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S. HRG. 110–368

S. 2232, THE FOREIGN AID LESSONS FOR

DOMESTIC ECONOMIC ASSISTANCE ACT OF 2007

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

FEBRUARY 27, 2008

Printed for the use of the Committee on Indian Affairs

(

(II)

COMMITTEE ON INDIAN AFFAIRS 

BYRON L. DORGAN, North Dakota, Chairman 

LISA MURKOWSKI, Alaska, Vice Chairman 

DANIEL K. INOUYE, Hawaii 

KENT CONRAD, North Dakota 

DANIEL K. AKAKA, Hawaii 

TIM JOHNSON, South Dakota 

MARIA CANTWELL, Washington 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

JOHN MCCAIN, Arizona 

TOM COBURN, M.D., Oklahoma 

JOHN BARRASSO, Wyoming 

PETE V. DOMENICI, New Mexico 

GORDON H. SMITH, Oregon 

RICHARD BURR, North Carolina 

ALLISON BINNEY, Majority Staff Director and Chief Counsel 

DAVID A. MULLON JR. Minority Staff Director and Chief Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on February 27, 2008 ....................................................................... 1

Statement of Senator Dorgan ................................................................................. 1 

Statement of Senator Inouye .................................................................................. 4

Prepared statement .......................................................................................... 4

Statement of Senator Murkowski ........................................................................... 3

WITNESSES

Anderson, Ralph, CEO, Bristol Bay Native Association ...................................... 20

Prepared statement .......................................................................................... 22

Applegarth, Hon. Paul V., CEO, Value Enhancement International .................. 26

Prepared statement .......................................................................................... 30

Brink, Zack, Executive Vice President, Association of Village Council Presidents ...................................................................................................................... 24

Prepared statement .......................................................................................... 25

Crow, Matthew, Deputy Assistant Secretary for External Affairs and Communications, Economic Development Administration, U.S. Department of Commerce ..................................................................................................................... 8

Prepared statement .......................................................................................... 10

Kitka, Julie, President, Alaska Federation of Natives; accompanied by Byron 

I. Mallot, Director, Sealaska Corporation .......................................................... 16

Prepared statement .......................................................................................... 17

Stevens, Hon. Ted, U.S. Senator from Alaska ....................................................... 5

Prepared statement .......................................................................................... 7

APPENDIX

AVCP/BBNA, joint funding proposal ..................................................................... 46

National Congress of American Indians, prepared statement ............................. 43

Support Resolutions for the ‘‘Native American Challenge Demonstration 

Project Act’’ ........................................................................................................... 129

(1)

S. 2232, THE FOREIGN AID LESSONS FOR

DOMESTIC ECONOMIC ASSISTANCE ACT OF 

2007

WEDNESDAY, FEBRUARY 27, 2008

U.S. SENATE, 

COMMITTEE ON INDIAN AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:35 a.m. in room 

485, Russell Senate Office Building, Hon. Byron L. Dorgan, Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. BYRON L. DORGAN,

U.S. SENATOR FROM NORTH DAKOTA 

The CHAIRMAN. We will begin the hearing today. My colleague, 

Senator Murkowski, is on her way and will be here momentarily. 

I will make an opening statement and I expect she will be here and 

I will recognize her for an opening statement. Then we have Senator Stevens, who has joined us, who will be the first witness. 

Today, the Committee is going to hold a hearing on S. 2232, the 

Foreign Aid Lessons for Domestic Assistance Act of 2007. This 

hearing is being held at the request of Vice Chairman Murkowski. 

Witnesses will include representatives from the Administration, 

various tribal leaders, and experts on economic development initiatives that are included in this bill. 

As many of us know, there are obstacles to individual Indians 

and to Indian tribes that wish to stimulate economic development 

in their communities. Many of the communities continue to face extreme poverty, severe health disparities, overcrowding and substandard housing, substance abuse problems, a weak education 

system, and the list goes on. 

I think most of us would say this is unacceptable and we have 

to change it. One of the ways to change is to provide more opportunity and jobs. Similar to Third World countries, many of the social issues faced by Indian tribes in America are a result of underdeveloped and unstable economies and governments. 

Stable economic growth for these communities, creating jobs and 

lasting livelihoods, ought to be a paramount goal for all of us. I 

think there are many different ways and many possibilities and 

policy choices for how to improve economic development in Indian 

Country. There are opportunities with respect to energy development that I think are very significant opportunities on Indian 

lands; and opportunities in the information technology sector. For 

2

example, the Mandan-Hidatsa-Arikara Nation, in my State, own 

and operate a successful document conversion program that is providing very important jobs. 

Today’s hearing will focus on a legislative proposal that has been 

offered by Senator Stevens to create an economic development pilot 

project in Indian Country modeled after the Millennium Challenge 

Corporation. In 2004, the Congress authorized the Millennium 

Challenge account to be managed by the Millennium Challenge 

Corporation. It seeks to provide assistance through a competitive 

selection process to developing nations that are pursuing political 

and economic reforms. 

I look forward to all of the testimony today and to the perspectives on the merits of this proposal and other proposals before us 

that would deal with economic development. We have asked our 

witnesses to provide full written statements, and ask that witnesses would summarize their comments in five minutes or less. 

Let me say that at the request of Senator Murkowski, I am holding this hearing. There are a wide range of proposals on economic 

development that we will and should consider. This piece of legislation, authored by our colleague, is one of those, and we are very 

pleased that he is able to be with us today to explain the legislation and the purpose and intent of the legislation. 

We established this hearing on relatively short notice last week, 

and I am going to ask Senator Murkowski to chair the second half 

of the hearing today. I can only be here for the first half. But let 

me thank her for recommending this hearing, and recognize Senator Murkowski for an opening statement. 

Before I do, I do want to say, however, and we will do this more 

appropriately at a later date, but yesterday on the floor of the 

United States Senate for the first time in 16 years, the United 

States Senate passed a piece of legislation to improve Indian health 

care. That is no small feat. It has taken us year after year after 

year after year to convince the Senate finally to move forward on 

Indian health care. 

My colleague, Senator Inouye, who has just entered the room, 

has been Chairman of this Committee for many, many years, and 

has worked on this issue. My colleague, Senator Ben Nighthorse 

Campbell worked on this issue. Our colleague, Senator McCain, 

worked on it as Chairman of the Committee. My colleague, Senator 

Murkowski worked on it with me. 

I couldn’t be more pleased that we have finally, at long, long last, 

made some progress. I look forward to the House passing its bill 

and having a conference, and with Senator Murkowski and other 

members of this Committee being able to send a bill to the President for his signature. For the first time in 16 years we will have 

made a step in the right direction on something that is not optional, something that is mandatory, and that is keeping America’s 

promise with respect to the health consequences and the health delivery system for the first Americans. 

So Senator Murkowski, thank you for your work on that important piece of legislation. I know you felt, as I did yesterday, that 

it was a significant victory for those who are the first Americans. 

Senator Murkowski? 

3

STATEMENT OF HON. LISA MURKOWSKI,

U.S. SENATOR FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

It was a very good day yesterday for Indian Country. I think we 

would all agree. I had an opportunity this morning to meet with 

a good handful of constituents from Alaska, many coming from our 

villages, many Alaska Natives. The enthusiasm is shared, let me 

tell you, about finally after all these years moving the Indian 

Health Care Improvement Act through the Senate. 

So I appreciate your leadership on it, and know that we are only 

halfway, but it is a very good start, and I look forward to advancing that. 

I want to thank you, Chairman Dorgan, for agreeing to take up 

the legislation that we have in front of us today, the Foreign Aid 

Lessons for Domestic Economic Assistance Act. I want to thank 

those that have traveled quite a ways to be with us here this morning. We have a few of our Alaska Native leaders. Byron Mallot is 

back there. We have Julie Kitka from AFN; Nelson Angapak back 

there; Ralph Anderson; Zack Brink, thank you. 

This legislation, introduced by Senator Stevens, really builds on 

the best practices of the international economic development and 

the successful principles of tribal self-determination here in the 

United States. I want to thank you, Senator Stevens, for introducing this legislation and for your continued commitment to the 

Native people of Alaska. 

I also want to recognize the very diligent work of Alaska Federation of Natives, AFN, in changing the economic landscape in rural 

Alaska and mapping the economic future of the Native people by 

merging culture and merging development. We know that the ingenuity of the Alaska Native people has enabled them to not only 

survive, but to thrive for centuries in one of the harshest, most unforgiving environments. It is that ingenuity that will enable them 

to strive into the future in their effort to harness the private market, to raise the standard of living and the social well being of 

rural Alaska. 

I appreciate the recognition and the importance that AFN has 

placed on sustaining the cultures of the Alaska Native people, in 

their effort to apply proven models of economic development. We 

know that this diligence to provide new opportunities for the future 

of generations of rural Alaskans will make that difference. 

AFN has done some very innovative things. We have engaged 

world-renowned economists such as Hernando DeSoto, and the 

larger international economic development community, to think 

about the economic realities that our rural residents face. The leadership forums that AFN has hosted in 2004 and 2006 have been 

pivotal in building relationships between rural Alaska and the 

global community such as the World Bank. It is these forums that 

enable them to share the ideas, the methods and practices of integrating indigenous peoples into the market economy, of realizing 

indigenous development potential, and of recognizing the importance of local cultures. 

The Alaska Marketplace is a great example of a success which 

integrates culture and development in a competition of business 

ideas, bringing together rural entrepreneurs with technical experts 

4

and financiers to bring the development ideas of the entrepreneurs 

into life. When you sit down and you talk to them, a lot of these 

are young people with great ideas, who need just a little bit of that 

financial backing to kick-start an idea that is going to make a difference within their community. 

I truly appreciate all that Senator Stevens has done in cultivating all of this activity through the legislation that we have before us today. Whether it is the Alaska Marketplace, the developments that we are seeing invigorate this entrepreneurial spirit in 

rural Alaska, making it more investor-friendly, forging a new path 

in economic development in our Native communities. 

I am looking forward to the testimony that we will hear this 

morning, and encouraging this important legislation to move forward. 

With that, Mr. Chairman, I thank you for your time here this 

morning. I know that you have other commitments, but I am glad 

that you will be able to hear at least a portion of what we have 

this morning. 

The CHAIRMAN. Senator Murkowski, thank you very much. 

Senator Inouye? 

STATEMENT OF HON. DANIEL K. INOUYE,

U.S. SENATOR FROM HAWAII 

Senator INOUYE. Thank you, Mr. Chairman. 

I commend the Committee for holding this important hearing, 

and I wish to commend my friend and colleague, Senator Stevens, 

for authoring this bill. This bill will play an important role in reviving the economies of many of our Native communities. 

I ask that the full statement be made part of the record. 

The CHAIRMAN. Without objection. 

[The prepared statement of Senator Inouye follows:]

PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII

Thank you Mr. Chairman. I commend the Committee for holding this important 

hearing on S. 2232. I wish to commend my colleague and friend Senator Stevens 

for authoring this legislation. This bill will play an important role in reviving the 

dire economies of many of our Native communities. 

Many of our Native communities continue to suffer from disproportionately high 

rates of unemployment, poverty, substandard living conditions, and poor health. 

This legislation has been developed to remedy some of the disparities mentioned 

earlier by creating long-term jobs, revenue opportunities, and an investment favorable climate which would in turn increase Native productivity in some of the poorest 

Alaska Native, Native Hawaiian, and Native American communities. 

I believe that this legislation will not only provide a wealth of opportunities but 

I have always said that one day native peoples will have to find other means to sustain themselves. Over the years, I have personally witnessed the Indian Gaming Industry grow into a multi-billion dollar industry. It has proven to be one of the most 

successful economic development tools for Indian Country. Over 200 tribes have 

taken advantage of this thriving economic opportunity to provide funds for government operations, and social programs. 

Although gaming has proved to be a success for some tribes it is not a solution 

for every community. 

As a cosponsor of this legislation, I would like to urge my colleagues to support 

this legislation and look forward to working with them on this initiative. Once again 

I thank you Mr. Chairman for holding this important hearing.

The CHAIRMAN. Senator Stevens, thank you for joining us this 

morning. We will recognize you and you may proceed. 

5

STATEMENT OF HON. TED STEVENS,

U.S. SENATOR FROM ALASKA 

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

I follow my good friend and colleague, and we have another hearing, so I would ask that my statement be printed in full in the 

record, as you indicated. 

Mr. Chairman, I would hope that this bill might stimulate another visit to Alaska by this Committee. It has been a long time. 

I really believe that those who deal with Indian affairs primarily 

in the South 48 have to get a grasp of the problems that our people 

in Alaska face with regard to economic development. 

We have 241 villages spread throughout an area that is one-fifth 

the size of the United States. The principal area of the northwest 

is larger than Texas, and it has scattered villages there. These villages can be reached year round only by air. Seventy percent, as 

a matter of fact, of all the cities and villages of the State can be 

reached year round only by air. They have some summertime boat 

supply, but basically their transportation is by air. 

We have an isolation that is just absolutely unheard of, really, 

in terms of the total Indian affairs of the Country. Most Indians 

in the South 48, and I had some experience with them back when 

I was in the Interior Department, are in areas where they are fairly contiguous. Our people are spread out so much that any economic development is very difficult to maintain. 

You may recall that in the Alaska Native Claims Settlement Act, 

Section VII(I), which requires that if any regional corporation received monies from resource development, they had to share 70 

percent of that with the other regions in the State. There were 12 

regions in the State. We tried to find a way to broaden opportunity 

that came from resource development. That has proven helpful, but 

it hasn’t really gotten down to the village level. 

I want to give really great credit to Julie Kitka, President of the 

Alaska Federation of Natives, for suggesting that we go this direction and look to the Millennium Challenge as an example of what 

can be done if our Federal Government puts its mind to finding a 

way to assist people in very rural areas to achieve some economic 

development, and achieve it and maintain it. 

The difficulties of the past have primarily been we have had spot 

programs that have come in and helped individual villages, but we 

have not been able to sustain that because of transportation and 

communications problems. Now, if you can bring the Committee to 

the State, and I really do urge it. We have made arrangements 

that the National Guard will take you throughout the State, and 

really have a chance to visit these areas and see the differences between them. 

But the real problem is the sustainability of this kind of development. In the past, it was really improbable. We could not tell you 

it could be done. But today, because of telecommunication and the 

expansion now of broadband to these areas, they have opportunities that we have never thought of before. 

There is no reason why Hyatt, for instance, should have people 

answering their phones in India. They could very easily be answered in our villages or some of the Indian reservations in the 

6

U.S. We have to find some way to give an incentive to bring some 

of these jobs back home. 

