difficult and would need to reflect
legislative requirements that have earmarked much of USIA's budget
for specific exchanges, broadcasting programs, and grantees. 
Nevertheless, to remain viable, USIA would undoubtedly be forced to
eliminate certain programs or locations of activities.  Scaling back
activities would risk stretching limited dollars so thin across so
many programs and activities as to render them insignificant.  GAO
believes that USIA could take steps to further reduce its costs,
while continuing to protect U.S.  interests, if fiscal conditions
require. 

To sustain a major reduction, USIA may have to consider closing more
posts than it presently plans in countries where USIA has determined
that the United States has limited public diplomacy goals.  The
impact of such closures now and in the future is uncertain.  Another
option would be to reconfigure USIA's overseas presence, which is
currently based on a structure established after World War II.  For
example, USIA maintains cultural centers and branch offices (that
provide basic information on the United States and counsel students
interested in attending U.S.  schools) in countries that previously
did not, but now have, access to other sources of information on the
United States.  These options have the potential to substantially
reduce costs. 

The Congress has already scaled back funding for some exchanges, but
eliminating one or more exchanges, which would require the Congress'
approval, is also an option to reduce costs.  USIA started managing
academic and cultural exchanges when there were very few other
exchanges.  Now, nearly all of the 453,000 foreign exchange students
in the United States finance their education without federal
government support.  Nevertheless, USIA exchanges permit the U.S. 
government to target potential leaders overseas, and consideration
should be given to the potential impact that cutting exchanges would
have on bilateral relationships with participating countries. 
Soliciting increased foreign government and private sector support is
also an option to lessen USIA's costs. 

The Congress has reduced funding for all nonmilitary international
broadcasting activities and mandated their consolidation.  Modest
economies are possible by eliminating overlap among broadcasters. 
Any substantial funding cuts, however, would require major changes to
the number of language services and broadcast hours.  Past experience
has shown that eliminating even one language is a difficult process,
requiring concurrence from a wide range of interest groups and
Members of Congress. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      USIA'S EFFORTS TO CUT COSTS
      AND REENGINEER FUNCTIONS
-------------------------------------------------------- Chapter 0:4.1

USIA developed a multiyear strategy to downsize and reduce costs. 
USIA and the broadcasting services have consolidated all nonmilitary
international broadcasting activities; incorporated advanced
technologies; engaged the private sector to reduce government
expenditures; terminated production of regional magazines; and
eliminated 2,586 staff positions, 1,496 of which were from the
broadcasting entities, by reductions in force and other means.  USIA
targeted headquarters operations for its first round of reinvention
activities where it replaced the Policy and Programs Bureau with a
smaller Information Bureau and reengineered and automated
administrative processes to save an anticipated $7 million.  This
year, USIA has reduced its presence overseas by closing operations in
four countries, shutting down 13 posts, and eliminating 115 U.S.  and
436 foreign service national positions.  The consolidation of the
Voice of America (VOA) and Radio Free Europe/Radio Liberty (RFE/RL)
engineering facilities and the elimination of overlap in broadcast
schedules to Eastern Europe and the former Soviet Union have enabled
USIA to reduce its fiscal year 1997 budget request for international
broadcasting activities to $365.4 million, $121.3 million less than
fiscal year 1994. 


      OVERSEAS PRESENCE CONSUMES
      MORE THAN ONE QUARTER OF
      BUDGET
-------------------------------------------------------- Chapter 0:4.2

With reduced funding, USIA may be forced to reconsider its current
strategy and plans regarding the number of locations and scope of
activities.  USIA, as well as the State Department, has traditionally
believed that USIA should be located wherever State Department has a
presence.  As a result, USIA has established new posts as the State
Department opened new posts in areas such as the newly independent
states of the former Soviet Union and Central and Eastern Europe.  In
fiscal year 1996, USIA is spending about $310 million, or 29 percent
of its budget, on salaries, infrastructure, and operating expenses
for overseas posts.  Personnel costs account for over half of the
costs of overseas posts.  Staffing at overseas posts range from one
foreign service national in Luxembourg to more than 300 U.S.  staff
and foreign nationals in India, and costs for post operations in
fiscal
year 1995 ranged from $43,000 in Suriname to $19.2 million in Japan. 

USIA has been using a system developed in 1993 to make decisions on
overseas post levels and reductions.  This system related resources
to U.S.  national interests and other factors like USIA's ability to
affect them.  In 1995, USIA developed a framework for realigning
resources at overseas posts, acknowledging that USIA could no longer
afford all its activities at all of its locations, and decided that
it should maintain only those activities that make a difference. 
Under this model, all posts would have a core information program;
larger posts could augment this core program with educational
exchanges and other activities.  Entire products, services, and
programs would have to be dropped by many posts and, in some cases
agencywide.  However, USIA management could not reach a consensus on
implementing the framework.  Implementing such an approach would
assist in identifying critical programs in specific countries that
should be continued while reducing costs. 


         CLOSING SOME NONCRITICAL
         POSTS COULD RESULT IN
         REDUCED COSTS
------------------------------------------------------ Chapter 0:4.2.1

USIA maintains its operations in countries of varying importance to
the United States.  Eliminating several posts in countries less
important to the United States could result in reduced costs.  For
example, in fiscal year 1995, USIA maintained posts in 67 countries
where--by its own criteria--the United States has limited public
diplomacy goals.  These posts cost more than $36 million for salaries
and operating costs, and exchanges for these countries cost an
additional $23 million.  While reducing USIA's presence would affect
to some extent its ability to influence foreign decisionmakers and
the media, fiscal realities may require reductions to the overseas
presence. 


         PROGRAM CHANGES COULD
         RESULT IN REDUCED
         EXPENDITURES
------------------------------------------------------ Chapter 0:4.2.2

USIA is beginning to address questions about the continued relevancy
of its programs in light of changing world conditions and the number
of staff who will be needed to support its activities.  Based on a
survey of overseas posts, USIA eliminated its regional magazines and
exhibits program.  However, if funding is cut significantly, USIA may
have to reassess the relative merits of other programs.  Some of its
programs began when information about the United States was scarce,
and they may not be as critical to U.S.  objectives in the future as
they were in the past.  For example, USIA estimates that it spends
about $4 million a year to counsel foreign students on opportunities
to study in the United States despite the availability of such
information in the private sector.  It also maintains a program to
encourage English language training that was begun in the 1940s when
English was not widely spoken.  Additionally, countries with a large
USIA presence, such as Germany, have USIA staff and facilities such
as translators and printing facilities that may be useful but not
critical to achieving post objectives.  It is not clear whether
cutting these programs would result in significantly fewer
English-speaking individuals and foreign students in the United
States. 

USIA may also be able to reduce the costs of those programs it wishes
to retain by obtaining additional financial support from the private
sector and charging for more of its products.  For example, USIA
could expand efforts to encourage private companies to assume control
of counseling facilities and charge fees for more of its English
language training activities. 


      ELIMINATING, RELOCATING, OR
      REFORMATTING OUTREACH
      CENTERS IS A COST REDUCTION
      OPTION
-------------------------------------------------------- Chapter 0:4.3

USIA maintains about 70 outreach centers (cultural centers,
libraries, and branch offices) that may not be colocated with a U.S. 
embassy or consulate, where staff deal directly with the public.  For
example, in fiscal year 1995, USIA spent $9 million to operate six
outreach centers, called "America Houses", in Germany.  The 77 staff
at these centers provide information on U.S.  policy and business and
study opportunities, as well as host cultural events.  Much of the
information USIA provides is generated by the private sector, is
available electronically, or could be distributed by a private
entity. 

Reformatting or relocating these outreach centers is another option
should funding be further reduced.  For example, the recent decision
to close an America House in Germany and support the development of a
local government and business supported German/American Cultural
Center could cut annual USIA operating costs in Germany by about half
a million dollars.  In Singapore, USIA plans to terminate a $455,000
yearly lease for a cultural center and move into Embassy facilities,
and USIA hopes to relinquish its $100,000 lease in Prague in the
Czech Republic if room becomes available on Embassy property. 

USIA believes, however, that USIA cultural centers offer easy and
inexpensive accessibility to a wide variety of foreign nationals who
otherwise would not gain insight into the U.S.  way of life.  USIA
cautions that notwithstanding the expense of these programs, cultural
centers still have a role in advancing U.S.  interests that the
private sector would not necessarily replicate. 


      OPTIONS TO REDUCE COSTS OF
      EXCHANGE PROGRAMS
-------------------------------------------------------- Chapter 0:4.4

In fiscal year 1996, USIA is spending about $210 million, or 19.5
percent, of its budget on a variety of congressionally established
academic and cultural exchanges.  On the whole, USIA believes that
all exchanges are inherently beneficial despite different goals and
impact.  Nevertheless, appropriations have not permitted USIA to
maintain the same level of exchanges, and the number of Fulbright,
international visitor, and other exchanges has fallen.  Potential
budget reductions may force decisions on which exchanges are
essential in meeting U.S.  objectives, and which are not. 

If appropriations for exchanges are further reduced, USIA may wish to
explore the relative value of each program to determine which are the
most important and which could be eliminated without significant
repercussions.  For example, the Congress began funding educational
exchanges after World War II, when few students were studying abroad
on their own and there were no other U.S.  funded exchange programs. 
Currently, about 453,000 foreign students attend U.S.  high schools,
colleges, and universities.  Of these, only 1.2 percent, or about
5,400, received U.S.  government funding as their primary source of
support, about 1,600 of whom were under the Fulbright Exchange
Program. 

Another option would be to evaluate the relative merits of the
current geographic distribution of USIA exchanges.  According to some
USIA and State Department officials, USIA should reduce exchanges to
major Western European and other industrialized nations where they
may no longer be as important as they were in the past. 


      OPTIONS TO FURTHER REDUCE
      INTERNATIONAL BROADCASTING
      COSTS
-------------------------------------------------------- Chapter 0:4.5

For fiscal year 1996, $405 million, or 38 percent, of USIA's budget
is for international broadcasting, including VOA broadcasts in 47
languages, RFE/RL broadcasts in 21 languages, Radio and TV Marti's
broadcasts to Cuba, and Worldnet's television broadcasts.  The
International Broadcasting Act of 1994, among other things, (1)
reaffirmed the requirement for U.S.-funded international broadcasting
and (2) directed the consolidation of all U.S.  government
nonmilitary broadcast services to reduce costs. 

Any substantial reduction in funding would require major changes to
the number of language services and broadcast hours.  Because of the
broadcasting consolidation and resulting downsizing and
reorganization, however, only modest opportunities to increase
efficiency and lessen duplication exist.  USIA cautions that
eliminating a language may be shortsighted, as a crisis could emerge
and the Agency would be unable to respond quickly.  Nevertheless,
fiscal realities may require the termination of some language
services. 

A study of the existing overlap between broadcast entities could
identify opportunities to reduce costs and increase efficiency.  For
example, because VOA and RFE/RL have different missions, they
broadcast in 14 of the same languages and have separate staffs,
broadcast facilities, and transmission costs.  Additionally, both
entities maintained news bureaus in Russia at a cost of $725,000 and
$919,000, respectively in fiscal year 1995. 

Privatizing broadcasting could also cut costs but has practical
limits.  The International Broadcasting Act expressed the sense of
the Congress that RFE/RL would no longer receive federal support
after December 1999.  Currently, RFE/RL, VOA, and Worldnet are each
seeking private sector support.  However, this is proving difficult
due to practical issues, one being the fact that many broadcasts are
not commercially viable.  VOA private funding amounted to less than 1
percent of VOA's appropriation for fiscal year 1995 and consisted
mostly of prizes and promotional items.  VOA cited private sector
concern over entering a market without research on audience size and
demographics, from which companies could assess potential
profitability.  VOA says it cannot conduct such research because of
budget concerns.  RFE/RL spun off its Czech and Polish services into
separate nonprofit corporations but has continued to provide them
with financial support. 


      HEADQUARTERS OPERATIONS AND
      GRANTS
-------------------------------------------------------- Chapter 0:4.6

USIA is spending $109 million, or 10 percent, of its fiscal year 1996
budget on headquarters salaries and operating expenses to provide
overall policy guidance, support overseas post activities, and manage
and oversee international exchanges.  Downsizing could be achieved if
the headquarters supported overseas programs, such as international
exchanges, binational centers, information resource centers,
libraries, English teaching, and student advising, were reduced. 

In fiscal year 1996, the Congress earmarked $44 million, or 4
percent, of USIA's budget to fund three private grantees over which
USIA has no operational control.  They are the National Endowment for
Democracy, the East-West Center, and the North/South Center.  Any
USIA effort to curb spending cannot unilaterally include reductions
to these grants.  The Congress has reduced appropriations to each
grantee for fiscal year 1996, and any subsequent year reductions
would also require congressional approval. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO is not making recommendations in this report.  Rather, it is
pointing out areas where reductions could be made to deal with
potential cuts in appropriations.  Balanced, thoughtful decisions
must be made to ensure that U.S.  public diplomacy requirements are
met within the constraints of available funding, and that only
essential activities are maintained. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

In commenting on a draft of this report, USIA said that it is
instituting changes to cut costs while preserving essential missions. 
USIA said that its core functions remain valid, and that "preventive
diplomacy" can help spare America from more expensive crisis-driven
international engagements.  USIA stated that it understands that the
intrinsic value of many traditional programs is no longer enough to
justify their continuation; there must be direct benefit to U.S. 
policy interests.  USIA's comments are presented in their entirety in
appendix IV. 

The Broadcasting Board of Governors characterized the report as
welcome and timely, and noted that GAO's observations and options to
reduce costs have been and will continue to be reviewed by the Board. 
The Board's comments are reprinted in appendix V. 

USIA and the Board suggested technical clarifications and provided
additional data that have been incorporated in the report as
appropriate. 


