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[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]

 
 REVIEWING THE ADMINISTRATION'S FY 2015 BUDGET REQUEST FOR EUROPE AND 

                                EURASIA
=======================================================================

                                HEARING

                               BEFORE THE

         SUBCOMMITTEE ON EUROPE, EURASIA, AND EMERGING THREATS

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 25, 2014

                               __________

                           Serial No. 113-170

                               __________

        Printed for the use of the Committee on Foreign Affairs

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
                                  or 
                       http://www.gpo.gov/fdsys/

                                 ______

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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
TREY RADEL, Florida--resigned 1/27/  GRACE MENG, New York
    14 deg.                          LOIS FRANKEL, Florida
DOUG COLLINS, Georgia                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida
LUKE MESSER, Indiana--resigned 5/
    20/14 noon deg.
SEAN DUFFY, Wisconsin--
    added 5/29/14 noon deg.

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

         Subcommittee on Europe, Eurasia, and Emerging Threats

                 DANA ROHRABACHER, California, Chairman
TED POE, Texas                       WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             GREGORY W. MEEKS, New York
JEFF DUNCAN, South Carolina          ALBIO SIRES, New Jersey
PAUL COOK, California                BRIAN HIGGINS, New York
GEORGE HOLDING, North Carolina       ALAN S. LOWENTHAL, California
STEVE STOCKMAN, Texas

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Daniel Rosenblum, Coordinator of U.S. Assistance to Europe 
  and Eurasia, Bureau of European and Eurasian Affairs, U.S. 
  Department of State............................................     4
Mr. Jonathan Katz, Deputy Assistant Administrator, Bureau for 
  Europe and Eurasia, U.S. Agency for International Development..    17
Ms. Denise Rollins, Acting Assistant Administrator, Bureau for 
  Asia, U.S. Agency for International Development................    24

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Daniel Rosenblum: Prepared statement.........................     7
Mr. Jonathan Katz: Prepared statement............................    19
Ms. Denise Rollins: Prepared statement...........................    26

                                APPENDIX

Hearing notice...................................................    44
Hearing minutes..................................................    45