The reason that they went to India, of course, was their nation 

subsidized the establishment of enormous phone banks. Now, with 

the advent of new types of communication, we can beat that very 

easily, provided we have the incentive to have these jobs come 

home. 

I think this Committee in particular has the toughest job of any 

in terms of trying to bring about economic development, because of 

the isolation of our people and because of the lack of development 

on the Indian reservations in the South 48. 

I hope that this will be an example. If we can get this bill passed, 

it would show what can be done if the Federal Government decides 

to combine the efforts of all the agencies and try to bring about and 

sustain economic development in areas where people currently 

think it is not possible. 

So again, I thank you very much for holding the hearing. I do 

hope that my colleague from Hawaii, and by the way, they have a 

similar situation. If you look at Hawaii, Hawaii’s outer islands really make Hawaii larger than our State. We have half the coastline 

of the United States, but they have this enormous bank of islands 

out there with the indigenous people still living there. They, too, 

have a problem, and they need a challenge. There is no reason why 

this bill can’t be expanded in the first instance to include Hawaii, 

if that is your desire to do so. It would make a lot of sense, because 

with the advent of new communications, not telecommunications, 

but really total communications, a communications-based economy 

in these areas where they have many people. 

By the way, our students out there are computer literate at the 

age of eight. We have the highest penetration of computer literacy 

in the Country. Out there in those areas, those schools are teaching 

children how to use the new systems that many people of the South 

48 are not using. At a very young age, they are into computer development, into internet access, and they can find jobs related to 

the new kind of economy, the internet economy, if we work to make 

it happen. 

So I thank you for the hearing. I hope you will think about coming up. We can find some very nice times to come up. These people 

can show you some of the best fishing in the world and other 

things, too. One time in the past, we took the whole Appropriations 

Committee to Alaska, and it was a very enlightening trip. I think 

that those who went along, there were 14 who went along, and 

went throughout the State and they learned a great deal, and they 

in years after that were very receptive to some of the ideas we had 

about trying to help Alaska per se. 

I make the same suggestion to this Committee in terms of trying 

to look at these villages and see what this plan means to those villages if it properly implemented. 

So I do thank you for your time. We have a lot of good friends 

here in the audience who are going to testify. I wish we could stay, 

but Senator Inouye and I have to have our own committee. We 

have revolving chairs, you know, so he is Chairman now. 

Thank you very much. 

[The prepared statement of Senator Stevens follows:]

7

PREPARED STATEMENT OF HON. TED STEVENS, U.S. SENATOR FROM ALASKA

I’m pleased to be here this morning to offer my support for the bill before your 

Committee today—S. 2232, the ‘‘Foreign Aid Lessons for Domestic Assistance Act 

of 2007.’’ I introduced this bill, along with you and Senators Inouye and Akaka, in 

the Senate in October 2007. 

Welcome to our Alaska friends who are here today to testify on behalf of this legislation—Julie Kitka, President of the Alaska Federation of Natives, Zack Brink, 

President of the Association of Village Council Presidents and Ralph Anderson, Executive Director of the Bristol Bay Native Association, and other Alaska Natives 

here today to offer support. 

First, Madame Chairwoman, congratulations to you and Chairman Dorgan on securing passage—after 10 years of efforts—of the reauthorization of the Indian 

Health Care Improvement Act yesterday on the Senate floor. It contains provisions 

that will benefit all Alaska Natives and American Indians. I am a cosponsor of that 

important legislation, and I look forward to its speedy consideration by the House 

and signing by the President. 

Today, however, your Committee turns its attention to another area of critical importance to the well-being of American Indians, Alaska Natives and Native Hawaiians—economic success and independence. 

Despite modest improvements in the economic and social circumstances of American Indians, Alaska Natives and Native Hawaiians, they continue to have extremely high rates of unemployment and poverty, poor health, substandard housing 

and the related ills of alcohol and drug abuse. Native people have vibrant cultural 

legacies and abundant natural resources on and under their lands and in their waters. Many Native communities have marketable timber, huge reserves of coal, natural gas, oil, fish and shellfish and other natural amenities. 

At the same time, Native economies are hobbled by geographic remoteness, distance from markets and population centers, poor physical infrastructure, and a lack 

of governmental transparency contributing to stagnating Native American economies. 

Because Native economies are often plagued by the same challenges as the economies of the developing world, Native economies are likely to benefit from the application of proven models employed in international development efforts, most notable 

the Millennium Challenge Act of 2003. This initiative aims to foster those policies 

that are known to be effective and reduce poverty and promote sustainable economic 

growth in the host country. Typically, the activities that are assisted are related to 

agriculture, irrigation, and related land practices, physical infrastructure development to facilitate marketing of goods and services, and a variety of health care programs. 

Similarly, the objectives of the legislation before your Committee today are just 

as straightforward: enhancing the long term job creation and revenue generation potential of Native economies by creating investment-favorable climates and increasing Native productivity. 

The Foreign Aid Lessons for Domestic Economic Assistance Act will also authorize 

administering federal economic development assistance by encouraging the integration and coordination of such assistance to benefit Native economies. To do that, the 

bill requires that any assistance provided must be coordinated with other federal 

economic development assistance programs for Native Americans. 

Madame Chairwoman, I hope your Committee will look favorable on this legislation and work for its passage during this Congress. Our Native people are looking 

to us for this much needed assistance to gain economic self-sufficiency and a share 

of the prosperity that so many others in our nation already enjoy. Thank you for 

the opportunity to speak on its behalf today.

The CHAIRMAN. Senator Stevens, thank you very much for being 

here today and providing testimony on a new and interesting idea. 

We appreciate the work of you and Senator Inouye. We will let you 

go, and we have other witnesses that we will then call to the dais. 

We are going to have two panels today. The first will be Mr. 

Matt Crow, who is the Deputy Assistant Secretary for External Affairs and Communications, Economic Development Administration, 

U.S. Department of Commerce in Washington, D.C. 

Following Mr. Crow, we will have Ms. Julie Kitka, President of 

the Alaska Federation of Natives; Mr. Ralph Anderson, President 

8

of Bristol Bay Native Association; Mr. Zack Brink, Vice President 

of the Association of Village Council Presidents; and Mr. Paul 

Applegarth, the CEO of Value Enhancement International. 

We will introduce them at greater length, but in the meantime, 

Mr. Crow, thank you very much for being with us from the Economic Development Administration. Your entire statement will be 

made a part of the permanent record, and we would ask that you 

summarize. Thank you very much. 

STATEMENT OF MATTHEW CROW, DEPUTY ASSISTANT

SECRETARY FOR EXTERNAL AFFAIRS AND COMMUNICATIONS,

ECONOMIC DEVELOPMENT ADMINISTRATION, U.S. 

DEPARTMENT OF COMMERCE 

Mr. CROW. Thank you, Mr. Chairman and Vice Chairman Murkowski, members of the Committee. 

I am honored to be here today representing the Department of 

Commerce. I am also pleased to be here at the same hearing as 

Julie Kitka. I have known Julie since I came to work at the Commerce Department, and on my visits to Alaska. She has been a 

great friend and a great source of advise and counsel to the Department of Commerce and to the Bush Administration as well. 

I appreciate the opportunity to discuss with the Committee the 

Foreign Aid Lessons for Domestic Economic Assistance Act of 2007. 

While the Administration hasn’t taken a position on the bill, the 

Department is pleased to offer its observations today based on our 

experience working with Native American communities. 

Overall, the Department appreciates the bill’s emphasis on planning to promote successful economic development and the effort to 

incorporate performance benchmarks in order to better ensure results are achieved in areas where economic development opportunity lags. 

The Commerce Department has promoted economic growth in 

Native American communities in the following ways. The International Trade Administration, ITA, their Commercial Service at 

the Department, plays a key role in promoting Native American exports abroad. Since 2004, the Commercial Service has helped its 

growing base of Native American businesses to achieve approximately $1 million in export sales in international tourism in tribal 

lands. The Commercial Service has provided research on target 

markets for Native American artisan work, funded activities at 

international industry trade shows, and presented training seminars for Native American communities on marketing their Native 

trade crafts and their lands as travel destinations across the world. 

EDA, my agency, makes investments to promote economic development in Native American communities. Native American communities are eligible to compete for EDA investments and can, by statute, receive up to 100 percent Federal funding for their economic 

development initiatives. 

Since 2001, EDA has made over 500 investments in Native 

American communities and organizations for economic development, totaling over $88 million. These investments are estimated 

to have created over 9,000 jobs for Native Americans, saved another 6,500 jobs, and leveraged over $395 million in private sector 

investment. 

9

Each year, EDA awards approximately 55 planning investments, 

totaling $2.5 million to Native American governments to help with 

the creation of comprehensive economic development strategies, 

CEDS plans. EDA expects to maintain this level of investment in 

2008. By drafting economic development strategies that reflect 

local priorities, Native American governments position themselves 

to direct their resources to optimal use. 

EDA has four policy priorities that guide our investment philosophy. We look for investment opportunities that promote innovation and competitiveness, entrepreneurship, regional collaboration, 

which is key the rural areas that Senator Stevens referred to, and 

connecting those regional economies to the worldwide marketplace. 

These four cornerstones of EDA’s approach have been successful in 

creating higher skilled, higher wage jobs, attracting private investment, and preparing America’s regions for success in the 21st century. 

In selecting projects for investment, both for distressed Native 

American communities as well as other distressed areas, EDA relies on grassroots ideas. As an example of EDA’s investments in 

Native American Indian communities, let me tell you about one of 

our more fruitful partnerships. In Qwinhagak, near Bethel, Alaska, 

EDA invested $1.2 million to extend the runway 800 feet to accommodate aircraft handling bigger payloads. This successful investment generated almost 200 new higher skill, higher wage jobs and 

is positioned to facilitate the shipment of cargo between remote 

Alaska areas and Anchorage, which benefits a whole region of Alaska, not just the local village. 

The Foreign Aid Lessons for Domestic Economic Assistance Act 

of 2007 correctly identifies the fundamental need to begin any economic development with strategies designed to achieve sustainable 

growth and reduce poverty over a defined period. The bill intends 

to mirror the framework established by the Millennium Challenge 

Act, which improves how the U.S. provides foreign aid to underdeveloped countries. If this demonstration project follows the Millennium Challenge Act model, it is critically important Native 

American communities be able to show development readiness by 

the improvement of schools and education levels, elimination of 

regulatory barriers to business creation, and a reduction overall in 

violent crime. 

In addition, the bill recognizes the critical need to measure actual results. Equally significant, it recognizes that accountability in 

the implementation of such projects is an important incentive for 

success. Accordingly, it authorizes the Secretary to suspend or terminate assistance for poor performance, so resources can be redirected to more promising initiatives. 

I also appreciate the intent of the bill to simplify the complex 

maze of often confusing regulatory requirements that Native American areas face in accessing assistance from a myriad of Federal 

programs. The demonstration bill, S. 2232, proposes to provide Native American communities with a multi-year strategic economic 

development plan developed by the community, and pushes the 

major decision-making to the local level. This is an important first 

step to a successful outcome, as is the provision of technical assistVerDate 0ct 09 2002 13:41 May 12, 2008 Jkt 041133 PO 00000 Frm 00013 Fmt 6633 Sfmt 6601 S:\DOCS\41133.TXT JACK PsN: JACKF
10

ance to support capacity building, which a number of communities 

are likely to need. 

We appreciate the intent of this bill to adapt the framework of 

the Millennium Challenge to Native American communities. We 

look forward to working with Chairman Dorgan and Vice Chairman Murkowski to bring our experience in economic development 

to bear in Native American communities. 

Thank you for your time, and the Commerce Department looks 

forward to being helpful as this bill moves through Congress. 

[The prepared statement of Mr. Crow follows:]

PREPARED STATEMENT OF MATTHEW CROW, DEPUTY ASSISTANT SECRETARY FOR

EXTERNAL AFFAIRS AND COMMUNICATIONS, ECONOMIC DEVELOPMENT

ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

Introduction 

Chairman Dorgan, Vice Chairman Murkowski, and Members of the Committee, 

I am honored to be here today representing the Department of Commerce. I am also 

pleased to be at the same hearing as Julie Kitka, President of the Alaska Federation 

of Natives. The Department of Commerce knows Ms. Kitka well, and we have come 

to greatly appreciate her passion, commitment, and new ideas regarding improving 

economic opportunity in Native American communities. 

I appreciate the opportunity to discuss with the Committee the ‘‘Foreign Aid Lessons for Domestic Economic Assistance Act of 2007.’’ Although the Administration 

has not taken a position on the bill, in this tight fiscal environment, it is clear that 

spending constraint is one of the Administration’s top priorities. However, the Department is pleased to offer its observations today, based on our experience working 

with Native American communities. Overall, the Department appreciates the bill’s 

emphasis on planning to promote successful economic development, and the effort 

to incorporate performance benchmarks in order to better ensure results are 

achieved for areas where economic opportunity lags. 

Department of Commerce Experience with Native American Communities 

The Department of Commerce has promoted economic growth in Native American 

communities in the following ways: 

International Trade Administration Promotes Exports and Tourism 

The International Trade Administration’s Commercial Service plays a key role in 

promoting Native American exports abroad. Since 2004, the Commercial Service has 

helped its growing base of Native American businesses to achieve approximately 

$975,000 in export sales and international tourism in tribal lands. The Commercial 

Service has provided research on target markets for Native American artisan work, 

funded activities at international industry trade shows, and presented training seminars for Native American communities on marketing their native crafts and their 

lands as travel destinations. 

Economic Development Administration Invests in Job Creation 

The Department of Commerce’s Economic Development Administration (EDA) 

makes investments to promote economic development in Native American communities. Native American communities are eligible to compete for EDA investments, 

and can by statute receive up to one hundred per cent federal funding of their economic development initiatives. 

Since 2001, the Economic Development Administration (EDA) has made 509 strategic investments to Native American communities and organizations for economic 

development, totaling over $88 million. It is estimated that these investments will 

have created over 9,400 jobs for Native Americans, saved another 6,500 jobs, and 

leveraged over $395 million in private sector investment over the lifecycle of the 

projects. 

Each year, EDA awards approximately 55 planning investments totaling $2.6 million to Native American governments to help with the creation of comprehensive 

economic development strategies, and EDA expects to maintain this level of investment in 2008. By crafting economic development strategies that reflect local priorities, Native American governments position themselves to direct their resources to 

optimal use. 

EDA has four policy priorities that guide its investment philosophy; we look for 

projects that promote:

11

• innovation and competitiveness, • entrepreneurship, • regional collaboration, and • connection to the worldwide market.