INTRODUCTION
============================================================ Chapter 1

The U.S.  Information Agency's (USIA) missions are to explain and
advocate U.S.  policy, provide information about the United States,
build lasting relationships and mutual understanding among the
peoples of the world, and advise U.S.  decisionmakers on foreign
public opinion and its implications for the United States.\1 Over the
years, its programs have shifted in emphasis from one part of the
world to another in response to foreign policy initiatives and
direction from the administration as well as to congressional
mandates.  Its budget for fiscal year 1995 was about $1.4 billion. 
Like other government agencies, USIA has faced the prospect of
uncertain, but likely reduced, budgets as the administration and the
Congress grapple with balancing the federal budget.  In fiscal year
1996, USIA received about $1.1 billion, 17 percent less than it
requested. 


--------------------
\1 USIA conducts its programs under the U.S.  Information and
Educational Exchange Act of 1948 (22 U.S.C.  1431) and the Mutual
Educational and Cultural Exchange Act of 1961 (22 U.S.C.  2451). 


   HISTORY OF PUBLIC DIPLOMACY
   PROGRAMS
---------------------------------------------------------- Chapter 1:1

The United States has engaged in foreign information programs,
international broadcasting, and publicly funded educational and
cultural exchanges for nearly 60 years.  In 1938, the Congress began
funding the first international educational exchange program in the
sciences.  U.S.  funding of broadcasting began in 1942 with a
15-minute broadcast in German, which was soon followed by broadcasts
in Italian, French, and English.  After World War II, the Congress
decided to introduce additional information and cultural programs
overseas to promote U.S.  policies and interests.  In 1946, it
mandated a peacetime international exchange program, beginning with
the establishment of the Fulbright Exchange Program.  This mandate
was expanded to include numerous exchanges under academic, artistic,
visitor, citizen, youth, and speaker programs. 

In 1948, the Congress permanently established a U.S.  international
information and cultural exchange program, which included the Voice
of America (VOA).  VOA's objectives are to provide accurate,
objective, and comprehensive news; portray a balanced view of
American society; and explain U.S.  government policy.  VOA was
followed by Radio Free Europe/Radio Liberty (RFE/RL) in the 1950s as
a private nonprofit company to provide uncensored news to the Soviet
Union and the Eastern bloc.  In 1985 and 1990, Radio Marti and TV
Marti, respectively, were established to fill a void in the news and
information Cuban citizens received due to censorship by the Cuban
government. 


   GROWTH IN PUBLIC DIPLOMACY
   PROGRAMS
---------------------------------------------------------- Chapter 1:2

Between 1981 and 1994, appropriations for public diplomacy programs
increased as the Congress funded new missions such as additional
exchanges for the newly independent states of the former Soviet
Union.  In fiscal year 1995, funding began a downward trend as a
result of the consolidation of international broadcasting activities
and reduction in exchanges and salaries and expenses.  (see fig. 
1.1). 

   Figure 1.1:  Public Diplomacy
   Funding Trends (fiscal years
   1981-96)

   (See figure in printed
   edition.)

Source:  USIA, Office of the Comptroller. 


As shown in the figure, USIA received $1.077 billion in fiscal year
1996, of which about

  -- $405 million (38 percent) is being spent for international
     broadcasting and radio construction:  VOA broadcasts in 47
     languages, RFE/RL broadcasts in 21 languages, Radio and TV
     Marti's broadcasts to Cuba, and Worldnet's television
     broadcasts;

  -- $310 million (29 percent) is for personnel, infrastructure,
     outreach activities, and headquarters support for USIA's
     overseas posts;

  -- $210 million (19 percent) is allocated for educational and
     cultural exchanges and related salaries and management expenses;

  -- $109 million (10 percent) is for headquarters salaries,
     operating expenses, a technology fund, and information programs;
     and

  -- $44 million (4 percent) is for grants to the National Endowment
     for Democracy, the East-West Center, and the North/South Center. 

In fiscal year 1996, USIA is operating its programs at 199 overseas
posts in 143 countries, as compared to 200 posts in 125 countries in
fiscal
year 1981.  The growth in country operations largely resulted from
opening posts in newly independent countries.  In 1981, USIA
maintained 16 posts in Eastern European countries and the former
Soviet Union, but it now has 31 posts in this region.  At the same
time, the level of its U.S.  and foreign service national (FSN)
personnel decreased; in 1981, USIA employed 642 Americans and 2,960
FSNs overseas, and by the end of 1996 it will have 523 American and
2,318 FSN employees.  Additionally, RFE/RL employs approximately 400
staff at its offices in Prague in the Czech Republic, VOA employs
about 600 personnel to manage transmission sites, and both fund
correspondents. 

Since the end of the Cold War, the Congress has appropriated funds to
establish new exchange programs.  For example, in 1992, the Congress
authorized the Edmund S.  Muskie Fellowship Program to provide grants
for graduate study to educators, government officials, business
leaders, and scholars from Soviet bloc countries for study in law,
economics, business, and public administration.  In 1994, the
Congress established the Mike Mansfield Fellowship Program for U.S. 
citizens to study the Japanese language and to serve 1 year in an
office of the government of Japan.  The U.S.  Agency for
International Development (USAID) transferred funds for USIA's
exchange programs budget for Eastern and Central Europe (fiscal year
1991 to present) and the former Soviet Union (fiscal year 1993 to
present).  Table 1.1 shows USIA appropriations by major account for
fiscal years 1981-96. 



                                                                      Table 1.1
                                                       
                                                       Funding for Public Diplomacy by Account

                                                                (Dollars in millions)

                      1981    1982    1983    1984    1985    1986    1987    1988    1989    1990    1991    1992    1993     1994     1995     1996
------------------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  -------  -------  -------
Salaries and          $372    $390    $441    $485    $532    $550    $588    $620    $620    $635    $658    $697    $490     $490     $477     $446
 expenses
Educational and         67      70      83     101     140     134     145     150     150     154     163     194     242      351      287      200
 cultural exchange
 programs
National Endowment                              18      19      17      15      17      16      17      25      28      30       35       34       30
 for Democracy
East-West Center        16      17      18      18      19      20      20      20      20      20      23      25      26       26       25       12
North/South Center                                                                                      10       5       9        8        4        2
VOA and other                                                                                                          253      256      243      254
 broadcasting\a
Broadcasting to                                 10       9      10      13      13      19      28      31      37      29       21       25       25
 Cuba
Radio construction       3      19      36      31      92     105      66       0      58      68     106      98     104       75       69       33
Other\b                                                                                          4       4       9       7        6        7        6
=====================================================================================================================================================
USIA total            $458    $496    $578    $664    $810    $837    $847    $820    $882    $927  $1,021  $1,093  $1,190   $1,268   $1,170   $1,006
RFE/RL                  82      81      83      94      94     124     145     170     171     194     206     217     220      210      237       71
=====================================================================================================================================================
Total public          $540    $577    $661    $757    $905    $960    $992    $990  $1,054  $1,120  $1,226  $1,310  $1,409   $1,478   $1,407   $1,077
 diplomacy
=====================================================================================================================================================
Total adjusted to     $540    $543    $598    $656    $756    $782    $783    $752    $766    $780    $823    $855    $901     $925     $863     $643
 1981 dollars
-----------------------------------------------------------------------------------------------------------------------------------------------------
Note:  Numbers may not add due to rounding. 

\a Prior to 1993, VOA costs were in the salaries and expenses
account.  Also, this category excludes Cuba broadcasting, RFE/RL, and
radio construction. 

\b Includes the Office of the Inspector General and technology fund. 


   GEOGRAPHIC DISTRIBUTION
---------------------------------------------------------- Chapter 1:3

In fiscal year 1995, USIA spent at least $3 million on programs in
more than 40 countries and more than $11 million on programs for 7
countries (see table 1.2).  Cuba was the largest single target of
public diplomacy programs; in fact, expenditures for Radio and TV
Marti exceeded the total costs for all activities targeted for any
other country. 



                               Table 1.2
                
                Seven Largest Public Diplomacy Programs
                           (fiscal year 1995)

                         (Dollars in thousands)

                                        Exchange  Broadcasti
Country                           Post         s          ng     Total
----------------------------  --------  --------  ----------  ========
Cuba                             $ 614         0     $28,435   $29,049
Russia                           6,155    $2,238      15,074   $23,467
Germany                         18,341     3,500           0   $21,841
Japan                           19,160     2,164           0   $21,329
China                            4,223     2,148       7,645   $14,016
Brazil                          10,469     2,389         764   $13,622
India                            8,500     1,780       1,327   $11,607
----------------------------------------------------------------------

   FUTURE FUNDING PROSPECTS
---------------------------------------------------------- Chapter 1:4

Further budget restrictions are likely given the degree of budgetary
stringency that the federal government is expected to face in the
next few years.  If total discretionary spending is held to levels
envisioned in this year's congressional budget resolution, it will
fall by almost 6 percent by 2002.  It will be difficult to exempt
USIA from bearing its share of this decrease. 

Various funding scenarios indicate the degree to which USIA's budget
could be reduced.  While the fiscal year 1997 request is slightly
higher than the $1.1 billion appropriated for fiscal year 1996, the
Office of Management and Budget (OMB) has projected that funding for
USIA will be reduced thereafter, falling below $900 million by fiscal
year 2000.  Under the fiscal year 1996 7-year concurrent budget
resolution, USIA could receive less than OMB projected.  If USIA were
to take a proportional share of the proposed reductions in the
international affairs account, the congressional plan would call for
reductions in funding for USIA to $865 million by 2000.\2

Because of inflation, costs for current services would increase by
about 4 percent.  Additionally, the fiscal year 1997 House budget
resolution assumes that much of USIA will gradually be privatized or
eliminated.  Therefore, there is a substantial gap between the costs
of maintaining the status quo and potential funding levels.  Because
of these fiscal constraints, USIA may not be able to continue all of
its current functions and operations.  Three funding scenarios for
USIA are shown in figure 1.2. 

   Figure 1.2:  Various Funding
   Scenarios for USIA

   (See figure in printed
   edition.)

Note:  Current services' projections represent the funding USIA would
need to maintain current services, according to OMB.  OMB guidance
shows projected funding for USIA based on OMB's fiscal year 1997
budget submission.  For the budget resolution projection we
calculated the percentage reduction to the 150 budget function called
for in the fiscal year 1996 concurrent budget resolution.  We applied
these same percentage reductions to USIA spending. 


--------------------
\2 USIA could receive far less under this plan.  The House version
assumed substantial reductions, if not outright elimination, of
funding for exchanges and broadcasting.  The Senate version did not
indicate how USIA programs would be affected by the overall
reductions planned for the international affairs programs. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:5

The Chairman of the House Committee on the Budget asked us to examine
USIA's reform and cost-cutting efforts and identify options that
could enable USIA to adjust to reduced budgets.  Our review focused
on activities of the primary components of USIA activities, namely
overseas posts, educational and cultural exchange programs, and
international broadcasting.  For each component we looked at the
reinvention and cost-cutting activities to date, plans for the
future, and potential options for additional cuts should funding be
significantly cut.  We identified options for lowering costs within
the context of specific programs and activities by reviewing Agency
studies and USIA Inspector General reports, meeting with a wide
variety of Agency officials, and analyzing whether current conditions
and program objectives remained relevant when compared to conditions
when the programs first began.  We did not attempt to evaluate the
importance and relevancy of public diplomacy as a foreign policy tool
or assess the amount of funding that would be appropriate. 

We met with officials and reviewed documents at USIA and State
Department headquarters in Washington, D.C., and at offices in
Germany and the Czech Republic.  We also met with officials from
private organizations that sponsor exchanges, U.S.  private
companies, and foreign government officials to gain their perspective
on USIA programs and used the results of a 2-day GAO symposium on
foreign affairs issues.  We conducted work at RFE/RL in the Czech
Republic.  We also relied on work previously conducted at USIA
headquarters and at posts in Mexico and Guatemala and our prior
reports on international broadcasting and exchange programs. 

We conducted our review between August 1995 and August 1996 in
accordance with generally accepted government auditing standards. 


USIA EFFORTS TO DOWNSIZE AND
REENGINEER ITS OPERATIONS
============================================================ Chapter 2

USIA has been involved in a multiyear restructuring plan to become a
leaner, more efficient, and more technologically advanced agency. 
USIA has reduced staff, eliminated some activities, and reengineered
some of the ways it operates.  Both the Congress and the
administration have been instrumental in this change. 


   CONGRESSIONAL AND
   ADMINISTRATION DIRECTION SPUR
   CHANGE
---------------------------------------------------------- Chapter 2:1

The House Conference Report on Fiscal Year 1993 Appropriations for
the Department of State indicated that the amount of funds provided
to USIA for fiscal year 1993 would be substantially below the amounts
needed to maintain then-current program levels and allow USIA to open
new posts in the countries of the former Soviet Union.  As a result,
the report directed USIA to review all programs, including the
library programs at USIA reference and research centers, and submit
proposals for reductions in lower priority programs. 

In 1993, Vice President Gore's National Performance Review and OMB
targeted many agencies for cuts.  The President directed USIA to
submit a streamlining plan to the Director of OMB by December 1993. 
The plan was to address the goal of reducing by half the number of
supervisory or managerial positions, reducing micromanagement and red
tape, realizing cost savings, and improving the quality of service
and productivity.  Furthermore, the National Performance Review
recommended the consolidation of all nonmilitary international
broadcasting to help meet the President's deficit reduction plan.  It
was anticipated that the consolidation would achieve savings of $400
million over a 4-year period. 

In response, the Agency developed a multiyear strategy to downsize
and reinvent its operations. 


   CONSOLIDATION OF RADIO
   BROADCASTS HAS REDUCED COSTS
---------------------------------------------------------- Chapter 2:2

The consolidation of VOA and RFE/RL eliminated RFE/RL's engineering
and transmission function and overlapping broadcast hours to the same
target nations, which resulted in a 32-percent reduction in total
broadcast hours.  Both VOA and RFE/RL have reduced the size of their
workforce since fiscal year 1994 in response to these changes.  The
International Broadcasting Bureau eliminated over 300 positions, and
RFE/RL eliminated over 1,150 positions, reducing costs significantly. 
Table 2.1 compares fiscal year 1994 funding with the fiscal year 1997
request to indicate the annual savings achieved through the
consolidation. 