                 REVIEWING THE ADMINISTRATION'S FY 2015

                     BUDGET REQUEST FOR EUROPE AND

                                EURASIA

                              ----------                              

                        WEDNESDAY, JUNE 25, 2014

                       House of Representatives,

         Subcommittee on Europe, Eurasia, and Emerging Threats,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2:05 p.m., in 
room 2200, Rayburn House Office Building, Hon. Dana Rohrabacher 
(chairman of the subcommittee) presiding.
    Mr. Rohrabacher. I call this hearing of the Europe, 
Eurasia, and Emerging Threats subcommittee to order. This 
hearing is entitled, ``Reviewing the Administration's Fiscal 
Year 2015 Budget Request for Europe and Eurasia.
    Now, all members will have 5 legislative days to submit 
additional written questions or extraneous materials for the 
record.
    The President has asked that Congress authorize over $50 
billion for international affairs programs for the next fiscal 
year. Over $620 million of that is allotted for countries in 
the jurisdiction of this subcommittee. This request comes at a 
time when our Government's debt is over $16 trillion and 
rising, rising at $500 billion more in debt every year.
    At a time when our own country's economy continues to 
struggle, Congress has a duty to scrutinize this 
administration's request, and the request to provide the 
development assistance, and foreign aid to other countries is 
certainly something that we need to look at closely. Western 
Europe is often cited as one of the greatest examples of U.S. 
foreign assistance success.
    After World War II, the Marshall Plan delivered $13 billion 
to help rebuild a shattered Europe and prevent the advance of 
Communism. As much as American aid dollars helped to relieve 
suffering, it was implemented in a way that connected it to a 
larger U.S. grand strategy, so we were not only helping others 
but involved with our overall global strategy.
    Furthermore, the German Government took upon itself to 
conduct reforms that removed extensive price controls and other 
restrictions on trade, production, and the distribution of 
goods, and those efforts on the part of the German Government 
did much to rebuild that economy. The success of the Marshall 
Plan highlights two key aspects for our international affairs 
efforts. First, any aid must be linked to a strategy and part 
of a coherent vision that serves our country's national 
interest. Second, true and sustainable development grows not 
from foreign assistance but from systematic economic reform. 
Economies grow when the rule of law is established, corruption 
is reduced, taxes are low, markets are open, and trade is free.
    I believe that our aid programs today fail to adequately 
appreciate these two attributes and too often resemble 
charitable handouts. Let me note, there is a grave distinction 
between humanitarian assistance and development aid.
    Of course, we should be ready to respond to natural 
disasters, earthquakes, and the likes. However, development 
funds can't work if the recipient countries do not undertake 
sound economic reforms. The role of government assistance is 
not to replace private investment. I look forward to hearing 
from our witnesses about how more than $600 million has been 
requested and how this furthers America's strategic interest 
and is effectively encouraging countries to reform their own 
economies so that private capital can lift their people out of 
poverty.
    With that, I turn to my ranking member, Congressman 
Keating, for his opening statement.
    Mr. Keating. Well, thank you, Mr. Chairman, for holding 
this important hearing today, and I want to welcome Mr. 
Rosenblum, Mr. Katz, and Ms. Rollins, who each have extensive 
experience in Europe and Eurasia.
    Since the collapse of the Soviet Union over two decades 
ago, the United States has worked to promote stability, 
democracy, and prosperity in Europe, Eurasia, and Central Asia. 
Our assistance efforts have supported the growth of civil 
society and independent media and have worked to establish 
societies where rule of law, accountable governance, and 
fundamental human rights prevail.
    Importantly, we have worked together with our European 
partners to help these countries on their self-determination 
path toward Westernvalues and institutions.
    Today, Russia's efforts to destabilize Ukraine and other 
former Soviet states threaten to undermine our collective 
effort to build a Europe whole, free, and at peace. Russia's 
illegal occupation and annexation of Crimea and its subsequent 
covert support for separatists in Eastern Ukraine have inflamed 
tensions throughout the entire region. Regrettably, Russia's 
engagement in similar activities in Georgia, Moldova, and even 
the Baltics, in flagrant violation of Russia's own 
international commitments, have undermined the sovereignty of 
these countries and unnecessarily increased the risk of 
conflict. These actions must not be allowed to stand.
    I am pleased that our partners, too, have shown they will 
not back down from aggression. This week, Ukraine, Georgia, and 
Moldova are signing association agreements with the European 
Union, and in doing so, they are making clear that their future 
lies in strong ties with the West. When these countries 
realize, as does the European Union, that the European 
integration is not a zero sum game, they realize the importance 
of close and productive ties with their regional neighbors, 
including Russia. In fact, I would argue that closer 
association with the EU is also in Russia's long-term interest.
    Ironically, Russia's actions in Eastern Europe ultimately 
do the Russian people more harm than they do good. That is why 
today's hearing is so important. We need to support these 
countries as they work together to build prosperous European 
democracies. In that light, I look forward to discussing the 
administration's plans to reinvest the liquidation proceeds 
from the Western Newly Independent States Enterprise fund in 
Ukraine, also known as West NIS. Recent events in Ukraine show 
the population is no longer willing to tolerate corruption and 
crony capitalism that have permeated Ukraine's politics for the 
past two decades.
    In the spirit of a fresh start, it makes sense to reinvest 
proceeds from the West NIS in Ukraine at zero cost to the 
American taxpayers, so we can help Ukraine's pro-reform 
government stabilize their financial sector, improve the 
business climate and attract foreign investment, all of which 
will increase prosperity and all of which will promote 
stability.
    I also look forward to hearing from our experts about our 
strategies for continued engagement in the region, not just in 
Eastern Europe but also in the Balkans, Central Asia, and 
Ireland. No matter what country or region we are discussing, it 
is essential that the United States stands for the rule of law, 
democracy, and human rights. While we continue to have strong 
allies in Europe and Eurasia, we cannot take these important 
relationships for granted. I support a foreign affairs budget 
that is focused on continuing support for these relationships 
and ensuring that peace and democracy are allowed to flower.
    With that, I thank you, Mr. Chairman.
    Mr. Rohrabacher. I thank you, and we have been joined by 
Congressman Lowenthal.
    Do you have a 1-minute opening statement or anything you 
would like to say? But you have to push the button.
    Mr. Lowenthal. I will do a 1-minute opening statement. 
First, I am pleased, thank you for holding this hearing, 
Chairman Rohrabacher and Ranking Member Keating. I just want to 
say that I, along with other--Chairman Royce and Ranking Member 
Engel, just before the May 25th election in early May, visited 
the Ukraine, and we are very glad to see the May 25th election.
    One of the things I was struck with was things that were--a 
number of things that Ranking Member Keating mentioned, issues 
around corruption, issues around how you unite Eastern--and 
what conditions we place on our foreign aid and our resources.
    Some of the issues that I was most concerned about was the 
disconnect between Eastern and Western Ukraine, some of the 
issues around reform that the government needed to do in terms 
of decentralization and more attention to the Russian heritage 
in folks from Eastern Ukraine, who felt that much of their--
that they were being denied attention, and if there was going 
to be one Ukraine, the importance of bringing back all parts of 
that country.
    Mr. Poroshenko made a commitment to doing that, and--but he 
also made a commitment to moving toward the EU, and I think 
that when we were there, anyway, there was a lack of Russian 
language broadcast by the Ukrainians, and into Eastern Ukraine 
what was coming in was only from Russia, and so the people were 
only hearing one side, and there was that disconnect. And to 
bring people together, it is going to mean that all parts of 
the country, just as we see in Iraq and others, all segments 
have to be part of that government, and so I would just like to 
see how our foreign aid really advances democracy in Ukraine. 
Thank you.
    Mr. Rohrabacher. Thank you very much, Mr. Lowenthal.
    And we have three witnesses today, and I will be reading 
their biographies and presenting that.
    But I would request that as we move into the time of the 
testimony, that you would give us your summary in about 5 
minutes, and the rest, of course, can go into the record.
    We first have Daniel Rosenblum, who is the State Department 
coordinator for U.S. assistance to Europe and Eurasia. He 
oversees U.S. aid to over 30 countries, mostly in the former 
Soviet Union. His office coordinates those programs across more 
than a dozen U.S. Government agencies.
    Previously, Mr. Rosenblum was--served as director of the 
FREEDOM Support Act Division and the deputy coordinator for 
that same office. Before coming to the State Department, Mr. 
Rosenblum spent 6 years as a senior program coordinator at the 
Free Trade Union Institute of the AFL/CIO. He has a BA in 
history from Yale and an MA in Soviet studies and international 
economics from Johns Hopkins School of Advanced International 
Studies.
    And we have Mr. Jonathan Katz, who we have worked with over 
the years, and been on this side of the aisle--or this side of 
the table and that side of the table as he has worked as a 
USAID's deputy assistance administrator for Europe and Eurasia, 
was appointed to his current post in March of this year. 
Previously, he served as a senior advisor to the assistant 
secretary of state and the Bureau of International 
Organizations Affairs. Katz joined the State Department 2010 
after working, as I say, here on Capitol Hill for 13 years as a 
staff director, minority staff director for this very same 
subcommittee, and he also served as legislative director for 
Congressman Robert Wexler, who we miss. He is a graduate of 
Syracuse University.
    Finally, we have Ms. Denise Rollins, also from USAID. She 
is acting assistant administrator for the Asia Bureau. Before 
assuming her current role, she was a senior director--or deputy 
assistant administrator since 2011, that organization. Ms. 
Rollins has served as USAID's mission director in Bangladesh 
and deputy missions director in South Africa. Before joining 
USAID, she worked as a legislative assistant to two Members of 
Congress. Ms. Rollins received a master's of international 
public policy degree from Johns Hopkins University and a 
bachelor in arts degree in economics from Howard University. I 
would like to welcome our witnesses.
    And Mr. Rosenblum, you may proceed, and we will then ask 
questions of the entire group after all the testimonies have 
been given.

