Appropriations for FY2003: Foreign Operations, Export Financing, and Related Programs
Released: 2003-05-05T00:00:00

Most Recent Developments

On February 13, Congress approved H.J.Res. 2 , a continuingappropriations measure to which Foreign Operations and 10 other FY2003appropriations bills had been added. This omnibus spending measure was signed bythe President on February 20 ( P.L. 108-7 ). As enacted, Foreign Operations is fundedat $16.3 billion for FY2003, about $150 million less than requested and $125 millionand $250 million less than bills recommended earlier by the Senate and House,respectively ( H.J.Res. 2 , as passed by the Senate on January 23 and H.R. 5410 reported in the House in September 2002). The conferenceagreement further provides for an across-the-board rescission of 0.65% of alldiscretionary budget authority in the bill. This reduces total Foreign Operationsfunding to roughly $16.18 billion.

As passed by Congress, the $16.3 billion Foreign Operations modifies several of the Administration's FY2003 funding requests. P.L. 108-7 increases ChildSurvival programs to $1.8 billion, about $242 million higher than the request. Thelegislation includes $880 million for international HIV/AIDS programs, $140 millionmore than proposed, but $172 million less than recommended by the Senate.

The measure further provides $446.5 million for bilateral family planning activities, compared with $425 million recommended by the House in H.R. 5410 and $435 million passed by the Senate. The conferees agreedto allocate $34 million to UNFPA, the same as in FY2002, but made the fundssubject to several conditions, including a requirement that the President certifies thatthe organization is no longer involved in the management of a coercive familyplanning program. Last year, the Administration declared UNFPA ineligible for U.S.support because of its program in China where the Secretary of State determinedUNFPA was involved in a coercive program.

The enacted Foreign Operations appropriation provides $700 million for the Andean Regional counternarcotics initiative. The Senate had approved $650 millionand the House ( H.R. 5410 ) had proposed $731 million, as requested. P.L. 108-7 includes $295 million for Afghanistan, compared with $296 million(House) and $220 million (Senate). The Administration estimated that it wouldallocate $98 million for Afghan aid out of its Foreign Operations request. Theconference agreement includes full funding for regular aid to Israel ($2.7 billion), butdoes not include House language that would have earmarked an additional $200million requested by the President in a September 2002 budget amendment for Israelianti-terrorism aid. The Omnibus Appropriation further cuts all funding for NorthKorean heavy fuel oil ($71.5 million) but retains $5 million for administrative costsof KEDO.

(Note: This report does not discuss or include $7.48 billion in Foreign Operations funding approved in P.L. 108-11 , the Iraq War Supplemental. For complete detailson that legislation, see CRS Report RL31829 , Supplemental Appropriations FY2003:Iraq Conflict, Afghanistan, Global War on Terrorism, and Homeland Security .)

Introduction

The annual Foreign Operations appropriations bill is the primary legislativevehicle through which Congress reviews and votes on the U.S. foreign assistancebudget and influences major aspects of executive branch foreign policy makinggenerally. (1) It contains the largest share -- abouttwo-thirds -- of total internationalaffairs spending by the United States (see Figure 1 ). The legislation funds all U.S.bilateral development assistance programs, managed mostly by the U.S. Agency forInternational Development (USAID), together with several smaller independentforeign aid agencies, such as the Peace Corps and the Inter-American and AfricanDevelopment Foundations. Most humanitarian aid activities are funded withinForeign Operations, including USAID's disaster program and the State Department'srefugee relief support. Foreign Operations includes separate accounts for aidprograms in the former Soviet Union (also referred to as the Independent Statesaccount) and Central/Eastern Europe, activities that are jointly managed by USAIDand the State Department. Security assistance (economic and military aid) for Israeland Egypt is also part of the Foreign Operations spending measure, as are smallersecurity aid programs administered largely by the State Department, in conjunctionwith USAID and the Pentagon. U.S. contributions to the World Bank and otherregional multilateral development banks, managed by the Treasury Department, andvoluntary payments to international organizations, handled by the State Department,are also funded in the Foreign Operations bill. Finally, the legislation includesappropriations for three export promotion agencies: the Overseas Private InvestmentCorporation (OPIC), the Export-Import Bank, and the Trade and DevelopmentAgency.

For nearly two decades, the Foreign Operations bill has been the principal legislative vehicle for congressional oversight of foreign affairs and for congressionalinvolvement in foreign policy making. Congress has not enacted a comprehensiveforeign aid authorization bill since 1985, leaving most foreign assistance programswithout regular authorizations originating from the legislative oversight committees. As a result, Foreign Operations spending measures developed by the appropriationscommittees increasingly have expanded their scope beyond spending issues andplayed a major role in shaping, authorizing, and guiding both executive andcongressional foreign aid and broader foreign policy initiatives. It has been largelythrough Foreign Operations appropriations that the United States has modified aidpolicy and resource allocation priorities since the end of the Cold War. Thelegislation has also been a key tool used by Congress to apply restrictions andconditions on Administration management of foreign assistance, actions that havefrequently resulted in executive-legislative clashes over presidential prerogatives inforeign policy making.

Status

Table 1. Status of Foreign OperationsAppropriations, FY2003: Action in the 107th Congress (H.R.5410 and S.2770)

Table 2. Status of Foreign Operations Appropriations, FY2003: Action in the 108th Congress(H.J.Res.2)

President Bush submitted his FY2003 federal budget request to Congress on February 4, including funding proposals for Foreign Operations Appropriationsprograms. Subsequently, on March 21, the White House requested FY2002emergency supplemental funds for homeland security and combating terrorismoverseas, a proposal that includes assistance to "front-line" states. House and SenateAppropriations Committees held a series of hearings on both the FY2003 andFY2002 supplemental requests, and approved the supplemental ( P.L. 107-206 ) onJuly 24, 2002. The Senate Appropriations Committee reported a bill for FY2003 onJuly 24 ( S. 2779 ). The House Foreign Operations Subcommitteeapproved its bill on September 5, a measure that was marked up by the fullCommittee on September 12 and reported on September 19 ( H.R. 5410 ). Both FY2003 bills expired at the end of the 107th Congress.

Subsequently, the Senate passed H.J.Res. 2 on January 23, 2003. The legislation contained 11 FY2003 appropriation bills, including ForeignOperations. On February 13, Congress approved the conference report for theOmnibus Appropriation, and the President signed the measure on February 20 ( P.L.108-7 ).

Foreign Operations Funding Trends

As shown in Figure 2 below, Foreign Operations funding levels, expressed inreal terms taking into account the effects of inflation, have fluctuated widely over thepast 25 years. (2)

After peaking at over $33 billion in FY1985 (constant FY2003dollars), Foreign Operations appropriations began a period of decline to $13.8 billionin FY1997, with only a brief period of higher amounts in the early 1990s due tospecial supplementals for Panama and Nicaragua (1990), countries affected by theGulf War (1991), and the former Soviet states (1993).

Table 3. Foreign Operations Appropriations, FY1995 to FY2003 (discretionary budget authority in billionsof current and constant dollars)

Note. FY1999 excludes $17.861 billion for the IMF. FY2003 does not include the 0.65% across-the-board rescission. FY2003 also excludes the $7.48 billion forForeign Operations included in P.L. 108-11 , the Iraq War Supplemental.

Supplemental funds added following the terrorist attacks of September 11, 2001, resulted in large increases for Foreign Operations programs. As part of a $40 billionemergency supplemental to fight terrorism enacted in September 2001 ( P.L. 107-38 ),President Bush and Congress allocated $1.4 billion for foreign aid activities. (3) Congress approved an additional $1.15 billion Foreign Operations supplemental ( P.L.107-206 ; H.R. 4775 ), bringing amounts for FY2002 to $16.54 billion. The amounts for each year since FY2000 -- ranging between $16.3 billion and$15.54 billion -- are the largest in nominal terms since FY1985 and in constantterms, are the highest in 10 years.

Despite the recent trend of increased spending on foreign aid, however, by historical standards the amounts between FY2000 and FY2003, in real terms, are relatively low. Except for the lowest point in foreign aid appropriations that occurredin the mid-1990s, this most recent period is lower, in real terms, than for any yearprior to FY1994.

As a share of the entire $2.15 trillion U.S. budget for FY2003, Foreign Operations represents a 0.76% share. As a portion of discretionary budget authority -- that part of the budget provided in annual appropriation acts (other thanappropriated entitlements) -- Foreign Operations consumes 2.13%. By comparison,at the high point of Foreign Operations spending in FY1985, foreign aid fundsrepresented 2% of the total U.S. budget and 4.6% of discretionary budget authority.

Foreign Operations, the FY2003 Budget Resolution, and Sec. 302(b) Allocations

Usually, Appropriations Committees begin markups of their spending bills only after Congress has adopted a budget resolution and funds have been distributed to theAppropriations panels under what is referred to as the Section 302(a) allocationprocess, a reference to the pertinent authority in the Congressional Budget Act. Following this, House and Senate Appropriations Committees separately decide howto allot the total amount available among their 13 subcommittees, staying within thefunctional guidelines set in the budget resolution. This second step is referred to asthe Section 302(b) allocation. Foreign Operations funds fall within the InternationalAffairs budget function (Function 150), representing in most years about 65% of thefunction total. Smaller amounts of Function 150 are included in three otherappropriation bills. (See Figure 1, above.)

How much International Affairs money to allocate to each of the four subcommittees, and how to distribute the funds among the numerous programs aredecisions exclusively reserved for the Appropriations Committees. Nevertheless,overall ceilings set in the budget resolution can have significant implications for thebudget limitations within which the House and Senate Foreign Operationssubcommittees will operate when they meet to mark up their annual appropriationbills.

Complicating the Committees' ability to set Section 302(b) allocations and proceed with markups of the FY2003 appropriations was the absence of enactmentof a budget resolution. The House approved H.Con.Res. 353 on March20, 2002, recommending $759 billion in total discretionary budget authority,including a $10 billion reserve for defense, the level requested by the President. TheHouse-passed budget resolution further assumed full funding -- $25.3 billion -- forthe President's proposal for International Affairs. On April 11, the Senate BudgetCommittee reported its version of an FY2003 budget resolution( S.Con.Res. 100 ) increasing total discretionary budget authority to $768billion, including $25.8 billion for International Affairs. Under either of the budgetblueprints, House and Senate Appropriations Committees would have had sufficientforeign policy funds to allocate the full amount requested to the Foreign OperationsSubcommittees, if they so chose. In the case of the Senate measure, the allocationfor Foreign Operations could have been higher than levels proposed by the President.

Congress, however, did not conclude debate on a budget resolution and agree on a common framework for FY2003. Some suggested that Congress include in the FY2002 supplemental appropriation ( H.R. 4775 ) a so-called "deemingresolution" that would have effectively enacted one of the two pending budgetresolutions and establish a ceiling for FY2003 discretionary budget authority andoutlays. Members remained divided during the 107th Congress, however, over whichbudget resolution level to use.

Nevertheless, in the meantime House and Senate Appropriation Committees issued section 302(b) allocations on June 21 and June 27, 2002, respectively, in orderto allow the Committees to begin marking up some of the spending bills. Overall,the allocations differed significantly, with the House approving $759 billion(including the $10 billion defense reserve) while the Senate distributed a total of$768 billion. Foreign Operations received a $16.35 billion allocation from eachCommittee, about $230 million higher than the President's request at that time.

Subsequently, President Bush proposed on September 3 an additional $350 million for Foreign Operations, but without identifying any offsets. The HouseForeign Operations Subcommittee, acting two days later on its draft bill, approveda $16.55 billion measure, exceeding by $200 million its June allocation. A weeklater, at the full Committee markup of the Foreign Operations bill, the Committeeincreased the allocation to $16.55 billion and reduced the defense allocation by anequal amount. Congress later restored the defense money prior to enacting theFY2003 Defense Appropriations bill.

Like the House and Senate Foreign Operations Appropriations bills reported in 2002, these 302(b) allocations expired with the end of the 107th Congress. With onlytwo appropriation bills enacted at the beginning of the 108th Congress, House andSenate leaders agreed to use $750 billion (excluding the $10 billion defense reserve)as the target for completing the remaining 11 appropriation measures. The SenateAppropriations Committee issued new 302(b) figures, providing Foreign Operationswith $16.25 billion, about $200 million less than the President's revised request. Although Foreign Operations budget authority in H.J.Res. 2 , as reported,remained within this allocation, the Senate approved a floor amendment adding $180million in additional international HIV/AIDS spending. Consequently, as passed bythe Senate on January 23, Foreign Operations totaled $16.43 billion, exceeding the302(b) allocation. Ultimately, Foreign Operations received $16.3 billion in theenacted Omnibus appropriation bill ( P.L. 108-7 ).

Foreign Operations Appropriations Request for FY2003 and Congressional Consideration

Request Overview

In February 2002, President Bush asked Congress to appropriate $16.1 billion for FY2003 Foreign Operations, a request that was subsequently raised to $16.45billion on September 3. The amended budget proposal was nearly $1.1 billion, or 7%higher than regular Foreign Operations appropriations for FY2002. When the $1.2billion provided for foreign assistance in the FY2002 supplemental appropriation ( P.L. 107-216 ; H.R. 4775 ) was added to enacted amounts for FY2002,the proposal for FY2003 was $95 million less than FY2002 total appropriations.