                               Table 2.1
                
                   International Broadcasting Funding
                     Before and After Consolidation

                         (Dollars in millions)

                                              1994        1997  Differ
Purpose                                     actual     request    ence
------------------------------------------  ------  ----------  ------
VOA                                         $103.7      $101.0   -$2.7
RFE/RL                                       160.0        71.7   -88.3
Radio and TV Marti                          21.0\a        25.0    +4.0
Worldnet                                      24.5        22.6    -1.9
Radio Free Asia                                  0        10.0   +10.0
Engineering                                  159.4       116.0   -43.4
Administration\b                              18.1        19.0    +0.9
======================================================================
Total                                       $486.7      $365.4       -
                                                                $121.3
----------------------------------------------------------------------
Note:  Totals may not add due to rounding. 

\a The actual expenditure was $27.3 million, including $6.3 million
in prior year funding. 

\b Increases include administrative costs formerly in the RFE/RL
budget. 


   USIA'S REENGINEERING EARNS
   SPECIAL RECOGNITION
---------------------------------------------------------- Chapter 2:3

In addition to broadcasting consolidation, USIA has taken a variety
of measures to reinvent itself.  USIA reduced its headquarters staff,
targeting duplication, bureaucratic layering, outmoded activities,
and the inefficient distribution of its workforce, and began a
reorganization.  It replaced its Policy and Programs Bureau with a
smaller Information Bureau, which eliminated more than 150 positions
and both removed management layers and developed systems and
information to best support the needs of the posts.  The Information
Bureau is now using advanced communications technology, such as
digital video conferencing, to perform traditional agency functions
in a more cost-effective manner.  Furthermore, USIA established a
technology modernization fund and created a technology steering
committee to enhance technology planning and decision-making. 

In response to congressional concerns, USIA also began converting
walk-in libraries in developed countries to technologically advanced
information centers.  USIA also surveyed its overseas posts to
determine the relative impact and priority of its activities and
programs.  In response, USIA eliminated the production of regional
magazines and exhibits that Agency officials determined were no
longer the most effective means of reaching foreign decisionmakers. 

In fiscal year 1996, USIA is streamlining its overseas operations by
eliminating about 115 U.S.  and 435 FSN positions.  USIA also plans
to review the structure and staffing of its Educational and Cultural
Affairs Bureau, and work with other foreign affairs agencies to
establish common administrative services, and eliminate unnecessary
and duplicative practices.  Reengineering and new automated
administrative processes are expected to save $8 million and further
reduce related staffing.  Furthermore, USIA is participating in the
review by the President's Management Council to increase the
effectiveness of the U.S.  overseas presence while reducing its cost. 
The review will focus on streamlining overseas operations, sharing
administrative support, and making better use of information systems
and communications technology. 

In recognition of some of its achievements, the Vice President
presented USIA a National Performance Review "Hammer Award." This
award symbolizes the federal government's commitment to tearing down
bureaucracy and rebuilding a new government that works better and
costs less. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 2:4

In commenting on a draft of this report, USIA said that it is
instituting changes to cut costs while preserving essential missions. 
USIA said that its core functions remain valid and that "preventive
diplomacy" can help spare America from more expensive crisis-driven
international engagements.  USIA stated that it understands that the
intrinsic value of many traditional programs is no longer enough to
justify their continuation; there must be direct benefit to U.S. 
policy interests. 


OVERSEAS POSTS
============================================================ Chapter 3

USIA conducts a wide variety of activities at its 199 overseas posts
to inform and encourage relationships with the public in 143
countries.  These activities range from disseminating information on
U.S.  policy to managing academic exchange programs.  (These
activities are discussed in app.  I.) In fiscal year 1996, USIA is
spending $310 million, or about 29 percent of its budget on
personnel, infrastructure, programs, and headquarters activities to
support overseas operations.  If appropriations are substantially
reduced, USIA may wish to consider reducing (1) the number of
countries in which it has posts, (2) the staff size of posts and
level of overseas activities, and (3) the infrastructure it maintains
overseas.  When weighing these options, consideration must be given
to the extent to which the reductions will diminish the U.S.  ability
to influence foreign publics. 


   REDUCING THE NUMBER OF
   COUNTRIES IN WHICH USIA
   OPERATES IS AN OPTION TO REDUCE
   COSTS
---------------------------------------------------------- Chapter 3:1

USIA's philosophy has been to maintain a public diplomacy presence
where a State Department mission is located.  Closing posts can yield
significant cost reductions, especially if posts have large
infrastructure or personnel costs.  Costs of overseas posts range
from $43,000 in Suriname to $19.2 million in Japan. 

USIA has closed some posts.\1 However, the Agency has maintained
posts in countries that, by its own criteria, are relatively less
important to U.S.  interests.  In fiscal year 1995, USIA operated
posts in 67 countries at a cost of more than $36 million (plus $23
million in exchanges), where USIA believed the United States had
limited public diplomacy goals.  One post, for example, had four U.S. 
foreign service officers and 21 FSNs assigned and cost $1.4 million a
year to operate.  Exchanges to that country cost an additional
$643,000.  In another country, three U.S.  and five foreign nationals
were employed, with post and exchange costs totaling $2.5 million. 

In April 1996, USIA announced that it was abandoning its principle of
universality because of budget constraints.  USIA states that as a
result, its current overseas presence is 13 posts and 4 countries
below fiscal
year 1995 levels. 


--------------------
\1 In 1993, the Agency notified the Congress that it intended to
close its offices in Izmir, Turkey; Bangui, Central African Republic;
Palermo and Florence, Italy; Lubumbushi, Zaire; and Nassau, Bahamas. 
The Bangui, Lubumbushi, and Izmir posts were closed in 1993, and the
post in Florence is scheduled to close in 1996.  According to USIA,
it decided not to close the Palermo post because the ambassador
objected to its closure.  USIA informed us that by the end of fiscal
year 1996 it will have terminated operations in Fiji, Lesotho, Gabon,
Guyana, and Suriname, which together cost about $1.6 million to
operate in fiscal year 1995. 


   ASSESSING POST PROGRAMS AND
   STAFF LEVELS COULD YIELD
   REDUCTIONS
---------------------------------------------------------- Chapter 3:2

Developing baseline requirements for activities and the number of
people needed overseas could help USIA to accommodate budget
reductions.  Overseas staffing levels are particularly important
because personnel costs consumed more than half the cost for USIA's
overseas operation in fiscal year 1995.  In some countries, these
costs were even higher:  personnel costs in Germany and Japan
consumed 65 percent and 68 percent, respectively, of the total USIA
country budget.  In Germany, USIA spent $9.5 million for the salaries
and benefits of 126 FSNs, and $2.4 million for 26 U.S.  employees. 

USIA is now downsizing its overseas personnel levels, which cost
approximately $168 million in fiscal year 1995.  Individual posts may
be losing one or more positions based on a 1993 USIA system that
ranks countries by importance and other characteristics, such as
population and size, and USIA's potential to affect U.S.  interests
there.  For each rank, USIA established a benchmark in 1994 for
personnel levels and programs, and posts with staffing levels above
this benchmark would lose staff.  However, this benchmark is based on
historic staffing and program levels and therefore may be above
actual staffing requirements.  For example, one USIA official stated
that USIA management recognizes that the post in Germany will be too
large even after downsizing, as it reflects the structure established
after World War II. 

A more comprehensive approach would be required if there were a major
funding reduction.  In June 1995, the USIA Director decided to design
a strategic vision for its overseas presence, assuming that funding
could be reduced by as much as 40 percent.  The model acknowledged
that the Agency could no longer afford to do some things, and that
many posts might have to drop entire products, services, and
programs.  In response, Agency managers developed a building-block
approach under which all USIA overseas posts would include a core
advocacy mission and USIA would add information activities,
exchanges, and cultural programs only if a country were important to
U.S.  interests and if USIA's efforts could be effective.  The model
called for deemphasizing media and public opinion reporting because
other agencies and the private sector already provide such reports,
eliminating programs in the arts because they do not add to what is
being done privately, and reducing grants to highly developed
countries.  Top management concluded that without such a redesign,
Agency inertia would result in merely a downsized status quo, which
would not yield an effective overseas structure.  However, we were
told that top management could not reach a consensus on the model, so
as of August 1996, no actions had been taken. 


      DIFFICULTY IN ESTABLISHING
      LINK BETWEEN PROGRAM AND
      DESIRED RESULT
-------------------------------------------------------- Chapter 3:2.1

USIA has not conducted assessments required to determine if programs
that were developed in a different era have outlived their usefulness
or if the value added from their involvement is worth the investment. 
Agency officials believe it is difficult to link a program to a
desired result, and existing evidence of impact is largely anecdotal. 
Such assessments are critical to USIA's ability to sustain a major
reduction and remain viable. 

One activity that we believe merits such review is USIA's student
advising operation.  USIA spends about $2.6 million annually to
subsidize more than 400 educational advisory centers worldwide that
provide information about the U.S.  system of education.  Some of
these centers are housed in USIA offices and are fully funded by the
U.S.  government.  Others are operated by host country universities
or U.S.  nonprofit organizations and are partially funded by USIA. 
An additional $1.4 million is spent for training, materials, and
other activities.  USIA believes that it is in the best interests of
the United States to support student advising because international
students spend nearly $7 billion a year in the United States,
contributing substantially to the U.S.  economy, and American
students are introduced to different cultures, enhancing diversity. 
However, the USIA Inspector General recently concluded that new
worldwide trends to internationalize higher education, advancements
in communication technology, and the increased sophistication of
non-U.S.  government-sponsored educational advising institutions
indicate that a guidance and oversight role for USIA is more
appropriate than an operational one.  Overall, the USIA Inspector
General believes that the increase in private sector counseling
services, coupled with dwindling USIA resources, suggest it is now an
appropriate time for USIA to turn over its educational advising role
to the private sector. 

USIA's English language training program, which originated in 1941,
also is a candidate for review.  The purpose of this program is to
encourage the teaching of English; develop host country institutional
capabilities to teach English; directly teach English in Africa, the
Near East, and Asia; and design materials to supplement host
countries' classroom texts in more than 140 countries, including
Western countries such as Brazil, France, and Mexico.  USIA supports
the program in part because it allows the United States access to
people and institutions that it might otherwise be denied, such as
universities in Islamic countries, and provides a better
understanding of and appreciation for American culture and values in
the curricula of these institutions. 

Other programs, specific to one or more posts, should also be
considered for review if budgets are significantly reduced.  For
example, a large post like Germany may employ translators and
printing facilities and issue post-generated materials whose value
would need to be assessed in a time of declining budgets.  One
example is a publication that contains statements made by U.S. 
officials on foreign policy questions and is developed and
distributed by the USIA post in Germany. 


   ALTERNATIVES TO CULTURAL
   CENTERS AND EXPENSIVE
   INFRASTRUCTURE COULD REDUCE
   COSTS
---------------------------------------------------------- Chapter 3:3

USIA data indicate that it maintains more than 70 cultural centers,
libraries, and branch offices overseas.  Because they may not be
co-located with an embassy and require staff to deal directly with
the public, they are often expensive to operate.  In Germany, for
example, the fiscal year 1995 cost to operate six cultural centers
(called America Houses) was nearly $9 million, which was for 77 staff
and for activities such as reference centers, including online
databases; student counseling activities; and cultural events.  Lease
costs for USIA's three branch offices in Japan exceed $350,000 a
year, and the cost for offices in Milan, Italy, was approximately
$137,000.  USIA stated that between fiscal years 1992 and 1996 it
closed 30 cultural centers, 12 of them in conjunction with decisions
to close posts in countries such as Iraq, Somalia, Lesotho, and
Guyana. 

USIA could cut costs by finding alternatives for its cultural
centers.\2 For example, the USIA Inspector General believes that
binational centers are a cost-effective alternative to cultural
centers.  Binational centers are private, autonomous institutions
established to promote mutual understanding between the United States
and host countries.  USIA may have only minimal or no funds invested
in the centers and may or may not assign staff.  USIA successfully
encouraged the formation of a binational center when funding
limitations forced it to close an America House in Germany.  USIA
collaborated with private industry and the local German government to
establish a German-American Institute to further relations through
cultural and educational events.  This decision could cut USIA's
annual operating costs in Germany by as much as half a million
dollars.  Of the 126 existing binational centers, 101 are located in
Latin America, 16 in Europe, 4 in the Far East, and 5 in the Middle
East. 

USIA officials said that the Agency has been forced to incur costs
for office space when an embassy or a consulate does not have
sufficient room available to house USIA.  Nevertheless, when
available, colocating with the State Department offers a more cost-
effective approach.  In 1996, USIA plans to terminate a $366,000
annual lease in Seoul, Korea, and a $455,000 annual lease in
Singapore and move into embassy facilities in both countries.  We
were also informed that when USAID leaves the Czech Republic, space
may become available for USIA to move onto embassy property and
relinquish its lease costing $100,000 a year. 


--------------------
\2 USIA decided not to open cultural centers throughout the newly
independent states of the former Soviet Union because the $3.7
million start-up cost at each location was prohibitive. 


   EXPANDING INNOVATIVE MANAGEMENT
   APPROACHES MAY PERMIT USIA TO
   ABSORB ADDITIONAL REDUCTIONS
---------------------------------------------------------- Chapter 3:4

If after assessing the impact of its overseas programs USIA believes
they remain critical to U.S.  foreign policy goals, USIA would still
be in a position to reduce costs.  USIA would be better able to
accommodate reduced funding levels by (1) obtaining further financial
support from the private sector, (2) charging fees for more of its
products, and (3) ensuring that improved communication technologies
are effectively integrated into how USIA delivers information. 

