Appropriations for FY2000: Foreign Operations, Export Financing, and Related Programs
Released: 1999-12-10T00:00:00

Most Recent Developments

On November 29, 1999, President Clinton signed into law the ConsolidatedAppropriations Act for FY2000 ( H.R. 3194 ; P.L. 106-113 ), legislationthat enacts by reference H.R. 3422 , the Foreign OperationsAppropriations Act, FY2000. H.R. 3422 was the third ForeignOperations measure debated by Congress in 1999 and represented the results ofextensive negotiations between Congress and the White House to resolve fundingdifferences. President Clinton had vetoed the first Foreign Operations measure( H.R. 2606 ) because it cut $1.92 billion from his request. H.R. 3422 provides $13.5 billion for regular foreign aid programs, plus$1.8 billion over three years for the Wye River/Middle East peace accord, for a totalpackage of $15.3 billion. H.R. 3422 remains about $900 million belowthe President's amended budget proposal.

In addition to including the Wye River money, the new Foreign Operations measure adds $799 million for several accounts that Congress had reduced earlier,including the World Bank's International Development Association and funds for thePresident's counter-proliferation Expanded Threat Reduction Initiative in the formerSoviet Union. New funding is offset by delaying the transfer beyond FY2000 of $550million of Israel's military aid. This will not reduce Israel's $1.92 billion militaryaid, but because the funds would have been placed in an interest bearing account,it will result in the loss to Israel of interest earned on the early disbursement.

The most significant Administration funding priority not included in the revised Foreign Operations measure is multilateral debt relief for poor developing countries. Congressional negotiators agreed to an additional $90 million for bilateral debtrelief -- bringing the debt reduction total to $123 million -- and they adopted amodified authorization (in H.R. 3425 , also enacted by reference in P.L.106-113 ) for the U.S. to support the IMF off-market sale of gold. Congress,however, would not add another $250 million to forgive debt owed to multilateralinstitutions or $600 million requested for debt relief in FY2001-2003. On the mostcontentious issue, the Administration further accepted abortion-related internationalfamily planning policy restrictions in exchange for congressional approval of nearly$1 billion in U.N. arrears payments. On November 30, President Clinton exercisedhis waiver authority to exempt the abortion conditions from applying to $15 millionof the $385 million population aid appropriation and said he would oppose inclusionof these restrictions in future spending measures.

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 executive branch foreign policy making generally. (1) It containsthe largest share -- about 70% -- of total international affairs spending by the UnitedStates (see Figure 1 ). The legislation funds all U.S. bilateral development assistanceprograms, managed mostly by the U.S. Agency for International Development(USAID), together with several smaller independent foreign aid agencies, such as thePeace Corps and the Inter-American and African Development Foundations. ForeignOperations includes separate accounts for aid programs in the former Soviet Union(also referred to as the New Independent States (NIS) account) and Central/EasternEurope, activities that are jointly managed by USAID and the State Department. Security assistance (economic and military aid) for Israel and Egypt is also part of theForeign Operations spending measure, as are smaller security aid programsadministered largely by the State Department, in conjunction with USAID and thePentagon. U.S. contributions to the World Bank and other regional multilateraldevelopment banks, managed by the Treasury Department, and voluntary paymentsto international organizations, handled by the State Department, are also funded inthe Foreign Operations bill. Finally, the legislation includes appropriations for threeexport promotion agencies: the Overseas Private Investment Corporation (OPIC),the Export-Import Bank, and the Trade and Development Agency.

From the perspective of congressional oversight and involvement in U.S. foreign aid policy making, the Foreign Operations bill has taken on even greatersignificance during the past decade. Congress has not enacted a foreign aidauthorization bill since 1985, leaving most foreign assistance programs withoutregular authorizations emanating from the legislative oversight committees. As aresult, Foreign Operations spending measures increasingly have expanded their scopebeyond spending issues and played a major role in shaping, authorizing, and guidingboth executive and congressional foreign aid and broader foreign policy initiatives. It has been largely through Foreign Operations appropriations that the United Stateshas modified aid policy and resource allocation priorities since the end of the ColdWar. The legislation has also been a key tool used by Congress to apply restrictionsand conditions on Administration management of foreign assistance, actions thathave frequently resulted in executive-legislative clashes over presidentialprerogatives in foreign policy making.

Status

President Clinton submitted his FY2000 federal budget request to Congress onFebruary 1, 1999, including funding proposals for Foreign Operations Appropriationsprograms. Subsequently, House and Senate Foreign Operations Subcommittees have held a series of hearings, including testimony from Secretary of State Albright,Treasury Secretary Rubin, and USAID Administrator Atwood. Skipping a formalsubcommittee markup, the Senate Appropriations Committee reported on June 17, S. 1234 . The full Senate approved the bill on June 30 by a vote of 97-2. The House Foreign Operations Subcommittee marked up its bill on July 14, followedby full Committee approval of H.R. 2606 on July 20. The Houseapproved the legislation on August 3. The following day, the Senate took up H.R. 2606 , deleted all of the House-passed text, substituted language in S. 1234 , passed H.R. 2606 , as amended, and requested aconference with the House.

House and Senate conferees met on September 22, 1999, agreeing to all issues in dispute except international family planning. Members resolved this final issuein disagreement on September 27 and filed a conference report. With PresidentClinton threatening to veto H.R. 2606 because of reductions to hisbudget request, the House (214-211) and Senate (51-49) agreed on October 5 and 6,respectively, to the conference report, clearing the measure for the White House. President Clinton vetoed the legislation, however, on October 18, because of lowfunding levels and the absence of appropriations for several initiatives, including theWye River/Middle East peace package and an expansion of the Heavily IndebtedPoor Country (HIPC) debt relief program.

The House, on November 5, approved a revised Foreign Operations measure ( H.R. 3196 ) that was acceptable to the White House. Furthernegotiations yielded a few additional changes to H.R. 3196 ,modifications that are reflected in a third Foreign Operations appropriation measure, H.R. 3422 . That bill is enacted by reference as part of the H.R. 3194 , the Consolidated Appropriations Act for FY2000 ( P.L.106-113 ), that includes five appropriation measures and other legislation.

Table 1. Status of Foreign Operations Appropriations, FY2000

H.R. 2606

H.R. 3196

H.R. 3422 *

* H.R. 3422 is enacted by reference in H.R. 3194 , the Consolidated Appropriations Act for FY2000. Conference report 106-479 pertainsto H.R. 3194 .

Foreign Operations Funding Trends

As the United States has adjusted its foreign and defense policy to a post-ColdWar environment, one of the major foreign assistance challenges for Congress andexecutive branch policymakers has been to formulate the most effective foreign aidprogram amidst a tightening resource base.

After peaking at $20.7 billion in FY1985, Foreign Operations appropriations began a period of decline, falling to about $12.3 billion in FY1997. Foreign aidspending cuts were especially sharp in FY1996 when Congress cut funding by $1.15billion, nearly 9% from the previous year. Many government and non-governmentexperts argued that these budget reductions seriously undermined U.S. foreign policyinterests and limited the ability of American officials to influence overseas events. After Foreign Operations funding levels fell again in FY1997 -- although by muchsmaller amounts -- the State Department and other executive agencies launched anaggressive campaign in to reverse the decade-long decline in the foreign policybudget. This effort coincided with congressional approval of a near $1 billionincrease for FY1998, setting Foreign Operations appropriations at $13.15 billion. Foreign Operations funds rose again to $13.8 billion in FY1999 when lawmakers, atthe urging of the White House, added nearly $900 million in the final days of the105th Congress.

As shown in Table 2 , the amount for FY1999 was the highest in five years, bolstered especially by $2.1 billion supplemental funding for Central Americahurricane relief, Kosovo humanitarian aid, and several other foreign assistanceemergencies. For FY1999, Foreign Operations represented 0.87% of the entirefederal budget and 2.6% of total discretionary budget authority. By comparison,these same figures in FY1985 were 2% and 4.6%, respectively.

Table 2. Foreign Operations Appropriations, FY1993 to FY1999 (discretionary budget authority in billionsof current dollars)

* The amount for FY1999 includes the "base" Foreign Operations Appropriations (the regular appropriation approved in P.L. 105-277 ) plus $2.1 billion in emergencysupplementals enacted in P.L. 105-277 and P.L. 106-31 . It excludes, however,$17.861 billion for the IMF.

Over the past 20 years, Foreign Operations spending has experienced three distinct trends when calculated in real terms, taking into account the effects ofinflation. The first period was marked by a steady growth in Foreign Operationsappropriations levels during the early 1980s when the United States rapidly expandedsecurity-related aid programs in Central America, Pakistan, and to countriesproviding the U.S. with military bases. Funding peaked in FY1985 at $31.9 billion(in FY1999 dollars) followed by a sharp cut in FY1986 as the effects of theGramm-Rudman deficit reduction initiative took hold and limited federal spendingin most areas. For the next five years, during a second phase of Foreign Operationsbudget trends, appropriations remained relatively stable at about $19.5 billion peryear (real terms).

Towards the end of the Cold War, foreign aid spending in real terms began to fall steadily -- from about $16.7 billion in FY1992, to $15 billion in FY1995, to $13billion in FY1997. Appropriations for FY1997 were the lowest since 1975 whenCongress slashed foreign assistance spending during the U.S. withdrawal fromVietnam. FY1999 Foreign Operations spending is about 29% below the averageappropriation level approved by Congress during the late 1980s, 17% less thanFY1992, a year that might be considered the first post-Cold War foreign aid budget,and 8% less than FY1995 when the majority in Congress changed.

Foreign Operations, the FY2000 Budget Resolution, and Section 302(b) Allocations

In most years, Appropriation Committees do not begin markups of their spending bills until Congress has adopted a budget resolution and funds have beendistributed to the Appropriations panels under what is referred to as the Section302(a) allocation process, a reference to the pertinent authority in the CongressionalBudget Act. Following this, House and Senate Appropriations Committeesseparately decide how to allot the total amount available among their 13subcommittees, staying within the functional guidelines set in the budget resolution. This second step is referred to as the Section 302(b) allocation. As noted above,foreign policy funds are appropriated within four bills with Foreign Operationshaving the largest share of around 68-70% in most years.