These four cornerstones of EDA’s approach have been successful in creating higher-skilled, higher-wage jobs, attracting private investment and preparing America’s 

regions for success in the 21st century. 

In selecting projects for investment, both for distressed Native American communities as well as other distressed areas, EDA relies on grassroots ideas. When economic development strategies are developed by local decision makers, the whole 

process works better. 

As example of EDA’s investments in Native American and Indian communities, 

allow me to review one of EDA’s more fruitful partnerships: 

Native Village of Kwinhagak 

In 2004, EDA made an investment in the Native Village of Kwinhagak near Beth- el, Alaska. EDA invested $1.2 million to extend the airport runway 800 feet to accommodate planes handling bigger payloads. This successful investment generated 

189 jobs. The runway is strategically located to ship cargo to remote wilderness in 

southwest Alaska and to Anchorage. Therefore, this runway extension benefits a 

whole region, not just a locality. 

S. 2232

The ‘‘Foreign Aid Lessons for Domestic Economic Assistance Act of 2007’’ (S. 

2232), proposes to base assistance to Native American communities upon a multiyear strategic economic development plan developed by the community. This is an 

important first step to any successful economic plan. The bill intends to mirror the 

framework established by the Millennium Challenge Act, which improves how the 

U.S. provides foreign aid to under-developed countries. Under this model, communities receiving assistance would need to show development readiness by the improvement of schools and education levels; elimination of regulatory barriers to business creation; and a reduction in violent crime. The bill recognizes the critical need 

to measure actual results and that accountability in the implementation of such 

projects is an important incentive for success. 

While these are positive features, we have some concerns with the proposal. The authorized program of $20 million per year, for example, would be inconsistent with 

the President’s 2009 Budget. 

We have also been informed that the Justice Department has concerns about the 

definition of ‘‘eligible entity’’ in section 3 of the bill. Since Congress has not recognized any group of Native Hawaiians as an Indian tribe and there is a substantial, 

unresolved question whether Congress may treat the native Hawaiians as it does 

the Indian tribes, I understand that Justice recommends that Native Hawaiian community organizations be deleted from the list of eligible entities. 

There is also concern over other agencies transferring development funds to the 

Department of Commerce. We would, of course, need to discuss such arrangements 

with our sister agencies. 

Conclusion 

We appreciate the intent of this bill to adapt the framework of the Millennium 

Challenge to Native American communities. While there are no Department of Commerce funds available for this program, we look forward to working with Chairman 

Dorgan, Vice Chairman Murkowski and the Committee, to bring our experience in 

economic development to bear in helping Native American communities prosper. 

Mr. Chairman, Vice Chairman Murkowski, and Members of the Committee, thank 

you for your time and we look forward to being helpful as this bill moves through 

the Congress.

The CHAIRMAN. Mr. Crow, thank you very much for your testimony. 

Let me ask a couple of questions. Is it your feeling that this proposal duplicates any other program that exists to provide stimulus 

or help? 

Mr. CROW. No. If you go back to a couple of years ago, there was 

an idea that unfortunately was strangled in its crib by different 

groups, called the Strengthening America’s Communities Initiative. 

It was a similar idea, to take all the economic development plans 

12

across the government, which there are approximately 15 different 

agencies involved in economic development, and combine them 

under one roof. Unfortunately, that didn’t see the light of day several years ago. So the answer to your question is no. 

The CHAIRMAN. But this is being offered because there is a feeling that there needs to be something more. You seem to feel like 

the Administration does not support this or has concerns about it. 

If there is a general feeling there needs to be something more and 

this is not it, what is the Administration recommending? 

Mr. CROW. To the degree that they want to see a greater coalescing of the economic development plans across the spectrum of 

Federal agencies, they support the bill. The funding measures that 

would have to come over to the Commerce Department, as delineated in the bill, will have to be discussed with our sister agencies, 

but I don’t think you are going to find anybody in the Bush Administration who is going to argue that this would be a much more efficient way to deliver economic development aid to Native American 

communities. 

The CHAIRMAN. And would you see, as you have reviewed this 

bill, it applies to Alaska Natives, Hawaiian indigenous people, as 

well as Native Americans in the lower 48 States? 

Mr. CROW. Yes. 

The CHAIRMAN. Senator Murkowski? 

Senator MURKOWSKI. Well, to follow on Senator Dorgan’s question then, is it just the money? In your written testimony, when 

you cite to the concerns, you first reference the authorized amount 

of $20 million per year as being inconsistent with the President’s 

budget. Then you just referenced the difficulty in kind of transferring to the Department of Commerce from other agencies. Is that 

the biggest hurdle, in your opinion? 

Mr. CROW. It has been historically because each of those Cabinet 

offices and agencies have their own appropriators and their 

authorizors. As you know, everybody gets very nervous in Washington when you start talking about moving large sums of money 

and different responsibilities for different agencies under one roof. 

In my estimation, that was one of the greatest hurdles that the 

Strengthening America’s Communities initiative had. 

Senator MURKOWSKI. You are obviously within Commerce. We 

know that in the State of Alaska, EDA does great things, whether 

it is the runway that you cite in Kwinhagak, or the various other 

EDA projects. We recognize that it makes a difference. But it is 

also just one small pocket of money, if you will. So often, the challenge is how do you marry that up with anything that is going to 

complete the project? Where do you go? It is kind of shopping from 

agency to agency to build a project that, as you know, kills a lot 

of projects. 

Mr. CROW. You put your finger on a huge problem, not only in 

rural Alaska, but also across the United States. For a rural community or a collection of rural communities from a regional standpoint to come together to shop all the different baskets of Federal 

economic development funding is a long and tedious process. It is 

a huge challenge for them. They almost have to hire somebody singularly on salary just to do that, and they don’t have the resources 

to do that. 

13

So in essence, they have to go around and cherry-pick all these 

different agencies like HUD, AG, Education, Commerce. It is a terrible burden on them. 

So I agree with you 100 percent. One of the greatest challenges 

of recognizing where the resources are in the Federal Government 

is finding them out in the first place and then trying to figure out 

what you are eligible for. There is no central control point. There 

is no one office you can go to to clear all that through. 

I am not advocating having that one central office dictate economic development policy. Far from it. We want to keep that at the 

local level, but it would be a huge advantage for rural communities 

to be able to go to one central location to find out what the resources are. 

Senator MURKOWSKI. So in your opinion, then, what is being proposed through Senator Stevens’ legislation is something that makes 

sense. 

Mr. CROW. It is. Yes. 

Senator MURKOWSKI. From an efficiency perspective and from 

the perspective of being able to accomplish what we are looking for, 

which is economic development in, at this point, economically distressed villages in Alaska or otherwise. 

Mr. CROW. And from a performance management standpoint, a 

performance review standpoint, with the concerns that OMB would 

have and the GPRA measures, we think it would be far easier to 

track. 

Senator MURKOWSKI. Well, I like your comments because they 

are positive. I get concerned recognizing that the hurdle of getting 

the commitment from other agencies to participate and work in a 

cooperative manner toward something like this is probably a bigger 

struggle. That I find discouraging, because I think we have to look 

beyond the typical framework that we face within government right 

now because what we are doing is we are putting up roadblocks to 

economic development. Whether it is in Alaska Native villages or 

on reservations or for Native Hawaiians, we are not able to advance what we know we need to do. 

So at some point in time, there has got to be greater coordination 

and a greater acceptance that we are going to have to change how 

we are approaching this problem. 

Where do you suggest we start? 

Mr. CROW. Well, to your point, I have never met a grant recipient or a potential grant recipient that cared or particularly wanted 

to care one way or the other about internal machinations back here 

in Washington, about the turf battles with different agencies and 

funding. They just have great ideas. They have innovative ideas 

that they want to use to grow jobs, and they are looking for the 

priming of their economic pump. 

I wish EDA could do more. We do as much as we can, but I agree 

with you completely that we owe it to the customers and to the taxpayers in these rural areas to make the delivery mechanisms, and 

the ability to deliver the Federal money. We are not talking about 

just giving the money to them. Most of these funds are matching 

funds. Most communities, particularly in Alaska, show terrific leadership. They show buy-in from the private sector. They show buyVerDate 0ct 09 2002 13:41 May 12, 2008 Jkt 041133 PO 00000 Frm 00017 Fmt 6633 Sfmt 6601 S:\DOCS\41133.TXT JACK PsN: JACKF
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in from the rural communities’ leadership. They show buy-in from 

the economic development professionals like Julie. 

We need to make it easier for them, not harder for them, to deliver the economic development help that they need. Because the 

ideas are there, the resources are there, but the ability for them 

to climb through the maze of all the economic development funding 

mechanisms in the Federal Government, it shouldn’t be their problem in the first place, but it is. 

Senator MURKOWSKI. Do you have anything specific within EDA 

or the Department of Commerce that you feel has been successful 

in retooling economic development within Alaska Native communities? 

Mr. CROW. I think I would have to point singularly to our work 

with the Department of Labor on workforce development issues. 

We have found that helping the Labor Department, and this is a 

good example of two Departments actually working together for the 

common good, they have identified areas in rural Alaska which 

have a workforce development problem. In other words, there are 

manufacturing jobs there, but there are not the skill sets for the 

people to come and work at the plants. On manufacturing sites, 

Labor has identified those. We have worked with Labor in those 

communities to develop workforce training sites. 

So we take a gentleman who is making $12,000 or $13,000 a year 

as a dishwasher and turn him into a $65,000 a year x-ray technician at a manufacturing plant. Those are the kinds of jobs we create. We are in the job business, but we are not in the low paying 

job business. We want to create higher paying jobs. 

So I point to working with the Labor Department and their 

WIRED initiative. 

Senator MURKOWSKI. Why has that been more successful? 

Mr. CROW. I think it combines two agencies who singularly don’t 

have the expertise, but together they have great expertise. So we 

take the Commerce Department with their ability with economic 

development in international trade, and you take the Labor Department who knows how to train people with their funds as well, 

with some of their budget. So I think you have a marriage there 

of two fairly efficient, well-managed Cabinet agencies pulling together and we are actually creating jobs a little bit faster than we 

used to in the past when we operated independently of each other. 

Up until 2002, there wasn’t a heck of a lot of communication between the Labor Department and the Commerce Department. 

Senator MURKOWSKI. What do you figure the biggest impediment 

is to meaningful economic development within Alaska Native villages right now? Is it dealing with the bureaucracy that we have 

put up for them? 

Mr. CROW. I think it is partly that. I think it is infrastructure. 

I think it is getting the water, getting the sewer, getting the power, 

the broadband to these regions. It is giving them the ability to 

identify the resources to work together to learn what works in 

other rural communities in the United States. While there are 

unique challenges to Alaska, there are tremendous success stories 

from a rural perspective in the Lower 48. If we could somehow 

combine the best practices and methods which we see in the Lower 

15

48 with attempts in Hawaii and Alaska, I think that would really 

benefit the customers and the taxpayer. 

Senator MURKOWSKI. Do you have any good ideas about how to 

do that? 

Mr. CROW. I would like to see some sort of a national organization which could gather together best practices and methods from 

rural communities across the United States, to exchange ideas for 

people like Julie and people who are here today from their communities, to come to this organization on a regular basis to learn from 

the success stories of the other rural communities, because by information sharing, you are not going to get that at national conferences and through brochures and through the Internet. You 

have to actually talk to practitioners. You have to talk to the people in those communities. That is an idea that I have absolutely 

no money to fund, or know where I would get it from. 

Senator MURKOWSKI. Well, it is something that we have talked 

about, too. Oftentimes here in the Committee, we hear all the bad 

statistics about what is facing Alaska Natives and American Indians around the Country, whether it is in the health care area or 

whether it is the shortage of housing or the substandard housing. 

We hear all of the negatives. We need to remember that there are 

a lot of good things that are happening out in Indian Country. 

But what is the forum for sharing best practices? What is the 

forum where you can sit down with one another and learn from the 

successes or perhaps the failures that have ultimately yielded success so that we don’t have to start over in every reservation in 

every village with these new ideas. 

I don’t know, Mr. Chairman, how we accommodate that at the 

Committee level, but it would sure be nice to have a focus on the 

good news instead of always the negative. So I appreciate your suggestions, Mr. Crow. I appreciate your testimony this morning and 

for your willingness to work with Julie, AFN and so many of our 

leaders on this issue. 

The CHAIRMAN. Mr. Crow, thank you very much for being with 

us today. We appreciate your attendance and your testimony is 

very helpful. 

Next, we will ask for the second panel to come forward: Ms. Julie 

Kitka, the President of the Alaska Federation of Natives; Mr. 

Ralph Anderson, the President and CEO of Bristol Bay Native Association; Mr. Zack Brink, Vice President of the Association of Village Council Presidents; and Mr. Paul Applegarth, CEO of Value 

Enhancement International and former CEO of the Millennium 

Challenge Corporation. 

As I indicated previously, I am also a member of the same Defense Appropriations Subcommittee that Senator Stevens and Senator Inouye had to leave to attend, so I will have to go to that subcommittee, and Senator Murkowski will chair the remainder of the 

hearing. 

I want to thank the witnesses especially for being with us today. 

We will begin with Ms. Kitka. 

I would say to all of you that your full statements will be made 

a part of the permanent Committee record and we would ask that 

you summarize. 

16

STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA

FEDERATION OF NATIVES; ACCOMPANIED BY BYRON I. 

MALLOT, DIRECTOR, SEALASKA CORPORATION 

Ms. KITKA. Thank you, Mr. Chairman, Madam Vice Chairman. 

On behalf of the Alaska Federation of Natives, I really appreciate 

your scheduling time for the hearing. We support the Senate bill 

that is before you. We urge that there might be a couple of technical amendments to the Senate bill that we might want to do, and 

we would be glad to get that to your staff. 

But overall, what we want to convey to the Committee is our excitement in working on creating economic opportunities for our 

communities, our excitement in working on national demonstration 

projects with our brothers and sisters, and our intense interest in 

focusing on rural America and what additional things need to be 

put into place for Native Americans that live in remote rural areas 

on that, because the challenges sometimes are different than ones 

that are more urban. 

In addition to this bill, which we fully support and are very excited about, we really would urge that a national priority for highspeed telecommunications be made a priority for this Committee. 

In order for us to participate in the global economy, and we are 

part of the global economy, everywhere you look around us we are 

part of that already, we need to have access to the high-speed telecommunications. 

We also really need the investment climate in our communities 

changed. We need tax policies and investment policies that 

incentivize economic empowerment of or people. And we need authorization language and funding for what we call clusters of economic initiatives. This bill is very important because it will move 

us forward as Native people all over the Country in the areas 

where the demonstration project is, whether or not the U.S. economy is very robust and growing in leaps and bounds, or whether 

or not we are in recession. It is that core of an initiative that will 

help us in either situation where the economy is at. 