Historically, USIA has had a close relationship with the private
sector, particularly with educational and nonprofit institutions that
support international exchanges.  Recently, USIA headquarters and
posts have sought to interest the private sector in supporting other
USIA programs to lessen government costs.  For example, the Vice
President instructed USIA to seek creative funding arrangements for
its overseas counseling activities.  In response, USIA entered into
an agreement with a private company to assume control of the
previously USIA-managed advising center in Singapore.  The company
will pay all costs, but the center will still carry the USIA name and
logo. 

USIA has sought to maximize its funding by charging for some of its
activities, and the Congress authorized USIA to supplement direct
appropriations with the proceeds.  In fiscal year 1995, USIA yielded
$3.5 million from customers of its worldwide English language
training program.  Posts sell materials to clients to cover shipping,
administrative, and markup costs.  Posts retain 95 percent of the
proceeds to spend on programs like their English training specialists
or to help host countries develop institutions to teach English. 
Five percent of the proceeds are returned to headquarters for
support.  To a much lesser degree, USIA can recoup some of the costs
associated with student advising.  All USIA-supported student
advisory centers can charge for their services.  According to USIA
officials, however, USIA posts cannot charge for services or
headquarters-supplied products.  The only exception is independently
developed materials, which in Germany are prepared in German,
published, and sold directly to students. 

USIA determined that as a global information agency in the
information age it needed to modernize its communication technology
and in fiscal year 1996 embarked on a modernization plan.  Its
headquarters reorganization supported the integration of new
technologies.  It was envisioned that by exploiting electronic
technology, USIA could close down high overhead public access
libraries in Europe and replace them with information centers, and
could open up home pages on the Internet for easy access by users. 
Home pages may include speeches and other statements of U.S. 
officials, information on country post activities, clips of U.S. 
news articles, and other information for researchers.  While not
explicitly stated, the underlying assumption would appear to be that
technology would significantly reduce and change USIA's involvement
in supplying information. 

We observed, however, that some USIA officials in the field appear to
view technology more as an addition than as a replacement for their
long-standing programs.  One official noted, for example, that
information centers were opened at the cost of closing traditional
libraries that lent out books and other materials.  Furthermore, USIA
believes that technology does not negate the need to target
individuals and institutions they believe are influential in shaping
opinions or insuring that the public receive accurate, comprehensive
coverage of U.S.  policies.  USIA officials with whom we spoke
believe that technology can never replace the personal contact of
USIA officials and can in fact cause an even greater need for USIA. 
They note that the proliferation of information will require that
USIA play an even greater role in explaining and sifting through all
the available data. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 3:5

USIA said that no one model can shape all overseas posts, and it is
recasting the size, scope, and focus of some of its operations and
phasing out separate cultural center operations whenever feasible. 
Regarding the privatization of its student advising program, USIA
stated that it will continue to cultivate private support of student
advising, but commented that it is not in the U.S.  government's
interest to fully privatize student counseling.  USIA also noted that
the goals of its English language program--to orient foreign teachers
toward American English and materials so students will be more likely
to study in the United States rather than other English language
countries and to develop ties with the United States--is not
generally shared by commercial programs. 


ACADEMIC AND CULTURAL EXCHANGE
PROGRAMS
============================================================ Chapter 4

USIA manages a variety of exchange programs to foster mutual
understanding between the people of the United States and other
countries.  Appendix II provides detailed information about these
programs.  In fiscal year 1996, these exchanges cost about $210
million plus approximately $29 million to manage them.  In recent
years funding levels have not permitted USIA to maintain the same
number of exchanges it supported in the past.  Should funding be
further reduced, options to cut costs include (1) eliminating certain
exchanges entirely, (2) reducing the amount of funds USIA allocates
to each program, or (3) obtaining more financial support from the
private sector or foreign governments.  The advisability of
implementing any or all of these options would need to be evaluated
along with the impact such actions might have on U.S.  bilateral
relationships and on the promotion of ties between private citizens
and organizations in the United States and abroad. 


   ASSESSING THE NEED FOR SOME
   USIA EXCHANGES COULD YIELD
   REDUCTIONS
---------------------------------------------------------- Chapter 4:1

USIA currently manages some U.S.  government exchange programs that
have existed for more than 50 years.  In 1994, USIA academic
exchanges accounted for less than 24 percent of all U.S. 
government-funded international exchange and training activities. 
The Agency has evaluated these programs, but the evaluations fell
short of assessing the usefulness of the programs for promoting U.S. 
foreign policy objectives.  Whether the federal government still
needs to fund each exchange, whether the exchange is targeted at the
most appropriate countries, whether it is unique and unavailable from
the private sector, and whether it is effective are questions
requiring review should the budget for exchanges be significantly
cut. 


      USIA ACADEMIC EXCHANGES
      REPRESENT A SMALL PORTION OF
      FOREIGN STUDENTS IN THE
      UNITED STATES
-------------------------------------------------------- Chapter 4:1.1

USIA manages a variety of academic scholarships.  The best known is
the Fulbright Academic Exchange program, which involves the exchange
of about 4,700 U.S.  and foreign students, research scholars,
lecturers, and teachers annually.  Additionally, USIA manages other
academic exchanges such as the Hubert H.  Humphrey Program, under
which mid-career professionals from developing countries receive a
year of specially designed academic study and professional
internships, an undergraduate exchange for economically disadvantaged
Central American students, and the Edmund S.  Muskie Fellowship
Program for mid-career professionals and qualified students in the
newly independent states to do graduate study in the United States in
the fields of business administration, economics, law, and public
administration. 

When the Fulbright Program was established, few foreign students came
to the United States for studies.  Clearly one objective of the
program was to provide funds to spur such interchange, and this was
borne out in subsequent years.  According to the Fulbright Foreign
Scholarship Board, in 1948, 500 British graduate students were
attending graduate studies in the United States, and of these, 200
were under the Fulbright program. 

Since the United States first began funding scholarships, conditions
have changed.  The number of foreign students in the United States
reporting personal or private resources as their primary source of
funding has increased markedly.  In 1950, 7.7 percent of foreign
students in the United States reported the U.S.  federal government
as their primary source of funding.  In 1994, about 453,000 foreign
students were studying in U.S.  colleges and universities.  In the
1994/95 academic year, only about 1.2 percent, or about 5,400
students received funding from the U.S.  government as their primary
source of support.  The Fulbright Program accounted for about 1,600
of the students receiving U.S.  government funds. 

Similarly, the number of U.S.  students abroad has increased
dramatically.  In 1969, approximately 18,000 U.S.  students were
studying abroad.  During the 1993-94 school year, more than 76,000
U.S.  students attended foreign educational institutions. 


      REDUCING CONCENTRATION OF
      EXCHANGES IN CERTAIN
      COUNTRIES IS AN OPTION TO
      REDUCE COSTS
-------------------------------------------------------- Chapter 4:1.2

Some officials believe USIA could decrease funding for exchanges with
western industrialized countries.  One USIA official argued that in
times of severe budget reductions, the Agency should direct more of
its resources to those countries with the greatest potential to
disrupt the world order.  A State Department official asserted that
USIA should concentrate more of its programs in Eastern Europe and
the former Soviet Union where information on the United States is
lacking.  Another State official asserted that USIA should operate in
poorer countries where social, political, and cultural development is
in the beginning stages. 

Although Western Europe accounts for approximately 20 percent of all
exchange participants, some European and other industrialized
countries receive relatively large programs.  The concentration of
exchange programs in some of these countries began shortly after
World War II.  For example, the U.S.  government began exchanges with
Germany in 1945 as part of a larger effort to assist Germans in
creating a new society modeled on western democratic concepts.  The
U.S.  government also engaged in democratization efforts in Japan. 
The exchanges initiated under these efforts evolved into the
Fulbright Program and other USIA exchanges. 

Germany and Japan have become modern democracies with large
economies, and many students from these countries study in the United
States.  In 1994, Japan, with over 45,000 students studying in the
United States, was the leading country of origin for foreign
students.  Germany was the leading country of origin in Europe for
foreign students studying in the United States.  In the 1994-95
school year there were 8,500 such students.  Despite the large number
of German and Japanese students studying in the United States on
their own, USIA still maintains a large program of exchanges in both
countries.  USIA's program with Germany ranks second of 187 countries
in which USIA has programs.  In 1994, 2,481 Germans traveled to the
United States and 861 Americans traveled to Germany on USIA exchange
programs.  USIA's program with Japan is the 14th largest in terms of
participants.  In 1994, 305 Japanese traveled to the United States
and 125 Americans traveled to Japan on USIA exchanges. 

USIA and U.S.  embassy officials asserted that maintaining a large
exchange program with Germany is still important.  According to USIA
officials, exchanges with Germany help the United States maintain the
strong relationship between the United States and Germany and reach
former East German citizens who have not had any experience with
democratic principles.  Both the U.S.  Ambassador and public affairs
officer in Germany said it was important to maintain a good
relationship with Germany because it is emerging as the leading
economic power in Europe.  The Ambassador also asserted that the
United States cannot rely on past relationships to maintain its
influence in the region.  USIA has made similar assertions about the
need to maintain and nurture its relationship with Japan. 

Nevertheless, there is disagreement within USIA over the level and
appropriate share of exchanges with such countries.  One USIA
official, for example, believes that the number of exchanges with
Germany is unnecessary because of the flow of exchanges funded by
other sources.  Another official offered that if private sector
exchanges are occurring without USIA, USIA exchanges could be merely
duplicating private sector efforts. 


      BASING CUTS ON UNIQUENESS
      AND RELATIONSHIP TO FOREIGN
      POLICY GOALS MAY BE OPTION
-------------------------------------------------------- Chapter 4:1.3

USIA and embassy officials with whom we met believe that the
international visitor and citizens exchange programs are particularly
important because they are directly related to U.S.  mission goals. 
These programs have little or no parallels in the private sector.  As
a result, some have suggested that these should be the last exchanges
targeted for cuts.  Furthermore, USIA officials also informed us that
those academic exchanges that involve government-to-government
agreements may also directly support U.S.  objectives and should be
maintained. 

For example, the officials told us that the International Visitors
Program can be linked to U.S.  foreign policy goals more readily than
long-term academic programs because the visitors' exchanges are
directly tied to USIA goals as described in the posts' country plans. 
Furthermore, participants are selected by post officials, including
the ambassador and the public affairs officer. 

To illustrate, USIA planned an International Visitor Program for a
group of German government and private sector officials around the
theme of foreign policy challenges facing western nations.  The USIA
post especially wanted to target persons from former East Germany who
had little contact with the United States but whose views would be
important in shaping future German policy.  In commenting on the
program, one participant, who was an official of the youth wing of a
political party in the eastern states, informed USIA that the trip
gave him a much more favorable attitude about the United States.  His
activities included a week in Washington, D.C., to meet with staff
and representatives from the federal government, academia, lobbying
organizations, and think tanks; another week in Miami, Florida, to
explore the foreign policy implications of Cuban and Haitian refugees
and immigration through meetings with journalists, local business
people, and others; an academic seminar in Lincoln, Nebraska, to
discuss a variety of topics; a stop in San Jose, California, to
obtain information on current trade issues and military downsizing;
and a few days in New York City, New York, to meet with individuals
from a variety of organizations to discuss human rights issues.  USIA
officials in Bonn, Germany, estimated that this particular exchange
cost $12,658. 

Officials in Washington and the U.S.  ambassador to Germany described
the International Visitors Program as a vital tool in achieving U.S. 
foreign policy goals.  A private sector official who manages private
as well as USIA exchanges said the private sector rarely offers
exchanges to political leaders.  Though the private sector could and
sometimes does conduct professional visitor exchanges, these
exchanges are based on economic needs, not U.S.  foreign policy
considerations. 

USIA can also use the Citizens Exchange Program to meet more
immediate foreign policy needs.  For example, USIA funded a number of
citizens exchange grants focusing on public administration and local
government development, business administration/management training,
economic and educational reform, rule of law, and elections.  These
exchanges have taken place with citizens from a variety of countries
such as those in Central and Eastern Europe, the newly independent
states, and South Africa. 

On the other hand, the U.S.  Ambassador to Germany gave more
importance to the Fulbright and the Congress-Bundestag youth exchange
programs than other USIA exchange programs because they are
bilateral.  Members of the German parliament with whom we met stated
that U.S.  government support of the exchanges proves its commitment
to Germany.  A senior advisor to the Parliament stated that Germany
contributes more to these two exchange programs than the United
States does and would view any decrease in U.S.  support as a symbol
of disengagement.  In fiscal year 1995, Germany contributed $5.4
million to the Fulbright Program, while the U.S.  government
contributed $2.9 million.  Table 4.1 shows U.S.  and partner
contributions to the Fulbright Program. 

In 1995, USIA had active bilateral agreements with 50 of the 148
countries participating in the Fulbright program.  These executive
agreements establish binational commissions to administer the
exchanges and commit both parties to support the program.  USIA and
others assert that the bilateral nature of the Fulbright Program
makes it relevant to foreign policy and distinguishes it from other
private and U.S.-funded academic exchange programs despite the small
number of students it supports relative to the total studying in the
United States.  For example, one of the binational commissions stated
that the unique binational structure, governed and financed by
representatives of both contracting countries, makes the program
special among private and government programs. 