Fighting the War on Terrorism. Although the request for FY2003 included a significant emphasis on aid activitiesassociated with fighting the war on terrorism, in several ways some regarded it as anincomplete budget plan for addressing U.S. interests overseas in a post-September11 environment. Since the terrorist attacks in 2001, American foreign aid programshave shifted focus toward more direct support for key coalition countries and globalcounter-terrorism efforts. The Administration included $4 billion in its FY2003proposal to assist the so-called "front-line" states in the war on terrorism. (4) ButFY2003 increases proposed for many of these "front-line" states were uneven. Forsome -- notably Jordan, India, Oman, and Yemen -- the FY2003 recommendationsincluded considerably more assistance than allocations for FY2002, while for others-- the Philippines, Uzbekistan, Tajikistan, Turkey, and Indonesia, for example --proposed additional assistance was modest compared to FY2002 amounts. TheFY2003 budget submitted in February also did not include specific levels forAfghanistan. Executive officials said that the request assumed $138 million forAfghanistan (of which $98 million would come from the Foreign Operations bill) inseveral refugee and humanitarian aid accounts that were not allocated by recipientcountries. Other bilateral reconstruction support for Kabul, they said, would bedetermined later.

The absence of a comprehensive plan for Afghanistan and far less assistance than anticipated for some key nations cooperating in the war on terrorism led severalMembers of Congress to characterize the FY2003 Foreign Operations plan as a"business as usual" budget that did not adequately address the most urgentrequirements of the war on terrorism. (5)

To a large extent, the $1.28 billion FY2002 supplemental Foreign Operations proposal, submitted to Congress on March 21, addressed the concerns of those whodoubted that the FY2003 plan was adequate. The supplemental included additionalaid to 27 nations around the world, many of which would receive no increase or onlya modest rise in U.S. aid under the FY2003 request. The supplemental further sought$250 million more assistance for Afghanistan. As enacted, the FY2002 supplemental( P.L. 107-206 ) increased the President's request to $1.8 billion in terrorism-relatedassistance. Nevertheless, President Bush's decision not to spend any money in thesupplemental that had been designated as "contingent emergency" meant that about$600 million of Foreign Operations funds, including some for Afghanistan and other"front-line" states, would not be available.

Other Key Elements of the FY2003 Request. Beyond the issue of aid to combat terrorism, the ForeignOperations proposal for FY2003 would have substantially increased aid activities inseveral areas while cutting resources for a few programs. Significant appropriationincreases included:

Development assistance would have risen by about $350 million, or over 13%, but increases among the many development programs weremixed. Funding for HIV/AIDS, agriculture, environment, and trade/investmentprograms would have grown sharply, while resources for several health activitieswould fall. (See below for more details in section on development aidpriorities.)

Andean Regional Initiative would have grown by $106 million, or 13%, continuing a program of several years to enhance Colombia's andother regional states' capabilities to interdict illegal drug production and to supportalternative development programs. (See below for moredetails.)

Peace Corps would have increased by $42 million, or 15%, in an effort to open eight new country programs and place 8,000 volunteers by the endof FY2003.

Contributions to the World Bank and other international financial institutions would have grown by $262 million, or 22%, covering allscheduled U.S. payments to the multilateral development banks, plus one-third ($177million) of U.S. arrears owed to these institutions.

Table 4. Summary of Foreign OperationsAppropriations

Source: House and Senate Appropriations Committee and CRS calculations.

* FY2001 levels include the regular FY2001 Foreign Operations Appropriations plus $1.329 billion emergency terrorism funding allocated from amounts provided in P.L. 107-38 , the EmergencyTerrorism Supplemental Appropriation enacted in September 2001. FY2002 levels include$15.346 billion in regular Foreign Operations appropriations enacted in P.L. 107-115 plus $1.1billion (net $50 million in rescissions), provided in P.L. 107-206 , the FY2002 emergencysupplemental appropriation. See Table 9 at the end of this report for more details regardingregular FY2002 Foreign Operations funding and terrorism-related supplementals.

** House amounts shown in this column are those reported by the House Appropriations Committee in the 107th Congress ( H.R. 5410 ). That bill expired at the end of 2002. Thefigures are included only as reference to what the House Committee recommended last year andhad no official status in the 108th Congress.

*** H.J.Res. 2 , as passed by the Senate, included a 2.85% across-the-board rescission. As enacted, the rescission totaled 0.65%. The amounts shown here are illustrative of how muchmight be withheld from Foreign Operations programs if the rescission were applied to eachaccount.

Funding reductions were sought in three primary areas:

Export-Import Bank funds would have dropped by $182 million, or 23%, although the Administration said that Bank lending would increaseby over 10% because of what it calls "more focused" estimates of default risk thatwill reduce the level of appropriations.

East European assistance would have fallen by $126 million, or 20% from enacted levels. The executive proposed reductions for nearly everyregional country, including Bosnia, Montenegro, and Kosovo.

Debt reduction would receive no funding in FY2003, although this did not represent a policy change. The United States fulfilled currentcommitments to the Heavily Indebted Poor Country (HIPC) initiative with theFY2002 appropriation of $229 million.

Leading Foreign Aid Recipients Proposed for FY2002/FY2003

While Israel and Egypt remain the largest U.S. aid recipients, as they have been for many years, in the aftermath of the September 11 terrorist attacks, foreign aidallocations have changed in several significant ways. The Administration has usedeconomic and military assistance as an additional tool in efforts to maintain acohesive international coalition to conduct the war on terrorism and to assist nationswhich have both supported U.S. forces and face serious terrorism threats themselves. Pakistan, for example, a key coalition partner on the border with Afghanistan, hadbeen ineligible for U.S. aid, other than humanitarian assistance, due to sanctionsimposed after India and Pakistan conducted nuclear tests in May 1998 and Pakistanexperienced a military coup in 1999. Since lifting aid sanctions in October 2001, theUnited States has transferred over $1.5 billion to Pakistan. India, the Philippines,Turkey, Jordan, and Indonesia also are among the top aid recipients in FY2002 andFY2003 as part of the network of "front-line" states in the war on terrorism.

Most recently, the enactment of the FY2003 Iraq War Supplemental Appropriation has added significant amounts to many of these same countries inrecognition of their support in the conflict. The supplemental also provided nearly$2.5 billion for relief and reconstruction programs in Iraq.

The other major cluster of top recipients are those in the Andean region where the Administration maintains a large counternarcotics initiative that combinesassistance to interdict and disrupt drug production, together with alternativedevelopment programs for areas that rely economically on the narcotics trade. Several countries in the Balkans and the former Soviet Union -- Federal Republicof Yugoslavia, Russia, Ukraine, and Georgia -- continue to be among the toprecipients, although at somewhat lower funding levels.

Table 5. Leading Recipients of U.S. Foreign Aid (Appropriation Allocations; $s in millions)

Source: U.S. Department of State.

Note: This table lists countries in order of the combined FY2003 regular appropriation, plus the FY2003 Iraq War Supplemental Appropriation.

a FY2002 includes funds allocated from the regular Foreign Operations appropriation, plus funds drawn from the Emergency Response Fundappropriated in P.L. 107-38 and allocated from the FY2002 SupplementalAppropriation ( P.L. 107-206 ).

b Amounts allocated from the regular Foreign Operations Appropriations, FY2003( P.L. 108-7 ).

c Amounts allocated from the Iraq War Supplement, FY2003 ( P.L. 108-11 ).

d Amounts provided Iraqi opposition support and the Iraq Relief and ReconstructionFund enacted in P.L. 108-11 .

e Congress earmarked $295 million for Afghanistan for economic and humanitarianassistance. This total includes the $295 million, plus an additional $27 millionallocated from military aid and peacekeeping accounts.

Congressional Response to the FY2003 Request

Senate Action. After the Senate Appropriations Committee reported on July 18, 2002, a $16.35 billion FY2003Foreign Operations appropriations ( S. 2779 ), the Senate took no furtheraction on the legislation during the 107th Congress. As a result, S. 2779 expired at the end of the session.

As one of the first orders of business in the 108th Congress, the Senate took up H.J.Res. 2 , a continuing resolution that had already passed the House. Senate Appropriation Committee leaders constructed an omnibus amendmentincorporating text of the 11 appropriation bills, including Foreign Operations, thathad not yet been enacted for FY2003. After voting to attach the omnibus amendmentto the joint resolution, the Senate began a week of debate on the measure, passing iton January 23, 2003 (69-29).

As approved by the Senate, H.J.Res. 2 provided $16.43 billion for Foreign Operations, about $20 million below the President's request. The jointresolution, however, also included an across-the-board rescission of about 2.85% thatif applied to Foreign Operations accounts, would have reduced the total by $468million and resulted in a net amount of $15.96 billion for Foreign Operationsprograms. (6) Beyond the overall size of the measure, H.J.Res. 2 made anumber of key changes to the Administration's proposal and to legislation -- S. 2779 -- reported by the Committee last year:

Child Survival and Health programs received $1.97 billion,$376 million above the request and $190 million higher than recommended by theSenate Appropriations Committee last year in S. 2779. H.J.Res. 2 went well beyond the President's budget for HIV/AIDS --providing $971.5 million rather than $740 million -- and also restored funds forother health programs that had been scheduled for reductions under theAdministration's proposal. HIV/AIDS resources grew during Senate floor debatewhen an amendment by Senator Durbin adding $180 million, including $100 millionadditional for the Global Fund, was adopted (see more below).

Population assistance increased to $435 million, $10 million above the request. But H.J.Res. 2 dropped a key provision in S. 2779 (Sec. 581) prohibiting the President from denying familyplanning grants to non-governmental organizations that engage in abortion-relatedadvocacy and lobbying activities with funds other than those provided by the UnitedStates. This would have effectively reversed one criteria of the President's so-called"Mexico City policy." NGOs would still have been barred from performingabortions with non-U.S. funds (see more below).

UNFPA contributions were earmarked at $35 million, a reduction from $50 million set in S. 2779 . The funds would have stillbeen conditioned on a determination by the President that UNFPA no longer supportsor participates in the management of coercive family planning programs. TheAdministration declared in July 2002 UNFPA ineligible for U.S. support due to theorganization's programs in China. S. 2779 would have modified theterms under which the President could declare UNFPA ineligible in a way whichwould have made such a finding more difficult. H.J.Res. 2 did notinclude this change (see more below).

Andean Regional Initiative funding was cut to $650 million, $81 million less than requested but $13 million higher than in S. 2779 . The joint resolution further continued several existing conditions on aid toColombia.

Afghanistan reconstruction aid was set in H.J.Res. 2 at $220 million, up from $157 million in S. 2779 . The Administration did not submit a formal request for Afghanistan forFY2003, but said there was about $98 million in humanitarian aid ForeignOperations accounts that would likely support programs inAfghanistan.

Peace Corps funding was set at $285 million, $32 million below the request. The Senate measure supported the current Peace Corps expansioneffort but believed a stronger planning effort should occur before more funds areprovided.

North Korea aid, which had been proposed at $75 million in the original request submitted a year ago, was prohibited in H.J.Res. 2 . This followed admissions by North Korea that it had resumed its nuclear program. The Administration suspended deliveries of fuel oil and food aid to North Korea. The legislation permitted the President, however, to provide up to $3.5 million foradministrative expenses of the Korean Energy Development Organization (KEDO)that administers the program to build light-water nuclear reactors in North Korea. H.J.Res. 2 further recommended $10 million to assist North Koreanrefugees and asylum seekers and $250,000 for human rights programs in North Koreamanaged by the National Endowment for Democracy.

A Palestinian Statehood general provision was included (Sec. 548) that would bar U.S. assistance to support a Palestinian state unless certainconditions were met, including those relating to a democratically-elected Palestinianleadership and the end of support for terrorism. This provision was not part of S. 2779 .

H.J.Res. 2 made no mention of the President's September 3 budget amendment adding $200 million for Israeli anti-terrorism aidand $50 million for Palestinian humanitarian relief . The measure, however,increased the disaster assistance account, out of which the Palestinian aid wouldcome, above S. 2779 by $35 million, although much of that may havebeen intended for Afghanistan. The Senate added $10 million to the ESF accountfrom amounts recommended last year in S. 2779 , but that was far shortthe amount necessary for the additional Israeli aid package.

House Action. On September 12, 2002, ten days after receiving a $350 million budget amendment, the HouseAppropriations Committee approved a $16.55 billion Foreign Operations spendingmeasure ( H.R. 5410 ). Congress adjourned, however, withoutcompleting action on the bill and H.R. 5410 expired at the end of the107th Congress.

Although the Senate debated and passed a new version of the Foreign Operations spending measure, as part of H.J.Res. 2 , the House did takeup new legislation in 108th Congress. Instead, House appropriators met with theirSenate counterparts in conference committee meetings and negotiated a common textof H.J.Res. 2 . For Foreign Operations, House conferees used H.R. 5410 , as reported by the Committee in 2002, as the basis forconference negotiations. Below are the major highlights of H.R. 5410 reported by the Committee in September 2002.