    STATEMENT OF MR. DANIEL ROSENBLUM, COORDINATOR OF U.S. 
   ASSISTANCE TO EUROPE AND EURASIA, BUREAU OF EUROPEAN AND 
           EURASIAN AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Rosenblum. Thank you, Mr. Chairman.
    Thanks very much. Chairman Rohrabacher, Ranking Member 
Keating, Mr. Lowenthal, thank you all for inviting us to 
testify today on the Fiscal Year 2015 budget request for 
Europe, Eurasia, and Central Asia.
    For more than two decades, the U.S. has been working to 
support political and economic reform in the formerly Communist 
states of Central and Eastern Europe and the Soviet Union. 
During that entire period, successive administrations have 
received strong bipartisan support for this effort, backed up 
by generous appropriations totalling $25.4 billion over that 
25-year period under the SEED and FREEDOM Support Acts.
    I want to start today by directly answering the question 
posed by the chairman in his statement that announced today's 
hearing. The question was, is our aid to this region being used 
in a fiscally responsible manner that helps to put nations on a 
path to where that aid is no longer needed? The answer, in my 
humble opinion, is yes. From the very beginning of our work in 
the post-Communist region, the basic philosophy has been, our 
job is to work ourselves out of a job. We want to help 
countries get to the point where they no longer require 
development aid, and if you look at the track record, it is 
pretty good. There are some real successes.
    Eleven countries have graduated from development 
assistance. All of them are now aid donors themselves. All of 
them are members of the European Union and NATO. Other 
countries in the Western Balkans continue to make significant 
progress toward EU and NATO membership. A few countries in 
Eurasia and in Central Asia have also made substantial progress 
toward establishing free market economies and democratic 
political systems, and if we have time later in today's 
hearing, I would like to tell you more about how we measure 
these trends and how we determine when it is time to phase out 
assistance.
    But my main message for the subcommittee today is that the 
goal of a Europe whole, free, and at peace isn't achieved and 
our work isn't done. I have outlined the remaining challenges 
in more detail in my written testimony, and Mr. Chairman, I ask 
permission that it appear in the hearing record.
    Mr. Rohrabacher. Without objection.
    Mr. Rosenblum. Our requested budget for Europe, Eurasia, 
and Central Asia is $625.3 million, a decrease of nearly 17 
percent, or $125 million as compared to Fiscal Year 2013, 2 
fiscal years ago. I should note that this budget was finalized 
before the onset of the Ukraine crisis. Since that crisis 
began, the U.S. has provided Ukraine a $1-billion loan 
guarantee and has redirected approximately $131 million in 
crisis-related assistance to augment our regular bilateral 
budget. This was done by redirecting previously appropriated 
Fiscal Year 2013 and Fiscal Year 2014 funds from various other 
regional and global pots.
    We have not requested any additional funds from Congress to 
date. In Fiscal Year 2015, our strong interest in bolstering 
stability, sovereignty, and reform in Ukraine and other 
countries in the region will likely require adjustments to what 
we proposed nearly 5 months ago in the budget request, 
potentially including adjustments to overall levels.
    Based on Appropriations Committee action in both House and 
Senate this week, it appears that Congress agrees with this 
assessment and may provide enhanced funding for this region. We 
look forward to final congressional action on Fiscal Year 2015 
funding measures, and at that time, of course, we will be 
consulting with this committee and other committees on any 
proposed adjustments from what we requested for Fiscal Year 
2015.
    So let me briefly, in the time remaining, outline five 
strategic objectives for our assistance to the region. First, 
we aim to enhance sovereignty, including the right of countries 
in the region to choose their own political and economic 
relationships. This is playing out today most dramatically in 
Ukraine, but it is an element in our assistant strategy 
throughout the region. In Central Asia, for example, we are 
helping countries in the region develop a diverse set of 
energy, trade, and transport linkages under the New Silk Road 
initiative.
    Second, we are supporting greater European integration for 
countries that seek it. This Friday, in Brussels, Moldova and 
Georgia will sign association agreements and deep and 
comprehensive free trade agreements with the EU. Ukraine will 
sign the remaining economic chapters of its association 
agreement. Many of our programs are helping these countries 
meet the necessary standards to implement these agreements.
    Third, we are working to help countries throughout the 
region take meaningful steps to root out corruption and shore 
up rule of law. We have seen that rampant corruption is like a 
cancer that drains economic vitality and undermines faith in 
democratic institutions. In the Western Balkans, we have seen 
some limited process in the context of the EU accession 
process, while in Eurasia and Central Asia serious challenges 
remain often due to a lack of the requisite political will to 
tackle the problem.
    Fourth, we are working to reverse the worrying trend of 
democratic backsliding. Our assistance aims at empowering those 
who seek to preserve and expand democratic principles, whether 
in independent media, the justice sector, democratic political 
parties, or other parts of civil society. Where possible, we 
seek to engage with government institutions that are open to 
reform.
    Fifth and finally, we are also supporting efforts to tackle 
broader security issues and transnational threats, ethnic 
tensions, protracted conflicts, infectious disease, organized 
crime, and weapons of mass destruction proliferation. The 
President's Fiscal Year 2015 request recognizes that even in a 
constrained budget environment, we can still utilize foreign 
assistance to advance U.S. national interests in Europe, 
Eurasia, and Central Asia.
    Going forward, we plan to maintain our 25-year tradition of 
working with Congress in a bipartisan manner to ensure that the 
resources that the American people provide for this purpose are 
being used in the most efficient and effective way possible to 
support stability, prosperity, and democracy in the region. 
Thank you.
    Mr. Rohrabacher. Thank you very much.
    [The prepared statement of Mr. Rosenblum follows:]
    
    
                              ----------                              

    Mr. Rohrabacher. Mr. Katz.

STATEMENT OF MR. JONATHAN KATZ, DEPUTY ASSISTANT ADMINISTRATOR, 
 BUREAU FOR EUROPE AND EURASIA, U.S. AGENCY FOR INTERNATIONAL 
                          DEVELOPMENT

    Mr. Katz. Mr. Chairman, it is especially--it is special for 
me to be here before the committee today, so we appreciate the 
opportunity. Mr. Chairman----
    Mr. Rohrabacher. You are in the hot seat now.
    Mr. Katz. Mr. Chairman, Ranking Member Keating, members of 
the subcommittee, thank you for inviting me to testify 
regarding the administration's Fiscal Year 2015 budget request 
for Europe and Eurasia. American foreign assistance is a vital 
tool in our effort to realize the U.S. foreign policy goal of a 
Europe whole, free, and at peace. To achieve this goal in an 
era of shrinking budgets, we are focused on strategic areas of 
U.S. Assistance to Europe and Eurasia.
    The majority of assistance requested for the region will be 
targeted to support democratic, economic, justice sector, and 
other reforms, particularly those necessary for Euro-Atlantic 
integration. As the chairman and as the ranking member 
highlighted, over the past two decades, we have witnessed 
significant progress toward these goals, and many countries in 
Europe have embraced political and economic reform, leading to 
vibrant growth and inspired democratic transformations.
    From USAID's 24 original partner countries in Europe and 
Eurasia, as Dan pointed out, 11 have graduated from our 
assistance, 17 have joined the WTO, 11 have acceded to the EU, 
and 12 have joined NATO. The 11 countries that have graduated 
from our assistance are some of our strongest allies and are 
now providing economic assistance to other countries in the 
region.
    Despite these advances, the work is far from complete, 
gains are tenuous, and much remains to be done to make progress 
sustainable. We are working to assist those countries and 
people from Sarajevo to Tbilisi to Kiev, that seek to move 
forward on a path to an even greater Euro-Atlantic integration, 
democracy, and progress.
    In Europe and Eurasia, serious challenges remain, including 
democratic backsliding, gradual financial sectors, high 
unemployment, infectious diseases, ethnic violence and tension, 
frozen conflicts, energy insecurity, and corruption, which was 
mentioned a number of times. Perhaps most notably, external 
pressures destabilize Ukraine and others in the region, 
threatening economic and political development across the 
former Soviet space.
    Our Fiscal Year 2015 request for Europe and Eurasia 
addresses continuing and emergent U.S. policy objectives while 
also recognizing budget constraints here in Washington. Our 
assistance is focused on two main objectives, to continue to 
promote democracy and economic reform in Europe and Eurasia and 
to strengthen democracy, governance rule of law, and economic 
growth. One of our core objectives across the region is to 
promote civic--citizen engagement and strength in civil society 
to mitigate backsliding on democratic reforms and economic 
development.
    Ukraine offers a prime example of how USAID support for 
civil society and media groups helps stop or limit government 
pressure and freedom of expression and association. Our media 
programs played a critical role in monitoring and reporting on 
attacks on journalists and on government actions throughout the 
Euromaidan protests.
    Looking ahead, USAID will continue to play a pivotal role 
as we work to sustain and strengthen cooperation between 
Ukrainian civil society and Ukrainian Government. Already 
strong cooperation between civil society and the government has 
led to historic reforms over the past 4 months, but that 
progress needs to continue.
    I want to further highlight our assistance to Ukraine. 
Since 1992, USAID has had a longstanding multifaceted 
engagement, focused on a more stable, democratic, and 
prosperous Ukraine, including on programs to promote economic 
reforms, support more democratic accountable governance, and 
combat HIV/AIDS and tuberculosis. Recent events in Ukraine, 
including the election of President Poroshenko and the response 
of the United States to them remain critical not only to 
Ukraine's future but the region's future as well.
    The U.S. is working with our international partners today 
to maximize and leverage assistance, provide urgently need 
support to Ukraine's people and economy. Our approach in 
Ukraine is to support the goals and aspirations of all the 
people of Ukraine for piece, prosperity, freedom, and human 
dignity, what so many Ukrainians are demanding the Maidan.
    Fiscal Year 2015 U.S. Bilateral assistance package is 
focused on meeting Ukraine's most pressing need and helping 
Ukraine make needed reforms. USAID's assistance will focus on 
four areas, which Dan mentioned, strengthen Ukraine's economy 
and promoting growth, support for constitutional reforms, 
national unity, confidence and confidence building measures, 
and help to diversify Ukraine's trade and reduce its energy 
dependence, as well as to support a fight against corruption. 
Just last week, I joined USAID administrator Dr. Rashad in Kiev 
to announce an additional $10 million in USAID funding that 
will be largely used to help Ukraine fight corruption.
    Mr. Chairman, Congressman Keating, members of the 
subcommittee, thank you again for this opportunity. The U.S. 
has a long track record of successful assistance to countries 
in Europe and Eurasia, but as the events of the last several 
months have demonstrated, there is much work to be done in this 
region. The Fiscal Year 2015 request will enable us to remain 
engaged in providing U.S. assistance in Europe and Eurasia at 
this critical moment. I will end there and look forward to 
answer any questions that you have. Thank you.
    Mr. Rohrabacher. Thank you.
    [The prepared statement of Mr. Katz follows:]
    