                                    Table 4.1
                     
                      USIA and Partner Contributions to the
                       Fulbright Program (fiscal year 1995)

                              (Dollars in thousands)


                                                 Endowments,
                                                 contributio
                                 Direct foreign          ns,
                          USIA       government      in-kind
Country                support          support      support        Total
------------------  ----------  ---------------  -----------  ==================
Argentina               $1,188             $200         $123        $1,511
Australia                  664              364          320        1,348
Austria                    325              527          117         969
Belgium/                   326              375            8         709
 Luxembourg
Brazil                   1,988              542           93        2,623
Bulgaria                   987                0           13        1,000
Canada                     263              200          444         907
Chile                      942                0          199        1,141
Colombia                   968               35          700        1,703
Cyprus                     242              215            8         465
Czech Republic           1,055              132          133        1,320
Denmark                    349              429          333        1,111
Ecuador                    693                0            9         702
Egypt                    1,130                0          239        1,369
Finland                    198              214          922        1,334
France                     946              656          270        1,872
Germany                  2,927            5,421          560        8,908
Greece                     527              105          305         937
Hungary                  1,559              131            8        1,698
Iceland                    199               85           19         303
India                    1,411                0           27        1,438
Indonesia                1,137                0          110        1,247
Ireland                    214                0           45         259
Israel                     941               71          372        1,384
Italy                    1,099              931            0        2,030
Japan                    1,816            3,591        1,013        6,420
Jordan                     767              100            0         867
Korea                      744              781            0        1,525
Malaysia                   503                0           43         546
Mexico                   1,956            1,200           75        3,231
Morocco                    678              924            0        1,602
Nepal                      542                0            0         542
Netherlands                388              518           38         944
New Zealand                509              181           51         741
Norway                     396              849          215        1,460
Pakistan                   851               14            4         869
Peru                       812                0           33         845
Philippines                739               35            6         780
Poland                   1,966                0          150        2,116
Portugal                   364               50          180         594
Romania                  1,597              103          130        1,830
Slovak Republic            633                0            0         633
Spain                      944            2,255          707        3.906
Sri Lanka                  565                1            0         566
Sweden                     350              381            0         731
Thailand                   840               80           75         995
Turkey                   1,215              241           65        1,521
United Kingdom             972              635          537        2,144
Uruguay                    290               27            0         317
================================================================================
Total                  $42,715          $22,599       $8,699       $74,013
--------------------------------------------------------------------------------

      EFFECTIVENESS MAY BE
      CRITERION ON WHICH TO BASE
      CUTS
-------------------------------------------------------- Chapter 4:1.4

One option to reduce costs is to eliminate or reduce exchanges with
the least impact.  For example, some officials believe that high
school exchanges should not be funded when budgets are declining
because they are more time-consuming and expensive, and have less
immediate impact than other exchanges.  However, USIA has little data
on the impact of exchanges that could be used to identify less
effective programs. 

As indicated in our June 1993 report\1 the Agency had devoted few
resources to evaluating the effectiveness and relative importance of
its programs because USIA believes exchange programs are inherently
beneficial and achieve foreign policy goals by promoting mutual
understanding, as stated in their enabling legislation.  Past USIA
evaluations were based mainly on anecdotal information, according to
a USIA official in the Office of Policy and Evaluation. 

In recent years, officials involved in advising or managing exchange
programs have expressed the need for more evaluation.  Furthermore,
in 1995, the U.S.  Advisory Commission on Public Diplomacy concluded
that the United States lacks a strategic justification for federally
funded exchanges.  USIA acknowledged the need for more evaluations
and in 1992 established the Office of Policy and Evaluation. 
However, the office's evaluations do not measure the impact in terms
of foreign policy goals.  Instead, the more than 60 studies conducted
attempted to measure the skills or knowledge the participants acquire
as a result of the exchange and their use of those skills after they
return to their countries. 

USIA officials have asserted that evaluating the impact of exchange
programs is difficult.  Its present approach of assessing the skills
and knowledge the participants acquire as a result of the exchanges
is not useful for deciding which programs are the most successful in
promoting U.S.  foreign policy goals.  According to an Office of
Policy and Evaluation official, USIA is developing criteria and a
methodology to better measure the degree to which exchanges are
linked to foreign policy goals and objectives at a broad level for
example, to U.S.  political and economic security.  He said the
office's goal is to develop evaluations that will support efforts to
prioritize programs. 


--------------------
\1 Exchange Programs:  Inventory of International Educational,
Cultural, and Training Programs (GAO/NSIAD-93-157BR, June 23, 1993). 


   ADDITIONAL OPTIONS TO REDUCE
   COSTS
---------------------------------------------------------- Chapter 4:2

In addition to scaling back or eliminating specific exchanges, USIA
can seek increased private sector and foreign government support to
offset possible budget cuts. 


      ENCOURAGE MORE PRIVATE
      SECTOR SUPPORT FOR EXCHANGES
-------------------------------------------------------- Chapter 4:2.1

In fiscal year 1995, USIA received approximately $109 million in
direct financial and other support from the private sector for
exchanges.  For example, private sector support for Fulbright
students ranges from tuition waivers to endowments to airline
tickets.  The Institute of International Education, one of the
organizations that manages the Fulbright student competitions for
USIA, also solicits private sector support and in 1994 raised about
$10 million for Fulbright students.  An Institute official stated
that the organization conducts the fund-raising efforts on its own
initiative.  He believes his organization could double the
contributions from the private sector if USIA provided a small amount
of resources for fund-raising activities.  Furthermore, the Fulbright
Foreign Scholarship Board has urged the binational commissions to
increase their efforts to raise funds from the private sector within
the countries they represent. 

The International Visitors Program, the Citizens Exchange Program,
and the Arts America Program also receive support from the private
sector.  Support for the International Visitors Program is provided
by 102 community-based voluntary organizations in 42 states generally
referred to as Councils of International Visitors.  Although USIA has
a budget of about $1.5 million to support the councils, the councils
raise most of the money they need to fund their activities.  Staff
and volunteers from the councils arrange the local appointments for
the visitors, accompany them, and arrange for home visits.  During
the home visits, volunteers arrange social events for the visitors
and take them sightseeing.  The home visits are often the highlight
of the program for the visitors.  For example, a visitor from Eastern
Germany stayed for 3 days with a farm family in Nebraska, where he
said he encountered the genuine America. 

Citizens Exchanges and Arts America Programs' requests for proposals
contain cost-sharing provisions requiring that organizations seeking
grants solicit other private sector support.  The Arts America
Program also solicits funds from foundations and corporations. 
Further, the program incorporates free commercial cultural activities
whenever possible.  For example, if a private organization funds a
musical or theatrical group's trip to Brazil, USIA may solicit a free
performance for its invited guests or fund the group's performance in
a neighboring country. 

At the same time, USIA officials caution that opportunities for the
private sector to assume total responsibility for USIA exchange
programs may be limited.  For example, USIA officials in Germany
assert that an increased role for the private sector is not viable if
a program such as the International Visitors Program is designed to
meet immediate foreign policy goals, or if a program is conducted
under a bilateral agreement.  They explained that the private sector
cannot make commitments for the U.S.  government.  Further, they said
foreign governments often prefer government-to-government
relationships.  Some former German international visitors said they
did not believe the private sector would be able to arrange the same
high-level meetings as the government.  One participant from eastern
Germany said he would not have participated in a program sponsored by
the private sector because it might have commercial purposes. 


      INCREASED FOREIGN GOVERNMENT
      SUPPORT FOR EXCHANGES COULD
      REDUCE COSTS
-------------------------------------------------------- Chapter 4:2.2

USIA could reduce its costs by requiring more support from partner
foreign governments.  One of the goals of the Fulbright Program is
that each binational partner provide an equal amount of the support,
but this goal has not been met.  Although most of the 50 partner
nations in the Fulbright Program provide program support, their
contribution falls far short of matching that of the United States. 
In fiscal year 1995, for every dollar the USIA spent on the Fulbright
Program, the foreign governments spent
19 cents.  Several binational partners (Austria, Belgium/Luxembourg,
Denmark, Finland, Germany, Japan, Morocco, the Netherlands, Norway,
Spain, and Sweden), contributed more to the program than the United
States in fiscal year 1995.  Table 4.2 shows fiscal year 1995 funding
and foreign government and private sector support for each of the
exchange programs. 



                               Table 4.2
                
                 USIA, Foreign Government, and Private
                    Sector Support for USIA Exchange
                      Programs (fiscal year 1995)

                         (Dollars in thousands)

                                     Foreign  Privat
                                  government       e
Program              USIA\a               \a  sector       Total
---------------  ---------------  ----------  ------  ================
Fulbright           $116,708         $22,599  $51,06      $190,374
                                                   7
Special              36,768              245  16,712       53,725
 academic
International        50,073            8,245     Not       58,318
 Visitor                                      availa
                                                 ble
Citizens              9,214            2,750  33,792       45,756
Congress-             2,500            3,200     Not       5,700
 Bundestag                                    availa
                                                 ble
Arts America          1,576                0   1,367       2,943
FSA/NIS\b            53,931                0   5,894       59,825
Unspent               1,940                0       0       1,940
 funding\c
======================================================================
Total\c             $272,710         $37,439  $108,8      $418,981
                                                  32
----------------------------------------------------------------------
\a Estimated. 

\b Freedom Support Act programs for the Newly Independent States of
the former Soviet Union funded through interagency transfer from
USAID. 

\c Funds carried over into fiscal year 1996. 

A USIA official stated that the Agency's efforts to encourage the
partner nations to increase their contributions have resulted in
increased contributions.  For example, he said Italy recently made a
commitment to double its contribution.  The Philippines and Turkey
have also made commitments to increase their support.  The USIA
official further stated that, although parity is the general goal,
some binational agreements make no reference to equal funding.  It
depends on the resources of the country.  He cautioned that it could
be difficult for USIA to demand increases from the partner nations
when the Agency is facing a substantial budget reduction and will
have to decrease its own contribution. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 4:3

USIA agreed that exchange programs should not be concentrated in
areas such as Western Europe, where non-USIA exchange opportunities
are plentiful.  As such, USIA indicated that it had been shifting
resources to exchange programs in regions that are not as fully
represented by other U.S.  government agencies or the private sector. 
Additionally, USIA stated that (1) it continues to curtail or
eliminate programs that must be sacrificed to address foreign policy
priorities; (2) it has moved resources from Central America to
Eastern Europe and the newly independent states of the former Soviet
Union; and (3) it encourages host government and private sector
cost-sharing of academic exchange programs and has been able to raise
the level of funding from partner countries. 


INTERNATIONAL BROADCASTING
============================================================ Chapter 5

The United States broadcasts over 1,600 hours of radio programming in
53 languages and over 400 hours of television in several languages
worldwide each week to support U.S.  foreign policy objectives. 
Appendix III explains each service and provides detailed information
on cost, staff, broadcast hours, and audience.  U.S.  international
broadcasting has undergone significant downsizing and restructuring. 
Nevertheless, a number of issues such as language priorities, the
proper mix of television and radio, and the role of the private
sector must be fully addressed to ensure the best use of limited, and
possibly declining, funds.  We offer some examples of the type of
cuts the Broadcasting Board of Governors (BBG) could choose to
implement if funding is reduced significantly. 


   INTERNATIONAL BROADCASTING HAS
   BEEN REORGANIZED TO ENHANCE
   OVERSIGHT
---------------------------------------------------------- Chapter 5:1

In the U.S.  International Broadcasting Act of 1994, the Congress
clearly tied international broadcasting to U.S.  foreign policy
objectives and reaffirmed the importance of continuing U.S. 
broadcasts to further U.S.  interests.  This legislation also
directed the creation of a broadcasting service, in addition to VOA,
to the People's Republic of China and other Asian countries that lack
adequate sources of free information. 

To better coordinate programs and ensure adequate oversight, the
legislation consolidated all nonmilitary international broadcasting
under the bipartisan BBG, which was established within USIA and
confirmed on August 11, 1995, and met for the first time on September
6, 1995.  The BBG is responsible for ensuring that broadcasts

  -- are consistent with broad U.S.  foreign policy objectives as
     well as international telecommunications policies and treaty
     obligations;

  -- do not duplicate U.S.  private or other democratic nations'
     broadcast activities;

  -- reflect the highest professional standards of broadcast
     journalism, including providing reliable information; and

  -- are designed to reach a significant audience. 

BBG staff told us that they will review all U.S.-sponsored
international broadcast entities and their various services to ensure
that they meet the U.S.  standards and principles. 


   ELIMINATING LANGUAGE SERVICES
   WOULD REDUCE COSTS BUT REQUIRE
   CLEAR BROADCASTING STRATEGY
---------------------------------------------------------- Chapter 5:2

Eliminating a language service or broadcast hours offers an immediate
reduction in costs.  For example, terminating RFE/RL's broadcasts in
Romanian could cut costs by over $2 million; terminating RFE/RL's or
VOA's Russian service could reduce annual funding by $7.8 million and
$5 million, respectively.  However, making decisions to cut languages
or services is difficult because the consolidation of VOA and RFE/RL
did not resolve questions regarding the relative importance and
priority of the various languages and the appropriate mix of
television and radio.  Furthermore, the BBG has yet to develop a
worldwide broadcasting strategy to address these issues. 


      WORLDWIDE LANGUAGE
      PRIORITIES NOT YET
      ESTABLISHED
-------------------------------------------------------- Chapter 5:2.1

The United States broadcasts in many languages for a variety of
reasons.  USIA agrees that some languages are clearly more important
to immediate U.S.  interests than others.  Some language services are
maintained because of interests of the Congress or the National
Security Council.  For example, in 1990 VOA proposed eliminating six
language services, Greek, Uzbek, Turkish, Slovene, Swahili, and Lao,
but decided to continue the services due to congressional and other
interest.  Also, there is a belief that maintaining low priority
services is "insurance" against a time when those languages may
become high priority.  For example, VOA eliminated its Farsi language
service in 1966 when Iran was a strong regional ally of the United
States.  After the fall of the Shah and the U.S.  hostage crisis, VOA
reinitiated a Farsi service in April 1979, but according to VOA
officials it took years to develop a high-quality service and to
rebuild a listening audience.  More recently, Creole was deemed a
low-priority language service.  However, with U.S.  intervention in
Haiti, the language took on a very high priority.  Therefore, the
cost savings from eliminating lower priority language services must
be measured against the risk of needing those language services in
the future. 

The BBG is developing a plan to extensively review all language
services and broadcast entities to determine their continued need and
effectiveness.  However, the BBG has not addressed the problem we
noted in 1992 concerning the lack of timely and specific research
data.\1 We concluded that the lack of data hampered VOA's ability to
make effective decisions on program content and resource allocations. 
Although extensive audience research is being conducted in Eastern
Europe and the former Soviet Union, research is still lacking in
other parts of the world.  For example, an August 1994 report by the
Office of Strategic Planning on the media climate in the Middle East
and South Asia concluded that the "data on VOA listenership in the
Middle East are uneven and largely out of date."

