U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

88–760 PDF 2003

S. HRG. 108–70

FOREIGN ASSISTANCE OVERSIGHT (PART II)

HEARING

BEFORE THE

COMMITTEE ON FOREIGN RELATIONS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

APRIL 2, 2003

Printed for the use of the Committee on Foreign Relations

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate

COMMITTEE ON FOREIGN RELATIONS

RICHARD G. LUGAR, Indiana, Chairman

CHUCK HAGEL, Nebraska

LINCOLN CHAFEE, Rhode Island

GEORGE ALLEN, Virginia

SAM BROWNBACK, Kansas

MICHAEL B. ENZI, Wyoming

GEORGE V. VOINOVICH, Ohio

LAMAR ALEXANDER, Tennessee

NORM COLEMAN, Minnesota

JOHN E. SUNUNU, New Hampshire

JOSEPH R. BIDEN, JR., Delaware

PAUL S. SARBANES, Maryland

CHRISTOPHER J. DODD, Connecticut

JOHN F. KERRY, Massachusetts

RUSSELL D. FEINGOLD, Wisconsin

BARBARA BOXER, California

BILL NELSON, Florida

JOHN D. ROCKEFELLER IV, West Virginia

JON S. CORZINE, New Jersey

KENNETH A. MYERS, JR., Staff Director

ANTONY J. BLINKEN, Democratic Staff Director

(II)

CONTENTS

HEARING SEGMENT I.—SUB-SAHARAN AFRICA

Page

Bellamy, William A., Principal Deputy Assistant Secretary of State, Bureau

of African Affairs, Department of State ............................................................. 4

Prepared statement .......................................................................................... 6

Response to an additional question for the record from Senator Feingold .. 107

Newman, Hon. Constance Berry, Assistant Administrator, Bureau for Africa,

United States Agency for International Development [USAID], Washington,

DC .......................................................................................................................... 9

Prepared statement .......................................................................................... 11

Response to an additional question for the record from Senator Feingold .. 108

HEARING SEGMENT II.—EUROPE AND EURASIA

Hill, Hon. Kent R., Assistant Administrator, Bureau for Europe and Eurasian

Affairs, United States Agency for International Development [USAID],

Washington, DC ................................................................................................... 31

Prepared statement .......................................................................................... 33

Ries, Charles P., Acting Assistant Secretary of State, Bureau of Europe and

Eurasian Affairs, Department of State .............................................................. 24

Prepared statement .......................................................................................... 26

HEARING SEGMENT III.—WESTERN HEMISPHERE

Franco, Hon. Adolfo A., Assistant Administrator, Bureau for Latin America

and the Caribbean, United States Agency for International Development

[USAID], Washington, DC ................................................................................... 71

Prepared statement .......................................................................................... 73

Responses to additional questions for the record from Senator Biden ........ 100

Struble, J. Curtis, Acting Assistant Secretary of State, Bureau of Western

Hemisphere Affairs, Department of State, Washington, DC ............................ 63

Prepared statement .......................................................................................... 65

Responses to additional questions for the record from Senator Biden ........ 95

Response to an additional question for the record from Senator Feingold .. 110

(III)

(1)

FOREIGN ASSISTANCE OVERSIGHT (PART II)

WEDNESDAY, APRIL 2, 2003

U.S. SENATE,

COMMITTEE ON FOREIGN RELATIONS,

Washington, DC.

The committee met, pursuant to notice, at 9:34 a.m. in room SD–

419, Dirksen Senate Office Building, Hon. Richard G. Lugar (chairman of the committee), presiding.

Present: Senators Lugar, Allen, Brownback, Alexander, Coleman,

Biden, Dodd, Feingold, and Bill Nelson.

The CHAIRMAN. This hearing of the Senate Foreign Relations

Committee is called to order. We were very pleased last week to

hear testimony from three Assistant Secretaries of State and the

Assistant Administrator for USAID. They provided insights into

foreign assistance priorities with respect to the Near East, South

Asia, and East Asia.

Today, we hope to hear how the administration’s fiscal year 2004

budget request will support U.S. foreign policy interests in three

other regions of the world—Africa, Europe, and the Western Hemisphere. Since the first of this year, this committee has held a number of hearings and briefings in which representatives from the administration and experts from the private sector have provided insights into the funding and authorizing legislation the State Department needs to carry out a successful foreign policy. These inquiries have proven especially valuable to the committee in recent

weeks as we were able to explain to our colleagues in the Senate

the critical role that the State Department must play in the world

and the hurdles it must overcome to fulfill that role.

With the support of many members of the Foreign Relations

Committee, I offered an amendment to the budget resolution to restore $1.15 billion to the 150 account, and I am pleased to report

that that amendment was passed and was included in the Senate

budget resolution. The success of the amendment on the Senate

floor during a process when few amendments receive favorable

votes illustrates that the Senate’s appreciation of the work of Secretary of State Powell and the State Department is certainly growing.

I am very pleased that three of our subcommittee chairs will preside over the three panels of this hearing today. Senator Alexander,

the subcommittee chair for African Affairs, will lead the first segment of our discussion. Across the entire continent of Africa, the

repercussions of the HIV/AIDS pandemic, droughts, and instability

in governance have weakened an alarming number of societies.

U.S. national security is increasingly affected by events and condiVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 88760.TXT SFRELA2 PsN: SFRELA2
2

tions in Africa. We look forward to a detailed inquiry into how the

United States can improve its assistance to African Nations.

In the second segment of our hearing, our subcommittee chair for

European Affairs, Senator Allen, will lead the discussion of foreign

assistance issues pertaining to Europe. We hope to learn how foreign assistance can help strengthen the nations that will soon

enter NATO and how it can foster democratization, economic reforms, and conflict mitigations in southeastern Europe. We also

will be interested in discussing the administration’s proposal to reduce assistance to Russia and Ukraine in the coming fiscal year.

Finally, Senator Coleman will lead the third segment in his capacity as our subcommittee chair for the Western Hemisphere. In

Latin America and the Caribbean, we have witnessed enormous

progress in achieving democratization. All countries but Cuba now

are led by democratically elected heads of state. However, several

countries face considerable challenges that threaten political and

economic stability. Venezuela, which until recently provided 15 percent of our imported oil, is struggling with the erosion of democratic institutions and civil society. Colombia remains an enormous

challenge to the United States, and we are closely following the

economic situations in Brazil, Argentina, and several other nations.

We look forward to hearing how fiscal year 2004 foreign assistance

request seeks to address those concerns.

It is a pleasure to welcome our distinguished witnesses. Mr. William Bellamy, Mr. Charles Rice, and Mr. Curtis Struble join us

from the State Department. Ms. Constance Berry Newman, Mr.

Kent Hill, and Mr. Adolfo Franco will be representing USAID. We

look forward to your testimony and to our discussion of the role

that U.S. foreign assistance can play in Africa, Europe, and the

Western Hemisphere.

And now it is my privilege to yield the gavel to Senator Alexander, who will conduct the first portion of our hearing today. And

I thank the Senator.

HEARING SEGMENT I.—SUB-SAHARAN AFRICA

Senator ALEXANDER [presiding]. Thank you, Mr. Chairman.

Thanks for arranging the hearing. And thanks very much to the

witnesses, Mr. Bellamy and Ms. Newman, for being here today.

For the first hour this morning, we are going to take a look at

the administration’s request for foreign assistance to sub-Saharan

Africa. And as chairman of the African Affairs Subcommittee, I am

delighted to have the opportunity to participate in this.

I am grateful to my colleague, Senator Feingold, who I expect to

be here, and who has had an intense interest in Africa for many

years as either the chairman or ranking member of the subcommittee, and I have had a good number of discussions with him

about our agenda for the next couple of years, and we look forward

to working together.

The African Continent is faced with a great many challenges.

The chairman has mentioned several—combating HIV/AIDS, promoting conservation as a way to further good government,

strengthening economies, combating corruption. Our responsibility

is to try to make our foreign aid, our foreign assistance, as effective

as it can possibly be toward those objectives. That is why I am esVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 88760.TXT SFRELA2 PsN: SFRELA2
3

pecially pleased with the President’s proposal. I like his Millennium Challenge Account. I like the idea behind it. It is a revolutionary new way of spending American taxpayer dollars to help

other countries succeed. Rewarding poor countries for strengthening democracy, growing their economy, I think, is the right way

to do it, and it is a way that Americans will be able to support at

a time when we also have important needs that we want to meet

here at home; and then using this foreign assistance toward a

major project in a country, something that will lift the country even

higher, a project that goes to the heart of what makes that country

special. All those things seem to me to be the right approach.

There is a lot more that I could say. Senator Feingold is here

now, and I want to ask him if he has any opening remarks.

Russ, I said before you came that we have worked together already and that I salute your interest and your background and

your bipartisan approach and the amount of time you have spent

on Africa, and I look forward to working with you.

We will have your statement, and then we will go to the witnesses and then we will have time for questions.

Senator FEINGOLD. Thank you, Mr. Chairman. I want to thank

Senator Lugar and you for holding this hearing, and I certainly

look forward to working with both chairmen in the weeks and

months ahead. I thank you very much, Mr. Chairman, for the kind

words. We already are enjoying working together, and I appreciate

the fact that on the Republican side, the African Affairs Subcommittee is kept in Tennessee’s good hands as we go from Senator

Frist to Senator Alexander. And I really do look forward to working

with you on this, what I regard as a very important subcommittee.

In this opening portion of the hearing, we are focusing on assistance to Africa, and I would like to take just a moment to comment

on how well-monitored, responsibly delivered assistance to sub-Saharan Africa is so important today even as the headlines are rightly focused on the Middle East.

It was not so long ago that a major news magazine ran a cover

story entitled ‘‘Hopeless Africa,’’ and the sentiment that that cover

reflected, the notion that African problems are too complex, too entrenched, and too big to address, is still very much with us. But

this is both wrong and dangerous. It is wrong because there is a

whole other side of the story, the ‘‘hopeful Africa,’’ that rarely gets

covered and discussed.

But over the course of 10 years on the African Affairs Subcommittee, I have had a chance to see some of ‘‘hopeful Africa.’’ I

have met the citizens of Mozambique organizing to fight corruption.

I have talked with doctors and nurses of South Africa who fight the

onslaught of AIDS every day with often minimal resources. I have

heard the religious leaders of Senegal courageously reach out to

their followers to talk to them about AIDS prevention. I have met

the independent journalists of Zimbabwe, who refuse to accept the

notion that citizens of that country do not deserve access to objective facts that allow them to draw their own conclusions. And I

could go on, Mr. Chairman, literally for hours on this. We have

strong partners in Africa, and we would be foolish to ignore them.

The idea of ‘‘Hopeless Africa,’’ I think, Mr. Chairman is also very

dangerous to this country, to our country, to the United States. In

4

the wake of September 11, we cannot afford to write off a continent, to ignore the obvious opportunities that lawlessness can

present and has already presented to those who would do us harm.

We cannot afford to disregard our African partners, because the

fight against terrorism is truly a global one, and we cannot prevail

without them. From helping our partners tighten up their financial

systems and border controls to very positively reaching out to Africa’s Muslim communities in a spirit of partnership and respect, we

have important work to do, and it cannot wait.

So, once again, I thank the chairman, and I look forward to hearing from our witnesses.

Senator ALEXANDER. Thank you, Senator Feingold.

And our first witness this morning is Mr. Bellamy, who is the

Principal Deputy Assistant Secretary of the Bureau of African Affairs at the Department of State.

Mr. Bellamy, we are glad to have you here. You are welcome to

summarize your comments and submit them for the record or however you would like to do so that we can have time after you and

Ms. Newman speak to go back and forth with questions.

STATEMENT OF WILLIAM A. BELLAMY, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF STATE, BUREAU OF AFRICAN AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

Mr. BELLAMY. Thank you. Thank you very much, Mr. Chairman,

Senator Feingold, members of the committee. Thank you for inviting me today to talk about budget priorities in sub-Saharan Africa.

I will summarize my statement and submit the rest of it for the

record and then yield to my colleague from USAID, Connie Newman.

At a time when the global war on terrorism and efforts to rid

Iraq of weapons of mass destruction have captured the world’s attention, we cannot afford to neglect Africa. Engagement with Africa

advances significant U.S. interests from fighting terrorism to promoting democracy to expanding our trade and investment opportunities.

Africa is a continent of great potential, rich in human resources

and in human talent, yet it remains the world’s poorest region.

Chronic conflict, poverty, and disease hinder effective government

and inhibit economic progress.

Increasingly, Africa’s problems are our problems, as well. The effects of refugee flows, arms and drug trafficking, the spread of disease, and environmental degradation are felt well beyond Africa’s

borders. Because of its porous frontiers and limited law-enforcement capabilities, Africa has become a potentially attractive target

for international criminal and terrorist organizations. The East Africa bombings of 1998 and the attacks by al-Qaeda in Kenya last

November remind us of Africa’s vulnerabilities to exploitation both

as a hiding place for terrorists and as a venue for terrorist attacks

on Americans and others.

No one is more sensitive to these vulnerabilities than Africans

themselves. Despite its exposure to terrorist attacks, Africa, as a

whole, was steadfast in support of the United States following the

9/11 attacks. Almost without exception, African governments joined

the global war on terrorism. Some African states offered bases and

5

ports to U.S. and coalition forces; others shared intelligence; others

apprehended terrorist suspects. Many remain eager to receive

counter-terrorism training and assistance from the United States.

I believe the most important message we can send to African audiences in these challenging times is that our priorities have not

changed and our commitment to reform and progress in Africa remains as strong as before.

Our five overriding goals in Africa are to promote economic

growth through support for market reforms in the private sector;

help resolve conflicts that are blocking economic and political development; foster democratic reforms, good governance, and respect

for human rights; combat the HIV/AIDS pandemic and other infectious diseases; and protect Africa’s natural environmental and renewable resources.

The President’s budget for fiscal year 2004 addresses these key goals. It requests $1.5 billion for the State Department, USAID,

and other foreign affairs agencies working to achieve our objectives

in Africa.

Mr. Chairman, economic growth is critical to African development and expanded U.S. commerce with the continent. Our strategy to promote growth includes an emphasis on rewarding and reinforcing successful government policies and on opening doors and

creating opportunities for private-sector development.

The chairman of the Senate Foreign Relations Committee was

personally instrumental in the conception and adoption of the African Growth and Opportunity Act, AGOA. AGOA will remain a flagship program in fiscal year 2004.

Conflict resolution remains a critical issue for Africa. Instability

and war jeopardize all our efforts to promote development and improve the lives of African people. The United States plays an important role in conflict resolution in Africa and will continue to do

so in the future. The end of the civil war in Sierra Leone, to which

the United States made important diplomatic and material contributions, shows that determined U.S. engagement can make a difference. Our diplomatic initiatives in the Sudan have created the

best chance in many years of achieving a negotiated end to this

long-running and tragic civil war.

Diplomacy alone, however, is not enough. It is essential that African states and regional organizations acquire the capability to

cope with African conflicts, from conflict prevention to conflict resolution. Creating this kind of peace support capacity requires resources and long-term commitment. In fiscal year 2004, we will use

most of the $24 million in Voluntary Peacekeeping Operations

funds requested in the President’s budget to continue our capacitybuilding programs.

Good governance, observance of the rule of law, respect for

human rights, and democratization are factors that mitigate

against civil strife and violent conflict. Much of the $77 million in

the President’s budget request in fiscal year 2004 for Economic

Support Funds [ESF] for Africa will go to promote free and fair

elections and the rule of law and to strengthen civil societies,

human rights organizations, and independent media.

The bulk of our ESF spending will be concentrated in ten nations

chosen because of their regional importance. The remainder of our

6

2004 ESF funds will go to support political and economic reform in

other less strategic countries, especially those without a USAID

presence, to support environmental initiatives, to fund programs

against trafficking in persons, and to implement various counterterrorism initiatives.

Africa remains ground zero in the fight against HIV/AIDS and

other infectious diseases. We will continue to help African countries

combat this pandemic that places immense strains on the social,

economic, and security prospects of so many governments. The

President’s initiative on HIV/AIDS was greeted in Africa as a major

breakthrough, an enormously positive step by the United States. It

represents a substantial, tangible commitment by the United

States to stand with Africa in what is literally a life-or-death struggle.

Africa’s rich biological diversity and natural resources are inextricably linked to national and international peace and security. In

2004, our ESF and Development Assistance Funds will be used to

achieve more sustainable use of Africa’s natural resources, protect

habitats and species, promote involvement in decisionmaking of all

stakeholders at national and regional levels, and build local capacity.

Mr. Chairman, we were invited to identify additional authorities

or modifications of restrictions which might help us to achieve our

goals. We are reviewing within the administration areas where

changes could be beneficial to achieving our mission, and we anticipate discussing any changes with the committee after this review

is complete. I will be pleased to discuss these issues in greater

depth with members of the staff or with your committee.

Thank you.

[The prepared statement of Mr. Bellamy follows:]

PREPARED STATEMENT OF WILLIAM M. BELLAMY, PRINCIPAL DEPUTY ASSISTANT

SECRETARY OF STATE, BUREAU OF AFRICAN AFFAIRS, DEPARTMENT OF STATE

Mr. Chairman, Ranking Member Biden and members of the Committee, thank

you for inviting me to testify before the Committee today on our budget priorities

for sub-Saharan Africa.

At a time when the global war on terrorism and efforts to rid Iraq of weapons

of mass destruction have captured the world’s attention, we cannot afford to neglect

Africa. Engagement with Africa advances significant U.S. interests from fighting

terrorism to promoting democracy to expanding our trade and investment opportunities.

Africa is a continent of great potential, rich in resources and human talent. Yet

it remains the world’s poorest region. Chronic conflict, poverty and disease hinder

effective government and inhibit economic progress. Increasingly, Africa’s problems

are our problems as well. The effects of refugee flows, arms and drug trafficking,

the spread of disease, and environmental degradation are felt well beyond Africa’s borders.

Because of its porous frontiers and limited law enforcement capabilities, Africa

has become a potentially attractive target for international criminal and terrorist

organizations. The East Africa bombings of 1998 and the attacks by Al Qaida in

Kenya last November remind us of Africa’s vulnerabilities to exploitation both as

a hiding place for terrorists and as a venue for terrorist attacks against Americans

and others.

No one is more sensitive to these vulnerabilities than Africans themselves. Despite its exposure to terrorist threats, Africa as a whole was steadfast in support

of the United States following the 9/11 attacks. Almost without exception, African

governments joined the global war on terrorism. Some African states offered bases

and ports to U.S. and coalition forces, others shared intelligence, others apprehended terrorist suspects. Many remain eager to receive counter-terrorism training

and assistance from the United States.

7

The most important message we can send to African audiences in these challenging times is that our priorities in Africa have not changed, and that our commitment to reform and progress in Africa remains as strong as before.

Our five overriding goals in Africa are to: promote economic growth through support for market reforms and the private sector; help resolve conflicts that are blocking economic and political development; foster democratic reforms, good governance,

and respect for human rights; combat the HIV/AIDS pandemic and other infectious

diseases; and protect Africa’s natural environment and renewable resources.

The President’s budget for FY 2004 addresses these key goals. It requests $1.5

billion for the Department of State, USAID and other foreign affairs agencies working to achieve our objectives in Africa.

Economic growth is critical to African development and expanded U.S. commerce

with the continent. Our strategy to promote growth includes an emphasis on rewarding and reinforcing successful government policies, and on opening doors and

creating opportunities for private sector development. The chairman of this committee was personally instrumental in the conception and adoption of the African

Growth and Opportunity Act (AGOA). AGOA will remain a flagship program in

FY04. In 2002, when our overall two-way trade with sub-Saharan Africa fell 15 percent, U.S. imports under the AGOA program rose 10 percent. In tiny Lesotho,

AGOA has added ten thousand jobs to the economy. In nearby Swaziland, more

than 20 new textile factories have gone up as a result of AGOA. In Namibia, AGOA

has spurred $250 million in new investment. AGOA is a striking example of how

to generate investment, create jobs and stimulate trade through open markets.

AGOA has also met its stated purpose to serve as a stepping stone toward the

first U.S. Free Trade Agreement in sub-Saharan Africa. Negotiations will begin this

spring toward an FTA with the five-member Southern African Customs Union. This

further demonstrates the readiness of these countries to undertake the rights and

obligations of full membership in the global economy.

The Africa Bureau will also continue its Sovereign Credit Rating Initiative in

FY04. Under this initiative, sixteen countries have signed up for ratings, two ratings have been issued, and a number of rating missions are underway. Throughout

Africa, we will reinforce our official assistance programs with steps to stimulate private sector activity:

• Private sector growth is crucial to diversifying and sustaining the Angolan economy in this post-war period. We are working closely with USAID to provide

technical assistance to a new, private sector bank that will provide capital on

reasonable credit terms to micro, small and medium sized enterprises.

• In Kenya, where a free market economy has the capacity to serve as an engine

for regional growth, we will provide technical advisors to the stock exchange

and management training for private sector umbrella groups.

• In Ethiopia, which is in a slow transition from a state-directed economy, we will

provide consultancy and training for the fledgling Chamber of Commerce’s capital market organization work, for the National Bank’s auditing and oversight

mechanisms, and for the new anti-corruption commission.

Conflict resolution remains a critical issue for Africa. Instability and war jeopardize all our all efforts to promote development and improve the lives of Africa’s

people. Regrettably, the descent of weak states into chronic internal conflict has become an all-too familiar phenomenon in recent years. Instability has spilled over

borders, triggering tragic, needless fighting among African governments and their

proxy forces.

The United States plays an important role in conflict resolution in Africa and will

continue to do so in the future. The end of the civil war in Sierra Leone, to which

the United States made important diplomatic and material contributions, shows

that determined U.S. engagement can make a difference. Our diplomatic initiatives

in the Sudan have created the best chance in many years of achieving a negotiated

end to this long running and tragic civil war.

Diplomacy alone, however, is not enough. It is essential that African states and

regional organizations acquire the capability to cope with African conflicts—from

conflict prevention to conflict resolution. Over the past several years, our work with

the Economic Community of West African States (ECOWAS) and with selected West

African states through the West African Stabilization Program (WASP), Operation

Focus Relief (OFR), the African Crisis Response Initiative (ACRI) and now the African Contingency Operations Training and Assistance Program (ACOTA) made important contributions to African peacekeeping capacity. West African forces are

today deployed alongside French forces to uphold the ceasefire in Cote d’Ivoire. This

deployment thus far has obviated the need for a more costly UN operation.

8

Creating this kind of peace support capacity requires resources and long-term commitment. In FY 2004 we will use most of the $24 million in voluntary peacekeeping operations funds requested in the President’s budget to continue capacity

building programs. At the same time, we must acknowledge that no matter how successful our capacity building efforts prove to be, instability and conflict in Africa will

at times be of such severity or complexity as to require UN peacekeeping.

Good governance, observance of the rule of law, respect for human rights and democratization are factors that mitigate against civil strife and violent conflict. They

are also essential to economic development. Much of the $77 million in the President’s budget request in FY 2004 for Economic Support Funds (ESF) for Africa will

go to promote free and fair elections and the rule of law, and to strengthen civil

societies, human rights organizations and independent media. One of the most stirring successes in Africa last year was the Kenyan election that brought a peaceful

transition at the conclusion of President Moi’s 24-year rule. Following this historic

event, it is important that we do everything possible to help the new Kenyan government succeed, including its promise to vigorously combat corruption. We plan to

use roughly $4 million in FY 2004 ESF to support a reform program in Kenya that

will, among other things, set up an Ombudsman’s office, train magistrates, implement a public asset disclosure system, and provide public sector ethics training.

The bulk of our ESF spending—over 70 percent—will be concentrated in ten nations chosen because of their regional importance. In this program we will seek not

only to strengthen governance and democratic practices, but also to consolidate reconciliation and recovery in post-conflict situations. For example, building a durable

peace in the war-torn Great Lakes region will require the reintegration and resettlement of excombatants, a task for which ESF is well suited.

The remainder of our FY 2004 ESF will go to support political and economic reform in other, less strategic countries, especially those without a USAID presence,

to support environmental initiatives, to fund programs aimed against trafficking in

persons, and to implement various counterterrorism projects. For example, under

the Safe Skies for Africa Program, we will continue to fund the provision of security

equipment and technical assistance by the Transportation Department to seven key

African states to improve aviation safety and security. In the area of terrorist financing and money laundering, we will continue to work with the Treasury Department to help African states that may be especially vulnerable to these activities.

Africa remains ground zero in the fight against HIV/AIDS and other infectious

diseases. We will continue to help African countries combat this pandemic that

places immense strains on the economic, social and security prospects of so many

governments. In his 2003 State of the Union address, President Bush announced a

new Emergency Plan for AIDS relief. The plan calls for a five year, $15 billion initiative to turn the tide in the global fight against AIDS. It calls for treatment, prevention and care. It aims to prevent seven million new infections, treat two million

HIV-infected people and care for ten million HIV-infected individuals and AIDS orphans.

The President’s initiative on HIV/AIDS was greeted in Africa as a major breakthrough, an enormously positive step by the United States. It represents a substantial, tangible commitment by the United States to stand with Africa in what is literally a life-or-death struggle.

Africa’s rich biological diversity and natural resources are inextricably linked to

national and international peace and security. Poor conservation practices and conflict over resources undermine stability and hamper prospects for economic growth.

Over the past two years, USAID’s and State’s support for environmental programs

has increased transparency, accountability and participation, and strengthened governance in places like Senegal, Namibia, Botswana, and the Congo Basin Forest region. There also has been substantial progress towards Africa-wide ratification of

the UN Convention on Desertification and regional cooperation on watershed management.

FY 2004 ESF and Development Assistance (DA) funds will be used to help achieve

more sustainable use of Africa’s natural resources, protect habitats and species, promote involvement in decision-making of all stakeholders at national and regional

levels, and build local capacity.

Mr. Chairman, you have invited us to identify additional authorities or modifications of restrictions which might help us achieve our goals. We are reviewing within

the Administration areas where changes could be beneficial to achieving our mission

and anticipate discussing any changes with the Committee after this review is complete. I would be pleased to discuss these issues in greater depth with the members

or staff of this Committee.

Senator ALEXANDER. Thank you.

9

Constance Berry Newman, better known as Connie Newman, Assistant Administrator for the Bureau of Africa for USAID, welcome

Connie Newman.

Ms. NEWMAN. Thank you.

STATEMENT OF HON. CONSTANCE BERRY NEWMAN, ASSISTANT ADMINISTRATOR, BUREAU FOR AFRICA, UNITED

STATES AGENCY FOR INTERNATIONAL DEVELOPMENT

[USAID], WASHINGTON, DC

Ms. NEWMAN. Mr. Chairman and Senator Feingold, I would like

to thank you for inviting me to appear before your committee to

discuss a continent with much promise and with significant challenges. That continent is, of course, Africa. Today, promise, potential and opportunity exist in Africa. The hope for the future is

based on current experiences in many countries on the continent.

And this is good news for the United States. A more prosperous,

healthy and stable Africa is in America’s best interest and contributes to the U.S. interest to foster worldwide economic growth and

increase trade and to combat transnational security threats.

For now, though, I want to really focus on the good news for the

same reason as the Senator’s opening remarks. I find that too often

the press and all the rest of us do not celebrate the very good news

of the continent. Positive results, as my colleague mentioned, from

the Africa Growth and Opportunity Act, in 2002 imports under

that act totaled almost $4 billion, a 20 percent increase over the

same period a year earlier.

Second, according to Freedom House, over the last decade the

number of free democracies in Africa has more than doubled. More

than half of the countries on the continent are in transition from

partly free to free. And I think we all are prepared to celebrate the

recent election in Kenya and the anti-corruption drive in Zambia.

I emphasize the positive news in trade and democracy because

the United States has played a strong role in both of these developments. The missions have been actively involved in promoting

trade capacity building. In 2002, USAID missions spent over $85

million in such activities.

Regarding the growth of democracy and democratic values, embassies and U.S. missions have promoted values through diplomacy, through support for elections, through bolstering civil society

and advocacy groups, and through strengthening parliaments and

judiciaries to strengthen the rule of law. These positive U.S.-backed

developments are further reinforced by the initiative that has been

taken by the Africans themselves through the New Partnership For

Africa’s Development, NEPAD. As an aside, I think we must understand that until the leadership on the continent takes responsibility for the problems and developing the solutions, the donors will

forever be on the continent. And the Africans know that, and that

is why I believe they are as committed as they are to NEPAD.

But there are challenges, challenges that my colleague mentioned. Almost half of Africa’s 690 million people live on less than

65 cents a day. HIV/AIDS, we all know about. The population

growth rate of 2.5 a year with an annual growth rate of only—way

under 7 percent. We understand that that continent will not reach

the millennium development goal of reducing poverty levels in subVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
10

Saharan Africa by 50 percent by 2015 at the rate they are going

and the rest of the world is going. It is not going to happen.

But there are examples on the continent that it can. Mozambique

is in double-digits for the past 7 or 8 years, except for the years

of the devastating floods. We see in Uganda and Ghana sustained

growth rates that I think can be replicated in other parts of Africa.

To reach the goals for reducing poverty, though, we must operate

on several fronts—increasing agricultural productivity; improving

competitiveness; diversifying the economic base; building human

capacity through improved educational opportunities, especially for

girls; expanding information and telecommunications; and

strengthening African capacity to manage economic and natural resources. We are helping Africa to do all of this, but we are doing

it more so in the context of their leadership.

During question and answer, I will be prepared to answer more

questions about the Congo Basin Forest Partnership, where we are

very much involved in preserving the forest in the Congo Basin.

Of existing programs, by far the largest is our request for $325

million for HIV/AIDS pandemic. And $134 million is requested for

agriculture, and $121 million is requested for education. A significant part of what the United States does comes, however, from private investments. So in addition to this request, I think you should

understand that we are spending a great deal of our time attempting to leverage the U.S. dollars with private dollars in order to extend the resources available to address these problems. In fiscal

year 2002, the Africa Bureau committed over $30 million from 50

agreements where USAID contribution was matched or exceeded

by corporations, universities, or other groups.

I do not know if you want to hear the sad story about our personnel levels and operating expenses. It is in the full statement. I

do hope that you and the staff cover it, because we are concerned.

If we do not have safe operations, if we do not have a safe environment, it is going to be much more difficult for us to recruit the

kinds of people that we need.

So, in summary, Mr. Chairman and Senator Feingold, American

national interests in combating terror, diffusing regional conflict,

and promoting democratic freedoms, and promoting global economic growth and American core values make it imperative that

we accord a high priority to Africa. We are seeing the fruits of our

development efforts. There are promising signs of change in many

African countries, and we are heartened by the new spirit of collaboration and partnership as reflected through NEPAD.

I would like to close by saying it is a pleasure to serve on the

panel with Mr. Bellamy. And I would like to introduce two colleagues from USAID who are here to help answer your questions.

First, Dr. Ann Peterson, who is the Assistant Administrator for

Global Health, and Garrett Grigsby, the Deputy for Democracy,

Conflict, and Humanitarian Assistance.

So I thank you very much.

[The prepared statement of Ms. Newman follows:]

11

PREPARED STATEMENT OF HON. CONSTANCE BERRY NEWMAN, ASSISTANT ADMINIS- TRATOR, BUREAU FOR AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

‘‘U.S. ASSISTANCE TO PROMOTE ECONOMIC FREEDOM AND DEMOCRACY IN AFRICA’’

I. GOOD NEWS IN AFRICA

Mr. Chairman, Ranking Member Biden and members of the Committee, I would

like to thank you for inviting me to appear before your committee to discuss a continent with much promise and with significant challenges. That continent is, of

course, Africa. Today, promise, potential and opportunity exist in Africa. The hope

for the future is based on current experiences in many countries on the African continent. This is good news for the United States. A more prosperous, healthy and stable Africa is in America’s best interest, and contributes to U.S. efforts to foster

world-wide economic growth and increased trade and to combat transnational security threats.

At the same time, there are serious threats to Africa’s future from the devastating

effects of the HIV/AIDS pandemic to long-standing armed conflicts. Today, however,

I will be focusing predominantly on the encouraging developments taking place in

Africa. Unfortunately, much of the good news coming out of Africa is often not carried in international media reports.

First, the positive results of the African Growth and Opportunity Act (AGOA) of

2000 demonstrate Africa’s potential to increase its share of world trade. In the first

six months of 2002, imports under the AGOA and Generalized System of Preferences program totaled almost $4 billion, a 20% increase over the same period a

year earlier. Under these programs, apparel imports increased seven-fold and transportation equipment more than doubled. Second, according to Freedom House, over

the last decade, the number of free democracies in Africa has more than doubled

from four to 10 and more than half the countries on the continent are in the transition from partly free to free. The successful 2002 democratic elections in Kenya, the

efforts by Angola to secure peace and a prosperous future after decades of war, and

the anti-corruption drive in Zambia further underscore this trend toward improving

political and economic governance in Africa.

I emphasize the positive news in trade and democracy because the U.S. played

a strong role in both of these developments. When the Congress passed AGOA, it

signaled to Africa that the U.S. wanted Africa to become an important trading partner. Africa has responded. Our missions have been actively engaged in promoting

trade capacity building. In 2002, USAID missions spent over $85 million in such activities, from workshops on the complex rules of the international trading system

to programs that help African businesses build on their strengths to become globally

competitive.

Regarding the growth of democracy and democratic values, embassies and USAID

missions have promoted democratic values through diplomacy, through support for

elections, through the bolstering of civil society organizations and advocacy groups,

and through strengthening parliaments and judiciaries to strengthen the rule of

law. The Administrator’s report, ‘‘Foreign Aid in the National Interest,’’ makes a

strong case for institutions of democratic and economic governance as the basis for

promoting prosperity and well-being. The Bureau for Africa has promoted democracy throughout the continent with the resources made available for this purpose.

These positive U.S.-backed developments are further reinforced by the initiative

that has been taken by Africans themselves through the New Partnership for Africa’s Development (NEPAD). NEPAD is first and foremost a pledge by African leaders to the people of Africa to consolidate democracy and sound economic management, and to promote peace, security and people-centered development. Experience

has shown that for countries to realize their full potential, and to take advantage

of opportunities to address the principal constraints to poverty reduction, they must

reform from within, in partnership with the international community. NEPAD,

which was launched in 2001, provides a welcome new framework for Africans who

plan to take charge of their own destiny. Given what we know about ownership of

the ways in which the challenges of the continent can he met, the U.S. and the

international community have pledged to develop partnerships with those countries

that demonstrate adherence to NEPAD’s principles.

II. CHALLENGES TO OVERCOME THROUGH FOREIGN ASSISTANCE

Despite the encouraging trends, we must not be blind to the serious challenges

facing Africa. Sub-Saharan Africa is the world’s poorest region, and average living

standards lag far behind those in the rest of the world. Almost half of Africa’s 690

million people live on less than 65 cents a day. HIV/AIDS is having a tremendous

12

impact on the most economically productive part of the population in many African

countries, and the recent famine in southern Africa in part is rooted in reductions

in agricultural productivity related to HIV/AIDS. At the current population growth

rate of 2.6% a year, reaching the Millennium Development Goal (MDG) of reducing

poverty levels in sub-Saharan Africa by 50% by 2015 will require a 7% annual

growth rate. Africa’s greatest challenge is to achieve rapid and sustained economic

growth. It is not currently doing so, but there is reason to believe it can do so. First,

countries such as Uganda, Ghana and Mozambique have achieved sustained growth

rates at or exceeding five percent per year, an accomplishment no one believed possible until they did so. Mozambique’s objective is to sustain its double-digit growth

by attracting foreign direct investment and ensuring the investment climate is attractive for domestic and foreign investors alike. Its performance over the past

seven to eight years, with the exception of the year of the devastating floods, shows

what can be accomplished. Other African countries have taken notice.

To reach the MDG for reducing poverty, concerted action is required along multiple fronts: increasing agricultural productivity and improving the competitiveness

of African products; diversifying the economic base; building human capacity

through improved educational opportunities, especially for girls; expanding information and telecommunications networks; strengthening African capacity to manage

economic and natural resources; improving the enabling environment for trade and

investment and curbing the spread of HIV/AIDS, malaria, and tuberculosis.

The U.S. is helping Africa do all this through the initiatives that are the centerpieces of USAID’s program. These are the two Presidential Initiatives: Trade for African Development and Enterprise (TRADE) and the Africa Education Initiative and

the two administration initiatives: the Initiative to End Hunger in Africa and the

Congo Basin Forest Partnership. These initiatives constitute $133 million of the

$1.041 billion requested for fiscal year 2004. They represent the most innovative,

targeted programming of the resources requested to address Africa’s challenges. The

initiatives build upon the successes of our current programs which make up $908

million of the $1.041 billion requested. Of the existing programs, by far the largest

is our request is the $325 million in funding to combat the HIV/AIDS pandemic.

$134 million is requested for agriculture and $121.5 million is requested for education. These are the highest priority sectors in our budget request.

Mr. Chairman, the United States can assist Africa to carry out all of these programs and to achieve its goals for durable and measurable development results. A

significant part of what the U.S. does comes from private investments, civil society

and faith-based contributions all of which combined now far exceed official development assistance levels. We active seek public-private partnerships, focusing on ways

to leverage our own public resources investments with private investments to assure

a greater impact for both. These are the basic principles of development articulated

by the President at the Monterrey Conference last year. In fiscal year 2002, the Africa Bureau committed over $30 million in over fifty agreements where the USAID

Contribution was matched or exceeded by funding from corporations universities

and philanthropic groups. We also made use of the Development Credit Authority

to mobilize local capital to fund development initiatives. The best example of this

has been the mobilization of mortgage financing for low-income HIV/AIDS-affected

households in South Africa.

Whatever innovations we use to increase the impact of our investments in development assistance our objectives are clear. We believe it is critical for the U.S. in

Africa to assist all people to prosper through the pursuit of equitable, Sustained economic growth on the foundation of strong institutions of democratic and economic

governance. We see everything we do in Africa as building upon these basic American values: rewarding individual initiative and enterprise in a free market system

and promoting individual liberties and freedom in democratic societies. These values

are universally shared and are the foundation for everything we want to help Africans Achieve.

III. MANAGING THE ASSISTANCE PROGRAM

As we strive to assist Africa in achieving its development objectives, we are mindful of the challenge posed to our officers and employees in the medium-term from

increased security risks. Six of 22 USAID Missions and two of the three Regional

Offices in sub-Saharan Africa exist in critical and high-threat situations. Of these

eight field offices, funding for new facilities that meet new security standards has

been allocated for three. We will continue to work to secure the funding that is critical for safe operations.

As we stated in the Congressional Budget Justification, USAID continues to determine the human resource needs required to have the most efficient and effective

13

field operations. This has resulted in shifting direct hire staff positions in the field

based on priorities. Overseas direct-hire field staff levels will increase from 216 to

227, including nine additional HIV/AIDS professionals and training positions for

junior officers entering the workforce. Washington-based Africa Bureau staff levels

will remain constant at 91. Even as the program has grown in size and complexity,

we have worked hard to streamline operations. Operating expense constraints are

such that we have decided to scale down significantly several of our small to medium size missions and reallocate staff to regional platforms. This will permit

USAID to oversee assistance programs more efficiently throughout Africa.

USAID also anticipates working in close cooperation with potential Millennium

Challenge Account countries and with the Millennium Challenge Corporation that

will implement recipient country programs. As the Administrator has said, ‘‘USAID

is the official U.S. development agency and as such the best practices of USAID will

not only be desired but required if MCA is to succeed. Therefore we will embrace

this chance to offer some of our own USAID professionals to complement this new

organization and to provide our best experience and know how.’’ We anticipate the

opportunity to develop substantial new assistance programs in Africa that respond

to the intent of NEPAD and the principles of the Millennium Challenge Account;

that is to say that those countries that are ruling justly, investing in people, and

promoting economic freedom should be further assisted in their efforts.

