STATE, FOREIGN OPERATIONS, AND RELATED 

PROGRAMS APPROPRIATIONS FOR 2011 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON STATE, FOREIGN OPERATIONS, AND RELATED 

PROGRAMS 

NITA M. LOWEY, New York, Chairwoman 

JESSE L. JACKSON, JR., Illinois 

ADAM SCHIFF, California 

STEVE ISRAEL, New York 

BEN CHANDLER, Kentucky 

STEVEN R. ROTHMAN, New Jersey 

BARBARA LEE, California 

JAMES P. MORAN, Virginia 

KAY GRANGER, Texas 

MARK STEVEN KIRK, Illinois 

ANDER CRENSHAW, Florida 

DENNIS R. REHBERG, Montana 

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full Committee, and Mr. Lewis, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

NISHA DESAI BISWAL, CRAIG HIGGINS, STEVE MARCHESE, MICHELE SUMILAS, 

MICHAEL MAREK, and CLELIA ALVARADO, 

Staff Assistants 

PART 6 

Page 

United States Department of State ............................................................... 1 

U.S. Agency for International Development ............................................... 97 

Department of Treasury International Development .............................. 273 

Peace Corps ........................................................................................................ 381 

Millennium Challenge Corporation .............................................................. 427 

Global Health and HIV/AIDS .......................................................................... 489 

Security Assistance ........................................................................................... 579 

Oversight of Civilian Assistance for Afghanistan ..................................... 655 

U.S. Civilian Assistance for Afghanistan ..................................................... 783 

Printed for the use of the Committee on Appropriations 


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PART 6—STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 2011 


jbell on DSKDVH8Z91PROD with HEARING
STATE, FOREIGN OPERATIONS, AND RELATED 

PROGRAMS APPROPRIATIONS FOR 2011 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON STATE, FOREIGN OPERATIONS, AND RELATED 

PROGRAMS 

NITA M. LOWEY, New York, Chairwoman 

JESSE L. JACKSON, JR., Illinois 

ADAM SCHIFF, California 

STEVE ISRAEL, New York 

BEN CHANDLER, Kentucky 

STEVEN R. ROTHMAN, New Jersey 

BARBARA LEE, California 

JAMES P. MORAN, Virginia 

KAY GRANGER, Texas 

MARK STEVEN KIRK, Illinois 

ANDER CRENSHAW, Florida 

DENNIS R. REHBERG, Montana 

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full Committee, and Mr. Lewis, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

NISHA DESAI BISWAL, CRAIG HIGGINS, STEVE MARCHESE, MICHELE SUMILAS, 

MICHAEL MAREK, and CLELIA ALVARADO, 

Staff Assistants 

PART 6 

Page 

United States Department of State ............................................................... 1 

U.S. Agency for International Development ............................................... 97 

Department of Treasury International Development .............................. 273 

Peace Corps ........................................................................................................ 381 

Millennium Challenge Corporation .............................................................. 427 

Global Health and HIV/AIDS .......................................................................... 489 

Security Assistance ........................................................................................... 579 

Oversight of Civilian Assistance for Afghanistan ..................................... 655 

U.S. Civilian Assistance for Afghanistan ..................................................... 783 

Printed for the use of the Committee on Appropriations 

U.S. GOVERNMENT PRINTING OFFICE 

66–402 WASHINGTON : 2011 


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COMMITTEE ON APPROPRIATIONS 

DAVID R. OBEY, Wisconsin, Chairman 

NORMAN D. DICKS, Washington 

ALAN B. MOLLOHAN, West Virginia 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

NITA M. LOWEY, New York 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

JAMES P. MORAN, Virginia 

JOHN W. OLVER, Massachusetts 

ED PASTOR, Arizona 

DAVID E. PRICE, North Carolina 

CHET EDWARDS, Texas 

PATRICK J. KENNEDY, Rhode Island 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CAROLYN C. KILPATRICK, Michigan 

ALLEN BOYD, Florida 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

MARION BERRY, Arkansas 

BARBARA LEE, California 

ADAM SCHIFF, California 

MICHAEL HONDA, California 

BETTY MCCOLLUM, Minnesota 

STEVE ISRAEL, New York 

TIM RYAN, Ohio 

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland 

BEN CHANDLER, Kentucky 

DEBBIE WASSERMAN SCHULTZ, Florida 

CIRO RODRIGUEZ, Texas 

LINCOLN DAVIS, Tennessee 

JOHN T. SALAZAR, Colorado 

PATRICK J. MURPHY, Pennsylvania 

JERRY LEWIS, California 

C. W. BILL YOUNG, Florida 

HAROLD ROGERS, Kentucky 

FRANK R. WOLF, Virginia 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New 

Jersey 

TODD TIAHRT, Kansas 

ZACH WAMP, Tennessee 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

MARK STEVEN KIRK, Illinois 

ANDER CRENSHAW, Florida 

DENNIS R. REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

STEVEN C. LATOURETTE, Ohio 

TOM COLE, Oklahoma 

BEVERLY PHETO, Clerk and Staff Director 

(II)


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(1) 

STATE, FOREIGN OPERATIONS, AND RELATED 

PROGRAMS APPROPRIATIONS FOR 2011 

THURSDAY, FEBRUARY 25, 2010. 

FISCAL YEAR 2011 BUDGET REQUEST FOR THE STATE 

DEPARTMENT 

WITNESS 

HON. HILLARY RODHAM CLINTON, SECRETARY OF STATE 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. The Subcommittee on State, Foreign Operations, 

and Related Programs will come to order. 

The Subcommittee on State, Foreign Operations, and Related 

Programs is delighted to welcome to our subcommittee Secretary 

Clinton. 

As always, it is an honor to have you with us. Your dedicated 

service and tireless efforts have taken you to over 47—it is hard 

to believe—47 countries in just 1 year. Your hard work as our Nation’s chief diplomat is respected and appreciated and has had an 

enormous impact. After many years of decline, global attitudes 

about the United States are on the rise. According to the most recent Pew Research Center Survey, ‘‘The image of the United States 

has improved markedly in most parts of the world. In many countries opinions of the United States are about as positive as they 

were at the beginning of the decade.’’ 

Our challenges are many, and your effective representation of 

the United States facilitates stronger multilateral partnerships to 

address global threats like instability in Afghanistan, Pakistan, 

Yemen, as well as Iran’s nuclear ambitions. 

Along with defense, diplomacy and development are essential elements of our national security strategy. With this budget request, 

the administration seeks diplomacy and development funding levels that will result in longer-term savings as we transition from the 

military to civilians in Iraq and work to prevent instability by addressing the root causes of conflict. But as we strive to foster greater stability and security overseas through ‘‘smart power,’’ we face 

pressing domestic needs. While there are signs of recovery in the 

economy, with 10 percent unemployment, the mounting Federal 

debt and budget deficit, the creation of jobs and economic security 

for American families must be the primary focus of this Congress. 

There is no doubt that this will make it difficult to sustain and 

expand all the priorities laid out in the President’s budget request; 

however, I am optimistic that we can balance our domestic and 

international priorities. 


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If we are to increase our assistance in this time of economic security at home, we must ensure that every dollar is well spent. And 

frankly, I am troubled by recent, SIGAR, SIGIR, OIG reports on 

democracy assistance and police training in Iraq, large power 

projects in Afghanistan, and development programs in FATA. The 

2011 budget and 2010 supplemental requests for significant increases in Afghanistan, Pakistan and Iraq require accountability to 

the U.S. taxpayer. Despite the difficult operating environments, to 

gain the trust and funding from this Congress, recommendations of 

the inspector generals should be implemented expeditiously. 

Madam Secretary, in this context we turn to the President’s fiscal year 2011 budget request for the programs and activities within 

the jurisdiction of the State, Foreign Operations, and Related Programs Subcommittee. At a total of $56.6 billion, it is $5.4 billion, 

or 11 percent, above the comparable fiscal year 2010 level, with 

over two-thirds of the increase for diplomacy and development in 

the frontline States of Afghanistan, Pakistan and Iraq. The balance 

of the increase continues the rebuilding of civilian staff at the Department of State and USAID, and prioritizes three key issues: 

global health, climate change, and food security. 

I am particularly pleased the budget rebalances the roles between the Department of Defense and the Department of State. 

The request of $1.2 billion for the Pakistan Counterinsurgency Capability Fund, coupled with the doubling of funding for the Complex Crises Fund, in lieu of funding for DOD’s section 1207, should 

ensure the State Department’s effective evaluation and implementation of these programs in the context of our overall foreign policy. 

Increases for critical development, global climate change, food security and global health are clearly aimed at creating the necessary 

conditions in developing countries for the growth of democracy, economic expansion and ultimately increased stability, priorities we 

all share. 

I applaud your emphasis on global health, which has proven to 

be one of our most effective interventions. While nearly 2.8 million 

people became infected with HIV/AIDS in 2008, this figure reflects 

a 20 percent decline in new infections compared to 2000, which is 

quite an accomplishment. Clearly our efforts are making a difference. Accountability and results in PEPFAR programs are also 

reflected in the administration’s Global Health Initiative. Coordinating with USAID’s global health programs, they will complement 

one another as well as the investments made by other country donors and the private sector like the Gates Foundation; Clinton 

Global Initiative; Global Fund to Fight AIDS, Tuberculosis and Malaria, and many more. And working together, which is an issue 

that we have been talking about for a long time, provides efficiency 

and effectiveness. 

Unfortunately, the budget did not prioritize basic education, an 

issue that we have both championed for many years. Education is 

the essential foundation for health, economic development, gender 

equality and long-term security. I am concerned that the requested 

cuts of nearly $100 million for this critical priority could compromise our development goals. This subcommittee will examine 

this proposal very closely. I hope you will work with us to restore 

funding to this program. 


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In addition, in your remarks I hope you will address questions 

regarding the administration’s strategy for stopping Iran’s quest for 

nuclear weapons, the justification for supplemental funding in light 

of previous assurances that regular appropriations would address 

recurrent needs, Yemen’s ability to be a consistent partner in our 

fight against al Qaeda, and the status of the Middle East peace negotiations, among, I am sure, many other issues. 

Finally, I want to thank the State Department for your extraordinary efforts to coordinate the response in Haiti. All of us are following the humanitarian response closely and are moved by the 

spirit and resilience of the Haitian people. And frankly, I was extraordinarily moved, and I continue to be extraordinarily moved 

and proud to be an American, to see our presence there. We look 

forward to working with you to ensure that adequate resources are 

provided for this humanitarian response. Reconstruction activities 

must be preceded by careful planning, oversight and guarantees 

that the money will be well spent. 

So thank you again, Madam Secretary, for your service. 

I would now like to turn to my esteemed Ranking Member Kay 

Granger. 

OPENING REMARKS OF MS. GRANGER

Ms. GRANGER. Thank you, Madam Chair. I want to thank Secretary Clinton for appearing before the subcommittee today to explain the Administration’s budget priorities for the State Department and foreign assistance programs. Madam Secretary, let me 

first say that I strongly support the objectives you seek to achieve 

with the fiscal year 2011 budget request and the fiscal year 2010 

supplemental. However, even though the subcommittee has only 

begun to receive the details of this budget request, the top-line 

numbers are startling in their size. No matter how you frame the 

budget proposal, there is a double-digit increase for international 

affairs. Given the daunting fiscal situation this country is facing, 

I would not be of service to my constituents or my own conscience 

if I didn’t pledge to examine the increase carefully and with some 

skepticism. 

I do recognize that the entire supplemental request and a large 

portion of the fiscal year budget request supports the frontline 

States of Iraq, Afghanistan and Pakistan, as Madam Chair discussed. But it was only last year that the Administration made a 

pledge to move away from supplemental appropriations. The subcommittee will take a close look at whether all of the $4.5 billion 

requested in the supplemental is, in fact, an emergency requirement when billions of dollars provided for these countries remain 

unobligated or unspent. There is no doubt, though, that the work 

being done in these countries is critical to achieving our national 

security and foreign policy objectives. 

I want to thank the men and women of this country in various 

Federal agencies for serving in the most difficult of circumstances 

overseas. They need our bipartisan support to achieve success. 

The budget request also includes a transition of some activities 

in these frontline states from the Department of Defense to the Department of State. I applaud the Administration for looking across 

the government to determine which agency is the appropriate lead, 


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especially when our troops are already being asked to take on so 

much as we continue to fight two wars. But it is equally important 

to be sure that the State Department is ready to take on all of 

these responsibilities. These functions are much too critical to be 

delayed or to be done ineffectively. 

The Administration’s budget request also includes billions of dollars in new resources for climate change, food security and global 

health. I worry that these significant multiyear commitments don’t 

take into account the fiscal realities this country and this Congress 

face. I want to hear more about the promises made by the executive branch. I pledge to work with my colleagues to extract details 

about these commitments, place oversight requirements on the 

funding provided, and keep a close eye on taxpayer dollars as programs are implemented. 

Madam Secretary, you have an enormous task in front of you. 

We all recognize that. We cannot let our efforts in Iraq, Afghanistan or Pakistan fail. We can’t let other countries become breeding 

grounds for extremism. We can’t let Iran’s nuclear ambitions go unchecked, and we can’t walk away from the fight against drug trafficking in this hemisphere. I know that you know that. 

In closing, I understand that balancing these and many other 

competing priorities around the world is not easy. I support your 

goal of having the right people in the right places so that the 

United States can overcome these challenges. I assure you I will 

work to give you the resources you need. However, there are many 

needs in this country as well, and this committee has the responsibility to ensure that our tax dollars are used efficiently and in a 

transparent method. My colleagues and I take that responsibility 

very seriously. We look forward to working with you so that we can 

better understand the full details of the budget request before us. 

Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

Madam Secretary. Please proceed with your statement. 

OPENING STATEMENT OF SECRETARY CLINTON

Secretary CLINTON. Well, thank you very much. Thank you, 

Chairwoman Lowey, Ranking Member Granger, members of the 

subcommittee, Chairman of the full committee Obey. It is a pleasure to be here with you today. When I was last here to discuss our 

budget, I emphasized my commitment to elevating diplomacy and 

development as core pillars of American power. Since then, I have 

been heartened by the bipartisan support of this committee and the 

rest of the Congress. So let me take a minute to thank you on behalf of the men and women of the State Department and USAID 

who work every day around the world to put our foreign policy into 

action. 

The budget we are presenting today is designed to protect America and Americans and to advance our interests. Our fiscal year 

2011 request for the State Department and USAID totals $52.8 billion. That is a $4.9 billion increase over 2010. Of that increase, 

$3.6 billion will go to supporting efforts in frontline states, Afghanistan, Pakistan and Iraq. Other funding will grow by $1.3 billion, 

or a 2.7 percent increase, that will help us address global challenges, strengthen essential partnerships, and ensure that the 


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State Department and USAID are equipped with the right people 

and resources to meet the challenges of our time. 

Over the past 6 weeks in Haiti, we have been reminded yet again 

of the importance of American leadership. I am very proud of what 

our country has done, and we continue to work with our Haitian 

and international partners to address ongoing suffering and to help 

them move from relief to recovery. 

Yet I also know this is a time of great economic strain for so 

many Americans. As a former Member of Congress, I know what 

this means for the people you represent. For every dollar we spend, 

we have to show results. That is why this budget must support programs vital to our national security, our national interests, and our 

leadership in the world, while guarding against waste, duplication 

and irrelevancy. And I believe it achieves those objectives. 

Now, these figures in the budget are more than just numbers on 

a page. They tell the story of the challenges we face and the resources we request to overcome them. We are fighting two wars 

that call on the skill and sacrifice of our civilians as well as our 

troops. We have embarked on a dual-track approach to Iran that 

has led to a growing consensus and a new unity with our international partners. Because of our efforts and engagement under 

the President’s leadership, we are now coming together with other 

countries to meet Iran’s continuing refusal to live up to its obligations with a unified and effective response. 

We are fighting two wars that call on the skill and sacrifice of 

our civilians as well as our troops, and we believe strongly that 

what we are doing is essential to achieving our objectives. Specifically, as you mentioned it with Iran, we believe that the President’s 

offer of engagement combined with the dual-track approach has left 

the international community with little choice but to impose greater costs for its provocative steps. 

With China, we are seeking areas of common purpose, while 

standing firm where we differ. We are making concrete the promise 

of a new beginning with the Muslim world. We are strengthening 

partnerships with allies in Europe and Asia, with our friends in the 

hemisphere, and with countries from India to Indonesia, from 

South Africa to Brazil and Turkey, and we are working every day 

to end the impasse between Israelis and Palestinians. 

At the same time, we are developing a new architecture of cooperation to meet global challenges, like climate change and the 

use of our planet’s oceans. In so many instances, our national interests and the common interests converge, and so we are promoting 

human rights, the rule of law, democracy and Internet freedom. We 

are fighting poverty, hunger, disease, and working to ensure that 

economic growth is broadly shared. 

Our agenda is ambitious because the times demand it. America 

is called to lead, and we have no alternative. We can bury our 

heads in the sand and pay the consequences later, or we can make 

hard-nosed, targeted investments now. 

Let me just highlight three areas where we are making significant new investments. First, the security of frontline States. In Afghanistan, we have tripled the number of civilians in 1 year on the 

ground, and this presence will grow by hundreds more with the $5 

billion in this budget. Our diplomats and development experts are 


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going into Marja with our troops there, embedded with our troops. 

They are, as we speak, working to help set up institutions of government, expand economic opportunities, particularly in agriculture, and provide meaningful alternatives for insurgents ready 

to renounce violence. 

In Pakistan, our request includes $3.2 billion to combat extremism, promote economic development, strengthen democratic institutions and build a long-term relationship with the Pakistani people. This includes funding of the Kerry-Lugar-Berman initiative. 

Our request also includes a 59 percent increase in funding for 

Yemen to help counter the extremist threat brought to our shores 

by al Qaeda in the Arabian Peninsula, and to build institutions and 

economic opportunity as an alternative. 

In Iraq, we are winding down our military presence and establishing a more normal civilian mission. Our civilian efforts will not 

and cannot mirror the scale of our military presence, but rather 

provides assistance consistent with the priorities of the Iraqi Government. So, our request includes $2.6 billion to help support the 

democratic process and ensure a smooth transition from the Department of Defense to civilian-led security training and operational support. These funds will allow civilians to take full responsibility, and at the same time, the defense budget for Iraq will be 

decreasing by about $16 billion. That is a powerful illustration of 

the return on civilian investment. 

We are blessed with the best military in the world, as we have 

seen time and time again in today’s wars. But we need to give our 

civilian experts the resources to do the job expected of them. This 

budget takes a step in the right direction. It includes $100 million 

for a State Department Complex Crises Fund, replacing the 1207 

fund through which the Defense Department directed money toward crisis response, and it includes support for the Pakistan 

Counterinsurgency Capability Fund, which previously also fell 

under the Defense Department. 

The second major area is investing in development, so this budget makes targeted investments in fragile societies, which, in our 

interconnected world, bear heavily on our own security and prosperity. These investments are a key part of our efforts to get ahead 

of crises instead of just responding to them all the time. I think it 

will help us be better positioned to deal with them and maybe prevent them, and I believe also can be less expensive. 

The first of these is in health. Building on our progress treating 

HIV, malaria and tuberculosis, our Global Health Initiative will invest $63 billion over 6 years, starting with $8.5 billion in fiscal 

year 2011 to help our partners address specific diseases and to 

build strong, sustainable health systems for themselves. 

The administration has also pledged to invest at least $3.5 billion 

in food security over 3 years, and this year’s request includes $1.6 

billion of which $1.2 billion will be funded through the State Department. This funding will focus on countries that have developed 

effective, comprehensive strategies where agriculture is central to 

prosperity and hunger remains widespread. 

On climate change, our request for $646 million seeks to promote 

the United States as a leader in green technology and to leverage 

other countries’ cooperation, including through the Copenhagen AcVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00006 Fmt 6633 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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cord, which for the first time brought together developed and developing countries. And this is part of the administration’s total request of $1.4 billion to support core climate change activities in developing nations. Our request also includes $4.2 billion for humanitarian assistance programs. I think, again, our efforts in Haiti have made clear 

that State and USAID must be able to respond quickly and effectively to human tragedies. These initiatives are designed to enhance American security, help people in need, and give the American people a strong return on their investment. Our aim is not to 

create or perpetuate dependency; we are not going to be just aiming at giving fish to people forever. We want to teach them to fish 

and help them devise solutions that will be in their best interests 

over time. And essential to this is a focus on advancing equality 

and opportunity for women and girls, who are the key drivers of 

economic and social progress. 

That brings me to the final and third area of investment. None 

of what we propose can happen if we don’t recruit, train and empower the right people for the job. State Department and USAID 

are full of talented and committed public servants, but too often 

they have been missing the tools needed to carry out their missions 

on the ground. And rather than building their expertise over time, 

we have too often relied on contractors, sometimes with very little 

oversight and often at a greater cost. 

This budget will allow us to expand the Foreign Service by over 

600 positions, including an additional 410 for the State Department 

and 200 for USAID. It will also allow us to staff the stand-by element of the Civilian Reserve Corps, a crucial tool for responding to 

crises. Now, while deploying these personnel does generate new expenses in some accounts, it will reduce expenses in others by 

changing the way we do business. We are ending an overreliance 

on contractors. We are saving money by bringing functions into 

government and improving oversight, and we take very seriously 

the IG lessons that we are applying. 

So I hope, Madam Chairwoman and Ranking Member, we can 

see from this budget that the United States State Department and 

USAID are taking the lead in helping to carry out foreign policy 

and national security. And as we finish the first-ever Quadrennial 

Diplomacy and Development Review, we will have a unique opportunity to define the capabilities we need and to match them with 

the resources and the priorities. 

I hope that we will continue to be able to work together in the 

year ahead. This is essential if we are going to enhance the security of Americans and assure the future of American leadership. I 

look forward to that, as I look forward now to taking your questions. 

Mrs. LOWEY. Thank you, Madam Secretary. 

[The information follows:] 


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IRAN

Mrs. LOWEY. I will begin before I turn to my Ranking Member. 

I would like to ask two questions, one regarding Iran’s nuclear ambitions. You stated in your testimony that we face urgent challenges in the Middle East. The leadership in Iran is dominated by 

hard-liners whose pursuit of nuclear weapons, support for terrorism through their Hamas and Hezbollah proxies, and assistance 

to armed groups in Iraq and Afghanistan continue to make Iran a 

threat to U.S. national security. The need for immediate action is 

compounded by Iran’s notification to the IAEA that it will begin 

producing high-grade enriched uranium material clearly intended 

for military weapons, which will ignite or maybe is igniting a regional arms race. 

We are committed in the Congress to imposing tough sanctions, 

both bilateral and multilateral, to stop Iran in its tracks. We need 

assurances that the administration is doing all it can to put pressure on Iran and those countries who are not fully cooperating with 

the sanction efforts. So if you can address the immediate next steps 

and timelines for imposing additional sanctions. 

You stated recently that sanctions should target those who actually make the regime’s decisions. How exactly would we target 

sanctions on the Revolutionary Guard and their front companies 

and the Iranian elite? What are you doing to prevent the U.N. Security Council from watering down any potential resolution and ensure that members, including Russia and China, fully support a 

tough and enforceable sanction regime? And if tough, binding sanctions cannot be passed in the Security Council, what steps will be 

taken with the Europeans and other willing countries to enforce 

crippling sanctions? 

Secretary CLINTON. Thank you very much, Congresswoman. 

We believe that the broader the consensus on sanctions against 

Iran, the more isolation and pressure that the Iranian Government 

will feel. So it is therefore important that we do everything we can 

to get the world to speak with one voice about Iran’s failures to live 

up to its responsibilities, about its refusal to engage seriously on 

its nuclear program, about the undisclosed facility revealed at 

Qom, about the rejection of the Tehran research reactor proposal. 

It is essential that we do everything we can to bring the rest of 

the world with us, and I would make three quick points about that. 

I believe that the President’s policy of engagement has actually assisted our argument very significantly. The world has seen the 

United States willing to talk with Iran, and we have seen Iran unwilling to talk seriously with the United States or anyone else. The 

fact that under President Obama’s leadership we were willing to do 

so has made much of the rest of the world much more responsive 

than they would have otherwise been. 

So, we are intensely pursuing diplomatic engagement around the 

issue and the content of sanctions. The State Department has 

worked closely with the Treasury Department in devising sanctions 

on individuals, on institutions, in areas of the economy, on a range 

of potential targets that we are now working to translate into a Security Council resolution. 


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I actually believe that we have had very productive conversations. I personally have engaged in many different settings over the 

last month; in London when I was there for the Afghanistan conference, in the Gulf where I just was, and then next week in Latin 

America. 

But I want to underscore that our efforts in the United Nations 

does not preclude us from taking additional national measures or 

working with other countries to take additional multilateral measures. We very well could supplement any resolution that we get in 

New York, and I think that what the Congress has done, we support the purpose and principle of the legislation passed in both 

Houses. We are working to make sure that we have the strongest 

possible approach about how we can effectively impact Iran, and 

we are hoping that we will see some positive results coming in the 

weeks ahead. 

Mrs. LOWEY. Thank you, Madam Secretary. 

Ms. Granger. 

Ms. GRANGER. Thank you. 

We have all been concerned about the growing threat of extremism in places like Yemen. Certainly the Christmas Day failed terrorism plot brought that to everyone’s attention. Funding was provided by this subcommittee to allow the State Department to significantly increase economic and military aid to Yemen by 60 percent in 2010. That doesn’t count the DOD plans to provide counterterrorism or security assistance. 

I have several questions. First, when does the Administration 

plan to consult with the subcommittee on its plans for fiscal year 

2011? And can you provide a preview for what types of activities 

you intend to support with the estimated $67 million available? 

What additional focus does the Administration foresee for the $106 

million requested for fiscal year 2011? 

YEMEN

Secretary CLINTON. Congresswoman, we are working very hard 

to facilitate economic opportunity in Yemen that is combined with 

our counterterrorism efforts, so that we really are approaching 

Yemen in a more comprehensive way. It is clear that the growth 

of Al Qaeda in the Arabian Peninsula is a threat far beyond the 

borders of Yemen, reaching our own shores. So there has been an 

increase in military funding and training, intelligence support and 

other activities directly aimed at empowering the government to go 

after Al Qaeda. And in the last several months, we have seen evidence of the success of that. The Yemeni military has raided training camps, arrested and killed a number of terrorists. 

At the same time, our assessment of Yemen is that you have to 

strengthen the institutions of the country and the economic opportunities available to the people of the country. I recently represented the United States at a conference about Yemen in London. 

It was very well attended because we are by far—we are not the 

biggest contributor. Other countries in the gulf and Europe are also 

contributing to Yemen. But, we are working as a united effort from 

the international community aimed at going after the terrorists, 

strengthening the military capacity of Yemen, and creating a development strategy in concert with the Yemeni Government. 


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Ms. GRANGER. I was aware of the conference that you attended 

and my understanding is that the last conference that was held 

was in 2006, and there were $5 billion in pledges, but most of that 

had not been delivered. Is my information correct? 

Secretary CLINTON. It is correct. And the reason is, I think, clear 

that people did not believe that the Government of Yemen was 

ready to receive either the money or the message that came with 

the money. But the situation has evolved to an extent where we 

now believe that the Yemenis are prepared to be a better partner, 

but we are going to be working hard to hold them accountable. 

I have discussed this at length with a lot of the other countries 

that are investing in Yemen’s economic development. I can’t sit 

here today and tell you that we know what the outcome is going 

to be, because we have to do several things simultaneously. But 

one indication of the seriousness of Yemen today vis-a-vis perhaps 

4 or 5 years ago is they came equipped with a national development plan which included a very candid assessment of their own 

problems, and that was the first anybody had seen of that. So we 

are hoping to build on what seems to be a new resolve from Yemen. 

Ms. GRANGER. Thank you, Madam Secretary and Madam Chair. 

I would hope you would keep us informed as to our plans and how 

our money will be used in Yemen. Thank you very much. 

Secretary CLINTON. Yes, ma’am. 

Mrs. LOWEY. Thank you. I will be calling on Members based on 

seniority of the Members that were present when the hearing was 

called to order, and I will alternate between majority and minority. 

Each Member is asked to keep their questions to within 5 minutes 

per round. 

Mr. Obey. 

Mr. OBEY. Madam Secretary, Eric Sevareid said that we needed 

to retain the courage of one’s doubts in dangerous certainties. And 

I guess I am reminded of that every time I think about policy in 

Iraq and Afghanistan. 

I am concerned that, in the end, there is going to be tremendous 

pressure for us not to maintain our scheduled withdrawal from 

Iraq. And I am dubious that, in the end, the Government of Afghanistan or Pakistan will be sufficiently constant and trustworthy 

to enable our policy in that region to succeed. 

But let me put that aside for the moment and simply ask one 

question. To date, we have appropriated over a trillion dollars for 

the war in Iraq and Afghanistan. This year, we appropriated $73 

billion for Afghanistan and $57 billion for Iraq. In the coming year, 

the administration is asking for $167 billion, $122 billion of that 

for Afghanistan, $45 billion for Iraq. 

CBO has estimated the cost to maintain a minimal level of 

40,000 troops in or near Iraq could be as high as $25 billion per 

year. The total cost of the Iraq war over 20 years could be well over 

$1 trillion, all paid for with deficit spending. Over the next 10 

years, at a minimum we are likely to spend $300 billion in Afghanistan and $250 billion in Iraq. 

Many hundreds of billions more will be required to fulfill our obligations to veterans of those wars. And I am not sure exactly what 

that means in terms of lifetime costs, but I am certain that it is 

going to wind up being over $2 trillion. 


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Now, in the past, our governments actually paid for their wars. 

In October, Abraham Lincoln’s salary was 3 percent less in 1862 

than it was the year before, because Congress passed an income 

tax in order to pay for that war. World War I, two tax laws were 

passed: the 1916 Revenue Act and the War Revenue Act of 1917. 

Even before we entered World War II, taxes were raised in 1940 

to support increased defense spending. In the Korean War, we once 

again saw a substantial increase in taxes. The same is true during 

Vietnam. It has only been in the last 30 years or so that our political leaders have chosen to cut taxes even as they substantially 

boosted spending, first on the Cold War and then on several hot 

wars. 

I raise this question simply to ask you two questions. Number 

one, what does the administration estimate the lifetime costs of the 

wars in Afghanistan and Iraq to be? And, secondly, why should we 

not at least pay for the cost of conducting our effort in Afghanistan? I know that decision is above your pay grade, but nonetheless. 

I mean, we have just seen a whole lot of talk about having a 

commission appointed in order to deal with mandatory costs, and 

yet we are continuing to borrow to pay for these wars. There is no 

sense of shared sacrifice in this country. The only people sacrificing 

are military families. Everybody else, we just get to put it on the 

cuff and it goes to the next generation. 

Mr. Murtha and I and 14 others have sponsored legislation suggesting that we ought to, on a delayed basis, at least begin to collect the costs of these wars. We would not have raised a war surtax 

during the recession. We would have given the President the authority to waive that for at least another year and a half. But, 

eventually, we wanted to send the signal that we were willing to 

pay for these, especially when we are being asked to freeze domestic discretionary spending for 3 years. 

Why shouldn’t we pay cash on the barrel head for this effort so 

that, regardless of our doubts about the endeavor, that we don’t 

wind up having to severely impinge upon what we need to do here 

at home because of the cost of that war? 

Secretary CLINTON. Chairman Obey, if I may speak personally, 

it is heartbreaking to me that 10 years ago we had a balanced 

budget and we were on the way to paying down the debt of the 

United States of America. I served on the Budget Committee, and 

I watched with such consternation as we threw away the greatest 

leverage we would ever have internationally and the greatest opportunity we would ever have to right the generational imbalance 

that existed. 

But we are today where we are today. And we have been in the 

midst of a recession, as you rightly point out. But I believe strongly 

that we have to address this deficit and the debt of the United 

States as a matter of national security, not only as a matter of economics. 

And I am not going to comment on the prerogatives of the Congress to determine how best to do that, other than to say, sitting 

where I sit today, I would not like to be in a position where the 

United States is a debtor nation to the extent that we are, with the 

projections going far into the future, the kind of disadvantages that 


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that implies for our ability to protect our security, to manage difficult problems, and to show the leadership that we deserve. 

So I would certainly think that there has to be great attention 

paid, and the moment of reckoning cannot be put off forever. But, 

again, that is within the prerogative of the Congress to determine. 

I do not have a lifetime estimate for the costs of the two wars, 

but we will get that to you based on our best assessment. 

But I share the concern that you and others on both sides of the 

aisle are expressing, and I wish we could turn the clock back. I 

really, honestly wish we could turn the clock back. Because we 

threw away the opportunity of not just one lifetime but all lifetimes 

in our country to put ourselves on the strongest possible financial 

footing that would have given us and future generations so much 

more security than we now have financially. 

Mrs. LOWEY. Mr. Rehberg. 

Mr. REHBERG. Thank you, Madam Chair. 

I am going to miss the opportunity to address a couple of the gratuitous comments that have been made by the committee in the 

opening and some of the responses. Because diplomacy did not end 

in 2000. It did occur. And I think that you would probably have to 

agree and admit that. And so, you know, while some of us were 

new in the Bush administration, diplomacy did occur. 

And I had the opportunity to travel with Chairman Kolby and 

others on this committee and appreciated that opportunity to see 

some of the great things that occurred, whether it be the MCC 

Challenge, Millennium Challenge, or the age initiative in Africa, 

that this administration has accepted and embraced and continues. 

And the deficit and the debt didn’t grow. We were on a path to 

reducing the debt. I am sorry we inherited a situation called September 11th. When I first showed up in 2001, I didn’t anticipate 

that we were going to be confronted with an act of terrorism that 

was not expected. And far be it from me to suggest that maybe the 

administration before the Bush administration ignored threats and 

didn’t allow us an opportunity to be safe going into September 

11th. 

So, you know, I would like to see some of the partisan politics 

that I sense in this hearing, you know, maybe end with my comments and move on to some of the things that are more substantive 

as far as foreign operations and our relationship with the world 

and such. So that is part of my comment. 

HAITI

The Haitian relief, I want to thank you for the fine work that occurred with the administration. 

As far as the orphans issue, one of the things that we saw, and 

I had parents that were concerned, that we are along in the process 

as far as the adoption. In some ways, UNICEF became an impediment or a barrier. 

Is there a procedure in place that you are looking at or trying 

to improve the adoption situation for interstate adoption within 

countries that we deal with for emergency purposes, where, if they 

are along a certain path and they have an opportunity to be moved 

through the process quicker for the safety of the children—and I 

think we all are interested in that—that maybe some of the imVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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pediments, the problems—and forget the Idaho situation. That was 

an anomaly. But there were other situations where Montana parents were ready; they were within days of receiving their children 

through the process. And whether it was a visa, that the passport 

had already been granted, they weren’t allowed that opportunity, 

because UNICEF got involved and they seemed to have an inherent objection or opposition to interstate adoption and created a 

problem for bringing these children out. 

Secretary CLINTON. Well, Congressman, I don’t believe that 

UNICEF has any objection to inter-country adoption that we are 

aware of. We will certainly double-check that. 

But on your larger question about dealing with orphans, it is a 

matter of great personal concern to me and also to the professional 

staff at the State Department. And what we are attempting to do 

is move on several fronts simultaneously. 

One, we think it is very important to help countries understand 

how they can better run their own adoption systems. A lot of countries culturally don’t believe in adoption. They don’t have any experience of adoption, and they are quite skeptical and suspicious of 

the whole idea. 

At the same time, we sometimes move more quickly than other 

cultures would accept in declaring someone an orphan who might 

have a relative somewhere down the line, and yet there are no real 

capabilities in these countries to search for and reunite children 

with the family members in an extended family. 

Haiti was a particularly challenging circumstance because all the 

records were—not all of them, but the vast majority of them were 

destroyed. We moved very quickly, and I am very proud of the 

work that was done, because we have different responsibilities 

within our government. The State Department, Department of 

Homeland Security, HHS all have a piece of the responsibility. But 

if we could get the records which showed that a child was in line 

to be adopted, we have moved those children. We have moved hundreds of them. 

On the other hand, some people got a little overanxious in their 

desire to help and tried to move children who still had family linkages or for whom there had been no process under way. We are 

looking hard at what happened and trying to make sure that we 

have an expeditious but extremely careful process so that we don’t 

inadvertently engage in any transport of a child who indeed does 

have a family still back in Haiti. 

But we appreciate the outpouring of generosity and love that so 

many Americans have demonstrated for children in Haiti and elsewhere around the world. And we are looking at what more we can 

do to deal with the whole problem of orphans globally. 

Mr. REHBERG. I appreciate that. Because there were some problems that I think could be very easily solved, and we have a relationship and they were along in the process. 

Real quickly—and I don’t want to get into the argument or the 

debate about private sector and contracting, because there obviously are problems with contracting. It is why you look at the defense budget. They are every bit as able to pad budgets as any 

other area. So, you know, I just happen to be one of those that believes in oversight of every single arena out there. 


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But you are asking for an additional 600 employees of the Federal Government under this budget. Could you tell me, real quickly, how many were in the last budget? If I remember correctly, and 

this is strictly off the top of my head, there was a request for an 

additional 2,000 employees in the last budget. 

So, were those positions filled? Did you fill the 2,000, and this 

is 600 on top of the 2,000? Within the last 3 years—or 2 years, actually, we are talking about 2,600 new Federal employees as opposed to the equivalent reduction of private-sector employees 

through contracting? 

Secretary CLINTON. Well, we are putting these positions in the 

pipeline, and we are filling them, and we are training people. I can 

get you the exact numbers about where we are in the pipeline. 

Mr. REHBERG. I would like that, yes. 

Secretary CLINTON. But part of the reason behind this is our assessment, number one, of the needs that we have. And I will just 

give you a quick example. 

You know, we have closed consulates in some parts of the world 

that are of great importance to us. Our Consulate in northern Nigeria, one of the largest Muslim populations in the world and a 

source of some religious conflict now, was closed years ago. I think 

we should have a consulate or at least some office there for the 

United States to have eyes and ears and hands on the ground 

there. 

So we are moving to identify needs and fill those needs, and we 

can give you a very specific breakdown. But we are also moving to 

evaluate carefully contractors. We made a decision a few weeks ago 

to replace one contractor with a full-time position inside. And when 

you looked at all the overhead and the costs associated with running the contract, we are going to save hundreds of thousands of 

dollars from that one position. 

Mr. REHBERG. Okay. Thank you. 

Thanks, Madam Chairman. 

Mrs. LOWEY. Thank you, Mr. Rehberg. And I believe the 2,000 

would include both the appropriated positions and the positions 

funded through passport and visa fees. 

Mr. Jackson. 

Mr. JACKSON. Thank you, Madam Chair. 

And I would like to welcome Secretary Clinton back to the committee and thank her for her testimony. 

Secretary Clinton, in order to preserve my time, I am going to 

ask you a few questions and save a couple of questions for the second round. 

Before I go to the specifics of the budget, however, Madam Secretary, the administration was widely criticized for its handling of 

the Christmas Day terror attack of a civilian airliner. The State 

Department had information, according to newspapers, from the 

perpetrator’s father before he boarded a plane. 

Can you share with the committee—and I understand this question may also be appropriately addressed to the Secretary of Homeland Security. Can you share with us what steps the State Department took to provide information to the Department of Homeland 

Security that may have been provided by the perpetrator’s father 

to prevent that activity and anything that you might have that will 


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convince the committee and share with the committee that this 

won’t happen again? 

And, secondly, for me, on another subject, it seems that this administration’s resolve isn’t quite the same as John F. Kennedy’s resolve when the threat of weapons of mass destruction were 90 

miles off the shore of America in 1962. I was born in 1965, so I 

missed the Cuban missile crisis, but from my read on history, it 

garnered a very different response from that administration. 

The idea of weapons of mass destruction in the post–9/11 world, 

however faulty the data, led the last administration to our present 

conflict in Iraq. The concern that al Qaeda is pursuing weapons of 

mass destruction has our Nation in pursuit of al Qaeda in Afghanistan and around the globe. But in Iran, we know they are pursuing 

weapons of mass destruction. 

I am wondering how the administration justifies its approach to 

gradualism in light of the history of past administrations on the 

question of weapons of mass destruction, particularly when they 

found themselves off the shores of our country and/or off the shores 

given their proximity in the Middle East to our critical interests. 

And lastly, a broader question about the Secretary’s request. 

There is this mood in Washington that we spend too much. When 

asked what spending we should cut, inevitably one of the first 

things mentioned is foreign aid. I don’t think some people realize 

that our foreign policy goes hand in hand with our national security policy. You have cited time and time again that defense, diplomacy, and development need to be treated equally for the U.S. to 

succeed overseas. 

In your testimony, you highlighted some of the administration’s 

development and diplomatic priorities. Can you tell the committee 

why these priorities are critical to our national interest and our 

foreign policy be successful if we only emphasize defensive spending? 

I thank you, Madam Secretary. 

And thank you, Madam Chair. 

CHRISTMAS DAY BOMBER

Secretary CLINTON. Well, thank you, Congressman. 

With respect to the Christmas Day bomber incident, we have obviously studied very closely what the State Department actions 

were and what we can learn from that and what changes needed 

to be undertaken. 

The information that was brought to the attention of several government agencies within our Embassy in Abuja was immediately 

transmitted to the respective agencies, both in the intelligence community, Homeland Security and elsewhere. But as has been studied very thoroughly, there wasn’t a connection of a lot of that information. 

The gentleman, the father who came in provided information 

which was followed up on. But the visa wasn’t revoked because, at 

the time, the correct spelling of the son’s name was not in the system. And when that information was received on November 19th, 

that he had a visa, then the revocation consideration was undertaken. 


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The State Department, before Christmas, was involved in revocation decisions by discussing with the intelligence community 

whether a revocation would disrupt an ongoing investigation. There 

have been numerous cases in which a unilateral and uncoordinated 

revocation would have disrupted important investigations carried 

out by the FBI, and the FBI has testified to that. 

So what we have concluded is that we are going to exercise more 

immediate discretion even if it disrupts an investigation. So, you 

know, it is not all on one side or all on the other side. 

But you should know, Congressman, that since 2001, the State 

Department has revoked 51,000 visas, including more than 1,700 

with suspected links to terrorism. And, in addition to the revocation authority, consular officers around the world in 2009 refused 

nearly 2 million visas. 

So this is an enormous undertaking. When you sit across from 

somebody or they are standing at the window in a consulate somewhere, it requires a lot of training and a lot of connecting dots. And 

some might say, ‘‘Well, you know, gee, in those 1,885,000–plus 

visas that you revoked, there were probably some people who 

shouldn’t have been.’’ Well, yeah, and there were probably a lot of 

people who should have. 

So it is a very difficult set of decisions that our people make 

every single day. And we have determined that we will take more 

unilateral authority. We have informed the FBI and others, you 

know, that that is going to be our policy. 

So we are working very hard, along with Homeland Security, 

along with the CIA, the Director of National Intelligence and others, to be as smart and vigilant as we can. And because of the 

amount of travel and the numbers of visas, it is an enormous undertaking. And, you know, we do the very best we can, and we are 

going to keep learning how to do it better. 

IRAN

With respect to Iran, we are engaged in very intensive diplomacy. And, you know, my reading of what happened with President 

Kennedy is that is exactly what he did. It was high-stakes diplomacy. It was hard to get the world community to understand, going 

to the United Nations, making a presentation, getting international 

opinion against the placement of Russian weapons in Cuba, you 

know, making a deal eventually with the Russians that led to the 

removal of the missiles. 

That is the kind of intensive high-stakes diplomacy that I am engaged in, that other members of our administration are, because 

we take seriously the potential threat from Iran. 

Mrs. LOWEY. Madam Secretary, I just want to make one point before I turn to my colleagues. 

Unfortunately, the Department of Homeland Security, in my 

judgment, is not willing to change their policy of a 30–minute review before a plane takes off. Many of us have been pushing for 

a minimum of 24 hours. And, in fact, the Secure Flight Program, 

which still is not on line, considered 72 hours. 

So I just mention that to my colleague because I just brought it 

up about half hour ago with the Secretary of Homeland Security, 

and I think this is something we must push. There is no reason 


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why you are giving these investigators 30 minutes to review. There 

will always be stragglers, but I think we have to look at a 24–hour 

time frame. 

Thank you. 

Mr. Kirk. 

Mr. KIRK. Thank you. 

Madam Secretary, I just wanted to thank you again for backing 

the Afghan surge. You had that shootout with Vice President 

Biden. He was wrong; you were right. The President sided with 

you. And the Marjah offensive is going well. We have nailed a 

number of top Taliban leaders now, and a lot of good news from 

the troops. 

You voted for the Armenian genocide resolution as a Senator. I 

hope we do that, and I hope the House of Representatives does that 

and you will let that happen. 

I also want to thank you for having Cha-hee Stanfield, a representative of thousands of Korean Americans who haven’t met 

their North Korean relatives, meet with Bob King, and they very 

much appreciate that. 

I just want to briefly call your attention to the plight of Christians in Iraq. We have had a number of killings in the run-up to 

the election there. It would be an awful shame if, at the end of all 

this democratization in Iraq, that it had no Christian community. 

And your continued attention, I would greatly appreciate it. 

I want to raise two issues very briefly. The first is, I understand 

that we are going to do a land swap, and I hope that this committee has no appropriated funds involved in the building of a new 

embassy in London. Great Britain is our best and most friendly 

ally, so the need to build a huge and expensive fortress seems to 

be extravagant. 

The report is that this new embassy will cost a billion dollars. 

And just to recall, the largest building, the new building in Chicago 

is the Trump Tower. It is a four-star hotel and luxury offices and 

apartments. The 92 floors of the Trump Tower cost $847 million. 

So this proposed embassy in London is 18 percent more expensive 

than the luxury Trump Tower and 92 floors. It feels a bit like 

Buckingham Palace 2.0, and that seems utterly extravagant. And 

I hope you would not request this committee would support this at 

all, because it seems like we have really run wild in the budget 

there. 

I wanted to raise, though, a separate issue, which is with regard 

to Iran, that we are not sending a clear signal to the Iranians. And 

when you look at our policy from Tehran towards Washington, as 

opposed to Washington to Tehran, here is what you see. 

We have a number of sanctions. I have a board here. As you 

know, in 1996, that the Congress passed the Iran Sanctions Act 

and said, ‘‘If you invest more than $20 million in the Iran energy 

sector, you are going to get hit with sanctions.’’ The Congressional 

Research Service has now listed all of these companies in potential 

violation of the Iran Sanctions Act. 

And this is just the Congressional Research Service did that. 

Your team said, we will answer the Congress back—about 60 Republicans and Democrats sent you a letter—within 45 days. 

Feltman had that. We are now about 20 days after that. 


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If the Iranians see that sanctions on the books are not enforced, 

then how would any future sanctions in any way be serious, one? 

Second, just two blocks from your office on the seventh floor of 

the State Department, the World Bank is still cutting checks to the 

Iranian Finance Ministry. So the last administration and this administration are still allowing money to go from the World Bank 

to the Iranian Finance Ministry. Wow, what a confused signal that 

Ahmadinejad gets, getting a check cut from 1818 H Street in 

Washington, D.C., two blocks from the White House. 

And, last, we understand that, you know, 400 Members of Congress have now backed the gasoline quarantine legislation in the 

House and Senate. My word from your team is, we will not support 

a gasoline quarantine absent a U.N. Security Council resolution. 

And with Bill Burns, I took him through a thought experiment. 

I said, I remember during the Clinton administration when President Clinton very wisely waited for the U.N. Security Council to 

approve our action in Kosovo before taking military action against 

Yugoslavia. And he nodded and said yes. And I said, that is absolutely wrong. President Clinton did not wait for the U.N. Security 

Council. The entire victory in Kosovo would have never happened 

if we had waited for the U.N. Security Council. There was no Security Council resolution possible. And President Clinton wisely did 

not wait for the gridlock in New York to stop him from saving 2 

million Kosovars. 

And so my question to you is, how about actually enforcing the 

Iran Sanctions Act against the 25 companies that we have already 

clearly identified in potential violation? How about cutting off 

World Bank funding to the Iranian Finance Ministry, which is 

going on right now? And, how about cutting loose from the U.N. Security Council, repeating the great success of your husband, and 

actually implementing measures which will succeed, as they did in 

Yugoslavia? 

ARMENIA

Secretary CLINTON. Well, first, on Armenia, let me reiterate what 

the President said last year in April, that the best way for Turkey 

and Armenia to deal with their common historical past is to address it as part of their effort in moving forward. And there has 

been a very important dialogue leading to protocols between Armenia and Turkey, which they have signed at a ceremony that I attended in Zurich. And we believe that that is the most appropriate 

way for the United States to be helpful at this time, is to continue 

to urge the ratification of those protocols. 

LONDON EMBASSY

Secondly, on the London embassy, we are not going to be asking 

this committee for any money because we are self-financing it from 

the sale of the existing embassy and the Navy Annex in order to 

consolidate all of our operations in one place, in a more secure 

place than the Grosvenor Square embassy. 


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IRAN

And, finally, on Iran, we did make a preliminary report to the 

Congress in early February. We will follow that up with a classified 

briefing. I have taken the responsibilities to examine the situation 

very carefully, and that is exactly what we are doing. 

There wasn’t any such inquiries before, in the last 8 years. There 

was only one finding in the prior administration. So we are going 

to fulfill the responsibility of looking at it and consulting with the 

Congress as to what the outcome should be. And I think that we 

will be having a briefing in a classified setting, which is the appropriate forum for that. 

Mr. KIRK. Thank you. And I just hope we follow up. Imagine how 

confused Ahmadinejad is when he gets a check from the World 

Bank, from the Obama administration. 

Mrs. LOWEY. Mr. Schiff. 

Mr. SCHIFF. Thank you, Madam Chair. 

And thank you, Madam Secretary, for being here. 

I will pick up where my colleague left off and also urge the administration’s support for recognition of the Armenian genocide. 

We have a markup coming up next month, and I would urge the 

administration to support the legislation and, at a minimum, certainly not to get involved in opposing the legislation. And I don’t 

think that the prospect of reconciliation, much as I would like it 

to happen, should be used as a reason not to recognize the undeniable fact of the Armenian genocide. 

I wanted to discuss with you today—and I just got back from a 

trip to Yemen, Pakistan, and Afghanistan—the situation, in particular, in Afghanistan. I think we have really the best team assembled there we could possibly have, both in terms of the military 

leadership and the civilian leadership. And, Madam Secretary, you 

have some of the finest people in the world working in State Department and USAID there. They are just phenomenal, courageous, 

committed, wonderful people. 

I have a lot of confidence that the military operations will be successful within the scope of what they hope to achieve, that the 

Taliban can be routed from their strongholds within the next 12 to 

18 months. But I have far, far, far less confidence that we can 

achieve our civilian objective. And not having anything to do with, 

again, the quality of the people over there, but it seems to me we 

are dealing with two very different timelines. 

We have a timeline militarily, and we have a timeline in terms 

of helping the Afghans establish the rule of law and good governance such that, when the military leaves, there is an infrastructure 

and governance there that is strong enough and well enough respected that the Afghan people won’t tolerate the Taliban coming 

back in. And that is the ‘‘hold and build’’ part of the plan. 

And so my question is, are these timelines so different that they 

are going to come in conflict 12 to 18 months from now? It seems 

to me you would need an escalation or a surge of probably 30,000 

State and USAID, Justice Department, Agriculture Department 

and Commerce Department civilians in Afghanistan to try to deal 

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tion and corruption of the government. We don’t have the capacity 

to do that. 

So what happens? If the governance is still so fragile, how do you 

continue with that work without having the military there in such 

numbers to maintain the security? 

AFGHANISTAN

Secretary CLINTON. Well, Congressman, I hope you and all the 

members of the committee have received a copy of the Afghanistan 

and Pakistan Regional Stabilization Strategy, which we have submitted to the Congress, because it goes into great detail about everything we are doing, from agriculture to health care to education 

to women’s rights. 

And, obviously, we are working closely with our military counterparts, as they heroically take on the Taliban alongside not only our 

international partners but, increasingly, the Afghan military. 

This is a very challenging undertaking, but there has to be a 

transition from the international force, the NATO ISAF force, to 

the Afghanistan people themselves. That is why we are emphasizing the training of the military and of the police. We are working, I think successfully, to make clear that we need good partners 

and that President Karzai, his government, as well as the military, 

have to do their part. And there are places in Afghanistan that we 

could transition to civilian rule today, and there are others where 

we still have a lot of work ahead of us. 

But we have a plan. We are going to do the best we can to implement that plan. I understand the questions that you and many others have, because this is a very hard undertaking. So I don’t want 

to in any way underestimate how difficult it will be. 

Mr. SCHIFF. If I could refine it, just very quickly. Do you think, 

in the 16 to 18 months of the increased military support there, that 

in these safe havens, or former safe havens like Marjah, that on 

the civilian side we can establish a sufficient rule of law and good 

governance such that, when we downsize our military presence, the 

Taliban won’t simply come back in because the Afghans are so fed 

up with the corruption of the Afghan Government? 

Secretary CLINTON. That is our goal, and that is what we are 

working to put into place. But, ultimately, the future of Afghanistan is up to the Afghans. You know, they are going to have to 

stand up and demand the kind of accountability from their government and the delivery of services. 

We are doing all that we know to do to create the conditions for 

that. But, at the end of this process, there has to be a government 

that is functioning and effective and has the support of its people. 

And there is no way completely to predict that. But we are doing 

the very best we know to do to try to create the conditions for it. 

Mr. SCHIFF. Thank you, Madam Secretary. 

Mrs. LOWEY. Mr. Crenshaw. 

Mr. CRENSHAW. Thank you, Madam Chairman. 

And thank you for your testimony today. 

I have two questions, one is about Iraq and one is about Haiti. 

But, on balance, I think what is happening in Iraq is obviously 

positive. But, as you know, in the last year, what happened at 

Camp Ashraf is really troubling to an awful lot of people. I mean, 


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once the Iraqi Government took over there, I guess it was back in 

June, the rage that occurred and just the awful, deplorable situation that took place there. And now to say we are going to move 

those 3,400 folks to some detention center certainly has got a lot 

of people’s attention. 

Because it is not just about Iraq; it is about Iran. And, as you 

may know, I think 172 Members of the House have signed on as 

cosponsors of the resolution basically deploring that activity by the 

Iranian forces, calling on Iraq to live up to its commitment to provide security and then also providing for the United States to take 

necessary action to kind of provide for their security. 

So I wanted you to give us an update on the current status of 

that situation. 

And then quickly about just Haiti, it seems to me that out of that 

terrible, terrible situation there is an opportunity for some good to 

happen in Haiti today. And, with all this tremendous outpouring 

of international assistance from both private and public, is there 

any one entity that is kind of emerging as an entity to kind of coordinate all of this foreign assistance in both private and government? And as part of that, are there procedures being put in place 

to make sure that everything is being accounted for and being 

transparent? 

And, finally, the third part of that is what is your view of the 

government there in Haiti and their ability to kind of rise up and 

be a partner with all this international assistance? 

If you could comment on those two, I would appreciate it. 

CAMP ASHRAF

Secretary CLINTON. Thank you, Congressman. 

You know, we are aware of the recent reports about difficulties 

in Camp Ashraf, and we have looked into these assertions. It is our 

conclusion that adequate food, fuel, and medical supplies are reaching the MEK members in the camp. Family visitation is not being 

blocked by Iraqi Security Forces. Foreign governments are able to 

conduct visits to the camp for any resident claiming third-country 

status. Yes, the Iraqi Government still has the stated goal of removing the MEK from Ashraf to another location, but there is no 

date for doing so. 

And our policy toward the MEK can be summarized briefly as 

follows: They are not refugees. They are not protected persons 

under the Fourth Geneva Convention. They are not providing valuable information on Iran to our government. However, we do support their human rights. We have repeatedly told the Iraqi Government that we expect their human rights to be protected. 

We have, in prior administrations, designated the MEK as a foreign terrorist organization. We do support Iraqi sovereignty over 

Ashraf. And we do hold the Iraqi Government responsible for how 

the members of the MEK are treated. And we expect the Iraqi Government to honor its written assurances that it will treat the MEK 

members humanely; it will not forcibly relocate them to any country where they could be persecuted for religious or political beliefs 

or where they could be tortured. 

And we support international participation in trying to resolve 

this matter. So there is a lot of information coming from all direcVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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tions. We have tried to be very careful in evaluating what the facts 

are. And, to the best of our ability, that is a brief summary. 

HAITI

With respect to Haiti, there is going to be a coordinating entity 

created. It will be a combination of the Haitian Government and 

the United Nations, along with a committee on which the United 

States will also participate. There will be measures of accountability that we are putting into place. There will be a conference 

on March 31st at the United Nations, cosponsored by the United 

States and other major donor countries, to lay out the way forward. 

The Haitian Government’s ability was severely impacted by the 

earthquake. They are trying to kind of get themselves organized 

and focused, but it is a very difficult challenge for them, and we 

are doing everything we can to help them. They are very grateful 

for the aid, both the military and civilian aid, and presence on the 

ground from the United States. 

So we have a big task ahead of us to try to help them take more 

responsibility, but to do so in an accountable way with sufficient 

oversight for the foreign assistance funds that are going to flow in. 

Mr. CRENSHAW. Thank you. 

Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

Mr. Israel. 

Mr. ISRAEL. Thank you, Madam Chair. 

Madam Secretary, we really miss you in New York. 

Secretary CLINTON. Oh, Steve. 

Mr. ISRAEL. We really, really miss you in New York. 

Madam Secretary, two questions. 

One, last year this subcommittee provided USAID with $10 million to stand up a solar village initiative which would help catalyze 

microfinancing for renewable solar projects in the developing world. 

I would just like a brief status report on that. 

SOLAR VILLAGE

Secretary CLINTON. Well, we support the solar villages, and we 

welcome your interest and your initiative on the solar villages. In 

fact, I thought you might ask about it, and I brought a quick update for you, Congressman, because it is the kind of innovative approach that we support. 

The $10 million which went to USAID Clean Energy funds are 

being used for microfinance renewable energy programs. And we 

want to work with you to determine the final country allocations 

because of your interest. And so I have directed that USAID reach 

out to you and let you know exactly what we are doing with that 

money. 

TURKEY

Mr. ISRAEL. Thank you. I appreciate that. 

Let me turn to Turkey, if I may, Madam Secretary. I am very 

concerned with the direction of Turkey. It seems to me, at least, 

that Turkey is contemplating a fundamental realignment. With respect to Iran, Turkey has exhibited irresponsible behavior, in my 


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view, undermining international efforts to slow Iran’s march to nuclear weapons, defending Iran’s position. Prime Minister Erdogan, 

back in October, asked why those who were talking about nuclear 

weapons always pick on Iran; increasing volume of Turkish investment and trade with Iran. 

On Israel, October of 2009, Turkey cancelled air force joint exercises with Israel, publicly attacked President Shimon Peres. On Cypress, Turkey renews its insistence on elements of a Cypress solution that no western democracy could ever agree to, continues an 

illegal occupation, digs in. On Darfur, denied the Darfur genocide. 

Prime Minister Erdogan said, ‘‘It is not possible for those who belong to the Muslim faith to carry out genocide.’’ Tell that to people 

of the Muslim faith who have been annihilated by that genocide. 

We have talked about Armenia. And, finally, on the ecumenical 

patriarch, Turkey’s history of religious intolerance continues, confiscating the property of the ecumenical patriarch, defying the values of 300 million orthodox Christians. 

It just seems to me that this is a fundamental reversal of Turkey’s role in the world and in the region. And I am curious as to 

whether the State Department is engaging in a reassessment of 

our own relationship with Turkey in view of what seems to be Turkey’s reassessment of its relationship with us and the rest of the 

world. 

Secretary CLINTON. Well, Congressman, let me put our relationship with Turkey in as broad a context as possible, because we believe we share a vital partnership, common strategic interests and, 

of course, membership in NATO. From the Balkans to Afghanistan, 

we are working together. Turkey has embarked on a very ambitious foreign policy, working to try to reach normalization with Armenia, trying to solve problems in its neighborhood. 

In the NATO context, Turkey is a key contributor to our ISAF 

efforts in Afghanistan. Turkey contributes nearly 1,800 troops. It 

commands a regional command. It maintains a PRT. It is going to 

have another PRT. It also contributes 500 troops to Kosova’s NATO 

forces. It is part of Operation Active Endeavor patrolling the Mediterranean. It has been a key contributor to Operation Ocean 

Shield, which is NATO’s counter-piracy mission, and helps patrol 

the Black Sea through Operation Black Sea Harmony. 

Now, with respect specifically to Iran, Turkey shares a long border with Iran. It has a lot of cultural and religious ties, a lot of 

commercial ventures with Iran, and it has access to many of the 

Iranian decision-makers. So Turkey has been very involved in, you 

know, trying to influence Iranian actions. It has expressly opposed 

Iran’s acquisition of a nuclear weapons capability and its aggressive regional policy. And we have worked very hard to move the 

Government of Turkey to a point where it will assist us in pressing 

Iran to respond to our demands. 

With respect to Israel, Prime Minister Erdogan, based on humanitarian grounds, criticized Israel’s closure of Gaza. Then a cabinet minister, Ben-Eliezer, visited in late November to meet with 

the Turkish Government. And I think, since that meeting, the government’s criticism has been noticeably muted. But then there was 

a slight by the Israeli deputy foreign minister of the Turkish ambassador during a mid-January meeting, which again created and 


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reignited tensions. Those were dampened when Defense Minister 

Barak went to Ankara. 

Both countries have confirmed their commitment to a strong bilateral relationship between Turkey and Israel. And, as you know, 

Congressman, Turkey was very involved in supporting Israel until 

Gaza, and then the events back and forth since then. But I think 

both countries are trying to get back on track with their relationship. 

We also share the concern about a resolution in Cyprus. And we 

have urged and worked with Turkey to support a settlement of Cyprus. Actually, the very intense negotiations that the Greek and 

Turkish Cypriots have engaged in have been publicly supported by 

Turkey. 

There is a lot that we have to do. And let me just conclude with 

the references to the ecumenical patriarch and to orthodox Christianity, particularly the Halki seminary. We continue to urge the 

Turkish Government to reopen the seminary. The President has 

called for it. I have called for it, both of us in Turkey and in the 

United States to protect and safeguard the patriarch’s property 

rights. And there still is a very vigorous discussion going on about 

this. And when the patriarch visited and I hosted him at the State 

Department, we discussed that at length. 

So there is a constant, ongoing consultation. But I think that the 

context of the relationship and actions is even more concrete and 

perhaps complex than either of us has recognized. 

Mr. ISRAEL. Thank you. 

Mrs. LOWEY. Ms. McCollum. 

Ms. MCCOLLUM. Madam Chair, I would like to yield at this time. 

I am checking facts on something because I think facts are very important to this committee, and I hope to have something to share 

shortly. 

Mrs. LOWEY. Ms. Lee. 

Ms. LEE. Thank you very much, Madam Chair. 

Good afternoon, Madam Secretary. 

Let me just say, like all of us, I have been greatly encouraged 

by the Obama administration’s support for rebuilding the capacity 

of the State Department and its commitment to utilizing diplomatic 

engagement as a means of reducing the risk of conflict and ensuring that the United States takes a leadership role in solving some 

of the most serious problems and sources of tension around the 

world. And your leadership, I just have to say, has been so instrumental in reshaping America’s image and role in the world. And, 

for that, I am really, deeply grateful. 

I recently returned from traveling as part of a bipartisan congressional delegation to the Gulf region led by our esteemed Chair, 

Chairwoman Nita Lowey. And it was quite an amazing visit. You 

were there during that period. We learned a lot. It was an eyeopener. And I just have to thank, again, Chairwoman Lowey. It 

was bipartisan, and it was very, very enlightening. 

IRAN

During this visit, Iran’s nuclear program and the destabilizing 

force of a potential nuclear weapons capacity in that region was 

discussed, and it was really a source of an intense discussion. The 


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weekend of our return, though, I think it was February 19th, a 

Wall Street Journal editorial on Iran concluded—and this is just a 

quote from that editorial: ‘‘Finally, the option of a military strike 

will have to be put squarely on the table.’’ 

Of course, I am a strong opponent of the use of military force, 

but this suggestion deeply troubles me. The possibility of sanctions 

I don’t believe should ever be viewed as a checkmark, you know, 

on the path to war, which is what, actually, the Wall Street Journal editorialized. 

Admiral Mullen recently expressed concern that a military strike 

in Iran would not be decisive, that diplomatic levers would be preferable, and that such a course of action would carry unintended 

consequences. 

So am I correct in characterizing the administration’s position 

that a military strike in Iran is neither appropriate nor preferable 

to other means of resolving this challenge? I mean, you know, I 

was very troubled by what the Wall Street Journal wrote. 

Secretary CLINTON. Well, Congresswoman, the administration 

has consistently said that all options may be on the table, but we 

are trying to set the table with sanctions, with pressure, to change 

the behavior of the Iranian regime. 

That is our focus, that is what we are planning, that is what we 

are doing. And I think, you know, for all the reasons that Admiral 

Mullen referred to, that is our preference, that we proceed as vigorously and intensely as we can to create the conditions for the Iranians’ change of behavior. 

HAITI

Ms. LEE. Great. Thank you very much for that. 

With regard to Haiti, first let me thank you, your team, the leadership of your chief of staff, Cheryl Mills, for the response, the coordinated response, as it related to the tragedy in Haiti. They were, 

quite frankly, phenomenal. And we were able to do quite a bit, as 

Chair of the Congressional Black Caucus, to work with your team 

to help expedite the badly needed resources. 

I wanted to ask you—and I know that we have been in conversations about this, and we forwarded you a letter about the Haitian 

American community, Haitians in the diaspora, finding an organized and structured vehicle for Haitian Americans to return to 

Haiti to provide technical capacity-building assistance in fields critical to reconstruction and development. 

And so I have a bill, which I have shared with your staff, H.R. 

417; it is called ‘‘The Next Steps for Haiti Act.’’ And that would create such a mechanism for establishing a USAID-housed effort that 

would do just this. And I would like to ask you for your consideration for that, because I think organizing in a way that is financed, 

the Haitian American community to return to Haiti to do this, 

would be very helpful. 

Secretary CLINTON. Well, we will certainly take a close look at 

your bill. We share your goal of enlisting the expertise and experience of the Haitian American community, and we are looking for 

ways to do that. 

Ms. LEE. Thank you. 


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And just one more point I would just like to raise, and I want 

to thank you for your help. You know, the three hikers that are in 

Iran, we discussed this when we were in the region somewhat. 

They were students, you know, in my district, University of California, and one is one of my constituents. 

And I am wondering if there is anything that you know that you 

could talk about that would give us a little bit of hope. I heard that 

the families may be allowed to visit them. That was the last I 

heard. But is there any movement at all, from your vantage point? 

Secretary CLINTON. Well, we push every day, because we think 

it is so baseless and unfounded to hold these three young people. 

And we have called on the Iranian regime to release them on humanitarian grounds and, certainly, to permit as much access while 

they are detained to family and loved ones. But I have nothing to 

report. 

Ms. LEE. Okay. Thank you very much. 

Thank you, Madam Chair. 

Mrs. LOWEY. Mr. Rothman. 

Mr. ROTHMAN. Thank you, Madam Chairman. 

Madam Secretary, it is always a great pleasure to see you. And 

let me say, from what we have seen so far, it is my opinion that 

there has never been a more effective or smarter Secretary of State 

in the history of the United States than you, Madam Secretary. 

Secretary CLINTON. Thank you. 

Mr. ROTHMAN. We are enormously proud of you and grateful for 

your service. You are indefatigable, and you are extraordinarily effective for our country. Thank you. 

It is no secret that Pakistan possesses nuclear weapons. It is, I 

think, equally not a secret that if those Pakistani nuclear weapons 

were to fall into the hands of radical Islamic terrorists, that just 

before that happened India probably would take steps to prevent 

that, which makes that region very volatile and makes relations between India and Pakistan so critical. 

So I am interested in your view as to how their relations are 

these days. And does Pakistan understand, the military and the 

government, how unacceptable it would be and how catastrophic, 

in terms of inviting a conflagration in the region which would affect 

the world economy, et cetera, and millions of lives, if they were to 

not do what was necessary to prevent terrorists from overthrowing 

the Government of Pakistan and acquiring Pakistani nuclear weapons? 

Secretary CLINTON. Well, Congressman, that is an extremely important issue, and it is one that we take as a very high priority in 

our efforts with both countries. 

We are heartened by the fact that they are resuming a dialogue. 