To date, the BBG has reviewed the Amharic service to Ethiopia after
receiving congressional complaints regarding the service.  It then
replaced the Amharic service with a new "Horn of Africa" service,
which includes two other languages in addition to Amharic to better
reach more people in that region of Africa.  The BBG considered input
from both the National Security Council and congressional staff, as
well as the best available audience research data, which came from
the British Broadcasting Corporation. 


--------------------
\1 Voice of America:  Management Actions Needed to Adjust to a
Changing Environment (GAO/NSIAD-92-150, July 1992). 


      ROLE OF TELEVISION AND RADIO
      IN U.S.  BROADCASTING NOT
      YET DECIDED
-------------------------------------------------------- Chapter 5:2.2

With tight budget constraints, difficult decisions may have to be
made regarding television and radio broadcasts.  Television is
significantly more expensive than radio but is rapidly becoming the
dominant broadcast medium throughout the world.  The number of
television sets worldwide is growing not only in industrialized
western countries but also in China and developing countries.  For
this reason, the United States Advisory Commission on Public
Diplomacy has recommended changing the mix of radio and television,
with more funding for television.  USIA research also supports
reducing shortwave broadcasting and increasing television programming
in many countries in Eastern Europe and the former Soviet Union.  BBG
staff informed us that they will be addressing this issue. 

VOA is experimenting with providing some television programming in
cooperation with Worldnet.  VOA's Mandarin service has initiated a
new program, China Forum, which is a weekly panel discussion
simultaneously broadcast live by radio and television.  The quality
of the television is not up to Worldnet's standards; nonetheless,
judging by the call-in segment of the program, it is popular since
over 20 percent of the callers are watching the program.  Worldnet,
using VOA broadcasters, produces a half-hour weekly television
program in Ukrainian, Window on America.  In a nationwide survey
conducted in the Ukraine in the spring of 1995, about 66 percent of
the respondents said they had heard of Window on America, one-half
said they had watched the program at least once during the previous 2
months, and 6 percent had watched it every week during the last 2
months.  This is comparable to weekly and occasional listening to VOA
or RFE/RL radio programming. 

High-quality television, such as Worldnet's programming and TV Marti,
is significantly more expensive than radio.  Furthermore, USIA does
not have as direct control over television transmission as it does
its shortwave radio.  Regarding the cost issue, Window on America, a
half-hour weekly program, costs about $790,000 annually to produce,
whereas 2 hours of daily VOA Ukrainian radio broadcasting costs $1.3
million annually to produce.  In the case of Radio and TV Marti, 24
daily hours of radio cost about $15 million, and 4-1/2 daily hours of
television cost $13.3 million in 1995.  Regarding control, most
viewers access U.S.  television programs from local television
stations or local cable systems.  Whoever controls the local cable
system or station can censor or terminate the broadcasts.  Few
potential viewers have, or have access to, satellite dishes to
receive the Worldnet signal directly. 


   INCREASED PRIVATE SECTOR
   FUNDING CAN REDUCE COSTS
---------------------------------------------------------- Chapter 5:3

In the U.S.  International Broadcasting Act of 1994, the Congress
expressed the sense that RFE/RL would no longer receive federal
funding after December 31, 1999.  VOA is attempting to get private
sector support for its programming and in some cases divest itself of
the programs, such as VOA Europe and the Latin American Service.  At
this time, however, the broadcasters have met with limited success in
interesting the private sector in assuming the costs and
responsibilities for international broadcasting. 

RFE/RL determined that both Poland and the Czech Republic least
required a U.S.  surrogate radio station and offered the best
potential for private support.  At this time, the prospects that
these spin-offs will actually occur is uncertain.  RFE/RL had hoped
that they could discontinue funding for the services by the end of
calendar year 1995.  However, RFE/RL estimated that for fiscal year
1996, it would still have to fund the services at a cost of $248,000
and $986,000, respectively.  VOA has also had little success
privatizing existing programs or language services.  One potential
partner for the Latin American service cited, among other concerns,
the lack of an adequate market assessment of listeners.  VOA
officials acknowledge shortfalls in audience research but cite the
cost associated with worldwide research. 

VOA and RFE/RL officials still hope that greater private sector
support is attainable, but it does not appear that, at least in the
near term, the private sector can replace the U.S.  government as the
prime supporter of this type of international broadcasting. 
Broadcast officials are concerned that several of their services,
such as those services aimed at closed societies, will not be
commercially profitable or in any way able to attract private sector
support for some time.  For example, VOA's attempts to persuade a
large corporation to fund broadcasts to China were unsuccessful,
partly because the corporation is concerned about the Chinese
government's reaction to its funding VOA broadcasts.  VOA has
received some prizes and other promotional items from private
businesses, but to date, such private support totals less than 1
percent of its appropriation. 


   MANAGEMENT IMPROVEMENTS OFFER
   POTENTIAL TO REDUCE COSTS
---------------------------------------------------------- Chapter 5:4

We identified areas where the study of existing overlap could yield
management improvements and cost reductions.  Further consolidation
of broadcasting assets, such as newsrooms, overseas bureaus, and
other offices, may result in additional cost reductions.  For
example, in fiscal year 1995 RFE/RL spent $919,000 on its Moscow
bureau and just over $1.5 million on freelancers for the Russian
service, while VOA spent about $725,000 on its Moscow bureau and
$45,000 on freelancers in Russia.  Also, program review functions
could be consolidated.  Currently, one office reviews all VOA,
Worldnet, and Marti programs, while RFE/RL is developing its own
program review capability to replace an office that was eliminated as
part of its downsizing. 

Greater emphasis on placement of radio programs on local AM and FM
radio stations has already reduced transmission costs while
increasing audience levels.  For example, VOA no longer broadcasts to
the Baltic states by shortwave; rather, broadcasts are sent by
satellite for placement on the respective national radio networks and
some private radio stations.  Elimination of shortwave broadcasting
significantly reduces transmission costs, and audience survey data
revealed that placement on local AM and FM stations increases the
number of listeners because the quality and accessibility of the
signal are better.  For example, a listener survey in three cities in
Senegal indicates a 4 to 7 percent listener rate for shortwave
broadcasts of VOA French to Africa but 22 to 34 percent listener
rates for the affiliate broadcasts.  Terminating VOA's English
broadcasts to Asia on shortwave and mediumwave could reduce
expenditures up to $2.5 million for transmission services. 

The trade-off to eliminating shortwave broadcasts is that in times of
crisis, hostile forces could terminate the local broadcasts since the
signal emanates from a location over which the United States has no
control.  Therefore, in many countries, such as Russia, VOA and
RFE/RL have local affiliates that broadcast their programs, but they
also continue to broadcast the programs directly over shortwave
radio.  VOA's 6 daily hours of direct broadcasting to Russia cost
almost $1 million annually to transmit. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 5:5

The Broadcasting Board of Governors characterized the report as
welcome and timely and noted that GAO's observations as well as
options to reduce costs have been and will continue to be reviewed by
the Board. 


GRANTEES FUNDED THROUGH USIA
============================================================ Chapter 6

The Congress uses the USIA budget as a means to transfer federal
funds to certain grantees.  Any USIA effort to curb spending cannot
unilaterally include reductions to these grants.  About $43.7
million, or 4 percent, of the fiscal year 1996 budget is for grants
to the National Endowment for Democracy, the East-West Center, and
the North/South Center. 


   NATIONAL ENDOWMENT FOR
   DEMOCRACY
---------------------------------------------------------- Chapter 6:1

The National Endowment for Democracy was established in 1983 as a
private, nonprofit organization to encourage free and democratic
institutions throughout the world and promote U.S.  nongovernmental
participation through private sector initiatives.  The Endowment
received $34 million in fiscal year 1995 and $30 million in fiscal
year 1996.  By law, the Endowment is a grant-making organization only
and cannot carry out programs directly.  It provides grants primarily
to the Center for International Private Enterprise, the Free Trade
Union Institute, the International Republican Institute, and the
National Democratic Institute.  An example of how the Endowment's
grant funds are used is the Free Trade Union Institute's trade union
development activities in Russia, Hungary, and Romania. 


   EAST-WEST CENTER
---------------------------------------------------------- Chapter 6:2

The East-West Center is an international educational institution
established in 1960 to promote better relations and understanding
among the nations of Asia, the Pacific, and the United States through
cooperative study, training, and research.  The Center conducts
research, seminars, and workshops and supports undergraduate and
graduate education.  For fiscal year 1995, the Center received $24.5
million, but the Congress reduced funding to $11.7 million for fiscal
year 1996. 


   NORTH/SOUTH CENTER
---------------------------------------------------------- Chapter 6:3

The North-South Center is a national educational institute closely
affiliated with the University of Miami.  Its mission is to promote
better relations, commerce, and understanding among the nations of
North America, South America, and the Caribbean.  The Center began
receiving a federal grant in 1991.  Since that time, funding has been
sharply reduced.  The Center received $10 million in fiscal year
1991, $4 million in fiscal year 1995, and $2 million for fiscal year
1996. 


OVERSEAS POST ACTIVITIES AND
PROGRAMS
=========================================================== Appendix I

This appendix describes activities of the overseas posts of the U.S. 
Information Agency (USIA).  Each post is unique because U.S.  foreign
policy interests and conditions in countries differ.  Nevertheless,
all posts develop core programs to supply information about U.S. 
policy and way of life, and manage exchanges and other cultural
activities. 


   ACTIVITIES AND PROGRAMS OF
   OVERSEAS POSTS
--------------------------------------------------------- Appendix I:1

Each year, USIA overseas posts develop plans that detail specific
activities and describe how each will support U.S.  goals as defined
by the Department of State.  USIA activities relate to the following
themes:  democracy and human rights, political security, U.S. 
society and values, communication and information, economic security,
and global issues.  Each major theme has subthemes that further
define the issues USIA will address.  For example, within the
democracy and human rights theme, USIA targets some of its programs
toward promoting the rule of law.  The goal of supporting
nonproliferation of nuclear weapons is an issue USIA may address as
it seeks to support U.S.  political security, while some USIA
activities address narcotics trafficking as one of the global issues
USIA supports.  The importance and emphasis placed on themes and
subthemes vary by country.  Democracy and narcotics would rank high
in an emerging democracy with a recognized drug-trafficking problem. 
Furthermore, specific issues or events--such as the Gulf War--may
require immediate USIA involvement.  Posts attempt to ensure that all
of their activities are tied to one or more of the themes. 

Posts implement their activities through their cultural and
information offices.  The ultimate goal of the information office is
to advocate U.S.  policy and provide sufficient information so that
foreign publics will support U.S.  policy.  An information officer is
the adviser and spokesperson for the ambassador on press and public
relations, and the point of contact with the foreign press.  An
information office may issue press releases and place USIA materials
in local newspapers, radio, or television; organize interviews or
teleconferences between foreign journalists and U.S.  officials; or
respond to requests for information on U.S.  culture and policy via
technologically advanced information centers.  For example, the post
in the Republic of Georgia developed a home page that includes
information on subjects such as consular services, student advising,
and information on the U.S.  government, including the White House
and the Congress.  Posts rely on a host of publications prepared in
Washington, D.C., such as the daily wireless file, which contains
news articles for overseas dissemination; materials translated into
Spanish, French, Arabic, or Russian; and special event reports on
relevant issues. 

The cultural office manages USIA-funded exchanges and speakers
programs, cultural centers, libraries, and other activities that
acquaint foreign nationals with U.S.  culture, institutions, and
values and prepare and encourage them to study in the United States. 
The office also manages student counseling, English language
training, sister cities programs, and other outreach activities to
the community.  For example, cultural officers may help to link a
foreign university with a university in the United States. 

Exchanges are a core function of the cultural offices.  In
administering exchanges, USIA officers and their staff may help
select exchange program candidates, administer English language
proficiency tests, present orientations to departing students, and
maintain contact with returning grantees to keep apprised of their
progress and use of their experiences.  Overseas posts also work with
USIA headquarters staff to develop international visitors' programs
and schedules that will meet U.S.  and participants' needs.  USIA
staff may also solicit private sector financial support for exchanges
and, with the help of press officers, plan and implement press events
to publicize their generosity. 

Examples of exchanges and other activities supporting U.S.  policy
include the following: 

  -- Posts in Africa supported democratic development through media
     training workshops on economic and political reporting and
     broadcast management and by pairing private institutions with
     American sister institutions, such as bar associations and
     women's organizations. 

  -- Posts in Latin America developed a multiyear anticorruption
     initiative with the U.S.  Agency for International Development
     by organizing several conferences and setting up television
     interactive programs. 

  -- Posts in Eastern and Central Europe provided legal advisers and
     funded international visitors to support improvements in the
     rule of law. 


   TYPICAL EVENTS OF A USIA
   CULTURAL CENTER
--------------------------------------------------------- Appendix I:2

USIA maintains approximately 40 cultural centers.  Specific
activities vary by country, but activities at the cultural centers in
Germany are typical of those found elsewhere.  During October 1995,
USIA in Germany reported that its cultural center staff in Berlin
participated in 38 events, 10 of which were held at the USIA America
House.  Additionally, the House engages in a variety of daily
activities, such as responding to information requests and counseling
German students about study in the United States. 

Costs for the 38 events were paid by several sources.  Nearly all of
them were conducted in conjunction with a non-U.S.  government
sponsor who supplied financial support, publicity, or the site for
the event.  Overall, incremental costs to the America House for each
event were minimal, ranging from $30 to $450, for a total of about
$4,000.  Nevertheless, these costs do not reflect the true U.S. 
government expense, as the USIA post in Germany pays personnel,
program, and infrastructure costs of $3 million to support the
maintenance of the cultural center and permit these events. 
Additionally, the America House may have hosted a U.S.  speaker whose
trip was funded out of one of the USIA exchange programs.  That cost
would therefore come from a headquarters exchange program budget. 
The following are examples of some events that occurred and their
incremental costs to USIA: 

  -- "Crossing Over-Changing Places," closing event of USIA Arts
     America Exhibit at a German museum.  America House cost:  $200. 