In summary, Mr. Chairman, American national interests in combating terror,

defusing regional conflict, promoting democratic freedoms, and promoting global economic growth and American core values that champion human dignity make it imperative that we accord a high priority to Africa. Today, we are seeing the fruits

of our development efforts. There are promising signs of change in many African

countries. We are heartened by the new spirit of collaboration and partnership as

reflected through NEPAD and are committed to match Africa’s efforts to untap its

full potential. We have confidence that under your leadership the United States will

contribute substantially to a better future for a prosperous and democratic Africa.

Senator ALEXANDER. Thank you, Ms. Newman.

Why do we not move on now to questions and, Senator Feingold,

if it is all right with you, why do we not take 5 minutes each, and

we will go back and forth, and maybe other Senators will come and

join in. We will finish at 10:30 or before.

Each of you mentioned protecting Africa’s natural environment;

Mr. Bellamy as one of the five major objectives, and Ms. Newman,

you talked about the Congo River Basin. It seems to me that there

has been some significant success in Gabon, for example. Would

you agree that there has been some success in Gabon in terms of

preserving the natural environment? And what are your thoughts

about this whole subject? Is this simply an environmental concern,

or is it a way that we can help individual countries focus on some

unique aspect that they have that might be developed and become

a project around which the country might unify, build institutions,

increase levels of income? How do you see the whole question of

helping African countries protect their natural environment?

Mr. Bellamy, let us start with you, unless you would rather start

with Ms. Newman.

Ms. NEWMAN. No, he can start.

Mr. BELLAMY. I thought I might respond to your general question, Mr. Chairman, and perhaps my colleague can talk a little bit

about the Congo Basin Initiative, which is, I think, one of the more

interesting flagship programs in which Gabon is very much involved.

Senator ALEXANDER. Yes.

Mr. BELLAMY. I did a quick, rough count, yesterday and came up

with 17 African countries with which we are actively conducting

environmental programs. And out of our projected ESF budget for

14

2004, we are looking at between $4 and $5 million that we hope

to invest in these programs. And there are various programs here.

Senator ALEXANDER. Give me examples of the kinds of things.

Mr. BELLAMY. I will give you an example, Mr. Chairman, of one

that I witnessed personally a couple of months ago and about

which I am extremely enthusiastic. For several years, we have

been funding an operation in Namibia called the Nature—well, this

is a conservancy program. The program essentially puts communities, rural communities, in charge of managing vast areas of relatively unpopulated landscapes. The successes that have been enjoyed there are truly fascinating. We have seen in some of these

large conservancies the reintroduction of wildlife, better controls on

farming, the introduction of profitable ecotourism. Local communities have formed management committees. They are able to generate income, and use this income to build schools and clinics. And

in the process of managing these natural areas and generating income in this way, they have also developed new techniques for selfgovernance. And I have seen cases of nature conservancies which

would become centers for, for example, distributing information on

HIV/AIDS.

So I think there are numerous examples around Africa where it

can be shown that protecting resources and the environment, in

fact, creates sustainable livelihoods and empowers local communities in areas that we were not aware of when we began these

projects.

Senator ALEXANDER. Of the $4 or $5 million you are talking

about spending, in addition to the Namibia idea, what kind of—on

what would you spend that money? What kinds of things?

Mr. BELLAMY. There are plans for baseline studies in the Congo,

the DRC and Congo-Brazzaville, to look at establishing programs

similar to the Congo Basin Forest Partnership. We are looking at

trans-boundary cooperation, where three or four countries will

come together to manage an area across borders. There is a program in Zambia, Namibia, and Botswana. There is a program between the Congo, Rwanda, and Uganda. These are trans-border

projects. We are looking at investing in several areas in Mozambique. These are large natural areas that have significant potential

for creating livelihoods for the local population and encouraging

ecotourism.

Senator ALEXANDER. Is it planning money and organizing money,

or is it money to buy land? What is the money spent for?

Mr. BELLAMY. I do not believe much of the money is actually

going to buy land. I think the set-asides have generally been on the

part of the governments involved. But the money is going to actually fund the organizations and to stand up the groups, to give

them the administrative capacity, to actually launch and operate

schemes of the kinds we have seen in Namibia.

Senator ALEXANDER. Ms. Newman, what about the Congo River

Basin Initiative?

Ms. NEWMAN. USAID has been funding a project in the River Basin since 1994 at about $3 million a year. And what has happened is, working with partners—World Wildlife Fund, World Resources Institute, Conservation—I can give you the list—there has

been built a foundation for understanding the importance of logVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
15

ging of regulations, understanding the importance of local resource

management systems, community-based management of protected

areas. And based on the experience through that period of time,

there was a determination by this administration to expand the

work, going from $3 million to $15 million a year, with the partners who are now working in the Congo Basin and to go even beyond that.

Gabon is a good example, but Gabon is not the only place in that

area where there are people, civil society, and government interested in preserving the Congo Basin. I think people understand the

relationship between the Basin being preserved and a decent, adequate living. So there is a combination here of preserving the environment, but improving the poverty level of the people who are in

the Basin.

Senator ALEXANDER. We will go to Senator Feingold now, but a

point I am driving at, and which both of you mentioned, is that it

is not just a matter of preserving the natural environment, per se;

that these activities go to the very nature of some of these countries—what is unique, what is special about them—and in the organizing of the effort to preserve the environment, institutions are

created, communities are developed, procedures are established,

and it becomes a stepping stone toward economic development and

institutional development and community building. And to the extent that is true, I think that is something I am very interested in

encouraging.

Senator Feingold.

Senator FEINGOLD. Thank you, Mr. Chairman.

Let me first ask you, Mr. Bellamy, and if Ms. Newman has a

comment, the same question I asked Secretary of State Powell in

February. The fiscal year 2004 request for development assistance

programs in Africa represents a $42.7 million decrease from the fiscal year 2003 request. Countries slated for serious cuts include

Kenya, Mozambique, South Africa, Somalia, and Tanzania. And

when I consider the importance of building on positive developments, particularly in Kenya and Mozambique, and consider the

tremendous importance of several of these countries in the campaign against terrorism, I am a little puzzled by these reductions.

I do not completely understand the priorities reflected by this request. Can you explain?

Ms. NEWMAN. Well, do you——

Senator FEINGOLD. Start with Mr. Bellamy, please.

Mr. BELLAMY. Senator Feingold, I think our overall budget for

Africa—you are quite right to point out there have been decreases

in the development assistance side. There have been increases in

other areas of the budget which I think result in an overall increase in the budget for Africa. But it is true that when development assistance funds go away, we have to take steps to try to fill

the gap. One of the ways we are going to try to fill the gap in 2004

is through more creative use of our ESF money. And I am hopeful

that our ESF funds in 2004 will stay at least the same level that

they were in 2003.

Senator FEINGOLD. Well, I would just follow, Mr. Bellamy, you

know, if you could specifically respond to the point I was trying to

make about these countries. I mean, Kenya and Tanzania are two

16

countries that were directly attacked by the terrorists prior to our

experience on 9/11, and these are—countries like South Africa and

Somalia are countries that, at least at some level, interface with

questions of terrorism and threats of terrorism that we face as a

nation. I think it is their No. 1 priority. And I am concerned about

the signal that we are sending of decreasing assistance to these

countries at this moment in our history. I am wondering if you

could respond to that.

Mr. BELLAMY. In the case of—Kenya, as you know, was a recipient of a substantial amount of supplemental funding in 2002, specifically for the purposes of combating terrorism, and we are going

to continue to work with Kenya, other countries in the Horn, and

other countries in Africa that we have identified as especially vulnerable, and we will continue to try to tap other available sources

of money where necessary to ensure that we are working with

them to help them develop the kind of terrorism capabilities they

need to have.

We will also, I think, in the case of Kenya and in the case of several of the other countries you have mentioned, do what we can out

of ESF money to ensure that we are addressing some of the democratization, the rule of law, sort of challenges that we have to address in those countries in order to make them more effective partners in the war on terrorism.

Senator FEINGOLD. Ms. Newman do you want to comment?

Ms. NEWMAN. Yes, Senator. With regard to, I think, some of

these countries being flat, Kenya does not really have a decrease

in our funding, but it is fairly flat. But there are several things I

will say.

First of all, it is the very tough question of how do we balance

addressing HIV/AIDS where there is the highest percentage with

our desire to improve—recognize that the entire continent needs

development assistance. And it is a very difficult conversation that

we all have within the Agency about, How do we do this? And

there are some calls that we make that, were it not for HIV/AIDS,

we would not make.

I will say, also, that there is much more communication with

other donors through the poverty reduction strategy planning process and an effort to determine who is doing what so that we can

match up our resources with other resources. And so there is a certain amount of information that we owe you that will say who else

is putting money into these places in programs that we also support.

The final thing I will say is that the major initiatives in education, trade, less so agriculture, have not identified yet which

countries will receive their funding, and it is conceivable that the

countries that you have identified will be bumped up as a result

of their receiving funding through these initiatives, for which they

would apply, really.

Senator FEINGOLD. I thank you for that comment. I know my

time is up. I just want to make a quick comment and wait for another round. I, of course, have total respect for what you have said

about the HIV/AIDS issue and how that affects many of these decisions. I would just make this comment to you and my colleagues,

that as we start thinking about this global war against terrorism,

17

if we do not think about what is going on in terms of the attitude

toward the United States of America in countries like Kenya and

South Africa and Somalia, Tanzania, the countries that are along

this border, so close to the Middle East, then we are missing an

important part of this whole puzzle. My view is that these countries are up for grabs. In my view, at least, some of the ones I have

mentioned are not, in any real sense, anti-American. We have a

real opportunity if we send the right signals to the countries as a

whole, and in particular to the Islamic populations in those countries, that we care about what is going on in those countries and

we are committed to their future. I think it has an enormous impact on our national security, and I would be the first to agree with

you that it is so hard to balance all these priorities for Africa, but

this is a new element that I am not sure has been completely incorporated into the thinking when we think about the priorities for Africa.

Thank you, Mr. Chairman.

Senator ALEXANDER. Senator Biden.

Senator BIDEN. Thank you very much, Mr. Chairman.

It is a little unfair to ask either of you the questions I am about

to ask, because neither one of you make policy. You make policy,

but you do not. You are given a number, you are told how much

you have, and you have no impact, as qualified as you are. You are

trumped by a tax cut. You are trumped by a budget. You are

trumped by—and you said very straightforwardly, Ms. Newman,

you said that we are making decisions that we would not otherwise

make were it not for the HIV/AIDS problem. And we approach this

like probably the Governor used to approach it, and every Governor

gets stuck with approaching it when the national economy turns

down, is you make the blind fight the deaf fight the cripple rather

than fight for—you know, you never have the aid packages in competition with anyone else other than other aid packages. And so my

question—I almost did not come to the hearing, because my questions and comments to you were basically useless, and your answers are useless to me, because—— Ms. NEWMAN. Wow—— Senator BIDEN. No, I am serious, and you are good people—because what you are given is, you know you do not have enough

money. Bottom line, you do not have enough money. That is the

bottom, bottom, bottom line. And so we come along, and we very

graciously say—it is in our own interest, in my view—we graciously

say we are going to plus-up the AIDS account. And the administration backs off that, by the way. But we pass here a substantial bill;

you all back off it—not you, the guys in the White House—in terms

of total money that we are going to be spending and how we are

going to spend it. And then we come along and we all sign on to

a position that says, look, when we are going to be dealing with

moneys for assistance for democracy and conflict resolution and

anti-corruption and economic growth, that is important to do, because we are going to base who we give aid to based upon whether

or not they can absorb it honestly and effectively. So if they are not

moving down the democratic path, if they are a corrupt outfit, so

on, so forth, we are going to measure what aid we give them

based—worldwide, not just Africa. And it makes sense. It makes

18

sense. If you give aid to countries that are corrupt, it does not get

to the people we want it to get to.

So here, what have we done? We have come along and flattened

out that portion of the funding for the continent of Africa that

deals with—and I am going to oversimplify in the interest of time,

but I would stand to be corrected if you tell me I am off the mark

in the points I am making—we flatten out the money for assistance, conflict resolution, anti-corruption, economic growth, we impose a test that says, by the way, we ain’t going to give you money

unless you get rid of corruption and unless you become more democratic and unless you have an economic growth that’s based upon

a market economy, and then we say, the reason we can’t do that

is because we’re spending more money on AIDS. It is all true. It

is all true. But it reminds me of the book, ‘‘Catch–22.’’ So, what are

we doing?

What we are doing is, we are not addressing the problem. What

is the problem? The problem is a combination of lack of democratic

institutions, lack of an ability for people to understand how the

market economy works and become a part of it, lack of efforts dealing with anti-corruption, compounded by this God-awful pandemic

of AIDS, which is stripping those countries of the leadership that

we helped train and Europe helped train in order to be able to deal

with these issues. And now you are left in the terrible position of

saying things like—I have been doing this too long. I can say to Mr.

Bellamy, I have been doing this too long. When I hear an incredibly

qualified person like you say, ‘‘We’ll get money from other sources

and we’ll use creative ways.’’ That, to me, in Washington, means

you do not know what in the hell you are going to do, you have

no idea how you are going to get this money, you do not have

enough, and you are going to rob Peter to pay Paul, and the bottom

line is, we ain’t going to get the job done.

So I am not going to ask any questions, just tell you I am going

to try to get you money. My effort here—which is not likely—my

effort here is to try to figure out how we can get more money into

this account, more money overall into this account. So I do not

have any questions, because we are kidding ourselves here.

Thank you all very much.

Senator ALEXANDER. Thank you, Senator Biden.

Senator Brownback.

Senator BROWNBACK. Well, thank you for the good work that you

are doing. I think you are doing——

Senator BIDEN. Excuse me. You are doing good work. You just

do not have the resources.

Senator BROWNBACK. And I think if we could cut taxes and get

the economy growing, you will have more resources to be able to

put——

Senator BIDEN. Make sure you have got a $350,000 cut.

Senator BROWNBACK [continuing]. Forward, and that will help

out. I think as we have shown improvement in the past when

President Kennedy cut taxes and President Reagan cut taxes and

we grew the economy and that that created more that we could be

able to do, and that that is an important way for us to press on

forward.

19

Also, I want to really commend the administration for the Global

HIV Initiative. That is an outstanding initiative that the administration has put forward. I know the House is considering the bill.

I think they mark up today on that. We have been working here

to try to get something pulled together and moving forward, and

I think that is a really a key initiative for us to press forth.

I also want to say that it seems to me that the time has come

for the United States to focus a lot more on Africa. And I feel it

coming. I am hearing and seeing a lot more comments from people

talking about what we need to do in Africa, and they do not necessarily couch it in the terms of vital and strategic interest, which

is where we used to—used to be our matrix of how we decide where

we are going to invest time and resources. But now it is out of a

humanitarian need and it is some off of what Senator Feingold

said, the view of the world toward us. We are a Nation that has

been greatly blessed and that we need to help in return. To whom

much is given, much is expected. And I appreciate your stepping

forward with things like the Millennium Account and the Global

HIV Fund to do these items.

One item that I want to get your numbers for is a basic issue

that we have seen coming up, is whether on the level of the food

aid in total—that is, the food aid in total that is needed and how

much has been conveyed to Africa to make sure—as I look at the

numbers, what I am getting is that we have got food aid, we have

got food aid going to Africa in the quantity that we need, but we

are not sure that we are going to have enough into the future if

the current crisis in the various places throughout the continent

continue. I would like to hear what your perspective is on that, because I want to make sure that we have got the food aid necessary

pressing on forward and into Africa.

Ms. NEWMAN. Yes. Senator, I think that everyone recognizes the

lead role that the United States has played in addressing the potential famine in Eritrea and Ethiopia and the countries in southern Africa. More than a third, and, to some extent, a half of the

metric tons required have been provided by the United States. I

think we are trying to push other donors to step up to the plate.

But, more importantly, all of us have to work on agriculture, because that is the key food security ensuring that for the future

there will be the opportunity for Africans to feed themselves and

to use food for trade purposes. This means that the administration

has done the right thing by having as one of its major initiatives

an agriculture initiative whereby money is being made available,

stating in Mali and Mozambique and Uganda, made available for

transfer of technology, for training, for preparing people to use new

seeds.

Senator BROWNBACK. My time is so limited. May I cut in here?

I understand that point of view in the administration. Will you

have sufficient food aid to meet the food needs—the food needs, not

the development needs—the food needs this year?

Ms. NEWMAN. Today. I think that there is a gap that we, alone,

are not going to be able to fill. But we are spending a great deal

of our power to encourage other donors. The EU has now stepped

up, and a few of the other donors have increased their pledge.

20

Senator BROWNBACK. What would you estimate that gap to be for

this year?

Ms. NEWMAN. I have the numbers by country and the number of

people. I would much prefer to have the Food for Peace people give

you the exact numbers. But what I see now in a number of the

countries is that the earlier estimates—there was an estimate— take Ethiopia. At one point, people were using numbers like 16 million people might have a famine potential. That number is down

to 11 now, as of the latest assessment. But we are providing, say,

about a third of that.

So in answer to your question, the most recent legislation adding a certain amount, $200 million, for Ethiopia and Eritrea will help

a great deal. Does not cover the entire gap? No. And also, frankly,

we believe that this should be shared with the rest of the world.

Senator BROWNBACK. OK, because we are—in the supplemental,

we have got a couple of hundred million more for food aid or possibilities for use for food aid in that supplemental, and I—do you

know, is that sufficient to meet the gap that is——

Ms. NEWMAN. No, it will not be. We will give you—you mean the

gap in Eritrea, Ethiopia, and in southern Africa?

Senator BROWNBACK. Yes, the food needs.

Ms. NEWMAN. No. But what I owe you is people giving you the

exact metric tons required, dollar required, by country. And I will

tell you one other thing. The problem is not only what is the total

amount needed, but it is where is it in the pipeline and will it be

available when the reserves are down? So that some of the reports

that I see say that May and June may be a problem time for some

of the countries in southern Africa and Ethiopia, not because

pledges have not been made, but that the food will not have gotten

on the ground in time. But we will give you a more detailed report

on that. We owe you that.

Senator BROWNBACK. And we need it soon, because the supplemental is coming to the floor this afternoon. If we are going to address it in that issue, we need it now.

Thank you, Mr. Chairman.

Senator ALEXANDER. Thank you, Senator.

We have 5 minutes left. Maybe if I ask a short question and you

give a short answer, each of the three of us will have time to ask

a short question and gat a short answer before we move on to the

next hearing.

My question is this. With this significant amount of new dollars

that we will be spending, and hopefully other countries will be

spending, to combat HIV/AIDS, especially in Africa, do you have

any suggestions for what the role of this committee should be in

making sure that the money is well spent?

Ms. NEWMAN. Mr. Chairman, I think this would be a wonderful

time for you to hear from——

Senator ALEXANDER. Well, we have got about one minute or two.

Ms. NEWMAN. Oh.

Senator ALEXANDER. So that person needs to move rapidly so

Senator Feingold can ask his question. Thank you.

Dr. PETERSON. Good morning, Mr. Chairman. I am Dr. Ann Peterson. I am in charge of the Bureau for Global Health, and I am

working closely with State Department, with HHS, with ONAP to

21

use the funds that we have now and to plan for scaling up our response to HIV/AIDS. We are building from very successful experience. We have both programmatic levels——

Senator ALEXANDER. Now, my question is, What can we do as a

committee, to make sure that—to help you make sure the money

is spent wisely?

Dr. PETERSON. Ask us for accountability. Ask us for what we are

doing in each of the different areas of endeavor. That is prevention,

care of orphans, care of people living with AIDS, as well as both

treatment, which we are starting to do, ARV treatment, and nonARV treatment, and the areas where we are able to track making

a difference. For the Presidential initiative we will be tracking very

closely both the dollars and the effect of those dollars.

Senator ALEXANDER. Thank you. May I invite you to—one of the

underutilized functions of the Senate, I believe, is the oversight

function, not to try to tell you what to do, but to make sure the

goals are being met—I invite you to submit to us some suggestions

about how we can work together to form our oversight role to see

that your executive role is as effective as possible.

Dr. PETERSON. Marvelous, and I would love to have your—working together. Thank you.

Senator ALEXANDER. Thank you.

Senator Feingold.

Senator FEINGOLD. Thank you, Mr. Chairman, and thank you for

your courtesy in making it possible for me to ask another question.

The HIV/AIDS pandemic is a problem we can all agree is of such

horrifying scope and scale in Africa that it demands a truly historic

international response. And the chairman just referred to the significant new moneys that, at least in theory, would be provided for

this. And I greatly appreciated the President’s commitment in his

State of the Union Address. I hope we can all work together to

make the U.S. commitment to prevention, care, and treatment a reality.

And I will tell you, I was in Botswana and South Africa a few

weeks after that. They know about it. Expectations have been

raised enormously. And it is one of the most heartbreaking situations in human history. So we are on the line on this one when we

start talking about $15 billion.

The President committed to spend new funds on AIDS rather

than robbing existing foreign assistance accounts, and I was very

pleased to hear that. But even before this announcement, it has become clear for some time that increasing our focus on HIV/AIDS

sometimes means decreasing the resources available for other programs. And you were referring to that earlier, Ms. Newman.

I am looking for some silver lining to this zero-sum scenario. So

I would ask Mr. Bellamy to tell me more about the positive spillover effects of our AIDS programs. How are we empowering girls

and women and improving health infrastructure through these targeted assistance efforts, and how are we maximizing that spillover

element?

Mr. BELLAMY. Well, Senator, I am not sure that I am best qualified to talk in detail about the success of our HIV/AIDS and programs on the ground in Africa. I can say what I think is well

22

known, is that we have had varying degrees of success around Africa. We have had better success in some countries than others.

I would simply like to say that I think where we have enjoyed

the most success is where we have listened and observed most

closely what is actually needed, not necessarily what kind of assistance we would like to provide, what kind of assistance we prefer

to provide, but have been very closely attuned to the situations of

individual countries. And in that respect, I would like to urge members of this committee to come out and see for themselves, as you

have, Senator Feingold, what we are doing on the ground, to talk

our embassies and to actually see for yourselves what we are doing

on the ground in Africa.

Senator FEINGOLD. Mr. Chairman, I would like—obviously, if we

had the time to do a lot more, particularly on this subject, but our

time is up—I would like to submit some questions for the record

if I could.

Senator ALEXANDER. Of course. Without objection.

Senator FEINGOLD. Thank you, Mr. Chairman.

Senator ALEXANDER. The questions will be submitted. I want to

thank the witnesses, Mr. Bellamy and Ms. Newman, for coming.

This has been very helpful. If you have any additional statements

you would like for us to have, we would like to have them for the

record.

We will adjourn the hearing now for a moment. Senator Allen

will be here shortly to begin the next phase of the hearings on the

President’s budget.

Thank you.

[Recess.]

HEARING SEGMENT II.—EUROPE AND EURASIA

Senator ALLEN [presiding]. The next segment of the Foreign Relations Foreign Assistance Oversight hearing will continue. Thank

you.

And I want to say good morning to everyone who has been listening to the first segment. This will be the second segment. I want

to thank Mr. Ries and Mr. Hill for coming to outline the Bush administration’s plan and proposals for assistance to Europe. This is

an important topic, and I look forward to exploring, listening,

learning and then making the right decisions on the strategies and

plans for implementing assistance programs to the countries of Europe.

Foreign assistance to Europe continues to be a necessary and essential investment for the United States, and while the nations of

Europe, specifically those which may be considered the East, but

also looked upon as northern Europe, which is northern Central

Europe and southeastern Europe and Eurasia, which generally is

Russia and the former Soviet Republics, all need to be examined

differently. And you have concerns all the way from Northern Ireland to some extent, all the ‘‘-stans.’’ And clearly in there is Turkey

all the way up to the Baltics.

Now, foreign assistance, while it is important, needs to be made

in a logical way. The countries, especially the newly freed countries

who are still nascent democracies for the last decade, have developed in many cases into vibrant free-market economies with more

23

opportunities for all their citizens. Those in Central Europe, we

have been having hearings on the expansion of NATO to seven aspirant countries, of which I am a strong supporter. But we do have

to look at concerns such as the assassination of the Serbian Prime

Minister to recognize that the concepts of the rule of law and democracy still are not firmly rooted and are in a tenuous situation

in certain southeastern European countries.

The foreign assistance that we want to utilize, which should be

utilized, is to promote democratic principles and transparency, and

I think that is an effective way to ensure that the trend of democratization does not fade away. We also need to be wary of reducing

assistance to countries which maybe still are not where they should

be. You look at countries like Armenia, which have seen a reduction in U.S. aid, while the rate of poverty continues to hover

around 50 percent.

I do think that we have to recognize that we cannot spend everything. We are not the guarantor of all countries. But what we need

to do is look at it in our interest, how it does help the United

States have stability, to have free markets, and to have freedom.

And, indeed when you look at some, especially the Eurasia countries, the Central European countries that have armament capabilities, the issue for our security, not economic, but physical security, is in the reduction of proliferation and making sure that we

have airtight export-control mechanisms. And that is an essential

part of safety for Americans all over the world.

Also, we have the war on terrorism, which will continue, and

many of these countries—in fact, every single one of these countries—can be essential and right now, in many cases, are very helpful in our war against terrorism. We must make sure that none of

these countries become a refuge for any of these terrorist organizations, but also make certain that they assist us in the war on terrorism with information, security matters, and others. And of

course, as I alluded to previously, making sure that these countries

are not in any way arming terrorists or terrorist rogue states. In

their efforts to get money, that should not be the way to do so.

And so we have many interests for security, for economic opportunities, and our instinctive Jeffersonian love of individual liberty

at stake in all of these areas, and to the extent that those Jeffersonian liberties and the concepts of individual freedom and governments being formed to protect those individual rights, not only will

that be good for jobs in this country, but I think it is clearly good

for the security and safety of the American people. We all are uplifted when we see people living happier, freer lives than being

under repressive totalitarian or tyrannical governments.

So I look forward to the testimony of our two witnesses, as well

as a vigorous dialog on our priorities and our obligations in Europe.

Your portfolio is diverse and one that is very much on our minds

today, particularly with countries such as Turkey, where the Secretary of State has just left from a meeting.

When Senator Biden arrives, he will make a statement and ask

questions, and I am sure you will also be happy to answer questions from members who may submit their questions in writing if

they do not show up today.

24

So, with that, I would like to turn it over to our witnesses. Have

you all agreed who wants to go first on this? Mr. Ries, are you

going to give Mr. Hill a break, since he already has been in here?

Mr. Ries, if you would please proceed first.

STATEMENT OF CHARLES P. RIES, ACTING ASSISTANT SECRETARY OF STATE, BUREAU OF EUROPE AND EURASIAN AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

Mr. RIES. Thank you very much, Senator. Let me say at the outset how grateful we are in the European Bureau for the committee’s initiative to undertake these hearings. We think that it is

truly a wonderful opportunity for us to describe, as I shall, how the

foreign assistance funds that the American people put in the hands

of the administration help advance our foreign policy priorities.

But, first of all, let me express my regrets for my boss, Assistant

Secretary Beth Jones. Beth very much looked forward to this hearing, spent a lot of work on the written statement, which we have

submitted for the record, and was looking forward to coming here

today. On Monday, however, Beth was asked by the Secretary of

State to accompany him to Turkey, where they have just left to

Belgrade, where they are on their way to—should be on the ground

shortly—and to Brussels, where they will be tomorrow. The Secretary of State is making this trip in order to take forward the dialog with our key friends and allies on the very many high-priority

foreign policy challenges in the world today, not least present hostilities in Iraq and the post-hostilities reconstruction and recovery

for that country.

Mr. Chairman, we never lose sight of the fact that foreign assistance is a tool to advance U.S. policy goals. And I might just say

that, from our standpoint, the U.S. policy goals we are advancing

in Europe and Eurasia are the promotion of democracy, market reform, stability, increased respect for human rights, and the securing of borders against weapons of mass destruction and terrorism.

We see, in fact, our key challenges at the moment to how we can

use our foreign assistance, and our foreign policy, more generally,

to help stop terrorist networks and related activity, like drug trafficking, that support them. And we see that these goals also intersect with other objectives at the border—trafficking in human

beings, movement of conventional weapons, as well as weapons of

mass destruction.

We, in the European Bureau, are, we believe, truly blessed by

the organizational advantages we have in this integration of foreign assistance and policy. Behind me is Tom Adams, who is our

coordinator for assistance to Europe and Eurasia, acting coordinator. This position was established nearly a decade ago to coordinate assistance to the emerging democracies of Eastern Europe and

the former Soviet Union. It used to be two positions that were integrated as we brought the whole bureau together 2 years ago. This

enables us to bring about this policy integration that we have been

talking about.

I should also say that, with my colleague, Kent Hill to the side

of me, we have, we believe, a super relationship with USAID. It is

a key to the success on the ground that we—we talk about policies.

25

We understand the programs. The coordinator’s office works closely

with USAID, and this is what helps make it all happen.

Let me cite just a few examples of how we think we can achieve

this policy integration. First of all, take as a policy objective the national objective of preventing conflict and resolving the conflict that

has happened in the Balkans. We provide assistance in a number

of ways in the Balkans. An example is the assistance that we have

given to the U.N. police force in Kosovo. We have been training the

multi-ethnic Kosovo police force. The result is that in the last 2

years, the crime in Kosovo has been cut in half and we are seeing

gradual stabilization.

Another example is our goal to stop illegal narcotics trafficking

in Central Asia. With assistance, we have funded a U.N. program

to create a drug-control agency in Tajikistan with vetted, betterpaid personnel. The result has been seizures of Afghan heroin in

Tajikistan have doubled, and the coordination with other Central

Asian states and the Russians has improved.

Another objective is our goal of promoting free markets and democracy. We have been providing technical assistance in Ukraine

to help the Ukranian Government to privatize land and give ownership rights to farmers. The result has been that 1.5 million land

titles have been issued thus far, and Ukranian agricultural production increased 9 percent last year. Ukraine is now once again an

exporter of food after a very, very long period during the Soviet era

of being a net importer.

The final objective that I would point out, we obviously have a

high priority national objective to stop proliferation and the development of weapons of mass destruction. We have been funding civilian research and development foundations, science centers, and

bio-redirect programs all in the former Soviet Union. The result

has been that thousands of former weapons scientists have engaged

in peaceful scientific research and collaborative research efforts

with the U.S. Over 50,000 scientists, a majority of whom are categorized as weapons-of-mass-destruction-capable scientists, have

participated in the science centers programs since 1992.

Mr. Chairman, you asked us for suggestions as to where we

think legislative authorities could be streamlined. We have a number of suggestions. In border control, we think some of the different

programs that are oriented toward different objectives—customs,

anti-narcotics, and anti-proliferation—there could be additional

flexibility added so that we would have less stove-piping and we

could take advantage of the natural complementaries of these programs. We will followup with the committee staff for the actual legislative suggestions. We also share the committee’s interest in looking at the reports and certifications that the committee asked us

for.

The funding trends that we have made in our request for fiscal

year 2004 represent, in our view, a keen adjustment of the assistance proposals to current situations. We have made some small reductions in Eastern Europe, in the Balkans, reflecting continued

stabilization in the region, and the graduation that we have

planned from assistance programs for Bulgaria and Croatia in fiscal year 2006. We have a larger reduction in the FSA accounts. A

good part of this reflects the administration’s decision to move exVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
26

change funding from our accounts to the exchange accounts and

treat all the exchanges that we do in the public diplomacy area together. We continue to ask for increases in nonproliferation IMET

and FMF funding.

In conclusion, Mr. Chairman, let me just say that we would always like to see more resources for the EUR region out of our own

parochial interests, but we think that the Secretary of State and

the President have to make the tough choices and tradeoffs among

different priorities. And we think that the administration’s fiscal

year 2004 request represents just this balanced tradeoff, and we

are pleased to put it forward to you today.

Thank you.

[The prepared statement of Mr. Ries follows:]

PREPARED STATEMENT OF CHARLES P. RIES, PRINCIPAL DEPUTY ASSISTANT

SECRETARY OF STATE, EUROPEAN AND EURASIAN AFFAIRS, DEPARTMENT OF STATE

Chairman Lugar, Senator Biden and other distinguished Committee members, I

am very pleased to participate today in your examination of U.S. foreign assistance

programs. I commend you for focussing on this crucial tool of U.S. foreign policy,

and I look forward to an ongoing dialogue with the Committee about our assistance

budgets and activities.

Like my counterparts in the Department’s other regional bureaus, I approach assistance programs with a basic question in mind: how can these programs best advance U.S. interests in Europe and Eurasia? In the Bureau of European and Eurasian Affairs, we are fortunate to have a unique structure, the Office of the Coordinator of U.S. Assistance. Created by Congress under the Support for East European

Democracy (SEED) Act of 1989 and the FREEDOM Support Act of 1992, the Assistance Coordinator helps to ensure the tightest possible integration between our assistance programs and our foreign policy goals. Acting Coordinator Tom Adams is

with me here today, and I talk to Tom literally every day about how assistance can

best support policy.

In large part because of the structures created under the SEED and FREEDOM

Support Acts, we are also fortunate to have a unique relationship with our colleagues at the U.S. Agency for International Development, with whom we work very

closely to develop effective programs. Kent Hill, USAID’s Assistant Administrator

for Europe and Eurasia is also here today and will give his perspective on assistance

in our region and on the State-USAID partnership.

Mr. Chairman, in recent months much of the world’s attention has understandably been focussed on the Trans-Atlantic relationship, and the differences that

emerged with some of our European friends and allies over Iraq. What has received

relatively less attention has been the steadfast support the U.S. has received from

a number of countries in the formerly Communist parts of Europe. Clearly, one of

the reasons we enjoy such a close and supportive relationship with these countries

is the intense engagement we have practiced—through foreign assistance and diplomacy—during their difficult transition from Communism to market economies and

democratic political systems. Some of these countries have essentially completed the

transition; some are still struggling in the middle of it. But over the past nearly 15

years, the U.S. has sought to foster movement toward market-based democracy and

to integrate these states into Euro-Atlantic and international economic and political

structures. And this persistent, long-term effort has earned us credibility and created a reservoir of trust that is paying off in the current situation.

The U.S. has important interests in Europe and Eurasia that go beyond supporting the transition of the formerly Communist countries and, particularly after

September 11th, these global interests—such as combating terrorism, weapons proliferation, and drug and other illicit trafficking—have come to the fore. I want to

highlight how our assistance directly supports these U.S. national interests, and

give examples of how this works in practice. Then I will explain what has changed

in terms of assistance priorities since September 11th, and how that change is reflected in the President’s fiscal year 2004 budget request, both in terms of programmatic priorities and country budgets.

Finally, I know that the Committee is interested in our views regarding legislative authorities and current restrictions on our ability to carry out assistance programs, so I will share some thoughts on that subject.

27

HOW ASSISTANCE SUPPORTS U.S. FOREIGN POLICY INTERESTS

We have an interest in cooperating with European and Eurasian countries in

counterterrorism and in stopping a variety of things from moving across borders, including members of terrorists groups, weapons of mass destruction, illegal drugs,

and trafficked persons. We have an interest in resolving and, where possible, preventing violent conflicts that threaten regional stability. And we also have an interest in seeing all countries of the region become democratic, market-oriented states:

this is the best long-term guarantee of regional stability and of positive, mutually

beneficial relations.

There are also specific characteristics of the region that give rise to specific U.S.

national interests. The large group of formerly Communist nations in Central and

Eastern Europe and the former Soviet Union are gradually becoming integrated into

European, Euro-Atlantic and international political and economic institutions. We

should not forget that we fought and won a fifty-year Cold War against Soviet Communism, and that the Soviet legacy is still reflected in many of the region’s persistent problems. To see this process through—to ‘‘win the peace’’—we have a compelling interest in promoting this integration and helping it become broader and

deeper.

Finally, the Soviet legacy of weapons of mass destruction (WMD)—an issue the

Chairman has been particularly engaged with for many years now—remains a critical U.S. security interest in the region. Our assistance efforts have and continue

to be targeted at the detection, deterrence, interdiction, control and reduction of the

vast Soviet military arsenal, with its widely dispersed sources of WMD and WMD

expertise. The bulk of assistance dealing with this challenge is funded through programs managed by the Departments of Defense and Energy. Nevertheless, the State

Department manages important non-proliferation programs, provides diplomatic

support for DOD and DOE efforts, and helps coordinate interagency approaches to

nonproliferation and threat reduction assistance. My bureau devotes particular attention to nonproliferation efforts since so much of the weapons and weapons expertise originates in our region.

Mr. Chairman, our interest in stopping a variety of cross-border threats—whether

they be in the form of weapons of mass destruction, other lethal weapons, illegal

narcotics, or individuals belonging to terrorist groups—is not new, but clearly has

shot to the top of the priority list in the wake of 9/11. We cooperate with nearly

all European and Eurasian countries on counterterrorism, non-proliferation,

transnational crime, and border security, and a number of countries also receive significant U.S. assistance directly aimed at these problems through programs funded

under the FREEDOM Support Act, the SEED Act, and other Foreign Operations accounts, such as the Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR) account. These assistance programs have greatly enhanced the ability of states in the region to deal with the challenge of cross-border threats, and

have led to some notable successes.

For example, assistance provided to Uzbekistan under the Export Control and Related Border Security programs funded by the FREEDOM Support Act and NADR

helped the Uzbeks to interdict several shipments of WMD material transiting their

border. Similarly, through our Anti-Crime Training and Technical Assistance

(ACTTA) Program, substantial U.S. support for a UN drug control program in

Tajikistan has enabled authorities in Tajikistan to seize record quantities of Afghan

heroin on its way to Russia and Western Europe and additional support has made

it possible for our U.S. Drug Enforcement Administration to set up the first ‘‘vetted’’

counter-narcotics unit in Central Asia, in Uzbekistan. Day by day, month by month,

the countries of Europe and Eurasia are becoming better equipped, better trained

and better coordinated with one another to deal with transnational threats. And our

assistance has played a critical role in catalyzing and now sustaining that process.

I should point out here that enhancements of border security and law enforcement

capabilities aid in responding to many threats and challenges, including the major

problem of trafficking in persons. This Administration is deeply committed to addressing this human tragedy. Several European and Eurasian states are ‘‘source

countries’’ for trafficking, and over the past several years we have directed SEED

and FSA resources to confront the problem at every point: in the communities where

former and potential future victims need job opportunities and other kinds of support; in schools and the media where public awareness of the problem can be increased; in the legal system where specific laws and mechanisms are needed; and

of course, at the borders, where the traffickers must be stopped.

A second major U.S. interest in the region concerns conflict resolution and prevention. Here is perhaps the clearest example where our diplomacy and assistance programs need to work hand in glove. From the Balkans, where U.S. support for trainVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
28

ing civilian police forces has been crucial to post-war stabilization, to Central Asia,

where we seek to head off future conflict in the volatile Fergana Valley by improving infrastructure and creating employment opportunities, we are devoting substantial assistance resources in this area. While admittedly foreign aid can never substitute for the genuine desire of the parties involved to find peaceful solutions to

their conflicts, we can do a great deal to support countries recovering from conflict

and to address the social, economic, and political conditions that sow the seeds of

conflict. Most importantly, we need to stay vigorously engaged with these countries

through our diplomacy and our assistance. We do not need more Afghanistans.

We also have a strong interest in the successful transition of the formerly Communist states of the region to democratic political systems and market-based economies, and their integration into Euro-Atlantic and international institutions. This

is clearly a long-term process, and progress has been slower and more uneven than

many expected when Congress passed the SEED and FREEDOM Support Acts.

The good news is that eight of the 15 countries covered by the SEED Act have

progressed sufficiently in their transitions to ‘‘graduate’’ from SEED assistance: the

Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. All eight are either NATO members already or have been invited to join. All

are scheduled to become EU members in 2004. We should all be gratified by their

success, and proud of the continued role played by our assistance and political support. The Department also intends to graduate Poland, Hungary and the Czech Republic from our export control and border security assistance programs in 2004, as

these countries have registered solid progress in these areas.