We also realize that it is one piece of the economic puzzle in considering and encouraging a whole look at economic initiatives like 

the cluster approach and demonstration projects. We really cannot 

underestimate how important that is in our view. We would like 

to let the Committee know that we would like to bring forward a 

couple of additional demonstration projects for consideration of the 

Committee, one in telecommunications and communications strategies of areas that we think can go forward, but also demonstrations 

in regard to compacting energy resources and new technology components on that. So with the permission of the Committee on that, 

we would like to bring that forward within the next 30 to 60 days, 

actual concrete proposals and ideas on that. Again, we think that 

the cluster approach is the way to go. 

We have also been focusing a lot on how do Native people, how 

do we become competitive in the economy? How do we be competitive in our State, in our Nation, and globally? We do think that we 

need additional tools to help us be more competitive, and we think 

that we have to go things more efficiently and more strategically 

and with much more foresight in what we are doing. Again, we believe that this legislation that is pending in front of you will help 

17

us in the areas where we are doing the demonstration, but if we 

are able to prove that successful, we sure like it ramped up. We 

have other areas in our State, other areas in the Country that 

would like to participate in the demonstration project, but we need 

to be prepared to ramp up and scale up some of these initiatives 

very quickly if we are able to prove that they make a lot of sense. 

Again, I am not going to rehash what is in the legislation with 

the written testimony. We strongly support it. We think it is very 

innovative. We think that it will has lasting results. And most importantly, it will be helpful to us as Native people regardless of 

where the U.S. economy is at. That is really significant when you 

see the changes that are going on and how people that basically are 

at the bottom of the economic sphere are impacted so much by 

changes in the U.S. economy, to know that this legislation and this 

tool will help us regardless of that. I think that is really significant. 

So with that, I would just ask that my written testimony be included in the record, and thank you very much for the leadership 

shown in the Committee and your support on this legislation. 

[The prepared statement of Ms. Kitka follows:]

PREPARED STATEMENT OF JULIE KITKA, PRESIDENT, ALASKA FEDERATION OF NATIVES

Good morning, Mr.Chairman, Vice Chair Murkowski and distinguished members 

of the Committee. Thank you for the opportunity to appear before you today on behalf of the Alaska Federation of Natives (AFN), to express our views on S. 2232. 

If enacted, this legislation will bring a welcomed new approach to stimulating Alaska Native, Native Hawaiian and Lower-48 Indian tribal economies. We strongly 

urge its passage during this Congress. 

My name is Julie Kitka. I am President of the Alaska Federation of Natives, Inc.; 

I am pleased to appear here today in support of this innovative and critically important legislation. 

By way of background, AFN is the largest statewide Native organization in Alaska, representing more than 130,000 Alaska Natives. We are a young, growing population, expected to double in size every 23 years, so our need for a solid economic 

base is critical. The Alaska Native population, although united in AFN, is a very 

diverse group. There are at least eight distinct cultural and ethnic groups: Yupik, 

Cupik, and Inupiat Eskimo peoples; Athabascan, Tlingit, Haida and Tsimshian Indian peoples; and Aleuts. Our Native cultures are land-based, and our occupation 

and use of our land predates Plymouth Rock and the pyramids. Within each cultural 

group, there is diversity—across generations, across geography, and across gender.

Because of this great diversity, there is no ‘‘one solution fits all.’’ We need a cluster 

of economic, health and educational initiatives that will empower our Native people 

to be able to maintain our unique land-based cultures and participate fully in the 

larger society. One such initiative is embodied in S. 2232 and H.R. 3351. 

America’s Native peoples, including Alaska Natives, continue to suffer disproportionately high rates of unemployment and poverty, poor health, substandard housing, and associated social ills when compared to any other group in our nation. Although there has been steady improvement in absolute terms, particularly in the 

area of health, the fact remains that there has been little progress in the last 30 

years towards closing the gap between Native peoples and the American public at 

large in most indicators of well-being. 

This poor statistical profile plagues Native communities in remote parts of Alaska, 

for example, despite a rich cultural legacy and abundant natural resources on their 

lands and in their waters. The extraction of natural resources from remote communities in Alaska, valued at billions of dollars, produces only modest direct economic 

benefit (jobs, household income, business purchases and public revenues) for most 

residents. Physical remoteness, distance from markets and population centers, poor 

physical infrastructure, and the lack of either a strong private sector or of healthy, 

transparent governmental institutions are among the reasons so many Native 

American economies remain stagnant. In several of these economies, these long-existing factors are compounded by a new challenge—the effects of climate change. 

The public perception may be that casino-style gaming is lifting tribes out of povVerDate 0ct 09 2002 13:41 May 12, 2008 Jkt 041133 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 S:\DOCS\41133.TXT JACK PsN: JACKF
18

erty, but the reality is that most Native American communities do not benefit from 

gaming due to geographic remoteness, legal constraints or other factors. 

To address this issue, AFN, working with the Association of Village Council Presidents (AVCP) and the Bristol Bay Native Association (BBNA), and their 87 federally 

recognized tribes, has spent several years developing and supporting an economic 

development proposal that would take the best lessons of the last 50 years of American experience in providing foreign aid to developing countries and apply them in 

the domestic context in remote, predominantly Native American areas. Since Native 

economies are often plagued by the same challenges as economies of the developing 

world, we believe strongly that our communities can benefit from lessons learned 

from international development assistance. These lessons include:

• The need to focus on sustainable poverty reduction, economic growth and job 

creation.

• The importance of local ownership, whereby the intended beneficiaries of programs determine priorities and are responsible for implementation.

• The need to focus on outcome-oriented objectives—where the beneficiaries determine, up-front, what outcomes they want to achieve and how they will measure 

success.

• The importance of establishing quantitative measures of success. Key to this are 

collecting baseline data up front, and establishing an arm’s-length program of 

monitoring and evaluation that tracks progress against benchmarks and that 

highlights the need for mid-course adjustments.

• The importance of capacity building. Skills learned in setting objectives, implementing programs, and making adjustments based on measurable results are 

readily transferred to other programs and to public and private sector activities.

AFN has advocated for building on the concepts and principles of the Millennium 

Challenge Corporation, and was pleased to work with Alaska’s congressional delegation and Senators Akaka and Inouye in refining the concept. S. 2232 embodies the 

concept we believe is needed in our communities. It adapts the lessons of foreign 

aid to underdeveloped economies, such as the experience of the Millennium Challenge Corporation, to the provision of Federal economic development assistance to 

similarly situated remote Native American communities in this country. 

This bill will serve to re-invigorate Native economies by using a compacting model 

to channel a significant amount of development funds to implement locally designed 

economic development strategies. The bill authorizes $100 million over five years, 

for disbursement to a total of five pilot projects; one each in Alaska and Hawaii and 

three in the Lower-48 states. 

The objectives are simple: to enhance the long-term job creation and revenue generation potential of Native economies by creating investment-favorable climates and 

increasing Native productivity. A corollary, but equally important, objective is to improve the effectiveness of existing Federal economic development assistance by encouraging the integration and coordination of such assistance for the benefit of Native economies. 

Consistent with the philosophy of the Millennium Challenge Corporation, S. 2232 

recognizes that communities that have made the threshold decision to improve their 

economic conditions and evince a ‘‘readiness for development’’ are precisely those 

most likely to make the best use of development aid. S. 2232 would provide Federal 

assistance, over and above the funding currently available, to those Native communities that are determined to be ‘‘eligible entities’’ by the Secretary of Commerce and 

are therefore poised to negotiate and enter into a bilateral compact with the United 

States. A key feature of the legislation is that the specific strategies and objectives 

will be determined by the eligible entities themselves. 

This novel federal initiative would have as its mission reducing poverty in Native 

communities. The compacts authorized under the bill would have to be consistent 

with the broad purposes of the Act, but must also contain five elements:

1. The specific objectives for sustainable economic development and the reduction of poverty that the eligible entity and the United States expect to achieve;

2. A description of the respective roles and responsibilities of the eligible entity 

and the United States in the achievement of such objectives;

3. A list and description of regular benchmarks to measure progress toward 

achieving such objectives;

4. An identification of the intended beneficiaries, disaggregated by income level, 

gender, and age, to the maximum extent practical; and

5. A multi-year financial plan.

19

A critical component of the demonstration project is in its demands for accountability in the performance of the Compact terms and the use of financial resources. 

For the Alaska component, AFN has been working closely with two Native regional organizations in southwest Alaska, the Association of Village Council Presidents and the Bristol Bay Native Association. Together these adjacent Native regions span 96,000 square miles, and contain 87 Native villages and one-quarter of 

the Native population of Alaska. These regions have a rich cultural heritage, and 

truly incredible natural resources, yet paradoxically have among the highest poverty 

and unemployment rates in the state, and in the country. 

We believe that these regions are ripe for this demonstration project. Both regional organizations are experienced with operating federal programs under Indian 

Self-Determination Act compacts, have a history of collaboration, and have done 

much of the planning legwork for undertaking economic development using this 

model. 

Our experience, and that of BBNA and AVCP and others, is that many federal 

programs that should foster economic development are splintered, suffer from lack 

of coordination between the federal agencies, are often poorly timed, and are complex and poorly understood by their intended beneficiaries. Thus, they remain 

under-utilized, as was borne out by the 2001 General Accounting Office report, 

GAO–12–193, which reviewed the effectiveness of some 100 federal programs that 

serve Native Americans. 

What we need is a paradigm shift in the way the federal government promotes 

economic development for Native American communities. S. 2232 represents just 

such a shift. It also represents the fruition of several years of intense discussion 

within parts of the Alaska Native community on how we can meet the challenge 

of reducing poverty and promoting sustainable economic growth in our rural villages. S. 2232 will enhance the long-term job creation and revenue generation potential of Native economies by creating investment-favorable climates and increasing 

Native productivity. Accordingly, we urge this Committee to pass S. 2232 as soon 

as possible.

Senator MURKOWSKI. [Presiding.] Thank you, Julie. Your full testimony will be included as part of the record. Thank you for all 

that you have done to help facilitate this. 

Byron, Mr. Mallot? 

Mr. MALLOT. Thank you, Senator. 

My name is Byron Mallot. I am a former President of the Alaska 

Federation of Natives. When Julie asked if I might come to Washington to testify on this bill, I was very excited by the opportunity. 

Recognizing that it also involves hopefully demonstration projects 

in the State of Hawaii, and of course within Indian Country here 

in the Lower 48, I contacted a colleague and friend, Nanoa Thompson, who is a trustee of Kamehameha Schools in Hawaii, as well 

as the leader of the Polynesian Voyaging Society on whose board 

I sit, in order to obtain his counsel and his thoughts about this 

kind of potential. 

I certainly cannot speak for him, but I can make an observation 

regarding his thoughts. He was very excited by the idea. He tried 

to get back here to Washington in order to testify, but because of 

the shortness of time was unable to. As I think about Alaska, as 

you are well aware, Senator, we are beginning to celebrate 50 years 

of statehood. After 50 years of statehood, we are still wrestling 

with the kind of negative issues that you commented upon earlier. 

But also as you commented upon, we have much success to celebrate within our State, and even within rural Alaska, and particularly within the Native community. The success of ANCSA, the 

Alaska Native Claims Settlement Act, and the institutions that it 

has created and made successful over these 50 years, along with 

the discovery of oil at Prudhoe Bay, will be the historical touchVerDate 0ct 09 2002 13:41 May 12, 2008 Jkt 041133 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 S:\DOCS\41133.TXT JACK PsN: JACKF
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stones for the first 50 years of statehood, and even well into the 

21st century. 

But in spite of that success, and I think building upon best practices and what we have accomplished, this bill captures where we 

are, the notion that there is still much to be done, but recognizing 

that we need to be smart about where we go and how we move forward; the idea of being able to measure performance; the notion of 

being able to combine assets and resources from a multiple of agencies with different mandates in order to be flexible and responsive; 

the notion of creating incentive for Native institutions, Native communities, Native minds to bring to fruition opportunities that are 

building upon generations of learning. All of that is tremendously 

exciting. 

I think that as we begin a new century, it could take us to another level in terms of how we think of our relationship with the 

Federal Government, which is one of a trust responsibility; of how 

we think of about and how we work with agencies and institutions 

of the Federal Government; of how we work internally, the leadership of AFN as a statewide institution bringing ideas and advocacy 

to where it is needed; looking to its owner institutions such as here 

at this table, to provide direction and strength; and allowing the 

kind of innovation, the kind of leadership, the kind of new thinking 

and the need for new ways to accomplish what we need to accomplish is all what is most exciting to me about this legislation. I urge 

its passage. 

Thank you very much. 

Senator MURKOWSKI. Thank you. We appreciate your testimony 

here and joining us this morning. 

Next, we will hear from Mr. Ralph Anderson with Bristol Bay 

Native Association out of Dillingham. Welcome. 

STATEMENT OF RALPH ANDERSON, CEO, BRISTOL BAY 

NATIVE ASSOCIATION 

Mr. ANDERSON. Thank you, Senator Murkowski. 

I am Ralph Anderson. I am the Chief Executive Officer at the 

Bristol Bay Native Association, which is a nonprofit consortium of 

31 tribes in Bristol Bay. 

First, I want to thank you and Senators Steven, Inouye and 

Akaka, for introducing this important piece of legislation. It will 

help to make a transformative, positive change in the way the Federal Government approaches economic assistance in Native American communities. 

It will be a large step toward lifting some of the most impoverished people in America out of poverty and linking us to the national and global economy, while preserving the distinctive cultural 

lifestyle values that make us the Native people who we are. 

It is true that we have made much progress in terms of health, 

education, housing and other social indicators in the decades since 

ANCSA, but our improvements haven’t really completely closed the 

gap with other Native Americans and with other Alaskans. We still 

lag behind in terms of average income and lead in most negative 

social indicators such as suicide rates, incarceration rates, alcohol 

and drug abuse and joblessness. We are still more likely to suffer 

21

alcohol and drug addiction, joblessness than average Alaskans. We 

remain heavily reliant on Government-provided services. 

At BBNA, we have been thinking long and hard about what 

might be done to improve our economy and the general well being 

of our people. To provide some context, the Bristol Bay region has 

about 7,000 people living in 31 villages in an area the size of Ohio. 

