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80–548PDF 2013

THE FY 2014 BUDGET REQUEST: U.S. FOREIGN

ASSISTANCE PRIORITIES AND STRATEGY

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

FIRST SESSION

APRIL 25, 2013

Serial No. 113–62

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/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

TREY RADEL, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

LUKE MESSER, Indiana 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Rajiv Shah, Administrator, U.S. Agency for International Development .............................................................................................................. 5

The Honorable Daniel W. Yohannes, Chief Executive Officer, Millennium 

Challenge Corporation ......................................................................................... 13

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Rajiv Shah: Prepared statement .................................................. 7

The Honorable Daniel W. Yohannes: Prepared statement ................................... 15

APPENDIX 

Hearing notice .......................................................................................................... 56

Hearing minutes ...................................................................................................... 57

The Honorable Eliot L. Engel, a Representative in Congress from the State 

of New York: Prepared statement ...................................................................... 59

Questions submitted for the record by the Honorable Edward R. Royce, a 

Representative in Congress from the State of California, and chairman, 

Committee on Foreign Affairs, and responses from: 

The Honorable Rajiv Shah .................................................................................. 62

The Honorable Daniel W. Yohannes .................................................................. 94

Responses from the Honorable Rajiv Shah to questions submitted for the 

record by the Honorable Eliot L. Engel, a Representative in Congress 

from the State of New York ................................................................................ 97

Responses from the Honorable Daniel W. Yohannes to questions asked during 

the hearing by the Honorable Ileana Ros-Lehtinen, a Representative in 

Congress from the State of Florida ..................................................................... 103

Responses from the Honorable Rajiv Shah to questions submitted for the 

record by the Honorable David Cicilline, a Representative in Congress 

from the State of Rhode Island ........................................................................... 106

Responses from the Honorable Rajiv Shah to questions submitted for the 

record by the Honorable Luke Messer, a Representative in Congress from 

the State of Indiana ............................................................................................. 110

Questions submitted for the record by the Honorable Joseph P. Kennedy 

III, a Representative in Congress from the Commonwealth of Massachusetts, and responses from: 

The Honorable Rajiv Shah .................................................................................. 113

The Honorable Daniel W. Yohannes .................................................................. 115

(1)

THE FY 2014 BUDGET REQUEST: U.S. FOREIGN 

ASSISTANCE PRIORITIES AND STRATEGY 

THURSDAY, APRIL 25, 2013

HOUSE OF REPRESENTATIVES,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 9:49 a.m., in room 

2172 Rayburn House Office Building, Hon. Edward Royce (chairman of the committee) presiding. 

Chairman ROYCE. This hearing on the Committee on Foreign Affairs will come to order. 

Today, we hear from the heads of the U.S. Agency for International Development and the Millennium Challenge Corporation, 

and together these agencies account for $21.3 billion or 41 percent 

of the President’s $52 billion international affairs budget request. 

Especially given our chronic Federal deficit, we must be rethinking 

how, where, and why we provide foreign aid. To be justified, the 

bar is high. Aid must support our national security, it has to support our economic interests, it must be efficient, and it has to be 

effective. It must advance democratic principles and develop reliable trade partners. And it must be implemented in a way that 

breaks the cycle of dependency. 

Over the past decade, USAID has seen its mission chipped away. 

The global AIDS coordinator who manages the largest U.S. global 

health program in history is housed in the State Department. The 

MCC has been created as an independent agency with a mandate 

to reduce poverty through economic growth. So it has been a challenging time for USAID. Indeed, the Bush administration stood up 

MCC, Millennium Challenge, as an alternative, a way to break 

with the tired, old development approaches that for decades have 

failed. But MCC has had its challenges, too. So-called compacts in 

the early days were big. They were complicated. They were overly 

optimistic. This has improved some, but MCC must stay true to 

itself. Getting pulled into countries where you don’t belong could 

ruin MCC’s recipe for success. 

By demanding that countries we are aiding have good policies in 

place and by strictly monitoring and elevating impact, MCC has 

served as a lab for what does and does not work. It is getting countries on a path toward graduation from foreign assistance. And 

that is why many of the administration’s new initiatives are borrowing from the MCC model. This is progress if it is well implemented. 

2

The President’s proposal to reform the International Food Program, helping more at less cost, is a bright spot in the budget request. For much of our food aid, this proposal would remove conditions that commodities be U.S. bought and U.S. shipped. Studies 

have shown that these conditions only make for a slow and inefficient program and I will add that in terms of being U.S. 

flagshipped, those ships are owned by foreign carriers in Scandinavia anyway. 

It is elementary that buying food closer to where the humanitarian crisis is taking place is faster, it is cheaper, and it helps 

save more lives. Only in recent years has the U.S. been able to experiment with a small pilot program to buy food close to the crisis. 

This local and regional purchase effort has been found to be 11 to 

14 weeks faster. It has also been found to be 25 to 50 percent 

cheaper. Essentially, the administration’s proposal would end a 

process called monetization. This is when Washington buys American grain, gives it to international charities who, in turn, sell it 

in poor countries. Congress’ investigative arm called this process 

inherently inefficient and found that it resulted in the loss of $219 

million over 3 years. That is an average of 25 cents on every taxpayer dollar. It is not just the waste that should bother us, but the 

harmful impact of dumping such commodities which can destroy 

local farming and, in turn, increase the dependency on aid that we 

would like to see end. 

So I look forward to working with Ambassador Shah, as well as 

the ranking member, to advance this ambitious and timely program. And I will now turn to Mr. Sherman of California to recognize him for his opening remarks. 

Mr. SHERMAN. Thank you, Mr. Chairman, and I don’t know if 

any of my Democratic colleagues would like me to yield 1 minute 

to them, but if they indicate that, I will. If not, I will give a hastily 

created opening statement. 

Chairman ROYCE. In the absence of Mr. Engel, that opening 

statement is appreciated. 

Mr. SHERMAN. And its quality will reflect the number of seconds 

I have had to prepare it. Our development aid is the right thing 

to do and that is reason enough for us to pay for it. But the American people are also told that it achieves our foreign policy objectives. One of those objectives is to lift all the boats in the world because it is in our foreign policy and economic interest that the 

countries of the world be able to afford our products. It is said often 

by the proponents of foreign aid that it is the most poor and dispossessed that become terrorists and wage war against us. But the 

vast majority of the 9/11 hijackers came from one of the wealthiest 

countries in the Middle East. 

One element of improving our image in the world is whether we 

tell people who are getting our aid that it is, in fact, American aid. 

One thing that disturbs me with our aid with regard to Syria, but 

also other places, is that we are deliberately obscuring the fact that 

the aid comes from the United States. The American people will occasionally face a Hobson’s choice, do you provide aid to people who 

live in communities where there is such antagonism to America 

that if they knew the aid came from the United States they may 

not want it? And yet, Syria is, of course, a difficult situation for us. 

3

So I will be asking our witnesses what we are doing to make sure 

that the recipients of the aid know that this comes from the generosity of the American people and where there are circumstances 

where in order for the aid to be accepted, in order for people to be 

willing to work with us, or in order for aid workers to be safe, we 

have to obscure that fact. 

Picking up on the chairman’s comments about local sourcing, I 

will want to hear your comments there. One thing to keep in mind 

is that one element of the coalition in support of American food aid 

is American agriculture. Do we give up some of that support in 

order to be more efficient, perhaps spending a few less dollars a lot 

more efficiently to provide food aid around the world? 

As Mr. Royce points out, selling our commodities in Third World 

countries as part of a U.S. Government program may drive prices 

down and disrupt local markets. 

There are also circumstances, particularly where there is disaster nearby, where we have to buy food where buying a lot of food, 

which might seem to help the local economy, can disrupt it and bid 

up the cost of food. Those analyzing the Arab Spring have pointed 

out that it may have been caused as much as anything by the increase in food prices in the Arab world that occasioned world-wide 

increase in commodity prices. 

I yield the remainder of my time to Mr. Bera from California. 

Mr. BERA. Thank you, Mr. Sherman, and thank you, Mr. Chairman, for calling this hearing. I look forward to the testimony. Obviously, USAID supports the moral values of our country. As a nation of abundance, one of our best approaches to diplomacy is sharing that abundance with the rest of the world. The Food for Peace 

program obviously has been a wonderful program, not only for the 

agriculture sector, not only for our farmers, but for the good will 

of the United States. 

And I look forward to the testimony. I look forward to looking at 

how to make this the most efficient program possible, as well as 

continuing to support American diplomacy through the USAID program. So I am very interested in the testimony and looking for 

ways that Congress continues to partner with USAID. So with 

that, I will yield back. 

Ms. ROS-LEHTINEN [presiding]. Thank you. Thank you so much. 

And the chair is pleased to yield 2 minutes for an opening statement from Mr. Smith, the chairman of the Global Health Subcommittee. 

Mr. SMITH. Thank you very much, Madam Chair. I would like to 

express my deepest appreciation to you, Dr. Shah, for your extraordinary leadership on so many fronts and the emphasis that USAID 

is giving to nutrition and food security and in particular our foreign 

assistance to ensure proper nutrition in the first 1,000 days of children’s lives—from conception to the second birthday—to reduce the 

impact of malnutrition that leads to a myriad of health problems 

including the stunted growth in development of an estimated 165 

million under the age of 5 in the world today. 

In September 2010, I joined seven African first ladies in New 

York City at a roundtable launch of this initiative. What was abundantly clear then has only been reinforced by empirical data that 

shows that the first 1,000 days of life is a unique, once in a lifetime 

4

window of opportunity for better health and it is without parallel. 

Much has been achieved. Obviously, must more needs to be done. 

UNICEF just issued a landmark report, an extraordinary call for 

further action, called ‘‘Improving Child Nutrition, the Achievable 

Imperative for Global Progress.’’ UNICEF’s Executive Director Anthony Lake says, ‘‘The legacy of the first 1,000 days of a child’s life 

can last forever. The right start in life is a healthy start and it is 

only the start from which children can realize their promise and 

potential.’’ He says, ‘‘We owe it to every child everywhere.’’

The report further reinforces a growing international consensus 

that this nutritional focus deserves a much higher priority in international development initiatives than was generally or previously 

realized. The UNICEF report emphasized and I quote it here,

‘‘Ensuring adequate micronutrient status in women of reproductive age, pregnant women and children, improving the 

health of expectant mothers, the growth and development of 

unborn children, and the survival and physical and mental development of children up to 5 years of age.’’

USAID’s Feed the Future’s strategic focus on improving nutrition 

during the first 1,000 days of life is one of the most important contributions that our foreign assistance can make to global health 

and it works synergistically with initiatives to mitigate malaria, 

HIV/AIDS, TB, and other devastating diseases around the world, 

but including and especially on the subcontinent of Africa. I thank 

you, Madam Chair. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Smith, and our 

last opening statement will be made by Mr. Cicilline of Rhode Island for 1 minute. 

Mr. CICILLINE. Thank you, Madam Chair, and thank you to our 

witnesses and welcome to the committee. I just want to begin by 

thanking you for your leadership and work. And as we all know, 

our investments in development and aid are not only important for 

us to do in terms of our national security, but they are important 

because the American people benefit when we help to create a more 

stable and more democratic world. 

I particularly want to compliment you on the work that is being 

done to reform our food aid, the whole USAID Forward, which I am 

anxious to hear more about, and the great work that the MCC has 

done in Cape Verde and in other places around the world. And this 

is an opportunity, I think, for us to really reinforce our responsibility to make these kinds of investments around the world, which 

is one of the great strengths of America that we bring these values 

and the democratic values that we all share. And I just want to 

compliment both of our witnesses for your outstanding work and 

look forward to your testimony. I yield back. 

Ms. ROS-LEHTINEN. Thank you very much. And this morning we 

are joined by Rajiv Shah, the Administrator of USAID; and Daniel 

Yohannes, the Chief Executive Officer of the MCC. Dr. Shah is the 

16th Administrator of USAID. Previously, he served as Under Secretary of Research, Education, and Economics at USAID and Chief 

Scientist at the U.S. Department of Agriculture. Welcome, Dr. 

Shah. 

5

Then we will hear from Dr. Yohannes, who was confirmed as the 

CEO of the MCC in 2009. Prior to his appointment, he held positions in the financial services sector, including as the vice chair of 

the Management Committee of the U.S. Bank. 

Welcome to both of our witnesses. Without objection, the witnesses’ full prepared statements will be made part of the record, 

and members may have 5 days in which to submit statements, 

questions, and extraneous material for the record. 