    
                              ----------                              

    Mr. Rohrabacher. Ms. Rollins.

       STATEMENT OF MS. DENISE ROLLINS, ACTING ASSISTANT 
 ADMINISTRATOR, BUREAU FOR ASIA, U.S. AGENCY FOR INTERNATIONAL 
                          DEVELOPMENT

    Ms. Rollins. Thank you so much, Mr. Chairman.
    Mr. Chairman, Ranking Member Keating, and Mr. Lowenthal, I 
am delighted to be here today to testify alongside my 
colleagues here on the administration's 2015 budget for Central 
Asia. This afternoon I wanted to share with you our perspective 
on the vital role of USAID's development programs in 
Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and 
Uzbekistan in addressing regional challenges and advancing 
American interests.
    More than 20 years after the region first opened its doors 
to international engagement, American involvement provides 
balance as well as choice for a disparate collection of 
countries that face ever more complex challenges in determining 
their own futures. These challenges will become even more 
formidable during the next 5 years or so against the backdrop 
of uncertainty in Afghanistan. Rising geopolitical interest of 
Russia, growing Chinese influence and looming political 
transition across the region where the Soviet legacy continues 
to have an important impact.
    From the U.S. perspective, active engagement in Central 
Asia and especially the good will and cooperation that result 
from well designed and well implemented assistance programs can 
help to establish a lasting alternative to forces that would 
otherwise destabilize the region.
    The President's Fiscal Year 2015 budget request for Central 
Asia is $133 million, which will enable both the State 
Department and USAID to continue to play an integral role in 
strengthening democratic systems of governance and diversifying 
economies. USAID's development assistance to the Central Asian 
republics also includes meeting urgent human needs through a 
focus on health, agriculture, and other issues, such as 
combatting human trafficking.
    To help--this is to help ensure countries grow peacefully 
and sustainably with the wherewithal to determine their own 
futures.
    So we are tackling complex regional challenges and 
advancing U.S. foreign policy through three development 
approaches. Number one, increasing regional economic 
cooperation and connectivity, which will help accelerate 
private-sector-led trade and yield greater prosperity and 
stability across the region as more cross-border ties are 
forged. Number two, we are addressing regional development 
challenges through the three Presidential initiatives: The 
Global Health Initiative, Feed the Future, and Global Clinate 
Change Initiative. Number three, we are leveraging our new 
business model, which is science, technology, innovation, and 
partnership, STIP, as we call it, which will extend our reach 
and maximize our impact while driving down cost and yielding a 
better return for the American taxpayer.
    Regional economic connectivity matters because while trade 
figures remain modest for now, greater economic dynamism across 
the region can provide future opportunities for international 
businesses, especially in key areas, such as the services 
industry, energy, mining, higher education, and infrastructure. 
USAID contributes to U.S. Government efforts under the New Silk 
Road initiative to increase regional economic connectivity 
between the economies of the peoples of South and Central Asia 
and, ultimately, foster greater political and socioeconomic 
stability across the broader region.
    While originally envisioned as a means to aid in 
Afghanistan's transition post-2014, our work toward regional 
connectivity in Central Asia is all the more critical in the 
current context of Russia's reassertion of influence in former 
Soviet spaces.
    This regional focus continues through the implementation of 
the three Presidential initiatives.
    Throughout our work in this constrained budget environment, 
USAID is utilizing a new model of development that promotes 
partnerships and harnesses science, technology, and innovation 
to enhance development outcomes and maximize impact.
    Across Asia, we are leveraging new talent and resources 
wherever possible--from the growing private sector to expanded 
donor collaboration. A prime example of how we utilize this 
approach is in Turkmenistan, for example, where through an 
innovative public-private partnership with Junior Achievement 
and Chevron, USAID is equipping young people in that country 
with practical skills that better prepare them to find jobs 
upon graduation, and it makes schooling more relevant to the 
demands of the modern job market.
    Finally, we are leveraging greater funding and support of 
development programs from emerging donors, and you heard my 
colleagues mention this, such as the Government of Kazakhstan. 
For the past several years, the Kazakh Government has provided 
two-thirds of the total funding for our economic development 
programming and is poised to provide an even larger share of 
funding over the next several years.
    Mr. Chairman, in today's interconnected world, our success 
addressing development challenges in Central Asia matters more 
than ever. Continued USAID assistance is vital in order to 
sustain gains and contribute to increased stability and 
prosperity in a part of the world where progress can pay 
dividends across the border region. I appreciate the 
opportunity to share what USAID is doing in Central Asia and 
look forward to your guidance. Thank you.
    [The prepared statement of Ms. Rollins follows:]
    