The unfinished news is in Southeastern Europe and the former Soviet Union. But

many—not all—of these countries are on the right track; our SEED and FSA assistance is having a positive impact. Southeastern Europe is now experiencing steady

progress in efforts to overcome the destruction and dislocation of the Balkan wars,

meet the grave challenges of crime and poverty, and open the area to business and

investment. In Kosovo, for example, we are particularly proud of participation by

American police officers in the UN Police Force, and equally proud of our leading

role in training up a new multi-ethnic Kosovo Police Service—including women officers. These efforts have helped to cut the crime rate in Kosovo in half. In Croatia,

in a recent positive development on court reform, the U.S., the EU and other donors

obtained the government’s agreement to implement a standardized court and case

management system that would unblock the one million case backlog, expediting the

long awaited commercial court due process.

The former Soviet states lag further behind in making the transition. Across the

region, corruption is a drag on reform. Some countries that made initial progress

in both democratic and market change have backslid on democracy in recent years.

Still, there have been notable achievements over the past ten years, thanks to U.S.

assistance. In Russia, for example, which has probably moved the furthest both economically and politically, major reforms have been adopted over the past three

years, including a complete overhaul of the Soviet-era judiciary and criminal justice

system, a new simplified and investor-friendly tax code, and the right to private

land ownership. All were adopted with the help of U.S. technical assistance. Again

with substantial U.S. help, Ukraine has privatized land and given titles to roughly

two million farmers, helping it become a net food exporter again for the first time

in nearly a century.

In every former Soviet state, we are also helping carve out a role for thousands

of nongovernmental organizations, independent media outlets, and democratic political parties—where none existed ten years ago. Under repressive conditions—such

as those existing in Belarus and Turkmenistan—these efforts are mostly aimed at

keeping alive hope for long-term change. In other countries though, civil society is

increasingly able to act as a real counterweight to arbitrary government behavior.

We saw examples of this in the past year in Ukraine, where the opposition won a

majority in parliamentary elections due to substantial involvement of NGOs in monitoring the vote count; in Kyrgyzstan, where NGO pressure led to revocation of a

presidential decree limiting freedom of the press; and in Tajikistan, where a sustained campaign by NGOs led to the registration of that country’s first independent

radio station.

With respect to integration into Euro-Atlantic and international institutions, our

assistance is supporting WTO accession in several of the former Soviet states; Georgia, Armenia, Moldova, and Kyrgyzstan have already acceded, and several others,

including Russia and Kazakhstan, are getting close. Our security assistance is

aimed at enhancing interoperability with NATO and U.S. forces. This has proven

invaluable as we continue the global war on terrorism and undertake Operation

Iraqi Freedom.

29

FY 2004 BUDGET REQUEST

Mr. Chairman, I would like to turn to the President’s fiscal year 2004 budget request, and what has changed in it from previous years. The first and most important shift to note relates to the challenge of international terrorism.

Counterterrorism has become a more prominent element of our assistance, cutting

across a number of programs. Our FY2004 request for global Anti-Terrorism Training (ATA) assistance increased significantly over previous years. We are putting

more resources into counter-narcotics and law enforcement cooperation across the

region, but particularly in Central Asia and the Caucasus, where porous borders

and weak law enforcement entities have created significant opportunities for terrorists and those trafficking in illicit weapons and drugs to operate. The FY2004 budget request reflects continued support for our Anti-Crime Training and Technical Assistance Programs across Eurasia specifically for law enforcement and counter-narcotics assistance programs in Central Asia creating a foundation of new programs

in that region initiated after September 11. The FY2004 budget request also reflects

increased funding in both the FREEDOM Support and NADR accounts for Export

Control and Related Border Security programs in Europe and Eurasia. This program provides assistance to help establish infrastructure to control the movement

of weapons and dangerous material across borders. It also provides equipment and

training—including radios, vehicles, patrol boats and helicopters—to enforce such

controls.

We have also energized efforts to address terrorist financial flows and money

laundering by providing assistance in drafting the necessary laws and regulations,

and by giving technical advice to financial intelligence units and bank regulators

throughout the region. These programs do not cost a large amount but have a potentially huge pay-off, and we fund them in the FY 2004 budget request.

Accompanying the increased emphasis on counterterrorism is a shift in regional

focus towards Central Asia. While the overall request for FREEDOM Support Act

countries is well below the appropriated FY 2003 level, the five Central Asian states

are slotted for an increase of around $14 million in FSA and exchanges funding.

These are the front-line states in the ongoing effort in Afghanistan, and expanded

assistance there will bolster stability and attack the root causes of extremism: economic desperation, political frustration, social degradation, and isolation.

Our request for FY2004 funding to support regional security programs such as

Foreign Military Financing, International Military Education and Training, and

peacekeeping operations also increases significantly. Especially in light of Operation

Iraqi Freedom, these programs are critical foreign policy tools to enhance interoperability, promote defense reforms, and enhance peacekeeping abilities.

Now let me briefly highlight the most significant features of the President’s budget with respect to specific country requests. The declining SEED budget reflects continued stabilization in the region and a shift towards more regular assistance funding. This allows us to achieve savings for other high-priority foreign assistance

needs, while maintaining our sharp focus on the transitional states of Southeastern

Europe. The FY04 request maintains strong funding for Serbia and Montenegro,

Kosovo, Bosnia and Albania. Graduation from SEED funding is planned for Croatia

and Bulgaria in FY 2007, after final bilateral funding in fiscal year 2006, and we

are currently looking at the possibility of setting a graduation date for Romania. All

of these countries continue to make progress, and yet each faces severe economic

and political challenges. We and other donors, particularly the EU, will have to stay

engaged to make certain the region does not revert to the strife which characterized

too much of the past decade. The emphasis of SEED programs in FY2004 will increasingly be in the area of civil security and rule of law, while we continue to work

on promoting good governance and private sector-led economic growth.

Regarding the FREEDOM Support Act, I should first note that while we are requesting a significant reduction ($179 million below the FY03 appropriated level),

it is not as dramatic a drop as it seems. Due to a decision to shift exchange programs in both SEED and FSA countries from those accounts into the Educational

and Cultural Exchanges (ECE) account, the FSA request is approximately $90 million lower than it would have been otherwise; the SEED request is approximately

$10 million lower. The Department expects to fund these exchange programs—

which we consider to be a vital component of our effort to change attitudes and

mindsets in these former Communist societies—for European and Eurasian countries at the $100 million level in FY 2004. I am working very closely with my colleague Patricia Harrison, Assistant Secretary for Educational and Cultural Affairs,

to make sure we secure these funds for programs in Southeastern Europe and Eurasia and that coordination between SEED and FSA and ECA programs continues

at a high level.

30

Even taking the shift of exchange programs into consideration, the FSA account

is significantly reduced, with most of the reduction coming from Russia and

Ukraine. This reduced request is first a reflection of difficult decisions that had to

be made among a large number of foreign assistance priorities. Beyond that, it is

recognition of the progress these countries have made—particularly Russia—toward

market and democratic reform. We are currently developing a strategy to phase out

FSA assistance to Russia over the next several years. This strategy will seek to ensure a legacy of sustainable institutions in Russia that will continue support for

democratic development and entrepreneurship. It should be stressed that assistance

to address serious health threats, like HIV/AIDS, and to support civil society

groups, including human rights monitors, may continue in Russia through other foreign assistance accounts even after the phase out of FSA assistance is completed.

We want to implement this phase out carefully, without jeopardizing the gains of

the past decade, and we would be happy to consult closely with the Committee as

we proceed.

In general, FSA programs in FY 2004 will increasingly emphasize three themes:

1. Conflict prevention through community-level projects to improve living conditions in volatile regions;

2. Decentralization of power by strengthening NGOs, independent media,

local governments, and where relevant, the judicial branch; and

3. Anti-corruption efforts by promoting rule of law and transparency and accountability in governance.

AUTHORITIES/RESTRICTIONS

Finally, Mr. Chairman, in your invitation letter for this hearing, you asked if I

believed that additional legislative authorities or a modification of restrictions currently in place were necessary to help us achieve our assistance goals. Rather than

getting into specific provisions at this time, allow me to make two general comments

on this subject. I will be glad to follow up at a later time, working through our Bureau for Legislative Affairs.

First, many of our interests in Europe and Eurasia come together in our programs

that work at borders—trying to stop harmful things from getting through, while also

trying to facilitate helpful trade and commerce across them. A variety of anti-terrorism, security, law enforcement, and economic growth programs are all working

on border-related issues. The authorities that govern these programs may be preventing productive interaction among them. For example, under our Export Control

and Related Border Security assistance programs, we can provide equipment, training, or infrastructure assistance to help secure borders to prevent weapons trafficking; but to combat drug trafficking at the same border site, we would have to

provide the equipment or training under our International Narcotics and Law Enforcement assistance program. In each case, we are trying to train the same customs, border guards and immigration officials, and often the equipment is identical,

but it must be provided under different funding sources and authorities. We will be

reviewing these authorities within the Administration to see how to make their

interaction more productive.

Second, we believe that Congressionally-mandated reporting requirements are excessive; a reduction could actually enhance Executive-Legislative branch communication on important foreign policy issues. The Department spends a great deal of

time and effort producing reports that spark little interest on the Hill or elsewhere

and often have long outlived whatever usefulness they once had. We suggest that

more frequent briefings and other contacts between representatives of the State Department and Committee members and staff would be a more productive use of

time, and result in more useful give and take. Again, the Bureau for European and

Eurasian Affairs, together with our Legislative Affairs colleagues, would be glad to

follow up on this issue with more detail.

In closing, Mr. Chairman, let me thank you and the other members of this Committee for your strong interest in our region, and for your renewed focus on foreign

assistance. We look forward to more interaction between the Department and your

Committee on these critical issues, and stand ready to work with you toward our

common goal of advancing U.S. national interests in Europe and Eurasia.

Senator ALLEN. Thank you, Mr. Ries.

Mr. Hill.

31

STATEMENT OF HON. KENT R. HILL, ASSISTANT ADMINISTRATOR, BUREAU FOR EUROPE AND EURASIAN AFFAIRS,

UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT [USAID], WASHINGTON, DC

Mr. HILL. Mr. Chairman, thank you for this opportunity to discuss USAID’s programs in Europe and Eurasia. And I am pleased

to be here with my colleague from the State Department, Charles

Ries.

I would ask that my written testimony be inserted into the

record.

The assignment the administration and the Congress have given

us through the years has been unprecedented in its scope and its

importance, mainly to assist in the transition of 27 non-democratic,

centrally planned, formerly communist nations into democratic,

free-market, prosperous, and peaceful members of the European

family of nations. It has not been an easy task.

During the 1990s, 13 significant conflicts, including two major

Balkan wars, rekindled ethnic hatred and demonstrated the regional fragility of this post-Communist, post-cold-war era. The 1998

collapse of the Russian financial system had severe repercussions

throughout Eurasia. Authoritarian rulers initially in southeast Europe, and still in many Eurasian countries, have impeded the

growth of democracy and broad-based economic growth.

Obviously, some countries have moved quickly toward democracy

and market-oriented economies, others have moved unevenly, and

a few much too slowly or not at all. Income levels in many countries have yet to return to levels that existed prior to the breakup of the Soviet Union. High unemployment, significant poverty,

widespread corruption, HIV/AIDS, and trafficking in persons are

all serious problems.

Though the challenges have been great, much progress has, in

fact, been made. Fourteen years after the fall of the Berlin Wall,

we find this part of the world to be a very different place than it

was during the Communist era. Eight of the 27 formerly Communist countries have graduated from being major recipients of

U.S. foreign assistance. In 1990, the private-sector share of gross

domestic product in this region was about 12 percent. By 2002, it

had reached 62 percent. Freedom House now ranks 21 of these

former Communist states as free or partly free. Sixteen of these 27

transitional countries have achieved full membership in the World

Trade Organization. And after years of economic contraction, the

region has recorded positive economic growth since 2000, an impressive development given the downturn in the global economy.

Hungary, Poland, and the Czech Republic became members of

the North Atlantic Treaty Organization in 1999. Bulgaria, Estonia,

Latvia, Lithuania, Romania, Slovakia, and Slovenia are poised to

enter by 2004. And ten of our recipient countries are on track toward full European Union membership within several years.

Without question, President Bush’s national security strategy,

which embraces the development of democracy and market economies as fundamental pillars of U.S. foreign policy, is bearing fruit

in the Europe and Eurasia region. These nations are becoming

America’s allies. Indeed, 15 recipients of SEED or FSA funding in

32

Europe and Eurasia are active supporters of Operation Iraqi Freedom.

A particularly serious problem in the region is the fundamental

misunderstanding of what capitalism and democracy are. Far too

often, the transition countries have held the Marxist view that capitalism is simply unlimited greed. In fact, capitalism is best understood as a free economic system which exists within a framework

of law and fair play.

Similarly, democracy is too often misunderstood to mean simply

elections rather than a complex system which must include minority rights—after all, there are things that majorities may not do—

religious freedom, limited government, a vibrant civil society, rule

of law, and an independent media. It is only in this context that

elections fully accomplish what mature democracies expect from

them.

Both a free economy and democracy depend on the cultivation of

common values without which the technical and legal structures of

free economies and democracy will collapse. A major new initiative

of the Bureau for Europe and Eurasia in the foreseeable future is

to solicit innovative proposals to promote these values.

As we look to the future, it is also critical that we understand

that of the 19 major recipients of foreign assistance in the former

Soviet Union and Eastern Europe, eight are historically Islamic,

while several more have significant minorities with Islamic roots.

If these populations are economically or politically marginalized

during the post-Communist transition, the stability of the region

can and will be put at risk. Unemployed and disillusioned youth in

historically Islamic areas may be particularly vulnerable to the

rhetoric of Islamic political radicals, radicals who often come from

outside the region. There is a direct connection between economic

and political reform’s success in our recipient countries and our

country’s broad national security strategy to minimize and eliminate the growth of terrorism.

Our present task is to address the most urgent transition issues

while consolidating assistance gains and planning over time, the

appropriate decline and end of our assistance relationships. In both

Europe and Eurasia, highest priority will be given to assuring as

much as possible the irreversibility of the economic and democratic

transition and helping control the HIV/AIDS explosion and the

multi-drug-resistant forms of tuberculosis.

In conclusion, it is imperative that we understand that further

assistance designed to stabilize the Balkans and Eurasia is intimately connected to the strategic interests of the United States to

promote stability, nurture important allies, and reduce opportunities for the spread of terrorism where stability is not present. I

would urge you and your committee to continue your support for

vital programs in Europe and Eurasia.

Thank you, Mr. Chairman. I welcome the opportunity to respond

to your questions or those of other members of the committee.

[The prepared statement of Mr. Hill follows:]

33

1 Appropriations made under this authority are also known as the Assistance for Eastern Europe and the Baltic States Act (AEEB). 2 Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia.

PREPARED STATEMENT OF HON. KENT R. HILL, ASSISTANT ADMINISTRATOR, BUREAU

FOR EUROPE AND EURASIAN AFFAIRS, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

INTRODUCTION

Chairman Lugar, Senator Biden, and other distinguished members of this Committee, I am delighted to have the opportunity to participate in your examination

of U.S. Foreign Assistance Programs. I look forward to providing the USAID perspective on assistance to Europe and Eurasia.

I want to begin by expressing my appreciation to Deputy Assistant Secretary of

State for European and Eurasian Affairs Charles Ries, Tom Adams—State Department’s Acting Coordinator for Assistance to Europe and Eurasia, and his team for

their fine collaboration in the region with USAID. Together we have been able to

accomplish much in this vital region of the world. I also want to acknowledge at

the outset my profound respect for the personnel with whom I work at USAID, both

in Washington and in the field, who effectively implement U.S. foreign policy objectives in an area of the world which is vitally important to our country’s interests—

the former Soviet Union and Eastern Europe.

Most of today’s testimony is focused on our assistance to the transition countries

in the region, as authorized by the Support for East European Democracy (SEED) 1

Act of 1989 and the Freedom for Russia and the Emerging Eurasian Democracies

and Open Markets (FREEDOM) Support Act (FSA) of 1992. We also oversee economic support programs in Cyprus, Northern Ireland and the Republic of Ireland,

and Turkey (see map, Annex 1).

The September 2001 attacks on the World Trade Center and the subsequent war

on terrorism have heightened the importance of U.S. foreign assistance. USAID programs are aligned with U.S. foreign policy goals and support U.S. national interests

abroad. For this reason, it is important that the Europe and Eurasia (E&E) region

continues to make headway in the transition to democratic freedom and economic

opportunity. A peaceful and growing region expands possibilities for U.S. trade and

investment and encourages the integration of these countries into regional organizations and global markets. The United States also looks to this region for cooperation

on a range of critical national security issues, ranging from the war in Afghanistan

and Iraq to the future make-up and viability of trans-Atlantic institutions.

The purpose of this written statement is threefold: to provide an overview of

USAID assistance to the E&E region, taking a look back to the inception of the program; to highlight the tremendous progress that has been achieved as well as some

of the critical obstacles we still face in accomplishing our goals; and to discuss how

we have shaped our program and budget for this year and next in order to respond

to the changing world in which we are operating.

OVERVIEW

When Congress authorized the SEED and FSA programs, Europe and Eurasia

(E&E) was a new frontier for U.S. assistance and the challenge was daunting: to

assist in the transition of the formerly communist region into 27 democratic, independent states with market economies. In coordination with the U.S. Department

of State and other U.S. Government entities, USAID quickly mounted a large program focused on the simultaneous transitions of economic, political, and social systems to market-based democracies. Through FY 2003, Congress has authorized a

total of $15.9 billion for this transition, of which USAID has managed about 65%.

It has always been our assumption that this assistance would last only as long

as necessary to ensure that the transition to market-based democracies was solidly

on track and not likely to be reversed. Indeed, eight of the 27 formerly communist

countries have ‘‘graduated’’ from being major recipients of U.S. foreign assistance.2

But elsewhere in the region, events during the 1990s produced setbacks and obstacles. Thirteen significant conflicts—including two major wars in the Balkans—rekindled latent ethnic hatreds, demonstrating the fragility of stability in the post-Cold

War era. The 1998 collapse of the Russian financial system had severe repercussions throughout Eurasia, underscoring the vulnerability of the economies in the region. Authoritarian rulers—initially in Southeast Europe and still in many Eurasian

countries—have stalled the pace of democratic transition and broad-based economic

growth.

34

3Testimony of Assistant Secretary of State for European and Eurasian Affairs, Ambassador

Elizabeth Jones, before the House International Relations Committee, Subcommittee on Europe,

March 13, 2003.

Despite these obstacles, tremendous progress has been made. Fourteen years

later, we find this part of the world to be a very different place than it was during

the communist era. From Poland and Slovenia in the west to the Russia Far East,

the economic and political changes that have occurred since the fall of the Berlin

Wall are truly profound. Where the state once controlled nearly every aspect of economic activity, free enterprise and entrepreneurship are flourishing. Where individuals were once afraid to assert their needs and beliefs, E&E citizens are finding

their voices through multi-party elections, the independent media, and the actions

of thousands of non-governmental organizations (NGOs). Where power and decisionmaking were once almost exclusively concentrated in Moscow, municipal governments, small businesses, and NGOs are working together to resolve problems and

improve the delivery of basic services in communities across the region.

President Bush’s National Security Strategy, which embraces the development of

democracy and market economies as a fundamental pillar of U.S. foreign policy, is

bearing fruit in the Europe and Eurasia region. These nations are becoming America’s allies. In Europe, Hungary, Poland, and the Czech Republic became members

of the North Atlantic Treaty Organization (NATO) in 1999. Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia and Slovenia are poised to enter by 2004. Their

backing in the international war on terrorism and of U.S. policy toward Iraq has

been unwavering. So has been the support of the Caucasus countries (Armenia,

Azerbaijan, and Georgia) and the Central Asian Republics (Kazakhstan, Kyrgyzstan,

Tajikistan, Turkmenistan, and Uzbekistan). Indeed, sixteen of our recipient countries in Europe and Eurasia are active supporters of Operation Iraqi Freedom.

With USAID assistance, the European countries are working toward meeting the

requisite criteria for accession to the European Union (EU). Eight E&E countries

that we have been assisting are scheduled to become EU members by 2004, with

Romania and Bulgaria strong candidates for EU membership later in the decade.

And, as noted by Assistant Secretary of State for European and Eurasian Affairs,

Ambassador Elizabeth Jones, in her testimony before the subcommittee of the

House International Relations Committee, the Eurasian countries will become Europe’s ‘‘new neighbors’’ after EU enlargement.3 A prosperous and stable Eurasia will

reinforce Russia’s growing relationship to the Euro-Atlantic community and expand

U.S. economic opportunity in that sub-region.

While all these changes are impressive, they are complex, and issues remain.

Some countries have moved quickly toward democracy and market-oriented economies, others have moved unevenly, and a few much too slowly. On the economic

side, a number of problems persist, including high unemployment rates and sectors

that cannot compete in global markets. On the democratic front, the region has a

long way to go to provide for the many systems and checks and balances we take

for granted in established democracies—including the consistent application of the

rule of law, strong and independent media, and transparent and responsible governance at national and local levels. While we continue to press for broad-based reform,

other problems have set in—particularly the deterioration of social conditions, the

rapid spread of HIV/AIDS, and the significant growth in human trafficking.

Our challenge, now, is to address the most urgent transition issues while consolidating assistance gains and planning, over time, an appropriate end of assistance.

The experience we have acquired will guide our program choices and enable us to

make prudent investments. I believe we have developed a budget and program for

FY 2003 and FY 2004 that address all aspects of this new challenge and promote

the ideals embodied in President Bush’s vision for global development: just rule, investment in people, and economic freedom.

USAID ASSISTANCE IN THE REGION

Peace, prosperity, and regional stability are the underlying principles of USAID

engagement in this part of the world. E&E programs focus on three goal areas: economic restructuring and growth; democracy and governance; and social transition.

In each of these areas, our strategy has been to target policy reform and institutional strengthening at national and local levels, and citizen involvement through

grass-roots organizations. As needed, humanitarian assistance has been provided as

a bridge from emergency relief to transition programs.

Experience has shown that this broad, multi-sector approach produces important

synergies. Democratic elections and growing civil societies strengthen the resolve

and robustness of economic reforms; credible rule of law is essential to fighting corVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
35

4 Albania, Armenia, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary,

Kyrgyzstan, Latvia, Lithuania, Moldova, Poland, Romania, Slovakia and Slovenia have acceded

to full WTO membership. Except for Turkmenistan, all other E&E transition countries have applied for WTO accession. 5 Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, the Slovak Republic, and Slovenia are set to join the EU in 2004. Bulgaria and Romania hope to accede by 2007.

ruption and fostering economic investment and growth; and fiscal reform is key to

the sustainability of social services and protection systems. Through FY 2002,

USAID has allocated about 53% of its resources to economic programs, including energy and environment; 17% to democracy; 10% to the social sectors, including

health; and 20% to humanitarian assistance.

USAID has prepared a set of funding charts to illustrate the manner in which

USAID resources have been used over time (see Annex 2). These graphs depict

SEED and FSA appropriation levels since 1992, USAID’s portion of these funds over

time, recent shifts in funding levels by country, and resource allocations by sector.

A SNAPSHOT OF PROGRESS AND OBSTACLES

A few facts demonstrate the progress that has been made in the transition to democracies and market-oriented economies in the E&E region:

• In 1990, the private sector share of gross domestic product (GDP) was 12%; in

2002 it accounted for 62% of GDP, region-wide;

• Freedom House ranks 21 of these former communist states as free or partly

free;

• Macroeconomic stability has been impressive—a majority of countries have reduced inflation to single digit levels;

• Sixteen of the 27 transition countries have achieved full membership in the

World Trade Organization; 4

• Ten countries are on track toward full EU membership within several years; 5

and

• After years of economic contraction, the region has recorded positive economic

growth since 2000, despite a downturn in the global economy.

While region-wide trends are generally favorable, there are significant differences

among the sub-regions.

In Northern Tier Europe (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia), countries have achieved democratic freedoms roughly on par with some Western democracies, but they have farther to go

to meet EU economic reform standards. Due to the strength of their transitions,

seven of the eight had graduated from USAID bilateral assistance by 2000 and

USAID’s office in Slovakia closed March 31st.

In Southeast Europe (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo,

Macedonia, Romania, Serbia and Montenegro), resettlement of war-torn areas is

progressing rapidly following a decade of ethnic violence. Most of these countries

now appear to be pulling ahead and following the transition path charted by the

Northern Tier. However, stability is not yet a given, as demonstrated by the recent

assassination of the Serbian Prime Minister, Zoran Djindjic. Other challenges include weak labor markets across the board, and poor human capital in select countries. Corruption remains an issue throughout the sub-region. We are also concerned

that ethnic clashes could easily reemerge without mechanisms for inter-ethnic understanding and cooperation, particularly given the scheduled decline in donor assistance.

The Eurasia picture is more complex (Armenia, Azerbaijan, Belarus, Georgia,

Moldova, Russia, Ukraine, and the Central Asian Republics—Kazakhstan, Kyrgyz

Republic, Tajikistan, Turkmenistan, and Uzbekistan). While progress in economic

policy reform has been positive, income inequality is increasing and long-term

growth does not yet appear sustainable. Eurasian economies are highly dependent

on primary commodities, and Russia dominates the economic links within the subregion. Depletion in human capital is a major concern, given the decades-long deterioration of health and education systems. With widespread corruption and an incomplete reform process, public trust in government and private institutions continues to weaken.

The slow pace of democratization in Eurasia reflects an ongoing struggle between

proponents of broad-based participation and the tradition of autocratic leadership.

Political leadership in Belarus steadfastly resists political and economic reform and

Ukraine has yet to fully embrace democratic reform. The Central Asian and

36

Caucasus countries struggle with a mindset more in keeping with Soviet times,

rather than with a post-Soviet, fully democratic era, and Turkmenistan is particularly unreceptive to transition.

As for the Central Asian Republics who have provided particularly strong support

for Operation Iraqi Freedom, regional stability, particularly in the conflict-prone

Ferghana Valley, is a particularly nettlesome issue that we are helping them address through employment-generation programs, community development activities,

and support for civil society development and advocacy. Other issues they face include harnessing their vast energy resources in a maimer that will produce benefits

for their people and politically sensitive items such as human rights, conflict prevention, and the rule of law.

SUCCESSES AND LESSONS

Since I joined USAID in 2001, I have traveled to nearly every country we assist

in the region. I have seen first hand what USAID has accomplished with the resources appropriated by Congress. Our in-country presence is most opportune, constituting an exceedingly valuable asset. It enables us to adapt to changing circumstances, design projects that work well, apply resources where it counts, and

achieve results.

Our ability to make small investments that reap multiple benefits has been proven repeatedly. For example, in Russia, USAID supports indigenous think tanks as

an effective way to promote policy reform at the national level. One of these think

tanks has played a pivotal role in helping a Presidential Commission develop a new

concept for intergovernmental fiscal relations. Another has been a key advocate for

a variety of laws that have opened the doors to the private ownership and sale of

land, private mortgage lending, and the introduction of means-testing in the delivery of social services. Not only does this approach produce policies that are sensitive

to the Russian context, it builds local institutional capacity that will continue to advocate for reform long after USAID departs from the country.

Once many of the basic reforms are in place, USAID has found it important to

ensure the benefits of transition reach beyond the capital into secondary cities,

towns, and rural areas. In Bulgaria, USAID established the Partners in Local Economic Development and Government Effectiveness (PLEDGE) program to target opportunities in regions with the highest poverty and unemployment rates. PLEDGE

brings together participants from the public, private, and NGO sectors to discuss

business conditions, make economic choices, and build partnerships. Over four

years, the program has reached some of the poorest communities in Bulgaria

through 197 economic development projects that have produced 534 new partnerships, 88 new businesses, and 3,535 new jobs. In 2004, the PLEDGE system will

be incorporated into the Bulgarian Ministry of Labor and Social Policy and its Social

37

Investment Fund. The Bulgarian government plans to allocate $40 million over the

next five years to continue this local economic development process.

Where central governments lack the political will to implement reforms or deliver

services to towns and villages, we focus our resources at the local level. In Azerbaijan and Georgia, community mobilization programs are inspiring hundreds of

communities to collaborate on the design and implementation of local improvement

projects, from rehabilitating schools to cleaning out irrigation systems vital to agriculture. Over time, these efforts are augmented with support for micro business and

NGO development. As these organizations mature, they become part of a growing

constituency for change. Similar approaches have been used in Bosnia and

Herzegovina, Kosovo, Macedonia, Serbia and Montenegro, and the Central Asia Republics to rehabilitate communities and promote inter-ethnic cooperation after a period of conflict.

In the last several years, USAID has advanced a highly participatory dialogue on

the social aspects of transition. Because the impact of change on basic human welfare in Armenia has been so harsh, USAID initiated a comprehensive social transition program that coupled policy and systems reform with targeted direct assistance

to the most vulnerable. Significant progress has been made in establishing the legal

and regulatory framework needed for implementing fair and transparent social insurance and assistance systems. Pension reform also has met with considerable success in Bulgaria, Croatia, Kazakhstan, and Macedonia. In Croatia, for example, surveys among members of the workforce showed that acceptance and understanding

of pension reform had increased from 30% to over 80%, following implementation

of a USAID-supported public education program that provided details of this reform

to the general populace. Workers are now signing up in large numbers to contribute

5% of their pensions to newly-created, private funds. USAID is continuing to support pension reform by working with the regulatory authority to ensure sound management of the private pension funds.

We have had some impressive successes in the health arena. For example, we

have helped introduce modern approaches to tuberculosis control in the former Soviet Union and contributed to a significant reduction in abortion rates through reproductive health programs. USAID’s women and infant health initiative has helped

Russia achieve a dramatic (23%) decline in infant mortality since 1996. In Ukraine,

the government was so impressed with USAID’s 12 model primary health care centers that the Ministry of Health has now replicated the model to over 260 centers.

Also, a USAID pilot program in Ukraine has demonstrated a 50% reduction in

mother-to-child transmission of HIV. Understanding that efficient health services

and healthy populations are critical to successful democratic and free market transitions, we are committed to expanding and strengthening our programs in combating

HIV/AIDS, tuberculosis, and other priority health challenges facing the region.

URGENT ISSUES

In light of these many successes, however, we also face several large and growing

problems—which, we believe, are causing backsliding in economic and democratic

reform and could put the transition of some E&E countries at risk if they are left

unattended. These issues are the rapid spread of HIV/AIDS, human trafficking, endemic corruption, latent conflict, and a need for greater attention to be focused on

the fundamental values needed to create thriving democracies and market economies that will last far into the future.

HIV/AIDS. Experts on the spread of HIV/AIDS are warning of acute dangers in

the near future because of the sharp rise of cases of HIV/AIDS in the region. Concerns are particularly focused on Russia and Ukraine, which have some of the highest HIV/AIDS rates of growth in the world. Although the disease is presently confined mainly to illicit drug use and prostitution, there is growing evidence that HIV/

AIDS is moving into the general population. Access to illegal drugs, the coincidence

of injecting drug use and prostitution, unprotected sexual relations, human trafficking, lack of blood security, and inadequate health systems, as well as unemployment and feelings of despair among youth are all contributing factors.

Human Trafficking. Trafficking in persons is an explosive human rights abuse

and a highly lucrative, illegal and dangerous global business. An estimated 175,000

persons are trafficked in and through the E&E region, representing about 25% of

all persons trafficked around the world. Most of the countries in the region are

source and transit countries and some are becoming destination countries.

Corruption. Despite USAID efforts to address the issue of corruption across all

sectors of its program, long-term gains have not yet been realized. Transparency

International reports that corruption is perceived to be higher in Eurasia than any

other region in the world. In Southeast Europe, it is roughly the same as found in

38

Latin America. The cost of corruption is enormous. It deters private investment, debilitates the institutions intended to serve citizens’ needs, and undermines basic

codes of conduct, trust, and cooperative behavior between individuals and groups.

Latent Conflict. While the outbreak of violence in E&E countries has diminished,

the risk of conflict has not been eliminated. The lack of social cohesion, growing inequities in income and access to services, and a general distrust of government are

all potential sources of conflict. The risk is particularly acute where democracy has

stalled or declined, since the potential for conflict increases exponentially when

groups within a country lack channels to voice their issues and petition for equal

access and opportunity.

The Issue of Values. There is a common issue that permeates many of the transition obstacles discussed above. It is a failure to understand the importance of cultivating values that make democracy and private enterprise work for the greater good

in society. A particularly serious problem in the region is the fundamental misunderstanding of what capitalism and democracy are. Too often, capitalism is understood to be individual greed. In fact, in the West, capitalism in its essence is a system of economic freedom within the context of the rule of law, which rewards initiative, hard work, and creativity. Furthermore, the evolution of free markets in the

West has included the broad concept of societies providing a ‘‘social net’’ of protection for those individuals and their families who, through no fault of their own, have

significant needs. Philanthropy is an important component of Western, free market

society.

Democracy, also, is frequently misunderstood. Too often it is defined as ‘‘majority

rule.’’ But, free and honest elections do not alone ensure democracy. Such a truncated definition of democracy can be indistinguishable from fascism. Just because

the majority—even the overwhelming majority—votes to commit genocide against a

minority, it does not make it right or democratic to commit such an act.

Democracy must always be understood to consist of a whole series of elements:

minority rights, religious freedom, separation and limitation of power, a vibrant civil

society including an independent media, elections, rule of law, and a free economy.

We must steadfastly affirm that the foundation for a full democracy, a free economy,

and a healthy, compassionate society must be a bed-rock of values—values appealing to that within each human being which transcends narrow self interest.

Democracy and the Islamic Context. Examining the issue of values also provides

an opportunity to look at the apparently growing divide between much of the Muslim world and western democracies. Among E&E transition countries, eight are historically Islamic while several more have significant minorities with Islamic roots.

If these populations are economically or politically marginalized during the postcommunist transition, the stability of the region can be put at risk. Unemployed and

disillusioned youth in historically Islamic areas may be particularly vulnerable to

the rhetoric of Islamic political radicals—radicals who often come from outside the

region.

THE FY 2003-2004 PROGRAM AND BUDGET

Current Budget Trends

After 10 years of high assistance levels to the region, the FY 2003 budget and

FY 2004 request reflect a realignment of priorities, including a significant decline

in levels for key countries owing, in part, to progress made in reforms. The SEED

appropriation for FY 2003 is approximately $522 million, of which USAID manages

$357 million (68%) of the total. For USAID, this represents a funding decline of 16%

from FY 2002. In FY 2004, the SEED request totals $435 million, of which $296

million (68%) is proposed for USAID programs. USAID’s allocation represents a

funding decline of 17% from FY 2003.

Reform progress in many of the Southeast Europe countries is permitting fairly

dramatic budget reductions. Croatia and Bulgaria are now on a ‘‘glide path’’ towards

graduation, with a final request for bilateral assistance funding coming in FY 2006,

provided progress on reform continues. Pending further review, Romania may be

put on a similar phase-out schedule. As the U.S. Government begins preparations

to leave this sub-region, it will look increasingly to the Europeans to support the

integration of Southeast Europe into regional institutions.

The FSA appropriation for FY 2003 is $755 million, of which USAID manages

$452 million (60%). This is only a slight decline from FY 2002 levels, before two

large budget supplementals related to the war on terrorism increased FY 2002 resources. The FSA request for FY 2004 totals $576 million, of which $418 million

(73%) is proposed for USAID programs. The proposed drop for USAID funding between FY 2003 and FY 2004 is 7.5 percent. However, proposed changes in some

country levels are even more telling.

39

In FY 2004, proposed USAID funding drops significantly for Russia (by 33%) and

Ukraine (10%) in comparison to the current FY 2003 budget. Levels for Russia are

declining, as the U.S.-Russian partnership in global matters continues to mature

and economic assistance becomes less central to this relationship. Ukraine’s lower

funding level reflects difficult budget choices that had to be made among competing

priorities, including increasing funding for the front-line states of Central Asia. Finally, I would note that the lower funding levels for all FSA recipient countries reflect the shift of roughly $110 million in funding for professional and educational

exchanges from the FSA to the Educational and Cultural Exchanges account in the

Commerce, State, Justice appropriation.

For their part, the Caucasus countries have been U.S. allies in the war on terror.

They have much to accomplish in their transitions. They will, therefore, continue

to receive significant resources. As for the Central Asian Republics, funding has increased significantly, starting in 2002, as a result of the heightened importance of

this region since September 11. Country budget level trends for FY 2001-2004 are

illustrated in Annex 2.5.

The Program

USAID’s challenge is to maximize and sustain the impact of assistance for both

countries that will continue to need our help and those expected to graduate in the

near to medium-term. To do this, USAID is adapting its assistance strategy by adjusting core program areas to reflect transition progress and urgent issues; planning

strategically for the phase-out of USAID country programs; and emphasizing critical

crosscutting themes, such as values cultivation, to help sustain the transition over

the long run.

Core programs. We are incorporating new ideas into our core program areas of

economic, democratic, and social transition to reflect the advances and

vulnerabilities in transition status. Two emerging themes in the economic growth

area are building trade capacity and increasing competitiveness. These initiatives

pragmatically ‘‘marry’’ macroeconomic reforms and microeconomic foundations for

business growth and link these efforts to demand in the marketplace. We also continue to have a significant role to play in working with micro and small business,

in providing business development services, and in building access to finance, together which will help reduce unemployment—a significant issue within the region.

In the democracy area, we firmly believe that our overall accomplishments in

transition cannot be accomplished without consistent improvements in civic and political freedoms, particularly in Eurasia. To this end, we are augmenting our traditional programs (NGO development, independent media, judicial and parliamentary

strengthening, and local governance) with the intention to emphasize even more

than in the past those universally recognized values that buttress a full understanding of democracy. These include majority rule and minority rights, good governance, freedom of speech and press, rule of law, religious freedom, human rights

and civic participation. USAID is also including conflict prevention programs and

modules into strategies for at-risk countries, such as Georgia, Macedonia, and the

Central Asian Republics.

In the social area, we will continue to develop awareness and targeted initiatives

to broaden access to the benefits of reform, thereby sustaining support for the transition to democracy and free markets. We are redoubling efforts to fight the spread

of HIV/AIDS, stem the growing tide of human trafficking, and mitigate the adverse

impacts of transition, including such programs as public-private partnerships for social insurance and pension reform.

Planning for program phase-out. In the face of lower resource levels, considerable

adjustments to USAID’s bilateral and regional transition programs are required. In

keeping with the State Department’s Balkans Assistance Policy, USA]D is using increasingly scarce monies to place greater emphasis on civil security, including the

rule of law, independent media, and democratic reforms. An overriding theme in

phase-out planning will be to find ways to decrease the region’s vulnerability to conflict and ensure that political and economic instability do not provide a seedbed for

terrorist activity and financial networks. In Eurasia, highest priority will be given

to assuring, as much as possible, the irreversibility of the economic transition, to

focusing on accelerating progress in democracy and governance, and to helping to

control the spread of HIV/AIDS and multiple drug resistant tuberculosis (TB). These

emphases are reflected in resource allocations across sectors (see Annex 2.4).

Systematic planning for the eventual end of assistance enables USAID to ensure

the sustainability of assistance gains in a number of ways. These include: focusing

resources on the most critical vulnerabilities and gaps in a country’s transition, determining areas that may need attention after USAID departs, and preparing for

an orderly close-out of activities. Phasing-out a bilateral program is by no means

40

the end of our connections. We have continued our close connections, including some

modest funding, to the eight European Northern Tier countries, and we will do the

same with those who ‘‘graduate’’ in the next few years. These countries are our allies and friends, and we seek their partnership in addressing a range of development issues, such as trade and investment, infectious disease control across borders,

and drugs and human trafficking.

Building on our experience with the European Northern Tier graduates, USAID

is exploring appropriate post-presence initiatives as a way to consolidate assistance

gains and carry support for democracy and markets into the future, even after a

local USAID mission is closed. Post-presence initiatives include wrap-up activities

that complete work already underway, support to local organizations—such as

NGOs—to sustain results already achieved, and legacy mechanisms and partnerships, which could be of a bilateral or regional nature.