Gentlemen, please feel free to summarize your statements and 

we will begin with Dr. Shah. 

STATEMENT OF THE HONORABLE RAJIV SHAH, ADMINISTRATOR, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

Mr. SHAH. Thank you. Thank you, Chairman Emeritus RosLehtinen. We appreciate your leadership and your guidance over 

the past several years as we have conducted our reforms and improved our performance. I just want to take this moment to thank 

Chairman Royce and Ranking Member Engel for their leadership 

and support and Representatives Sherman, Smith, and others, 

Cicilline and Bera, who have made important opening comments. 

I want to thank you for the continued partnership to ensure that 

America has the capacity to effectively project its values around the 

world through our development and humanitarian activities and to 

do so in a manner that advances our national interests while delivering real results. We believe this is an important moment for development. We are drawing down from a decade of war and have 

the ability to rethink and reimagine how America projects itself 

and its values around the world. 

President Obama and Secretary Kerry, like Secretary Clinton before him, have repeatedly commented on the importance of elevating development as part of our national security strategy and as 

part of our foreign policy, including as part of our economic competitiveness strategy. 

I note that perhaps the most significant moment I have had in 

this role was an opportunity to visit a refugee camp in Dadaab, 

Kenya on the border of Somalia during last year’s tragic famine. 

In that context, I had the opportunity to meet women who had 

been through extraordinary challenges in efforts to bring their literally starving children to safety. Some made it. Some were able 

to bring their children. Others were not. But in that context, I had 

the chance to see firsthand that when they walked through the 

camp and got into a place that was safe, it was American humanitarian effort and American development partnerships that, in fact, 

gave them hope. 

And as tragic as that moment was, just a few months ago I had 

a chance to visit Mogadishu. And I got a chance to see the other 

side of the hope that is taking fruit there. I noted that the day before my visit USAID had worked with the local partners to install 

more than 600 solar street lights and for the first time in two decades, people were able to come out peacefully and celebrate in the 

evenings. 

We are replacing piracy on the coast with small-scale fishing infrastructure and helping people leave IDP and refugee camps to go 

back to their communities supporting the revitalization of their 

6

own agriculture in more than 400 communities in that country. 

That path from dependency to self sufficiency, and ultimately dignity and growth, is what our aid and assistance should be about. 

And I hope we get to discuss today whether this approach is delivering results. We believe it is. 

Our signature Feed the Future program, which started when we 

cut back on agricultural investments in 23 countries to focus on 19 

where we thought we could make the biggest impact, has reached 

more than 7 million farm households and is helping to reduce 

stunting, as Chairman Smith noted, in more than 12 million children who previously lacked effective nutrition. 

In our Feed the Future countries, we are seeing extreme poverty 

being reduced at an average annual rate of 5.6 percent, significantly higher than in counterpart nations. We are working with the 

private sector to motivate $3.5 billion of private investment to become complementary to our investments, including having raised 

more than $500 million through the Development Credit Authority 

to this purpose. And we are implementing real policy reforms along 

the way. 

This is just one example of how large scale, modern, results-oriented efforts can work and deliver critical outcomes. It is the result 

of a reform effort we call USAID Forward which I am eager to describe to you in terms of our progress today. Thanks to the support 

of this committee, we have been able to rebuild our staff, bringing 

in more than 1,100 Foreign Service Officers to USAID over the 

course of my tenure. We have been able to implement an evaluation policy that is recognized as best in class. And today, you can 

go to the Apple app store and download an application on your 

iPad or iPhone and pull down more than 180 high-quality evaluations that describe, in an adulterated, independent manner, how 

our programs are working or not working and what we are learning as we seek to make improvements. 

We have expanded our investments in local solutions that can at 

times be less costly and more sustainable in delivering these results. And I am very eager to discuss with you today our efforts to 

reform food aid to bring this approach about efficiency and effectiveness to efforts to reach an additional 4 million children without 

spending additional resources and to do a better job of savings lives 

while renewing the partnership with American agriculture. 

So I thank you for the chance to be here today and look forward 

to this dialogue, learning from you and continuing this important 

partnership. 

[The prepared statement of Mr. Shah follows:]

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Ms. ROS-LEHTINEN. Thank you so much, Dr. Shah. 

Mr. Yohannes. 

STATEMENT OF THE HONORABLE DANIEL W. YOHANNES, 

CHIEF EXECUTIVE OFFICER, MILLENNIUM CHALLENGE 

CORPORATION 

Mr. YOHANNES. Thank you, Madam Chairman, and members of 

this committee for the opportunity to appear today with my friend 

and colleague, Dr. Shah, to discuss the Fiscal Year 2014 budget request. 

I would like to summarize my statement and submit the full 

version for the record. 

Ms. ROS-LEHTINEN. Without objection. 

Mr. YOHANNES. Thank you. The present request of $898.2 million 

would allow the Millennium Challenge Corporation to continue advancing prosperity, stability and American values around the 

world. MCC does this by reducing poverty through sustainable economic growth. Our partners are rigorously selected countries that 

have a track record of sound democratic and economic governance. 

We ask them to prioritize their economic needs and to develop and 

implement cost-effective solutions that make a measurable difference. 

We are selective about which investments we make because 

Americans deserve to see their tax dollars deliver a high rate of return. We sign compacts with our partner countries spelling out the 

terms of our assistance. During compact implementation, we monitor and evaluate progress and require that programs be completed 

in 5 years. We will stop the flow of development dollars if countries 

fail to respect human rights or democratic values. Lastly, we measure program effectiveness to see what did and did not work. This 

is part of our evidence-based approach, and because we are committed to transparency and accountability we make our findings 

public. 

Madam Chairman, MCC is delivering real achievements for the 

world’s poor. Transportation networks are stimulating trade with 

regional impact. Projects in land security, food security, energy security and water security are connecting the poor to economic 

growth and opportunity. And MCC-inspired reforms are empowering women, advancing civil rights, and promoting democratic 

principles. 

Your constituencies are also benefitting as policy reforms and 

targeted investments foster an enabling environment for American 

businesses to succeed. Last fall, MCC released the first set of independent impact evaluations. These use rigorous statistical methods 

to measure changes in farm and household incomes of project participants. In El Salvador, for example, evaluators found that dairy 

farmers doubled their farm incomes. In Ghana, the annual crop income of farmers in the northern region increased significantly relative to the control group over and above any impacts recorded in 

other zones. Even when the findings are not all positive, this helps 

us improve the design and evaluation of future projects as we continue to learn and hold ourselves and our partners accountable. 

In December 2012, MCC’s Board of Directors selected five countries as eligible to develop a compact: Liberia, Morocco, Niger, SiVerDate 0ct 09 2002 13:22 Oct 17, 2013 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\042513\80548 HFA PsN: SHIRL
14

erra Leone, and Tanzania. Our request also includes funding for 

threshold programs with Guatemala and Nepal to help them reform policies and institutions that will move them closer to qualifying for compacts. The five newly eligible countries are home to 

over 100 million of the world’s poorest people. They represent an 

opportunity to reduce poverty and advance U.S. interests. These 

countries have taken concrete steps to reform, improve governance, 

and qualify for MCC compacts. This is what many call the MCC 

Effect. In fact, a recent study of government officials in developing 

countries worldwide ranked the influence of MCC’s policy performance scorecards greater than any other external measurement system. 

MCC’s modest request for Fiscal Year 2014 will not allow us to 

fund compacts with all five countries, so some will have to compete 

for future funding. It is important to note, however, that the MCC 

Effect depends on having sufficient resources to incentivize and 

sustain policy changes. If our funding is cut, that effect is diminished. 

Madam Chairman, with the committee’s support, MCC and our 

partner agencies will continue to play a key role in fighting global 

poverty. 

Thank you, and I welcome your questions. 

[The prepared statement of Mr. Yohannes follows:]

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Ms. ROS-LEHTINEN. Thank you to both gentlemen for excellent 

testimony. And I thank Chairman Royce and Ranking Member 

Engel for calling this important and timely hearing. 

Once again, we are having this hearing amidst the backdrop of 

economic uncertainty, both here and abroad. But here, it is incumbent upon us to be responsible stewards of the tax dollars of hardworking Americans. We want to ensure that these hard-earned dollars are spent wisely and strategically, while advancing our national security interests and addressing our foreign policy priorities. Which brings me to the administration’s request of $370 million for West Bank and Gaza assistance. 

With Prime Minister Fayyad’s resignation casting a greater 

shadow in the future makeup of the PA and with the knowledge 

that corruption is rampant within that body, Dr. Shah, do you believe that the PA possesses adequate internal controls to effectively 

deliver any U.S. aid? And what assurances have we received that 

no money will be diverted to Hamas and other terrorist organizations? 

In addition, Dr. Shah, I continue to be concerned over the administration’s attempts to cut much needed democracy programs to the 

Cuban people. Forty pro-democracy activists remain on hunger 

strikes in Cuba to call attention to the dozens of Cubans who are 

being detained by Castro’s state security forces. These brave heroes 

are risking their lives, yet we are cutting their support, which is 

not prudent, especially at a time when the crackdown by Castro’s 

thugs is actually on the rise on the island. 

And Mr. Yohannes, with the Millennium Challenge Corporation, 

we must ensure that the founding principles of the MCC continue 

to be upheld and do not fall under the trap of providing more and 

more assistance without an end in sight. Instead, we have got to 

focus our efforts on economic growth and the graduation of countries away from being dependent on our assistance. 

As chairman of the Subcommittee on the Middle East and North 

Africa, I note that the MCC compact with Jordan is coming to an 

end this year and I wanted to know if you would comment on that. 

We will be meeting with the leaders of Jordan later today. Also, 

Morocco continues to be an important ally to the United States and 

is a strategic partner in the region. We must further seek ways to 

reiterate the strong bonds that tie our two nations and promote our 

shared values and vision for stability in that region. 

With that in mind, and shifting to another region, Mr. Yohannes, 

I am concerned about the MCC’s attempt to seek a second compact 

with El Salvador. American investors continue to have problems 

accessing their assets. There is a lack of public-private partnerships and endemic corruption issues are still prevalent in El Salvador. According to reports, the current Presidential candidate for 

the FMLN celebrated the terrorist attack on 9/11 and burned an 

American flag. So I believe that the MCC compact should not be 

used as a political tool as Presidential elections draw near. I would 

urge the MCC to wait until after the elections before proceeding 

with that compact. 

So, Dr. Shah, if you could address the PA assistance issue and 

the Cuba issue. 

25

Mr. SHAH. Certainly. Thank you. And thank you for your strong 

leadership on the range of issues here. On West Bank/Gaza, the 

goals of our effort there are very specific. They are about creating 

economic opportunities to underpin a peace process to support basic 

social services and we have been able to reach more than 200,000 

people with food and more than 75,000 connected to improved 

water systems and some core humanitarian priorities as needs 

arise. 

We do have very strict controls in how any specific transfers to 

the Palestinian Authority are conducted and we are confident that 

that will continue to go forward as we have run it in the past, very 

strict. 

Ms. ROS-LEHTINEN. Thank you. And on Cuba? 

Mr. SHAH. And on Cuba, again, the goals there are support for 

civil society and democracy with some small humanitarian efforts 

and we have worked closely with our partners. We believe the 

President’s budget of $15 million reflects an appropriate investment that they have the capacity to implement. We recognize and 

take some faith in the fact that GAO reviewed our approach to implementing this program and very strongly commented on the effective reports we put in place to have a clear and compelling implementation strategy for this effort. 

Ms. ROS-LEHTINEN. Thank you. And Mr. Yohannes, I have not 

left you much time for Morocco, Jordan, and El Salvador, but 

maybe you could reply in writing. I don’t wish to rush those answers because they are important. Thank you very much. 

I am pleased to yield 5 minutes to our substitute ranking member for the substitute chair, Mr. Sherman. 

Mr. SHERMAN. Thank you and thank you, Chairman Emeritus, 

for your questions particularly with regard to the Palestinian Authority and democracy in Cuba. I want to associate myself with 

your concerns. 

NGOs just are there to try to provide relief for development. 

USAID focuses also on our foreign policy objectives. 

Administrator Shah, how do you coordinate with the State Department to get—to have our foreign policy and a foreign policy 

and national security objectives affect what you do? 