We have many well-known obstacles to progress. Our villages are 

remote, transportation costs are high, and the mainstay of our cash 

economy, the commercial fishing industry, has been in relative decline the past few years. There have never been many year round 

jobs in the villages. Many people have moved out of our region. With the rise in oil prices, gasoline in Dillingham is now $4.93 per gallon. Heating oil is $4.20 per gallon. And prices for both in 

the villages can range between $5 and $10 a gallon. While it is true 

that the Federal Government already spends a great deal of money 

providing services to Alaska Natives, a feature of this funding is 

that most of it is provided in distinct channels, with Indian Health 

Service funding for health, NAHASDA money for housing, and BIA 

funding for line services, some road construction and a variety of 

social and education services. 

In a sense, the Native organizations in rural Alaska such as 

BBNA have grown up around these funding sources. That sometimes gives us tunnel vision that makes it difficult to think more 

broadly beyond the service programs that are already provided. 

None of these major funding streams has directly promoted economic growth, although the BIA does have a loan program and 

there is some flexibility in the use of other BIA funds. BBNA, for 

example, operates BIA programs, but we receive a grand total of 

$9,000 specifically to support economic development. 

This hearing is about a bill that is the fruition of discussions 

about economic development within the Alaska Native community 

over the past several years. The fundamental idea is to build upon 

two success stories. One is the experience of the Millennium Challenge Corporation which provides funds to developing countries for 

use in locally determined economic development strategies, but 

with clear accountability and measures for determining success 

built on the funding agreements. 

The other success story is domestic, the tribal self-governance 

compacting under the Indian Self-Determination Act. Tribal selfgovernance has allowed tribal entities to operate Federal services 

and in many instances to design programs, but to date it is limited 

to the Indian Health Service and BIA. Both the Millennium Challenge Corporation and Indian self-determination use the compacting devices for providing funds, which has the effect of cutting 

through the red tape normally associated with government contracts, and also signifies that these agreements are more than just 

ordinary grants. They are commitments between governments. 

We believe that by providing funds for the Native communities 

specifically to foster economic development, S. 2232 plugs a major 

gap. It has features that we believe are absolutely critical for such 

a program to succeed. One, it provides enough funding to make a 

difference. Two, it is self-directed and allows the recipients to develop the economic development strategies and projects to be funded, although with the advice and assistance of the funding agency. 

22

Number three, it provides assurance that funding will be available 

for the entire project period, as opposed to the annual funding of 

most grants. And finally four, it requires benchmarks for measuring our success. 

The bill authorizes a new demonstration project for economic development with the Department of Commerce that would fund five 

demonstration projects nationally for five years. Total funding 

would be $100 million over the five years. Alaska Natives would receive one demonstration project, with Native Hawaiians one and 

tribes in the Lower 48 would receive three. 

Another important feature of the bill is that it would allow, but 

not require, existing funding sources or existing funding from a variety of agencies to be integrated into the compact. 

We believe that this is an exciting opportunity to make a real difference in the lives of Native American people and we urge that it 

be enacted. 

Thank you very much for allowing me to testify. 

[The prepared statement of Mr. Anderson follows:]

PREPARED STATEMENT OF RALPH ANDERSON, CEO, BRISTOL BAY NATIVE

ASSOCIATION

Chairman Dorgan, Vice-Chairman Murkowski, and distinguished members of the 

Committee, thank you for the opportunity to appear before you today to speak in 

support of S. 2232, the Foreign Aid Lessons for Domestic Economic Assistance Act. 

My name is Ralph Andersen. I am testifying today in my capacity as Chief Executive Officer of the Bristol Bay Native Association, which is a non-profit Native organization based in Dillingham and serving 31 communities in Southwest Alaska. I 

have been in my current position for about 21⁄2 years. I am also from Bristol Bay 

and have spent most of my life in rural Alaska—I grew up in the village of Clarks 

Point, a small village about 15 miles from Dillingham on Nushagak Bay. 

First, on behalf of BBNA, I would like to thank Senators Murkowski, Stevens, 

Inouye and Akaka for introducing S. 2232, and to thank this Committee for providing the opportunity to testify. We believe this legislation, if enacted, will make 

a transformative, positive change in the way the Federal Government approaches 

economic assistance to Native American communities. It will be a large step toward 

lifting some of the most impoverished people in America out of poverty and linking 

them to the national and global economy, while preserving the distinctive cultural 

and lifestyle values that make we Native people who we are. 

It is true that although we have made much progress in terms of health, education, housing and other social indicators in the decades since the Alaska Native 

Land Claims Settlement, but our improvements have not closed the gap with other 

Americans. We still lag far behind in terms of average income and lead in most negative social indicators such as suicide rates, incarceration rates, alcohol and drug 

abuse, and joblessness. We are still more likely to suffer alcohol and drug addiction 

and joblessness than average Alaskans. And we remain heavily reliant on government-provided services. 

At BBNA have been thinking long and hard about what might be done to improve 

our economy and the general well-being of our people. To provide some context, the 

Bristol Bay Region has about 7,000 people living in scattered communities in an 

area the size of Ohio. We have many well-known obstacles to progress: our villages 

are remote, transportation costs are high, the mainstay of the cash economy—commercial fishing—has been in relative decline, and there have never been many yearround jobs in the villages. Many people have moved out of our region. With the rise 

in oil prices, gasoline in Dillingham is now $4.93 per gallon, heating oil is $4.20, 

and prices for both in the villages can be over $5 or even $7 per gallon. 

Yet—in a seeming paradox—the Bristol Bay region is rich in natural resources, 

it has a vibrant Native culture, the Native corporations own hundreds of thousands 

of acres of land, and there is no reason to think our commercial salmon fishery 

won’t continue to be an important economic base for the foreseeable future. By any 

measure Bristol Bay is a world class destination for sports hunters and fishermen, 

and for eco-tourists. Improvements in telecommunications partially offset geographic 

23

barriers, and link even the smallest of our villages to the modern global environment. 

Given the positive factors, we do not believe there is any inherent reason why 

Bristol Bay and rural Alaska in general cannot develop a robust sustainable economy, while preserving our culture and lifestyle. 

While it is true that the Federal Government already spends a great deal of 

money providing services to Alaska Natives, a feature of this funding is that most 

of it is provided in distinct channels—Indian Health Services funding for health, 

NAHASDA money for housing, and Bureau of Indian Affairs funding for land services, some road construction, and a variety of social and education services. In a 

sense the Native organizations in rural Alaska have grown up around these funding 

sources, and that may sometimes give us tunnel vision that makes it difficult to 

think more broadly, beyond the service programs we already provide. 

None of these major funding streams is directed at promoting economic growth, 

although the BIA does have a loan program and there is some flexibility in the use 

of other BIA funds. BBNA operates BIA programs, but we receive a grand total of 

only about $9,000 specifically to support economic development. 

Today’s hearing is about a bill that is the fruition of discussions about economic 

improvement within the Alaska Native community over the last several years. The 

fundamental idea is to build upon two success stories: One is the experience of the 

Millennium Challenge Corporation, which provides funds to developing countries for 

use in locally determined economic development strategies, but with clear accountability and measures for determining success built into the funding agreements. 

The other success story is domestic: tribal self-governance compacting under the 

Indian Self-Determination Act. Tribal self-governance has allowed tribal entities to 

operate federal services and in many instances to design the programs, but to date 

it is limited to Indian Health Service and Bureau of Indian Affairs funding. Both 

the Millennium Challenge Corporation and Indian Self-Governance use the ‘‘compacting’’ device for providing funds, which has the effect of cutting through the red 

tape normally associated with government contracts, and also signifies that these 

agreements are more than just ordinary grants. They are commitments between 

governments. 

We believe that by providing funds to the Native community specifically to foster 

economic development, S. 2232 plugs a major gap. It has features that we believe 

are absolutely critical for such a program to succeed.

1. It provides enough funding to make a difference.

2. It is self-directed. It allows the recipients to develop the economic development strategies and projects to be funded, although with the advice and assistance of the funding agency.

3. It provides assurance that funding will be available for the entire project period (as opposed to the annual funding of most grants).

4. It requires benchmarks for measuring success.

The bill authorizes a new demonstration project program for economic development, within the Department of Commerce, that would fund five demonstration 

projects nationally for 5 years. Total funding would be $100 million over the 5 years. 

Alaska Natives would receive one demonstration project, Native Hawaiians one, and 

tribes in the Lower 48 states would receive three. Another important feature of the 

bill is that it would allow, but not require, existing funding from a variety of federal 

agencies to be integrated into the compacts. 

We believe this is an exciting opportunity to make a real difference in the lives 

of Native American people, and we urge that it be enacted. 

Thank you again for the opportunity to testify.

Senator MURKOWSKI. Thank you, Ralph. We appreciate your 

comments and your presence here today. 

Next, we will hear from Zack Brink, who is Vice President of the 

Association of Village Council Presidents out of Bethel. Welcome, 

Zack. 

24

STATEMENT OF ZACK BRINK, EXECUTIVE VICE PRESIDENT, 

ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS 

Mr. BRINK. Thank you, Senator Murkowski, and thank you for 

the opportunity to speak to you on behalf of the Association of Village Council Presidents about the importance of this bill. 

My name is Zack Brink. I am testifying today in my capacity as 

Executive Vice President of the Association of Village Council 

Presidents, whose headquarters are located in Bethel, Alaska. 

I have worked for AVCP for a total of 15 years. Myron Naneng, 

AVCP President, was not able to attend this hearing and sends his 

apologies and best wishes. 

On behalf of the Native people of the Yukon Kuskokwim Delta, 

thank you for your many years of service in the Congress, in the 

Senate, and on this Committee meeting here today. We are grateful 

for you and your staff’s hard work over the years. Quyana. 

By way of background, the AVCP region in Southwest Alaska 

represents 56 tribes and is approximately the size of Oregon. AVCP 

was organized in 1964 and serves as the regional Native non-profit 

corporation. 

Our message today is that the Association of Village Council 

Presidents is very supportive of S. 2232 and urges Congress to act 

and pass this bill. 

For the past several years, the Association of Village Council 

Presidents, Bristol Bay Native Association and the Alaska Federation of Natives have been working together in an innovative manner. We have partnered together to lay the groundwork for our 

project and we are ready to take the next step. We have taken it 

upon ourselves to make the lives of our people better and we are 

here to share with you how important this project is for us. 

The overall goal of the project is to substantially improve the economic, educational, social health and cultural status of our people. 

We see these four areas of focus as tied together. It is our belief 

that any improvement in one area directly impacts the other areas. 

In our region, the predominant Native language is Yup’ik. 

Despite a rich cultural heritage and widespread reliance on subsistence resources, Southwest Alaska has the highest poverty rates 

in the State and very high instances of substance abuse, suicide 

and other indicators of social health. By funding this bill, the lives 

of our people in the region would benefit greatly in the economic, 

educational, social and cultural arenas. 

We want to build on what we already know that works in our 

region. Our strengths include our Yup’ik culture, language and people. We want to design the projects to fit our region and to build 

on our past successes. Specifically, we want this project to work in 

our villages. We want to meet the challenge of reducing poverty 

and promoting sustainable economic growth in our rural villages. 

When considering S. 2232, please consider the following issues. 

The AFN/AVCP/BBNA partnership is working. Over the past several years, this partnership has been preparing for this. We have 

put considerable time, effort and planning into the project. AVCP 

is committed to making it work. 

The AVCP region is ready to take the next step. Our 56 tribes 

met and passed resolutions in support of the project, both at the 

25

regional and village levels. The AVCP Board of Directors is in full 

support of the project. 

Our strategy works for us. The overall goal of the project is to 

substantially improve the economic, educational, social health and 

language/cultural status of our people. This strategy is holistic and 

it works for us in filling the gaps. We want to design our project 

in this manner. 

We want to share what we learn. In this demonstration project, 

we want to share what we learn. We also want to learn from others 

through the model, specifically through the Millennium Challenge 

Corporation model. We want to design our own model. Lessons 

learned from a domestic demonstration will help all of us. 

The AVCP region exists in an environment of extremes. What 

that means is that all the economic, educational, social health, and 

language/cultural indicators are either very high or very low. They 

are either at one end of the spectrum or the other. The lessons 

learned will help all of us. 

The project will take time. We know that this will not happen 

overnight or just over a couple of years. This is a long-term project 

and we want it to be successful. 

In conclusion, AVCP believes that this project will work and we 

ask for your support. 

Quyana. 

[The prepared statement of Mr. Brink follows:]

PREPARED STATEMENT OF ZACK BRINK, EXECUTIVE VICE PRESIDENT, ASSOCIATION OF

VILLAGE COUNCIL PRESIDENTS

Introduction 

Thank you for the opportunity to speak before you today on behalf of the Association of Village Council Presidents to talk about the importance of Senate Bill 2232: 

Foreign Aid Lessons for Domestic Economic Assistance Act of 2007. 

My name is Zack Brink. I am testifying today in my capacity as Executive Vice 

President of the Association of Village Council Presidents whose headquarters are 

located in Bethel, Alaska. I have worked for AVCP for a total of 15 years. Myron 

P. Naneng Sr., AVCP President, was not able to attend this hearing and sends his 

apologies and best wishes. 

On behalf of the Native people of the Yukon Kuskokwim Delta, thank you for your 

many years of service in the Congress, in the Senate, and on this Committee meeting here today. We are grateful for you and your staffs hard work over the years. 

Quyana—Thank you. 

Background 

By way of background, the AVCP Region in southwest Alaska represents 56 

Tribes and is approximately the size of Oregon. AVCP was organized in 1964 and 

serves as the regional Native-Nonprofit Corporation. 

S.B. 2232: Foreign Aid Lessons for Domestic Economic Assistance Act of 

2007

Our message today is that the Association of Village Council Presidents is very supportive of S.B. 2232 and urges Congress to act and pass this Bill. 

For the past several years the Association of Village Council Presidents, Bristol 

Bay Native Association, and the Alaska Federation of Natives have been working 

together in an innovative manner. We have partnered together to lay the groundwork for our project and we are ready to take the next step. We have taken it upon 

ourselves to make the lives of our people better, and we are here to share with you 

how important this project is for us. 

The overall goal of the project is to substantially improve the economic, educational, social health and cultural status of our people. We see these four areas of 

focus as tied together. It is our belief that any improvement in one area directly 

impacts the other areas. In our region the predominant Native language is Yup’ik. 

26

Despite a rich cultural heritage and widespread reliance on subsistence resources, 

Southwest Alaska has the highest poverty rates in the state, and very high instances of substance abuse, suicide, and other indicators of social health. By funding 

this Bill, the lives of our people in the region would benefit greatly in the economic, 

education, social and cultural arenas. 