    
                              ----------                              

    Mr. Rohrabacher. I thank all of our witnesses for your 
concise and very to the point testimony today.
    And the chairman intends to yield to the ranking member as 
well as to Congressman Lowenthal so that they will have their 
time to ask questions first, and then I will take advantage of 
my opportunity after they are done.
    You may proceed, Mr. Keating.
    Mr. Keating. Well, thank you, Mr. Chairman, and I look 
forward to working together with all of you for the type of 
assistance you describe in your testimony to Georgia, Moldova, 
and Ukraine, and despite the constraints we have on our budget 
during this very difficult fiscal time, I am convinced that in 
the right situations, Congress will continue to do the right 
thing.
    However, I just want to make clear, and I think I speak for 
many members, that it is essential that the administration help 
us make the case to our constituents here at home, that this 
money is spent wisely, and two of you have mentioned 
specifically the pervasive nature of corruption in Ukraine and 
through some of the countries in this region. I just wanted you 
to comment on what kind of safeguards the administration has 
put in place on U.S. assistance on the funds to Ukraine 
Government, those funds being raised through the U.S. loan 
guarantees in particular, and also comment on any assurances 
that these funds won't be used to pay debts to Russia.
    Mr. Rosenblum. So thank you for that question, Mr. Keating. 
It is obviously something that is of great concern to us as 
well, and we know we have to make the case to the American 
taxpayer that their money is being well spent. On the--
specifically on the loan guarantee, we provided that on the 
basis of a written agreement with the Ukrainian Government in 
which they undertook certain--they made certain commitments, 
one of which was that the money would be used for the purposes 
that we agreed on, which were to contribute to their ability to 
meet obligations to the population and social spending.
    The adjustments that Ukraine has had to made as a result of 
the IMF program have created and potentially will create more 
hardship for the population because they are dealing with a 
legacy of many, many years of inefficient and poorly targeted 
subsidies through their social safety net system. That is being 
changed now with help from the World Bank, but in the meantime, 
there is going--there is going to be some short-term 
dislocation and pain, so we felt it was important for our funds 
to go in that direction.
    The funds, as you know, are--were raised by the Ukrainian 
Government itself through a bond issuance that our guarantee 
helped to make possible and then went into their general 
treasury to be spent for the purpose of these--the social 
payments. I will just make a general--more general point about 
the risk of corruption and diversion of funds, and that is that 
this mechanism for support that we provided in the case of 
Ukraine in May was very unusual for us, and I can only think, 
in the years that I have been doing this, of maybe two other 
occasions in 17 years or so where we have--where we have 
essentially provided budget support to countries. One was with 
Georgia after the 2008 conflict and one was in Kosovo, right 
after Kosovo's independence, where we provided debt relief. In 
general, our assistance is provided through technical 
assistance, advisors, grants to civil societies, support to 
private business, et cetera, so--and in this those cases, you 
know, we are not as exposed to that risk.
    Mr. Katz. The only thing I would add, too, is that I think 
on the issue of corruption, at least what we have seen so far 
since March is a real effort to pass reform legislation, 
anticorruption legislation, a lot of it which was gathering 
dust previously. And I will just read you the past four really 
important pieces of legislation recently, and these are 
working--and this is Ukrainian civil society working with the 
government that passed a new public procurement law which was 
recently adopt. New amendments were adopted to the criminal law 
and framework law in preventing and countering corruption. 
Legislation was adopted on access to public information, 
legislation adopted on access to information of budgetary 
expenditures of government.
    Mr. Keating. Can I interrupt just because our time is 
getting----
    Mr. Katz. Sure.
    Mr. Keating [continuing]. Short. And I want to see if I can 
get one--at least the beginning of another question here. What 
recourse is there if they are not doing this and then not 
adhering to these guidelines, just quickly? What do we have as 
a mechanism or safeguard to enforce that they are?
    Mr. Rosenblum. So, well, one recourse we have is to 
withhold further aid, and you know, we--our support is assuming 
a commitment to reform. I think that the chairman made this 
point in his opening about, you know, the success of these 
programs only is ensured if governments have that commitment, 
have that in the policies in place.
    Mr. Keating. We can maybe follow up on that. I just wanted 
to get one other topic in.
    Mr. Rosenblum. Sure.
    Mr. Keating. I am running a little bit over in time but----
    Mr. Rohrabacher. I will give you one more.
    Mr. Keating. Thank you, Mr. Chairman. And this is something 
we had a committee hearing on.
    Mr. Rohrabacher. We will have second round if you want.
    Mr. Keating. A committee hearing on this previously as 
well, and that is the issue that we take a lot of pride in our 
country and I think in terms of peacekeeping and have another 
example of where our country's intervention clearly made a 
difference, whether it was political and religious turmoil in 
the past, and that is in Northern Ireland, and particularly 
given the rise in Euro skepticism and the continuing communal 
violence that has been spiking up there from time to time. I 
just wanted you to comment on not having the administration 
fund moneys, any moneys, zero summing international fund for 
Ireland.
    Mr. Rosenblum. Mr. Keating, the U.S. committed in 2012 to 
provide $7.5 million to the IFI in support of a action plan 
that was agreed on by all the contributors to it, and the 
funding that we provided between 2011 and 2014, so this current 
fiscal year, we will have met that commitment. As we looked at 
the 2015 budget and given the significant budget constraints 
that we faced and the need to focus on the highest priorities, 
we didn't request additional funding, as you noted, for IFI, 
but that does not bear at all on our strong commitment to 
provide diplomatic support for the efforts of our partners in 
Ireland, United Kingdom to move forward on the peace process to 
work with the Haass proposals that are on the table now. I 
think there was just a meeting yesterday where those were 
discussed with all the parties, and our assistant secretary 
actually in my bureau, Victoria Nuland, is on her way to 
Northern Ireland as we speak. I think she is there tomorrow to 
continue that engagement, so we are very committed to it.
    As things go forward, we are always open to reconsidering 
programming and things that we can do to help the process. At 
this point, though, again, you know, in our request, we didn't 
include the funding for that for those reasons.
    Mr. Keating. I hope in part because of our hearing that we 
had earlier this year that the House will be engaged and has 
been engaged, frankly, in trying to get some of those fundings 
because part of the response we had from that hearing was the 
necessity to take it that final step, and we are so close to 
the process. It had some obstacles that that was particularly 
noted that the U.S.--we have been such a strong supporter, had 
not come through with that, so that is my comment, and I yield 
back, Mr. Chairman.
    Mr. Rohrabacher. Thank you very much.
    Mr. Lowenthal.
    Mr. Lowenthal. Thank you, Mr. Chairman.
    First, I would like to associate myself with many of the 
questions that Mr. Keating asked, especially wanting some of 
the specifics in terms of you mentioned rooting out corruption 
and eliminating corruption, especially in the Ukraine, which as 
I mentioned, I just recently visited, which even as up to the 
May 25th election, even though reforms had been put into place, 
