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Staff Contact: Russ Vought (x68581) June 8, 2006

**Appropriations Policy Brief**

**H.R. 5522---Foreign Operations Appropriations Act for FY 2007**

**[Comparison to the RSC Budget]{.underline}**

**Overview:** The RSC budget provided \$829 billion in discretionary
spending for FY 2007, compared to the \$873 billion allotted in the
House-passed resolution (H.Con.Res. 376). While the RSC budget did not
apportion this discretionary spending level by subcommittee---the 302(b)
allocation process---it did call for many program reductions within the
jurisdiction of the Foreign Operations Appropriations Subcommittee.
Below are the highlights:

**International Development Association (IDA), Multilateral Development
Banks, and the Global Environment Facility.** IDA, an affiliate of the
World Bank, is supposed to make low-interest loans to the world's
poorest nations. The Multilateral Development Banks (MDBs), including
the Inter-American Development Bank, the Asian Development Bank, the
African Development Bank, and the European Bank for Reconstruction and
Development, finance development projects in less developed countries.
Under the RSC budget, the U.S. would continue to be a member and
stockholder in the banks but would stop supplying new capital. The
Global Environment Facility, which provides technical assistance and
funding for projects to protect the global environment, would also be
eliminated in the RSC budget. H.R. 5522 provides \$1.3 billion for such
international financial institutions, an increase of \$26 million over
last year.

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**International Export/Investment Agencies***.* OPIC is a government
corporation that provides financing and political risk insurance to U.S.
companies investing in developing regions, a function that can be
performed through the private sector. The Export-Import Bank promotes
U.S. exports by providing subsidized financing to foreign buyers of U.S.
goods. The bank makes loans set at below-market rates and guarantees
private lending without receiving full compensation for the contingent
liabilities. Likewise, the U.S. Trade and Development Agency (TDA)
provides grants for feasibility studies for major development projects
in the developing world. The RSC Budget eliminates these three agencies.
H.R. 5522 provides \$65.5 million for OPIC, \$50.3 million for the U.S.
Trade and Development Agency, and \$57.6 million for the Export-Import
Bank.

[]{.mark}

**Development and Humanitarian Assistance.** The Agency for
International Development (USAID) administers development-related
projects and provides technical advice to roughly 100 countries. In many
cases, these programs have been wasteful and ineffective. According to
the Heritage Foundation, over the past 45 years, the U.S. has spent
roughly \$1.5 trillion "with few development success stories---none
clearly attributable to provision of development assistance." The RSC
Budget eliminates USAID funding. H.R. 5522 provides \$4.1 billion for
USAID, which is \$302.8 million less than FY06.

**Millennium Challenge Account***.* The Millennium Challenge Account
(MCA), President Bush's initiative to restructure foreign aid to reward
and therefore provide incentives to countries taking steps towards
economic independence has been added on top of, *instead of replacing*,
the USAID budget. The RSC Budget eliminated funding for this program.
H.R. 5522 provides \$2.0 billion for MCA, \$247 million above last year
and \$1.0 billion below the request.

**Economic Assistance to Egypt***.* Since 1979, Congress has provided
foreign aid to Egypt, as many other nations do. However, Egypt has been
unable to spend all of our funds and delayed internal reforms needed to
foster self-sustaining growth. Despite being the second largest
recipient of U.S. foreign assistance, Egypt's democratic development has
been extremely limited and its human rights record remains poor,
according to the Department of State's Country Reports on Human Rights
Practices for 2004. Egyptian authorities continue to mistreat and
torture prisoners, arbitrarily arrest and detain persons, hold detainees
in prolonged pretrial detention, and occasionally engage in mass arrests
without charge. For instance, according to recent press reports, the
runner-up in the last presidential contest, Ayman Nour, was placed
behind bars on spurious charges, and in December, 27 Sudanese refugees
(including infants and grandparents) were beaten by a Cairo police
squad. In addition, according to Freedom in the World 2005, "corruption
in Egypt is a serious problem," discrediting claims that such U.S. aid
is being spent as intended. The RSC Budget would reduce funding for the
Economic Support Fund by eliminating such assistance to Egypt (funding
through the separate Foreign Military Financing Program would continue).
H.R. 5522 provides \$455 million in Economic Support Fund assistance to
Egypt, which his \$35 million less than FY 2006.

