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FOREIGN OPERATIONS, EXPORT HNANCING, ,xro7 / AND REUTED PROGRAMS APPROPRIATIONS aiu FOR 1997 Y4.AP bfl.flb/bmy PT,3 Foreign Operations* Export Financin. . . JilNGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OP REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS SECOND SESSION SUBCOMMITTEE ON FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS SONNY CALLAHAN, Alabama, Chairman JOHN EDWARD PORTER, IlUnois CHARLES WILSON, Texas BOB LIVINGSTON, Louisiana SIDNEY R. YATES, Illinois JIM LIGHTFOOT, Iowa NANCY PELOSI, California FRANK R. WOLF, Virginia ESTEBAN EDWARD TORRES, California RON PACKARD, California JOE KNOLLENBERG, Michigan MICHAEL P. FORBES, New York JIM BUNN, Oregon NOTE:UnderCommitteeRules,Mr.Livingston,asChairmanoftheFullCommittee,andMr.Obey,asRanking MinorityMemberoftheFullCommittee,areauthorizedtositasMembersofallSubcommittees. Charles Flickner, William B. Inglee, and John Shank, StaffAssistants, LoRi Maes, Administrative Aide PART 3 Page — Administrator ^Agency for International Development 1 President's Fiscal Year 1997 Budget Request for Security Assistance 141 Supenntendent ot Doeuments" DEPOSITORY JUL 1 6 1996 Printed for the use of the Commiltee on Appropriations Boston Public Library «_GQvernment DociimBnt^ nop* FORnGN OPERATIONS, EXPORT FINANCING, AND REUTED PROGRAMS APPROPRIATIONS FOR 1997 HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS SECOND SESSION SUBCOMMITTEE ON FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS SONNY CALLAHAN, Alabama, Chairman JOHN EDWARD PORTER, Illinois CHARLES WILSON, Texas BOB LIVINGSTON, Louisiana SIDNEY R. YATES, Illinois JIM LIGHTFOOT, Iowa NANCY PELOSI, California FRANK R. WOLF, Virginia ESTEBAN EDWARD TORRES, California RON PACKARD, California JOE KNOLLENBERG, Michigan MICHAEL P. FORBES, New York JIM BUNN, Oregon NOTE:UnderCommitteeRules,Mr.Livingston,asChairmanoftheFullCommittee,andMr.Obey,asRanking MinorityMemberoftheFullCommittee,areauthorizedtositasMembersofallSubcommittees. Charles Flickner, Willl\m B. Inglee, and John Shank, StaffAssistants, LORi Maes, Administrative Aide PART 3 Page — Administrator ^Agency for International Development 1 President's Fiscal Year 1997 Budget Request for Security Assistance 141 Printed for the use of the Committee on Appropriations U.S. GOVERNMENT PRINTING OFFICE 24-838O WASHINGTON 1996 : ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-052732-5 COMMITTEE ON APPROPRIATIONS BOB LIVINGSTON, Louisiana, Chairman JOSEPH M. McDADE, Pennsylvania DAVID R. OBEY, Wisconsin JOHN T. MYERS, Indiana SIDNEY R. YATES, IlUnois C. W. BILL YOUNG, Florida LOUIS STOKES, Ohio RALPH REGUL.\, Ohio TOM BEVILL, Alabama JERRY LEWIS, California JOHN P. MURTHA, Pennsylvania JOHN EDWARD PORTER, Illinois CHARLES WILSON, Texas HAROLD ROGERS, Kentucky NORMAN D. DICKS, Washington JOE SKEEN, New Mexico MARTIN OLAV SABO, Minnesota FRANK R. WOLF, Virginia JULIAN C. DDCON, California TOM Delay, Texas VIC FAZIO, CaUfomia JIM KOLBE, Arizona W. G. (BILL) HEFNER, North Carolina BARBARA F. VUCANOVICH, Nevada STENY H. HOYER, Maryland JIM LIGHTFOOT, Iowa RICHARD J. DURBIN, lUinois RON PACKARD, California RONALD D. COLEMAN, Texas SONNY CALLAHAN, Alabama ALAN B. MOLLOHAN, West Virginia JAMES T. WALSH, New York JIM CHAPMAN, Texas CHARLES H. TAYLOR, North CaroUna MARCY KAPTUR, Ohio DAVID L. HOBSON, Ohio DAVID E. SKAGGS, Colorado ERNEST J. ISTOOK, Jr., Oklahoma NANCY PELOSI, California HENRY BONILLA, Texas PETER J. VISCLOSKY, Indiana JOE KNOLLENBERG, Michigan THOMAS M. FOGLIETTA, Pennsylvania DAN MILLER, Florida ESTEBAN EDWARD TORRES, CaUfornia JAY DICKEY, Arkansas NITA M. LOWEY, New York JACK KINGSTON, Georgia RAY THORNTON, Arkansas FRANK RIGGS, California JOSE E. SERRANO, New York MIKE PARKER, Mississippi RODNEY P. FRELINGHUYSEN, New Jersey ROGER F. WICKER, Mississippi MICHAEL P. FORBES, New York GEORGE R. NETHERCUTT, Jr., Washington JIM BUNN, Oregon MARK W. NEUMANN, Wisconsin James W. Dyer, Clerk and StaffDirector (U) FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS APPROPRIA- TIONS FOR 1997 Wednesday, April 24, 1996. AGENCY FOR INTERNATIONAL DEVELOPMENT U.S. WITNESS j. brianatwood,administrator Chairman's Opening Statement Mr. Callahan. Good morning, Mr. Administrator. We are happy you could be with us. It is important that we hear from you and have the ability to ask questions, because it is becoming difficult to obtain timely and complete information from AID regarding its ongoing operations and the 1997 budget as well. We do not yet have a congressional presentation document from AID. Both the State Department and Treasury Department have supplied us with documents for their budget request. We also only have tentative numbers for country allocations for fiscal year 1997, and although I do understand that you are negotiating with the State Department on final decisions on country closeout and reductions, I am told that it will be at least mid-May before a complete congressional presentation document will be available to the committee. Thus, we may mark up our 1997 appropriation bill without an adequate justification for the President's budget request for AID. While our 1996 appropriation bill was not fully enacted into law until late January, with the exception of one amendment, the con- ference report was actually adopted in the House last October. The 1996 funding