We want to build on what we already know that works in our region. Our 

strengths include our Yup’ik culture, language and people. We want to design the 

project to fit our region and to build on our past successes. Specifically, we want 

this project to work in our villages. We want to meet the challenge of reducing poverty and promoting sustainable economic growth in our rural villages. 

Issues to Consider 

When considering S.B. 2232 please consider the following issues:

1. The AFN/AVCP/BBNA Partnership is working. Over the past several years 

this partnership has been preparing for this. We have put considerable time, 

effort, and planning into the project. AVCP is committed to making it work.

2. AVCP Region is ready to take the next step. Our 56 Tribes met and passed 

resolutions in support of the project both at the regional and village levels. The 

AVCP Board of Directors are in full support of the project.

3. Our strategy works for us. The overall goal of the project is to substantially 

improve the economic, educational, social health and language/cultural status of 

our people. This strategy is holistic and it works for us in filling the gaps. We 

want to design our project in this manner.

4. We want to share what we learn. In this demonstration project we want to 

share what we will learn. We also what to learn from others through this 

model, specifically through the Millennium Challenge Corporation Model.

5. We want to design our own model. Lessons from a Domestic Demonstration 

will help all of us. The AVCP region exists in an environment of extremes. 

What that means is that all the economic, education, social health, and language/cultural indicators are either very high or very low. They are either at 

one end of the spectrum or the other. The lessons learned will help all of us.

6. The project will take time. We know that this will not happen overnight or 

just over a couple years. This is a long term project and we want it to be successful.

In conclusion, AVCP believes that this project will work and we ask for your support. 

Quyana. Thank you.

Senator MURKOWSKI. Thank you, Zack. We appreciate your testimony this morning. 

We will finally hear from Mr. Paul Applegarth. Paul is the CEO 

of Value Enhancement International out of Connecticut and formerly the CEO of the Millennium Challenge Corporation. Welcome, 

Mr. Applegarth. 

STATEMENT OF HON. PAUL V. APPLEGARTH, CEO, VALUE 

ENHANCEMENT INTERNATIONAL 

Mr. APPLEGARTH. Thank you, Madam Vice Chairman, and 

thanks for the invitation to speak today about the Foreign Aid Lessons for Domestic Economic Assistance Act, which Senators Inouye, 

Stevens, Akaka and yourself have introduced. It is a real pleasure 

to be here. I will speak only briefly this morning, but I have given 

longer remarks for the record, which with your permission would 

be added to it. 

Senator MURKOWSKI. Those are included as part of the record. 

Mr. APPLEGARTH. Thank you. 

It is likely that anyone coming into this Committee room by mistake this morning would wonder why we are talking about foreign 

aid in the Committee on Indian Affairs, yet we are, thanks to an 

original insight of the leaders of AFN, BBNA, and AVCP. About 

27

two years ago, they came to me, introduced themselves, and said 

in effect, even though we are in the United States, our people face 

challenges like those in a developing country. Do you have some 

ideas from your experience in international development that 

might benefit us? 

I gave them a couple of suggestions, and thought that would be 

it. So to my surprise, they came back several months later, and 

even more to my surprise, they had implemented by earlier suggestions. They asked if there was more they could do, and that ultimately led to the reason that we are here today, legislation which 

establishes a pilot program targeted to Native Americans based on 

the lessons of 50 years of international development assistance. 

The objective of the legislation is to promote poverty reduction 

among Native Americans through sustainable growth and economic 

development using the lessons of international development. The 

MCC, which is a major U.S. initiative in foreign aid, is built on 

these same lessons. 

As you have heard this morning from my panel colleagues and 

as you noted in your own remarks and Chairman Dorgan noted in 

his remarks, despite some improvement in recent decades, many 

Native American communities, whether they are American Indians 

or Alaska Natives or indigenous people in Hawaii, face issues similar to those that people face in the developing world. They continue 

to suffer disproportionately high rates of unemployment and poverty, poor health, substandard housing, a lack of access to basic infrastructure like power and water, and limited job opportunities. 

These conditions lead to high alcoholism and suicide rates, and 

the loss of young people to urban areas, threatening traditional culture and heritage and in the case of Alaska at least, a valued traditional lifestyle. Now, many communities also face increased concerns about environmental changes that could be precipitated by 

global warming. 

As you know, Madam Vice Chairman, the concept of foreign aid 

is not well regarded by many Americans. In several instances, this 

poor reputation is probably deserved. However, foreign aid has had 

successes. In the more than 50 years of international development 

assistance, there have been a number of lessons learned about 

what works and what doesn’t work. The lessons include that programs intended to assist long-term development should explicitly 

focus on sustainable poverty reduction, economic growth and job 

creation. Sometimes those programs get diverted to all other kinds 

of objectives, but if you do not make poverty reduction and growth 

the objective of the program, they are not likely to happen. 

Another lesson is that local ownership is important. Development 

assistance is much more effective when the beneficiaries identify 

what they need and themselves take responsibility for ensuring 

that the programs are a success. 

If I can divert some from my prepared remarks, I think if you 

listened to some of the discussion this morning, you would think 

this legislation is primarily about better coordination in Washington, more efficiency, and more program integration. I think that 

is a valuable plus of the legislation, but it misses the fundamental 

point. This approach represents a fundamental change in the way 

28

programs work. Who decides? The people who are going to benefit 

or the people here in Washington administering the program? 

Who is responsible for success, the people here in Washington or 

the potential beneficiaries? It is a different mind set of who has 

ownership, who decides what the priorities are, and who is responsible for success or failure. 

Programs should also focus on results, by the impact on the people who are the intended beneficiaries. Simply focusing on how 

much money is spent or how quickly it is dispersed is a recipe for 

disaster. Viewing development assistance more as an investment 

and focusing on what you get for these taxpayer dollars, as this legislation does, is a much more effective approach in determining 

which programs work and making sure that they work. 

It is also important to establish quantitative measures of success 

up front, collect baseline data, and track progress toward those objectives. This doesn’t take a long time to do, but it is very important in determining both whether your program is successful and 

whether you need to make mid-course adjustments to make it work 

better. 

Another lesson is that those programs should also build capacity, 

as well as achieve specific objectives. Skills learned in setting objectives and implementing programs are readily transferred to other 

programs and to other public and private sector activities. 

And finally, the assurance of longer term funding over the life of 

a program is important. Being dependent on annual appropriations, which are uncertain in their amount and when and if the 

money will ever arrive, and which expire at the end of a fiscal year, 

makes program management very difficult. It leads to inefficiencies, wasteful spending and in the words of several of my friends 

in the developing world, it has led to corruption in some cases. Far 

better to have steady assured funding up front. 

The legislation before us today is built upon these lessons. Under 

it, the potential beneficiaries have ownership from the beginning. 

They choose the priorities. They compete based on the quality of 

their plans, and they have to win. Competing and winning builds 

ownership. 

They are judged on their existing poverty rates and their ability 

to implement a good plan. The funding is explicitly directed to promoting economic growth and the elimination of poverty. Each proposed program must have specific objectives, identify who will benefit and establish regular benchmarks to measure progress. Ownership is built up front. The entities must compete. It is their plan 

and they have responsibility to implement it. This of course also 

builds local capacity and promotes entrepreneurship. Compacts can 

be up to five years in length and are fully funded up front. The 

funding is ‘‘no year’’ money. The authorization does not expire, so 

there is no artificial rush to spend everything by September 30 of 

each fiscal year. 

Let me give you a concrete example of how this might work in 

practice. One of the entities in Alaska that hopes to be able to participate in the demonstration project has already begun working on 

what its proposal might be. Thanks to prior studies, it has excellent social, economic and demographic data on the population of 

Alaska, both Native American and other. While the data shows imVerDate 0ct 09 2002 13:41 May 12, 2008 Jkt 041133 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 S:\DOCS\41133.TXT JACK PsN: JACKF
29

provement for all groups, it also shows a persistent gap between 

the status of Native Americans and other parts of the population. 

The program they are working on is explicitly targeted to help 

close that gap. It is testing the program against the lessons 

learned. The priorities are decided in Alaska by the people who 

would benefit from the program, people from one of the poorer 

areas of Alaska, not here in Washington. The intended results are 

specific, targeted to growth and poverty reduction, and measurable. 

The beneficiaries, as well as you here on the Hill, performance 

managers at OMB, and U.S. taxpayers can know in advance what 

the funding will be used for and what the implementation plan is. 

They will be able to monitor progress and at the end of the program they will be able to know with confidence whether it has been 

successful. 

The proposed legislation also incorporates one lesson not built 

into the original Millennium Challenge bill. It is structured as a 

pilot and a demonstration project. It allows the parties to learn. Establishing the initial program as a demonstration project gives 

time to move up the learning curve and to get startup issues behind them. Once they have, the experience with the pilot can be 

used to fine tune both a larger program built on the same lessons, 

as well as to make adjustments in other programs intended to benefit Native Americans. 

The benefits of a pilot are not limited to Native Americans and 

other directly involved in the programs. There is a need for education elsewhere as well. MCC, which was a start up in 2004, has 

been criticized by some, and I think quite unfairly, for being slow 

in making commitments and disbursements. Certainly, in a world 

of fast-disbursing emergency assistance and in which money not 

spent by September 30 is lost, it may seem slow. But emergency 

assistance to provide relief is not the model or the lessons on which 

MCC was built, nor how it or the program established by this legislation should be evaluated. As each highlighted this morning, those 

are long-term fundamental problems, and they require deliberative, 

well planned and long-term solutions. 

Ultimately, both MCC and this legislation should be evaluated 

on the outcomes they achieve and the progress their programs 

make toward their objectives and their benchmarks. In the interim, 

since the outcomes are not known immediately, there are other 

measures. In terms of the pace of its own commitments, MCC compares favorably with other international aid institutions, even 

though it has slowed somewhat from its early days. There are other 

benchmarks set out in my written testimony. 

In short, establishing the program first as a demonstration 

project will allow us time to educate everyone on the approach and 

to better manage expectations. 

In closing, let me say, as you know, this legislation has bipartisan sponsors. The original MCC legislation was passed with bipartisan support and the support of many of your Senate colleagues who serve on the Senate Foreign Relations Committee. I 

remember with particular appreciation and respect the support and 

assistance that I and the others at MCC received from many of 

them, including both Senators Lugar and Biden, who were the 

Chair and Co-Chair of the Committee, and Senators Feinstein, 

30

Coleman, Hagel, Dodd, Sununu and others. This was a very distinguished and helpful group, and the result showed the value of a bipartisan effort. 

You all now have the opportunity to bring some of these international lessons and ideas here domestically to address the same 

fundamental problems of helping people to escape poverty and to 

achieve sustainable long-term growth and to do so on a bipartisan 

basis. I hope that you will. Thanks very much. 

[The prepared statement of Mr. Applegarth follows:]

PREPARED STATEMENT OF HON. PAUL V. APPLEGARTH, CEO, VALUE ENHANCEMENT

INTERNATIONAL

Good morning, Mr. Chairman and Madame Vice-Chairwoman, Senator Murkowski, and Members of the Committee. I am Paul Applegarth, CEO of Value Enhancement International, and, formerly, the founding CEO of the U.S. Millennium 

Challenge Corporation. 

Thank you for the invitation to speak with you today about S. 2232, the Foreign 

Aid Lessons for Economic Assistance Act of 2007, introduced by Senators Inouye, 

Stevens, Akaka, and yourself, Madame Vice-Chairwoman. It is a pleasure to be 

here. I will speak only briefly this morning, but with your permission will provide 

longer written remarks for the record. 

It is likely that anyone entering this Committee room by mistake this morning 

would be wondering why we are discussing Foreign Aid in the Committee on Indian 

Affairs. Yet we are, thanks to an original insight of the leaders at the Alaskan Federation of Natives, BBNA, and AVCP. 

About two years ago, they came to me, introduced themselves, and said, in effect: 

‘‘Even though we are in the United States, our people face challenges like those in 

a developing country. Do you have some ideas from your experience in international 

development that might benefit us? ’’

I gave them a couple of suggestions, and thought that would be it. Somewhat to 

my surprise, they came back several months later, and even more to my surprise, 

had implemented my earlier suggestions. They asked if there was more they could 

do, and that ultimately led to the reason we are today—legislation which establishes 

a pilot program targeted to Native Americans based on the lessons of fifty years of 

international development assistance. 

The objective of the legislation is to promote poverty reduction among Native 

Americans through sustainable growth and economic development, utilizing these 

lessons of development. The Millennium Challenge Corporation, the United States’ 

major new initiative in foreign aid, is built on these same lessons. The experience 

with the pilot projects created by the legislation can be used to fine-tune both a 

larger program based on the same lessons, as well as to make adjustments in other 

programs intended to benefit Native Americans. 

As you have heard this morning from my colleagues here on the panel despite 

some improvement in recent decades in measures of their economic and social wellbeing, many Native American communities—American Indians, Alaska Natives and 

Native Hawaiians—do face issues similar to those faced by peoples in the developing 

world. They continue to suffer disproportionately high rates of unemployment and 

poverty, poor health, substandard housing, a lack of access to basic infrastructure 

like reliable power and water, and limited job opportunities. These conditions lead 

in turn to high alcoholism and suicide rates, and the loss of young people to urban 

areas, threatening traditional culture and heritage, and the case of Alaska, a valued 

traditional life style. Now, many communities also face increased concerns about environmental changes that could be precipitated by global warming. 

The Lessons of International Development 

Mr. Chairman, as you know, the concept of what foreign aid does is not well regarded by many Americans. In several instances, this poor reputation is richly deserved. However, foreign aid and development assistance have had a number of successes. In the more that fifty years of international development assistance, there 

have been a number of lessons learned—lessons about what works and what does 

not. 

Because Native economies are often plagued by the same challenges as the economies of the developing world, they are likely to benefit from these lessons. The legislation we are discussing today has been designed with them in mind. 

The lessons include:

31

1Similar criticisms are made of Congressional ‘‘earmarks’’ that mandate that certain amounts 

of foreign aid must be directed to specific purposes.

Lesson #1: Programs intended to assist long-term development need to explicitly 

focus on sustainable poverty reduction, economic growth and job creation. If you 

do not make poverty reduction and growth the objective of the program, it is 

less likely to happen. Much of U.S. foreign aid has other objectives. It is directed to important humanitarian assistance, to disaster relief efforts, or simply 

to reward friends of the United States. Many of the efforts are by their nature 

short-term. To achieve long-term poverty reduction and ensure Native Americans permanently escape the cycle of poverty, these short-term assistance efforts must be complemented with assistance explicitly targeted to economic 

growth, including development of the private sector. If sustainable poverty reduction and job creation are not explicit objectives, experience shows that they 

are less likely to happen.