**[Items of Note]{.underline}:**

[]{.mark}

**Global AIDS, Tuberculosis, and Malaria Funding**: Includes \$3.6
billion to combat international HIV/AIDS, including \$2.8 billion for
the State Department's Global HIV/AIDS Initiative and \$838 million for
USAID. Such funding levels exceed last year's level by \$821 million.

[]{.mark}

**Export-Import Bank**: Provides \$57.6 million, a *decrease* of \$54.8
million, for the Export-Import Bank. In the past, some conservatives
have expressed concern that the Bank subsidizes corporations that export
to other countries. For instance, in FY 2000, Boeing, General Electric,
and United Technologies were among the top beneficiaries of the Bank.

[]{.mark}

**Economic Support Fund**: Contains \$2.7 billion for global economic
support, including \$120 million for Israel, \$455 million for Egypt,
\$250.5 million for Jordan, \$135 million for Columbia, \$35.5 million
for Lebanon, and \$15 million for Cyprus.

[]{.mark}

**Russian Assistance to Iran**: Withholds 60% of the funds allocated for
the Government of the Russian Federation until the President certifies
that they terminated any arrangements to provide nuclear assistance to
Iran and are providing access to humanitarian relief for Chechen
refugees.

**Trade Capacity Enhancement Fund**: Provides \$522 million "to assist a
country in efforts to qualify for, implement and benefit from free trade
agreements with the United States."

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**Foreign Military Financing**: Contains \$4.5 billion for foreign
military financing, including \$2.3 billion for Israel (an increase of
\$83 million) and \$1.3 billion for Egypt (an increase of \$13 million).
Such funding levels for Israel and Egypt fully meet the President's
request. The bill bars such funding for Sudan and Guatemala.

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**Magen David Adom and the Red Cross**: Retains language that withholds
the annual contribution to the International Committee of the Red Cross
if the Magen David Adom Society of Israel is denied participation.
Although a reevaluation is set for later this year, the Society is still
being denied participation because it refuses to use the Red Cross
emblem instead of the Red Shield of David. According to the Committee
Report: "This limitation will not, and is not intended to, restrict
funding for humanitarian assistance programs that may be programmed
through the ICRC using other funds provided in this account. It is only
intended to affect the funding the United States provides on an annual
basis to the ICRC bureaucracy in Geneva." For more information about the
Magen David Adom Society, which performs emergency medical services in
Israel, please see:
[http://www.magendavidadom.org/aboutus.asp]{.underline}

[]{.mark}

**Pro-Life Provisions**: Maintains the Kemp-Kasten language that allows
the President to take funding away from any group that supports a
coercive population control program; maintains the Tiahrt language to
require family planning be voluntary; maintains the ban on foreign aid
funding for abortion; and maintains the ban on using Peace Corps funds
for abortion.

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**UNFPA Funding**: Provides \$34 million for the United Nations
Population Fund (UNPFA), provided that the UNFPA does not fund abortions
and that the U.S. contribution is not spent in China. **Note**: Since
FY02, the Bush Administration has determined that "UNFPA's support of,
and involvement in, China's population-planning activities allows the
Chinese government to implement more effectively its program of coercive
abortion" (Source: Secretary Powell, July 21, 2002). This determination
has triggered the Kemp-Kasten statutory language and thus UNFPA has not
received any U.S. taxpayer funds in the past few years, despite the fact
that the appropriations committee continues to earmark funds for the
organization. Because UNFPA refuses to stop its collusion with the
enforcers of China's brutal one-child policy, it is expected the FY06
funds allocated in this bill would again be frozen.

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**Funding Commodities in Surplus:** Restricts funding for expanding
production of any commodity for export by a country other than the U.S.,
if the commodity is likely to be in surplus on the world market and if
such assistance will injure U.S. producers.

[]{.mark}

**Relocation of U.S. Businesses and Workers Rights:** Prohibits funds
from being used to provide an incentive for U.S. businesses to relocate
outside the U.S. if such a relocation will reduce employment in the U.S.
In addition, funding is prohibited for any activity that contributes to
a violation of internationally recognized worker rights.

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**Prohibition On Assistance to Governments That Support Terrorism:**
Prohibits assistance to countries that support international terrorism,
including Cuba, Libya, North Korea, Iran and Syria, and countries that
export lethal military equipment to such countries.

**Middle East Foundation:** Provides \$35 million to establish and
operate a Middle East Foundation to support democracy, governance, human
rights, the rule of law, and private enterprise. The Foundation must
secure funding from sources other than the U.S. as well.