level should have been no surprise to the agency. However, it was not until 2 weeks ago that we received a final version ofAID's proposed plans for implementation ofthe 1996 Ap- propriation Act, and the 1996 country allocations have just arrived. I have stated a number of times that I am not interested in micromanaging your department. However, ifoperational flexibility is abused or if the agency fails to adequately inform the Congress of their activities, then we certainly have the authority to take stronger steps. In addition, as I indicated in our Haiti hearing last month, when we do take a position in either bill language or report language, I expect this direction to be taken seriously. If it is not, then my po- (1) sition on providing as much flexibility as possible to the executive branch might conceivably have to be revisited. The point is that you can have your shrimp fried or boiled or bar- becued, but you must remember that we are the ones who give you the shrimp, and if you want us to tell you how to prepare them, well, then we will do that as well. The budget request for 1997 in your prepared testimony, it sounded to me, Brian, like you were appealing to OMB more than you were to us for a higher allocation. The administration funding request for development assistance in 1997 is not much different than the level that we appropriated for 1996. You may not like the reductions Congress proposed in 1996, but they have been largely accepted by the administration and are included, in effect, in the President's 1997 budget request. I am disappointed the administration has proposed to eliminate the Child Survival Protection Account. As you know, child survival is something that I take some pride ofauthorship in. You know the intent ofchild survival, and that is that we wanted to prioritize the balance of the money that was available for USAID. We wanted such things as polio eradication, we wanted child survival activities, to be adequately funded, and I am very disappointed that you and the administration just chose to ignore that, because obviously you know that I am going to put it back in there anyway, and obviously you know that this committee, on both sides ofthe aisle, fully supports that concept. We did not just dream up child survival because we wanted to do something to do you harm. We dreamt up child survival to tell you exactly what we wanted you to do with the limited monies that were available. So child survival was in there last year. It is going to be in there again next year. As a matter offact, to emphasize the importance ofit, I am going to try to increase child survival to emphasize to you how serious I am and to let you know I am very serious about one thing, and that is child survival. I have tried to give you as much latitude as I could on everything. I tried not to interfere with the operations of your agency. I have tried to afford you the flexibility that you need to operate it. I have done that with the administration throughout the entire 150 account. But child survival is serious, it is to be taken seriously, and I am not going to be told by those trying to eradicate polio, like Rotary International, that money is not available when money is available, because this Congress, this committee specifically made it available by creating the Callahan Child Survival Account. So I don't want people walking in my office telling me that no money is available for these programs or there are delays. The money is there. It is earmarked for child survival. We have given you discretionary authority. We have told you to fully fund UNICEF. We emphasized in report language the importance of polio eradication. I don't want to get into telling you what month you are going to spend this money in, but that is permissible. We do it in some in- stances. We do it for Israel. We tell you to give them their money up front. So if we are going to have to get into telling you to do it month by month or to expedite some type of advance payment for programs, we will do that too, Brian. But I don't want to do that. I want to give you the flexibility to run your agency. But at the same time, we don't want you or your staff to ignore report language nor to ignore the obvious intent of Congress when we appropriate this money to you. We don't know exactly when we are going to receive our budget allocation, but I imagine it would be within the next couple of weeks. We hope to probably slow down or at least reduce the number of hearings this year as best we can and that sometime mid- May we will be able to give you a bill that, hopefully, the President can sign. At least we will pass it through the House and Mr. McConnell I am sure this year is just going to accept whatever we send to him, and we will send it directly to the President. In any event, I am going to go ahead and submit my questions for the record. So I will let you get on with your testimony. Mr. Callahan. Mr. Wilson is not here today. Does anyone else have an opening statement? Ms. Pelosi's Opening Statement Ms. Pelosl I have an opening statement. Thank you very much, Mr. Chairman. I join you in welcoming so warmly Mr. Atwood to our committee this morning. As you know, Mr. Chairman, last year Congress reduced the foreign aid budget to a level ofjust a little over $12 billion, the lowest level in modern times. While I respect the Chairman's