They made progress in the last dialogue between then-President 

Musharraf and Prime Minister Singh. It was suspended when 

Musharraf left office; it is now only being resumed. I think both 

countries realize that there are lots of important issues that only 

they can resolve between them. But the United States has encouraged the dialogue, and we obviously hope that it will be productive. 

With respect to Pakistan’s actions, we have been encouraged by 

the results of military and intelligence operations over the last several weeks. It resulted in the capture and detention of some of the 


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key members of the so-called Quetta Shura, very high-ranking 

Taliban leaders, right up there with Mullah Omar. We have also 

been encouraged by the Pakistani military’s successful efforts to 

rout the Taliban from their own country, from Swat to North 

Waziristan. And we are working very closely with the government, 

both the democratically elected government and the military and 

ISI. 

But we believe that the people and Government of Pakistan 

have, over the course of this past year, since I was last here, understood the direct threat to their state’s survival posed by the extremists inside Pakistan; that it is not a problem for someone else; that 

they are operating out of Pakistan; that given the brutality and the 

horrific attacks launched against mosques, markets, universities, 

volleyball games, police stations, ISI headquarters, this has now 

been seen for what it is: a direct assault on the sovereignty and capacity of the Pakistan Government. 

So I am actually quite pleased to see the very vigorous response 

coming forward. 

Mr. ROTHMAN. And that is—I hate to use this word or expression, ‘‘trickle down,’’ because I normally don’t accept that view. But 

the general population in Pakistan gets that, Madam Secretary? 

Secretary CLINTON. It is our impression that, if that were not the 

case, the government and the military would not be proceeding. 

And—— 

Mr. ROTHMAN. May I just go on to one—— 

Secretary CLINTON. Yes. 

Mr. ROTHMAN [continuing]. Fast other question, but it is a powerful one, I think. The President’s request in the Middle East includes $400 million in economic assistance to strengthen the Palestinian Authority as a credible partner in the Middle East peace and 

continue to respond to humanitarian needs in Gaza—$400 million. 

The Palestinian Authority recently celebrated the birthday of the 

Palestinian Authority by naming a square in Ramallah in honor of 

the terrorist who killed 37 Israelis when that terrorist hijacked a 

bus in 1978. 

The Palestinian Authority Prime Minister Salam Fayyad also 

honored a terrorist who just killed an Israeli by stabbing him 

through the window of his car and went to pay a condolence call 

to his family—the murderer’s family. And finally, in a sermon aired 

on Palestinian Authority television on January 29, 2010, an 

unnamed imam made hateful remarks equating Jews with Nazis 

and saying that Jews are the enemies of the Palestinians and that 

the Jews must be killed. This is on Palestinian Authority television 

as recently as January 29, 2010. 

Are you satisfied that the Palestinian Authority is, A, going to 

be a partner for peace with our number one ally in the region, the 

State of Israel, at this stage given what has just recently occurred, 

and/or that the Palestinian Authority is taking the steps to end the 

incitements and the hatred and incitement to murder that is just 

going on right with their consent under their authority? 

Secretary CLINTON. Well, the United States continues to reinforce to the Palestinian Authority leadership that all acts of incitement should be avoided and condemned no matter when and where 

they happen. We consider incitement still to be a problem, but we 


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believe that the situation is much better than it was in the past. 

And in light of that, in response to the televised sermon that you 

were referencing this past Friday, the Palestinian Authority immediately told the United States Government that the speech was inconsistent with Palestinian leadership’s support for a two-state solution, that it did not represent the policies of the Palestinian Authority. And then this past Friday, a sermon promoting religious 

tolerance was delivered in all 1,800 West Bank mosques by direction of the of Palestinian Authority. 

So we see much greater sensitivity. We see fewer incidents of incitement. We still take every single one of them seriously. 

Mr. ROTHMAN. Thank you, Madam Secretary. 

Thank you, Madam Chairman. 

Mrs. LOWEY. Are you ready, Ms. McCollum? 

THE WORLD BANK

Ms. MCCOLLUM. I am ready, and I thank the Chair for her patience, and I know my colleagues were happy to go before me. 

Madam Secretary, I want to, for the record, get something 

straight. I wanted to learn more about how the World Bank functioned, and so I became very involved in learning more about the 

World Bank. It is not a perfect organization. I have disagreements 

with it at times. But Mr. Kirk’s statements here about the World 

Bank were misleading and, in my opinion, were outright false. 

The World Bank has most of its projects closed with the country 

of Iran. There are two that remain open that they are completing. 

These deal with the poorest of the poor in Iran. They deal with 

water, potable water, for children and families to drink and for 

sanitation. That is it. There aren’t any others in the pipeline. 

And I am going to read from the World Bank’s Web site right 

now. ‘‘Does the World Bank Group follow U.N. sanctions on Iran?’’ 

And it goes on to say, Yes. An independent United Nations specialization agency and multilateral development bank, the World Bank 

Group fully complies with U.N. sanctions with Iran and reviews 

payments and contracts under the World Bank financed projects to 

ensure that no loan, no funds are used to finance goods prohibited 

by the U.N. sanctions or for payments to designated entities or individuals. 

And I have been present, as many of us, when President Zoellick 

has been here, and those questions have been put to him before, 

and he has repeatedly stated World Bank policy. And I just felt 

that I had an obligation, having been present at those conversations, to set the record straight. So I thank the Chairwoman for her 

indulgence and letting me get the facts. 

Madam Secretary, I would like to begin now on a lighter note by 

applauding the work that you have done to reestablish the United 

States as a global leader in human rights. I am so excited that you 

are speaking out against child marriage in Yemen; that you are 

pressing Internet freedom in China; and you are taking an aggressive stance against the atrocious, just terrible legislation in Uganda 

to punish its gay and lesbian citizens. You are making the light 

shine brighter on the Statue of Liberty. Thank you so much. 

And I also want to applaud your work with Special Envoy Mitchell, your engagement in the Middle East, and President Obama’s 


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leadership on this is good. I am very pleased to see that we now 

have an ambassador back in Syria, and that we are engaging Syria 

as a partner to bring Syria into the peace process. 

GLOBAL FOOD INITIATIVE

I would like to take the little bit of time I have remaining to talk 

about global food security. The fact that 1 billion people around the 

world are struggling with chronic hunger is a moral issue, it is an 

obstacle to development, it is a strategic concern, and you have 

shown great leadership in this. Just this past September I was in 

Guatemala where 50 percent of the children are physically and 

mentally stunted because of undernutrition. 

It is no doubt that food security is the foundation of all the other 

developmental interests that we make. If students are hungry, they 

can’t learn in school. If parents do not have proper nutrition, HIV 

medications don’t work. So I support the commitment that the 

President and you have made to develop a comprehensive food 

global security strategy. 

Last year I advocated on this subcommittee for reasons needed 

to support new food security initiatives. Before we make decisions 

about a second year of funding, this committee needs to see a detailed plan, however, on how and where the fiscal 2010 funds are 

being invested. So my first question is when can we expect to receive this information? And then, as you know, I am working with 

Senator Lugar on the Global Food Security Act legislation that will 

authorize this major new foreign policy initiative. Could you please 

talk to all of us about your plans for engaging with this committee 

and with Congress to create the support we need to make this new 

Global Food Security Initiative successful? 

Secretary CLINTON. Congresswoman, thank you very, very much. 

And thank you for actually believing in facts and sharing those 

facts with all the rest of us. 

On the Global Food Initiative, we are looking forward to briefing 

not only this committee, but others in the Congress, the Hunger 

Caucus and the like, who care deeply about this important initiative. We will try to get that set up as soon as possible now that 

the budget is up so that we can demonstrate to you what we are 

spending money on and what the way forward will be. But we very 

much appreciate your personal commitment, your work with Senator Lugar on this issue, because we consider it one of the most important initiatives of the Obama administration. 

With respect to Senator Lugar’s legislation, it very much tracks 

with the plans that we have. We think that focusing on small holding agriculture plots, focusing on women who are on average 70 

percent of the farmers who are actually farming those small plots, 

working on technological improvements like better seeds, better irrigation systems, will put together the comprehensive approach to 

give us the chance for a second green revolution. That is our goal. 

You know, the United States was the driver of the first green 

revolution. Norm Borlaug won the Nobel Peace Prize for his unbelievably effective work in leading that effort. So we want to have 

the same kind of impact, and I look forward to having you briefed 

and working with you as we go forward on this together. 

Ms. MCCOLLUM. Thank you. 


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Thank you, Madam Chair. 

Mrs. LOWEY. You were very patient, Mr. Chandler. 

Mr. CHANDLER. Thank you, Madam Chairman. 

And, Secretary Clinton, I am going to get in line behind my colleagues and thank you for taking on what I believe is maybe the 

most difficult job that our country has to offer, and for handling it 

with great aplomb. 

I am going to try to ask you a question that you may find simple 

to answer, and you may find it very difficult. It is very broad. So 

you can handle it any way you want to. 

I think most of the American people believe that our main enemy 

in the world today is Islamic fundamentalism. We see it crop up 

in many different places. The Muslim world stretches, of course, in 

one form or another essentially from the Philippines all the way to 

Morocco, and it covers a very large swath of the human population 

on the planet. It seems like we see one fire after another breaking 

out in different parts of that world. Of course, we have got the dramatic fire in Afghanistan and Pakistan. We deal with fires in Iraq. 

We deal with fires in the West Bank, in Gaza and Israel, Yemen, 

Somalia, all sorts of places. And it seems to me that at any given 

time fires can break out anywhere, and we have to deal with them. 

That may just be the way it is, and it may be the best way to approach the problem. 

But I was wondering if you could give me as concise an idea as 

you can about a broader strategy that our country is involved in 

to try to combat this problem overall. It is a very—again, may be 

a necessary way to combat it, to fight it country by country, but 

it is a broad problem that is very expensive when you do it that 

way, and I am wondering if the administration has a larger, more 

cogent plan to deal with this. 

Secretary CLINTON. Well, Congressman, I think that the President’s vision of outreach to the Muslim world is really at the core 

of his strategic approach. There are more than a billion Muslims, 

and the vast, vast, vast majority of them live peacefully, care about 

everything we care about, from, you know, getting their kids off to 

a good start in life to finding a good job, to taking care of their parents. I mean, it is a small but lethal group of extremists who pervert Islam for the purpose of seizing power, settling grievances, imposing very strict rules on women. They do not reflect the vast majority of their fellow religious believers. 

So when the President spoke in Cairo, it was to send a very clear 

message: We are not at war and we are not against Islam. We are 

not even against Islamic fundamentalism. I mean, people of different religions have different levels of beliefs. We are against terrorists and the use of terrorism to kill innocent people, to intimidate and turn the clock back on the rights and opportunities that 

all people, particularly women, should be entitled to. 

So there are many aspects of our strategy that follow up on the 

President’s vision. How we work in Indonesia is not how we work 

in Yemen. How we work in Pakistan may not be what we do in 

Senegal. And I think it is rooted in your question that we look at 

the full range of opportunities we have to strengthen, deepen and 

broaden our relationships with Muslim majority countries, and that 

is exactly what the President has in mind when he speaks about 


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the American relationship with the Muslim world. Next month he 

will be going to Indonesia, a country that he knows well, and the 

country that has the largest Muslim population in the world. 

I think that our goal is to demonstrate clearly that we are only 

focused on those extremists and terrorists who choose to pervert religion, who choose to pursue political gain and power in the cloak 

of religion, and that we will seek them out. We will find common 

cause with other countries to prevent them from gaining ground 

and finding safe haven to assault innocent people anywhere. 

Mr. CHANDLER. Thank you. 

Mrs. LOWEY. Well, we have you for about 10 more minutes, 

Madam Secretary, and you have extraordinary endurance. You can 

see the admiration for you on both sides of the aisle. And for those 

of us who have traveled with you, we see the courage in speaking 

out against corruption, and, on the other hand, the average person 

looks at you as a rock star. So we are, again, I want to say, very 

fortunate to have you representing our country. We are going to 

have to take a quick second round. 

Several of us have talked about the difficulty in passing this 

budget. Even though we know on this committee how difficult it is 

to send the message, we all agree that it is very important to national security. So I would hope that you and the President would 

use your skills, which you have been very successful at in the 47 

countries you have visited, to convince the American public that 

this is an issue of national security. 

A couple of short, quick questions, and one is directly related to 

the issue of our economy. Iraq has the largest oil resources in the 

world, yet it doesn’t have the ability to maximize its resource to 

generate wealth by increasing production, and export levels are severely handicapped by factors within and outside the government’s 

control. And there are things that Iraqis can do now to improve oil 

production, including fighting corruption, passing hydrocarbon legislation to address legal uncertainties, increasing cooperation between the Kurds and central government. 

Now, I understand there is a successful second round of bidding 

for oil service contracts in December, showing some progress, yet 

serious challenges in the oil sector remain. So what are the realistic prospects for the expansion of Iraq’s oil production over the 

next 5 years? What are the major challenges Iraqis need to overcome in order to meet the oil production expansion goals? 

The United States has provided $53 billion since 2003 for the reconstruction of Iraq. The President is requesting $1.2 billion for police training, institution building, economic performance and essential services. So I would like to say, in light of their wealth, it is 

time they started paying for these services themselves. Can you respond? 

Secretary CLINTON. Yes. Thank you. 

You are right. Iraq conducted two successful oil bid rounds in 

2009, but the significant increases in oil output and revenue are 

still several years in the future. It is going to take probably a decade for some of the less developed fields to come on line. Others 

will be coming on line within, we hope, 3 to 5 years with greater 

production, and the Government of Iraq has to significantly improve its infrastructure to handle the increased output. 


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Now, the Iraqis are increasingly using their own resources to 

fund themselves. And their funding now does exceed the United 

States in terms of their commitment to their own development and 

reconstruction. In 2009, just this past year, the State Department 

adopted guidelines for the Iraqi Government matching of assistance funds which requires the Iraqis to match at least 50 percent, 

and the Iraqis have already matched or exceeded State foreign assistance funds. We have an ambassador in Baghdad who is devoted 

to making sure that the Iraqi Government enforces the matching 

requirements, and we conduct a yearly review of all activities to 

ensure Government of Iraq cost sharing. And on the security side, 

Iraqi spending has already exceeded the Department of Defense’s 

funds since 2006. Iraq spent $9.6 billion on its own security last 

year. It is budgeted to spend $11 billion in 2010, far exceeding our 

spending. 

So we are on the right trajectory. We just have to keep everybody 

pointed where they need to go. 

Mrs. LOWEY. Thank you. And I know that we will be wanting to 

follow this issue, and we appreciate the numbers, and we look forward to continuing the conversation. 

Ms. Granger. 

Ms. GRANGER. Thank you. Before I ask just a brief question, I 

want to say that as the co-chair of the Turkey Caucus, I certainly 

share the Secretary’s statements about the importance of U.S.-Turkey relations and Turkey’s importance to the region and certainly 

to our efforts in Afghanistan. 

PAKISTAN

I have one question having to do with Pakistan. This subcommittee has provided significant funding, $1.2 billion, for nonmilitary aid to Pakistan in fiscal year 2010. That is roughly triple 

what was provided in fiscal year 2008, and there is now a new request for $344 million in the fiscal year 2010 supplemental. I understand there is significant money still in the pipeline, unspent 

funds from prior years. I would like to know how much of that is 

unspent, and if it is unobligated and unspent, then why is there 

an emergency appropriation needed? 

Secretary CLINTON. Congresswoman, I will have to take that for 

the record. We will get back to you immediately because I don’t 

know the exact amount that might be unspent. I don’t think there 

is much, if any, that is unobligated. But let me get to you specifically what is unspent. 

Ms. GRANGER. Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

Mr. Schiff. 

Mr. SCHIFF. Thank you, Madam Chair. 

Madam Secretary, I wanted to applaud you and Ambassador 

Holbrooke for the new approach to foreign aid that you have initiated to try to bypass some of the Beltway bandits and get foreign 

aid out of the Beltway and use indigenous nonprofits to help do the 

work, particularly in Pakistan. And I hope it is a policy that will 

be replicated around the world in terms of our foreign aid program. 

So I am a full supporter. 


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I do think there were some substantive questions that were 

asked, and I had a chance to meet with some of our staff about it 

and have a discussion about the pace of moving in this direction. 

And I think it was Dr. Cullitson wrote a dissent through the State 

Department channels about some of the concerns he had expressed 

that there wasn’t the capacity, for example, in Pakistan and maybe 

Afghanistan to undertake this effort so quickly. 

I am all for doing this as fast as it can possibly be done, and I 

think it is a great move. But I wanted to get your sense and how 

you think it is going, whether—I don’t know if those concerns have 

percolated to you, but whether you think there is any legitimacy 

to them and whether any retooling needs to happen. 

Secretary CLINTON. Well, Congressman, I certainly think it is 

quite challenging to identify, vet, fund, hold accountable, subject to 

oversight new recipients of aid. That includes the Afghanistan Government where we have a process where we are certifying ministries. If we believe they can be held accountable for money we 

give them, we do so, but there are very few that yet have met that 

standard for us. Two of the NGOs that are on the ground actually 

performing the functions—which is one of the reasons why we are 

trying to get more aid in a direct line so it is USAID personnel on 

the ground, State Department personnel on the ground. But it is 

challenging. 

And similarly in Pakistan, there were a number of decisions that 

had been made in the past to fund very worthy organizations to 

provide services, education, rule of law, and training those kinds of 

important programs. But, the circumstances under which they operated were practically impossible. So even the best-intentioned, 

best-trained, most honest grant recipient couldn’t get into the 

FATA, couldn’t deliver the services. 

So there are security problems, there are corruption problems, 

capacity problems. But we did make the decision to look at every 

single grant and just hold them to the highest possible standard. 

We will continue to do that. But we have undertaken a very big 

task to try to supervise where the money goes and then try to find 

what the results are so that we can tell you that we are actually 

making progress. But I don’t know any other way how to proceed. 

And again, I would hope that you and others would look at this 

regional stabilization strategy so that you can see what we are trying to do and also see the results, because, you know, there are a 

lot of positive things that we have gotten done: the National Solidarity Programme, which I know this committee supports. 

But, for example, one of the first questions that I got when I 

came to the Congress last year is, Why don’t we do anything about 

Afghanistan’s agriculture? And I said, We are going to. That is one 

of our highest priorities. Well, now we have 89 agricultural experts 

on the ground, 64 from USDA, 25 from USAID. We have a rapid 

response team where USAID is issuing vouchers to farmers in 18 

provinces, and in particular Helmand and Kandahar, for them to 

get better seeds and better fertilizer and the like. 

I mean, we are really moving on the ground, but sometimes the 

complexity of what we are trying to do kind of interferes with us 

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cessful it is, yet how far we have to go. But that is the full range 

of what we are trying to get our arms around. 

Mr. SCHIFF. Thank you. 

Mrs. LOWEY. Madam Secretary, you have been very generous 

with your time. We have one, two, three, four, five, six Members. 

Ms. MCCOLLUM. I have to go to Budget, Madam Chair. 

Mrs. LOWEY. We have five Members who are signaling they 

would like to ask you a question. If they can control themselves 

and ask the question in 1 minute, would that be good for you? 

Secretary CLINTON. Yes; 1-minute question and 1-minute answer, 

we will try to do that. 

Mrs. LOWEY. Okay. Mr. Rehberg. 

Mr. REHBERG. Thank you, Madam Chair. And I assume we can 

ask unanimous consent to keep the record open for a period of time 

so we can share additional questions with the Secretary. 

MCC

I have more on UNICEF and orphans in Haiti and such. My 

question is quick. Having been a former executive branch person 

who—I separated a program very popular to our administration 

which at that time was the Consensus Council. After our administration left, it got moved back into an agency, and it ultimately disappeared. I look at some of the press on the MCC, or the Millennium Challenge, and I see that there is some movement on the 

part of the administration to consider moving that independent 

agency back into another agency rather than it remaining independent. Can you give us some assurances? Because your request 

is the lowest that we have ever seen from the Millennium Challenge. It is not as low as we have appropriated it, but it is the lowest request that we have seen. Could you give us some assurances 

that that is not going to be rolled into another agency and then ultimately—— 

Secretary CLINTON. Congressman, we have no such plans, and I 

believe we have a significant increase for MCC this year. Am I 

looking around here? Yes, we have a 15 percent increase in our 

budget request. 

Mr. REHBERG. Mine shows 1.28. Is that not correct? Well, I don’t 

have it in front of me right this minute. Our appropriations was 

1.1-, but that wasn’t the request from the administration the last 

time. 

Secretary CLINTON. Well, we will get you the—but rest assured, 

I support MCC. I Chair the Board. I have frequently spoken about 

the merits of MCC. 

Mr. REHBERG. So the press reports are just speculation that it is 

going to be moved to a different agency? 

Secretary CLINTON. Well, I can’t imagine that there would be 

anything wrong in any press reports. So I don’t know how to respond. 

Mr. REHBERG. I just wanted to make sure that that press report 

was wrong. 

Secretary CLINTON. Yes, sir. 

Mr. REHBERG. Thank you. 

Mrs. LOWEY. Just for the record, we were at 1.1- last year. I 

think you have asked for 1.27-. And it is my recollection that the 


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administration asked for a very generous amount. The Senate cut 

it back tremendously, and in negotiations we have managed to 

bring it up a little bit. But I know there will be a great deal of discussion on that issue and focusing on—— 

Mr. REHBERG. Well, that was my point. They asked for more before, and the Senate or—I was just wondering why the reduction 

on their ask. 

Mrs. LOWEY. Maybe they were just being more realistic, but you 

can certainly request that of the Secretary. 

Ms. Lee. 

PEPFAR

Ms. LEE. Thank you very much, Madam Chair. 

Very quickly, let me just thank you, first of all, once again, for 

bringing on Dr. Eric Goosby to run our global programs through 

the President’s Emergency Plan for AIDS Relief. Of course he is a 

constituent, but he is a phenomenal person, and thank you so 

much for that. 

Let me just ask you about PEPFAR, the Global Fund, and how 

do these initiatives fit within the new Global Health Initiative? I 

am concerned that PEPFAR—it is my understanding that we have 

$48 billion. That is what our commitment was for 5 years, and now 

it seems like it is $51 billion over 6 years. So I want to make sure, 

because the need is still very great, that we don’t back off of our 

commitment to PEPFAR as well as the Global Fund, which President Clinton actually signed the Global Aids and Tuberculosis Relief Act in 2000 which set the framework for the Global Fund. 

Secretary CLINTON. We are committed to PEPFAR, and what Dr. 

Goosby is doing, which I fully support, is trying to figure out how 

we can help countries whom we are supporting with treatment 

funds begin to build sustainable health systems. Because one of the 

things that we are aware of is that oftentimes countries don’t follow through on their own budget commitments to health systems 

because we and other donors are in there providing the money. So 

we want to do everything possible to continue to treat and increase 

the number of people on treatment, but we want to build something more institutional. Otherwise, it is not sustainable. So that 

is what we are working on. 

Mrs. LOWEY. Mr. Kirk. 

Mr. KIRK. Thank you. 

WORLD BANK

Since we were talking about the World Bank—and I think I am 

the only Member of Congress who actually has worked for the 

World Bank—let me be blisteringly specific and legal. No World 

Bank projects have been recently approved for Iran, but several 

World Bank projects have been approved, and money has not been 

provided. According to the World Bank’s own Web site, as of 10 

minutes ago, two major projects—the northern cities water project, 

and the Alborz land management project—have $258 million in 

undisbursed, nonspent World Bank—and I will be legal—International Bank for Reconstruction Development, IBRD, funds that 

are pending. 


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Now, as you know the World Bank as well as I do, the IBRD does 

not support projects. Checks from the IBRD under its charter at 

the Bretton Woods conference is paid directly to the Finance Ministry of the Islamic Republic of Iran, a government which you have 

said has stolen an election and is subject to a creeping military 

coup. 

So the question that I would have is, will the administration seek 

to block the disbursement of $258 million in World Bank funds 

from 1818 H Street, Washington, D.C., to support the northern cities water project and the Alborz land management project, which 

would be paid directly to the Finance Ministry of the Islamic Republic of Iran? 

Secretary CLINTON. Well, Congressman, we will certainly take 

this up with the World Bank. As you point out, the funds have not 

been disbursed. I don’t, sitting here today, know the reasons why 

they have not been disbursed, but we will look into it immediately. 

Mr. KIRK. Let me briefly interrupt you. These funds have been 

disbursed on a regular basis. So we have seen hundreds of millions 

of dollars transferred from the World Bank to the Islamic Republic 

of Iran’s Finance Ministry. You have another $258 million to go. So 

now that over 400 House Members and Senate Members have 

voted to cut off gasoline for Iran, certainly we could stop the disbursement of assistance. 

You and I were not born yesterday. We would know that the 

money paid to the Islamic Republic of Iran’s Finance Ministry is 

extremely fungible. I would suggest the analogy is we would certainly have cut off money going from an international institution 

to the Nazi Treasury, even if the Nazis claimed that it was going 

to support some project. 

Secretary CLINTON. Well, Congressman, we will raise this with 

the World Bank, and we will get back to you. 

Mr. KIRK. Thank you. 

Mrs. LOWEY. Mr. Rothman. 

Mr. ROTHMAN. In 1 minute, Madam Secretary, will you tell the 

American people why, if they would like a safer world and don’t 

want to invest rightfully so, or are reluctant to invest American 

men and women’s blood in defending what needs to be defended 

overseas to protect our beloved United States of America, it is important to have diplomats and the resources for those diplomats? 

Secretary CLINTON. Well, your question reminds me of that famous saying by Winston Churchill: Jaw, jaw is always better than 

war, war. Talk and talk and talk and talk, and sometimes it tries 

the patience, and it makes people crazy with frustration. But talking and diplomatic activity and engagement is far preferable to 

having to engage in war. 

Mr. ROTHMAN. At 1 percent of the budget. 

Secretary CLINTON. Yes, that is right. 

Mr. ROTHMAN. Thank you, Madam Secretary. 

Mrs. LOWEY. Madam Secretary, thank you so much for sharing 

your wisdom with us. Thank you for your eloquence. Thank you for 

representing us throughout the world. We personally appreciate it, 

and we look forward to working with you. Thank you very much. 

The meeting is adjourned. 


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(97) 

THURSDAY, MARCH 4, 2010. 

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

WITNESS 

DR. RAJIV SHAH, ADMINISTRATOR, UNITED STATES AGENCY FOR 

INTERNATIONAL DEVELOPMENT 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. The Subcommittee on State and Foreign Operations 

will come to order. Today we welcome Dr. Rajiv Shah, Administrator of the U.S. Agency for International Development, for his 

first official appearance before our subcommittee. I am so pleased, 

Dr. Shah, that you assumed these responsibilities. We are really 

delighted that you are at the helm of USAID and appreciate your 

leadership in coordinating the United States Government response 

to the crisis in Haiti, as well as the tireless efforts of your colleagues at USAID. We look forward to discussing your long-term 

vision for development and global health, and we really appreciate 

your taking the time to join us here today. 

As I noted last week, the mounting federal debt and budget deficits, as well as the need to create jobs and support economic recovery, will make it difficult to sustain all of the priorities outlined in 

the President’s fiscal year 2011 budget for USAID. Within the 

minimal proposed increases in USAID’s operating expenses and humanitarian assistance, funding is requested to continue the development leadership initiative, which has been a priority of this subcommittee. With these additional staff, USAID should decrease its 

reliance on contractors, reduce the size of contracts and grants, and 

increase direct oversight of these grants and contracts, leading to 

better performance and outcomes. 

In addition to an overview of how the DLI has been implemented 

over the past three years, I hope you will describe the process to 

ensure that the 200 new foreign service officers included in the fiscal year 2011 budget have the technical skills to carry out the Administration’s and Congress’s programmatic priorities. While efforts are underway to ensure that new hires have expertise in climate change and agriculture, experts on safe water, gender integration, and microfinance are also critical to the agency. 

The President’s proposed assistance budget prioritized three 

issues: global health, agricultural development and food security, 

and climate change. These increases, however, are funded in part 

by cuts in other areas, including many congressional development 

priorities. Basic education is reduced by $82 million, safe water 

programs by $53 million, biodiversity programs $92 million. I hope 

you will explain for us how the budget for these programs was determined. 


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98 

For example, is the reduced funding a result of reduced demand? 

In the case of education, with 72 million children in the developing 

world not in school, this surely cannot be the case. Education is the 

essential foundation for health, economic development, gender 

equality, and long-term security. With the growing youth bulge in 

the developing world, children must be given the opportunity to become productive contributors to their societies. Access to education 

is the first vital step in this process. 

The budget’s request of $1.35 billion for food security and agricultural development would support the Feed for the Future strategy an accountable and realistic plan that should increase agricultural development, especially among the poorest of the poor. How 

will USAID coordinate with other private and multilateral efforts 

in this arena? Will the Millennium Challenge Corporation investments in agriculture be adjusted to ensure that the core principles 

of this initiative are incorporated in their programs? 

Climate change is also a significant priority in this budget. 

Though increases for this initiative are primarily funded through 

climate funds at the Department of Treasury, I am concerned that 

USAID does not currently have extensive expertise in this area, 

and the current staffing plan calls for only 15 new officers. How 

does USAID intend to provide proper oversight and management of 

this new initiative? Because successful programs have maximum 

impact when efforts are well coordinated, I hope you will assure us 

that USAID’s plans to coordinate with multilateral funds and the 

State Department, as well as provide insight into who is taking the 

lead on climate accord negotiations. 

Finally, the global health initiative provides a long overdue opportunity to fully integrate our health programs. The budget includes a $200 million reserve fund for GHI-plus countries. How will 

these countries be determined? What criteria will be used to make 

the selection? While global health programs have effectively demonstrated impact and tracked their results, the GHI strategy calls 

for stronger monitoring and evaluation. Please explain the additional efforts to achieve greater accountability for all global health 

programs, as well as steps you are taking to ensure that any 

changes bolster, not weaken, the effectiveness of current health 

programs. 

Both the food security and GHI strategies prioritize the inclusion 

of women and girls. I have consistently voiced a need for women 

to be in the front and center in the development agenda, and I am 

encouraged by their inclusion in these initiatives. Can you outline 

how programs will be structured to ensure that this priority becomes a reality? Are there any other steps USAID is taking to ensure gender considerations are integrated across all programs? As 

these initiatives progress and USAID’s workforce grows, you must 

have the capacity to develop robust policy options, outlining budgetary needs, monitor and evaluate programs. What are you doing 

to address these gaps in USAID internal capacity? Can you speak 

to your involvement in the presidential study directive and the 

Quadrennial Diplomacy and Development Review processes? Do 

you believe the outcome of these efforts will change or improve program implementation? 


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99 

Dr. Shah, I look forward to our discussion today and working 

closely with you. And before we move to your testimony, let me 

turn to Ms. Granger, the Ranking Member, for her opening statement. Ms. Granger. 

OPENING REMARKS OF MS. GRANGER

Ms. GRANGER. Thank you, Madam chair. I am very pleased, Dr. 

Shah, that you are with us today to provide testimony and answer 

questions about fiscal year 2011 and your budget request. The Administration’s fiscal year 2011 request for the State and Foreign 

Operations Bill, as you know, is $56.6 million, which is a doubledigit increase over the fiscal year 2010 regular appropriation. Such 

a large increase comes at a time when domestic agencies are being 

cut or held at last year’s levels. 

I have many questions about such large funding increases going 

abroad during these difficult economic times at home. I look forward to hearing the justification for these increases, including the 

funds requested for USAID’s development workforce. I want to 

know what we are achieving with the 700 staff already funded, and 

if 200 additional officers are required. As you know, I have advocated for increasing staff in order to ensure the proper balance of 

diplomacy, development, and defense so that we can more effective 

achieve our national security goals. But these investments, of 

course, have to be made wisely. 

I also hope the new funding requested for the Administration’s 

initiatives, like global health, food security, and climate change, 

will be addressed. The increases requested for each are significant, 

and they come on top of new resources that were provided in fiscal 

year 2010. We need to better understand how these funds will be 

programmed, what is new and different about these new initiatives, and if such large increases can be effectively absorbed. 

Another topic I hope the Administrator will address is oversight 

of foreign assistance dollars. Proper management and efficient use 

of these resources are key priorities for me, particularly during this 

challenging economic period. I look forward to working together 

with the Chair, as always, and Dr. Shah to ensure that resources 

provided by this subcommittee are responsibly programmed in the 

field. I know that only days after you were sworn in as Administrator, you were tapped to lead the U.S. government’s response to 

the devastating earthquake in Haiti. That was an enormous responsibility, so we did not get to have some time to talk about the 

subcommittee and your vision for the agency you lead. I certainly 

understand that, but I hope we can begin that conversation today. 

Thank you very much, and thank you, Madam Chair, as always. 

Mrs. LOWEY. Thank you. Administrator Shah, your full statement will be placed in the record. Please feel free to proceed as you 

will. If you choose to summarize your oral statement, I know we 

will leave time for questions. Please proceed, and thank you again 

for being with us today. 

Dr. SHAH. Thank you, Chairwoman Lowey, Ranking Member 

Granger, and Members of the committee. I am honored to be with 

you today to support the President’s fiscal year 2011 Foreign Operations Budget Request. 


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As you know, just a few days after my swearing in, I was tapped 

to help lead our effort to respond to the earthquake that occurred 

in Haiti. And this past weekend, Chile suffered a devastating 

earthquake as well. Our thoughts and prayers, as are yours, have 

been with the people of Chile and Haiti as we provide humanitarian relief and assistance. Our response in Haiti was targeted, 

swift and aggressive. Working with partners from across the federal government, we launched the largest and most successful 

international urban search and rescue effort ever. We created a robust urban food distribution system that reached more than 3 million individuals with critical food supplies at a critical time. And 

we increased the nation’s infrastructure, especially the airport and 

the seaport, allowing other countries to effectively participate in 

the relief operation. 

Our coordinated medical assistance, and direct services provided 

by U.S. personnel, allowed for treatment for more than 30,000 patients and performed hundreds of surgeries, saving life and limb. 

Haiti faces a long and steep road to recovery, and as the operation 

now transitions from rescue to recovery, we will continue to stand 

by the people of Haiti, and appreciate the support of this committee 

in doing so. 

At the same time, we will not lose sight of our other priorities, 

many of which you have summarized for us, including the important work USAID does to help countries achieve their development 

goals, and the critical need to strengthen our own capacity and our 

own accountability in pursuit of this mission. As President Obama 

said in Oslo last December, security does not exist when people do 

not have access to enough food or clean water or medicine and shelter that they need to survive. 

Secretary Clinton strongly shares this view, and has asked us to 

elevate development to stand with diplomacy and defense as part 

of our nation’s foreign policy. We are doing so through the Presidential Study Directive on U.S. development policy and the Quadrennial Diplomacy and Development Review. Both processes allow 

for significant presence and representation of USAID and for myself. 

The fiscal year 2011 budget request will support development 

priorities that contribute directly to our national security. Specifically, it focuses on three areas: critical frontline states, urgent global challenges, and aid effectiveness and accountability. 

In critical frontline states, we propose spending $7.7 billion in 

State and USAID assistance in support for Afghanistan, Pakistan, 

and Iraq. We have made some progress in each of these countries, 

but we realize that significant challenges remain. Our focus on Afghanistan has been achieving greater stability and security, and we 

are beginning to see major improvements in health, education, and 

agriculture. 

The Administration’s funding request going forward is designed 

to align with the President’s Afghanistan strategy and is designed 

to encourage the stability and opportunity that allows for our military to draw down in time. In Pakistan, our request supports ongoing efforts to combat extremism, promote economic opportunities, 

strengthen democratic institutions, and build a long-term partnership with the people of Pakistan. The funding increase in fiscal 


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year 2011 will help USAID reach approximately 60,000 more children with nutrition programs, increase enrollment in both primary 

and secondary schools by over 1 million learners, and support more 

than 500,000 farm households to improve their agricultural productivity. 

In Iraq, we have transitioned to a new phase in our civilian assistance relationship, shifting away from core reconstruction activities towards the provision of assistance to bolster local capacity in 

line with Iraqi priorities. USAID is promoting economic development, particularly in the private sector, strengthening agriculture 

and focusing in health and education. 

Our second budget priority is meeting urgent global challenges. In this area, we request $14.6 billion in State and USAID assistance to support local and global solutions to core transnational 

problems. In global health, we are requesting $8.5 billion in State 

and USAID assistance in support of the President’s Global Health 

Initiative. With this additional funding, we will build on our strong 

record of success in saving lives in HIV/AIDS treatment, TB, and 

malaria control, and seek to focus on areas where progress has 

lagged, such as obstetric care, newborn care, and basic nutrition for 

targeted populations. In food security, we are proposing to invest $1.2 billion for State 

and USAID programs in food security and agriculture, in addition 

to $200 million set aside for nutrition. With these additional funds, 

we will work in countries in Africa, Central America, and Asia, to 

combat the currently rising trend of extreme poverty and unnecessary hunger and starvation. In climate change, we propose to invest $646 million for State and USAID programs, part of the Administration’s overall $1.4 billion request on climate change. USAID will support the implementation of focused programs in sustainable landscape investments, 

as well as working with countries to develop low carbon development strategies and clean energy supply and energy sector reform. 

In humanitarian assistance, State and USAID propose to invest 

$4.2 billion. This funding allows us to assist internally displaced 

persons, refugees, and victims of armed conflict and natural disasters worldwide, such as the disasters in Haiti and Chile. With 

these combined investments, we will save lives and help make people less vulnerable to extreme poverty. 

Our third major budget priority focuses on enhancing USAID’s 

effectiveness and accountability by investing $1.7 billion in ongoing 

rebuilding efforts for USAID’s personnel and infrastructure. 

I want to thank the committee for its foresight and leadership in 

this area, especially with respect to the Development and Leadership Initiative, which we believe is central to helping our agency 

rebuild and be successful. We are currently rebuilding our capabilities in evaluation, planning, budget management, and policy research to ensure that we can incorporate the best practices of development and innovations from the field in our work going forward. 

We also seek to recruit, hire, and retain best-in-class development professionals and accelerate the pace at which we deploy personnel to our priority areas and priority countries. By reducing our 

reliance on contractors to design and evaluate programs, we hope 


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to save taxpayer dollars and also enable greater oversight and 

more effective program implementation. 

I know this is a time of great economic strain for so many Americans. For every dollar we invest, we must show results. That is 

why this budget supports programs vital to our national security 

and our ability to account for outcomes. The United States must be 

able to exercise global leadership to help countries as they develop 

more stable and sustainable foundations for security and wellbeing. This requires the effective use of all instruments of our national security, including development, and it requires a relentless 

focus on results and accountability, a focus we embrace with enthusiasm. 

Thank you very much, and I look forward to answering your specific questions as we go through the hearing. Thank you. 

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Mrs. LOWEY. Thank you. I gather there is a vote, one 15-minute 

vote, followed by two 5-minute votes. 

But let me proceed quickly because our discussion, I know, will 

be very important. I am going to be calling on Members based on 

seniority who were present when the hearing was called to order, 

and I will alternate between majority and minority. And we are 

going to each keep our questions to five minutes, including myself. 

As you well know, I am a strong believer in coordination and 

have been encouraging USAID and the State Department to improve and streamline their interagency effort. I can still remember 

a trip not too long ago to Africa where I made a point of asking 

the Ambassador, bring everyone together who is doing anything. 

Well, it was a wonderful gathering, about 50 people. No one knew 

anybody, and I thought it was a very productive meeting. And I 

think what was key there was that everyone was doing excellent 

work, but they were doing it in their own stovepipes of excellence, 

and they really did not know each other. 

So I think it is absolutely essential that we bring people together, and that the agency knows who is doing things in the private sector. It is absolutely essential, not only to be effective, but 

to save dollars. 

I know that Secretary Clinton shares this strong interest in coordination, and her efforts to establish food security and global 

health strategies reflect this vision, and I am pleased you have 

made this a priority. Maybe you can tell us how you are incorporating the principle of coordination into USAID programs. I was 

pleased to see USAID/DOD collaboration in Haiti as the lead agency in the Haitian relief efforts, and what lessons have you learned. 

So perhaps we will begin with those two. Thank you. 

Dr. SHAH. Thank you, Madam Chairwoman. I would like to start 

with global health. That is an area where I am actually very proud 

of the way we are approaching our work. We have established a 

governance group for global health that includes the leaders of all 

of the major implementing programs, from NIH to CDC to USAID 

to the State Department’s Office of the Global AIDS coordinator. 

Mrs. LOWEY. What about international? 

Dr. SHAH. Well, we are doing that here in Washington, and we 

have established an operational group that will focus primarily on 

USAID programs working with CDC and PEPFAR, since those are 

the largest groups present in countries and in Missions. 

Mrs. LOWEY. Would you bring the information at least to these 

gatherings as to what are the countries doing, certainly, and what 

the private—CGI is doing so much, Nike—I can go on, Bill Gates. 

Dr. SHAH. Absolutely. 

Mrs. LOWEY. And Melinda. 

Dr. SHAH. So thank you. We have reached out, for example, to 

more than 20 countries. We are surveying the specific full-range of 

health-related activities, both in U.S. Government programs and 

across major partners, foundations, other donors, and multilateral 

institutions, like the Global Alliance for Vaccines and Immunization and the Global Fund, both of which we have reached out to 

specifically. What we will then do is select a smaller subset of those 

countries for the initial implementation. 


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That implementation will involve us sitting down, looking at all 

of our contracts and programs, literally unpacking the portfolio of 

work, and entering into a new long-term partnership with the government and with other partners that is much more systems oriented, much more focused on a set of outcomes that are not simply 

disease-specific treatment outcomes, but maternal health outcomes, 

child health outcomes, and where all of our partners that receive 

our funds have a very specific exit strategy. 

It may be a long time before they are able to exit and the governments can take over the responsibilities of providing services, but 

they nevertheless need to be thinking about sustainability and exit 

from the beginning. And I think it is going to be a challenging process to go through that because it will involve rewriting contracts, 

restructuring programs, setting new outcomes. But it puts our entire programmatic approach on the table, as opposed to simply programming in a small increment of additional resources. And by 

doing this, we hope to significantly improve the effectiveness. 

I was talking just yesterday with the Global Alliance for Vaccines 

and Immunization. They have set aside nearly a billion dollars for 

health system strengthening, and we can leverage some of those 

funds by encouraging them to partner with us in these countries. 

So we will use the themes of focus, of leverage, of being very results oriented, and fundamentally changing the way we do our contract and outsourcing work to be systems oriented and more respectful of and in a deeper partnership with government. And that 

process is already underway. I suspect we will have selected countries by the end of April based on country feedback, based on other 

partners, and based on a country’s commitments to take forward 

and sustain these big investments in their health sector. 

HAITI

Mrs. LOWEY. Tell us about coordination in Haiti. I think it is important that we understand how that has been proceeding. 

Dr. SHAH. So in Haiti we have set up an office of the relief coordinator as part of the USAID group there, and we have a joint task 

force with the military, JTF Haiti. Between those two organizations, we are effectively allowing the entire humanitarian community to source tasks to the U.S. military in order to complete those 

humanitarian assistance tasks. And we track those taskings. We 

organize and prioritize them. And we do really work together as a 

community. In order to achieve many of the outcomes we have 

talked about, we leveraged heavily the U.S. Department of Agriculture, the Department of Health and Human Services, a number 

of the U.N. partners, but it really was that Office of the Relief Coordinator we established that brought together the military, the 

international humanitarian assistance groups, and other U.S. agencies in what is a challenging environment, but I think a far more 

effective coordinating environment. 

The feedback I have gotten from NGO partners has been that 

their experience of engaging in that process and with the military 

has been better than in prior disaster relief situations, and we hope 

that this will become a model going forward for how to expand and 

coordinate the effort and humanitarian responses. 


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Mrs. LOWEY. Before I turn to Ms. Granger, I would like to say 

that I hope you can keep us up to date on that because it is well 

known that there are thousands of NGOs that were operating in 

Haiti before this disaster, and currently are operating in Haiti. And 

many people will comment, so what were they doing? Now we know 

because we interact with these people—we know that they are good 

people accomplishing good work, and the challenges are enormous. 

But I think it is very important that when contracts are given, and 

when NGOs are functioning, that there is really an understanding 

about how their work fits in as part of the whole, and that we have 

expert accountability sessions. I think it is absolutely essential. 

Again, where I started, when the economy is in such distress 

here—and the American people are good people; they want to help. 

But they want to be sure that the money is not going down the 

tubes to keep people employed, but that it is going to do good work. 

So I think this whole issue of coordination, accountability, working 

with all of the actors in the region, and your ability to let us know 

who is doing what and what is needed at any time is really essential. 

Thank you. Ms. Granger. 

Ms. GRANGER. Thank you. I want to return to your emphasis on 

global health. I know that pandemics are a global issue, by definition. I served on the Labor and HHS subcommittee, and that is 

when I first worked with pandemics. I know that USAID has made 

significant efforts to combat these deadly viruses. 

On February 24th, the World Health Organization noted specific 

concerns about the recent spread of a virus in West Africa and the 

possibility of future outbreaks when winter arrives in the southern 

hemisphere. I am also still keeping my eye on H5N1, which has already claimed, as you know, lives in Egypt and Vietnam this year. 

I know USAID has taken steps to acquire pre-pandemic vaccines 

for your effort to combat these viruses on a global scale. I am also 

aware of the important role of antivirals, such as Tamiflu, in combating influenza pandemics. In 2009, the Congress provided $50 

million and reprogrammed $35 million to prepare for the H1N1 

pandemic. How are these funds being programmed? And now that 

the H1N1 thankfully was not as severe as predicted, have USAID’s 

plans changed? Specifically, are both vaccines and antivirals being 

stockpiled and at what levels? What progress is being made? I am 

very concerned about the ability to have these plans and antiviral 

resources in place. Could you address that? 

Dr. SHAH. Well, thank you. We are very specifically focused on 

this. We have been working in a close partnership with both the 

World Health Organization, as part of the larger international pandemic influenza response and surveillance activity, and with CDC 

in that context. I request the opportunity to get back to you on the 

specifics of what we have stockpiled and which particular commodities and products we have purchased and in what volumes with 

respect to that. 

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Ms. GRANGER. And also how you determine the amount of those 

antivirals. If you could get back to me on that, I would appreciate 

it. Since I have a little more time, I would also like to ask you one 

more question. I know that in the previous Administration, the 

USAID Administrator was dual-hatted as a Director of Foreign Assistance, a position that was created within the State Department. 

So I would like to know what you are going to do about that position. And again, returning to what the Chair asked about, the coordination of foreign policy agencies, what principles will be applied in that coordination, and delivery approaches? 

Dr. SHAH. Well, thank you. I think we are very closely coordinated with the State Department. In fact, I report to the Secretary, 

and we take that very seriously. We have a regular development 

meeting, which is a standing essentially one-on-one discussion. We 

have a series of other ways to report and plug in on a set of priorities. 

In terms of the specific question of the organizational structure, 

we are working through a lot of that through the QDDR and the 

PSD processes. Those processes are now in a much more specific 

operational frame. So phase two of the QDDR, which is the phase 

we are currently in, is working specifically to develop a handful of 

operational plans that we can then propose in the April/May time 

frame. And that, I think, will address a number of these things. 

I would just return to one point that I made previously when I 

was confirmed, which was simply that the Secretary has been very 

committed, as is the White House and our own agency, to rebuilding our capacities to be more effective and more accountable. So we 

are building our policy planning capacity. We are reshaping our 

evaluation work, and hired Ruth Levine, a preeminent scholar from 

the Center for Global Development, to lead that effort. We have a 

new effort underway to build our budgeting processes in a way that 

allows for more transparency and accountability because ultimately 

accountability is making those tough tradeoffs. And we want to be 

held responsible for that. 

So we are doing that in partnership with the State Department. 

And as the QDDR rolls out recommendations, I think that will 

make that more concrete. 

Ms. GRANGER. Thank you, Madam Chair. 

Mrs. LOWEY. What we will do is recess, probably for about 15 

minutes. 

Dr. SHAH. Thank you. 

[Recess] 

Mrs. LOWEY. Thank you for waiting for us, and the hearing will 

come to order. And we turn to Mr. Israel or Ms. McCollum. 

Ms. MCCOLLUM. Thank you, Madam Chair. Well—— 

Mr. ISRAEL. Actually, she asks better questions than I do anyway. 

Ms. MCCOLLUM. Well, actually, technically Mr. Israel and I got 

here together, both on the committee and the Congress. Good 

morning, Doctor, and welcome to all of your hardworking staff that 

are with you. Your vision to restore USAID as the world’s premiere 

development agency is critically important to the success of this 

country’s international policies. As a member of the subcommittee, 

I am committed to making this vision a reality. I want to evaluate 


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and strengthen USAID and ensure your agency has the authority 

and the resources it needs to focus on long-term development rather than crisis response and contract management. 

This is an exciting moment for USAID and for global development. In this past year, President Obama has launched two major 

initiatives, global food security and global health. I applaud these 

commitments from the President. Food security and global health 

are my highest priorities in global development. Following today’s 

hearing, I would like to talk to you more about both of these efforts. 

At least week’s hearing, I had the opportunity to discuss with 

Secretary Clinton about food security, and I would like to discuss 

global security here with you today. Specifically, I want to talk 

about America’s efforts to save the lives of children around the 

world. As a physician, as a development expert, and a parent, you 

know better than anyone that the most basic measure of a country’s development is whether or not its children survive. You know 

that dollar for dollar, U.S. investments in child survival produce 

some of the best results because we have simple, inexpensive, and 

effective interventions. And I am encouraged to see the global 

health initiative is beginning to rebalance U.S. global health investments. 

Child survival and maternal health, neglected disease, and family planning are finally starting to receive more resources, but the 

rebalancing must continue. According to the Kaiser Foundation, in 

the first year of a global health initiative, just 6 percent of the total 

$8.6 billion went towards maternal child health. HIV programs received 64 percent. We need to do more to save the lives of children. 

Child deaths are now at the lowest level in history, but we still lose 

24,000 under the age of five every day, 24,000 children under the 

age of five every day. 

The September 9th article in the Lancet found the rate of decline 

under five mortality as so grossly insufficient to have the Millennium Development goals by 2015, particularly in sub-Saharan Africa and South Asia. Your global health initiative sets a goal of saving 3 million children, but it also states that nearly 9 million children die every year from preventable cause. 

I am going to challenge you and the President to set a more ambitious goal. With political will, we can close the gap between 3 

million and 9 million children’s death. This year’s budget includes 

an increase for child survival and maternal health. So here are my 

questions. Please share with the committee how this investment 

will be targeted and what results the funding will produce. How do 

investments that save the lives of children and mothers fit into the 

overall global health initiative? And how will the new focus on integration across all global health programs work in practice? 

You are a numbers person, so I would like to hear some of the 

analysis from you as to what we can expect from our return in investment and saving the lives of children. Thank you, Madam 

Chair. 

Dr. SHAH. Over the past 10 years, we have had tremendous 

progress in maternal and child health in both of those groups. As 

you identify, maternal and child health indicators, like neonatal 

mortality and maternal mortality have lagged and are projected to 


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continue to lag such that we will not hit the MDGs. So the global 

health initiative is targeting exactly that statistical gap between 

hitting the MDGs for those indicators and missing that measure of 

success. And so we will basically focus on a few interventions to 

help make that happen. 

The first is integration at the health system level. By unpacking 

our projects and putting them back together against a set of specific indicators that relate to maternal and child health, we will effectively have significant additional resources going to child health 

and to maternal health. 

So, for example, we will look at existing implementation of 

PEPFAR projects. And in cases where we can get both the mandated outcomes for those programs as well as use those resources 

to help strengthen the health system and train health workers to 

be skilled attendants at birth, for instance, that is a win-win, 

where you can use existing resources to get better maternal health 

outcomes in a focused way. 

We will do that also with our GAVI partnerships and our resources there. Instead of just training immunization workers, those 

workers can also be skilled attendants at birth. They can be doing 

a broader range of things. And we will be looking for those 

synergies and those investments. 

The second part of it is integration at the point of service. So a 

pregnant woman and a child under two really should not have to 

go to three different places or get care from different providers. We 

will really focus on integration at the point of service so that there 

is a single place to go, and there are more streamlined interventions. We can do that across intermittent preventive therapy for 

malaria, for example, kids provided with immunization. Like that, 

you can do a lot of joint provision of services at the point of delivery, and we are exploring how to do that. 

And then finally, we will have some additional resources that 

will target specifically those vulnerable populations. Right now, 

those additional resources are maternal health, child health, and 

nutrition. I think nutrition is often not described as being as important as it is. But targeted feeding programs in the minus nine to 

two years of age effort done through a health system is probably 

the single most cost effective intervention, outside of basic immunization, in terms of improving the quality of life and getting years 

of life at a relatively low cost. And so we are really focusing on 

that, and I think that represents more than a doubling of the actual investment in that state. And I hope personally that we can 

use that as the point of an arrow and really bring together both 

the health and food serving intitiatives in a way that will give us 

a much bigger outcome for the investment. 

So those are just some examples. But as I mentioned, in 20 countries, we are actively starting this process of looking at how we will 

achieve these integrations in those specific areas. 

Mrs. LOWEY. Thank you. I understand Mr. Kirk is very gracious, 

and will defer to Mr. Israel. 

Mr. ISRAEL. Thank you, Madam Chair. And thank you, my colleague Mr. Kirk, who will be missed on this committee, but going 

on to bigger and better things. 


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Administrator, I have been focused on a project that has recently 

been funded, thanks to the bipartisan cooperation of this subcommittee, and that is solar villages microfinancing. And I am focused on that as a national security imperative. I used to be on the 

Armed Services Committee, and when I was on the Armed Services 

Committee, and I would question generals and admirals as to what 

elements we need for stability and security in remote and dark 

areas of the world, the answer would consistently be, well, number 

one, you need the empowerment of women; number two, you need 

small business models; and number three, you need light so the 

parents can read to their kids and keep their streets safe. Terrorists do not like recruiting in the dark. And from that, we modeled 

something called the Solar Villages Initiative, which would provide 

microfinancing in developing areas of the world to deploy solar 

panels, charge solar lanterns, cell phones, generators, dig wells, et 

cetera. 

This subcommittee provided $10 million in financing to start that 

up. Last week, Secretary Clinton acknowledged that the funding is 

in process. I think you are going to send somebody up to meet with 

me shortly to talk about the allocations. I just wanted to make sure 

that this was on your radar. And we have not had an opportunity 

to talk about your own views with respect to these programs, and 

I am interested in hearing your assessment as to their viability. 

Dr. SHAH. Well, thank you, and thank you for your leadership on 

that issue. I used to carry with me a solar-powered flashlight. And 

even in the context of Haiti, we have had a number of the partners 

that we might work with in this particular initiative also reach out 

and offer solar-powered streetlights and those types of items—as 

contributions to the Government of Haiti. 

We have taken a position that we would like to accept those 

things, and then sometime during the reconstruction next year or 

the year after put them to use when that can be prioritized. So I 

recognize how important and how valuable this is. I also think the 

intersection between using microfinance in a sustainable way, connected to the dissemination of these products and services, is a 

great intersection. We have seen that work successfully in some 

areas like Grameenphone, where they did this with mobile phones 

in Bangladesh. We have seen it be less successful in some other 

areas. So we hope that we can design programs that work in the 

space of using better energy technologies. 

I think as our teams work with you, we would like to learn more, 

and I would love to spend more time with you specifically to understand the full range of technologies we should be thinking about in 

the context of a solar village framework. There are great new technologies, as you know better than anyone, that range from the 

flashlights to the streetlights to other solar heating tanks and 

other things. So there are a range of technologies we would like to 

look to. And it is a priority for us to actually invest both in the development of these technologies and the deployment, using sustainable systems, whether that is microfinance or bottom- of-the-pyramid business models that can allow for things to be sold, but because of savings makes sense for consumers to buy. And we just 

want to understand the frame. We will present to you the set of 


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thoughts we have, and we would like your feedback on whether 

those meet the frame that you were thinking of. 

But I am very optimistic that someday distributed small-scale 

clean energy solutions that are essentially off-grid will offer a huge 

amount of human benefit in low-income parts of the world, rural 

communities, and that, potentially could bring more people energy 

than traditional grid-based systems over a 20-year period. So I 

think it is a ripe area for investment. 

Mr. ISRAEL. Thank you very much, Mr. Administrator. And 

again, I thank my friend from Illinois for his courtesy. 

Mrs. LOWEY. By the way, Mr. Israel, you have other good company, too, carrying around the solar flashlights. Before the disaster 

in Haiti, I had an opportunity to interact with President Bill Clinton, and the first thing he showed me was a solar flashlight. So you 

have applause far and wide. Mr. Kirk. 

Mr. KIRK. This committee has funded a very expensive partnership vetting system for assistance to Gaza and the West Bank, 

which we are now in the second years of delay by the administration. The partnership vetting system is wildly unpopular with 

NGOs in the West Bank and Gaza because they just want the 

money, and they do not want much accountability. It should be 

wildly popular with AID because this is a time bomb waiting to go 

off in your PR shop when you fund a terrorist sponsored organization. 

Deputy Secretary Lew promised us that we would rapidly see 

this expensive and extensive PVS system that the Chairman and 

I and others of the committee have backed implemented. But still 

zip from you guys. 

Dr. SHAH. We do have, as you know a very strong system in 

place in Gaza and the West Bank. And so you do know better than 

anyone how it works and how robust it is. We have been working 

with the State Department and other interagency colleagues to 

abide by congressional guidance to design and roll out a pilot of 

that system in a broader set of contexts. 

So we have been working with our NGO partners. We believe we 

have that pilot ready to be deployed. By Congressional mandate, it 

needs to be deployed both across AID programs and across State 

Department programs as well. 

Mr. KIRK. But you are two years late already, and you have got 

kind of a time bomb waiting to go off. It looks like because of pressure from the NGOs you do not want to implement it. 

Dr. SHAH. Well, we have been in very close context with our 

NGOs. We have a plan to do—— 

Mr. KIRK. That is what I am saying. 

Dr. SHAH. Yeah. 

Mr. KIRK. That they are delaying your ability—— 

Dr. SHAH. I will say we are not bowing to pressure from our partners and our NGOs. We think we have—— 

Mr. KIRK. So how many more years do we go before you implement this? 

Dr. SHAH. Before we implement the pilot? 

Mr. KIRK. Yeah. 

Dr. SHAH. Well, you know, so we will be on the Hill to brief the 

Committee on March 16th to talk about the specific rollout of the 


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pilot. I do not think it will be many years. I think it will be—I do 

not want to commit myself to saying it will be this year, but we 

have the construct—— 

Mr. KIRK. Oh, so you are saying even by December 31st you will 

not have this implemented? 

Dr. SHAH. We have the construct of this designed. 

Mr. KIRK. Right. 

Dr. SHAH. We are working with the State Department to make 

sure that we meet the congressional mandate to be able to roll this 

out across U.S. AID programs and State programs jointly—— 

Mr. KIRK. So before I go to the news media, you cannot even 

promise by the end of this year that this will be implemented? 

Dr. SHAH. I believe it will be implemented. I believe the pilot will 

roll out this year, but I will—— 

Mr. KIRK. But you cannot promise that. Because you are the AID 

administrator. How about promising this committee that by the 

end of this year, it will be implemented. Take a leap. 

Dr. SHAH. Look, I want to make that commitment. We know we 

can do it across our AID programs. 

Mr. KIRK. Right. 

Dr. SHAH. We have vetted this with our partners. We have developed a pilot framework. We have to check that we can do that 

across the State Department programs as well because the law 

mandates that we do it in a joint fashion, which makes good sense. 

So I can commit on behalf of AID—— 

Mr. KIRK. So it looks like the Kirk amendment will be necessary 

to order you to do this. 

Dr. SHAH. I do not think so. I think we have been working aggressively on this. We will come out with a very specific plan on 

March 16th. I think it is the 15th or the 16th. 

Mr. KIRK. With a date for implementation? 

Dr. SHAH. With a date for implementation or—— 

Mr. KIRK. That will be in this year. 

Dr. SHAH. Yes. I hope—yes. I am prepared for AID programs for 

this to roll out this year. I cannot speak on behalf of the State Department right now. I can come back to you with the specifics when 

we are ready to roll that out. 

Mr. KIRK. Okay. In writing. 

Dr. SHAH. In writing. 

Mr. KIRK. Yeah, okay. What is your view on sole-source no-bid 

contracts? Do you have views that square with the President’s 

view? 

Dr. SHAH. Absolutely. We have already put into place—— 

Mr. KIRK. The President’s view is that they are no good. 

Dr. SHAH. I have already put in place a board for acquisition and 

assistance review that is looking at a broad range of contracting reform issues at USAID. It is a major part of our agenda going forward. We are looking at large contracts and how to bring those 

down into smaller chunks. We are looking at doing more local investment in local capacity building in our contracting. 

Mr. KIRK. But do you support granting sole-source no-bid contracts? 

Dr. SHAH. Well, I would not want to take a tool completely off 

the table. But no, in general we would much rather compete the 


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contracts. There are, you know, times when there is either a time 

pressure or a catastrophic emergency or some unique reason why 

a modest investment in that frame might make sense, so I would 

not make a generalization. But in general, no. 

Mr. KIRK. So in Haiti, World Vision has $91 million in projects 

going, delivered over 5,000 tons of aid. Catholic Relief Service has 

a current contract for $61.7 million. It has delivered 5,300 tons of 

food. CF International, a $52 million project. ACDI/VOCA, $37 million, delivered 64 tons. There is a long list of people. And when I 

checked, they all have years of experience and language capability, 

and that is that. When the earthquake hit, you decided to override 

them and give a sole-source no-bid contract to James Lee Witt Associates that has zero French language capability and had never 

had an AID contract in Haiti before. What was the process by 

which you decided they were better than all of these experienced 

partners? 

Dr. SHAH. Well, I would not say that we overrode anyone. Let me 

just describe what the purpose of that contract was. We were asked 

by the President to coordinate a whole government response and to 

do that in a manner that connected up very closely and effectively 

deployed significant military assets that were going into the state. 

Mr. KIRK. Did you know James Lee Witt was a registered congressional lobbyist? 

Dr. SHAH. What we did was we needed—— 

Mr. KIRK. That is a yes or no question. 

Dr. SHAH. No. I want to help describe why we did the contract 

because I made the decision and I stand by it. We needed support 

to understand how to best structure our organization and how to 

best build our communications capabilities in an environment 

where we were going to be working with a broad range of agencies, 

including FEMA, including DHHS, including the DOD. And by the 

way, in no prior disaster response have we done that. We have not 

sent disaster and medical assistance teams from HHS in an international setting before. We mobilized and sent FEMA and several 

of their search and rescue teams. That had not happened previously. 

Mr. KIRK. But let us stick with James Lee Witt. Did you know 

he was a congressional lobbyist? 

Dr. SHAH. We ran our process of checks through. We abided by 

every contracting rule in the process. What I needed was someone 

and some organization that had significant experience in how to 

structure these types of broad, whole-of-government, expansive response efforts, that knew how to integrate U.S. response assets and 

Haitian response assets. 

Mr. KIRK. Okay. Third time. Did you know he was a congressional lobbyist. That is a yes or no question. 

Dr. SHAH. I ran the checks. I asked that we follow every procedure that we normally follow in accepting a contract. 

Mr. KIRK. Okay. Fourth time. Did you know he was a congressional lobbyist. This is a straight question. 

Dr. SHAH. Well, I did not ask that question, but I asked that we 

follow every rule. And I said, if there are any red flags, let me 

know, and I looked at the process we followed, and we followed our 

contracting processes. 


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Mr. KIRK. Did you know that he had no French language background among him—— 

Dr. SHAH. Well, I was not asking James Lee Witt to go to Haiti. 

There was a team of people that I had met with, including people 

who have been working in Haiti for the past 14 months, like Mark 

Merritt, who were part of that, who were very, very helpful in 

thinking through how we would structure this. And I relied on 

their guidance in putting in place a very unique—the Chairwoman 

asked a very good question about how did we structure the response. We built an Office of the Relief Coordinator that is a 

unique part of our international response. It allowed for incredibly 

effective communication with DOD, and it allowed for engaging 

this other partners. 

Mr. KIRK. I am not interested in—— 

Dr. SHAH. And I used their guidance and their advice to construct that. 

Mr. KIRK. And their guidance and advice was to take a registered 

congressional lobbyist who had no operations, no French language 

experience, and had never worked with the Office of Foreign Disaster Assistance to get a no-bid contract. 

Dr. SHAH. I think that is an unfair characterization. What I 

asked, I asked a team of people who had significant experience in 

Haiti, who had significant experience in disaster response, and who 

knew uniquely how to help me construct an organization that 

would bring together all of these unique whole-of-government assets, whether it was military or U.S. emergency relief responders 

into a coherent, coordinated effort. The President asked very clearly for a swift, aggressive, and coordinated response. So we did a lot 

of things very differently, and we were very worried from the beginning about how we were going to coordinate and bring these 

things together. They were very helpful in helping to resolve that, 

and so I stand by that decision. 

Mrs. LOWEY. Mr. Kirk, is it not correct that you sent a letter to 

Mr. Shah, and Mr. Shah—— 

Mr. KIRK. It is a very bureaucratic, superficial letter that does 

not describe how he was a congressional lobbyist. I guess I understand now that you did not know that. It does not describe how he 

had no French language background. It does not describe how he 

had no experience in any contract. 

Dr. SHAH. We did not send James Lee Witt to Haiti. We sent — 

Mr. KIRK. You sent him to coordinate Haitian—— 

Dr. SHAH. No. We sent a team of people to go down and work 

with us in that early response to set up our coordination structure, 

and it worked quite well. I mean, I just want to impress on the 

committee and to share with you that it was a real challenge to figure out how do you coordinate all of these assets going down in an 

environment where people did not have communications—— 

Mr. KIRK. So you have already had a lot of bad press on this. 

What other sole-source contracts do you think you could probably 

issue? 

Dr. SHAH. What other—I do not—— 

Mr. KIRK. Would you commit to this committee that you will not 

be doing non-competitive—you know, the President has been very 


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clear, and his record in Illinois is outstanding, against sole-source 

non-bid contracts. 

Dr. SHAH. Look, I do not want to do any sole-source non-bid contracts. But in an emergency crisis environment, for the purpose 

that we needed this support, and at the amount that this was, and 

for the purpose that it met, I stand by that decision. 

Mr. KIRK. It sounds like actually a terrible decision on your part. 

I hope you would, to go forward, because you are very young in this 

administrative position; you have been embarrassed by this. I 

would suggest that you might want to think about going with solid 

partners, experience in the country, language capability, contractors with OFDA, and not using a congressional lobbyist that was 

not on the ground, did not have a language background, and had 

no contract experience of OFDA. 

Dr. SHAH. Sir, I respect your point of view. I would just say I 

spoke almost daily with a number of our NGO partners through 

this process. These partners were on the ground. They had been 

devastated by this earthquake. They were trying to do their operational work. And they were asking us for support. They were in 

a position to send a consulting team into our organization to help 

us understand how to latch up the military, FEMA, a number of 

other agencies that were prepared to provide unique capabilities to 

help us commit to the President’s response. 

Mr. KIRK. Those of us who have been here before, though—we 

have been on this committee for decades watching OFDA handle 

this. And so I might reach into the USAID staff itself rather than 

go with a sole-source contract to a congressional lobbyist that has 

no language experience or OFDA background. 

Dr. SHAH. I appreciate that point of view. This was a very different response than I think most of the other ones. 

Mr. KIRK. It does seem very different, very disappointingly different. 

Dr. SHAH. I will just look at the numbers. We have treated— 

those DMAT teams from HHS treated 30,000 people. OFDA does 

not have the capability to do that. The five additional non-OFDA 

USAR teams saved more than 100 lives. Left to our own devices, 

we would not have been able to do that. 

Mrs. LOWEY. Mr. Kirk, I think we should move on. 

Mr. KIRK. I am just worried, just to close—in other disasters, we 

have done outstanding work—OFDA is one of the stars of your operation—without sole- sourced contracts to congressional lobbyists. 

Mrs. LOWEY. I certainly think, Mr. Kirk, that Dr. Shah could respond to any additional questions you have. In addition, there is 

specific language in the fiscal year 2010 bill about sole-source contracts. But I frankly, putting aside the unanswered questions—and 

I am sure you will get back to Mr. Kirk—I want to thank you again 

for the extraordinary response. I can remember, Mr. Kirk, our discussions with Stuart Bowen. And in Iraq, it took them two and a 

half years to even get a computer system up and running to even 

be able to document the kinds of grants they were making. It 

seemed to me they were taking cash out of pockets and just putting 

them into the sand. 