everyone acknowledged that there still was rampant, rampant 
corruption going on.
    But as I also pointed out, I would like to know, you know, 
us to acknowledge or at least to talk about our funding. There 
is a real clear difference--not that it is not one country 
between Eastern and Western Ukraine, there were some really 
critical differences, and when we were there, we heard lots of 
talk about, well, there will be greater decentralization of 
power, that is part of the reforms, there will be more control 
over some of the budgetary things, there will be more 
responsiveness to many of the Russian--Ukrainians of Russian 
heritage. Are these measurable objectives that we look at also? 
And how are we going to look at to see whether this occurs so 
that regardless of the outside Russian coming in, there were 
some really legitimate concerns that were going on in this 
country? And are we aware of that, and how are we going to at 
least condition some of our resources and foreign aid to their 
making changes to really bring--have a more unified government?
    And then the third question is where does our funding and 
what do you see in terms of energy independence for the Ukraine 
in the sense of U.S. funding, where are we, and are they going 
to need additional resources?
    Mr. Rosenblum. Okay. Thank you for three very excellent 
core questions for us, and I will look to Jonathan to help 
provide some of the answers.
    So, corruption, first of all. I can talk specifically about 
Ukraine, but what I say applies more broadly which is that it 
is--and I think I said in in my opening statement. It really is 
like a cancer that eats away at the very, you know, vital force 
of the society, and we--and addressing it and dealing with it 
is very complex, and we haven't, to be honest, seen a lot of 
great success stories around the world and in our region. Where 
it has been more successful, you need a combination of high 
level commitment, and as we, you know, use the phrase 
``political will,'' really willing to do some risks and do 
prosecutions and pursue cases against people, but you also need 
the demand coming from civil society that is organized and it 
is pushing. That has to be there, too.
    I think right at the moment, in Ukraine, you do have both 
of those elements. You know, the proof is in the pudding as 
they say, and we still need to wait to see, you know, Jonathan 
referred to these new laws being adopted. They have to be 
implemented, and that is one of the areas where our assistance 
can help by having--we talked with the government about having 
advisors that would actually be in ministries and help with the 
implementation. Other donors are committed to that as well. So, 
it is a long-term and complicated task, but it is essential and 
especially in Ukraine.
    On the second question was about the unity of the country, 
the east/west divide, and so on. We think it is absolutely 
essential that that be agenda item number one. I guess maybe it 
is obvious it has to be, given the violence and separatist 
activities in Eastern Ukraine. President Poroshenko has made a 
very strong commitment, which he is now following through on, 
to open negotiations. There is a ceasefire that has been in 
effect for--a unilateral ceasefire, I should add--for the past 
5 days, and negotiations have begun, discussions have begun. 
That is going to have to be in the context of a broader move 
toward reforming the constitution, which again, he is also very 
strongly committed to, to provide for more decentralization, 
more authority, as you were alluding to, to local government.
    But the one other element that you didn't mention, which I 
think is also critical, is the economic growth in the east 
especially. That region, as you know, it is sort of the rust 
belt of Ukraine and has lagged behind much of the rest of the 
country in growth and has a lot of industrial enterprises that 
are not particularly efficient anymore, and grappling with that 
has been a challenge for every Ukrainian Government. It is 
going to remain one here. We and other donors are right now 
thinking about and planning activities that can help jump start 
growth in the east in terms of especially small business 
growth, more credit access for small businesses, providing 
support basically to grow the economy in the east, and that 
will, over time, also affect the split, the divide in the 
country.
    And then the third, the third issue was----
    Mr. Katz. Energy.
    Mr. Rosenblum. The energy, right. Energy, like corruption 
at large, very complex, lots of elements to it. Just in terms 
of what we are specifically doing on energy in Ukraine, 
together with the EBRD, the European Bank for Reconstruction 
and Development, and the EU, we are developing a plan to help 
restructure the gas supply system, and the company that is in 
charge of that, Naftogaz, this is something that, again, the 
government has asked us for help with. That company and that 
system is a source of a lot of, you know, the inefficiencies, 
the losses, and the corruption that plagues the energy system 
in Ukraine.
    We also have been helpful more in a diplomatic way, not so 
much through assistance, on the issue of reverse flows of gas 
so that more gas can be coming from Europe back into Ukraine 
from especially Slovakia. The EU sort of has the lead on that, 
but that is another critical issue.
    And then the other area, which is something Jonathan's--
that USAID is deeply involved in is energy efficiency.
    Mr. Rohrabacher. Which is not heard of at this moment in 
Ukraine.
    Mr. Rosenblum. Yes, it is nascent.
    Mr. Rohrabacher. It is already----
    Mr. Katz. Inefficient, one of the worst in the--globally.
    Mr. Rosenblum. Yeah. So we have got a program already that 
USAID has been doing for years in Ukraine. We are going to 
expand that and get more financing for local infrastructure 
improvements that will make the efficiency work. So that is--I 
don't know if, Jonathan, you wanted to add.
    Mr. Katz. Yeah. No. I sort of associate on all of your 
remarks as well. I think what you--what Dan was saying about 
this being the right moment, a moment I think the--Congressman 
Keating mentioned that as well, that Maidan had such an impact 
both on the current government but also in the population of 
Ukraine, that this is really the right opportunity, and you see 
it through the legislation that they are passing, you see it 
through the effort, you mentioned the constitutional effort 
right now, I think, even today. President Poroshenko laid out 
his decentralization amendments to the constitution. This is 
what was reported today. I haven't seen what that entails, but 
we see as--there is a sense of seriousness within the 
government to move forward.
    And I wanted to just say, too, just in terms of general of 
anticorruption measures, all of our programs, USAID's programs 
in the region have a anticorruption measures embedded in our 
programs, and so I think this is particularly important. We 
recognize that this--because of endemic corruption in the 
regions, that we need to have it as part of our programs.
    Mr. Lowenthal. Mr. Chair, if I just may follow up on that. 
Just to add to one----
    Mr. Rohrabacher. Go right ahead.
    Mr. Lowenthal. If you will, again, the next time we have 
this hearing next year on this, if we could see some of the 
results of these measures because, you know, we make decisions 
without knowing any measurable results, and I would like to 
hear some of these measures that have been put into place
    Mr. Katz. Yeah.
    Mr. Lowenthal. Thank you, and I yield back.
    Mr. Rohrabacher. Would you like to--you have something to 
add?
    Ms. Rollins. My bailiwick happens to be Central Asia, so I 
really don't have anything to comment on Ukraine.
    Mr. Rohrabacher. Thank you very much.
    The chair now will take his allotted time. There was 
mention in the beginning of the testimony that there was a $1-
billion loan guarantee for Ukraine. Seeing that we have 
discussed Ukraine, I guess I might as well ask some of the 
details about that. What bank provided the loan that we have 
guaranteed to Ukraine?
    Mr. Rosenblum. The loan wasn't provided by a bank. It was a 
bond issuance that the Ukrainian Government did, and so the 
bonds were purchased by people from institutions, individual 