For example, one of the legacy mechanisms created as the European Northern

Tier countries prepared for graduation was the Baltic American Partnership Fund,

which continues to provide an environment for Baltic NGOs to be forces in sustaining the transition to market democracies. Another is the Polish-American Freedom Foundation (PAFF), which was established with earned proceeds of the USAIDsupported Polish-American Enterprise Fund. PAFF is a private, nonprofit organization that uses income from investments to promote economic and democratic reform

without requiring active USAID involvement. Recently, the newly-formed Balkan

Trust for Democracy was set up jointly by USAID, the German Marshall Fund, and

the Mott Foundation. This public-private partnership establishes a $25 million

Trust that will provide continuity and grassroots support for democracy and good

governance through a small grants program.

This partnership with the German Marshall Fund and the Mott Foundation is but

one example of USAID/E&E Bureau’s commitment to developing private-public alliances under our Agency’s Global Development Alliance (GDA) business model. In FY 2002, the Bureau obligated nearly $15 million that was matched by nearly $39

million from private sector partners, much of which was devoted to the Earthquake

Zone Alliance in Armenia. With the support of USAID’s GDA Secretariat, both

Washington-based and field staffs are receiving training in the identification and development of public-private alliances. We expect each of our overseas missions to redesign past activities or design new ones to leverage additional funds from the private sector.

Crosscutting themes. To augment and support the efforts of our Missions overseas,

we are allocating part of the regional budget to fund interventions intended to incorporate values into core programs. Specifically, we will invite qualified partner organizations to propose innovative ideas that cultivate and strengthen universally recognized values in support of USAID’s program goals in the economic, democratic,

and social transition. USAID also is committed to promoting democracy and human

rights in an Islamic context and to minimizing opportunities for violent extremism

in historically Islamic areas.

Corruption and conflict are also critical crosscutting issues and relate substantively to the E&E Bureau’s new initiative on values. Overcoming corruption requires not only the strengthening of laws and institutions, but also cultivating the

capacity for honesty and good will inherent in all societies. Reducing the risk of conflict within and between countries necessitates a respect for the dignity and worth

of every human being, regardless of their religion, ethnicity, or worldview. To this

end, we are helping our field Missions to systematically analyze current portfolios

through corruption and conflict lenses and to incorporate these types of assessments

into new program development. Our Washington headquarters office is also developing a system to track conflict-related trends to enable cross-country analysis and

better targeting of resources in this area. Finally, we are working in tandem with

USAID’s new pillar bureaus to address these issues. For instance, during the past

year, the new Conflict Management and Mitigation Office with the Democracy, Conflict, and Humanitarian Assistance Bureau helped our Missions in Armenia, Georgia, and Kyrgyzstan to conduct conflict assessments as part of strategic planning

preparations.

In all our programs, we will continue to emphasize themes such as democratic

and economic governance, host country ownership, performance, and accountability,

themes that have assumed even more importance with the President’s landmark

Millennium Challenge Account (MCA) initiative. The issues of improved economic,

democratic, and social governance—key themes of the MCA—traditionally have

been at the heart of all the Bureau’s transition work. We endorse strongly the MCA

premise that economic development assistance in poor countries works best when

sound policies are pursued that are conducive to growth. We also will redouble efforts to get other members of the donor community to focus on these themes, a key

41

point made in the publication ‘‘Foreign Aid in the National Interest,’’ a report promulgated by our Administrator—Andrew Natsios. In sound policy environments,

every dollar of aid attracts two dollars of private capital.

ASSISTANCE FROM THE FOREIGN RELATIONS COMMITTEE

You asked in your invitation to us if there was any way that you could help us

out. In general, we are most pleased with the authorities that you have accorded

us. They provide us considerable flexibility and latitude in our programming. We especially appreciate ‘‘notwithstanding authority.’’ That has really helped us in program implementation and is one factor contributing to the impressive development

results that we have been able to achieve in such a short time.

We are also finding one tool to be excellent—Development Credit Authority, although we recognize that it has been appropriated but not authorized. It permits

us to leverage significant support for our recipient countries at small budgetary cost

to the U.S. government. We already are reaping considerable benefits from the use

of this innovative tool, e.g., a $20 million housing facility for Croatia and a $6 million Ukraine agri-business program.

We are reviewing other areas where legislative changes could provide flexibility

to address the new challenges that the E&E region is facing, including HIV/AIDS,

Muslim World Engagement, Trafficking in Persons, clean air emissions, and other

pressing priorities. After we review the types of changes needed within the Administration, we look forward to discussing any needed changes with the Committee.

CYPRUS, NORTHERN IRELAND AND THE REPUBLIC OF IRELAND, AND TURKEY

Outside the E&E transition countries, USAID is managing program resources in

other areas. Traditionally, Congress provides Economic Support Funds (ESF) to

Northern Ireland and the Republic of Ireland and Cyprus to promote reconciliation

and conflict resolution through local, bi-communal initiatives. The FY 2003 appropriation for Cyprus is $15 million and $25 million for Northern Ireland and the Republic of Ireland (excluding the Walsh Visa Program). The FY 2004 request proposes $7.5 million for Cyprus ($7.5 million reduction) and $8.5 million for Northern

Ireland and the Republic of Ireland (a $16.5 million cut).

The FY 2004 budget request also proposes $200 million in ESF funds to Turkey

for debt servicing in support of its economic recovery.

CONCLUSION

USA]D remains committed to the important task of promoting democracy, free

markets, and social stability in Eastern Europe and the former Soviet Union. We

are proud of our successes, and yet we are very aware that there is much left to

be done. The remaining work to further stabilize the Balkans and Eurasia is closely

connected to U.S. strategic interests to promote stability, nurture important allies,

and reduce opportunities for the spread of terrorism where stability is not present.

As new priorities emerge in other parts of the world, I urge the distinguished members of the Senate Foreign Relations Committee to provide continued support to the

program in Europe and Eurasia so that we can achieve the worthwhile and strategic

foreign policy objectives which are so vital to U.S. and regional interests in this important part of the world.

Thank you, Mr. Chairman. I would be most pleased to answer any questions you

or the Committee may have.

42

ANNEXES

ANNEX 1: MAP, NOTING SEED, FSA, AND ESF COUNTRIES.

43

ANNEX 2: SEED AND FSA FUNDING TRENDS.

E&E BUDGET TRENDS AND FUNDING LEVELS

Appropriation Trends, FY 1992-FY 2004 (see Chart 2.1)

• Early SEED funding averaged about $400 million annually. Following a peak

of $497 million in 1996, resources for Europe started to decline as the countries

in northern tier Europe approached graduation from bilateral assistance. Higher levels after 1998 reflect additional support to Southeast Europe as a result

of the Kosovo crisis and the changing political landscape in Croatia and Serbia.

The drop in levels beginning in 2003 reflects progress in Southeast Europe and

planning for graduation.

• FSA funding peaked in FY 1993 due to a supplemental appropriation resulting

from the Clinton-Yeltsin summit in Vancouver, Canada. The funding level for

1995 also spiked as a result of increased resources for Russia. Funding for Eurasia has stabilized around $800 million annually between 1998 and 2001. Appropriations have contained substantial earmarks and directives for Armenia,

Georgia, and Ukraine, as well as funding for the Clinton Administration’s Expanded Threat Reduction Initiative (ETRI). The drop in levels in FY 2003-2004

reflect a realignment of foreign policy priorities and a separate appropriation for

the Educational and Cultural Exchanges Account in the Commerce, State, Justice 2004 appropriation.

Resources to USAID and Other USG Agencies (see Charts 2.2)

• U.S. assistance to Europe and Eurasia is overseen by a legislatively-mandated

State Department Coordinator and implemented by various USG agencies.

USAID has managed the largest portion of assistance to the region, although

percentages have varied.

• The strong, multi-agency USG response to the Kosovo crisis resulted in an increasing share of SEED funds transferred to other agencies during 2000.

• The share of total FSA funding managed by USAID decreased from 62% in 1999

to a low of 52% in 2000, as the administration implemented ETRI. Since then,

USAID’s share has gradually increased.

Budget Allocations by Sector (see Charts 2.3 and 2.4)

• SEED and FSA funding support the transition of the region to market-oriented

democracies. Resources are allocated to four broad program areas: economic restructuring; democracy; social transition; and humanitarian assistance.

• Cumulative obligations through FY 2002 (chart 2.3) show that the economic restructuring area (including energy and environment) has captured the lion’s

share of resources at 53%. This percentage is gradually decreasing as an increased proportion of SEED resources are allocated to democracy-building.

• Humanitarian assistance (about one-fifth of obligated resources) has addressed

the fallout from conflicts and natural disasters, particularly in the Caucasus

subregion, Tajikistan, and the countries and provinces that comprised pre-1989

Yugoslavia. Humanitarian programs provide emergency relief and lay the foundation for recovery through community-based, self-help projects.

• Social sector resources support improved health care and provide for a social

sector strategy that addresses the social safety net issues related to transition.

Country Budget Levels, FY 2001-2004 (see charts 2.5)

• SEED and FSA budget trends for each country are shown.

FY 2003-2004 Budget Levels Compared (see charts 2.6)

• Current funding for Kosovo, Montenegro, and Serbia constitutes 45% of the

total SEED budget, reflecting the priority attributed to the post-Kosovo situation. Bosnia and Macedonia each capture 10% of SEED resources. Programs for

Albania, Bulgaria, Croatia and Romania each share between 5-6% of resources.

Regional funds include legislative earmarks for the Baltics ($5.0 million). It is

anticipated that the country share of SEED resources will vary only slightly in

FY 2004.

• In Eurasia, Russia and Ukraine capture the greatest proportion of FY 2003 FSA

resources (20 and 18%, respectively), followed by Armenia and Georgia (12%

and 11%). In the FY 2004 budget request, these proportions decline for Armenia, Russia, and Ukraine.

44

45

46

47

48

49

50

Senator ALLEN. Thank you, Mr. Hill and Secretary Ries, for both

your statements and your outstanding leadership on behalf of our

shared principles in these areas from Eurasia to northern and

southeastern Europe.

Before I ask some of these questions, I do want to preface my

questions with what is on everyone’s mind right now—in the countries in which you all are discussing and the focus of this hearing,

in particular, in Europe and Eurasia.

There are concerns with some of our allies, NATO allies, concerns with Russia, Turkey, France, Germany, Belgium. In this

51

country—and you hear it, you read it, ‘‘Gosh, why aren’t they with

us.’’ It is my belief that we will prevail in Iraq with our willing allies. We will disarm Saddam and that regime and we will liberate

the people of Iraq.

The extent that some of these countries will want to assist in the

rebuilding of Iraq remains to be seen. It will need to be done consistent with our principles in recognizing the right of the Iraqi people to have the assets of their oil as a national asset and the whole

list of priorities and principles that will guide us, not just in the

military action, but, more importantly, after the military action is

successfully concluded.

In the aftermath of the military action in Iraq, I think there

probably has to be a new recognition that we are not always, or

may not always, rely on people who, or countries that are normally

our allies. We may not be able to rely on them all the time. That

is a new reality, maybe a sad reality. You like to have your whole

team and all your allies with you every time. Sometimes you do

not. But taking the long view, while we have these concerns right

now, I think it is very important that we do not unnecessarily

make some of these countries adversaries, because there are many

other endeavors—whether it is in the Balkans, whether it is the

war on terrorism, whether it is Afghanistan, and who knows what

other crisis—we would want to have them shoulder-to-shoulder

with us sharing that risk, sharing that burden.

Now, let me pose this question insofar as foreign assistance to

Turkey. It is my understanding that we are continuing to provide

Turkey with significant foreign assistance. And let me just say,

Turkey is vitally important to us for a variety of reasons, so that

our real enemies do not use religion as a reason or a cause for their

violent anti-American interests or actions. Now, I know Secretary

of State Powell has just left Turkey. I think it would be helpful for

the committee and all Americans to give your perspective of the

meeting with Turkey. There is significant aid in here for Turkey,

and if you could go over the strategy of using foreign assistance

with regard to Turkey, I think this committee and the American

public, the taxpayers, would benefit from that perspective.

Whichever one of you all wants to handle that. Probably you are

the best, Mr. Ries.

Mr. RIES. Thank you very much, Senator. I will start, and Kent

may want to add something.

First of all, Senator, I share your view of Turkey. I must say,

personally, I spent a year of my life learning the Turkish language,

served in Turkey, I have a great affection for the people in the

country. I agree with you that it is in a key piece of real estate.

It is the leading secular democracy in the Islamic world. It is proof

that an Islamic country can have a market economy, can be democratic. And the Turks have been stalwart friends of the United

States for many years.

The conflict in Iraq came upon Turkey, a month into this new

government, shortly after they took office. It is a party that has not

been in power before. They were confronted not only with the hard

choices and widespread public opposition about the war, proposed

military action if the Iraqi regime did not comply with U.N. Security Council mandates, but they also faced very difficult choices in

52

their relations with the European Union and the widespread interest, including our own interest, in seeing a permanent settlement

to the divided island of Cyprus. All those things hit the government

quickly on taking office, and the leader of the AK Party, Mr.

Erdogan, in fact, did not even have an official governmental position.

Many of these situations have been worked through. We had

asked the Turks for very serious help in order for an infantry division to, if necessary, land assault on Iraq through their territory,

and a variety of other kinds of assistance. The government swallowed hard and put that to the Parliament at the beginning of last

month and lost. I think we have to respect the fact that they made

a very serious effort to get this through. And we can go into the

details of why they lost, but, nevertheless, they have lost.

We have made a proposal in the supplemental for a significant

sum of money to assist Turkey, nonetheless. A lot less than we

would have if we had had full cooperation for our land forces.

The Turks, for their part, have gone back to Parliament and gotten parliamentary approval for overflight by U.S. aircraft in the

conflict in Iraq. And Secretary Powell has just been there, as you

mentioned today, and had very good meetings with President

Sezer, now Prime Minister Erdogan, Foreign Minister Gul, and the

Chairman of the Turkish Joint Chiefs of Staff. And through those

meetings, the Secretary got the Turkish commitment to allow us to

supply our forces with food, fuel, and water across Turkish territory, to allow humanitarian assistance to pass over Turkish territory into the north, and reaffirmed their commitment to allow overflights. This is making a major contribution to the war effort for

us.

And we continue, of course, to be interested in Turkey’s own economic development and success.

Senator ALLEN. Before you go further, they are letting our troops

get fuel, food, and——

Mr. RIES. Food, fuel, and water across Turkish territory on land.

Senator ALLEN. For our troops.

Mr. RIES. And for the region, yes, and humanitarian assistance.

The Secretary just had a press conference a couple of hours ago

and discussed this.

Senator ALLEN. We were in a top-secret briefing looking at the

whole thing.

Mr. RIES. Sometimes it is hard to tell in a top-secret briefing

what is really important, because you can’t watch CNN.

Senator ALLEN. Go ahead. Well, that is some progress.

Mr. RIES. That is considerable progress.

Senator ALLEN. And I also understood that—and what was resolved as far as Turkish troops going into Northern Iraq if you are

allowed to say that?

Mr. RIES. We have an agreement with Turkey that they would

not, absent some severe threat to their national interest, which I

guess any country would add to the proposition, but they have

agreed not to go in unilaterally. They have agreed to consult with

us about the situation in the north and reaffirm that with the Secretary.

53

Senator ALLEN. And do they recognize or agree that the refugee

concern that they had of Kurds leaving Northern Iraq into Turkey—which did happen back in the 1991 war.

Mr. RIES. It did happen. 30,000 in 1991.

Senator ALLEN. But right now, from all information that I have

received, and this is from State Department people, that there have

been virtually no refugees leaving Northern Iraq going into Turkey.

Mr. RIES. That is right, and they agree with us on that.

Senator ALLEN. They agree with that. All right. Well, if you could

go forward on our strategy again.

Mr. RIES. Well, I think our strategy—Turkey has its own considerable economic challenges. You are aware, Senator, that the Turkish public and widespread sections of the business community believed that the conflict in 1991 led to a persistent period of economic weakness for the country. Their economists argued that on

various points, but it is a political fact that they believe that the

1991 conflict harmed their economy and that the assistance that

they received from the international community was inadequate.

The Turkish economy now, even before our conflict, faced some

very serious challenges. Interest rates are too high. They have

problems in a variety of sectors and they have had a series of arrangements with the IMF.

We have been very clear that we think that the Turkish Government ought to stay the course with the IMF in its own interests,

and we have been supportive of the tough choices that they have

needed to make in that process. Our assistance will help them

meet their very serious macroeconomic challenges as well as help

their military with its own re-equipping program, which is a contribution to NATO.

Senator ALLEN. Mr. Hill.

Mr. HILL. Just a couple of comments. It should be obvious, I am

sure, that whatever amount is finally appropriated to Turkey will

flow through this Bureau or through whatever mechanism is decided not in the traditional assistance way the programs often do.

Whether it is cash transfers, or loan guarantees, or, as Mr. Ries

pointed out, other ways that will help at a macro level, it is not

typical development assistance.

I do want to note something about what you said regarding your

concerns about the relations with European allies, and here I have

four quick points.

It would seem to me that the lesson since World War II is that

the remarkable strategy of the Marshall Plan, which said even

countries that had been former enemies should be helped to establish democracy and restore their economies, paid wonderful benefits to us during the Communist era, during a very dangerous time.

I think when the history of the 20th century is told about America,

that is going to be one of the shining moments of American history.

But there is a followup to this, and this is my second point. What

we have done since 1989, again, with former enemies—whether it

is the Warsaw Pact or the Soviet Union—the assistance, the billions of dollars that have flowed in this direction, have in fact, once

again provided us with extraordinarily loyal allies. It is no coincidence that in Eastern Europe, about 11 countries, by my count at

least, and four in the FSA account, are very supportive of U.S. polVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
54

icy—tough policy with respect to Iraq. I do not think it is a coincidence. I do not think it is accidental.

Or consider what we did in the 1990s with respect to the Balkans and Kosovo and Albania and the struggles that were there.

Our defense of Muslim populations has gained us tremendous support in that part of the world. When I visit Albania, I do not think

there is a country I visit in the region where I sense that there is

more genuine love and respect for the United States than in that

country, which is overwhelmingly Muslim.

Third, with respect to Russia, I know that we are at a bumpy

place in the road with respect to their attitude toward Iraq, but I

think any sane political scientist or student of history would acknowledge that despite this rough place in the road, the relationship with Russia is fundamentally different from 15 years ago, and

we will get through this era. There is so much common ground between Russia and the United States that that relationship, I do not

believe, is going to be fundamentally or for a long time damaged

by this disagreement over Iraq. And again, I think it is partly because of our assistance strategy, which has involved us there.

Fourth, I would point out that as we think about ways to repair

the relationships with some of our European allies, it is worth noting that there is already—going on now, goes on throughout this

conflict and beyond—very good collaboration and coordination between U.S. foreign assistance, USAID, and European donors and

the E.U. We invariably meet with these folks on our trips. We talk

about who should be involved in what part of the development’s

pie, and that relationship will help us, I think, restore better relations even with some of the Western European allies that have

been strained in recent days.

And one final point with respect to Turkey, since you were mentioning the relationship with Turkey. I actually believe that Turkey

is going to be of help to us in Europe and Eurasia with respect to

those 8 out of 19 major recipient countries that have historically

an Islamic population. When we are trying to make the case that

you do not have to choose between being a serious Muslim and

being a supporter of democracy and free markets, you need to have

people within the Muslim world who have experimented with this.

Turkey, of course, is a prime example of this. I would expect that

we will use in our Bureau contacts with Turkey to allow the dialog

that will go forward in Central Asia and Bosnia and Albania and

Azerbaijan, et cetera. When there is a debate about whether it is

compatible to be a supporter of democracy, religious freedom, and

human rights and be a serious Muslim, our Turkish allies will be

of help to us.

Senator ALLEN. Thank you both for your comments. I agree with

you. That is what I was alluding to insofar as Turkey as an example, and also, for those who try to say that our values are U.S. values and try to turn everything into religious differences, Turkey is

very beneficial. And, in fact, when Turkey had some efforts in Afghanistan, that was very helpful to us insofar as stopping the arguments of those who like to divide people based on religious intolerance.

And I agree with you on the lessons of World War II, the Marshall Plan as a prime example. We are proud at VMI and in VirVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
55

ginia, of the Marshall Plan. It is a shame that some of those countries do not remember recent history, or maybe appreciate it,

whereas those who were formerly in the Warsaw Pact, Poland, the

Czech Republic, Hungary, even the aspirant countries in the Baltics, Romania and others are very much appreciative and are enjoying the invigorating breeze of freedom through their lungs after

being repressed for so long.

And again, through this, we have to make sure, we do not unnecessarily create adversaries in this situation. And the focus so much

on the few countries of Europe, particularly Western Europe, who

are opposed to us, let us not forget that the vast majority of the

countries of Europe are with us and are willing partners in this endeavor.

As far as Turkey, you also mention their influence or ability to

work with other Muslim countries. One issue that has come up has

to do with oil and Azerbaijan. For the fiscal year 2004, what is the

aid that is envisioned for Azerbaijan as a result of the President’s

January 2003 exercise of the waiver to the Freedom Support Act,

section 907, which limits aid to Azerbaijan. I would like to know

what aid is being requested to support the building and the security of an oil pipeline for Azerbaijan to Jeyhan, which is a Mediterranean port of Turkey.

Mr. HILL. You want to deal with security and I will deal with the

rest?

Mr. RIES. Yes. First of all, on our requests, we have requested basically $41 million for fiscal year 2004 for Azerbaijan. We are

presently spending out of FSA funds, Freedom Support Act funds,

$43 million a year, of which $4 million is security and law enforcement.

The security funding is largely border security, as I was mentioning in my opening comments, expenditures for anti-terrorism

assistance, equipment and training, English language training for

the border security forces. We are also helping them with antimoney-laundering and anti-terrorism legislation, data information

systems management, and the judiciary rule of law, as well as

other economic programs that Kent will cover.

We are not, as far as I know, providing specific security assistance to provide security for the pipeline, which, after all, does not

go just through Azerbaijan, it also transits Georgia on the way to

Jeyhan and Turkey. I think that the governments are capable of

providing that security, working with the owners of the pipeline.

Mr. HILL. Several points. First, of all the countries of the former

Soviet Union, despite the fact that the FSA levels in general are

going down, if you look at the numbers for Azerbaijan, they are actually going up, which is indicative of the fact that we believe there

is important cooperation and work that can go on there.

The second thing, of course, that is important to remember about

Azerbaijan is that with the 907 waiver, which allows USAID and

other agencies of the government to work with the government directly, there are opportunities that we did not previously have. And

so, for example, we are doing work with the Azeris and their government with respect to macroeconomic reforms. We are trying to

create a climate—regulatory climate—that will be more open to

small- and medium-enterprise development. But we have a whole

56

portfolio of reforms in Azerbaijan which go beyond economics to

civil society and social transition sorts of things.

So we have more opportunities than we have had in recent years

to have a fuller portfolio of programs there, and we all expect that

within a few years, the assistance level will be able to drop dramatically because once the oil really begins to flow here, they

should be able to take care of a lot of their needs. And that is why

right now it is important to help them make some of the structural

economic changes that will allow them to make use of that additional revenue and use it in a way that helps the population.

Senator ALLEN. Thank you. Now on to Armenia. There is a concern that I have as well as my colleagues about the declining

amount of foreign aid going to Armenia. While progress has been

made in Armenia, there are those of us who feel that without a

continued commitment of U.S. assistance, the country could revert

back to previous policies.

If you could share with me, with our committee, what is the

benchmark, or what is the logic for reducing aid or the aid package

for Armenia?

Mr. RIES. Let me make a couple of general comments and then

Kent, I am sure, can speak to the specifics.

First of all, the decline in funding for Armenia is somewhat less

than might appear because of the decision to move the exchange

programs to the budget line for the Educational and Cultural Affairs Bureau as public diplomacy spending, which was sort of an

administration-wide good housekeeping budget policy decision.

For example, in fiscal year 2002, we spent $90 million in Armenia, of which $13 million was for exchanges. So the sort of net on

economic development and other security and other related spending was $77 million or so. Some of the reason for the decline is the

fact that the overall Freedom Support Act budget request has declined, and some of it reflects the success of previous programs.

We have micro-credit programs, for example, in Armenia that

have become self supporting. We have supported reforms to the

electricity sector which have taken, and so forth.

We continue to be committed to assistance for Armenia. We

think Armenia is an important country, and the kinds of programs

we are doing, the exchanges for example, have a long-term horizon

and we want to support the very good performance that we have

seen in certain areas in Armenia over the last few years.

Mr. HILL. First a little bit on the context. You are correct to note

that Armenia really does have a steep mountain to climb in terms

of dealing with its problems. When you consider the fact that during the Soviet period, Armenians felt protected by the Russians,

they unlike some peoples of the former Soviet Union were more

vulnerable when the Soviet Union broke up. Some of the subsidies

and support they had disappeared.

No. 2, you had the devastation of the 1988 earthquakes. I mean

even within recent months, USAID assistance is still going to deal

with some of those problems. You are talking about a very high

level of poverty in Armenia, a land-locked country, and a tremendous outflow of population. So all of those factors keep the situation difficult.

57

On the other side, it must be noted that of all the countries we

give assistance to in Eastern Europe and the Balkans, the highest

per capita rate of assistance goes to Armenia. And so, we have been

very generous. The Congress has been very generous with trying

to support the Armenians, and that reflects itself in that high per

capita amount of assistance that goes to Armenia.

There’s another point that’s probably worth noting and that is

that typically, if you look at the funding patterns over the last few

years, Congress has tended to raise by about 20 percent over the

request levels of the administration, the amounts for Armenia. I

simply mention that to note that although it may be the judgment

of the administration that in fact funding priorities might better be

spent than another way in their judgment, the final dollar amount

listed in the request may not end up being the final amount that

gets appropriated in Armenia.

And finally, I’d simply note that I think some of our most successful programs are in Armenia and it’s partly because of the wonderful collaboration USAID has with Armenian diaspora groups

and organizations who are unusually loyal and we are trying more

and more to collaborate with them to leverage U.S. foreign assistance dollars so that whatever the amount is that we give, more private dollars and other sources are going in to help this beleaguered

country.

Senator ALLEN. Well, thank you for your comments, both gentlemen, I have a better understanding of and appreciation for your respect for the legislative branch in appropriations and also you did

it in a very straight-faced way, recognizing budgetary horse trading

as a part of the whole process. That’s great to see. Senator Coleman, did you have any questions?

Senator COLEMAN. I’ll pass, Mr. Chairman.

Senator ALLEN. OK. Let me ask one final question. It may also

get into how you look at various aspects of funding in fiscal year

2003, the administration requested and received—and this has to

do with the International Fund for Ireland—received $25 million.

Now the funding request for 2004 has been reduced to $8.5 million.

Now, does this reflect dissatisfaction with the International Fund

for Ireland, or does it—does the improved economic situation in the

Republic of Ireland and Northern Ireland over the last decade factor into this decision?

Ireland, I will note, is probably the most vibrant and strong and

competitive economies of all of Europe, and while the others have

higher taxes, lower taxes in Ireland means more investment and

more jobs. And one of the most technologically advanced countries.

So I don’t know if it’s a function of their economic strength or

whether it’s a question of the International Fund of Ireland. If either of you or both gentlemen could address that, I’d appreciate it.

Mr. RIES. I’ll take a stab at it, sir. First of all, the administration’s commitment to support the Good Friday Accords and the reconciliation that has taken place between both halves—Northern

Ireland, part of the U.K., and the Republic of Ireland—is

undiminished, and certainly very strong. I think that the request

of $8 million was part of the hard choices that were made in putting together the overall request, and it’s one more of those budget

58

line items that reflects what Kent is talking about in terms of the

outcomes are often different from the requests.

Nevertheless, the administration does very much support the

International Fund for Ireland. The International Fund for Ireland

has done enormously good work, both in the north and the south,

and in promoting economic development that promotes reconciliation between the two traditions of Ireland. I would say that the

Republic of Ireland’s economy has been one of the best reforming

economies within the European Union over the last decade. However, they have come on some hard times. The collapse of the sort

of dot-com bubble has hit them very hard. They have been disproportionately committed to information technology and computer

industries and there actually is rising unemployment in the Republic, making the economic development activities of the International Fund all the more necessary and useful at this point.

Mr. HILL. Just simply to reiterate, lest there be no misunderstanding, the reduced request level has nothing to do with performance. As I understand it, as Mr. Ries pointed out, the International

Fund for Ireland has done very good work, very important work,

and it’s just a question of the hard decisions that have to be made

with respect to the dollars available.

Senator ALLEN. Thank you.

Senator Nelson, did you have any questions of these panelists?

Senator NELSON. Thank you, Mr. Chairman. Yes, I do. You’re requesting $1 billion in aid for Turkey. Given the fact of the very unpleasant experience that we’ve had in the course of the last couple

of weeks, why don’t you justify that request?

Mr. RIES. Yes, Senator, I’d be glad to. We talked about this a lit- tle bit earlier. The request for $1 billion is a very, very substantial

reduction from the amount of money that we were talking about to

the Turks staging land forces in Turkey. It represents a recognition

that we have had nonetheless very important, strategically important support from Turkey in the present conflict, which has just

been reiterated to Secretary Powell today in Ankara.

The Turks went to their Parliament at the beginning of March

to get Parliamentary approval for a series of memoranda of understanding that would have constituted full cooperation, and the Parliament narrowly defeated that proposition. Since then, the relatively new government led by Prime Minister Gul at the time

went back to Parliament. We are talking about a society in which

there is very widespread opposition to the war, and he nonetheless

succeeded in getting permission for overflight of Turkish territory

by U.S. military aircraft pursuing hostilities against Iraq, which

was itself very difficult.

We also got approval by the Turks for resupply of U.S. forces in

Northern Iraq and for emergency landings by U.S. aircraft. We

have to keep in mind that the Turks for 12 years have supported

Operation Northern Watch, which allowed us to keep air cover over

the North.

Senator NELSON. Define the resupply.

Mr. RIES. I’m sorry?

Senator NELSON. Define the resupply, what you just said.

Mr. RIES. The Turkish Government—Turkish Prime Minister—

told Secretary Powell today that that would involve land transport

59

of food, fuel, and water, as well as humanitarian goods being supplied to the Iraqi people from Turkish ports overland into the

North.

Senator NELSON. Food, fuel, and water for U.S. troops in Iraq?

Mr. RIES. U.S. troops and for the Iraqi people as well. And overflight permission to bring in anything we want to as well as to

transit Turkish airspace by armed combatants.

Senator NELSON. What about all of our military aircraft at

Incirlik? They cannot launch from there and overfly for military operations?

Mr. RIES. My understanding of the present situation is that’s

right. They cannot launch attacks with U.S. aircraft at Incirlik

going into Iraq on sorties, no.

Senator NELSON. At one point, the Turks were asking for $22 billion in aid as the price for having us come overland. Tell me what

you think about that.

Mr. RIES. Well, I think that the Turks—the Turkish Government

should speak for itself, but I do think that their request for assistance reflected their concern over the impact of a conflict on their

economy. The Turkish public believes that the first gulf war in

1991 adversely impacted their economy. They estimate the lost

gross national product in the area of $100 billion. It is certainly undeniably true that the prospect of conflict even now has had an impact immediately on the Turkish tourism and sort of travel business, which is a significant business for Turkey. And the transit of

Turkey by Iraqi petroleum, for export, as the main export route

under the Oil for Food program, that also has been slowing radically since hostilities began.

Senator NELSON. Well, there are certainly good things that are

happening. You’ve just enumerated them. What I can’t understand

is why we’ve had this wonderful relationship with Turkey for close

to a half a century. Why is there so much anti-American feeling

there now?

Mr. RIES. That’s a question that probably requires a long answer.

Senator NELSON. Well, have at it.

Mr. RIES. The Turkish people have become convinced that a war

to enforce the U.N. Security Council resolutions to call for the disarmament of Iraq is a greater threat to their interest than to continue to live with the status quo. And their anxiety about that, I

think, does not reflect a reevaluation of the overall position with

respect to, as a member of the NATO alliance, as a friend to the

United States, or as an aspirant to the European Union. It does not

reflect a change, if you will, in the overall strategic position of

where Turkey wants to be in the world.

Turkey still sees itself, average Turks on the street see themselves, as a country that is a strong and self-sufficient country in

a dangerous part of the world that needs to take tough action. I

think that another part of the Turkish concern about conflict is the

prospect of independence for the Kurdish regions of Northern Iraq.

They took in some 30,000 refugees after the gulf war. They believe

with some considerable reason that a number of these refugees contributed to an ongoing insurgency in the east of the country by

Turks of Kurdish extraction, and that they spent the better part

of a decade and lost several thousand lives in fighting.

60

There is now a cease-fire within Turkey. The former head of the

PKK, Mr. Ocalan, is in jail, and I think to the Turkish man in the

streets, some of the talk of renewed conflict with Iraq raises renewed fears of problems on their southern border with people of

Kurdish extraction.

Senator NELSON. So, Mr. Chairman, is it worth $1 billion to us?

Our relationship with Turkey has been a very good one and it’s

been a very important one. Turkey clearly wants to enter the European Union, and I think we want them to. They’ve got to get their

financial house in order. That’s clearly in our interest. It’s clearly

in their interest. But there is going to be American blood spilled

because we do not have a pincer movement coming from the north

to the south, on Baghdad.

And that just sticks in my craw. And so the question is, is it

worth it for us to try to repair the relationship? It probably is. But

is it worth $1 billion? That’s the question I raise.

Senator ALLEN. Well, that will be one of those issues that we’ll

be debating. We’re discussing in this committee today the relationship with all the countries. I will say to you, Senator Nelson, before

you came in, I started on Iraq—excuse me, I started with Turkey,

and we’re finishing with Turkey. I found it also very interesting

that trying to get a report on Secretary Powell’s meeting—the key

thing that you picked up on was the same thing I picked up on—

food, fuel, and water for our troops. That is significant.

I share your aggravation, recognizing what our original military

plan was, to have based the mechanized units, the armored units,

as well as the flights from Turkey. Thank goodness our special operations forces were able to get in there to assist and help organize

the Kurds to keep that quiet. While efforts were made from the

south, pilots flew longer flight missions, in their support of our

troops, in preparing the battle ground. The mechanized units and

all the redeployment of the ships has all been occasioned by Turkey’s lack of assistance in allowing us to stage those troops and armaments in Turkey.

It is frustrating. I agree with everything you’ve said. We will ultimately be successful, but by not having Turkey, it’s made it much

more difficult. And I suspect that you may be able to attribute the

loss of life to that added difficulty. I’m not sure how we’ll be able

to do that, but I suspect that it is a logical estimate and assertion.

Turkey, nevertheless, is a key ally for us. It is a Muslim democracy, and what was said earlier by these two gentlemen is true. It

shows that one who is believing in one’s faith, which is one’s

human right, but also being in a democracy—religious beliefs and

democracy actually should go together, as opposed to being exclusionary to one another, which is unfortunately the case in much of

the Muslim world.

And your gritting of your teeth is the same as I’m doing with

this. There’s going to be some very difficult decisions we need to

make, but I believe as we decide how much money, whether it’s $1

billion or whether it’s less, is something, as we make this decision,

we need to take the long view, and what’s in the best interest of

the security of the United States, and making sure that those who

are not with us in this particular important venture for our secuVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
61

rity and for the liberation of the people of Iraq, in the long run,

we do not want to turn them into adversaries.

It is a difficult vote that we’re all going to have to cast, and

that’s the purpose of this hearing is to look at the larger context.

I share your concerns. We’re all going to have to examine this even

further. But our time is up in this subcommittee.

I thank you, Senator Nelson, for your questions. I particularly

thank Secretary Ries and the Honorable Kent Hill for your testimony and your leadership for America. I will now conclude this

part of the hearing and turn it over to Senator Coleman, who will

chair the segment that has to do with the Western Hemisphere.

HEARING SEGMENT III.—WESTERN HEMISPHERE

Senator COLEMAN [presiding]. Thank you.

We’ll get this portion of the hearing going and let me start by

saying what a pleasure it is to welcome the acting Assistant Secretary for Western Hemisphere Affairs, Curt Struble, and the Assistant Administrator for the Bureau for Latin America and the

Caribbean at USAID, the Honorable Adolfo Franco.

Gentlemen, on a personal note, thank you for taking the time to

visit with me before this hearing to make yourselves available. It

is much appreciated. And we do look forward to your testimony and

our discussion today on the role of U.S. foreign assistance—that it

can play in confronting the challenges in the Western Hemisphere.

I would also like to say it’s a pleasure and an honor for me to pick

up the gavel at the Senate Foreign Relations Committee for the

first time in my role as chairman of the Subcommittee on Western

Hemisphere, Peace Corps and Narcotics Affairs ,and I look forward

to working with Chairman Lugar and my colleagues on the subcommittee and the full committee as well as with each of the witnesses before us today.

In the midst of the current war in Iraq, the continuing presence

of U.S. forces in Afghanistan, the provocations of North Korea, the

disagreements within NATO alliance, and the threat to our homeland that the nexus of terrorists and weapons of mass destruction

poses, it’s all too easy to lose sight of the challenges and also the

opportunities that face the Western Hemisphere.

Yet, because of the region’s proximity and close cultural and economic ties, we cannot afford to let this region slip into the background. Let me first mention what I see as some of the bright

lights, some of the achievements and the opportunities that we can

build upon in fostering our policy goals of democracy, development

and security in the region.

With regard to war on terrorism, I understand that 31 states in

the region—nations in the region—have signed the Interamerican

Convention Against Terrorism. U.S. security has been enhanced by

signing and implementing bilateral board of partnership agreements with Mexico and Canada. Under President Bush’s leadership

last year, Congress passed trade promotion authority. With these

fast track procedures in place, the prospects of passing the U.S.-

Chile Free Trade Agreement and the U.S.-Central American Free

Trade Agreement, or CAFTA, are much greater, and I look forward

to those discussions.

62

In addition, trade and investment discussions have been underway with Argentina, Brazil, and Uruguay, separately, and furthermore, talks to form a free trade area of the Americas, FTA, continue, and I think that’s a good thing. In promoting the so-called

second generation of democratic reforms, 28 countries have ratified

the Interamerican Convention Against Corruption, the first internationally binding convention to focus specifically on corruption.

Increased U.S. support for the Government of Colombia has expanded U.S. assistance to the Government of Colombia’s campaign

against narcotrafficking. And recent indications seem to be that the

policy is beginning to be effective in reducing the number of acres

under cultivation in Colombia.

In September 2001, the Organization of American States adopted

the Interamerican Democratic Charter. This document gives the

governments of the hemisphere a compass to guide their action

when democracy is challenged. And over the past decade, many

Latin American countries have made enormous strides in political

development which certainly we support.

These are the bright spots, and I commend the President and the

administration for these achievements. Despite the bright spots, a

number of areas of concern still remain in the region. Let me list

a few of them. First, Colombia, with its problems of drug cultivation, violence, and political instability, remains high on the list of

concerns, and I do hope that we send a very strong statement to

President Uribe that we’re supportive of his efforts.

In addition, despite our strong relations with Mexico and Nicaragua, these countries continue to be major transit points for drugs

into our country and our cities. Second, recent political developments in Venezuela, Bolivia, and Haiti and even in several Central

American countries, threaten democratic development in these

countries. Third, I was deeply concerned by the recent testimony of

General Hill before the House Armed Services Committee that

there appears to be or is Hezbollah or Hamas presence in the triborder region of the South American Continent.

Fourth, with regard to Cuba, I believe we may want to take a

look at reevaluating our policies there, looking at those policies,

and perhaps there are some alternatives we haven’t previously considered that could serve to encourage a rapid transition to democracy, respect for human rights, and a better life for the people

there. And I do want to note that I am deeply disturbed by the continued crackdown on human rights and democracy dissidence as

well as a lack of press freedoms in Cuba and Senator Nelson has

personally raised that concern with me, and I know that he is been

on the forefront of that.