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Mr. KIRK. Oh, you backed me, and this committee banned solesource contracting in Iraq, a signal that you should have picked up 

in our view on sole-source contracting. 

Mrs. LOWEY. Well, there is some language in the fiscal year 2010 

bill, and we can talk again about any amendments that have to be 

made to it. But I personally want to congratulate you. In a crisis 

of such enormous proportions, I am sure you were acting with as 

much help as you can get. And I also think relevant to your point, 

Mr. Kirk, we have been trying to build up the capacity at USAID. 

And ideally, there will be a response team that can respond so that 

you do not have to go outside of USAID. So this can certainly be 

continued in other discussions, and I want to thank you again. 

We have a little time left, and I just want to express, my praise 

for the way you handled Haiti. I want to express my disappointment that the President’s budget does not prioritize expanding access to basic education, and reduces funding for basic education by 

$85 million. And the committee has been told this is due to a shift 

within the Pakistan portfolio. 

I have to tell you, this explanation does not work for me. We 

have clear evidence from every advocate with whom I interact that 

education is a key pillar in expanding economic opportunity, and 

increasing gender equality. Without a strong, accountable education system that educates boys and girls, families just will not be 

able to benefit from these expanded opportunities. Over the past 

decade, I have worked with USAID to put in place an innovative 

and groundbreaking basic education program. And frankly, I am 

really disappointed that this budget does not build on that foundation. And I think wherever this committee has traveled on site to 

look at the programs, you see the difference in society when girls 

are getting education and moving on to economic development activity. 

So maybe you can tell me briefly why basic education is not one 

of the key development priorities in the fiscal year 2011 budget? 

Dr. SHAH. Thank you, Madam Chairwoman. It is absolutely a 

priority for us. You know, when you talk about the reduction, it is 

true that we have shifted resources from the basic education portfolio in Pakistan in an amount that is equivalent to the overall decrease compared to the 2010 estimate, approximately $75 million, 

as you note. The remainder of the shift in the strategic approach 

in Pakistan and elsewhere is largely around higher education and 

workforce development, but in Pakistan, because we made a big investment last year in basic education, we have been able to launch 

the largest basic education program we have anywhere around the 

world. 

It is a more than $200 million program that will work nationwide and prioritize, as you have asked in all of our work, prioritize 

girls’ enrollments. Across the portfolio of work we do, 47 percent of 

students in schools we support are girls, and I was just in Haiti 

in Petit Goave where our school was one of the few structures still 

standing because it had been built to earthquake code and was 

being used both as a school and a relief supply shelter and where 

goods were being distributed. 

So we, as you know, meet high standards on construction and 

have a strong track record in certain areas. I also hope that in this 


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year we will significantly expand our partnership with Education 

for All and the Fast Track Initiative, that has been an effort that 

has accelerated the numbers of people in school. And as you have 

worked with USAID we have been much more focused also on quality and the actual attainment, so we will be rolling out and reinvesting based on some key learnings about how to improve teacher 

training, how to improve testing and assessments of students as we 

have done in Kenya and Liberia, and take some of the lessons 

learned from there and apply them elsewhere. 

So our goal is to expand significantly the impact of our work by 

working with multilateral partners, by working more effectively in 

our direct programs. And we did not think of this as a reduction 

or a lack of commitment in any way. We are doing as much as we 

possibly can in basic education in Pakistan and we are continuing 

to have the robust commitment overall around the world. 

Mrs. LOWEY. Let me just say that the Fiscal Year 2010 budget 

included a directive to establish communities of learning in order 

to build on the fact that these serve as community gathering spots. 

Many of the schools I have visited, you see young girls walking two 

hours to get there, without having some cereal, any kind of porridge. Wouldn’t it be nice if we can encourage the parents to come 

with them? They could benefit from programs that we had at a 

community of learning, we could have horticulture, and agriculture 

programs. 

We have had success in our own country with this model. So I 

am really an advocate of this, and the fact that you are making a 

change in Pakistan does not make up for not appropriating the 

amount of money because we need it all over the world. And it 

seems to me that if we are establishing a new agriculture initiative 

and expanding basic health initiatives, not to focus on communities 

of learning, which is a Congressional initiative not original to us, 

would be a mistake. Could you respond? 

Dr. SHAH. Absolutely, I have had the chance to—— 

Mrs. LOWEY. And if you can tell me what steps USAID has taken 

to implement this directive. 

Dr. SHAH. So, we have taken a number of steps in terms of planning and looking across our programs at certain best practices. I 

have had the chance myself to visit programs in Ghana and Kenya 

and Malawi where both USAID and also other partners have done 

very innovative programs in using schools as platforms for service 

provision, for learning in a broader way, and for community engagement and support. I think we will try and do a lot more in this 

area. 

I think we can use in particular, and we are already planning 

to, some of the resources in the Food Security Initiative to do programs that build on the school feeding programs and other things 

and leverage schools for that purpose as well. So we will absolutely 

prioritize this and can be much more detailed in a more formal response if you would like. 

[The information follows:] 


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Mrs. LOWEY. I would like to pursue this for another minute and 

then we will have Ms. McCollum ask you another question if you 

would give us a couple more minutes, Dr. Shah. 

Dr. SHAH. Sure. 

Mrs. LOWEY. In the past, basic education has been a bilateral 

program. Now with new leadership and the priority being placed 

on multilateral engagement, what is the Administration doing to 

engage the Fast Track Initiative of the World Bank? There are 

many advocates out there who are enthusiastic about the likely establishment of a global fund for education, based on the Global 

Fund to Fight AIDS, Tuberculosis, and Malaria. Can you tell us 

whether the United States is going to take a lead in establishing 

a multilateral fund? How would U.S. government technical expertise and modern schooling initiatives be integrated into such a 

global effort? 

Dr. SHAH. Well, I can tell you that we will take the lead in organizing the international community and the multilateral work so 

that we work effectively with it. I met on Friday with President 

Zoellick of the World Bank. We talked about, amongst other things, 

education and opportunities to partner better. As you know, USAID 

has unique expertise in areas like teacher training, in student assessments through some verbal assessment methodologies that 

have been piloted in Kenya and Liberia and elsewhere. And we 

think we can help the international system which has been very focused on getting the numbers, appropriately focused, on getting the 

numbers up, also do a better job on quality and educational attainment and assessments, and thinking about using schools as a 

broader platform for service provisions. 

So there is a natural partnership there, we are in that discussion. Right now we have a member of our team who serves as the 

observer on the board of EFA and FTI. I personally would like to 

see a far deeper engagement. I think that is an okay first step, but 

we are going to have resources to put on the table to do things differently. In education we want to leverage the great work that has 

happened in the multilateral system, and we want more than an 

observer status on the various opportunities to engage. 

Mrs. LOWEY. Well, it sounds great. And another great fan of engagement and a Member of this Committee who has been very 

much involved in depth with the World Bank, Ms. McCollum. 

Ms. MCCOLLUM. Thank you, Madam Chair, and I could not agree 

with you more. And I think I am going to ask about some other 

indicators, but before I do that, I have to agree with you, we have 

ambassadors in our office and we are doing great work and you 

have been outspoken on education and the opportunities to do 

school feeding at education as we ramp up our food nutrition, that 

is a great intersection that you just described. I do not have the 

ambassadors coming in asking for that very often, so I think we 

had better start asking them so they know it is important. 

So to kind of tag onto that, I would like to learn more about how 

USAID defines country ownership and how you plan to increase 

country ownership in our foreign assistance programs. I believe it 

is necessary to have a transformation of recipient governments into 

partner countries, and the only way to sustain development is to 


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invest in citizens and governments developing into their own future. 

And I know it is tough work, but I talked earlier about the importance of saving the lives of children and mothers, and this horrible reality is that we cannot want kids and moms in poor countries to live more than their own government leaders. They have 

to want it just as all of us on this Committee want it, just as much 

as all the USAID workers that you have on the ground trying to 

make it happen. And as I was pointing out to the Chairwoman, I 

see my fair number of ambassadors, I know you see more, Madam 

Chair, but I have never had an ambassador come into my office 

and ask for more funding to save the children and the mothers in 

their own countries. 

Mrs. LOWEY. Well I have. 

Ms. MCCOLLUM. I have not. 

Mrs. LOWEY. In Pakistan, because they knew of my interest, and 

the first thing they said is, I am for education and here is my education minister. 

Ms. MCCOLLUM. Well, then we need to hold their feet to the fire. 

So how do we help USAID hold their feet to the fire on that? How 

can we change our policies, working with the Chairwoman and I, 

to approach and get more country commitments to development, 

not just words but action? And then how can we put together a 

plan to hold these countries accountable and for maintaining these 

commitments? So could you explain to us, as Chairman Lowey and 

I are talking to, you know, ambassadors and foreign ministers and 

health ministers and education ministers, that we are going to hold 

them accountable and if they want to have a partnership we expect 

to have a real partner? 

Dr. SHAH. Well, I appreciate that comment and question. At the 

end of the day we believe that country ownership takes a number 

of different forms. First and foremost is, as you point out, commitment, which can be measured in financial terms, we can observe 

political commitment at the highest levels, and we can insist on 

that level of commitment both in terms of the senior political commitment and in terms of real financial commitments. 

We are doing that in the Food Security Initiative where we are 

asking participating countries to go through a process where they 

develop an effective agricultural development plan, it is signed off 

by the President of the country so it has the visibility and authority that we need in order for that to be successful, and it requires 

that countries significantly increase their spending in agriculture. 

Average spending in terms of public budget percentages are 5.5 

percent. We want countries to meet their broad commitments to get 

to 10 percent or 15 percent as part of the process of securing additional funding from the United States, and that is mutual accountability and commitment in its most sort of rigorous form financially. 

We also work with countries to improve the planning capabilities 

and implementation capabilities. In Afghanistan, for example, we 

have been assessing the capabilities of the Ministry of Agriculture 

and Livestock and working with other partners, we are really 

building greater capacities there both for planning and for financial 

management and procurement to allow us to work more directly toVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00131 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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gether. That worked in the health sector in that context and we are 

using it in other environments. 

And finally it involves changing the way we work, because if we 

go through those processes and then do all of our work in parallel 

contracting systems that do not have the same connectivity to the 

country leadership or the country planning, we will not be credible 

long term partners. And so to live up to the aspiration to do our 

work in partnership and not patronage, we will look at our contracts and we will look at our programs and we want to implement 

those things differently. And it speaks to our efforts at procurement reform; it will speak to our efforts to do multi-year planning 

and budgeting, which is very much a priority in the QDDR, and 

our efforts to build civil society interests around the core priorities 

as expressed by countries. 

So this is an area where if we are going to rebuild and if this 

agency is going to be the world’s premier agency in development, 

we have to go beyond signing the Paris Declaration and saying we 

are going to work in partnership. We actually have to change the 

guts of our operating system to do that. And we have a number of 

processes already in place to do that, and before the end of June 

I hope to roll out a new contracting set of guidances that will help 

us be better and more serious and more accountable long term 

partners with countries that do stand up. So that is what we are 

working on. 

Ms. MCCOLLUM. Madam Chair, it sounds like you and I can look 

to making some of those quality measurements, not only for USAID 

and for the other people that we work with that go into country 

to help but with our country partners as well. And maybe we start 

by asking them their education budgets and having them show 

what they have been over the past couple years and what they are 

going to be over the next couple years, the same with their maternal child health budgets too, I know the World Bank does that but 

maybe we ought to start doing that a little more ourselves. Thank 

you, Madam Chair. Thank you, sir. 

Mrs. LOWEY. Well thank you. And I want to thank you, Administrator Shah. You have breathed fresh hope and life and enthusiasm 

into your position, and I really want to thank you for your time. 

This concludes today’s hearing on the President’s Fiscal Year 2011 

request for the U.S. Agency for International Development. The 

Subcommittee on State Foreign Operations and Related Programs 

stands adjourned. 


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(273) 

THURSDAY, MARCH 25, 2010. 

U.S. DEPARTMENT OF THE TREASURY INTERNATIONAL 

PROGRAMS 

WITNESS 

HON. TIMOTHY F. GEITHNER, SECRETARY OF THE TREASURY 

OPENING STATEMENT OF CHAIRMAN LOWEY

Mrs. LOWEY. The subcommittee on State, Foreign Operations, 

and Related Programs will come to order. 

Mr. Secretary, my former constituent—where do you vote? Here 

or Westchester? We will have to figure this out. 

I welcome you to the subcommittee to present the Treasury Department’s request for fiscal year 2011 international programs. The 

budget request includes $3.1 billion for U.S. contributions to international financial institutions, debt relief, technical assistance programs, a $1 billion or 33 percent increase above the fiscal year 

2010 level. The requested $1.073 billion for development funds at 

the World Bank includes $635 million for the Clean Technology 

and Climate Change Strategic Funds, and $438 million for Food 

Security and a new Multilateral Food Security Fund. 

I believe the significant increase will be difficult to fund at a 

time when we face severe domestic budget constraints, large deficits, high unemployment, all in the midst of two wars. Your perspective on how U.S. contributions support our national interests 

is important as this committee prepares to make tough funding decisions. It is critical to leverage every cent of taxpayers’ dollars and 

demonstrate that it is being spent effectively and efficiently. I hope 

you can share with us reform priorities for each of the institutions 

and actions underway to provide greater transparency and accountability including program effectiveness measures at the IFIs. 

There are a number of key issues that I would like you to address. First, coordination on key U.S. priorities, including poverty 

reduction, economic growth, food security, climate change, the environment, debt relief, and technical assistance. How are these programs coordinated within the U.S. government among bilateral and 

multilateral organizations and on the ground? I am especially interested in the new food security trust fund and the climate investment funds administered by the World Bank. How will Treasury 

coordinate with State and USAID? Who has the lead within the 

U.S. Government? Why was the decision made to house these funds 

at the World Bank? And will we have enough oversight of implementation? 

As the number of funds based in Western capitals grow, civil society groups must be involved to ensure the voices of those most 

affected by IFI programs and lending are heard. What is Treasury 


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doing to get maximum and meaningful participation from civil society within these new funds? 

The World Bank has been deeply involved in post-conflict, fragile 

and failed states, and I hope you will explain the role of multilateral development banks (MDBs) in front-line states and other priority countries, including Afghanistan, Pakistan, Iraq, and Haiti. 

For several years this subcommittee has raised concern about the 

World Bank’s administration of the South Sudan Trust Fund and 

the slow disbursement of funds due to severe capacity constraints. 

What is the status of this Trust Fund? 

Lastly, while the U.S. shares decision-making with other countries and multilateral banks, we maintain tremendous influence. 

As you know, certain lending decisions have major impact on 

Congress’s support for the Banks, and at the top of the list of concerns is Iran. This subcommittee is deeply troubled that the World 

Bank made a number of loans to Iran between 2004 and 2005 that 

are still being disbursed. Although these loans were for humanitarian and development purposes and were therefore legal under 

UN Security Council resolutions, we remain concerned that funding continues to be disbursed to a country that carries out repressive and dangerous policies that negatively impact Iran’s own people, the region, and the world. 

It is absolutely essential that the World Bank Group not re-engage in lending to the current government of Iran if it is to maintain credibility and future U.S. support. I have urged Ambassador 

Rice to ensure the next UN Security Council resolution does not 

allow a loophole for development lending to continue to Iran. Nevertheless, in the absence of a new resolution prohibiting development funding, there should be no excuse for the World Bank to finance development loans to Iran while the regime continues to 

fund their nuclear weapons activities and support terrorist organizations. 

While we are discussing Iran, I would like to commend the excellent work Under Secretary Stuart Levey has undertaken. The February 10 announcement of sanctioning Iran’s Islamic Revolutionary 

Guard Corps (IRGC) is just one clear example of his aggressive efforts, which I applaud, and I know this view is shared by this committee. 

Mr. Secretary, our discussions today on these important institutions for the United States interests and many other key issues 

will impact our funding decisions. We look forward to working with 

you. And before we move to your testimony, let me turn to Ms. 

Granger, the Ranking Member, for her opening statement. 

Ms. Granger. 

OPENING REMARKS OF MS. GRANGER

Ms. GRANGER. Thank you, Madam Chairman. 

I would like to welcome the Secretary for his first appearance before the subcommittee today to discuss the fiscal year 2011 request 

for the Department of the Treasury’s International Programs. Additionally, I would like to hear about the current status of the International Monetary Fund, given the large level of funding approved 

last year by Congress. 


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Secretary Geithner, I understand that several years you were the 

Assistant Secretary and then Under Secretary of the Treasury for 

International Affairs. Therefore, these programs under this subcommittee’s jurisdiction are certainly familiar to you, and I look 

forward to our discussion. 

The President’s budget request is $3.1 billion for Treasury’s 

International Affairs Program, which is an almost 44 percent increase or $396 million over last year. I would also like to highlight 

that this is a near doubling of funds in 2 years. All of these funds 

are contributions to international financial institutions with the exception of the Treasury Technical Assistance and Debt Relief Programs. I hope you can explain why we need such a large increase 

for multilateral assistance when our bilateral assistance programs 

are coming under tighter constraints as this country continues to 

dig out from economic crisis. 

Additionally, my support for this request is in doubt when it is 

unclear to me how much influence the United States has over the 

allocation of the appropriated dollars we contribute each year to 

these banks. Specifically, I am concerned about corruption at the 

banks and how bank leadership is attempting to rein it in. I also 

fear the decreasing relevance of these institutions as we observe 

many long-term recipient countries that are stagnating and not 

progressing even after billions of dollars of multilateral assistance. 

It seems surprising to me that, given all the doubts that this 

Congress has about the functioning of the World Bank and the regional banks, the administration has committed billions of dollars 

in Climate Change Fund and Food Security Fund in the last year, 

much of which will be deposited at the World Bank. And just this 

past weekend Treasury agreed to a sizable multiyear capital increase to the Inter-American Development Bank and is in the 

progress of negotiating several others. 

Before this Congress is asked to provide substantial capital increases, I hope we will be provided convincing evidence that the 

taxpayer dollars will be used more effectively in the future than 

they have been in the past at these institutions. While so many 

countries are languishing in poverty ruled by corrupt governments 

and often subjected to civil strife, I would hope that the multilateral development banks could find a way to promote positive economic and political change in these countries. Otherwise, nothing 

changes except greater wealth transfers from the developed to the 

developing world. 

Secretary Geithner, I hope your testimony today can alleviate my 

concerns that, with respect to the Treasury request, the administration is out of touch with the fiscal realities of this Nation. As 

you know, Mr. Secretary, I am a supporter of using U.S. foreign assistance as a soft power tool to achieve our national security objectives as well as promote the quality of life for those living in hunger and poverty. However, I believe that our role in this subcommittee through rigorous oversight is to make it work better at 

achieving our goal. I thank you, and I look forward to your testimony. 

Mrs. LOWEY. Mr. Secretary, as you know, your full statement can 

be placed in the record, so you may summarize if you wish. Please 

proceed. 


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OPENING STATEMENT OF SECRETARY GEITHNER

Secretary GEITHNER. Thank you, Chairwoman Lowey and Ranking Member Granger, members of the committee. 

It is a pleasure to be here before you today. Thank you for those 

opening statements, very thoughtful statements, and I agree with 

the basic imperative you have laid out, which is for all of us to recognize we have a huge stake in what happens outside the United 

States. We also share a great obligation to make sure the resources 

we provide these institutions in support of the development, et 

cetera, are used as effectively as possible. 

I want to thank you for the support you have given these institutions, the Treasury, the foreign assistance budget over the years in 

recognition of those interests, and we look forward to working with 

you closely in the coming months to build on that record of cooperation. 

As you know, our international programs are guided by four 

basic priorities: The first is to support economic growth here at 

home and abroad. The second is to protect our national security interests. Third is to lift the lives of the world’s poorest. And the 

fourth finally is to promote global solutions to address climate 

change and other global problems. Our budget request supports 

these key goals. 

At their core the multilateral development banks, the MDBs, 

strengthen private sector-led growth and help integrate developing 

nations into the global economy. By helping these countries stabilize and grow, we build new markets for U.S. exports and help 

create more jobs here at home. 

At no time has the importance of the MDBs been more evident 

than during the financial crisis. These institutions acted with our 

encouragement with exceptional speed and force to help cushion 

the effects of the crisis on the poorest and to help restart flows of 

finance and restart the flow of global trade. 

Treasury’s initiatives also help support frontline states vital to 

our national security interests. Last year, for example, the MDBs 

provided $543 million in grants to Afghanistan and $3.35 billion in 

assistance to Pakistan. 

Our Office of Technical Assistance at Treasury complements 

these efforts by strengthening the financial management of governments around the world. Treasury, for example, helps the Afghan 

government develop a financial intelligence unit that helps prevent 

money laundering and terrorist financing. 

Of course, we support these institutions not just to support our 

own national security and economic interests but also to defend our 

ideals as a nation. More than 1 billion people around the world suffer from chronic hunger. At the G–8 summit in Italy last year, 

President Obama pledged greater U.S. focus on reducing global 

hunger and extreme poverty. And as part of that, we are proposing 

to increase investments in agricultural development and food security, including through a new multilateral trust fund for food security. 

I want to express my appreciation for the strong support of so 

many members of this committee for our work to relieve Haiti’s 

debt burden following the earthquake, and I urge all of you to supVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00276 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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port the supplemental the President submitted to Congress yesterday. In parallel with your efforts, just this past weekend, we 

reached agreement with other IDB, Inter-American Development 

Bank, shareholders to cancel all of Haiti’s $479 million debt to that 

institution. 

Climate change of course is a global challenge, and that demands 

a global solution. We are doing our part here at home with a 

sweeping set of investments in clean energy and technology to help 

promote energy efficiency, but we can’t solve this problem on our 

own. And our budget request, therefore, will support efforts to help 

reduce greenhouse gas emissions globally. 

Now, in order for the World Bank and the regional development 

banks to fulfill their missions in each of these priority areas, we 

ask you to fully fund our budget request. Our request represents 

just 5 percent of the total international affairs budget. And because 

our dollars are not only matched by other donors but used to generate significant additional resources in the capital markets, you 

get quite a lot of bang for the buck. In fact, every dollar the U.S. 

has contributed to the World Bank enables lending levels that are 

about 250 times that. 

Our focus on resources of course will be matched by an insistence 

on stronger reforms, stronger results in four critical areas. We are 

working to put in place much more disciplined financial practices 

to improve governance and management to increase transparency 

and accountability and to narrow the focus of institutions on core 

priorities that have the highest return. 

Now, to support continued progress in these reforms, we need to 

stay engaged in these institutions. As you know, our ability to 

shape these institutions, to shape what they do, how effective they 

operate rests on being a member in good standing which pays its 

fair share. 

Now, as you both recognize and as we recognize, we make these 

requests in the context of one of the most challenging economic environments for Americans in generations and with our Nation facing severe fiscal constraints, but we make it with the confidence 

that these investments will contribute to building a stronger global 

economy and promoting our national security interests. 

There is a long history of bipartisan support for these initiatives, 

not just on this committee. As President Reagan said, quote, These 

institutions have reflected a shared vision of growth and development through political freedom and economic opportunity. That vision has become a reality for many of us. Let us pledge to continue 

working together to ensure that it becomes a reality for all. 

I look forward to working with you and being as responsive as 

I can to your questions. Thank you. 

[The information follows:] 


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IRAN

Mrs. LOWEY. Thank you, Mr. Secretary. 

This subcommittee, and I see members on both sides of the aisle, 

some of whom are not here today, have expressed deep concern 

about the number of World Bank loans made to Iran between 2004 

and 2005 that are still being disbursed. In previous years, the subcommittee has been told that this disbursement could not be 

stopped because the United Nations Security Council Resolution 

exempted humanitarian and development activities. It does not 

make sense to me that we would allow this funding, which is in 

the hundreds of millions of dollars, to move forward without some 

effort to stop or slow this disbursement. 

If you could share with us what mechanisms are currently in 

place to ensure that the funding disbursed on the old loans is used 

for the intended humanitarian purposes and are not diverted to 

other purposes, and how does the Treasury follow these loan disbursements? What checks do you currently have in place to monitor the Bank and ensure it is checking the legitimacy of the expenditures? And what is Treasury doing to prevent further multilateral bank loans to Iran? And as part of the interagency process, 

what is Treasury doing to recommend that the UN Security Council resolutions prohibit funding for humanitarian and development 

purposes? 

Secretary GEITHNER. Thanks for raising this issue. As you know 

we oppose those loans. We don’t think they should have gone forward. And we have been successful in blocking any further loans 

since then, and we are going to continue to work closely with countries around the world to substantially increase the pressure on 

this government in Iran. 

Now, these loans are—the disbursements still continuing, as you 

acknowledged, are permitted under the UN resolution. I do not believe they are material, but I share your concern about them. The 

World Bank has a very elaborate well-functioning set of controls in 

place to make sure they go to their intended purposes, which are 

to promote development under this humanitarian exemption, but I 

just want to underscore that we share your view that this should 

not have happened and will not happen in the future until we have 

a satisfactory outcome with our discussions with that government 

in reducing their support for terrorism and to ending their nuclear 

weapons program. 

Mrs. LOWEY. I know this is a great concern to members of this 

committee on both sides of the aisle. I want to make it clear, it is 

totally unsatisfactory if we are working together, and I commended 

Stuart Levey in particular on tightening the noose, tightening the 

sanctions, and then seeing these hundreds of millions of dollars 

going to Iran; it is essential that we get a clear understanding that 

these dollars are not going in the direction which I know you and 

I and this government has made clear do not want it to go. 

I also want to make it clear that, in the interim, before the Iran 

Sanctions Act is passed, this committee put in very tough language 

regarding the Export-Import loans. 

Just to refresh your memory: None of the funds made available 

in title VI of this act under the heading ‘‘Program Account’’ or 


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‘‘Subsidy Appropriation’’ may be used by the Export-Import Bank 

of the United States to authorize any new guarantee, insurance, or 

extension of credit for any project controlled by an energy producer 

or refiner that continues to provide Iran with significant refined petroleum resources, materially contribute to Iran’s capability to import refined petroleum resources, or allow Iran to maintain or expand in any material respect its domestic production of refined petroleum resources, including any assistance in refinery construction, modernization, or repair, et cetera. 

There is bipartisan support for this policy, and until that sanctions act is passed, we have the authority under the Appropriations 

Committee to even expand on this language. So I would hope that 

you can certainly get back to us about the loan disbursements and 

the checks that you have in place to monitor the bank and ensure 

it is checking the legitimacy of the expenditures. 

Secretary GEITHNER. I am happy to do that, and you are right 

to highlight it. And I want to thank you again for commending the 

work of Stuart Levey and his colleagues at Treasury. They have 

been remarkably effective in substantially increasing the pressure 

on this regime through our financial sanctions, and we are working 

very hard every day with countries around the world to bring additional pressure to bear on this regime, and they have had a substantial effect already, but we are working very hard to bring additional pressure to bear on that government. 

IMF

Mrs. LOWEY. Ms. Granger. 

Ms. GRANGER. Last year in the fiscal year 2009 emergency supplemental, the Congress authorized the sale of IMF gold to shore 

up the IMF’s internal operating expenses and to contribute a share 

of the proceeds to help poor countries. The IMF conducted a gold 

sale last fall. Can you tell me how much was raised from this sale? 

Was it more than was estimated, given the high price of gold? Has 

the endowment been set up by this sale? Are proceeds paying for 

operating expenses? And is the IMF continuing to streamline its 

operations and expenses, as was promised in exchange for the authorized gold sales? 

Secretary GEITHNER. You are right to point out that the purpose 

of this program was to both help fund the operational budget of the 

IMF, which under current leadership was reduced quite substantially, but also to free up some resources to help the poorest members of the IMF. I will have to get back to you with the details on 

the amount raised, and I will be happy—— 

Ms. GRANGER. Surely you have an estimate. 

Secretary GEITHNER. I don’t have it in front of me today, but I 

will be happy to provide it in writing to you. 

Ms. GRANGER. Your staff doesn’t? 

Secretary GEITHNER. Oh, I am sure they do, but I don’t have it 

with me here. If they give it to me while I am up here, I will read 

it to you. But I will be happy to get back to you in writing. 

NAB

Ms. GRANGER. I have another question. The fiscal year 2010 omnibus, we include a number of conditions on the use of funds, the 


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IMF’s new arrangements to borrow, the NAB. Could you give me 

an update on the NAB operation? Is it functional? Has it made 

loans? Is it serving its purposes? 

Secretary GEITHNER. We built those conditions into the agreement. That fund has reached its targeted commitments of $500 billion. It is not yet operational yet, but it is going to come into place 

relatively soon. And I want to underscore the importance of what 

you helped make possible, which is we were able to get countries 

around the world to put up a very substantial contingent reserve 

to help provide insurance against future financial crises, and the 

signal of that commitment, starting early in the spring of last year, 

almost a year ago today, was very helpful in arresting, breaking 

the back of the panic of the global financial crisis. 

So I want to commend you for your support of that initiative. We 

have been very successful in getting countries to put up very substantial forms of money behind this new emergency reserve fund. 

It is likely to come into operation relatively quickly, and we have 

met the conditions you have put into the law to make sure we are 

protecting our interests. Remember, those conditions were designed 

to make sure that the U.S. was leveraging commitments from other 

countries as efficiently as possible, and we had the chance to, how 

should I say, take stock of the merits of this arrangement, how it 

is working, relatively soon. 

BRIC

Ms. GRANGER. I have a little more time. I have also read in the 

press that the so-called BRIC countries, Brazil, Russia, India and 

China, that they formed a voting bloc and have veto authority over 

the NAB’s operation. Is that true? And if it is true, isn’t this a 

threat to the accountability of the U.S. taxpayers’ funds? 

Secretary GEITHNER. No threat to us. And I would say that all 

countries who contribute, they seek to maximize their influence as 

do we. And so I think what you see them do occasionally is—Europeans do this, other countries do this already—is to see where they 

can work together, build coalitions to advance their interests. But 

no risk to our interests in that context. 

And again, the basic benefit of this fund, like the IMF and like 

the World Bank and the other regional banks, is we get very good 

leverage for the taxpayers’ money. And for that reason, it is a very 

effective way to promote our economic interests, our national security interests, because of other people coming alongside us putting 

their money in play as well. 

Ms. GRANGER. Thank you, Madam Chair. I will have more for 

the next round. I hope there is one. 

Mrs. LOWEY. Thank you. 

Mr. Israel. 

IRAN

Mr. ISRAEL. Thank you, Madam Chair. 

Mr. Secretary, welcome. I want to pursue the chairwoman’s discussion about the Iran Sanctions Act. I want to take issue with 

your characterization of efforts to enforce sanctions as remarkably 

effective. 


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I was stunned to read in the Sunday, March 7th, edition of the 

New York Times a lead cover story with the headline, ‘‘United 

States Enriches Company Defying its Policies on Iran.’’ 

Now, the issue is not simply the enforcement of sanctions, which 

can prevent loans from going to these companies. The Iran Sanctions Act allows for far greater leverage. Contracts, Federal contracts should be denied. Export authority can be denied. Military 

licenses can be denied. Financial services activities can be prohibited. 

And this story notes that 49 companies doing business with the 

United States are also doing business in Iran. Your Office of Foreign Assets Control oversees implementation of the Iran Sanctions 

Act of 1996. You have an Under Secretary for Terrorism and Financial Intelligence. The work he is doing—I have a high regard 

for him personally, but it seems to me the work he is doing 

wouldn’t result in headlines in stories like this. 

This is not you alone. I have to say, in 8 years of the Bush administration, there was a consistent willful defiance of Congress, a 

refusal to enforce the Iran Sanctions Act passed in 1996. Eight 

years in the Bush administration, and it hasn’t changed in this administration. 

Mr. Kirk and I have decided that if you aren’t going to change 

it, we will. This is the Appropriations Committee. We have the 

power of the purse, and so Mr. Kirk and I have inserted language 

or asked for language in every single appropriations bill that says 

that none of the funds appropriated or otherwise made available by 

this act will be obligated or expended by any Federal department 

or agency to provide funds to any person or entity through a contract grant, loan or loan guarantee unless the person or entity certifies that Iran Sanctions is not being violated. 

So my question to you, Mr. Secretary, is, how can you persuade 

me that this language isn’t necessary? What are you going to do 

to enforce the Iran Sanctions Act? And that is number one. The 

second question is, what are you doing to discourage those companies from engaging in illegal activity with Iran? 

Secretary GEITHNER. Congressman, we share your commitment, 

and we are working very hard to find—explore all feasible means 

to bring greater pressure to bear on this regime. I will be happy 

to work with you on that suggestion, happy to come talk to you in 

more detail about how to do this effectively. We will be open to any 

effective means for bringing greater pressure to bear on this government. But I—and again, I am happy to have my colleagues, Stuart Levey and others, spend more time with you on this stuff. 

This has been a very aggressive, very effective program, particularly in trying to convince other countries to bring pressure alongside ours. As you know, we have been the toughest of any country 

in this area, the most aggressive, but our efforts aren’t going to be 

effective unless we have other countries moving with us. In any 

case, we share your commitment to this, and we will work with you 

to explore any feasible means to bring greater pressure to bear on 

this government. 

Mr. ISRAEL. Mr. Secretary, I appreciate your sharing of the commitment, and I don’t doubt that you share the commitment. And 

I understand that we need to find all feasible and effective means. 


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But this is an Act of Congress signed by a President of the 

United States. All I am asking you to do is enforce the law, and 

so what is the difference? I mean, I am saying enforce the law, and 

I think your interpretation is, we will enforce the law as we see fit 

based on our interpretation of effective means. 

Secretary GEITHNER. Of course, we are enforcing the law, and we 

are working very closely with our colleagues in the executive 

branch, including the State Department, to make sure we are enforcing that law. 

But we want to do better than that. We want to make sure that 

we are working with countries around the world to bring greater 

pressure to bear on this government, and it is going to more than 

just enforcing our current authority to do that. But, again, I will 

be happy to work with you and Congressman Kirk on how best to 

do that, and I commend you for your effort and focus to this important national security issue. 

Mr. ISRAEL. I appreciate that. Mr. Kirk and I have submitted 

language, identical language, in every single one of the appropriations bills, and we will look forward to a dialogue with you. 

Thank you, Madam Chair. 

Mrs. LOWEY. I just want to share the chair’s opinion, Mr. Secretary, that I, and I know members of the committee, strongly support the views of Mr. Israel and Mr. Kirk on this issue and are 

aware that the Department of State has the key role in enforcing 

these priorities and working to try to build a multilateral coalition. 

So as we move forward, before our appropriations bill is passed, 

we already took action with regard to Ex-Im in this bill, and depending on when the Iran Sanctions Act is signed by the President 

and the actions of State in building a multilateral coalition, we will 

move forward and put additional restraints. 

I just want to say what I am particularly concerned about, having just returned from a bipartisan codel to Saudi Arabia, Amman, 

Dubai, and Abu Dhabi, that subsidiaries of our corporations are 

having a field day there, and it is of great concern to all of us. And 

that is why this recommendation of a certification, I do believe, and 

I share the gentleman’s concern, is essential in moving further in 

enforcing the sanctions. 

So I thank you and Mr. Kirk for bringing this issue to the attention of the Secretary. 

Secretary GEITHNER. Madam Chair, could I just respond to Congresswoman Granger’s question about gold sales? This is a part of 

the response, but I will give you the rest subsequently in writing, 

which is that the total profits on gold sales to date are $4.7 billion. 

That is the return on the sales above the book value held by the 

IMF, but I don’t know what that is relative to what expectations 

were. But you asked a series of other detailed questions, and I will 

be happy to respond in writing. 

Ms. GRANGER. Thank you very much. 

Mrs. LOWEY. Mr. Kirk. 

Mr. KIRK. I echo the sentiments of my chair and Mr. Israel here. 

I would just say that I would hope that our policy for the President’s upcoming action is, sign it and seal it. Sign the Refined Petroleum Sanctions Act, and then seal off gasoline to Iran. 


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In the briefings that we have had, it appears the Obama administration is against imposing gasoline sanctions on Iran. Your staff 

has given me the strong impression that you will not impose a gasoline sanction on Iran and that the administration will not consider 

any unilateral action that is not approved by the UN Security 

Council. 

You are getting a fusillade of opinions, and I would refer you to 

Senator Schumer’s speech before AIPAC, in which he cut loose 

from the Obama administration policy and said that a unilateral 

policy of restricting gasoline is absolutely essential to the security 

of the United States and Israel. 

Now, are you in favor of what Stuart Levey said to us, which is 

basically, we are not going to do gasoline sanctions? 

Secretary GEITHNER. Congressman, I will state to you, as I did 

to your colleagues, we share your commitment to finding effective 

ways to bring substantially greater pressure onto this government, 

and we are working very hard with countries around the world in 

support of that objective. And we will look at any effective means 

for doing that. 

It is important, of course, to recognize that it is not just what we 

do, and of course, right now, it is not even the most significant 

thing what we do as a country, because we have been very aggressive. It is what we are able to convince other governments around 

the world to do because they are now the primary source of economic and financial assistance to this regime. 

But, in any case, we share your commitment to this issue. You 

are right to bring attention to it. We commend you for your leadership on it, and we will work with you to explore ways to bring more 

pressure onto this government. 

Mr. KIRK. It actually appears that you are going in the opposite 

direction. The Wall Street Journal reports that the U.S. has softened its stand on Iran sanctions and has now removed banking 

service and capital markets action from any discussion of sanctions. 

Secretary GEITHNER. I do not believe that report is correct, but 

I think I need to leave it to my colleague, the Secretary of the 

State, to walk you through particular strategy and objectives with 

respect to the new resolution that we are pursuing in the UN. But, 

again, we are committed, the President is committed, to trying to 

build the strongest possible international support for the strongest 

possible resolution so we can bring more pressure to bear on this 

government. We are making a lot of progress in this area. 

Mr. KIRK. But the President is against a unilateral use of the 

United States Navy to restrict gasoline from the Islamic Republic 

of Iran pursuant to the Act which he is about to sign. 

Secretary GEITHNER. No, I can’t say whether that is correct or 

not. I didn’t want to speak to that. 

I am just saying that we will work with you to try to find ways, 

again, to bring more pressure onto this government. And we are 

making a lot of progress trying to build support for this around the 

world. 

Mr. KIRK. Did you know that the World Bank provided $50 million in support directly to the Islamic Republic of Iran Finance 

Ministry in 2009? 


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Secretary GEITHNER. I don’t know if that is correct, but I will be 

happy to go and check. 

But as you know, Congressman Kirk, under these loans, which 

we tried to block but were unsuccessful in blocking, which were 

permitted under the UN resolution, they are still disbursing. Now, 

right now, Iran is paying the World Bank net resources every year. 

These are not large amounts of money. 

The critical test of whether we are effective in trying to end their 

nuclear program and deal with other concerns of Iran is going to 

be what we are able to achieve in the UN and what we are able 

to achieve working with countries around the world to tighten substantially the existing network of multilateral sanctions on Iran. 

Mr. KIRK. And you are about to pay the Islamic Republic of Iran 

Finance Ministry out of the World Bank—this is literally two 

blocks from your office—$191.5 million. 

Secretary GEITHNER. Again, I don’t—you are saying I am about 

to. I don’t know that. But I will be happy to check the facts and 

get back to you. 

Mr. KIRK. I think you are about to. I think this committee is 

probably—— 

Secretary GEITHNER. Are you saying—just to make sure I understand, because I want to make sure I respond in writing accurately, 

you are saying—can you repeat again what your concern is? 

Mr. KIRK. In 2009, the World Bank using—— 

Secretary GEITHNER. You are referring to World Bank disbursements—— 

Mr. KIRK. Right. Using—20 percent of that funding is from the 

United States taxpayer, sent the Islamic Republic of Iran Finance 

Ministry $50 million. 

Secretary GEITHNER. No. As I said, you are referring to these two 

loans, disbursement of these two loans, and you are right to be concerned about this. And as you know, we tried to oppose these. We 

can’t block them and don’t have the ability to do it. They are still 

disbursing under that. It is not, I believe, a material amount of resources in the context of a broader objective, and we are going to 

work very carefully to make sure that there are no new loans approved to this government by those institutions. 

Mr. KIRK. Madam Chair, there is one bigger issue that I think 

could engulf this committee, and that is Moody’s reported on Monday that it has warned your government that the U.S. and United 

Kingdom are moving closer to losing their AAA bond rating. This 

week we have learned that Berkshire Hathaway is now a safer 

place, according to the market, to lend money to than Uncle Sam, 

and that your auctions of the notes, and especially the 10–year 

bond, were fairly disastrous yesterday. 

Secretary GEITHNER. That is not true, congressman, but—— 

Mr. KIRK. Actually, well, should I read the L.A. Times to you in 

its coverage of your bond sales? 

Secretary GEITHNER. You can if you like, but I know what happened in the Treasury market and—— 

Mr. KIRK. ‘‘Sell-off Sends Treasury Bond Yields Soaring’’ is the 

headline. 

Secretary GEITHNER. Maybe I could—you and I have had a 

chance to talk about this a lot in many, many hearings in the past; 


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so let me just see if I can respond to your concern. You are right 

to be concerned about our unsustainable fiscal position. We share 

that concern. Our budget deficits are too high. They were too high 

a year ago when we came into office. And if you look forward, they 

are unsustainable over the longer term. 

Mr. KIRK. I am trying not to make a partisan point. I am trying 

to make—— 

Secretary GEITHNER. Nor am I. 

Mr. KIRK. So I am going to try to make a point directly into the 

AOR of this subcommittee. Because we have a growing sovereign 

debt issue that even includes the sovereign debt of the United 

States, the sovereign debt situation of Portugal, Spain, and Greece 

is now becoming more dire. And my understanding is that the negotiations of the Greek Government to the EU and Germany have 

not yielded a European solution. So the Greeks are now being 

asked to come to the IMF, an institution funded by this subcommittee. Is that not the situation we are in? 

Secretary GEITHNER. Well, Europe is trying to come together to 

find a way to help the Government of Greece dig out of their economic crisis. Greece is a member of the IMF. You are right to say 

the press is reporting that the Europeans are considering asking 

the IMF to play some role in the resolution of this crisis. Greece, 

as a member of the IMF, has the right to go to the IMF and to borrow funds if it is willing to commit to an economic program that 

can help dig its way out of the crisis. 

But Europe hasn’t reached agreement yet on how to resolve this 

problem. They are working on it. They have the capacity to figure 

out a solution that will help Greece manage through this, and I am 

confident they are going to do that. 

Mr. KIRK. I would just say to the chair, I am increasingly concerned that resources at the IMF are not adequate to meet a growing sovereign debt crisis; that the Portuguese and Greek crises are 

only harbingers of the Spanish debt crisis, which is five times 

worse. And this may directly affect funding in our bill when we 

write it in May or June. 

Mrs. LOWEY. Thank you. 

And I know that the Secretary would be happy to continue this 

discussion recognizing the severity of the problem. 

I will tell you one good thing. It is good to know that Moody’s 

can be relied on for some kind of a rating. Unfortunately, in the 

last few years, that wasn’t the case. 

Ms. McCollum. 

Ms. MCCOLLUM. Thank you, Madam Chair. 

Madam Chair, I appreciate your comments about loans that have 

been made in 2004, 2006, I believe; so I want to focus on kind of 

what is today. 

Mr. Secretary, in your testimony, you stated that every $1 invested in the World Bank results, from our calculation in checking 

with others, $26 worth of development assistance delivered. That 

is a pretty good return. 

And for that reason, I have been very supportive of the U.S. role 

in advancing important development work of the World Bank. 

Unfortunately, this committee sometimes gets a little confused 

when we are talking about what loans and what the World Bank 


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is doing and what the U.S. has a role in. There was, in my opinion, 

some distortions made about the important role that the U.S. plays 

in the World Bank. In fact, there was a statement made in a recent 

subcommittee hearing with Secretary Clinton, and I quote, Imagine 

how confused Ahmadinejad is receiving a check from the World 

Bank from the Obama administration. 

Secretary Geithner, is the Obama administration providing taxpayer funds to the World Bank through IBRD, the IFC, or IDA 

that goes to assist the Iranian President Ahmadinejad? 

Secretary GEITHNER. This administration is not. Those loans 

were made, as you said, back in 2005, and they were made by the 

entities of the World Bank Group. Now, we, of course, are a major 

shareholder in those institutions—— 

Ms. MCCOLLUM. Correct. 

Secretary GEITHNER. And of course, those institutions have a 

claim on our commitments and our resources. But those loans were 

made in 2005 over our objection, but they are still disbursing because they are permitted under the UN resolution. 

Ms. MCCOLLUM. But we are currently, under the accounts that 

we do put money into that does developmental aid, none of that is 

going to Iran. They don’t even qualify for IDA so—— 

Secretary GEITHNER. That is right. Exactly. That is true. 

Ms. MCCOLLUM. I, too, read the Wall Street Journal, and I will 

quote from March 2, 2010: Caterpillar, of Peoria, Illinois, has acknowledged in the past that its equipment is sold to Iran, despite 

U.S. Sanctions that prohibit most American exports to the Islamic 

Republic. The company has said that its foreign subsidiaries have 

conducted limited sales to independent dealers outside Iran, which 

resell to customers inside the country. Caterpillar has said those 

sales have been in full compliance with U.S. Regulations. 

And I would differ with that. 

So going back to regarding sanctions: A group of former Bush administration officials have an organization that they called United 

Against a Nuclear Iran. This organization recently exposed an Illinois-based company, Caterpillar, for profiting from selling machinery including tunnel-drilling equipment to Iran through a subsidiary. The United Against a Nuclear Iran letter to Caterpillar 

CEO James Owen states, quote, In the face of overwhelming bipartisan support in the U.S. Congress to economically isolate Iran’s oil 

and natural gas industry, Caterpillar continues to make its machinery available for use in the development of the Iranian oil industry. 

The letter further goes on that they call upon Caterpillar to clarify whether tunneling equipment or heavy machinery in Iran is 

used to develop for the construction of Iran’s nuclear facilities. The 

prospect that the Illinois company’s equipment right now is digging 

tunnels to assist Iran’s nuclear program is very troubling. 

Mr. Secretary, we all know that money is fungible, so when a 

U.S. company’s product is sold in Iran through foreign subsidiaries, 

companies like Caterpillar profit, and then use to influence decisions made here in this Capitol, our efforts are being undermined 

at making these sanctions really work. 


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Mr. Secretary, does Congress need to strengthen sanctions to 

prevent companies like Caterpillar from profiting in Iran, and what 

do we need to stop that now? 

Secretary GEITHNER. I don’t know if I can speak specifically to 

that case, so I will be happy to look at it and refer your questions 

to my colleagues, but of course, we are prepared to work with Congress to strengthen the existing sanctions regime to make sure it 

is being applied as effectively as possible. And as I said, we are 

working very hard with countries around the world to make sure 

we can bring substantial additional pressure to bear on this government. 

Ms. MCCOLLUM. Madam Chair, I have some documents to enter 

for the record. 

[Information appears on page 358.] 

Mrs. LOWEY. Without objection. 

Ms. MCCOLLUM. And I went back, and I think all of us need to 

take a serious look at Caterpillar’s involvement here with us individually on the hill. 

Mrs. LOWEY. Mr. Crenshaw. 

HAITI

Mr. CRENSHAW. Thank you, Madam Chairman. 

Mr. Secretary, yesterday we had a briefing with the Department 

of State and talked about Haiti, and it was pointed out there is 

about $4 billion that is going to be given to them over the next 18 

months. I think for the reconstruction period, it is another $11 billion, $11.5 billion. So that is about $15 billion. Our fair share of 

that, I think you said, was about $2 billion to $3 billion. And I saw 

where the supplemental has $212 million for debt relief. I am trying to understand those numbers. 

As I understand it, back in July, there was kind of a debtors conference, and all the donors agreed to forgive all the debt for Haiti, 

and certainly that is understandable. But I am trying to understand how, if that was in July, now we have another $212 million 

that we are going to forgive, obviously, in the situation they are in, 

that is certainly appropriate. 

So part of it I would like to understand why they have the debt 

there over these last 7 months, and partly I would like to understand if that is a country that is so poor that they qualify for debt 

relief, I wonder what is the criteria for a debt versus a grant because I just don’t want this committee to be in a position this time 

next year to say, well, we have got some more, the fact that we 

have already given $2 billion to $3 billion, but now there is some 

more debt that we are being asked to forgive. So if you could talk 

about that. 

Secretary GEITHNER. A very good question. Most of the debt 

Haiti owes to governments around the world is—very little of it is 

owed to the United States. Most of the debt they owe to multilateral institutions is owed to the Inter-American Development Bank 

and some other international financial institutions. To reduce that 

debt, the debt they owe to the IDB, costs money, but we think it 

is good policy because it doesn’t make sense for us to be providing 

substantial resources directly to Haiti; it just goes to pay back the 

obligations they have to the IDB. 


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So as part of this broader effort to mobilize as much global resources as we can to help Haiti through this, we thought an accord 

on canceling Haiti’s was appropriate and necessary, but to do that 

effectively, you need to deal with the debt they owe to the multilateral institutions, not just the bilateral institutions. And our share 

of the cost in reducing the debt they owe to the IDB is the number 

you referred to in your opening—in your remarks in your questions. 

But again the simple test is, you can provide resources lots of different ways; it doesn’t make sense for us to give them substantial 

amounts of money that just go to repay their multilateral and bilateral creditors. So we have worked with countries around the 

world to get them to agree to cancel or extinguish their bilateral 

debt, but we need the IDB and those other institutions to do the 

same thing. 

Mr. CRENSHAW. So the IDB probably, in that intervening 7 

months, made an additional loan—— 

Secretary GEITHNER. I don’t actually know that is the case. I 

guess it is possible. So I am not sure what changed between July 

and—— 

Mr. CRENSHAW. Or maybe they didn’t all—maybe they didn’t 

agree—I mean, they all agreed to pay 100 percent of the debt, but 

maybe it wasn’t paid—— 

Secretary GEITHNER. They may not—it is possible—but I will 

come back to you on this in more detail. It is possible that that initial stage was just about governments around the world, not the 

international institutions. And this will be a critical part of it. Getting the IDB to move, too, will be a critical part of any effective 

solution—— 

IDB

Mr. CRENSHAW. You mentioned the IDB. Let me ask you, I think 

just last week you released another $500 million to kind of increase 

their capital, and I imagine they make loans, Latin America, Caribbean, difficult times globally in part and also just because there is 

more demand down there. Would you comment on that? Is that the 

reason why that $500 million was added, released? And also comment on the fact that, from time to time, I hear that the IDB is 

not very friendly to the U.S. when it comes time for some of the 

procurement contracts. I don’t know if that is true or not, but it 

seems like we are providing a lot of the money that goes in the IDB 

that we ought to get a fair shake when it comes time to procure 

those contracts. Could you comment on those two things? 

Secretary GEITHNER. Absolutely. At the peak of this financial crisis, when you saw exports stop around the world, growth stop 

around the world, we were successful in convincing the World 

Bank, the IDB, the Asian Development Bank, other MDBs to substantially increase the amount of resources they were giving to 

what are some of the most important markets for U.S. exporters. 

They delivered. They moved very, very quickly. They got a lot of 

loans out the door in support of reforms at development projects 

and that made a critical effort in helping restart the flow of trade, 

restart growth globally. 


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In the wake of that commitment, which is substantially where 

their capital is based, we have worked with the other major shareholders in the IDB to reach a provisional agreement on how to 

strengthen their financial position. As part of that, we have 

reached agreement on a set of reforms to improve how the institution is run, to make sure those resources are being used in the 

most effective manner possible. 

I don’t have with me any details on the procurement record of 

U.S. institutions in IDB-supported projects. I would be happy to 

come back to you with more detail on that. I haven’t been exposed 

to concerns recently about that. But again, our interests are in 

making sure these institutions are supporting U.S. interests, our 

economic interests, our national security interests, and they have 

a very good record, including the IDB, of providing very good leverage for our scarce resources in support of those commitments. 

But when we put resources on the table to make them stronger, 

we do so only in support of a very tough, ambitious set of reforms 

that are designed to make them more transparent, more accountable, better run, more focussed on things that we think best serve 

our interests, and this provisional agreement we reached last weekend, which I think is what you were referring to, is in that best 

tradition. 

Mrs. LOWEY. Mr. Chandler. We are going to try to move through 

here. 

Mr. CHANDLER. That is the way it always is when it comes to me. 

Mrs. LOWEY. No. But we will come back just for you if you would 

like. 

IRAN

Mr. CHANDLER. I appreciate that. 

Mr. Secretary, hello. I know you have been talking a lot already, 

because members are interested in it, in sanctions against Iran. 

The reason, of course, that they are interested in it is that none 

of us want Iran to get nuclear weapons. I have—for as long as I 

have been on this committee, I don’t think there is any issue that 

is more important to the members of this committee, and that is 

across the board. It is extremely important to the members of the 

committee, and I think we all know that if sanctions don’t work, 

we will be looking at options that we don’t even want to contemplate, none of us want to contemplate. 

So it becomes imperative that we make the sanctions work. And 

I know that you have a great deal of experience in Asia. I know 

you have lived in several countries there during your career. Could 

you give us some indication of where China is on the subject right 

now? Sanctions, we all want them to work, but we also know that 

if we don’t have some unanimity, some effort amongst all countries, 

that we have got a significant problem and that they either may 

not work or probably won’t work. 

Secretary GEITHNER. You made the critical points. This is vital 

to our national security interests. And to be effective in bringing 

pressure to bear on this government, we have to get the other 

major players to come with us. This includes Russia, and it includes China. It is not just about Europe. 


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And Secretary of State Clinton and Ambassador Rice are working 

very hard right now in trying to make sure they can strengthen the 

prospects of broad agreement among those key countries for a very 

strong resolution. That is the principal focus of the President’s attention right now, and of course, we are going to work very hard 

to be persuasive with Russia and China to gain their support for 

a strong resolution. 

Mr. CHANDLER. Where does the matter stand now? From what 

you can tell, what kind of progress are we making along those 

lines? There has been some suggestion that there was some intransigence there on the part of those countries. Do you— 

Secretary GEITHNER. All I can say, Congressman, now is that is 

really a question that I should leave to my colleague, the Secretary 

of State, but she is very persuasive. She is very tough, and she is 

working on it very hard with the full engagement of the President. 

And we are going to keep at it until we get as much support as 

we can for the strongest resolution. 

Mr. CHANDLER. I see I have time. One more quick question. The 

World Bank. Are we spreading too thin? It seems like it is undertaking a number of different roles that it had not played in the recent past. All of a sudden and now we are talking about a global 

food security fund that it is going to be involved in. Are we spreading it too thin? 

Secretary GEITHNER. I don’t think so. I think you are right to 

point out that, over time, what happens is we give new missions, 

new responsibilities to these institutions, particularly the ones that 

have the best record of being effective, and the World Bank is a 

step above the others, frankly, in how effective it is in using these 

development resources in support of things we all care about. But 

the reason why we are proposing to put a larger share of our overall foreign assistance budget into these trust funds and into the 

multilateral banks is because, again, we think they give us better 

leverage for our dollars, our scarce dollars, and we think they come 

with the best technical expertise, frankly, in running programs in 

agricultural development, to promote food security, to increase agricultural productivity, as well as in the areas of encouraging greater energy efficiency, reducing emissions. 

The World Bank has the greatest concentration of technical expertise in the world in those specialized areas, and I think our 

judgment is, if you build on that expertise, you build on those institutions, you are more likely to have other countries come in and 

have those resources mobilize in support of our resources with better outcomes, better returns. 

Now, I said in my remarks, that among the reforms we are proposing to the institutions is to try to get them to concentrate on 

a set of core objectives which we think are most important. And the 

ones we focused on are private-sector development, food security, 

agriculture development, helping the poorest in these countries, 

helping address poverty most directly, and in the areas of climate 

change. Now, there are other things that are important for them 

to do as well, but we want to make sure that we can concentrate 

their focus, narrow their focus on those core areas of concern to us. 

Mr. CHANDLER. Thank you. 

Mrs. LOWEY. Mr. Rehberg. 


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Mr. REHBERG. Thank you, Madam Chair. In the interest of time, 

I would like to submit some questions for the record to have the 

Secretary answer. 

Real quickly, in your fiscal year 2011 request, following up on his 

point, you are asking for $408.4 billion for the global agricultural 

and food security program. I am a real supporter of food aid and 

believe it is important to do. But my first concern is that it is still 

in the initial stages. Second, that Canada and Spain and the Gates 

Foundation are the only ones that have joined in so far. Third, 

there is no congressional legislation authorizing the appropriation. 

Fourth, there is a possibility that the World Bank’s International 

Development Association, which is asking for $1.285 could do this 

same thing. 

So I will give you a series of six questions for the record, but I 

guess, most importantly, aren’t you getting the cart before the 

horse in that there is no authorization for the expenditure of this 

fund in the first place? And what is a fair percentage for America 

to shoulder? I always look at numbers to see who else is involved. 

Secretary GEITHNER. Those are good questions. And of course we 

are working very closely with the authorizers to make sure we 

have authorizing legislation to go with this. 

Mr. REHBERG. And you anticipate that within this 12 month period. 

Secretary GEITHNER. We do anticipate that. Again, my sense is, 

just for the reasons you said, I think there is a lot of support for 

this. I think people recognize that if you care about development 

and in our economic interest in development, one of the most important things for us to do is to reverse what was a decade long 

decline in the share of resources and investments into these things 

that can make the biggest difference. 

You are right to say that we are at the early stages still and trying to mobilize as much resources as we can. But we are confident 

that we have a better chance of getting more resources into this 

key priority by using this mechanism, a multilateral fund that 

works, that is located in the World Bank, uses that institutional 

expertise, that basic mechanism. I think we are going to have a 

better chance of getting more money from other countries if we use 

that mechanism. 

Mr. REHBERG. I have tried to see if any recipient countries are 

going to be on the governing board. Can you assure us they are 

not? 

Secretary GEITHNER. I don’t know, but I will respond in writing. 

And I understand your concern again. The general tradition that 

has guided my predecessors in the past in the Treasury in the 

United States for dealing with these is, we want to have governing 

bodies where the creditors, the people putting up the money, have 

the dominant influence in what that money is used for. 

Mr. REHBERG. I will yield back the balance. 

Thank you Madam Chair. 

Mrs. LOWEY. We are running into a time issue. 

Ms. Lee. 

Ms. LEE. I am going to be very, very quick. 

Good to see you, Mr. Secretary. 


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Two questions. One is the GAO report 2008 laid out how the 

funds of OFAC are really misdirected in enforcing the travel ban 

on Cuba, and that an inordinate amount of OFAC’s resources are 

tasked with an enforcement of policy that really has nothing to do 

with our risk in terms of our national security. So we were waiting 

to see the risk assessment as recommended by GAO, and I just 

want to see if that has been done. And have you reallocated your 

limited resources during this time of very tight budgets to areas 

that best address the risks to our national security? 

And the second question is PEPFAR, our Global Aids Initiative. 

I know in the previous bill, in the last bill, we authorized Treasury 

to assist countries with their public finance systems. I want to see, 

have you started working on that? Are you coordinating with State, 

or how is that working, or have you started? 

Secretary GEITHNER. On the first issue, you are exactly right 

that it is very important that we allocate these resources in OFAC 

to where we have the greatest national security concerns. I believe 

we are doing that, but I am happy to provide you more details in 

writing about how we use those resources today and how it has 

changed recently. 

Ms. LEE. You were supposed to do a risk-based assessment as 

recommended by GAO. 

Secretary GEITHNER. Again, I would be happy to come back to 

you in writing and tell you what we have done in that area and 

how we are using those resources. But you are right about the 

basic point. We want to make sure that, we don’t have unlimited 

resources, we want them used to where we have the most important risks. 

On PEPFAR, I have to come back to you in writing. I am sure 

we are coordinating with State very closely on this, and we will respond to any detailed questions you have about the state of play 

on that particular program. 

Ms. LEE. Thank you. 

And I have more questions for the record, Madam Chair. 

Mrs. LOWEY. Mr. Rothman. 

Mr. ROTHMAN. Thank you, Madam Chairman. 

Mr. Secretary, great to see you again. I don’t know how you actually read all the things you need to read with all the time you 

spend on the Hill answering our questions, but—— 

Secretary GEITHNER. I respect very much this important tradition in government, and I am happy to cooperate closely. I do enjoy 

coming up answering questions. It is a good thing that you guys 

put us in the position we have to come up here and explain. It does 

take time. 

Mr. ROTHMAN. Good. And thank you for the outstanding work 

you are doing, by the way, in all areas. 

I did want to acknowledge the issue raised today by Congressmen Israel and Kirk. Coincidentally, yesterday I announced that I 

would be adding to each appropriations bill limiting language with 

regard to preventing Federal agencies of the United States from 

doing business with any companies who did business with Iran. I 

was unaware of the language that Mr. Israel and Mr. Kirk were 

concurrently working on. And I do look forward to working with 

Mr. Israel and Mr. Kirk and others, the chairwoman, on that issue. 


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I have used that limiting language device before on other issues, 

and it works. 

The State Department does seem to me to have the lion’s share 

of responsibility of enforcing the prevention of companies being 

funded through the U.S. Federal Government to do business with 

Iran. But to the—and I appreciate your saying you would cooperate 

and work with the Congress. To the extent that you have not fully 

scrubbed your Department of the Treasury in that regard, I urge 

you to do so. And the only reason I make note of that is because 

in a recent article in The Times of a few days ago referring to a 

State Department spokesperson who had reviewed 27 of the deals 

in question, they said that there were some, quote, carefully constructed mechanisms of these companies to get around the law, and 

some other problematic cases. If you can come up with language 

that will help us tighten these laws, please submit that language 

to us, and we will make it the law so that they cannot carefully 

construct loopholes through which they can do business with Iran. 

I just came back from Afghanistan and Pakistan, and one of the 

major issues there has to do with corruption in Afghanistan. And 

I understand, and it is reflected in your budget, that your Office 

of Technical Assistance is working with the Afghan government to 

address that. Could you comment on how that is going, ending the 

corruption or training, providing fail-safe mechanisms to end corruption in the Afghan government? 

Secretary GEITHNER. Again, thank you for highlighting the role 

they play. We have a group of very talented, very brave people, 

frankly, working closely with the Afghan government to improve a 

variety of things that are basic, basic to running an effective finance ministry, Central Bank, et cetera. I referred in my statement, I think I quoted a former minister saying that the technical 

assistance he got from Treasury was the best technical advice he 

had gotten from anywhere. 

This program has a great record around the world. It is tremendously valuable. It is a very, very small amount of resources with 

a very, very high return. And I think it would be—I couldn’t do it 

in my statement, but we would be happy to provide more details 

in writing about the full extent of what we are doing, not just in 

Afghanistan, but in many other countries. Great record in Iraq, 

great record in Afghanistan, great record in countries in Eastern 

Europe, and not just in the areas I referred to in my testimony in 

preventing money laundering and terrorist financing, but in building the basic institutions of government controls, reducing corruption, building central banks, building payment systems. These are 

things that all governments need to operate effectively. 

Mr. ROTHMAN. As you know, one of the reasons why the Afghan 

people, aside from the threats of the Taliban to kill their families 

if they didn’t join them, were some of the Afghan people wanted 

relief from the corruption of the Afghan government and turned to 

the Taliban for protection from the corruption in the previous Afghan regime. So your continuing efforts are very important. And if 

you can keep us apprised of your efforts and the success of those 

efforts, we would be greatly appreciative. 


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And please, thank your personnel, who are demonstrating not 

only intellectual and scholarly prowess, but also the physical courage of being in a war zone providing all that assistance. 

Secretary GEITHNER. Thank you for saying it. It is a great sacrifice. And as I said, they are not just dedicated competent thoughtful people, smart people, but they are brave to be doing it, and I 

really very appreciate their sacrifice, and thank you for highlighting it. Any place we are putting in substantial resources, 

whether we are at war or we have some other broad interest, you 

want to make sure that you are helping governments put in place 

the kind of controls to make sure they are not just feeding corruption and the resources when we need them. And so that is why it 

is so important to have the technical expertise of these bilateral 

programs funded adequately alongside what we are doing through 

the World Bank, but thank you for highlighting that. 

Mr. ROTHMAN. Thank you. 

Mrs. LOWEY. Thank you, Mr. Rothman. 

We have 1 minute left for Ms. Granger. 

Ms. GRANGER. The chairwoman has been kind enough to let me 

ask another question. I will ask it very quickly. 

I was talking yesterday to our Ambassador to Mexico, Carlos 

Pascual, about the violence in Mexico. I know that the Treasury 

designated 54 members of the Gulf Cartel and the Los Zetas as 

specifically designated narcotics traffickers, which is part of the 

strategy of going after the cartels’ organization network. What else 

can you do in Mexico to disrupt this organization and prohibit the 

effect of this new strategy? 

Secretary GEITHNER. Of course, this is just one of the many tools 

we have, but it is a very important tool. Because what it does is, 

it deprives them of the ability to access financial resources through 

our institutions. And we, of course, use this program to make sure 

we are giving information to the next that they can use. This can 

be very effective. 

But as you all pointed out you need to keep moving. You can 

catch it in one area and shut it down, and it is going to move somewhere else. So it is a constant struggle. And Stuart Levey and his 

colleagues work every day to make sure that they are gradually not 

just expanding the scope of these things but tightening them in 

their reach. And again, it can be very effective. It doesn’t solve the 

problem, but it is a very effective tool. 

Ms. GRANGER. Thank you very much. 

Secretary GEITHNER. Chairwoman Lowey, could I just say one 

thing? I want to just say one thing—— 

Mrs. LOWEY. Go right ahead. 

Secretary GEITHNER [continuing]. I said in my statement, but I 

want to end with this. Because, as you all said, even those of us 

who recognize the long commitment to supporting these institutions, these programs, you know, this is a time when one in eight 

Americans are on food stamps. Unemployment is 10 percent, and 

we have got unsustainably high fiscal deficits. And we are living 

with greater constraints on scarce resources than we have in decades. And this is a large increase in request, but I want to underscore something that I think you understand, but I want to make 

sure people understand this. The overall international affairs budgVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00303 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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et of the administration is only proposed to increase 2.8 percent, 

just slightly above inflation. 

So even though we are in a time when we are fighting two wars, 

we have tremendous global challenges, huge American interest in 

being part of that, this is a very restrained overall budget. Our 

piece of it, which is a very small piece of the budget, is only 5 percent of the budget. We are proposing, as you said, a substantial increase over last year, and if you look over 2 years, it is a substantial increase. But we are doing that because we are trying to be as 

fiscally prudent and responsible as possible, because by shifting resources more to these multilateral institutions, we are getting a 

much bigger bang for the American dollar. So by putting a dollar— 

taking a dollar from a bilateral program and putting it into a multilateral program, we have a much greater chance of having that 

dollar leverage commitments from other countries. And if we put 

them through the World Bank and others, they are leveraged further by the borrowing capacity of the World Bank. 

So although our numbers are going up, we are a very small share 

of the overall budget. The overall budget is going up only modestly. 

And again, this shift toward the multilateral institutions at the 

margin is part of a fiscally responsible approach to substantially increasing the leverage we get for asking the American people to put 

up some of their taxpayers’ money in support of these broad objectives. 

Mrs. LOWEY. I just want to say, Secretary Geithner, I appreciate 

your testimony. I appreciate your closing comments. And the results are only as good as the accountability and the oversight, and 

we always look forward to those reports, because unfortunately, 

there have been many instances with bilateral aid, with multilateral aid, where that may not be the case. So we appreciate your 

oversight, and we look forward to following up with you. This meeting is adjourned. 

Secretary GEITHNER. Thank you very much. 


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THURSDAY, MARCH 18, 2010.

FY2011 BUDGET REQUEST FOR PEACE CORPS 

WITNESS 

AARON S. WILLIAMS, DIRECTOR PEACE CORPS 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. The Subcommittee on State and Foreign Operations 

and Related Programs will come to order. Oh, Ms. Granger is here 

just in time. And we apologize in advance—she got over here 

quick—we apologize in advance because it looks like they are going 

to be calling votes. 

So, we are going to begin and it is my great pleasure to welcome 

Aaron Williams, the Director of the Peace Corps for his first hearing with us to discuss the President’s fiscal year 2011 request for 

the Peace Corps. Mr. Williams brings a wealth of experience in development to the Peace Corps. He is not only a returned Peace 

Corps volunteer, but a former senior foreign service officer at 

USAID and former Vice President for International Business Development with RTI International. Mr. Williams, it is a pleasure to 

have you testify today. 