[]{.mark}

**Assistance to the PLO:** Contains several specific restrictions on
providing assistance to the PLO (See Sections 544, 547, 550, and 558).

[]{.mark}

**Palestinian State:** Prohibits funding to support a Palestinian State
unless certain conditions are met (See Section 555). The President is
allowed to waive this prohibition if it is vital to national security.

**Reconciliation Programs:** Provides \$15 million for reconciliation
programs that bring together individuals of different ethnic, religious,
and political backgrounds from areas experiencing civil war.

***New* USAID Trade Office:** Creates a new office of Trade Capacity
Enhancement at USAID to coordinate all the government-wide trade
capacity building efforts of the U.S. government.

[]{.mark}

**Debt Relief for the Poorest Countries**: Authorizes the reduction of
debt owed to the U.S. by the poorest counties so long as appropriations
have been made in advance (and such a debt forgiveness would not be
considered as "assistance" if there is a law limiting assistance to such
a country).

**[Earmarks:]{.underline}**

-   \$5 million for water infrastructure and clean water projects in the
    south of Lebanon

-   \$4 million to preserve cultural traditions, promote development,
    and preserve the environment in Tibet and an additional \$250,000
    for National Endowment for Democracy efforts in Tibet

-   \$200,000 for southern Africa to protect the wild cheetah population

-   \$500,000 for the Peregrine Fund's worth through the International
    Raptor Program (for protecting birds of prey worldwide)

-   \$7 million for the Parks in Peril program

-   Directs USAID to "actively consider proposals" submitted by a number
    of colleges and universities. For a list, see pages 22-24 of the
    Committee Report

-   \$5 million for the African Housing and Infrastructure Facility

-   \$3 million for a new USAID Guatemala mission

**[Funding Summaries]{.underline}:**

*In Thousands*

  ------------------------------------------------------------------------------------------------------- ------------- ------------- ------------- ---------- ------------ ---------- -----------
                                                                                                          **FY 2006     **FY 2007     **FY 2007     **Cmte Vs. **Cmte Vs.   **Cmte Vs. **Cmte Vs.
                                                                                                          Enacted**     Request**     Cmte**        FY 2006**  Request**    FY 2006**  Request**

                                                                                                                                                                                       

  Export-Import Bank\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....                    112,458       57,604        57,604        -54,854    0            -48.78%    0.00%

  OPIC Subsidy Appropriation\...\...\...\...\...\...\...\...\...\...\...\...\...                          20,073        20,035        20,035        -38        0            -0.19%     0.00%

  OPIC Admin Expenses\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....                       41,851        45,453        45,453        3,602      0            8.61%      0.00%

  Trade & Development Agency\...\...\...\...\...\...\...\...\...\...\.....                                50,391        50,300        50,300        -91        0            -0.18%     0.00%

  USAID\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...   4,388,650     4,014,526     4,085,813     -302,837   71,287       -6.90%     1.78%

  *Child Survival\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*        1,569,150     1,433,000     1,565,613     -3,537     132,613      -0.23%     9.25%

  *Development Assistance\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...*                    1,508,760     1,282,000     1,294,000     -214,760   12,000       -14.23%    0.94%

  *Int\'l Disaster Assistance\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....*               361,350       348,800       348,000       -13,350    -800         -3.69%     -0.23%

  *AID Operating Expenses\...\...\...\...\...\...\...\...\...\...\...\...\...\.....*                      623,700       678,826       646,000       22,300     -32,826      3.58%      -4.84%

  Economic Support Fund\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....                      2,607,660     3,214,470     2,650,740     43,080     -563,730     1.65%      -17.54%

  Economic Assistance to Israel\...\...\...\...\...\...\...\...\...\...\...\...                           237,600       120,000       120,000       -117,600   0            -49.49%    0.00%

  Economic Assistance to Egypt\...\...\...\...\...\...\...\...\...\...\.....                              490,050       455,000       455,000       -35,050    0            -7.15%     0.00%

  Int\'l Fund for Ireland\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...             13,365        0             10,800        *-2,565*   10,800       -19.19%     

  Assistance for Eastern Europe\...\...\...\...\...\...\...\...\...\...\...\...                           357,390       273,900       227,900       -129,490   -46,000      -36.23%    -16.79%

  Assistance to the Former Soviet Union\...\...\...\...\...\...\.....                                     508,860       441,000       371,280       -137,580   -69,720      -27.04%    -15.81%