H.R. 5410 provided $80 million more than the President's amended request and stood $120 million more than the Senate measure passed in 2003. TheCommittee had planned, prior to receiving the September 3, 2002, budgetamendment, to approve a $16.35 billion bill. At the higher level, the Committeeaccommodated the President's request for an extra $200 million for anti-terrorism aidto Israel, $50 million in humanitarian aid to the Palestinians, and $100 million ininternational HIV/AIDS spending. While raising the level by $200 million, theCommittee absorbed the other $150 million in the budget amendment by reducingother accounts. Other key elements included:

Child Survival and Health programs received $1.71 billion,slightly higher than the request. The bill provided $786 million for HIV/AIDS, andalso restored funds for other health programs.

Population assistance was set at the $425 million request.

UNFPA contributions were earmarked at $25 million, even though the President declared UNFPA ineligible in FY2002 for U.S. support due tothe organization's programs in China. The House Committee measure furtherconditioned U.S. assistance on UNFPA not providing any support to China's StatePlanned-Birth Commission or its regional affiliates. H.R. 5410 ,however, retained current law regarding the terms under which the President candeclare UNFPA ineligible.

Andean Regional Initiative funding was set at the $731 million request and the bill modified an existing certification requirement regardingthe release of these funds.

Afghanistan reconstruction aid was set at $296 million. The Administration did not transmit a specific request for FY2003, but said there is about$98 million in humanitarian aid accounts for Afghanistan.

Peace Corps funding was set at $317 million, the requested amount.

A Palestinian Statehood general provision was included that barred U.S. assistance to help establish a Palestinian state unless certain conditionswere met, including those relating to democratic reforms and the end of support forterrorism. An amendment to modify the provision by Representative Obey wasdefeated during Subcommittee markup.

Conference Agreement. Congress approved H.J.Res. 2 on February 13, and the President signedthe spending measure on February 20 ( P.L. 108-7 ). The Foreign Operations portion,one of 11 regular appropriation measures included in the omnibus measure, setsfunding at $16.3 billion for FY2003, about $150 million less than requested and $125million and $250 million less than bills recommended earlier by the Senate andHouse, respectively ( H.J.Res. 2 , as passed by the Senate on January 23and H.R. 5410 reported in the House in September 2002). In order toreduce the total cost of the omnibus bill, conferees further added an across-the-boardrescission of 0.65% of all discretionary budget authority in the legislation. Thisreduces total FY2003 Foreign Operations funding by $122 million, making the total $16.18 billion.

As approved, the $16.3 billion Foreign Operations modifies several of the Administration's FY2003 funding requests. One area of significant change focuseson international health programs for which Congress added substantial funds to thePresident proposed budget:

Child survival and health programs are set at $1.84 billion, $242 million, or 15% higher than the request.

HIV/AIDS programs receive $880 million, including $630 million from bilateral activities and $250 for the Global Fund to Fight HIV/AIDS,Tuberculosis, and Malaria (Global ATM Fund). (7) The total for HIV/AIDS is 19%higher than the request and 73% above FY2002 levels. The President had requested$100 million for the Global Fund from the Foreign Operationsappropriation.

Tuberculosis activities receive $80 million (excluding an assumed distribution of $40 million through the Global ATM Fund). This is 50%more than the amount proposed by the Administration.

Malaria programs receive $72.5 million (excluding an assumed distribution of $42.5 million through the Global Fund). This total is nearly twicewhat the President requested.

Reproductive health/family planning activities are earmarked at $446.5 million, the same as for FY2002, but higher than the $425 million requestand House-reported level. For UNFPA , the conference agreement provides $34million; funds, however, that are subject to several conditions, including arequirement that the President certify that the organization is no longer involved inthe management of a coercive family planning program.

Conferees further added funds to other accounts and programs throughout the spending bill:

Afghanistan economic aid is set at $295 million, about the same as recommended by the House, but higher than the $220 million Senate-passedlevel. The Administration estimated that it would allocate $98 million for Afghanaid out of its Foreign Operations request.

Refugee accounts, both regular and emergency, receive $813 million, similar to levels recommended by the House and Senate, but $93 million, or13%, more than proposed for FY2003.

Peacekeeping operations receive a $7 million, or 6%, increase above the budget submission. The additional funds support expanded U.S. effortsto train and equip African peacekeepers.

Basic education programs receive $250 million in the enacted bill, about 25% higher than the request.

Environment projects receive special attention in the conference agreement, with $175 million earmarked for energy conservation andefficient energy production and distribution capacity, and $145 million for biodiversity .

In order to accommodate these increased funding levels but remain within the limits established for Foreign Operations, conferees reduced funding in a few areas:

Andean Regional counternarcotics initiative receives $700 million, $31 million less than proposed and recommended by the House in H.R. 5410 . The Senate had provided $650 million. Conferees,however, permit a $31 million transfer from regular counternarcotics programs forthe Andean Initiative, an authority that would allow the President to fully fund theARI.

USAID Capital Investment Fund receives $43 million, less than half of the $95 million request. This new account for FY2003, out of whichUSAID will cover overseas mission construction and security costs, includes $30million for a new USAID building in Kenya. It does not have sufficient funding,however, for other construction projects proposed in Guinea, Cambodia, andGeorgia.

Israel aid is set at $2.7 billion for regular economic and military programs (reduced by $18 million due to the across-the-board rescission),as requested. But conferees did not include an earmark for an additional $200million antiterrorism request. The Administration chose not to allocate this latter$200 million for Israel.

Peace Corps receives $297 million, up from $275 million in FY2002, but below the President's $317 million request. This will delay fullimplementation of Administration plan to double the number of volunteers byFY2007.

Multilateral Development Bank contributions, at $1.3 billion, are about $140 million less than the request, including $24 million less for the WorldBank's International Development Association (IDA). The Administration couldchoose to fully fund current commitments but not pay portions of U.S. arrears, as hadbeen planned.

Korean Peninsula Energy Development Organization (KEDO) payment is limited to no more than $5 million, covering only administrativeexpenses. The United States had planned to make a $75 million contribution, mostlyin heavy fuel oil for energy production in North Korea. President Bush suspendedoil transfers in late 2002 after Pyongyang announced that it was continuing a nuclearweapons program.

Supplemental FY2002 Foreign Operations Funding

The Administration sought $1.28 billion in additional FY2002 ForeignOperations funding, primarily to increase economic, military, and counter-terrorismassistance to so-called "front-line" states in the war on terrorism. The United Stateshas placed a growing priority on increasing assistance to 26 nations representing notjust those bordering Afghanistan or located in the region, but including countriesglobally that have committed to helping the United States in the war on terrorism.

As finalized by Congress and signed by the President on August 2 ( P.L. 107-206 ), the Administration received $1.8 billion in foreign aid funding (less $269million rescission), over $400 million above the request. This came on top of about$1.5 billion for Foreign Operations programs that were drawn, beginning October 1,2001, from the $40 billion emergency terrorism supplemental approved by Congressshortly after September 11 ( P.L. 107-38 ). The supplemental, as submitted, alsoincluded several policy changes related to foreign aid activities that raisedcontroversy during congressional debate.

Nevertheless, as a result of a decision made by President Bush on August 13 not to spend any of the $5.1 billion supplemental designated as "contingent emergency,"about one-third of the foreign aid supplemental became unavailable. According tothe 1985 Balanced Budget and Emergency Deficit Control Act as amended, both thePresident and Congress must agree that spending is emergency for those funds to beexempt from budgetary controls over total spending. After the White House stronglyobjected to House and Senate proposals to exceed the President's $27.1 billionsupplemental request, lawmakers agreed to provide $5.1 billion of the $28.9 billionsupplemental total as contingent emergency funding for which the President alsowould have to designate as emergency resources in order for the money to becomeavailable. The $5.1 billion in contingent emergency funding included new itemsadded by Congress and increases above the Administration's request. The enactedsupplemental, however, included a so-called "all or nothing" provision, requiring thePresident to declare either the entire $5.1 billion as emergency funds or none of it.

On August 13, President Bush announced that he would not utilize the $5.1 billion of contingent emergency spending. The decision had the effect, in terms usedby the White House, of a "pocket veto" by the President of the contingent emergencyfunds. Major foreign aid funds that were not available because of the President'saction included:

Israel aid -- $200 million

Palestinian aid -- $50 million

Afghanistan aid and refugee relief -- $134million

Philippine military aid -- $30 million

International HIV/AIDS, malaria, and tuberculosis -- $200million

The White House said, however, that the President supported more aid to Israel, the Palestinians, and for HIV/AIDS, and would seek other means to gain congressionalapproval for these activities in the future.

Subsequently, on September 3, the Administration submitted a $996 million budget amendment to the pending FY2003 request, including $350 million forForeign Operations. Included were $200 million for Israel, $50 million for thePalestinians, and $100 million for the International Mother and Child HIV Preventionprogram. An additional $100 million for HIV/AIDS was requested for the Centersfor Disease Control fund in the Labor/HHS appropriation.

Other Foreign Operations contingent emergency funds, including those for Afghanistan and the Philippines, were not part of the President's amendment. Theeffect of not seeking to restore the contingent emergency funds for Afghanistan andthe Philippines not only meant less aid for those two countries than amounts assumedby Congress when it passed the supplemental bill, but reductions for several othercountries. Congress had assumed that Afghanistan would receive about $264 millionin P.L. 107-206 , $14 million more than the $250 million request. Ultimately, asshown in Table 6 below, the State Department allocated Afghanistan $258 million. Working with $75 million less in total economic and military assistance thanrequested, a congressional directive to spend $7 million on a Muslim educationexchange program, and the loss of the contingent emergency funds, Administrationofficials had to reduce amounts for a number of priority aid recipients in order tomaintain a high level for Afghanistan. Final supplemental allocations cut aid toPakistan by $30 million, African nations by $16.5 million, a Middle East economicinitiative by $30 million, and Yemen, Nepal, and Colombia by smaller amounts. ThePhilippines received $37 million, $3 million less than requested and $33 millionbelow what Congress assumed when it passed the supplemental.

The FY2003 budget amendment request also proposed no offsets, but the White House said it expected Congress to absorb the additional funds within the original$759 billion appropriation request for all 13 spending bills. In the case of ForeignOperations, the House Committee raised the bill's total by $200 million, reduced theamount available for defense appropriations, and accommodated the balance of thePresident's amendment by reducing other programs in the Foreign Operations bill by$150 million. (8)

Table 6. FY2002 Supplemental Compared with Enacted and Requested ($s -- millions)

Sources: Department of State and House and Senate Appropriations Committee.

a Enacted amounts include those provided in the regular FY2002 Foreign OperationsAppropriation ( P.L. 107-115 ) and funds drawn from the $40 billion emergencyterrorism supplemental appropriation ( P.L. 107-38 ).

b Afghan aid figures for FY2001 and FY2002 represent estimates of U.S. assistanceprovided primarily through humanitarian aid accounts, such as food, refugeerelief, and disaster aid. The FY2002 enacted level includes total amountsobligated for Afghanistan, including funds enacted in the Supplemental bill.

c As enacted, P.L. 107-206 appropriated $200 million for Israel, $50 million for thePalestinians, $200 million for HIV/AIDS, $30 million in additional military aidto the Philippines, $40 million refugee relief for Afghanistan, plus additionalamounts in disaster assistance for Afghanistan. These funds represented newitems not requested by the President but added by Congress. As such, they weredesignated as "contingent emergency" funds that needed the President also todeclare them as emergency spending before they would become available. Because of the President's decision not to spend money designated as"contingent emergency," none of these funds became available.

d The Administration did not allocate economic aid for African states on acountry-by-country basis, but as a "regional" program shown in the line below. As it suggests, the $35 million economic aid request for Africa was reduced to$20 million in the final allocation. Additional amounts shown here for Djibouti,Ethiopia, and Kenya are allocations for military assistance.

e As enacted, P.L. 107-206 appropriated $1.549 billion, $622 million of which wasdesignated as "contingent emergency" funding. The President decided he wouldnot spend any of the $5.1 billion contingent emergency funds provided in P.L.107-206 . See footnote "b" above.

Funding Issues

The proposed supplemental set new directions in the distribution of assistance to meet the terrorist threat. Much of the $1.5 billion emergency aid distributed priorto March 2002 focused on two areas: 1) economic support to Afghanistan andneighboring countries in anticipation of food shortages, displacement and otherhumanitarian disruptions that would occur during the military campaign; and 2)efforts to achieve security and stabilize the economic situation in Pakistan anddemonstrate support for President Musharraf. By contrast, the proposed $1.28 billionsupplemental would distribute additional economic and military assistance among23 countries in all regions of the world.

In several respects the $1.28 billion supplemental proposal reflected what many said should have been incorporated in the FY2003 plan. Although like the FY2003budget, the request included significant amounts for Pakistan ($145 million) andJordan ($125 million), it distributed, as shown in Table 6 , considerable amounts ofaid to Central Asian states that would not receive substantial increases in FY2003and to other nations outside the region.