How much foreign policy money to allocate to each of the four subcommittees, and how to distribute the funds among the numerous programs remain decisionsexclusively reserved for the Appropriations Committees. Nevertheless, overallceilings set in the budget resolution can have significant implications for the budget limitations within which the Foreign Operations subcommittees will operate whenthey meet to mark up their annual appropriation bills.

The FY2000 budget resolution that cleared Congress on April 15 ( H.Con.Res. 68 ) strongly suggested that the Foreign Operationssubcommittees would receive a significantly reduced Section 302(b) allocation thanassumed in the President's budget. H.Con.Res. 68 set a $17.7 billiontarget for total international affairs budget, a figure 15% below the request.

In late May 1999, House and Senate Appropriations Committees approved Section 302(b) funding allocations for each of their 13 appropriation bills, settingamounts for Foreign Operations programs sharply below the President's $14.6 billionrequest and the $13.3 billion "base" appropriation for FY1999. (2) The SenateCommittee initially provided $12.5 billion in budget authority but later raised theamount to $12.7 billion. It is 12.8% less than the budget proposal and 4.8% belowthe current Foreign Operations "base." The House Appropriations panel originallyallocated $10.36 billion for Foreign Operations, 29% below the President's requestand 22% under the "base." After shifting funds among several subcommitteeaccounts, the House panel subsequently increased the Foreign Operations amount byover $2.2 billion, resulting in a $12.625 billion level.

Limitations on outlays under the Section 302(b) allocation were also problematic. (3) Congress can only influence "new"outlays -- those that willspend-out in FY2000 as a result of enactment of new budget authority. House andSenate outlay allocations provide about the same amount in controllable, or "new"outlays -- $5.43 billion and $5.25 billion, respectively. These levels were about 11%less than the request. Moreover, funding limits at these levels constrained the abilityof the Appropriations Committees to respond to new aid initiatives such as the WyeRiver-Middle East peace package and expanded debt reduction for the world'spoorest nations. Secretary of State Albright told the Senate AppropriationsCommittee on May 20 that "cuts of this magnitude would gravely imperil immediateand long-term American interests."

A major reason that the Foreign Operations allocation, as well as the allocation for several other spending measures, were so low, was the congressional and WhiteHouse desire to stay within discretionary spending "cap" limits agreed to in 1997. The caps, which were negotiated at a time of budget deficits, were intended toprovide the means to balance the U.S. budget by FY2002. With the far earlieremergence of a budget surplus, some lawmakers, including members of theAppropriations Committees, called for revisions to the budget caps so that a portionof the surplus could be used to ease the spending limitations posed by the currentceilings. Other Members, however, argued that the surplus was largely made up ofsocial security resources; that Congress must not endanger the future of socialsecurity by utilizing part of the surplus, nor should it abandon the spending disciplineestablished by the 1997 budget agreement.

Foreign Operations Appropriations Request for FY2000 and Congressional Consideration

Funding Issues for Foreign Operations Appropriations, FY2000

Total Foreign Operations Funding Levels. President Clinton, in his initial February 1999 request,asked Congress to appropriate $14.1 billion for Foreign Operations programs inFY2000, plus $1.9 billion in support of the Wye River/Middle East peace accord inFY1999-2001. The total proposal, with the Wye River money, came to $16 billion. The request (excluding the Wye River agreement) was about $700 million, or 5%higher than the "base" Foreign Operations spending level Congress approved forFY1999 (see footnote 3). Congress further enacted an additional $2 billion in twoFY1999 emergency supplementals for Central American hurricane relief, Kosovohumanitarian assistance, and a series of other foreign aid accounts. Compared withthe $15.4 billion total FY1999 Foreign Operations spending -- the "base" plussupplementals -- the FY2000 request, without the Wye River funds, was about $1.35billion, or 9% less than FY1999 amounts. (See below for discussion of thesupplemental/advance appropriation requests.) Subsequently, the President amendedhis request from $14.1 billion to $14.38 billion, primarily through a September 1999proposal that added $250 million for poor country debt relief in FY2000 and $600million more during FY2001-2003. Including the Wye River funds, the total FY2000request, as amended, came to $16.186 billion.

Funding for Selected Foreign Operations Accounts. For the most part, portions of the $700 million increaseabove the "base" sought for FY2000 were spread out over many Foreign Operationsaccounts, resulting in small boosts for these aid activities. Development assistancewould grow by about $175 million (9%) above the "base," (4) non-proliferation andcounter-terrorism programs would increase by $33 million (17%), military trainingfunds would rise by $2 million (4%) and military aid grants would move up by $100million (3%). The military aid grant hike mainly would provide additional supportto Israel. The budget request also included a few large increases from FY1999,representing special priorities of the Administration:

Export promotion programs were slated for an increase of $92 million (11.6%), mainly to provide the Export-Import Bank with the resources tomeet what it believed will be increased demands in FY2000.

Debt reduction funds would grow from $33 million to $120million in order to launch two new debt relief initiatives for FY2000. In September,this request was amended to $370 million in FY2000 and a total of $970 million overfour years (FY2000-2003). (See below for more discussion of thisissue.)

Peace Corps funding would rise by $30 million (12.5%) to maintain the plan to increase the number of Peace Corps volunteers from 6,700 to10,000 within the next few years. (See CRS Report RS20082, Peace Corps: 10,000Volunteer Goal , by [author name scrubbed].)

Table 3. Summary of Foreign Operations Appropriations (Discretionary funds -- in millions of dollars)

Source: House and Senate Appropriations Committees. FY1999 excludes a one-time IMF appropriation of $17.861 billion. H.R. 3196 represents levels approved by theHouse on Nov. 5.

* Includes "base" appropriations plus emergency supplementals enacted in P.L. 105-277 and P.L. 106-31 .

U.S. assistance to Russia and the former Soviet states would grow by $179 million (21%), the result of a new Administration program -- theExpanded Threat Reduction Assistance Initiative -- addressing the securityimplications of the economic crisis in Russia and other NIS states. (See below underregional aid priorities for more discussion.)

Peacekeeping for non-U.N. missions would increase by $54 million (71%), mainly due to recommendations to boost funding from $10 millionto $43 million for the OSCE Kosovo operation, and for smaller increases in Africaand OSCE Bosnia/Croatia peacekeeping activities.

For the first time in several years, the Administrations sought funding ($5.1 million) for the African Development Bank, an institution that has hadits operations suspended until recently due to administrative and economic problemsin the region.

In one area, the FY2000 Foreign Operations request proposed a small program reduction -- U.S. assistance to Eastern Europe would drop by $37 million (-8.6%)with most of the cuts coming in aid to Bosnia.

Table 4. Leading Recipients of U.S. Foreign Aid: FY1998 - FY2000 (Appropriation Allocations; $s in millions)

*Includes $100 million supplemental appropriation in P.L. 106-31 .

** Includes regular request for Israel, Jordan, the Palestinians, plus amounts for Wyepeace accord: Israel--$300 million; Jordan--$100 million; Palestinians--$100 million.

Note: Data exclude food aid, a program not appropriated in the Foreign Operations bill. With food aid included, the rank order above would change somewhat. Foodaid projected for FY2000 includes Peru--$50 million; Haiti--$26 million;Bangladesh--$25 million; and Guatemala--$17 million. Moreover, because of alarge food aid program, Ethiopia, India and North Korea (FY1998/99) would alsorank among the lower 10 of this top 15 list.

Funding for Country Aid Programs. At the country level, the FY2000 proposal recommendedgenerally the same roster of major recipients as for FY1999. The proposal reflectedcontinuing U.S. policy emphasis on Middle East peace, democratic transition in theformer Soviet Union, implementation of the Dayton Peace accords in Bosnia, and toa somewhat lesser extent, efforts to counter the drug trade in Latin America. Israel($2.85 billion) and Egypt ($2 billion) would continue to be the largest recipients,although levels would decline as the United States continues to implement areduction in economic assistance to both countries. (5) Russia, and to a lesser extentUkraine, were scheduled for increases in FY2000, mainly due to the Expanded ThreatReduction Assistance Initiative. U.S. assistance to Israel, Jordan, and thePalestinians (West Bank/Gaza) would rise significantly in FY2000 if Congress agreesto a request of $500 million to back the Wye Memorandum peace accord.

Congressional Debate on Foreign Operations Spending

Summary of Debate. In separate actions during the summer, the House and Senate approved bills spending roughlythe same amount of money overall -- $12.624 billion and $12.691 billion,respectively -- but at levels less than appropriated in FY1999 and well below thePresident's request. The legislation, however, included some significant differencesin how to allocate funds among the various foreign aid accounts. Confereesapproved $12.693 billion, nearly identical to the Senate's level, but still belowamounts for FY1999 and the President's request. On very close votes largely alongparty lines, the House (214-211) and Senate (51-49) agreed on October 5 and 6,respectively, to the $12.693 billion spending measure. Most democrats supported thePresident's opposition to the measure because of the sizable cuts made to his foreignaid request. Other Members voted against the bill because the conference agreementremoved House-passed abortion restrictions related to international family planningprograms and included funding for the U.N. Population Fund which maintainsactivities in China. Keeping to an earlier pledge, President Clinton vetoed H.R. 2606 on October 18 because of inadequate funding levels. Asprimary reasons for his veto, the President specifically cited cuts to his request forvoluntary peacekeeping activities, the Expanded Threat Reduction Initiative designedto safeguard weapons of mass destruction in Russia and other former Soviet states,contributions to multilateral development banks, and support for the HeavilyIndebted Poor Country (HIPC) debt relief program, as well as the absence of fundingfor the Wye River Accord supporting the Middle East peace process.

Following the mid-October veto of H.R. 2606 , the White House and congressional leaders negotiated the terms of a compromise package thatnarrowed the gap between executive-legislative funding differences. On November5, the House approved a revised Foreign Operations measure ( H.R. 3196 ) that added $799 million for White House priorities, plus $1.8 billion for theWye River agreement. Although acceptable to the President, the bill fell about $900million short of the Administration's amended request, including denial of $247million for the cancellation of poor country debt owed to multilateral developmentbanks.