  -- "Welcome to Wittenberg," official greeting of delegation from
     Springfield, Ohio, which is Wittenberg's sister city.  America
     House cost:  $30. 

  -- "Preventive Diplomacy and Conflict Mediation," roundtable of
     U.S.  federal mediator with German officials at German
     foundation.  America House cost:  none. 

  -- "Black Poetry and Ethnic Pride," a reading by American author
     Michael Warr at the House.  America House cost:  none. 

  -- "Exhibition of photographs by Richard Crisler at a local
     facility.  America House cost:  $300. 

  -- "Meet the Author:  Susan Bergman," a reading at the House. 
     America House cost:  $300. 

  -- "Study in the U.S.," meeting at the House to discuss USIA
     program.  America House cost:  none. 

  -- "German-American and Transatlantic Relations," meeting of
     Ambassador with journalists at newspaper location.  America
     House cost:  none. 

  -- "U.S.  Exchange Program," discussion of U.S.  and German
     academics and members of nonprofit organizations at a local
     facility.  America House cost:  $50. 

  -- Opening of Leucorea Foundation and its Center for Advanced
     English and U.S.  Studies; Ambassador and others presided over
     opening ceremony at the Foundation.  America House cost:  $300. 

  -- "The Art of Miles Davis," press conference and exhibit opening
     at the House.  America House cost:  $300. 


EXCHANGE, INFORMATION, AND
CULTURAL PROGRAMS AND PRODUCTS
========================================================== Appendix II

USIA exchanges promote personal, professional, and institutional ties
between private citizens and organizations in the United States and
those abroad.  In addition, over the years, USIA has developed a
variety of products and programs for use overseas to enhance ties and
understanding. 


   ACADEMIC AND NONACADEMIC
   EXCHANGE PROGRAMS
-------------------------------------------------------- Appendix II:1

USIA administers a number of academic and nonacademic exchange
programs, including those detailed below. 


      ACADEMIC EXCHANGES
------------------------------------------------------ Appendix II:1.1

The Fulbright Program, established in 1946, is the centerpiece of
academic exchanges.  It awards about 4,000 grants annually to
American and foreign scholars to study, teach, lecture, or conduct
research.  The exchanges usually last from 6 to 12 months.  Other
academic exchanges were authorized to deal with special interests. 
These programs include exchanges (1) to establish and maintain
quality U.S.  studies programs at foreign universities; (2) to bring
mid-level professionals from developing countries, Eastern and
Central Europe, and the former Soviet Union to the United States for
a year of study and professional internships; and (3) to address a
wide variety of developmental needs for Russia and the newly
independent states of the former Soviet Union.  In fiscal year 1995,
the Fulbright Program cost about $117 million, and all other academic
programs cost approximately $37 million. 


      INTERNATIONAL VISITORS
      PROGRAM
------------------------------------------------------ Appendix II:1.2

The International Visitors Program is a major nonacademic exchange
that USIA manages.  It brings potential foreign leaders in
government, politics, the media, education, and other fields to the
United States to meet and exchange ideas with their American
counterparts.  U.S.  embassies overseas may choose participants based
on their knowledge in key fields, their positions, and their
influence in their own countries.  A visit to the United States may
be developed solely for one individual and focus on a particular
issue such as the U.S.  economy or the electoral system.  Other
international visitor exchanges bring together colleagues with
similar professional interests from a number of countries or regions. 
Typical exchanges last about 4 weeks.  In fiscal year 1995,
approximately 3,000 foreign individuals visited the United States
under this program, for which USIA's funding was about $50 million. 


      CITIZEN EXCHANGES
------------------------------------------------------ Appendix II:1.3

In fiscal year 1995, USIA awarded $9.2 million in grants to nonprofit
U.S.  institutions, including voluntary community organizations,
professional associations, and universities, to strengthen ties
between U.S.  and foreign institutions.  The exchanges are designed
around specific themes, for example, rule of law and development of
free market economies.  The citizen exchange program differs from the
international visitor program in that the citizen exchanges are
always two way.  For example, in one case a Latvian educator traveled
to the United States to learn about U.S.  higher education and the
land grant tradition, and then an American educator visited Latvia. 


      CONGRESS-BUNDESTAG PROGRAM
------------------------------------------------------ Appendix II:1.4

Through this program, German and American young people are linked
through a mutual exchange.  In fiscal year 1995, 820 people
participated in the secondary school exchanges, for which USIA
provided $2.5 million. 


      ARTS AMERICA PROGRAM
------------------------------------------------------ Appendix II:1.5

In fiscal year 1995, USIA spent about $1.6 million to fund tours of
performing arts groups and exhibitions, represent the Agency on the
Fund for U.S.  Artists at International Festivals and Exhibitions,
and provide limited awards to nonprofit institutions to encourage
increased private sector involvement in international arts exchanges. 
Resources for the program have declined over the years, and as a
result, activities have also declined. 


      FREEDOM SUPPORT ACT/NEWLY
      INDEPENDENT STATES AND SEED
      ACT PROGRAMS
------------------------------------------------------ Appendix II:1.6

USIA manages a variety of exchanges in Russia and the newly
independent states of the former Soviet Union.  Such programs include
exchanges of secondary school students and educators and internships
for Russian entrepreneurs.  In fiscal year 1995, USIA received about
$54 million in interagency transfers from USAID to support these
programs. 


   INFORMATION, TELEVISION, AND
   CULTURAL OUTREACH ACTIVITIES
-------------------------------------------------------- Appendix II:2

USIA develops a wide range of products to supply information about
the United States overseas.  Some of these products have been in use
for many years such as the daily wireless file, which provides posts
official texts and translations.  Others are recent additions and
incorporate advanced technology. 


      INFORMATION OUTREACH
      PRODUCTS AND SERVICES
------------------------------------------------------ Appendix II:2.1

  -- Foreign press centers located within the United States for
     official U.S.  government briefings to foreign journalists. 

  -- Telepress conferences. 

  -- Digital videoconferencing. 

  -- Daily wireless file. 

  -- Digital desktop publications keyed to policy issues (electronic
     journals). 

  -- Agency web and gopher sites. 

  -- USIA overseas post home pages. 

  -- On line CD ROM support for official documents. 

  -- Special print materials such as Economic Reform Today and Issues
     in Depth. 


      TELEVISION OUTREACH
------------------------------------------------------ Appendix II:2.2

  -- Satellite television conferences between U.S.  and foreign
     officials. 

  -- Specific programs about the United States, such as Window on
     America, and Foro Americano for Latin America. 

  -- Special issue programs such as Assignment:  Earth and Science
     World. 

  -- Viewer call-in shows such as Dialogue with the West and On the
     Line. 


      CULTURAL PROGRAMS
------------------------------------------------------ Appendix II:2.3

  -- Performing and fine arts presentations. 

  -- Artistic ambassadors. 

  -- Cultural specialists. 

  -- Creative arts linkages. 


      SPECIAL PROGRAMS
------------------------------------------------------ Appendix II:2.4

  -- U.S.  studies summer/winter institute. 

  -- U.S.  studies grant support. 

  -- English language fellows. 

  -- English language teaching specialists. 

  -- English language forum and other materials. 

  -- Regional English language support. 

  -- American Council of Young Political Leaders. 

  -- Partners of the Americas. 

  -- Sister cities international. 

  -- Advising and foreign student services. 

  -- Speakers Program. 


U.S.-FUNDED INTERNATIONAL RADIO
AND TELEVISION BROADCAST SERVICES
========================================================= Appendix III

This appendix describes the purposes and activities of individual
broadcast entities and provides information on language broadcasts,
broadcast hours, staff sizes, and estimated costs for each language
service. 


   FUNCTIONS OF U.S.  RADIO AND
   TELEVISION BROADCASTING VARY
------------------------------------------------------- Appendix III:1

The United States funds nonmilitary international broadcasts through
the Voice of America (VOA), Worldnet television, Radio and TV Marti,
and Radio Free Europe/Radio Liberty (RFE/RL).  Each has specific
missions, and all are components of USIA except for RFE/RL, which is
a private company funded by a federal grant.  Additionally, the
Congress has appropriated $10 million to start another private
company to conduct surrogate broadcasting to Asia.  This company, the
Asia Pacific Network (Radio Free Asia), was incorporated on March 11,
1996, and is expected to begin broadcasting later this year. 


      VOICE OF AMERICA
----------------------------------------------------- Appendix III:1.1

VOA's mission is to provide consistently accurate, objective, and
comprehensive news; present a balanced and comprehensive projection
of significant American thought and institutions; and present U.S. 
policies clearly and effectively.  VOA currently broadcasts over 800
hours of original programming weekly, in 47 languages.\1

Approximately 59 percent of VOA programming is news; 26 percent is
feature reporting about economics, science, medicine, American
history and culture, and other topics; 12 percent is music--jazz,
country, rock, and classical; and the remaining 3 percent is U.S. 
government editorials. 

In fiscal year 1995, VOA spent about $205 million.  Approximately
one-half of the funding was spent on programming, the news division
and bureaus, and broadcast operations and management, while the other
half was spent on engineering and technical operations, including
broadcast transmission, project planning, and engineering staff.  VOA
has an estimated 92 million listeners worldwide on shortwave and
medium wave (AM), and millions more now listen to VOA on local AM and
FM stations.  VOA places 42 of its language programs on over 1,300
independently owned stations in 96 countries. 


--------------------
\1 As of July 15, 1996, VOA will broadcast in 52 languages, with the
addition of the Bosnian, Kirundi, Kinyarwanda, Oromiffa, and Tigrigna
languages. 


      RADIO FREE EUROPE/RADIO
      LIBERTY
----------------------------------------------------- Appendix III:1.2

RFE/RL was established in the early 1950s as private nonprofit
companies to provide surrogate radio programming to and about Eastern
Europe and the Soviet Union.  It currently broadcasts or contracts
for over 700 hours of programming in 21 languages weekly.\2 As a
surrogate or alternate broadcaster, the main focus of RFE/RL
programming is news and commentary about political, social, and
economic developments within the countries and region.  With the end
of the Cold War and the emergence of new governments, RFE/RL has
expanded its coverage to programs that explain the details of how
market economies and democracies work to help the people understand
the rationale for needed but painful reforms.  It is also pursuing a
role as a model and trainer for the emerging independent media in
Eastern Europe and the former Soviet Union. 

In fiscal year 1995, RFE/RL spent about $244 million:  about $37
million for producing programs; $42 million for transmitting
programs; $65 million for administrative and management activities,
pension and retiree insurance, and other costs; and over $100 million
for downsizing RFE/RL and moving its operations from Munich, Germany,
to Prague, Czech Republic.  RFE/RL has an estimated audience of over
24 million regular listeners. 


--------------------
\2 RFE/RL launched two new private nonprofit companies to provide
news and current affairs programming in Czech and Polish on a
contract basis.  RFE/RL had planned to end all subsidies by the end
of fiscal year 1995 but has delayed plans to do so until the end of
fiscal year 1996, by which time it hopes that the Czech and Polish
companies will be self-sustaining. 


      WORLDNET
----------------------------------------------------- Appendix III:1.3

Worldnet was established in 1983 as the official television service
of the U.S.  government.  It provides nearly 400 satellite hours of
programming to more than 300 American embassies and cultural centers,
as well as over 1,200 television and cable systems in over 150
countries.  Worldnet broadcasts its own productions, such as Doing
Business, Window on America, and Science World; programs acquired
from commercial and private sources, such as MacNeil/Lehrer Newshour,
Ethics in America, and Working Woman; and statements, often live, by
the President and other senior U.S.  government officials.  Worldnet
also produced about 500 Dialogue programs in fiscal year 1995.  These
are live, interactive programs that bring together American and
international leaders, journalists, artists, and academics to discuss
U.S.  policy.  In the past year, Worldnet has regularly produced
programs in English, Arabic, French, Spanish, Russian, and Ukrainian. 
Additionally, it has produced or dubbed programs in several other
languages, such as German, Croatian, Mandarin, and Turkish. 

In fiscal year 1995, Worldnet spent about $23.7 million, of which
about $16.9 million was for about 283 personnel to produce, procure,
and distribute programs, and to procure, maintain, repair, and
replace technical equipment.  In addition to personnel expenses,
about (1) $2.8 million was spent to produce programs; (2) $400,000
was spent to acquire programs; (3) $2.6 million was spent to transmit
programs; and (4) $1.1 million was spent for travel, executive office
activities, and other items. 


      RADIO AND TV MARTI
----------------------------------------------------- Appendix III:1.4

Radio Marti was established in 1985, and TV Marti was established in
1990.  Their missions are to (1) support the right of the people of
Cuba to see, receive, and impart information and ideas; (2) further
the open communication of information and ideas; (3) serve as a
consistently reliable and authoritative source of accurate,
objective, and comprehensive news; (4) broadcast programs with a
variety of views; and (5) promote the cause of freedom in Cuba. 
Radio Marti broadcasts 24 hours a day, 7 days a week, while TV Marti
broadcasts 7 days a week from 3:30 a.m.  until 8:00 a.m.  They both
broadcast news and news commentary, features on life in the United
States and other nations, entertainment, and sports. 

In fiscal year 1995, TV Marti spent about $12.9 million, of which
$3.4 million was spent on news, $1.8 million on other programs, $4.5
million on technical operations, $2.1 million on direction and
management, and $1.2 million for conversion to UHF.  Radio Marti's
costs for the same period totaled $15.5 million:  $3.4 million for
news, $3 million for other programs, $1.6 million for research, $3.3
million for technical operations, $4.1 million for direction and
management, and $187,000 for acquisition and construction of
facilities. 