Policy Issues

The supplemental request included several general provisions that would change current policy regarding the distribution of military aid, assistance to Colombia, andconditions under which regular foreign aid is transferred. Each was closely examinedduring congressional debate.

DOD's Role in Military Aid Allocations. Currently, the State Department receives fundingthrough the Foreign Military Financing (FMF) account of the Foreign OperationsAppropriations and provides broad policy direction for U.S. military assistanceprograms. DOD frequently administers FMF activities, but under the policy guidanceof the State Department. The Administration proposed in the FY2002 supplementalto grant DOD authority to use up to $30 million to support indigenous forces engagedin activities combating terrorism and up to $100 million to support foreigngovernment efforts to fight global terrorism. The $130 million total would comefrom defense funds -- not Foreign Operations -- and be directed by the Secretary ofDefense and be available "not withstanding any other provision of law." A thirdprovision proposed $420 million in DOD Operation and Maintenance funding forpayments to Pakistan, Jordan, and "other key cooperating states for logistical andmilitary support provided" to U.S. military operations in the war on terrorism thatwould also be under DOD's policy purview.

DOD officials said that these provisions were essential to help reimburse countries for costs they incur in assisting U.S. forces engaged in the war on terrorism. The United States had to delay payments to Pakistan for support provided inOperation Enduring Freedom because of competing demands on regular military aidfunds and the absence of agreements between DOD and the Pakistan military thatwould allow such transfers out of the defense budget. Nevertheless, critics chargedthat such a change would infringe on congressional oversight and the StateDepartment's traditional role in directing foreign aid policy and resource allocations. By including a "notwithstanding" proviso, the request further would remove humanrights and other conditions that must be observed by countries in order to qualify forU.S. security assistance.

At a House hearing on April 18, Deputy Secretary of State Armitage told the Foreign Operations Appropriations Subcommittee that although the State Departmentsupported the "intent" of the provisions, the Administration drafted the legislationin a "rather poor way" and that the authority was "a little broader in scope than wereally intended." Secretary Armitage pledged that both State and DOD officialswould work with Congress to adjust the provisions in a way that would protect theprerogatives of the Secretary of State as the "overseer of foreign policy and foreignaid." (9)

Colombia Aid Restrictions. An additional provision in the supplemental sought to broaden DOD and StateDepartment authorities to utilize unexpended Plan Colombia, FY2002 and FY2003 appropriations to support Colombia's "unified campaign against narcotics trafficking,terrorist activities, and other threats to its national security." (10) The provision wouldallow funds to be used not only for counter narcotics operations, but also for militaryactions against Colombian insurgents and any other circumstances that threatenedColombian national security.

Although the most immediate effect of the change would be to permit the United States to expand intelligence sharing with Colombian security forces, theprovision would also allow helicopters and other military equipment provided overthe past two years to fight drug production to be used against any threat toColombia's security.

The Administration, however, did not ask Congress to soften two other Colombia aid restrictions: a 400-person limit on U.S. personnel inside Colombia andthe prohibition of aid to Colombian military and police units that are engaged inhuman rights violations (Leahy amendment). Despite the inclusion of a clause thatpast and future aid be available "notwithstanding any provision of law" (see below) -- except for the two restrictions noted above -- Administration officials said theywere not seeking to remove other enacted conditions on Colombian aid, such as thoserelated to human rights and aerial coca fumigation. Coupled with a pending FY2003$98 million military aid request to help protect Colombia's oil pipeline and otherinfrastructure against guerilla activity, critics argued that the U.S. objective inColombia was shifting from one of combating narcotics production and traffickingto a counter-terrorism and insurgency strategy.

Removal of Restrictions for Other Economic and Military Assistance. The Administration's supplemental submissionasked Congress to provide most of the economic and military aid funds"notwithstanding any other provision of law." Such language is usually reserved onlyfor situations where humanitarian assistance or aid in support of the highest U.S.foreign policy interests would be prohibited due to existing legislative restrictions onassistance to governments that violate human rights, engage in weapons proliferation,came to power through a military coup, do not cooperate in counter-narcoticsactivities, or a series of other similar aid conditions.

Because of the sweeping and broad nature of "notwithstanding" provisions, Congress has often been reluctant to enact such a waiver without fully understandingthe implications of excluding foreign aid restrictions. More often, Congress prefersto waive specific legislative constraints rather than approving across-the-boardwaivers. Administration officials said that such a waiver was needed in thesupplemental because of impediments that apply to Afghanistan, Yemen, Ethiopia,and Cote d'Ivoire. These first three countries were overdue in making debt paymentsto the U.S. in violation of the "Brooke amendment" (section 512 of the ForeignOperations Appropriations, FY2002). Cote d'Ivoire is ineligible for aid because ofthe military coup against a democratically elected government in 1999, in violationof section 508 of the Foreign Operations Appropriations, FY2002.

Congressional Action on the Administration's Supplemental Foreign Operations Request

House, Senate, and conference action increased foreign aid funding proposed by the President, but limited to some extent policy provisions and waivers sought bythe White House. The enacted measure also added a new issue into the supplementaldebate -- additional funding to fight global HIV/AIDS -- but dropped aSenate-added provision concerning the status of U.S. contributions to the U.N.Population Fund (UNFPA).

As passed by Congress, the supplemental included $1.818 billion in new Foreign Operations funds, nearly $500 million above the request. (This total wasoffset by $269 million in rescissions, for a "net" total of $1.55 billion for ForeignOperations.) The House had included $1.82 billion, while the Senate measureprovided $1.78 billion. New items added by both the House and Senate, andcontained in the final bill, included $200 million in assistance to Israel, $50 millionfor the Palestinians, and $200 million to combat HIV/AIDS, malaria, andtuberculosis. The HIV/AIDS money could be used to support the President's newInternational Mother and Child Prevention initiative, but conferees stated that $100million of the total should be used as an additional contribution to the Global Fundto Combat HIV/AIDS, Tuberculosis, and Malaria.

Both versions increased aid to Afghanistan for reconstruction and security support above the President's $250 million request: the House by $120 million andthe Senate by roughly $110 million. The conference agreement did not set a specificamount for Afghanistan, but with the $134 million designated for Afghanistan withinthe International Disaster Assistance Account ($40 million requested), the finalallocation for Afghanistan would likely be higher than the request. The Senate billadded $15 million to create an international exchange program for students fromcountries with large Muslim populations, and conferees set the total at $10 million. In most cases, the conference agreement did not set specific country allocations,leaving that to the discretion of the President.

As noted above, however, the additional funds added by Congress over the President's request -- aid to Israel, the Palestinians, for HIV/AIDS, and some of theassistance to Afghanistan and the Philippines -- were designated as a "contingentemergency." The President said he did not agree with the emergency designation,and did not make these funds available. Only $1.2 billion of the $1.8 billion total innew foreign aid funds would be spent, according to the White House. Nevertheless,on September 3, the President amended his FY2003 Foreign Operations requestseeking the contingent emergency funds for Israel, the Palestinians, and internationalHIV/AIDS programs. In late September, the State Department released the finalcountry and program allocations of the supplemental funding, making reductions notonly to levels assumed for Afghanistan and the Philippines, but also to requestedamounts for Pakistan, Nepal, Colombia, Yemen, several African nations, and aMiddle East economic initiative (see Table 6 , above).

On policy issues, the final bill removed the requested "notwithstanding any provision of law" provisos, but waived the "Brooke amendment" regarding debtpayments in arrears. This permitted most waivers the Administration sought. OnColombia, the final bill included language similar but less sweeping than theAdministration's request. It allowed Colombia to use American foreign aid (moneymanaged by the State Department) for a unified campaign against narcoticstrafficking, against organizations designated as terrorist groups, and for humanitarianrescue operations. All current restrictions on Colombian aid, however, remained ineffect. The bill further added a requirement regarding the newly elected ColombianPresident and policies regarding human rights, military reforms, and financialcommitments to implement other reforms.

Congress denied DOD's request for authority to use $30 million to support indigenous forces engaged in activities combating terrorism, but approved $390million for payments to Pakistan, Jordan, and other cooperating states for logisticaland military support provided.

H.R. 4775 , as passed by the House, had approved DOD's request for $100 million to support foreign government efforts to fight global terrorism, butwith significant changes. Transfers would be limited only to reimbursements for thecosts of goods, services, or use of facilities by U.S. military forces and any proposedcommitment of funds must be submitted jointly to the Committees by the Secretariesof State and Defense 15 days in advance for Committee approval. The Senatemeasure and the final bill did not include a provision related to this issue.

During House Committee markup, another contentious foreign aid policy issue was introduced. Between mid-January and mid-July 2002, the White House hadmaintained a hold on U.S. contributions to the U.N. Population Fund (UNFPA)because of allegations that UNFPA is participating in the management of coercivefamily planning practices in China. For FY2002, Congress provided "not to exceed"$34 million for UNFPA, and some Members criticized the White House for delayinga decision regarding UNFPA's eligibility. A State Department investigation teamspent two weeks in China during May.

After initially adopting an amendment by Representatives Lowey and Kolbe (32-31) that would require the President to transfer the full $34 million to UNFPAby July 10 if the State Department team concluded that UNFPA was not involved incoercive family planning practices in China, the Committee approved a furtheramendment by Representative Tiahrt that over-rode the Lowey/Kolbe provision. TheTiahrt amendment required the President to determine whether UNFPA participatedin the management of coercive family planning practices by July 31, 2002, but saidnothing about how much the President must contribute. Prior to final passage of H.R. 4775 , however, the second rule ( H.Res. 431 ) underwhich the bill was debated deleted both amendments from the legislation. As such,the House-passed measure did not include any language regarding UNFPA. TheSenate bill, however, included language nearly identical to Lowey/Kolbe text.

Under any of these amendments, a determination that UNFPA was involved in coercive practices would have resulted in the termination of U.S. support. Withoutsuch a determination, however, the Senate and Lowey/Kolbe amendments wouldhave required the President to transfer the full $34 million. Under the Tiahrtprovision, however, the President could have reduced the U.S. contribution tosomething less than $34 million to express displeasure over alleged coercive familypractices in China and UNFPA's involvement. The White House strongly opposedthe Senate language.

Conferees agreed to drop all UNFPA language from the final bill, leaving the decision entirely up to the President. Subsequently, on July 23, the White Houseannounced the U.S. would withhold the $34 million transfer.

Major Policy and Spending Issues for FY2003

While the Foreign Operations appropriations bill can include virtually anyforeign policy issue of interest to Congress, the annual debate usually focuses onseveral major policy and spending issues. Issues for FY2003 have included thefollowing.

Foreign Aid as a Tool in the War on Terrorism

As discussed above, since the September 11 terrorist attacks and the initiation of military operations in Afghanistan, combating global terrorism has become oneof the top priorities of American foreign assistance. While there is disagreementregarding the extent to which foreign aid can directly contribute to reducing the threatof terrorism, most agree that economic and security assistance aimed at reducingpoverty, promoting jobs and educational opportunities, and helping stabilizeconflict-prone nations can indirectly attack some of the factors that terrorists use inrecruiting disenfranchised individuals for their cause. More than $6 billion wasextended to "front-line" states in FY2002, through regular and two supplementalappropriations, while the FY2003 budget proposed about $4 billion.

Foreign aid can be programmed in a number of ways that contribute to the war on terrorism. Assistance can be transferred, as has occurred in Pakistan andAfghanistan, to bolster coalition-partner government efforts to counter domesticdissent and armed attacks by extremist groups, and to promote better health care,education, and employment opportunities to its people. Security assistance canfinance the provision of military equipment and training to nations facing threatsfrom their own internally-based terrorist movements.

While there has been substantial congressional support for additional foreign aid resources aimed at countering terrorism, some warn that the United States needs tobe cautious about the risks of creating a close aid relationship with governments thatmay have questionable human rights records, are not accountable to their people, andare possibly corrupt. As noted above, Members have been especially critical ofAdministration efforts to include in aid proposals for "front-line" states legislativelanguage that would waive all existing restrictions and prohibitions on the transfers. Instead, these critics argue, the Administration should specifically identify anyobstacles to proceeding with a country aid program and seek a congressional waiverfor those particular problems. For example, in late 2001 when the Administrationwanted to provide Pakistan with $600 million in fast-disbursing economic aid,Congress approved P.L. 107-57 which waived restrictions concerning aid to countriesthat engaged in missile proliferation, whose leaders came to power through a militarycoup, and were behind in debt payments to the United States.

Beyond substantial amounts of bilateral aid for "front-line" states, the Foreign Operations appropriation bill funds several global programs specifically aimed atanti-terrorism efforts overseas and the provision of security for USAID employeesliving abroad.

Anti-Terrorism Assistance (ATA). Since FY1984, the State Department has maintained the ATA program designed tomaximize international cooperation in the battle against global terrorism. Throughtraining, equipment transfers, and advice, the ATA program is intended to strengthenanti-terrorism capabilities of foreign law enforcement and security officials. Between1984 and 1999 (the most recent year for which ATA data are available), over 23,000officials from 112 countries participated in ATA programs. ATA funding is includedwithin the Foreign Operations account of Non-proliferation, Anti-terrorism,Demining, and Related Programs (NADR).