The President’s budget request 446 million for the Peace Corps, 

a 10 percent increase over the fiscal year 2010 enacted level. The 

request includes findings to increase volunteers, enhance recruitment efforts, and expand to three new countries. On its 49th anniversary two weeks ago, we mark the Peace Corps’ success in promoting American values and ideals throughout the world and increasing understanding of the global community among Americans. 

Today with 7,800 volunteers in 70 countries, Peace Corps volunteers are integrating into communities providing needed technical 

assistance and support for development programs and cross cultural exchanges. They are truly indispensable to U.S. foreign policy. Through presidential initiatives and food security and global 

health, this administration has emphasized working across U.S. 

government agencies to address the needs of the developing world 

through engagement with local stakeholders. 

We would appreciate insight into the Peace Corps involvement in 

the various presidential initiatives. Last year, the committee asked 

the Peace Corps to undertake an assessment of its program model, 

management, and operations, and can you update us on the 

progress of that assessment? In the short time you have been director, have you undertaken any initiatives to address the growing 

needs of the agency and alleviate the management strains of the 

current structure? 

If the Peace Corps funding is to increase at the rate necessary 

to meet the administration’s goal of 11,000 volunteers by fiscal year 

2016, the agency must transition quickly to more effective up-toVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00381 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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date management and evaluation practices. For example, what 

steps have you taken to ensure that Peace Corps support staff are 

appropriately trained and empowered to assist volunteers? What 

monitoring and oversight is in place to measure the effectiveness 

of programs? 

Peace Corps volunteers have been some of the United States 

strongest ambassadors to the world, maintaining that reputation 

and influence requires adaptation to growing and changing needs, 

expeditious recruiting that ensures a high-quality volunteer force, 

thorough training, quality medical care, and solid support services 

for return volunteers. Finally and perhaps most importantly, we 

must ensure there is constant attention to volunteer safety. 

I hope you will address these priorities in the coming year. Mr. 

Williams, I appreciate your testimony today. But before we hear 

from you, let me turn to Ms. Granger, the ranking member, for her 

opening statement. 

OPENING REMARKS OF MS. GRANGER

Ms. GRANGER. I will be very brief because I want to hear from 

you. We all do. This is a 12 percent increase over 2010 and 31 percent over 2009, so certainly, we are going to hear about that. Your 

internal review, how that is going, and how you are making these 

requests before that assessment has been completed is going to be 

very important. As the chairman said, the rate of growth is significant, so what is the capacity and the training to manage it? I will 

turn it over to you again. 

Mrs. LOWEY. I think what we will do is proceed and we would 

be delighted to hear from you. 

OPENING STATEMENT OF MR. WILLIAMS

Mr. WILLIAMS. Thank you, very much. Chairman Lowey, ranking 

member Granger, members of the subcommittee, thank you for the 

opportunity to appear before the committee today in support of the 

President’s fiscal year 2011 budget request for the Peace Corps. It 

is my intent, with your permission, to briefly summarize my full 

testimony that I have submitted for the record. 

It has been just over six months since I was sworn in as Director 

of the Peace Corps. It is an honor for me as a returned Peace Corps 

volunteer to serve as director, as you can well imagine. It is my 

distinct privilege to have been asked by President Obama to lead 

the Peace Corps in the eve of our 50th anniversary and at a time 

of strategic and quality growth. It is our great responsibility to recruit, train, and support the next generation of volunteers. 

Before I discuss the fiscal year 2011 budget request, I would like 

to thank this committee for its tremendous support of the Peace 

Corps. The Peace Corps’ 2010 appropriation of 400 million is unprecedented expression of support and confidence by the Congress. 

I recognize this is a time of great economic uncertainty for many 

Americans. These are difficult times in many ways. Yet they are 

also times that present new opportunities to serve our country. I 

believe the Peace Corps represents one of the best value propositions for the United States government overseas. 


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Our volunteers are grassroots ambassadors for the United 

States. They represent America’s values, generosity, and hope. 

Today, 7,600 Peace Corps volunteers are serving in 76 host countries. We are charged by the Peace Corps Act to have, at a minimum, 10,000 volunteers in the field each year. The last time the 

Peace Corps had more than 10,000 was in 1969. 

The Peace Corps’ budget request for fiscal year 2011 is 446 million dollars. The fiscal year 2011 request will enable the Peace 

Corps to provide support to 8,500 volunteers serving in approximately 79 countries worldwide in fiscal year 2011. The Peace Corps 

fiscal year 2011 budget request represents the continuation of the 

President’s initiative to significantly increase the number of Americans serving as Peace Corps volunteers to 9,400 by the end of fiscal 

year 2012 and 11,000 by the end of fiscal year 2016. 

The comprehensive agency wide assessment mandated by Congress in our fiscal year 2010 appropriations is currently underway. 

I expect this assessment to provide critical information and guidance to position the agency for strategic growth. The Peace Corps 

plans to submit the findings of this comprehensive assessment to 

Congress in June of this year. 

We plan to invest in quality growth at the Peace Corps. We intend to spend about 80 percent of the proposed fiscal year 2011 

budget on direct volunteer operations. Partnerships are an integral 

part of our growth plans. We will continue to seek to increase strategic partnerships with international and local non-governmental 

organizations. Through these efforts to explore innovative and strategic partnerships, the agency will expand its geographic reach and 

enhance the development impact of Peace Corps volunteers. 

Our growth model has four key strategies. First, to expand the 

number of volunteers serving in existing host countries. Second, to 

encourage third-year extensions of volunteers who have demonstrated extraordinary skills and a desire to continue in a leadership role. Third, we want to increase the number of Peace Corps 

Response Volunteers. And, finally, fourth, we want to pursue entry 

into new host countries. 

To oversee this growth, I established the Office of Global Operations to provide overarching strategic support and management of 

the three geographic regions. In addition to adding funds to the 

field, I am also using our resources to strengthen two of our key 

offices in Washington that support the health and safety of our volunteers. Keeping Peace Corps volunteers healthy and safe in the 

challenging circumstances under which they serve is our top objective. We want to invest in recruiting the next generation of volunteers. 

Peace Corps, as you know, continues to capture the imagination 

of Americans interested in public service abroad. In fiscal year 

2009, over 15,000 Americans applied for 4,000 positions. The Peace 

Corps is engaged in an intensified strategic recruitment campaign. 

The recruitment will continue to rely heavily on the person-to-person efforts of our field-based recruiters in nine regional offices to 

build a volunteer Corps that reflects the diversity of America. I believe we can do a better job of recruiting volunteers by demonstrating the Peace Corps services are life-changing leadership exVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00383 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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perience. I certainly know this firsthand from my own personal experience when I served as a volunteer in the Dominican Republic. 

Another way to increase the impact of our recruitment effort is 

by investing our third goal initiatives. The fiscal year 2011 funds 

will be used, among other purposes, to promote educational opportunities that place returned Peace Corps volunteers with schools to 

share their overseas experiences and to develop educational curriculum materials for American classrooms. We can do a better job, 

I believe, of supporting our volunteers by beginning the process of 

scaling the benefits of service to more accurately reflect increases 

in the cost of living. The Peace Corps readjustment allowance has 

remained the same for the past 11 years. Effective April 1, the readjustment allowance will increase to 275 dollars per month, an increase of 50 dollars per month. 

We also want to be innovative. We want to invest in innovation 

and infrastructure to make sure that we can invest in sustainable 

impact. I know through careful planning and investment, we can 

have an even greater impact by creating a culture that values efficiency, transparency, and the sharing of best practices. The agency’s new Office of Innovation will manage a bottom-up process 

across all of our offices and challenge staff to work on the issues 

that will promote change and support growth. I am also encouraging the agency to share ideas and best practices from the field 

that might be low-tech but high-impact and also green. 

Let me conclude by saying that throughout our history, the Peace 

Corps has adapted and responded to the issues of the times. Peace 

Corps priorities should reflect current global realities and the development priorities of our host countries. In fiscal year 2011, 

Peace Corps growth will continue to focus on sectors such as education, food security, health and HIV/AIDS, environment, and renewable energy. 

While times have changed since the Peace Corps’ founding in 

1961, the agency’s mission to promote world peace and friendship 

has not. Over the last 49 years, almost 200,000 Americans have 

served in the Peace Corps. I envision a Peace Corps that remains 

vibrant for another 50 years, one that grows, adapts, and continues 

to carry the torch of President Kennedy’s dream and responds to 

President Obama’s call to service. 

I want to thank the Committee again for allowing me to testify 

in support of the President’s budget request. I also appreciate the 

support the members of the Committee have offered and your willingness to visit our volunteers when you travel around the world. 

I am pleased to answer your questions and thank you, very much, 

for this opportunity. 

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Mrs. LOWEY. Thank you, sir. I think what we will start with, Ms. 

Granger, do you have one question before we adjourn for votes. 

Ms. GRANGER. In the recommendations from the assessment, I 

know you are not ready to produce that yet, but tell us what indications you have. 

Mr. WILLIAMS. Well, just briefly, and we are looking at seven 

areas that were included in our appropriation. Our team has been 

working on this for a couple of months now and we are looking at 

all the areas that we were asked to, including recruitment, training 

and medical care for volunteers, adjusting volunteer placement reflect U.S. priorities, coordinatation with different institutions, lowering our early termination rates, strengthening management and 

independent evaluation and oversight, and strengthening our thirdgoal activities. So, we have people working on each one of those 

components. 

And I think from the early indications, number one, we are going 

to come up with some very hardhitting recommendations that I 

think will please the Committee in terms of the depth and the 

scope of what we are going to look at. We are going to be responsive to the concerns that were raised by the Chairwoman and also 

by yourself, Ranking Member Granger, in terms of management 

structure. And we are going to deliver a good assessment by the 

end of June. 

Ms. GRANGER. Thank you. 

Mrs. LOWEY. I think what we will best do is adjourn and we will 

try and get through these three votes as quickly as possible and 

then come back. And I thank you, again, for appearing before us. 

We shall return as soon as we can get back. 

[Recess.] 

Mrs. LOWEY. Thank you for waiting for us, the hearing will come 

to order. 

Mr. WILLIAMS. Thank you, Madam Chairwoman. 

Mrs. LOWEY. I would like to ask you about the coordination with 

other U.S. government agencies. We know, the Secretary and I 

have been talking about coordination wherever we travel because 

we find that everyone operates in their own stovepipe of excellence. 

So, I am really encouraged by steps the administration is taking 

through the global health food security initiatives to streamline 

programs. Peace Corps global presence sectoral breadth in agriculture, health, and education programmatic model make it a very 

natural complement to the U.S. government agencies working 

internationally. 

If you can share with us whether there is a formal process for 

communicating or standard sharing of information and best practices. How do you coordinate with other agencies? 

Mr. WILLIAMS. Thank you, Madam Chairwoman. First of all, I 

share your interest and support for coordination. It is very, very 

important. And Peace Corps, for example, had a longstanding partnership with USAID. USAID provides a small amount of grant 

funds in just about every AID mission around the world to support 

small scale grant projects of Peace Corps volunteers. 

But more broadly, we, for example, participate in the Secretary’s 

Quadrennial Diplomacy and Development Review (QDDR) process. 

We have a representative there. We also participate in the overall 


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NSC policy on development framework and it is an ongoing process 

and it is being chaired by the NSC. So, we certainly are we have 

a seat at the table and we play a role there. 

We also are seeking to have a broader number of partnerships 

with other federal agencies. For example, we are looking to work 

with USDA. Secretary Clinton has announced, of course, her new 

signature initiative food security and we want to play a role in 

that. As you know, historically, Peace Corps always had a major 

role in the agriculture sector and I think one of the things that we 

have not been able to do for many, many years now because of lack 

of funding has been to have a vigorous, robust involvement in the 

agriculture sector. I would like to do that. I would like to have 

more engagement with the land grant universities, which back in 

the 1960s really were the backbone of Peace Corps involvement of 

the training faculty members and involvement in the agriculture 

sector. So, I think we are going to expand our partnership with the 

USDA. 

We also are going to work closely with PEPFAR. We have had 

conversations with Ambassador Goolsby about things we can do. 

We already have a number of volunteers that work in the PEPFAR 

area. For example, in Africa, no matter what a volunteer’s primary 

project is, their secondary project is probably working in HIV/AIDS, 

awareness and prevention at the community level. 

I had an interesting meeting the other day with the administrator of NASA, as a matter of fact, and we are looking for ways 

to work with NASA, both in terms of countries where they have 

international programs, where Peace Corps has programs, and also 

in terms of our third goal of bringing things back home, working 

in schools across the United States with NASA, with Peace Corps, 

in this particular area. 

And the agency that I plan to reach out and develop partnerships 

with would be The Centers for Disease Control (CDC). They, of 

course, are very active. As you know, they have a growing presence 

in Africa and we are in Africa and we can really be helpful working 

with them at the grassroots level. 

So, overall, I think it is important. I want to do everything I can 

to support these kinds of partnerships. I think this is urgent. 

Mrs. LOWEY. Now, you mentioned food security and we know 

how critical that is and the administration has really ramped up 

that program. Tell us a little about what Peace Corps volunteers 

are doing in that regard. Give me some examples and how they can 

be most supportive. 

Mr. WILLIAMS. Peace Corps volunteers have been working, for example, one of the things that is important in schools in Africa, as 

you know, the children often come very hungry to school. They 

have very little food. And so one of the things that has been very 

important at the community level is Peace Corps involvement in 

school gardens, especially trying to help them grow gardens in 

areas that—in soils that you would not expect gardens to be able 

to grow. And so, we have been working very hard to support that 

initiative. 

The other thing is working with farmers at the grassroots level 

in terms of trying new seed trials, trying to improve the overall 

yield of the harvest. There are all kinds of opportunities, I think, 


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in Africa and in Asia for Peace Corps to be involved at the grassroots level in food security. Same things in terms of water and 

sanitation. 

Mrs. LOWEY. My dream has always been communities of learning, where you have the school as the center and we have the garden and water and training for the families, so that you can really 

have a coordinated approach. Perhaps one day we will have some 

good examples of that. 

Mr. WILLIAMS. That is a great development model, without a 

doubt. I agree. 

Mrs. LOWEY. Now, Ms. Lee was here, but I guess we lost some 

people along the way, Mr. Kirk, but we have Mr. Israel. 

Mr. ISRAEL. I will do the best I can. Director, thank you for being 

here. Last year’s State Foreign Ops bill included House language 

that I inserted urging the Corps to find ways to channel the efforts 

of its volunteers to increase access to remote energy sources, including solar energy options. I am quoting. It goes on to say the 

Peace Corps Director shall report to Congress in the fiscal year 

2011 hearing on these efforts. We are at the fiscal year 2011 hearing and I am looking forward to hearing about what you are doing, 

in order to promote solar and other renewable energy efforts. 

Mr. WILLIAMS. Thank you, Congressman. And I must admit that 

that is one area that I have not looked at in my first six months, 

but I certainly will do so. I believe that is important. One of the 

things that I experienced when I was a foreign service officer in the 

Caribbean is that many of the Caribbean islands, they use solar 

energy almost exclusively to heat water. And this is very simple, 

very low cost. It seems to me that Peace Corps should be involved 

in renewable energy and I would like to follow-up on the recommendations in which you put in to the legislation. I will take a 

careful look at it. But, I have to admit, I have not looked at that 

at this point in time, but I will certainly follow up and do so. 

Mr. ISRAEL. I appreciate your candor and I understand that you 

have only been on the job for six months. I am surprised that your 

staff, when you took the job, did not sit down with you and say 

here is what the United States Congress is requiring you to do. 

You are going to a hearing, expect this question, since it was actually enshrined in the law. 

Mr. WILLIAMS. I understand, Congressman, and I will certainly 

rectify that. 

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Mr. ISRAEL. Thank you. I appreciate it. I yield back. Thank you. 

Mrs. LOWEY. Ms. Granger. 

Ms. GRANGER. Yes. 

Mrs. LOWEY. Maybe we should go to Ms. Lee, since she did not 

ask a question yet. Ms. Lee. 

Ms. LEE. Thank you, very much. Good to see you again, Mr. Williams. I am glad you are here, doing a great job, and just want to 

see what more we can do to help. The Peace Corps, of course, is 

one of my real, I guess, organizations that I always want to see 

more money and more money and more money because, right, 

Madam Chair, because you do so much with so little. And truly, 

Peace Corps volunteers are our ambassadors and every time I have 

a chance to go abroad, I always try to find Peace Corps volunteers 

and look at the projects and see how they are doing. I am especially 

excited and interested in people who have retired and returning to 

the Peace Corps, you know, Peace Corps volunteers who are now 

retirees and how they work where they live and the type of real 

contributions that they make. So, it is really an amazing moment, 

I think, for the Peace Corps. 

I wanted to ask, and I know you cannot endorse this, but we 

talked about this a little bit or support legislation at this point, but 

I hope you look at my bill, H.R. 336. It would actually issue a semipostal postage stamp in honor of the extraordinary work of the 

Peace Corps. It would sell at a slightly higher rate than the standard 44 cents, but all of the additional revenue would benefit the 

Peace Corps. And I have been working on this bill for probably 10 

years. I want to have a Peace Corps stamp. And I understand the 

politics of all of this, but I want to keep pushing for that. 

But, I want to find out with regard to your resource limitations. 

How many countries without a Peace Corps presence are currently 

requesting volunteers, if any, and what percentage of countries in 

which the Peace Corps operates would you estimate that are under 

resourced, whether in terms of the sheer number of volunteers or 

the technical capacity of volunteers or whatever? And how, finally, 

is your recruitment, especially with minority serving institutions? 

We always wanted to see more diverse Peace Corps. I have done 

a lot of Peace Corps recruiting in my own district under a previous 

administration to try to get more people of color involved in the 

Peace Corps. 

Mr. WILLIAMS. Thank you, very much, Congresswoman for those 

series of questions. First of all, thank you for your hard work in 

trying to promote a Peace Corps stamp. That is wonderful. I am 

happy to hear that. 

In terms of countries asking for Peace Corps volunteers, one of 

the things that has struck me since I have been on the job for the 

last six months is that not a week goes by when one of our U.S. 

ambassadors to a country or one of the host country ambassador 

comes to visit me and says either start a Peace Corps program in 

our country, or we want to expand Peace Corps in our country. So, 

there is a long list of countries that are interested in having us either expand or reenter their countries. 

The good news is that this year, we have already gone back into 

two countries, Sierra Leone, which was a historic Kennedy-Shriver 

era country. This week, volunteers arrived in Indonesia. And so, we 


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are delighted to have that. Indonesia, of course, is a very important 

country. It is the most populous Muslim country in the world. It 

is another historic country where we were involved. So, we have 

announced those two. We have a couple of other countries that we 

are looking at for this year. So, we intend to be aggressive about 

moving into new countries. 

In terms of volunteer levels, as we build a strong Peace Corps 

with strong management systems, as we learn from the assessment 

that we are engaging right now, we are going to look for ways to 

build up our volunteer levels. In terms of the countries that I have 

visited, for example, after I was sworn in, I went to the Dominican 

Republic, Nicaragua, South Africa, and Thailand, those countries 

have long historic ties with the Peace Corps. We can grow our programs in each of those countries. And I feel confident that in 90 

percent of the countries where we serve now, we can do that. And 

so, we have some very aggressive plans for growing. 

Ms. LEE. Madam Chair, may I just follow-up with that and just 

ask, you say Sierra Leone and Indonesia, we just . . . 

Mr. WILLIAMS. We have signed agreements and we have volunteers that have just arrived in Indonesia this week. In Sierra 

Leone, volunteers will arrive in June. 

Ms. LEE. Do you have a waiting list of countries that make these 

calls and want Peace Corps volunteers that we are unable to fulfill, 

in terms of 

Mr. WILLIAMS. I would say there is a healthy list of countries 

that have called on us and are ready and willing for us to move 

forward, if we had additional resources. 

Ms. LEE. Do you have a list of those countries? Do we know how 

to kind of focus on which countries they are? 

Mr. WILLIAMS. Well, typically, when we are engaged in negotiations with countries, we do not mention that in public. But, I would 

be happy to give you a briefing on that. 

Ms. LEE. Okay. I would like to know just kind of which countries 

really want us. 

Mr. WILLIAMS. Sure. I would be happy to do that. 

Ms. LEE. Okay, thank you. Thank you, Madam Chair. 

Mr. WILLIAMS. Thank you. 

Mrs. LOWEY. Thank you. Mr. Kirk. 

Mr. KIRK. Who introduced the Congress and this committee to 

the 10,000 volunteer goal back during President Reagan’s administration. And I am very happy that we are now approaching that 

goal once again. 

I looked over the list of countries where we are at and offline we 

had a discussion and I want to just reprise that briefly. I think the 

Peace Corps of 20 years ago is very different than the Peace Corps 

today because 15 percent of your volunteers are older, far more experienced, and far more capable and especially for those men and 

women, who are more mature and have agricultural capabilities. 

You have, I believe, a unique role to play in Afghanistan. Safety 

and security is one of the premier values of the Peace Corps and 

putting a 22 year old in a difficult environment like this is not 

wise. But a 40 or 50 year old, who understands what they are getting into, but is patriotic and wants to help out could provide a critical level of expertise to a PRT and here in the Congress, we would 


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all absolutely sing your praises and help your budget, if you were 

able to do this. So, I wonder if I could ask, would you consider mature, capable, especially agricultural experts, maybe to assist a 

PRT in Afghanistan, as part of the Peace Corps mission? 

Mr. WILLIAMS. Thank you, Congressman, and good to see you 

again. First of all, Afghanistan was a historic Peace Corps country 

and one of the things that I found is that there is a strong affinity 

group that continues to ask us about whether or not Peace Corps 

will ever return to Afghanistan. So, I would like to take a look at 

whether or not we can consider that. Because, as you said, it is not 

a place that you want to send a 22 year old to, because first and 

foremost in our minds is the security of our volunteers. So, we will 

take a look at it. 

Mr. KIRK. Thank you. I would like to work with you, General 

Flynn, General McCrystal. It would be a big feather in your cap 

and I think this Committee would really like to see how the Peace 

Corps was bringing peace even to the most difficult environments, 

with some of your more capable volunteers. Madam Chairman, 

thank you. 

Mrs. LOWEY. Ms. Granger, do you have any questions? 

Ms. GRANGER. Just one. I mentioned earlier about the 12 percent 

increase. I did not really get an answer on what you are basing 

that when you have not finished your review. With regard to the 

Overseas Programing and Training Support and the Office of Strategic Information, Research, and Planning, you are only asking for 

a three and a six percent increase. With the number of volunteers 

that you are saying that you want to add, which is very significant, 

I certainly want to properly invest in training and a program evaluation. Would you explain that increase in funding and how you 

balance that? 

Mr. WILLIAMS. I think that in recent years, Peace Corps has not 

been able to invest in training of staff and training of volunteers 

to the extent that one would expect in the 21st century. So one of 

the things that I would like to see us do is to bolster our staff. I 

think you cannot grow and put more volunteers in the field if you 

do not have, number one, headquarters staff to support the growth 

and also staff in the field. And the other thing that makes Peace 

Corps somewhat unique and I think and ties directly to your question, Peace Corps relies on host country professionals to a larger 

extent than any of our foreign affairs agencies. And I think we 

have not been able to invest in their training and they represent 

the continuity of most Peace Corps operations. So, we need to bolster training for our host country nationals. We need to expand our 

staff in the field and in headquarters to support our growth. And 

we want to make sure that we expand training. And that is across 

the board, in terms of field staff, country directors, and also volunteers, because volunteers will gain the kind of skill sets they need 

to be more effective on the ground. 

Ms. GRANGER. So, you think that three percent is all you need 

to do that. Is that right? 

Mr. WILLIAMS. At this point in time, it looks like that would do 

the trick for us. But one of the things that we are going to learn 

from the assessment, I hope, is whether or not we need to redirect 

some investment in that area. 


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Ms. GRANGER. Okay. Thank you. 

Mr. WILLIAMS. Thank you. 

Mrs. LOWEY. Please excuse the attendance, but this is a crazy 

day. No indication of our passion and respect for the Peace Corps. 

Perhaps I will close with asking you about what you are doing in 

Haiti. I know you have been involved and are currently involved. 

Let me ask the question, what are you currently doing with the response to the earthquake in Haiti? I understand the Peace Corps 

now does not have a mission in Haiti. Have discussions taken place 

to consider the Peace Corps reentering into Haiti? How would 

Peace Corps propose to support volunteers in the field? Is this an 

opportunity to try a new model of increased partnering and burden 

sharing with NGOs? Does the earthquake and reconstruction efforts in Haiti affect the Peace Corps plan for the fiscal year 2011 

budget? Please tell us, is the Peace Corps there? What are they 

doing there and what could they do there? 

Mr. WILLIAMS. Well, this is a subject, which is very near and 

dear to my heart for a surprising reason, Madam Chairwoman. I 

served as a foreign service officer for almost five years in Haiti, as 

did my Chief of Staff. Stacey Rhodes is here with me today. And 

we also were instrumental in convincing Peace Corps to establish 

a Peace Corps Program in Haiti, at the time that we served there, 

in the early 1980s. So, this is an important topic for me. 

I can tell you that before the earthquake, we were talking within 

the administration about Peace Corps considering going back into 

Haiti. I think the earthquake has made this even more urgent. Because we were not in Haiti, we were not one of the first responders 

and Peace Corps typically is not unless we are already in the country. However, we did send four Peace Corps staff members to work 

in the interagency relief effort, including a Haitian-American doctor, who is also a public health specialist and speaks French and 

Haitian Creole. So, we did contribute. 

We now have, as of last week, two Peace Corps Response Volunteers, the first of a larger number we hope to put into Haiti, working with NGOs, in partnership, as a matter of fact, because I think 

that is the most effective way right now for us to work in Haiti, 

is through partnerships. 

So, I certainly would like to entertain conversations with the government to look for ways to move forward. I hope that they will be 

forthcoming and we would like to be aggressive. 

Mrs. LOWEY. Thank you. And I see Ms. Lee returns. So, you may 

have the last question. 

Ms. LEE. Well, let me just go back to the Peace Corps volunteers, 

the retired Peace Corps volunteers. Do you have a percentage or 

numbers and where they are posted, to get a sense of how they are 

doing and what they are doing, where they are? 

Mr. WILLIAMS. In terms of the older volunteers? 

Ms. LEE. Yes. 

Mr. WILLIAMS. The more mature volunteers? The experienced 

volunteers? 

Ms. LEE. Yes, the experienced volunteers, who share their knowledge, experience, and everything, their life’s work—— 

Mr. WILLIAMS. Exactly. 

Ms. LEE [continuing]. With this important organization. 


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Mr. WILLIAMS. One thing I can say about the more experienced 

volunteers, every country director that I have talked to, and I now 

have met all 75 in the last six months, they really like to have 

these kinds of volunteers serve in their country for all the obvious 

reasons that you know so well. They are experienced. They serve 

as an anchor for some of the younger volunteers. They bring a special expertise. They made a very hard decision to decide to join 

Peace Corps at this stage of their life and so they are very dedicated. 

So, we certainly want to encourage more experienced volunteers, 

50 plus to consider joining the Peace Corps because they play an 

important role. They represent a very important part of what we 

do. And I will be happy to follow-up and give you a breakdown of 

where we have our largest numbers of these experienced volunteers. One of the things that you will find is that they tend to be 

clustered in countries where we have the best possible medical care 

available for them. 

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Ms. LEE. Yes. That is what I wanted to ask you and look at because I think as we try to recruit more retirees, we may want to 

look at more support for them, such as the medical support and 

whatever else people would need, pharmacies, you know, whatever. 

Mr. WILLIAMS. I think that would be a good investment. 

Ms. LEE. Yes, I think so. So, I would look at that—— 

Mr. WILLIAMS. Okay. 

Ms. LEE [continuing]. And work with you on it. Thank you, very 

much. 

Mr. WILLIAMS. Thank you. 

Mrs. LOWEY. Thank you. I may change my mind and close on the 

security issue because I think it is so important. And we know the 

most important responsibility the Peace Corps has is to ensure the 

safety of its volunteers. When volunteers are not protected, this has 

been tragically highlighted by the 2009 murder of Catherine Puzey 

in Benin. Unfortunately, as we know, this was not an isolated case. 

Peace Corps volunteers have been victims of crimes, including robbery, rape, physical assault, physical intimidation. In fact, I could 

not help but think as we were in Ghana a couple of years now you 

were with us and I remember this beautiful little blond hitchhiking 

all through to meet us for dinner. And I kept thinking, gutsy, 

gutsy, young woman. But, we know that the murder of Catherine 

Puzey is not an isolated case. 

And we understand that there are inherent risk in Peace Corps 

services. I cannot stress enough the importance of keeping volunteers as safe as possible in the communities they serve. So, if you 

can share with us what steps are being taken to ensure the safety 

of Peace Corps volunteers, what mechanisms are in place to ensure 

that Peace Corps staff in country are vigilant and promote appropriate safety measures. And you could also address the organizational changes, in terms of recruitment of local volunteers for the 

local paid people for the Peace Corps, we would be most appreciative. Thank you. 

Mr. WILLIAMS. Thank you, Madam Chairwoman. As you said, 

volunteer safety and security is our highest priority. There is no 

doubt about it. And you have to admire the people who serve in the 

Peace Corps in sort of isolated communities around the world, for 

their courage, determination. And the fact is that one of the most 

important parts of their security is the fact that they become parts 

of the community. They are seen as being part of the community 

and they are supported. 

The Office of the Inspector General is in the process of finalizing 

a report and audit of the Office of Safety and Security. And I intend to carefully consider all of the recommendations that come out 

of this IG report, because it is a very, very important issue for me. 

That is one of my top priorities. And so, you can rest assured that 

once we get that report, we will sit down with the Committee and 

discuss it and make sure we take the steps and follow-up on the 

recommendations that are being made regarding that. 

In terms of in-country security, we have three levels of security 

in terms of volunteers. First of all, we have regional security officers that serve in about 10 countries around the world. Then in 

every country, we also have a dedicated safety and security officer. 


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And then, of course, we have a headquarter staff of safety and security. So, we have three different levels of that. 

And we also have a very good system. One of the things that has 

been really one of the great improvements, I think, in Peace Corps, 

different from my generation, is that now volunteers, almost 90 

percent of our volunteers have cell phones. So, they are able to stay 

in contact with their families. We are able to stay in touch with 

them. It is much easier now. We have emergency plans in place in 

case we need to evacuate volunteers. 

So, Peace Corps is paying a lot of attention to this and we intend 

to continue to do that. And I am looking forward to reviewing the 

IG report to get more information about this. 

Your third point regarding local staff, I think one of the things 

that is important is that we need to make sure that all local staff 

prior to hiring are thoroughly vetted, the same way one would expect in terms of USAID or the State Department, when they hire 

foreign service nationals. And that is going to be one of our priorities. 

Mrs. LOWEY. Thank you. We were going to close, but we are 

joined by our very distinguished member, Mr. Schiff. 

Ms. SCHIFF. Thank you. 

Mrs. LOWEY. Do you have a question? 

Ms. SCHIFF. Thank you, Madam Chair, and I will be quick. Mr. 

Williams, nice to see you again. I just had a couple of questions. 

There are some that believe the Peace Corps should recruit more 

volunteers who specialize in certain areas, in order to meet the 

needs of the countries where the Peace Corps operates. Others contend this would undermine the original mission of the Peace Corps 

and the ethos of the Peace Corps, as both a development assistance 

agency, as well as, say, vital public diplomacy component. How do 

you see this divergence of opinion? Do you anticipate recruiting 

people with more specialized skills? Those are what I wanted to 

ask and apologize if you have addressed. And if you have, I will 

just get the cliff notes from my colleagues later. But, I am curious 

about the response component that began in the mid–1990s and 

how that is going and whether you have adequate funding in order 

to move forward with that important initiative. 

Mr. WILLIAMS. Thank you, Congressman, good to see you again, 

also. Thank you for joining us. First of all, specialized skills, I 

think there are certain areas where Peace Corps certainly needs to 

recruit people with specialized skills. And many of our 50 plus volunteers come into the Peace Corps with those kinds of skills. For 

example, earlier, we were talking about the fact that we wanted to 

expand our involvement in Secretary Clinton’s food security initiative. In order to do that, I think we are going to need to bring in 

volunteers who have additional skills in the agricultural sector. I 

want to also use as a bridge to develop stronger partnerships with 

the land grant universities around the country that used to be a 

really important player and partner with the Peace Corps during 

the Shriver era. And I think there are plenty of opportunities 

there. So, I think in terms of specialized skills, both in healthcare 

and agriculture, there is ample room to bring in people who have 

those kind of skills. So, we are going to continue to recruit those 

types of individuals. 


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On your second point regarding Peace Corps Response, I often 

joke around the office that if Peace Corps Response or what used 

to be called the Crisis Corps, if it did not exist, I would have to 

invent it because we need to have a rapid response corps within 

the Peace Corps to respond to the Haiti-like situations of the world. 

And so, we have used the crisis corps to go into a couple of new 

countries. For example, Sierra Leone, which we have announced we 

are going to go back into in June, we are going to use the Crisis 

Corps there—excuse me, Peace Corps Response Volunteers. So if 

we were to go back into Haiti, we would be using probably initially 

Peace Corps Response Volunteers. We have already line up about 

100 Haitian Creole speakers who would love to go back into Haiti, 

former peace corps volunteers who have served over the years. So, 

the Crisis Corps, I think—I keep calling it the Crisis Corps—the 

Peace Corps Response Volunteers are important. 

Ms. SCHIFF. And do you view the Response volunteers as kind of 

the vanguard for bringing in the regular Peace Corps later on—— 

Mr. WILLIAMS. I think so. 

Ms. SCHIFF [continuing]. Or the situations where you have a 

Peace Corps presence already, but there is an emergency where 

you need to supplement it? 

Mr. WILLIAMS. I think it depends on the country. For example, 

if you are going into a post-conflict situation like Sierra Leone or 

Liberia, I think a Peace Corps Response is the right way to go. And 

it also gives you a chance to learn the new lay of the land now that 

we have not been in the country for some time, to prepare the 

groundwork, start working with the ministries and other potential 

partners on the ground, and then prepare for a regular two year 

Peace Corps program. Yes, I think it is a very useful tool and it 

is part of our growth targets to increase Peace Corps Response. 

Ms. SCHIFF. Thank you, Madam Chair. 

Mrs. LOWEY. Thank you, again. We are most appreciative for 

your leadership. We look forward to seeing all of the many changes 

you are making in the field and we appreciate you coming before 

us. Thank you, Director Williams. 

Mr. WILLIAMS. Thank you, so much, Madam Chairwoman, for all 

of your support of the Peace Corps. We know this is really something that you support. You believe in it. And we are going do everything we can to make you proud of what we do in the 21st century. And I thank Congressman Schiff for joining us today and for 

your other colleagues. I really appreciate the chance to talk about 

the Peace Corps and our fiscal 2011 budget request. 

Mrs. LOWEY. Thank you and the Committee on State, Foreign 

Operations, and Related Programs is adjourned. Thank you, very 

much. 


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(427) 

WEDNESDAY, APRIL 14, 2010.

MILLENNIUM CHALLENGE CORPORATION (MCC) 

WITNESS 

DANIEL W. YOHANNES, CHIEF EXECUTIVE OFFICER 

Mrs. LOWEY. Good morning. The Subcommittee on State, Foreign 

Operations, and Related Programs will come to order. 

Today we are delighted to welcome Daniel Yohannes, the Chief 

Executive Officer of the Millennium Challenge Corporation, for his 

first hearing with us to discuss the President’s fiscal year 2011 request for the Millennium Challenge Account. 

Mr. Yohannes, you bring a wealth of experience in both the private and public sector to the MCC, and it is a pleasure to have you 

testify today. 

The President’s budget requests $1.28 billion for the MCC, a 16 

percent increase over the fiscal year 2010 enacted level. 

As the MCC enters its sixth year of operation, we must examine 

accomplishments, shortfalls of the concluding country compacts, 

lessons learned for future compacts. And, although I share your belief that the MCC model holds tremendous potential to bring transformative change, reduce poverty, and support sustainable longterm economic development, this committee needs to hear today 

about the results achieved with the over $7 billion that has already 

been committed to the 20 compacts and 21 threshold programs. 

Last year’s hearing focused on the proposed compacts with Malawi, Jordan, and the Philippines, and the committee appropriated 

$915 million in fiscal year 2010 to support them. Can you share the 

current status of these compacts and when you believe they will be 

signed? 

For several years, we have discussed the need to clearly articulate the short, medium, and long-term impacts of country compacts. 

In 2011, as country compacts in Benin, Georgia, and Vanuatu conclude, it is imperative to thoroughly evaluate the effectiveness and 

continuing impact of these programs. 

As you know, I believe that we must evaluate the poverty-reduction successes of country compacts, not just general economic outputs. I hope you will provide insight on your efforts to do so in 

MCC’s monitoring and evaluation programs. 

The fiscal year 2011 request also includes two new country compacts in Zambia and Indonesia and additional funding for a country compact in Malawi. I hope that accountability measures will be 

put in place, especially in a country as large as Indonesia, to ensure that funds are not misused and to innovatively measure the 

impact of MCC assistance. 

This year, MCC will complete its first 5-year compact in Cape 

Verde, making it the first country eligible for a second compact. 


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Can you explain why MCC is choosing to pursue a second compact, 

rather than entering a new country? Isn’t this a departure from the 

original MCC model? 

And, lastly, the success of all Federal agencies is dependent on 

the assurance that taxpayer dollars are spent effectively. The MCC 

was designed to improve development effectiveness by leveling the 

playing field and ensuring that the most effective companies are 

utilized. This model is predicated on fair and transparent contracting mechanisms. Are you satisfied with the current procurement mechanisms and that there are quality-control mechanisms 

in place? 

Mr. Yohannes, I appreciate your testimony today and look forward to discussing the fiscal year 2011 budget request for the 

MCC. But, before we hear from you, let me turn to Ms. Granger, 

the ranking member, for her opening statement. 

Ms. Granger. 

OPENING STATEMENT OF MS. GRANGER

Ms. GRANGER. Thank you, Madam Chair, and good to be back 

with you. 

Thank you and good morning, Mr. Yohannes. Thank you for appearing before our subcommittee. 

Since the first compact was signed in 2005, MCC, as the chair- man said, has programmed over $7 billion in support in 20 countries. You are coming on at a very exciting time for the MCC, but 

a very crucial time. 

I spent my first year as ranking member learning about the 

many, many foreign assistance programs under the jurisdiction of 

this subcommittee. We, of course, see enormous levels of suffering 

in the world in the news every day. I remain impressed by the generosity of the American people, not only through the official foreign 

assistance but through private contributions and charitable giving. 

However, we must examine our foreign assistance budget and fully 

utilize programs that build the capacity within these countries, so 

one day they are able to graduate from receiving foreign aid. MCC 

is one of a number of programs, I believe, positioned to do just that. 

Today’s domestic economic situation in the United States is a 

good reminder to us that jobs are the key to long-term economic 

growth, both at home and in developing countries. The MCC is the 

best tool in our foreign assistance budget to help lay the groundwork in select countries that have demonstrated responsible governance. With this tool, governments can strengthen local institutions and communities and ultimately attract the private-sector investment necessary to provide jobs and generate income. The 

MCC’s economic rate of return for its projects are key to a country’s 

overall success and growth. It should become the model for privatesector growth in these countries, leading the way for increased investment and additional jobs. 

It is my hope to see the MCC progress from funding mostly infrastructure-focused programs to being a real catalyst for change, 

which was what was envisioned when the MCC was first created. 

Mr. Yohannes, given your background, I think you are the right 

person for the job. I look forward to discussing these topics with 

you. 


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And I yield back. Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

Mr. Yohannes, as you know, your full statement will be placed 

in the record. You may summarize as you wish. Please proceed. 

OPENING STATEMENT OF MR. YOHANNES

Mr. YOHANNES. Thank you, Chairwoman Lowey, Ranking Member Granger, and other members of this subcommittee, for the opportunity to discuss President Obama’s fiscal year 2011 budget request of $1.28 billion for the Millennium Challenge Corporation. 

With this funding, we anticipate signing MCC compacts with Indonesia, Zambia, and Malawi and possibly entering into a second 

compact with Cape Verde. 

I would like to summarize my statement and submit the full 

version for the record, if I may. 

I come to MCC from the financial services industry. I appreciate 

how MCC makes the business of aid more businesslike. My priority 

as CEO is to show how MCC’s programs are delivering results and 

changing people’s lives. 

To achieve MCC’s mission of reducing poverty through economic 

growth, I have set forth three priorities: 

First, being innovative. We must make smart investments that 

will produce significant returns in the fight against global poverty. 

We will strive to continuously improve our financing and operations by looking at what has worked and what we must improve, 

making midcourse corrections to achieve better results and walking 

away from investments, even partners, who are not delivering on 

their promises. We must adapt programs based on implementation 

challenges. 

I am committed to communicating with you as we work through 

these processes. I would like your support for critical legislative 

changes, such as concurrent and longer compacts. Congress created 

MCC to be innovative. We must live up to those expectations and 

build on our performance-based, transparent, country-driven model. 

Second, leveraging partnerships. Getting the biggest bang for our 

MCC investment will require more creative partnerships with 

other U.S. Government agencies, the private sector, civil society, 

philanthropic organizations, NGOs, and multilateral institutions. 

Third, delivering results and showing impact. We are committed 

to comprehensive monitoring and evaluation to analyze every MCC 

program as an investment. It costs money to do this right, and that 

is why monitoring and evaluation is included in MCC’s budget request. 

We must think differently about results. Five-year investment 

programs like ours produce outputs similar to those of other institutions, like the number of farmers trained, roads built, and land 

titles issued. Yet this does not go far enough to show how MCC is 

improving the lives of the poor. 

During my recent visit to Ghana, I met with a farmer named 

Mavis. Mavis was one of the farmers that was trained by an MCC 

program. In Ghana alone, we trained 25,000 farmers. She told me 

how she went from producing five bags of rice to 140 bags of rice 

after one season after she participated in our training program. 

And now Mavis is investing the dividends in to the land, buying 


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additional land and also buying additional equipment. And she now 

has a better life than before. There are hundreds and hundreds of 

stories like this one. 

Increases in individual incomes are only a small fraction of the 

total impact expected to result from MCC projects. Our impact 

evaluations will determine with rigor the long-term impact of our 

investments. All MCC compacts will undergo independent impact 

evaluations, and I look forward to sharing the results from these 

with you and the American people. 

Leadership in these three priority areas will require that MCC 

remains committed to ensuring gender equality in all programs we 

fund, so that women as well as men can share in the benefits. 

I am grateful for the strong relationship MCC has with this committee, and I welcome working with you to do even more to fight 

global poverty. With so many priorities competing for limited resources during these challenging times, we all have to be prepared 

to make tough choices. We can and we will make wise investments 

and deliver results with the resources you provide. 

I welcome your questions. Thank you. 

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Mrs. LOWEY. Thank you for your thoughtful testimony. 

As you well know, without fail, every year we have a conversation about the disbursements of MCC compact funds. Now, we understand, certainly, on this committee the need for slow dispersion 

of funds to ensure accountability. But I am concerned that even 

those compacts that are nearing completion are not working effectively. 

For example, Cape Verde’s country compact will conclude in 7 

months, October 2010, but only 63 percent of the compact funds 

have been disbursed. Georgia’s compact will conclude in April 2011, 

but only 48 percent of the compact funds have been disbursed. 

Vanuatu’s compact will also conclude in April 2011, but only 69 

percent of compact funds have been disbursed. 

So there are several questions I have. First of all, will the remaining funds be disbursed before the compact concludes? Will you 

be asking to extend the term of these compacts? And, beyond the 

disbursement of funds, will these countries be able to complete the 

programmatic components of the compacts before the 5-year deadline? 

And, equally important as the other questions, in fact we would 

say maybe most important, what economic results have resulted 

from these compacts? And do you have concrete data that you can 

share that proves the MCC has been an effective tool for lifting 

people out of poverty? 

I think there are many people that were all excited about the 

MCC and felt this was a new way of doing business. The others, 

after a couple of years, are saying, ‘‘Well, it is business as usual. 

What have they accomplished?’’. 

I think it is very important that you explain and give us some 

concrete evidence that the MCC is doing differently and the results 

are different and more positive, moving the country in an independent direction. 

Thank you. 

Mr. YOHANNES. Thank you, Chairwoman Lowey. I share your 

concerns. And to show results to this committee, to Congress, and 

to the American people is my number-one priority today and also 

for the next 3 or 4 years. 

Having said that, we have interim results, and the interim results we have are very consistent in terms of how the industry as 

a whole reports results. For example, in terms of the agriculture 

area, we have about 150,000 farmers trained. And I came from one 

of the countries, Ghana, where we have trained over 25,000 farmers, and every farmer I have spoken to, they told me how our programs are having a tremendous impact in terms of their ability to 

increase production and also being able to increase their income. 

Projects in Nicaragua, where we train a lot of farmers, the farmers there have improved their production by 75 percent in fruits 

and then also 40 percent in milk production. So we get stories after 

stories. 

In roads, the nature of the investment by design are not completed in 1 or 2 years, they are primarily long-term projects, but 

we have completed already about 350 kilometers, and we have 

about 1,400 kilometers that are under construction, and we have 

designed about 4,500 kilometers. 


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When I was in Cape Verde, I drove on the 40 kilometers that 

was completed that connects one coastal town to another coastal 

town. What I was told in speaking to community leaders, government officials, and farmers, now they have access to markets, they 

have access to clinics, they have access to schools as a result of the 

40 kilometers that was completed. 100,000 people are benefiting 

from this road construction. 

In Ghana, we are not only concentrating on the agriculture, but 

also we are building a lot of feeder roads that are providing access 

to many of the farmers to the markets. 

As far as education is concerned, in Ghana alone, where I just 

went last month, we have completed 65 schools, and we are planning to build an additional 200 schools in the next 2 years. And I 

was told, as a result of our investment in this sector, that we now 

have, you know, 40 percent more enrollment and the girls enrollment has increased by 100 percent. 

And, in terms of other investments we have, in addition to what 

is visible, you know, we have been able to have a tremendous impact in terms of policy reform. In Lesotho, for example, because of 

our compact we were able to get full rights for women. In Nicaragua, where we built over 100 kilometers of road, we were able 

to work with the government so now they set aside some funding 

for road maintenance. Where previously they only had about $3.5 

million to maintain 500 kilometers, today that program has been 

expanded to include 2,700 kilometers and they now have about $35 

million set aside for road maintenance. 

So, in addition to a lot of the visible projects that have been committed and are having some impact, we are seeing significant 

changes in terms of policy reforms. 

For example, we are in the process of completing the port in 

Benin and Cape Verde. Two of those projects are going to be transferred to the private sector for management. In Moldova and Georgia, where previously the management for many of the irrigation 

systems were owned by the state, now, because of our compact, 

they are going to be transferred to the private sector for management. So not only are we seeing tremendous results for the last 5 

years, but also we are seeing a tremendous impact in terms of policies in partner countries. 

Now, when you talk about results, we are the only agency in this 

country, maybe even in the world, that looks at it differently. In 

addition to the interim results that were submitted and discussed 

this morning, we don’t begin impact evaluations until the end of 

the 5 years. At the end of 5 years, we bring in independent evaluators to tell us if our investments are providing the desired impact on the ability to raise the partner’s income. We have Cape 

Verde and Honduras this year that will come to the end of 5 years, 

and we should be able to provide you with our assessment sometime next year. 

Also, from experience, I mean, you are going to see some results 

at the end of 5 years, but the much bigger result will begin to happen at the end of 10 years, 15 years, and 20 years. Our $7.5 billion 

investments are projected to increase our partners’ income by $9 

billion over a 20-year period. So it is working. 


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And, also, in areas where we have learned lessons, we are making some adjustments. I know you mentioned your concern about 

Cape Verde. When I was there, I spoke with the prime minister, 

the finance minister, all the engineers. And the port that is under 

construction will be completed on time before September, and the 

funds will be disbursed, all of them, before the completion date, 

which is in September. So I am not concerned about the completion. 

I know you raised Vanuatu. I believe it is going to be completed, 

as well. Of course, due to the nature of the projects, it takes a long 

time. The first 3 years you spend little, but a lot happens at the 

end. 

Mrs. LOWEY. I want to turn to Ms. Granger, and I did want to 

keep us all to our time so we can go around. However, I just want 

to mention one point, if I may, that you can think about. 

I have been to many countries in Africa, as you have, and in 

other places of the world, as well. And this was supposed to be a 

new, different model. But corruption is business as usual. You have 

seen the reports about Senegal, where the MCC just signed a $540 

million compact in September 2009. 

Similar reports are emerging from Ghana. And Johnny Carson, 

as you know, the Assistant Secretary of African Affairs, has been 

engaging with Ghana. We are hearing reports about the government extracting money from newly discovered oil, using money in 

inappropriate ways. 

So we are concerned that there are many reports that are emerging in several compact countries that businesses are facing unreasonable regulation, extortionist practices by members of the government. And we can discuss that further when it is my turn 

again, but I want to make it clear to you that this was supposed 

to be a new process. And we are seeing business as usual, corruption as usual, and we are not seeing the lifting up of the people 

in the country to make this really different. 

So I want to turn to Ms. Granger. It may be unfair for me to not 

let you respond, but I did want to move on. 

Mr. YOHANNES. Okay. All right. No problem. 

Ms. GRANGER. Thank you. 

As I addressed in my opening remarks, I am interested in your 

ideas and plans to involve the private sector. I have here in front 

of me an interview you gave on February 12th talking about how 

important that is. And, you know, we don’t have unlimited foreign 

assistance dollars. The foundation for economic growth is, I believe, 

the private sector. 

So would you tell me why you think the foreign aid community 

has failed to grasp the role of the private sector and what it can 

play in economic development of African countries and other poor 

nations? And give me some details about opportunities you have 

identified at MCC to partner with the private sector in compact implementation. 

Mr. YOHANNES. Thank you very much. 

One of the best ways to achieve economic prosperity is by bring- ing the private sector in as partners. We are investing about $7.5 

billion with many of our partner countries. We look at it as a downpayment. I mean, it is going to have some significant impact, but, 


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nevertheless, the longer impact is going to happen when you include the private-sector investments within the country as well as 

from outside. And many of those countries we work with are countries that share the same values as ours. 

In addition to the visible results that we have seen in the last 

3 or 4 years, we believe that this system where we have an opportunity to work in partnership, primarily as it relates to policy, 

changes by making their countries very attractive to investment 

from outside as well as within. 

Having said that, we are trying to leverage the investment by 

bringing the private sector into the picture so that they can consider investing in many of these countries. For example, in El Salvador, where we do have a compact, we are able to work with a 

Virginia-based company in which we invested about $31 million. 

Now they are bringing electricity to northern El Salvador, benefiting something like about 200,000 people. 

In addition to the private sector, since I have been on board for 

the last 4 months, I have reached out to a lot of other government 

agencies and nonprofits like the Gates Foundation. We are trying 

to find a way in which we partner together to leverage the investments that have been given to us by Congress. 

So, in the long term, I really believe the best way to achieve 

prosperity or reduce poverty in a very sustainable way is really to 

bring the private sector into the picture. That is the only way. 

Ms. GRANGER. I agree with that; I just don’t see it happening. 

The chairwoman talked about the enormous investment and the intention of the MCC. And so, what we are saying is: That was the 

intention; here is the money that has been approved. But what is 

happening, where we can point to it and say, yes, this private investment has occurred or is occurring right now? 

Mr. YOHANNES. There is some that has occurred. I think we have 

to knock on the doors of a lot of American businesses. Of course 

in some cases, we have not had a lot of interest in the past. But 

now it is our job at MCC to spread the word, the fact that many 

of those countries we work with are ready and prepared to accept 

investments from our country as well as investments within their 

own countries. 

So we have to do a lot of education, informing a lot of American 

businesses to the fact that these are countries ripe for investment. 

So we have a lot of work to do, Madam Congresswoman. 

Ms. GRANGER. Okay. I have a few minutes left, and so I am going 

to go back to the corruption issue that the chairman asked. And 

my question is, has any country had MCC funding delayed or 

stopped because fraud or corruption has been detected? In other 

words, what are the safeguards, and what has happened? 

Mr. YOHANNES. I think that is a great question. 

We take corruption very seriously. It is the major hindrance to 

economic development. We have safeguard after safeguard after 

safeguard. And I have asked if we had lost anything in the past. 

The answer is, we have not lost a dime to corruption or corrupt 

practices because we have excellent safeguards. 

We have procurement agents. We have fiscal agents. We do audits on a quarterly basis. We don’t disburse the funds directly to 

the countries; we disburse the funds directly to the vendors. 


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And I believe we have a very good system, but I am committed 

to make sure that we continue to refine the system so that American taxpayers’ money is not spent on corruption or corrupt practices. 

Ms. GRANGER. So are you saying funding has been stopped when 

corruption—— 

Mr. YOHANNES. We have not seen any money spent on corruption 

or corrupt practices because of the system we have put in place. 

Ms. GRANGER. What I am saying is, where there is funding—or 

we have said, ‘‘We approve funding,’’ and then we have discovered 

the corruption, has our funding stopped? Have we said, ‘‘You don’t 

get the funding’’? 

Mr. YOHANNES. We monitor those countries on a yearly basis. We 

have indicators that primarily put a lot of emphasis on corruption. 

I know Chairman Lowey talked about Senegal and others countries. And, when we made the decision, when the board made the 

decision to fund some of those countries, a lot of those countries 

passed the corruption test. And if, in fact, then, the country fails 

some corruption indicators, then the board has an option to terminate, suspend, or to put on hold. But we have not had any country 

that failed the corruption test indicators in which the board had to 

make a decision. 

Ms. GRANGER. So the answer is no? 

Mr. YOHANNES. The answer is no, yes. 

Ms. GRANGER. Thank you. 

Madam Chair? 

Mrs. LOWEY. We will continue that discussion. First, Mr. Israel? 

Mr. ISRAEL. Thank you, Madam Chair. 

I would like to continue that discussion, particularly with respect 

to Ghana, which the chairwoman raised. I want to share with you 

an editorial that appeared in the Wall Street Journal on February 

18, 2010, headline, ‘‘Why Africa Is Poor: Ghana Beats up on Its 

Biggest Foreign Investors.’’ And let me just very briefly share two 

paragraphs from the editorial and then ask how you think we need 

to respond to it. 

Quoting from the editorial, ‘‘President Obama headlined his first 

trip to sub-Saharan Africa last July with a stop in Ghana. Speaking to the parliament in Accra, Mr. Obama praised the country’s 

growth and its example that ‘development depends on good governance.’ Eight months later, Ghana’s Government is turning the nation into a cautionary tale for foreign investors.’’ 

Then the editorial goes through a variety of case studies of capricious government meddling in a variety of potential deals. And it 

concludes, ‘‘Attracting foreign investment has been a pillar of Ghana’s development strategy, with the government pitching itself as 

the gateway to West Africa. Spooking new investors by repudiating 

contracts will rapidly ruin the country’s prospects for long-term development. The Obama administration has so far been silent on the 

shadows now haunting the country it heralded as a source of hope 

and leadership in Africa. Getting the country back on the track of 

moderate good governance and respect for the rule of law would be 

an important example to set on the poorest continent.’’ 

Now, I am not making a judgment on the intricacies of this issue, 

but I wanted to know whether you are aware of these concerns. 


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And what is the proper role of the MCC in helping the Government 

of Ghana correct the perception that it is mistreating foreign investors? 

Mr. YOHANNES. Thank you very much, Mr. Congressman. 

I am very much aware of the incident. I have spoken to the 

Blackstone Group about this incident. I also have spoken to our 

Ambassador in Ghana. I have also spoken to a lot of our associates 

at the Millennium Development Agency in Ghana. 

Now, it is a matter of commercial complaint that is being handled by the Embassy, by the proper department at State Department. And, you know, our hope is that, at the end, the decision 

that will be made will satisfy both the country and the companies 

that have been impacted by it. 

But we are actively following the developments, and definitely it 

is a concern to us. And as soon as a decision is made, we definitely 

will take into consideration the results. 

Mr. ISRAEL. Well, I appreciate that. And I think you have heard 

that this is a very significant concern on both sides of the aisle. 

And, clearly, when you have patterns of behavior by MCC partners 

that undermine the performance and chances for compact success, 

it needs to be a matter of urgent focus. And so I hope to engage 

with you. And I am pleased that you are aware of this and you believe it needs to be addressed. And I look forward to continue to 

partner with you on it. 

Mr. YOHANNES. Thank you. 

Mr. ISRAEL. I yield back, Madam Chair. 

Mrs. LOWEY. Thank you. 

But, before I go to Mr. Rehberg, since you didn’t use your whole 

5 minutes—maybe you did; the red light is on—I just want to clarify—and this is the issue that three of us have brought out. When 

there is a political coup, like in Madagascar, the guidelines are 

very clear. But there are no guidelines that address corruption. 

And Johnny Carson has been concerned about that, we have been 

concerned about that. And, frankly, if there are no guidelines, this 

program is not going to continue to exist because it will not be tolerated. 

So I think it is essential that you address this committee, if not 

today, another day. Again, with a political coup, you know what to 

do. But when money is being extorted from a private investment 

group and political corruption continues, or if it was not there before when the compact was given, it is alive and well now, there 

has to be guidelines to deal with it. 

Mr. YOHANNES. I agree and support your statement, Chairwoman Lowey. You know, corruption is one area that we take very 

seriously. And if a country fails the corruption indicators, then the 

board has an option to terminate or suspend the compact. 

I mean, the countries we work with, when you look in terms of 

the corruption indicators, they all have passed. Like, you talked 

about Senegal; I know you said Senegal earlier. Senegal passed the 

corruption indicators when Senegal was selected to get this program. 

Now, we are monitoring the situation not only by the indicators 

but also on the ground, working with our embassies. Again, if we 

see information that impacts otherwise, I just want to guarantee 


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you that the institution and board is ready to make a decision. If 

we have to terminate, we will terminate. But, again, the scenario, 

we monitor it on almost a daily basis. 

Mrs. LOWEY. Well, if you can provide some information to this 

committee. This is serious enough so that Assistant Secretary 

Johnny Carson has made visits, has discussed it. We have seen— 

I mentioned the problems in Ghana. 

Look, in Kenya, they had a threshold compact. They haven’t gone 

on to the next step. And I was there not too long ago with Secretary Clinton, who was very eloquent in her discussions of corruption. 

But if you can get back to us as to what is happening in Senegal, 

and what is happening in Ghana. I think we need to put very clear 

rules in place. And in Ghana, when you see extortionist practices 

by members of government, this is incredibly disturbing. 

Mr. YOHANNES. Madam Lowey, in fact, we are sending a highlevel delegation team to Senegal next week, both from MCC and 

the State Department. We are coordinating our efforts in Senegal. 

So, we are monitoring the situation on almost a daily basis. Of 

course, when you have reports like what happened in the last couple of months, it doesn’t make us feel comfortable. I addressed our 

concerns with the President about 2 or 3 months ago, and I do have 

a response from him. 

We are coordinating all of our efforts with the various agencies 

within our government. And, again, I think next week or the following week, a high-level delegation from State as well as from 

MCC is going to address our concern to Senegal. 

Mrs. LOWEY. Thank you. 

Mr. Rehberg. 

Mr. REHBERG. Thank you. 

Obviously, the committee is very supportive of what you are attempting to do. The criticism is probably procedural. I guess one 

of the questions I always want to ask is, there anything that Congress is doing that makes your job more difficult, whether it is in 

the authorization or the timing of appropriations? 

When I say the timing, I was in Senegal years ago when they 

wanted to move the town. As I understand it, that is no longer the 

project. So sometimes time is a good thing because it allowed them 

an opportunity to refocus their priorities. Other times, something 

might have gotten done quicker where there wasn’t the turmoil 

within the government because, if the project had gotten done 

quicker, the economy could have turned around quicker and they 

wouldn’t have the difficulties. 

So I want to reflect back on us first. Is there something the Congress could do to make your life easier? 

Mr. YOHANNES. Thank you very much, Mr. Congressman. 

The answer is yes. We have requested your approval for concurrent and longer compacts. The current process used today is, a 

country can only get one compact for every 5 years. So it takes 

such a very long time, it takes anywhere from 2 to 3 years to develop a compact. Of course, it takes 5 to 51⁄2 years to get it implemented. So—— 

Mr. REHBERG. That is not as a result of them taking the time 

to establish their priorities, their vision, their strategy. 


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Mr. YOHANNES. Precisely. 

Mr. REHBERG. They, in many cases, could get it done quicker, it 

could be approved quicker, and then could be funded quicker. 

Mr. YOHANNES. If we get the concurrent compact approval from 

Congress and we don’t have to wait for 2, 3 years to develop the 

entire compact, we could fund for those projects that have already 

completed compact development and feasibility studies, and we 

could deploy the funds much faster. 

Mr. REHBERG. Let me use Africa as an example. Because many 

of the governments are new and there are emerging countries, and 

they have term limits. And the one thing that we know, it is called 

the two term limits. The new leader in the country feels like they 

are the most important leader, so they want to break the Constitution and get that third term. 

If they could complete a project within their term of office, would 

that help? Meaning, Congress speeded it up a bit, made sure that 

the compact gets done within the 1, 2, 3-year period? Would that 

help? Because if we agreed to a compact based upon the government that is in place and then you have an election and you get 

somebody with an entirely different vision that doesn’t agree, that 

is where your problem would exist. 

Mr. YOHANNES. Well, fortunately, we have not had difficulties because a government changes. In fact, El Salvador was a classic example. We signed the current compact with the previous regime, 

and this regime was elected last year, and they have been very 

supportive and they are abiding with many of our principles. 

I think where we have had some challenges has been the amount 

of time. It just takes so long, the time it takes to develop a compact, which means that we are not able to deploy the funds to be 

able to have a tremendous impact much faster than the current 

structure. 

Mr. REHBERG. So your request of the committee is to—— 

Mr. YOHANNES. Give us the permission to do the concurrent compacts, which means we could do the projects much faster, instead 

of waiting for five different projects to be included under one compact. 

Thank you. 

Mr. REHBERG. Thank you, Madam Chair. 

Mrs. LOWEY. Mr. Schiff. 

Mr. SCHIFF. Thank you, Madam Chair. 

Mr. Director, there were a couple of questions I wanted to ask 

you—one country-specific, one more general. 

The country-specific question involves Armenia. The compact 

with Armenia has been suspended a couple of times related to 

democratic governance issues, media freedom among them. The 

most recent suspension was on June 10th of 2009. And there is a 

notation in the CRS report that at least one board member noted 

the suspension was in effect a termination because the work, if reapproved, couldn’t be completed within the compact lifespan. The 

compact was a 5-year compact that began in November of 2005, so 

conceivably it could go through November of this year. 

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struction work under that compact? If you could let me know the 

status on that. 

The more general question I have relates to the State Department and the quadrennial review that it is undertaking. There 

have been statements by the head of policy planning, by the Secretary herself, indicating an elevation, as they describe it, of development alongside diplomacy, which suggests some merger of the 

diplomatic and development missions. 

Have you been playing a role in the formulation of that quadrennial review? Do you see development being subsumed as a vehicle 

of diplomacy, or how do you see that shaking out? 

Mr. YOHANNES. Thank you very much, Mr. Congressman. 

In terms of Armenia’s concern, Armenia is in its fourth year of 

implementing the compact. The $65 million that was designed to 

fund the road project is still on hold. However, the other funds that 

are invested in agriculture are doing extremely well. We have 

trained over 30,000 farmers, and we are in the process of rehabilitating 17 different pump stations. And we have about $4.5 million 

outstanding through out micro finance to Armenian families. 

And 25 kilometers of road have already been completed. And the 

designs for the new road, that we paid for, I understand construction is going to be financed by the World Bank. 

Now, when you look in terms of governance, particularly in terms 

of human rights—— 

Mr. SCHIFF. Sir, before we move on, how much of the compact 

is remaining? 

Mr. YOHANNES. About $65 million is still on hold, the money that 

was designed to fund the road project. 

Mr. SCHIFF. The road project. 

Mr. YOHANNES. Correct. 

Mr. SCHIFF. And is there any change in the governance issues 

that concern MCC? Is there any potential release of those funds to 

undertake as much of the road work as possible before the compact 

is terminated? 

Mr. YOHANNES. If you look, the policy indicator for governance in 

Armenia, actually, the last 3 years it has gotten worse than it was 

before. So it is still a concern. We are monitoring it very closely. 

And if, in fact, we see some significant changes, then I think the 

board would make the proper decision. But right now, it is going 

the other way around. 

Mr. SCHIFF. Well, I would love to follow up with you on it—— 

Mr. YOHANNES. Okay. 

Mr. SCHIFF [continuing]. In terms of specific issues that MCC is 

looking at to see change in Armenia. 

And on the other question, Mr. Director? 

Mr. YOHANNES. Okay, on the QDDRs and the PSDs, they are 

both studies, one conducted by the White House, the other one 

being conducted by the State Department, we have been very active at the table, providing lessons learned these last 5 years. You 

know, hopefully the results will come sometime this year. We really 

have not seen the final result. But our people, both our chief economists and our experts in the food security area, have been involved 

heavily in the last few months, really providing a lot of information 


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that has worked for us at MCC. So I am just waiting, like you, to 

see the final results, Mr. Congressman. 

Mr. SCHIFF. Do you see any change in the selection of countries 

being more a function of diplomatic initiatives or that the choice of 

development missions within an MCC compact might be more 

heavily influenced by diplomatic considerations? 

Mr. YOHANNES. Again, what I am hearing right now is that a lot 

of our principles are emerging as priorities for this administration—the country ownership, results, accountability, you know, all 

of the principles that we argue for and that we are committed to. 

Mr. SCHIFF. I think I am out of time, Madam Chair. Thank you. 

Mrs. LOWEY. Thank you. 

We are going to start a second round. 

Ms. Lee, if you are ready, you can proceed with your question. 

Thank you. 

Ms. LEE. Thank you, Madam Chair. 

I apologize for being late. I had three hearings at one time. But 

thank you. I really wanted to be here for this. So if my questions 

are redundant, I apologize. But it is good to see you. And congratulations again. 

Mr. YOHANNES. It is good to see you, Congresswoman Lee. 

Ms. LEE. As you know, I have been extremely concerned about 

the involvement of minority and women-owned businesses in 

MCC’s compact agreements or at least in terms of supporting the 

efforts that take place, recognizing that primarily MCC provides for 

opportunities for local entrepreneurs in host countries. But I do 

know, and I have visited, actually with our chair, several countries 

and saw some MCC compacts being executed with U.S. partners. 

And I have not seen any people of color from our own country involved in some of these projects, wherever U.S. involvement is required. 

So I would like to ask you about how you are working. Do you 

work with SBA? What your procurement arrangements are when 

you hire people, like auditors, accountants, or whomever you hire 

to do whatever kind of work with MCC, how you are moving forward on that. As well as your workforce, how diverse is MCC’s 

workforce? 

And, finally, I would just like a little bit of background on the 

compact, I believe with Malawi, that you are in the process of 

working through at this point. I am interested to know that, and 

how women are integrated and gender considerations as part of the 

compact programs as a given, you know, an integral component of 

how you negotiate these deals. 

Mr. YOHANNES. Thank you very much, Congresswoman. 

In terms of employment at MCC, 50 percent of our employees are 

women and about 20 to 25 percent are people of color. And they 

are all well-represented at every level. 

In terms of our business procurements, approximately 40 percent 

are primarily to small businesses. And, within that group, about 15 

percent are primarily to minority-owned businesses. 

Ms. LEE. Fifteen percent? 

Mr. YOHANNES. Fifteen percent. 

I am committed to expanding opportunities to small businesses 

and minority-owned businesses. So we are going to do a very agVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00462 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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gressive reaching out to a lot of the small businesses as well as the 

various community groups that could help us to bring a lot of businesses from the minority communities. You know, it is 15 percent, 

but I would like to see it much higher at some point. So I am committed to make sure that we reach out to every available business 

that could be a potential partner in this area. 

Ms. LEE. How are you doing that? Do you have a specific outreach effort? How are you operationalizing that effort? 

Mr. YOHANNES. We reach out primarily through our Web sites. 

But also, we are going to be working very closely with the Constituency for Africa. That is an organization that really promotes 

businesses. And also with other groups, as well, making sure that 

we reach out to those businesses. 

I think the best and only way, in addition to the Internet, is to 

talk to the various groups that exist in our country that are Hispanic business associations, women business associations, African 

American business associations, Asian business associations. So we 

tend to be very active in sending the message so they can participate when we have the procurement processes. 