Mr. SHAH. Well, thank you, Representative Sherman. I guess I 

will offer a general point and a specific one. In terms of coordination, I think under the Obama administration, under Secretary 

Clinton, and now under Secretary Kerry, it has been both very 

transparent and much improved. We develop country assistance 

strategies for each country. They are carefully vetted through 

USAID and State. We jointly approach the priorities and define 

them in a specific way and then measure results and make those 

outcomes as public and transparent as possible. 

We have implemented a foreign assistance dashboard that has 

excellent data from USAID, from State, and from MCC that meets 

our International Aid Transparency Initiative commitments and I 

believe that has been very strong coordination. One important example of that, I think, that speaks to your opening comment, is 

Syria. We have worked hand in glove to make sure that we provide 

now nearly $400 million of humanitarian support inside of Syria. 

Sixty-five percent of that reaches opposition-controlled areas. We 

26

are reaching 2.4 million people with critical services and doing 

that——

Mr. SHERMAN. Administrator, I am going to have to go on to a 

few other things and ask you to supplement your answer for the 

record, although the fact that the flag is not on the bag in Syria 

is of great concern to me. 

I would like you to, for the record, describe what regulations or 

policies you have for your people in the field as to when they must 

emphasize that the aid is coming from the United States, literally 

put a big flag on the bag of food, etcetera, and when they are allowed to depart from those policies. 

I would also like you to provide for the record some key studies 

or examples to illustrate what is the difference in cost between a 

local sourcing on the one hand and U.S. sourcing, U.S.-flag carrier 

delivery on the other. I am sure that there will be a wide variation 

in the differences in costs depending upon where the aid is going. As to Pakistan, we have provided $2.8 billion in nonmilitary assistance since 2009. The Islamabad Government has its own objectives, but we need to win over all of the people of Pakistan and I 

focused my attention on the Sindh Province. To what degree does 

Islamabad determine where our aid is focused within Pakistan? 

And then in writing maybe you could provide a description of what 

we are doing in the Sindh Province. Who picks the projects and the 

locations, you, or the Pakistani Government? 

Mr. SHAH. Thank you. Let me just say with respect to Pakistan 

first, and Sindh, in particular, we have very important partnerships. We design them together. We absolutely retain the capacity 

and authority to both select projects and oversee their implementation. One example is we made a commitment to help them produce 

1,200 megawatts of energy. We have already seen through and successfully produced 800 megawatts and that has been seen as a tremendous success. 

Second, we have invested quite a lot of effort in a comprehensive 

branding strategy for anywhere in the world. Pakistan, I think, is 

a good example where, as a result of our efforts, we have data that 

shows that the awareness of American assistance efforts in Pakistan has gone up three-fold. There have been 3,000 locally 

placed——

Mr. SHERMAN. I am going to try to sneak in one more question, 

but please give us that analysis of what is going on in Sindh. I am 

somewhat concerned that the administration request cuts aid to 

Armenia. I think you ought to increase that instead. And if you are 

looking for a source of funds, you could look at U.S. aid of all types 

to Azerbaijan, which is thwarting our development efforts for the 

area by threatening to shoot down civilian aircraft that go into 

Stepanakert’s new airport. 

I have talked to Mr. Yohannes about the Javakheti region of 

Georgia. We provide very substantial aid to Georgia and I hope, as 

I have discussed with him, and now I have a chance to discuss with 

you, that a significant part of our aid would go to that otherwise 

neglected region. 

And I will ask, if I have got a chance, Mr. Yohannes to describe 

what is the status of our second compact with Georgia, and will 

Javakheti be a strong focus if that compact is concluded? 

27

Mr. YOHANNES. The investment proposal is proceeding extremely 

well and should be presented to the board sometime in June of this 

year. And Mr. Congressman, please know that there is some funding set aside for Armenian language and also for a number of 

schools in that region. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Sherman. 

Mr. Smith is recognized. 

Mr. SMITH. Thank you very much, Mr. Chair. Five minutes and 

so many questions to ask but let me just ask you, Dr. Shah, 2 days 

ago Dr. Frieden testified before my subcommittee. Of course, you 

work very closely with CDC and he does head up that very important agency. We focused on superbugs and the parasites as well as 

antimicrobial resistance, and how this is becoming more and more 

of a problem. 

I would just ask you, if you could to speak to the issue of tuberculosis. MDR and XDR TB is becoming, it always has been, but 

even more of a problem. I know it is probably OMB, but there is 

a cut of $45 million in the budget. Hopefully, that can be restored 

and maybe even enhanced because it is so important. 

And on the issue of malaria, we had a great discussion, disturbing discussion, that artemisinin resistance in Southeast Asia 

portends a very dangerous possibility of that expanding into Africa 

and we also know that bed nets and all the rest of the efforts that 

have been Herculean in combating malaria need to be renewed, 

new bed nets provided. There are 104 malaria-endemic countries. 

You might want to speak briefly to that and more so for the record. 

Secondly, before you came out, we talked about the issue of child 

survival and the vital importance of ORT, 1,000 days, immunizations, all of the important things to save lives. You had indicated 

you had just been in India and you might want to speak to the 

issue. 

A new documentary film was released yesterday. It is entitled, 

‘‘It’s a Girl.’’ It notes a U.N. figure that there are 200 million missing girls on the planet directly attributable to sex selection abortion, and to a lesser extent infanticide. China and India are the two 

most egregious violators. These are gender crimes, extermination of 

a girl child in the womb or at birth has not only in and of itself 

led to this destruction of girls, but it led to more sex trafficking and 

that has sky rocketed in India and in China, in particular. But you 

did talk about the nexus with child survival with some of the 

health ministers and if you could speak to that very quickly. 

Mr. SHAH. Thank you, Chairman Smith, and thank you for your 

strong leadership on these issues for decades in child survival in 

particular. 

With respect to child survival, last year we pulled together partner countries from around the world to get everyone to make a 

commitment to end preventable child death worldwide. The United 

States signed the pledge, as did others, and today, there are more 

than 150 countries producing data-driven report cards and score 

cards tracking progress. There are about 7 million children under 

the age of 5 who die every year. As the President noted in the 

State of the Union address, we are committed to taking that down 

to as close to zero as possible within two decades. 

28

In India, in particular, I think it is a good example of this public/

private partnership model of work coming together. We have private companies making investments to track data and report on 

outcomes. We have private companies expanding zinc mining precisely to create zinc syrups and other products that can be helpful 

to children who would die otherwise of diarrhea. We know these efforts are generating results as these ministers came together to 

brief me on their progress, but also to describe how it is correlated 

with the sex selection problem to which you speak and how that 

needs to be incorporated into the approach. 

Let me just say on that though, I think the most amazing thing 

is we are not driving this process through big, new investments of 

American taxpayer dollars. It is really American leadership and a 

focus on science and technology and measurement and results that 

is allowing us to partner with others to achieve that kind of an outcome. 

With respect to tuberculosis, I appreciate your comments and we 

are very focused on multi-drug resistant and also XDR TB which 

I am sure Tom Frieden spoke about. He is one of the world’s experts on that for many decades now. 

There are three foreign assistance accounts that provide our tuberculosis support so we have limited some of our funding in one 

account. We are expanding our efforts in HIV-related TB and in 

using the Global Fund for AIDS, TB, and Malaria to make sure 

that our investments crowd in resources from other donors and 

allow for more sustainability over time. 

Finally, to your point on malaria, I think this with your strong 

leadership, has been one of the big success stories America can 

take great pride in. Independent evaluations by Boston University 

and others have shown that there are, as a result of this annual 

investment we make of less than $700 million, as many as 200,000 

children under the age of five who don’t die every year in sub-Saharan Africa because we have an evidence-based, clearly measured, 

targeted approach and it serves as the basis for our efforts to further reduce preventable child death in that region. So thank you 

for your leadership. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Smith. 

Mr. Kennedy is recognized. 

Mr. KENNEDY. Thank you, Madam Chair. 

Ms. ROS-LEHTINEN. I am so sorry. I am out of touch. 

Mr. Cicilline. 

Mr. KENNEDY. I appreciate the thought though. 

Mr. CICILLINE. I would yield to Mr. Kennedy, of course. 

Ms. ROS-LEHTINEN. Mr. Cicilline is recognized. 

Mr. CICILLINE. Thank you, Madam Chairman. I am not sure 

whether the proper way to address is Ambassador or Administrator 

or Doctor. I am not sure which of those is best, but I think Ambassador is what I will use. 

I want to first thank you for your great leadership at USAID. 

And the issue I would like to hear a little bit more about is that 

we have seen, and I have certainly learned about, the decline in 

personnel at USAID over the last 20 years or so and kind of the 

breaking up of some of the functions with different agencies within 

the government and the on-going use of contracting services. The 

29

impact that that has had, I think, has been detrimental to our development and aid efforts around the world and I think you have 

recognized that in your forward AID initiative. 

And so I would like you to sort of talk a little bit about what is 

the end goal of that, where you are in the implementation of that, 

and whether or not there are things that we can do on the legislative side to protect that kind of rebuilding of both budgeting policy, 

and personnel capacities of USAID, which I think is reflective in 

some of the questions that people are asking about: People understanding what role we are playing in aid and development around 

the world. 

So I will stop there and you can go first with that question. 

Mr. SHAH. Thank you, Congressman, and thank you for your 

leadership and that accurate reflection of the situation that 

emerged over 15 years. Between 1990 and 2005, our staffing was 

reduced by more than 40 percent, the policy and budget activities 

ceased to exist, and the Agency did engage, in my view, in quite 

a lot of no-bid contracting with very little oversight, often in war 

zones where that can lead to all kinds of unintended consequences. 

So in response to that, we launched USAID Forward. And it was 

basically an Obama administration effort to help USAID rebuild as 

America’s premier development humanitarian entity. With your 

and Congress’ strong support, we have been able to hire 1,100 new 

officers into the Agency during my tenure. Those officers have 

helped us fill a 40 percent staffing gap in Africa. 

We have, in fact, cut a large number going from almost 800 down 

to 520 specific programs around the world so we could focus our efforts in those places where we deliver the best results. We have reshaped and repositioned our staff, closing more than 14 missions 

around the world in order to advance the focus and selectivity we 

think is critical to delivering results. 

USAID Forward has three major components: A partnership 

component that says we should be working efficiently and effectively with partners that can create the conditions where aid is no 

longer needed. And we released a detailed report about 11⁄2 months 

ago that shows we have in a thoughtful and rigorous way been able 

to expand our engagements with local partners by more than 50 

percent over the last few years. We have a focus on innovation and 

science and technology. Last year, we opened, in partnership with 

seven American universities, development innovation laboratories. 

Those laboratories are producing new technologies and insights like 

a Cell Scope that Chairman Smith would be interested in, I am 

sure, but it takes an iPhone and connects to a plastic microscope. 

It allows you to take essentially a photograph of a blood smear and 

then run a software algorithm to diagnose malaria and hopefully 

some day tuberculosis. Taking laboratory diagnostics out of treatment and care in the context where we work would be a major cost 

reducer and would allow us to add to the list of success stories in 

terms of serious disease reductions in difficult parts of the world. 

And finally and most importantly, there has been an effort that 

really attempts to focus on delivering real results. So today, you 

can, as I noted, download an application that would show you all 

of the evaluation data that we put forward. We actually produce 

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30

vival efforts, and on our malaria program. That just came out a few 

days ago. And we think it is important to be transparent with the 

American people because the capacity to support this work, I think, 

is much stronger when people see clear direct results and they are 

now able to do that. 

Mr. CICILLINE. Thank you. I am also very pleased that this budget reflects the administration’s commitment to political, economic, 

social, and cultural equality for women and girls and I would just 

ask you, maybe in written response, to tell us a little more about 

the progress that you are making with respect to those issues and 

particularly how investing in gender equality is helping to reduce 

poverty and create development opportunities around the world. I 

am particularly interested in learning more about our efforts to reduce violence against women all over the world and I know that 

that is work that is ongoing and would like to hear more about that 

in written response. 

And just for my last 7 seconds, I wanted to say to Mr. Yohannes, 

thank you for second Millennium Compact for Cape Verde which 

is helping the country improve water delivery and sanitation. I 

know very well the great success that they are having in Cape 

Verde and thank you again for your leadership in that area. And 

I yield back the negative 10 seconds I have. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Cicilline. 

Mr. Chabot of Ohio is recognized. He is the chair of our Asia 

Subcommittee. 