Resources for the $38 million annual ATA program (FY2001) rose sharply following September 11, with an additional $45.5 million allocated out of theTerrorism Emergency Response Fund. In addition to the regular $38 million forFY2002, a further $20 million was included in the emergency supplementalappropriation ( P.L. 107-206 ; H.R. 4775 ). The President requested $64.2million for FY2003. Increased funding for FY2002 and FY2003 is intended tofinance three post-September 11 changes in the ATA program:

conducting training sessions more frequently overseas, on-site where participants can be withdrawn quickly to respond to an emergingcrisis;

adding new courses on kidnap intervention and advanced crisisresponse; and

expanding training to counter the use of weapons of massdestruction by terrorists.

Terrorist Interdiction Program (TIP). As one response to the 1998 bombings of Americanembassies in East Africa, the State Department launched the TIP, an activity intendedto restrict the ability of terrorists to cross international borders, launch attacks, andescape. TIP strengthens border security systems in particularly vulnerable countriesby installing border monitoring technology, training border security and immigrationofficials in its use, and expanding access to international criminal information toparticipating nations. Like ATA, funds for TIP are part of the NADR account in theForeign Operations spending bill.

Since September 11, the State Department has expanded from 34 to 57 the number of countries where it believes TIP would immediately contribute to theglobal counterterrorism campaign. The $4 million TIP budget doubled for FY2001following September 11, and grew to $14 million in FY2002. The request forFY2003 was $5 million.

Terrorist Financing. In December 2001, an interagency review group identified 19 countries where a significantterrorist financing threat existed, and with $3 million allocated from the EmergencyResponse Fund, launched a training and technical assistance program. The StateDepartment allocated $10 million out of the FY2002 supplemental appropriation toexpand the program, while the Treasury Department proposed funding this activityin FY2003 out of its $10 million "Technical Assistance" program. Anti-terroristfinancing training is managed by the Treasury Department.

USAID Physical Security. USAID maintains about 97 overseas facilities where much of its workforce -- bothAmericans and foreign nationals -- is located. Many missions are based in placeswhere there is a high threat of terrorist activity, and especially since the 1998embassy bombings in Kenya and Tanzania, agency officials have been concernedabout insuring adequate security. In countries where USAID is or is scheduled to beco-located with the U.S. embassy, the State Department's Foreign BuildingsOperations office had been responsible for financing USAID secure facilities. Thesefunds are appropriated in the Departments of Commerce, Justice, and Stateappropriations. Nevertheless, there have been serious construction delays forUSAID co-located facilities -- especially in Uganda -- due to competing StateDepartment building priorities and conflicting congressional directives.

In an effort to overcome these problems, USAID requested for FY2003 a new Foreign Operations account -- the Capital Investment Fund -- that would supportenhanced information technology ($13 million) and facility construction ($82million) specifically at co-located sites where security enhancements are needed. USAID planned to use the money in FY2003 for construction projects in Kenya,Guinea, Cambodia, and Georgia. With the facility in Uganda still not built, USAIDsaid it may have to divert some resources from other intended projects to Uganda ifan appropriate lease arrangement cannot be worked out in Kampala.

Security upgrades for the 64 overseas missions situated some distance from American embassies have been provided out of USAID operating expenses, aForeign Operations account that has been under funding stress in recent years due toagency relocation costs in Washington, replacement of failed financial managementsystems, and dwindling non-appropriated trust funds used to finance some in-countrycosts. As a result, security upgrades for some USAID missions have been deferreddue to funding shortfalls. For FY2003, USAID requested $7 million for securityneeds out of its operations account, a slight increase over the $6.9 million level inFY2002. The agency further used $2 million from the FY2002 emergencysupplemental ( P.L. 107-206 ; H.R. 4775 ) for establishing secure USAIDoperating facilities in Afghanistan and Pakistan.

Aid Restrictions for Terrorist States. Annual Foreign Operations spending bills routinely includegeneral provisions prohibiting U.S. assistance to countries engaged in terroristactivities or providing certain types of support to terrorist groups. Included in theFY2002 funding measure were two:

Sec. 527 prohibited bilateral U.S. assistance to any country that the President determined grants sanctuary from prosecution to any individual orgroup which has committed an act of international terrorism, or otherwise supportsinternational terrorism. The President could waive the restrictions for nationalsecurity or humanitarian reasons.

Sec. 544 prohibited any U.S. aid to a government which provided lethal military equipment to a country that the Secretary of State haddetermined is headed by a terrorist government. The President could waive therequirement if it is important to U.S. national interests.

Despite these restrictions, however, certain types of humanitarian foreign assistance may be provided "notwithstanding" other provisions of law, which would overridethe terrorism restrictions. Disaster and refugee relief, child survival and HIV/AIDSprograms, emergency food and medicine, and demining operations are among thecategories of U.S. assistance that could potentially be provided to a country thatwould otherwise be ineligible.

Congressional Action. Both House ( H.R. 5410 ) and Senate ( S. 2779 ) FY2003 ForeignOperations bills, as reported in 2002, expired with the end of the 107th Congress. Inlate January 2003, the Senate adopted a revised FY2003 Foreign Operations measureas part of H.J.Res. 2 , a continuing appropriation bill to which the Senateadded the full text of the 11 funding measures that had not been enacted for this fiscalyear. House and Senate conferees worked out a common Foreign Operationsmeasure for FY2003 in February, and after passing Congress on February 13,President Bush signed the joint resolution a week later ( P.L. 108-7 ).

The enacted FY2003 Foreign Operations measure provides sufficient funding needed by the Administration to fulfill its plan to use foreign aid in the war onterrorism. Because much of this money is not specifically earmarked in H.J.Res. 2 , there are few direct allocations for programs to combatterrorism. Nevertheless, since the accounts out of which these funds are drawn arefunded near or above the President's request, the Administration has been able tofollow much of its original request. Of the roughly $4 billion requested for FY2003in aid for the "front-line" states, the Administration has allocated $4.1 billion to these26 countries. The approximate $100 million increase is the result of a congressionalearmark for Afghanistan that is well in excess of the assumed executive proposal. For nearly all other front-line states, aid allocations are at or near levels proposed inthe FY2003 budget request. India is the most significant exception among front-linestates. The State Department reduced India's aid package from $244 million to $186million, taking most of the cut from a planned $50 million military aid program.

The approved funding bill further provides $306 million for the Non-Proliferation, Anti-Terrorism, Demining, and Related (NADR) Programsaccount, from which several terrorism-related activities are funded. After adjustingfor the prohibition on funding for North Korea out of this account, the $306 millionappropriation is $5 million more than requested. ATA, TIP, and severalnon-proliferation programs funded within the NADR account receive amountsrequested for FY2003. In addition, the Department of Treasury's terrorist financingprogram is fully funded under the enacted appropriation measure. The spendingmeasure continues both general provisions (sections 527 and 543 in the new bill)relating to prohibitions against terrorist countries.

The largest reduction in resources for terrorism-related activities comes in the Capital Investment Fund, the new USAID account that will finance security upgradesand construction of new missions. The FY2003 enacted spending bill provides $43million, the same as recommended by the House in H.R. 5410 , butsharply below the President's request ($95 million) and the Senate approved level($65 million). The conference agreement assumes $30 million for a new USAIDfacility in Kenya and authorizes up to $10 million for temporary buildings inAfghanistan. Other USAID plans for FY2003, including $13 million for informationtechnology upgrades and construction of facilities in Guinea, Cambodia, andGeorgia, may be pared back significantly due to funding shortfalls.

Development Aid Policy Priorities

A continuing source of disagreement between the executive branch and Congress is how to allocate the roughly $3 billion "core" budget for USAIDdevelopment assistance programs. Among the top congressional development aidfunding priorities in recent years have been programs supporting child survival, basiceducation, and efforts to combat HIV/AIDS and other infectious diseases. TheAdministration also backed these programs, but officials object to congressionalefforts to increase funding for children and health activities at the expense of otherdevelopment sectors. When Congress has increased appropriations for its priorities, but not included a corresponding boost in the overall development aid budget,resources for other priorities, such as economic growth and the environment, havebeen substantially reduced.

In 2001, the Bush Administration set out revised USAID core goals for sustainable development programs focused around three "spheres of emphasis" or"strategic pillars" that include Global Health, Economic Growth and Agriculture, andConflict Prevention and Developmental Relief. The Administration furtherintroduced a new initiative -- the Global Development Alliance (GDA) -- in aneffort to expand public/private partnerships in development program implementation. Under the initiative, USAID would identify good development opportunities beingconducted by private foundations, non-governmental organizations, universities, andfor-profit organizations, and provide parallel financing to leverage resources alreadycommitted to these activities. USAID officials envision that the agency will becomemuch more of a coordinating and integrating institution to expand and enhancedevelopment efforts of these non-governmental development partners. AlthoughUSAID requested $160 million in FY2002 to finance GDA projects, only $20 millionwas set aside. A budget of $30 million was proposed for FY2003.

For FY2003, USAID sought $2.96 billion for development aid (including $120 million for UNICEF and the September 3, 2002, budget amendment), an increase ofabout $350 million, or 13% above FY2002 levels. (11) However, about $100 millionof the increase represented a decision to transfer the funding source for a fewcountries from the Economic Support Fund account in FY2002 to the DevelopmentAssistance account in FY2003. After adjusting for this, the USAID proposal wasroughly 9% more than FY2002.

USAID proposed increases for each of its three "strategic pillars," with specific emphasis in several areas:

agriculture programs would increase by 30% to $261 million.

environmental activities would grow by 11% to $308 million. By contrast, USAID proposed $225 million for the environment for FY2002, a levelthat Congress raised to about $279 million.

business, trade, and investment funding would rise by 25% to$317 million.

basic education, a high congressional priority, would increaseby 10% to $165 million.

HIV/AIDS funding would rise by nearly one-half to $740million, including $100 million for the Global Fund to Combat HIV/AIDS, Malaria,and Tuberculosis and $100 million for the International Mother and Child HIVPrevention Initiative. (12)

democracy aid would rise by 68% to $200 million, althoughmuch of this increase came from shifting recipients that had previously receivedsimilar types of aid from the Economic Support Fund (ESF) account to thedevelopment aid account.

USAID also asked Congress to appropriate all development aid in a single Development Assistance account. Congress created a second account -- the ChildSurvival and Health Programs Fund -- in FY1997 in order to highlight theimportance of aid activities aimed at promoting the health and well being of children,mothers, and other vulnerable elements of society and to specifically appropriatefunds for these purposes. The Administration argued that a successful developmentstrategy required an integrative approach for which resources could be flexibly drawnupon to meet the changing, complex and interwoven nature of development goals. Congressional proponents of a separate Child Survival/Health account, however,continued to argue that special attention needs to be drawn to child and maternalhealth programs, and said they would challenge the elimination of this seconddevelopment aid account.

The proposed FY2003 budgets for various global health activities encountered close congressional scrutiny. USAID requested $1.59 billion for child survival andhealth programs (including $120 million for UNICEF and the September 3 budgetamendment) within the Development Assistance account, about $155 million higherthan FY2002 amounts. After adding smaller health-related funds from other ForeignOperations accounts, the total amount for child survival and health projectsthroughout the entire funding measure was $1.77 billion, an increase of $115 million,or 7%. As noted above, with a large increase proposed for HIV/AIDS programs(+45%), funding for nearly all other global health activities would have declined inFY2003 under the agency's budget plan. As illustrated in Table 7 , resources forChild Survival and Maternal Health would have fallen from $383 million in FY2002to $344 million in FY2003; amounts for Vulnerable Children would drop from $32million to $20 million; levels for malaria would decline from $60 million to $42.5million and for tuberculosis, from $70 million to $52.5 million.

USAID maintained that resource limitations required the United States to concentrate funds on the most severe health needs in the developing world, which itviewed as fighting the HIV/AIDS epidemic. Some congressional critics of theAdministration's decision to increase HIV/AIDS and de-emphasize other healthprograms said they would work to fully fund or exceed the HIV/AIDS proposal whilealso restoring funds for areas set for reductions in FY2003. (For more informationon this issue, see CRS Report RL31433 , U.S. Global Health Priorities: USAIDFY2003 Budget Request .)