Subsequent negotiations followed as Congress and the President attempted to complete an omnibus spending package for the five remaining appropriation bills. The most important changes for Foreign Operations -- reflected in the introductionof a third measure, H.R. 3422 and a separate authorization bill, H.R. 3425 -- regarded congressional authorization for the IMF to makean off-market sale of gold to finance the HIPC debt relief initiative( H.R. 3425 ) and the attachment of abortion restrictions to internationalfamily planning funds that Republican leaders had demanded in exchange forapproval of money to pay U.S. arrears to the United Nations ( H.R. 3422 ). H.R. 3194 , a consolidated spending bill passed by the House onNovember 18 and by the Senate on November 19, enacted by reference H.R. 3422 and H.R. 3425 . President Clinton signed intolaw H.R. 3194 on November 29, 1999.

Senate Debate. The Senate approved its version of the Foreign Operations request for FY2000 on June 30, 1999( S. 1234 ). The $12.691 billion was about $1.9 billion, or 13%, less thanthe President's request. Compared to FY1999 levels, the recommendation was about$700 million, or 5%, below the "base" foreign aid appropriation (regular ForeignOperations funding approved in the FY1999 Omnibus spending bill ( P.L. 105-277 ),and over $2.7 billion, or 17.7%, under total Foreign Operations appropriations forFY1999 that includes large Central America and Kosovo emergency reliefsupplementals.

House Debate. It had been expected that the House Appropriations bill would fall far below the Senate measuredue to an initial $10.4 billion budget authority allocation to the Subcommittee (seediscussion above under the section on 302(b) allocations and Foreign Operations). Immediately prior to the House Committee markup on July 20, however, the panelrevised the Foreign Operations figure upwards to $12.6, making available roughlythe same amount of money as passed the Senate. As adopted in the House on August3, H.R. 2606 appropriated $12.624 billion in discretionary funds, $1.99billion, or 13.6 % less than the FY2000 request. It was $777 million below the"base" FY1999 appropriation, and $2.8 billion (18%) under the total ForeignOperations enacted amounts for this year, including both "base" funding andemergency supplementals.

Conference Consideration, Veto of H.R. 2606, and a Revised Foreign Operations Bill. On September 22, House-Senateconferees resolved all differences except one in their respective versions of H.R. 2606 . Subsequently, Members worked out their disagreement oninternational family planning and contributions to the U.N. Population Fund, andapproved on September 27 a $12.93 billion measure. Like the Senate-passed bill,the conference fell about $700 million, or 5%, below the "base" spending level forFY1999 and $1.9 billion, 13% less than the President's request. President Clintonand his senior foreign policy advisors argued that the conference agreement shirkeda number of U.S. financial responsibilities and jeopardized American interests inpromoting Middle East peace, safeguarding nuclear weapons and scientist expertisein the former Soviet Union, and stabilizing several global "hot spots." Following theveto of H.R. 2606 and several weeks of negotiations, congressionalleaders and White House officials agreed to a compromise package which thePresident says he supports. The agreement, approved by the House on November 5in a second Foreign Operations measure, H.R. 3196 , added $1.825billion for the Wye River peace accord and $799 million for a range of foreign aidprograms the White House charged were under-funded in the earlier H.R. 2606 . The total package in H.R. 3196 representedfull funding for the Wye River agreement and roughly half of Administration'srequest that had been cut in H.R. 2606 .

As negotiations to resolve all budget issues continued after House passage of H.R. 3196 , a third Foreign Operations spending measure -- H.R. 3422 -- was introduced on November 17, legislation representingthe final agreement over foreign aid spending. The major difference between H.R. 3196 and H.R. 3422 is the addition in H.R. 3422 of abortion restrictions that apply to international familyplanning programs. Congressional negotiators had been insisting that the WhiteHouse accept such conditions on population assistance in exchange for congressionalapproval of nearly $1 billion to pay off U.S. arrears at the United Nations. Invirtually all other respects, the two bills are the same. The ConsolidatedAppropriations Act for FY2000 ( H.R. 3194 ; P.L. 106-113 ) enacts H.R. 3422 and several other spending and authorization measures byreference. The House approved H.R. 3194 , and therefore H.R. 3422 , on November 18 and the Senate approved the bill onNovember 19.

With the exception of over $2.6 billion in additional funding for selected accounts and the inclusion of abortion restrictions for international family planningprograms, H.R. 3422 is virtually identical to the conference agreementon H.R. 2606 , a bill vetoed by the President. Three major congressionalpriorities funded in the vetoed measure and continued in H.R. 3422 include:

Kosovo and Balkan assistance -- H.R. 3422 includes about $535 million for Balkan reconstruction and regional economicstabilization, with a $150 million recommendation specifically for Kosovo. Thisfollows closely what the Senate had passed in S. 1234 . The President'sbudget, prepared before the outbreak of hostilities, included only $393 million for theregion. The House measure did not include earmarked funds for a Kosovo and aregional reconstruction initiative. H.R. 3422 stipulates, however, thatnone of the funds for Kosovo are to be used for large scale infrastructure projects orbe available until the President certifies that the U.S. commitment at a late-1999Kosovo donor pledging conference does not exceed 15% of totalpledges.

Child Survival and Disease programs -- H.R. 3422 provides a separate account, as proposed by the House, at $715 million forchildren and infectious disease activities. Overall, the revised Foreign Operationsbill increases the account from the "base" FY1999 appropriation of $650 million andthe amended $700 million FY2000 request. (6) Inaddition, if the President exerciseshis authority to waive abortion-related family planning restrictions, $12.5 million willbe transferred from population aid programs to child survival and diseaseactivities.

Aid to Israel, Egypt, and Jordan -- Following the lead of Senate and House-passed levels, H.R. 3422 increases aid to Israel andEgypt beyond the Administration's regular funding request. The President's budgethad proposed accelerating to $150 million the ten-year, $100 million per year pacefor reducing U.S. assistance to the two countries that Congress began last year. Thebill increases the request by $50 million, restoring the ten-year, $100 million peryear reduction. Under the H.R. 3422 , Israel will receive $2.88 billionand Egypt $2.035 billion. In addition, the bill earmarks $225 million for Jordan, asrequested.

In many other areas, the revised Foreign Operations bill increases spending levels that had led to the President's veto of H.R. 2606 :

Wye River accord. H.R. 3422 provides full funding of $1.8 billion through FY2002 for the Middle East peace pledge made byPresident Clinton in late 1998. At the time, the U.S. committed $900 million forFY1999, $500 million for FY2000, and $500 million for FY2001 in additionalassistance to Israel Jordan, and the Palestinians. During a period when little progresswas made by the parties in implementing the Wye accord, Congress approved in May1999 only $100 million for Jordan in the FY1999 Supplemental Appropriations. With the more recent meetings between President Clinton and newly elected IsraeliPrime Minister Ehud Barak, the Administration once again pressed Congress toapprove expeditiously the remaining Wye accord aid pledges. H.R. 3422 further adds an additional $25 million in military aid for Egypt. Although notlinked with the Wye accords, the Administration had requested for FY2000 thatCongress approve early disbursement of some of Egypt's military aid that could bedeposited into an interest bearing account that would enhance Egypt's aid package. This would be similar to an arrangement extended for several years to Israel. Because of budget limitations and the outlay impact of early disbursement of funds,Congress rejected the proposal in H.R. 2606 . The $25 million includedin H.R. 3422 represents roughly the amount of interest Egypt wouldhave earned under the early disbursement plan.

Aid to Russia and nuclear weapons safeguards. A top Administration priority has been $241 million for its Expanded Threat Reductionprogram, a counter-proliferation initiative in the former states of the Soviet Union. The amounts approved in H.R. 2606 for Russia and other independentstates -- $735 million -- would have jeopardized funding for the threat reductionproject, plus squeezed aid for Russia and some of the other countries in the region. H.R. 3422 adds $104 million for the account, bringing the total to $839million, and specifically earmarks $241 million for the counter-proliferationinitiative. The new bill continues other provisions from H.R. 2606 bysetting aid targets of $180 million for Ukraine, $95 million for Georgia, and $90million for Armenia. Even with the additional funding, bilateral economic aid forRussia and several other countries in the region are likely to fall below requestedlevels, and perhaps below FY1999 amounts.

Multilateral development bank funding. Multilateral assistance, funded within title IV of the Foreign Operations appropriation receivedone of the deepest cuts under the terms of H.R. 2606 -- over $500million, or one-third less than requested. H.R. 3422 , restores $233million to title IV, including $150 million for the World Bank's InternationalDevelopment Association (IDA). Congress initially cut the $803 million request to$625 million, primarily due to disagreement with Bank policy over extending a loanto China that would involve the resettlement of poor Chinese farmers into atraditionally Tibetan area. The new Foreign Operations measure also fully funds($128 million) the African Development Fund and increases from $1 million to $4.1million resources for the U.S. to subscribe to a new African Development Bankreplenishment. H.R. 3422 also adds $16 million for the Inter-AmericanInvestment Corporation, funding that was not provided in H.R. 2606 . U.S. voluntary contributions to international organizations received an additional $13million, funds that most likely will be used to increase payments to the U.N.Development Program. The amount and terms of a $25 million Americancontribution to the U.N. Population Fund did not change under the revised ForeignOperations bill. The major remaining resource shortfall for multilateral programs in H.R. 3422 is for the Global Environment Facility for which theappropriation remains at $35.8 million, or one-fourth of therequest.

Economic Support Fund (ESF) assistance. ESF, a bilateral economic aid channel through which the United States extends support largely forpolitical and security purposes, had been cut significantly under H.R. 2606 , except for Middle East recipients. After subtracting earmarks for Israel, Egypt,Jordan, and Lebanon, the vetoed Foreign Operations measure had reduced thePresident's request for all other ESF activities by roughly 45%. Most vulnerablewould have been aid programs in Haiti, Guatemala, Cambodia, and Indonesia, aswell as a series of regional human rights, democracy building, environment, andother global issue initiatives. H.R. 3422 restores $168.5 million to theESF account, leaving a more modest $95 million, or 17%shortfall.

USAID operating expenses. Under H.R. 2606 , Congress approved the Senate-passed level of $495 million for the costs of staffsalaries and living expenses overseas for the primary U.S. bilateral aid agency. Agency officials argued that without higher funding, they would be forced to initiatea reduction-in-force as had occurred in 1997. Moreover, USAID continues to beplagued by ineffective financial management systems and failed attempts to replacethem. H.R. 3422 provides an additional $25 million that should allowUSAID to cover its operating costs as well as complete plans for a new financialmanagement initiative.