investors.
    Mr. Rohrabacher. Was there any major investor that bought 
those bonds like, Western European investors maybe?
    Mr. Rosenblum. I will have to get back to you on that, Mr. 
Chairman. I don't have the details on who purchased.
    Mr. Rohrabacher. I would like to get a rundown as to who 
bought the bonds that we are not guaranteeing because the fact 
is, whoever makes the loan is the real recipient of our 
largesse. Ukraine is not the recipient. Whoever loaned the 
money to Ukraine is making a guaranteed profit via the United 
States taxpayers. That is true of all of these guaranteed loans 
that we talk about here, and we have to realize that it is a 
big issue coming up on the Export-Import Bank. And who is the 
real recipient of all of this--all of these billions of dollars 
that the Export-Import Bank guarantees. It is not the companies 
that they are talking about. It is the banks who are in the 
middle who make that money because they have now a guaranteed 
profit. And I don't understand how we can--I don't have a way 
right now how we can get away from that system, but it seems 
that we are paying--that there is a lot of middlemen making a 
lot of money off benevolent programs like this.
    So it is possible that those bonds that you are talking 
about were actually purchased by some financial institutions in 
Western Europe; isn't that true?
    Mr. Rosenblum. It may--it is possible. It is possible. And 
we will----
    Mr. Rohrabacher. It is possible.
    Mr. Rosenblum. We can get back to you with a more detailed 
answer to your question.
    Mr. Rohrabacher. Now, how were you getting involved with 
the Ukrainian problem in the first place? They had their first 
real free election, I remember, about 10 years ago, and in came 
with the Orange Revolution--and I visited there during the 
Orange Revolution in support of the Orange Revolution, and they 
had a corrupt government, and they then brought in a 
government, and there was an election, and they were elected, 
and that government turned out to be corrupt even though they 
were pro-Western, and that is why you in a very free election 
that was verified by the OSCE that you had Mr. Yanukovych, who 
was elected, right, democratically elected President, who was 
overthrown by the people who we now are pouring our resources 
into, and he was overthrown before the election process, not as 
a result of the election process.
    I don't think that is a good precedent for us to set. I 
don't think that when an elected government is overthrown, that 
we necessarily have to come in. We should do some really soul 
searching because I believe there were powerful forces at play, 
maybe even European financial interests that didn't want 
Ukraine to be associated with a Russian common market as 
compared with a Western European common market that may have 
been at play here. I don't know. It just seems that that may 
well be the root of this problem, and here we end up pumping a 
billion dollars' worth of guarantee into some financial 
supporters who may be those same Western Europeans. It is a 
very murky situation, and it is not, as some of my colleagues 
believe to be, as simple and as easily definable as, who is the 
good guys and who is the bad guys, as you might assume.
    Let's get back to your request; $625 billion--does the 
billion-dollar that we have a loan guarantee, that doesn't come 
off the $625 million request. So for all of your jurisdiction, 
you are asking for $625 million, the administration is, and yet 
we have just provided one country, Ukraine, with a $1-billion 
loan guarantee. Okay. I guess that is resulting because there 
is a crisis going on and we need to--because there is a crisis, 
we need to get involved in it. I would suggest that we don't 
need to get involved in all of these crises. I would suggest 
that perhaps it would be better for us not to be doing that, 
and unless it is an emergency, as I mentioned in my opening 
statement, that we should focus on if there is an emergency 
humanitarian situation, that is far different than having us 
come into other societies like Ukraine and trying to 
restructure the way they have their government and their 
society functions, which it seems like we are trying to do. And 
our ridding--ridding Ukraine and some of these other countries 
like Ukraine of corruption would be the equivalent, I guess, of 
ridding Ireland of beer, and it is part--beer is their culture 
up there, and you don't try to tell people in Ireland not to 
drink beer.
    Well, corruption is a way of life with some of the people 
that we know, and for us to placate all of our policies on 
changing the basic way of life does not make sense to me 
because I don't think it is going to happen. I think we tried 
that in Iraq, and it didn't work.
    We can try--we can try to make--we can try to say to other 
people that they shouldn't have religious faith, but it may be 
really part of their culture that they have a religious faith, 
and maybe even they include it in their government, and our 
theory of government is that the church and state should be 
totally separate. I think it would be wrong to go into another 
country and say to them I am sorry that we are going to try to 
put pressure on you to make sure that church and state are 
never allowed to be together. And I would hope that our limited 
funds that we have are not--I mean, not you--all the goals that 
you have outlined today are lofty goals. I mean, certainly 
ridding their country of corruption is a lofty goal. It just 
seems to me that--I am not confident that we are going to 
achieve that goal, and I am also confident that when we try to 
get too deeply involved, there are international forces that 
are at play that can manipulate our largesse and our 
benevolence.
    With that said, I will certainly go through another round, 
so Mr. Keating can chastise me for using the expression of beer 
in Ireland.
    Mr. Keating. Well, thank you, Mr. Chairman.
    I must tell you that the issues that we are dealing with 
are ones of violence. In Ireland, for instance, it was a 
climate of a terrible violence, civil rights issues that would 
have continued much further if it wasn't for the U.S. 
intervention. It is a sterling example of how our country--and 
that is not just an American speaking. That is what I hear 
universally from both the north and the south of Ireland. If it 
wasn't for U.S. intervention into that era of terrible 
violence, the peace that is there, the success we made wouldn't 
be there, and certainly I believe we can take it to the finish 
line, given Mr. Haass' testimony to this committee and the 
progress we have made, I think we are so close
    And the issue in Ukraine, from my way of thinking, is not 
what Western Europe wants. It is not what the United States 
wants. It is not what Russia wants. I think our 
administration's position is to allow Ukraine to have what it 
wants and the people and its administration, and that is the 
kind of assistance we are giving to them now. We tried it in 
Poland. We tried it in Estonia. We tried it in Latvia. We tried 
it in the Czech Republic, and you know--we tried it in Ireland, 
and you know, that kind of assistance did work in those 
instances. And we have had the success that our panelists have 
spoken about in terms of the progress of those countries.
    So I think given that is the way I view it, and I think it 
shared with many of the people that have testified, I think it 
is important, though, that there are metrics, as Mr. Lowenthal 
has said. It is important there is accountability, not because 
it is the U.S. making the decisions about Ukraine, but because 
it is U.S. guarantees involved. The decisions with Ukraine, if 
we are going to be successful, and we will fail to be 
successful if we don't, must come from Ukrainians themselves, 
and that is why this election, this past election was so 
important, and I think it was the fundamental step that we had 
to take going forward, so I see some progress.
    I did want to, in a second round, just touch base on 
another area, Turkey, which is a strategically important 
partner for the U.S., and I am concerned about the government's 
treatment of political opponents, independent journalists, and 
members of the political opposition. What are State and USAID 
doing to support civil society and independent media in Turkey? 