Senator NELSON. As a matter of fact, it’s my understanding that

the committee will consider the resolution that I’ve filed, condemning those recent arrests, including independent journalists in

Cuba. And it’s my understanding we’re going to take it up pretty

quick, and I’m very grateful it’s done in a bipartisan spirit, and I’m

sensitive to it since of course I come from the State of Florida. So

thank you for mentioning that, Mr. Chairman.

Senator COLEMAN. I appreciate Senator Nelson raising the issue,

requesting that we move on it very expeditiously. We will not have

a hearing in this subcommittee, my understanding, it will go diVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00066 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
63

rectly to full committee. Government oppression of oppositionists

such as Oswaldo Paya, organizer of the Verel project, Bernardo

Pedron, and others must stop, and Senator Nelson, I applaud you

for raising the issue and being so outspoken, and we will have that

discussion in committee.

Finally, two countries in the region, Mexico and Chile, are currently members of the United Nations Security Council. Neither of

these countries was willing to back a U.N. Resolution calling for

the use of force against Iraq and implementing the 17 U.N. resolutions requiring Iraq to disarm. I plan to explore these concerns further after we hear the testimony of the witnesses.

Senator Nelson, would you like to make some preliminary comments? If not, why don’t we go directly to the witnesses.

Mr. Struble.

STATEMENT OF J. CURTIS STRUBLE, ACTING ASSISTANT SECRETARY OF STATE, BUREAU OF WESTERN HEMISPHERE AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

Mr. STRUBLE. Mr. Chairman, thank you very much. Senator Nelson, thank you also. I appreciate this opportunity to testify in support of the President’s fiscal year 2004 foreign assistance request

for the countries of the Western Hemisphere. I have prepared a

written statement that details the administration’s policy objectives

for the Western Hemisphere, and explains how our budget request

will contribute to their achievement, and I respectfully request the

committee’s approval that it be entered into the record.

Senator COLEMAN. Without objection.

Mr. STRUBLE. No region of the world is more important to the

prosperity and security of the United States than the Western

Hemisphere. Most of the petroleum we import comes from suppliers in our own neighborhood. Our largest export market is Canada, and we sell more of our products to Latin America and the

Caribbean than we do to either the European Union or East Asia.

The exchange of goods is accompanied by a large-scale movement

of people. The U.S.-Mexico border, for example, sees more than 1

million legal crossings every day. This interdependence carries opportunities, but also carries risks. Ours is a region where failure

to address the consequences of devastating natural disasters, failed

economic policies, or political instability translates quickly into a

surge of illegal migration into the United States.

It’s a region where our neighbors’ success in treating communicable diseases has consequences for the health of our own citizens. And it’s a region where weak governments can create space

for transnational criminal organizations that threaten our wellbeing. We pursue three overriding objectives in the Hemisphere—

deepening the institutions of democracy, encouraging economic development and expanded trade, and enhancing security against the

depredations of transnational crime and terrorism.

USAID Assistant Administrator for Latin America and the Caribbean, Adolfo Franco, will describe for you how our child survival

and health programs and our development assistance support these

policy objectives. My presentation will address the role played by

Economic Support Funds, known as ESF, and Foreign Military Financing, as well as the Andean Counter Drug Initiative.

64

Democracy has come a long way in the hemisphere in the last

20 years. While free elections are the norm throughout most of the

Americas, they are not enough in themselves. The people of the

hemisphere are expressing discontent with the quality of their democracy and the perceived inability of their governments to deliver

higher standards of living, safe streets, and good schools. They

want, and we promote, second generation democratic reforms that

enhance the honesty and efficiency of government institutions and

encourage investments in people. The $86 million in ESF that the President has requested for the

Western Hemisphere will support these efforts by, for example,

providing technical assistance for the reform of judicial institutions,

training legislative staffs so that the second branch of government

can do a more efficient job in performing its role in the democracy,

promoting citizen involvement in government institution-making,

strengthening the ability of governments to fight official corruption,

and helping municipal and regional governments improve the delivery of services. The $7 million in ESF will support our democratic outreach programs in the only remaining dictatorship in the Western Hemisphere, Cuba. This money will buy books, radios, and other informational material for Cuban dissidents, and help opposition leaders and human rights workers.

USAID’s Development Assistance account is our primary tool in

supporting economic and human development. ESF does provide

some technical assistance to help governments adopt sound macroeconomic policies. It also finances some microfinance projects that

permit the poor to become more productive.

USAID LAC works very closely with my Bureau to ensure that

it’s economic development program supports our policy priorities. I

particularly wish to commend USAID for its efforts to ensure that

the benefits of freer trade which we seek through CAFTA and

FTAA, as mentioned by the chairman, will provide upward mobility

to the poor.

For this to be the case, governments must begin now to help the

poor develop skills that they’ll need in the workplace. The most

pervasive threat to the security of Western Hemisphere countries

is posed by transnational crime. The networks criminal organizations employ to move arms, narcotics, money and people into and

out of the United States represent a pipeline that can be exploited

by terrorists.

In Colombia, crime, especially narcotics, finances the activities of

three foreign terrorist organizations that are waging an increasingly cruel battle against the civilian population. One year ago, in

connection with the administration’s fiscal year 2002 supplemental

request, we asked for and received expanded authorities to assist

the Government of Colombia to combat the intertwined threats of

narcotics trafficking and terrorism. And we ask that the Congress

extend these authorities for the coming years.

Three years ago, when the administration submitted the plan Colombia supplemental to the Congress, we set an important objective

for ourselves, reversing the expansion of coca cultivation in Colombia in 2002. We met that goal last year when cultivation fell by 15

percent, reversing a decade-long trend. The Andean Counter-Drug

65

Initiative, launched 2 years ago, recognized the need for a coordinated regional approach to fighting narcotics. The ACI seeks not

just to eradicate coca and opium poppy, but to provide alternative

development opportunities to poor farmers and to strengthen government institutions in the region.

The administration’s ACI request level of $778 million for fiscal

year 2004 will allow us to continue this important work. And, Mr.

Chairman, I want to take just a moment also to acknowledge that

we have with us today Acting Assistant Secretary Paul Simon of

the International Narcotics and Law Enforcement Bureau.

Our fiscal year 2004 budget request also seeks $143 million in Foreign Military Financing for the region. And $110 million of this

money is proposed for Colombia. About one-third of that will help

train Colombian Army mobile units. I note in that regard that Colombian Army units trained by the United States have an excellent

record of respect for human rights. The remaining moneys will improve the airlift capabilities of the Colombian Air Force, and support the marine and counternarcotics interdiction capability of the

Colombian Navy.

In regard to the latter, despite relatively modest assistance levels, the Colombian Navy interdicts more narcotics leaving that

country than any other entity. We’re seeking $15 million in FMF

to help Ecuador improve communication and mobility for the country’s military units arrayed along its border with Colombia. And

the balance of funds in this account will assist military and coast

guard units in Central America and the Caribbean to protect their

territorial waters from drug traffickers, to help regional militaries

share the burden of international peacekeeping, and to assist efforts to respond to natural disasters.

In closing, Mr. Chairman, I want to acknowledge and express my

appreciation for the support of the Senate for the foreign assistance

programs in the Western Hemisphere. And I welcome the opportunity to address your questions.

[The prepared statement of Mr. Struble follows:]

PREPARED STATEMENT OF J. CURTIS STRUBLE, ACTING ASSISTANT SECRETARY OF

STATE, BUREAU OF WESTERN HEMISPHERE AFFAIRS, DEPARTMENT OF STATE

Mr. Chairman and Members of the Committee:

Thank you for the opportunity to discuss the Administration’s foreign assistance

priorities for the Western Hemisphere. No region of the world is more important to

our prosperity and security than the Western Hemisphere. In no other region do

events have the capacity to so directly and so immediately affect our national interests and the well-being of the American people.

We are at a critical juncture in the economic and political development of the

Americas. The weaker and more vulnerable economies of Latin America have been

badly hurt by the combination of a U.S. economic slowdown, a more risk-averse attitude among international investors, and the impact of September 11, 2001 on tourism and hemispheric trade. The ensuing financial crises have been contained for

now, though there are no grounds for complacency. Even during the ‘‘good times,’’ hemispheric growth was weak except for star performers like Chile, El Salvador,

Mexico, and the Dominican Republic, which embraced reform and moved to open

their economies. Too many of our hemisphere’s citizens have begun to question

whether the triumph of democracy—the crowning achievement of the hemisphere in

the last twenty years—can better their lives.

At the same time, there are encouraging signs that the framework for success has

been built throughout the region: economic development in Mexico resulting from

the North American Free Trade Agreement (NAFTA), Chile’s strong economic performance, and the predominance of democracy, which has brought freedom to every

nation in the hemisphere save one. Recent elections in the hemisphere have been

66

celebrations of democracy, including peaceful transitions to new administrations.

With the Inter-American Democratic Charter, we have recognized the hemispheric

consensus for the freedoms we cherish and responsibilities we accept. Economic

progress, though often tenuous, has been achieved through effort and sacrifice. Poverty has declined in countries embracing reform, such as Mexico, Chile, and El Salvador. We have created partnerships to advance common interests with Canada,

Chile, Brazil, Argentina, and of course Mexico. In short, we have made great

progress. U.S. assistance has been, and continues to be, a major factor in our success. That said, our work is far from over.

We pursue three objectives in the hemisphere: deepening democracy, including increasing governmental integrity; encouraging both national and individual development, including expanding economies to strengthen trade; and enhancing security,

including securing our hemisphere against the depredations of terrorism, increased

personal security, and heightened regional stability.

Our continued progress in achieving these aims in the hemisphere requires that

we confront, in a systematic way, those problems that have seemed too large and

entrenched to address directly. They include corruption, failures of governance, inadequate education systems, insufficient health care, and crime. We can no longer

afford to dismiss these issues as endemic or to address transnational threats in a

piecemeal fashion. The kind of progress we want—the kind that creates strong, resilient democracies and growing, modern economies—requires a broad commitment

to address these issues.

DEMOCRACY

Democracy has come a long way in this hemisphere over the last twenty years.

While free elections are now the norm throughout most of the Americas, free elections alone are not enough. The people of the hemisphere are expressing discontent

with the quality of their democracy and the perceived inability of their governments

to deliver higher standards of living, safe streets, and good schools. They want, and

we promote, the second-generation democratic reforms of deepening democratic institutions and investing in people.

To deepen and develop democracy, the member states of the Organization of

American States (OAS) adopted the Inter-American Democratic Charter on September 11, 2001. At the very moment our nation confronted terrible tragedy, the

free nations of the Western Hemisphere reaffirmed our commitment to the principles of democracy targeted by the terrorists. The Charter acknowledges collective

responsibility to promote, protect, and advance democracy in this hemisphere and

has been the basis for more active regional engagement in crises in the region.

The President announced on May 20, 2002, an initiative to promote a transition

to democracy in the only nation in the hemisphere that did not adopt the Charter—

Cuba. In his landmark speech, President Bush made clear that a rapid, peaceful

transition to democracy characterized by strong respect for human rights and open

markets in Cuba remains one of the critical priorities of U.S. foreign policy. Through

our democracy outreach program, we provide books, radios, and other informational

material to Cuban dissidents, opposition leaders, and human rights workers. We

seek to expand this program, and so request an increase in ESF for Cuba to $7 million in fiscal year (FY) 2004. Unfortunately, our efforts to encourage democratic reform and transition were answered by the regime’s arrests of dozens of opposition

leaders and representatives of independent civil society since March 19, in the most

significant act of political repression in years.

Democracy also remains at risk in Haiti. The Caribbean Community (CARICOM)

worked closely with us on Resolution 822 of the OAS, which provides clear guidelines to restore a climate of security to Haiti and to enable a return to full democracy through free and fair elections. The United States was an integral part of a

joint high-level OAS-CARICOM delegation that visited Haiti March 19 and 20. The

delegation delivered a strong message to the government about the crucial importance of meeting commitments under Resolution 822 and urged the opposition and

civil society to participate in the electoral process once the government meets its

commitments.

The situation in Venezuela continues to deteriorate, undermining Venezuela’s democracy and economy while threatening regional stability. We must help Venezuela

find a solution to the current impasse to avoid further harm. The only politically

viable solution is a peaceful, constitutional, democratic electoral process agreed upon

by both the government and the opposition. The dialogue led by the OAS Secretary

General remains the best hope for Venezuelans to reach such a solution. The proposals tabled January 21 by former President Carter—either a constitutional

67

amendment to enable early elections or an August recall referendum—present viable options to break the impasse.

Achieving fully the democratic objectives that our hemisphere’s leaders have established requires responsible government stewardship. Secretary Powell has said,

‘‘Promoting integrity in government and the marketplace improves the global governance climate, nurtures long-term growth, and extends the benefits of prosperity

to all people.’’ Corruption is the millstone the citizens of the hemisphere continue

to drag as they strive toward modern economies and effective democracies. Corruption distorts markets and undermines faith in the institutions of government. It limits opportunity to only the elite and steals resources that should be used for health

care, schools, and community police. Most of all, it creates disappointment and resentment that can destroy free and open systems.

To improve governance, we offer enhanced help in the fight against corruption

across the hemisphere. For example, we support the efforts of President Bolan ̃ os of

Nicaragua to beat back impunity in his nation. A U.S. government-funded and

trained anticorruption unit in the police force carried out initial investigations

against tainted high-level figures. We have adopted a ‘‘no safe haven’’ approach to

corruption. We will deny U.S. visas to corrupt officials as appropriate under existing

law, we will monitor aid to ensure it is used transparently, and we will assist countries in recovering stolen funds. We have also developed a comprehensive program

to combat corruption in the hemisphere, not just through bilateral and multilateral

programs, but also through collaborative actions with our partners.

Creating governments with integrity, where impunity is not tolerated and law applies to everyone, requires a major commitment of effort and resources, but virtually

every U.S. national interest, from regional stability to trade, from democracy to combating transnational crime, requires government integrity and eradication of impunity. We work to build strong government institutions, broad-based and effective national political parties, independent labor unions, and a free and responsible press;

enhance the rule of law and investigatory and prosecutorial capacity; and develop

ethics education at the secondary and professional levels. We have supported the

protection of workers’ rights by insisting that the rule of law be observed and applied and that acts of violence against workers and their representatives be fully

investigated and prosecuted. In FY 2002, we spent almost $75 million in Economic

Support Funds (ESF) on democracy and good governance in the region. These resources helped to support emerging democracies in Latin America and the Caribbean through training and technical assistance to municipalities, judiciaries and legislatures, and programs that support prosecutors in their battles against corruption,

money laundering, and other criminal activities. Urgent global priorities will reduce

that amount in FY 2003, but we look to Congress for support for our FY 2004 budget so that we can continue to consolidate the region’s gains. Specifically, we seek

full funding for our ESF request of $86 million, a significant portion of which will

be devoted to democracy and governance activities.

Our regional administration of justice program strengthens rule of law, with a

special emphasis on police reform. The development of strong civilian police organizations is essential for citizen security in emerging democracies and also for international cooperation to combat the threat of transnational crime. For FY 2004, funding is needed to continue programs underway in El Salvador, Guatemala, Honduras,

and Nicaragua that focus on the implementation of new criminal procedure codes

and related anti-crime initiatives. Another ongoing activity funded from this account

is the Justice Studies Center of the Americas, an initiative of the Summit of the

Americas to provide a forum for comparative research and coordination of justice

sector reform initiatives throughout the hemisphere. Political and legislative developments permitting, we may also initiate programs in Venezuela, the Dominican Republic, and the English-speaking Caribbean. We hope that you will fully fund our

request for $7 million—which is part of our overall $86 million ESF request—to continue these efforts in FY 2004.

DEVELOPMENT AND EXPANDING ECONOMIES

Economic uncertainty destabilizes nations and regions, just as economic advancement is inhibited by political strife. We have exercised leadership both bilaterally

and within the international financial institutions to assist nations suffering from

financial crises. Just last month, the United States accelerated the delivery of $10

million in ESF funds for Bolivia to help the democratically-elected government there

stave off civil disturbances related to economic conditions. Last year, the United

States provided Uruguay with a $1.5 billion bridge loan that was repaid—with interest—in one week. Argentina has now stabilized its economy. With crucial help

from the U.S., it reached a transitional accord with the IMF and has begun the long

68

climb back to economic recovery. The U.S. has also assisted Brazil, Colombia, and

Bolivia in their efforts to obtain significantly greater resources from the international financial institutions (IFIs). U.S. Government contributions constitute

about one-sixth of IFI funds. Thus, U.S. money channeled through IFIs leverages

much larger assistance packages. For FY 2004, almost 30 percent of our ESF funds

for the region ($24.445 million) are budgeted for economic growth and trade capacity

building, in addition to the development assistance funds with USAID to be spent

on related activities. Half of those expenditures for economic growth and trade capacity building ($12.37 million) are targeted at the Andean region. These funds reduce barriers to trade, support microfinance lending to the most needy, improve tax

administration, and help the historically disadvantaged generate the incomes they

need to lift themselves out of poverty.

Recognizing that a strong Mexican economy is in the interest of both Mexico and

the U.S., Presidents Bush and Fox launched the U.S.-Mexico Partnership for Prosperity in September 2001 to promote development in the more remote areas of Mexico. This innovative public-private initiative tackles the root cause of migration by

fostering an environment in which no Mexican feels compelled to leave his or her

home to find work. In its first seventeen months, the Partnership has reduced the

cost of sending money home for thousands of Mexicans in the U.S., trained Mexican

entrepreneurs in the use of electronic commerce, and launched a hundred million

dollar fund to finance environmental projects. The partnership has also provided

over a million dollars for feasibility studies for Mexican infrastructure projects and

initiated a $50 million, seven-year scholarship program to enhance the capacity of

Mexican institutions of higher education. We are seeking $12 million in ESF for

Mexico in FY 2004 for a variety of activities in support of democratic and economic

development, scholarships and security to promote stability and foster economic

growth.

The Third Border Initiative, unveiled by President Bush at the 2001 Quebec Summit of the Americas, is a comprehensive framework of cooperation with the Caribbean region on issues that affect vital mutual interests such as security. It also provides funding and training for disaster preparedness, environmental management,

and for the fight against HIV/AIDS. Our $9 million request for FY 2004 for this initiative will allow us to help this region while we help ourselves by improving stability and security in the Caribbean through increased training of local authorities

and increased information sharing.

President Bush believes in the transformative power of trade. The effect of the

reduced tariffs from NAFTA and the Uruguay Round—equivalent to a $1,300 tax

cut for an American family of four—demonstrates what trade can accomplish. That

is why the conclusion of a Free Trade Area of the Americas (FTAA) Agreement in

2005, established as a target date by hemispheric leaders at the Quebec City Summit of the Americas in 2001, will be critical. Parallel to those negotiations, our discussions with the Central Americans on a free trade agreement, like the agreement

signed with Chile, move us in the direction of a hemispheric market. Some nations

of our hemisphere require our assistance to develop the capacity to take advantage

of the agreements as fully as possible. My colleague, Adolfo Franco of USAID, will

discuss in greater detail our efforts to build trade capacity throughout the hemisphere.

SECURITY

For democracy and development to thrive, a nation must be secure. Promoting

hemispheric security remains a key U.S. objective, as it is a precondition to every

objective we share—stopping terrorism; ending the trafficking in arms, illicit narcotics, and people; strengthening the rule of law and respect for human rights; halting environmental degradation; ending lawlessness and criminality; and expanding

economies. Foreign terrorist organizations and their supporters operate in the hemisphere, most notably in and on the borders of Colombia, in Peru, and in the triborder region of Argentina, Paraguay, and Brazil.

We are encouraged by the response of the Guatemalan government to our concerns about counternarcotics. The March 19 seizure of over a ton of cocaine was a

vivid demonstration of Guatemala’s commitment to improve counternarcotics operations. In the last several months, the old counternarcotics police force has been replaced, seizures have increased, and seized drugs have been destroyed. The government of Guatemala has also taken steps to improve and enhance cooperation on extraditions and maritime counternarcotics efforts. Illegal narcotics flows continue to

pose a significant threat to Guatemala and the other Central American countries,

and it is important that the United States and Guatemala continue to increase our

cooperation.

69

The State Department’s Bureau of International Narcotics and Law Enforcement

Affairs (INL)—bilaterally as well as multilaterally through the OAS—is supporting

a wide variety of programs to address drugs, crime, and violence throughout the

hemisphere. There is close coordination between INL and my bureau to ensure that

International Narcotics Control and Law Enforcement (INCLE) and ESF-funded

programs and activities are complementary. We are improving cooperation with our

allies, strengthening the efforts of the Financial Action Task Force (FATF) and the

two FATF-styled regional bodies that cover the Caribbean and South America to

combat money laundering, and enhance border controls. We can only create a secure

environment by working together and the Western Hemisphere has been notably active in this effort.

Following the September 11, 2001 attacks, members of the hemisphere invoked

the Rio Treaty, our collective security agreement for the region. The OAS, with

strong U.S. leadership, also revitalized the Inter-American Committee Against Terrorism (CICTE) and endowed it with a comprehensive work plan. We are transforming CICTE into an effective body of counterterrorism experts that can take concrete action. In less than one year, the OAS drafted the Inter-American Convention

Against Terrorism, a binding legal instrument that establishes mechanisms for coordinated action against terrorism, which has already been signed by thirty-three

of the thirty-four member states. Recently, under the leadership of governments in

the region, the U.S. has collaborated with Brazil, Paraguay, and Argentina to establish the ‘‘Three Plus One’’ counterterrorism cooperation mechanism to address activities relating to terrorism as well. U.S. officials, in the context of the Commerce

Department’s Transshipment Country Export Control Initiative (TECI) and State’s Export Control and Border Security (EXBS) Program, also have begun discussions

with Panamanian officials on strengthening their trade control and border security

systems to prevent terrorists and other entities of concern from acquiring key goods

and technologies associated with weapons of mass destruction.

In December 2001, the U.S. and Canada signed the Smart Border Action Plan,

creating a more secure and more efficient border. To the south, we enhanced our

shared border security with Mexico by signing and implementing a similar Border

Partnership Plan in March 2002. Over the past year, we have made significant

progress toward our mutual goal of keeping North America safe from terrorism

while sustaining trade and transportation flows crucial to our economies and citizens. We sought and obtained new legal authorities to better help Colombia in its battle

against terrorism. With your support, since July 2000, the U.S. has provided Colombia with almost $2 billion to combat the intertwined problems of drug trafficking

and terrorism. These resources have strengthened Colombia’s democratic institutions, protected human rights, fostered socioeconomic development, and mitigated

the impact of the violence on civilians. We requested $37 million in FMF and $34

million in ACI funds as part of the 2003 supplemental to meet these goals.

You also passed the Andean Trade Preference and Drug Eradication Act, creating

new jobs and hope for Colombia’s people. For FY 2004, we are requesting additional

resources for Colombia and its neighbors, to build on these successes. Our request

for funds for the Andean Counterdrug Initiative (ACI)—directed at Colombia, Bolivia, Brazil, Ecuador, Panama, Peru, and Venezuela—is $731 million for FY 2004.

Another threat to stability in the hemisphere is the lingering obstacle of crossborder conflicts, especially a series of unresolved border disputes that can flare into

small-scale confrontations. These disputes poison relations between neighbors and

impede efforts toward cooperation and integration. To enhance hemispheric integration and guarantee the success of the FTAA, our neighbors must resolve these disputes equitably. Development efforts, such as those we have undertaken on the

Peru/Ecuador border, can help cement cross-border economic cooperation and development in the disputed area and beyond. Our FY 2004 request includes $4.5 million

for the Peru-Ecuador peace process, part of our pledge to assist in bringing peace

to the area.

We seek an increase in Foreign Military Financing (FMF) for the region. We

share the concern of the U.S. Southern Command that a decade of reduced security

assistance and local military budgets has left the region’s militaries in need of modernization. These militaries, particularly in Central America and the Caribbean, are

sorely pressed to protect national airspace and waters from transnational criminals

who smuggle drugs, arms, and people. Hurricane Mitch in 1998 and the El Salvador

earthquakes of 2001 showed that regional armed forces are a key element of Central

America’s ability to cope with large-scale national disasters. Our FMF request for

$143 million in FY 2004 is well above the FY 2003 level and focuses on the Andes.

The higher level of FMF is required to support the Colombian government’s efforts

to take back control and governance of those areas of Colombia currently dominated

70

by terrorists and narcotics traffickers. FMF support is also critical for Colombia’s

neighbors to preclude narcotics and terrorism from spilling over Colombia’s borders.

FMF programs will focus on strengthening security forces in border areas and complement the ACI-funded activities that I mentioned earlier.

On the related topic of legal authorities for our work in this region, you have provided us with expanded authorities in Colombia. We ask that you extend these authorities for the coming years, to permit us to assist the Government of Colombia

in combating the dual threats of narcotics and terrorism. We also ask that these

authorities be free of restrictions that can cause unhelpful delays. In fact, we hope

these authorities can be extended indefinitely, removing the need to seek their renewal each year, which injects uncertainties into the planning process.

We would like to explore with the Committee’s staff the prospect of reviewing and

rationalizing current Colombian reporting requirements. Consolidation of these requirements would, in addition to increasing efficiency, provide you with a clearer

picture of our efforts. We have identified several other areas where legislative

changes may facilitate implementation of our policies. We are still reviewing these

areas within the Administration and would like to engage with you and your staff

on these at a later date. For example, there are now so many separate exceptions

to the prohibitions on police assistance that it is hard to know what is allowed in

any particular situation. This makes coherent planning difficult. There are also gaps

between existing authorities that create unintended consequences. We look forward

to discussing these issues with you.

At State, we have identified several other areas in which we would like to engage

with you and your staff on legislative changes that would facilitate implementation

of our policies. For example, there are now so many separate exceptions to the prohibitions on police assistance that it is hard to know what is allowed in any particular situation. This makes coherent planning difficult. There are also gaps between existing authorities that create unintended consequences. We look forward to

discussing these issues with you.

CONCLUSION

Although we are paying close attention to events elsewhere in the world these

days, this does not mean we are neglecting our own hemisphere. We are deeply engaged—from negotiations for a historic hemisphere-wide free trade area, to significant contributions toward increasing regional security, to sustained work to improve

the governance of our region. Public diplomacy plays a critical role in all our efforts.

From broadening public outreach in Cuba to explaining our objectives in Colombia,

from media campaigns in Haiti to deter immigration to support throughout the

hemisphere for free elections, public diplomacy is ever-present. We work toward a

public diplomacy strategy of broad, continuous engagement with all levels and age

groups of American societies. While we have increased efforts to engage those who

shape public opinion and make decisions through the American Fellows Program

and programs like the Humphrey, Fuibright, and International Visitor programs, we

also need to reach out to the average voter and the successor generation in ways

that will deepen the understanding Latin Americans have of the United States on

a personal level. This means more vigorous information outreach programs, creating

opportunities for person-to-person interaction, and actively listening to what our

neighbors are saying. These efforts must continue in parallel with the efforts I have

described above.

Admittedly, all is not rosy in the Western Hemisphere. Although we have come

a long way, there has been backsliding, and growing democracies face threats from

all sides. We are optimistic, however, because our problems are not intractable. We

can overcome existing challenges together and bring a free, secure, and bright future to all the peoples of the hemisphere.

President Bush believes that freedom is the key to unlocking potential. Freedom

allows the creativity that is the essence of human nature to express itself and be

realized. Freedom is the path of political, social, and economic progress. As President Bush said, this hemisphere of eight hundred million people strives for the

dream of a better life, ‘‘A dream of free markets and free people, in a hemisphere

free from war and tyranny. That dream has sometimes been frustrated—but it must

never be abandoned.’’ He knows there are millions of men and women in the Americas who share his vision of a free, prosperous and democratic hemisphere. Working

together as partners, I am confident that we will achieve this goal.

Senator COLEMAN. Thank you, Secretary Struble.

Mr. Franco.

71

STATEMENT OF HON. ADOLFO A. FRANCO, ASSISTANT ADMINISTRATOR, BUREAU FOR LATIN AMERICA AND THE CARIBBEAN, UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT [USAID], WASHINGTON, DC

Mr. FRANCO. Thank you, Mr. Chairman. Mr. Chairman, Senator

Nelson, it’s a pleasure to appear before you today to discuss how

USAID Bureau for Latin America and the Caribbean is promoting

the President’s vision for the Western Hemisphere.

Assistant Secretary Struble has done an admirable job outlining

the administration’s policital priorities for the region. Assistant

Secretary Struble and I work closely together and I fully share his

views. I would like to focus my remarks on what the administration and USAID believe are the region’s development challenges

and priorities.

Mr. Chairman, with your permission, I would like to make an

oral statement which summarizes the testimony I have submitted

for the record.

Senator COLEMAN. Without objection.

Mr. FRANCO. Thank you. In his letter of invitation to this hearing, Chairman Lugar refers to the most pressing challenges facing

Latin America today. They are corruption, the narcotics trade, the

need for trade capacity building, and threats to democracy and

good governance.

I cannot agree more with the chairman’s concerns, and my testimony will focus on how USAID’s efforts in these areas as well as

the countries of particular concern to the U.S. Government, which

are Venezuela, Colombia, Bolivia, Guatemala, and Haita, are being

addressed. President Bush’s national security strategy clearly

states that the U.S. Government’s objective is to make the world

not just a safer place, but a better place, and recognizes the important role of development assistance.

The Latin American/Caribbean region is facing development

challenges, as you’ve noted Chairman Coleman, that threaten the

national security and economy of the United States—contracting,

economic growth rates, extensive poverty, a thriving narcotics industry, and the risk of HIV/AIDS and drug-resistant tuberculosis.

On our borders undermine the ability of the region as a whole. Popular disillusionment, as Assistant Secretary Struble has noted,

with governments that cannot reduce poverty, corruption, or crime,

is growing in the region. For that reason, USAID support programs

that combat corruption, improve governance, and strengthen civil

society.

Anti-corruption efforts emphasize prevention and citizen oversight and support groups which challenge weak governance, entrench political institutions and poor public sector management.

President Bush, Secretary Powell, and Administrator Natsios have

all said that trade and investment are the twin engines that are

essential to economic growth and poverty reduction in the region.

Therefore, to help countries in the region participate effectively in

the global trading system, USAID has been working in partnership

with these countries and the United States trade representative to

build trade negotiation capacity for our neighbors to the south.

Mr. Chairman, I would now like to focus on five countries of particular concern because I believe the problems of these countries

72

typify those of the region as a whole. These five countries are Venezuela, Colombia, Bolivia, Guatemala, and Haiti. In Venezuela, political conflict over President Chavez’s policies has severely shaken

the Venezuelan economy. President Chavez has demonstrated increasing disregard for democratic institutions and intolerance for

dissent. This is exemplified by actions of the Chavez government

to move against strike leaders and dissidents in February. Through

its Office of Transition Initiatives, USAID supports nonpartisan activities aimed at bringing the two sides together, lowering tensions,

and bridging divisions.

In Colombia, the scourge of narcotics threathens the fabric of

that society. The lack of state presence in 40 percent of the country

has allowed the illegal narcotics trade, guerrilla armies, and paramilitary forces to flourish. USAID is there for working in partnership with Colombia’s strong reformist President Uribe to combat

narcotrafficking and expand the reach of democracy and the rule

of law throughout the country.

USAID alternative development program gives small-scale farmers the means to abandon illicit crop production by increasing their

options to licit income generation. This program has now benefited

approximately 20,000 families and supported the cultivation of

nearly 16,000 hectares of illicit crops and former coca and poppy

growing areas.

Mr. Chairman, when I assumed this position a little over a year

ago, we were helping 4,000 families. We’re now helping five times

that number, and we were working on licit activities with 1,000

hectares, we’re now working with 16,000 hectares.

USAID-supported infrastructure projects in the affected areas

also helped to provide access to markets, and improved the health

and education of communities. In addition, USAID provides significant assistance to Colombia’s growing number of internally displaced people.

In Bolivia, poverty and social unrest are eroding Bolivia’s democratic and economic stability. In response to unrest in Febrauary,

USAID redirected $10 million to help stabilize the situation in Bolivia. Other donors have pledged new grant assistance totaling over

$30 million, and the International Monetary Fund will soon render

an opinion on the standby agreement for Bolivia. Despite the success, USAID’s alternative development program in Bolivia is now

under increasing pressure as economic woes strengthen the hand

of an opposition party controlled by coca producers.

Guatemala’s cooperation with U.S. anti-narcotics efforts is of continuing concern to us. I recently traveled to Guatemala, and expressed my concern about this matter and the slow pace of reform

to the Guatemalan Vice President and the Chief Justice of the Supreme Court. USAID projects in Guatemala continue to assist in

reforming the judicial sector, to strengthen its ability to combat

corruption. Additionally, USAID-supported civil society coalitions

are actively promoting transparency, preventing crime, and improving legislative oversight.

In Haiti, a decade of poor governance and economic mismanagement has brought the country to a near standstill, and illegal migration is on the rise. USAID concentrates on helping Haiti’s civil

society resist the Haitian Government’s growing authoritarianism

73

as well as meeting essential humanitarian needs and generating

employment in a very difficult environment. The P.L. 480 Title 2

food program is a key element of USAID’s humanitarian efforts in

Haiti. In response to the current drought in that country, USAID

is providing an additional $3.5 million in Title 2 emergency food for

direct distribution to Haiti’s poor.

In conclusion, Mr. Chairman, as the President has said, this

hemisphere of 800 million people strives for a dream of a better

life. I quote what the President had to say: ‘‘A dream of free markets and free people in a hemisphere free from war and tyranny—

that dream has sometimes been frustrated, but it must never be

abandoned.’’ President Bush knows there are millions of men and

women in the Americas who share his vision of a free, prosperous,

and democratic hemisphere.

In sum, at USAID, our programs strengthen democracy and governance, trade capacity building, healthcare systems, and education, and we are doing all we can to help our friends and the

neighbors in the hemisphere to fulfill their aspirations.

Mr. Chairman, this concludes my testimony. I will be pleased to

answer any questions you or the other distinguished members of

this committee may have for me.

Thank you.

[The prepared testimony of Mr. Franco follows:]

PREPARED STATEMENT OF HON. ADOLFO A. FRANCO, ASSISTANT ADMINISTRATOR, BUREAU FOR LATIN AMERICA AND THE CARIBBEAN, U.S. AGENCY FOR INTERNATIONAL

DEVELOPMENT

Mr. Chairman, Members of the Committee, it is a pleasure to appear before the

Senate Committee on Foreign Relations to discuss with you how USAID’s Bureau

for Latin America and the Caribbean (LAC) is promoting the President’s vision for

the Western Hemisphere.

The chairman refers in his letter of invitation to this hearing to the most pressing

issues facing Latin America: democracy, good governance, anti-corruption, counternarcotics, and efforts to increase support for trade capacity building. I could not

agree more. My testimony will focus on these areas as well as countries of particular

concern in the region—Venezuela, Colombia, Bolivia, Guatemala, and Haiti.

President Bush’s National Security Strategy reflects the urgent needs of our country following the September 11 terrorist attacks and recognizes the important role

of development assistance. It states clearly that the U.S. Government’s aim is to

help make the world not just a safer place, but a better place. The President has

said the future of our Hemisphere depends ‘‘on the strength of three commitments:

democracy, security and market-based development.’’ At USAID, we work closely

with our colleagues in other agencies and departments, from the Department of

State to the Office of the U.S. Trade Representative, to promote political and economic freedom for all nations, and particularly among our closest neighbors with

whom we have such strong social and cultural ties.

MANAGEMENT

At USAID, we know that the way in which we do things is as important as what

we do. During his tenure as USAID Administrator, Andrew Natsios has taken the

President’s challenge to heart and tried to make foreign assistance more effective

and results-oriented, and I work toward this daily in my role as Assistant Administrator for Latin America and the Caribbean. With many pressing priorities and security concerns around the world, the Agency’s costs of doing business have increased. I have initiated a substantial review of management practices in each of

the 16 missions in my region with an eye to increasing efficiency and reducing duplication of effort. As a result, there are efforts underway to regionalize financial

management and other support services. In addition, we hope there will be an opportunity for USAID and this committee to have serious discussion on the need to

increase flexibility in the way we use administrative resources.

74

USAID is proud of its contribution to the broader U.S. Government policy objectives in Latin America and the Caribbean. We have been working assiduously to

remold our program to respond to the development challenges in the region and to

promote the President’s priorities for our Hemisphere.

CONTINUING CHALLENGES

Over the past several years, the Latin America and Caribbean region has faced

increasing development challenges that threaten the national security and economy

of the United States. Contracting economic growth rates, extensive poverty, unemployment, skewed income distribution, crime and lawlessness, a thriving narcotics

industry and a deteriorating natural resource base continue to undermine the stability of the region. The risks of HIV/AIDS and drug-resistant tuberculosis on our

borders also threaten the population of the United States. Civil unrest threatens

countries in South America and the Caribbean, while political instability in Venezuela and Haiti continues. Increasingly, citizens’ confidence in the ability of democratically elected governments to provide security and prosperity is waning. Bolivia’s recent problems show the risks to democracy there as well.

The region’s GDP shrank by approximately 0.8% in 2002, the worst economic performance since 1983. Inflation has edged up after eight years of steady decline. Mediocre economic performance has caused per capita income in LAC countries to decline significantly since 1998, while poverty has increased. These woes have brought

discontent and political turbulence, raised questions about the health of democracy

in the region, about investment priorities, social sector policies, and the benefits of

a decade of liberal reforms. The effects in the poorest countries, such as Haiti, and

even regions within countries with generally solid economic performance, such as

northeast Brazil, have been even more disheartening.

Still, it is important not to portray the region in a single-minded negative light.

LAC’s economy overall is expected to recover slightly in 2003. The Argentine economy is expected to grow about 2% this year. Chile, Mexico, Peru, and the Dominican

Republic are expected to top the growth league in 2003, with expansion of 3% or

more, assuming that the slowdown in the United States abates and strong growth

resumes. Countries that have adopted sound fiscal policies and oriented their economies toward foreign investment, and rules-based trade under the World Trade Organization (WTO), have tended to resist the recent downturn. The North American

Free Trade Agreement (NAFTA) has resulted in phenomenal growth for all three

partners. Since 1993, trade among NAFTA nations has climbed dramatically, and

U.S. merchandise exports have nearly doubled.

Another area of progress is commitment of LAC countries to good governance as

represented by the signing of the Inter-American Democratic Charter and the InterAmerican Convention against Corruption of the Organization of American States

(OAS). Nicaragua is striving to curb government corruption, and other countries,

such as Mexico, have also made important commitments to reduce official corruption. Recent elections in Jamaica, Brazil, Colombia, Bolivia, and Ecuador were all

judged to be free and fair.

PRIORITIES

To address the myriad challenges in the LAC region, the United States is committed to helping build a hemisphere that lives in liberty and trades in freedom.

In his landmark March 14, 2002 speech to the community of donor nations in

Monterrey, Mexico, the President pledged to create a Millennium Challenge Account

(MCA) which would make additional development assistance available to countries

that show progress in ruling justly, promoting economic freedom and investing in

people. Through programs that help governments to strengthen democratic processes, promote equitable economic growth, and improve health and education standards, USAID is helping countries in the region with the will to reform to move along

a trajectory toward MCA eligibility. In addition, USAID programs foster cooperation

on issues such as drug trafficking and crime, disaster mitigation, and humanitarian

assistance. The LAC Bureau is committed to using our resources in the most catalytic way possible including consideration of government performance, particularly

responsible governance and accountability, in our resource allocation decisions.

DEMOCRACY AND GOOD GOVERNANCE

While support for democracy remains solid in the LAC region, popular disillusionment with governments that cannot reduce poverty, corruption, or crime is growing.

Although significant strides have been made, many countries’ democracies remain

fragile and they must make a concerted effort to reinforce the institutional building

blocks of democracy. USAID is working with other donors to strengthen democracy

75

in the LAC region through programs that include anti-corruption, rule of law, municipal governance, and civil society strengthening programs.

Anti-corruption programs emphasize prevention, citizen oversight, and building

the capacity of countries to attack weak governance, entrenched political institutions, and poor public sector management. USAID provides assistance to citizens

groups and nongovernmental organizations to devise national and local anti-corruption plans and to monitor the dealings of public officials and government agencies.