Mr. CHABOT. Thank you, Madam Chair. Mr. Sherman has already raised the issue, but I want to emphasize something that he 

said, which is the fact that the U.S. is the most generous country 

on earth, by far, in providing aid around the world. I find it particularly annoying that we oftentimes have to hide the source of 

that aid which is the American taxpayer because we might offend 

some people who, let us face it, hate America. We should proudly 

and prominently display and, in fact, trumpet the generosity and 

the goodness of the American people. If this offends someone and 

they turn the aid down, fine. We will give it to somebody else who 

would appreciate it. 

Now, as chair of the Asia and Pacific Subcommittee, I have a 

couple of questions; one on Indonesia, one on China, and one on 

Vietnam. 

Mr. Yohannes, I believe the Millennium Challenge account, the 

sustainability, economic growth mission is how all of our foreign 

assistance should be modeled because in a number of cases it is 

proven to be far more successful than many of the foreign assistance programs administered through USAID. 

In 2006, Indonesia was named eligible for the MCC threshold 

program which seeks to reduce corruption by bolstering several key 

anticorruption institutions including the Supreme Court and the 

Anti-Corruption Commission. Last year, Indonesia’s ranking on the 

corruption perceptions index unfortunately fell from 100 in 2011 to 

118 out of 176 countries polled. Relative to other countries polled, 

Indonesia remains in the ‘‘cluster of countries with significant corruption problems.’’

Considering the MCC has been in Indonesia for a few years now, 

could you discuss how the MCC has helped fight corruption and 

31

some of the challenges you are confronting in meeting your program goals? I also understand in this particular case, Indonesia 

has been a reluctant partner in implementation which questions 

the sustainability of the program once the MCC leaves. Can you 

discuss this particular issue and how MCC is working to address 

the problem? Thank you. 

Mr. YOHANNES. Thank you, Congressman. Corruption is a major 

obstacle to economic growth and we have absolutely zero tolerance 

for corruption. Let me say that all of the countries, including Indonesia, were selected because they passed our corruption indicators. 

We look to see if, in fact, corruption is institutionalized. We know 

that despite efforts to cut down on corruption, corruption exists, 

not only in Indonesia and in a lot of our partner countries, but we 

also know that corruption exists in developed countries. But we 

look in terms of is it institutionalized? Do they honor contracts? Do 

they abide by the rule of law? Are the judges independent from the 

executive branch of government? Are they creating the best environments for businesses to succeed? 

We look for trends to make sure that they are creating a very friendly environment for businesses to succeed. Part of our $600 

million compact is to help that country to fight corruption primarily 

by helping open procurement opportunities in their countries. In 

fact, they had to do a special decree to set up an MCC affiliate in 

that country because previously all aid was funded directly from 

the government. We don’t even only give a dime directly to the government. In fact, after the President decreed this new MCC entity, 

it had to be approved. This was the first time it was ever done in 

the country. 

Mr. CHABOT. Thank you. Let me cut you off there just because 

I have two other quick questions I would like to present to Administrator Shah. One is on China. USAID has requested $4.5 million 

in economic support funds for China. Right now they own an estimated $1.7 trillion of U.S. debt and they hold over $3.25 trillion 

in foreign cash reserves. How do you justify this, particularly when 

we have a $16.8 trillion debt? 

Finally, relative to Vietnam, we had a staff codel over there last 

month. Their human rights record, unfortunately, is not good. And 

unfortunately, many would argue is getting worse. It has been requested an $18 million increase over the past year. How do you justify that? And you have got 15 seconds to answer both questions. 

Mr. SHAH. Thank you. With respect to China, we don’t provide 

any support to the Government of China. The $4.5 million is specifically to help Tibetan communities improve livelihoods, promote 

sustainable development and preserve cultural traditions and is absolutely no correlation or flow to the Chinese Government whatsoever. 

With respect to Vietnam, I would note that compared to the Fiscal Year 2012 real number, the Fiscal Year 2014 request is an 

overall 12 percent reduction in our investment there. And our focus 

there is to maintain our support for the PEPFAR HIV/AIDS effort 

as well as to support civil society and in particular, people with disabilities in addition to the dioxin remediation activities that have 

been an ongoing commitment of the United States. 

Mr. CHABOT. Thank you. 

32

Chairman ROYCE [presiding]. Thank you. We will go now to Mr. 

Eliot Engel, our ranking member on the committee. 

Mr. ENGEL. Thank you, Mr. Chairman. I would like unanimous 

consent to insert my statement into the record, but I want to just 

talk about some things. In this difficult fiscal environment, some 

reflexively turn to the foreign assistance budget as the first place 

to make cuts and I think that is regrettable. I really wanted to say 

that because I think it is important. 

I want to commend the administration for its food aid reform 

proposal. Our current food aid programs waste millions of taxpayers’ dollars and often harm agricultural markets in the countries we are trying to help. The Secretary of Agriculture has said 

this reform initiative will have little or no effect on American farmers. So I would like to, after I say a few more words, I would like 

to ask Dr. Shah to comment on the administration’s plans to restructure our food aid programs to make them more efficient and 

affordable. 

I want to say in terms of global health, I was pleased to see the 

small overall increase in funding for global health programs at 

USAID, especially for PEPFAR. I think that is very, very important. 

Mr. Yohannes, I think it is a testament to MCC that many of the 

reforms being pursued by USAID and the State Department are 

based in large part on the MCC model. I think that is very, very 

good. But I am interested in hearing your thoughts on how MCC 

can address my longstanding concern about how we work with 

countries that lack data on their respective score cards. As you 

know, I have been very disappointed in MCC’s handling of Kosovo, 

a country recognized by the United States, but not a member of the 

U.N. because of MCC’s dependency on U.N. agencies for much of 

the data it uses. Kosovo was left with multiple, empty failed boxes 

on its score card, essentially keeping it from competing for a compact or threshold program. I thought this was very unfair to Europe’s newest country. And while I recognize MCC’s willingness to 

accept supplementary data, it is unclear at best how MCC uses this 

information to calculate a country’s scores and unlike the rest of 

MCC’s process, there is nothing transparent about this approach. 

So, I really hope MCC addresses this problem so that future 

countries in Kosovo’s position will be evaluated and able to compete 

the same way as all of the countries. And the last point before I 

ask both of you to answer the questions is that Congress has been 

appropriating unprecedented sums for the Palestinians and the 

Palestinian Authority for the past several years. This is important 

for maintaining a semblance of stability in the West Bank in 

Israeli-Palestinian relations as well for humanitarian reasons. But 

it is no coincidence that this increase in U.S. assistance has occurred during Salam Fayyad’s tenure as prime minister, a man 

who won great respect for his emphasis on budget transparency 

and other aspects of good governance. Fayyad, unfortunately, in my 

opinion, resigned last week and we anticipate a replacement will 

be named soon. 

And I wanted to take this opportunity to urge President Abbas 

of the Palestinians in considering Fayyad’s replacement to appoint 

someone who can continue the positive aspects of Fayyad’s apVerDate 0ct 09 2002 13:22 Oct 17, 2013 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\042513\80548 HFA PsN: SHIRL
33

proach. Without continued budget transparency, further U.S. assistance for the Palestinian Authority will not be possible. 

So I am wondering, first, Dr. Shah, we have met many times and 

you know I am an admirer of yours. I support the administration, 

like Chairman Royce. I support the administration’s plans to restructure our food aid programs to make them more efficient and 

affordable. So could you elaborate for us the potential taxpayer savings this plan will generate? Do you believe it will have any impact 

on American farm income? And has DoD signaled their concerns 

about the proposal in regard to its impact on military readiness 

and deployment capacity? 

Mr. SHAH. Thank you, Mr. Ranking Member, and thank you for 

your leadership across the range of these issues and for the extra 

efforts you have put in to help us do our work better and more effectively. 

With respect to the food reform proposal, it is geared around the 

absolute intention to reach 4 million additional children without 

spending additional resources. We recognize these are very difficult 

budget times and the Fiscal Year 2014 request is actually in total 

6 percent lower than the Fiscal Year 2012 request. 

With respect to what is happening right now, why this is urgent, 

because of the incredible commitment to Syria, Syrian refugees, 

and the food needs in that context, what limited flexibility we have 

had in this program has been absorbed in that context. As a result, 

there are many other parts of the world—post-famine Somalia, the 

DRC, Pakistan—where we are reverting kids from programs that 

have been supported through the more flexible local and regional 

procurement program back to the more restrictive Title 2 program. 

And in the context of doing that, we are having to reduce services 

to hundreds of thousands of beneficiaries. 

We believe we need the flexibility embedded in the proposal and 

have studied carefully the impact on American agriculture. The 

truth is over the last decade this program has been shriveling up 

because of the changing cost structure of the effort. We used to 

ship 5.5 metric tons, now we ship 1.8 million metric tons. As Secretary Vilsack has noted, this is less than 1⁄2 of 1 percent of the 

total value of U.S. agricultural exports and we are only proposing 

a diminishment from 85 percent to 55 percent in terms of tied U.S. 

commodities as part of the program. There have been more than 

a dozen studies that have validated the efficiency gains of taking 

this approach in a number of respects and we believe this will help 

us renew the partnership between American agriculture and American humanitarian communities to maintain American food security and hunger leadership around the world. Thank you. 

Mr. ENGEL. Thank you. And if the chairman will indulge me. 

Mr. Yohannes, I mentioned that it is really a testament to MCC 

that many of the forms being pursued by USAID are doing it in 

large part based on the MCC model because clear metrics and 

transparent benchmarks should be the hallmark of all of our foreign assistance programs, so I commend you for that. 

I would like your comments on Kosovo. It has been a long-stranding frustration of mine. 

Mr. YOHANNES. Congressman, thank you. When Kosovo became 

independent in 2008, it presented a different challenge for us. We 

34

simply did not have a lot of the indicators from the indicator companies, but since 2008 we have worked very closely with all the indicator organizations that provide us with that information. And 

today, we have more information about Kosovo than we ever had 

in the past. The only agency that is not providing this information 

is the United Nations, but we have been able to get supplemental 

information directly from them. We have been actively engaged. I 

sent one of my best economists to that country last year and today, 

they only passed 8 out of the 20 indicators. 

Having said that, we are working with them very closely to make 

sure that they understand what needs to be done. And the good 

news and the bad news, Congressman, is that they have graduated 

to the higher income bracket in the last 2 years and if they continue to make that progress, they may not be eligible for our program. But we work with them and I would be more than happy to 

work with you, Congressman, on what we need to do in the future 

in cases like this one. 

Mr. ENGEL. Thank you. I want to work closely with you on that. 

And finally, before I relinquish, I would like to just add my voice 

to Mr. Smith’s comments about cutting TB funding by $57 million. 

It is really extremely short sighted. And I really think that we 

have to sufficiently fund our efforts to treat and eliminate tuberculosis. And I just wish you would take that into consideration. 

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

Chairman ROYCE. Thank you, Mr. Engel. I wanted to go just for 

a minute to this issue of food aid reform. And Ambassador Shah. 

I am very encouraged by this reform proposal. It is one that had 

been made in the prior administration as well or had been suggested. And I remember talking to Andrew Natsios about your 

predecessor in your position about some of the challenges that he 

had and his feeling that both hands were tied behind his back. As 

he shared with us at one point when we had a devastating food crisis in Africa and in Asia, he said food aid often gets there after everyone is dead. He was clearly very, very perturbed by the circumstances and the delays. 

And one of the things that he said is that people can’t eat shipping costs as he was commenting on the reality of the burdensome 

way that the system operated. When it takes months for food aid 

to arrive or when you have a situation where you have seen the 

United States dump food into markets that undermine local production, and drive the population into deeper poverty, it really 

gives you pause in terms of our current method of operation. 

When I chaired the Africa Subcommittee, we had the President 

of Mali here. This was probably about a decade ago. He testified 

how it was undermining his farmers and how agricultural subsidies were undermining his society. There is a negative impact our 

western agricultural subsidies have on African farmers and we 

need to be responsible here. And the framework for your proposal, 

I think, has been found to save time, money, certainly lives, and 

I think it promises to reduce the deficit going forward over the next 

10 years by about $1⁄2 billion. 

I was going to ask you a question and this goes to the issue of 

aid to refugees from Syria. I understand that the requirement of 

35

a U.S. ship recently delayed a food shipment to Syria and I was 

going to ask you about that, Mr. Shah. 

Mr. SHAH. Thank you, Mr. Chairman. And thank you for your 

very strong and effective leadership on this topic in particular. 

The Syria crisis has, in fact, precipitated an urgency around the 

need for this reform because, in opposition-controlled parts of Syria 

traditional food convoys would be targeted. We have had more than 

150 deaths across humanitarian workers in that context and because, as we have used what limited flexibility we have had in and 

around Syria and it has been effective in that context, we have 

eliminated our capacity to use that same flexibility in places like 

Somalia and the DRC. 