Table 7. Funding for USAID Global Health Programs (estimates across all Foreign Operations accounts --in millions of dollars)

Note: Amounts shown in this table for House, Senate, and enacted levels concerning Child Survival and Maternal Health, Vulnerable Children, and Other InfectiousDiseases, are estimates based on House and Senate report directives and CRSestimates. It is likely that House, Senate, and enacted Global Health totals will beslightly higher than the figures shown here after USAID releases final allocations.

a House, Senate, and conference bills did not set a level for Child Survival and Maternal Health across all accounts in the bill. The bills, however, specifiedamounts that should be allocated for this purpose from the Child Survival andHealth (CS/H) account, as shown here. These levels compare to theAdministration's request of $282 million for Child Survival and MaternalHealth out of the CS/H account.

b House, Senate, and conference bills did not set a level for Vulnerable Children across all accounts in the bill. The bills, however, specified amounts that shouldbe allocated for this purpose from the Child Survival and Health (CS/H)account, as shown here. These levels compare to the Administration's requestfor $13 million for Vulnerable Children out of the CS/H account.

c House/Senate conferees set HIV/AIDS funding at $800 million, assuming that 67% of the $250 million for the Global Fund to Fight HIV/AIDS, Malaria, andTuberculosis (Global ATM Fund) would be allocated for HIV/AIDS activities. For consistency with amounts listed for FY2002 and earlier actions for FY2003,the entire $250 million for the Global ATM Fund is included in this total forHIV/AIDS.

d Contributions to the Global ATM Fund benefits HIV/AIDS, malaria, and tuberculosis programs. In total, the United States contributed $200 million tothe Global Fund in FY2002 and the President pledged a $200 million transferin FY2003. The balances to reach these totals that are not shown here areincluded in the Labor/HHS/Education Appropriations bill. In addition toHouse, Senate, and enacted amounts for the Global Fund shown here, there is$100 million provided in the FY2003 Labor/HHS/Education Appropriationsmeasure. The total U.S. Global ATM Fund contribution is $350 million.

e An additional $100 million for the International Mother and Child HIV Prevention Initiative is provided in the FY2003 Labor/HHS/ Education appropriation.

f House/Senate conferees attributed 17% and 16% of the Global ATM Fund contribution to total tuberculosis and malaria funding levels included in theenacted FY2003 Foreign Operations. For consistency with FY2002 and earlierFY2003 actions, the enacted amount shown here does not include theseassumed allocations from the Global Fund. If the conference committeeassumptions are included, the total amount for tuberculosis is $120 million andthe total for malaria is $115 million.

Congressional Action. Both House ( H.R. 5410 ) and Senate ( S. 2779 ) FY2003 ForeignOperations bills, as reported in 2002, expired with the end of the 107th Congress. Inlate January 2003, the Senate adopted a revised FY2003 Foreign Operations measureas part of H.J.Res. 2 , a continuing appropriation bill to which the Senateadded the full text of the 11 funding measures that had not been enacted for this fiscalyear. House and Senate conferees worked out a common Foreign Operationsmeasure for FY2003 in February, and after passing Congress on February 13,President Bush signed the joint resolution a week later ( P.L. 108-7 ).

As enacted, the FY2003 Foreign Operations provides roughly $2 billion for global health programs across all accounts, about $210 million, or 12% more thanrequested. The $2 billion total is approximately mid-way between amountsrecommended by the Senate ($2.1 billion) and the House ($1.9 billion). Congressboosts funding for international HIV/AIDS programs to $880 million, 19% above therequest and 73% higher than FY2002. (13)

The enacted legislation further restores funding for other health activities that had been slated for reductions under the President's budget proposal. As shown inTable 7, earmarks for a number of activities -- polio, micronutrients, microbicides,malaria, tuberculosis, and reproductive health -- are set at or above FY2002 levelsand well above the executive's request. Details of how funding for these programscompare with earlier House and Senate recommendations are also shown in Table 7.

Family Planning, Abortion Restrictions, and UNFPA Funding

U.S. population assistance and family planning programs overseas have sparked perhaps the most consistent controversy during Foreign Operations debates for nearlytwo decades. The primary issues addressed in nearly every annual congressionalconsideration of Foreign Operations bills focus on two matters: whetherabortion-related restrictions should be applied to bilateral USAID population aidgrants and whether the United States should contribute to the U.N. Population Fund(UNFPA) if the organization maintains a program in China where allegations ofcoercive family planning have been widespread for many years.

UNFPA Funding. The most contentious issue usually concerns the abortion restriction question, but recentattention has been focused on UNFPA and a White House decision in July 2002 toblock the $34 million U.S. contribution to the organization. During the Reagan andBush Administrations, the United States did not contribute to UNFPA because ofconcerns over practices of forced abortions and involuntary sterilizations in Chinawhere UNFPA maintains programs. In 1985, Congress passed the so-calledKemp-Kasten amendment which has been made part of every Foreign Operationsappropriation since, barring U.S. funds to any organization that supported orparticipated "in the management" of a program of coercive abortion or involuntarysterilization. In 1993, President Clinton determined that UNFPA, despite itspresence in China, was not involved in the management of a coercive program. Inmost years since 1993, Congress has appropriated about $25 million for UNFPA, butadded a directive that required that amount reduced by however much UNFPA spentin China. Consequently, the U.S. contribution has fluctuated between $21.5 millionand $25 million.

For FY2002, President Bush requested $25 million for UNFPA. As part of a larger package concerning various international family planning issues, Congressprovided in the FY2002 Foreign Operations bill "not more than" $34 million forUNFPA. While members of the Appropriations Committees say it was their intentto provide the full $34 million, the language allowed the President to allocatehowever much he chose, up to a $34 million ceiling. According to February 27testimony by Arthur Dewey, Assistant Secretary of State for Population, Refugees,and Migration before the Senate Foreign Relations Committee, the White Houseplaced a hold on UNFPA funds in January because of new evidence that coercivepractices continue in Chinese counties where UNFPA concentrates its programs. ASeptember 2001 investigation team, sponsored by the Population Research Institute,concluded that a consistent pattern of coercion continues in "model" UNFPAcounties, including forced abortions and involuntary sterilizations. Refuting thesefindings, a UNFPA-commissioned review team found in October 2001 "absolutelyno evidence that the UN Population Fund supports coercive family planning practicesin China or violates the human rights of Chinese people in any way." (14)

While most observers agree that coercive family planning practices continue in China, differences remain over the extent to which, if any, UNFPA is involved ininvoluntary activities and whether UNFPA should operate at all in a country wheresuch conditions exist. Given the conflicting reports, the State Department sent itsown investigative team to China for a two-week review of UNFPA programs on May13, 2002. The team, which was led by former Ambassador William Brown, andincluded Bonnie Glick, a former State Department official, and Dr. Theodore Tong,a public health professor at the University of Arizona, made three findings andrecommendations in its report dated May 31:

Findings:

There is no evidence that UNFPA knowingly supported orparticipated in the management of a program of coercive abortion or involuntarysterilization in China;

China maintains coercive elements in its populationprograms;

Chinese leaders view "population control as a high priority"and remain concerned over implications for socioeconomicchange.

Recommendations:

The United States should release not more than $34 millionof previously appropriated funds to UNFPA;

Until China ends all forms of coercion in law and practice, noU.S. Government funds should be allocated to population programs inChina;

Appropriate resources, possibly from the United States, shouldbe allocated to monitor and evaluate Chinese population controlprograms.

Despite the team's recommendation to release the $34 million, Secretary of State Powell determined on July 22 to withhold funds to UNFPA and to recommendthat they be re-directed to other international family planning and reproductive healthactivities. (The authority to make this decision has been delegated by the Presidentto the Secretary of State.) The State Department's analysis of the Secretary'sdetermination found that even though UNFPA did not "knowingly" support orparticipate in a coercive practice, that alone would not preclude the application ofKemp-Kasten. Instead, a finding that the recipient of U.S. funds -- in this caseUNFPA -- simply supports or participates in such a program, whether knowingly orunknowingly, would trigger the restriction. The team found that the Chinesegovernment imposes fines and penalties on families that have children exceeding thenumber approved by the government, a practice that in some cases coerces womento have abortions they would not otherwise undergo. The State Department analysisconcluded that UNFPA's involvement in China's family planning program "allowsthe Chinese government to implement more effectively its program of coerciveabortion." (15)

Critics of the Administration's decision oppose it not only because of the negative impact it may have on access to voluntary family planning programs bypersons in around 140 countries where UNFPA operates, but also because of thepossible application of the determination for other international organizations thatoperate in China and to which the U.S. contributes.

For FY2003, the President proposed no funding for UNFPA, although $25 million was requested in "reserve" for the account from which UNFPA receives itsfunding. Presumably, this could be made available to UNFPA if it is found not to bein violation of Kemp-Kasten.

"Mexico City" Policy. The debate over international family planning policy and abortion began nearly three decadesago, in 1973, when Congress added a provision to the Foreign Assistance Act of1961 prohibiting the use of U.S. appropriated funds for abortion-related activitiesand coercive family planning programs. During the mid-1980s, in what has becomeknown as the "Mexico City" policy (because it was first announced at the 1984Mexico City Population Conference), the Reagan Administration, and later theGeorge H. W. Bush Administration restricted funds for foreign non-governmentalorganizations (NGOs) that were involved in performing or promoting abortions incountries where they worked, even if such activities were undertaken with non-U.S.funds . Several groups, including International Planned ParenthoodFederation-London (IPPF-London), became ineligible for U.S. financial support. Insome years, Congress narrowly approved measures to overturn this prohibition, butWhite House vetoes kept the policy in place. President Clinton in 1993 reversed theposition of his two predecessors, allowing the United States to resume funding forall family planning organizations so long as no U.S. money was used by thoseinvolved in abortion-related work.

During the past six years, the House and Senate have taken opposing positions on the Mexico City issue, and thus have repeatedly held up enactment of the finalForeign Operations spending measure. The House position, articulated byRepresentative Chris Smith (N.J.) and others, supported reinstatement of the MexicoCity policy restricting U.S. aid funds to foreign organizations involved in performingabortions or in lobbying to change abortion laws or policies in foreign countries. TheSenate, on the other hand, has rejected in most cases House provisions dealing withMexico City policy, favoring a position that leaves these decisions in the hands of theAdministration.

Unable to reach an agreement satisfactory to both sides, Congress adopted interim arrangements for FY1996-FY1999 that did not resolve the broad populationprogram controversy, but permitted the stalled Foreign Operations measure to moveforward. The annual "compromise" removed House-added Mexico City restrictions,but reduced population assistance to $385 million, and in several years, "metered"the availability of the funds at a rate of one-twelfth of the $385 million per month.

In FY2000, when the issue became linked with the un-related foreign policy matter of paying U.S. arrears owed to the United Nations, a reluctant PresidentClinton agreed to a modified version of abortion restrictions, marking the first timethat Mexico City conditions had been included in legislation signed by the President (enacted in the Foreign Operations Act for FY2000, H.R. 3422 ,incorporated into H.R. 3194 , the Consolidated Appropriations Act forFY2000, P.L. 106-113 ). Because the President could waive the restrictions for $15million in grants to organizations that refused to certify, there was no major impacton USAID family planning programs in FY2000, other than the reduction of $12.5million in population assistance that the legislation required if the White Houseexercised the waiver authority.

When Congress again came to an impasse in FY2001, lawmakers agreed to allow the new President to set policy. Under the FY2001 Foreign Operationsmeasure, none of the $425 million appropriation could be obligated until afterFebruary 15, 2001. Subsequently, on January 22, 2001, two days after taking office,President Bush issued a Memorandum to the USAID Administrator rescinding the1993 memorandum from President Clinton and directing the Administrator to"reinstate in full all of the requirements of the Mexico City Policy in effect onJanuary 19, 1993." The President further said that it was his "conviction thattaxpayer funds should not be used to pay for abortions or to advocate or activelypromote abortion, either here or abroad." (16) Aseparate statement from the President'spress secretary stated that President Bush was "committed to maintaining the $425million funding level" for population assistance "because he knows that one of thebest ways to prevent abortion is by providing quality voluntary family planningservices." The press secretary further emphasized that it was the intent that anyrestrictions "do not limit organizations from treating injuries or illnesses caused bylegal or illegal abortions, for example, post abortion care." (17) On February 15, 2001,the day on which FY2001 population aid funds became available for obligation,USAID issued specific policy language and contract clauses to implement thePresident's directive. The guidelines are nearly identical to those used in the 1980sand early 1990s when the Mexico City policy applied. (18) For FY2003, President Bushseeks $425 million for USAID population assistance, the same as requested forFY2002, but less than the $446.5 million appropriated for FY2002.

Critics of the certification requirement oppose it on several grounds. They believe that family planning organizations may cut back on services because they areunsure of the full implications of the restrictions and do not want to risk losingeligibility for USAID funding. This, they contend, will lead to higher numbers ofunwanted pregnancies and possibly more abortions. Opponents also believe the newconditions undermine relations between the U.S. Government and foreign NGOs andmultilateral groups, creating a situation in which the United States challenges theirdecisions on how to spend their own money. They further argue that U.S. policyimposes a so-called "gag" order on the ability of NGOs and multilateral groups topromote changes to abortion laws and regulations in developing nations. This wouldbe unconstitutional if applied to American groups working in the United States,critics note.

Supporters of the certification requirement argue that even though permanent law bans USAID funds from being used to perform or promote abortions, money isfungible; organizations receiving American-taxpayer funding can simply use USAIDresources for permitted activities while diverting money raised from other sources toperform abortions or lobby to change abortion laws and regulations. The certificationprocess, they contend, stops the fungibility "loophole."