Ms. LEE. Well, Madam Chair, let me just ask you—I don’t know 

many members of the Congressional Black Caucus who have gotten 

any information about what you are doing. And so we need to figure out a way that, at least we know when you are reaching out 

to our constituency businesses, that we can help, because I haven’t 

found any members who know that. 

Mr. YOHANNES. I appreciate that. And I will commit to you that 

I will work with you and with congressional members. 

In terms of Malawi, it is still in the process. You know, we are 

going back and forth. The expected funding is going to be primarily 

to rehabilitate the energy sector. In fact, you know, the acting vice 

president is going back again next week to Malawi. Compact development has taken a little bit longer. You know, like many of these 

compacts, they have little snags. But we do expect to sign Malawi 

in the fourth quarter or the beginning of next year. 

Ms. LEE. And women? 

Mr. YOHANNES. With gender, you know, that is an area—in every 

single project we do, it includes gender integration. In fact, I have 

asked Cassandra Butts, who came from the White House, who was 

previously the deputy counsel, to take the lead in that area. And 

we are committing every resource we have to make sure we have 

consistency in every different country. 

When I first came here about 4 months ago, I was told by a 

group that our gender integration programs may not have been 

consistent in some countries. We are providing the technical training as well as the financial resources that are required to make 

sure we have people that really understand and could monitor it 

and could implement it extremely well. 

Ms. LEE. Thank you. 

Thank you very much, Madam Chair. 

Mrs. LOWEY. Thank you very much. 

And I just want to make a quick point relevant to your point, in 

that we urge you to carry out consultations in the country with the 

diverse group of civil society organizations, including women and 

minority groups, and consider their meaningful input when you are 


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developing a compact. I think it is very important to reach out to 

the diverse groups in the country when you are putting the compact together. 

Mr. YOHANNES. Madam Chairman, I agree and support that 100 

percent. In fact, every single compact, if it does not have civil society, NGOs, businesses, and others, they wouldn’t consider the 

project as part of the compact. So it is a requirement within our 

system to making sure that civil society in that country is consulted before it becomes an agreement. So I support it 100 percent. 

Mrs. LOWEY. Ms. Granger. 

Ms. GRANGER. Thank you. 

You can see there is a great concern about corruption in the 

countries, not in the MCC but in the countries you are dealing 

with. And the importance is that, if there is a history of corruption 

or a report of corruption, what safeguards are being established. 

I would ask you, what kind of cooperation do you receive from 

local communities to fight corruption? And does there need to be 

more outreach and ways for community members to anonymously 

report incidents of fraud or corruption? 

How are you working with those communities and with those 

compact countries to establish tougher anti-corruption safeguards 

so that, when we have this hearing the next time and have a follow-up, then we will have more assurance that that is occurring? 

Mr. YOHANNES. We work with a number of groups. Number one, 

we work very closely with the State Department, particularly with 

embassies in those countries, to gather a lot of information, especially as far as corruption is concerned. 

We also work very closely with NGOs in those countries. And, 

also, when I was in Cape Verde, for example, and Ghana, I spent 

some time with the business community independent of the government and was asking them questions specifically if they were concerned about corruption or corrupt practices in those countries. 

And, of course, we put a lot of emphasis on the corruption indicators that are provided to us by a third party, which comes from 

that group interviewing the civil society, businesses, and others in 

those countries. 

So we have a lot of information we gather. Again, having said 

that, I believe there could be other opportunities that maybe I have 

not thought about in the past that we would be more than happy 

to work with you on. 

Ms. GRANGER. Thank you. 

Mrs. LOWEY. The violent events of the last week in Kyrgyzstan 

are of great concern to the committee. And it is my understanding 

that MCC is currently engaged in a threshold program in 

Kyrgyzstan, and one of the stated reasons for discontent in 

Kyrgyzstan was the awareness of corruption in government. Given 

the threshold program’s focus on corruption over the last 2 years, 

it leaves me a bit uneasy about the effectiveness of this program. 

First and foremost, have the events of the last week compromised the security of MCC employees and implementing partners? And what effect will these events have on the program in 

both the long and short term? And, finally, is MCC considering terminating the program, given the current situation? 

Mr. YOHANNES. Thank you, Chairwoman Lowey. 


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We had a 2-year threshold program with Kyrgyzstan for about $16 million, primarily intended to strengthen the criminal justice 

and the law enforcement sections of that country. The program 

comes to an end in June. We are currently working with the State 

Department and National Security Council about the situation before we take any kind of action. And, as soon as we get the green 

light, we will be able to make the final decision in terms of how 

to proceed. 

Mrs. LOWEY. Thank you. 

Mr. YOHANNES. But the program comes to an end in June. And, 

at this time, we have no plan to extend the program beyond June. 

Mrs. LOWEY. Thank you. 

Mr. Rehberg, do you have a question? 

Mr. REHBERG. Yes, one quick question. 

If you were to give us a couple of success stories of completed or 

nearly completed or will-be completed and never going to ask for 

money again, what two countries would you write up as a success, 

so that we could look at some statistics and a little bit of the history and figure out where they are and talk to USAID and such? 

Could you come up with a couple? 

Mr. YOHANNES. I could give you a couple. But the most frequently asked questions when I speak to many of those countries 

is the fact that they all want a second compact. So I have be very 

careful. If I tell you the country, then tomorrow I am going to be 

asked for a second compact. 

Mr. REHBERG. Sure. 

Mr. YOHANNES. But definitely Cape Verde was one of the countries that we selected to be eligible for a second compact. And if 

you look in terms of what has been accomplished in that country, 

it has just been phenomenal. I went and inspected the port which 

will be completed sometime in September, which will open a lot of 

opportunity for that country for trade and investments. 

Projects in Georgia are doing extremely well. Projects in Ghana, 

even though there were some concerns recently because of some 

corruption issues that were discussed, the progress has just been 

phenomenal. El Salvador is continuing to do extremely well. 

Mr. REHBERG. Okay. I am not going to suggest that all projects 

must end, but I don’t believe that it was ever intended that it was 

going to be an ongoing foreign affairs appropriation to these various countries. Is there an ending date? 

I know the compact comes to an end, but if the country has the 

opportunity to come in—I mean, I can always find more money in 

Montana year after year after year. That doesn’t mean that eventually we shouldn’t stand on our own two feet and say, enough is 

enough. 

What is the plan for ending projects, just saying ‘‘El Salvador, we 

love you, but you are on your own now’’? 

Mr. YOHANNES. That is a good question, Mr. Congressman. 

And my objective is to make sure many of those countries replace 

our aid dollars with investment from the private sector. I believe—— 

Mr. REHBERG. Okay. The question then becomes, are your criteria objective or subjective? Does the board of directors have a 

threshold that is available to us? Is it advertised, or is it just a beVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00465 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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hind-closed-doors board of directors decision to consider a second 

compact or a third or a fourth or a fifth? 

Mr. YOHANNES. When you consider a second compact, I think you 

have to do a couple things. Number one, the countries themselves 

must continue to perform extremely well in all of the policy indicators. That is number one, all right? 

Before we can make a decision to do second compacts, we look 

in terms of the first 5-year investment’s ability to accomplish its intended mission or goals. So it is a very, very good set of processes 

before a country is selected or eligible to get a second compact. 

And in the last 5 years, we had five countries that were graduated from low-income countries to LMIC. By definition, some of 

those countries at some point would be able to replace our aid dollars with private-sector investment. So it just varies from country 

to country. 

Again, our hope is that many of those countries will replace our 

investment dollars with private-sector investment at some point in 

the future. And I hope at some point in the future MCC will not 

exist and all our investment will be replaced by the private-sector 

investments. 

Mr. REHBERG. Well, probably that won’t be possible because 

there are so many countries that probably need the initial help. It 

just seems like right now we are spending a lot of time trying to 

figure out how to save the countries that are in or how to fully fund 

those that currently exist, and it would be nice to have a strategy 

to end so we could bring in more countries, as opposed to just continuing to support those that are successful. And there is nothing 

like success breeds success; however—— 

Mr. YOHANNES. Well, some of those countries that graduate definitely would be candidates for other funding in the future. But we 

need to continue to work with some of the countries that have done 

a great job in terms of improving their policies and so forth. 

But we can’t predict in terms of which countries are going to be 

next for getting a second compact. And as much as possible we are 

working in cooperation with other aid agencies within our government, as well as continuously encouraging the private sector to 

make sure they consider making investments in some of those 

countries, so at least the burden would not be on American taxpayers in the long term. 

So it is going to vary from country to country, Mr. Congressman. 

Mr. REHBERG. One last question: Can you name the one thing 

that is the same in all the successful countries? Is it agriculture? 

Or is it transportation? And I know you would like to say, ‘‘Well, 

in one case it is a port, and in another case it is a railroad.’’ But 

are there some things that are being funded that seem to be an 

overriding theme for success? 

Mr. YOHANNES. Approximately about 50 percent of our investment dollars are primarily invested in agriculture. And that seems 

to be an area where it is providing a lot of food security for a lot 

of our partner countries. In addition, all together, when you include 

agriculture, infrastructure, it is 65 percent of our investment. That 

has been the case in the past. 

However, we are looking at other areas where our investment 

could have a tremendous impact much faster and more quickly. We 


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have a lot of technologies that could be employed in many of those 

countries. So, as we consider Indonesia and others, we are speaking 

to those countries to consider other alternatives in addition to the 

traditional investments that have been made. So—— 

Mr. REHBERG. But agriculture would probably be your answer, or 

something affiliated. If it is a railroad in Mongolia, it probably 

moves agricultural products. 

Mr. YOHANNES. Precisely. 

Mr. REHBERG. And if it is Benin and it is the port, it is probably 

moving agricultural products. 

Mr. YOHANNES. That is correct. 

Mr. REHBERG. Okay. All right. Thank you. 

Mrs. LOWEY. I want to thank you, Mr. Yohannes, for engaging 

in our committee. Given your focus on agriculture, perhaps you can 

share with us the coordination between the MCC and Cheryl 

Mills’s efforts to coordinate, the whole foreign aid apparatus and 

our other agencies in government and focusing them on agriculture. 

Secondly, I just want to say that this committee has been very 

committed to the MCC, and we understand that the MCC has the 

great potential to lift people out of poverty. And because of our support, this is why we have been so concerned about the corruption 

and the stories that I know don’t please you or us on this committee. And we hope to work through them and have greater dialogue with you about how to move forward. We know that you have 

done excellent work in building schools in addition to agriculture 

and roads, and we look forward to the dialogue. 

In closing, well, perhaps you can just address the idea of coordination among the MCC and the other efforts that Cheryl Mills is 

leading with regard to agriculture. And then I will turn to Ms. Lee. 

Mr. YOHANNES. Okay. Thank you very much. 

Chairwoman Lowey, in terms of corruption, I know we talked 

about it several times, but I just want to point out that we have 

a new fraud and corruption policy at MCC. That was just implemented before I just got there, so it is something new. And then, 

also, we have country-by-country fraud and corruption assessments, which has been ongoing for some time. And all compacts 

have civil society stakeholder committees that do oversight. And, 

also, we have a system in which we receive anonymous tips about 

corruption from many of those countries. 

So I just want to add to the record that, in addition to my earlier 

statement, these are additional processes that have been in place 

for some time, even before I got to MCC. 

Mrs. LOWEY. Before you get to agriculture, I did want you to talk 

about that, because 50 percent of your work is focused, as you said, 

on agriculture. 

I think the issue is the MCC has clear guidelines related to a political coup, and guidelines related to corruption are fuzzy. And because of this committee’s support for the MCC, we would like to 

work with you and hear more about how you are going to face 

those challenges. 

So, if you could just address the coordination on agriculture between the MCC and Cheryl Mills’s effort, I think that would be 

helpful. And then I will turn to Ms. Lee. 


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Mr. YOHANNES. Okay. Thank you, Madam Chairwoman. 

We have been working in coordination with Cheryl Mills’s office. 

In fact, Kristin Penn, who is MCC’s agricultural expert, she is on 

loan from MCC to the State Department. And because of lessons 

learned the last 5 years, we have done so much in that sector, the 

administration is—we are assisting the administration in terms of 

the broader response in food security. And so we are continually 

working with the State Department. 

Again, like I said earlier with our experiences in Ghana and 

Nicaragua and other places, we are seeing a tremendous progress, 

not only farmer training but also they are using our education and 

training in which they are producing much higher quantities. And 

also we have set aside something like 51,000 hectares of agricultural land primarily to be used for high cash-crop commercial farming. 

In Ghana alone, for example, where I just was 2 months ago, I 

was at a commercial pineapple farm in which we provided the cold 

storage, where Ghana is now exporting a lot of delicious pineapples 

to Europe, earning a lot of precious foreign currency reserves. 

So it is working. We are providing what we have learned the last 

5 years to the administration. 

In addition to the projects we have become extremely effective in 

making sure that both men and women are benefiting from our investments in agriculture. Again, when I was in Ghana 2 months 

ago, I was fortunate enough to pass out land certificates at a ceremony in which both men and women 50 percent benefited from our 

investments. So not only are we able to see increases in incomes 

of many of the farmers, but also we are seeing how our gender policy is having a tremendous impact. 

Mrs. LOWEY. Again, before I turn to Ms. Lee, Ms. Lee and I were 

in Ghana about 2 1/2 years ago, saw that same very important and 

exciting pineapple plant. And I look forward to the day when you 

or Ms. Lee or I can go back and we will see many exciting businesses sponsored and encouraged by the MCC. 

Ms. Lee? 

Ms. LEE. Thank you very much, Madam Chair. And that was a 

very exciting trip, and I concur with the chair, in terms of a return 

to see these investments taking off and doing what they were intended to do. 

And agriculture and infrastructure programs have been, really, 

the centerpiece, I know, of the MCC. But also now I want to find 

out as it relates to basic education and health projects, how are 

they given equal consideration—or are they now—in MCC compacts? 

I know you revised the guidelines for—it is the economic and 

beneficiary analysis to now use health and education projects as examples to demonstrate positive economic rates of return. So have 

you seen any increased interest in education-based projects in compact proposals? Are countries and people aware that this is an indicator on the—what is it called, the ‘‘investing-in-people basket’’? 

And what are those indicators and how are they scored, as it relates to the health- and education-sector projects? 

Mr. YOHANNES. Because all of our projects are country-owned 

from design to implementation, and to the extent a country identiVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00468 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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fies what appears to be their major constraints for economic development, those are the projects we work with. 

So, for example, in terms of health, we have only done two different projects. One is in Lesotho, where we have about 24 percent 

of the population infected with AIDS. So we are working in coordination PEPFAR, which we are building the clinics and PEPFAR is 

really providing the medical supplies. 

And our most recent compact was with Mongolia in terms of 

health, primarily where they have huge problems with diabetes 

and high blood pressure, so we are partnering with them. But 

many of the health concerns were addressed primarily in the 

threshold programs where we provided the funding for the immunization of children. 

But as long as a country considers a sector to be a priority and 

to the extent that it works, we are willing to work with them. But, 

historically, it has been much more easier to get funding for health 

and education from other sources. 

Ms. LEE. Sure, but countries are aware that this is part of it? 

Mr. YOHANNES. Definitely. Definitely. We have no sector requirements, no earmarks. You know, everything that was considered to 

be a major economic constraint is what we are working with the 

countries on, absolutely. 

Ms. LEE. Okay. Thank you. 

Mr. YOHANNES. Thank you very much, Congresswoman Lee. 

Mrs. LOWEY. Mr. Yohannes, I thank you again for your time and 

appearing before this committee. 

This concludes today’s hearing on the President’s fiscal year 2011 

request for the Millennium Challenge Corporation. The Subcommittee on State, Foreign Operations, and Related Programs 

stands adjourned. 

Mr. YOHANNES. Thank you very much for having me. 

Mrs. LOWEY. Thank you. 


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(489) 

TUESDAY, MARCH 23, 2010.

GLOBAL HEALTH AND HIV/AIDS PROGRAMS AT THE DEPARTMENT OF STATE AND THE U.S. AGENCY FOR 

INTERNATIONAL DEVELOPMENT 

WITNESSES 

ERIC GOOSBY, M.D., U.S. GLOBAL AIDS COORDINATOR, U.S. DEPARTMENT OF STATE 

GLORIA STEELE, SENIOR DEPUTY ASSISTANT ADMINISTRATOR FOR 

GLOBAL HEALTH, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. The subcommittee on State Foreign Operations and 

Related Programs will come to order. 

I would like to welcome Dr. Eric Goosby, the United States Global Aids Coordinator, and Ms. Gloria Steele, the Senior Deputy Assistant Administrator of the Bureau for Global Health at USAID, 

to discuss the President’s fiscal year 2011 request for global health. 

This committee has made global health a key priority, providing 

over $30 billion over the past 5 years with impressive results. HIV/ 

AIDS programs directly supported 2.4 million people on treatment. 

Malaria programs have protected 19 million families with bednets; 

and nineteen million women have access to voluntary family planning services. 

Despite expanded services, the development of parallel systems 

or ‘‘stovepipes of excellence,’’ present challenges with integration 

and efficiency. It makes no sense for a woman to travel east of her 

village for a prenatal visit, west to get her daughter vaccinated, 

and north for an HIV/AIDS test. I am pleased that the budget request proposes to put in place better coordination, particularly 

given the strong foundation within the HIV/AIDS programs. The budget requests $8.5 billion for the Global Health Initiative—a 9 percent increase that supports a coordinated health program in key countries, with a goal of increasing access to health 

services and reducing mortality and morbidity. I hope you will address how the U.S. Government-supported health programs will become more effective and efficient in target countries. Overall, I applaud the streamlining effort and look forward to working with 

both of you on implementation. 

Looking to specific health issues. The budget request provides a total of $1.49 billion for maternal health, child survival, family 

planning, and nutrition. In fiscal year 2008, USAID developed a 

comprehensive strategy, at the direction of this Subcommittee, to 

expand child survival programs, focusing resources in 30 countries. 

What results were attained with these additional resources. We 

would like you to share with us. What lessons learned will be apVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00489 Fmt 6601 Sfmt 6601 E:\HR\OC\A402P2.XXX A402P2

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plied to the GHI? And do we expect improved results with an integrated model under GHI? 

I have championed expanded access to voluntary family planning 

for many years. We still find ourselves unable to meet the demand 

in much of the developing world. And under the GHI, how will U.S. 

Government resources insure access to those most in need of these 

services? What efforts will be made to integrate family planning 

with other services for mothers, including child survival and Malaria programs? Other donors have prioritized family planning, and 

I am interested to hear how you will coordinate with them so the 

expanded U.S. effort fully complements their programs. 

With increased focus on host country ownership, which is critical, 

many remaining questions require evaluation. How will this new 

priority impact implementation of global HIV/AIDS programs? Will 

OGAC funding be provided to governments as budget support? Will 

grants and contracts with nongovernmental entities end or will 

these programs be implemented by host country governments? 

What monitoring and evaluation is in place to ensure consistent 

and accessible services for patients during this transition? 

Finally, although the new HIV/AIDS strategy prioritizes prevention, I am concerned the budget request does not reflect this new 

commitment. Although new infections have dropped and young people in some parts of the world are waiting longer to become sexually active, the number of infections continues to grow. Every 

minute, five people become infected; and nearly 25 years into this 

pandemic we still do not know what prevention strategies work. 

This subcommittee requested a prevention strategy in the fiscal 

year 2010 conference agreement that was due to this committee 

this week but has not yet been provided. When can we expect this 

report? And what new strategies will you put in place to strengthen our prevention intervention? What new research is emerging to 

slow the pandemic? Obviously, prevention is just a piece of the picture, and U.S. funding will continue to support care and treatment. 

I look forward to addressing these issues during the question and 

answer portion of the hearing. 

The challenges before us are immense. I am pleased the United 

States will continue its leadership role in global health. We are 

very lucky to have your expertise, and I look forward to hearing 

your remarks and working with both of you on these and other 

global health issues. 

First, let me turn to the ranking member, Ms. Granger, for her 

opening statement. I apologize for some of my colleagues, because 

there is a signing ceremony at the White House. So I had to say 

to Speaker Pelosi 5 minutes ago, sorry, I couldn’t go over with you. 

But thank you again for appearing before us. 

Ms. Granger. 

OPENING REMARKS BY MS. GRANGER

Ms. GRANGER. Thank you very much. 

I would like to welcome Ambassador Goosby and Ms. Steele before this subcommittee to discuss the fiscal year 2011 request. 

The President’s Global Health Initiative was announced last May 

and encompasses all global health funding under this subcommittee’s jurisdiction. It totals $8.5 billion in fiscal year 2011, an inVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00490 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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crease of $684 million from last year, the majority of which, of 

course, comes from this subcommittee. Almost 70 percent of the request, $5.8 billion, is for HIV/AIDS programs under Ambassador 

Goosby’s office, as the chairman mentioned. 

I want to be on record that the goals of the President’s Global 

Health Initiative are impressive, they are important, and they are 

worthy of support. These goals include achieving better health for 

women and children in the developing world and providing a longterm plan for delivery of health services led by the countries themselves. 

Funding for global health programs has increased significantly 

since the start of the Bush administration to last year’s enacted 

level, from $1.8 billion to $7.8 billion. This three-fold increase in 

funding has allowed for a rapid scale-up of our health intervention 

overseas. 

Now is the time to begin examining the path forward, because 

this level of increase can’t be sustained while our country faces 

such a dire fiscal situation. We must examine our global health 

budget and take advantage of programs that can build the capacity 

within countries so that they are one day able to provide more for 

themselves over the long term. 

I applaud the administration for looking at how to shift the global health debate to sustainability, sustainability by recipient countries so they can graduate from U.S. bilateral assistance one day 

and sustainability by the many hospitals and clinics built by the 

United States government funding so that trained health care 

workers will provide services in the future. 

We have a long way to achieve these goals, but I commend the 

administration for starting the dialogue. In practice, I see a number of challenges, in particular the faith-based organizations that 

I hope to address during my question time. 

Additionally, I don’t understand why a Presidential initiative of 

this size is not being formalized through authorization legislation. 

Instead, the administration has put this subcommittee in a difficult 

position by requesting a number of significant funding increases for 

several programs, maternal and child health, nutrition, family 

planning and neglected tropical diseases, but there is no legislative 

recommendation for laying out the concrete steps necessary to determine how those dollars might be spent differently. How can we 

be assured that the Global Health Initiative will not just add another layer of bureaucracy to these crucial programs? 

Finally, with respect to the U.S. contribution to the Global Fund, 

Ambassador Goosby, I understand you will be leaving today to fly 

to Geneva for the Global Fund’s replenishment meeting. If I could 

suggest one message for you to take to the conference, it would be 

that the Global Fund must find a way to manage its demand, particularly in a constrained fiscal environment. 

The committee included language in the statement of managers 

last year addressing this issue, and I look forward to hearing from 

you the recommendations of the Global Fund’s working group to 

manage tension between demand and supply and how those recommendations can be implemented prior to launching a tenth 

round of new grants. 


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I thank you both for appearing before us today, and I look forward to hearing about your work. 

Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

Ambassador Goosby, your full written statement will be placed 

in the record. Please feel free to summarize your oral statement. 

Thank you. 

Dr. GOOSBY. Thank you very much. 

Well, Chairwoman Lowey and Ranking Member Granger, it is 

really an honor to have this opportunity to talk to you today. Your 

bipartisan support has been the essential ingredient to the program’s success. 

In a time of tightening budgets and economic constraint, the 

President is seeking nearly $7 billion for bilateral HIV/AIDS programs, bilateral TB programs and research, and contributions to 

multilateral efforts. The United States is and under this budget 

will remain by far the largest donor to global health and HIV/ 

AIDS, contributing more than half of the global donor response. 

In addition, the President’s request of $1 billion for the Global 

Fund represents the largest request made in a President’s budget 

to date and maintains our status as the leading contributor to the 

fund. 

PEPFAR is the cornerstone of the President’s Global Health Initiative, which commits $63 billion over 6 years to support partner 

countries in improving and expanding access to health services. 

The Global Health Initiative is about integration, coordination, 

building capacity, and creating the conditions for a long-term sustainability project. I want to stress that this new initiative will not 

change PEPFAR’s emphasis on prevention, care, and treatment of 

HIV/AIDS but will allow us to ensure that communities affected by 

HIV have access to comprehensive health services to address the 

needs that they face. 

Seven years after the creation of PEPFAR, AIDS is still a leading 

cause of death in many countries and a continued threat around 

the world. Investments in PEPFAR and the global AIDS fight overall continue to be necessary. 

At the same time, we should take note of the difference PEPFAR 

has made. Many thought treatment never could be scaled up in Africa because of weak health care delivery systems—the need for 

doctors, nurses, the lack of resources. Now PEPFAR is directly supporting almost 2.5 million individuals on treatment. In 2009 alone, 

PEPFAR supported HIV counseling and testing for nearly 29 million people and care for 11 million people, including 3.6 million orphans and vulnerable children. 

PEPFAR’s core business has been and will continue to be prevention, care, and treatment. 

I would like to briefly discuss some of the themes which will 

guide us over the next few years as we move from an emergency 

response to promoting sustainable country-led responses. 

Preventing new infections represents the long-term, sustainable 

way to turn the tide against HIV/AIDS. Over its next phase, 

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tions, working with countries to target and research most at-risk 

populations and expand the evidence base around prevention. 

Another key focus is support for country ownership. Strong government leadership of the health system is integral to long-term 

success. 

Last August, I wrote to our U.S. ambassadors to ask for their 

support in the transition from an emergency response to a sustainable program. I have been greatly encouraged by their leadership 

as our country programs develop partnership frameworks and accompanying implementation plans with governments. Our discussions are also laying the groundwork for engaging in partnership 

with countries more broadly through GHI. 

A heightened focus under both our 5-year strategy and GHI is 

support for strengthening of health systems. By reducing the HIV 

burden on facilities and health workers, PEPFAR frees up capacity 

to address other health needs. 

We are also supporting training of new health workers and expansion of infrastructure. As part of GHI, PEPFAR will explore opportunities for joint programming and increased coordination for 

health system activities. 

Our strategy recognizes that HIV/AIDS is a shared global responsibility. All the elements of a national response to health requires support from a mix of national resources and external resources. Because the United States has done so much on HIV/ 

AIDS, I sometimes sense a tendency for people to conclude that we 

can or should do it all. Even if we somehow could do it all, globally 

or in any country, that would completely undermine the principles 

of country ownership and sustainability. 

This administration is aggressively pursuing dialogue around a 

truly shared global response in multiple form with partner governments, other donors, multilateral organizations and foundations. 

We must all come together if we are going to win this fight and 

continue to respond to the unmet need. 

Finally, PEPFAR represents a whole-of-government approach. 

We owe the people who lead the implementation of PEPFAR a tremendous debt of gratitude. Our leadership and management structures must support them to the best of our ability. 

PEPFAR has worked to decentralize programming and ensure 

that decisions move down to country level activities as made by 

United States country teams. We are working to further integrate 

the field perspective into its policy and communications, reduce the 

reporting burdens and paperwork requirements placed on the field; 

and I am pleased to note that PEPFAR’s whole-of-government emphasis is being reinforced by GHI. 

Once again, Chairman Lowey and Ranking Member Granger, I 

appreciate the subcommittee’s strong support; and I look forward 

to our question and dialogue. Thank you. 

[The information follows:] 


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Mrs. LOWEY. Thank you. 

Ms. Steele, your full written statement will be placed in the 

record. Please feel free to summarize your oral statement so we can 

get to questions. Thank you very much. 

Ms. STEELE. Thank you. 

Chairwoman Lowey, Ranking Member Granger, thank you very 

much for inviting me to testify on the President’s Fiscal Year 2011 

Budget Request for Global Health and Child Survival. 

As I begin, on behalf of USAID’s staff and the people we serve, 

I want to thank you for your long-standing support for global 

health. As a result of your support, the U.S. Government stands as 

a leader in the health area; and as a result of your support, we 

have made profound differences in the lives and welfare and in the 

health of the world’s poor. 

As we implement the President’s Global Health Initiative, we 

once again count on your support. The GHI will build upon the successes of health that you have supported in the past years; and I 

want to go over some of them, as you have already done, Chairman 

Lowey. 

We have remarkable successes in PEPFAR, as Ambassador 

Goosby has talked about. We have equally remarkable successes in 

malaria. In 2009, we have reached, after 3 and a half years, 50 million people in Africa with prevention and treatment measures. In 

six African countries, we have seen substantial reductions in 

under-5 mortality, from 19 to 36 percent. A large part of the reduction in under-5 mortality has been due to measures that we have 

done in malaria. 

We have also made significant progress in neglected tropical diseases. Since 2006, we have delivered over 221 million treatments 

to over 55 million people; and we have reduced the cost of treatment by 41 percent. We have worked with the private sector and 

have received over a billion dollars to date in free drugs from the 

private sector. 

Our progress in TB has also been impressive. By the end of 2008, 

the prevalence rate of TB had fallen by 26 percent in TB countries 

where we have been working, compared to 10 years ago. 

Our progress in family planning is also impressive. Through increased access and voluntary family planning services, modern contraceptive use among women of reproductive age in the developing 

world has increased from under 10 percent in the 1960s to 43 percent today. In harmony with the desired family size, the average 

number of children per woman has fallen from over 6 percent to 

almost 3. We have also continued to see increases in the proportion 

of births spaced 3 or more years apart, as well as seeing declines 

in the proportion of young women having their first birth before 

the age 18. 

In maternal and child health, we have made impressive gains. 

We have reduced under-5 mortality to 8.8 million children. In fact, 

there were 15 million child deaths in the 1980s. This represents almost 8 million child lives saved, and that is a tremendous accomplishment. 

While globally we have not made much impact in reducing maternal death, in the countries in which USAID has worked we have 


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seen significant reductions in maternal deaths in the range of 20 

to 50 percent over the last 10 years. 

However, as you know the challenges remain. Today, 530,000 

women still die from pregnancy related deaths. Over 6 million out 

of the 8 million children under age 5 die from causes that are easily preventable, causes such as diarrhea, pneumonia, malaria, complications related to birth, and malnutrition. In fact, maternal and 

child malnutrition contributes to 3 and a half million child deaths 

every year. 

There are still 9 million new cases of TB, with 1.7 million deaths. 

Nine hundred thousand people die from malaria. We still see 52 

million unintended pregnancies occur in the world today, and 

400,000 people are disabled by tropical diseases for which simple 

treatments exist. 

The President launched the Global Health Initiative in May last 

year; and the Global Health Initiative is intended to achieve greater impact than we have today, building upon the successes that we 

have accomplished. Through integration, which Chairwoman Lowey 

has talked about, we intend to be more efficient in the use of our 

resources. We intend to link services in the same place because we 

are working with the same service provider. We intend to integrate 

activities that relate to each other in service delivery. We want to 

achieve sustainability so that a woman who is treated through programs we support today will continue to receive the same highquality service 5 years from now. We will implement a woman-centered approach that addresses the barriers that keep women from 

achieving improvements in their own and their families’ health. 

We will invest heavily in monitoring and evaluation to increase 

transparency, accountability, and learning. The GHI will promote 

investments in research and innovation to scale up proven interventions and explore new ways of providing health services. 

We will continue to interact closely with other development partners, both bilateral and multilateral, including faith-based organizations and community-based organizations. We believe that by 

working together more effectively we will be able to build upon 

each other’s strengths and together we will accomplish more than 

if we work separately. We will design and implement health programs within the framework of priorities identified by our partner 

countries. 

To do all of this, we will work in collaboration with other U.S. 

Government agencies, such as CDC, NIH, Peace Corps, and the 

State Department. 

We have requested $3 billion in order to be able to accomplish 

the goals that we have set under the Global Health Initiative. This 

includes $90 million for maternal and child health, which includes 

nutrition at $200 million. We hope to see a reduction in maternal 

mortality by 360,000 women’s lives saved by 2014. We hope to see 

a reduction in under–5 mortality by 3 million, and we hope to reduce under-nutrition by 30 percent. 

We are requesting $590 million for family planning and reproductive health, and by the end of GHI would like to see 54 million 

unintended pregnancies prevented. We are requesting $618 million 

from malaria so that by the end of 2014 we will see the reduction 

in the burden of malaria by 50 percent for 450 million people. This 


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would include starting malaria programs in Nigeria and D.R. 

Congo. We are requesting $230 million for TB so that we can save by 

the end of the GHI 1.3 million lives. 

We are requesting $155 million for NTD in order to reduce the 

prevalence of seven major NTDs by half among 70 percent of the 

affected population. 

In 2005, we asked for your support to be able to change our 

model in malaria, and you provided us that support. As a result of 

that, we have delivered to you some of the most outstanding 

achievements in global health today. We are asking for the same 

support today to save many more millions of lives using the new 

business model of the Global Health Initiative. 

Thank you. 

[The information follows:] 


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Mrs. LOWEY. Thank you to you both. 

Over the past decade, the members of the G8 have prioritized 

poverty reduction and development on their annual agendas, with 

health a consistent top priority. As the world faces a global economic crisis, donor countries are finding it even harder to meet 

previous commitments. For example, Canada will make child survival and maternal health a central issue at this summer’s G8 

meeting but, at the same time, will likely reduce their commitment 

to HIV/AIDS programs. 

If you could—whoever wants to go first—could you explain to us 

what steps will the U.S. take to ensure that donors do not rob 

Peter to pay Paul and walk away from existing commitments? And 

some have accused the U.S. of shifting priorities as the fiscal 2011 

budget has a relatively small increase for HIV/AIDS and actually 

reduces the U.S. contribution to the Global Fund to fight AIDS, tuberculosis, and Malaria. Can you explain why this decision on the 

budget and why was the decision made on both bilateral and multilateral commitment for HIV/AIDS? 

Dr. GOOSBY. Yes, Chairwoman. Excellent questions. I will get 

right to the core of the issues and dilemmas that we are confronted 

with. 

In this time of economic severity, we have been put in a position 

of having to think smarter, be more efficient, look for efficiencies, 

et cetera. But we have also matured in our programs to the degree 

to which we now have efficiencies and platforms of care that we do 

not need to reproduce and scale up from the ground but add on to, 

look for additional opportunities based on those platforms to focus 

on new populations that are nearby, eliminate duplications, et 

cetera. 

We are confident that with a rigorous look at how and where we 

are putting our prevention programs in particular in front of the 

movement of the virus through the population that we will be able 

to effectively expand the impact of our prevention structures within 

the countries that we are already committed in and indeed look for 

opportunities—prevention opportunities in countries that we have 

less robust prevention strategies. 

In terms of the bilateral activity that you referred to with Canada, the maternal and child health issue is a huge issue. The 

MDGs, as you know, 3 and 4 focus on these. We have all been focused on this to try to respond to it. 

The leading cause of death for women in child-bearing ages continues to be HIV/AIDS. So we will actually be approaching and focusing on maternal and child health through a more rigorous attempt to identify, diagnose, treat, and enter individuals around 

their HIV/AIDS needs. 

We have seen drops in maternal mortality in Rwanda, in South 

Africa, and KwaZulu-Natal by those programs having an impact on 

maternal and child morbidity; and it is those types of synergies 

that we need to amplify and insist increase. 

In terms of your final issue around global responsibility, it is the 

key dialogue that we have engaged with in every multilateral discussion we are in. I am leaving this afternoon, as you alluded, to 

engage in activities in The Hague around replenishment for the 

Global Fund. The Global Fund continues to be a conduit through 


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which countries with resources can move resources to countries 

without resources and continues to be complementary to our bilateral efforts and an essential ingredient in our ability to respond to 

what is, as you have both stated, an expanding unmet need. I think 

that our need to become more efficient, become less duplicative, 

look for opportunities to build on each other’s programs affords a 

broad opportunity for us to again save resources during these economically severe times. 

Finally, I would say that the call for global responsibility that is 

a shared responsibility which you both articulated in your testimonies is really what we do need to start talking about everywhere. We cannot do this alone as one bilateral effort. We need to 

look for every opportunity to start combining our resources differently, responsibly, with total visibility but differently in the way 

we add each other’s resources on top of the other to actually expand the number of people who receive care and treatment. 

So I would end with that. 

Mrs. LOWEY. Thank you. 

Did you want to add to that? 

Ms. STEELE. Yes. In terms of the global responsibility, it is a 

major issue outside of HIV/AIDS; and, as with Ambassador Goosby, 

I will be traveling tonight to go to The Hague in an event that is 

organized by GAVI to get donors together to show their responsibility towards immunization. I think this is a very important event, 

and we are taking that very seriously. 

Bilaterally, we have been working with Canada, with Japan in 

order to see what roles we can play, how we can divide up the responsibility so we do not duplicate the work, given our limited resources. I think the Global Health Initiative’s emphasis on efficiency is very important in this regard. 

If in fact our donors will begin to reduce their contributions, we 

need to be able to maximize the impact of our resources; we need 

to reduce the duplication within our own programs; we need to integrate our programs that need to be integrated; and we need to 

begin working on developing sustainability, beginning with developing health systems so that in the end, in the long run, our partner countries will begin to be able to carry out some of the functions or most of the functions themselves. 

We are also working outside of the health sector with the economic growth sector. I think that it is important, in order for sustainability to occur, for the growth of the economy in our partner 

countries to happen. It is not realistic for them to continually depend on donor input in order to make their health systems function. They need to grow their economies so they can pay for their 

own services and their commodities in the long run. 

Thank you. 

Mrs. LOWEY. Before I turn to Ms. Granger, I don’t know if you 

want to comment, but that depends on the tax system in the country as well. 

Ms. STEELE. That is correct. And in our economic growth sector 

we are providing assistance in taxation, simplifying the tax procedures of the countries so that we can generate more taxes. 


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On the other end, we are working on issues of corruption to 

make sure that the taxes are used more effectively in the countries 

where we work. 

Thank you. 

Mrs. LOWEY. Thank you. 

Ms. Granger. 

Ms. GRANGER. Thank you. 

I would like to discuss the Global Health Initiative’s strategy to 

integrate health programs at the programming and procurement 

level. 

The current conscience clause, as you know, was expanded by the 

Lantos-Hyde Act so that faith-based organizations could opt out of 

any HIV/AIDS program or activity when it has a religious or a 

moral objection. I have several questions. 

First, how will the Global Health Initiative integrate family planning with HIV/AIDS programs so that the faith-based organizations aren’t excluded, especially given that in some African countries they deliver 40 percent of health services? 

I also would like to know how the many pro-life restrictions on 

U.S. foreign assistance can be followed in an integrated global 

health program and exactly what activities will be jointly programmed. When, for example, the CDC just established its global 

health center to oversee its global health programs? 

Dr. GOOSBY. Will, I will start the answer to that. Those are two 

good questions. 

I think that we will, of course, follow the law and honor the beliefs of a NGO that is conflicted and moving forward and integrating or connecting to a family practice, family planning service 

model, referral on consultation, individuals who have parallel capability that are nearby, being sensitive to the fact that an organization may be conflicted around their ability to make a referral. But 

we are in ongoing dialogue with our faith-based partners to better 

understand how we can configure this so it is respectful and honors 

the letter of the law. So we are committed to that. 

In terms of the family planning integration piece and how this 

impacts savings, I want to just make you aware of a project that 

we are doing in Kenya, the AIDS Population and Health Integration Assistance Project, APHIA. This is an example of taking family planning, maternal and child health, tuberculosis, Malaria, on 

a PEPFAR platform of care and services. And instead of having 

five different service implementation efforts going concurrent, putting them together as one program allows us to have one overseer, 

one manager, one procurement distribution system, one pharmaceutical system that also interfaces with the procurement distribution system, one motor pool system, one monitoring and evaluation 

system. 

We, by doing that, are able to save enough resources to take 

what would have been one program focused on one province in 

Kenya and are now able with the same resources to give the same 

services to eight. That is a perfect example of how this really is a 

cost-savings exercise through the Global Health Initiative as well 

as PEPFAR; and as we move through the whole-of-government idea 

of working better together, that is really kind of a graphic example 

of what we are talking about. 


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Ms. GRANGER. Thank you. 

I have another question. In the fiscal year 2010 statement of 

managers accompanying the appropriations act, we included a reporting requirement on global health program effectiveness. That 

was included at my request. Could you give me an update on the 

status of that report? 

Dr. GOOSBY. We have been working on that report. It was mentioned and referred to in our 5-year plan. 

The prevention aspect of that, we have just finished our country 

operating plan review last Friday and are about to look specifically 

this Friday at how the prevention efforts within the same countries 

that we reviewed in the country operating plans have reinvigorated 

their prevention efforts to refocus on it. This will complete the data 

collection process that we have gone through. To answer you, within a couple of weeks you should be getting the record. 

Ms. GRANGER. Good. And you will come back to us on that? 

Dr. GOOSBY. I will. 

Ms. GRANGER. I am sorry. I am talking about the overall global 

report, and you are talking about the prevention report. 

Dr. GOOSBY. I am. 

Ms. GRANGER. This is the report that was asked for in 2010 at 

my request, and that is the larger report we are talking about. 

Dr. GOOSBY. The larger report for the whole global health portfolio, we are working on. I was talking about the prevention report, 

and I will have to get back to you on the time frame for that, but 

we will report to you around those issues as well. 

Ms. GRANGER. But you have not ignored it? You are working on 

it, right? 

Dr. GOOSBY. Have absolutely not ignored it, yes. 

Mrs. LOWEY. The GHI presents a good opportunity to strengthen 

the U.S. government’s commitment to global health goals, and I am 

very pleased that the implementation strategy indicates that the 

initiative will have a strong women-centered focus. Can you explain 

exactly how the women-centered focus will impact programming 

through the initiative and what other U.S. goals related 20 women’s health and specific commitments to improving maternal 

health? 

Ms. STEELE. Thank you. That is a very good question. 

We believe that if we are able to address the health needs of the 

women, we will be able to address the health needs of the entire 

family. And we are incorporating a number of measures in the way 

that we design our programs so that there is a whole lot more sensitivity and awareness of what constrains a woman, what 

incentivizes a woman to go to a health center. 

The issue of integration is very important, as you said. By having 

separate health centers that the women has to go to, it serves as 

a disincentive. Because they are busy. They can not keep coming 

back into town in order to be able to meet their health needs. And 

so we are designing our programs to be very sensitive to the constraints that they are faced. 

We are pushing a very strong community-based approach to our 

health programs so that we can provide the services where the 

woman is and where her family is. We have set targets and goals 


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under the Global Health Initiative. They are ambitious but attainable. 

From now until 2014, we hope to reduce maternal mortality by 

360,000. We have not made global progress before, but we are 

going to do that now. 

In the area of family planning, we have set a target of preventing 

54 million unintended pregnancies. We are helping women to reduce the number of births before age 18, and we have set a 20 percent target for that. We are also hoping to increase the number of 

women who will space their births more, 3 years or more than they 

currently have been doing. 

And, of course, Malaria. We have a very aggressive Malaria program, and women and children are the major target clientele for 

us in Malaria. 

Mrs. LOWEY. Thank you. 

The budget request documents indicate that 20 GHI plus countries will be chosen in the coming fiscal year. And some of the criteria lean towards supporting countries with the capacity and resources to immediately leverage new funding, while other criteria 

seem to point to less developed countries where the health needs 

are greatest. How will the administration balance the need to show 

results in countries with capacity versus supporting programs in 

countries with the highest needs and little capacity? 

Dr. GOOSBY. I would be happy to start with that. 

It is a critical dilemma that we are trying to work through. We 

want to pick countries that have high need but at the same time 

have the ability for us to put in place delivery systems that are responsive to those needs in a time frame that allows us to report 

back success, impact on the actual issues and concerns that we 

have targeted. 

We also want to learn from the initial countries how to do it in 

countries that are less prepared than the initial pick. That will be 

at the end of April that we come back with a discussion back to 

this committee to actually go over some of the specifics around the 

country choices. 

It is our hope that this becomes a wave that hits the beach and 

goes all the way up for all government USG activity in all the 80 

countries that we are currently involved in and really becomes the 

new way that we approach development activities in the future. 

We are confident that we will be able, with a different relationship with country governments and engaging them from the beginning in discussion around how they can manage, how they can define unmet need, how they can oversee programmatic issues for implementation for these programmatic interventions that we are 

making for their populations and maintain that ownership, increase that ownership, and amplify that ownership. 

The last piece of it will be monetary transfer to country. That 

will only be when the country is capable of managing, when the 

country is capable of putting a transparent picture in place, and 

with our civil society colleagues in partnership, including NGOs 

and other members of civil society, that constellation of implementers will be defined in dialogue with country, with civil society, 

with our NGO community to complete and develop continuums of 


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care and services that remain responsive to the needs of the population they are serving. 

Mrs. LOWEY. Following up on that one, will the administration 

propose funding be provided directly—you touched on it—directly 

to governments with capacity for a budget mechanism rather than 

through bilateral agreements? As you know, this committee has 

strong concerns about the use of budget support. Do you have difficulty tracking and accounting for both impact and results? 

Dr. GOOSBY. Well, we are aware of this committee’s concerns, 

and we share the concern. We will not move forward without a robust dialogue with this committee before any type of new relationship is initiated, but we do not foresee that occurring for years into 

this program. That type of relationship is something that countries 

will demonstrate their ability to, with full transparency, engage 

with. So we are not looking to that as being any part of the first 

wave of activity and would be in dialogue with this committee before we move forward. 

Mrs. LOWEY. Did you want to say something? 

Ms. STEELE. I wanted to address at the right time your question 

about achieving a balance with the GHI plus countries and the 

non-GHI plus countries. 

Mrs. LOWEY. Well, following up on that, GHI will be coordinated 

through USAID, OGAG, and CDC. Indications are that funding 

will be provided through these three agencies and that programs 

will be coordinated at both the Washington level and the country 

level. Unfortunately, this model did not always work as well when 

it was used as the implementing mechanism for PEPFAR. So 

maybe you can share with us what lessons have been learned, what 

would be different about the GHI program, and how will funding 

be allocated to the three agencies? Are you undertaking a formal 

review of programmatic expertise within the agency to ensure the 

most efficient and effective implementation of this new initiative? 

Dr. GOOSBY. Yes, I will start the answer to that. 

That is exactly what we are doing. We have learned a lot from 

PEPFAR and from USAID and CDC programming to date in a variety of different programs. 

The PMI, as well as maternal and child health, family planning 

programs, and the PEPFAR information has given us a picture of 

a cross-agency coordination that has highlighted the need for us to 

be explicit about defining core competencies of each of the agencies 

we are working through. Once those core competencies are defined 

by the agency, they will go to an internal evaluation and have 

USAID, PEPFAR, and other HHS entities, as well as the Treasury, 

Department of Defense, and Peace Corps, included in thinking 

about how that cross coordination actually works through each of 

their respective agencies to transform them into program. 

We have learned that being clear and then enforcing the clarity 

around core competencies will be a necessary prerequisite to success. I believe we configured a governance process that will allow 

for an exchange, for the coordination, the vetting of ideas but real 

clarity in what we expect in moving forward. 

Mrs. LOWEY. I want to say one thing. Because I remember our 

trip to Ghana very clearly, and we had asked the ambassador to 

bring everyone together, and it was a wonderful meeting. No one 


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knew anyone else, and they were all operating in their own stovepipes of excellence, as I have learned to call it, and just telling us 

they were too busy to even know what the other one is doing. 

So good luck. This is the challenge. 

Before I turn to my colleague, did you want to comment? 

Ms. STEELE. No, I totally agree. We have learned a lot of lessons, 

and the most important is reaching clarity of roles. We really have 

been working as an interagency both in the field—having heard the 

story about challenge and knowing from other experiences—and in 

Washington. We are doing right now, as an interagency, and we 

have been working together, pulling together plans as a U.S. Government team, country team, as opposed to separate agencies out 

in the field and here in Washington. Since the President announced the Global Health Initiative, we have been working together with the State Department, CDC, HHS, MCC, as a team, 

rather than separately. 

Mrs. LOWEY. Thank you. 

Ms. Granger. 

Ms. GRANGER. I want to return to the GHI plus countries and the 

Strategic Reserve Fund and ask when we can expect the administration to decide which countries will be selected? And also why 

does the administration believe that no legislative authority is 

needed for new funds such as this? 

Dr. GOOSBY. The country selection is thinking around looking at 

what countries, looking at need, looking at geography, looking at 

the capability of each of the countries to engage quickly in this type 

of work, looking at our USG resources in country that can work to 

create the integrative activity at the program level are all factors 

that are going into deciding where we should start. 

Those GHI plus countries will be chosen. We will look at a list 

that we will take to this committee for further vetting to make the 

final decision, and that should be—by the end of April is when we 

should have all of that done. 

We are hopeful that this will be a blueprint for the broader 80 

country USG footprint that is already out there, not to wait until 

we finish the 20 before we start the 80 but to concentrate our effort 

on 20 to make sure we maximize our ability to understand the 

issues around implementation and then bring it to the larger 

group. 

Ms. GRANGER. I know that you didn’t address the need for legislative authority to establish the Strategic Reserve Fund. 

Dr. GOOSBY. You know, I would have to get back to you on the 

specifics of that. 

I don’t know, Gloria, if you have a specific answer for that. 

Ms. STEELE. No, I have no specific answer. We will get back to 

you. 

Dr. GOOSBY. I hear you, and we will absolutely get back to you 

on that. 

[The information follows:] 

Ms. GRANGER. I know that you didn’t address the need for legislative authority 

to establish the Strategic Reserve Fund. 

Ms. STEELE. No additional legislative authority is needed for the Global Health 

Initiative’s (GHI) Strategic Reserve Fund. It will be funded from the overall GHCS 

request for FY 2011. These funds will be allocated to countries and in amounts to 

be determined after the budget is appropriated by Congress. The funds are reVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00527 Fmt 6601 Sfmt 6621 E:\HR\OC\A402P2.XXX A402P2

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quested within the five legislative health categories and will be used for their allowed purpose. The GHI Strategic Reserve Fund will be used to supplement and accelerate learning by USAID, and efforts to improve primary and specialty care 

health outcomes—with a focus on women, newborns, and children. It will provide 

resources for up to 10 GHI Plus countries above and beyond their current, growing 

baseline allocations. We will continue consultations with Congress on GHI Plus 

country selection and the allocation of the Strategic Reserve to those countries. The 

funds will continue to be tracked and reported on by each health category. 

Mrs. LOWEY. Well, Ambassador Goosby and Ms. Steele, I want to 

thank you on behalf of Ms. Granger and myself for your time. I 

thought this was an excellent hearing. 

This concludes today’s hearing on the President’s fiscal year 2011 

request for global health programs. The Subcommittee on State, 

Foreign Operations, and Related Programs stands adjourned. 

Thank you very much. 


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(579) 

WEDNESDAY, APRIL 14, 2010.

SECURITY ASSISTANCE 

WITNESSES 

DAVID T. JOHNSON, ASSISTANT SECRETARY, BUREAU OF INTERNATIONAL NARCOTICS AND LAW ENFORCEMENT AFFAIRS, DEPARTMENT OF STATE 

ANDREW J. SHAPIRO, ASSISTANT SECRETARY, BUREAU OF POLITICAL-MILITARY AFFAIRS, DEPARTMENT OF STATE 

AMBASSADOR-AT-LARGE DANIEL BENJAMIN, COORDINATOR FOR 

COUNTERTERRORISM, DEPARTMENT OF STATE 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. Good afternoon. The Subcommittee on State, Foreign Operations, and Other Related Programs will come to order. 

I thank you, gentlemen, for appearing before us. I apologize for 

taking you away from your important responsibilities. 

It is a pleasure seeing you after I was present at your swearing 

in. 

Nice to see you all. I welcome our distinguished panel: Assistant 

Secretary of State for International Narcotics and Law Enforcement Affairs, David Johnson; Assistant Secretary of State for Political-Military Affairs, Andrew Shapiro; and the Coordinator for 

Counterterrorism, Ambassador Daniel Benjamin. 

Our hearing today examines the security assistance programs 

under the jurisdiction of the U.S. Department of State, which totals 

$9.9 billion, 25 percent of the foreign assistance request for fiscal 

year 2011. 

Security assistance has been appropriately and significantly increased in the past 4 years to protect our national security in this 

dangerous world. Not only do these programs support key allies in 

the Middle East like Israel, Egypt, and Jordan; they combat terrorism in Afghanistan and Pakistan. They also fight piracy off the 

coast of Somalia and protect us from drug cartels in Mexico and 

Colombia. 

Lack of resources and capacity in the State Department to address security needs in theatres like Iraq, Afghanistan, and elsewhere previously forced us to rely on the Defense Department. 

However, the provision of security assistance is integral to the conduct of our foreign policy, and aspects of our foreign affairs priorities, such as human rights, civilian control of the military, unified 

coordination of U.S. assistance, can be most effectively managed by 

the Secretary of State. 

I am pleased to see that as we increase capacity in civilian agencies the President’s budget is taking steps to reestablish the lines 

of responsibility for security assistance at the Department of State. 

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onstrate capable implementation of the programs as well as appropriate oversight to ensure that programs achieve the desired objectives and that resources are not diverted or abused. 

Therefore, as we proceed with the hearing, I would like the panel 

to address the following: 

What are the appropriate roles and responsibilities of the State 

Department and other agencies, particularly DOD, regarding security assistance programs? 

What role should DOD play, if any, in assisting police and other 

nonmilitary security forces? 

What are we doing to address emerging threats from places like 

Yemen? 

How can counterterrorism assistance be leveraged to combat al 

Qaeda? 

In what situations might U.S. assistance for combating terrorism 

be perceived negatively by recipient countries’ populations? 

Lastly, I would like the panel to discuss security cooperation 

with Mexico. Drug trafficking and other criminal enterprises have 

intimidated and overwhelmed government institutions in much of 

Mexico. News reports continue to highlight the violence related to 

drug cartels and organized crime which, tragically, has touched 

your Department with the murders of three people associated with 

the consulate in ciudad Juarez, and the bombing of the consulate 

office in Nuevo Laredo. 

Specifically, what effect is our assistance having on the flow of 

illegal drugs to the United States? What is the coordination between the U.S. and Mexico? How are the various U.S. agencies coordinating to ensure our security assistance is reinforcing our 

broader objectives for strengthening Mexican institutions? What 

more do we need to do? Is it more equipment? Do we need more 

equipment? How do we ensure that the roughly $1.4 billion in assistance this committee has provided to Mexico is having its intended effect? How are the various U.S. agencies coordinating assistance to ensure security programs for Mexico are enhancing and 

complementing efforts to strengthen Mexican Government institutions? 

Additionally, GAO released a report in December 2009, which 

found only 2 percent of the funding appropriated for Mexico had 

been expended. What is the current status of expenditures? How 

are such lag times allowed to exist; are they normal? Does the 

State Department find this acceptable? What is the State Department doing to accelerate delivery of equipment and training? 

I continue to believe that the State Department must exercise 

management of security assistance and development programs, be 

they training and equipping of foreign security officers, forces, programs to deny terrorist organizations and rogue states the ability 

to acquire weapons of mass destruction or providing food, water, 

and health services to those in need. These activities must fall 

within the context of our overall foreign policy, and as such, the 

primary authority should be with the Secretary of State. 

Again, thank you for testifying today. I look forward to our discussion. But before I turn to our witnesses, let me turn to Ms. 

Granger, the ranking member, for her opening statement. 

Ms. Granger. 


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OPENING REMARKS OF MS. GRANGER

Ms. GRANGER. Thank you, Madam Chair, and thank you for accommodating my request for this hearing, especially at a very busy 

time. I know we are going to hear today about the priorities this 

administration has identified for the coming year and the assistance being requested, such as that for our long-term friend and 

ally, Israel, and for our partners in the Middle East, like Jordan 

and Egypt. They are so important, as is our help for Pakistan and 

improvements in the justice sector at all levels for the Afghan Government. But my focus today is our neighbor, Mexico, and the 

frightening increase in violence there. 

Just as the Congress was finishing here before leaving for our 

Easter break, Juarez, Mexico, a city just across the Texas-Mexico 

border, was referred to in the press as the most dangerous city in 

the world. Juarez, Mexico. The mayor of that city spoke just days 

ago at the University of Texas. There was very tight security and 

there was an overflow crowd. The mayor talked about the violence 

in Juarez. Five thousand murders, dozens of businesses torched, 

death threats against him and the police and other elected officials. 

At our southern border, drug traffickers in places are turning 

their guns and grenades against the Mexican army. They are using 

armored cars and grenade launchers and trying to trap members 

of the military by blocking access on highways. 

Yesterday, it was reported that Mexican smugglers are using 

cloned Border Patrol vehicles. Steven Cribby, a spokesman for the 

Department of Homeland Security, said that assaults on Border 

Patrol agents are up 16 percent over last year, and there are reports of bounties of $250,000 offered for kidnapping and murdering 

border agents. 

Just last month, several U.S. citizens, including, of course, your 

employees, were gunned down, and last week a rancher was shot 

and killed on his ranch just this side of the Mexican border. That 

makes, according to a report today, 22,700 people killed since 

President Calderon took office and took on the gangs and drug cartels. 

We are now at $1.33 billion of the $1.4 billion we pledged for the 

Merida Initiative, but the situation today is worse than when we 

started this important help. If we have additional help in the future, my concern centers around how it is turning out today, tomorrow, and next week, and the importance of us looking not at numbers and not at dollars as we sign something, but how is it getting 

the help that is needed right there. 

Secretary of Defense Gates, Secretary of State Clinton, and the 

Chairman of the Joint Chiefs of Staff Admiral Mike Mullen were 

all in Mexico, as you know, just weeks ago, looking at this emergency, and they certainly understood what we know and that the 

help we secured has been very slow in coming. Admiral Mullen in 

a defense hearing in March after returning from Mexico said, The 

house is on fire now. Having the fire trucks show up in 2012 is not 

going to be particularly helpful. 

You can play a very key role, and of course you would, in addressing the concerns we have. And I will use my question time to 

focus on some of the problems as I see them, but the situation on 


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the border seems to be getting worse. I believe it is no less a crisis 

than it was. We have a pledge. We are meeting our pledge. But my 

concern is how is it playing out. I will ask the witnesses my questions when it comes back for questions. 

Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. Your statements will be placed in the 

record. Please feel free to summarize in your oral statements so 

that we can leave time to get to everyone’s questions hopefully before the votes go off. 

The order of recognition will be Secretary Johnson, Secretary 

Shapiro, Ambassador Benjamin. 

Please proceed, Secretary Johnson. 

OPENING STATEMENT OF ASSISTANT SECRETARY JOHNSON

Mr. JOHNSON. Thank you very much. Chairwoman Lowey, Ranking Member Granger, distinguished members of the committee, 

thank you for inviting us to discuss the President’s fiscal year 2011 

budget request for the Department of State’s Bureau of International Narcotics and Law Enforcement Affairs (INL). 

The INL Bureau, which I have the honor to lead, helps countries 

around the world develop their own capacity to fight crime, administer justice, and safeguard the rule of law, all of which are critical 

to our own national security and foreign policy objectives. Helping 

our partner nations become responsible international partners with 

full sovereignty within their own borders denies safe haven to 

international criminal threats. 

For fiscal year 2011, the President has requested approximately $2.1 billion in international narcotics control and law enforcement 

funds, or INCLE funds, to combat transnational crime and fight illicit trafficking. Of this request, 42 percent directly relates to counternarcotics. This marks a dramatic shift from 2 years ago when 

nearly 72 percent of fiscal year 2009 INCLE funds were counternarcotics focused. This shift reflects our refocused emphasis on 

helping partner nations establish their own capacity to administer 

justice and combat illicit actors. 

Each of our activities, be it civilian police training in Iraq or correction systems in Mexico, is designed collaboratively with host nations to address their specific needs. As a result, some of our largest programs are designed to meet our largest challenges. But this 

isn’t always the case. Many of the relatively smaller security assistance programs that INL operates in underdeveloped or critical 

areas, ranging from Central America to West Africa, have a major 

impact in staving off future conflict and combating development 

threats. 

The President’s budget request your support of INL’s contribution in key areas such as Iraq, Afghanistan, Pakistan, Haiti, Mexico, and the West Bank, but it also requests your support for our 

smaller programs. Efforts to combat counternarcotics in West Africa will be instrumental in supporting stability in the region. Police 

training and support to the criminal justice systems in Lebanon 

and Liberia, as well as our support for Sudan, continue to meet urgent needs that support these countries’ criminal justice sectors. 

Regional programs in the Caribbean, Central America, the 

Trans-Sahara, and East Asia, on drug treatment and prevention, 


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intellectual property rights, anti-crime and anti-corruption, support 

for the United Nations Office on Drugs and Crime and the Organization of America States Inter-American Drug Abuse Control Commission and the continued support for the International Law Enforcement Academies, all of these programs are instrumental to our 

own security and our efforts to support the rule of law, aims that 

President Obama and Secretary Clinton and all of you strive for. 

Given the growing importance of the security sector reform to 

our Nation’s foreign policy, we can and will more effectively adapt 

to battlefield environments so that our contract management and 

oversight can be fully carried out in the manner expected by taxpayers and by you. 

Madam Chairwoman, Ranking Member Granger, INL is committed to continuing our strong partnership with your subcommittee so we can provide the effective programmatic security 

assistance that our international partners need. 

I look forward to addressing your questions. Thank you. 

[The statement of Mr. Johnson follows:] 


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OPENING STATEMENT OF ASSISTANT SECRETARY SHAPIRO

Mr. SHAPIRO. Chairwoman Lowey, Ranking Member Granger, 

members of the subcommittee, thank you for holding this hearing 

today. I appreciate the opportunity to testify on how the State Department’s security assistance programs contribute to our collective 

efforts to improve national and international security. 

Since being established a half century ago, the Bureau of Political-Military Affairs has developed a strong partnership with the 

Department of Defense in addressing the serious international 

challenges that the United States faces today. One of the Bureau’s 

most important responsibilities is managing security assistance 

funds, which collectively total more than $7.2 billion requested for 

fiscal year 2011. These funds are important tools to the United 

States in today’s security environment, and we work to ensure that 

they support our foreign policy objectives. Given the difficult economic times that many American families face, we are acutely 

aware of the need to make every dollar entrusted to us by the taxpayers deliver the maximum benefit to our national security. 

PM manages security assistance through five accounts: Foreign 

Military Financing, or FMF; Peacekeeping Operations, PKO; International Military Education and Training, or IMET; Nonproliferation, Antiterrorism, Demining and Related Programs, NADR, and 

the Pakistan Counterinsurgency Capability Fund (PCCF). 

The fiscal year 2011 request for the Foreign Military Financing 

Account is $5.47 billion. The programs further U.S. interests 

around the world by ensuring that coalition partners and friendly 

governments are equipped and trained to work towards common 

security goals and to share burdens and joint missions. The request 

supports funding for coalition partners and allies and assists in our 

efforts to promote U.S. national security, fight extremists, and advance Middle East peace. 

The fiscal year 2011 request for the Peacekeeping Operations Account is $285 million. PKO programs support ongoing regional 

peacekeeping missions and are increasing countries’ capacities to 

participate in peacekeeping operations. PKO funds also support defense reform in critical African countries and increased counterterrorism capabilities. 

The fiscal year 2011 request for the International Military and 

Education and Training Account is $110 million. IMET provides 

military personnel from allied and friendly nations with valuable 

training and education on U.S. military practices and standards, 

including exposure to democratic values, civilian control of the military, and respect for human rights. 

The fiscal year 2011 request for the NADR account is $145 million. Our NADR funds support the removal of land mines and 

unexploded ordnance, as well as the destruction of excess weapons 

and unstable ammunition. This helps protect local populations and 

removes a source of deadly supplies that extremists could use 

against U.S. forces and our partners. This year’s request also reflects the consolidation of three former NADR sub accounts into 

two, which would provide greater demining and small arms-light 

weapons projects within the same country program. 


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The fiscal year 2011 request for the Pakistan Counterinsurgency Capability Fund is $1.2 billion. Fiscal year 2011 will be the first 

year the Department of State assumes full management of PCCF. 

Funds will continue to be targeted at building the capability of 

Pakistan security forces directly engaged in counterinsurgency efforts in contested areas throughout the North-West Frontier Province and the Federally Administered Tribal Areas. 

A more capable Pakistani military will diminish extremist access 

to safe havens from which attacks on Pakistan and on U.S. and 

international forces operating in Afghanistan are planned and executed. Additionally, a better trained and equipped Pakistani security force will facilitate efforts to execute our $7.5 billion 5-year 

U.S. civilian assistance strategy, which includes efforts to include 

basic services in areas vulnerable to extremists. 

A major difference in the management of PCCF in fiscal year 

2011 will be the increased State Department oversight and involvement throughout the execution process, which will ensure that this 

major assistance program aligns with our broader foreign policy objectives and complements our other foreign assistance programs in 

Pakistan and the broader region. We are actively working to ensure that the transition of PCCF management from the Defense 

Department to the State Department is a smooth one. 

Managing and implementing these five security assistance programs form a substantial part of the essential partnership between 

the Departments of State and Defense. In the dynamic security environment we face today funding of the security assistance programs provides our government with the flexible tools needed to 

advance U.S. National security interests. 

Thank you for the opportunity to testify before you this afternoon. I am committed to working with this subcommittee to ensure 

that these important programs are adequately funded and effectively executed. I look forward to taking your questions. 

[The statement of Mr. Shapiro follows:] 


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Mrs. LOWEY. Mr. Ambassador. 

OPENING STATEMENT OF AMBASSADOR BENJAMIN

Ambassador BENJAMIN. Members of the subcommittee, thank you 

very much for the opportunity to appear before you today. I particularly appreciate the opportunity to testify together with my colleagues from the Bureaus of Political-Military Affairs and International Narcotics and Law Enforcement on President Obama’s 

2011 budget request. The President has requested $294 million for fiscal year 2011 in 

nonproliferation, antiterrorism, demining, and related program 

funds for the Department’s Office of the Coordinator for Counterterrorism. This budget reflects our three priorities: countering violent extremism, CT capacity building, and multilateral engagement. Underlying all of these, and not always measurable in dollars, is a renewed and vigorous effort to ensure that diplomacy 

plays a central role in our counterterrorism efforts. 

To successfully develop and implement CT programs, we must 

understand the dynamics of the local conditions that give rise to 

extremism. Every community, whether long-rooted or part of a new 

diaspora, possesses a unique political, economic, and social landscape. For this reason, one-size-fits-all CT programs are likely to 

have limited appeal and utility. Instead, our efforts must be tailored to fit the local context. Thus, it is critically important that 

our embassies, which are on the front lines of our counterterrorism 

efforts, play a key role in designing CT programs. They can best 

identify credible local partners and carry messages of moderation 

and successfully implement CT programs. 

Let me now discuss each of our key programs. First, countering 

violent extremism. Curtailing the influence of militants is critical 

to enhancing our Nation’s security. The primary goal is to stop 

those most at risk of radicalization from becoming terrorists. Its 

tools are noncoercive and include social programs, counter-ideology 

initiatives, and working with civil society to delegitimize the al 

Qaeda narrative and, where possible, provide alternative narratives. This involves capacity building, outreach to civil society organizations, supporting mainstream voices, and educational development as much as it does direct messaging. It involves working 

through host governments and NGOs to engage with clerics and 

other credible influential voices. 

We intend to use CVE funding to focus on hotspots of 

radicalization and recruitment. We will work with embassies to develop locally tailored programs to counter the factors driving atrisk populations towards violence. In many cases, S/CT will be implementing these programs and coordinating them through existing 

offices, including the Under Secretary of State for Public Diplomacy 

and Public Affairs, the State Department’s Special Representative 

to Muslim Communities, and USAID, to avoid duplication and to 

ensure that we focus on the right areas. 

One CVE program already in its third year is the Ambassador’s 

Fund for Counterterrorism, which allows posts to identify local 

partners and submit proposals to secure funding of up to $100,000 

to counter extremism. The Ambassadors’ Fund was previously 

funded under NADR/ATA, but has moved to NADR/CVE in 2011. 


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Our fiscal year 2011 appropriations request has revised NADR 

language that broadens the definition of antiterrorism to include 

countering radicalization and violent extremism. This will ensure 

that we have the right authorities in place to successfully execute 

our CVE mission. 

TIP/PISCES. The Terrorist Interdiction Program seeks to constrain terrorist mobility by helping countries enhance their port of 

entry security capabilities. TIP provides participating countries 

with a computerized stop list system, known as PISCES, and provides PISCES hardware and software at selected ports of entries 

in consultation with host governments. In fiscal year 2011 we will use $33.65 million to provide significant biometric software and hardware enhancements that will assist 17 partner nations to better identify and track individuals entering and departing their land, sea, and air ports of entry. Fiscal 

year 2011 biometric upgrades are planned for Cambodia, Djibouti, 

Ethiopia, Ivory Coast, Kosovo, Macedonia, Thailand, Uganda, and 

Zambia. 