Lesson #2: Policies matter. If a country’s policies are not supportive of development, if they do not fight corruption, promote economic freedom, and invest in 

their people’s health and education, including the education of young women, 

if they do not manage their natural resources well, growth does not occur.

As the chart on the next page shows, there is a strong correlation among good 

polices, aid effectiveness and growth rates. Fortunately, by being in the United 

States, Native communities are relatively well off in terms of their macro-policy 

environment. There are certainly improvements to be made, but we rank near 

the top of most country policy rankings.

Lesson #3: Local ownership is important. Intended beneficiaries of programs 

should determine priorities and be responsible for implementation.

Critics of traditional approaches to development assistance sometimes say that 

‘‘it consists of consultants and development officials from developed countries 

going to developing countries and saying ‘You need this, and we’re here to do 

it for you.’ 1 They then do their work, depart for their home countries, and leave 

nothing behind.’’ This assertion does an injustice to many dedicated professionals, but does contain at least a kernel of truth. Development assistance is 

more effective when the beneficiaries identify what they need, and themselves 

take responsibility for insuring that the programs are a success. 

There is no Federal economic development paradigm for Indian country, and if 

there is list of Lessons Learned for Indian economic development assistance 

similar to those in the international area, no one I have asked is aware of it. 

However, it should be acknowledged that Native American communities have 


227c.eps
32

2The highly regarded Indian Self-Determination and Education Assistance Act of 1975 (25 

U.S.C. 450 et. seq.) has been particularly effective in devolving Federal decision making and authority to administer programs and services from the United States to tribal governments. Its 

transfer of authority and resources has resulted in more effective and efficient program administration as well as the development of an Indian civil service whose skills are transferable to 

tribal economic development efforts. At the end of the day, however, the ISDEAA is a mechanism whereby Indian tribes and tribal consortia manage Federal funds, and is therefore akin 

to a contracting program.

some experience with this approach 2 The Foreign Aid Lessons for Domestic 

Economic Assistance Act of 2007 builds on the most effective tools to date: selfdetermination, contracting and self-governance, and leave provide broad Federal 

parameter but leave specific program objectives and tactics to the tribes. 

Lesson #4: Programs should focus on, and be measured by their outcomes—by 

their impact on the people they are intended to help. Simply focusing on how 

much money is spent and how quickly it is disbursed is a recipe for disaster. 

Rather, an investment approach whereby the beneficiaries determine, up-front, 

what results they want to achieve, and how they will measure success is crucial, 

i.e., ‘‘what they will get for the money.’’

Lesson #5: It is important to establish quantitative measures of success up-front, 

and to track the progress toward those objectives. Proponents of many programs 

claim success in qualitative terms. However, establishing clearly articulated 

quantitative targets and rigorously tracking progress toward those targets promotes accountability and leads to more successful programs. Keys to this are 

collecting baseline data up front, and establishing an arm’s-length program of 

monitoring and evaluation that tracks progress against benchmarks and that 

highlights the need for mid-course adjustments.

Lesson #6: Each program should build capacity, as well as seek to achieve its 

specific objectives. This is why local ownership and responsibility for implementation is so important. Skills learned in setting objectives, implementing programs, and making adjustments based on measurable results are readily transferred to other programs and to public and private sector activities.

Lesson #7: Assurance of longer term funding over the life of a program is important for success. Being dependent on annual appropriations, which are uncertain 

in their amount, and when—and even if—the money will arrive, and which expire at the end of a fiscal year, makes program management difficult. It leads 

to inefficiencies, wasteful spending, and in some cases corruption.

S. 2232 and the Lessons of Development 

The original legislation establishing MCC is built on these lessons, as is the legislation before you today. 

Potential beneficiaries compete to be selected for funding, based on the quality of 

their plans, their existing poverty rates, and their ability to implement the plan. 

Funding is explicitly directed to promoting economic growth and the elimination of 

poverty. 

Ownership is built in up front, as the entities must compete, it is their plan, and 

they have responsibility to implement it. This of course builds local capacity, and 

promotes entrepreneurship. 

Compacts can be for up to five years of operations, and are fully funded up front. 

Funding is ‘‘no year’’ money; i.e., authorizations do not expire, so there is no artificial rush to spend everything by September 30 of each year. 

Finally, programs proposed under the legislation must have specific objectives, 

identify intended beneficiaries, and establish regular benchmarks to measure 

progress. 

To give an example of how this will work in practice: One of the entities in Alaska 

that hopes to be able to participate in the demonstration project has already begun 

working on what its proposal might be. Thanks to prior studies, it has excellent social, economic, and demographic data on the population of Alaska, both Native 

American and other. While the data shows improvement for all groups, it also shows 

a persistent gap between the status of Native Americans and other parts of the population. The program they are working on is explicitly targeted to help close that 

gap. Intended results are specific, targeted to growth and poverty reduction, and 

measurable. The beneficiaries, you here on the Hill—and U.S. taxpayers—can know 

in advance for what the funding will be used and what the implementation plan is. 

You will be able to monitor progress, and, at the end of the program, know whether 

it has been successful. 

33

Advantages of a Demonstration Project and Benchmarks for Success 

The proposed legislation also incorporates one lesson not built into the original 

MCC bill—it is structured as a pilot and demonstration project. It allows the parties 

to learn. 

The Foreign Aid Lessons for Domestic Economic Assistance Act of 2007 represents 

a fundamental change in approach. Many potential beneficiaries are accustomed to 

having the government set priorities, design programs, handle implementation, procure goods and services, and manage many other aspects of these activities. 

It will take time for Native Americans—in Alaska, Hawaii, and the lower 48 

states—and government officials to understand that this approach is different and 

to come up the learning curve. Once they have, the experience with the pilot can 

be used to fine-tune both a larger program based on the same lessons, as well as 

to make adjustments in other programs intended to benefit Native Americans. 

The benefits of a pilot are not limited to Native Americans and others directly 

involved in the programs. There is a need for education elsewhere as well. MCC, 

which was a start-up as recently as 2004—has been criticized by some—for the most 

part, unfairly I believe—for being slow in making commitments and disbursements. 

Certainly, in a world of fast-disbursing emergency assistance and in which money 

not spent by September 30 is lost, it may be seem slow. But that is not the model 

or the lessons on which it was built, nor how it should be evaluated. 

Ultimately, both MCC and this legislation should be evaluated on the outcomes 

they achieve, and the progress their programs make toward their benchmarks. In 

the interim, other measures exist. 

In terms of the pace of its commitments, MCC compares favorably with other 

international aid institutions, even though it has slowed somewhat from its early 

days.

Similarly, benchmarks can be set for the pace of disbursements. It would be unreasonable in measuring the pilot’s success to expect that 100 percent of the funding 

for a 5-year program would be disbursed in the first year. In a fully functioning, 

steady state program, achieving a pace of 20 percent a year might be reasonable. 

However, allowing for initial start-up challenges, the time needed to decide objectives, prepare proposals, to evaluate them, and mobilize to implement them is likely 

to result in a disbursement pace will below that in the project’s early years. 

Establishing this initial program as a demonstration project gives time for participants to come up the learning curve and to get start-up issues behind them. It allows them to educate constituents, and to manage expectations. 

In Closing 

The original MCC legislation was passed with bipartisan support, and with the 

support of many of your Senate colleagues who serve on the Foreign Relations Committee. I remember with appreciation and respect the support and knowledgeable 

assistance we received from many of them, including Senators Lugar and Biden—

the Chair and Co-Chair of the Committee—Senators Feinstein, Coleman, Hagel, 

Dodd, Sununu, and others. 


227c1.eps
34

You now have the opportunity to bring some of those same lessons and ideas here 

domestically, to address the same fundamental problems of helping people to escape 

poverty and achieve sustainable long-term growth—and to do so on a bipartisan 

basis. I hope that you will. 

Thank you.

Senator MURKOWSKI. Thank you, Mr. Applegarth, and all of you 

for your testimony. We certainly appreciate it here this morning, 

not only to give a little bit of background on the legislation itself 

and how it fits in with the Millennium Challenge Corporation, but 

also to understand from the local perspective what this might 

mean. 

Mr. Applegarth, let me start with you. Just to better understand 

how we might see direct application in Alaska. Mr. Crow had some 

very good testimony this morning about what we actually have 

within the bureaucracies that we have set up and the difficulty in 

moving the money between the agencies to allow for real, and complete economic development. And your point is that there needs to 

be a fundamental change in how we allow these programs to work. 

Given what Mr. Crow described, and the structures that we have 

within agencies, short of this legislation and this MCC approach, 

do you believe it is possible to do what Julie and the folks at AFN 

want to do in terms of economic development, short of this legislation? 

Mr. APPLEGARTH. There are people here with more experience 

with that particular group of agencies than I have. There are certainly some good programs that are already existing, and some 

very well- intentioned professionals here in Washington. But, if you 

look at the world of international development, there are also very 

well-intentioned programs and some good, hard-working professionals. Insiders in the development community sometimes characterize their efforts as: People from a developed country, whether it 

is Washington or London, or Paris, come to a country and say, 

‘‘Hey, we are here to help, this is your problem, and we are going 

to fix it for you.’’ And so professionals go for a while, they spend 

some money, and they leave. There is no capacity-building, and at 

the end of the day it is not clear that a lot has been accomplished 

except spending for consultants and other things. It is hard to see 

the real benefit on the people and really see a fundamental change 

in the lives of the people. 

This legislation, and these lessons on which it is based really 

turn that model on its head. It starts from which problem do the 

people in the affected area believe is their highest priority. And 

what is the best way to fix it? A compact under this program is a 

vote of confidence in the potential beneficiaries, in the people that 

are experiencing the problem on a day to day basis, and are they 

willing to sign up to take responsibility to get it done? While there 

is certainly a trust and verify element in this, you are shifting the 

responsibility out of Washington and putting it onto people on the 

ground. So they have to step up: say yes, we will take it, develop 

plans, explain what they are and how it is going to work, and then 

be willing to be tracked against it. You certainly still have high 

standards in terms of making sure the money is used well, but it 

really is a shift. 

35

Certainly a lot of developing countries don’t qualify for this vote 

of confidence. MCC only takes, roughly, the top quartile of countries. Even before a country gets to talk to MCC, it wants to see 

its government is committed to the fundamental kind of policy environment that is important for growth. 

Senator MURKOWSKI. Let me ask you, Senator Stevens raised 

this in his opening remarks, Alaska geographically is a challenge 

because it is so remote. You have very small villages that are very 

isolated and so the ability to build a stronger economy is very limited because of, primarily geographic factors. In your experience, in 

working with the Millennium Challenge Corporation, and how that 

came together, and recognizing the developing countries that you 

wanted to assist, are Alaska’s issues much more unique than other 

countries that can avail themselves of the MCC? In other words, 

do we need to do anything different with Alaska because of our 

small, isolated population and the fact that you have very localized 

economies? Are there more similarities or more differences? 

Mr. APPLEGARTH. Well, I think there are both. The reality is 

there are some 150 developing countries. They are widely diverse. 

The differences between Bangladesh and Cape Verde, for example, 

are vast. And I think that is part of the point, that you can’t, in 

Washington or in a centralized donor country, make decisions of 

what is going to work in each situation. It is not a cookie cutter 

approach. That is why it is important to have the people at the 

local level who know the situation best driving the process. 

There are similarities—I can think right away of a couple—between the situation in Alaska and some other emerging economies, 

and there are opportunities for lessons learned. I think one of the 

many good things we did at Millennium Challenge was to encourage the people in each country responsible for program implementation to talk to each other. We would sponser group meetings and 

then suggest some topics of conversation. That would be the last 

thing we would say, because then everybody gets animated and 

talks among themselves and a real exchange of lessons. Encouraging this kind of dialog between the native program located in 

Alaska, and those in developing countries, would be one of the 

things we could do. To sum up I think there probably are some lessons that would be attributable to Alaska or Hawaii or the lower 

48 in some other emerging markets that we could look closely at. 

I believe one of the advantages that Alaska has is the leadership 

provided by the BBNA and AVCP. They deal on a day to day basis 

with the local communities and making sure they are involved in 

the processes. I have had the opportunity to sit in some of the 

Council meetings and watch the process of debating resolutions 

and coming to a conclusion or not. And anybody who thinks that 

this rubber stamp process has another lesson coming. There is animated, active debate. Ralph and Zack and their colleagues must 

really have to have a thick skin sometimes. Because there is involved—I will put it this way—there is involved local ownership of 

the issue. 

Senator MURKOWSKI. Let me ask the two of you, Ralph from 

BBNA’s perspective, and from AVCP’s perspective, it is one thing 

to know that you have a reliable funding stream, and I appreciate 

the benefits that that certainty yields. But it is also about what 

36

you can build in your region. Zack mentioned the poverty rates 

there in the area, the unemployment, the poverty, is as extreme 

there as anywhere in the Country. As you are sitting and dreaming 

about what you could do with this potential, how do you see a specific program developing out there that can provide for this level 

of economic development in an area that has just been historically—I don’t want to say depressed—there is very little economic 

vitality in the region in many of those outlying villages. 

Mr. BRINK. I think what we envision in this area is what will 

work. I can’t say what will work in that area. They know what will 

work in their area. And I think what they were talking about is 

tourism. There are several individuals in the Yukon River that are 

trying that. So they are the ones that they know what will work 

and then we want to build on those. I am not from the Yukon, I 

am from the Kuskokwim area, and the Kuskokwim in summertime, 

the fishing and hunting networks that we have, that brings income 

to some individuals. In the Yukon, there is not a whole lot of that. 

So they will need to take the opportunity for them to try things 

that will enhance their lives. 

Senator MURKOWSKI. What about out in the Bristol Bay area, 

Ralph? 

Mr. ANDERSON. Thank you, Senator. You know, over the past five 

years, we have been discussing this whole concept of how best we 

can meet our economic challenges and how can we help to move 

our people into the 21st century. Paul mentioned some things that 

I think were absolutely right on. One is that for many years we 

have lacked capacity-building from service providers. We would 

have government officials come swooping and say, hey, we are from 

the government and we are here to help. They might be there to 

take care of an emergency problem or some specific problem with 

funding ending on September 30, and then they are gone, with 

maybe a facility built or a service started without any local person 

left behind to do the actual maintenance in carrying out the project 

or carrying out the service. 

Being from the small village of Clarks Point, I grew up there. 

There are 60 people, and 30 of us were students, grade school students. And now the population is cut in half. There are now 30 people living there. Our school is barely being kept open. We are still 

above the 10 student threshold. 