So all of the basic points you have made, I think, are the core 

rationale for this effort and we know that we can get a 30 to 50 

percent cost reduction on natural product purchases. We know 

there is an 11- to 14-week shipping delay in pursuing the traditional model. We know that shipping costs have increased by a factor of more than three over the last decade, which is, in part, why 

the metric tons of food that we buy and ship have fallen from 5.5 

million metric tons to 1.8 million metric tons. And as a result, 

American leadership on this issue around the world has also fallen. 

And today, we service less than half of the beneficiaries we did 

when President Bush and Andrew Natsios made a version of this 

proposal 10 years ago. 

I also want to validate and highlight the challenges of the practice of monetizing food assistance. When we try to support a wonderful partner like CARE or World Vision or Catholic Relief Services in the Democratic Republic of Congo by shipping food from 

here to there, giving them the food, asking them to sell it in precisely the markets where they are then turning around and using 

the cash to help farmers produce value, they both create strong disincentives and frankly lose 50 percent of the value in that case of 

the resource compared to what we spent buying the food on this 

end of the world. So there is a strong consensus around a datadriven approach here and we are trying to put this proposal forward in a way that manages and maintains the important coalitions required to renew American leadership on hunger. 

Chairman ROYCE. Let me bring up one other issue. I am deeply 

concerned about the growing number of land seizures taking place 

in the Philippines. Property rights are essential to an individual’s 

personal and economic security, but it is also essential in terms of 

economic growth. 

And Mr. Shah, I see the request for development assistance in the Philippines includes an increase up $6.6 million for a total of 

$87.7 million. Will any of these funds be directed toward securing 

and protecting property rights and if not, why not? 

Mr. SHAH. Our intention is to ensure that we work on the range 

of those types of issues in the context of these programs. I would 

have to provide more specific details perhaps in writing. 

Chairman ROYCE. I will be in consultation with you afterwards. 

Mr. SHAH. Thank you. 

Chairman ROYCE. Mr. Yohannes, MCC has $434 million in its 

compact with the Philippines and that is nearly 2 years into implementation. And I appreciate your commitment to raising the land 

36

seizure issue with the government there. Is this not an issue of 

commitment to rule of law that is central to your mission? 

Mr. YOHANNES. Mr. Chairman, it is very important, the rule of 

law. And we have communicated our concerns to the government. 

I think it is also extremely important for economic growth, and I 

know they are very committed in the fight against corruption. But 

also, they need to do something different on this one; and based on 

the conversations we have had with them, they understand the 

problems and they are willing and committed to finding solutions 

for this problem. 

Chairman ROYCE. Mr. Yohannes, thank you for your efforts. And 

Mr. Shah, we appreciate it. We are going to go now to Dr. Bera. 

Mr. BERA. Thank you, Mr. Chairman. And thank you, Dr. Shah, 

and Mr. Yohannes, for being here. 

As a doctor, I recognize the important work that USAID does in 

global health including seeking to prevent child and maternal 

death through the transmission of AIDS, particularly in the Global 

Health Initiative and through their PEPFAR funding, very important programs that have really relieved human suffering. 

Obviously, one of the goals of both the MCC and USAID is to 

help the countries that we are interacting with become self sufficient. That is always one of our goals. In my conversations with the 

Government of India and with the State of California, as we are 

looking at the issue of food security and helping India feed its own 

population, I was astonished at the amount of food loss that occurs 

in India. It is upwards to 40 percent of the food gets lost in a nation where hundreds of millions go to bed hungry every night. A 

lot of this is around issues of cold storage and issues of lack of infrastructure for taking the food and moving it to market. 

I would be interested in hearing from either one of you on some 

effort working with the Government of India to improve both the 

storage issue and then the movement issue. 

Mr. SHAH. Thank you. I will just address a few of those points. 

I think with respect to food security in India, when President 

Obama visited during his state visit, he launched a Partnership for 

an Evergreen Revolution with Prime Minister Manmohan Singh. 

And that partnership was really designed to have both countries 

partner along technical and other lines as opposed to having the 

United States make significant investments in India because India 

has plenty of resources in its agricultural sector. As a result of 

that, three things have happened. One is there has been a much 

expanded technical exchange across universities, some from California, like Davis, along with partner universities in India, many 

of which we had a strong role in helping to develop decades ago. 

Second, the Indian Government has tried to pass legislation to 

allow for American companies like Wal-Mart and others to be involved in essentially professionalizing the food chain and creating 

and bringing the technologies and logistics capabilities of those 

companies to address exactly the issues you raise like cold storage 

and reducing post-harvest losses. We have been a technical partner 

in that effort and between USAID, USDA, and the Government of 

India that is moving forward. 

So those types of activities have been very important. 

37

The third and final thing I would note is there are a range of 

technology partners in India that have joined this effort and are 

now actually partnering with the United States, investing their 

own resources in tackling hunger in sub-Saharan Africa through 

our Feed the Future partnership. And we think that is emblematic 

of a new model where India places a larger role bringing some of 

its technology and businesses to partner with us on this challenge 

in sub-Saharan Africa. 

Mr. BERA. Mr. Yohannes, would you like to respond? 

Mr. YOHANNES. About 40 percent of MCC’s investments are tied 

primarily to help many of our partner countries become food secure. So for example, in agriculture, we not only are training farmers how to become self sufficient, but also providing them with a 

lot of opportunities. We are building roads so that communities will 

have access to markets. We are building cold storage facilities for 

the foods that have been produced by those farmers are not spoiled 

before they ship overseas. And last year, we just completed five impact evaluations with five of our countries, which relate to farmer 

training. And we are seeing great results. 

In the past, most development agencies measured outputs and 

outcomes as a result of farmer training. But what we are learning 

is to take this one step further. For example, in El Salvador, dairy 

farmers doubled their income as a result of our investments. In 

Nicaragua, they increased their income by 30 percent. In Ghana, 

they increased their income significantly, by 40, 50 percent. And 

what we do next is we know it is very difficult to see if our investments are increasing household incomes, which is very difficult to 

do, but we will know more in the next 2, 3 years. But we have seen 

great results from our investment with the program. 

Mr. BERA. Great. Well, Dr. Shah, Mr. Yohannes, I think that is 

exactly what we should be doing. As we help people become—and 

countries become more self-sufficient, obviously we help save lives 

or governments. We help promote our democratic values. It also is 

good business sense. Dr. Shah, as you pointed out, we have technologies. The university to university partnerships that are occurring with my home university at UC-Davis, as well as with our entrepreneurs and innovators, certainly we can take what we are 

doing here and export that and help other countries. So I look forward to working with both of you. I yield back. 

Chairman ROYCE. We will go now to Mr. Rohrabacher of California. 

Mr. ROHRABACHER. Thank you very much, Mr. Chairman. Let us 

before we can have an honest discussion about this, people need to 

face the reality of what our fundamentals are right here in the 

United States. Dr. Shah, do you know what the proposed level of 

deficit spending is by the administration in their budget? Not foreign aid, but the overall, no, you don’t. 

And Mr. Yohannes, do you know? Well, we are going to at least 

expend $1 billion more than we are taking in and we have been 

doing this for 5 years. If that is not corrected within a very short 

period of time we won’t be able to do any of these noble things that 

you are talking about. So in order to do our responsibility here, we 

need to be confronting that basic truth. And so how do we do that? 

38

Yes, it is a trillion, not a billion, excuse me. A trillion, billion, billion. 

So before every expenditure that we are talking about, we need 

to put in front of this, is this worth the United States borrowing 

this money from China in order to expend it; wherever we are 

going to do it. Because that is what we are talking about. We are 

talking about borrowing money from a foreign power, probably 

China or Japan, in order to give it to someone else. And if we can’t 

answer, honestly answer that, we should not be doing that project. 

That is for sure. 

I personally believe that we need to restructure aid considering 

this so that our aid is no longer developmental aid. And Mr. 

Yohannes is doing a great job in that; he is insisting on, with his 

organization, changes in the fundamental status quo that has created the hardship in those countries, rather than just giving aid 

which will then not do any good at all because if they are not 

changing the status quo in the way you do things, it will go right 

back to what it was. But we need to basically restructure our whole 

concept into developmental aid; it is no longer our responsibility because we can’t afford it. Borrowing from someone else in order to 

help another country develop is not right. And our aid should be 

basically emergency humanitarian aid in cases of natural disasters. 

That is what we can afford. That is it. Maybe that is worth borrowing from another country in order to save people who are in a 

desperate situation. Otherwise, we are going to put our own people 

in a desperate situation. 

A couple questions on specifics about your request this year. Dr. 

Shah, you visited China last week. We were involved in a new 

working group on climate change that was announced, that U.S. 

was going to cooperate in developing these new technology, clean 

technology projects. We have been borrowing money in order to 

give to China for these technologies. Is that over or does your announcement mean we are going to continue giving aid to China 

that we are actually borrowing from China? 

Mr. SHAH. Thank you, Congressman. Just to clarify, sir, I was 

not in China and I am certainly not a part of that. 

Mr. ROHRABACHER. Thank you. 

Mr. SHAH. But I would also highlight that our request with respect to China is solely focused on Tibetan communities and it is 

the——

Mr. ROHRABACHER. Okay, thank you very much. Good answer. 

Let me just announce right here that we should not be giving aid 

to countries that are hostile to the United States or can be seen 

that their governments have committed actions that have supported international terrorism. 

That is why, Mr. Chairman, I would announce today that I plan 

to offer an amendment to whatever foreign aid bill comes to the 

floor that suggests that Pakistan should get not one penny of support for anything until Dr. Afridi, the man who helped us bring to 

justice Osama bin Laden, is freed from a Pakistani dungeon. The 

American people need to be outraged that Pakistan is holding Dr. 

Afridi in the first place after giving safe haven to Osama bin 

Laden, the murderer of 3,000 of our citizens. But for us then to 

give them aid on top of that is absolutely unconscionable and so, 

39

Mr. Chairman, I will be offering an amendment. And until Dr. 

Afridi is freed, we shouldn’t even consider giving them one penny. 

There are other countries that are hostile to us and we should not 

be giving money to those countries while their governments are 

hostile to the United States. Thank you very much. 

Chairman ROYCE. Thank you, Mr. Rohrabacher. Now we go to 

Ms. Lois Frankel from Florida. 

Ms. FRANKEL. Thank you very much. I want to just first of all 

thank the panel for being here. I want to preface my remarks first 

by saying that I do believe that foreign aid is a good purchase 

when it is spent correctly. And so with that said I do want to talk 

to you about Afghanistan because from what I have read and what 

I have heard, is that much of the aid that we have given, and I 

am not even talking about military now, has just been very wasteful. It has lined the pockets of bad actors. It has been used for bribery. It has made folks there more reliant on the United States and 

less reliant on themselves. 

In that regard, I would like you to comment on that, but I want 

to ask you some questions to go along with that that you could also 

comment on. Who is in charge of development in the world? You 

can use Afghanistan as the example. Is it the military, who seems 

to be doing similar functions? Is it USAID? Is it the State Department? What do you measure your outputs, if you build a school, do 

you actually determine whether anybody is getting educated? And 

how would you avoid the kind of waste that we have heard about 

in Afghanistan in the future? 

Mr. SHAH. Thank you, Congresswoman, and thank you for your 

preface because foreign aid is less than 1 percent of our budget and 

for that we believe we deliver critical and national security results 

and economic opportunities that sustain American leadership 

around the world and will for decades. 

With respect to Afghanistan, I just want to step back for a moment and articulate that I believe the collective development investment in Afghanistan has created some basic conditions that 

allow our troops to come home and allow us to aspire for a stable 

and secure country that is not a terrorist threat to us in the future. 

We have seen annualized rates of growth of 9 to 10 percent over 

the last several years. We have seen a more than tripling of electricity access due to large part because of our specific investments, 

including helping the Afghan utility company use mobile payments 

to increase their own generation of revenues by more than 300 percent. We have helped build 1,900 kilometers of road that has contributed directly to improve economic activity and business investment. And today, there are 8 million kids in school, including 3 

million girls, when there were zero girls in school under the 

Taliban. The fastest and most significant reductions in child death 

and maternal death during childbirth anywhere in the world over 

the last decade have been in Afghanistan, have been verified by 

independent studies that were released last year, and create a 

basis for some degree of stability as we look ahead. 