Peacekeeping operations. Voluntary contributions to non-U.N. sponsored peacekeeping activities had been reduced in H.R. 2606 to $78 million, $52 million less than the request. H.R. 3422 addsback $75 million, for a total of $153 million, that will cover American payments topeacekeeping operations included in the original requests, plus those, such as inSierra Leone and East Timor, that have developed since early1999.

Peace Corps. Under the terms of the conference agreement of H.R. 2606 , Peace Corps funding was cut to $235 million, $35 millionless than the request and $5 million under FY1999 levels. H.R. 3422 restores some of the reduction by adding $10 million. The $245 million FY2000appropriation, however, will still fall short of the Administration's goal of achievinga 10,000 volunteer Peace Corps.

In a few areas, the third Foreign Operations bill does not substantially alter funding shortfalls that had been approved in the vetoed H.R. 2606 . Themost significant, from the Administration's perspective, is debt relief for the world'spoorest nations. In the original budget request submitted in early 1999, the Presidentsought $120 million for debt reduction, including funds for U.S. participation in the World Bank/IMF managed Heavily Indebted Poor Country (HIPC) initiativedesigned to provide extensive reduction of debts owed to both bilateral governmentsand multilateral institutions.

Following a G-7 agreement in June and World Bank/IMF endorsement in September to significantly expand HIPC, the President asked Congress on September21 to increase debt relief funding to $370 million in FY2000, plus $600 million forFY2001-2003. The conference agreement on H.R. 2606 included only$33 million for debt cancellation, none of which could be used for helping reducemultilateral debt. The revised H.R. 3422 increases debt relief fundingby $90 million, all of which must be used for bilateral reduction. HIPC proponentsfear that if the United States does not contribute to the multilateral portion of theHIPC initiative, other bilateral donors will follow, leaving a large funding shortfallfor HIPC implementation. Although the White House did not achieve full fundingfor debt relief, Congress agreed in a separate bill, H.R. 3425 (that is alsoenacted by reference to the Consolidated Appropriations Act), to authorize U.S.support for an IMF off-market sale of gold that would finance the Fund's ability towrite-down poor country debts.

In perhaps the most controversial provision included in H.R. 3422 , the White House agreed to accept restrictions on international family planningpolicy that prohibit U.S. grants to private foreign non-governmental and multilateralorganizations that either perform abortions or lobby to change abortion laws inforeign countries. The President can waive the restrictions for up to $15 million ingrants, but if he does, population aid funding declines from $385 million to $372.5million. The restrictions apply only to FY2000 and will expire on September 30,2000. Although the President exercised his waiver authority on November 30, 1999,and instructed USAID to minimize any adverse impact the provision might have onU.S.-funded family planning programs, the legislation represents the first time in 15years of heated congressional debate that such restrictions have been enacted intolaw. Critics of abortion restrictions are concerned primarily about the precedent thatthis sets and the effect it will have on another contentious debate in Congress nextyear when the current restrictions expire. The White House reluctantly agreed to theabortion conditions when congressional leaders refused to approve funds to pay offU.S. arrears to the United Nations unless the restrictions were also added.

Another funding reduction in H.R. 2606 not addressed in H.R. 3422 is for the Inter-American Foundation . The IAF is a small,independent grass-roots aid organization supporting projects in Latin America since1969. Under both H.R. 2606 and H.R. 3196 , the IAF willreceive $5 million in FY2000, less than a quarter of the Administration's $22.3million request. Further, the bills authorize the President to abolish the IAF nextyear. The Foundation had been heavily criticized for recent managementirregularities and for the continuation of funding for certain NGOs that had beeninvolved in the kidnaping of Americans in 1997.

The third Foreign Operations bill further does not include funding for two emerging foreign aid initiatives that the Administration had announced earlier itwould pursue during the final budget negotiations. Although the executive branchnever submitted formal requests, it had consulted extensively with congressionalcommittees for additional funds for Balkan reconstruction and stabilization effortsand counter-narcotics programs in Colombia. As noted above, both H.R. 2606 and H.R. 3422 provide more for Balkan andKosovo assistance than requested by the Administration earlier in 1999. But thereremains about a $300-$400 million gap between amounts provided in H.R. 3422 and what the executive wants to pledge for reconstructionneeds. Presumably, the Balkan aid package will come before Congress in 2000 aspart of a supplemental to provide additional DOD costs of peacekeeping operationsin the region. For counter-narcotics, an initiative with strong congressional support, H.R. 3422 increases spending by $20 million for FY2000. Nevertheless,this remains far short of preliminary proposals recommending $1 billion-$1.5 billionfor Colombia and the Andean region over three years.

Two non-funding, but controversial policy issues that had been narrowly approved during House and Senate floor debate and settled by conferees in H.R. 2606 , are continued unchanged in H.R. 3422 :

School of the Americas. H.R. 3422 drops a House provision that would have denied International Military Education andTraining Funds (IMET) for the Army's School of the America's, located at FortBenning, Georgia. The School trains Latin American military officers, drawing onIMET for some of its operating costs, although most of its funding comes fromDefense Department money. Critics of the school contend that it has trained someof the most ruthless human rights violators among Latin American militaries,especially during the 1970s and 1980s. The Administration, which argues that theSchool's curriculum has been overhauled during the 1990s and is designed topromote the observance of human rights principles by its graduates, strongly opposedthe House amendment. Prior to releasing funds to the School, however, H.R. 3422 requires the President to issue certain certifications regardingthe curriculum at the School of the Americas.

Silk Road Strategy Act. The new Foreign Operations bill includes the Senate-passed text authorizing aid programs for the South Caucuses andCentral Asia -- the so-called Silk Road Strategy Act. As originally offered duringSenate debate by Senator Brownback, the text would have allowed the President towaive the ban of non-humanitarian aid to Azerbaijan found in Section 907 of theFreedom Support Act. An amendment by Senator McConnell and others, however,struck the waiver provision (53-45), thereby maintaining the Section 907 restriction. The House had approved similar legislation, including retention of Section 907, ina separate bill, H.R. 1152 .

Offsets for Higher Foreign Operations Spending. A congressional and White House priority foradditional FY2000 funding in any spending measure has been to package them insuch a way that the total amount does not exceed discretionary spending caps or drawon budget surpluses derived from Social Security payments. The $2.624 billionadd-on for Foreign Operations is offset in two ways. First, the Wye River/MiddleEast Peace package is designated as an emergency which means none of the $1.825billion will count against the discretionary caps. To offset the outlay impact of theadditional spending, something that could potentially dip into the Social Securitysurplus, H.R. 3422 limits to $1.37 billion the amount that Israel canreceive earlier than it would otherwise of its total $1.92 billion military aid transfers. For many years, Congress has approved the immediate transfer of economicassistance to Israel that could then be invested in interest-bearing accounts beforeIsrael needed the funds to service debts owed the United States. Several years ago,Congress extended this benefit by allowing the early disbursement -- and the outlay-- of $1.8 billion in annual U.S. military aid. Normally, for other countries little orno military assistance would be drawn upon in the year it was appropriated, andtherefore, would not result in any outlays. Consequently, the lower outlays estimatedunder H.R. 3422 because Israel will not receive $550 million in earlydisbursement of military aid fully offsets the outlay impact of funding for the WyeRiver accord and other foreign aid spending. Although this does not cut the $1.92billion military aid package for Israel, it will result in the loss to Israel of whateverinterest would have accrued.

Major Policy and Spending Issues in the Foreign Operations Debate

In addition to funding decisions made by Congress in the Foreign Operations appropriation bill, the annual spending measure also includes a wide range of policyprovisions that frequently raise contentious foreign policy disagreements between thePresident and Congress. As mentioned above, because Congress has not enactedforeign aid authorization bills for over a decade, the Foreign Operations legislationoften becomes the vehicle for debate on the conduct of U.S. foreign policy moregenerally. Many of these policy provisions take the form of conditions or restrictionson how the President can use money included in the spending bill. Many of theseprovisions are opposed by the Administration as excessively limiting his ability tomanage American foreign policy. The legislative-executive policy differences havein the past delayed the enactment of the Foreign Operations bill or have prompted apresidential veto.

Among the most significant funding and policy issues raised during congressional debate this year on the Foreign Operations appropriation measureconcern conflicting executive-legislative branch development assistance strategypriorities, restrictions on international family planning programs, regional aidallocations, competing initiatives to reduce debt burdens of the poorest developingcountries, and the terms and conditions under which the United States provides heavyfuel oil to North Korea.

Policy Priorities of U.S. Development Aid. Since the end of the Cold War, a recurring debate has focusedon what should replace the anti-communist foreign aid rationale of the past 50 years. A more fundamental question raised by some, especially critics of developmentassistance, is whether the United States needs to maintain an active, globally focusedeconomic aid program. Many of these critics argue that aid can be transformed intoa smaller, more targeted, and often privatized instrument to support only the highestpriority U.S. foreign policy interests.

Although there has been no definitive consensus on priorities, the Clinton Administration has strongly supported the retention of an activist foreign aid policywhich can be used to bolster a variety of U.S. foreign policy initiatives around theworld. In early 1994, USAID released its blueprint for a post-Cold War developmentaid policy, based around the goal of "sustainable development," and its four strategiesof promoting economic growth, stabilizing global population, protecting theenvironment, and advancing democracy. More recently, USAID added a fifthstrategy aimed at developing human capacity through education.

Since adopting these strategies in 1994, USAID has maintained that they operate as inter-linked, mutually reinforcing elements of an overall U.S. effort to promote theadvancement of market economies and democratic transitions in developing nations. Officials argue that U.S. aid is justified until countries reach a point of sustainabilitythat no longer requires external aid. Funding reductions, congressional restrictions,and fluctuating Administration priorities, however, have required USAID to alter themix of resources devoted to each of the strategies, raising questions over whether theintegrative, mutually reinforcing principles can be maintained. Congress, forexample, limited development aid for population programs in FYs1996-99 to roughlytwo-thirds of the amount provided in FY1995. (See below for more discussion onfamily planning restrictions.) Further, the State Department's Bureau of GlobalAffairs places a high priority on environment programs and presses USAID toallocate the maximum amount possible to such activities. As a result, theenvironment sector of sustainable development likely has not declined as much as itmight have otherwise.