priorities and I certainly applaud him for the manner in which the subcommittee went about its business, I do want to indicate that I believe we went too far in our cuts last year. The cuts which fell dis- proportionately on AID programs will have serious consequences in developing countries around the world. Over $800 million was cut from the Administration's request for development assistance in Eastern Europe, Newly Independent States programs, and Food for Peace programs. According to your statement, Mr. Atwood, seven million families throughout the world will lose access to family planning services as a result ofthe cuts in population funding. Cuts in other areas such as environment, health, education, and democracy programs will also have an adverse impact. Everybody here, of course, is not going to be in complete agree- ment on the specifics that Mr. Atwood will address in his statement on AID cuts. However, I would hope that as we move to the fiscal year 1997 request we address not only the level offoreign aid spending but also the role that the U.S. should play in the world. TTiis should not just be measured it by strictly budgetary bench- marks, but by what our leadership role should be. We have come a long way in reducing foreign aid, in large part due to your leadership, Mr. Chairman, but AID has already reduced the number ofmissions and will have further reductions this year. You and I don't always agree on that. Now, the AID is considering a 10 percent RIF of its workforce. Our ability to respond to emerging problems in desperate places has been diminished. I personally regret that the cuts have been made to this extent as far as AID is concerned. AID has built up a unique capability and expertise in problem-solving over the years and is now in danger of losing it. I would close by saying that re- cent developments in Bosnia are a perfect way of illustrating my point. Again, Mr. Chairman, you took the lead in helping to make the funds available for Bosnia. I have further elaboration on that which I will submit for the record. The President has chosen wisely in naming Mr. Atwood the di- rector ofAID. His leadership has changed that organization. Many of us had concerns and complaints about AID which Mr. Atwood has addressed. I call that to the attention of the committee and once again state that the framework of the decision-making that I am striving for would be one that recognizes our leadership role in the world as well as our budgetary considerations. Mr. Chairman, I do want to add, since you mentioned the subject of child survival, and you mentioned specifically polio, that I hope there will be a strong component for disease eradication in the Child Survival Fund that you mentioned. With that, once again, I welcome Mr. Atwood and look forward to his testimony. Thank you, Mr. Chairman. AID FUNDING Mr. Callahan. Let me respond to your statement £ind tell you that we have to go back 18 months and look at where we were. I have no qualms with Mr. Atwood. I greatly admire him. Natu- rally I have questions about some of his staff not understanding what report language is all about, and that is always the case with any agency. But I have great admiration for Brian Atwood. You might recall that 18 months ago Brian was having difficulty finding true friends here on Capitol Hill, that you had the White House trying to merge his agency in with the State Department, you had the Senate trying to abolish his agency altogether, and it was this committee that stood behind USAID, even though we had tremendous opposition from some of our colleagues in the House. So I have no problem with Mr. Atwood and his professionalism. That is not in question here today. I naturally have views, and this committee has suggestions that we have tried to suggest, as to the priorities with the limited amount monies availability. And secondly, I think you must recognize that we are under a budget allocation. That it is not a question of whether or not this committee wants to give Brian more or wants to give any other agency under our control or under our jurisdiction more money, it is that the Budget Committee tells us this is going to be it. We left a reserve in there last year for a good purpose, and that was, we knew Bosnia was going to require some money, and then we knew there were going to be probably some emergencies that came up during this fiscal year, which they did. I don't know how much of an emergency they were, but the supplemental appropriations grew by about $600 million. So I think that we have an- swered as responsibly as we possibly could. You must also be aware that the Budget Committee originally had intended to cut us to about $10.4 billion and that we had to, for the first time in our life, go in £ind plead with the Budget Com- mittee to give our committee more money. So I think that we, as a committee, both sides of the aisle, have acted responsibly in pro- curing as much money for allocation as we possibly could have got- ten. But the administration this year, 0MB, has not substantiated 0MB what Brian is saying. is telling us that this is all they need for USAID. So he has a twofold problem, and that is getting 0MB to agree with him as well as getting this committee to agree with him. But I heard the President say he is not going to pay much attention to OMB, that he is going to let the CBO score