That said, sustaining these gains in the context we are in and 

fighting corruption are absolutely our priorities. I was on the call 

earlier this week with General Dunford and we have a very close, 

tightly integrated, civilian-military plan. And we need to have that 

40

kind of tight integration. The military has matched any civilian development investment and far exceeded that investment. So doing 

it together is critical to being able to deliver those results and 

being able to fight corruption. 

We last year brought together the international community to 

pledge sustained support for Afghanistan, but also to implement 

what we created as the Tokyo Mutual Accountability Framework. 

And if Afghanistan does not meet clear criteria on free and fair 

transparent elections on fighting corruption and recovering assets 

from the Kabul Bank crisis, on efforts to provide rights for women 

and girls, including the 25 percent quota for women in the Parliament, then we will pull back our aid and assistance and we will 

do that in concert with more than a dozen other international partners. And it is that kind of serious conditional accountability 

framework that we believe is the best way to make sure that we 

sustain the gains, allow our troops to come home, and recognize 

that 2 percent of the total Afghanistan investment that is represented by development will ultimately play a much larger percentage impact on whether there is a stable future for that country 

and a terrorist threat to us. 

Ms. FRANKEL. Thank you and I yield, Mr. Chair. 

Chairman ROYCE. We go to Mr. Ted Poe of Texas. 

Mr. POE. Thank you, Mr. Chairman. Thank you, both, for being 

here. 

Dr. Shah, after sequestration took place, the administration notified the military that they were going to cut the military tuition 

assistance program. Congress rectified that in the Continuing Resolution. The military assistance tuition program, as you know, helps 

military who are currently on active duty to finish their education. 

It helps them. It helps the military, and of course, it helps the state 

of readiness. But at the same time, after sequestration took place, 

USAID notified Congress that $41 million would be sent to Pakistan to help pay for scholarships for Pakistani students. So it just 

seems to me, we don’t have money to help our own military go to 

school because of sequestration, after sequestration takes place. We 

do have the money to help Pakistani kids go to school. I can tell 

you that has not sat well for a lot of folks. 

Can you walk me through this decision and why it was made and 

if we are still going to help those students in Pakistan? 

Mr. SHAH. Thank you. Thank you, Representative, and I appreciate your comments and leadership on these issues and on transparency and results reporting in our portfolio work as well. 

I will just say that sequestration has affected USAID and foreign 

assistance as severely as any other part of the budget. And we are 

recognizing and feeling that every day. There has been more than 

$70 million reduction to our food aid and assistance, more than 

$400 million reduction to our economic and development assistance, and nearly $470 million reduction to our operating expenses. 

And we, like many other parts of the government, are putting in 

place strict measures to achieve those forced and required savings 

in the context where 75 percent of our staff are in international 

context. 

Mr. POE. Excuse me, Dr. Shah, I understand sequestration has 

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ing to Pakistan for their students to finish their education. If you 

could just zero in on why that decision was made? 

Mr. SHAH. I would have to go back and get you a specific answer, 

but my understanding would be that the Fiscal Year 2013 budget 

has been reduced significantly in Pakistan, in fact, far more than 

the sequester amount, as well as in many other parts of the world. 

I would presume that that was well before maybe Fiscal Year 2011 

or 2012, but let me come back to you on that, sir. 

Mr. POE. I would appreciate that. As you know, Dr. Shah, I filed 

a bill called the Foreign Aid Transparency and Accountability Act. 

What it does is have us, the government, USAID, evaluate foreign 

aid to see if it is actually working. I was surprised to learn until 

I filed that legislation that generally over the years of foreign assistance we have never evaluated programs that work and help and 

programs that don’t work and are still not working. But we are still 

giving them money, in some cases because none of this has been 

evaluated. 

The legislation did pass the House last year. The Senate blocked 

it. It didn’t come up for a vote before the end of the year. 

Could you weigh in on transparency, maybe the bill, maybe not, 

but the whole concept of Americans sending money to other nations, Americans want to see if the money that we are sending to 

NGOs and governments, etcetera, is working or not working. 

Would you just weigh in on that whole concept of transparency and 

accountability? 

Mr. SHAH. Absolutely, sir. It is essential and I want to congratulate you on your leadership on that and also express our very 

strong support for the bill and in particular the version that passed 

in the House. 

The administration has made the first ever commitment to the 

International Aid Transparency Initiative and Daniel and I are 

leading the charge to ensure that all of our assistance is very 

transparent in that context. Both of us publish all of our financial 

data on the Foreign Assistance Dashboard, which is an online Web 

site. The MCC this year published a series of very important impact evaluations. We at USAID put more than 180 high-quality 

evaluations on a site where you can download it on an app and 

look at the projects. In both cases, the data shows real, significant, 

important results in many cases and in some cases show the programs did not work. In our case, more than 50 percent of the programs were adjusted based on the initial evaluation data and I 

know the MCC has the same kind of learning approach that allows 

us to be better and more effective in how we do our work. And so 

we are all very supportive of this move. This administration has 

tried to lead in this space and I think we have used modern technology to help to be more transparent than any prior administration ever has on development and humanitarian investments. 

Mr. POE. Thank you, Dr. Shah. Mr. Yohannes, I was going to 

have you weigh in on that, too, but my time is up. So thank you. 

I yield back, Mr. Chairman. Thank you. 

Chairman ROYCE. Thank you. We are now going to Mr. Schneider of Illinois. 

42

Mr. SCHNEIDER. Thank you, Mr. Chairman. Thank you, Dr. Shah 

and Mr. Yohannes, for joining us and sharing with us your experience, insights, and priorities. 

Let me add the emphasis of the importance of the work you do, 

the fact that you are focused on mission, the selectivity in deciding 

where to apply our resources, and the accountability. It is very 

much appreciated. 

One of my areas of concern we see in the Middle East, the region 

is having a lot of challenges, in particular between the Israelis and 

the Palestinians with the announced resignation of Prime Minister 

Fayyad, which in many ways is related to the support and aid we 

give. 

Moving forward, as Mr. Fayyad moves on or wherever he goes, 

I would be interested in your sense of the impact that is going to 

have in our aid in the region. 

Mr. SHAH. Well, thank you for that question. Secretary Kerry 

spoke to this specifically and indicated that we are moving forward 

with a process that he believes can deliver a positive outcome over 

time and our aid and assistance in this region is very tied to that 

process. Currently, the priorities are building the kind of public/private investment partnerships that can create economic activity and 

some hopefulness in an alternative path forward for many in the 

region. 

We continue to pursue both humanitarian assistance in the West 

Bank, as well as support for the Palestinian Authority. The way we 

structure that program has very careful partner vetting, so we 

know who we are giving resources to and who we are not. It has 

a very specific degree of financial flows that Mr. Fayyad help put 

in place with us where the resources essentially go to Israeli Bank 

and first pay off debts that the Palestinian Authority has with 

those Israeli banks. So we have a high degree of confidence, but we 

will be vigilant about making sure that the protections we built 

with Fayyad continue on and, of course, that will continue to be a 

condition on our continued assistance there. 

Mr. SCHNEIDER. What is the plan moving forward with Fayyad 

moving on? The institutions he has started to build, the frameworks that we are going to provide for potentially a future state, 

that those continue to get the development support they need in 

the ways you outlined holding people accountable? 

Mr. SHAH. Absolutely, and in fact, while we do have a lot and 

have had a lot of confidence in Fayyad specifically, these have been 

institutional efforts. Every year we go through a very rigorous process to ensure that these institutional checks are in place, that we 

are building these institutions in a rigorous way, and that we can 

track and trace our resources. So it is important that his replacement abides by those principles and stands for those principles, but 

if they can’t, then we won’t be able to go forward with what we do. 

But we have every reason to believe that this focus on building 

strong, transparent credible institutions, paying off debts that are 

accrued, and doing it in a transparent way will continue to be the 

sort of hallmark of this relationship. 

Mr. SCHNEIDER. Great. Thank you. Shifting gears, Mr. Yohannes, 

I am going to my colleague’s former question because what you are 

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stand a little more the impact that is having and looking forward 

how we will make decisions to maintain effectiveness in the high 

return on the investment you guys are making? 

Mr. YOHANNES. Our approach to development is like a business. 

We use evidence-based, decision-making processes for how we select countries, how we do constraint analysis, how we make investment decisions; we primarily invest in those countries that really 

accept American values. And also the investment I expect to have 

the best return for American taxpayers. 

And once investments are made, we have the most rigorous evaluation and monitoring to make sure that the investments are producing the desired results. In addition to what has been done traditionally by most aid agencies, we go one step further and do a very 

thorough impact evaluation by independent parties. That tells us 

if, in fact, the investments that have been made have increased income. And we have seen a lot of successes. We have also seen what 

needs to be changed as a result of what we have seen from the 

independent impact evaluations. 

I think the most beautiful part of the whole process is we are 

learning and building evidence about what needs to be changed 

and what is working; what is not working informs in terms of how 

we should design and implement future programs as a result of 

these rigorous impact evaluations, we are learning, and we hold 

our partners accountable. All the programs are country owned. We 

only have two American hires on the ground. They are responsible. 

They want to replace aid investment with the private sector. We 

help them to become self sufficient. 

And let me tell you, I was in Tanzania last week and I saw many 

of the works that have been completed. Even by American standards, those are very complex projects. But you know what? They 

have been done on time and they want to prosper. And we are creating commercial and investment opportunities because these countries are also creating an investment climate that is very conducive 

for American companies to invest in those countries. 

So they are great partners and they are the future. And investments in those countries also will be able to help here at home for 

American companies to create more jobs, and they are our future. 

Thank you. 

Mr. SCHNEIDER. Great. Thank you very much. I yield. 

Chairman ROYCE. Go now to Mr. Tom Marino of Pennsylvania. 

Mr. MARINO. Thank you, Chairman. Gentlemen, thank you for 

what you do. You are both extraordinary men. I appreciate that. 

Doctor, if I could for a moment, as a prosecutor handling cases, 

my theory was follow the money. And it always ended up in convictions. Would you explain to the taxpayers how specifically you follow the money to see how it is spent? Because there is a perception 

out there that we wire millions of dollars over to the government 

into their account and then we do not see it any more. 

Mr. SHAH. You know, I very much appreciate both your prosecutorial background in that question because I think it is very, very 

important. The United States, when I started, the amount of 

money we provided to foreign governments was 9 percent of our 

total expenditure. That compares to all of our peer organizations 

44

around the world where they are somewhere between 60 and 80 

percent in terms of how they do that. 

We have since moved up to 14.8 percent, still orders of magnitude behind other partners, but in a more direct and specific 

way. 

When we do that, we do very careful assessments of countries 

that are receiving resources. Often the assessments will result in 

us not being able to move forward with partnering directly with the 

country. But even more importantly most of the resources we provide are provided on what we call a ‘‘fixed amount reimbursement 

agreement,’’ which means countries have to implement a program, 

invoice the costs they incur, and send the invoices in. We do a 

third-party monitoring of ‘‘has the activity been conducted effectively?’’ And then pay the bill for it per an initial agreement we 

may have made. 

In addition to that, in some difficult to work in settings like Afghanistan or elsewhere, if we do that, we will also use geospatial 

monitoring and data and third party monitoring to further verify 

that the resources are being shepherded in an effective way. 

I would also point out because I think there is a misperception 

that we provide a lot of direct assistance to the Governments of Afghanistan and Pakistan. In Afghanistan, almost the great majority 

of our investment that is labeled that way goes to a World Bank 

trust fund called the Afghan Reconstruction Trust Fund that has 

been studied by any number of partners including Harvard and 

MIT and found to be very, very effective at both tracing and tracking resources and ensuring that it delivers real results. 

Mr. MARINO. Mr. Yohannes, I know you touched on that a little 

bit. Do you care to elaborate on that, please, for me? 

Mr. YOHANNES. A couple of things. Number one, we don’t transfer a single dime to the government directly. And all payments are 

made directly to vendors. We have international procurement 

agents. We have international fiscal agents, and we pay the vendors after all the projects have been completed. 

We are very careful with American taxpayers’ money. We don’t 

want to spend even a dime on corruption or on corrupt practices. 

So we do have a workshop that we teach to a lot of our affiliates 

on how to detect fraud and corruption, and we have an open line, 

an anonymous line, that comes directly to the IG if, in fact, they 

smell some kind of corruption. But we have control after control to 

make sure that American taxpayers’ funds are not spent on corruption or corrupt practices. 