Congressional Action. Both House ( H.R. 5410 ) and Senate ( S. 2779 ) FY2003 ForeignOperations bills, as reported in 2002, expired with the end of the 107th Congress. Inlate January 2003, the Senate adopted a revised FY2003 Foreign Operations measureas part of H.J.Res. 2 , a continuing appropriation bill to which the Senateadded the full text of the 11 funding measures that had not been enacted for this fiscalyear. House and Senate conferees worked out a common Foreign Operationsmeasure for FY2003 in February, and after passing Congress on February 13,President Bush signed the joint resolution a week later ( P.L. 108-7 ).

As enacted the FY2003 Foreign Operations measure provides $446.5 million for bilateral family planning activities, compared with $425 million recommendedby the House in H.R. 5410 and $435 million passed by the Senate. Conferees agreed to allocate $34 million to UNFPA, the same as in FY2002, butsubject to several conditions, including a requirement that the President certify thatthe organization is no longer involved in the management of a coercive familyplanning program. Last year, the Administration declared UNFPA ineligible for U.S.support because of its program in China where the Secretary of State determinedUNFPA was involved in a coercive program.

Previously, the Senate had made several significant changes to what the Senate Appropriations Committee had recommended last year regarding international familyplanning funding and policy issues. H.J.Res. 2 , as passed by the Senate,provided $435 million for population assistance, $15 million less than what wasproposed by the Senate panel in July 2002. The legislation also did not includelanguage in S. 2779 that would have effectively reversed the MexicoCity policy. During Senate debate on H.J.Res. 2 , lawmakers adopted anamendment by Senator Leahy increasing population aid from $425 million to $435million and earmarking $35 million for the UNFPA. Funds could be provided toUNFPA, however, only if the President determined that the organization no longersupported or participated in the management of a program of coercive abortion orinvoluntary sterilization. The Leahy amendment altered the determinationrequirement shifting the responsibility from the Secretary of State to the President. The Senate legislation did not include the change to Kemp-Kasten language proposedby the Committee in July 2002 that would have narrowed the circumstances underwhich the restriction could be imposed.

The 2002 House-reported measure ( H.R. 5410 ) that expired last year provided $425 million for bilateral family planning aid and a "hard" earmark of$25 million for UNFPA. The House bill further conditioned the UNFPAcontribution, including a restriction that UNFPA provides no funding for the StatePlanned-Birth Commission or its regional affiliates in China, and required the U.S.to reduce its grant to UNFPA by whatever amount the organization spends in China. The legislation did not address the Mexico City policy.

Previously, Congress debated the UNFPA issue prior to the Administration's July 22, 2002, decision to terminate support. During consideration of the FY2002Emergency Supplemental ( H.R. 4775 ) on May 9, 2002, the HouseAppropriations Committee approved (32-31) an amendment by RepresentativesLowey and Kolbe that would have required the President to transfer $34 million toUNFPA by July 10 if the State Department commission concluded that UNFPA wasnot involved in coercive family planning practices in China. Meeting on May 15,however, the Committee added an additional provision offered by RepresentativeTiahrt and supported by the White House, requiring the President to determine byJuly 31, 2002, whether UNFPA participated in the management of coercive familyplanning practices. Before final passage, however, pursuant to H.Res. 431 , the second rule for consideration of H.R. 4775 , both theLowey/Kolbe and the Tiahrt amendments were deleted from the bill.

The Senate-passed Supplemental Appropriation included a provision nearly identical to the Lowey/Kolbe text. Under any of these amendments a finding thatUNFPA was in violation of Kemp-Kasten would result in the termination of U.S.support. Without such a conclusion, however, the Senate and Lowey/Kolbeamendments would have required the full $34 million contribution to go forward. The Tiahrt amendment would have left open the possibility for the President toallocate something less than $34 million for UNFPA. As enacted, however, H.R. 4775 dropped all references to UNFPA, leaving the decision up tothe President.

Andean Regional Initiative (19)

The Andean Regional Initiative (ARI) was launched in April 2001, when the Bush Administration requested $882.29 million in FY2002 economic andcounternarcotics assistance, as well as an extension of trade preferences and othermeasures, for Colombia and six regional neighbors (Peru, Bolivia, Ecuador, Brazil,Panama, and Venezuela). Of this amount, $731 million was designated asInternational Narcotics Control (INC) assistance in a line item in the budget requestknown as the Andean Counterdrug Initiative (ACI). A central element of the programhas been the training and equipping of counternarcotics battalions in Colombia.

According to the Administration, the distinctive features of the program, compared to Plan Colombia assistance approved in 2000, (20) are that a larger portionof the assistance is directed at economic and social programs, and that more than halfof the assistance is directed at regional countries experiencing the spill-over effectsof illicit drug and insurgency activities. Another aspect of the initiative wasPresident Bush's request for the extension and broadening of the Andean TradePreferences Act (ATPA) expiring in December 2001, that would give duty free orreduced-rate treatment to the products of Bolivia, Peru, Ecuador and Colombia. Thiswas a central topic when President Bush met with Andean leaders at the Summit ofthe Americas meeting in Canada in April 2001.

In a mid-May 2001 briefing on the Andean Regional Initiative, Administration spokesmen set out three overarching goals for the region that could be called thethree D's -- democracy, development, and drugs. The first goal was to promotedemocracy and democratic institutions by supporting judicial reform, anti-corruptionmeasures, human rights improvement, and the peace process in Colombia. Thesecond was to foster sustainable economic development and trade liberalizationthrough alternative economic development, environmental protection, and renewalof the Andean Trade Preference Act (ATPA). The third was to significantly reducethe supply of illegal drugs to the United States from the source through eradication,interdiction and other efforts. (21)

During consideration by the Congress in 2001,critics of the initiative argued that it overemphasized military and counter-drugassistance, and provided inadequate support for human rights and the peace processin Colombia. Supporters argued that it continued needed assistance to Colombia,while providing more support for regional neighbors and social and economicprograms.

By the end of 2001, Congress approved, in the Foreign OperationsAppropriations Act ( H.R. 2506 / P.L. 107-115 ), $625 million for the ACI,$106 million less than the President's ACI request. Also included were a series ofconditions and certification requirements relating to human rights and to thecontroversial aerial eradication spraying (also known as aerial fumigation) programto destroy illicit coca crops, and an alteration of the cap on military and civiliancontractors serving in Colombia.

For FY2003, President Bush requested about $980 million for the ARI, including $731 million in counternarcotics assistance under the ACI, with some ACIfunds being used for social and economic programs ($291 million). (See table 8below.) Over half -- $537 million -- was targeted on Colombia, with othersignificant amounts proposed for Bolivia and Peru. The FY2003 request was similarto the FY2002 request, except that the Administration proposed $98 million inForeign Military Financing (FMF) for Colombia to train and equip a Colombian armybrigade to protect the Cano-Limon oil pipeline in northeastern Colombia. Therequest marked a sharp break with previous policy towards Colombia, as it was thefirst request for military assistance provided specifically for a purpose other thancounternarcotics operations. The Administration also requested $1 million each forBolivia, Ecuador, Panama, and Peru in FY2003 FMF funding.

Table 8. Andean RegionalInitiative ($s millions)

a ACI amounts do not differentiate between interdiction and alternative development.

Proponents of the Administration's request argued in the context of the post-September 2001 war on terrorism that Colombia and the region should besupported, and they urged the Administration to seek expanded authority to providesupport for an expansion of activities. (22)

On March 6, 2002, the House passed H.Res. 358 expressing the sense of the House of Representatives that"the President, without undue delay, should transmit to Congress for its considerationproposed legislation, consistent with United States law regarding the protection ofhuman rights, to assist the Government of Colombia protect its democracy fromUnited States-designated foreign terrorist organizations and the scourge of illicitnarcotics." Two weeks later, as part of the Administration's FY2002 supplementalappropriation request, the executive branch specifically requested broader authorityfor the Departments of State and Defense in supporting Colombia's bothcounternarcotics and counterterrorism activities. This issue became a major focusof congressional debate on both the FY2002 supplemental and the FY2003 regularappropriation request. (For a full discussion of this particular issue, see above underthe FY2002 supplemental overview.)

Critics argued that the new request would expand the U.S. military role in Colombia, at the time strictly limited to counternarcotics, into a problematiccounterinsurgency one. Critics who emphasize human rights considerations arguedthat such a role would inevitably involve tolerance of the linkages between theColombian military and paramilitary groups which are responsible for grossviolations of human rights. (A particular concern was the lifting of human rightsconditions concerning paramilitary groups in the FY2002 supplemental request, seebelow.) Others, who believe U.S. military power should not be committed unless itcan be effective, warned that the proposed assistance fell far short of that required tohave any significant effect on the situation in Colombia. Many also worried that theUnited States was slowly being drawn into a Vietnam-like morass, providingassistance to a government that did not have the credibility and political will to payfor and successfully wage its own war, and conclude a just peace.

In addition to the request for FY2003, on March 21, 2002, the Bush Administration requested $27.1 billion in Emergency FY2002 SupplementalAssistance, which was mostly to support Department of Defense and HomelandSecurity counter-terrorism efforts, but would also provide $38 million in additionalfunding and authorities relating to Colombia and the Andean Region. Included inthis submission was a request for $4 million of International Narcotics Control (INC)funding for Colombia police post support, $6 million of FMF funding for Colombiafor infrastructure security and $3 million for Ecuador for counter-terrorismequipment and training, and $25 million of Nonproliferation, Anti-Terrorism andDemining funding for a counter-kidnaping program for members of Colombia'spolice and armed forces. As noted above, the supplemental submission proposed tobroaden the authorities of the Defense and State Departments to utilize FY2002 andFY2003 assistance and unexpended Plan Colombia assistance to support theColombian government's "unified campaign against narcotics trafficking, terroristactivities, and other threats to its national security." According to theAdministration's explanation, these provisions "would allow broader authority toprovide assistance to Colombia to counter the unified 'cross-cutting' threat posed bygroups that use narcotics trafficking to fund their terrorist and other activities thatthreaten the national security of Colombia."

Such a change would allow the Administration to expand the scope of U.S. assistance, particularly military assistance, to Colombia, allowing State and Defensedepartment funds to assist the Colombian government to counter any threat to itsnational security. The immediate, and widely discussed, effect of this change wouldbe to allow the U.S. government to broaden the circumstances under which itcurrently shares intelligence with Colombian security forces, providing intelligencenot only for counterdrug operations, but also for military operations against theColombian guerrillas and paramilitaries. The change would also permit the PlanColombia helicopters and other equipment that the United States has provided to beused for such purposes.

The Administration's proposal would continue the "Leahy Amendment" -- a provision in the foreign operations and defense appropriations legislation forbiddingassistance to military and police units credibly alleged to engage in gross violationsof human rights -- as well as the current caps of 400 each on the number of U.S.civilian contractors and U.S. military personnel supporting "Plan Colombia"activities in Colombia. (The new proposed military activities, i.e., infrastructureprotection and anti-kidnaping assistance, are not, however, "Plan Colombia"activities.) Except for those two specifically mentioned conditions, however, theAdministration's proposal stated that funding would be provided "notwithstandingany provision of law." That statement would lift conditions like those of Section 567of P.L. 107-115 , the FY2002 Foreign Operations Appropriations Act, which hasstiffer provisions regarding human rights violations by security forces, and alsorequires the armed forces to address the continuing links of some of its members withillegal rightist paramilitary groups. It would also lift P.L. 107-115 conditionsregarding aerial fumigation spraying and alternative development.

Congressional Action. Both House ( H.R. 5410 ) and Senate ( S. 2779 ) FY2003 ForeignOperations bills, as reported in 2002, expired with the end of the 107th Congress. Inlate January 2003, the Senate adopted a revised FY2003 Foreign Operations measureas part of H.J.Res. 2 , a continuing appropriation bill to which the Senateadded the full text of the 11 funding measures that had not been enacted for this fiscalyear. House and Senate conferees worked out a common Foreign Operationsmeasure for FY2003 in February, and after passing Congress on February 13,President Bush signed the joint resolution a week later ( P.L. 108-7 ).

As enacted, the Foreign Operations appropriation for FY2003 provides $933 million for the Andean Regional Initiative, with $700 million of that total allocateddirectly for the Andean Counternarcotics Initiative. The ACI funding level is $31million below the President's request, although the conference agreement allows theAdministration to transfer $31 million from regular narcotics programs for the ACI. As shown in Table 8 above, Colombia receives about $11 million less than proposed,although Administration allocations increased the level of interdiction funding andcut amounts for alternative development. Conferees further permit up to $93 millionof military aid for the security of the Cano-Limon oil pipeline, $5 million less thanrequested but higher than the $88 million recommended by the Senate.

The enacted legislation bill specifies that not less than $250 million of the ACI account is to be apportioned directly to USAID for social and economic programs,$25 million higher than proposed by the Senate. It also adds earmarks similar tothose recommended in the Senate-passed bill: (1) not less than $5 million for trainingand equipping a Colombian Armed Forces unit dedicated to apprehending the leadersof paramilitary organizations; (2) not less than $3.5 million for assistance to theColombian National Park Service for training, equipment, and other assistance toprotect Colombia's national parks and reserves, which according to the report arethreatened by illegal drug cultivation and illegal logging; (3) not less than $3 millionfor web monitoring software for use by the Colombian National Police; and (4) notless than $1.5 million for vehicles, equipment, and other assistance for the humanrights unit of the Procurador General.