everything, and that is how he is going to weigh what we do here. So, in any event, I think that this committee has been kinder to Mr. Atwood than any other committee that I am aware of. Mr. Torres. Mr. Torres' Opening Statement Mr. Torres. Thank you, Mr. Chairman. I want to echo the statements by my colleague, Ms. Pelosi, regarding what we all believe to be a serious issue, the fact that there are major cuts in AID. But I did take note of your comments referring to Mr. Atwood and your personal feelings towards him and the agency. I appreciate that. I appreciate the leadership you are providing us on the committee today to bring forth this kind of a hearing, and simply to welcome Mr. Atwood and his associates, and I look forward to hearing their statements. I yield back the balance ofmy time. Mr. Callahan. Mr. KnoUenberg. Mr. Knollenberg. Mr. Chairman, I don't have any questions at this time. I welcome the Secretary, and I believe that I will have a question or two at the appropriate time, but at this time I will just pass and jdeld back to the chair. Mr. Callahan. I might say that he is not the Secretary yet. Mr. Knollenberg. Mr. Atwood, I was looking for a title, and I renounce what I said. Mr. Callahan. I will tell you, I just expressed my admiration and if he is interested in being Secretary, I will talk to Mr. Dole about that. Mr. Knollenberg. I willjust correct and say "administrator." Mr. Atwood's Opening Statement Mr. Atwood. Thank you very much, Mr. Chairman. And I want to say I want to thank all of the members who have been so kind in their remarks. But with respect to you, Mr. Chairman, I think our feelings are mutual about one another. I really appreciate the role that you have played. I know how difficult it is. These are difficult times, but I think you have treated us fairly. I think your staff has treated us fairly. They have asked us tough questions. We haven't always been able to answer those questions immediately, but I hope some ofthe things I will say will provide some explanation for that. I don't think we would have a fiscal year 1996 appropriation if it were not for your leadership, and I very much appreciate that, and I appreciate what you did for us on the Bosnia supplemental as well. And we have had some private talks about how difficult this might be in your district. It is not easy for anyone to support foreign aid, and I understand that, although I think if people do understand more about the specifics, then there is more support out there than we understand and imagine. I had someone last night tell me a story that I think might be appropriate for the kind of relationship that we should have, given the difficulty of your task and the difficulty of my task. Several years ago when the administrator was William Gaud and the chairman of the committee was Otto Passman. Mr. Passman was saying how difficult it was in his southern district to support foreign aid, and William Gaud said to him, "Mr. Chairman, if it helps, you ought to know that you are our favorite SOB." Mr. Callahan. I understand Mr. Passman used to also tell his constituents that just to make certain that our foreign aid was being spent wisely, that he was going to travel to every country where it was spent. I will tell you that the people in South Ala- bama are not going to accept that. Mr. Atwood. Well, Mr. Chairman, I want to say that I think your constituents ought to appreciate the fact that when you do travel to countries, you go to places like Bosnia, and you are about — to go to Haiti, and I think that is you are to be commended for that. You need to be looking at those programs. It is part of your responsibility. And those are not easy places to visit. So I appreciate that.— Let me I have submitted a statement. You have seen it. I hope it will be made a part of the record, and I would like to make a couple ofmore personal statements about the state ofUSAID. We have been through very, very difficult times, as you well know. We started in 1993 with a total reorganization of the place. It was done with a lot of consultation with the Congress. We have reduced. We announced the closing of 27 missions, and by the end ofthis year we will have closed 24. We have reengineered our internal systems. That is not easy on our people. Our people have lived with a great deal of uncertainty about the future of the agency. Some of that you have alluded to, and some of that uncertainty has not been generated only by the Congress. There have been a number of new initiatives that we have imposed on our people: The New Partnerships Initiative wherein we want to work more with NGrOs. We recently announced a new Emerging Markets Office where we want to see if we can facilitate trade and investment more effectively. We have had the West Bank and Gaza and Haiti and the President's Greater Horn initiative and a number ofother initiatives that we have imposed on our people, and they have responded to each of these things very, very well. Now, just recently I have had to announce the need for a reduc- tion in force. We are also engaged in negotiations, as you indicated, with the State Department over even further reductions of our overseas presence. We have already reduced our direct hire staff more than any other agency save one, the Office of Personnel Management. We have reduced our direct hire staff by 18 percent. Our entire staff,