In addition, USAID supports local initiatives to establish special commissions and

investigative units to expose and prosecute cases of corruption and fraud by public

officials. In Ecuador, the Anti-Corruption Commission has the investigative authority to uncover cases of corruption. In Nicaragua, USAID provides assistance to improve the capacity of the Attorney General’s Office to tackle high-profile corruption

cases against the former government. USAID is also helping the new Office of Public Ethics in the Nicaraguan Presidency, which will be responsible for setting standards for ethical conduct, training public employees, and monitoring government

agencies’ compliance with internal control systems.

Increasing crime and violence is consistently ranked by citizens as one of their

primary concerns. The endemic problems of impunity for violent crime, corruption,

money laundering and narcotics crime, undercut social and economic growth in

many LAC countries. USAID is responding in more than a dozen countries in the

Hemisphere by providing direct assistance for modernization of their justice sectors.

New Criminal Procedure Codes and other criminal justice system reforms, developed and enacted over the last decade with USAID support in Nicaragua, Honduras,

Guatemala, El Salvador, Bolivia, Colombia, and the Dominican Republic, are introducing profound changes as countries move from written inquisitorial justice systems toward more oral adversarial systems. The new system of oral trials makes

justice more accessible and transparent, whereas the previous system lent itself to

corruption and delays and discouraged the average citizen from seeking judicial redress. In Colombia and Guatemala, USAID is expanding access to alternative dispute resolution and other legal services to millions of marginalized citizens through

a growing network of community-based centers.

As a key element of the justice system, it is essential that the police do their jobs

responsibly and that there is trust between the police and the communities in which

they work. Section 660 restrictions of the FAA limit our ability to work on critical

security issues such as community policing, which is increasingly integral to development in many LAC countries. Specific legislative authorization has allowed

USAID to initiate a community policing program in Jamaica and to continue a successful program in El Salvador. The program in El Salvador is part of a larger law

enforcement institutional development program conducted in cooperation and collaboration with the Department of State and the International Criminal Investigative Training Assistance Program (ICITAP) of the Department of Justice.

The primary justification for the program in Jamaica is summed up in the words

of the 1993 National Task Force on Crime in Jamaica, which states, ‘‘The inability

of the police to control crime has largely been due to the breakdown of the relationship between the police and the citizen.’’ The program in Jamaica is focused on moving the Jamaican Constabulary Force toward a proactive, decentralized model of

community policing, reducing police fear of the inner-city communities in which they

work, as well as the community’s fear of the police, and engaging community stakeholders as a catalyst for change in community development and crime reduction.

Similarly the community policing initiative in El Salvador has been a proactive,

solution-based, and community driven activity involving extensive community outreach. Increased police presence in communities has improved response to criminal

activity and has been key in establishing credibility with people. Reported crime and

homicides have dropped by 25% and 30% overall in just one year in the program’s

target areas. Further, 70% of citizens believe the police force has improved its ability to decrease crime. Based on this early success, the U.S.-supported program is

now being replicated by the Government of El Salvador at the national level.

USAID-supported training and technical assistance helps strengthen the capacity

of national and local governments to demonstrate that responsible leaders can deliver benefits to communities. With the direct election of local mayors and the devolution of authority to municipalities, USAID is helping citizens and elected leaders

devise community development plans that respond to local needs and generate

growth. In fourteen countries, USAID is helping mayors hold public hearings about

annual budgets and allow citizen involvement in public decision-making. Many mayors have established transparent accounting and financial management procedures

with USAID assistance to create the framework for greater revenue generation at

the local level for roads, schools, health centers, and job creation. In turn, citizens

monitor the use of public funds and devise ‘‘social audits’’ in countries such as the

76

Dominican Republic and Bolivia to track spending in accordance with local development plans in order to keep officials accountable to the public.

ECONOMIC GROWTH

Sustained development depends on market-based economies, sound monetary and

fiscal policies, and increased trade and investment. USAID’s efforts in LAC are resulting in an improved enabling environment for positive and peaceful changes. We

are mindful of the critical need to continue these efforts and build on our experiences in order to encourage further economic development. President Bush, Secretary Powell, and Administrator Natsios have all said trade and investment are essential to economic growth and poverty reduction. Without an increase in trade and

investment, the region’s substantial development gains will be put at risk, and hemispheric stability could falter.

Through support for legal, policy, and regulatory reforms, USAID has been working with LAC countries to strengthen the enabling environment for trade and investment as the twin engines for economic growth and poverty reduction. USAID

support for trade capacity building has increased substantially in the last several

years. In FY 2001, the LAC Bureau invested $5 million in trade-related activities.

This figure climbed to more than $23.5 million in FY 2002. USAID plans to increase

support for trade capacity building even more substantially in future years.

In August 2002, President Bush signed the Trade Act of 2002. On January 8,

2003, Acting Assistant Secretary Struble and I participated with U.S. Trade Representative Ambassador Robert Zoellick in launching negotiations for the U.S.-Central America Free Trade Agreement (CAFTA). Negotiations continue on track to establish a Free Trade Area of the Americas (FTAA) agreement by January 2005. In

response to these opportunities, USAID has been working in partnership with the

region’s smaller economies to build their capacity to participate effectively in the

global trading system by building trade negotiating capacity, developing markets,

and providing assistance for business development. In response to requests from

country governments, USAID will assist governments to comply with the ‘‘rules of

trade’’ such as sanitary/phytosanitary measures, customs reform, and intellectual

property rights.

Assistance will expand in the area of commercial and contract law and property

rights. USAID will continue to promote rural economic diversification and competitiveness, including non-traditional agricultural exports and access to specialty coffee

markets. Business development and marketing services will help small and medium

farmers and rural enterprises improve competitiveness and tap new markets. Let

me highlight some of USAID’s trade capacity building programs in the region:

In Central America and Mexico, USAID will continue the Opportunity Alliance,

a presidential initiative that emphasizes trade-led rural competitiveness through

and agricultural niche markets. The Alliance was initiated in FY 2002 in response

to a protracted drought, collapse of coffee prices and resulting unemployment of seasonal agricultural workers. An estimated 52% of the population, more than 14 million people, is poor and chronically food-insecure in Guatemala, Nicaragua, El Salvador, and Honduras. USAID activities in FY 2003 and FY 2004 will continue to

support democratic governance, trade and employment creation, agricultural production, and sound environmental management. USAID is assisting the Central American countries in their efforts to prepare for the FTAA as well as for negotiation and

implementation of CAFTA. As part of this process, USAID worked closely with other

institutions such as the Inter-American Development Bank, the Organization of

American States, and the Economic Commission for Latin American and the Caribbean to assist each Central American country to prepare a national trade capacity

building strategy in support of their participation in the CAFTA process.

USAID has added a trade component to the President’s Third Border Initiative

(TBI) to strengthen trade capacity and competitiveness of Caribbean countries. It

will build on modest trade activities underway for several years in a sub-region with

many small island economies lacking diverse sources of income. When launched in

2002, TBI aimed to strengthen political, economic and security ties between the U.S.

and the nations of the Caribbean. The majority of interventions and bulk of funding

thus far have supported USAID’s HIV/AIDS program. Working closely with the development assistance community, USAID is now moving quickly to mobilize trade

capacity building support to respond to countries’ priorities including technical

training of government trade officials, developing trade-related databases, implementing trade agreement commitments in such areas as customs reforms and sanitary and phytosanitary measures, providing assistance for small business development, and fostering greater civil society outreach. USAID’s Caribbean Regional Program is helping to strengthen Caribbean Community (CARICOM) countries’ comVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
77

petitiveness in hemispheric and global trade, and assisting eight CARICOM countries to prepare national trade capacity building strategies under the FTAA Hemispheric Cooperation Program.

In the Dominican Republic, USAID supported technical training on trade issues

for government trade officials. The Dominican Republic has since offered better market access in recent rounds of negotiations. As a result of a USAID-supported program in Jamaica, which is led by the private sector and provides succinct information to private and public sector leaders on the benefits of free trade, the Jamaican

private sector now better understands the potential benefits of free trade and has

become a stronger advocate of the FTAA.

USAID initiated trade capacity building activities in South America in FY 2002

and is expanding the program for trade within the sub-region in FY 2003. In Peru

we have developed an Andean regional trade capacity building program to assist

Andean Community countries in addressing ‘‘rules of trade’’ and competitiveness

issues, with initial emphasis on providing technical assistance in a variety of trade

disciplines including customs reforms, sanitary and phytosanitary measures, and

competition policy.

At the hemispheric level, USAID has a new ‘‘quick response mechanism’’ to provide greater capacity to address technical assistance and training needs arising from

trade negotiations. Through this mechanism, we are also working with FTAA countries, initially in Central America and Brazil, to provide government officials and

civil society—including business leaders—with information on the benefits of free

trade.

An important aspect of building trade capacity is broadening the education base

for a more productive workforce. USAID will support advancements in secondary

education and workforce training to improve the quality of instruction, increase

worker productivity, and help youths prepare to enter the workforce. For example,

USAID’s ESF-funded Trainirg, Internships, Exchanges, and Scholarships program

in Mexico will enhance capacity of Mexican scholars and institutions to respond to

the objectives and strategies of NAFTA and the U.S.-Mexico Partnership for Prosperity, which together define the emerging U.S.-Mexico Common Development

Agenda.

Recognizing that remittances constitute a potentially large source of development

finance, USAID will continue to support and implement mechanisms for remittance

transfer with lower transaction costs.

INVESTING IN PEOPLE

The LAC Bureau has placed great emphasis on two of the President’s other stated

goals for our region—health and education. In health, there has been significant

progress in raising vaccination coverage and in reducing or eliminating major childhood illnesses such as measles. Also, because of USAID assistance, affected countries are more willing to discuss the HIV/AIDS problem. This is particularly relevant in our region, as the Caribbean has the second highest rate of HIV/AIDS in

the world, after sub-Saharan Africa. USAID programs have had some success in reducing the social stigma attached to the disease, and prevention campaigns, including those that promote abstinence, hold even greater promise for lowering transmission rates. While steady progress is being made in lowering maternal mortality

and in applying proven cost-effective protocols for combating malaria, tuberculosis

and other infectious diseases, rates remain unacceptably high, and new strains of

the causative organisms are increasingly resistant to treatment. Because diseases

do not respect geographic boundaries, and due to the high numbers of legal as well

as illegal immigrants traveling to the United States, I believe USAID assistance to

the LAC countries in health care at the policy, institutional and technical levels is

critical to the health and security of the United States.

The quality and relevance of primary and secondary schooling in LAC countries

continue to cause concern. Less than 30% of students in the region complete secondary school, and many of those who do finish lack adequate skills to compete in

the workplace. USAID education and training programs aim to improve the poor

state of public education systems where the majority of youth attend weak and

under-funded schools and fail to acquire basic skills in mathematics, language, and

science. USAID will continue to provide support for education reform, enhancing

skills of teachers and administrators, and improving training for application in the

workforce. USAID will also continue support to the newly launched Centers of Excellence for Teacher Training, an initiative announced by President Bush in April

2001. Three sub-regional training networks established in Peru, Honduras, and Jamaica will improve the cadre of teachers in LAC countries by training 15,000 teachers, benefiting 600,000 students, and advancing education policy reform.

78

FIVE PRIORITY, FRAGILE COUNTRIES

Many of the democracies in the Hemisphere are fragile, and USAID works in a

variety of ways in concert with other U.S. government agencies to strengthen them.

I would like to discuss Venezuela, Colombia, Bolivia, Guatemala, and Haiti because

the problems in these countries are of particular concern.

Venezuela—We are deeply concerned about the deteriorating situation in Venezuela. We are concerned about the independent media, and the severe disruptions

to the Venezuelan economy, for decades one of the most prosperous nations in the

hemisphere. I also know this situation has caused great pain and hardship to the

people of Venezuela.

The United States had urged all sides to reject violence and intimidation. We

have also urged the Government of Venezuela to exercise its constitutional responsibility to respect individual rights and fundamental freedoms, and to adhere to the

Inter-American Democratic Charter.

Our policy is clear and consistent: We support OAS Secretary General Cesar

Gaviria’s efforts in Caracas to facilitate a dialogue between government officials and

opposition representatives to help achieve a peaceful, democratic, constitutional and

electoral solution to Venezuela’s crisis, consist with OAS Permanent Council Resolution 833. We are also actively working with the ‘‘Friends’’ group, which includes the

United States, Brazil, Chile, Mexico Spain and Portugal, to help achieve these objectives.

USAID supports non-partisan activities aimed at bringing the two sides together,

lowering tensions, and bridging divisions among the population. USAID has expanded opportunities for government and opposition forces to meet at the bargaining table and helped them identify common interests. USAID is also providing

training in conflict mediation and negotiation techniques to government and opposition representatives involved in the national dialogue.

Colombia—In Colombia, the scourge of narcotics threatens the fabric of society,

and poses a threat to the U.S. as well. The lack of state presence in large portions

of the country has allowed both the illegal narcotics trade and armed, drug-dealing

terrorist organizations to flourish. Events in Colombia affect the ertire region, and

the threats to its security also threaten the security of its neighbors. Ecuador’s

northern border is vulnerable, and intensive eradication efforts by the Government

of Colombia may create incentives for the narco-trafficking industry to move back

into Peru and Bolivia.

USAID is working in partnership with Colombia’s strong reformist president,

Alvaro Uribe Ve ́lez, an invaluable ally in facing down terrorism and the illicit drug

trade. President Uribe is actively pursuing policies to fight narco-terrorism and expand the reach of democracy and rule of law in Colombia.

In order to provide small farmers a means to abandon illicit crop production permanently, USAID’s alternative development program in Colombia seeks to increase

licit income opportunities for small producers of opium poppy and coca. The program

is on track and progressing well. This program has now benefited approximately

20,000 families and supported cultivation of nearly 16,000 hectares of licit crops

such as rubber, cassava, specialty coffee, and cacao in former coca and poppy growing areas. Some of the coca growing areas currently are not suitable for sustainable

agriculture for both economic and security reasons. USAID works to create permanent labor opportunities to absorb the pool of people following the coca harvest, thus

undermining coca production. USAID also works with the Colombian private sector

outside of the coca growing areas to increase licit income opportunities, making coca

production unattractive. Infrastructure initiatives are an important component of

the program as they provide short-term employment in construction as families

make the transition to licit crops, and provide communities with physical access to

markets necessary to sustain a viable, licit economy or develop the skills and acquire the funds to move to a more viable economic section of the country. As of midFebruary, USAID has completed 208 social infrastructure projects including roads,

bridges, schools, and water treatment facilities were completed in Colombia.

USAID is successfully implementing a program to strengthen the Colombian

criminal justice system, expand access to community-based legal services, promote

alternative dispute resolution mechanisms, and strengthen the capacity of justice

sector institutions to carry out their functions in a more timely, open, and fair manner. USAID has established 29 community-based centers for alternative dispute resolution and other legal services to increase access to justice for the urban and rural

poor. Over the last seven years, the centers have handled 1.5 million cases, the majority of which are related to intra-family violence. Women represent the highest

percentage of beneficiaries under the program. As a first step in facilitating Colombia’s transition to a modern accusatorial system of justice, USAID has helped estabVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00082 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
79

lish 19 oral trial courtrooms and trained 6,000 lawyers, judges, and public defenders

in oral procedures designed to reduce impunity and quicken the judicial process.

USAID is working to improve respect for human rights in Colombia through a

three-tiered approach including: prevention of human rights violations by strengthening governmental and civil society human rights institutions; protection of human

rights workers, community leaders, journalists, and local elected officials under

threat; and the improvement of Government of Colombia response to human rights

violations.

USAID’s transparency and accountability program seeks to harmonize accounting

and internal control standards within the Government of Colombia and increase citizen awareness of available instruments to combat corruption. Last year, this program successfully completed a nationwide public awareness anti-corruption campaign that reached six million citizens through radio, newspaper and television messages, and standardized internal control units in five government entities.

Colombia has the fourth largest population of internally displaced people (IDPs)

in the world and the only IDP population in the western hemisphere. USAID’s IDP

program seeks to provide integrated services and assistance to Colombia’s internal

refugees after short-term emergency relief has expired. As of mid-February, the program has assisted 635,000 IDPs by providing health services, shelter, income generation opportunities, education, and community infrastructure. As most IDPs are

women and children, aid has been targeted specifically towards female heads of

household. USAID continues to develop significant partnerships with the private

sector that either support IDP activities or offer to employ IDPs in their new communities. In addition, USAID assists demobilized child combatants by supporting

psychological counseling, vocational training, and educational opportunities, with

the goal of re-integrating them into society. More than 600 former child combatants

and at-risk children have been aided through this program.

Bolivia—In Bolivia, the twin poisons of illicit drugs and poverty are weakening

democracy and undermining prosperity. Bolivia remains a strategic ally of the U.S.

in Andean counter-drug efforts and played a leading role in South America in democratic reform and trade liberalization. Its current economic difficulties are largely

a result of external factors.

In February, President Sanchez de Lozada’s introduction of budgetary austerity

measures touched off weeks of protests, rioting and looting. Bilateral and multilateral donors were asked to contribute additional funds so that Sanchez de Lozada’s government might reconfigure his budget and allow for more spending in the social

sector. President Sanchez de Lozada requested immediate support from the U.S.

and other donors. The IMF indicated it would consider a more flexible term for a

standby arrangement, provided that additional donor funding became available immediately to meet the financing gap. In consultation with the inter-agency process

and the Congress, USAID redirected $10 million in Economic Support Funds (ESF)

to support the govenunent in a time of crisis. This assistance will be used by the

Government of Bolivia for payment of multilateral development debt and will leverage additional bilateral and multilateral contributions. New grant assistance has

been pledged by other bilateral donors. The IMF board will meet to make a decision

regarding a standby arrangement on April 2.

Due to the success of counternarcotics efforts, coca production declined 70% between 1998 and 2001 at a cost of $200 million to the Bolivian economy. The loss

of this illicit income was felt most by the small-scale farmer. There is also concern

that the country’s economic problems, coupled with the intensive aerial eradication

program in Colombia, will translate into pressure from the narcotics industry for

new production in Bolivia. These concerns and the violence in early February have

heightened the importance of and the need for USAID’s alternative development

program in Bolivia.

Working in partnership with the Government of Bolivia, USAID’s alternative development program is bringing the benefits of Bolivia’s anti-narcotics strategy to

communities. USAID is working to eliminate illegal and excess coca from Bolivia by:

establishing sustainable, farm-level production capacity and market linkages for

licit crops; increasing licit net household income; and improving municipal planning

capacity, social infrastructure and public health in targeted communities. In the

coca-producing Chapare and Yungas regions, assistance for high-priority projects

such as road improvement and bridges, which are defined by the communities and

contingent on coca reduction, are providing links to markets for licit crops. In the

Yungas region, USAID is introducing improved agricultural technologies for selected

products to improve competitiveness and encouraging adoption of low-cost forestry

and agro-forestry practices to improve soil fertility and increase crop yields.

USAID’s support for criminal justice system reforms through implementation of

the new Code of Criminal Procedures complements the alternative development proVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00083 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
80

gram. The new Code makes justice more accessible and transparent through use of

an oral system and citizen judges. The previous written, inquisitorial system lent

itself to corruption and delays and discouraged the average citizen from seeking judicial redress. Improved court processes have reduced case processing time by twothirds.

Guatemala—As the members of this Committee are well aware, Guatemala is of

continuing concern because of lack of cooperation with U.S. anti-narcotics efforts. I

recently traveled to Guatemala and expressed my concern to the Guatemalan Vice

President and Chief Justice of the Supreme Court. In addition, corruption, organized crime, weak enforcement of the rule of law, and lack of political will under

the current administration have made it difficult to promote democracy effectively.

Use of death threats and kidnapping to manipulate government officials, increasing

human rights violations, continued growth in crime, and concerns about citizen security all suggest that progress toward democracy has stalled in Guatemala. Nonetheless, pressure from the international community and civil society has positively

influenced the government to take some significant actions that lay the groundwork

for greater inclusiveness and responsiveness in Guatemala’s democratic system.

USAID has been helping the judicial sector make institutional reforms to

strengthen its ability to combat corruption. USAID also helped establish an autonomous, professional public defender service throughout the country. Today, 27

USAID-assisted ‘‘justice centers’’ help local communities, churches and governments

connect with police, prosecutors, judges and public defenders to fight crime, ensure

respect for human rights, and mediate disputes. Case file and information management system reforms are significantly improving efficiency while reducing the potential for corruption. The time to locate case files has dropped from hours to less than

15 minutes and cases are randomly assigned to judges. Due process has improved

because information on time required for various stages of court procedure is now

available. The Supreme Court is using statistics on workload, productivity, case intake, and bottlenecks to improve efficiency and identify problems. A major reform

of Guatemala’s principal law school has been completed and the new curriculum instituted for the first year. The complete revamping of the curriculum and admissions standards, an indigenous law program, and an expanding internship program

will all improve the quality of personnel entering the justice system.

After several months of intensive training and planning sponsored by USAID,

eight civil society coalitions are now actively combating ethnic discrimination, promoting transparency and anticorruptiori, improving congressional oversight, and enhancing public security. Over the last few months, the Alliance for Transparency (a

coalition of the Chamber of Commerce and two regional organizations) developed a

model profile, selection criteria, and procedures to elect the new Comptroller General and focused public attention on this process for the first time. A coalition engaged in preventing crime is bringing together gang members, the media, citizens,

and police in working to reduce crime in six target areas. A civil society group drafted new legislation to address domestic violence and promoted understanding and

application of current laws. For the first time, local human rights organizations

played an important role in the selection by the Congress of a new Human Rights

Ombudsman.

Hait—I would now like to shift to the continuing challenge presented by Haiti,

where a decade of poor governance and economic mismanagement has brought the

country to a near standstill, threatening another wave of illegal migration to the

Dominican Republic, the Bahamas, and the United States. A pernicious drought in

the country’s Northwest and Central Plateau regions has made things even worse

and placed additional strains on our humanitarian relief efforts in the country. We

are responding with an additional $3.5 million in Title II emergency food for direct

distribution to affected groups.

The growing authoritarianism of President Aristide and his Fanmi Lavalas party

frustrated USAID’s efforts to bolster the Haitian judiciary and national police in the

late 1990s. Consequently, we shifted our emphasis to helping civil society resist the

growing authoritarianism of the Haitian government. Recently we have added activities to strengthen political parties and the independent media. The country’s direction now depends on whether the government can establish a climate for free and

fair elections in 2003 and secure the participation of Haiti’s opposition parties, many

of which boycotted the election of President Aristide in November 2000. We also

keep in close contact with the Haitian human rights community and incorporate

these groups whenever possible into our activities. Last but not least, we are actively engaged with the Haitian Diaspora, seeking ways to help them foster democracy in Haiti.

In addition to our work with civil society, USAID’s programs in Haiti are designed

to meet essential humanitarian needs and generate employment in a difficult ecoVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00084 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
81

nomic environment. The FY 2003 funding level for Haiti is $58.5 million (including

$24.9 million in non-emergency food aid). The P.L. 480 Title II food program is a

key element of USAID’s support for humanitarian needs in Haiti. Some food is distributed outright through school feeding programs but principally through maternalchild health care facilities in remote areas. This approach ensures that U.S. food

aid is reaching the neediest and most vulnerable Haitians—rural children under

five and nursing and/or pregnant mothers. The bulk of the Title II food commodities

are sold to local millers and the proceeds used to finance projects in health care (including assistance to orphans), primary education, and food production.

ALLIANCES

Private investments, civil society and faith-based contributions now far exceed Official Development Assistance levels. Linking our USG investments with private investments will assure a greater impact for both, as was articulated by the President

at the Monterrey Conference last year. The Global Development Alliance (GDA) and

the Development Credit Authority (DCA) are exciting business models where we

have made the USG dollar and impact extend much farther by partnering with businesses, universities, and philanthropic groups.

Several examples of GDA-type partnerships are just getting underway in the region. USAID’s Central America Regional program plans to leverage significant private sector contributions for its quality coffee and regional diversification programs.

Two recently-signed agreements exemplify the emphasis on alliance building and

counterpart contributions: one with the Coffee Quality Institute to develop a volunteer-based technical assistance program, and one with Green Mountain Coffee

Roasters designed to generate new resources. Of the 18 partnerships between U.S.

and Mexican colleges and universities recently approved for USAID’s new educational exchange program in Mexico, 15 exhibit greater than one to one funding

matches from higher education institutions and the private sector. The 18 agreements total about $10 million, with USAID providing approximately $4 million and

non-USG public and private partners contributing $6 million.

USAID’s Development Credit Authority (DCA) offers an opportunity to mobilize

local capital to fund development initiatives. Through DCA, USAID/Mexico provided

guarantees to two Mexican microfinance institutions. The programs were designed

to allow both institutions to leverage the guarantee by capturing savings, especially

longer, fixed-term savings, which are an important source of loan capital. Both programs have greatly exceeded expectations, with the banks increasing total deposits

by $4.8 million and $5.7 million respectively. In Guatemala, investment efforts in

market towns also exceeded expectations. The Non-Traditional Exporters Guild was

directly responsible for promoting $4.25 million worth of new investments in the

Peace Zone and the BANCAFE Development Credit Authority mechanism leveraged

an additional $4.7 million for microlending.

CONCLUSION

Hemispheric commitment to democracy remains high with the creation of the

Inter-American Democratic Charter and agreement to an ambitious democratic reform agenda—each time the Hemisphere’s leaders meet. So far, democratic systems

have persisted even in the face of severe economic crisis and, in some cases, either

very weak or even virtually no effective governance. These political crises—all very

different—have not caused permanent ruptures in democratic practices. They nonetheless demonstrate the fragility of institutions and the need to strengthen the

building blocks of democracy if the progress of the past two decades is not to be undone. As President Bush has said, this hemisphere of eight hundred million people

strives for the dream of a better life, ‘‘A dream of free markets and free people, in

a hemisphere free from war and tyranny. That dream has sometimes been frustrated—but it must never be abandoned.’’ President Bush knows there are millions

of men and women in the Americas who share his vision of a free, prosperous, and

democratic hemisphere. At USAID, our programs in democracy and governance,

trade capacity building, health, and education are helping our friends and neighbors

in the Hemisphere fulfill their aspirations.

Senator COLEMAN. Thank you, Mr. Franco.

I certainly share that vision of a free, prosperous, and democratic

hemisphere and believe that trade and investment ultimately are

the key elements in the way to get there. But before you can get

to trade and investment, or if you’re going to do trade and investment, it has to be built on a firm foundation, and I have a lot of

82

concerns. And I think, Mr. Franco, you laid them out specifically,

focusing on specific countries, highlighting some of those concerns.

You have to have national security. You have to have a firm foundation, in terms of some sense that democracy is going to work.

You have got to deal with corruption. And then beyond that, there

is the issue which we did not talk about, but we need to spend

some time, some more time, on the issue of AIDS and the impact

it is having in Haiti and other areas.

I was going to begin my questions, but the distinguished ranking

member is here. And, Senator Dodd, before I begin my questions,

would you like to make a statement?

Senator DODD. I will make a brief statement here, but I apologize to my colleague. We have been involved in some markups in

the Health Committee. So I apologize to our witnesses for not being

here. So let me just share a few thoughts, Mr. Chairman, and

thank you first of all for convening this hearing. We convene, as

we all know, to discuss the Bush administration’s, request for foreign aid. This is the second of two hearings the committee is holding, and I am pleased to have the opportunity to share some

thoughts on it.

In the coming year, our task, the task of the entire government

of our country, will be to ensure that vital foreign assistance initiatives are properly funded and managed. And as a world leader, the

United States has the responsibility to help promote peace and stability. That is why I am concerned about the limited amount of

Federal dollars currently allocated to foreign aid projects. However,

our endeavors in this area are vital not only to the success of the

specific program or a set of programs; they are a central component

of our ability to promote the vital interests of the United States

globally. Therefore, I am hopeful that this shortfall is addressed in

the Senate deliberations, funding levels for foreign aid initiatives

for fiscal year 2004.

Certainly, there are many regions of the world that need and deserve American assistance. Once our troops emerge victorious from

the current military conflict in Iraq, as I am confident they will,

we will be faced with the considerable responsibility of rebuilding

that nation.

Having said that, as we are under certain time constraints today,

I would like to focus my attention on a request for programs in the

Western Hemisphere. And my colleague from Florida, who is with

us here, has a strong interest in this region of the world, as well,

and we talk about at great length.

As you know, Latin America has many significant problems.

Throughout the past year, this important region, our closest neighbors, have been plagued by economic instability, political instability, and civic unrest. The illegal narcotics trade and the devastating impact that it has had on Latin America persist. Poverty

rates remain extremely high, and access to education and health

remain alarmingly limited. From the bottom of the South American

Continent to the Caribbean, Argentina, Brazil, Colombia, Venezuela, Haiti, and others, have been struggling to create and ensure a safe and secure future for their people.

While USAID, for the most part, does a good job with the resources allocated to them, the Western Hemisphere, as a region, is

83

not provided with sufficient resources, in my view, and attention to

address the myriad challenges that it is facing.

I am also concerned that the administration seems to be unwilling to engage certain governments as part of their efforts in the region; most specifically, Haiti. Haiti is one of the most povertystricken nations in the Western Hemisphere; in fact, one of the

most poverty-stricken in the world. It has an unemployment rate

as high as 50 percent and is being devastated by the HIV/AIDS

epidemic, with almost 5 percent of the population infected. How is

the government of that nation going to be able to strengthen its

governing capability and provide for its people if the administration

refuses to work with them? In my view, supporting the people and

economies of developing countries, especially those in our region, is

not only sound policy, but also in keeping with our leadership in

the world community. Helping impoverished nations foster democracy, feed their people, and protect their environment will reap

great benefits for the United States. It is in our enlightened selfinterest both with regard to our economic success and our national

security needs. Therefore, I, again, urge my colleagues and the administration to consider the broad spectrum of responsibilities we

have to the global community and, more specifically, to our neighbors in this hemisphere as we debate about the funding levels for

foreign aid in the foreign aid initiatives as it unfolds.

Again, Mr. Chairman, I thank you for doing this today, and I am

hopeful that our discussions will be worthwhile, and again, with a

particular emphasis in Latin America.

I do not mean to exclude other points, but I want to particularly

point to that area of concern I have.

Senator COLEMAN. Thank you, Senator Dodd. And I share that

concern and share the belief that we have to be engaged in doing

those things that strengthen the foundation for democracy and stability. And I think we have great self interest in making sure that

that is accomplished.

If I may, let me just turn to Colombia, first. Specifically, there

was discussion about aid to Colombia, in terms of its military,

army, air force, et cetera. How would you assess President Uribe’s

efforts to strengthen security forces? And, in particular, I am interested in some of the anti-terrorism, anti-kidnaping issues that he

is facing which are such a great threat to internal security.

Mr. STRUBLE. Thank you, Mr. Chairman.

I was struck by a line in the Government of Colombia’s recently

published National Security Strategy, which said that of all of the

inequities that afflict the poor in Colombia, there is no greater inequity than that of access to security. Security in Colombia is important to achieving all of our objectives there. USAID, for example, cannot fully attain its objectives, although they have been very

creative in their ways of trying, in alternative development unless

there is adequate security in the areas in which they are seeking

to work.

The United States, beginning last year, has an enhanced focus

on providing security. The Congress was generous enough to appropriate, first in the fiscal year 2002 supplemental and then more recently in the fiscal year 2003 bill, a total of $98 million for infrastructure protection in Arauca Province. I would like to note that

84

the philosophy that undergirds this project is not that you protect

a pipeline; you protect a province, you protect the people of the

province, you bring in government institutions presently not active

there, including prosecutors and police, and establish a thoroughgoing presence. That has been remarkably successful; even as we

are at the beginning stages we have seen attacks against the pipeline fall from about 170 in 2001 to, if I recollect rightly, 42 last

year.

We also received funding from you in the supplemental process

last year for training bomb squads. And, indeed, in the markups

that were done yesterday in the Senate, there was, again, funding

provided in the supplemental for training of bomb squads. Vitally

important. The FARC has been turning to urban terrorism even before the breakdown of the peace process in February of last year.

They have been targeting the people who deactivate mines; if I

recollect rightly, six of these small number of experts were killed

last year doing this work. As you know, the bombs have increasingly been targeted against civilians in Colombia, as shown by the

El Nogal bombing 2 months ago.

We have also provided assistance, sir, for specialized anti-terrorist and anti-kidnaping units, and this assistance gives them

equipment, such as bulletproof vests, secure communications, training in hostage negotiation, training in special tactics. It is directed

both at police special units and military units, the police being

more active in urban areas, the military with the forces that are

turned to in rural areas.

And then, finally, with the support that has been granted by the

Congress, we have been able to assist the Government of Colombia

to build hardened police stations in municipalities where there is

no police presence at the present time. And we have also been able

to provide training for a new type of force of the Colombian police,

the carabineros.

There is a space that opens up between the time when the military goes into an area where the government has not been present

and begins to push out the FARC or the ELN and the AUC and

the time that the region is sufficiently pacified that a regular police

force can be in there. And the carabineros are a mobile, mostly

horse-mounted police force that have been specially training, that

emphasizes on being present in these broad areas in that period between when the military starts to clean it out and a regular police

presence to help in that transition.

Senator COLEMAN. I am hopeful that we will look kindly on the

request, the budget request here. Is there something, Assistant

Secretary Struble, that is not in here that Colombia really needs?

If there was something that we should be doing to support President Uribe that perhaps we have not talked about, can you let me

know what that would be?

Mr. STRUBLE. In point of fact, the supplemental that is moving

very speedily through the Congress has provided that support.

There was $34 million in additional funding for INL’s INCLE account. That will help us to provide—I believe it’s $5 million more

for the bomb experts, $7 million for hardened police stations, $7

million for the security of President Uribe and other vulnerable

members of his cabinet. It has $37 million in Foreign Military FiVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00088 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
85

nancing that helps especially the intelligence collection ability of

the Colombia Armed Forces. And I think that we, in fact, have

done very well with the Congress’ support in backing up the political will that President Uribe has shown.

Senator COLEMAN. Thank you, Assistant Secretary Struble.

If I may, Mr. Franco, as we see success in Colombia, particularly

dealing with the issue of eradicating and lessening the cultivation

of the cocaine crops, coca production, my concern is that it is kind

of like squeezing a balloon, and perhaps that it blows up a little

bit more in Bolivia. And you noted in your presentation and talking

about areas of concern of the instability that we are seeing in Bolivia. Can you talk to me a little bit about what our focus is there,

what are our prospects of success, are there things that we need

to be doing that we are not doing to try to find a little more stability in that area of the hemisphere?

Mr. FRANCO. Thank you, Mr. Chairman.

First, I would like to say that I share your concern about what

we refer to sometimes as the ‘‘balloon effect,’’ which is as we apply

pressure and even—I think showing significant progress in Colombia, and I attribute that to the excellent work that has been done

through our INL Bureau and the coordination we have had with

NAS on the ground in Colombia, and really the very focused, very

effective interagency approach to dealing with the problem.

As Assistant Secretary Grossman has said, this is a regional

problem. This just underscores your concern. Colombia’s problems

are the region’s problem. I think that he has tried, the Assistant

Secretary has tried, very hard, and Assistant Secretary Struble, to

stress that on our neighbors, and I think we have made progress

in that area with Peru and Bolivia.

On the Bolivia question, to answer your question specific to the

issue, in both Bolivia and Peru we have made significant progress

over the years on alternative development and reduction of coca

production. And controlling, which, as you know, in Bolivia’s case,

particularly, its illicit crop for non-narcotic consumption, and we

have worked with the Bolivian Government to control that, I think,

effectively over the years. I will say this, that has been a process

of 15 to 20 years, as exemplified or illustrated by the GAO reports

that have been conducted in the region. So this is a very long-term

process, be it in Colombia or elsewhere.

The balloon effect, to the extent that we approach this, as I think

we do in the administration—that is why we call it the Andean

Counter-Narcotics Initiative. It is a regional problem and issue I

think is the way to address your concern.

With respect to Bolivia, we have had conversations. We are engaging the new Government of Bolivia, the government of Sanchez

de Lozada, President Lozada’s government, on the need to make

adjustments to our program in the Chapare and Yungas areas,

where we have seen an up-tick in the production of coca. There are

some, as I alluded to in my testimony, some issues regarding internal politics in Bolivia with an opposition party that has replaced

the Cocalero Party. So we need to work some of those issues

through.

We would like to continue to build on the infrastructure and the

ability for illicit crops in the Chapare and elsewhere. We believe

86

that is the recipe, unfortunately, for success, and that is to provide

an alternative. What has been the problem has been the disruption

in the area recently, with strikes and things of that nature.

So I think to the extent that we can provide assistance to stabilize the situation in Bolivia, we can address the development

issues as that stability comes to pass, because as the Assistant Secretary noted, Assistant Secretary Struble noted, be it in Colombia

or elsewhere, without security on the ground it is extraordinarily

difficult to conduct development work. So our strategy is to work

with the Government of Bolivia on those pressure points and provide the necessary assistance once the situation on the ground is

stabilized.

Senator COLEMAN. Thank you, Mr. Franco.

I am going to turn to our colleague from Florida, Senator Nelson.

Senator NELSON. I thank Senator Dodd, so that I can get on to

an appointment. Just a couple of quick questions here about Haiti.

It is, as you have said it is, Mr. Struble, in a world of hurt. It

needs political and economic stability. We need political stability to

emanate from the President. I have spoken directly to him. My wife

has actually spoken to his wife about this. And we were down there

with a delegation a couple of months ago. But it is almost like a

vicious downward spiral. You need the political stability in order

to have the economic stability. The world banking community

needs to know that they are going to utilize the funds adequately

in order for those bank loans to be made. Now, recently we have

heard of the possibility of a bridge loan that is being worked on to

pay the arrears so that more loans can flow. Why is not our administration involved in working on this arrears situation?

Mr. STRUBLE. Thank you, Senator.

Our administration, has, in fact, been trying to help Haiti to access International Financial Institution lending. We changed our

policy with the adoption of OAS Resolution 822 this past winter.

It represented a hemispheric consensus that we should de-link

international financial institution lending to Haiti from the resolution of Haiti’s political crisis. They are both very important, but the

position we adopted then was that the United States will support

international financial institution lending to Haiti based upon Haitian compliance with the technical qualifications of those loans, and

that includes very important transparency commitments.

Just some 10 days ago, there was a delegation from the Organization of American States, which included a representative from

the United States, Special Envoy Ambassador Otto Reich, that visited Haiti for conversations with President Aristide and the opposition about getting the 822 process back on track. Accompanying

that delegation were some representatives from international financial institutions. There will be a Permanent Council meeting in

the OAS tomorrow to review how the Government of Haiti is doing

against some of the benchmarks that were provided by this delegation that visited Haiti.

On the IFI side, the Inter-American Development Bank has

talked about structuring a loan to Haiti that would allow the Government of Haiti to cancel its arrears to other international financial institutions. Naturally, it is important that Haiti first conclude

a staff-monitored agreement with the IMF. Those discussions are

87

underway. They have made progress. The Haitians have done some

things. They have changed their pricing scheme on gasoline, for example. They have made some commitments on transparency. It is

very important that they follow through on those.

In the meantime, though, Senator, the United States remains the

largest bilateral donor of assistance to Haiti. And in our request for

fiscal year 2004, we are seeking $53 million for humanitarian assistance to Haiti.

Senator NELSON. Well, that is encouraging, because when I was

in Haiti a couple of months ago, it seemed like that the administration had this ideological rigidity about these loans. And there is

certainly concern about that, because Haiti was not doing what

they were supposed to be doing with the money. On the other

hand, to do nothing and just say, ideologically, ‘‘We’re not going to

give you the loans until you can pay off the other arrears,’’ and

they cannot do that. And, of course, it is a downward spiral. It is

clearly not in the interest of the United States for Haiti to go in

a downward spiral. It is clearly not in the interest of the State of

Florida, where we get a lot of the out-migration. So that is an encouraging report, and I want to encourage you to get in there and

do that and work that thing out.