The strength of our strategic partnership in Turkey should be 
based on shared respect for democratic values and institution, 
not just regional interests, so I just wanted to touch for a 
second on that if we could.
    Mr. Rosenblum. I will let Jonathan begin.
    Mr. Katz. Yeah. Thank you for that question. You know, 
USAID is not present in Turkey. We don't have a mission there, 
and so I don't want to speak out of turn. However, you know, as 
we, the United States, know from our own experience, 
strengthening due process, fighting corruption, encouraging 
civic participation, including the media, and political 
decision making not only make countries freer but also help 
them grow more quickly.
    And while the United States is not, and I want to repeat, 
will not become involved in Turkey's internal politics, we will 
continue to express, as we do around the world, our strong 
support for transparent and accountable government.
    Mr. Rohrabacher. So we have no money going into Turkey? 
There is no aid programs there.
    Mr. Rosenblum. We don't have any aid programs there now----
    Mr. Katz. That is correct.
    Mr. Rosenblum [continuing]. Related to civil society. The 
money that is going to Turkey, the small amounts are for--we 
have an IMET program, the military, education and training, and 
we also have a small amount for a counterterrorism program 
related to terrorist financing, so that is--that is----
    Mr. Keating. How has that counterterrorism funding been 
received by Turkey? Not physically received. How have they 
reacted to that? There is an increase in that.
    Mr. Rosenblum. Well, actually, it is a little misleading, 
and I have to explain the way our budget was presented this 
year. It looks like a big increase. Apparently, and as we 
learned as we were preparing for this hearing, the same program 
that we are going to be continuing in Fiscal Year 2015 is 
ongoing, and it was funded previously from a global 
counterterrorism fund, and for the 2015 budget, it was decided 
to put it into the bilateral line for Turkey in the interest of 
the transparency, essentially, to show exactly where the money 
is, and it is essentially, it is supporting a resident legal 
advisor who works on counterterrorism financing activities and 
facilitates interagency capacity building related to that 
financing. And I think we--you know, our understanding is that 
we are working closely with Turkish counterparts in the 
government, and they are supporting their reforms. These are 
reforms that they want to make.
    Mr. Keating. Working closely, but do they accept the 
premise that there is a counterterrorism threat there?
    Mr. Rosenblum. Well, they accept the value of our 
assistance, so I can't speak to the broader question, but they 
must--I think it has to do with their qualification for the 
FATF, or the Financial Action Task Force, this international 
body, and meeting those standards, which they want to be part 
of.
    Mr. Rohrabacher. They may have too much to be thinking 
about when they are dealing because they spend so much time 
helping the groups that are trying to take over Syria now, 
those benevolent groups that are trying to take over Syria.
    Mr. Lowenthal.
    Mr. Lowenthal. I am really enjoying this hearing. But I 
don't think the analogy of beer drinking in Ireland and 
corruption in the Ukraine is quite accurate. I think--I think 
that most people in Ireland enjoy their beer and most people 
that you speak to in Ukraine abhor the corruption, abhor it. 
But it may be difficult, and I do agree with the chair, to have 
it imposed and those changes from the outside does not seem to 
be a successful way of dealing with it.
    I would like to turn to Central Asia. You are on the panel. 
We have not forgotten about you. And talk a little bit about 
human trafficking in Central Asia and what kind of challenge 
that is and what is really--what can we, and you know, and 
realistically do and what we can't. I think--I think one 
country, I am not sure it is in Central Asia, but it is now a 
Tier 3 country, according to the recently released Trafficking 
in Persons Report, and how is our assistance tied in any way to 
the reduction in human trafficking?
    Ms. Rollins. Thank you very much for that question.
    So we are also very concerned about the human trafficking 
situation in Central Asia, and it is pervasive. We do have a 
program that we work through IOM to help set up centers for 
women and men. We also have a center in Tajikistan that is 
specifically for men who are brought back across the borders. 
But we work on prevention, so we have media campaigns to help 
deter families from sending their men or women out.
    We have centers when they come back so that they are 
provided psychosocial support and health facilities, et cetera, 
testing and treatment for infectious diseases, and set up kind 
of small and medium type enterprise livelihood activities so 
that they can go back into their communities.
    So it is a very serious concern in that part of world. I 
will let my colleague Dan talk about the tier ranking. It is 
Uzbekistan that is now on Tier 3. The others, though, have made 
some progress throughout the years.
    Mr. Rosenblum. It is a serious challenge in the region. All 
five countries have, to varying degrees, have shown commitment 
to tackling it and have welcomed our assistance in the areas 
that Denise mentioned. We actually, in addition to having 
centers for victims of trafficking and doing prevention work 
on, you know, sort of public announcement, service announcement 
type work, there has also been an element on the prosecution 
side, where we are actually helping countries in Central Asia 
develop the capacity to prosecute those cases under their laws.
    Uzbekistan is Tier 3 in a recently released trafficking 
report. They are now Tier 3 for the second year. In the case of 
Uzbekistan, it really has to do with labor, and you know, 
compelled labor for the cotton harvest. That is really the key 
issue. There is still--that is still occurring. And now the 
positive development is that the Government of Uzbekistan is 
allowing the ILO to come in and send observers, and they have 
also signed on to a new ILO--to an ILO program that is called 
the--what is it called, the Decent Work Country Programme, so 
we think--we view these as positive steps. It wasn't enough to 
get them to the higher tier this year, but they are moving in 
the right direction, we think.
    Also, just programmatically, overall in Central Asia, it is 
about $3 million that is going toward this whole group of 
programs that we have been talking about. So, again, you know, 
problems remain, some progress, and we could--you know, if we 
had more time, we could go into more detail on that progress, 
but it is--you know, it is one area where we actually have good 
engagement between civil society and the governments of the 
region. There seems to be, you know, the governments have 
actually not have welcomed the involvement of NGOs and mostly 
through this IOM, International Organization for Migration.
    Mr. Lowenthal. Thank you.
    I yield back.
    Mr. Rohrabacher. I want to thank our witnesses. I always 
appreciate a good discussion, and I also, as is noted, I don't 
gavel people down until all the points have been made, and I 
certainly appreciate you folks doing your part in this and 
keeping us informed.
    I would like to have a list of those people who purchased 
the Ukrainian bonds. Obviously, there is a disagreement on the 
issue of Ukraine. I voted against that billion-dollar program, 
and my colleagues, of course, supported it and people can 
honestly disagree, and I respect them for their position.
    Mr. Lowenthal. We respect you, too
    Mr. Rohrabacher. And we are very pleased that you are here 
to give us the information we need to know, and we are making 
those type of decisions, and then they go out and do a good job 
in implementing them, so thank you for the good work that you 
are doing, for your service to your country, and we are all 
trying to make this a better world, and with that said, this 
hearing is adjourned.
    [Whereupon, at 3:15 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

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         Material Submitted for the Record

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