At the center of this issue for the past four years has been differences between Congress and the executive branch regarding funding levels for programs supportingchild survival, basic education, and efforts against HIV/AIDs and other infectiousdiseases. Despite cutting overall development aid in FYs1996-97 by about 23% fromFY1995 levels, Congress earmarked children and disease programs at amounts equalto or somewhat greater than those allocated in FY1995, making the cuts on all otherelements of sustainable development closer to 30%. Congress boosted developmentaid appropriations for FY1999 by about $20 million beyond the President's request,but lawmakers set funding targets for child survival and infectious disease activitiesat about $460 million, $85 million more than the Administration proposed. As aresult, USAID cut funding for economic growth programs by $47 million andenvironment projects by $42 million below what the agency had planned forFY1999. (7)

Congressional proponents of the child survival priority argue that even though budget pressures require the United States to reduce or hold the line on foreign aidspending, the protection of children remains a core American value demanding thatcuts should be implemented without putting at risk the lives and well-being of smallchildren in developing nations. They further point out that the spread of infectiousdiseases poses a direct threat to U.S. citizens, and that American national interestsrequire continued support for global efforts to reduce or eliminate such illnesses.

Table 5. USAID Sustainable DevelopmentPrograms (in millions of dollars)

Source: USAID. Amounts in this table only apply to USAID "development aid" programs and do not include funds used for the same purposes, although to a lesserextent, in other accounts, including Economic Support Fund (ESF), East Europe andformer Soviet aid programs. For example, USAID estimates that it will spend inFY1999 $385 million across all accounts for family planning programs and about$331 million across all accounts for Child Survival activities.

* Includes $40 million for Child Survival and $10 million for HIV/AIDs provided in supplemental appropriations.

** Includes a July 19 budget amendment seeking $45 million more to support a presidential AIDS initiative aimed primarily at sub-Saharan Africa.

Although agreeing with the importance of child survival and infectious disease programs, USAID officials apply a broader definition to the terms, arguing, forexample, that efforts to protect small children go well beyond immunizations andaccess to other health services. The quality of a child's life, they assert, also isdetermined by an array of other factors, including the degree of relative stability insociety, protection of the surrounding environment, access to adequate shelter, andimplementation of sound economic policies that will ensure jobs and economicopportunities in the future. Consequently, they contend, that the "squeeze" that thesetargets place on other areas of sustainable development partially undermines thesuccess of programs that also benefit children.

As has been the pattern the past few years, USAID's sustainable development request for FY2000 reduced or maintained at current levels funding for severalcongressional priorities while increasing development aid overall by $59 million, orabout 3%. The $1.89 billion original request would have cut funds for child survivalprograms by $40 million from FY1999 appropriations, and hold spending for otherinfectious diseases activities at the current allocation of $50 million. (8) Environmental

funds, especially those for global climate change programs, would grow the mostunder the Administration's request -- up $42 million (17%) from existing amounts. Family planning spending would also increase slightly, rising by $16 million (5 %)from FY1999 levels. Other congressional development aid priorities would alsoreceive higher funding under the President's budget for FY2000. For example,microenterprise, agriculture, and basic education programs each would grow by10-12% for FY2000.

Congressional Action. H.R. 2606 , as approved by the conferees and continued largelyunchanged in the revised H.R. 3422 , reduces the amended USAIDdevelopment aid account by $87 million, while at the same time increases funds forselected activities. Some of the largest development assistance and child survivalearmarks and recommendations, including those mentioned in House and Senatecommittee reports on the legislation, are:

international population aid -- $385 million, as passed by the House. The President requested $400 million, while the Senate had earmarked $425million within development assistance and as much as $45 million under otheraccounts.

HIV/AIDS and other infectious diseases -- $180 million forHIV/AIDS, including $35 million specifically for Africa. Conferees did not earmarkfunds for other disease programs. The Senate had recommended $225 million, ofwhich $150 million was for HIV/AIDS; the House had included $227 million,including $127 million HIV/AIDS.

maternal health -- $50 million in the Senate bill; no mentionin the conference agreement.

tuberculosis -- $30 million recommended in the House bill andan expectation in the Senate bill to increase funding in FY2000. Conferees did notset a specific amount, although they support USAID's $3 million tuberculosisprograms in Mexico.

polio eradication -- $25 million in both House and Senatebills. Conferees did not set a specific level.

basic education -- $98 million earmarked in H.R. 3422 . Senate and House bills had recommended $110 million and $98 million,respectively.

displaced children and orphans -- $30 million in the Housebill. Conferees did not set a specific level.

agriculture -- $305 million recommended in the conferenceagreement. The Senate bill had earmarked $305 million.

microenterprise -- $152 million in the House measure, whilethe Senate bill directed USAID to increase microenterprise funding above FY1999levels. H.R. 3422 does not specify an amount for microenterprise otherthan to require that at least 50% of the loans made be less than$300.

biodiversity -- The conference committee, following a Senateamendment, directs USAID to restore biodiversity funding to the same proportionof development assistance funds it received in FY1995. This would result in about$99 million for biodiversity activities in FY2000. Funding had fallen by nearly halfin recent years -- from about $100 million in FY1995 to $55 million in FY1998. With the support of Congress, USAID increased the FY1999 program level to $68million.

The net result of the overall reduction to development assistance, plus increases for selected Senate and House priorities, would likely be lower funding levels for othersustainable development activities. Economic growth and private sector programs, environmental activities other than biodiversity, and democracy promotion programsare the most likely areas to face modest funding cuts under H.R. 3422 .

Population and Family Planning Assistance. Another aspect of the discussion regarding policypriorities of U.S. development aid is the continuing controversy regardinginternational family planning restrictions. For FY2000, the President sought $400million for USAID population programs, a $15 million increase over FY1999 levels. The principal dispute over population assistance, however, goes well beyond fundingissues, centering more directly on abortion-related activities of foreign recipients ofUSAID grants. For over a decade, Congress has engaged in contentious debates overU.S. international family planning policy, often as part of the Foreign OperationsAppropriations. Twice, congressional positions on this issue have been one of themajor reasons prompting a presidential veto.

U.S. international family planning programs had been one of the largest growth areas of the foreign aid budget in the 1990s. From an average of about $250 millionin the late 1980s, FY1995 spending across all Foreign Operations accounts totaledapproximately $548 million. In the following years, when Congress deadlocked overabortion-related restrictions and U.S. population aid policy, a situation that blockedmovement of the entire Foreign Operations bill, lawmakers adopted interimprovisions that, among other things, strictly limited the amount of funding forUSAID family planning programs. The appropriation cap of $385 million enacted ineach of FY1997-1999 is roughly two-thirds the amount provided in FY1995. As aresult of the impasse over abortion restrictions, Congress established a delayedtimetable for making these funds available, a schedule that included monthlyapportionments or "metering" of the appropriation.

A second issue in the population aid debate, and one directly connected to funding reductions and metering of the past four years, deals with abortionrestrictions and the eligibility requirements for foreign organizations receiving fundsto implement U.S.-sponsored family planning programs. During the mid-1980s, inwhat has become known as the "Mexico City" policy, the Reagan, and later the Bush,Administration, restricted funds for foreign non-governmental organizations thatwere involved in performing or promoting abortions in countries where they worked,even if such activities were undertaken with non-U.S. funds. Several groups,including International Planned Parenthood Federation-London (IPPF), becameineligible for U.S. financial support. In some years, Congress narrowly approvedmeasures to overturn this prohibition, but White House vetoes kept the policy inplace. President Clinton in 1993 reversed the position of his two predecessors,allowing the United States to resume funding for all family planning organizationsso long as U.S. money was not used in abortion-related work.

During the past four years, the House and Senate have taken opposing positions on the Mexico City issue that in each case held up enactment of the final ForeignOperations spending measure. The House position, sponsored by RepresentativeSmith (N.J.) and others, supported reinstatement of the Mexico City policy restrictingU.S. aid funds to foreign organizations involved in performing abortions or inlobbying to change abortion laws or policies in foreign countries. The Senate, on theother side, has rejected House provisions dealing with Mexico City policy, favoringa policy that leaves these decisions in the hands of the Administration. Moreover,Administration officials have stated that President Clinton would veto any bills thatinclude the House-passed Mexico City restrictions, a threat he carried out in October1998 when he rejected legislation authorizing family planning programs that includedMexico City policy ( H.R. 1757 ).

Unable to reach an agreement satisfactory to both sides, Congress has adopted interim arrangements for FY1996-1999 that do not resolve the broad populationprogram controversy, but has permitted the stalled Foreign Operations measure tomove forward. It was hoped that the arrangement, which neither side liked, wouldprovide incentives for those involved in the debate to find a middle ground. Underthe terms of the FY1999 temporary arrangement, as included in P.L. 105-277 ,Congress deleted the House-supported Mexico City restrictions, limited populationaid funding to $385 million, down from $435 million passed by the Senate, anddelayed, or "metered" the availability of the funds at a rate of one-twelfth of the $385million per month.

Congress further enacted for FY1999 a ban on U.S. contributions to the U.N. Population Fund (UNFPA), a prohibition that had been in place during the Reaganand Bush Administrations but which was lifted by President Clinton in 1993. Atissue are UNFPA programs in China, a country where there have been continuingreports for many years of coercive family planning practices. During the mid-1990s,Congress reduced UNFPA contributions by an amount the organization spent inChina, but when UNFPA ended its China program in 1997, the controversy subsided. UNFPA, however, reinstituted activities in China soon thereafter, resulting in thewithholding in FY1998 of $5 million for UNFPA and the enactment for FY1999 ofa total prohibition on the U.S. $25 million contribution, so long as the organizationremained active in China. Nevertheless, the Clinton Administration sought $25million for the UNFPA in FY2000. (9)

A new element in the family planning issue added during the FY1999 debate emerged following reports that Peru, where USAID has population aid programs, hadestablished national targets for tubal ligations and vasectomies There were alsoallegations that some Peruvian health workers may have conditioned the receipt offood and medical care on the acceptance of sterilizations. USAID maintains a policyof strict voluntarism for family planning programs it supports, and opposes the useof performance-based quota systems. The Agency says that Peru's government hasinstituted significant reforms in its family planning programs, including criteria thatensure voluntary informed consent. To reinforce U.S. policies opposing programsbased on coercive practices or quota systems, Congress adopted for FY1999 anamendment by Representative Tiahrt that more precisely defines the term, voluntary family planning programs, and establishes criteria for USAID to apply regarding thevoluntary nature of its population projects. (10) (Formore information, see CRS Issue Brief IB96026, U.S. International Population Assistance, Issues for Congress, by[author name scrubbed].)