We developed some concepts between us, between our groups, 

AVCP, BBNA and AFN. We started this a couple of years ago actually, when we had our first formal meeting between us on the 

project. 

There is also a really key component of the legislation that will 

help us to move along. There is a provision in there for planning 

because we need to know, and we would also like to find out from 

Millennium Challenge how the compacts are set up. We are familiar with compacting. We know how they operate. So we would also 

like to find out from Millennium Challenge just how they have 

their compacts set up and how they are administered and programs 

developed. 

There is also another component here where we need to teach a 

new agency, Commerce, the whole concept of compacting, because 

my understanding is that the only agency that I am aware of that 

37

compacts with Native tribes and Native Alaskans is the Department of Interior. Although there may be an Administration policy 

encouraging other DOI services to be compacted, we haven’t seen 

any. So this is also helps us to expand the concept of compacting 

to other departments. So there is some planning that would need 

to occur. 

We have explored in the Bristol Bay region telecommunications 

possibilities, energy possibilities, but we also understand that in 

order to be successful, we need to go about implementing the 

project as carefully as possible, because we want to be successful. 

We don’t want to set ourselves up to fail, because our success 

means that Native Americans, Native Alaskans throughout the 

State will also benefit. We will be opening doors for other opportunities for them as well. So we want to succeed. 

As far as specifics for the villages, and Zack was very accurate 

in saying that different areas have different needs. One of the 

things that we have seen in Bristol Bay and everywhere in Alaska 

is just the astronomical costs for energy. We are having people 

leave our region or leave our villages as well. At the same time, 

we are facing really poor economic conditions. How do we provide 

for families in the villages to buy heating fuel at $5 a gallon in the 

coldest winter months when it is 20 or 30 degrees below? 

Those are some of the challenges that we are facing. If you take 

a look at the $100 million over five years, and you count the number of eligible entities, we are not going to see $100 million apiece. 

We are not going to see enough money to build roads, airports, and 

infrastructure with the costs the way they are. But we will be able 

to build companies to build roads and airports, to build infrastructure, to provide economic opportunities and jobs in our regions. 

We might not be able to provide some direct program services 

and facilities as a result of the legislation. If you divide $100 million by six, and that doesn’t leave very much, if you are just doing 

the math. But we will be able to build the companies and build enterprises that would allow them to pursue other funding sources as 

well. 

Senator MURKOWSKI. Let me ask you about that, Julie, because 

you mentioned that what you needed were the tools for competition, and whether the tools for competition are ensuring that you 

have high-speed Internet, basically the ability to communicate not 

only village to village, but around the globe. 

What else are you considering in terms of the tools for competition that are going to make the difference? 

Ms. KITKA. Well, we need an education component. We need 

more training money for workforce development. It is absolutely 

critical because if you are going to be moving towards more communication and knowledge economy on that, an educated workforce 

and an educated people and community is essential on that. 

So I would say that you need access to the high-speed Internet. 

You are going to need additional training and workforce development money that is able to be compacted, that people can really 

move not only a sizable number of people into greater and greater 

ability to use the communications and technologies, but also move 

people to the whole model of life-long learning. 

38

I think that that is really what you are saying in regard to how 

do you move our people to be more competitive in the world is to 

change the mind set. It is not really changing. It is just encouraging and making explicit that that is what life is about, is lifelong learning, and getting people from where they are at to move 

forward and continue to develop. 

As I said, another aspect is what I have called changing the investment climate. We had an economic forum one time here a few 

years ago, and we had a speaker that does a lot of investing all 

around the world. We were talking about what the differences are 

in some of these countries and in Alaska, and they basically said 

the United States Government incentivizes us to invest in Brazil, 

in India, in China. The U.S. Government does that. And if you 

want us to invest in your State or your rural area, the government 

really has to take a look at what are its economic incentives and 

its climate that it provides to incentivize that. 

Senator MURKOWSKI. Is that just at the Federal level or is it also 

at the State level? 

Ms. KITKA. I think it is both. One in particular I mentioned at 

the beginning of the testimony, the idea of additional demonstration projects. One which I have been particularly interested in is 

taking a look at what is going on the Middle East in the Arab 

countries, in particular Dubai and others, where they have created 

these free trade zones where companies can relocate there and they 

pay absolutely no taxes. They have areas there where they become 

magnets for all these world class universities to locate there, to 

provide world class education. 

These countries, when they are looking at how do they build sustainable economies and transition from oil economies to other ones 

to benefit their people and position themselves, they really are 

looking at education and expanding that, but also again this whole 

investment climate of how do you incentivize people to locate there. 

I really think it is really ripe for a national demonstration project 

on what we would call a free trade zone to try to incentivize business opportunities in Alaska, in Hawaii, and in the reservations. 

It may sound like it is just nothing but big thinking, but I think 

if you think in terms of the global economy and how things move 

so rapidly and how far the United States is falling behind in being 

competitive in the world, I really think that the Committee and the 

Congress really needs to take a look at how can each part of the 

Country gets its strategic edge and help us be more competitive in 

the global economy based on our strategic edge. 

When I think about Alaska in particular, I think our closeness 

to Asia and the Pacific and that whole rim, and the growth of those 

economies and what that means, our potential trade partners, I 

really see Alaska and our people and the people of the Pacific 

Northwest and California as being transition areas for that part of 

the world. 

Again, with some of these demonstration projects, you can test 

some of these things out. You don’t have to make a full-blown total 

commitment, but you can test things out for a few years to say does 

this make a difference in making us more competitive; does this 

take advantage of our strategic competencies that we might have 

or our geographic location; and does this move us forward. 

39

I would argue that we are really far behind in doing that. That 

is why I am suggesting that even at this late time in this Congress 

on that, that we consider entertaining more demonstration projects 

and moving those forward, because I do think that we are falling 

behind more than we realize. We do need to catch up. 

Senator MURKOWSKI. I appreciate your comments about the 

trade zones or the economic development centers where you do 

incentivize, whether it is educational institutions or some level of 

industry to come in. I think that that is important. 

I think that leads to the other initiative that you had indicated 

that you would hope to include as a demonstration project. This is 

the focus on energy resources. I am convinced that if we are not 

able to get our energy costs under control and have reliable, affordable clean energy available, it will be very, very difficult for us to 

be competitive in that global marketplace. 

The comments have been made today about what the high energy costs are doing to our villages, whether it is Clarks Point 

where you grew up, Ralph, where you are seeing people move out 

of the villages because of high energy costs. I think if we can focus 

on this as an area and figure out how we bring down our energy 

costs. 

I know you have had the conversation with the President of Iceland. We have seen how that country has been able to attract 

world business leaders to come locate in, again, a geographically remote country like Iceland, not because of the labor force there, but 

because there is affordable, reliable, clean energy sources. 

So I would hope that of the initiatives, as you try to advance 

this, that the energy piece is one that we are able to tackle. We 

have some initiatives that we are working with. NakNik is looking 

at how they might be able to bring on geothermal, not just for their 

community, but for the communities within that region, to be able 

to tie them into that. If you had an economic center where you did 

have an energy source that worked there, I think your possibilities 

are greatly expanded. 

I wanted to ask, Julie, you had mentioned some technical amendments that you would present to staff, just in terms of additions 

to the legislation. Are there any specifics to the technical amendments that we might want to know about? 

Ms. KITKA. The one technical amendment I would suggest would 

be a severability amendment that if anything is ruled unconstitutional, that it would be severed. I know that if you look at the Justice Department’s concerns on the Hawaiians being included in 

that, AFN is absolutely totally behind the Hawaiians staying in 

this project, but if that helps overcome some of the concerns with 

Justice Department on the bill, having that severability if there is 

any reason why they shouldn’t be on that, I think that that helps 

the bill go forward. 

Also, I was going to say in regard to, and I think that there was 

one technical amendment that was to in the other agencies on that 

make it more permissive for the agencies, as opposed to mandatory, 

so that you are building the cooperation of the agencies that are 

participating, contributing resources into Commerce, as opposed to 

hitting them over the head. So it was kind of like build up the 

mechanism and build up the attractiveness of that, and allow the 

40

ability to have negotiations and build positive things to make that 

happen, as opposed to it being viewed negatively. So I think those 

are the two there. 

And certainly if there was an interest in making explicit capturing best practices on that, I am sure that there is a technical 

amendment that could be developed on that. 

We also felt that there was something that could be done totally 

aside of legislation to try to help capture some of the best practices. 

That would be just basically maybe a letter or a request from this 

Committee to the Millennium Challenge, opening up that inquiry 

and saying we really would like to see this sharing take place. I 

think that when we went to meet with them, Ralph and many of 

us sat down for briefings over there on that. I think that there is 

a real willingness for people to share what is going on, but if we 

can formalize that somewhat and maybe, like I said, even a letter 

going over there expressing the interest of the Committee in making sure we capture some of these best practices, could get the ball 

going as well. 

Senator MURKOWSKI. Which would be I think very important to 

be able to share that. 

We are going to have to wrap up here in just a few minutes. 

Is there anything further? Byron, I haven’t directed a question 

at you this morning. Is there anything further that you wanted to 

add in terms of support or the initiatives as they may apply in 

Alaska? 

Mr. MALLOT. Well, just based upon the testimony and discussion 

here, I would emphasize the notion of continuing to think about appropriate incentives. Senator Stevens mentioned that in his testimony. 

I think we also need ultimately to effect an attitudinal change 

about rural Alaska within our State, the notion that putting dollars 

into rural Alaska some how is a sunk cost, while building something in another place might be an investment. 

I also think that as we look at high energy costs, with what is 

happening with climate change, a more profound focus on the ultimate future of our rural communities and rural places in our State, 

and their importance not just to Alaska, but to the United States 

and to the world, as being places that we can learn and act and 

hopefully bring again best practices and lessons that can be applied 

elsewhere. 

My final comment would be that we know that high energy costs 

are bringing rural Alaska to its knees as we speak, that the outmigration is significant, and that the need to wrestle that 500 

pound gorilla to the ground is absolutely necessary and vital. It is 

preaching to the choir, but it is something that very much needs 

to be emphasized and dealt with. 

So thank you very much for your leadership, Senator. 

Senator MURKOWSKI. Well, we will work with you on all these 

issues. The energy one, I do believe, is the biggest hurdle we have 

now within certainly most parts of the State to real economic advancement. If the residents can’t afford to continue to live there, 

that means they can’t afford to continue to do any business there, 

and we do see that migration into town or elsewhere, leaving the 

41

State. That is something that we have to be able to get our arms 

around. 

Julie? 

Ms. KITKA. Madam Vice Chair, I neglected to extend our deepest 

thanks for the Indian Health Care Improvement Act getting done 

yesterday. I was meaning to do that, but I kind of jumped into our 

testimony. I think that that is really critically important that that 

happened. We are so pleased with that. We can hardly wait to get 

back home and share the news. That is a major accomplishment for 

the Senate. We want to thank you and Chairman Dorgan and all 

the staff people and all the members of the Congress that made 

that happen, because we know that that has been a long time coming and a lot of work, but we deeply appreciate it. It was very significant. 

Senator MURKOWSKI. Well, I appreciate your kind words. When 

you think about the economic health of a region, regardless of 

where it is, whether it is Alaska, Hawaii or Bangladesh, we can 

work hard to create good, strong economies, but if you don’t have 

healthy individuals, if you don’t have healthy families, you simply 

do not have that strong economy that you need. 

And so I view the focus on the Indian Health Care Improvement 

Act as an integral part to how we bring about economic development and real economic stability within a region. We have to be 

able to provide for the health care needs, and as we know, we have 

to be able to provide for those health care needs out in those regions. I think that this Act goes a long way in helping to do that, 

so that along with education, along with job training, is the healthy 

individual. So we will continue to push on that. 

We will ask for your help on the House side in encouraging them 

to move it along so that we can actually get this one tied up this 

year. It is going to be very, very important to us. 

Gentlemen, anything further that you would care to add before 

we conclude? 

Paul? 

Mr. APPLEGARTH. Senator, pardon me, when I mentioned the efforts of AVCP and BBNA, I failed to mention AFN and Julie and 

Nelson’s efforts in helping to pull this legislation together, and in 

involving everybody in the local communities. I didn’t want that 

oversight to be uncorrected. 

Since I have the floor, I also want to emphasize a couple of other 

things quickly. One is how quickly lessons learned spread. One of 

the things that we have seen is if you shift the responsibility to the 

people at the local level, the benefits of lessons learned spreads 

automatically. They take the initiative to call their counterparts 

elsewhere. It is not something that needs to be coordinated or 

planned in a forum. 

For example, I remember when the local coordinator of a MCC 

program in one of the African countries asked for a list of the other 

coordinators from their other countries. He got on the phone and 

called them, and said, what are you doing about this or that. MCC 

probably would have gotten that idea after a couple of months, but 

the reality is, it was happening well ahead of us. This is an example of the market working and ownership being taken, with indiVerDate 0ct 09 2002 13:41 May 12, 2008 Jkt 041133 PO 00000 Frm 00045 Fmt 6633 Sfmt 6601 S:\DOCS\41133.TXT JACK PsN: JACKF
42

vidual participants who accomplish their own goals go out and do 

things. 

I also think new technologies offer us an opportunity to preserve 

life at the local villages in a way that some of us are just beginning 

to imagine. We are seeing about the power of distributed computing in terms of stay at home moms doing work or other kinds 

of things. There may be a way to apply similar concepts, and allow 

people to become economic powerhouses in their same village. They 

do not have to leave home, not have to spend the energy to commute somewhere else and so on, and still generate income and help 

preserve the traditional lifestyle. 

How this would work in practice, I don’t yet know, but the reality 

is this kind of approach in this legislation allows those kinds of 

ideas to bubble up into proposals and to programs where other people can learn about it. 

Finally, it really is important that you have held the hearing 

today. Thank you very much for your own efforts. 

Senator MURKOWSKI. Thank you. 

And I want to thank AFN, AVCP and BBNA for your efforts to 

work together, to coordinate. I greatly appreciate the interest of so 

many Alaskans that are here at the Committee today to listen to 

this. I think we are all looking at this as a new idea, an approach 

that is going to startle some, is going to scare some because it is 

not the norm. Sometimes you have to shake things up in order to 

change the way that things have happened for a long period of 

time. 

So again, I appreciate the leadership and the ingenuity of so 

many of you that have brought us to this point. We will be working 

on it on this end, and again thank you. I appreciate the fact that 

you have traveled some great distances to be here, and I look forward to working with you. Thank you. 

With that, this hearing is adjourned. 

[Whereupon, at 11:25 a.m., the Committee was adjourned.] 

(43)

APPENDIX


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Æ


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