It was so instructive to me. I went three times into Citi Soleil,

the slum. And in the midst of all that slum, that open sewer and

everything, there is a dignity of the people in Haiti. These little

thatched, open-roof, stone huts, they would keep them just as neat

as they could possibly in the midst of all of their poverty. A school

for children, they got the children to go to the school and enforced

it through their parents in this slum by getting the parents to come

in and get instruction late in the day. And I saw those parents

being instructed, and they were just so engaged. I mean, it was so

encouraging to see that.

You were very generous with your time, and I am going to exit.

I would just say an issue in front of us on the emergency supplemental that is on the floor right now is the question of food aid.

As you know, I was involved in it with regard to Food for Africa.

And I do not want to see—and I think we are working in a bipartisan way to get some language into the bill that they are not going

to be able to squirrel the money away on food famine aid for Africa

over to Iraq that we had intended to go to Africa. And I would say

the same thing with regard to the food aid for Haiti. Let us make

sure that what is intended in the bill gets there and does not get

squirreled away to other areas.

Thank you.

Senator COLEMAN. Thank you, Senator Nelson.

Ranking Member Dodd.

Senator DODD. Thank you very much, Mr. Chairman. I thank

Senator Nelson. There is an awful lot of ground to cover, and I am

going to ask, Mr. Chairman, probably a consent to submit some

questions because to cover the region would be difficult. And I do

not want to get into a competitive war in a sense, but the fact that

Western Hemisphere, as a region, receives the smallest amount of

assistance in the world, about $830 million—not insignificant dollars, and realize there are massive problems that exist elsewhere,

so I do not want to suggest that ought to be the standard necVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00091 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
88

essarily solely by which we judge the effectiveness of programs,

but, nonetheless, when you consider the incredible problems that

exist in this hemisphere in—we talked about Haiti a bit here, and

I will raise that, as well. I already have in my opening statement.

Central American countries are in desperate conditions. I mean,

in the end, when you go back and know the millions we have spent,

literally hundreds of millions spent back in the 1980s as a result

of the guerilla wars that were going on in El Salvador and Nicaragua, and then these countries being devastated once we resolved

those conflicts down there, just countless, almost it seemed, natural

disasters that plagued the region. You now have, according to one

estimate, some 28 million people literally living in utter poverty

just in the Central American countries. And you start talking about

the Andean nations and the problems that persist in Colombia that

we have already addressed to some degree here, and I want to

come back to that a little bit in terms of the aid function there, it

is a country that is being just shredded, where literally a million

people now displaced, hundreds of thousands are leaving the country. Many send their children to school in the United States and

elsewhere just because of the violence that is gripping the nation.

The problems in Bolivia are huge, and the problems in Brazil,

which is, of course, the one country that if you do not get it right,

everyone else gets affected immediately. The other countries can

have problems and they do not necessarily affect everyone else, but

the problems of Brazil—if Brazil gets a cough, everyone else gets

pneumonia, is the often-used expression in—certainly in South

America. The problems of Argentina, of course, have been well-reported in the media.

And I am not suggesting that all of these are areas necessarily

where some dollar amount is going to necessarily solve the problem. And I say this with all due respect, because I know there are

people, including our witnesses here today and others, who really

do care deeply about the region. But I would be remiss in a hearing

like this, Mr. Chairman, if I did not express a deep sense of disappointment that exists, in spite of all these other problems we

face—and, Lord knows, they should be a priority problem; certainly

9/11 demonstrated that, certainly the problems in the Persian

Gulf—but there is a sense that in the midst of all of this, this region has been terribly neglected over the last couple of years. And

I share that concern, not that this should have been the highest

priority, but the failure to even sort of engage this region to some

extent has been deeply, deeply disturbing.

So let me raise, starting backward in a sense, just a general comment and maybe ask our witnesses, on the region generally, in

terms of your assessment, generally speaking, about the region.

Second, I would like to raise the issue, if I could, about the problems with the Millennium Challenge Account, if I could. The administration has proposed setting up an independent government

corporation to provide a new spigot of assistance to poor countries

who are committed to improving the lives of their citizens. USAID

at the moment is excluded from the board of this new corporation.

And I wonder how many countries in the Western Hemisphere will

be eligible to receive resources from the Millennium Challenge Account. And so if you could respond to that, I would appreciate it.

89

And I wonder if you would just—and I said that in the first question to you, but if you had to assess access to more resources, what

would your priorities be? I would like to hear from you what your— if you could sit there—and I know there is a—just generally, where

would you—how do you think, stepping back from this and looking

at the region, how you would assess what your priorities for the region would be, if you could, Mr. Secretary.

And then let me come back in, if I can, on a couple of questions,

if time permits, Mr. Chairman, on the Haiti issue as well as the

question of aid in Colombia. I would like to know what sort of levels of aid we are talking about there. In Brazil, obviously, again,

will USAID provide any resources to the initiative of the Brazil

Zero Hunger Effort there that President Lula de Silva has been

talking about and whether or not we are going to participate in any

way.

I apologize. There are a lot of questions, but obviously the region

has a lot of questions.

Senator COLEMAN. And, Senator Dodd, I will note that, without

objection, we will keep the record open for questions until the end

of the week.

Senator DODD. Thank you.

Senator COLEMAN. So we will get those in.

Mr. STRUBLE. Thank you, Senator. I will take up your invitation

to provide a general assessment of the state of the hemisphere and

talk a little bit about what our priorities are, and then my colleague, Adolfo Franco, who was just in Brazil looking at, among

other things, the Zero Hunger Program, and I know he will want

to comment for you on that, and Haiti and a few other areas, as

well as the Millennium Challenge Account.

On a general assessment, I had the opportunity to say in my oral

statement and in my written remarks that of greatest concern to

us is that while we have achieved the crowning success in the past

25 years of helping establish democratic governments in all but one

country of this hemisphere, I am worried that citizens in the hemisphere are not satisfied with the quality of democratic governance.

Corruption is much too high. If you look at Transparency International, they would rank a number of the countries in Central and

South America toward the bottom of the worldwide scale. The

World Bank study that is perhaps a bit more mid-term in its outlook puts them around the 50th percentile. But that is not acceptable for a hemisphere that puts such a priority on democracy and

on responsive governments.

There also are the difficulties that our governments have had in

creating macroeconomic stability and sustained economic growth.

Now, mind you, our own troubles in the United States have contributed a great deal to that. As you have said, like Brazil, if we

get a cough, everyone else in the hemisphere gets pneumonia. The

fact that countries like Mexico have seen their growth rate go from

7 percent in 2000 down to 1 percent or 3 percent is illustrative of

what an impact our economic downturn has had on countries that

depend upon access to our market.

The Caribbean has been badly hit by the turndown in international tourism since 9/11. Other countries have been impacted by

a more risk-adverse investment climate in the hemisphere. Some

90

of this will be cured as our own economy begins to pick up again.

Some of this can be addressed on the policy side rather than the

assistance side by moving smartly on programs like ATPDEA,

CAFTA, and the FTAA.

On the Millennium Challenge Account, without getting into some

of the specifics, I want to note that in the first year, based upon

per capita criteria only, there would be five countries in this hemisphere that would be eligible, that have per capita income below

$1,435. In the second year, there would be 7; in the third year,

there would be 14. And those countries, just to take the first year

for example, include most of those that have been cited by members of the committee as of special concern to them—Bolivia, Haiti,

El Salvador, Nicaragua.

Now, of course, the criteria of the Millennium Challenge Account

puts an emphasis in three different areas—political liberties, economic liberties, and investment in people. Most of our countries in

the hemisphere do very well in political liberties. A country like

Haiti would have more difficulty there. They are doing reasonably

well on economic freedom, and they are doing better all the time

in investment in people. But one of the things that would, in fact,

be my priority is to ensure that countries in this hemisphere are

in an advantageous position to compete for those additional resources in the Millennium Challenge Account. I do think, in fact,

that combining good governance policies with assistance is a smart

outcome, that it ensures that our assistance dollars will have much

more effect there, and I particularly look forward to trying to help

countries, the Central American countries, Bolivia, get access to

this money.

Senator DODD. What was the reason why USAID was not included on the board? I do not understand that.

Mr. FRANCO. If I could—— Senator DODD. Just a quick answer. I do not know the—do you

know the answer why they were excluded?

Mr. FRANCO. Well, Senator Dodd, I think the answer to that is

the chairman of the board of—the proposed chairman of the board,

as proposed to Congress, would be the Secretary of State. And as

my boss, the Administrator, often says, ‘‘He’s my boss,’’ and, therefore, there is a sense, very strong sense, more than a sense, an understanding that USAID will, certainly on the ground, be working

very closely. So I think that is Administrator Natsios’ position, and

the Secretary of State is the boss.

Senator DODD. Sure.

Mr. FRANCO. If I could just add, because—to your—I jotted down

some notes—try to answer your questions and just add a bit to

what Assistant Secretary Struble said, although he has done a superb job of outlining, I think, the administration’s positions and

concerns throughout the hemisphere. If I could just briefly comment on a few areas and concerns that you have expressed.

You have asked what would we do if we had a perfect world, and

I wanted to say that with regard to trade capacity building—and

free trade is not the panacea, not the answer to all the development problems in the world. And I think Ambassador Zoellick

would be the first to say that, and I certainly believe that. But I

do think, in the case of Mexico and NAFTA, I think that the numVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6602 88760.TXT SFRELA2 PsN: SFRELA2
91

ber of jobs that have been created in Mexico, the stability, and I

frankly think, Senator Dodd, the openings in Mexico can, in large

part, arguably be attributable to the free trade accords that we

have with Mexico and NAFTA.

So I believe that free trade—and we talk about trade capacity

building—encompasses more than just what we want to do, which

is open new markets for U.S. products and certainly have Latin

Americans increase their exports and improve their competitiveness. It has the added benefit that when we are talking about an

investment climate, we are talking about what Chairman Coleman

has articulated, and that is questions of corruption, questions of

crime. These are impediments to investments.

And when governments recognize that the old way of doing business, what we now refer, as Chairman Coleman has said, the second generation of reforms is now necessary. We have celebrated for

the last 20 years free elections, which are wonderful. We now take

almost for granted the transition, the peaceful transition, of power

in the region—we just had elections in Ecuador—from one election

to the other. This second generation of reforms and under the rubric of free world trade capacity encompasses things like reforms

of institutions, transparency in budgeting, accountability, and political party building.

So I believe that if I had my druthers to say, and I think the

President’s vision, to push that agenda is to push a development

agenda and a social and a political agenda as well as a trade agenda, as a general proposition. As the chairman has articulated, I

think it is one of the—as you said, Mr. Chairman, at the beginning—one of the opportunities. Obviously, we face other challenges,

but I believe that to be at the core of our foreign policy objectives

for the region from USAID’s perspective. And I know Assistant Secretary Struble and I have talked about that and he shares the need

to promote this agenda.

On a couple of the countries that you mentioned specifically, our

aid to Colombia, we are planning, in terms of development assistance programs, $150 million for Colombia. Now, expenditures this

year were $125 compared to $37 million I recall when I first took

this job over a year ago. So we are ramping up our assistance programs significantly in Colombia in three broad areas, and I will not

take a lot of time here, but they are our alternative development

programs, which I discussed in my testimony, in the coca producing

areas. They have to do with justice, political reform, corruption

issues we talked about, to reform the judicial system in Colombia,

to have human rights. They have an early warning system in Colombia to avoid massacres, to bring in police and authorities into

vulnerable areas as quickly as possible and a very important internally displaced people’s program. Colombia is the only country in

the region that has internally displaced people. There are actually,

Senator Dodd, over 2 million people who are internally displaced.

We have assisted 600,000 of them in conjunction with the PMR Bureau at State.

With respect to Haiti, I am sorry Senator Nelson has departed,

we are planning this year, in fiscal year 2003, to spend $9.5 million

above the congressional earmark for Haiti. So we are expending

more than the Congress earmarked for the region. And we will—

92

I want to be very clear for the record—we will fully fund Haiti’s

emergency food needs. We have a commitment from the Secretary

of State and from the Administrator to do that.

Last, with respect to Brazil, Assistant Secretary Struble said I

was just in Brazil last week. I could not agree with you more, Senator Dodd. We need to engage Brazil. If we do not work with Brazil

and we do not have a good relationship in partnership with the

Brazilians, I think we are missing an enormous opportunity. And

it is, as you said, in our enlightened self interest. We have a team

that has just returned from Brazil on March 28, was in Brazil for

10 days, a USAID/USDA team working on Zero Hunger. I met with

Minister Graziano personally in Brasilia to discuss how we can provide assistance in setting up a food-stamp-like program to reach

Brazil’s 53 million people who live on less than a dollar a day. Yesterday, I met with Ambassador Barbosa from Brazil to, again, offer

our assistance in this regard. It’s been very well received by the

Brazilian Government. We expect a report next week.

Senator COLEMAN. Just a quick issue on the—and I apologize for

the jumping around—but on the alternative development issues in

Colombia, and particularly in the Putumayo section, which is one

of the largest drug-producing sections in the southwestern part of

Colombia, there is the—I wonder how the program has changed

since the report was—is it the Gersoni—— Mr. FRANCO. Yes.

Senator COLEMAN [continuing]. So-called Gersoni Report.

Mr. FRANCO. Right.

Senator COLEMAN. How has the alternative development program changed since that report has come out?

Mr. FRANCO. Well, since that report came out, and I think it is

a very valuable report, we have certainly invested a great deal

more in infrastructure projects. Working with municipal governments—in fact, the Governor of Putumayo was up here in Washington this week, and I was hoping he would meet with as many

members and staff as possible to discuss what we have done in the

last year in infrastructure since the Gersoni Report, Senator, which

has been work on bridges, work on road construction, work on community infrastructure and road-building, which is something we

were not doing a couple of years ago.

I want to say this. This predates me, but I want to be as fair as

I can to people at USAID. We were scheduled to close our Colombia

program in 1999, so we have gone from closing the program to

ramping it up to being our largest single program in Latin America. So we have done the best—they have done and we have done

the best that we can on trying to focus in on program priorities

working in conjunction with the Government of Colombia. But they

are focused largely on infrastructure projects and then on licit agricultural activities for which there are markets in the area. Because, as you know, the proximity of Putumayo’s other markets is

one of the problems, and that is what we have done principally.

Senator DODD. Yes. I just want to underscore, as well, the points

raised about Haiti, and there are a series of questions here. I go

back—I recall—of course, the amount of effort, the amount of

time—as some of you know, I was in the Peace Corps, of course,

over on the western border of the Dominican Republic, back years

93

ago now, but I spent a lot of time in Haiti over the last 40 years.

And back in the early 1980s, of course, after—or not the early

1980s; the late 1980s after President Aristide, went back, there

was a real effort down there to buildup—we spent a lot of money

in the policing, building up a better police security force. I do not

remember the exact numbers, but it was in the millions of dollars.

And it has just been terribly disappointing that that has all sort

of collapsed. Everyone said at the time this will have to be a sustained effort over many years in order to make this work. The idea

you are going to come in and be able to sort of dump a lot of money

onto a program, bring some people into an academy, and expect

that you are going to change a culture was terribly unrealistic. In

fact, even with the expenditure over a long period of time and commitments as hanging in there, the assumption was this was going

to be a risky endeavor, as it was.

But we sort of all of a sudden stopped in all of this. And it is

like chicken and egg in a sense. It seems to me without some security it is very difficult to get people to invest, it is very difficult to

expect the kind of things to improve economically. And so I am

just—how realistic—do we expect the Haitian Government to improve its own security, in a sense, when they have so limited resources here? And I wonder if you have any quick comments on

that.

Mr. STRUBLE. Thank you very much. In fact, one of the issues

that the OAS Special Mission raised with President Aristide was

the need, the fundamental need, for security in order to have free

and fair elections in 2003. And they asked President Aristide to appoint a new director of the Haitian National Police who would be

credible, who would be seen as not politically dependent upon some

outside party. Regrettably, the acting director who has been named

by President Aristide does not fit that bill. He is a person who is

suspected of having participated in the murder of the leading member of the political opposition almost a decade ago and who has

other stains on his character that are of concern.

We did, indeed, make a sustained effort to help the Government

of Haiti have an independent, apolitical, effective, competent police

force. We are still struggling in that direction in the sense that we

have urged in some of our special programs through the International Narcotics Affairs Bureau that they create special police

units that are vetted and polygraphed and that can help them to

advance in these areas. The size of the Haitian National Police has

withered a great deal over the past few years. It is not been sustained financially by the Government of Haiti. As I mentioned before, there has been increased politicalization of it. And that, in the

first instance, is something that needs to be addressed before the

international community will be able to effectively assist the police

force in performing its security mission.

Senator DODD. Last, I just raise the issue of—you mentioned the

dollar amounts, in terms of assistance to Haiti. I think we are looking at here, $52.8 million, with almost half of that assistance in the

form of food aid, $23.8 million. And this has hovered basically

around this level now for a number of years. I would like to get

just a quick assessment of how much of that assistance has gone

to the Haitian Government organizations. The reason I raise that

94

is because the concern has been raised by some U.S. public health

officials about our absence of involvement with the health officials

with the HIV/AIDS issue and the spread of it and the growing concern, the fact that we have excluded our participation with any of

these organizations has exacerbated some of these problems, particularly in the area of public health. And I wonder if you would

comment.

Senator COLEMAN. Senator Dodd, before—this may be the last

question—— Senator DODD. Yes.

Senator COLEMAN [continuing]. And I would actually like to add

a piece to that so they can address these same—and that is the

Economic Support Fund is an area in which there are zero dollars,

as I understand it, to Haiti. And as you address Senator Dodd’s

question about these various funding levels, can you help me understand why no support for the Economic Support Fund?

Senator DODD. When I said ‘‘excluded,’’ it is not excluded, but

limited involvement would be a better choice of words.

Mr. FRANCO. Thank you. I will let Assistant Secretary Struble

speak on the Economic Support Fund, since they are more of a

State Department issue directly.

With respect to levels in Haiti, we will be transferring additional

funds, so our total expenditure for Haiti for this year will be $62

million. That is what we are going to plan for this year for fiscal

year 2003, which is significantly higher than we have had in the

past, Senator Dodd, in terms of percentages. It represents a significant increase.

I want to reiterate our food program, humanitarian assistance,

remains a priority, and we will fully fund Haiti’s food needs. And

I think that is very important for the committee to know. I know

Senator DeWine and other Senators have also expressed concern to

us on this matter.

With respect to the health officials, we have engaged. I mean, we

have had contact with health officials in Haiti. I was actually in

Haiti about a year ago with Secretary Thompson. So there has

been contact with the Government of Haiti. However, our work and

our resources are channeled through non-governmental organizations in Haiti. It is a high, intensive-focus country for us on HIV/

AIDS. We are able to work with non-governmental organizations,

I think, effectively in Haiti. I think Assistant Secretary Struble articulated some of the concerns we have with the Government of

Haiti.

I want to be very clear that our commitment is to do everything

we can to reach the Haitian people. I understand your position or

your concern regarding the institutions in the country, but we are

able to carry out, I think, a very effective HIV/AIDS program in

Haiti through the non-governmental sector, which we support.

Mr. STRUBLE. And to add to what Assistant Administrator Franco said, I would first note that Haiti has also recently obtained access to some global funds, very significant ones. You recall that the

President, in the State of the Union Address, announced a new $15

billion, 5-year initiative to fight HIV/AIDS in Africa and the Western Hemisphere. And $10 billion of that will be new funding. And

the two countries in the Western Hemisphere that are specifically

95

found eligible for that are Haiti and Guyana. Some of the funds

will also be distributed regionally. So I think it will have a very

useful impact on it.

The determination of Haiti’s eligibility was based, in fact, upon

the pervasive poverty rates, the widespread nature of HIV/AIDS infection, as well as our assessment of their ability to absorb this additional aid.

On the question, Mr. Chairman, of ESF, as the Department was

preparing its fiscal year 2003 budget request, the Department official who at that time was responsible for reviewing ESF levels,

Under Secretary John Bolton, observed that virtually all of our programs in Haiti that were being funded by ESF were, in fact, classic

Development Assistance programs that in other areas of the world

were financed through the Development Assistance program of

USAID. And therefore, the Department of State consulted with

USAID and an agreement was reached that the ESF level would

decline and the Development Assistance level would rise. However,

there was a wash in terms of being able to continue most of these

programs.

Senator COLEMAN. Thank you, gentlemen. The ranking member

has left. I would note that during my time as chairman, I hope to

draw upon his experience and passion that he has for this area. I

suspect that—we have spent a lot of time on Haiti; we could have

spent on a whole range of areas, many of which, Mr. Franco, you

listed as the fragile concerns of Bolivia, Guatemala, Colombia, Venezuela. So there is a lot of work to be done. There is certainly great

interest, and we do appreciate your appearing before us today and

the work that you do.

Thank you, and this hearing is adjourned.

[Whereupon, at 12:50 p.m., the committee adjourned, to reconvene subject to the call of the Chair.]

RESPONSES TO ADDITIONAL QUESTIONS SUBMITTED FOR THE RECORD

RESPONSES OF J. CURTIS STRUBLE, ACTING ASSISTANT SECRETARY OF STATE, WESTERN HEMISPHERE AFFAIRS, TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED BY SENATOR JOSEPH R. BIDEN, JR.

Question 1 of 3. Last year, Congress provided authority for the first time to Colombia to use equipment provided by the United States for other than counter-narcotics purposes. Consequently, several dozen U.S. Army Special Forces soldiers recently arrived in northeastern Colombia to begin training Colombian soldiers to protect the 500-mile long oil pipeline near the Venezuelan border.

1. Can you give us a report on this training, how it is proceeding, and the

force protection measures being taken for our forces in that region?

2. Is this training sufficient? Isn’t one of the real requirements for these Colombian forces the need to have more mobility? What is the schedule for procuring additional helicopters for these units under the funding provided in the

fiscal 2003 budget?

3. How do you assess President Uribe’s partnership in the effort to train security and counternarcotics forces?

This supplemental request for fiscal 2003 contains over $100 million for Colombia ($34 million in DOD funds, $34 million for the Andean Counterdrug Initiative, and $37 million in Foreign Military Financing).

4. Can you elaborate on the purpose of this request and to which programs

it will be devoted?

Answers:

96

Answer 1. Since January 2003, about 60 U.S. Army Special Forces trainers have

been in Arauca and Saravena to prepare the Colombian Army’s 18th Brigade to implement the Infrastructure Security Strategy (ISS), which focuses on protecting the

Can ̃ o Limo ́n petroleum pipeline. The training aims to improve the Brigade’s intelligence collection and operational planning skills. Assistance to the Brigade’s

Counter-Guerrilla Battalion focuses on reconnaissance, quick reaction force operations, tactics and planning. Overall, training is proceeding well. We have trained

two of the Battalion’s four companies, which are now deployed to protect the pipeline.

The program still faces challenges. Historically, the 18th Brigade has been passive

and risk-averse; we continue to work with the Colombians to change this mindset

and to instill greater discipline among regular soldiers, both key to improving the

Brigade’s operational results.

U.S. Special Forces have undertaken major projects to enhance force protection

for U.S. servicemen at the U.S. compound in Arauca. They installed cameras at the

front gate and an infrared camera scans the compound’s perimeter; soldiers cleared

out underbrush, installed a back fence, introduced lighting, and built a berm to protect the rear of the main base. Sandbags fortify the U.S. compound; we will soon

replace them with Hesco barriers (earth-filled bastions). The U.S. soldiers have a

Battalion Surgeon on standby and rely on a Joint Intelligence Center for force protection, as well as for strategic and operational intelligence.

Answer 2. Our assistance programs for Colombia take into account the need for

greater Colombian Security Forces mobility so that they can re-establish government presence and carry out President Alvaro Uribe’s joint campaign against terrorism and narcotics trafficking.

We agree with your concern regarding air mobility. As we have previously briefed

Congress, with the $93 million appropriated in the FY 03 Foreign Operations Appropriations Act (P.L. 108-7), the Department of State plans to provide additional

helicopters to increase Colombian Army mobility in support of its pipeline protection

mission, as required by the Act. We have also been exploring ways to respond to

recent Colombian government requests for assistance in boosting the overall mobility of its forces. We are studying the feasibility of various options. We will, of course,

consult with Congress as we develop our plans.

Answer 3. Colombian President Alvaro Uribe has done more than any recent Colombian president to support training for his military and police forces and has publicly called on Colombians to make sacrifices for public security, receiving broad popular support for this position. He increased government spending on security to 5.8

percent of GDP—an unprecedented commitment. Much of this new funding goes to

training and equipment, as well as operations against Colombia’s Foreign Terrorist

Organizations.

Answer 4. We intend to use supplemental assistance to improve the training, mobility, and intelligence capabilities of Colombia’s security forces so that they can

more effectively confront the Western Hemisphere’s most sophisticated and well-established terrorist groups.

The 2003 Supplemental allocates $37.1 million in FMF and $34 million for the

Andean Counterdrug Initiative (ACI). Of the $37.1 million in FMF, $20 million will

provide the Colombian Army Counter Drug Brigade and Special Forces Brigade of

the Rapid Deployment Force with aerial intelligence and command and control platforms, including crew training and operational and maintenance support. $12 million will provide additional aviation training and equipment to enhance current hostage search and rescue capabilities. The remaining $5.1 million will expand the

number of mobile listening stations intercepting terrorist communications, giving

Colombians more information on terrorist operations, while providing a valuable

force protection asset for both the Embassy and our various activities around Colombia.

The $34 million for ACI in the FY 2003 Supplemental package includes $5 million

to provide bomb technicians with proper protective equipment, communications systems, remote controlled equipment and tools, and radio frequency blocking devices—

enhancing Uribe’s safety, particularly at his public appearances. These funds would

also allow the Colombian government to hire more personnel to support an explosives repository database, critical to collecting and disseminating the latest information on terrorist bomber techniques. We intend to use $7 million of the ACI supplemental funds to continue helping Colombia establish a police presence in municipalities where the Colombian State currently has no security forces deployed, and

to provide these new units with basic packages of arms, training and equipment.

We plan to use $7 million of the ACI funds to act on the results of our Uribe Presidential Security Survey and expand upon the training and equipment we have alVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00100 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
97

ready provided to help keep Uribe alive. This funding will provide needed physical

and technical security upgrades to key presidential sites, advanced protection

courses and crisis response training. It will also help the Government of Colombia

to respond to threats against other key government officials, such as when we uncovered a specific threat against the Mayor of Bogota, whose office is two blocks

from the Presidential Palace.

The final $15 million will expand the drug eradication program, building on recent success in cutting the coca cultivation that finances Colombia’s terrorist organizations. This funding will allow for continued use of three spray planes (pressed into

service for search operations) that otherwise could not be operated due to funding

limitations, and will purchase two additional aircraft. The funding will also allow

for purchase of critical spare parts and components needed to maintain the readiness of the spray aircraft fleet and will provide pilot training, refueling equipment,

additional imagery, fuel and coca herbicide.

Question 2 of 3. As you know, there has been significant and legitimate concern

in the Congress about the human rights situation in Colombia. Most of the violations are committed by the guerrillas and the paramilitaries. However, there continue to be serious and credible allegations of continued collaboration between the

Colombian military and the paramilitaries; for example, the State Department’s

2002 Human Rights report states that ‘‘some members of the government security

forces continue to commit serious abuses, including unlawful and extrajudicial

killings . . . and collaborate with paramilitary groups that committed serious

abuses.’’

1. Can you speak to these concerns?

2. How do you assess the Colombian military’s attitude regarding respect for

human rights and toward severing ties with the paramilitaries? Do you detect

any material improvement?

3. How serious is the Colombian government about prosecuting the perpetrators of human rights abuses?

Answers:

Answer 1. Over the last several years, the Colombian Armed Forces have made

significant progress in improving their human rights record. Elements of the Colombian Military (COLMIL) commit a small percentage of all human rights abuses in

the country. Still, some military personnel continue to maintain ties to paramilitary

units that are a major source of human rights violations. Impunity for both state

and non-state actors is a core human rights problem. The civilian judiciary is hampered by resource constraints, competing demands, and threats and intimidation.

The Uribe Administration has pledged to improve its record. Additionally, President Alvaro Uribe and Defense Minister Marta Lucia Ramirez have stated repeatedly that they will not tolerate collaboration between military personnel and paramilitary groups. We have confidence in their commitment.

The Uribe Administration has already taken steps to improve the human rights

situation in Colombia. Vice President Santos has reinvigorated the Presidential

Human Rights Program creating a Special ‘‘Momentum’’ Committee to promote judicial resolutions of high-priority human rights cases, and establishing regular dialogue with local human rights groups. The Colombia office of the United Nations

High Commission for Human Rights (UNHCHR) was extended through 2006. To

create an environment conducive to the protection and promotion of human rights,

Uribe has instituted a Democratic Security plan designed to increase and consolidate state presence throughout the country, particularly in previously neglected

areas where U.S.-designated Foreign Terrorist Organizations have traditionally had

significant influence.

We are committed to working with the GOC to continue to improve the Colombian

military’s human rights performance and will report to Congress accordingly.

Answer 2. We believe the Colombian armed forces are taking effective action to

sever links between military personnel and paramilitary units. We recognize that

more needs to be done, but we note that arrests, combat operations, and intelligence

activities by the Colombian Armed Forces against paramilitaries increased in 2002.

As of November 30, 2002, 183 paramilitaries were killed (compared to 117 in 2001)

and 1,214 were captured (compared to 1,089 in 2001).

On May 1, 2002, the Secretary of State, and on September 9, 2002, the Deputy

Secretary of State determined and certified to the appropriate Congressional committees that the Colombian Armed Forces met all three conditions of the statutory

criteria as required under section 567(a)(1) of the Kenneth M. Ludden Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2002 (P.L. 107-

115). These conditions were the Colombian Armed Forces are suspending members

98

credibly alleged to have committed gross violations of human rights and/or

paramilitarism; are cooperating with civilian prosecutors and judicial authorities;

and are taking effective measures to sever links with paramilitary groups.

Answer 3. The Uribe Administration is committed to holding members of the Colombian Armed Forces accountable for their actions. As recently as March, the Prosecutor General’s Office charged Lt. Col. Orlando Pulido Rojas with homicide and

conspiracy for collaborating with paramilitaries in the murder of five alleged FARC

collaborators in Casanare Department, and issued an arrest warrant for former

General Jaime Humberto Uscategui for failing to prevent a paramilitary massacre

in Meta Department in 1997.

Other recent military success against paramilitaries include:

• February 18—arrest of three AUC members in Cartagena;

• February 16—AUC leader in Cesar Department arrested;

• February 9—troops killed 7 and wounded 3 AUC members in clash in Valle de

Cauca;

• January 30—arrest of two AUC members during Navy operation against AUC

in Gulf of Morrosquillo;

• January 30—11th Brigade arrested two ATJC members in La Sierpe (Sucre);

• November 16—police and army arrest 16 ATJC members in Barrancabermeja.

We have advised the GOC on the new statutory certification requirements contained in Section 564 of the FY 2003 Omnibus Appropriations Act which sequesters

25% of funds for Colombia’s security forces until the Secretary of State certifies that

the GOC has made demonstrable progress on 5 conditions associated with severing

military’ paramilitary ties and ending human rights abuses. We are emphasizing to

the GOC the importance of (1) suspending and prosecuting members of the Colombian Military (COLMIL) involved in human rights abuses or paramilitarism; (2)

COLMIL cooperating with civilian prosecutors and judicial authorities in such cases;

(3) COLMIL severing links with paramilitary organizations and executing orders for

capture of paramilitary leaders.

We will report on the GOC’s progress for this year’s first certification later this

spring and then again after July 31, as required by certification legislation.

Question 3 of 3. As you are well aware, unemployment and poverty in Haiti has

worsened in the past two years. Currently, 80 percent of Haitians are unemployed;

the average per capita income is $250 per year, less than one-tenth of the average

in Latin America. Yet at the same time, the U.S. and multilateral institutions and

donors are withholding direct aid to Haiti until President Aristide acts on a series

of political, judicial and economic reforms.

To what extent is the withholding of United States’ and multilateral assistance contributing to the poverty crisis in the country?

What steps is President Aristide taking to cooperate with the reforms set by

the United States and the international community? To what degree is the implementation of the reforms contingent on the government having the financial

resources to do so?

Clearly, as the United States and the international community continue to

push for reforms, the Haitian people are suffering.

What can we do to increase attention to the immediate and critical needs of

Haitians while the Haitian government’s political and judicial reforms are in

process?

Answers:

The U.S. government has not withheld any aid from Haiti; indeed, it has been

and remains Haiti’s largest bilateral donor, disbursing assistance through NGOs.

The Administration is increasing its aid this year precisely to address critical food

needs. The U.S. disbursed more than $840 million in assistance to Haiti in FY 1995-

2002. The Haitian government has taken some of the reform steps requested by the

International Monetary Fund as conditions for an agreement, but these steps have

generally come slowly and without the transparency and consultation that would

maximize their benefit. The IMF is continuing its dialogue with the GOH in an effort to reach an agreement on a sustainable budget and macroeconomic framework.

Historically, the high point of international donor assistance to Haiti was immediately following the return of elected government to Haiti. In FY 1995, Haiti received $611 million in total aid from the international community ($194 million

from the U.S.), representing the disbursement of assistance allocations spanning

over several years. Total aid declined to $427 million in FY 1996, and has steadily

declined since, reaching $189 million in FY 2001 and $120 million in FY 2002. The

largest portion of assistance from FY 1995-FY 2001 went into governance, including

99

U.S.-led efforts to dismantle the Haitian armed forces and set up a professional national police force. Those efforts concluded in FY 2001.

Principal USG aid programs budgeted for FY 2004 include:

• Food Security ($23.8 million): P.L. 480 Title II (food assistance) improves the

nutritional well-being and food security of Haiti’s poorest populations, especially

children under five and nursing mothers. An early warning system developed to anticipate and prepare for food emergencies in the Northwest region is now being replicated in other parts of the country.

• Health ($21.8 million): USAID uses a network of over 30 local organizations to

provide services to some 2.5 million Haitians, close to a third of the population.

Child immunization rates in USAID-assisted areas are nearly double the national

average, as high as 85 percent in some parts of the country. Child malnutrition

rates in USAID-assisted areas fell from 32 percent to 22 percent in 1995-2000. The

percentage of women nationwide seeking prenatal consultation has increased from

68 percent to 79 percent. The national contraceptive use rate has gone from 9 percent to over 15 percent, with even stronger gains in USAID targeted areas. This is

part of our expanded AIDS prevention program. Haiti is also a beneficiary of the

Global Fund against AIDS, Tuberculosis, and Malaria.

• Economic Growth ($1.75 million): Programs are aimed at sustainable increases

in income for the poor. They expand availability of small business loans to urban

micro-entrepreneurs; provide assistance to small farmers in marketing valuable export crops such as coffee, cacao, and mangos; and help Haitian artisans find niche

export markets. Beneficiaries include small entrepreneurs (80% of whom are female), approximately 250,000 hillside farmers, and 2,000 artisans.

• Education ($2.5 million): Programs increase pass rates for third and fourth

grade students through improved in-service training for 4,000 teachers and school

directors, radio education in math and Creole, and the provision of books, teaching

aids, and curriculum guides.

• Democracy ($2.9 million): Our democracy programs focus on increasing the professionalism of political parties, strengthening independent media and civil society

organizations and promoting judicial reform and human rights. Training and other

support is also provided for independent election observation groups. Our public diplomacy programs also bring Haitian government officials, journalists, and academics to the U.S. to observe and learn about U.S. public policies and programs.

Through these programs, we aim to alleviate poverty, illiteracy, and malnutrition

and to promote respect for human rights and the rule of law. Effectiveness of U.S.

assistance has been shown in the improvement of social indicators in the areas of

intervention, despite a deteriorating economy overall.

USAID BILATERAL ASSISTANCE TO HAITI

[INCLUDES P.L. 480 FOOD]

BUDGET FY 2001

Disbursed

FY 2002

Disbursed

FY 2003

Estimated

FY 2004

Budgeted

TOTAL in MILLIONS $72 $56 $50 $55

The above figures do not include programs funded by the U.S. Departments of

State and Defense for training! equipping units of the Haitian National Police with

counter-narcotics responsibilities, Peace Corps, or U.S. contributions to Haiti

through international organizations, such as the OAS, UNDP, and the International

Organization for Migration (IOM).

The U.S. can best draw attention to the immediate and critical needs of Haiti by

continuing its efforts to settle the current political crisis. Political stability will enhance prospects for economic development. The potential for investment in Haiti is

great—in 2002 Haitians living overseas sent approximately $800 million in remittances back to Haiti.

The U.S. has made a sustained effort to bring about a resolution of the political

crisis. The U.S. actively participated in negotiations at the OAS that produced Resolution 822, under which the Haitian government committed itself to a series of actions aimed at creating an improved climate of security for elections in 2003. Resolution 822 called for and supported normalization of Haiti’s relationships with International Financial Institutions.

Some of the Haitian government’s commitments—such as holding free and fair

elections and long-term strengthening of the Haitian National Police and democratic

institutions—will depend in part on international assistance. But many others—noVerDate 11-MAY-2000 13:17 Aug 13, 2003 Jkt 000000 PO 00000 Frm 00103 Fmt 6633 Sfmt 6621 88760.TXT SFRELA2 PsN: SFRELA2
100

tably first steps toward disarmament and the arrest and prosecution of those involved in political murders—are well within the financial resources of the Haitian

government, which has simply failed to act. In failing to meet its commitments, the

Haitian government has not shown the political will to achieve the political and judicial reforms needed for an improved climate of security.

A high-level joint OAS/CARICOM delegation, on which the U.S. was represented

by Special Presidential Envoy for Western Hemisphere Initiatives Otto J. Reich, visited Haiti March 18-20 to urge the Haitian government to meet its commitments,

and to call on the opposition to respond constructively once the government did so.

Primary responsibility for Haiti’s poverty crisis rests with the Government of

Haiti. Only it can adopt the policies that will attract domestic and foreign investment as well as increased levels of international donor support. These policies would

not have significant financial cost to the government; in fact, they would tend to

increase government revenues.

RESPONSES OF HON. ADOLFO A. FRANCO, ASSISTANT ADMINISTRATOR, BUREAU FOR

LATIN AMERICA AND THE CARIBBEAN, USAID, TO ADDITIONAL QUESTIONS FOR THE

RECORD SUBMITTED BY SENATOR JOSEPH R. BIDEN, JR.

Question 1 of 5. Early last month, the Administration reported that coca cultivation in Colombia had declined by 15 percent during the year. However, according

to recent Central Intelligence Agency estimates, coca cultivation increased by 7.6

percent in Peru and 23 percent in Bolivia, where it had been declining.

I also understand that there is concern that some Colombian farmers have begun

to plant a new variety of coca—called ‘‘Tingo Maria’’—that can yield more than

twice as much cocaine as the predominant strain of coca now grown in Colombia.

Question. How do you assess the progress of our alternative development efforts

in Colombia, as well as the rest of the region? The eradication is clearly making

progress, but have development efforts kept pace? How can they be improved?

Answer. Colombia. Significant progress has been achieved in our alternative development programs in Colombia. As of March 31, 2001, support had been given to

24,549 hectares of licit crops and 247 infrastructure projects had been completed,

benefiting 22,829 families. All of these achievements surpassed cumulative program

goals. The large-scale spraying of coca areas, especially in Putumayo, convinced

farmers to abandon their illegal crops. Additionally, the continued fighting between

armed groups contributed to farmers’ growing distaste for illicit crop production in

southern Colombia. These advances demonstrate that USAID is making significant

progress in providing alternative agricultural options to illicit crop cultivators.

Eradication has had a significant impact on farmers’ willingness to participate in

alternative development.

However, considerable challenges remain to sustain this progress. The lack of security and government presence in rural areas continues to pose a real challenge

to private sector investment. Farmers must also be willing to invest some of their

own resources in longer term alternative development efforts to achieve a sustainable commitment to licit activities. Finally, sustainable alternative development,

licit crops, and income generating options must take into account the agro-climatic

conditions and marketing opportunities.