On policy issues and aid conditions, the enacted measure specifies, as requested, that FY2003 funds are available in Colombia for a unified campaign against narcoticstrafficking, against terrorist organizations such as the FARC, ELN, and AUC, and toprotect the health and welfare in emergency circumstances. Conferees included thisbroadened authority in recognition that "the narcotics industry is linked to theterrorist groups, including the paramilitary organizations, in Colombia," althoughthey expressed their expectation that counternarcotics, development, and judicialreform would remain the main emphasis of U.S. policy in Colombia. The conferenceagreement, however, would remove this expanded authority if the Secretary of Statehas evidence that the Colombian military is not attempting to restore governmentauthority and human rights in areas under the control of paramilitary and guerillaorganizations.

The enacted appropriation (section 564) further allows for the distribution of only 75% of the funds for Colombia's military, after which the Secretary of Statemust certify that Colombian members of the armed forces alleged to have committedhuman rights violations are being suspended, prosecuted, and punished, and that theColombian military is severing ties with and apprehending leaders of paramilitaryorganizations. Such a certification by the Secretary would release 12.5% ofassistance to the Colombian military. The remaining 12.5% would be available afterJuly 31, 2003, if the Secretary certifies that Colombian military is continuing to meetits obligations required in the first certification and trying to gain authority andprotect human rights in areas under control of paramilitary and guerilla organizations. These certification requirements are similar to provisions contained in both Houseand Senate bills, although the House measure ( H.R. 5410 ) would haverequired only a single certification to release all funds.

Other Colombian aid conditions provided in the enacted appropriation include: the continuation, as proposed in both House and Senate bills, of the cap of 400 on thenumber of U.S. civilian contractors and on the number of U.S. military personnel thatcan be funded during FY2003; requirement for the return of any helicopter procuredwith funding from this bill if it is used to aid or abet the operations of any illegalself-defense groups or illegal security cooperatives; and the requirement, similar tothe Senate-passed joint resolution, that the Secretary of State and the EPAAdministrator submit a report on the usage and safety of chemicals used in the aerialcoca fumigation program in Colombia before FY2003 funds can be used to purchasethose chemicals. A new requirement for FY2003 is the completion of anenvironmental impact statement.

Regarding other conditions, the enacted bill, as proposed by the House, prohibits the use of funds to support a Peruvian air interdiction program unless the Secretaryof State and Director of Central Intelligence certify to Congress, 30 days before theresumption of U.S. involvement in such a program, that effective safeguards andprocedures are in place to prevent a shoot down similar to that of April 20, 2001, inPeru.

Earlier, in the FY2002 supplemental ( P.L. 107-206 ; H.R. 4775 ), Congress endorsed the unified campaign policy proposed by the Administration,thereby allowing funds to be used both for counter-narcotics and to fight terrorism.

Millennium Challenge Account

In a speech on March 14, 2002, at the Inter-American Development Bank, President Bush outlined a proposal for the United States to increase foreign economicassistance beginning in FY2004 so that by FY2006 American aid would be $5 billionhigher than three years earlier. If the aid budget rises in three equal installments of$1.67 billion each year, the initiative could provide as much as a cumulative $10billion in additional economic assistance above what might be assumed for the threeyear period without the President's initiative. The funds would be placed in a newMillennium Challenge Account (MCA) and be available to developing nations thatare pursing political and economic reforms in three areas:

Ruling justly -- promoting good governance, fighting corruption, respecting human rights, and adhering to the rule oflaw.

Investing in people -- providing adequate health care,education, and other opportunities promoting an educated and healthypopulation.

Fostering enterprise and entrepreneurship -- promoting openmarkets and sustainable budgets.

If fully implemented, the initiative would represent one of the largest increases in foreign aid spending in half a century, outpaced only by the Marshall Plan followingWorld War II and the Latin America-focused Alliance for Progress in the early1960s.

The concept is based on the premise that economic development succeeds best where it is linked to free market economic and democratic principals and policies. Conditioning assistance on policy performance and accountability by recipientnations is not new to U.S. aid programs. Since the late 1980s at least, portions ofAmerican development assistance have been allocated to some degree on aperformance-based system. What is different about the MCA is the size of thecommitment; the competitive process that will reward countries for what they havealready achieved not just what is promised for the future; the pledge to segregate thefunds from U.S. strategic foreign policy objectives that often strongly influencewhere U.S. aid is spent; and to solicit program proposals developed solely byqualifying countries.

Assuming that Congress fully funds the President's aid request for next year and that FY2003 will be the baseline from which to compare growth in foreign aidspending during implementation of the MCA, a $5 billion dollar increase by FY2006would result in a $17.2 billion foreign aid budget. In real terms (constant FY2003dollars), taking into the account the estimated effects of inflation, U.S. economicassistance in FY2006 would be $16.14 billion, the highest amount since FY1979 andthe signing of the Camp David Middle East peace accords and FY1985, an unusualyear in which the United States responded to special Middle East economicstabilization and African famine requirements. But using FY2003 as a baselinerather than FY2000, the percentage of increase, especially in real terms (countinginflation), between FY2003 and FY2006 will be less than the 50% figure used bysome Administration officials. The nominal increase would be about 41% while inreal terms, FY2006 funding would be nearly 32% more. Because of the size of theU.S. economy and continued growth projected over the next several years, the MCAincreases will have little impact on the amount of U.S. aid as a percent of GDP. According to current projections, assistance would rise from the current 0.11% ofGDP to 0.13%.

During the first year of the MCA, participants will be limited to the 74 poorest nations that are eligible to borrow from the World Bank's International DevelopmentAssociation and have per capita incomes below $1,435. The list will expand toinclude all lower-middle income countries by FY2006 with per capita incomes below$2,975. Participants will be selected largely based on 16 performance indicatorsrelated to the three categories of good governance, economic freedom, and investingin people. Countries that score above the median on half of the indicators in each ofthe three areas will qualify. Emphasizing the importance of fighting corruption,however, should a country fall below the median on the corruption indicator (basedon the World Bank Institute's Control of Corruption measure), it will beautomatically disqualified from consideration.

To manage the MCA, the Administration will propose the creation of a Millennium Challenge Corporation (MCC), a new independent government entityseparate from the Departments of State and Treasury and from the U.S. Agency forInternational Development (USAID). The White House envisions a staff of about100, drawn from various government agencies and non-governmental organizations,led by a CEO confirmed by the Senate. A review board, chaired by the Secretary ofState and composed of other cabinet officials, will oversee operations of the MCC.

Congressional Action

Despite some discussion to launch an MCA "pilot" project in FY2003 instead of waiting until FY2004, it appears that such a plan has been deferred. The enactedForeign Operations for FY2003 includes no MCA funding and earlier versions ofHouse and Senate bills provided nothing for a pilot program this year. TheAdministration, however, submitted authorizing legislation and a $1.3 billionFY2004 budget request.

For Additional Reading

General/Overview

CRS Report 98-916 . Foreign Aid: An Introductory Overview of U.S. Programs and Policy.

CRS Report 97-62(pdf) . The Marshall Plan: Design, Accomplishments, and Relevance to the Present.

CRS Report RL31687 . The Millennium Challenge Account: Congressional Consideration of a New Foreign Aid Initiative.

Foreign Operations Programs

CRS Report RS20329(pdf) . African Development Bank and Fund.

CRS Issue Brief IB10050. AIDS in Africa.

CRS Issue Brief IB88093. Drug Control: International Policy.

CRS Report 98-568 . Export-Import Bank: Background and Legislative Issues.

CRS Report RS21181. HIV/AIDS international programs: FY2003 request and FY2002 spending.

CRS Report RS20622. International Disasters: How the United States Responds.

CRS Report RL30830 . International Family Planning: The "Mexico City" Policy.

CRS Report RL30932(pdf) . Microenterprise and U.S. Foreign Assistance.

CRS Issue Brief IB96008. Multilateral Development Banks: Issues for the 107th Congress .

CRS Report RS21168 . The Peace Corps: USA Freedom Corps Initiative.

CRS Report RL31689 . U.S. International Refugee Assistance: Issues for Congress .

CRS Issue Brief IB96026. U.S. International Population Assistance: Issues for Congress .

CRS Report RL31433 . U.S. Global Health Priorities: USAID FY2003 Budget.

Foreign Operations Country/Regional Issues

CRS Report RL31355 . Afghanistan's Path to Reconstruction: Obstacles, Challenges, and Issues for Congress.

CRS Issue Brief IB95052. Africa: U.S. Foreign Assistance Issues.

CRS Report RL31383(pdf) . Andean Regional Initiative (ARI): FY2002 Supplemental and FY2003 Assistance for Colombia and Neighbors.

CRS Report RL30831(pdf) . Balkan Conflicts: U.S. Humanitarian Assistance and Issues for Congress.

CRS Report RS21213 . Colombia: Summary and Tables on U.S. Assistance, FY1989-FY2003.

CRS Issue Brief IB95077. The Former Soviet Union and U.S. Foreign Assistance.

CRS Issue Brief IB85066. Israel: U.S. Foreign Assistance.

CRS Report RS20895. Palestinians: U.S. Assistance.

CRS Report RL31362(pdf) . U.S. Foreign Aid to East and South Asia: Selected Recipients.

Selected World Wide Web Sites

African Development Bank http://www.afdb.org/

African Development Foundation http://www.adf.gov/

CRS Current Legislative Issues: Foreign Affairs http://www.crs.gov/products/browse/is-foreignaffairs.shtml

Export-Import Bank http://www.exim.gov/

Inter-American Development Bank http://www.iadb.org/

Inter-American Foundation http://www.iaf.gov/

International Monetary Fund http://www.imf.org/

Overseas Private Investment Corporation http://www.opic.gov/

Peace Corps http://www.peacecorps.gov/

Trade and Development Agency http://www.tda.gov/

United Nations Children's Fund (UNICEF) http://www.unicef.org/

United Nations Development Program (UNDP) http://www.undp.org/

United National Population Fund (UNFPA) http://www.unfpa.org/

U.S. Agency for International Development http://www.info.usaid.gov/

U.S. Department of State http://www.state.gov/

World Bank http://www.worldbank.org/

World Bank HIPC website http://www.worldbank.org/hipc/

Table 9. Foreign Operations: Discretionary Budget Authority (millions of dollars)

Sources: House and Senate Appropriations Committee and CRS calculations.

a. In 2002, House and Senate Appropriations Committees reported bills appropriating FY2003 ForeignOperations funds. Congress adjourned, however,before completing action on these measures. The 108th Congress enacted FY2003 Foreign Operationsappropriations as part of new legislation -- H.J.Res. 2 . For comparative purposes, amounts reported but not enacted in the 107th Congressare shown in the final two columns ofthis table.

b. FY2002 supplemental includes funds appropriated in P.L. 107-117 (legislation allocating $20 billionin emergency terrorism response funds) and P.L.107-206 (Emergency FY2002 Supplemental Appropriations). Excluded from this total is $1.329 billionappropriated in September 2001 in P.L.107-38 and (the Emergency Terrorism Response Fund) and allocated to Foreign Operations programs during thefirst half of FY2002.

c. For FY2003, the Administration proposed to consolidate Child Survival/Health andDevelopment Assistance accounts into a single account. Forcomparative purposes with FY2002, the FY2003 request broke down as follows: $1.474 billion for ChildSurvival/Health and $1.365 billion forDevelopment Assistance. The Child Survival/Health figures also include the U.S. contribution for UNICEF, anamount requested in title IV, butincluded by Congress in this account.

d. On September 3, 2002, the Administration amended its original request, proposing additional fundsfor three accounts: development aid, from $2.86billion to $2.96 billion for HIV/AIDS programs; international disaster assistance, from $235.5 million to $285.5million for humanitarian aid forthe Palestinians; and the Economic Support Fund, from $2.29 billion to $2.49 billion for anti-terrorism aid to Israel.

e. Population and HIV/AIDS aid funding include small amounts from other Foreign Operations accounts. The figures here represent totals "across allaccounts," not just those within the Development Aid subtotal.

f. The Administration request included the Ireland Fund as part of the Economic Support Fund.

g. Excludes UNICEF contribution which is part of Development Assistance under Title II above.

h. H.J.Res. 2 , as passed by the Senate, included an across-the-board rescission of 1.6% (ï¿½601,Division N). This rescission was augmentedby ï¿½ 309 of Division G, which required an increase in the rescission to offset $5 billion inadditional education spending. According to CBO, thisamount generated an additional 1.252% reduction. Thus, the total across-the-board reduction is currently estimatedat 2.852%, which has beencalculated by CBO as $11.392 billion. As enacted, ï¿½ 601 of H.J.Res. 2 requires a 0.65%across-the-board rescission Figures listed hereare estimates reflecting the impact of these rescissions.