Congressional Action. S. 1234 , as approved by the Senate , increased family planning funds within thedevelopment aid account from the $355 million request to $425 million. Across allaccounts, including ESF, NIS, and SEED programs, the Senate recommendationwould set population aid at about $470 million, a $70 million increase above theAdministration's overall $400 million recommendation. The bill further earmarkedUNFPA funding at $25 million, as requested.

The House measure, like previous bills, capped family planning assistance at $385 million. But unlike enacted Foreign Operations laws the past few years, theHouse bill would not "meter" the availability of these funds. An amendment offeredby Representative Pelosi at the House Committee's markup restored the $25 millionrequest for the U.N. Population Fund, but made it subject to a reduction by whateveramount UNFPA spends in China in 2000.

During floor debate, the House adopted two competing and apparently conflicting amendments affecting U.S. international family planning policy. On a228-200 vote, the House approved a modified Mexico City policy amendment byRepresentative Smith (NJ) prohibiting U.S. funds to foreign NGOs that performabortions or lobby to change abortion laws in foreign countries, regardless of whethersuch activities are financed with U.S. funds. The House also adopted (221-208) acounter amendment by Representative Greenwood permitting U.S. grants to foreignNGOs as long as they do not use U .S.-provided money to perform abortions orviolate abortion laws in foreign nations. The Greenwood amendment further requiressuch organizations to support programs that reduce the incidence of abortion as amethod of family planning. Because the Smith language is more restrictiveconcerning foreign NGO eligibility for receiving USAID grants, it would be theoperative text if both amendments are enacted. Requirements in the Greenwoodprovision that NGOs support programs reducing abortions as a method of familyplanning and adhere to abortion laws in foreign countries, nevertheless, would alsoapply should conferees adopt both positions. Theoretically, however, some foreignNGOs that would be eligible recipients of USAID grants under the Greenwoodamendment would be barred from receiving U.S. population aid under the Smithrestrictions. The White House said the President would veto any bill that includedthe Smith language.

As has been the case in the past, the Foreign Operations conference committee meeting could not resolve the House-Senate differences on the family planning issue. Senate conferees insisted that UNFPA funding remain in the bill, while their Housecounterparts agreed to drop the modified Mexico City abortion restrictions containedin the Smith amendment if the UNFPA contribution was also removed. Followingfurther negotiations, conferees agreed to continue current law regarding populationaid funding levels and abortion restrictions -- that is, $385 million, metered on amonthly basis, but the deletion of both the Smith and Greenwood amendments. Theyalso added the $25 million UNFPA earmark, with conditions that passed the Houseand Senate.

The revised Foreign Operations bill ( H.R. 3422 ) makes no changes to the conference agreement of H.R. 2606 regarding UNFPA fundingand conditions, but the issue of abortion restrictions became one of the last and mostcontentious issues resolved in the final budget package. When congressional leadersrefused to include U.N. arrearage payments without revised Mexico City language,the White House reluctantly agreed to the abortion restrictions. This is the first timethat Mexico City restrictions are included in legislation. Under the terms of H.R. 3422 , private foreign non-governmental and multilateralorganizations that either perform abortions or lobby to change abortion laws inforeign countries are prohibited from receiving USAID population aid grants. ThePresident can waive the restrictions for up to $15 million in grants, but if he does,population aid funding declines from $385 million to $372.5 million. Therestrictions apply only to FY2000 and will expire on September 30, 2000. Althoughthe President used his waiver authority on November 30 and the impact onU.S.-funded family planning programs is expected to be minimal, critics of abortionrestrictions are concerned primarily about the precedent that is set and the effect itwill have on another contentious debate in Congress next year when the currentrestrictions expire.

Regional Allocations of U.S. Foreign Aid and the Request for an Africa-specific Account. Although the Middle Easthas received by far the largest proportion of U.S. assistance over the past threedecades -- 55-63% of bilateral aid appropriated in Foreign Operations spendingmeasures in most years-- allocations to other regions have fluctuated considerably,especially since the end of the Cold War. Asia, which received substantial assistancein the 1980s associated with the presence of U.S. military bases in the Philippines,had its share drop to 16% to 4% by FY1997. Latin America, where CentralAmerican governments were confronted with internal conflict, had its share dropfrom 16% to 6%. Africa's proportion remained about the same -- 7-8% -- adevelopment that disappointed those who argued that the world's poorest regionshould receive higher priority, especially with the reduction in emphasis on securityassistance. U.S. aid to the emerging democracies and market-oriented economies inEastern Europe and the former Soviet Union, where the United States had noprograms prior to 1990, grew to represent 14% of American bilateral assistancefunded in the Foreign Operations bill for FY1997.

Table 6. Regional Allocations of U.S. Aid (in millions of dollars; % of bilateral total in ForeignOperations)

Source: USAID. Amounts in the this table exclude food aid funded in the Agriculture Appropriations measure.

*FY1999 estimates include supplemental appropriations for Central America hurricane reconstruction ($621 million), economic aid for countries surroundingKosovo ($225 million), and assistance to Jordan ($100 million).

A number of observers, including some Members and congressionalcommittees, believed these shifts in regional aid allocations had swung too far. Thiswas particularly true in the cases of Asia and Latin America, given the Asianfinancial crises and significant U.S. interests to promote economic development inLatin America in order to counter the trend of rising illegal immigration to the UnitedStates. Foreign Operations appropriations measures the past two years haveemphasized the need to maintain or increase assistance especially to Latin America. In the case of Africa, others argued that not enough has been reallocated to offersufficient help to meet the region's unmet needs and to promote future U.S.-Africantrade opportunities.

As the share of bilateral Foreign Operations funding for the Middle East exceeded 60%, some in Congress began promoting the view that there should besome limits to the amount provided and that if the Administration wanted to pursuenew Middle East peace initiatives using foreign aid as an implementing tool,resources should be found within existing Middle East programs and not be takenfrom other regions.

Accordingly, for FY1998 Congress took steps to legislate a cap on Foreign Operations resources for the Middle East. At the initiative of RepresentativeCallahan, Chairman of the House Foreign Operations Subcommittee, lawmakersstipulated in the FY1998 funding measure (Section 586 of P.L. 105-118 ) that selectedMiddle East nations and regional programs could not receive more than $5.4 billionof the total appropriation. Following this, Israel put forth in January 1998 a plan tocut its aid over the next ten to twelve years. The concept behind the Israeli initiativeto decrease assistance from the United States was first raised by Prime MinisterNetanyahu in a speech before a joint session of Congress on July 10, 1996. Asoutlined to congressional and Administration officials by Israeli Finance MinisterNeeman in late January 1998, the United States would cut economic aid by $120million each year for about ten years, while increasing military assistance by $60million annually. At the end of the period, Israel would be receiving an annualappropriation of $2.4 billion in military aid but no longer receiving any economicassistance. If done over a ten-year period, U.S. aid to Israel would fall $60 millioneach year in net terms, with a total savings of $600 million by 2009. For FY1999,Congress supported the $60 million net reduction of aid to Israel, also adding asimilar $40 economic aid cut for Egypt.

The President's FY2000 Foreign Operations request reflected several of these regional allocation views expressed by Congress in recent years. Highlights of theAdministration's recommendations include the following.

Creation of the Development Fund for Africa Account. After a three-year absence, the President askedCongress to re-establish a separate Foreign Operations account for African aid andto increase funding slightly over FY1999 levels. Ten years ago, Congress and theAdministration launched a joint initiative to create special legislative authority forU.S. economic aid to Africa. The Development Fund for Africa (DFA -- authorizedin Chapter 10 of the Foreign Assistance Act of 1961) was intended to extend moreflexibility to USAID program managers and to protect aid resources for Africa frombeing transferred to other regions as new foreign policy crises unfolded. At its peak,the United States channeled about $800 million annually through the DFA.

Although the DFA authorization law remained in force, Congress ended the practice of a direct DFA appropriation in FY1996, funding Africa's assistance out ofworldwide development aid and child survival accounts. Following PresidentClinton's visit to Africa in 1998, during which he pledged to restore U.S. aid tohigher levels provided in previous years, the Administration has proposed a directDFA appropriation account for FY2000. The budget includes $745 million forAfrican development aid, including funds from both the DFA and Child Survivalaccounts. Combined with funds requested under the Economic Support Fund, largelyfor democracy and economic growth initiatives, and smaller amounts of militaryassistance, the FY2000 budget includes $893 million for Africa. This compares toFY1999 allocations of $883 million.

Increased Funding for Asia. The FY2000 foreign aid budget proposed significant increases in assistance programsthroughout the Asian region. The $424 million requested is nearly $100 million, or30% higher than allocations for FY1999. This represents the largest percentageincrease sought in the FY2000 foreign aid request for any of the five major regionsunder USAID's portfolio. Much of the increased funding is for a new East Asianeconomic recovery initiative. This multi-year plan, administered by USAID, wouldsupport job creation opportunities, social safety net programs, transparency andanti-corruption activities, and regional economic recovery programs. TheAdministration plans to spend about $53 million for the initiative out of bothdevelopment aid and ESF accounts. The Administration is also proposing anexpansion of various East and South Asian regional programs aimed at meetingglobal climate change goals and deterring forest and marine/coastal zone degradation,and promoting democratization and governance initiatives in South Asia. TheFY2000 budget request further includes a new item: a $5 million program to counterviolence against women and to promote increased participation by women in thepolitical process.

Modest Increases for Most Latin America Programs; Central America Reconstruction Supplemental. Excludingcounter-narcotics assistance and emergency Central American hurricane relief, LatinAmerica would receive a modest increase in U.S. assistance for FY2000. (TheFY1999 Omnibus Appropriation Act included a separate emergency supplementalfor drug control programs -- most of which was earmarked for Colombia -- thatdoubled the regular counter-narcotics budget.) The $735 million proposed level forthe region is roughly 8% higher than the "base" allocations for FY1999, afteradjusting for the supplemental drug and Central America disaster funds. The mostsignificant regional initiative Congress addressed in 1999 was a supplemental forreconstruction and other assistance for the victims of Hurricanes Mitch and Georges,which struck Central America and the Caribbean in 1998, and the more recentearthquake in Colombia. Of the $1 billion appropriated for hurricane relief andreconstruction (enacted in P.L. 106-31 ), $621 million will finance a Central Americaand Caribbean Recovery Fund to assist Nicaragua, Honduras, and other states tore-build their countries.