Mr. MARINO. And Mr. Yohannes, I believe I read or through a 

conversation learned that you have a process whereby you inform 

the respective countries or entities that there is a time period by 

which the proceeds or the aid may stop because there is not improvement and because there is not an initiative on the part of the 

government. Would you explain that a little bit, please? 

And Doctor, if I have time, I am going to ask you to touch on 

that, please. 

Mr. YOHANNES. We hold our partners accountable. A lot of the 

commitments are made for 5 years. And if they don’t get it done 

within 5 years, then definitely they lose the funding. But during 

that 5 years, we expect partners to continue to commit to good ecoVerDate 0ct 09 2002 13:22 Oct 17, 2013 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\042513\80548 HFA PsN: SHIRL
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nomic governance, continue to be committed to democratic governance. And in some cases, for example, in Malawi, about 11⁄2 years 

ago, they did not abide by the same commitment that helped them 

to qualify for a compact and the project was suspended. 

Mr. MARINO. Good. 

Mr. YOHANNES. And after the new President came in and she 

complied with many of our requests, including the request from her 

constituencies, the Board lifted the suspension. 

Mr. MARINO. Thank you. I am going to move on to the Doctor. 

Does USAID have such a program? 

Mr. SHAH. Absolutely. We have actually increased suspensions 

and debarments of partners of all kinds by more than fivefold relative to the prior administration. We have been very, very focused 

on accountability in that context and in fact, just this past weekend, we pulled together all of the international partners for Afghanistan to use the Afghan accountability framework to make 

joint judgments about should we be continuing to invest or pulling 

back some resources if the Afghans do or don’t do a certain number 

of things. And we think that is a hallmark of good aid effectiveness. 

Mr. MARINO. Thank you, gentlemen. I yield back. 

Chairman ROYCE. We will go to Mr. Ted Deutch of Florida. 

Mr. DEUTCH. Thank you, Mr. Chairman. Dr. Shah and Mr. 

Yohannes, thanks for being with us today and answering all these 

questions. 

Dr. Shah, I want to thank USAID and State as well for the vital 

and often underappreciated role of providing humanitarian relief to 

the Syrian people. I agree that the administration should remain 

focused on helping those in need and protecting our aid workers. 

Obviously, and you have heard here today, the concern about extremist organizations is growing and there is some frustration that 

despite our efforts we still hear that the Syrian people don’t always 

feel that the U.S. with them. 

I would point out the article that sparked much of this debate 

included some other important details that haven’t been getting 

that much attention: The feeding of 210,000 people a day by flour 

purchased by the United States, which has helped resolve the acute 

shortage of bread. Extra food rations have been distributed to more 

than 400,000 people. One hundred sixty-eight thousand people 

sleep under U.S.-provided blankets. One hundred forty-four field 

hospitals funded by the United States—this is something we 

should be proud of. It is the right thing to do. Can you tell us how 

you are working to strengthen our relationship and enhance our 

reputation with the Syrian people? 

Mr. SHAH. Thank you. Thank you very much for asking that 

question and referencing that data and information that I think is 

critical. 

We are addressing those needs in three primary ways. First, we 

do try to brand and make visible our humanitarian assistance 

wherever possible. In fact, in this context, and one thing the article 

did not capture is, we have actually worked with the Syrian Opposition Council to create television content and radio content that 

we use and communicate throughout opposition-controlled areas, 

highlighting the efforts. We are not at all concerned about highVerDate 0ct 09 2002 13:22 Oct 17, 2013 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 F:\WORK\_FULL\042513\80548 HFA PsN: SHIRL
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lighting the extent to which America is providing this assistance. 

In fact, we are seeking to do that. 

What we are trying to do is avoid consequences and attacks on 

our humanitarian partners. Many of these NGOs, including people 

like Syrian-American trauma surgeons, are taking tremendous personal risks and we know they are being targeted. Bakeries in opposition-controlled parts of Aleppo are targeted. There have been 143 

deaths among medical personnel in and around hospitals who are 

trying to provide surgical support to people that have been harmed 

because of the brutality of the Assad regime. There have been 

other deaths of U.N. workers and others. So with that safety consideration in mind, we are doing absolutely everything we can. 

Furthermore, Secretary Kerry announced this past weekend an 

acceleration of our direct support to the Syrian Opposition Council 

of $250 million. That investment is designed to help the SOC with 

our co-branded partnership deliver basic services in opposition-controlled areas: Provide everything from garbage and trash removal 

to helping to restart electricity grids and provide generators and 

fuel. And those are the types of things that we also believe ought 

to be co-branded so America is recognized as standing with people 

in opposition-controlled areas in Syria. 

Mr. DEUTCH. Absolutely, right. I appreciate your highlighting 

that. In the short time I have, it gets frustrating sometimes, frankly, to hear some of the criticism of foreign aid, this false choice that 

we are given, that we can invest in schools abroad or we can invest 

in schools here. We can invest in infrastructure abroad; we can invest in infrastructure here. It is a false choice. You rightly pointed 

out that our entire foreign aid budget is less than 1 percent of the 

overall budget. Both of you, Mr. Yohannes, you are a good example, 

too. You work with the poorest countries in the world, right? Dr. 

Shah, you are involved—I went to that app that you referenced and 

the thousands of projects all around the world. Tell me in the short 

time I have left, put the papers aside, why do you do this? Why 

does it matter so much for us to be engaged the way we are every 

place in the world? 

Mr. SHAH. I will just say very briefly, this is in our core national 

security interest and we have seen this over and over again. It is 

in our national security interest in Pakistan which is a nuclear 

power about to go through what we believe will be the first civilian 

election and hopefully peaceful transition of power. They have experienced post-independence. It is in our national security interests 

in Afghanistan where it brings our troops home. And as Daniel has 

spoken about, it is in our national interest in Africa——

Mr. DEUTCH. Dr. Shah, I am sorry, I only have a couple of seconds left. 

Mr. Yohannes, speak to that, please. 

Mr. YOHANNES. The same thing. It is in our national interest. If 

you look in terms of many of the countries that were assisted by 

us, whether South Korea, Thailand, and Taiwan, they have now become our major trading partners. We are doing the same thing. 

Many of the countries that we are helping today are going to be 

our major trading partners in the next 15, 20, 30 years. It is about 

creating jobs here. It is also about increasing the dividends, at that 

same time also helping those countries and really creating the best 

47

trading partners for us in the future. So it is in our national interest. It is about our security. It is about our prosperity. 

Mr. DEUTCH. Thank you, both. Thank you, Mr. Chairman. 

Chairman ROYCE. Let us go to Mr. Yoho of Florida. 

Mr. YOHO. Thank you, Mr. Chairman, and I appreciate you gentlemen being here. Thanks for your input. My question, I guess, is 

coming from a representative of the people of the 3rd Congressional 

District of North Central Florida and I appreciate Mr. Deutch’s 

comments, that it is only 1 percent. 

When I go back to the district, you know, I come from a district 

that has 85 percent of the people say they want to end all foreign 

aid period. I have got to sell this to them and I can tell them it 

is only 1 percent. What difference does it matter? When I have the 

mother struggling to send her child to school at a university, or 

they have to pay out of state tuition and she says they can’t do it 

and we have got $41 million going to Pakistan, it is a hard sell. 

To ask people in this time and this economy in our country that 

we are going to give this aid to them, but yet, you are getting laid 

off because of sequestration in our country. 

I think of the words of Ronald Reagan, ‘‘Unless a nation puts its 

own financial and economy house in order, no amount of aid will 

produce progress.’’ We have been doing this—I don’t want to say 

a game—but our policies have been going on for over 30, 35, 40 

years, longer than that, but I have been paying attention to that. 

And I see some improvement, but I see a lot of stuff going in the 

wrong direction. When you see countries and I kind of resonate the 

words of Mr. Chabot that we send aid, but yet we don’t want to 

tell it where it is coming from. I stand with him in putting a big 

red, white, and blue flag on any aid that goes over there, whether 

it is a bushel of wheat or a bushel of corn. That says this product 

was produced by, paid for by, and sent by the American people. Because to go down the path that we are going down it is a hard sell 

when I go back and face the people at home. 

I know you guys are doing a job that you talk about and you are 

putting forth the effort to expand economic development. You were 

talking about the economic development in El Salvador, it is growing 9 percent, or in Nicaragua, yet our economic development in 

this country is not going really well. I am reverberating the frustration that I hear at home. 

And you talk about the transparency and the accountability in 

these programs and you were saying, Mr. Yohannes, that you run 

your organization like a business. And Dr. Shah, you talk about 

how you are at the top of your organization. Who holds the person 

at the top of those accountable when we come up with the fraud, 

the waste, or the abuse? Who answers to that? That really wasn’t 

a question that you can answer. It is more of a rhetorical. I guess 

my question is, what direction do you see the American Government going as far as foreign aid? And what should our role really 

be? Are we looking at economic development or are we looking at 

just giving foreign aid that becomes more of a foreign welfare in 

which case it does no good? 

Mr. SHAH. I believe and the President has spoken about this very 

consistently and this budget reflects that these are tough times. We 

48

have presented a budget that is 6 percent lower than it has been 

for that purpose. 

We also believe that foreign assistance should be about creating 

the conditions where aid is no longer needed. This pathway from 

dependency to self sufficiency and dignity should be at the core of 

what we do. The single most important reflection of that principle 

in this budget that has been sent to Congress by the President is 

the food aid reform proposal. It has bold and important reforms 

embedded in it to allow us to reach 4 million additional people 

while also achieving $500 million of mandatory budget savings. It 

allows us to actually expand the effectiveness of our effort, saving 

more lives and difficult situations, while moderating and having as 

Secretary Vilsack has noted, no significant perceptible impact on 

American agricultural produce and value. 

We know that we can do a better job and when we can, some of 

these programs are six decades old, we want to work with you to 

have a reform approach that allows us to be more effective and efficient because I think we all want to be able to go back to the American taxpayer and say, however, we conducted our mission, our priority was getting the most value for money we possibly could. 

Mr. YOHO. I am going to cut you off there and I appreciate that. 

I do hope you pare those programs down. And Mr. Yohannes, if you 

can jump in there for the next remaining few minutes, seconds? 

Mr. YOHANNES. My colleague Raj and I have two different purposes and we both promote U.S. Government interests worldwide. 

We work with countries that are poor, but well governed, countries 

that have embraced American values, countries that have taken responsibility for their own growth. 

These are countries, we believe, that will be our future trading 

partners because they want to replace aid with the private sector. 

Countries that are really committed to reform, which is very difficult to do, but countries that are creating the best investment climate that will help American businesses in the long term because 

we need some trading partners. Like I said earlier, many of the 

countries that we supported in the past are now our major trading 

partners. With South Korea, we do over $100 billion in trade investment-related activities. 

Mr. YOHO. I appreciate your time. My time has expired and I will 

yield what time I don’t have back. Thank you. 

Chairman ROYCE. Okay, we will go to Ms. Karen Bass of California. 

Ms. BASS. And thank you, Mr. Chair, for holding this hearing 

today. I appreciate it very much. And I want to thank both of you 

for your excellent work from your organizations. I wanted to take 

issue with my good colleague from California who says that we 

shouldn’t use tax dollars for development, but only for emergency 

aid. And both of you, I think, have been doing a great job today 

explaining the work of your organizations, but I am going to ask 

you in a minute to give examples of specific projects instead of the 

10,000-foot level. 

I disagree with the part that says that we should only focus on 

emergency aid because I believe that the work of both of your organizations really leads to us—well, really leads to preventing the 

type of emergencies that take place. And I think that Mr. 

49

Yohannes was just referencing that and I think the example of 

Korea is a wonderful example. And I see that future in Africa. 

Dr. Shah, I would love for you to talk about Feed the Future and 

Africa’s long-term goal, our long-term goal. 

And Mr. Yohannes, I first want to thank you for sending Cassandra Butts to Los Angeles. She did a wonderful job speaking 

with small businesses in my district about how this is about business relationship between the United States and Africa. So if you 

could both give an example of how the work of your organization 

leads to us in the long term not needing to have the level of foreign 

aid that we do now, how development leads to that with a specific 

Feed the Future example. 

And then Mr. Yohannes, if you could talk about Benin and the 

port and regional integration in Africa. 