Antiterrorism Assistance. ATA continues to be our flagship 

counterterrorism capacity building program, and our partner nations have registered several concrete successes over the last year. 

S/CT and INL have increased cooperation on law enforcement with 

joint assessments in high priority countries such as the Philippines. Under our fiscal year 2011 request, India’s ATA bilateral 

budget would almost double to $4.5 million to meet the increasing 

political will on the part of the Indian Government, which has requested more and higher level training in the aftermath of the 

Mumbai attack. 

Counterterrorism Finance Program. The CTF programs are 

aimed at reinforcing partner countries’ financial, regulatory, judicial and law enforcement institutions to detect, disrupt, and dismantle terrorist finance networks. With additional funding, we will 

expand our efforts not only focusing on key countries such as Afghanistan, Pakistan, and Iraq, but sources further afield that fund 

terrorists in these countries. We are also looking to increase in 

such important threat areas as Yemen and North Africa. 

Counterterrorism Engagement. Increased funding will help the 

United States support the efforts of multilateral organizations to 

support more effective policies and programs. We place great importance on engaging with the international community to combat 

terrorism, especially through the U.N. and regional organizations 

such as the OSCE, the OAS, and APEC. We plan to support U.N. 

Bodies, including the Counterterrorism Committee Executive Directorate, the U.N. Office of Drugs and Crime, and the wider Counterterrorism Implementation Task Force. We will use $5 million in 

CTE funds to increase support for the Regional Strategic Initiative. 

The Regional Strategic Initiative. Denying terrorists safe haven 

is a key element of U.S. counterterrorism strategy. Through the 

RSI we work with ambassadors and interagency representatives in 

key terrorist theaters of operation to assess the threat and devise 

collaborative strategies, using all the tools of statecraft to help host 

nations understand the threat and strengthen their political will 

and capacity to counter it. The RSI promotes cooperation between 

our counterterrorism partners; for example, between Malaysia, InVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00611 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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donesia, and the Philippines, as they confront terrorism transit 

across the Sulawesi Sea, or among Mauritania, Algeria, Morocco, 

Chad, and Mali to counter al Qaeda in the Islamic Maghreb. 

Let me just say in closing that we take our responsibility for managing the more than $294 million in security assistance funds 

requested for fiscal year 2011 very seriously. In the dynamic environment we face today, funding these programs provides our government with the necessary and flexible tools to advance U.S. national security interests around the globe. 

I want to thank you for the time and the opportunity to appear 

before you today to discuss these programs, and I look forward to 

your questions. 

[The statement of Ambassador Benjamin follows:] 


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Mrs. LOWEY. Thank you very much. I know we are expecting 

votes shortly. I understand Ms. McCollum may not be able to come 

back after votes. So why don’t you begin. 

Ms. MCCOLLUM. Thank you, Madam Chair. I have two questions 

that do kind of the same theme—have some of the same things, so 

I will ask them together, and then I have a third one. Given the 

increasing violence that is in the news about the drug trafficking 

on the southern U.S. border in Mexico and Central America, I am 

curious as to why the fiscal year 2011 funding request for International Narcotics and Law Enforcement Account shows a decrease 

of $16.4 million for the Western Hemisphere. 

Along with this, Assistant Secretary Johnson, in your testimony 

you explain that drug traffickers adapt to our efforts to halt drug 

activities; for example, by shifting their operations to territorial 

waters and countries off of Central America when pressure on 

criminal operations in Mexico really started to feel the heat. 

So my question is whether the funding that this subcommittee 

provides you is flexible enough to cross accounts and agencies to 

enable that our government is adapting quickly when the criminals 

change their operations. So if you could answer that. And then if 

there is time remaining, I have a brief question on Sharia law. 

Mr. JOHNSON. Thank you very much for your questions. With respect to the funding levels and the changes, there are two broad 

reasons for that. First, in the case of the Andes, and in particular 

in Colombia, we have been engaged with the Colombians over the 

course of the last 2 to 3 years, negotiating with them what we refer 

to as a nationalization program, where they are taking over more 

and more of the responsibility for particularly the maintenance and 

operation of aircraft associated with the Colombian army. So the 

numeral goes down somewhat because of that this year, as it did 

the year before and the year before that. 

The other larger and observable piece of this is that the numeral 

for Mexico has declined a little bit this year as well. The reason 

for that is that we have largely concluded the request for funding 

that we need to assist the Mexicans to buy equipment and aircraft, 

which are by their nature quite expensive. And we are moving 

much more into the institution building side of things—training 

their police, training their judiciary, training their prosecutors, providing them with additional techniques. While there continues to 

be some equipment purchases associated with this budget, the proportion of that is declining over time and there is more focus on 

institution building. Therefore, the numeral goes down somewhat 

during the course of this year. 

The commitment, the activity, the engagement of both the individuals of the Department of State as well as the broader interagency though will continue to increase during this course of time, 

and you will see more people on the ground working with their 

Mexican and Central American counterparts during this period. 

Ms. MCCOLLUM. And the flexibility is there? 

Mr. JOHNSON. I think working with the committee and the committee staff we do have the flexibilities that we need to move 

things back and forth. Should we run into an obstacle, I am not 

very shy, and we will bring it to your attention and ask for some 

sort of relief and see if we can work out some way to move moneys 


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if we need to. But as we have seen needs and as they have developed during the course of the implementation of this, we have 

made some changes in cooperation with the committee and committee staff. 

Ms. MCCOLLUM. Thank you. Madam Chair, I have a concern because I don’t feel I have enough information. I have been to Afghanistan and I met with some of the judicial people that were 

working there. And scaling up, they don’t have attorneys. It is a 

big country with a lot of challenges. So I know that there has been 

thoughtful conversations about Sharia law being used. But I want 

to make sure that they are thoughtful, that girls aren’t being forced 

into marriage, being sold, that women who have been raped aren’t 

imprisoned and that there is accountability and transparency if we 

are using that and that there is some training that goes forward, 

because other than that we have money supporting a judicial system that I think most men and women in this country and in the 

free world would find very questionable. If you could tell me what 

is going on. 

AFGHANISTAN

Mr. JOHNSON. We have a significant program to help develop the 

justice system in Afghanistan. I am presuming that is what you are 

referring to. And working with the Afghans there, we wish to expand that with this budget. It has been not totally but significantly 

a cobble-centric trick effort over the course of the last several 

years, helping the central government develop its institutions, 

training prosecutors, defense bar, judges for that. It is based on a 

system of law which includes Sharia but is not exclusively so. And 

it is really I think some of the popular ideas that you were talking 

about that are not encompassed in the system of law that we are 

supporting. 

One of the other issues that we are trying to come to grips with 

and we have brought into play the expertise at the U.S. Institute 

for Peace that is working with us is how do you combine what they 

describe as traditional systems of justice with the formal system. 

By that, they don’t mean what we normally mean I think pejoratively by Sharia, but actually what they mean there is how communities get together and resolve disputes related to activities within 

that community. Shuras. How people work together and how you 

merge these systems so that they actually work smoothly and that 

they do not do exactly as you say, they do not become some sort 

of mechanism for violating human rights. 

Ms. MCCOLLUM. Madam Chair, thank you for the courtesy, and 

I am a supporter of traditional justice. I work with many native 

communities here that have circles in that. But I think we need to 

make sure that there are the oversight mechanisms in place on 

this issue. 

Thank you, Madam Chair, for your courtesy. 

Mrs. LOWEY. Thank you. Ms. Granger. 

MERIDA INITIATIVE

Ms. GRANGER. Thank you. In December of 2009, GAO issued a 

preliminary report stating that of the $1.3 billion in Merida funds 

appropriated by this subcommittee only $830 million had been obliVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00634 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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gated and only $26 million of the funds have been spent. In response to that report, the State Department’s response indicated 

that the use of expenditures was not a good metric to determine 

success of the Merida Initiative. My question is: If that is true, 

then what is the most accurate metrics and what metrics is the 

State Department using and how are you measuring up to those 

metrics? 

Mr. JOHNSON. Thank you. I think usually the most accurate way 

to measure whether or not we are performing well or whether we 

are moving money out the door, if you will, is through what funds 

have been obligated. That is not necessarily an ironclad way to do 

it, because it can both over report and under report. But it is much 

more accurate than ‘‘expended.’’ For example, the helicopters that 

we are providing to the Mexican police have been manufactured. 

Sikorsky has finished their work. They have delivered them to the 

army command. They are now undergoing the modifications that 

the Mexicans have specifically requested for them. I haven’t paid 

a penny for those yet. So there is no expended funds for those even 

though Sikorsky has already completed its work. 

Under the metric that obligated, we have obligated almost all of 

the supplementary appropriations for fiscal year 2008 and about 

half for the supplementary appropriation for fiscal year 2009. The 

base amounts are being invested more slowly because of the nature 

of some of the programs that they are investing in, more in human 

resources than anything else. But we are struggling with ways to 

try to push that along more quickly as well. We want this to happen as fast as it possibly can. We have no interest in being bureaucratic, if you will, about this. But some of the issues that we have 

to deal with; for example, we have delivered a fair amount of nonintrusive inspection equipment, but now I am struggling with how 

to deal with a contract protest concerning that. I have to work, of 

course, within the law and give contractors in the United States 

and people who work here adequate opportunity to compete. 

So we are working through some of those things but it is our desire, it is our aim to move this as quickly as we possibly can. 

Ms. GRANGER. I am glad you mentioned the helicopters because 

Chairman Lowey and I were in Mexico meeting with President 

Calderon in February 2009, and at that time there were five helicopters that we had appropriated funding for and they hadn’t been 

delivered. As we were there at that meeting with this wonderful 

BlackBerry I can say, Where are those helicopters and why aren’t 

they on the ground. There was a huge push by some very senior 

people to get those helicopters that were ready; that they confirmed 

yes, they are on the runway, but they are sitting there because 

some paper hasn’t been signed. 

My report and continuing this has not been good. And there is 

a huge bureaucracy. And the bureaucracy involves the Department 

of State and DoD in getting that equipment and what is needed 

there, as I said, while the house is on fire. And it is on fire. Beheadings are occurring. 

So I hear what you are saying. That is certainly not the information that my office has or I have on this way to get this on the 

ground. I would very much appreciate your participation in a meeting with DoD and for us to go through this and see what is hapVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00635 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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pening all at the table at the same time because this situation escalates. The news coming out daily is astounding. What we want 

is our neighbor to be safe and secure because it makes us safe and 

secure, helps us be safe and secure, but I would very much appreciate, if I called a meeting like that, for you to participate. 

Mr. JOHNSON. Absolutely. Juarez holds a special place for me. I 

started my diplomatic career there. We want to help in every way 

we can, and we are concentrating our work there right now. We are 

pushing this every way we know how. 

Ms. GRANGER. Good. Thank you very much. 

Mrs. LOWEY. Thank you. Ambassador Benjamin, you had stated 

I believe in your testimony that on any given day al Qaeda remains 

the foremost security threat the Nation faces. And our primary 

counterterrorism goal remains to disrupt, dismantle, and defeat al 

Qaeda and its extremist allies. In what ways does the fiscal year 

2011 request reflect the intelligence community’s January 2010 assessment that al Qaeda-affiliated threats have grown and dispersed 

to multiple regions of the world, and how are the counterterrorism 

programs at DoD and State Department different? I am not sure 

if I can appropriately ask you, but you can speak to this room. And 

how do you interface with our current intelligence and is it providing you relevant information? If you can’t answer the last question, we will just leave it. 

Ambassador BENJAMIN. Let me take a run at all of those questions. I certainly stand by my remark from late December, and I 

think I have repeated it on any number of occasions. I hope that 

as we have put together this budget request that it reflects the dynamic nature of the threat and will give us the flexibility to direct 

our programs to deal with the threat circumstances we face all 

around the world. 

We have, for example, in the Regional Strategic Initiative an effort to bring together really all the people who have the very best 

information on the ground from our posts as well as the Intelligence Community, the military, and other agencies. We have a 

mechanism for crafting strategies in a very real-time manner to 

deal with threats in particular areas. I believe I have attended five 

of these so far just since being sworn in last year. 

We also have in the form of our global accounts for Counterterrorism Finance, Counterterrorism Engagement, Countering Violent 

Extremism, and TIP/PISCES, an ability to direct the resources 

where they are most needed as the threat evolves. 

I think that it is true that the threat is different that we face 

than it was say 5 years ago, and we have seen, for example, in the 

emergence of Yemen as a place, which you mentioned before, as a 

place in which there is an AQ affiliate that is prepared to mount 

logistically sophisticated attempts to attack the homeland. That 

represents a significant departure from the threat we faced just a 

few years ago, and in the overall significant rise in funding across 

many different accounts for Yemen, we are dealing with that particular threat. 

You asked about how we deal with DOD. We have a very close 

relationship with the Department. Under our chairmanship at the 

State Department we have essentially a capacity building coordination mechanism to ensure that we aren’t duplicating; that we have 


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the same sense of the threat; that we are allocating resources as 

needed to exactly the right kinds of functions in differing countries 

and in differing regions. 

I would add that it is very important that we expand our activities, as this budget does, to countering violent extremism, because 

I believe the President came in with the belief that we needed to 

take a more strategic approach to counterterrorism and not deal 

only with those terrorists who are already in the field but to try 

to stem the tide of recruits, because this is critically important for 

our ability to roll back the threat over time. That is why we have 

directed $15 million, we have asked for $15 million for countering 

violent extremism so that we can make interventions in those environments around the world in ways that will turn those who are 

headed for violence away, those who are most at risk of joining the 

terrorist camp. I think this is vitally important. 

As for the question of intelligence, we have a daily drip of intelligence. We are completely plugged into everything that is going on 

in the Intelligence Community. I have an NCTC and a CIA detailee 

in my office. And we are through the interagency process intimately bound up with everything that is going on in the intelligence world both in terms of analytic and operations. So I don’t 

see any deficiencies in that regard. 

Mrs. LOWEY. Maybe we will leave this for another day, but your 

responsibilities are so enormous. And I think in Afghanistan, Pakistan, and what is happening in all the villages and all the provinces, I would like to certainly pursue this on another day. 

But I will turn to Mr. Crenshaw. 

Ambassador BENJAMIN. I would be delighted to. 

TIP/PISCES

Mr. CRENSHAW. Ambassador, you talked about terrorism and 

counterterrorism that was a Terrorist Interdiction Program, TIP. 

As I understand, that helps countries that terrorist activity is going 

on, it helps in terms of border security. But is it correct that the 

administration proposes an $11 million cut in that program? If it 

is, seems like in today’s world, with terrorism on the increase, is 

that the right direction to be moving in? 

Ambassador BENJAMIN. Sir, our budget reflects, first of all, a 

fairly austere environment that we are in. The budget that we 

came up with for TIP/PISCES is robust enough to fund the upgrades that we think are essential in the areas of biometrics. That 

is really the key initiative that we are undertaking right now. We 

will be doing biometric upgrades in many key countries—Afghanistan, Yemen, Pakistan, among others—this year and are planning 

for a wide range of others in fiscal year 2011. 

Frankly, we think that we are where we need to be right now 

in terms of the number of countries that we are in. TIP is not a 

program for a lot of very well developed countries in which we have 

lots of other ways of screening and of dealing with travel information. So I think that having reviewed all this, we think that this 

is really in the right place right now. We think it is a good program 

and we think this is an appropriate amount of funding for this 

coming year. 

Mr. CRENSHAW. I am not clear. Is it actually a cut of $11 million? 


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Ambassador BENJAMIN. I believe it is a cut of a little—about $11 

million, yes, that is correct. 

Mr. CRENSHAW. It just seems I hope you can do more with less 

because that is what we are all trying to do, but it seems to me 

this is something that is on the front burner in terms of that we 

have got to make sure we are helping. So I appreciate that. 

Ambassador BENJAMIN. I should emphasize it is important to 

consider TIP within the broader range of all the different terrorist 

travel programs that are going on in USG, some of which are classified, some of which are not. And we think within that framework 

this is the appropriate level. 

Mr. CRENSHAW. On that point, you mentioned the Ambassador 

program, the counterterrorism; a lot of smaller grants. Can you 

give us an idea of how that money might be used? Maybe a specific 

example. Sometimes it seems like if you take a little bit of money 

and do a little project, how is that going to impact the big picture 

in terms of counterterrorism? If you can give us a real world example. 

Ambassador BENJAMIN. In fact, if you look at the world of terrorism, a lot of it is a lot of little pictures stitched together. We do 

have important programs that deal with regional strategies and 

that deal with terrorist travel and the like, but we also feel a 

strong need to be attacking those sort of micro environments, if you 

will, that are producing the terrorists that we face today. And so 

we are looking for—we are trying to do something that I don’t 

think has been done very much in the past, and that is target programs at this very narrow spectrum of opinion where people are on 

the verge of being radicalized. We believe that through careful assessment of what the radicalizing drivers are in those particular 

areas, that we can decide whether a particular neighborhood in a 

particular country needs some kind of economic initiative, whether 

it needs something for at-risk youth, whether we want to push for 

some kind of school to be a rival to, shall we say, a radical institution that is the centerpiece of radical activity in that area. There 

are a lot of different things. There is some very interesting work 

going on in the Intelligence Community in terms of analysis of 

these hotspots, and we think that this is one way to go upstream 

and to stop people from becoming terrorists before we have to deal 

with them when they are already armed and dangerous. 

Mr. CRENSHAW. How do you evaluate that to see if it is working? 

Is that something you can talk about? 

Ambassador BENJAMIN. Well, that, obviously, is going to be one 

of the big challenges coming up with the metrics that are going to 

assure us that we are going to be getting this right. And that is 

part of what we are dealing with now. We are dealing with assessments of different particular cities, areas, that have shown a tendency to produce terrorists. I think that part of the proof will be in 

the pudding, whether we see fewer radicals coming out of their 

areas, whether we have a sense that the temperature is being lowered. But we definitely are on the hook to produce those metrics, 

there is no question. 

Mr. CRENSHAW. Thank you. Thank you, Madam Chairwoman. 


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PCCF

Mrs. LOWEY. Thank you. Secretary Shapiro, in your statement 

you say that the PCCF continues to build the capability of Pakistan 

security forces who are directly engaged in combat operations 

against extremists. In light of the substantial funding already provided, and the $1.2 billion request in 2011, I would like to know, 

is it working? Is the intelligence adequate to do your job effectively? Are we able to rely on the Pakistan security forces? Are 

they actually confronting extremists? What metrics are you using 

to measure success? How effective has the U.S. counterinsurgency 

assistance to Pakistan been delivered and employed since 2001? 

Mr. SHAPIRO. Thank you for that question. Thank you for your 

advocacy in having PCCF management moved to the State Department and the confidence that you are showing in the State Department and Bureau of Political-Military Affairs in managing that 

program. 

In terms of the success of security assistance in Pakistan, particularly PCCF, over the last year, in our view the Pakistani security forces have increased their operations tempo and have made 

great stride against insurgents, including the capture of senior 

members of the al Qaeda network. They have strengthened their 

cooperation with ISAF and they have improved their intelligence 

sharing and assisting in operations in border areas and clearing 

the necessary space to allow for civilian assistance to commence. 

In our view, the way we evaluate the success of the PCCF is 

measured by the positive results on the ground. We have seen 

major activity operations in Swat and Waziristan, and that has 

been a positive development which we seek to continue to encourage. 

IRAN

Mrs. LOWEY. Let me go to another part of the world, because I 

am afraid the votes are going to ring any minute. 

I led a congressional delegation to the Gulf States in February, 

and it was clear from the meetings I had that our allies in the region are very concerned with Iran. There has been a whole realignment and they are all very worried and willing to work with us. 

It is clear that the leadership in Iran is dominated by a select few 

hardliners whose pursuit of nuclear weapons and assistance to 

arms groups in Iraq and Afghanistan, as well as support for terrorism through proxies like Hamas and Hezbollah, continue to 

make Iran a threat to U.S. national security and the security of our 

allies in the region. Iran continues to send shipments of weapons 

to its terrorist allies. What can the United States do? What steps 

can we take now to put a stranglehold on Iran’s ability to smuggle 

these weapons? 

Mr. SHAPIRO. Well, obviously, we are very concerned about the 

Iranian regime’s activities, and I as the Assistant Secretary of PM 

travel a few times a year to the Gulf and conduct Gulf security dialogue with our friends in the region, and I have heard some of the 

same concerns that you have heard. And we are working on a 

counter-smuggling initiative with our friends in the region. At the 

end of the day, we need to continue to put pressure on the Iranian 


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regime so that they realize that they do not benefit from this type 

of behavior and that they indeed will pay a price for this type of 

behavior. 

Ambassador BENJAMIN. Madam Chairwoman, if I can just add to 

what Assistant Secretary Shapiro said. 

Mrs. LOWEY. Yes. 

Ambassador BENJAMIN. Our effort to put sanctions on the Revolutionary Guard Qods Force is, I think, a very robust effort to go 

at the Iranian group that is most involved in the sponsorship of 

terror. Iran, of course, does remain the leading state sponsor of terror. And with this effort I think we are making it increasingly 

taboo for others to deal with the Qods Force and with the IRGC 

more broadly, and this will have a long-term effect on their ability 

to operate. 

Mrs. LOWEY. Well, related to that, I am very concerned with 

Hezbollah’s influence in Lebanon. I am troubled by the recent news 

reports that Syria has transferred SCUD missiles to Hezbollah, 

which would appear to be a blatant violation of the U.N. Security 

Council’s resolutions. 

Who would like to address that? Can you give us an assessment 

of the number and types of missiles Hezbollah now has in Lebanon? How would you assess UNIFIL’s performance since the last 

Lebanon war? And what is the government doing to stop Syria’s illegal weapons trafficking? 

Mr. SHAPIRO. I will take the first shot and Ambassador Benjamin 

can backstop me. On the assessment, I think we would have to 

defer to the Intelligence Community for an assessment of the number and type of missiles as well as their capability to strike Israel. 

Mrs. LOWEY. Assuming they have that assessment. 

Mr. SHAPIRO. Assuming they have that assessment. In terms of 

UNIFIL’s performance, achieving full implementation of U.N. Security Council Resolution 1701, including its call for Lebanon to establish a weapons free zone in the south, secure its borders, and 

assure all weapons remain under the control of the Lebanese 

UNIFIL, remains a top priority of the United States. President 

Suleiman has consistently reiterated his commitment to Resolution 

1701, and we are urging the Lebanese to take more assertive steps 

to combat weapons and to enforce the weapons free zone in the 

south in the process of militia disarmament. 

In our view, we are continuing to work with the Lebanese Government and UNIFIL to stop the weapons smuggling. Obviously, 

we are greatly concerned about the transfer of weapons to Lebanon, and we continue to monitor it very closely. As I just discussed, we are working with the Lebanese Government to try and 

limit it and reduce the flow of weapons into Lebanon. 

Ambassador BENJAMIN. I would just add to that that I traveled 

with Under Secretary Burns to Beirut and Damascus earlier this 

year and I can tell you that the messages on these issues in both 

capitols were absolutely crystal clear. And we have made the Syrians know our deep concern about any potential introduction of 

longer range missiles into Lebanon. And it is a subject that we are 

watching closely and are deeply concerned about. 

Mrs. LOWEY. Before I just turn to my ranking member, following 

up on that, this Congress has been very concerned and has made 


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sure that Israel’s qualitative military edge has been maintained. It 

is a longstanding policy, as we know. As the U.S. seeks to sell even 

more advanced equipment in Arab states, what steps are being 

taken to ensure that these sales will not ultimately undermine 

Israel’s qualitative military edge? 

Mr. SHAPIRO. Thank you for that question. The qualitative military edge and evaluating Israel’s qualitative military edge and ensuring that it is maintained is one of my top priorities at the Bureau. As Secretary Clinton said, for President Obama and her and 

for this entire administration, our commitment to Israel’s security 

and Israel’s future is rock solid, unwavering, enduring, and forever. 

So we look at every sale in the region through the lens of how it 

will impact Israel’s qualitative military edge. We have consultative 

mechanisms so we can understand what the Israelis are concerned 

about in terms of the regional situation. We also have a robust dialogue with our partners at the Pentagon to assess what the introductions of weapons systems in the region will mean. 

At the end of the day, we need to strike the right balance because we want to demonstrate to our partners in the Gulf that we 

are a reliable ally, and bolster them so they are better able to resist the pressure from Iran. But, at the same time, we want to assure that Israel’s qualitative military edge is maintained. It is a 

complicated process. It requires balancing. But we take it very, 

very seriously, and we are consulting closely. 

Mrs. LOWEY. Thank you. Ms. Granger. 

Ms. GRANGER. Thank you. In a conversation I had with Ambassador Pascual about the situation in Mexico, he explained to me 

that there was an emphasis on the Mexican police forces; that it 

is different from what it has been from where the military has been 

taking the lead up to this point. It is my understanding that the 

State Department is exploring the possibility of entering into 

agreements with State and local law enforcement agencies here in 

the U.S. with the Mexican police increasing their forces up to, I 

think, over 30,000 now. That seems like to me a very reasonable 

thing to do, particularly with the border States like Texas, where 

we have police training facilities and agencies and of course there 

is a huge interaction. 

I would like to know what the State Department’s strategy is for 

improving Mexico’s state and local police forces. Are they asking for 

this kind of help? Also, what are the possibilities of these local law 

enforcement agencies in helping with that? 

Mr. JOHNSON. Madam Congresswoman, we have been working 

with the Mexican federal authorities. And so, working through 

them, but we have a very concentrated effort in several localities, 

with a real emphasis on Ciudad Juarez, to see how we might assist 

with them strengthening and almost starting from the ground up 

yet again on their state and local authorities there. We have an ongoing conversation about that. We have had an assessment of what 

we might do, and we are working with the Mexican federal authorities to see how most effectively we can engage there. But we already have people on the ground who are working with those state 

and local authorities in a number of ways. 

With respect to how we might engage our own State and local 

facilities and capabilities here, we got a request about a year ago 


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from Mexico asking for help as soon as possible, and they were 

going to start in about 6 weeks training 5,000 new investigators. 

Their aim is to train up to 15,000 over a period of several months 

or years, but initially 5,000 that they had recruited, who were university graduates, law school graduates, and this was really a different quality of police officer than they had brought on board before. 

In responding to that, we were able to take advantage not just 

of serving Federal law enforcement trainers—although our Federal 

Law Enforcement College was very generous with this. That wasn’t 

sufficient. We also knew that some of the skills we were talking 

about are those that kind of tend to reside in State or local as well. 

So we were able to reach out to Harris County, Texas, to Los Angeles County, California, and to the City of Chicago Police Department, who were able to assist us with Spanish-language capable 

trainers who were able to deploy to Mexico and work with us there. 

It was and is a very effective program, one that is designed by us 

but in cooperation with the Mexicans where we have transferred 

that skill and also brought in other countries such as Colombia to 

help us with that as well. 

That was something of a pilot project, if you will, but we want 

to build on that. Kind of the next stage is to move beyond bringing 

in what was really individuals from those institutions and try to 

marry up institutions as a whole. 

We have an incipient program with the New York City Police Department to deploy to Haiti because they have a Creole-speaking 

capability there because of the Haitian American community in 

New York. I signed a memorandum agreement with Commissioner 

Kelly about 8 weeks ago now. We are working out some of the final 

details of exactly what they would do and some of the kinks in the 

process of getting people to go and some legality issues. But we are 

confident that they will be able to deploy in Haiti very soon, and 

we want to build on that not just with New York, but particularly 

with police agencies that have Spanish language capabilities, because that is really where the need is. Those will come significantly 

from our border States, especially including Texas. 

Ms. GRANGER. Would you keep me aware as that occurs and the 

timeframe and how many? And in putting that together, the other 

issue is the report that has just come out giving a number of 

16,000 gang members here in the United States related to the drug 

traffic in Mexico and the cartels in Mexico. And in that policing 

and all of those issues, those programs that are going on, is there 

an awareness of that crossover gang membership? 

Mr. JOHNSON. Absolutely. We have had anti-gang programs in 

Mexico and in Central America for several years now. They have 

been augmented significantly under Merida. They are cross-informational, if you will. We are learning things from those countries 

about how gangs that operate in a cross-border way are operating 

in the United States as well. 

Ms. GRANGER. Thank you, Madam Chair. 

Mrs. LOWEY. Mr. Crenshaw. 

Mr. CRENSHAW. Just a quick question. We talked about arms 

smuggling and the role Iran plays. We talked some about Lebanon, 

talked about Syria. As I understand, we have a memorandum of 


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understanding with Israel relating to the flow of arms, rockets, 

other weapons into Gaza for Hamas. Can you update us on how 

that is working? Has that had an impact on the flow? And maybe 

talk about how Egypt, how that works. Are they doing everything 

they can in that regard? 

Mr. SHAPIRO. Yes. We have worked very closely with the Israelis 

on Gaza counter-smuggling. There is a Gaza counter-smuggling initiative that has been set up to work with a number of states. It 

had a meeting last year, and there is an upcoming meeting. It is 

designed to focus on how to prevent smuggling into Gaza. We are 

pleased by the efforts that the Egyptians have made regarding 

counter-smuggling in Gaza, but at the end of the day there is a demand signal in Gaza because of—there is demand for these goods. 

So there are a couple of things that we need to think about, how 

do we reduce that demand signal by ensuring that there is enough 

humanitarian aid going in. And obviously we talk with the Israelis 

about that. Also, we are looking at ways to give the Bedouin, who 

do a lot of the smuggling, a better economic deal. So we are trying 

to look at creative ways to address that as well. 

Mr. CRENSHAW. I am talking about weapons. Is it working? Can 

you see a significant impact that this memorandum of understanding has had over the last year? 

Mr. SHAPIRO. In terms of our assessment of weapons in Gaza, I 

think that we probably would have to discuss in more classified 

setting. But I would say that countering smuggling, you are trying 

to capture—when you stop smuggling, you are capturing both 

weapons and economic goods. So efforts to reduce weapons smuggling will also impact the other. And often they use the same 

routes. The same smugglers will smuggle weapons or other things. 

So we need to address the economic incentives that smugglers have 

and some of the networks that they are using. 

Mr. CRENSHAW. Thank you. 

Mrs. LOWEY. Let me just follow up before I turn to Mr. Kirk. If 

you can follow up on Mr. Crenshaw’s questions. We understand 

that the smugglers, the Bedouins, are smuggling weapons and economic goods. So I would be interested in the same issue. With the 

cooperation, supposedly, of the Egyptians, you are saying you can’t 

do anything about the weapons going through? 

Mr. SHAPIRO. Not at all. 

Mrs. LOWEY. Can’t we do more to stop the smuggling of weapons? 

Mr. SHAPIRO. What I was saying is that we are—we need to take 

away the economic incentives for smuggling. 

Mrs. LOWEY. Sell the weapons on the open market? 

Mr. SHAPIRO. I am talking about the smugglers are paid to smuggle the weapons. 

Mrs. LOWEY. I get that. I also understand that their clothing and 

everything else is going through. But my question is: If we were 

really determined—I think that is what Mr. Crenshaw is saying— 

if in fact the Egyptians are really determined, and they are building this wall, I guess you call a partition wall, you are saying there 

is nothing we can technically do to stop the weapons from going 

through? 


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Mr. SHAPIRO. No, I am not saying that at all. I am saying we 

have been encouraged by the Egyptian efforts to stop smuggling 

and we want to encourage those, and we want to continue our work 

through the Gaza counter-smuggling initiative to prevent weapons 

from flowing. 

Mrs. LOWEY. Could you discuss that further with us, the initiative, and how it is more effective than what it has been in the last 

few years? 

Mr. SHAPIRO. We have been trying to energize that process. 

Mrs. LOWEY. What does that mean? 

Mr. SHAPIRO. Be engaging in a major diplomatic effort consulting 

both with the Israelis and the other Europeans who have signed 

up for this initiative. So we are engaged in intense discussions with 

our allies on how to prevent the weapons from entering Gaza. 

Mrs. LOWEY. Let me just say I would like to have further discussion. I think we need to have a classified setting to tell us exactly 

what is being done because I am very concerned. There are reports 

again today about the SCUDs going into Lebanon. Today’s report 

from Syria. I don’t think we can continue just saying we are going 

to keep talking about it. 

Did you want to contribute to that? 

Ambassador BENJAMIN. I would just add that there is a lot of 

very technically sophisticated work that is going on that I don’t 

think is yet at a stage where I think we can say it is delivered yet 

but it is in process and will be quite productive again. As Assistant 

secretary Shapiro suggested, we will probably do this better in a 

classified setting. There is quite a lot going on. 

I would also add that the smuggling issue is not confined to Gaza 

alone. Egypt is contending with smuggling networks that take it 

down into Sudan, into the Red Sea. Very complicated paths. We are 

looking at that. We are quite satisfied that the Egyptians are making a very, very serious good faith effort, but there is a lot of additional resources that are required here to really put a dent in it. 

These smugglers are incredibly innovative and resourceful. But I 

do think that we are on the right track here. 

Mr. SHAPIRO. We are also working with the Department of the 

Treasury to identify and designate individuals and groups involved 

in Gaza arms smuggling by cutting off the financial means for terrorist groups in Gaza to operate. 

Mrs. LOWEY. I think Mr. Crenshaw and I understand this. I 

think we need to have another discussion in a classified setting, because these smugglers are getting the best of Egypt, the United 

States, the Israelis, and this is a tinder box, and it can become a 

greater tinder box. I think we really need to get more information 

on this. 

Mr. Kirk. 

Mr. KIRK. I want to ask a question related to the work that Congressman Israel and I are doing in regard to Afghanistan. To be 

fairly blunt, we have lost militarily the battle around the key dam 

in western Afghanistan called Kajaki Dam and have decided to not 

add to its capacity. It was the planned source of electricity for 

Helmand and Kandahar. Because the British can’t hack it, we are 

not going to move forward on that plan. We won the battle of 

Marjah and Helmand. And ISAF has now signaled that we are 


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going to fight the battle of Kandahar in June or July, from what 

ISAF has openly told the press. 

Congressman Israel and I have been very focused on providing 

reliable electrical power to Kandahar, because the writ of the government seems to end wherever electricity ends. I think AID staff, 

largely thinking that it wasn’t invented here, is resisting this, but 

I will tell you just about every one at the Kandahar PRT is strongly—and ISAF—strongly in favor of building a set of generators at 

Kandahar airfield, where they can be protected, and then running 

a power line the 10 miles into the city, so that when U.S. troops 

are fighting and dying we have electricity to roll in right afterwards to improve things. 

Are you guys going to let the bureaucracy kill the Kandahar 

power project and undermine our troops or are you going to let it 

go forward as the bipartisan majority here wants to do? 

Mr. SHAPIRO. I will just start off by saying this is not something 

that I think any of us here—you correctly pointed out it is a 

USAID program. So I am not familiar with the details. 

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Mr. KIRK. Since it is the focal point of U.S. combat forces and the 

press and the President, you should be better prepared. 

Mr. SHAPIRO. Okay. 

Mr. KIRK. Tends to be every major network will be there. So you 

better know your briefs. 

Mr. SHAPIRO. We will take back your comments and consult with 

the special representative at USAID and get you back an answer. 

Mr. KIRK. They will resist you, to the detriment of our soldiers. 

You need to provide electrical power where combat operations are 

happening. 

Mrs. LOWEY. I just want to stress to you that this is an issue for 

the chairwoman. I have worked with Mr. Israel on it and Mr. Kirk 

on it. With an upcoming supplemental, we definitely want to have 

further discussions with you so we can take action. 

I am very concerned in general with several of the issues that 

have come up in recent days. I believe, sir, you mentioned you went 

to the New York City Police Department to get Creole speakers. 

Again, we probably should do this in a classified session, but it 

seems to me we are constantly just catching up. When it comes to 

intelligence or other agencies representing here today, I have heard 

at many hearings, Well, we don’t have the language capacity and 

we need to train people. It would seem to me that—and I understand the way some of these agencies work. A couple months there, 

a couple years there, and then they come back and forth. But 

seems to me we have to look ahead and see where the problem is, 

where we need the language capacity, whether it is DOD or State 

or Intelligence and plan ahead for it. Frankly, I have been very 

concerned about some of the answers I have gotten. 

So if this is an issue that we should be concerned about, we need 

to have a classified briefing so we can get some better answers. 

I would also like to say with regard to Mr. Kirk’s comments, I 

would like to perhaps, in a classified briefing, again—we may have 

won the battle, but I don’t know about the hold part and I don’t 

know about the cooperation with all the villages. It would seem to 

me there are too many reports about the Taliban moving in and 

threatening the villages, frightening the villages. 

So I would certainly suggest to this committee that I think we 

need another session to pursue the issue you brought up, to pursue 

the issue Mr. Crenshaw and I brought up, and I know there is a 

lot of concern from those who happen to be in another meeting 

today. 

Let me just, unless you have another question. 

Mr. KIRK. I have one other. 

Mrs. LOWEY. Yes, Mr. Johnson. 

Mr. JOHNSON. If I could respond to the issue about the Creole 

speakers. I have access to literally hundreds of Creole from traditional sources. I wanted to develop this capacity with State and 

local providers because I thought it was in our best interest to do 

that and saw this as an opportunity and so did the NYPD. So this 

was a seized opportunity. We had Creole speakers at our leisure. 

Mrs. LOWEY. Let me say the Creole wasn’t a good example of the 

point I was trying to make because we didn’t know there would be 

an earthquake in Haiti and we wouldn’t know there would be the 

urgency. 


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We can continue this in a classified setting, as I mentioned, but 

there are areas of the world where, as you know and I know, State 

Department, DOD, intelligence agencies, are rushing to get people 

trained, when perhaps we could have predicted it. Let me leave it 

at that. 

Mr. Kirk. 

Mr. KIRK. Two parts on the second issue, which is you have re- quested this committee approve $212 million for UNIFIL. Name 

the top three successes of UNIFIL in the last year. 

Mr. SHAPIRO. Well, we will get back to you for the record. 

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Mr. KIRK. Just off the top of your head. Give me the top two. 

Mr. SHAPIRO. I think from our perspective UNIFIL plays an important role in Lebanon. We work with them to try and prevent 

smuggling. So they do play an important role that we want to continue to work with them on. I can get you a more detailed answer 

for the record, but I do think that we view them as someone who 

is important to continue to communicate with and coordinate with 

as we try and develop a Lebanon that will be resistant to extremist 

influence. As we try and work to build up the Lebanese Government, the Lebanese Armed Forces, that will be able to resist the 

influence of Hezbollah and other extremists. 

Mr. KIRK. I will just follow up. I think there will be bipartisan 

concern on this issue as well. 

Utterly useless, seems to be the $212 million that you are asking 

for. You can’t even keep SCUDs out of southern Lebanon. And we 

can tell you exactly where they are. But you will try to get $212 

million out of this committee and you will not even get them to go 

into a single SCUD barn and get it out of Lebanon. So the question 

is: For $212 million in taxpayer money, it is a total waste of money. 

They have completely rearmed. My understanding is that under 

UNIFIL’s AOR they have more missiles against Israel than they 

have ever had ever. Now they have failed to stop SCUDs from coming in, which are enormous vehicles that are well and easily 

tracked, and you will not be able to certify that for $212 million 

you will get a single SCUD seized by UNIFIL, will you? 

Mr. SHAPIRO. As of now, the assessment of what weapons are in 

and out of Lebanon, as I mentioned, would probably have to take 

place in a classified setting. 

Mr. KIRK. It used to be classified, but it is now in three major 

newspapers in the Middle East. So it is kind of out that UNIFIL 

has totally, completely failed. And you want us to give them another 212 million bucks. For what? You couldn’t even specifically 

name the top three achievements of UNIFIL. 

Mrs. LOWEY. Mr. Kirk, I think perhaps we can have more indepth discussions on that issue as well. 

Gentlemen, let me just say that I appreciate your coming here. 

This is a very serious issue. We have covered part of the globe, but 

I know we will look forward to continuing the discussion in a classified setting. Thank very much for coming. 

This hearing is concluded. 


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THURSDAY, JULY 15, 2010. 

OVERSIGHT OF U.S. CIVILIAN ASSISTANCE FOR 

AFGHANISTAN 

WITNESSES 

MAJOR GENERAL ARNOLD FIELDS, USMC-RETIRED, INSPECTOR GENERAL, OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN 

HON. DONALD A. GAMBATESA, INSPECTOR GENERAL, USAID 

CHARLES JOHNSON, DIRECTOR, INTERNATIONAL RELATIONS AND 

TRADE, GAO 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. Good morning. The subcommittee will come to 

order. 

The State and Foreign Operations and Related Programs Subcommittee serves a vital role in supporting our national security by 

appropriating funds for diplomacy, development, and humanitarian 

response worldwide. Civilian contributions to the Administration’s 

strategy are integral to the success of the military and the stability 

of Afghanistan and the region. 

For example, there are effective programs funded by the U.S. 

Government like the National Solidarity Program and the Maternal and Child Health programs that have contributed to local development and increased stability in regions of the country. 

However, due to recent allegations of rampant corruption and 

theft of U.S. Government assistance, concerns with billions in cash 

leaving Kabul airport, and alleged influence peddling and interference with and obstruction of corruption investigations by Afghan 

officials, I deferred consideration of the $3.9 billion requested for 

foreign assistance to Afghanistan in fiscal year 2011. The State Department’s assessments that such activities undermine our civilmilitary mission and our responsibility to ensure Americans’ hardearned tax dollars are not squandered or mismanaged, especially 

in this time of economic recovery, require our urgent and thorough 

examination. 

Now, I want to make it very clear to my colleagues on both sides of the aisle that $4.1 billion has been appropriated for civilian-led 

assistance programs in Afghanistan in the fiscal year 2010 bill, and 

$1.7 billion has been appropriated in the fiscal year 2010 supplemental for civilian-led assistance programs in Afghanistan that 

passed the House July 1st and which the Senate will consider in 

the coming weeks. It is my understanding that 90 percent of Fiscal 

Year 2010 funds remain unobligated as programs are being developed now. 

Therefore, the Fiscal Year 2011 bill will not become law until the 

Fall after both Chambers consider it. We have the responsibility, 


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the obligation, and the time to protect taxpayer money and get the 

process right; and I am very pleased that the Administration understands that we need accountability and they have agreed to 

work with us. 

I welcome the Special Inspector General for Afghanistan Reconstruction, Retired Major General Arnold Fields; the USAID Inspector General, Donald A. Gambatesa; and the Director of International Relations and Trade of the Government Accountability Office, Charles Johnson. These government watchdogs will provide insight into their audit and investigation findings to date, existing 

mechanisms to safeguard our assistance dollars, any gaps in oversight, and any evidence they have uncovered of corruption and 

graft within programs under this Committee’s jurisdiction. 

Just yesterday, the GAO released a report, entitled Enhancements to Performance Management and Evaluation Efforts Could 

Improve USAID’s Agricultural Programs, which outlined concerns 

with management and oversight of significant U.S. funded agriculture and alternative development programs in Afghanistan. 

Similar to previous reports, its findings indicate compromised effectiveness, including the lack of project management, defined goals 

and outcomes, and direct oversight. Please outline for us today additional procedures that USAID should implement to more clearly 

define goals and measure and validate outcomes. 

Because the President’s strategy depends on the capability of the 

Afghans to govern effectively, we look forward to your evaluation 

of the level of commitment of Afghan officials to improve governance and accountability. For example, are senior Afghan Government officials impeding investigations into bribery and corruption? 

And, if so, what action is being taken by United States Government 

and Afghan officials to stop such interference and move forward 

with prosecutions? What steps have the Afghan Government taken 

to support anti-corruption efforts, and do you believe they are effective? 

Especially given President Karzai’s call this past Monday for the 

international community to channel 50 percent of donor assistance 

through Afghan Government ministries, it is essential that the 

Government of Afghanistan be capable of managing international 

assistance in an effective, transparent, and accountable manner. 

Have the Department of State and USAID established conditions 

on the provision of direct assistance to Afghan ministries? If so, 

what are they? Are the conditions adequate? Are the assessments 

or certifications of Afghan ministries under way? If so, who is undertaking these assessments and what is the process? What recommendations do you have for the Administration and Congress to 

strengthen the assessment and certification process and provide 

greater assurance that any funding channeled through Afghan 

ministries is properly monitored, programmed, and executed? 

And finally, this Committee is under no illusions about the difficulty of implementing programs in Afghanistan, including security threats, a nascent banking system, challenges in identifying 

and developing credible local partners, among many other factors. 

In fact, just in the last 2 days, eight American servicemen were 

killed and today five Ministry of Health employees were kidnapped 

in Kandahar while on a health mission to help their countrymen. 


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Our hearts and prayers go out to both our soldiers and their families who have made the ultimate sacrifice and to the Afghans who 

are risking their lives to rebuild their country. 

To ensure effectiveness of our assistance in this environment, 

this Committee has increased funding for Inspector Generals and 

mandated close consultation on implementation of U.S.-funded programs. In fact, some of the concerns we will address today may 

have been uncovered as a result of this expanded investigative capacity and the Government of Afghanistan’s increasing ability to 

monitor funds and programs. 

Our discussion today of the systems currently in place to safeguard United States assistance from fraud and abuse and your insights on additional steps the Subcommittee should take will help 

us in our work in refining the fiscal year 2011 bill before it goes 

through the entire process and becomes law, we hope, in the Fall. 

Before turning to Ranking Member Granger, let me close by saying that the Subcommittee intends to hold an additional hearing 

and briefings with other top Administration officials to examine ongoing efforts to provide accountability and thwart corruption in Afghanistan. With such high stakes, and we know how high the 

stakes are, any gaps identified by our witnesses today must be immediately addressed to provide confidence—confidence to the 

American people—that assistance for Afghanistan continues to advance our mission and support our troops in the field. 

I would like to turn to my ranking member, Kay Granger, for her 

statement before we proceed. 

OPENING REMARKS OF MS. GRANGER

Ms. GRANGER. Thank you, Madam Chair; and thank you for calling for this very important hearing on Oversight of U.S. Civilian 

Assistance for Afghanistan. 

I understand this will be the first in a series of hearings, the 

chair outlined that we will be holding; and I agree there are many 

issues that should be addressed and I hope will be addressed in 

these hearings. 

Let me begin by saying I share the chair’s concerns about the 

disturbing news reports coming out almost every day highlighting 

the corruption problem in Afghanistan. We are all eager to get to 

the bottom of those allegations. 

I would also like the cite some of the most alarming results of 

recent surveys: A UN report earlier this year showed that more Afghans are concerned about corruption than any other public problem. Transparency International’s most recent survey again ranked 

Afghanistan as one of the most corrupt places in the world. And 

just last week an Afghanistan-based group revealed a new study 

showing that bribery may be a billion dollar business. 

Corruption is not something that can be fixed overnight, but we 

must do all we can. This subcommittee must take decisive action 

to ensure that U.S. taxpayer funds are used as they were intended 

to be used. At the same time, I want to be sure that the subcommittee’s actions support the broader strategy on the ground in 

Afghanistan. The strategy was not intended to be solely a military 

endeavor. The civilian side was inherently linked to the overall. 


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As General Petraeus noted in his June 15th testimony to the 

Senate Armed Services Committee, a critically important part of 

our civilian military campaign in Afghanistan is promoting broadbased economic and infrastructure development. With this in mind, 

I remain concerned about any potential negative impact that withholding foreign assistance could have while U.S. military and civilians are on the ground. 

That is why it is essential that we hear from the witnesses before 

us today to get a better understanding of the oversight that is 

being conducted. 

I also look forward to another hearing with senior administration 

officials who are responsible for executing the civilian side of the 

Afghanistan strategy. 

I want to welcome today’s witnesses. They are very important in 

what we are learning and how we will move forward. Each of you 

and your organizations play a critical role in preventing and detecting fraud, waste, and abuse of foreign assistance dollars; and I 

thank you for your service. 

The chair has already laid out many questions for you to answer, 

all of which deserve your attention, but there are a few additional 

matters I would like for you to address. 

First, I want to know that funds invested in Afghanistan are 

achieving tangible results. This starts by ensuring that programs 

are free from corruption, which I know we will discuss in great detail today, but it also means that U.S.-funded programs have clear 

goals and objectives that are tracked and measured over time. 

When I visited Afghanistan last fall, I was stunned by the lack of progress there. With roughly $50 billion invested by the U.S. 

since 2002, results are difficult to see. This can’t continue. Accountability and a focus on results must be part of the culture of U.S. 

agencies, and that should funnel all the way down to the implementers, the Afghan Government, contractors, grantees, international organizations, and the multiple levels of awardees below 

them. I would appreciate hearing your thoughts on how we can 

move toward a focus on results and accountability. 

Next, I want to have confidence that sending more assistance 

through Afghanistan’s institutions and nongovernmental organizations is the best course of action. I recognize the need to build the 

capacity of the government and local groups, but, given the recent 

allegations, now is not the time to subject U.S. funds to unnecessary risk. If the administration continues with this Afghan First 

Initiative, more than $1 billion could be distributed in this way. I 

believe this policy deserves intense scrutiny, and I would like to 

hear your assessment and any recommendations that the subcommittee should consider. 

I also want to discuss the civilian personnel strategy in Afghanistan. I understand the positions have tripled in the last 18 months, 

but I want to determine if the people who are filling those slots 

have the right skills to oversee such large programs and in such 

a difficult operating environment. I would like to hear your 

thoughts and any recommendations in this area as well. 

In closing, I look forward to getting a better understanding of the 

work your organizations have already undertaken and the work 

that is planned to address waste, fraud, and abuse. Your testimony 


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will help the subcommittee have confidence in providing the funds 

necessary to support the President’s strategy in Afghanistan. 

Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

Mr. Lewis. 

OPENING REMARKS OF MR. LEWIS

Mr. LEWIS. Thank you very much, Madam Chairman. 

I want to congratulate both you and Kay Granger for holding, beginning this series of very important hearings. 

The American public, to say the least, is skeptical about our having foreign assistance programs in the first place. The average taxpayer often thinks that we are spending 10, 15 or 20 percent of our 

national product on foreign aid as it were. You all know that it is 

considerably below that. Well below 1 percent, as a matter of fact, 

flows in to these areas. But, nonetheless, the reports that have 

raised the kind of alarm and concern that the chairwoman has expressed concern about very much feed that public doubt about 

whether these programs are worthwhile at all. 

While I really support strongly efforts to help you give us insight 

as to what is actually happening on the ground, please know that 

this is not a partisan consideration. Foreign assistance has to reflect American interests, efforts that we can make to make sure 

those dollars that are delivered get to those people we portend to 

want to help in the first place is critical. 

One area of interest of mine that I would appreciate your addressing, if you can, involves a long-standing interest about programs we may or may not be carrying forward effectively dealing 

with the poppy and the impact that those poppy fields have had to 

feed our enemies, if you will, to provide funding flows that do not 

help farmers for certain but instead help warlords. I would like to 

know, hear more about your evaluation as to programs to strengthen the agricultural sector in Afghanistan outside of the poppy. Any 

reporting you can give us in connection with that would be very 

much appreciated. 

So thank you, Madam Chair. 

Mrs. LOWEY. Thank you. 

We look forward to hearing from our witnesses. I want to alert 

you all that we may have votes in about an hour. Your statements 

have certainly been submitted for the record; and to the extent that 

you feel comfortable summarizing, please proceed as you wish. And 

we—in terms of the panel, we will proceed as usual, go from one 

side to the other, giving each member 5 minutes. 

Let us begin with General Fields; and, again, we thank you for 

appearing here today. 

OPENING STATEMENT OF GENERAL FIELDS

General FIELDS. Thank you very much, Chairman Lowey, Ranking Member Granger, and distinguished members of the committee. 

Again, thank you very much for inviting me to participate at this 

very important hearing. I appreciate the introductory comments, 

Chairwoman Lowey, Ranking Member Granger and Representative 

Lewis. 


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I have provided the committee with a longer statement which I 

will now summarize. 

Recent press reports have alleged that billions of dollars have 

been transported out of Afghanistan via the Kabul Airport. We do 

not know at this time whether these dollars are from reconstruction funds or not. However, our investigators are aggressively 

working with other Federal agencies to determine the source of this 

currency. 

The lack of visibility into the movement of money and financial 

transactions in Afghanistan is one of many issues that puts reconstruction dollars at risk. We have identified problems in four broad 

areas: accountability, sustainment, metrics, and capacity development. That must be addressed to improve the effectiveness of the 

reconstruction program and prevent waste, fraud, and abuse. 

The U.S. Government does not have an integrated management 

system that provides complete and accurate data on all reconstruction activities. It does not have a comprehensive database on reconstruction contracts. Such systems, especially given the high turnover of staff, both civilian and military, would help to better manage U.S. projects. 

The U.S. Government has very little visibility into the activities 

of some subcontractors. This must change. SIGAR has identified 

sustainment issues in every audit it has conducted of an infrastructure project. Not only is the Afghan Government unable to pay for 

the operations and maintenance of donor-funded infrastructure, it 

cannot pay for most of its basic operating expenses, including salaries. 

The international community is providing 85 percent of the Afghan national budget. 

We are finding that U.S. implementing agencies must do a better 

job of establishing and tracking metrics to help determine if a program is making progress and is sustainable. For example, our recent audit of our capabilities milestone rating system found that 

the system could not provide reliable or consistent assessments of 

Afghan security forces capabilities, a part of the reconstruction effort to which the United States alone has already invested over $27 

billion. 

The U.S. reconstruction strategy emphasizes building Afghan capacity to govern. The Department of State is implementing this 

strategy by deploying more civilian experts to work in partnership 

with Afghans and channeling more reconstruction dollars through 

Afghan institutions. SIGAR is conducting an audit of the civilian 

surge to assess the extent to which these civilians are being deployed effectively to achieve U.S. reconstruction goals. 

We are also conducting a series of audits to do basically two 

things: one, examine U.S. and donor efforts to build Afghanistan’s 

institutional capacity to deter corruption and to strengthen the rule 

of law and, two, the extent to which Afghan institutions have the 

systems in place to account for donor funds. 

These audits are having an impact. I am pleased to say that 

USAID has since told us that it plans to provide up to $30 million 

over the next 3 years to support the High Office of Oversight, Afghanistan’s key anti-corruption body; and the U.S. Embassy in 

Kabul reported that it is working with donors to develop capacity 


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of the Control and Audit Office, the institution responsible for auditing Afghanistan’s public finances. 

There are many challenges to providing assistance in a war zone, 

but we must do a better job to ensure that taxpayer dollars are not 

wasted. 

Building Afghanistan capacity to deter corruption and strengthen 

the rule of law will be the key to protecting U.S. funds from fraud 

and abuse. SIGAR is committed to providing oversight in a timely 

fashion so that our implementing agencies can make course corrections before U.S. resources are wasted. 

Thank you very much. 

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Mrs. LOWEY. Thank you very much, Mr. Fields. 

Mr. Gambatesa. 

OPENING STATEMENT OF MR. GAMBATESA

Mr. GAMBATESA. Good morning. Good morning, Chairwoman 

Lowey, Ranking Member Granger, and distinguished members of 

the subcommittee. Thank you for inviting me here today to testify 

on the oversight of USAID programs in Afghanistan. 

Afghanistan’s reputation for corruption and fraud is well known. 

As Ranking Member Granger reported in her opening remarks, a 

January, 2010, a report from the United Nations stated that it is 

almost impossible to obtain a public service in Afghanistan without 

paying a bribe. The latest Transparency International’s corruption 

perception index ranks Afghanistan at 179 out of 180 countries, the 

second worst in the world. 

The U.S. Agency for International Development has obligated over $9 billion in Afghanistan and currently has more than 400 civilian and Foreign Service national personnel overseeing approximately 100 ongoing grants and contracts worth more than $7 billion. 

Since fiscal year 2003, we have conducted 34 performance audits 

and made 128 recommendations for improvements and issued 33 financial audits with nearly $100 million in sustained question costs. 

We have also initiated more than 70 investigations, with recov- eries and savings of approximately $150 million. Moreover, in the 

past 2 years alone, we have referred 10 individuals for prosecution 

in the United States or Afghanistan. 

We have a great deal of experience conducting fraud investigations in Afghanistan, and we work collaboratively with our colleagues from the Special Inspector General for Afghanistan Reconstruction, the Federal Bureau of Investigation, and other law enforcement agencies as well as Afghan police officials and prosecutors. 

Although the Afghan Government has not interfered with any of 

our investigations, we sometimes have difficulty pursuing a case 

because of the concerns for the security of informants and witnesses. Individuals who provide us with information are often reluctant to continue to participate in the investigations out of fear 

for their safety. In these instances, we share relative information 

with appropriate U.S. government agencies within the Kabul Embassy. 

With regard to the subcommittee’s concern about funds being 

transported out of Afghanistan, we have no evidence linking 

USAID assistance programs to the large quantities of U.S. dollars 

that are reportedly being shipped. 

Although Afghanistan is largely a cash economy, most USAID 

funds are provided to contractors and grantees through electronic 

transfers. In some situations, sums of money, generally under 

$25,000, are paid in cash as in the cash award programs. In these 

situations, controls have been put in place to ensure that funds 

have been used for their intended purpose. 

USAID has the following systems in place to prevent fraud and 

abuse: pre-award surveys of contractors and grantees; annual financial audit requirements for contracts, grants and sub awards; 


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financial reporting requirements for contractors who receive advance payments; and program monitoring by USAID and third parties. 

Despite these controls, however, oversight is not as robust as it 

should be; and USAID does not have a sufficient number of qualified personnel on the ground to monitor projects effectively. However, the agency has developed a more effective monitoring evaluation process, to include increasing staffing and training. 

Our office supplements USAID’s oversight by performing financial audits and reviewing public accounting firms to determine 

whether they are eligible to audit agency funds. Financial auditors 

pay special attention to control over cash. 

We also conduct concurrent financial audits of the highest-risk 

programs, such as infrastructure programs, to provide early detection of potential problems. 

As part of the government’s commitment to the Paris Declaration 

principles, USAID is channeling increasing levels of development 

funding directly to the Government of Afghanistan. By leading the 

resulting development projects, the Afghan Government can build 

public confidence in its ability to deliver programs that improve the 

welfare of the people. However, Afghanistan is still developing the 

capacity to manage projects and monitor and account for associated 

resources. This places Federal dollars in greater risk of waste, 

fraud, and abuse. USAID must develop an approach to building Afghanistan’s capacity that balances the imperative for local engagement in the development process with effective stewardship of taxpayers’ dollars. 

This concept of effective stewardship of taxpayers’ dollars is also 

critical for budget support provided to the Afghan Government 

through trust funds or other instruments managed by international 

organizations. My office does not have audit rights to these funds, 

and oversight of these funds becomes the responsibility of the implementing entity or the Afghanistan’s Control and Audit Office. 

The following steps could be considered to minimize risk associated with funding assistance programs in Afghanistan: 

One would be to require that direct assistance to the Government 

of Afghanistan be committed through specific projects rather than 

budget funding so that USAID funds can be traced to its end use; 

require concurrent audits of USAID’s direct assistance to the Government of Afghanistan; adopt specific contracting practices for Afghanistan and other conflict settings that limit the tiers of subcontractors and subgrantees so that we don’t have these subs of 

subs of subs. 

In addition to the options I mentioned, my office can take the following actions, as resources permit, to further mitigate risk: 

We can review USAID’s pre-award survey and certification process to determine whether further strengthening is required; we can 

also conduct a review of cash disbursement practices employed by 

program implementers to see if what we are hearing is really correct as far as the control over the cash; and increase participation 

with other Federal agencies that are following the trail of expenditures in Afghanistan. 


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We share the subcommittee’s concerns that funding appropriated 

to foreign assistance programs in Afghanistan not be wasted or 

channeled to those who wish to do us harm. 

I would be happy to answer any questions. Thank you for inviting me here today. 

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Mrs. LOWEY. Thank you very much. 

Now we are very happy to hear from Mr. Johnson. Thank you. 

OPENING STATEMENT OF MR. JOHNSON

Mr. JOHNSON. That you, Madam Chairwoman, Ranking Member 

Granger, and members of the subcommittee. 

I am pleased to be here to discuss oversight of U.S. assistance 

programs in Afghanistan. Strengthening the Afghan economy 

throughout development assistance efforts is critical to the U.S. 

counterinsurgency strategy and a key part of the United States’ civilian military campaign plan for Afghanistan. 

Since fiscal year 2002, the U.S. Agency of International Develop- ment has awarded over $11.5 billion in support of development assistance programs in Afghanistan. Since 2003, the GAO has issued 

several reports and testimonies related to U.S. efforts in Afghanistan. In addition to reviewing program planning and implementation, we have focused on efforts to ensure proper management and 

oversight of the U.S. efforts. These are essential to reducing waste, 

fraud and abuse. Over the course of this work, we have identified 

improvements that were needed as well as obstacles that affect the 

success and should be considered in program management and 

oversight. 

While drawing on past work related to U.S. development efforts 

in Afghanistan, I will focus much of my testimony today on findings in our most recently released report which was just released 

yesterday on the USAID’s management oversight of its agricultural 

programs in Afghanistan. 

My statement today will address the challenges the U.S. faces in 

managing and overseeing development programs and the extent to 

which the USAID has followed its existing and established performance management and evaluation procedures. 

To start, I would like to note that various factors challenged U.S. 

efforts to ensure proper management and oversight of U.S. efforts 

in Afghanistan. Among the most significant has been the highthreat working environment that U.S. and others are working in, 

the difficulties in preserving institutional knowledge due to the 

lack of formal mechanisms for retaining and sharing information 

during high staff turnover, and the Afghan Government ministries’ 

lack of capacity and corruption challenges. 

It is also worth noting that the USAID has taken some steps to 

assess and begin addressing the limited capacity of the Afghan 

ministries and to address corruption challenges associated with 

those ministries. 

USAID has established performance management and evaluation 

procedures that are already in place to help oversee its programs. 

These procedures, among other things, require the development of 

a mission performance management plan, the establishment and 

approval of implementing partner performance indicators and targets, and the analysis and use of performance data. 

We have found, however, that the USAID has not consistently 

followed its established performance management and evaluation 

procedures. In particular, we found that the Afghanistan mission 

had been operating without an approved performance management 

plan to guide its management and oversight efforts after 2008. 


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In addition, while implementing partners have routinely reported 

on the progress of USAID-funded programs, USAID did not always 

approve the performance indicators these partners were using and 

did not ensure, as its procedures specifically require, that its implementing partners establish targets for each performance indicator. 

For example, only two of the seven USAID-funded agricultural 

programs, which we highlight in our most recently released report, 

during fiscal year 2009 had targets for all indicators. They actually 

lacked targets for all indicators as required. 

In the absence of consistent application of its existing performance management and evaluation procedures, USAID programs 

may remain more vulnerable to waste, fraud, and abuse. For example, GAO reported in 2009 that USAID’s failure to adhere to its existing policies severely limited its ability to require expenditure 

documentation on an Afghanistan-related grant that was later associated with findings of alleged criminal actions and mismanagement of U.S. Funds. 

To enhance the USAID development assistance programs in Afghanistan we have recommended, among other things, that the administrative USAID take steps to, one, ensure programs have performance indicators and targets; and, two, fully assess and use performance data and evaluations that it has collected or that it will 

collect to adjust current and future programs and address preservation of institutional knowledge. 

USAID has concurred with these recommendation and is in the 

process of developing a new performance management plan to 

guide its future efforts. We will continue to monitor and follow up 

on the implementation of all open GAO recommendations. 

This concludes my prepared statement, but before closing I would 

like to note that the GAO looks forward to assisting the Congress 

and the administration in its efforts in Afghanistan, and I would 

be happy to answer any questions at this time. 

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Mrs. LOWEY. Thank you very much for your testimony. As I stated before, we will rotate from side to side, and we look forward to 

your response. 

I want to follow up, if I may, on the London Conference in January, 2010. Donors agreed to provide up to 50 percent of donor assistance directly through Afghan Government mechanisms. In anticipation of the Kabul Conference next week, President Karzai has 

called on donors to align assistance programs with Afghan priorities and move toward the 50 percent goal. 

First of all, can you describe what USAID has done to safeguard 

funding provided directly through the Ministries of Health and Finance? How much funding is provided through these sources on an 

annual basis? Does USAID anticipate providing direct support 

through other government ministries in fiscal year 2010? What 

process has USAID undertaken to assess the capacity of these ministries to receive direct assistance and what could USAID or other 

U.S. Government agencies do to increase the capacity of Afghan 

ministries that are being considered for direct government-to-government support? 

Several of you addressed changes that you are recommending in 

the oversight process. If there is anything else you would like to 

add to that, please do. 

And I would also like to know what oversight role does USAID 

have in reviewing programs and projects of the Afghan Reconstruction Trust Fund? Can the USAID IG or the SIGAR audit funding 

channeled through the Trust Fund? 

You may have a choice, whoever would like to respond. 

ARTF

General FIELDS. Let me first address the ARTF, Afghanistan Reconstruction Trust Fund; and then I would be inclined to yield to 

my counterpart IG from USAID to discuss more of the details of 

your questions. 

First, we have not conducted an audit per se of the ARTF. The 

ARTF is administered by the UN; and our mandate, while broad, 

that I execute does not necessarily include the UN. And its mechanisms. However it is my intent and has been since I have been in 

this capacity to pursue the U.S. dollar to whatever extent it may 

be, wherever it may reside. And so we have had a dialogue with 

the UN; and I believe that if this dialogue continues I feel that we 

will be permitted, if jointly, to look into the ARTF into which the 

international community has thus far invested $900 million, of 

which approximately $300 million has been invested by the United 

States. 

We also have conducted an audit of the Control and Audit Office, 

as I pointed out in my initial statement, and I feel that we can potentially conduct joint audits with the CAO, which is somewhat 

equivalent to our GAO, and accomplish matters associated with the 

ARTF and the extent to which those funds are being implemented 

through whichever institution in Afghanistan. 

Mrs. LOWEY. And the remaining, Mr. Gambatesa. 

Mr. GAMBATESA. Thank you. 

I would like to follow up on the ARTF before I get into the other. 

As I said in my opening statement that we really don’t have any 


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audit rights in ARTF funds, oversight will be provided by the 

World Bank or by the audit office in Afghanistan. However—— 

Mrs. LOWEY. Even though $300 million of American funds are 

contributed. 

Mr. GAMBATESA. Yes, ma’am. They become fungible once they go 

into the account, and they basically lose their identity at that 

point. 

Mrs. LOWEY. Is there anything we can do about that? 

Mr. GAMBATESA. I am not certain if we can do anything with that 

specifically. As auditors, all we can do is raise concerns to them 

and ask them to do something. But we have had dealings with UN. 

organizations before, our international organizations, where they 

don’t really have to listen to us. 

But the agency, the USAID, does have some amount of oversight 

into this process from what I have been told, that they use a monitoring agent, PricewaterhouseCoopers, to check compliance with 

government internal controls. They participate in project identification and preparation and appraisal, and there is also a methodology they call preferencing where a certain amount of funds that 

a government can contribute can be preferenced. I don’t know all 

the details, but there are certain ways they can do that, and it is 

a little bit complicated. 

The USAID receives reviews, reports, financial reports, quarterly 

donor reports, and annual reports basically saying how the funds 

were expended. So there is some oversight from the agency from 

the standpoint of quality control or due diligence, I guess is the 

best way to put it. 

Mrs. LOWEY. We will catch Mr. Johnson on the next question, because my time is up. But I would appreciate learning more about 

that because, as you mentioned, Mr. Fields, we have a responsibility and you are looking at following all the dollars. 

General FIELDS. Absolutely. 

Mrs. LOWEY. And Norway does have the responsibility for oversight of these funds, and we should be able to ask questions and 

pursue any trail wherever it leads. I thank you. 

Ms. Granger. 

Ms. GRANGER. Yes, I want to follow up on that line of questioning that the chairman asked, because I want to focus on the 

ministries. 

The administration has their Afghan First Initiative that we 

would be sending funds through the Afghanistan ministries. I understand these ministries have to be certified, so I would like to understand more about the process for certification and has the IG’s 

office been involved in that? 

Because what I am hearing is there aren’t the people—there is 

a history of corruption. There aren’t enough people to do this oversight, and yet we are sending money directly to those Afghan ministries. So I would like some more information about that certification process, how reliable it is, and how that Afghan First is 

going to proceed. 

Mr. JOHNSON. If I may respond to that initially, Ranking Member Granger, GAO actually just initiated some work looking at the 

U.S. certification process that we are undertaking in terms of certifying Afghanistan ministries, and we think that in addition to that 


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certification process there needs to be controls in place to allow the 

U.S. to have access to certain financial information to be able to 

go in and look at, follow some of the dollars. So we are going to 

be looking at that as a part of our review in terms of what specific 

controls or policies or agreements do we have in place. 