Middle East Aid Reduced for FY2000, but Large Supplemental Package Sought for Wye Peace Accord. ThePresident's FY2000 foreign aid request for the Middle East reduced slightly U.S.assistance to the region -- from $5.47 billion enacted for FY1999 to $5.24 billionproposed for next year. The $230 million reduction stemmed largely fromlarger-than-expected cuts in assistance for Israel and Egypt. Many assumed whenCongress first began this downsizing in FY1999, that phased cuts would continue ata steady pace of $100 million per year for ten years. The FY2000 proposal,however, recommends a cut of $150 million: $60 million for Egypt and $90 million(net) for Israel. Administration officials say that they still intend to follow theten-year time period, but that they have not established a firm pace at which amountswould be reduced. The budget also included a $1.9 billion supplemental/advanceappropriation proposal -- to be allocated over three years -- in support of the WyeMemorandum and the next phase in the Middle East peace process. The $1.9 billionWye Memorandum proposal would provide $900 million in FY1999 and an advanceappropriation of $500 million in both of FY2000 and FY2001. Israel would receive$1.2 billion, the Palestinians and Jordan, $400 million and $300 million, respectively.

Although the President had hoped that Congress would dispense with this proposal as part of an FY1999 supplemental ( P.L. 106-31 ), Congress only considered$100 million requested for Jordan in FY1999, deferring the balance to subsequentlegislation, including the Foreign Operations measure for FY2000.

Sharp Increase in Aid to Russia and Other Former Soviet States. In dollar terms, U.S. assistance to Russia and theother Newly Independent States (NIS) of the former Soviet Union would grow morethan for any other region. The $1.032 billion FY2000 request for the NIS accountis $185 million, or 22% higher than for this year; aid to Russia would rise from $172million in FY1999 to $295 million. The increase sought for FY2000, however, istotally the result of a $241 million Expanded Threat Reduction Assistance Initiativeplanned to be launched in Russia and other NIS countries next year. The ETRinitiative is aimed at reducing the risks of weapons proliferation, weapons deliverysystems, materials, and technology, and the transfer of scientific and technicalexpertise. The $241 million requested in Foreign Operations spending is part of alarger $1 billion Administration proposal for increasing amounts dedicated toproliferation issues in the NIS, with the remaining funds coming from theDepartments of Defense ($486 million) and Energy ($265 million). (For moreinformation, see CRS Report RS20203(pdf) , The Expanded Threat Reduction Initiativefor the Former Soviet Union: Administration Proposals for FY2000 , by Amy Woolfand [author name scrubbed], and CRS Issue Brief IB95077, The Former Soviet Union and U.S.Foreign Assistance , by [author name scrubbed].)

Congressional Action. The conference agreement on H.R. 2606 made a number of changes to the President'sregional and country aid proposals, some of which were significant factors in thePresident's decision to veto the bill. The second Foreign Operations measure( H.R. 3422 ) makes several adjustments that accommodate a number ofexecutive concerns:

Kosovo and other Balkan reconstruction assistance would grow considerably under the bill's $535 million earmark for East European assistance. This represents no change from the vetoed H.R. 2606 .

Funding levels for former Soviet states received a major boost in the revised Foreign Operations bill from amounts approved in H.R. 2606 . The new bill sets spending at $839 million -- up $104 million from H.R. 2606 -- a level $38 million higher than FY1999, but $193 millionless than requested for FY2000. H.R. 3422 earmarks $241 million forthe one of the President's top priorities, the counter-proliferation Expanded ThreatReduction Initiative. Other earmarks for Ukraine, Armenia, and Georgia protectfunding for these countries, while allocations for Russia and several other formerSoviet states might be reduced because of overall account reductions and theearmarks.

Middle East assistance, especially for Israel, Egypt, and Jordan, would be funded at or above requested levels for regular aid programs. Moreover,the new Foreign Operations measure fully funds the Wye River accord, the absenceof which in H.R. 2606 had been a primary reason for theveto.

Given the worldwide reductions in H.R. 2606 under both the development assistance and ESF accounts, it was likely that spendingin Africa, Latin America, and Asia would fall below the President's request. Anadditional $168.5 million in ESF aid added in H.R. 3422 will reduce thisimpact somewhat, although the decisions of how to allocate the specific cuts will beup to the Administration. H.R. 3422 further does not re-establish aseparate Development Fund for Africa, as proposed.

Korean Energy Development Organization (KEDO) and U.S. North Korea Policy. At the heart of the ClintonAdministration's North Korea policy is the 1994 U.S.-North Korea AgreedFramework, an arrangement under which the United States provides the DPRK witha package of nuclear, energy, economic, and diplomatic benefits, in exchange forsuspension by North Korea in the operations and infrastructure development of itsnuclear program. As part of the accord, two new light water nuclear reactors will beconstructed -- financed largely by South Korea and Japan -- to replace the nuclearfacilities shut down under the Agreed Framework that have the potential to producenuclear weapons grade material. While the new reactors are being built, the UnitedStates and other nations have been contributing funds to the Korean EnergyDevelopment Organization (KEDO) for the purchase of heavy fuel oil to supplementNorth Korea's power and electricity production. Administration officials previouslyestimated that annual KEDO contributions, appropriated in the Foreign Operationsbill, would total about $20-$30 million.

The Administration's policy of engagement with North Korea and the approach outlined in the Agreed Framework have been a frequent source of controversy incongressional debates in recent years. But a series of actions in 1998 by the NorthKorean government -- missile sales to Iran, suspected construction of a new nuclearsite, and the launch of a rocket that traveled over Japanese airspace -- prompted asharp reaction from congressional critics, during which the House voted to prohibitthe President's FY1999 $35 million request for KEDO.

Although lawmakers ultimately agreed to provide the $35 million payment of heavy fuel oil, Congress attached stiff conditions that had to be met in 1999 prior tothe full transfer of funds. Under terms provided in P.L. 105-277 , the first $15 millionbecame available only after March 4, 1999, when the President certified that progresswas occurring on implementing several nuclear-related agreements with North Korea,that the DPRK was cooperating fully in the canning and storage of all spent fuel fromits graphite-moderated nuclear reactors, that North Korea had not diverted anyassistance, and that the U.S. was moving ahead with efforts to block DPRK'sdevelopment and export of ballistic missiles.

The remaining $20 million became available June 1 following a second presidential certification that progress has been made on the nuclear and ballisticmissile issues, and that the U.S. and North Korea had agreed on the means to satisfyU.S. concerns about the DPRK's suspect underground construction. P.L. 105-277 further limited the President's "special" waiver authority (Section 614 of the ForeignAssistance Act of 1961), blocking its use to provide more than $35 million to KEDOin FY1999. In addition, Congress required the President to appoint a senior NorthKorea Policy Coordinator by January 1, 1999, to review U.S.-DPRK policy and todirect negotiations with North Korea. The President named former Secretary ofDefense William Perry to the position in late 1998.

The review of North Korean policy was delayed until after a visit by Secretary Perry to North Korea in May and a separate visit by U.S. inspectors to the suspectedunderground nuclear site. In a preliminary report, the inspectors said, that althoughthey found an extensive underground tunnel complex, work had ceased, the tunnelswere empty, and there was not evidence that North Korea was in violation of theAgreed Framework. Reportedly, North Korea had been demanding payment for aU.S. inspection, something the United States rejected. Nevertheless, shortlyfollowing the mid-March announcement by the State Department that North Koreahad agreed to multiple site visits, officials said that the United States would proceedwith a bilateral pilot agricultural project designed to improve potato production inNorth Korea and contribute an additional 200,000 metric tons of food aid to helpNorth Korea deal with its continuing food shortage and widespread starvation andmalnutrition. This was followed by an another 400,000 food pledge on May 17. While officials argue that food assistance is based solely on humanitarianconsiderations and need, some observers contend there is a connection betweenarrangements to visit the suspected nuclear site and the food decision.

Beyond issues related to conditions in last year's Foreign Operations measure and the release of FY1999 funds for KEDO, Congress considered this year theAdministration's $55 million request for KEDO payments in FY2000. The proposalis the highest since the U.S. first began financing heavy fuel oil in FY1995, largelydue to past shortfalls in U.S. funding and lower-than-anticipated contributions fromother nations. (For further information, see CRS Issue Brief IB91141, North Korea'sNuclear Weapons Program, by Larry Niksch.)

Congressional Action. H.R. 3422 , drawing on the same language in H.R. 2606 ,reduces the President's $55 million KEDO request to $35 million and, like forFY1999, makes available the first $15 million before June 1, 2000, and $20 millionafter June 1, subject to certain Presidential certifications regarding North Korea'snuclear program, ballistic missile threat, and several other items. The President maywaive the certification requirements for vital national security interests. The billfurther drops a House-passed provision that would have blocked the President fromreprogramming funds to increase the $35 million appropriation if he chose to do soat a later date.

Debt Reduction Initiatives for Poor Countries. Providing debt relief to poor developing nations thatborrowed in the past from the United States, other creditor governments, andinternational financial institutions has emerged as one of the key issues in the ForeignOperations debate for FY2000, the result of several factors. First, theAdministration's initial request of $120 million was nearly four times the amountappropriated for FY1999 in support of continuing debt reduction programs and twonew activities for FY2000. Secondly, encouraged by various international campaignspromoting more expansive debt relief that will target poverty reduction, including theJubilee 2000 movement, (11) several congressionalinitiatives have been introduced in1999 that go beyond the President's FY2000 request. Further, on March 16, 1999,the White House announced more ambitious U.S. debt reduction policies for theworld's most heavily indebted poor nations. At the G-7 Summit in June, thePresident's new policy was largely endorsed by the other major creditor governments. Finally, during World Bank/IMF meetings in September the institutions endorsed theG-7 proposals for reforming the Heavily Indebted Poor Country (HIPC) Initiative.