Mr. SHAH. Thank you. With respect to Feed the Future, this was 

a program that President Obama asked us to create and implement 

in order to move people from dependency to self sufficiency using 

agriculture to address extreme poverty. We have implemented the 

program in 19 countries. We have actually focused our efforts to 

cut and eliminate agriculture programs in 23 other countries. In 

each country we work in, they adhere to a set of commitments and 

reforms, some of which are to increase domestic expenditure on agriculture by 10 percent, some of which are to avoid export bands 

in the sector so that there can be more trade in investment. 

As part of this effort, last year at Camp David, President Obama 

brought together the American industry along with this and said 

what we can do to accelerate the partnership with private investment and get companies to commit $3.5 billion of agricultural investment to these countries. And today, we are seeing the results. 

In Ethiopia, in a partnership with USAID and DuPont and the people of Ethiopia, we are doubling maize yields and significantly improving access to improved crop varieties. 

Ms. BASS. Thank you. I saw an example in Kenya of U.S. companies that were essentially lending their scientific expertise as well 

as products that was helping Kenya move forward. 

Mr. Yohannes? 

Mr. YOHANNES. Thank you, Madam Congressman. About 70 percent of our investments is concentrated in the continent of Africa. 

We are building the infrastructure for those countries. We are 

building the roads, the bridges. Like in Benin, we were able to 

spend about $180 million to expand the port. That port has been 

able to get additional investment from the private sector for $20 

billion. That port is a lifeline for Benin and for many of the countries in that region. And as a result of our investment in Benin, 

we have seen commerce increase significantly in the region. 

I just came back from Tanzania where we inaugurated a major 

road that links Tanzania with Kenya. The same road has also been 

used by other countries in the region that are simulating trade and 

investment activities. So unless you build the infrastructures of 

those countries, the water, the energy, the roads and so forth, it becomes extremely difficult for some of those countries to compete 

globally. And they are competing today. And again, we are working 

with my good friend Raj to help some of those countries to become 

food secure. 

50

To give an example, in Senegal, where we are building the infrastructure for irrigation, USAID is providing the training. In Ghana, 

where we are building many, many schools, the teacher training is 

also being provided by USAID. So we are working in partnership 

to make sure that many of those countries become self sufficient, 

wending my way from aid to major policy reforms by creating the 

best environments for businesses to be invested in those countries. 

So we are complementing AGOA. I know, Madam Congressman, 

you have been very much involved in AGOA, and we are a good 

complement for AGOA. Without infrastructure, it is very difficult 

for many African countries to take advantage of the opportunities 

that exist. 

Ms. BASS. I appreciate that and we actually just had a breakfast 

earlier this morning talking about AGOA. And one of the things we 

consistently hear from African countries is that they want to move 

beyond aid. It is about trade. To the extent that the countries are 

developed around the world, that is more business for our companies in the United States. Thank you very much. 

Chairman ROYCE. Thank you, Ms. Bass. We now go to Mr. Cook 

of California. 

Mr. COOK. Thank you, Mr. Chairman. A previous question was 

asked about the corruption of Afghanistan. I went on a visit over 

there and I was impressed with actually the military, impressed 

with the Afghan Army and some of the aid programs that had been 

done. Corruption is a big problem and I know there is kind of a 

wink-wink, nod-nod when you start talking about the poppy and 

the drug situation, which is almost analogous to Colombia. I am 

kind of a cynic on this and I am very surprised the way things 

have turned out in Colombia. 

Because of the political situation there and this variable, can you 

address that, the poppy? Because they are talking about this year 

is going to be a bumper crop over there again and whether money 

that might be intended for other programs is going to go to support 

that underground economy, which is obviously very, very successful. 

Mr. SHAH. Thank you. Thank you for your visit to Afghanistan 

and for taking the time to engage with our USAID team and look 

at those projects. This is part of an important shared civilian-military effort to help establish a degree of stability, both economically, 

socially, and from a military perspective to allow our troops to 

come home and to reduce the long-term national security threat. 

Poppy is a huge challenge. We have seen big ups and downs. The 

core drivers and we have learned this, from Peru, from Colombia, 

from other areas where we have had successful alternative agriculture or alternative development programs, the core drivers of 

getting people out of that illicit economy into the licit one is making the opportunities in the licit economy more productive and 

more economically rewarding. 

So one of our major areas of partnership and investment has 

been in agriculture in Afghanistan. We help with improving wheat 

yields, for example, bringing more high-value agriculture, working 

for export opportunities to the Gulf and to other countries in the 

area. And really one of the few things that has been really effective 

at getting people out of poppy and these other areas is creating 

51

those market and economic opportunities that are safe and legal 

and financially, fiscally rewarding to small-holder producers and to 

small businesses there. 

And we have seen some real progress in that setting, but it continues to be a major challenge. 

Mr. COOK. And thank you for that answer, but can you also address the fact that, I was under the assumption, which is always 

dangerous, that the poppy was going to the Western countries, but 

now the big market or part of it is Russia and that avenue is somewhat open. If you could just address that very briefly, too. 

Mr. SHAH. Sure. That is accurate and part of our approach is to 

help manage and bring much more transparency to—and fight corruption at trading posts and border crossings, both for combating 

poppy trade and revenue flow from that. But also just to help the 

Afghan Government collect real Customs revenue in a transparent 

way so they can have domestic revenue replace aid over time as 

they really take on the sustainability efforts on their own. So all 

those things go together and cause a real focus on regional trade 

and that brings you quickly to trade and Customs posts. 

Mr. COOK. Thank you very much for answering my questions. I 

yield back. 

Chairman ROYCE. We will go now to Gerry Connolly of Virginia. 

Mr. CONNOLLY. Thank you. Thank you, Mr. Chairman, and welcome to both of our panelists. It is a great honor to be the very last 

questioner out of 18. 

Mr. Shah, the Foreign Assistance Act was written in 1961. It is 

52 years later. I heard you talk about the need to sort of revisit 

the way we do business. The goals that maybe were relevant half 

a century ago, but maybe less so today. I assume by extension from 

those remarks you would be amenable to a rewrite of that Act? 

Mr. SHAH. Absolutely. Secretary Kerry in front of the panel also 

implied an enthusiasm to see new authorizing legislation go forward. We would be eager to work with you on that. 

Mr. CONNOLLY. You are familiar with the effort our former ranking member and former chairman of this committee, Mr. Berman, 

and I undertook and in fact introduced legislation in the previous 

Congress. 

Mr. SHAH. Yes. 

Mr. CONNOLLY. And do I understand from your remarks that you 

are committing the agency and yourself to working with us on that 

reform legislation as we get ready to reintroduce it in this Congress. 

Mr. SHAH. Yes. 

Mr. CONNOLLY. We really want to work with you. We see it as 

something we hope will streamline efforts and more logically align 

the goals and directives. I have the privilege of, if you can call it 

that, having been one of the only surviving human beings who 

wrote the last foreign aid authorization bill that became law, 1986. 

I was a staffer in the Senate. If I were the aid administrator, I 

might like the existing law because there were over 250 objectives 

and priorities and goals and everything else because we just added 

to it over the 50 years. But I am not sure it is a good way to really 

go forward. 

52

And so I very much welcome your statement because we want to 

make sure aid is part of the process; and it is my understanding 

that, in the past, aid has maybe been sidelined or stayed on the 

sideline. I don’t want to see that. We are trying to be partners with 

you on the legislative end to enable the agency to go forward. So 

thank you. 

Mr. SHAH. Thank you. 

Mr. CONNOLLY. I look forward to working with you and your 

team as we move forward. We are getting ready to reintroduce the 

bill and I have already talked to the chairman about hopefully at 

least having some hearings perhaps about aspects of it and see if 

we can’t try to do this on a bipartisan basis. 

Let me ask, what is your understanding, Dr. Shah, and Mr. 

Yohannes, yours as well. You and I had a private conversation 

about this, but I have to admit I am not quite sure I fully understand the different missions between your two organizations. So 

very briefly if you can share that with us and then tell us how you 

coordinate. How do you make sure that if you are pulling out of a 

country, they are not getting in it, if there is a substantive reason 

for withdrawal and how do you make sure that we don’t have resources competing against each other or contradicting each other in 

a structural way? 

Mr. SHAH. Let me echo Secretary Kerry on this one. As Secretary 

Kerry has noted publicly and privately, we have the same mission. 

Our mission is to elevate the role of development and humanitarian assistance in the context of our foreign policy and in advancing our national security agenda. To do that, we have to have a 

broad range of tools and capabilities that can be applied in setting 

those as diverse as Cape Verde and Afghanistan. And so, the MCC, 

the broad range of capabilities that USAID has through different 

programs including Food for Peace, which has been an important 

part of today’s conversation; OPIC, the Overseas Private Investment Corporation; the Export-Import Bank, which are playing a 

critical role on energy efforts in sub-Saharan Africa, are all important components of that and we all seek to work together toward 

that ultimate and singular and the exact same mission. 

Daniel can speak to some really good examples where we have 

worked hard to make sure that we have an integrated approach in 

the field as well. 

Mr. YOHANNES. We both work to promote the government’s interest. We have a very specific, narrow mission, which is, we work 

with countries that are poor, but those that are well governed, 

countries that have embraced our American values, that are committed to good governance, economic governance, democratic governance, and countries that are committed to investing in their 

constituencies. These are countries we want to be the next emerging markets. So we have a scorecard system they have to pass—

many of those scorecard indicators in three buckets—in order to be 

considered for our program. 

In terms of coordination, Raj and I work very closely. We talk almost on a weekly basis. A lot of our people speak on a weekly 

basis, or daily, and many of our projects are well coordinated. Like 

I talked about earlier in Ghana, we are building a school, they are 

providing teacher training. And in some cases like in Jordan, the 

53

water project that was begun earlier by USAID, is now a scale-up 

from what they have begun. Moldova, the same thing. We are 

doing the infrastructure for water and they are providing the department training. So, we work very closely making sure that we 

don’t duplicate each other but rather complement each other. 

Mr. CONNOLLY. Thank you, and Mr. Chairman, if you will allow 

me just 30 seconds since I am the last——

Chairman ROYCE. Mr. Connolly, I will allow you several minutes. 

Mr. CONNOLLY. You are wonderful, Mr. Chairman. Thank you. 

Two points I would like to share with you, Mr. Shah. One is the 

enthusiasm expressed by the chairman and the ranking member 

for your Food for Peace reform, notwithstanding, a word of caution 

as somebody who has been writing and supporting foreign assistance for over 30 years. The coalition for foreign aid is very fragile. 

And there are political aspects to what you propose that with the 

best of intentions could actually damage that fragile coalition. And 

I strongly urge you and the administration to carefully vet that as 

you move forward because you may win the battle and lose the 

war. You heard on this committee people express well, we just can’t 

afford foreign aid. I agree with Ted Deutch, it is a false choice, but 

there are lots of people here and back home, a lot of Americans are 

under the impression that we can balance the budget just by cutting foreign aid. You hear it all the time at town hall meetings. 

It is a fragile coalition getting votes up here to support what you 

are both doing and we must be cognizant of the impact of reforms 

that may do good, but that also fracture that coalition. 

And the second thing I would commend to you both is we have 

to have a better narrative on success. Surely we have more to talk 

about than Taiwan and South Korea after a half century, 60 years 

of actually making these investments. What works? What doesn’t? 

Give us some success stories that we can talk about. That is why 

we have got to do it. 

It isn’t always self evident that it is in our national interest. We 

can repeat that, but there is certainly a strain of isolationism that 

has always been with us in the United States that does not accept 

that rationale. The more we can point to efficacy, ‘‘here is what we 

were able to do in reducing poverty and improving food production, 

extending lifespan and ending this disease or that disease and actually creating a market economy that is now a full-fledged member of the international community.’’ Those are very important success stories, especially if we can tie them to the investments we 

make in your respective agencies. 

Thank you, Mr. Chairman. I really appreciate your graciousness. 

Chairman ROYCE. Thank you, Mr. Connolly. I will remind you it 

is only 45 percent of the Food for Peace account that they are talking about, so it is a compromise that these gentlemen are suggesting and that is in the budget, a compromise which will make 

that 45 percent far more costly to the overall budget. So again, 

your other point was those who are concerned about the cost, this 

is a reduction in cost, but those who are concerned about the humanitarian impulse here, it gets the aid there faster, more efficiently and does not depress the local markets that impacts the 

local farmers. 

54

I just wanted to take a moment and thank both of our witnesses 

and indicate to you both we look forward to working together, not 

only on food aid reform, but also on greater transparency, greater 

effectiveness and we thank you again for your willingness to come 

up and testify and we stand adjourned. 

[Whereupon, at 11:58 a.m., the committee was adjourned.] 

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