I do want to note that it is important that the Afghanistan ministries, as we have noted before, have that capacity as a part of 

building the capacity of the Afghan government is I think our certification process before we provide them with direct funding. It is 

a part of that whole of government approach that we are taking, 

and so we are planning to look into that in particular. 

Ms. GRANGER. What kind of time frame is that? 

Mr. JOHNSON. We just initiated that review. 

Ms. GRANGER. How long should that take? 

Mr. JOHNSON. On average, we roughly are able to produce things 

in about 6 months, 6 to 8 months, but if there are immediate needs 

we can provide you with something sooner than that. 

Ms. GRANGER. I would request that you provide this subcommittee with that information as it goes forward with the recommendation. Six to eight months puts us in a real delicate situation with the funding if that process isn’t in place and the safeguards aren’t there. 

Mr. JOHNSON. We will be in a position to provide you with briefings on what we have learned. 

Ms. GRANGER. Yes. 

Mr. GAMBATESA. We haven’t as yet reviewed it, but we intend to 

review the process of the precertification. 

My understanding is that none of the funds or very few of the 

funds have gone to direct budget support, that thus far the ministries have received funding for specific projects, which obviously 

increases the accountability because they have to say what they 

have achieved with the program. 

As we mentioned, USAID is providing training and technical assistance when there is a lack of capacity. Oftentimes, they will use 

a contractor to go in, an accounting firm as such, to go in and assess the capability of the ministry to account for the funding basically, to see if their internal controls and their accounting systems 

are such that they can actually provide a good sheet to us to determine that, in fact, the funds are being spent appropriately. 

My understanding is they have blanket agreements with a number of CPA firms to go in and actually work, and they are local 

CPA firms, so they would not be U.S. firms. 

Ms. GRANGER. So they are local contractors, Afghan contractors, 

that we are contracting to see if the Afghanistan Government and 

the ministries can oversee these projects, not the budget toward 

them but the actual projects, is that right? 

Mr. GAMBATESA. More so of the financials, if they have the capacity financially to oversee the funding. That is really on the financial side. 

And the other part as far as the performance side would be the 

training issue of whether the ministry has the proper training and 

expertise to actually implement the programs. 

Ms. GRANGER. And that is also determined by a contractor in 

most cases, is that right? 


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Mr. GAMBATESA. I am not certain. 

Mr. JOHNSON. If I may also add, based on our preliminary work 

that we have done so far, with respect to the 50 percent target that 

has been established, we have noticed that between fiscal year 

2002 and 2010 there was roughly about 18.5 percent of our money 

has been provided for program support to the government of Afghanistan. 

Ms. GRANGER. Would you say that again, please? 

Mr. JOHNSON. Eighteen point five percent of our USAID’s funding has been awarded for program support to the Afghan Government. In fiscal year 2010, specifically, that has jumped up to 51 

percent. So I think the direction towards the 50 percent for AID is 

taking place. But those are all preliminary numbers. 

Ms. GRANGER. Thank you. 

Mrs. LOWEY. I would like to just submit this letter for the record, 

a letter from Acting Mission Director Rebecca Black. 


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Mrs. LOWEY. I am pleased to see that this issue is on the screen 

of many of the people who are here today. 

We do need an increased focus on fiduciary and governance 

framework of the Afghanistan Reconstruction Trust Fund. 

So I think this is an important step in the right direction, and 

I thank you. 

Mr. Jackson. 

OPENING REMARKS OF MR. JACKSON

Mr. JACKSON. Thank you, Madam Chair. I thought I beat the 

clock just before you slammed the gavel. I am grateful. 

Again, thank you, Chairwoman Lowey, and let me also welcome 

our guests to the hearing today. 

In perfect candor, I haven’t heard very much today that gives me 

the impression that the United States Government has done and/ 

or is doing everything that it can do to keep taxpayer dollars from 

being at risk in what almost universally each of you have indicated 

is the second-most corrupt country in the world, just above Somalia. My confidence today has not been strengthened at all by the 

testimony of you as witnesses, and that is not to cast an aspersion 

upon the dedicated nature of your service to our Nation. 

But, as General Fields indicated, the high turnover in terms of 

civilian capacity on our side, the high turnover on the military side 

of our own efforts in Afghanistan certainly suggest that there is a 

continuity problem on our side, let alone the expectations that we 

have for the Afghan officials in monitoring these projects. 

I have introduced a bill to help with the reconstruction of Liberia, and one of the key aspects of the bill is to improve the capacity 

and professionalism of the civilian government. 

Improving governance is obviously imperative to providing sustainable development for Afghanistan. It is also a complex task 

that requires reform in virtually every ministry and every level of 

government. 

I am interested in hearing from all of you what in your judgment 

are the most pressing priorities for improving Afghanistan governance and what areas of governing are making the most progress? 

What areas are also the most problematic? 

Let me start with General Fields. 

General FIELDS. Thank you very much, sir. 

First, if you permit me, sir, I wish to correct myself. I earlier 

mentioned that the UN oversees the ARTF. It is actually the World 

Bank that oversees the ARTF. 

But none of which, of course, precludes what I earlier said, that 

we will work with whichever entity we need to in order to ensure 

that the U.S. tax dollar is wisely used. 

In terms of what we are doing in reconstruction, let me say that 

we have spent or are spending $27 billion or more for the security 

aspect of reconstruction, $15 billion over the course of our involvement in Afghanistan since 2002 for governance and development. 

So, your question, sir, is very important, because we have devoted 

a lot of money to reconstructing, if you will, the governance sector 

of Afghanistan. 

In terms of a direct answer to your question, I feel that much is 

under way in addressing governance in Afghanistan, but it is not 


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nearly where it really needs to be, which is why the issue of corruption is such an agenda item to date. 

One failure that I would ask and recommend that we not make 

should we engage in another situation similar to Afghanistan is 

that we, I don’t feel—and there is little evidence thus far discovered by my auditors and by me personally—to suggest that we 

started in 2002 building capacity in Afghanistan. It is very difficult 

to build capacity in a nation as broken as Afghanistan has been 

and to a large extent still is. And I would encourage that our planners at all levels consider capacity at the forefront of an engagement by the United States into which so much money by the American taxpayer is to be invested. 

The justice system is still not adequate. We are working on it, 

and I feel that the United States Embassy is focusing on that area 

through training of judges and prosecutors as well as building facilities in which they can carry out their work. But we are not 

there yet. We have conducted audits in this regard, and we have 

reported certain recommendations to the Embassy, and we await 

responses sufficient to confirm that in fact they have turned to—— 

Mr. JACKSON. General, let me just share with you for the Committee, and then I will conclude, because I know my time has expired. 

Fifteen billion dollars in governance and capacity building since 

2002, and yet every member of this panel has to confront a Washington Post article that asks the question, is the Afghan Attorney 

General on our side or not? 

Have your investigators found evidence that the Afghan Attorney 

General impeded investigations and prosecutions; and, if so, is this 

at the direction of senior Afghan officials? 

Before this committee appropriates another dollar, whether or 

not taxpayer dollars are at risk, fall within the purview of this 

Committee and the purview of that chairwoman to oversee that 

this money is being spent adequately. And what I am not hearing 

is that after $15 billion on governance that we have there, which 

means another $15 billion and another $15 billion and more articles like this which every one of us have to go back home and explain to a constituent why it is either sufficient or insufficient or 

why we may need to pull our troops back. 

Madam Chair, I yield back the balance of my time. 

Mrs. LOWEY. Thank you. 

Mr. Lewis. 

Mr. LEWIS. Thank you, Madam Chair. 

Would each of you kind of give me a yes or a no answer, since 

we are attempting to measure what has happened to American dollars in Afghanistan, because your advice and counsel you get from 

people who have expertise in each of your organizations indicate to 

you that there is serious believability relative to those charges that 

suggest that huge amounts of cash, American cash, have been leaving Afghanistan with some regularity. And if you do see, if your answer is yes to that question, would you tell us short term, what 

Jesse Jackson and I can do to see that those dollars go to the people we want to help in the first place and not go to somebody’s 

bank account outside of Afghanistan? As much of a yes or no as 

possible from your background I would appreciate. 


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General FIELDS. Yes. Money is leaving Afghanistan, and this has 

been reported to me by my investigators. There are investigations 

under way and which were under way prior to the media reporting 

on this matter, and we are not prepared at this time to give the 

final details because it is ongoing. But, yes, sir, money is leaving; 

and this is money that is being declared as the so-called owners of 

it depart Afghanistan. 

Mr. GAMBATESA. Well, I don’t think there is any doubt that funds 

are leaving, the money is leaving, but whether they are USAID 

funds that have been diverted in some way is something that we 

don’t know. And we have no indication, as I mentioned in my statement, that any USAID funds are being sent out of the country, basically, as I said earlier, because there is not much cash out there. 

Mr. LEWIS. If 85 percent of the government’s budget comes from 

our assistance, certainly a ‘‘yes’’ sounds pretty close to being on the 

money to me. 

Mr. GAMBATESA. I am not contradicting you. I am saying that we 

have no information to show that any USAID funds are being 

shipped out of the country in pallets. 

Mr. LEWIS. So your support people are telling you that you think 

perhaps the answer is ‘‘no’’ rather than yes? 

Mr. GAMBATESA. Well, I think it is more we don’t know. But absent positive knowledge to it, and you never want to say never, but 

we have nothing to indicate that it is for sure. I would say no. Yes. 

Mr. LEWIS. GAO? 

Mr. JOHNSON. Based on the work we perform, we don’t have any 

specific evidence that money is leaving Afghanistan illegitimately. 

We have done some work in the past where we were reported on 

allegations and misuse of U.S. funds that were provided through 

USAID, but, other than that, we don’t have any specific examples 

of money being flown out of Afghanistan inappropriately. 

Mr. LEWIS. Thank you. 

Mrs. LOWEY. Just to clarify, before I turn to Mr. Schiff, Mr. 

Fields, you are saying that you are in the process of conducting an 

investigation on those allegations, and you were before the media 

reports revealed the information. We look forward to hearing the 

results of your examination. Do you have any idea of the time 

frame? 

General FIELDS. Not at this time. This is an investigation that 

we started really in March. And it was really another investigation 

that was under way, and a tip through that investigation led us to 

matters relating to the departure or exodus of money through the 

airports. I don’t know, Madam Chairwoman, when we will have 

completed this, but I can assure you that we will work this as rapidly as we possibly can. 

Mrs. LOWEY. Thank you very much. 

Mr. Schiff. 

Mr. SCHIFF. Thank you, Madam Chair. 

I have a few questions today, and I am going to try to state as 

quickly as I can to see how many we might get through. 

I want to follow up on the chair’s question, and maybe we just 

don’t have enough information, but to the degree that money is 

leaving the country, and I don’t know what is worse, the potential 

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cause it has been stolen or whether this is U.S. taxpayer dollars 

or other international donor assistance that has not been stolen but 

has been taken through the process and is being exported out of 

the country. Either way, it shows that some in the leadership in 

Afghanistan have no confidence in the nation’s future, and that is 

I think a real, vital concern for our effort. 

But I would be interested to know, to the degree you can talk 

about it today, if there is money leaving the country, what is the 

likely source of it and who are the likely players in terms of taking 

it out of the country? 

More broadly, I would like to ask you about our anti-corruption 

strategy which I am very concerned about. It seems our military 

is on one timeline, our anti-corruption strategy, our governance 

building is on an very different timeline which may take years, decades, a generation. 

Who is in charge of our anti-corruption strategy? Is there an 

anti-corruption plan? 

My understanding is that the Embassy drafted an anti-corruption strategy but that it has been sitting at the State Department 

for about a year now; and the only thing that has been released 

is a corruption reporting guidance which, among other things, established an e-mail address for people to send reports of corruption, 

corruption.tf@gmail.com, but no one is monitoring the site. 

So people are evidently sending e-mail reports of corruption, but 

there is nobody on the receiving end. 

So I would be interested to know, are you familiar with this email address? Do you know if anybody is monitoring it? If you don’t 

know, I would ask you to find out, as well as whatever happened 

to the anti-corruption strategy. 

Do we have adequate personnel working on governance and rule 

of law? We have had a military surge, we have had a civilian 

surge, but the civilian surge has been a lot less than the military 

surge. My understanding is there are three people at the Embassy 

working on rule of law, two State Department people, one DOD 

person. Do we have adequate civilian personnel working on this 

anti-corruption strategy? 

So those are the questions that I have, as many as you might be 

able to get through. 

General FIELDS. Well, sir, let me comment on at least a few of 

them. 

First, I want to say that we identified anti-corruption as a missing component to the reconstruction effort in Afghanistan. From 

the work that we have done, very little if anything had been done 

prior to about a year ago to address anti-corruption in Afghanistan. 

We have thus far conducted two audits, as I mentioned earlier, 

focusing on the systems that need to be in place in order for anticorruption to be properly addressed within the structure of the Afghanistan Government; and, therefore, our audits of the Control 

and Audit Office and the Higher Office of Oversight pertain to this. 

You reference, to some extent, the financial oversight and basic 

capacity of Afghanistan from an institutional standpoint. This is 

being addressed through the reconstruction effort, but it is one to 

which I think attention has been too lately provided. 


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In terms of reconstruction strategy relating to anti-corruption, 

there is one that has been put in place by the U.S. Embassy. An 

official, once again, trying to bring some degree of emphasis to this 

matter, has been put in place to oversee this as a part of the new 

leadership structure of Afghanistan at the ambassadorial level who 

will coordinate the development of the rule of law. 

Mr. SCHIFF. Can you tell me who that is? Who is that that is in 

charge of the anti-corruption strategy? 

General FIELDS. Newly arrived Ambassador—— 

Mr. JOHNSON. Ambassador Klim. 

Mr. SCHIFF. Are you familiar with the Web site I mentioned? 

General FIELDS. No, sir, I am not familiar with that Web site. 

Mr. SCHIFF. If you could find out and let us know whether there 

has been anyone on the receiving end of that, I would be very interested to find out. 

General FIELDS. Aye aye, sir. 

Mr. JOHNSON. If I could quickly add, there is a key line of effort 

in the U.S. integrated civ-mil plan that specifically addresses anticorruption issues. If you look at the civ-mil plan, it actually mentions corruption or anti-corruption issues 37 times in the plan. It 

is through all alliance efforts with the Department of Defense as 

well as USAID and the State Department. So the U.S. has focused 

quite a bit on that in its new strategy going forward. 

Mrs. LOWEY. I just want to say to my colleagues that we will 

have a second or third round. So if you want to vote and come 

back, we welcome you. 

Mr. Crenshaw. 

Mr. CRENSHAW. Thank you, Madam Chairman. 

I am just sitting here thinking that our goal in Afghanistan is 

to try to develop a self-sustaining government, and what I hear 

today is not very encouraging. In fact, it is downright discouraging. 

I was there maybe 2 months ago, and we spent a lot of time talking about the security aspect of trying to build a police force and 

build an army. And that was right after Marja had happened, and 

that was successful. But immediately when the Afghani army went 

in, there were all these allegations of corruption, looting. It just 

seems that the corruption aspect pervades everything that goes on, 

and somehow we have got to get control of that. 

And when I hear you all say, well, we know money is leaving the 

country, but we really don’t know what money it is or whose money 

it is, it seems to me some how some way the Afghan Government 

needs to, if they are going to stand up and be self-sustaining, they 

ought to have some input into this. 

But we are not even talking about that. We are talking about the 

United States dollars going there, and we are not sure where our 

money goes. And I wonder if the Afghani Government knows where 

the money goes. Because, ultimately, they are going to be responsible. That is what we want to happen, when we send them money 

that they use it wisely. 

We are having a hard time figuring out just from our standpoint 

where the money goes. So that is a little bit discouraging in term 

of trying to build this self-sustaining government. 

I just want to say that as a general comment. 


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But let me just ask you specifically. This whole business about 

multilateral aid, it seems like we are moving more in that direction. And when we do bilateral aid direct involvement, I hear the 

USAID person say, we are not sure, we are trying to put it in 

place, some oversight and accountability; and I think we all applaud that. But when it comes to the multilateral aspect, we seem 

to have very little oversight and accountability, and yet that is 

where we are moving. In Haiti, we are moving more toward multilateral business. As I read some of these reports, as much as 75, 

85 percent of the money that goes into these multilateral accounts, 

this reconstruction fund, comes from us. And yet we don’t have any 

oversight. We don’t have any accountability. 

So my main question is, in a broad sense, if that is the direction 

we are moving in, what are your ideas about how we can have 

more accountability and oversight in terms of these multilateral assistance programs? Because if that is where we are going and that 

is where we are putting all our money and yet we don’t have any 

control over that, that is another big problem. 

Could you comment on that? I don’t know who would be best, but 

I think you are all working on that. But I would love to hear how 

you think we can best deal with that. 

General FIELDS. Sir, I will begin and then yield to my colleagues. 

But, as I once again mentioned, this office, the Special Inspector 

General for Afghanistan, we will take any measure that is appropriate, legal, and ethical and so forth to follow the money. And we 

have been doing that. 

The capacity of my office, certainly, has not focused on that part, 

thus far, even though we have been working in conjunction with 

it and creating the dialogue with these international entities. But 

as my capacity increases, we certainly will focus more on that aspect of money. 

The other part the equation, I feel, is that our own U.S. needs 

to work more closely with the international community to put in 

place rules and agreements, if you will, that will allow the inspectors general and other appropriate oversight entities to peer into 

these funds such as the Afghanistan Reconstruction Trust Fund 

and the National Development Program, NDP, for Afghanistan. 

Mr. GAMBATESA. Well, I think one important issue, and my colleague has issued a report on the Control and Audit Office in Afghanistan who would have the responsibility to oversee these 

multi-donor accounts that are being funded for Afghanistan, but 

that organization is woefully low as far as its experience, as far as 

its training, as far as its ability to function as an independent 

agency because it doesn’t have the legislative authority that we 

enjoy. 

So one way to do it would be, and I believe that their audit report mentioned this, is to build the capacity of the control and accounting office in Afghanistan to be able to provide the oversight 

to these multi-donor funds, would be one way to do it. 

Mr. JACKSON [presiding]. Let me allow Ms. Lee to ask her questions. There are about 2 minutes left in this vote. 

Ms. LEE. Thank you very much, Mr. Chairman. 

Welcome. This has been a very important panel, and thank you 

very much for your testimony. 


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A couple of things. I think my question should be directed to 

General Fields. 

There was a New York Times article June 6th that cites Afghan 

and NATO officials contended that some security contractors or 

that companies at least have been charged with defending U.S. and 

NATO interests. They funneled money directly to the Taliban not 

to attack convoys or other targets, and in at least one case there 

is suspicion of a contractor compelling the Taliban to attack NATO 

forces in order to delegitimize competitors. 

Do you know about this? As we continue to increase our footprint 

in Afghanistan and spend billions of dollars to support this war, 

which, of course, I opposed from day one, are we entrenching a corruption economy which overshadows our work to foster development, if those reports are accurate? 

And, secondly, let me just ask you, I think earlier you reported 

that about 40 percent of your investigations involve procurement 

fraud. Is that accurate? In your experience, what recourse has been 

taken against those contractors? Has anyone gone to jail or prison 

for trying to defraud the U.S. Government? 

General FIELDS. Thank you very much. 

We have investigations under way in a number of areas. Fraud 

is one of the principal ones that we have ongoing and have investigated in the past. 

Yes, our investigations working in conjunction with other Federal 

agencies have resulted in either the recovery of money or in conjunction therewith of individuals who were found guilty having actually gone to jail. So there have been results of our efforts in that 

regard. 

Regarding the private security contracts and matters relating to 

money somehow finding its way to the Taliban and ultimately used 

perhaps against our U.S. interests, I am aware of these matters, 

but we have not investigated these matters to the full measure, 

and so I am not prepared to answer at the depth and breadth of 

your question that otherwise I would like to at this time. 

Ms. LEE. Thank you very much. 

Are you going to investigate these matters? Because it seems to 

me that if this investigation shows that these allegations are accurate, then we really do need to look at how we are fueling or funding this type of corruption economy if we just let that pass, if these 

reports are true. 

General FIELDS. Yes, we do plan to investigate those matters 

that we feel fall within our purview. And to some extent, we have 

at least audit work under way examining the process by which private security contractors arrive at their contracts and the mechanisms through which these contracts are executed in support of our 

reconstruction effort. 

I can assure you that as these matters continue to develop and 

I continue to build my investigator capacity we will focus on these 

matters. 

Ms. LEE. Thank you. 

And then if you find that the money has been funneled to the 

Taliban, who takes that on next? What is the next step in the process? 


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General FIELDS. Well, our process works like this. If we take on 

this particular investigation—this is a hypothetical—we conduct it 

to its full measure, just as any criminal investigation would be conducted in the FBI and other Federal agencies within our own community. We will determine who the alleged guilty folks are. We 

hand off those matters in the case of those relating to the U.S. justice system to the Department of Justice; and then we follow up, 

of course, to ensure that those matters are carried to the full measure. But once we hand them off, they are essentially in the hands 

of the Department of Justice. 

In the case of Afghanistan, it is another situation. There are not 

rules currently in place that very easily transfer an investigation 

from the hands of a U.S. entity to the Afghans with the assurance 

that the appropriate measures will follow and the guilty parties are 

brought to justice. 

Ms. LEE. Thank you very much, Mr. Chairman. 

Mr. JACKSON. Mr. Rothman. 

Mr. ROTHMAN. Thank you, Mr. Chairman. Thank you, gentlemen, for appearing here today and thank you for your careers of 

public service. 

I would like to start with the General, please. 

If your written testimony, I believe it says that from fiscal year 

2002 through fiscal year 2010, excluding the supplemental, $51.5 

billion have been spent to rebuild Afghanistan, 51.5 billion. Just 

doing a simple division, it comes to, I think, about $6.5 billion a 

year, on average. Has the amount of money to rebuild Afghanistan, 

using your words, has that increased? Has it remained flat? What 

has it been like in the 2 years, General, that you have been in 

charge? 

General FIELDS. The amount of money really has increased during the 2 years that I have been in this office. But going really back 

to just a bit beyond that, I believe we began to seriously invest in 

Afghanistan around 2005. 

Mr. ROTHMAN. Sir, in the last 2 years, what would you say the 

number is? And I don’t mean just money for reconstruction. I 

mean, as you divided it, it appeared to me, money for governance, 

and I forget the other term you used. 

General FIELDS. Development was the other term. 

Mr. ROTHMAN. Governance and development and then you ascribed the other half or other portion to security to back up the 

governance and the other item. 

But to me, since one requires the other, both halves should be 

considered in one total sum as the expenditure we are making for 

reconstruction. So in the last 2 years, sir, what is the average of 

those per year? 

General FIELDS. Yes, sir. I don’t know if I have an average for 

each of those individual sectors. 

Mr. ROTHMAN. For reconstruction, sir. 

General FIELDS. Yes, sir. Exactly. But just to preface my comment here, there are three areas which define reconstruction in Afghanistan: security, governance, and development. 

Mr. ROTHMAN. I understand. I only have 5 minutes. So could you 

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nition of reconstruction. For the total amount of reconstruction, including those three, what is the dollar figure, please? 

General FIELDS. Yes, sir. When I took over this position, the figure of expenditure in Afghanistan between 2002 and 2008 was at 

$32 million. That figure is now—I am sorry, $32 billion. That figure is now $51.5 billion. So within that 2-year period, we have—— 

Mr. ROTHMAN. It is about $10 billion a year, sir, is that the answer? 

General FIELDS. Yes, sir. 

Mr. ROTHMAN. Okay, so $10 billion a year. 

You talked about your dismay, and I share it with you, that 

there was lack of visibility of the money we have given, no integrated system. And it has been several years now since the new 

team is on board, which disappoints me that we still don’t have an 

integrated system. The high turnover of staff, which no one has apprised me that that is going to be changing, that there will be more 

permanence to the staff. So that is $10 billion a year. How many 

more years do you think it will take before Afghanistan will be reconstructed to the extent the administration is requiring before we 

can cease these kinds of expenditures of $10 billion a year? 

General FIELDS. Sir, I do not have an answer for your question. 

Mr. ROTHMAN. Will it be 3 years, General? 

General FIELDS. Yes, sir. I will tell you, sir, because we did not 

begin with the capacity building effort in Afghanistan back in 

2002—— 

Mr. ROTHMAN. I heard that, sir. 

General FIELDS. We are just turning 2 on that regard. It is going 

to take another 10 years. 

Mr. ROTHMAN. So 10 years. Would you say at a minimum of $10 billion a year for reconstruction or would it be greater than $10 billion a year? 

General FIELDS. I don’t know the answer there either, sir. However, we can maximize the money that we are currently providing 

for reconstruction in Afghanistan by better oversight and better accountability. 

Mr. ROTHMAN. Would you guess it would be a lot less than $10 

billion a year? 

General FIELDS. I will tell you, sir, it could be a lot less than $10 

billion a year. 

Mr. ROTHMAN. Do you expect that within the next 5 years to be 

less than $10 billion a year? 

General FIELDS. I don’t know, sir. But—— 

Mr. ROTHMAN. If you had to guess. 

General FIELDS. I would guess it could be, yes, sir. 

Mr. ROTHMAN. It could be. 

General FIELDS. If we work harder at what we do and maximize 

the dollars that we are providing to Afghanistan. 

Mr. ROTHMAN. Less than $5 billion? 

General FIELDS. Again, sir, I must say that—— 

Mr. ROTHMAN. General, my point is I am trying to get my head around this for my constituents who say, $50 billion over 8 years, 

we could have used that here in the United States of America. You 

said that for the first 6 years before your appointment that money 

was not spent wisely, not accounted for, and you are hoping to do 


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things better but foresee 10 more years of billions of dollars, if not 

tens or $50 billion more of an investment. And I am wondering, do 

you think 10 years will do it? Can you guarantee that? 

General FIELDS. I cannot guarantee it, sir, but I will tell you that 

I think, given what I have seen so far, it is going to take another 

no less than 5 to 10 years to move Afghanistan really where we 

feel it needs to be for us to seriously begin to disconnect our support for Afghanistan. 

Mr. ROTHMAN. Given the present policy objectives? 

General FIELDS. Well, as I understand the President’s policy objectives, it is to commence some level of disengagement in terms 

of—— 

Mr. ROTHMAN. No, I mean what we want Afghanistan to look 

like—I am sorry, Mr. Chairman—what we want it to look like. If 

we change our notion of what we want Afghanistan to look like, 

then we may be able to spend less and get out faster. 

I yield back. I know you have given me extra time. Thank you, 

Mr. Chairman. 

Mr. JACKSON. The second round of questioning. Ms. Granger. 

Ms. GRANGER. Excuse me—I had to go vote—if this was answered, but I don’t believe it is. You were talking about a corruption plan, a plan to eliminate the corruption or at least approach 

to a reasonable extent corruption that is a plan that is sitting on 

someone’s desk, right? So we have a plan that is sitting on somebody’s desk. We are dealing with a country that has had a tradition 

of corruption, but we are saying Afghan first. That is this administration’s plan. 

So building capacity is one thing, but, right now, we are talking 

about enormous amounts of money. And what we are doing, it 

sounds to me, is we are auditing as it is done to say, well, was it 

done wrong, instead of putting a plan together to say, how do we 

ensure that whatever amount of money that we send or whatever 

we do with these programs in building capacity that there is an 

oversight that is reasonable. 

Who in the opinion of the three of you should be—who is the 

most capable of that oversight? If you are saying Afghans first, 

then we are saying Afghan auditors. Are there auditors there that 

are trained and that are capable of doing that? Who should be 

doing this? 

General FIELDS. I think it should take place on multiple dimensions. 

First, the very officers represented at this table in terms of their 

carrying out their interest of the United States, I think we should 

be leading that effort. And, thus far, with my office being a new 

office stood up only in 2008 that should have been stood up in 

2002, I appreciate the funding that you have provided to me to get 

my work done. And so we will continue to build our staff to increase our capacity to answer your mail, Representative Granger, 

in that regard. 

But, at the same time, we are also peering into the institutions 

of Afghanistan. Again, let me go back to the Office of Comptroller 

Audit Office or the Auditor General’s Office of Afghanistan, the 

High Office of Oversight. Those institutions must be built to their 

maximum extent so that they can really lead this effort. So it is 


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the synergy that should result from the Afghans doing their part 

and certainly the United States doing ours. 

Mr. GAMBATESA. One area that I have been told could be done 

is the pay for civil servants in Afghanistan is very low; and increasing their pay could, in fact, eliminate some of the problems of taking bribes, things like that. 

The other thing that I have been told is that the Afghan National 

Police started getting their pay through electronic means, and apparently their paychecks or their cash would be skimmed by their 

bosses, things like that that went on. 

So those two things could help increase or decrease the amount 

of corruption, at least at a certain level. 

Mr. JOHNSON. I would like to add that it is hearings like this 

that help ensure oversight of our efforts in Afghanistan and continuing these types of hearings as well as the work that we all do 

at this table. 

But, more importantly, the administration has to move forward, 

given its assessments that it has done of corruption in Afghanistan, 

and actually put controls in place, tie those controls to our investment of our U.S. dollars. 

But, as General Fields noted it is going to take a concerted effort 

on the part of the Afghan Government to move forward and to take 

some action with respect to corruption in particular. 

Ms. GRANGER. There is also something called a ‘‘civilian uplift’’ 

that this Congress has provided funds to triple the civilian staff in 

Afghanistan since January of 2009. They are in Kabul. They are 

out in the field. Is this enormous, a tripling of the staff, or do they 

have the right skill sets? Are they in place to do oversight within 

the country? 

General FIELDS. We don’t know at this time, and that is why my 

office, SIGAR, is conducting an audit that is already under way. 

We are working with the State Department, the Department of 

Justice, Treasury, Health and Human Services, and Homeland Security to define whether or not—and certainly the Department of 

Agriculture—to define whether or not the quantity and quality of 

civilians being infused into Afghanistan are of the appropriate 

number to ensure that our strategic interests are carried out. 

We are also going to determine the extent to which, once these 

women and men arrive in Afghanistan, are they all hurdled in 

Kabul in a safe environment or are they out in the interior of Afghanistan working with the districts, the provinces, the provincial 

reconstruction teams, the councils and so forth to carry out their 

respective work? 

Mr. JOHNSON. If I may add, GAO has a similar engagement 

under way, and we have coordinated with our SIGAR counterparts 

as well, looking specifically at the civilian uplift in Afghanistan. 

One thing we are going to focus specifically on is the requirements that have been identified to see if a part of those requirements include making sure folks who are going to be overseeing 

U.S. programs are going to be a part of the civilian surge, not just 

those implementing the program but those who are going to be ensuring proper oversight and management of our programs, that 

those individuals are in place as well. 


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Mr. GAMBATESA. As General Fields mentioned, that if the new 

people coming in don’t have the ability to get out in the field, then 

the effectiveness will be minimized. 

Also, there is a question of whether they—I am speaking for 

USAID now—whether the individuals who are in this surge have 

the requisite skills and training to take on these positions. 

I think what we have seen, and this has gone on so long for a 

number of years, that many of the staff are going back for the second and third time, and I guess thus far for the most part it has 

been fairly voluntary. I don’t think the agency—don’t hold me to 

that; I am not positive—but I don’t think they have had to assign 

someone without their volunteering. 

I think what they are seeing is they have a lot of new individuals 

coming in who may be not as experienced as others, and I think 

what you are seeing is what we are seeing is a lot of the newer 

people who are less experienced volunteering to go to places like 

Afghanistan and Iraq and Pakistan who don’t really have as much 

experience as the others. 

I think there is going to be a burnout factor eventually of people 

going year after year. Eventually, they are going to come back 

around and have to go time and time again. I think that is going 

to be a problem in the future. 

Ms. GRANGER. Thank you, Madam Chair. 

Mrs. LOWEY [presiding]. Mr. Moran. 

Mr. MORAN. I thank you, Madam Chairwoman. 

Let me first address USAID Inspector General. 

You found this year that it was a 5-year program to build 1,400 

structures and, in fact, the structures that were built were defective. They need to be rebuilt due to a lack of engineering capacity 

and technical skills. This is not dissimilar from what you found 5 

years ago, that the completion of road building projects were insufficient, inadequate. Basically, the construction was faulty and had 

to be redone; and AID-built schools and administrative buildings 

were either not completed or not even usable. 

Part of the problem is that we apparently are contracting with 

people with very limited capability to carry out the projects that 

they are assigned and paid to carry out. Personally, I feel it is very 

important that we give the Afghan people and their own indigenous companies an opportunity to compete and to construct the 

stuff themselves. On the other hand, if we are paying for it, it 

needs to be the kind of structure that will last and doesn’t have 

to be rebuilt. 

But a lot of the contracts are going to non-U.S. firms that are 

simply exploiting the situation, making enormous sums of money 

and, in fact, are able to win competitive bids because they act in 

an uncompetitive field where they don’t have to pay the kind of 

taxes that U.S. firms have to pay. They don’t have the personnel 

standards, whether it be safety or overtime or insurance or any of 

that stuff. And so their costs are substantially less, plus the fact 

that they don’t hire the qualified personnel that come at some 

price. If they are hiring unskilled people to do skilled labor, well, 

obviously, their costs are going to be less. And what is happening 

is they are making enormous profit margins is what I understand. 


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One of the things we have done is to give a preference to firms 

so that more professional, competent, dependable firms can get this 

work done. We did that in other areas. We did that in Iraq, for example, finally. I think it was a 20 percent preference. We don’t do 

that in the CENTCOM area now I understand. Do you think that 

would be a good idea? 

Mr. GAMBATESA. I am sorry. As far as CENTCOM—— 

Mr. MORAN. Central Command area, that would include Afghanistan. 

Mr. GAMBATESA. So you are not talking military. You are talking 

civilian. 

Mr. MORAN. Right, I am just talking about a regional, an area, 

and that seemed to be the best. Because that is why we are there. 

Because it is part of CENTCOM’s responsibility. We are there for 

a military purpose, unfortunately, more than an economic development purpose. 

But I am wondering whether USAID thinks that that would be 

a good idea to take that into consideration. We are paying firms 

that aren’t getting the work done. We are paying them much more 

than they are worth, frankly, given the quality of the workmanship. 

Mr. GAMBATESA. I think the strategy of the administration or the 

government is to develop the capabilities of indigenous organizations, and so I think that is the reason that they have done that 

through local subcontractors. But I am not certain of the question, 

sir. 

Mr. MORAN. If we want the work done, sometimes you need to 

hire people that have experience in doing the work with a certain 

skill set. That skill set comes at a price. It is impossible for many 

firms with that skill set to competitively bid these projects if they 

are bidding against firms that don’t have experienced engineers, 

that don’t have a record of quality performance, that don’t have to 

pay taxes or abide by the normal rules that we apply to our contractors. And so what we did, finally, in Iraq to get quality product, 

and we have done it in many other places, is to give what is called 

a preference. Basically, it came to a 20 percent preference. If you 

can show that you can do the work for 20 percent or less money 

over and above what less qualified contractors are doing, then you 

can still compete. 

Would you consider that to be some reasonable approach? 

Mr. GAMBATESA. I think so. But, as I said earlier, I am not certain that the administration is going in that direction, but I agree. 

Mr. MORAN. I know they are not. But sometimes they go in the 

direction that is pointed out through oversight reports that this 

may be a recommendation. Part of your job responsibility is to— 

when you find problems, you recommend solutions, don’t you? 

Mr. GAMBATESA. Yes, sir. 

Mr. MORAN. And the fact is we are getting an enormous amount 

of deficient structures and roads and infrastructure that is built. 

And I grant we need to be developing the capability of the Afghan 

people. But what is happening is all we are doing is developing the 

wealth of the elite who know enough to bid on these contracts, and 

then they hire people who are unskilled, they do a slipshod job that 

has to be rebuilt, they take the money, and a lot of that money is 


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the money that Chairwoman Lowey is pointing out is going out of 

the country. 

A hell of a lot is in this Sherpur district, where if you walk into 

the community you see these mansions; and many of these people 

that own these mansions are the very people that are making these 

contracts and taking enormous profit margins off the top because 

they represent the very small sliver of educated, savvy people who 

are wheelers and dealers and who we will trust to engage in contracts with us. 

So something has to be done. Something has to be changed. 

Mr. GAMBATESA. I don’t disagree with you. The only recourse 

that USAID would have is through the prime contractor to recover 

funding, and we have done that in some cases where we sent bills 

of collection to subcontractors who have not performed where the 

agency has recovered funding that way. But I agree that certainly 

the—— 

Mr. MORAN. The construction work that we are paying for is miserable in too many cases. 

Madam Chairman, I would just like to ask these members—and 

it is a yes-or-no answer—are you aware that in order to deliver fuel 

and supplies in many parts of Afghanistan we are paying the 

Taliban personnel for safe passage? Are you aware of that? Yes or 

no. 

Mr. GAMBATESA. I have heard of it, yes. 

Mr. MORAN. You have heard that. 

Mr. JOHNSON. Same thing, we have heard that, but we don’t 

have the evidence. 

General FIELDS. Same here, sir. I have heard of it. 

Mr. MORAN. You have heard it, but you have no direct evidence? 

General FIELDS. That is correct, sir. 

Mr. MORAN. Madam Chairwoman, we have direct evidence. We 

are partially financing the Taliban to get safe passage of our materials, particularly fuel, to where we need it to go. 

Mrs. LOWEY. I would just like to say to the panel and to Mr. 

Moran before I turn to Mr. Kirk, the purpose of this hearing, which 

encouraged by the State Department, is as we move forward to 

support our strategy to support your work and make the improvements and the changes that are necessary so we can safeguard taxpayer dollars and also focus on our mission. So I thank you. 

Mr. Kirk. 

Mr. KIRK. Thank you, Madam Chair. I want to thank you very 

much for holding the hearing. 

I want to say that in my view, right now, our key objective in 

Afghanistan for the next couple of months is the success of General 

Petraeus’ operation in Kandahar; and I want to make sure that we 

are moving this committee and our policy forward to make that 

Kandahar operation a success. 

I note that Republicans on the committee sent a letter to the 

chair on July 7th wanting Ambassador Eikenberry to testify before 

us via teleconference. I think he is our critical State Department 

National Security Memorandum 32 man on the ground, and I hope 

the committee is able to hear from him. 

Mrs. LOWEY. If I can interrupt for just a moment, did you get a 

copy of the response I sent to the letter? 


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Mr. KIRK. I haven’t. I hope it was yes. 

Mrs. LOWEY. Well, the letter made some other points, too; and 

I hope you get a copy. Otherwise, we will send it to you. 

I have been in touch with Ambassador Eikenberry, and I also 

have been in touch with the Secretary of State and others, and we 

are trying to make all this happen. 

Mr. KIRK. Right. 

Last month, the DOD set up Task Force 2010 to ensure funds 

spent by coalition forces are achieving their intended purpose. One 

aspect will be a particular focus on the flow of dollars to the subcontractor level. For example, there has been a concern about the 

Sherzi contractors or the Ahmed Wali contractors, many different 

entities which may or may not be controlled by them. 

My understanding is State and USAID are not part of Task 

Force 2010, but the IGs and GAO have raised questions about similar problems that may exist in the contracting and grant process. 

In particular, one of the USAID contractors, one of their largest, 

is called Development Associates International, DAI, and they fired 

10 staff on June 16th because of allegations of soliciting kickbacks. 

Do you have any information on why State and USAID are not 

part of Task Force 2010, and do you think they should participate? 

Mr. GAMBATESA. My understanding is they are part of Task 

Force 2010. I didn’t attend the briefing, but apparently a handout 

was given that shows USAID on the chart here. So I am assuming 

they are. 

Mr. KIRK. Good. 

On this tracking of funds—and this is both for General Fields 

and you—is there a way to track subcontractors and subgrantees? 

Because especially on the DOD side we have a large number of construction or security companies that may or may not actually be 

owned by the same guy, Sherzi and Karzai being the ones in the 

south. 

Do you yet have a wiring diagram of all of these various companies and who actually owns them? 

General FIELDS. SIGAR does not, sir, but we have had under 

way for quite some time and we are pretty close to reporting out 

a complete assessment of the contracting situation in Afghanistan. 

We don’t know, for example, the United States—at least SIGAR 

doesn’t know and no one has been thus far able to tell us how 

many contractors we have in Afghanistan. So we are doing that by 

way of an audit on which we will report out in the near term. 

Mr. KIRK. And will that audit also include who actually owns and 

controls these entities? Because while it seems like they have a 

number of names, there has been talk that maybe a whole bunch 

of them are just controlled by one or the other family. 

General FIELDS. Sir, I am inclined to say that this audit will reveal some of that information. 

But the contracting network in Afghanistan is a very complicated 

one, particularly given the cascading nature of prime to other subordinates or subcontractors. But I am inclined to say, sir, that our 

investigation and our audit will reveal some of that which may 

bring light to your question. 

Mr. KIRK. My last question. I have been very involved and this 

committee has assisted me in looking at the problem of electrical 


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power for Kandahar. We have a severe military constraint on delivering electricity generated by the Kajaki Dam all the way to 

Kandahar. And my understanding—correct me if I am wrong—is 

the British have largely given up on this mission and the United 

States has not taken up this mission of actually getting Kajaki 

electricity to Kandahar. 

The New York Times seems to have reported General Petraeus 

has backed the Kajaki power project, and so he is going to be using 

a substantial amount of SERP funds to make this happen so at 

least Kandahar can generate electrical power. 

Have you seen the Wall Street Journal reports that, of what 

Kajaki power is being generated, it is being delivered to districts 

controlled by the Taliban and the Taliban actually collects the payment for the Kajaki electricity? 

General FIELDS. Yes, sir, I have read and I have an appreciation 

for that article. I do not know the depth and breadth of the extent 

to which the electricity is, in fact, being siphoned off or distributed 

by way of Taliban. 

I will tell you that I have been to Kajaki. It is one of the major 

generating energy networks of Afghanistan. It is a very dangerous 

place. They have improved it since I was there about a year ago. 

It is now doubled in output, as acknowledged in the article. There 

are three generators there, two operational, as I am being informed, but the other is in peril right now and no clear way ahead, 

and I trust that General Petraeus and others might turn to to fulfill this engagement. 

Mr. KIRK. My hope is after Kandahar. But it might be a good line 

of inquiry, because the Wall Street Journal has highlighted this, an 

estimate of how much money the Taliban is collecting from electricity generated from this very USAID project. 

General FIELDS. Yes, sir. 

Mr. KIRK. Thank you, Madam Chair. 

Mrs. LOWEY. Well, before I ask another question, I just want to 

thank the gentleman for bringing up this issue. 

It is my understanding that the reason they have not been able 

to continue work on the Kajaki Dam is because of security issues; 

and, therefore, General Petraeus has gotten two additional generators to provide electricity so they can accomplish the mission but 

continues to support the efforts if and when they can work on it. 

But I would suggest that there are important allegations in the 

Wall Street Journal article and we would all appreciate additional 

work to get to the bottom of it. I think this is an important issue, 

and we look forward to continuing the discussion. 

Thank you. 

Mr. MORAN. Would the gentlelady yield for a moment? 

Mrs. LOWEY. I would be happy to. 

Mr. MORAN. It is relevant to this. 

I wonder if there was to be further investigation in this area of 

basically our supporting the Taliban indirectly if they might also 

look at the money that is going to the Taliban just for safe passage 

of fuel and supplies. 

Mrs. LOWEY. Absolutely. And I would say to Mr. Moran it is my 

understanding that—and Mr. Kirk is probably aware of this—there 

was a lively discussion between USAID and Defense, between 


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USAID and probably McChrystal and now Petraeus, as to whether 

to provide those additional generators. Because they were concerned about exactly what you are saying would happen, the electricity would be siphoned off by the Taliban. 

So I think a decision was made that they had to do the electricity 

even though some of the power would be siphoned off from by the 

Taliban, and this is the concern with the Kajaki Dam as well. 

Mr. KIRK. Would the gentlelady yield? It is important that we 

are talking about two separate projects. Kajaki Dam is in Helmand 

Province, and the problem is the power can’t get to Kandahar Province. 

Mrs. LOWEY. But if you cut it off you would lose the 15 percent 

power that you are already getting from the Kajaki Dam. So the 

question is, can you increase the power at the Kajaki Dam? But security problems, as I understand it, have been preventing that; 

and, therefore, General Petraeus made his decision to back the new 

project. 

Mr. KIRK. That is exactly right. 

Mrs. LOWEY. So, obviously, we are coming to a close. I would like 

to add some additional questions, but I am hoping that we can continue this dialogue. And we will certainly have representatives 

from State to continue the dialogue in the following weeks and 

have additional briefings. But I am sure, given the work that you 

are currently doing, you are very much aware of all the challenges. 

I would like to close. 

I would like to make a couple of points. 

First of all, there was an issue before on multilateral funds. And 

we know that multilateral funds have been an issue, as Mr. Fields 

has said, for many years. And based on these concerns, the ARTF 

has multiple layers of auditing, I want to clarify that, some done 

by the World Bank itself, others done by private accounting firms 

led by the Norwegians in this case, and USAID also has the ability 

to audit projects and ministries funded by the ARTF and I expect 

USAID and USAID’s IG to do additional programmatic and financial audits of this sort. 

I would just like to say, Mr. Gambatesa, there have been some 

concerns about the dialogue we had previously and if you can clarify that in follow-up briefings. But USAID does have the authority, 

based upon the information I have, and the ability to audit projects 

and ministries funded by the ARTF, and I expect that USAID will 

do additional programmatic and financial audits of this sort. 

If we are spending hundreds of millions of dollars as our contribution to ARTF, then we must have the ability to audit. We do 

have the ability to audit, and I would like some additional clarification of what we have audited, and what we intend to audit. If we 

are going to increase our contributions, this Committee is not going 

to be too happy if we don’t know that these dollars are being audited. 

So why don’t I go to Ms. Granger next for an additional question, 

and then I have—do you have an additional question, Mr. Moran? 

Mr. MORAN. No, I am fine. I think we have made our points. 

Thank you, Madam Chairwoman. 

Mrs. LOWEY. Thank you. 

Ms. Granger, I have a final question. 


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Ms. GRANGER. I have one question. 

State and USAID have unique personnel structures in Washington and then in the field. And, for example, there are two additional State Department officials serving with the rank of ambassador for development and rule of law activities. This is in addition 

to the USAID mission director. So in Washington we have Ambassador Holbrooke’s office at State and a Task Force at USAID that 

is in the process of transforming into a permanent Afghanistan/ 

Pakistan office. So when we are talking about anti-corruption, the 

anti-corruption efforts are addressed by both of those agencies and 

then several other agencies. 

My question is, with so many actors in this, isn’t there a risk of 

getting mired down in passing the buck or that some of the issues 

that really we are coming back to over and over about anti-corruption, who is responsible? And how are we going to oversee this as 

we move into Afghanistan and, as you said, do things that have not 

been done before? 

General FIELDS. First, I am pleased that the Embassy, in conjunction with other communities, has in fact focused on the anticorruption issue. While I say there is a plan, I am really saying 

that there is a strategy that is under way. The refinement of that 

plan I feel under the leadership of the Ambassador, who is now 

overseeing that subset of the implementation, I think that will help 

lead to better answer some of your concerns. 

I might also point out that GAO published a report recently that 

addressed a number of strategies and programs that are being executed by the United States and international community in Afghanistan. My question would be, to what extent are those programs coordinated of which anti-corruption I am confident would 

be a subset? And we will look into those matters and report accordingly. 

Mrs. LOWEY. Thank you very much. 

And I just want to say, in closing, I am very glad that the Defense Department and Mr. Moran, we are fortunate to have him 

here as a member of both committees, because he offers a wealth 

of information. And we are counting on both the Defense Department and USAID to look carefully at where our tax dollar money 

is going. And I appreciate that. 

As a final question, I would like you to tell us where you believe 

there has been progress made with U.S. assistance funding, what 

are the most significant gaps, where do you believe programs must 

be scaled up if we are going to see success in Afghanistan and do 

additional programmatic and financial audits of this sort? Are you 

planning them? Where are they going? 

We hear of programs that are extremely successful, both on the 

civilian side and the military side. Both the civilian and military 

side have to safeguard our taxpayer dollars. Perhaps you can share 

with us some of the changes that have been made—and I would expect each of you respond—some of the changes that have been 

made. What is posited? If we are going to see success, where do you 

believe programs must be scaled up and what additional steps 

should we be taking? 

Mr. JOHNSON. I will take the first stab at that. 


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The one area that we have reported on that we have seen 

progress in is the fact that the U.S. Government now has identified 

a specific strategy for Afghanistan and has developed an integrated 

civilian military coordinated plan for Afghanistan, something that 

didn’t exist before, to help guide our efforts in Afghan. So we were 

quite pleased—— 

Mrs. LOWEY. It didn’t exist since we were there in 2002? 

Mr. JOHNSON. On multiple occasions we requested those documents, and they were never able to be produced by the—previously. 

But we were quite pleased to see that those things are now in place 

to help guide our efforts and that there is an ongoing effort to continue to update those and to work in a coordinated fashion among 

our various different elements of national power in the U.S. Government to do that. 

I would say that the one area that I think needs to be scaled up 

more so, and this hearing in particular addresses that, is the issue 

of Afghan Government capacity to address corruption issues in particular and to make sure that we have controls in place over all the 

money and the investment we are putting in Afghanistan. 

In terms of our plans going forward, as I noted earlier, GAO has 

initiated a review looking at what we are doing to certify the Afghan ministries and also look at what we are doing to make sure 

the money that we may be giving directly to the Afghan Government, if it goes in that direction, has proper controls in place, that 

we are building in those controls. So we are looking at that in particular. 

Mrs. LOWEY. Thank you. 

Mr. GAMBATESA. Well, I believe I mentioned earlier that for 

USAID they really need to increase the number of personnel incountry, the properly trained staff persons in-country to oversee 

these programs. I have discussed this with Administrator Shaw, 

and he is committed to increased oversight and monitoring the 

evaluation. I am sure when he testifies next week or the following 

week, whenever it is, he will basically talk about some of that. 

Again, I mentioned the direct assistance issues. I think that if 

the direct assistance to Afghanistan is in the form of specific 

projects, we have much better oversight, the agency has much better oversight, rather than direct budget support. 

The other issue I mentioned is in this contracting issue of subcontracting and too many subcontractors and you lose control when 

you have subs of subs of subs and you get to the point where the 

prime has really no idea of what this third sub down the road is 

doing, and I think that is the other thing we should try to limit. 

My staff tells me that there has been improvement, that there 

has been some progress, and we are certainly not there yet. But I 

think it is improving to a small degree. 

Mrs. LOWEY. Mr. Fields. 

General FIELDS. Thank you. 

The two that I will address, one, I think the civilian surge that 

is currently under way is a good idea. During my most recent visit 

to Afghanistan, which was in May, I have seen evidence really of 

the civilian surge actually taking hold. We are not there with appropriate numbers, we are not there yet with the distribution of 

those civilians, but our audit work will bear this out. 


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The other point, as I have emphasized earlier, if we are concerned now about anti-corruption, we need to focus money in that 

direction. I think it is shameful, really, that over the course of our 

investment of $51.5 billion we have invested, the United States, 

only $1 million towards the support to the High Office of Oversight. 

This needs to change, and that is a recommendation I would make 

to this committee by way of your appropriations capacity. The Control and Audit Office and the High Office of Oversight, they need 

capacity, and they need money with which to build it. 

Thank you. 

Mrs. LOWEY. Well, I thank you very much. 

I have one last question. In hearing about and having had a brief 

discussion about Task Force 2010, do you expect there will be any 

coordination between the civilian and military efforts? Often they 

are working in the same communities on the same issues. One of 

my concerns since I have been in the government is the lack of coordination. You can be in any country, not just Afghanistan, and 

people are operating in their own I call them silos of excellence 

doing good work, but they don’t even know each other. 

Now given the issue of corruption and given the allegations that 

have been reported, I am very interested in knowing whether you 

expect there will be coordination between this Task Force 2010 and 

the work you are doing? 

Yes, sir. 

Mr. GAMBATESA. Yes, absolutely. We will be participating with 

2010. 

As I mentioned earlier, we have already gone to an initial briefing with them. And their goal is obviously to look at this contracting in a more overall sense. So we will definitely be working 

with them to either input and to pull out what they may find. 

Mrs. LOWEY. Mr. Johnson. 

Mr. JOHNSON. Yes, same here. With respect to work we are going 

to do on certifying the Afghan ministries, any corruption work we 

do, we will be reaching out to Task Force 2010. 

General FIELDS. SIGAR has met with and has briefed the commander of the Task Force. We intend to work with them consistent 

with the mandate that we must follow to remain independent, but 

certainly we have mutual interests, and we will work with the 

Task Force to the maximum extent possible. 

Mrs. LOWEY. Thank you very much. As you can see, there is support on both sides of the aisle for the work you are doing, and we 

are all focused on success in Afghanistan. And in my judgment and 

I know in the judgment of my ranking member, work on these 

issues that have been highlighted in our hearing today are critical 

to that success. 

Thank you very much. 


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WEDNESDAY, JULY 28, 2010. 

OVERSIGHT OF U.S. CIVILIAN ASSISTANCE FOR 

AFGHANISTAN 

WITNESSES 

RICHARD C. HOLBROOKE, SPECIAL REPRESENTATIVE FOR AFGHANISTAN AND PAKISTAN 

DR. RAJIV SHAH, ADMINISTRATOR, USAID 

OPENING STATEMENT OF CHAIRWOMAN LOWEY

Mrs. LOWEY. Good morning. The Subcommittee will come to 

order. I am very pleased to welcome Ambassador Richard 

Holbrooke, the Special Representative for Afghanistan and Pakistan, and Dr. Raj Shah, the Administrator of the United States 

Agency for International Development (USAID), to share with us 

today the systems and processes to assure accountability of U.S. 

taxpayer funds, outline the joint U.S.-Afghan strategy to combat 

corruption, and describe mechanisms to coordinate the U.S. civilian-military strategy. We understand the difficult environment in 

which the men and women in Afghanistan work, and we appreciate 

their and your commitment to this very crucial effort. 

Funding appropriated by this subcommittee for diplomacy, development and humanitarian programs plays a vital role in supporting our national security. Nowhere is this reality more evident 

than in Afghanistan, where the President has crafted an integrated 

civilian-military strategy to disrupt, dismantle and defeat al 

Qaeda. 

Recent media reports of rampant corruption, concerns about billions of dollars in cash leading to the Kabul airport, alleged influence peddling, reported interference with and obstruction of corruption investigations by Afghan officials led this Subcommittee to 

defer consideration of the fiscal year 2011 request for funding for 

Afghanistan. Over the past 2 weeks, this Subcommittee held a series of hearings, briefings and meetings to assess the media allegations, current oversight procedures, and steps the U.S. is taking to 

address accountability, transparency, and oversight gaps. This Subcommittee has worked quickly and diligently to help assure the 

American people that their hard-earned tax dollars are not being 

squandered or mismanaged. 

With sufficient unspent funds in the pipeline, this investigation 

has not delayed implementation of civilian programs in Afghanistan. Taking into account the total funding appropriated through 

fiscal year 2010, including yesterday’s passage in the House of the 

Supplemental Appropriations Act for Fiscal Year 2010, there is 

funding, more than adequate funding in the pipeline, to continue 

development programs unabated through fiscal year 2011. 


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Several themes have emerged from our investigation. First, despite efforts by our government and reformers within the Government of Afghanistan, corruption is endemic both at senior and civil 

service levels, and undermines our mission in the country. 

Second, oversight of programs by both the Afghan Government 

and the United States must be improved. Nearly everyone we 

heard from acknowledged the need for better trained investigators 

and auditors and for improved documentation of program goals and 

outcomes. As Secretary Clinton has stated, we must do a better job 

of monitoring and evaluating our contracts and grants to ensure 

they do not enable weak governance or inadvertently encourage 

corruption. 

Thirdly, there is a desperate need to increase the capacity of both 

the civil service and judicial systems at all levels of government. 

The legal foundations are weak. Ministry officials are untrained. 

Oversight entities lack the capability and independence to perform 

their tasks. This vacuum of capacity fosters a culture of influence 

peddling and political interference. 

Fourth, questions remain about the political will of President 

Karzai and the Government of Afghanistan to take the steps necessary for the civilian-military strategy to succeed. 

While failure in Afghanistan is not an option, success can only 

be achieved if we and our Afghan partners share common goals. 

For many months, President Karzai has been saying the right 

things but have he and his government taken the necessary implementation actions? For example, the cabinet approved a bill that 

established a Special Tribunal to try officials accused of graft. Do 

you believe that this Special Tribunal will be given the necessary 

independence to move forward in an effective manner? Will the Afghan Parliament act on the legislation in a timely manner? What 

has been the response of the Government of Afghanistan when confronted with evidence of interference in corruption cases? 

Just last week, the global community demonstrated its commitment to Afghanistan when nearly 70 representatives of foreign 

countries and organization attended the Kabul Conference. In a 10- 

page communique, the conference outlined dozens of commitments 

consistent with those proposed by President Karzai in his inaugural speech and at the London Conference to combat corruption 

and improve Afghan governance. How will the United States hold 

the Karzai government accountable to these commitments? What 

will the consequences be if the Afghan Government does not meet 

these goals? 

During our hearing with the Inspector General and GAO, one 

witness testified, our plan is that all levels should consider capacity 

development at the forefront of any engagement by the United 

States. As Afghans take the lead in managing their government, it 

is vital that they are trained in technical skills but also professional and ethical standards by which they are expected to adhere. 

Congress has provided hundreds of millions of dollars to increase 

the capacity of the Afghan Government and people. What has been 

achieved with this funding? Has the standard of the government’s 

performance improved? Are finite goals and objectives in place? 

And are outcomes being evaluated to measure their success? 


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Last week, Treasury representatives shared with us some positive steps to strengthen fiscal management within the Ministry of 

Finance. This progress has taken years because of the great challenges, including lack of capacity, which is a critical element for 

our success in light of the Kabul Conference commitment to funnel 

half of all assistance through the Afghan Government, yet we don’t 

have years to wait. We need to aggressively pursue capacity building measures so the Afghan Government can expand effective governance. What conditions and benchmarks must Afghanistan meet 

prior to the provision of 50 percent of funding through its ministries? 

Our long-term success hinges on our ability to combat corruption 

and ensure accountability for government expenditures, build a capable military and police force in a state that has never had one, 

create a viable legal and economic foundation that will provide a 

safe and prosperous future for the men, women and children of Afghanistan, and enable the Afghans to sustain the civilian assistance programs we are working so hard to establish. 

We have worked together. I want to continue to work with you 

both to ensure that we have the best prospects for success while 

assuring the American people that their funds are being spent in 

a transparent and accountable fashion. 

Before we proceed, I would like to turn to my ranking member, 

Kay Granger, for her statement. 

OPENING STATEMENT OF MS. GRANGER

Ms. GRANGER. Thank you, Madam Chair. Thank you for calling 

this hearing today on Oversight of U.S. Civilian Assistance for Afghanistan. The subcommittee has held, as you know, a series of 

hearings and briefings. Since our subcommittee markup, we have 

addressed a range of concerns, but many more important questions 

remain. As the subcommittee seeks answers, I remain committed 

to our efforts in Afghanistan because I believe they are critical for 

U.S. national security. At the same time, I am equally committed 

to ensuring that U.S. assistance is used as it was intended. 

I am interested in hearing from our witnesses today about how 

investment on the civilian side will contribute to overall success in 

Afghanistan. In addition, the subcommittee needs to know that 

mechanisms are in place to ensure that funds are being and will 

be spent properly. I would like to thank our witnesses today for 

being here. Both of you play a critical role in executing the civilian 

strategy in Afghanistan, and I thank you for your service. 

I believe the success of our civilian effort depends on three 

things. U.S. assistance programs must be focused on results. These 

funds must be spent in a transparent manner, as the chair said, 

free from corruption, waste, fraud and abuse; and we must be conducting our efforts alongside a reliable partner. 

Let me explain more fully. First, it must be clear that civilian investments are achieving tangible results. A focus on achieving 

measurable outcomes needs to be part of the culture in U.S. agencies. This should funnel all the way down to the implementers, the 

Afghan Government, contractors, grantees, international organizations, and the multiple levels of awardees below them. I know that 

Administrator Shah is committed to focus on monitoring an evaluaVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00785 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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tion on USAID, and I hope that this is his top priority in Afghanistan. 

Next, it is critical that U.S. assistance is spent in a transparent 

way, free from corruption, waste, fraud and abuse. There are several elements of the administration’s strategy that seem particularly vulnerable. My first concern is with the Afghan First Initiative. The administration plans to expand this initiative and send 

billions of dollars through the Afghan budget. 

While I certainly recognize the need to build the capacity of the 

Afghan Government, the ongoing allegations of corruption and illicit activity do not give me confidence that now is the time to subject U.S. funds to unnecessary risk. We must ensure that funds go 

to Afghan ministries for the right reasons and to achieve real results, not simply to meet an arbitrary goal of sending a certain percentage of assistance through the government. 

In addition to increasing aid to the Afghan Government, the administration also plans on channeling more funds to internationally 

managed trust funds, but it is still not clear to me that those funds 

can be properly overseen and audited by the U.S. Government. 

Another concern is whether U.S. staff are able to provide adequate oversight of assistance programs. This subcommittee has 

been quite generous in its support, allowing the tripling of staff in 

Afghanistan over the past 18 months. But increasing the number 

of staff does not necessarily mean that oversight is improving. It 

is difficult to determine if staff are able to ensure that contracts 

and grants are properly managed. 

Finally, in order for U.S. efforts to be successful, we must have 

a reliable partner. The U.S. Government can place appropriate 

safeguards on our assistance dollars, but our efforts will not be successful without cooperation from our Afghan partners. It is the administration’s responsibility to hold Afghan officials accountable for 

commitments made last week at the Kabul Conference. There must 

be a renewed commitment to the people of Afghanistan in order to 

build confidence in their government. That starts with the Afghan 

Government living up to its promises to do more on oversight, 

transparency and delivering results for the Afghan people. Simply 

making announcements and creating more bureaucracy will not improve the situation. The results must be clear. 

In closing, I have described a long list of concerns, but I also 

know that the two witnesses before us today are highly skilled in 

diplomacy and development. I have confidence that you can address 

these issues. You need to make a strong case today so that the subcommittee can have confidence in providing the funds necessary 

and the oversight required to support the President’s strategy in 

Afghanistan. 

Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. Gentlemen, your full written statements will be placed in the record. Feel free to summarize in your 

oral statements. I am sure there will be many questions. We will 

proceed as you desire, and we will proceed with Ambassador 

Holbrooke. 


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OPENING STATEMENT OF AMBASSADOR HOLBROOKE

Ambassador HOLBROOKE. Madam Chairwoman, it is a great 

honor to appear before you and your colleagues again today and especially to testify alongside Dr. Raj Shah, the Administrator of 

USAID. I thank you and your colleagues for your support yesterday 

in the important supplemental vote. We are very mindful of the difficulties presented by such votes, and we greatly appreciate your 

support. 

Before I begin, Madam Chairwoman, I would like to extend on 

behalf of the administration our deepest condolences to the victims 

of the plane crash in Islamabad today, Airblue Flight ED 202. I understand from our embassy in Islamabad that the smoke is visible 

throughout the city. We hear there is going to be a national day 

of mourning. There are apparently two Americans who were on 

that plane. And I just wanted to express on behalf of the U.S. Government and the administration our deep condolences. 

Secondly, with your permission, Madam Chairwoman, I would 

like to make a brief comment about the recent leaks that were from 

WikiLeaks. To be clear, as President Obama said yesterday, that, 

first of all, the leaks themselves are pretty appalling. And for somebody like myself who has been in and out of the government for 

over 40 years, in fact, as an author of one of the volumes of the 

Pentagon Papers, I have lived through something similar before, I 

just find it inexplicable that people would take the oath of office 

to the United States and violate it in such an extraordinary way. 

Having said that, Madam Chairwoman, I want to underscore 

what President Obama said yesterday, that there is nothing in 

these documents, most of which date way back to the previous administration, that should change anyone’s judgments about the situation in Afghanistan and Pakistan. We have confronted these 

issues for a long time, and I do not think that they revealed anything which we had not discussed in detail during our policy reviews last year. And I will leave it at that, just to make clear how 

deeply we are upset by the leak but how there is nothing revealing 

in them that changes things. 

Madam Chairwoman, I listened carefully to the statements of 

you and Congresswoman Granger, and I would just like to make 

a few comments in addition to the testimony which we are submitting for the record. First of all, we share your commitment on the 

issue of corruption, governance and effectiveness. We have worked 

as partners with your subcommittee now since we came into office, 

and we are very grateful for your involvement in shaping the correct appropriations for both countries. In personal terms, I just 

want to state that as an occasional columnist for The Washington 

Post, I addressed these same issues as a private citizen. And when 

we came into office, we discovered that almost nothing had been 

done about them. We have here on the side of the room four poster 

boards which at the appropriate time Dr. Shah and I and our colleagues would like to brief you on because I think they will show 

that from the very beginning of this administration, we were taking steps, creating task forces, and working closely with the government in both Pakistan and Afghanistan to deal with this problem. We knew that if corruption isn’t dealt with, other things won’t 


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succeed. We had stated that it was a malignancy that could destroy 

everything else we were doing. 

In this, we ran shoulder to shoulder with the military. David 

Petraeus and I had talked about this the very first time we met, 

and we are working together. The military has set up Task Force 

2010, headed by Rear Admiral Kathleen Dussault to deal with 

that. I believe you have met with Admiral Dussault, so you know 

the work she is doing. And we will have USAID and State Department personnel assigned to Task Force 2010. 

In addition, we have the many measures which Dr. Shah and I 

will outline in a moment. And I do want to underscore our very 

deep commitment. 

Also, we have this extraordinary interagency team set up in the 

State Department. And with your prior permission, we brought 

with us today representatives of six of the 10 agencies we work 

with. The ones that are not here are the FBI, the Agriculture Department, the CIA, and the Office of the Secretary of Defense. But 

I would, with your permission, like to ask the team behind us just 

to stand as I mention their names so that you know who they are. 

The first person, who is not on our team but you all know very 

well, is Assistant Secretary of State Rich Verma. Next to him is 

one of my deputies, Dan Feldman. Next to him, our senior deputy, 

Frank Ruggiero, just returned from Kandahar. I asked him to come 

here today with his boots full of dust, but unfortunately, he cleaned 

up for you. But I think most of you have visited him in Kandahar. 

Next to Frank, Rami Shy, our Treasury representative, who has 

done a phenomenal job. I hope we will get a chance to address that. 

Next to Rami, Matt Stiglitz from the Department of Justice. Next 

to Matt, Shannon Darcy, who has returned from Afghanistan as 

one of our two AID representatives. Next to Shannon, Colonel Rose, 

one of our two military representatives. And in the second row, our 

new Congressional Liaison from State, Greta Lundeberg. Next to 

Greta, Ashley Bommer, who you all know is focused on communications. Next to Ashley, Matt Asada, David Adams from the Congressional Bureau, Jennifer Chartrand. And next to her, from the Department of Homeland Security, Raul Ortiz. DHS has a very important role in all these issues. And next to Raul, Mike McNerney. 

So with that, Madam Chair, I will yield to Dr. Shah and look forward to discussing the posters at the appropriate time. Thank you 

very much. 

[The statement of Ambassador Holbrooke follows:] 


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OPENING STATEMENT OF DR. SHAH

Dr. SHAH. Thank you. Madam Chairwoman, Ranking Member 

Granger and members of the committee, I appreciate the opportunity to be here to address this issue today. I also appreciate the 

chance to testify with Ambassador Holbrooke. The two of us traveled together recently with the Secretary of State to attend the 

Kabul Conference and to work on the range of issues that we will 

be discussing today. I share his ‘‘thank you’’ for your recent vote 

in support of funding for the Afghanistan strategy that the President has laid out and also his condolences on the tragic event last 

night in Pakistan. 

This recent trip was an important opportunity to assess progress 

in the civilian effort and to observe the government of Afghanistan 

hosting a major international conference in which they laid out 

their strategy in areas where they commit to taking greater accountability. It is within the context of those commitments that we 

are able to review our programs and better understand the effect 

of the footprint of our programs and our spending in Afghanistan 

and against the President’s strategy. I would like to just make a 

few remarks about our approach in the area of accountability and 

in the area of addressing the concerns that have been laid out. 