Peru: Since 1995 USAID/Peru’s AD program has contributed to the reduction of

coca cultivation from 115,000 to 34,000 hectares. The program was successful in improving licit income and living conditions in the five areas where most of Peru’s coca

is produced. The value of licit production for agriculture, livestock, and forestry sectors rose 40%, from $27 million to almost $39 million and the population’s access

to basic social services increased almost 50%, from 40% to 59% through 2002.

Over the last two years, a convergence of factors has caused USAID to dramatically shift our strategy. Coca prices have risen, as has coca production, while the

price of a key licit crop such as coffee has dropped precipitously. Coca paste and

cocaine is now dispersed among smaller labs throughout the coca-growing region.

The new Peruvian Administration has not effectively countered the growing coca

farmer opposition to the eradication efforts.

Under USAID/Peru’s new strategy, AD benefits are linked to eradication targets,

and USAID strategically chooses to enter those communities that offer some alternative economic opportunities so that the development investments can yield returns that, coupled with improved governance and social services, will increase the

likelihood that farmers do not replant coca.

Since the shift to the new strategy, the AD program is having a more direct impact on the eradication of coca. Judging by the rate of acceptance and the pace at

101

which new communities were entering agreements for the new autoeradication program, results are encouraging. Judging by the growing opposition from the narcotraffickers, USAID concludes that the program’s initial success is threatening their

business and is, therefore, effective.

USAID must use its funds to leverage private investment in productive markets

and infrastructure along with creating an environment where the State acts with

authority and public services are provided. While USAID is moving quickly, these

kinds of lasting developmental changes take time to achieve.

Bolivia: Considerable progress has been achieved in reducing net coca cultivation

in the last five years. Although, cultivation increased slightly last year, the potential

for annual cocaine production has dramatically decreased by two-thirds from 240

MT in 1995 to 60 MT in 2002.

Alternative development programs significantly contribute to net coca reduction

by conditioning assistance to farmers, thus avoiding coca replanting. More specifically, over the past two years approximately 60,000 Ha in the Yungas of La Paz

received certification from the Government of Bolivia’s coca eradication agency

(DIRECO) as free of coca cultivation. In the Chapare, approximately 13,000 families

have agreed, in exchange for alternative development benefits, to forego coca replanting. The rather large USG-funded alternative development investments over

the past 15 years continues to enable forced eradication of some 10,000 Ha of coca

each year in the Chapare.

Question. What can you tell us about cultivation of the new variety of coca in Colombia?

Answer. Tingo Maria’s special characteristic is its high productivity. This coca variety responds well to higher levels of fertilization, higher plant density per hectare

and good rainfall. For example, the plant density for regular coca ranges from 8,000

to 12,000 plants per hectare; for Tingo Maria the average is at least 30,000 plants

per hectare. This variety is now found, to one degree or another, in all coca-producing areas of the country, but the department of Norte de Santander is where the

highest productivity has been observed. The characteristics leading to its higher productivity also lead to a higher risk for farmers growing this variety. The costs and

labor intensity are higher and the higher density and cultivation in open areas also

make them more susceptible to identification and subsequent aerial spraying.

Question. How concerned are you about coca cultivation appearing to move from

Colombia to Bolivia and Peru? Please speak to this possible demonstration of the

‘‘balloon effect.’’ What new steps are being taken to help the governments of Bolivia

and Peru control this new trend?

Answer. The increased pressure on narco-traffickers by the Uribe government is

resulting in increased production of illicit crops in Peru and Bolivia where the governments have a much less aggressive stance. While changes in AD strategy can

somewhat mitigate this increased production, it is imperative that the USG press

these governments to match Colombia in their strong stand against narco trafficking.

Peru: Peruvians, from elected leaders to farmers, must be more aware of the dangers of increased production. As part of a new strategy that links AD benefits to

eradication targets, USAID has solicited the political support of elected leaders in

an effort to permanently eliminate illicit coca, as well as community participation

in the decision to eradicate their coca. USAID added a ‘‘communication for behavior

change’’ component to our new strategy which aims to convince citizens of the multitude of negative effects of coca—on health, on environment, on governance, on the

economy, on development—as a means to achieving greater Peruvian ownership of

the problem. This component includes a variety of measures targeting a change in

public opinion. USAID has also added a new component that focuses on national

policy issues aimed at better delineating legal from illegal coca, determining the actual domestic consumption of licit coca and the licit commercial use of coca, and

strengthening of the Peruvian drug czar’s institution, among others.

Bolivia: The Mission believes that we and the GOB need to be very concerned.

We know that demand will continue, so the supply will come from somewhere. The

recent heightened violence in the Chapare and the slowness of the GOB response

by rule of law institutions, demonstrating weakness, may attract more coca. With

regards to the steps taken to control this trend, the USG must press the GOB to

hold the line and not loosen up on current eradication policy.

Question 2 of 5. As you well know, there is considerable public opposition in countries such as Bolivia and Peru to U.S. forced eradication efforts and a consequent

request for increased alternative development programs.

102

At the same time, in the President’s budget request for Fiscal Year 2004 for the

Andean Counterdrug Initiative, the amount for interdiction programs in the region

increased over Fiscal Year 2003, from $407.5 million to $448 million, while funding

for alternative development and institution building decreased, from $275.4 million

to $257 million.

Question. Can you give us an overview of how alternative development programs

are working, or not, throughout the Andean region?

Answer. Please see the response to Question 1.

Question. What is the reason for the decrease in funding for alternative development programs?

Answer. There are many important priorities and needs in the Andean countries

and elsewhere in the region. The Deputy Secretary of State weighs these in determining the proportion of ‘‘hard’’ eradication and interdiction activity funding to

‘‘soft’’ alternative development funding.

Question. What steps are we taking to support alternative development as the

third leg of an effective counter-narcotics strategy? How do you recommend that we

improve upon alternative development to work in coordination with eradication and

interdiction programs?

Answer. In Colombia, alternative development is a critical element of eradication

and interdiction efforts. The importance of aerial spraying in Colombia is clear.

Farmers surveyed in Putumayo ranked the risk of forced eradication along with a

desire to get out of a violent social situation as their reasons for embracing alternative development programs. In areas where aerial spraying was not a threat,

farmers were hesitant to participate in alternative development programs.

Alternative development programs should not necessarily operate in all areas

where interdiction, and especially eradication, is being carried out. Alternative development in the case of licit crops must be based on sound agro-climatic and marketing opportunities. Going after illicit crops with alternative development activities

is not feasible in all areas where illicit crops are grown. Such a strategy would not

be implementable with the current resources levels devoted to alternative development. Further, security and a government presence are needed to sustain the gains

made through eradication. In areas where there are viable alternative development

options, the consolidation of coca-free areas is critical to protect farmer and private

sector investments in licit crops.

Peru: The timing and sequencing of alternative development interventions is now

strategically linked to eradication and interdiction. In developing the GOP 2003

eradication plan, USAID worked closely with DEA and NAS to develop a strategy

and geographic focus where the three institutions work in an interdependent fashion. For example, in one particularly difficult valley of the coca-growing region, the

strategy calls for DEA to support interdiction through roadblocks and seizures first

while USAID begins a communication campaign aimed at the evils of coca. Then

NAS begins a program to destroy processing labs. The intent is to disrupt coca

prices long enough for USAID to enter and secure eradication agreements with the

communities. The timing and sequencing of this strategy is critical for USAID to

be successful in securing eradication agreements without social unrest thereby making the initial step in alternative development—the eradication—possible.

Bolivia: In Bolivia, the USG is the largest, single donor supporting alternative development efforts. USAID continues to be engaged in policy dialogue with the Government of Bolivia’s Vice Ministry of Alternative Development and key ministries

to ensure coca eradication conditionality is consistent with Law 1008. In addition,

the USAID Mission has been supporting the GOB in the development of a new alternative development strategy, which maintains eradication targets but expands

social programs.

Question 3 of 5. The Administration has set forth an ambitious agenda of rapidly

completing negotiations for a Free Trade agreement with five Central American

countries (CAFTA) which began in January 2003 and establishing a Free Trade

Area of the Americas (FTAA) by 2005.

Question. What is the nature of foreign aid programs that are characterized as

‘‘trade capacity building’’? What do these programs do?

Answer. ‘‘Trade Capacity Building’’ (TCB) programs seek to help the developing

countries participate more fully in the evolving ‘‘rules-based’’ global trading system

under the World Trade Organization (WTO) as well as a growing number of ‘‘free

trade agreements’’ (FTAs) in which these countries are signatories (or negotiating

to become members).

103

TCB programs provide technical assistance in three broad areas: (1) preparing for

trade negotiations (e.g., technical training to understand the trade issues that are

being negotiated); (2) implementing trade agreements (e.g., technical assistance to

establish standards and practices consistent with obligations under a trade agreement); and (3) transitioning to free trade (e.g., helping countries to develop capacity

to produce quality goods and services they can sell in the expanding global marketplace).

TCB programs help developing countries strengthen their capacity to trade

through a mix of assistance interventions, including training, technical assistance,

technology transfer, research and studies, development of data bases, small business

enterprise development assistance, and civil society outreach, among others.

Question Where in Latin Anerica do we focus aid for these types of programs?

Answer. USAID is providing TCB support throughout the LAC region, with a

focus on the Central American countries of El Salvador, Nicaragua, Guatemala and

Honduras, the Caribbean countries of Dominican Republic, Jamaica and the island

nations of the Eastern Caribbean, and the South American countries of Brazil, Peru,

Bolivia, Ecuador, and Colombia.

TCB programs are implemented by:

• A growing number of our bilateral Missions which are including TCB as the

major focus of their economic growth portfolios;

• Three sub-regional programs which are providing regional TCB assistance in

the Caribbean (J-CAR), Central America (G-CAP), and the Andean Region

(USAID/Peru); and

• AID/W which manages a ‘‘rapid response’’ mechanism that provides quick and

flexible assistance in response to TCB-related needs that arise in the context

of the ongoing FTAA negotiations.

Question. While economic growth may be a means to alleviate poverty, trade analysts have expressed the concern that new regional trade agreements could roll back

existing requirements to respect workers’ rights which have been negotiated under

unilateral preference programs, particularly for Central America (such as the Generalized System of Preferences and the Caribbean Basin Economic Recovery Act).

Can you speak to this concern? What safeguards are we taking to ensure that labor,

as well as environmental, protections that currently exist through unilateral preference programs, will not only be maintained, but strengthened through the establishment of the two regional free trade agreements? For which countries in Latin

America is the strengthening of workers’ rights and environmental standards the

most crucial?

Answer. USAID responds to TCB requests that countries make for assistance in

a number of areas. However, since USTR takes the lead in negotiating the new

trade agreements, these are issues on which the USTR would have a more informed

basis for providing the requested information.

Question 4 of 5. As you are well aware, a combination of extreme drops in export

coffee prices, drought, and tropical storms have brought an intense increase in the

level of severe malnutrition in several countries in Central America.

About half of Nicaragua’s five million people live in poverty, with 17 percent living in extreme poverty. In Guatemala, about 83 percent of the people live in poverty, and almost 60 percent in extreme poverty. In Honduras, the per capita income

level is $850 per year.

Question. What are we doing to address this crisis in Central America?

Answer. In order to respond to these development challenges, USAID provided

over $200 million to Central American countries for development assistance, emergency relief, and earthquake reconstruction in FY 2001, followed by another $277

million in FY 2002.

Since Hurricane Mitch, USAID has concentrated on more comprehensive disaster

mitigation efforts, such as early warning systems, watershed protection, construction standards, and community planning. The new USAID Opportunity Alliance has

an important vulnerability management component, scheduled to begin in FY 2003,

to assist countries in managing climatic and environmental risks, including disaster

preparedness and mitigation, watershed management, and forest fire control. As it

did last year, USAID is closely monitoring weather conditions and crop production

in Central American countries. USAID is using a new USDA database, which shows

precipitation, ground water, and vegetation data on a 10-day basis, and is collaborating with NGOs and host governments to monitor the agricultural and nutritional

situation at the local level. Moreover, USAID is developing a comprehensive early

warning system for Central America, based on a model used successfully in Africa.

104

Household consumption surveys and nutritional monitoring under feeding programs

will add an important dimension to this information network.

A glut in the coffee market has depressed prices dramatically. World coffee prices

have declined by 75 percent in the last 24 months due largely to the oversupply created by new production from Southeast Asia and increasing production from Brazil.

It is expected that production from Brazil will increase again this year, so the coffee

prices for the upcoming year will likely remain low. The loss in income for Central

American farmers was on the order of $1.5 billion in the 2001-2002 production year

alone. Falling prices at the farm gate (currently less than one half of normal prices)

mean that many farmers, including small-scale producers, cannot earn enough to

cover their production costs. Many hundreds of thousands of seasonal jobs and hundreds of thousands of permanent coffee farm jobs are being lost. The economic downturn in the United States has also had a devastating economic impact on Central

American countries which send most of their exports to the U.S.

Under the Opportunity Alliance, USAID is supporting trade capacity building and

rural diversification. USAID is fostering public and private partnerships and tradeled growth. In the medium term the rural diversification component aims to stimulate agricultural diversification and off-farm employment among the region’s poorest

inhabitants. Demand-driven business development services will help small and medium farmers and rural enterprises improve competitiveness and tap new markets

within the agriculture sector, including nontraditional exports, and specialty coffee,

and into non-agricultural areas such as ecotourism, aquaculture, crafts, and services.

Innovative finance activities will stimulate small-scale rural finance and venture

capital and will promote linkages between remittances and microfinance institutions

and credit unions. A regional activity to develop quality coffee has already been

funded with $6 million in FY 2002 funds and an intended additional $2 million in

FY 2003. It will increase competitiveness among selected Central American producers by assisting them to improve the quality of coffee and to access the expanding specialty and quality coffee markets. In FY 2003 and beyond, funding under the

rural diversification component will also help some farmers who cannot compete in

coffee to diversify into agricultural or non-agricultural alternatives.

To focus on the trade side, USAID will augment existing regional programs to

build trade capacity to help prepare countries for the Free Trade Area of the Americas, the World Trade Organization Doha Round, and U.S.-Central America Free

Trade Agreement negotiations, and to meet trade obligations, e.g., sanitary/

phytosanitary measures, customs, and intellectual property rights. Under this effort,

USAID will also target legal, policy, and regulatory reforms to improve the trade

and investment climate.

Over the past year, with hunger as the main concern, the distribution of most

emergency food aid was through food-for-work projects aimed at improving longterm food security and rehabilitating community infrastructure; however, where

warranted, mother-child feeding programs used free rations to target malnutrition

in children under five. In addition to emergency and non-emergency food aid,

USAID supported programs that provided seeds and other agricultural inputs to

farmers in the affected regions. USAID continued to target food aid resources

throughout the year, as poor households required help to cope with the effect of

drought and loss of employment in the coffee sector.

USAID support was extremely responsive to affected families after the 2001-2002

crop season. USAID collaborated actively with U.S. private voluntary organizations

(PVOs) responsible for distributing PL 480 Title II development food aid to transfer

in-country Title II commodities to drought emergency zones. The USG was also the

primary contributor of commodities to the World Food Program (WFP) to assist

drought-affected farmers and unemployed coffee plantation workers in the region.

Between September 2001 and August 2002, the USG contributed over $22 million

to short-term emergency drought relief, which helped deal with localized food shortfalls, treatment of malnutrition problems stemming from the drought and the coffee

crisis, and preparations for the next planting season. USAID and its PVO partners

worked in close cooperation with the WFP, UNICEF, and local governments to coordinate all emergency operations. These efforts were essential in helping national

governments mobilize their own and other donor resources to come to grips with the

crisis in their own countries.

Question. What are the governments of these Central American countries, if the

capacity exists, doing to reduce malnutrition and hunger?

Answer. The rural crisis is reducing government revenues, further weakening national financial systems and contributing to overall social and economic instability.

The countries are heavily dependent on the coffee sector for rural employment, farm

105

family income, and export earnings. Central American countries are collectively, but

differently, going through a sorting out of their financial sectors. Each country has

its own set of problems. Few have well regulated financial sectors despite many

years of advice from the donor community and the international financial institutions. An example of some specific actions the Central American countries are taking to combat malnutrition follows.

Front-page pictures in 2001 of severely malnourished Guatemalan children like

two-year old Juan Jose ́, who was only the size of a six-month old baby, shocked

Guatemala and the world. The chronically poor nutrition situation in the Central

American region reached crisis proportions in Guatemala due to the combined economic fallout from the coffee crisis and slowdown in the U.S. economy. The nutrition

crisis exposed a big gap in the Guatemalan Ministry of Health’s community programs. Community program norms like regular monthly weighing of children, counseling of mothers on better feeding practices and health care were not being adequately carried out. This realization, along with a high-level commitment to respond

to the nutrition crisis, combined to become a unique opportunity to learn from a

neighboring country and promote the sharing of best practices.

For several years, Honduras has implemented a successful community nutrition

program called Integrated Child Care (known by the Spanish acronym AIN) that detects growth faltering at an early stage and prevents malnutrition in young children

through effective nutrition education for their caregivers. Authorities from the Guatemalan Ministry of Health, USAID, key health partners and U.S. nonprofit organizations working in food assistance were invited to Honduras to learn about this

community nutrition program and observe it in the poorest communities. Despite

the similar circumstances due to the coffee crisis and crushing poverty, Honduran

villages with the community nutrition program successfully prevented severe cases

of child malnutrition often seen in Guatemala. The Guatemalan Ministry of Health

immediately made the adoption of the community nutrition program a top priority,

formalizing its commitment in the ‘‘Tegucigalpa Declaration’’. The Guatemalan Ministry of Health decided to incorporate the best features of the community-based program into their existing integrated management of childhood illnesses program,

which emphasizes diagnosis, treatment and counseling for common childhood illnesses at clinical level. The revamped program emphasizes prevention of maternal

child health problems at the community level, with strong emphasis on early detection of growth faltering and prevention of malnutrition in children less than two

years of age. After the trip, U.S. nonprofit organizations working in food assistance

also began implementing the community nutrition program in their nutrition emergency food aid programs. As a result, within months the U.S. organizations cut the

percentage of children not gaining adequate weight in half.

What made this south-to-south exchange so successful was the win-win fashion

in which it was carried out. The Guatemalan Ministry of Health had an excellent,

world-famous program of contracting out to local nonprofit health organizations to

expand health care coverage that the Honduran Ministry of Health wanted to learn

from. In return for organizing the visit to orient the Guatemalan delegation on its

community nutrition program, a Honduran Ministry of Health delegation visited

Guatemala to learn about how it contracts local nonprofit health organizations. Honduras then adapted the effective tools and systems that the Guatemalan Ministry

of Health had perfected for its outstanding public-private partnership. Now both

countries are contracting local community organizations to extend health care coverage to the rural poor that otherwise would have no access. The exchange of best

practices between the two governments and USAID missions has proven very successful and cost-effective. These shared strategies have saved thousands of dollars

and years of time by using proven approaches developed with previous USAID investments to jump-start programs in both countries.

Question. How does U.S. Agency for International Development coordinate with

other federal agencies, or multilateral institutions such as the United Nations and

the World Bank, to alleviate the increase in malnutrition and poverty in Central

America?

Answer. In each Central American country, USAID is working with international

financial institutions, nongovernmental organizations (NGOs), host governments,

and other donors to develop greater access to and responsiveness of national institutions. We meet regularly with our counterparts at the InterAmerican Development

Bank and World Bank in Washington. In the field, USAID participates along with

the Ambassador on ‘‘group of friends’’ donor organizations to ensure coordination

and to maximize impact. Periodic 1DB chaired Consultative Group meetings bring

together the donor community with the countries to discuss economic, political, social, and financial issues. On malnutrition and poverty issues, USAID supports the

106

efforts of the World Food Program and others. We coordinate closely at the sectoral

level with the United Nations, Organization of American States, and regional organizations.

Question. Should the United States rejoin the International Coffee Organization

as a means to alleviate the poverty caused by the collapse of the world coffee market? Why or why not?

Answer. The ICO recently informed President Bush of an ICO October resolution

inviting the United States to rejoin. Several Latin producers and the U.S. coffee industry support this move. Although the United States Government withdrew from

the ICO in 1993, the Trade Policy Staff Committee (TPSC) is reviewing this position. USAID, together with State, USTR, and other members of the TPSC will complete consultations with Congress to determine whether the US will rejoin or not.

In order to rejoin the ICO, the USG would need to accede to the 2001 International Coffee Agreement, or if possible, to apply the Agreement provisionally.

State Department lawyers are reviewing the requirements for accession to the

Agreement. It is unclear at this point if there is a deadline under ICO procedures

for participating countries to accede to the Agreement.

Question 5 of 5. The State Department’s 2002 Human Rights Report states that

serious human rights abuses continue in Guatemala—and in some areas, respect for

human rights has deteriorated. In 2002, Guatentalan security forces continued to

commit extrajudicial killings and, in some cases, tortured, abused, and mistreated

suspects and detainees. In addition, threats increased against journalist, labor organizers, and other activists.

Question. What is your assessment of the current human rights situation in Guatemala? Is it getting better or worse?

Answer. The situation has gotten worse over the past year, as these threats to

prominent human rights workers have increased.

Question. What steps has the Portillo Administration taken to investigate and

prosecute human rights violations by Guatemalan security forces?

Answer. The Portillo Administration recently agreed with civil society groups to

create an international commission to investigate clandestine groups that appear to

be the cause of the increased threats of violence against the human rights community. This commission is to be established by September 2003 and would be empowered to investigate the groups and bring cases to the justice system. On the other

hand, it is alleged that these clandestine groups have ties to the Portillo government. The USG will contribute to the operation of this commission.

Also recently, local human rights organizations played an important role in the

selection by the Congress of a new Human Rights Ombudsman. With the support

of USAID, a consortium of civil society organizations organized themselves as the

National Movement for Human Rights and designed and implemented a successful

lobbying strategy to influence the selection process. Their strategy successfully mobilized public opinion and key contacts to affect votes in the Guatemalan Congress.

The first element of the strategy developed by the Movement was to identify and

support persons that would meet their criteria as ideal candidates for the Ombudsman position. Some 74 organizations participated in the election of three pre-candidates for the Ombudsman position. These candidates traveled together in the interior as well as in the capital and spoke publicly of their vision for a future Office

of the Human Rights Ombudsman.

The high profile of the three pre-candidates helped create a political imperative

in the Congressional Human Rights Commission to name one of them as part of the

list of three candidates presented to the Congress for their plenary vote to select

the Ombudsman. When Dr. Sergio Morales, head of the human rights center at San

Carlos University and frequent collaborator with USAID, was named as one of the

candidates, human rights organizations developed a lobbying strategy and held a

forum for all the candidates to express their views. Their efforts contributed significantly to building support for Dr. Morales and his election to the post by the Congress.

The election of a civil society candidate was remarkable since the government and

Congress include many architects of the civil war’s systematic violation of human

rights. Credit should be given to the public relations efforts of Dr. Morales who approached recalcitrant sectors to lower their fears regarding his candidacy and to the

human rights organizations which opted for a lower profile, non-confrontational approach at the key moment of election. The election of Dr. Morales, with the backing

of the human rights civil society sector, creates new opportunities for collaboration

between civil society and the government in protecting human rights.

107

Question. What are we doing to help strengthen the rule of law, democratic institutions, and administration of justice in Guatemala?

Answer. USAID has been very active in promoting rule of law, democratic institutions, and administration of justice in Guatemala both through the Peace Program

and through its democracy and governance effort. Pressure from the international

community and civil society helped push the government to take some significant

actions that lay the ground work for greater inclusiveness and responsiveness in

Guatemala’s nascent democratic system. Reforms in the Guatemala City Clerk of

Court Office and in case file and information management systems in each Justice

Center are significantly improving justice system efficiency while reducing the potential for corruption. The time to locate case files dropped from hours to less than

15 minutes for 95% of users; random assignment of cases prevents forum shopping;

case loads are balanced; and due process is improved because information on time

required for various stages of court procedure is now available. The Supreme Court

is using statistics on workload, productivity, case intake, and bottlenecks to improve

efficiency and identify problems that need attention and is now taking action to further standardize and institutionalize these efforts.

The successful pilot effort to reduce the backlog of unresolved cases managed by

the Public Ministry in Quetzaltenango (where 32,000 backlogged cases were cleared

up) has been expanded to Santa Cruz and Huehuetenango (where nearly 43,000

cases have already been reviewed). Public Ministry case intake units emphasizing

customer service (reducing the time involved to file a criminal complaint from 4-5

hours to less than 15 minutes) are now in place in all Justice Centers as well as

Guatemala City. Victims Attention Offices, supported by USAID in the capital and

in Justice Centers, are also now expanding nationwide, providing over 8,000 victims

of crime and their families with medical, psychological, and legal counseling.

The major structural reform of the country’s principal law school has been basically completed and the new curriculum has been instituted for the first year. The

complete revamping of the curriculum, admission standards, an indigenous law program, and an expanding internship program will all contribute significantly to improving the quality of personnel entering the justice system.

Efforts to promote broader more effective civil society participation in the policy

process and oversight of the public institutions continued under a USAID program

which began activities in September 2001. Eight civil society coalitions now focus

on combating ethnic discrimination, transparency/anti-corruption, public security,

and congressional oversight. These coalitions have successfully organized around the

strengths of multi-sector actors to focus varied experiences and synergies on achieving concrete results. For example, an academic center, a war victim’s organization

and an organization fighting organized crime are working together to improve public

security and professionalization of the National Civil Police. Over the last few

months, the Alliance for Transparency (a coalition of the Chamber of Commerce and

two regional organizations from Quetzaltenango) developed an ideal profile, selection criteria, and procedures to elect the new Comptroller General and focused public attention on this process for the first time. PAQ’UCH, a coalition focused on combating ethnic discrimination, negotiated successfully with government authorities to

create the Presidential Commission Against Racism and Discrimination. The Crime

Prevention Association (APREDE) is bringing together gang members, the media,

citizens, and police in working to reduce crime in six target areas. Accion Ciudadana

has helped establish the Citizen Observatory, a coalition composed of fifteen civil

society organizations focused on promoting access to information and lobbying for

a new Access to Information Law.

Question. How does aid to Guatemala in the Fiscal 2004 Budget request compare

to previous funding levels?

Answer. Guatemala’s level was reduced from $51.1 million in FY 03 to $45 million

in FY 04. Cuts were severe in the area of economic growth, trade, and agriculture.

The democracy and governance program depends heavily on continuation of ESF

funding.

RESPONSE OF WILLIAM A. BELLAMY, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF

STATE, AFRICAN AFFAIRS, TO AN ADDITIONAL QUESTION FOR THE RECORD SUBMITTED BY SENATOR RUSSELL D. FEINGOLD

Queston. What diplomatic steps can be taken to ensure that Cote d’Ivoire does not

descend into the lawless violence that currently grips Liberia and once held sway

in Sierra Leone? What kind of assistance can reinforce this effort?

108

Answer. The United States Government recognized early the danger that prolonged conflict in Cote d’Ivoire could degenerate into the kind of senseless violence

that has occurred in neighboring countries, and has closely worked with the leaders

of the Economic Community of West African States (ECOWAS), the Government of

France, the United Nations, the government of President Gbagbo and the Ivoirian

parties to stop the conflict and assist in peace negotiations.

As a result of these efforts, the Ivoirian parties to the conflict have achieved a

cease fire and have begun to put into place an effective peace process. We have encouraged ECOWAS leaders to remain involved at the highest levels. They have responded by participating in numerous regional summits and by being present at key

events such as the Paris conference following the Linas-Marcoussis agreement on

January 25-26, the swearing in of the new Prime Minister, Seydou Diarra, and,

most recently, at the April 3 meeting of the new Ivoirian Government of National

Reconciliation in Yamoussoukro to ensure the attendance by the rebel ministers.

The ECOWAS leaders have also made good on their pledge to deploy a peace observation force, numbering 1288 men, to Cote d’Ivoire.

The United States has pressed Liberia strongly to assert control of its borders to

prevent the movement of Liberian fighters into Cote d’Ivoire. Additionally, we have

made clear to other governments bordering Cote d’Ivoire that any actions that might

contribute to exacerbating the conflict are unacceptable to the United States.

The Department of State believes that the active and determined efforts of

ECOWAS can contribute most effectively to the peace process. We will continue to

support ECOWAS political and peacekeeping efforts. To date, we have dedicated

$4.35 million for transportation, communications and logistical support to the

ECOWAS military force in Cote d’Ivoire. We also have provided vehicles, communications equipment, and generators to the force from our depot in Freetown, Sierra

Leone.

At the same time, we have supported efforts in the United Nations that might

contribute to the peaceful resolution of the conflict. We were firm supporters of Security Council Resolution 1464 of February 4, 2003. We are presently working positively in the UNSC to craft a resolution that would reaffirm the international community’s continued support for the Linas-Marcoussis process, and define the tasks

that the UN can undertake, under the direction of the Special Representative of the

Secretary General, Ambassador Teveodjre, to further assist in the peace process.

The immediate and continuing thrust of our diplomatic efforts is to end the violence, focus the parties on a workable process that can achieve the restoration of

peace and stability, and prevent outside interference that might destabilize the situation further. At the same time, we are also keenly aware that the conflict has exacerbated the human rights situation in the country. While it is the Government of

Cote d’Ivoire’s responsibility to hold those responsible accountable, we are also

working to ensure that other governments collectively and individually make all

Ivoirian parties aware that these actions are unacceptable and must be redressed.

Finally, we have been working with international humanitarian and refugee organizations and regional governments to help ease the plight of those who have lost

their homes and jobs as a result of this conflict. To date, we have provided $1.5 million to the Office of the United Nations High Commissioner for Refugees to help

those who have fled the country; $50,000 to the International Committee of the Red

Cross for emergency aid inside Cote d’Ivoire, and $383,113 to Merlin for emergency

medical aid inside the country. This is a continuing situation that will require longterm attention.

RESPONSES OF HON. CONSTANCE BERRY NEWMAN, ASSISTANT ADMINISTRATOR, BUREAU FOR AFRICA, USAID, TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED BY SENATOR RUSSELL D. FEINGOLD

AIDS IN AFRICA

Question. The HIV/AIDS pandemic is a problem of such horrifying scope and scale

in Africa that it demands a truly historic international response. I appreciated the

President’s commitment in his State of the Union Address, and I hope that we can

all work together to make the U.S. commitment to prevention, care and treatment

a reality. The President committed to spend new funds on AIDS rather than robbing

existing foreign assistance accounts. But even before his announcement, it has been

clear for some time that increasing our focus on HIV/AIDS sometimes means decreasing the resources available for other programs. I am looking for the silver lining to this zero-sum scenario. So tell me more about the positive spill-over effects

of our ATDS programs. How are we empowering girls and women, and improving

109

health infrastructure, through these targeted assistance efforts, and how are we

maximizing that spill-over element?

Answers:

1. Empowering Women and Girls. Until the mid-1990s, the role of women in the

AIDS crisis was little recognized. Now women account for more than half of all infections in Africa. In addition, it is increasingly recognized that women and girls

bear a disproportionate share of the care and support burden at the household level.

Therefore, USAID and others increasingly target programs and assistance at

women. For instance, USAID:

• Works through and strengthens maternal and child health centers; • Helps women to reduce their risk of HIV/AIDS infection;

• Is increasing the number and quality of mother-to-child transmission programs,

and initiating antiretroviral treatment programs in three countries: Ghana,

Rwanda and Kenya;

• Educates women (including widows), who become household heads because of

the AIDS death of their spouse, about their property and inheritance rights;

• Works with an increasing number of HIV/AIDS women’s groups to provide advocacy for AIDS and women’s issues, to support to women living with AIDS,

etc.;

• Pays special attention to the needs and participation of girls, including the provision of school and bursary fees and targeted peer education materials so that

girls can better protect themselves against HIV/AIDS; and

• Involves men in discussion groups and outreach programs to better support the

health and welfare of women and girls.

2. Improving the health infrastructure. Already overstretched health systems in

developing countries, particularly in Africa, are having difficulty responding to the

emergence of the HIV/AIDS crisis. The pandemic is increasing demand on health

services, while at the same time health workers themselves are dying of HIV/AIDS

in greater numbers. USAID remains the preeminent world leader in health systems

research and development, including on HIV/AIDS. USAID is strengthening systems

by:

• Developing protocols for health services that will reorient health systems in

light of HIV/AIDS;

• Developing drug supply mechanisms and systems to ensure the most effective

use of limited resources;

• Assisting in the analysis of health personnel requirements, including training,

to ensure that appropriate and sufficient staff are available;

• Developing care and treatment guidelines, and supporting countries to implement their new policies and practices; and

• Developing management systems that support prevention, care and treatment,

as well as developing a regulatory framework for the introduction of

antiretroviral treatments and the work of the private sector in health care provision.

3. Maximizing the spill-over effects:

• As part of its mother-to-child transmission, voluntary testing and counseling

and antiretroviral programs, USAID is strengthening hospitals, clinics, and primary health care centers, training health staff, and building better systems;

• As part of its orphans and vulnerable children programs, USAID is training

teachers in HIV/AIDS, strengthening prevention through peer education, providing much needed materials and supplies to impoverished schools for orphans

and vulnerable children, increasing the enrollment of girls, and strengthening

out of school programs through distance learning;

• At national levels, USAID is supporting health, education and social welfare

policy and legislation reviews; and

• In all countries, USAID HIV/AIDS programs work with faith-based or community-based organizations, which in turn strengthen civil society.

BASIC EDUCATION INITIATIVE

Question. The Basic Education Initiative puts a heavy emphasis on providing textbooks to African students. In which languages will these textbooks be produced? I

know that Historically Black Colleges and Universities in America will be involved,

but what about African institutions and publishers? Doesn’t it make sense to develop their capacity? Which actors in this initiative have experience in cost-effective

textbook development and distribution?

Answer. The initial six countries for the textbook component of the Africa Education Initiative (Benin, Ethiopia, Guinea, Mali, Senegal, and South Africa) were

110

chosen because they are currently engaged in programs that develop and produce

textbooks and other learning materials. The language of the textbook component of

the initiative will be the official language of learning in each country.

Historically Black Colleges and Universities will work in partnership with incountry institutions including ministries of education, universities and teacher

training colleges, and other appropriate institutions. The intent of the program is

to develop the capacity of the African partners as well as strengthen the contribution of Historically Black Colleges and Universities to development in Africa.

This program does in fact emphasize in-country commercial publishing capacity.

It will generate employment and support economic growth by contracting locally

with printing companies and, where feasible, support the upgrade of existing printing machinery to enable increased business activity. The program will help local

companies to develop and produce quality, long-lasting learning materials. By working with the publishing sector to develop and produce textbooks and other material,

this program will rekindle these African publishing capabilities and stimulate economic growth.

Hampton University and Elizabeth City State University are the lead institutions

in this program. Hampton University has over 100 years experience in developing,

publishing and distributing educational materials.

ANTI-CORRUPTION FUNDS

Question. Corruption stands in the way of nearly every U.S. foreign policy goal

in Africa. The President’s own Millennium Challenge Account initiative acknowledges this, placing a high priority on addressing corruption in eligibility criteria.

But I notice that in FY 2004, anti- corruption DA funds are requested at a $6 million level, a decrease from the $7.5 million in the F? 2003 request. Why is this? How

do you plan to use these funds?

Answer. The Africa Bureau has launched an Anti-Corruption Initiative that will

promote; public access to information; citizen advocacy and participation in decisionmaking; transparent and accountable government procedures; effective government

oversight institutions; and public-private dialogue. The initiative will also support

African-led anti-corruption efforts, such as the good governance principles put forward under the New Partnership for Africa’s Development (NEPAD) and the emergent anti-corruption agendas of various African institutions like the African Union

and the Southern African Development Community.

Most of the anti-corruption funds will be used to support bilateral programs in

a limited number of missions and regional programs implemented by USAID’s three

regional missions in Africa. From among the twenty-two bilateral missions being invited to submit proposals, approximately six will receive funding.

The intent of the initiative is to concentrate these additional resources in a limited number of countries where a dedicated anti-corruption program can show results in a five-year period. Missions have been encouraged to consider carefully the

local enabling environment for anti-corruption programming and the probability of

achieving results. Budget levels for bilateral programs are expected to be between

$250,000 and $750;000 per year in scope. Proposals are due in Washington on April

30, at which time they will be reviewed against specific selection criteria, and funds

allotted. Regional missions have been asked to submit work plans that outline how

they will provide technical support and work with regional institutions and organizations to adopt and implement anti-corruption protocols.

The reduction of funding for the initiative in the FY 2004 request from the FY

2003 request level results from the need to prioritize programming choices among

competing needs within an overall FY 2004 request level that increases by only $41

million. The FY 2004 HIV/AIDS request increases by $75 million (30 percent) over

the FY 2003 request level, and funding for Sudan triples in the FY 2004 request

to $66 million. Meeting these program build-ups, while also providing increased

funding levels for Administration initiatives in trade, agriculture and basic education, required USAID to pare down funding for a number of other programs.

These reductions include a 27 percent decrease in overall democracy and governance

activities and a 20 percent reduction in the Anti-Corruption Initiative.

RESPONSES OF J. CURTIS STRUBLE, ACTING ASSISTANT SECRETARY OF STATE, WESTERN HEMISPHERE AFFAIRS, TO ADDITIONAL QUESTIONS FOR THE RECORD SUBMITTED BY SENATOR RUSSELL D. FEINGOLD

Question 1. The latest coca crop survey showed that, while cultivation declined

somewhat in Colombia, it rebounded in Bolivia and Peru. Yet the Administration’s

111

FY-2004 request calls for holding alternative development assistance to Bolivia

steady while cutting it nearly 28 percent for Peru. Can you explain this inconsistency?

Answer. The Administration formulated its FY-2004 budget request before survey

information became available indicating 2002 coca crop increases in Bolivia and

Peru.

We held steady our alternative development-funding request for Bolivia in recognition of the Government of Bolivia’s need to offer stronger alternative development incentives to restive coca growing communities that challenge local government stability in outlying areas.

We reduced our FY-2004 alternative development request for Peru to reflect the

lack of a well-defined Government of Peru strategy to tie alternative development

benefits to progress on coca eradication and a slowdown in Peruvian alternative development activities due to vigorous opposition in some key coca growing areas.

We will revisit these allocations in light of the 2002 coca crop increases, looking

for opportunities to push ahead with alternative development programs in Bolivia

and Peru.

Question 2. The Administration has stated that alternative development programs

cannot be developed for every community where illicit crops are found, yet it supports the Colombian policy subjecting all drug crops to aerial fumigation without

condition. Colombia already has hundreds of thousands of rural unemployed and internally displaced people. What do we expect coca farmers to do after their crops

are sprayed?

Answer. Limited resources, security constraints, and low population densities

make it extremely difficult to develop alternative development programs for every

farmer or every community where illicit crops are found. Environmental fragility

also renders some areas impractical for alternative development program interventions.

Both USAID and Colombian government resources support alternative development in departments with illicit crops targeted for aerial eradication. The GOC announced in mid-2002 that all drug crops would be subject to spraying without condition and is proceeding to implement this policy with USG support.

USAID-funded alternative development programs focus on communities willing to

collaborate in sustained eradication efforts. The threat of aerial eradication of illicit

crops is a compelling and key element in convincing farmers to voluntarily eradicate

their drug crops, participate in alternative development programs and return to licit

activities.

USAID alternative development programs emphasize offering farming communities an alternative by improving market access and supporting licit income generating activities that will help reestablish a legitimate economy. As of December 31,

2002, 20,128 families had benefited from these programs and 15,742 hectares of licit

crops had been established.

USAID is also investing in cost-effective areas that are likely to attract migrant

coca leaf pickers away from drug production and into licit occupations. By involving

farmers and communities, USAID alternative development programs are reestablishing farmers’ confidence and participation in sustainable medium and long-term

alternative income generating possibilities.

Æ