  Inter-American Foundation\...\...\...\...\...\...\...\...\...\...\...\...\....                          19,305        19,268        19,268        -37        0            -0.19%     0.00%

  African Development Foundation\...\...\...\...\...\...\...\...\...\....                                 22,770        22,726        22,726        -44        0            -0.19%     0.00%

  Peace Corps\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....        318,780       336,700       324,587       5,807      -12,113      1.82%      -3.60%

  Millennium Challenge Corporation\...\...\...\...\...\...\...\...\.....                                  1,752,300     3,000,000     2,000,000     247,700    -1,000,000   14.14%     -33.33%

  Global HIV/AIDS Initiative\...\...\...\...\...\...\...\...\...\...\...\...\.....                        1,975,050     2,894,000     2,772,500     797,450    -121,500     40.38%     -4.20%

  Int\'l Narcotics Control & Law Enforcement\...\...\...\...\...                                          472,428       795,490       703,600       231,172    -91,890      48.93%     -11.55%

  Andean Counterdrug Initiative\...\...\...\...\...\...\...\...\...\...\...\...                           727,155       721,500       506,850       -220,305   -214,650     -30.30%    -29.75%

  Migration & Refugee Assistance\...\...\...\...\...\...\...\...\...\...\...                              783,090       832,900       750,206       -32,884    -82,694      -4.20%     -9.93%

  Emergency Refugee & Migration Assistance Fund\...\....                                                  29,700        55,000        30,000        300        -25,000      1.01%      -45.45%

  Nonproliferation, anti-terrorism, demining\...\...\...\...\.....                                        405,999       449,430       425,010       19,011     -24,420      4.68%      -5.43%

  Conflict Response Fund\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....                     0             75,000        0             0          -75,000                 -100.00%

  International Technical Assistance (DOT)\...\...\...\...\.....                                          19,800        23,700        23,700        3,900      0            19.70%     0.00%

  Debt Restructuring\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...              64,350        182,799       20,000        -44,350    -162,799     -68.92%    -89.06%

  Int\'l Military Education & Training\...\...\...\...\...\...\...\...\....                               85,877        88,900        88,000        2,123      -900         2.47%      -1.01%

  Foreign Military Financing\...\...\...\...\...\...\...\...\...\...\...\...\.....                        4,455,000     4,550,900     4,454,900     -100       -96,000      0.00%      -2.11%

  *Military Assistance to Israel\...\...\...\...\...\...\...\...\...\...\...\...\....*                    *2,257,200*   *2,340,000*   *2,340,000*   82,800     0            3.67%      0.00%

  *Military Assistance to Egypt\...\...\...\...\...\...\...\...\...\...\...\...\...*                      *1,287,000*   *1,300,000*   *1,300,000*   13,000     0            1.01%      0.00%

  Peacekeeping Operations\...\...\...\...\...\...\...\...\...\...\...\...\...\.....                       173,250       200,500       170,000       -3,250     -30,500      -1.88%     -15.21%

  Contribution to the Global Environmental Facility\.....                                                 79,200        56,250        56,250        -22,950    0            -28.98%    0.00%

  Contribution to the Int\'l Development Assoc\...\...\...\....                                           940,500       950,000       950,000       9,500      0            1.01%      0.00%

  Contribution to the Multilateral Invest. Guarantee\...\...                                              1,287         0             0             -1,287     0                        

  Contribution to Inter-American Development Bank\...                                                     3,450         25,000        23,000        19,550     -2,000       566.67%    -8.00%

  Contribution to the Asian Development Bank\...\...\...\...                                              99,000        139,000       115,250       16,250     -23,750      16.41%     -17.09%

  Contribution to the African Development Bank\...\...\...                                                137,945       140,718       140,718       2,773      0            2.01%      0.00%

  Contribution to the European Bank for Reconstruct\...                                                   1,006         0             0             -1,006     0            -100.00%    

  Contribution to the Int\'l Fund for Agriculture\...\...\...\....                                        14,850        18,000        18,000        3,150      0            21.21%     0.00%

  Int\'l Organizations and Programs\...\...\...\...\...\...\...\...\...\.....                             326,163       289,000       327,570       1,407      38,570       0.43%      13.35%
  ------------------------------------------------------------------------------------------------------- ------------- ------------- ------------- ---------- ------------ ---------- -----------