   LANGUAGE SERVICES OF U.S. 
   NONMILITARY INTERNATIONAL RADIO
   BROADCASTERS
------------------------------------------------------- Appendix III:2

Table III.1 shows languages broadcast; broadcast hours; staff sizes;
estimated direct costs of language services and program transmissions
as of January 15, 1996; audience estimates; and the source of the
audience estimates. 



                                   Table III.1
                     
                     Direct Program and Transmission Costs of
                          U.S. Nonmilitary International
                                   Broadcasting

                              (Dollars in thousands)

                                             Cost to   Audience
           Hours per  Number of   Program   transmit\  estimate   Basis for
Language    week\a      staff      cost         b      (weekly)   estimate
---------  ---------  ---------  ---------  ---------  ---------  --------------
VOA          12:15       11        $733       $228     42% or     1993 data
Albanian                                               957,000

VOA          7:00        10         639        68      20%        1995 data
Amharic

VOA          52:30       42        2,637      1,576    Jordan     1994 data
Arabic                                                 2.0%       (urban)
                                                       Lebanon
                                                       4.8%
                                                       Egypt
                                                       2.2%
                                                       UAE\c
                                                       0.8%
                                                       Saudia
                                                       Arabia
                                                       2.4%

VOA         (7:00)        8         527         0      47% or     1994 data
Armenian                                               560,000    (urban)

RFE/RL       21:00        8         833        177     16% or     1994 data
Armenian                                               190,000    (urban)

VOA          3:30         7         432        20      11% or     1995 data
Azerbaija                                              190,000    (urban)
ni

RFE/RL       21:00        7         624        170     21% or     1995 data
Azerbaija                                              360,000    (urban)
ni

VOA          10:30       10         705        108     23% or     1993 data
Bangla                                                 15,000,00
                                                       0

VOA          3:30         6         551        13      2% to 3%   Two 1995 data
Bulgarian                                              or         sets
                                                       140,000
                                                       to
                                                       270,000

RFE/RL       42:00       10        1,616       484     3% or      1995 data
Bulgarian                                              270,000

RFE/RL       28:00       10         990        265     6% or      1995 data
Belarus                                                500,000


VOA Burmese 10:30 12
740 89 No data
available
--------------------------------------------------------------------------------

VOA Cantonese 7:00 4
326 149 No data
available
--------------------------------------------------------------------------------
VOA          9:30        13         730        64      37% or     1995 data
Creole                                                 474,000    (urban)

VOA          10:30        6         558        227     7% or      1995 data
Croatian                                               225,000

VOA Czech    8:45        13         966        23      4% or      1995 data
                                                       330,000

RFE/RL       10:00        0         986         9      9% or      1995 data
Czech\d     (47:00)                                    760,000


VOA Dari 7:00 11 816
52 No data available
--------------------------------------------------------------------------------
VOA          28:30       21        1,732       978     Nigeria    1993 data
English                                                8.8%       1995 data
to Africa                                              Chad 1%    (urban)
                                                       Kenya 3%   1993 data
                                                       or
                                                       413,000


VOA English to 90:15
54 4,067 Part of No
data for W. Europe
and 1% to 5% for E.
Europe
--------------------------------------------------------------------------------

VOA English to Latin
20:00 \e \f 201
Chile 1% per 1993
data (urban) no
other America
--------------------------------------------------------------------------------

VOA English to 49:00
\e \f 786 No data
available Caribbean
--------------------------------------------------------------------------------

VOA English to East
49:00 \e \f 2,515 No
data available Asia
--------------------------------------------------------------------------------

VOA English to South
42:00 \e \f Part of
No data available
Asia
--------------------------------------------------------------------------------

VOA English to 70:00
\e \f $1,530 No data
available Mid-East
--------------------------------------------------------------------------------
VOA         (3:45)        5        $300         0      9% or      1995 data
Estonian                                               100,000

RFE/RL       7:00         8         874        67      7% or      1995 data
Estonian                                               90,000


VOA Farsi 24:30 26
1,982 160 No data
available
--------------------------------------------------------------------------------
VOA          22:30       19        1,365       336     Ivory      1995 data
French to                                              Coast 5%,  (urban)
Africa                                                 Senegal    low is
                                                       4-34%,     shortwave and
                                                       Chad 19%,  high is
                                                       Burkina    placement
                                                       Faso 6-
                                                       18%
                                                       Mauritani
                                                       a 31%

VOA          3:30         5         342        46      5% or      1994 data
Georgian                                               60,000     (urban)

RFE/RL       21:00        7         758        221     3% or      1994 data
Georgian                                               40,000     (urban)


VOA Greek (4:45) 5
347 0 No data
available
--------------------------------------------------------------------------------
VOA Hausa    6:00        10         620        56      Niger 6-   1994 data
                                                       26%        (urban)
                                                                  1993 data
                                                       Nigeria
                                                       8.1%

VOA Hindi    10:30       16        1,070       89      1%         1993 data
                                                                  (urban)

VOA          3:30        14         984        62      5% or      1994 data
Hungarian   (7:00)                                     410,000


VOA Indonesian 17:30
20 1,369 226 No data
available
--------------------------------------------------------------------------------
RFE/RL       28:00        8         705        214     5% or      1994 data
Kazak                                                  12,000     (urban)


VOA Khmer 14:00 13
850 80 No data
available
--------------------------------------------------------------------------------

VOA Korean 10:30 12
768 373 No data
available
--------------------------------------------------------------------------------

VOA Kurdish 7:00 6
461 66 No data
available
--------------------------------------------------------------------------------
RFE/RL       14:00        7         719        102     5% or      1994 data
Kyrgyz                                                 25,000


VOA Lao 7:00 10 717
34 No data available
--------------------------------------------------------------------------------
VOA         (3:30)        5         366         0      7% or      1995 data
Latvian                                                140,000

RFE/RL       7:00         7         933        67      9% or      1995 data
Latvian                                                180,000

VOA         (3:45)        6         452         0      19% or     1995 data
Lithuania                                              510,000
n

RFE/RL       7:00         7         783        67      19% or     1995 data
Lithuania                                              510,000
n


VOA Mandarin 77:00
58 4,000 2,129 No
data available
--------------------------------------------------------------------------------

VOA Pashto 7:00 13
915 43 No data
available
--------------------------------------------------------------------------------
VOA          21:00       23        1,685       137     2% to 3%   Two 1995 data
Polish      (1:45)                                     or         sets
                                                       579,000
                                                       to
                                                       850,000

RFE/RL       0:00         0         248         0      4% or      1995 data
Polish\d                                               1,200,000


VOA Portugese to
9:30 11 $696 $118 No
data available
Africa
--------------------------------------------------------------------------------
VOA         (5:00)       11         668         0      1% or      1992/93 data
Portugese                                              80,000     (urban)
to Brazil

VOA          7:00         8         665        123     7% or      1995 data
Romanian                                               1,340,000

RFE/RL       42:00       11        1,646       497     9% or      1995 data
Romanian                                               1,700,000

VOA          42:00       58        4,052       927     5% or      1995 data
Russian     (24:30)                                    5,800,000

RFE/RL      126:00       40        5,549      2,219    7% or      1995 data
Russian                                                8,100,000

VOA          21:00       10        1,137       657     5% to      Two 1995 data
Serbian                                                10%        sets
                                                       375,000
                                                       to
                                                       832,000

RFE/RL       14:00       16        1,754       176     7% or      1995 data
South                                                  582,000
Slavic

VOA          7:00         7         527        102     3% to 4%   Two 1995 data
Slovak                                                 or         sets
                                                       150,000
                                                       to
                                                       159,200

RFE/RL       14:00       11        1,088       20      7% or      1995 data
Slovak                                                 290,000


VOA Slovene (3:45) 3
230 0 No data
available
--------------------------------------------------------------------------------
VOA          15:00       20        1,232       167     1% to 6%   1993 data both
Spanish     (11:00)                                    for        urban and
to Latin                                               countries  national
America                                                surveyed

VOA          6:00         9         594        85      Kenya 3%   1993 data
Swahili                                                or
                                                       413,000


RFE/RL Tajik 24:30 8
755 157 No data
available
--------------------------------------------------------------------------------

RFE/RL Tatar-
Bashkir 28:00 7 792
157 No data
available
--------------------------------------------------------------------------------

VOA Thai (6:00) 4
326 0 No data
available
--------------------------------------------------------------------------------

VOA Tibetan 14:00 15
827 178 No data
available
--------------------------------------------------------------------------------
VOA          7:00         9         616        96      2% or      1994 data
Turkish                                                803,400


RFE/RL Turkmen 28:00
7 723 253 No data
available
--------------------------------------------------------------------------------
VOA          14:00       17        1,322       192     5% or      1995 data
Ukrainian                                              2,000,000

RFE/RL       42:00       21        2,157       359     7% or      1995 data
Ukrainian                                              2,800,000

VOA Urdu     10:30       15        1,003       187     1% or      1992/93 data
                                                       707,800

VOA Uzbek    4:00         8         574        53      4% or      1994 data
                                                       30,000     (urban)

RFE/RL       28:00        7         667        178     6% or      1994 data
Uzbek                                                  40,000     (urban)


VOA Vietnamese 21:00
16 1,138 261 No data
available
--------------------------------------------------------------------------------
Radio       168:00       101       8,300       936     16% to     1994 and 1995
Marti                                                  76%\g      data
--------------------------------------------------------------------------------
\a Number indicates the direct broadcast hours on shortwave or medium
wave.  Numbers in parentheses indicate original broadcasting hours on
affiliate stations.  Rebroadcast affiliate hours are not shown. 

\b Transmission cost does not include the fixed costs of maintaining
the transmission network, including satellite feeds, salaries, and
rents. 

\c UAE = United Arab Emirates. 

\d RFE/RL Czech and Polish services are separate nonprofit
corporations that receive subsidies from RFE/RL. 

\e Staff are included in the VOA English to Europe staff number. 

\f Program cost is included in the VOA English to Europe service. 

\g Radio Marti audience estimates vary due to the difficulty of
conducting audience research in a closed society.  The 76-percent
figure for 1995 is based on interviews with Cuban travelers in Miami,
while the 16-percent figure for 1994 is based on personal interviews
in Cuba. 




(See figure in printed edition.)Appendix IV
COMMENTS FROM THE U.S. 
INFORMATION AGENCY
========================================================= Appendix III



(See figure in printed edition.)



(See figure in printed edition.)




(See figure in printed edition.)Appendix V
COMMENTS FROM THE BROADCASTING
BOARD OF GOVERNORS
========================================================= Appendix III


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI


   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix VI:1

John Brummet
Rick Barrett
John Butcher
Hynek Kalkus
Joan Slowitsky
Laverne Tharpes





RELATED GAO PRODUCTS
============================================================ Chapter 1

USIA:  Issues Related to Reinvention Planning in the Office of Cuba
Broadcasting (GAO/NSIAD-96-110, May 13, 1996). 

Overseas Staffing:  U.S.  Government Diplomatic Presence Abroad
(GAO/T-NSIAD-95-136, Apr.  6, 1995). 

International Broadcasting:  Downsizing and Relocating Radio Free
Europe/Radio Liberty (GAO/NSIAD-95-53, Apr.  5, 1995). 

Radio Marti:  Program Review Processes Need Strengthening
(GAO/NSIAD-94-265, Sept.  23, 1994). 

Voice of America:  Station Modernization Projects Need to Be
Justified (GAO/NSIAD-94-69, Jan.  24, 1994). 

Promoting Democracy:  Foreign Affairs and Defense Agencies Funds and
Activities--1991 to 1993 (GAO/NSIAD-94-83, Jan.  4, 1994). 

International Broadcasting (GAO/NSIAD-93-302R, Sept.  17, 1993). 

International Broadcasting (GAO/NSIAD-93-286R, Sept.  17, 1993). 

Foreign Assistance:  Promoting Judicial Reform to Strengthen
Democracies (GAO/NSIAD-93-149, Sept.  1, 1993). 

Exchange Programs:  Inventory of International Educational, Cultural,
and Training Programs (GAO/NSIAD-93-157BR, June 23, 1993). 

Exchange Programs:  Observations on International Educational,
Cultural, and Training Exchange Programs (GAO/T-NSIAD-93-7, Mar.  23,
1993). 

Radio Marti (GAO/NSIAD-93-126R, Feb.  17, 1993). 

Foreign Affairs Issues (GAO/OCG-93-26TR, Dec.  1992). 

Nonimmigrant Visas:  Requirements Affecting Artists, Entertainers,
and Athletes (GAO/NSIAD-93-6, Oct.  26, 1992). 

Voice of America (GAO/NSIAD-92-300R, Aug.  17, 1992). 

Voice of America:  Management Actions Needed to Adjust to a Changing
Environment (GAO/NSIAD-92-150, July, 24, 1992). 

TV Marti:  Costs and Compliance With Broadcast Standards and
International Agreements (GAO/NSIAD-92-199, May 6, 1992). 

Promoting Democracy:  National Endowment for Democracy Efforts to
Improve Grant Management (GAO/NSIAD-92-89, Jan.  28, 1992). 

Promoting Democracy:  National Endowment for Democracy's Management
of Grants Needs Improvement (GAO/NSIAD-91-162, Mar.  14, 1991). 

Broadcasts to Cuba:  TV Marti Surveys Are Flawed (GAO/NSIAD-90-252,
Aug.  9, 1990). 

U.S.  Information Agency:  Waiver of Exchange Visitor Foreign
Residence Requirement (GAO/NSIAD-90-212FS, July 5, 1990). 

Selected Personnel Practices of the Voice of America Warrant
Management Attention (GAO/T-NSIAD-90-49, June 19, 1990). 

Need for Study of U.S.  International Broadcasting Policy
(GAO/T-NSIAD-90-24, Mar.  22, 1990). 

International Broadcasting:  Construction of U.S.  Radio Relay
Station in Israel (GAO/NSIAD-90-123FS, Mar.  14, 1990). 

U.S.  Information Agency:  Inappropriate Uses of Educational and
Cultural Exchange Visas (GAO/NSIAD-90-61, Feb.  16, 1990). 


*** End of document. ***