First, we are looking across our portfolio and have been for 18 

months, as Ambassador Holbrooke highlights, to achieve greater 

strategic clarity for each and every program that we support. Programs that are designed to achieve short-term stabilization have 

specific program metrics related to what success looks like in that 

area. Programs designed to achieve long-term economic development in sectors like energy, agriculture, water management similarly are designed around specific outcome metrics that help us ascertain whether or not they are successful over time based on outcomes and not simply process indicators. 

We are also working to improve the analytics that underpinned 

these programs so that we can be more precise and more efficient 

in the use of U.S. taxpayer funds. For example, in programs aimed 

at achieving stability in villages and in rural communities, we are 

using tools like the District Stability Framework that allow us to 

gather through survey data a better understanding of what are the 

actual immediate sources of instability and how can our programming be focused to most effectively address those sources of instability in an effective way? 

Third, we have put in place a number of efforts to improve accountability, including taking on a more aggressive approach to 

doing monitoring evaluation and oversight. This has been a major 

focus for me in my tenure at USAID across all of our countries and 

all of our program portfolios, but it is most acutely felt in Afghanistan and Pakistan where we have significant program investments. 

We are doing this by using our Multiple Oversight System, and we 

will talk about that when we have the opportunity to step through 

some of the charts that we hope to present. 

No system is foolproof, but these systems are fairly robust in 

their ability to allow us to track the flow of funds and to understand process indicators that describe how those funds are being 

used in accordance with program goals. In addition, in Afghanistan 


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we have the most significant Inspector General and Special Inspector General efforts anywhere in the world, covering approximately 

25 percent of the entire portfolio every year, and every 3 to 4 years 

covering all of our full extent of USAID investments. In terms of 

having the capacity to conduct more aggressive monitoring evaluations we have, as has been identified, more than tripled our staff 

presence and more aggressively used our Foreign Service national 

staff in country to get out, visit programs, and ascertain progress 

in a direct manner. We are also improving our direct engagement 

with the government of Afghanistan to this end and using thirdparty contract support to help do independent third-party evaluations. 

Fourth, we are reviewing and improving our contract oversight 

process. We have a process that allows for very strong oversight on 

prime contracts and on subcontracts within those primes. There 

are specific areas where we are trying to improve oversight of subcontracts of subcontracts, and I am happy to discuss that as we go 

forward. 

The efforts that have been articulated to improve direct assistance efforts to the government of Afghanistan are specifically designed to help build the capacity in the ministries, in the provinces 

and in the districts of the Afghan Government to ultimately allow 

us the opportunity to reduce dependency and over time to have a 

sustainable governing system that can work without our aggressive 

and direct engagement. 

In all of these efforts, we abide by the strictest of rules with respect to compliance and recourse, which are the underlying fundamental things that drive our assessment of risks related to how we 

make those investments and which tools we use. In all cases, we 

have a range of tools, including host country contracting, direct 

budget support, and a range of intermediate efforts that can allow 

us to tailor the type of support we offer to the environment or the 

ministry capabilities that exist. And in each situation, we conduct 

thorough assessments of auditing capability and our ability to 

track money, resources and activity prior to making any such direct 

investments. 

I look forward to sharing more about our process as we go forward. 

I would like to conclude just by commenting that overall success 

will require improved governance at all levels in Afghanistan. I 

value the oversight and the guidance that you have provided, and 

this long-term challenge is one that we take on, fully understanding its importance to the President’s strategy and how challenging it is to create improvement in a short time horizon. Nevertheless, our investment portfolio is one that is designed to address 

this challenge. And as we go sector by sector, we have tried to align 

our portfolio with the strategic dialogue that has taken place with 

Afghan leaders and with the accountabilities that they have stood 

up and articulated as the areas where they will be clearly responsible for ensuring improved outcomes. Overall, our priority is to define, track, observe and report on the results of our programs and 

how it contributes to the President’s strategy. And while USAID 

programming is one part of a large and multifaceted diplomatic 

and development strategy on the civilian side, it is an important 


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part, and our commitment is to absolutely track resources against 

outcomes as effectively as we can. 

I look forward to this discussion. Thank you. 

[The statement of Dr. Shah follows:] 


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Mrs. LOWEY. Thank you. And as usual, I will be calling on members based on seniority of the members that were present when the 

hearing was called to order. And I will alternate between the majority and the minority. We have a lot of questions this morning 

and just 2 hours with our witnesses. So I ask each member to keep 

their questions to within 5 minutes per round so all members have 

an opportunity to question all witnesses. I will begin with Ambassador Holbrooke. 

At last week’s Kabul Conference, the Government of Afghanistan 

committed to 19 new goals and objectives related to accountability, 

good governance, and anti-corruption efforts. Well, the goals are 

laudable and reflect commitments that President Karzai made in 

his inaugural speech and at the London conference. So we know 

that President Karzai has been saying the ‘‘right’’ or ‘‘politically 

correct’’ things. I heard it when I was in Afghanistan several times. 

But to date, the actions by his government do not seem to reflect 

a true commitment to these issues. 

So a couple of questions. What evidence do you have now that 

any of the goals and objectives included in the Kabul Conference 

communique are anything more than hollow gestures to appease 

the international community? What practical steps has the Government of Afghanistan taken to address corruption in the past 6 

months? What specific benchmarks are you holding the Government of Afghanistan to with regard to countering corruption? And 

do you believe that the new law passed by the cabinet to address 

high-level corruption will become law? Will it have an impact? 

Maybe I will stop at that point, Mr. Ambassador. And I will proceed if I have any time left. 

Ambassador HOLBROOKE. Madam Chairwoman, you asked the 

very same questions that the President asks, that our Ambassador 

and our Commanding General ask. If I could ask Rami Shy to 

bring this chart closer to us, perhaps we could address your question in very specific form. Rami is, as I said earlier, our Treasury 

person. And I would like to draw your attention specifically to the 

four vertical lines from top to bottom. And I want to stress, Madam 

Chairwoman, that this did not start with the Kabul Conference a 

week ago. This started the day we took office. 

On the left, the Major Crimes Task Force, we formed that in May 

of 2009. I must stress, nothing had been done on this when we took 

office. Rami was working at the Treasury Department, and there 

was no one at State, no one at AID. Rami moved out of our office. 

There are at least 30 people working full time on this at Treasury. 

Raj Shah can address the AID effort. But the Major Crimes Task 

Force mentored by the FBI, Treasury and international law enforcement bodies has been up. There are 169 investigators. There 

are 36 active corruption cases. I hope you will pardon me if I don’t 

go into details. But some of these cases are extraordinary, and they 

involve the DEA, FBI, USAID, State, Department of Justice, the 

Afghan officials. And they are ongoing and they are extremely sensitive in some cases. And they have caused some concern in some 

parts of the Afghan Government for reasons that will be obvious. 

But please forgive me if I don’t go into operational details. 

The second group is the Anti-Corruption Unit. Vanna, could you 

just point to the correct one? Thank you. The Anti-Corruption Unit 


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was formed in April of 2009, and the U.S. Department of Justice 

has worked on that. Matt Stiglitz on the other side of that is our 

DOJ representative. And if there are further questions, I hope you 

will permit them to also respond. 

Mrs. LOWEY. Can I ask you to clarify, Mr. Ambassador? When 

you are saying that there are 36 active corruption cases and growing, are they all Afghans? Or are our contractors part of this mix? 

Ambassador HOLBROOKE. One of the ones that I can talk about 

publicly, last year was two Afghan Americans, dual citizens, who 

were involved in a kickback scheme of about $3 million in an $18 

million roads project. And they were brought to the United States 

under a very high tech operation run by the Department of Justice 

and the embassy. They were tried and convicted, and they are in 

jail now in Virginia. And they were linked to people in the government. So the answer is, a little of both. 

I mean, this is a work in progress. We have put it at the top of 

our priority. And as we mentioned earlier, Task Force 2010, under 

Admiral Dussault, is focused on an area which is probably much 

larger than AID, the one you and I and Congresswoman Granger 

have already talked about privately, because the bulk of the foreign 

spending in Afghanistan comes on the military side, and that is a 

very opportunistic target for people who are looking for opportunities. 

In any case, the Anti-Corruption Unit, 79 cases indicted with 

about a 90 percent conviction rate, is that correct? Yes, 90 percent 

conviction rate. 

The third vertical line, Anti-Corruption Tribunal, started hearings last year. Their conviction rate is also 90 percent. They have 

223 cases in front of them. And you will see in the bottom chart 

here that General Hakeem of the border police got an 8-year prison 

term, the Ministry of the Hajj Treasury a 15-year prison term. And 

then finally, the High Office of Oversight, which is the main anticorruption body in the country. That existed in the past but was 

pretty ineffectual. From President Obama on down, we have talked 

about the HOO and the need to upgrade it, and in both his inaugural address and in his speech in Kabul last week, President 

Karzai addressed that. And we are, and the government has 

pledged to obtain asset declarations from senior officials, 17 have 

published so far. And we are working directly with each ministry 

to develop anti-corruption plans. 

Madam Chairwoman, is this enough? Of course not. 

Mrs. LOWEY. I thought you meant in 5 minutes since my 5 minutes is up. 

Ambassador HOLBROOKE. Is it a start? It is. And I will stop there 

because I didn’t want to use up your time. But I do want to underscore that everything that brought us together today is something 

we are working on all the time, nonstop with a very substantial 

number of people. But it is daunting. It is tough. The circumstances of the history of the country make it difficult. 

Mrs. LOWEY. Thank you. Ms. Granger. 

Ms. GRANGER. Administrator Shah, the Kabul communique reiterated the goal of providing assistance to the Afghan Government’s 

core judgment. The administration is currently providing about 20 

percent in direct assistance and hopes to get to 50 percent in the 


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next 2 years. Building the government’s capacity and gaining confidence within the Afghan population are important, but I am concerned about rushing in to meet an arbitrary goal. Can you assure 

me that this is good development policy? It seems to me this approach is least appropriate in a country where there is a low level 

of capacity. 

Dr. SHAH. Thank you, Congresswoman. Let me first address why 

we are pursuing this approach and then perhaps speak to a slide 

in terms of how we hope to do it in a way that maintains our compliance and oversight at a very high level of diligence and safeguards. 

First, we believe this is exactly the right approach to be taking 

at this point in time in this setting. It is really the only way to 

build accountability and capacity in the institutions of governance 

and government in Afghanistan at a variety of levels, in the Federal ministries, in the provincial government and in the district 

governments. We are not pursuing this process by simply handing 

money to ministries or institutions. It is part of a cohesive strategy 

where we are investing and training 16,000 civil servants through 

the Civil Service Training Institute, which USAID has already established and supported, evaluated and finds to be very productive. 

We are specifically training civil servants in the range of activities 

we think are critical to implement these programs, ranging from financial management to program design to procurement to evaluation. And we are putting in place a district delivery program which 

is a project to help the Afghan Government better recruit and train 

an additional set of civil servants that will then go into district and 

provincial governments so there is more trained capacity at every 

level of government. 

That said, our transition from 20 percent current direct assistance to 50 percent assistance will require a significant and coherent assessment process and set of compliance standards. 

The slide to my left helps articulate how we are pursuing this 

in a way that protects our resources and allows us both confidence 

in compliance standards and the ability to have recourse should 

there be malfeasance in the use of funds. I start with a point about 

assessment. Basically our assessment process covers a few specific 

points. We need to make sure the organizational structure and implementation capacity of a ministry or any other public institution 

is accountable, has sound financial management capabilities, has a 

procurement structure that is transparent, meets our standards, 

and we have the ability for recourse should we identify that funds 

are used inappropriately. Without those clear standards being met, 

we will not and cannot proceed. 

Second, the next sort of three points under the assessment point 

are really about having a clear and identifiable audit trail. We 

have already sent an expanded service support team to our embassy and to our mission. They have expanded their capabilities by 

hiring both local and international auditors, including firms we are 

all quite familiar with, to make sure as we make these investments 

we are doing it against specific auditable trails as funds flow so 

that we know exactly where these monies are going to the same 

standard that we use with our U.S.-based contracting implementers. 


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The next point on certification is particularly important. Our certifications are specific to programs and projects, so we would not 

be in a setting where we certify a ministry, write a check, and then 

fail to pay attention to ‘‘are they achieving program outcomes?’’ I 

was recently there to launch an agricultural development fund 

which was a $150 million investment. Of that, $50 million is targeted to build specific capacity in the appropriate ministry and in 

the partner provincial governments and district governments; and 

the remainder of the funds is a credit fund for farmers. In that specific example, we have metrics and numbers against how many 

farmers we expect will receive credit, which intermediate banking 

institutions will get the access to a subsidized credit fund, and we 

will be able to track those resources as they flow project by project 

and procurement by procurement. 

That is what we mean when we say, assess and make a determination that we can work with the ministry. And we back that 

up with very specific monitoring and evaluation of how those funds 

flow. 

Finally, on the monitoring and evaluation piece, in addition to 

what is stated here about USAID personnel meeting directly with 

the ministry at all levels, we have a range of tools that we use, including embedding ourselves or our partners in ministries so they 

can track and support decision making and funds flow, and doing 

retrospective reviews of outcomes related to the specific programs 

because we are funding specific programs, not comprehensive ministry activities. 

And then finally, third-party auditing. As with all of our work 

and all of our processes, we believe there needs to be strong thirdparty evaluation and auditing. We certainly have the ability to get 

out and see projects and programs. But that does not obviate the 

need to have an independent assessment. And in all of these cases, 

we will have investments that are carved out for third-party evaluation so we can track these resources. 

But I would like to just assure you that the purpose of this directional and strategic shift is to build the capacity in these institutions so they can sustain themselves over time and so that in the 

future the need for our direct engagement and support is much, 

much lower than it is today. Thank you. 

Ms. GRANGER. Thank you, Madam Chair. 

Mrs. LOWEY. Mr. Schiff. 

Mr. SCHIFF. Thank you, Madam Chair. And Ambassador, thank 

you for being here and thank you for your good hard work. I go 

back and forth between trying to decide whether you or Ambassador Mitchell has the tougher job. And probably from week to 

week it goes back and forth between the two of you. 

I wanted to ask you the question that I wrestle with most, and 

that is, I think, that our military can clear these areas that the 

Taliban occupy. I think we can build, through USAID and through 

your efforts, we can build infrastructure, we can build capacity. 

The question I have is not can we hold but can the Afghans hold, 

a year from now, when we start drawing down our troops, can the 

Afghans hold or will the Taliban simply come back? And whether 

they can hold will depend on whether they have a form of governance that the Afghan people are willing to fight for and to die for. 


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Right now, the Afghan people are very disturbed by the level of 

corruption not only in the regime but on a day-to-day level, the fact 

that to get their crops from one place to another they have to bribe 

five people on the way; that a police commander has to pay for his 

job, and then can sell the subordinate positions to people who can 

then stop people at checkpoints and charge them, the sort of dayto-day graft which is so widespread that, a relatively small number 

of cases at the higher levels of the Afghan Government may not 

deal with the endemic problem. And what I wanted to ask you, 

Ambassador, is how can we measure, how can we know if we are 

making progress towards the Afghans being able to hold once we 

start drawing down? How do we measure that, if it can be measured? Do you see anything that gives you confidence that we can 

get there in a year’s time or longer? What should give us some either confidence or pause about the Afghans’ ability to hold once we 

start drawing down? 

Ambassador HOLBROOKE. Congressman Schiff, that is the core 

question of our entire strategy, and you have described it very well. 

People often talk about clear, hold, and build. It is really clear, 

hold, build, and transfer. And it is that fourth area that you have 

really addressed. The American and NATO troops can hold any 

acre of land in the world with force, and they can clear it before 

they hold it. But the project will only succeed if the local authorities gradually replace the international forces. That is why it is a 

linked civilian-military mission. But it begins with security. Rajiv 

Shah and I are committed to agriculture programs, rule of law, 

governance, subnational governance, and many other programs, 

health and education foremost among them. But those can only 

work if the Afghans can take care of their own security. 

And here I want to underscore a point which I don’t think is appreciated enough, and yet which has a direct impact on the work 

of this important committee. And that is that the military forces, 

as the President has said, will not stay forever. Our commitment, 

as he said, is not open-ended on the combat role. But we will have 

to recognize that there is a long-term economic, development and 

security assistance component to our presence there as we assist 

the Afghans to achieve the goals you outlined. Specifically, in July 

of next year, as President Obama has made clear, we will begin the 

phasedown, the drawdown of American and allied combat troops. 

However, the pace and scope will be determined by the situation 

on the ground following the policy review. But there has been a 

widespread misunderstanding here which I hope we can clarify 

that does not mean the end of the international support of Afghanistan because the issue you talked about is a long-term issue. A 

country that has been shattered by war, 30 years of continuous different forms of war with a very difficult situation on its borders, 

particularly the Pakistani border, needs international support, and 

we cannot repeat what happened in 1989. 

So to be specific, the training of the military and the police, the 

support and assistance of the police and the military will be a 

longer-term project. And the work that Rajiv Shah and his very 

brave men and women in AID are doing will also have to continue 

long after the combat role is finished. Because what you are talking 

about, transferring from the international community, led by the 


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U.S., to Afghan leadership is a gradual process. Look at the police, 

85 percent are illiterate. You can’t have an illiterate police force, 

but you can’t turn it into a literate police force overnight. Agriculture is our most successful program because they have such a 

great tradition. But rule of law, extraordinarily difficult, but we are 

committed to it. And that is why we come back to your committee 

over and over again to ask for your support in shaping and continuing this set of programs. 

Mr. SCHIFF. Thank you. Thank you, Madam Chair. 

Mrs. LOWEY. Thank you. Mr. Rehberg. 

Mr. REHBERG. Thank you, Madam Chair. By way of introduction, 

I represent the State of Montana. So I have the largest population 

of any congressional district in the last 10 years and probably in 

the next 10 years because we won’t get a second seat. So I am averaging just less than a million people in my congressional district. 

Over the course of the last Congress, since January 1, 2009, I have 

had 60 town hall meetings. I have another 15 coming up this week. 

I will tell you that I am noticing a change in my constituency about 

the direction of the American activities in Afghanistan, and it is 

not good. My State has been supportive. They have given the administration the benefit of the doubt. And I just want to suggest 

that it ought to give you at least some pause or some early warning 

signs at least. And we are not necessarily a microcosm of America. 

Montana is different than California, which is different, thank God, 

than New York and some of the other States. 

So I just want to suggest that as I am traveling around, I see 

a problem. And one of the problems is, nobody really knows who 

to hold accountable other than, of course, the President is getting 

either the credit or the blame at this time. Could you give me some 

indication of who we hold accountable for all of the difficulties as 

they are starting to show up, whether it is the corruption, the missing money, the pallets. It is easy for the fingers to be pointed at 

DOD and at State and at USAID. But I am confused. I can’t articulate a direction right now, and I want to be supportive and defensive on your behalf. I just don’t know. And I love the charts. Could 

we have a chart like that with names on it beyond the President 

and the Secretary of State and such to see, who do we, as congressmen and Congresswomen, hold accountable? 

Ambassador HOLBROOKE. Well, I say with great trepidation you 

can hold us accountable. That is our jobs. 

Mr. REHBERG. Who are ‘‘us’’? 

Ambassador HOLBROOKE. Well, let me answer you seriously, Congressman. First of all, I appreciate your support. And we take very 

seriously what you have just said about the people of Montana who 

have, on a per capita basis, had a higher casualty rate than almost 

any other State, so we are particularly mindful of that. 

Secondly, in terms of accountability, that is why we are here, and 

that is why we will always be available to your committee. Dr. 

Shah is the designated person in charge of a very large amount of 

money which your committee appropriates, and we respect that. I 

have a non-fiduciary responsibility given to me by the President 

and the Secretary of State to oversee and coordinate the civilian 

programs. The military command has its role to play in this, even 

if the money flows through another part of the House. And we 


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should be held accountable by you and by the American public, and 

we respect that. 

Secondly, there is one thing you said I really would respectfully 

amend. We have not started this process now. We are not here 

today because of an article that appeared in The Wall Street Journal or The Washington Post. We are here today to report on what 

we have done over 18 months in an area that hadn’t been addressed before. And this chart is a very clear demonstration of it 

because this chart—15 months ago, this chart would have been an 

empty chart. 

Mr. REHBERG. Could I ask then in my remaining time of Dr. 

Shah, how many transactions do you have at USAID? You know, 

we appropriated $50 million for reconstruction this last year. How 

many transactions were there within that money? 

Dr. SHAH. I would need to check the specific number. 

Mr. REHBERG. I just had my staff go onto Wikipedia real quickly 

and look up the credit card purchases. Visa had 9 billion transactions last year for a total of $764 billion worth of transactions. 

I will bet they are not missing as much money as is missing or in 

question here. So what we are trying to find is, how many transactions did you have over the course of this last year? 

Dr. SHAH. Let me speak to that because we don’t believe we are 

quote-unquote missing money. We have approximately 120—and I 

could be off by a few—major program relationships. About 40 percent of that is cooperative agreements or grants, and the remainder 

are contract agreements with partners. They then have a series of 

subcontract agreements in order to implement large-scale programs. 

Mr. REHBERG. So the audit that is being done, trying to track the 

money that is leaving Afghanistan is not missing money or that, 

you know, it is not yours or it is not American. 

Ambassador HOLBROOKE. Congressman, with great respect, we 

are not missing money. I really don’t think the American public 

should draw that conclusion. We are here to figure out how to work 

together to continue to cut down on corruption. That is what this 

is about. 

Mr. REHBERG. Madam Chair, if I heard correctly, last week when 

we had our meeting, an audit is being done to make a determination whether that is American money leaving Afghanistan by the 

palletful. 

Mrs. LOWEY. I am very pleased that both Ambassador Holbrooke 

and Dr. Shah are here today to discuss the entire program. We are 

appropriating a lot of money, and the reason I held up the $3.9 billion and fenced it in, that I want to understand the systems that 

are in place that have really—as Ambassador Holbrooke said, been 

neglected for years. So we are here to hear what they are doing. 

What made me fence the money in was The Wall Street Journal 

report, as I am sitting home on a Sunday afternoon at a Little 

League game, that $3 billion in cash was being sent to Dubai. 

Now the good news is that a couple of years ago, you probably couldn’t even identify the $3 billion. In fact, they probably didn’t 

even count it as it was being transferred out to Dubai. The bad 

news, as we are proceeding, is to look into all the transactions that 

occurred there. But at this moment, as an investigation is proVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00819 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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ceeding, we don’t know where that $3 billion came from. It could 

have been from the military, it could have been from contractors, 

it could have been from private investments. We don’t really know. 

But this hearing and the work that we are doing is the whole 

process because I think it is essential, and as Ambassador 

Holbrooke mentioned, I am very pleased that at the same time the 

Defense Department and General Petraeus are looking at Task 

Force 2010 and Operation Spotlight to look at the whole package, 

not just USAID. 

Mr. REHBERG. Madam Chair, that is why I asked the question 

about transactions and about accountability in the chain of command because of course in the L.A. Times on July 26, they are talking about the fact that the Pentagon can’t account for $8.7 billion 

in Iraqi funds. And the difficulty is, are they going to ask us for 

the money back? Do we know where the money went? And that is 

why I ask specifically about the chain of command. 

Mrs. LOWEY. Let me say this, I can recall one of the hearings we 

had with Stuart Bowen, and he told us it took 2-1/2 years to get 

a computer system up and running in Iraq just to account for all 

the expenses and all the transactions. So I am not surprised with 

that news, but I think that has to be explored separate from what 

is happening in Afghanistan. And I daresay, if we look into several 

agencies who have been involved, we might find some of the problems with computer systems and how they are accounting for all 

the problems. 

Mr. REHBERG. Well, Madam Chair, it just pales in comparison to 

the Cobell case with the Native Americans where literally our accounting procedure was down since the days of the Custer battlefield. That is when the money was first noticed missing, and they 

are about to settle with the Native Americans for $4.3 billion of 

money we frankly don’t have. And our concern is to get on this as 

quickly as we possibly can. There is no excuse anymore when you 

look at what goes on with the banking transactions and the credit 

card industry—literally $1.76 trillion changed hands with American Express and Visa and Master Card and Discover—for a total 

of $20.2 billion transactions. So there is no excuse anymore. 

Mrs. LOWEY. I happen to agree with you. And that is exactly why 

we are having this hearing, and that is exactly why this investigation will go on, and that is exactly why Dr. Shah and Ambassador 

Holbrooke are making this presentation and will continue to move 

forward in making sure adequate protections are in place. My taxpayers in New York, your taxpayers in Montana deserve answers 

to these questions. 

Did you want to respond? Yes? 

Dr. SHAH. If I might, and thank you for the comments. We just 

don’t have that specific problem in our mission in Afghanistan. We 

have a strong single computer database. We call it Afghan Facts. 

It is built off of a larger system we use called Facts Info. It allows 

us to track program outcomes. We have almost 500 people out 

there in our different hiring capacities that are tracking program 

activities plus thousands of additional program contractors that are 

mostly local that actually get to programs and talk to communities 

that are beneficiaries. 


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Let me give you one example. Agriculture has been an area of 

significant additional investment. And given the volume of investment, we have been very focused on tracking the results. In the 

past year, we now know that we have employed more than 400,000 

Afghans at different points for cash-for-work short-term programs 

that have helped clear canals, improve irrigation systems, and get 

water to support agricultural productivity. We have built more 

than 370 Afghan-led farm stores or depots from which farmers can 

get inputs and another variety of tools and implements. This has 

resulted in more than $32 million of sales in fiscal year 2009 and 

benefited almost 90,000 farm households. We have provided 

675,000 vouchers to support farmers getting back into their trade 

of getting access to improved inputs and improving productivity. 

And we were with Minister Rahimi this past week, and he suggested that the combination of these efforts have led to a more 

than 40 percent increase in overall agricultural productivity year 

on year. 

Those are the kinds of indicators we have to track to know that 

the investments we are making are creating a sound basis of economic activity and productive activity that can support the President’s overall strategy and ultimately sustain the types of governance, institutions and economic entities that will be required for 

Afghanistan to be an effective and well-governed society over time 

without large-scale U.S. engagement. 

Mrs. LOWEY. I am going to turn to Ms. Lee. But I want to ensure 

you that your concerns are shared by all of us, including the administration. That is exactly why we are having this hearing. So 

I thank you. 

Ms. Lee. 

Mr. REHBERG. Thank you. 

Ms. LEE. Thank you very much, Madam Chair. And it is good to 

see both of you. It is no secret that we should begin to end the 

longest war in American history, and of course that is in Afghanistan. So getting the right and effective mechanisms of development 

and diplomacy in Afghanistan, it really is part of that goal, and we 

have to get it right. But I am beginning to wonder if we are. 

At a recent hearing, this subcommittee held—I think it was with 

the Special Inspector General for Afghanistan Reconstruction—I 

was really quite shocked at some of the amazing, damning incidents of corruption which I think—well, we are aware of and even 

contributing to as we continue to increase our military footprint in 

Afghanistan. 

For example, I raised at that hearing a recent New York Times 

report, citing Afghan and NATO officials contending that security 

contractor companies, including those connected with President 

Karzai’s family and affiliates, charged with defending United 

States and NATO interests have actually funneled money directly 

to the Taliban not to attack convoys or other targets and in at least 

one case there is suspicion of a contractor compelling the Taliban 

to attack NATO forces in order to delegitimize their competitors. 

The response of the Inspector General was that he was aware of 

these reports but not currently conducting an investigation or at 

least, you know, it wasn’t a priority at that point. 


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So I want to clarify with you, who is supposed to follow up on 

these allegations? And are we sitting back in some instances while 

U.S. funds are directly financing the ongoing insurgency? 

And then secondly, of course we learned yesterday that the Defense Department is trying to account for what, 96 percent or $9 

billion provided for DOD reconstruction projects in Iraq. And I am 

wondering if you know, because I know we are suppose to have at 

least close coordination between DOD and our civilian reconstruction projects in Afghanistan. Are we looking at any way to make 

sure that an investigation is conducted as it relates to Afghanistan 

when we are working on DOD civilian projects in a joint way? 

And thank you again for being here. 

Ambassador HOLBROOKE. You are welcome. On your second 

point, I read the articles with the same astonishment as you did. 

They refer to Iraq. They refer to events that happened starting in 

2003. Neither Dr. Shah nor I are in any position to comment on 

it. It is military money. It is in another country. 

In regard to your question about the Special Inspector General 

for Afghan Reconstruction, General Fields, I have met with General Fields and his staff many times. As you know, they report to 

Congress, not to us. All we do is provide them with the funds out 

of the State Department budget and logistical and housing support 

in Afghanistan. They report to you. And they have always emphasized that. 

Having said that, we support them, we cooperate with them, and 

anytime that General Fields or his team bring anything to the attention of Dr. Shah, myself or Ambassador Eikenberry, we follow 

up on it. 

As for the specifics you referred to, we are well aware of that, 

and the embassy does work on all of those things, and we covered 

them in our previous comments. 

Ms. LEE. But if you are well aware of them, I just want to get 

a handle on, do we have to ask for an investigation then of what 

is taking place in terms of the allegations that occurred in—that 

were raised in The New York Times article as it relates to contractors funneling money to the Taliban to convince them not to attack 

convoys or targets? Who would be responsible for investigating 

those allegations? 

Dr. SHAH. So, Congresswoman, we appreciate the point. I would 

like to just speak to USAID’s perspective on how we assess especially security subcontracts of grants and projects. First, I would 

highlight that as Ambassador Holbrooke indicated, our total security outlays are going to be far, far lower than military-related security outlays. 

Second, some of our activities—and we have looked at this carefully, like transport and fuel for construction programs, may require more security. But in general, we think security outlays as 

part of contracts are somewhere around the order of 7 percent of 

our total spent. We have special safeguards and a special system 

for vetting subcontractors that are security contractors. We use the 

Spot database and a number of other mechanisms to track and approve subcontracts. 


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Ms. LEE. Okay. So are we or are we not on top of the allegations 

that money is being funneled to the Taliban? U.S. dollars, U.S. contractors. 

Dr. SHAH. For security contracts that are subcontracts of USAID 

programs, we are on top of that issue. 

Ms. LEE. So how will we know the results? Are you investigating 

it, reviewing it? When will we know if these allegations are true? 

Dr. SHAH. So I am not sure which specific allegations you are referring to. But for our prime programs, we are constantly reviewing 

and evaluating the effect of our subcontracts. I am asking our 

teams to redouble efforts to look at subcontracts of subcontracts, 

and that is an area where I think more visibility is needed. But we 

are on top of this with respect to our programs and projects. 

Mrs. LOWEY. I just want to respond to Ms. Lee for a moment and 

then I will turn it to Ambassador Holbrooke. 

At the beginning, I mentioned that I was very pleased, after we 

announced our hearings, to hear of Task Force 2010 and Task 

Force Spotlight. Task Force Spotlight is particularly focused on the 

area you are talking about, the security contracts. It is unfortunate 

that you need to create a Task Force 2010 and Task Force Spotlight after we have been there since 2002. But those are the facts 

of life. So that is their responsibility. And I do expect and they 

have a responsibility to get you some answers on that issue. 

Ambassador Holbrooke, if you want to respond. 

Ambassador HOLBROOKE. Actually, Madam Chairwoman, you 

just made the point I was going to make. 

Mrs. LOWEY. My goodness, thank you. 

Mr. Lewis. 

Mr. LEWIS. Thank you, Madam Chairman. I very much appreciate you and Ms. Granger bringing this hearing together. These 

witnesses are perhaps as good as we could have to help us focus 

in a different way on Afghanistan. Ambassador Holbrooke and Dr. 

Shah, we appreciate your being here. 

Ambassador Holbrooke, it was perhaps 25 years ago when I first 

asked this question relating to the poppy in Afghanistan that we 

learned a lot more about after Charlie Wilson’s War. We have 

made significant progress, I gather, in connection with at least 

interdicting and in trying to deal with the cash flows that go to 

warlords and, in turn, support the Taliban and our terrorist opponents. I am very concerned that we haven’t—in a comprehensive 

way developed a policy to try to long term deal with this. 

Perhaps, Madam Chair, the most lasting example of socialism in 

the world has existed between the American Government and agriculture. It seems crazy to me that some way we haven’t been willing to say that the poppy and those narcotics flows are so important to American interests that we ought to establish an agriculture-like program that long term delivers money to those farmers in a fashion that would allow us to truly create different crops 

since some wonderful things have gone on between India and Pakistan or in Afghanistan, for example, in recent years. 

But I would like to know what thinking is going on within your 

offices regarding a project of this kind. 

Ambassador HOLBROOKE. Let me start, and I will let Raj pick up. 

First of all, Congressman, this administration made a major 


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change in counternarcotics and agriculture policy, and I need to be 

very clear on that, even if not everyone agrees. We terminated 

American support for poppy destruction because we came to the 

conclusion, after analyzing the intelligence and looking at it carefully, that we were driving farmers into the arms of the Taliban, 

that our poppy crop eradication program was a recruiting tool for 

the Taliban, and that it was not in any way reducing the flow of 

opium and heroin to the West because the previous efforts did not 

address the big drug traffickers, the dangerous nexus between government officials, drug traffickers, the Taliban and the police which 

created this multibillion dollar industry in Afghanistan. 

We also found that we were spending more money on poppy 

eradication than agriculture, so we made agriculture our top nonsecurity priority. And I believe in a moment when Dr. Shah picks 

up from me, you will see that we are doing exactly what you are 

talking about. We have cash for work programs. We have AVIPAplus programs. We work on alternate crops, saffron, pistachios, 

pomegranates. We are now with this historic transit trade agreement that we negotiated, that America played a central role in negotiating last week between Pakistan and Afghanistan. There is 

now a new market for Afghan agricultural goods in Pakistan of 

enormous importance. Remember that Afghanistan was an exporter of agriculture products until the Soviet invasion. They are 

really good farmers in that difficult rocky soil that is high, high up 

in the air, and they need our support. It is an agricultural country. 

When we create agricultural jobs, we deny a recruiting tool to the 

Taliban. 

Not everyone agrees with us. Some of your colleagues think we 

shouldn’t have stopped crop eradication. The Afghan Government 

may do its own crop eradication, but we don’t. The Russians have 

objected strongly and publicly to what we did. That only encourages me to think we are on the right track. 

But I want to underscore, Congressman, that everything you said 

underlies our new philosophy, and we believe that this is really 

paying off. I think that Raj and I would feel that this is our most 

successful program on the civilian side. 

And with that, I would ask Raj to pick up. 

Dr. SHAH. Thank you. I would just add a few thoughts. The first 

is that we know from experience around the world that creating an 

alternative economic opportunity for poppy-growing farmers has 

proven to be more effective than singular eradication and destruction efforts. This is part of the evidence base that supports Ambassador Holbrooke’s suggestion that we have transitioned our strategic approach. 

In terms of our strategy in agriculture, I ran through some of the 

statistics about the scale and the progress that we are starting to 

see. But it is basically based on improving staple crop productivity, 

offering high-value crop opportunities for both growing and caring 

for fruits and vegetables and other high-value products, like saffron, but also having real export markets that are supported by a 

local agro processing industry. And in each of these areas, we have 

programs that are addressing these points at scale, and we are confident that this is an area that can be very successful, especially 

if we can get more private investment and more agro processing 


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into play, which is why just last week we launched a major agricultural credit fund to allow for more commercial production, processing and export. 

So those are the types of economic opportunities that we hope 

are the valuable alternative and the sustainable alternative to 

poppy. We are very focused on implementing that strategy at real 

scale. 

Ambassador HOLBROOKE. Congressman Lewis, I forgot to add 

one critical thing. In ending the crop eradication programs, we refocused our efforts on interdiction, major drug traffickers and drug 

czars. We could prove to you—and we would be happy to give you 

a private briefing on this—the amount of paraphernalia we have 

destroyed, the amount of opium—the poppy seed that we have 

found, and the actual production in hectarage has gone down by 20 

percent in each of the last 2 years. We have destroyed an enormous 

amount of morphine, opium and poppy. And in this case, the military command under General McChrystal and General Petraeus 

has really joined us in this. This is a joint civilian-military effort 

of the highest coordination. And we know from intelligence reports 

that the Taliban have lamented our decision because it removed 

the recruiting tool. 

Mr. LEWIS. Madam Chair, thank you very much for the time. Let 

me just mention that I began by saying it was 25 years ago I asked 

this question first, which would suggest that many an administration has come and gone since then. And I am still not satisfied that 

we really have a handle on where we are going with this, but we 

do want to work closely with you. 

Thank you. 

Mrs. LOWEY. Thank you. Mr. Rothman. 

Mr. ROTHMAN. Thank you, Madam Chair. Thank you, Mr. Ambassador, Dr. Shah. 

Mr. Ambassador, first of all, thank you for your extraordinary career in public service and your continuing to take on matters of 

great difficulty and complexity and danger. You are the Special 

Representative of the President for Afghanistan and Pakistan. I 

know we are not in a classified setting. But many people believe 

that while there has been some progress made in addressing what 

has been called a double game by Pakistan’s intelligence services 

and military in supporting both NATO and U.S. efforts but also 

supporting the Taliban, many people believe that that is going to 

be an insurmountable obstacle to your work in producing civilian 

programs in Afghanistan, for example, that we hope will pacify the 

region and deny al Qaeda a place to train. 

Can you comment on the allegations of the Pakistani dual game? 

You mentioned the positive aspect of the trade agreement between 

Afghanistan and Pakistan. But what about the allegations that 

there is a dual game going on? And then I have other questions. 

Ambassador HOLBROOKE. The relationship between the U.S. and 

Pakistan has been characterized in a book which is about to come 

out that traces the history of it as three marriages, two divorces, 

and we inherited a really unacceptable relationship with Pakistan 

both in bilateral terms and in regional terms. It was unsustainable. 

You are not going to succeed in Afghanistan unless Pakistan is 

part of the solution. Not just Pakistan, however. Pakistan is part 


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of a region that includes other major countries. To the west of Afghanistan, a country we have another kind of problem with. To the 

north, Tajikistan, Turkmenistan, Uzbekistan, and beyond them 

Russia. China borders on Afghanistan with a serious vested interest, and beyond that is India. 

So this is the most complicated region you could imagine. But at 

the core of it, Pakistan must be part of the solution. President 

Obama directed early last year that we change the relationship 

with Pakistan, number one, and number two, we try to change the 

relationship between Afghanistan and Pakistan in order to move in 

the direction that you have discussed. 

Mr. ROTHMAN. Have those efforts succeeded? 

Ambassador HOLBROOKE. I believe we have made dramatic steps 

forward and we are not there yet. It is a work in progress. But if 

I may just be specific, I would not dismiss the transit trade agreement as merely a trade agreement. It is the most significant agreement between Pakistan and Afghanistan in at least 50 years. 

These countries have had a very troubled relationship going back 

to the day Pakistan was born. 

Mr. ROTHMAN. I apologize. I only have 5 minutes. 

Ambassador HOLBROOKE. But you have raised the most important issue, and with your permission, I want to just finish this. 

So on the U.S.-Pakistan front, with your support Secretary Clinton has attended and chaired two strategic dialogues, one in March 

in Washington, one in Islamabad 2 weeks ago. We will chair a 

third here in Washington in October. In those dialogues with 13 

working groups, from water and energy to a law enforcement—— 

Mr. ROTHMAN. But I have to interrupt you. Have you noticed a 

difference in the receptiveness on the part of the Pakistanis? 

Ambassador HOLBROOKE. Dramatic. And those people who were 

with us on the trip, Dr. Shah and I were sitting with Secretary 

Clinton. Secretary Clinton herself, everybody commented on the 

change in tone over the last year. It is improving America’s image 

in the public area. 

Now on the second tier, what you are really referring to, we are 

engaged in a very intense dialogue with the Pakistani military, 

with their intelligence services. I myself have met with General—— 

Mr. ROTHMAN. Are we making progress in that regard? 

Ambassador HOLBROOKE. We are absolutely. 

Mr. ROTHMAN. Before my time runs out, what is the Taliban’s interests, Mr. Ambassador? This goes to our long-term hope for success in Afghanistan. What is the Taliban’s interest in a society in 

Afghanistan where there is rule of law, women’s rights, and a 

nonpoppy agriculture where they are not getting a piece of the action? What is their interests? 

Ambassador HOLBROOKE. That is why they are opposed. 

Mr. ROTHMAN. How do they ever get onboard? 

Ambassador HOLBROOKE. Well, we have this reintegration program which has been funded by the international community, 

which is offering the Taliban, under the tremendous military pressure they are facing now, a chance to renounce al Qaeda, lay down 

their arms, accept the constitution and reintegrate. That program 

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ferred. It is funded with $2 million by the international community. 

The U.S. is not funding their program. But the Congress authorized $100 million of CERT for General Petraeus to work with. I 

think if David Petraeus was with us today, he would say that is 

the most important program he is working on. It addresses specifically your point. 

In other words, 70 percent, Congressman, 70 percent of the 

Taliban at least have no ideological commitment to al Qaeda, 

Mullah Omar. They are fighting either because they don’t know the 

real story in Afghanistan or because of a local grievance and they 

need to be brought in. 

Mr. ROTHMAN. And it is not religious in terms of—for example, 

girls attending school and women having certain rights that they 

don’t presently enjoy? 

Ambassador HOLBROOKE. Well, that is a huge issue, but the 

Taliban are not fighting because of that issue. If you read Taliban 

propaganda, and we study it very carefully, they never mention the 

issue of women, girls in school because that was their most losing 

issue. What they talk about is corruption, the reason we are here 

today. That is their number one recruiting tool. We took the other 

one away, narcotic poppy destruction. And they talk about American and international forces defiling the people. And then they 

talk about women, but in a totally grotesque way that I won’t even 

discuss here. So their propaganda always eliminates this because 

they know that was their biggest mistake. 

Mr. ROTHMAN. I thank you. Thank you, Madam Chairman. 

Mrs. LOWEY. Thank you. 

Mr. Chandler. 

Mr. CHANDLER. Thank you, Madam Chair. Ambassador 

Holbrooke, Dr. Shah, and all your staff who are sitting in those two 

rows behind you, I can’t tell you how much respect I have for what 

you all do. I don’t think you are ever appreciated enough. And I 

am certain that people generally don’t understand the enormity 

and the difficulty of what you are dealing with, what you deal with 

on a day-to-day basis. So I want to thank you. I want to thank you 

for all of your efforts. 

Ambassador Holbrooke, I think earlier you said that the circumstances of this region made this a very, very difficult job. That 

I thought was one of the all-time understatements that I have ever 

heard. I just can’t imagine, knowing the history of Afghanistan and 

Pakistan—I think many people in this country are now familiar 

with that history. It is a history of a place where both the British 

and the Russians, among others, came to grief. In my view, those 

two countries in some respects are not even really nation states or 

effective nation states. They haven’t been in their history. I don’t 

believe they have ever had, at least by our lights, effective governance. I don’t think they have ever had, again by our terms, systems 

that weren’t corrupt, and I don’t think they have ever had any real 

economic capacity, at least in relation to what we are used to in 

this country. 

And what we are trying to do may very well be the most difficult 

undertaking in the history of this country. Again, I don’t think that 

people understand the enormity of it. I understand why we got in 

this war, and I understand why we are in Afghanistan. I have supVerDate Mar 15 2010 01:34 Jun 03, 2011 Jkt 066402 PO 00000 Frm 00827 Fmt 6601 Sfmt 6602 E:\HR\OC\A402P2.XXX A402P2

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ported it. We went in as a war of necessity. It is unlike the Iraq 

situation. But that being said, I think we really have to ask ourselves serious questions about whether or not this really is doable. 

As I understand it, our strategy essentially is this: In order to 

achieve success in this region, we have got to build opportunity for 

the people of the region. We have got to build some kind of successful economic system. We have got to try to put people to work. We 

have got to give them some hope of prosperity in order to have success. I understand that to be the basis of our strategy. 

We are even having trouble doing that in this country, and we 

are trying to do it with an area of—Afghanistan and Pakistan 

alone have over 200 million people. When you throw in all the rest 

of these areas, with the backwardness of the economic and governmental situation that we had there, I have to ask you, do you really believe that we can succeed at this? Do you really believe that 

there is a legitimate chance? We have already been in it for, as I 

think Ms. Lee said earlier, a longer time than we have been in any 

other similar undertaking—at least military undertaking. Can we 

succeed at this? And what kind of economy are we really trying to 

build in this area? 

Ambassador HOLBROOKE. Thank you for a very good question. 

Let me make three quick points. Number one, on a personal note, 

I wouldn’t be in this job if I thought it was impossible to succeed. 

I would so state and make my views known as an alternative. So 

yes, of course, I believe we can succeed. But it is difficult. It is the 

most difficult job I have had in my career because of what we inherited and the exogenous factors, such as the sanctuary that we 

discussed a moment ago in regard to Congressman Rothman’s 

equally important question. 

So we have to go back to first principles, Congressman Chandler. 

Why are we there? I don’t want to waste time going back to 9/11. 

But that is why we are there. We wouldn’t be choosing to fight on 

the most remote and difficult terrain in the world if we hadn’t been 

attacked on September 11, 2001. And if the outcome is not a good 

one, al Qaeda will return to Afghanistan with the Taliban, and 

there will be regional repercussions that will extend from Beirut to 

the Himalayas. So we have to deal with those. 

Having said that, I need to be clear. This war isn’t going to end 

on the Battleship Missouri or the Wright-Patterson Air Base in 

Dayton, Ohio. It is a different kind of situation. David Petraeus 

and I have talked a great deal about how this war ends. And it is 

not the subject of this hearing. It is a complicated issue. I will be 

happy to talk to you offline about it. But the civilian mission, the 

reason we are here today before your committee, is absolutely indispensable because this is not simply a war of military fronts. It 

is a war in the end. And this goes back to the question of Congressman Schiff and Congressman Lewis and all of your colleagues. We 

must have a way of improving the Afghan governance. And yet we 

cannot replace that government, as was implicit in the exchange 

with Congressman Schiff. What we need to do is help them establish themselves. 

Now, it is very a very interesting point which I don’t think I have 

mentioned publicly before. When we took office, we inherited a mission statement from the previous administration which I don’t 


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know if it was public or not, but it was extraordinarily ambitious. 

It was creating a modern state, a modern democracy in Afghanistan with limited resources. The President narrowed the mission to 

a reasonable, achievable goal, and increased the resources with the 

support of your committee. That was the core of what we did in Afghanistan. 

Meanwhile, going back to Congressman Rothman’s point, we refocused on Pakistan, which previously had been dealt with as a 

separate issue unto itself. We integrated the two countries without—we don’t use the word AfPak in public, but it did imply that 

the fact that what happened in one country affected the other. That 

is the strategy. 

I know we are out of time, and it is a long issue, but we do have 

a strategy. It involves both countries, and we want to get Afghanistan to a reasonable level of stability and security but we are not 

delusional. With the illiteracy rate as high as they have, the poorest non-African country in the world, and the distortions in the situation in the economy caused by an international presence in history, there are limits to what we can do. We are seeking to protect 

our national security interests. If we didn’t feel that, we wouldn’t 

be asking you for the kind of support that you and your colleagues 

have so generously given us. 

Mrs. LOWEY. Thank you. Mr. Moran. 

Mr. MORAN. Thanks, Madam Chairman, for having this hearing. 

I have enormous regard for you, Dr. Shah. But I am not going to 

address my questions at you. I am going to address them at Ambassador Holbrooke because you are not particularly a warrior or 

an USAID Administrator. You are a diplomat and par excellence. 

And you are just the kind of person we need. I don’t disagree with 

any of the facts that you have shared with us. I do disagree with 

your conclusions though. You have lost me, for whatever it is 

worth, in terms of the viability of this mission, and I noted accordingly yesterday. 

One of the turning points I think was Marjah. It was supposed 

to be an Afghan National Army offensive. We claimed it as successful. But when you look at the number of wounded and dead, 85 

percent of them were Americans. There is a story I was told when 

I was over in Afghanistan that the one particular Marine company 

had given the marketplace in the middle of Marjah to—and they 

routed the Taliban. They couldn’t find their ANA counterparts, 

sent out a scout. They find them in the marketplace sitting on the 

ground, smoking hash with a pile of stuff that they had looted from 

the shopkeepers. So we reimbursed the shopkeepers what amounted to $300 to $500 a piece to make up for all the goods that the 

Afghan Army had taken. 

One of the people who is in a position of consequence in this mission shared with me what the elders told him. We didn’t liberate 

Marjah. The Taliban did, from a corrupt police chief that was taking everything they were making. And then the government reimposes somebody they brought from Germany who was also corrupt; 

in fact, had been convicted of a violent crime. I can’t imagine why. 

I can only speculate that they were involved as a conduit or something for a drug trade or some kind of reason. But anyway, he 

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lated was that the government is never going to get the loyalty of 

the Afghan people because it doesn’t deserve it. It will be another 

generation after we educate the government servants and so on, 

but particularly the police and military. We don’t have the political 

will in this country, let alone the resources or the lives to expend 

in that effort. 

They feel that the only hope—although it is not by any means 

a perfect solution—is the kind of government of conciliation, whatever you want to call it, collaboration with the Taliban that President Karzai has cited. That worked in Ireland. I am familiar with 

it. I know you are. You know, they reached out to Gerry Adams. 

A lot of the folks in New York City and other places couldn’t believe they were doing that. But it worked. To some extent it worked 

in the Balkans. 

I would like to hear from you, Ambassador Holbrooke, whether 

as an imperfect situation but perhaps expedient, given all the other 

factors considered, whether you think we could bring about such a 

government? They are not so much right now in Afghanistan. And 

bring about the kind of local governments, justice, if you will, albeit 

terribly harsh that many of the people are looking for? 

Ambassador HOLBROOKE. Thank you, Congressman Moran. It is 

good to see you again. I would like to address the macro part of 

it. And with the chairwoman’s permission, Frank Ruggiero, who 

has just returned as my deputy, was in Kandahar and Marjah. He 

has just been back a few days. I think he might give us a vivid picture of the issue that the Congressman just mentioned. 

As President Obama and Secretary Clinton and the rest of us 

have said, we support the reconciliation program of President 

Karzai that you referred to. We support it, and we also support the 

reintegration program that I discussed earlier in response to an 

earlier question. 

With three red lines, those red lines are for our own national security. And just to repeat them because they are so critical, renounce al Qaeda, lay down their arms, and participate in the political process. Thousands of people have done that. The programs atrophied after the last few years. Last year was a year focused on 

the Kabul and the Afghan elections, which were very messy. We 

got through those—a close call but we got through them—and now 

the government has resurrected the reintegration program. They 

have added what you correctly called the reconciliation program, 

and we are going to support it. But I would caution you, there is 

a lot less there so far than the press has speculated on. 

With that, Madam Chairwoman, could I ask Frank Ruggiero to 

answer the second part of the question? This is Frank Ruggiero. He 

is my senior deputy, and he was the senior civilian representative 

in the southern region of Afghanistan until 2 weeks ago. 

Mr. RUGGIERO. Thank you, Congressman. I was in Marjah the 

fourth or fifth day after the U.S. forces went in, and I agree completely with your point. When we talked to the residents of Marjah, 

what they told us was the previous government that the Taliban 

had displaced was absolutely corrupt and preying on the people. 

As you pointed out, the district government that we appointed or 

the Afghan Government appointed, there are challenges certainly 

with his background. We have worked, I think, in a pretty good 


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manner to try to make that government serve some basic needs of 

the people that are in Marjah. 

The point I would make on Marjah is that Marjah is part of a 

larger issue. 

Ambassador HOLBROOKE. Just to clarify, while Frank was on vacation, the man you are talking about was dismissed. He is gone. 

Mr. MORAN. Oh, he was? 

Ambassador HOLBROOKE. He attempted to murder his stepson, 

and that seemed like an unfortunate thing. 

Mr. MORAN. Questionable background, yes. 

Ambassador HOLBROOKE. So the point is, the man is gone as of 

about 5, 8 days ago. 

Mr. MORAN. That is great news. Good. 

Mr. RUGGIERO. In terms of Marjah, we try to look at it in the 

overall effectiveness of what we are doing in the central Helmand 

River Valley. The U.S. Marines and U.S. civilians went into various 

important districts in central Helmand last summer and cleared 

those out. In Nawa and Gharmsir and in the capital city, Lashkar 

Gah, we have seen a pretty good effect of our counterinsurgency 

strategy. We have seen the same thing in Nad Ali, which is just 

north of Lashkar Gah. Marjah remains a challenge. But Marjah is 

the last area in the central Helmand River Valley where the vast 

majority of the population of Helmand lives that we would have to 

clear and stabilize. The Taliban recognizes that. They are putting 

up a significant fight. But I think we are making progress there. 

Mr. MORAN. Thank you. Very good response. Thank you, Ambassador. Thank you, Frank, very much. Thank you, Madam Chairwoman. 

Mrs. LOWEY. Thank you. We are very fortunate that Congressman Moran serves on the Defense Subcommittee as well as our 

committee so we get the benefit of his expertise which is often interesting as we discuss these issues. 

Mr. ROTHMAN. Madam Chairwoman. 

Mrs. LOWEY. Oh, absolutely. We are also—— 

Mr. ROTHMAN. I serve with Mr. Moran and was on that trip 

when we heard—— 

Mrs. LOWEY. Mr. Israel, who understands the issues but isn’t on 

the Defense Subcommittee. 

Mr. ISRAEL. Thank you, Madam Chair. Ambassador and Dr. 

Shah, thanks for joining us. I apologize for having had to leave the 

room. 

My district, like the chairwoman’s district, is in the New York 

area. My district is 30 miles from Ground Zero, and so I think it 

is important for us to refocus on basics. You know there is a fog 

of war on the battlefield but sometimes there is a fog of war on this 

center of gravity and sometimes we lose sight of the basics. And I 

believe the basics are that we do have a mission to reintegrate and 

reconcile those who can be reintegrated and reconciled and to degrade and defeat al Qaeda. 

There is a second reality that I would like to share with you. And 

these aren’t my words and they don’t come from any sophisticated 

punditry. They come from a member of the Special Forces with 

whom I met during a visit to firebase ties near Musa Qala several 

years ago. Congressman Jim Marshall and I participated in a 


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CODEL and we went to this remote fire base and met with some 

folks from the Special Forces who were preparing to enter Musa 

Qala. We were asking them about the history of Musa Qala and 

we were told that Musa Qala had shifted back and forth from ISAF 

to the Taliban, back to ISAF, to the Taliban. We had lost control, 

gained control, lost control repeatedly. So I asked a dumb question, 

and my question was, well, were the residents of Musa Qala for us 

or were they for the Taliban? And one of the soldiers in the Special 

Forces said, Congressman, they are for them. They are for them. 

He said, Here is what is going to happen tomorrow: We are going 

to go into Musa Qala. We are going to shoot up the bad guys. Some 

are going to be killed, the others are going to flee to the mountains 

and the caves. We are going to build a new bridge over the river 

at Musa Qala with U.S. taxpayer funds. We are going to build a 

maternity clinic in Musa Qala with U.S. taxpayer funds. We are 

going to let the governing council where women serve in Musa 

Qala and then we are going to leave because we are going to be 

ordered to the next Musa Qala. And you know what is going to 

happen? The Taliban is going to come out of the caves, out of the 

mountains, come to Musa Qala, assassinate the people on the governing council, blow up the bridge and blow up the maternity ward 

that we built. He said, You know, I am all for this winning the 

hearts and minds. He said, but you know what, hearts change, and 

people change their minds. He said, If we want to get this right in 

Afghanistan, you have got to give people an alternative and you 

have got to protect that alternative. He said, and that is going to 

take a long time. I said, Well, how long? He said, Well, how long 

have we been in Korea, Congressman? And that was very telling. 

And not from FOX News and not from MSNBC but from somebody 

who is doing the shooting. 

Now to me that is the history of Afghanistan. You just cannot 

impose order from above. The WikiLeaks was just—not new history, ancient history. You cannot impose order from above unless 

you are going to get people protected, but ultimately they are the 

best protectors. The one in my view—here is my question. Long 

windup. Here is the pitch. The one truly successful program in Afghanistan has been the National Solidarity Programme, in my 

view. Why? Because it is not made in the USA. It is not us going 

in and building a bridge and a maternity clinic. It is funded by us 

and the World Bank, but it is run out of the Afghan Ministry of 

Rehabilitation and Rural Development. It is in 44,000 villages. It 

doesn’t say ‘‘Made in the USA.’’ It says ‘‘Made by the People of Afghanistan,’’ and it has largely been immune from Taliban attacks 

because the Taliban understands hearts and minds, and they don’t 

want to anger local residents by blowing up their own sweat equity. 

So my question to you is, do you agree that the National Solidarity Programme is an effective strategy in securing Afghanistan 

for the Afghan people? And if so, what other models should we be 

supporting that are similar to the National Solidarity Programme? 

Ambassador HOLBROOKE. We totally agree with you. We have 

gone back for more funding. I have talked to Bob Zoellick, the 

President of the World Bank, about it many times. The head of the 

NSV program was in Washington recently, and we have asked him 

to come back in October—the Congress was out of session when he 


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was here—in order perhaps to come up and share his views with 

you. But I couldn’t agree more. 

Now as for your scenario from Musa Qala, if that is what happens, the strategy will not succeed. We all understand that. How 

do we prevent that pattern from occurring? That goes back to my 

earlier discussion with, I believe, Congressman Schiff about clear, 

hold, build, and transfer. If we can’t transfer, the process will not 

move forward. And that will take time, which is why I emphasized 

in my earlier remarks that long after the combat troops have left 

there will have to be a continuing American commitment on military, the police, and economic and development assistance. 

And Dr. Shah may wish to comment on it because in the long 

run, he is going to have the most important role, in my view. Otherwise, the pattern you described will happen. But it doesn’t have 

to happen for this reason, Congressman. As you well know—because the depth and the way you phrase the question suggests a 

substantial understanding of it, you left out one thing. People really don’t like the Taliban. They really, truly don’t. You talk about 

hearts and minds. A minority can take over. An armed and ruthless minority can take over a majority. Mao Tse-tung was really 

the developer of that thesis and he set a pattern which everyone 

else has followed. He once said, Give me two good men, and I will 

take any village in China. By good men, he meant terrorists who 

would have public beheadings of just the sort you described. 

So it isn’t enough just that they don’t like the Taliban. They have 

to be given security. And that security cannot be given indefinitely 

by international forces. So you and I are in the same place. We 

have the same goal. But we need your support. And I thank you 

for it. And I think Dr. Shah should also comment about the longterm needs for economic development. 

Dr. SHAH. Thank you for your comment. And I just want to start 

by saying, we agree with your assessment of the National Solidarity Programme, and I know we have spoken with the chairwoman about her support for that program as well. We have looked 

carefully at the more than 22,000 community development groups 

that have come together, councils, and the work that they have 

done. I think there is a new preliminary Harvard study that will 

show the strong performance and sustainability of those programs. 

And you are right, they have been protected in terms of the benefits they have offered for clean water and improved governance and 

women’s empowerment. We have just participated in an approval 

of the third phase of that program that will reinvest in about 

17,400 of those councils for the next phase and to add an additional 

10,300 communities in which they will do that. This is a major 5- 

year, $1.5 billion investment and the U.S. Government would be 

the largest single provider for that, doing it with international 

partners. And that is part of the funding plan going forward. 

On the longer term piece, you know, one of the reasons I was excited about the Kabul Conference was that it was an opportunity 

for the Afghan Government in a coherent way to present a viable 

long-term economic strategy that would provide access to economic 

resources through sustained investment in the agriculture sector 

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tunity has been identified largely by our partnership with the U.S. 

Geological Survey, funded by USAID, to help explore and make 

visible what resources are actually there. Hundreds of billions in 

some estimates, trillions of dollars of mineral resources. That needs 

to be coupled with continued sustained investment in local governance and local opportunities, like the National Solidarity Programme, and there are many other programs that we are trying to 

design in that way that benefit from that local piece. And it is really the two of those things, large-scale long-term economic opportunity connecting with this local vibrancy and capability of governance, when it can succeed, to come together and create a viable economic plan over the long term. 

So thank you for raising that and highlighting that specific program. 

Mr. ISRAEL. Thank you, Madam Chair. 

Mrs. LOWEY. I thank you for raising that issue as well because 

this committee has certainly been extremely supportive of the NSP 

program, and we look forward to seeing it expand to all the communities that it hasn’t participated in as well. 

Ms. Granger. 

Ms. GRANGER. Thank you. I have three questions circling back to 

some of the answers or discussions today. So if you could be concise 

in your answer, maybe the chair will let us have all three of them. 

First of all, back to Mr. Lewis’ question having to do with the 

poppies, there was a negative GAO report released last week on agriculture which said USAID can’t track performance. So I would 

like your response to that. 

Also, in talking about tracking, what Mr. Rehberg was talking 

about, you explained your computer system and your tracking. 

What can you say about DOD and their tracking? If you can refer 

to that. 

And the last thing is, we started with this and have heard it 

through three hearings about one of the problems with the money 

leaving Afghanistan is the lack of a banking system. So why 

haven’t we addressed the banking system? And why didn’t we address it very early as far as rebuilding? 

Dr. SHAH. I will take the first question, and perhaps ask Ambassador Holbrooke to address the others. On agriculture in the GAO 

report, we have looked at that very carefully and largely believe 

that we can implement most of the findings of that report. The distinction I would make would be between our ability to track the 

flow of funds, and the process indicators that are in grants and 

contracts and cooperative agreements and the actual observation of 

outcomes. 

So I can sit here and tell you how many Ag depots have been 

created, how many vouchers have been handed out. We are improving our capability to then understand, what does that mean for a 

farmer who went back, planted improved seed varieties and used 

fertilizer? What kind of a yield improvement did they get? What 

kind of an income improvement did they get? And how did that 

connect to the larger agricultural sector performance? We absolutely need to get to a place where we can do that. We are working 

aggressively to make that happen. 


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That is the difference between what that report highlighted and 

our ability to track with strong oversight the actual flow of funds 

and the process indicators. 

I won’t comment on necessarily DOD’s systems for tracking outcomes. I was just in Bamiyan last week where we saw roads funded through the CERT program come together with roads funded 

through USAID programs. We certainly have a system that we 

think is pretty rigorous in terms of standards of performance and 

contracting and construction quality and sustainability. I think the 

effort to bring together the civilian and military sides in those settings in the PRTs is helping. At the point of those decisions people 

understand the value of those types of standards and that kind of 

oversight. 

So I am optimistic that we can get to a place where there is more 

coherence, but I can’t speak specifically to the tracking system. 

Ambassador HOLBROOKE. Congresswoman Granger, on the cash 

flow system, we brought this chart with us, and I hope it can be 

added to your record. This is an extraordinarily tough problem and, 

once again, one that was simply ignored until early last year. 

There were no active banks in Kabul in 2001. Today there are 17. 

But this is one of the most underbanked countries in the world. As 

a result, almost everything is cash payments, either cash carry 

couriers or hawala system. 

I would like to submit for the record this list of things we are 

trying to do so as to save time. But only 5 percent of Afghans hold 

bank accounts, almost all of them in the big three cities or four cities. 95 percent of the people rely on hawala system, and the articles in The Washington Post and The Wall Street Journal left the 

understandable impression that that huge flow of money going 

through the airport was all illegal or drug traffic. Some of it is. But 

it is also required to fund their economy. 

Total imports to Afghanistan last year, $8.8 billion. Total exports, $2.2 billion. How is this paid for? The trade deficit, which is 

50 percent of GDP, 50 percent, it requires these large cash flow 

movements. 

Now, how do we regulate them? It is declared, just as in our 

country. Originally we thought—and part of my team is right behind me, Rami Shy and Matt Stiglitz, we thought maybe we could 

get some control over this directly. We are doing a lot in the Gulf 

because Dubai is obviously the major port of call for this cash 

movement. We are working very closely with the government on 

this. We do believe some of the money is illicit, of course. But what 

we are really trying to do is move them to a mobile banking system. Ashley Bommer, who is in the second row, has been focused 

on that since the day she joined the government with me at the beginning of last year. 

For example, a small but important example, we are trying to 

pay soldiers and police through cell phone payments. And what 

happened? We did an experiment with about 50 police. And they 

came to people and said, Our salaries are much higher than we realized. Because they were being skimmed. And so we are going to 

try to proliferate that. Mobile banking is a partial solution to this. 

But we agree with you how important it is. 


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The only thing I would caution is don’t assume that all the 

money going through that airport is illicit money because if they 

couldn’t move money this way, the economy would implode and Dr. 

Shah would be unable to do his programs. 

Ms. GRANGER. Thank you. 

Mrs. LOWEY. Thank you. Before I close, I want to correct myself 

once again. In addition to Mr. Moran and Mr. Rothman, we have 

our ranking member, Kay Granger, who serves on the Defense 

Subcommittee. So we have a lot of expertise here when it comes 

to dealing with corruption and accountability. 

As I close, I want to thank you on behalf of the subcommittee. 

I do want to thank our witnesses for your candor. Over the past 

3 weeks, the Subcommittee has delved into the issues of accountability and corruption in Afghanistan. As you know, we had a hearing with the relevant Inspectors General, the Government Accountability Office, as well as briefings with Ambassador Eikenberry, 

and the Treasury Department. The staff and myself have met with 

many individuals, agencies, nongovernmental officials who have expertise in these areas. And the common message in these meetings 

is that challenges in Afghanistan are complex. They are significant. 

They are multifaceted. They are difficult. But I must say from this 

hearing and your testimony, I am heartened to hear that the administration is taking these challenges very, very seriously. 

And just to repeat as we close, establishing a new Rule of Law, 

Ambassador in Kabul, to begin to strengthen and coordinate the 

rule of law programs, embedding advisers in the Afghan Ministry 

of Finance and the Afghan Customs Service to improve their capacity to track Afghan and international assistance funds, taking steps 

to put in place a ministry assessment process that lays the groundwork for building ministry capacity, put in place expanded oversight mechanisms for bilateral and multilateral mechanisms, creating Task Force Spotlight to examine private security contractors, 

Task Force 2010 working with DOD to review the contracts and 

subcontracts and improving the visibility of contract funding flaws. 

I am also somewhat encouraged that the Government of Afghanistan at least has committed itself to additional steps in the areas 

of good governance, judicial reform, and anti-corruption during the 

Kabul Conference. However, only time will demonstrate whether 

these commitments are real, and there is a political will to make 

tangible changes. 

Certainly we have heard of stories, such as the one you related, 

where some people have been arrested and charged, but we also 

know that there are many people at the top who were charged but 

not arrested and not prosecuted. 

So there is a lot of work to be done. I am very confident that the 

Secretary of State, our witnesses today, Ambassador Eikenberry 

and his team will continue to raise our concerns as we pursue 

methodology to address them. We are pleased that you are pursuing these concerns at the highest levels in the Afghan Government. 

It is also apparent from the testimony today that the Administration understands the importance of accountability and transparency for maintaining U.S. taxpayer support. 


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You have heard from my colleagues. People are pained. They are 

losing their sons, their daughters. This is very, very difficult for our 

Members of Congress to go home to. And then when they hear stories of the corruption, the lack of accountability, it is very difficult 

to continue to be supportive. And I think you are aware of that. 

The war in Afghanistan was allowed to languish without sufficient strategy or resources for far too long. So I do commend the 

President for refocusing our efforts and our strategy. However, 

none of us should be under any illusion that all of the problems are 

behind us. And in the weeks ahead, I look forward to working with 

you, Ambassador Holbrooke and Dr. Shah, and the Subcommittee, 

to put in place safeguards to ensure that the funds we appropriate 

for programs in Afghanistan, where the civilian components of the 

Administration’s strategy are integral to the success of the military 

and the stability of the region, are being used for their intended 

purposes, and reach the intended recipients. I know you are committed to it. This Committee is committed to it. We know we have 

a lot more work to do. 

But thank you for coming today and we look forward to continuing to reach our goal. Thank you very much. The committee is 

adjourned. 


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(i) 

W I T N E S S E S 

Page 

Benjamin, Ambassador-At-Large Daniel ............................................................... 579 

Clinton, Hon. H. R ................................................................................................... 1 

Fields, Major General Arnold ................................................................................. 655 

Gambatesa, D. A ...................................................................................................... 655 

Geithner, Hon. T. F ................................................................................................. 273 

Goosby, Eric ............................................................................................................. 489 

Holbrooke, R. C ........................................................................................................ 783 

Johnson, Charles ..................................................................................................... 655 

Johnson, D. T ........................................................................................................... 579 

Shah, Dr. Rajiv........................................................................................................ 97 783 

Shapiro, A. J ............................................................................................................ 579 

Steele, Gloria ............................................................................................................ 489 

Williams, A. S .......................................................................................................... 381 

Yohannes, D. W ....................................................................................................... 427 

Æ 


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