For the past decade, the United States has engaged in various forms of debt relief for developing nations, resulting in the cancellation of about $14.4 billion offoreign debt. Much of it -- $10.1 billion -- resulted from special cases involvingkey U.S. national interests: for Egypt in 1990 ($7 billion), for Poland in 1991 ($2.5billion), and for Jordan in 1995 ($635 million). U.S. debt reduction policy for othernations based strictly on need has been guided by the principle that eligible countries must have demonstrated a strong and sustained commitment to economic policyreforms prior to receiving debt relief. Under budget rules instituted in 1992,Congress has had to appropriate funds in advance representing the costs of cancelingdebt. The cost determination methodology is based on a complicated formula thattakes into account among other things, the loan's net present value, its interest rate,and the likelihood the loan will be repaid. For especially poor countries with particularly large debt overhangs, the appropriation requirement may be quite smallrelative to the loan's face value -- perhaps 10% or less.

When it was first introduced in 1996, HIPC was hailed as the first arrangement that included relief from debts owed to the World Bank, the IMF, and otherinternational institutions, organizations that hold over 25% of debt held by the mostheavily indebted nations. Previously, multilateral organizations had declined toparticipate in debt cancellation, arguing that it would increase their costs of raisingnew money to lend, expenses that would have to be passed on to borrowers. Forty-one countries -- mostly in Africa -- are eligible for HIPC, although only 29likely have "unsustainable" debt, a further criterion for being a HIPC participant. Countries deemed eligible for HIPC terms may have their bilateral public debtreduced by 80% after they have maintained a record of strong economic performancefor as much as six years. At present, Uganda, Bolivia, and Mozambique are the onlynations that enjoy full HIPC benefits.

Strong critics of HIPC emerged, especially among non-governmental organizations and religious groups working in developing countries. They chargethat HIPC terms are not deep enough -- that 90% or 100% of bilateral debt owedshould be canceled and multilateral debt write-offs should go further -- and that sixyears is far too long a period for countries to qualify. They further believe that thenon-sustainable debt criteria, based largely on a ratio of a country's debt-to-exports,is too high and therefore excludes many countries that are also in need of debt relief. Some critics oppose the economic reform requirements and argue for unconditionaldebt reduction. A number of organizations further advocate instituting mechanismsthat would ensure that savings realized by debtor governments would be channeledinto spending on basic services, such as health and education, that would improve thequality of life of the very poor. Many of these arguments are reflected in legislativeinitiatives launched in 1999, including H.R. 1095 (Debt Relief PovertyReduction Act of 1999), H.R. 772 (Hope for Africa Act), and H.R. 2232 (Debt Relief and Development in Africa Act of 1999). Complicating enactment of such bills, however, is the large additional costs thatwould be associated with efforts to broaden, deepen, and accelerate HIPC or U.S.bilateral debt reduction policies.

For FY2000, the President sought in February 1999 $120 million for three debt reduction activities funded under the Foreign Operations legislation. But betweenMarch and June the White House expanded U.S. debt reduction policy addressingmany of the concerns expressed by HIPC critics. The President's new initiative,much of which was endorsed by other leaders at the June G-7 economic summit inCologne, would provide deeper debt relief to more poor developing countries. Someof these steps are similar to those proposed in pending legislation -- especially H.R. 1095 -- although all congressional initiatives would expand HIPCbeyond the Administration's revised policy. Reflecting the higher costs of anenhanced HIPC initiative, the White House sent to Congress on September 21 an$850 million budget amendment to cover the anticipated U.S. costs. The revised$970 million total request over three years have the following major components:

$110 million (plus $210 million more in FY2001-2003) to continue U.S. bilateral debt relief agreements for reforming poorcountries.

$210 million (plus $390 million more in FY2001-2003) for U.S. contributions to the HIPC Trust Fund. While the World Bank and the IMF willfinance their own participation in HIPC, some multilateral organizations, such as theAfrican Development Bank, do not have the necessary resources to extend debt reliefto their debtors. The Trust Fund, which has received contributions of over $450million from about 19 countries, is designed to assist these international agencies toreduce debt owed by eligible HIPC nations.

$50 million for debt relief to countries that are committed to protecting their tropical forests. Congress enacted last year the Tropical ForestConservation Act of 1998 ( P.L. 105-214 ), authorizing the President to buy back,swap, or cancel concessional U.S. economic and food aid loans in order to generatelocal currencies that will be used to support tropical forest conservationprograms.

Congressional Action. The $33 million appropriation for debt reduction, limited entirely for bilateral relief, was a majorfactor in the President's decision to veto H.R. 2606 . While the revisedForeign Operations bill adds $90 million for bilateral debt cancellation, no U.S.contributions can be made to the HIPC Trust Fund and funding for FY2001-2003must be dealt with in the future. Nevertheless, in separate legislation( H.R. 3425 ) that is also enacted by reference in the ConsolidatedAppropriations measure, the White House gained congressional approval anauthorization that would allow the United States to vote in favor of an IMFoff-market gold sale that will finance the Fund's costs of HIPC participation.

FY1999 Supplemental Appropriations and Foreign Operations

Congress considered several major FY1999 supplemental appropriation requests as part of S. 544 and H.R. 1141 , and a separate emergencyKosovo military and humanitarian initiative. H.R. 1141 , which clearedCongress and was signed by the President on May 21 ( P.L. 106-31 ), includes $1billion for Central American and Caribbean reconstruction aid in the wake ofhurricanes that struck the region in late 1998; $100 million for Jordan, the mosturgently sought portion of a $1.9 billion, three-year aid package for Israel, Jordan,and the Palestinians to help implement the terms of the Wye Memorandumnegotiated in October 1998; and $819 million in humanitarian and refugee aid toKosovo and surrounding countries. All of the Middle East and Kosovo assistance,and nearly $700 million of the Central American relief package fall under thejurisdiction of the Foreign Operations measure.

Because of congressional decisions to offset the costs of the new spending, however, the President threatened to veto preliminary House and Senate bills. Proposed offsets -- cuts to existing appropriations -- affected Foreign Operationsprograms especially in H.R. 1141 . Among the most controversialoffsets in the House bill was the rescission of $648 million in callable capitalappropriated prior to 1980 that is used by multilateral development banks to leverageborrowing in global markets and to maintain their high credit ratings. Administrationofficials claimed this might lead to higher borrowing costs by the World Bank andothers, and thereby, recommend that the President veto the legislation. H.R. 1141 would have further cut existing funds for the Export-ImportBank and USAID development assistance programs. As enacted, most of the ForeignOperations offsets were dropped, except for a $25 million rescission of priorappropriations for U.S. contributions to the Global Environment Facility, and $5million in ESF funding. (For further information, see CRS Report RL30083(pdf) , Supplemental Appropriations for FY1999: Central America Disaster Aid, MiddleEast Peace, and Other Initiatives, by [author name scrubbed].)

For Additional Reading

Foreign Operations Programs

CRS Issue Brief IB88093. Drug Control: International Policy, by Raphael Perl.

CRS Issue Brief IB96008. Multilateral Development Banks: Issues for the 106th Congress , by Jonathan Sanford.

CRS Issue Brief IB86116. U.N. System Funding , by [author name scrubbed].

CRS Issue Brief IB96026. U.S. International Population Assistance: Issues for Congress , by [author name scrubbed].

Foreign Operations Country/Regional Issues

CRS Issue Brief IB95052. Africa: U.S. Foreign Assistance Issues , by Raymond Copson.

CRS Issue Brief IB95077. The Former Soviet Union and U.S. Foreign Assistance , by [author name scrubbed].

CRS Issue Brief IB85066. Israel: U.S. Foreign Assistance , by Clyde Mark.

CRS Issue Brief IB91141. North Korea's Nuclear Weapons Program , by Larry Niksch.

Selected World Wide Web Sites

CRS Foreign Affairs, Defense and Trade Division http://www.loc.gov/crs/foreign/fandpage.html

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

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

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

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/

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/

Appendix -- Detailed Foreign Operations Accounts

Table 7. Foreign Operations Appropriations: DiscretionaryBudget Authority (millions of dollars)

a. The FY2000 request includes amendments made since the initial submission on Feb. 1, 1999, as well as the complete three year request for the Wye River/Middle East peace accord.

b. The account structure for development aid differs among various versions of the bills. This tableshows a consistent and comparable account structure based on the conference agreement fordevelopment aid, FY2000.

c. Amounts reflect the transfer of $12.5 million from development assistance/population aid to childsurvival due to the President's exercise of his waiver authority to exempt abortion restrictionsfrom applying certain population funds.

d. For FY2000, the Administration requested a separate account under development assistance forAfrica (the Development Fund for Africa, or DFA). African aid was also proposed within theChild Survival account. The total amount requested for Africa -- DFA plus Africa ChildSurvival -- was $745 million. This compares to an FY1999 level of $730 millionappropriated within the Child Survival and Development Assistance Fund accounts.

e. The Administration requested $1.9 billion in ESF and FMF funds to support the Wye RiverAccord over the period FY1999-2001. Congress approved $100 million of the total for FY1999and an additional $1.825 billion that is available through FY2002.

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

g. On September 21, 1999, the Administration amended its pending budget request for debtreduction, seeking $250 million more for debt reduction in FY2000, and $600 million forFY2001-2003.

h. Of this amount, however, $21 million is not available until September 30, 2000.

i. IMF funding occurs only occasionally -- about every five years. There was no request forFY2000.

j. The "Base" Appropriation refers to amounts funded in the regular Foreign OperationsAppropriations for FY1999, as included in Division A of the Omnibus Appropriations Act,FY1999 ( P.L. 105-277 ). Congress approved additional Foreign Operations funds in twosupplemental measures: $411 million for Child Survival programs, aid to Russia, victims ofthe Kenya/Tanzania embassy bombings, counter-narcotics, counter-terrorism, and Y2Kupgrades (Division B of P.L. 105-277 ); and $1.641 billion for Central America hurricane relief,Kosovo humanitarian assistance, counter-narcotics, and the administration of three foreignaffairs commissions. All but about $5 million of the supplementals were declared"emergencies" and do not count against the Foreign Operations FY1999 allocation limits. Under special allowances provided in the Balanced Budget Act of 1997, Foreign OperationsAppropriations for multilateral development bank arrearage payments and IMF funds also donot count against the FY1999 allocation limits.