U.S. Democracy Assistance in Burma: USAID and State Could Strengthen Oversight of Partners' Due Diligence Procedures
Released: 2017-07-28T00:00:00

Letter

Background

Burma’s Population and Geography

Burma, with a population of over 56 million people, is located in Southeast Asia between Bangladesh, India, China, Laos, and Thailand, and borders the Andaman Sea and the Bay of Bengal (see fig. 1). The country consists of seven divisions, seven states, and one union territory. Burma is an ethnically diverse country with 135 officially recognized ethnic groups.

Burma’s Political History and U.S. Relations

From 1962 until 2011, Burma was under military rule, with leaders routinely restricting freedom of speech, religion, and movement and committing other serious human rights violations against the Burmese people, according to State documents. Further, the military government, at times, condoned the use of forced labor and took military action against ethnic minorities living within the country, according to State.

Through legislation and executive orders, political and economic sanctions were imposed on Burma’s military government in response to its violent suppression of the Burmese people. In May 1997, President Clinton declared a national emergency with respect to Burma. Beginning with this executive order, the United States prohibited new investment in the country and later also imposed broad sanctions to prohibit the exportation of financial services, certain imports, and transactions with senior Burmese officials and others and provided limited assistance to the country. The sanctions were developed through laws, such as the Burmese Freedom and Democracy Act of 2003 and the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008, as well as through presidential executive orders.

In 2011, the Burmese government began a transformation to a more open and democratic society. In March 2011, the State Peace and Development Council (SPDC), which had been in power since 1988 and had restricted freedom of speech and committed human rights violations, formally dissolved itself and transferred power to a semicivilian government known as the Union Government, headed by President Thein Sein. President Thein Sein, with the support of Burma’s Union Parliament, implemented a number of political and economic reforms. See figure 2 for a time line of significant events since 2011.

In response to the reforms made by the Burmese government starting in 2011, the U.S. government adopted a new policy of greater engagement while maintaining existing sanctions. On April 4, 2012, the United States announced the reestablishment of the USAID mission in Burma to support further political and economic reforms. According to U.S. officials, U.S. democracy assistance aims to deepen Burma’s political and economic transition, strengthen human rights, ensure that reform benefits everyday people, and support the development of a stable society that reflects the diversity of the country.

In November 2015, Burma held nationwide parliamentary elections, from which the NLD, Aung San Suu Kyi’s political party, emerged with an absolute majority in both chambers of Burma’s Union Parliament. Using its majority in both houses of parliament, the NLD elected Htin Kyaw, Aung San Suu Kyi’s close advisor and long-time NLD supporter, according to a Congressional Research Service report, as president. Burma’s first civilian government after more than 5 decades of military dictatorship was sworn into office in March 2016.

On October 7, 2016, President Obama issued an executive order that ended the national emergency with respect to Burma that had been in effect since 1997 and revoked five other executive orders that had imposed, enforced, or waived economic sanctions on Burma. In addition, the executive order waived the financial sanctions contained in the 2008 JADE Act, as allowed for in the act.

Current Challenges Facing the Burmese Government

Burma has made progress in its transition to a democratically elected civilian government, according to U.S. officials, but the new government still faces significant challenges, given the country’s history of corruption, repression, human rights abuses, armed conflict, and isolation. There is broad agreement among the international community that Burma’s opening constitutes the most significant opportunity to advance democracy and national reconciliation in the country in more than 60 years, according to USAID. However, the new government will need to address many issues to continue its democratic transition.

A recent Congressional Research Service report identified several challenges facing Burma’s new government, including managing relations with the military, ending the ongoing civil war, dealing with internally displaced minority ethnic groups, and releasing its political prisoners. U.S. officials in Burma also identified many of these same issues. Specifically, the main challenges identified were the following: managing relations with Burma’s military, known as the Tatmadaw. Burma’s new government will need to work with the military to get any reforms passed. By order of the Burmese constitution, the military occupies 25 percent of the seats in parliament, giving it the ability to block constitutional amendments. ending the civil war. For Burma’s new government to be successful, it must bring about peace. For nearly 70 years, the Burmese government and various ethnic armed organizations have engaged in periods of active fighting and times of relative peace under negotiated ceasefire agreements. The most recent ceasefire was signed in October 2015, but not all ethnic armed organizations were signatories. ending the persecution of minority groups. Burma’s new government faces international pressure to end widespread persecution of minority groups. Burma has been plagued by the continued persecution of minority ethnic groups, especially the Rohingya, a Muslim group located in Rakhine State. resettling internally displaced people. Burma’s new government also faces international pressure to develop a solution that allows for the safe resettlement of tens of thousands of internally displaced people. In addition to the estimated 100,000 Rohingya located in resettlement camps in Rakhine State, Burma has tens of thousands of other internally displaced persons, mostly in Kachin State and Shan State, the result of ongoing fighting between the Tatmadaw and several ethnic militias. releasing political prisoners. Lastly, Burma’s new government needs to release all remaining political prisoners or risk facing increased international scrutiny and pressure. The Burmese Assistance Association for Political Prisoners asserts that as of July 31, 2016, at least 83 political prisoners remained in jail, along with 202 activists awaiting trial for political actions.

In addition, U.S. officials have also cited a low level of capacity as a major challenge for Burma’s new government. USAID officials told us that many of the members of the new government have little to no experience governing. As a result, there is a need for capacity building.

U.S. Agencies Providing Democracy Assistance in Burma

U.S. democracy assistance in Burma is primarily provided by USAID’s Mission in Burma Office of Democracy and Governance (USAID/DG), USAID’s Bureau of Democracy, Conflict, and Humanitarian Assistance’s Office of Transition Initiatives (USAID/OTI), and State’s Bureau of Democracy, Human Rights, and Labor (State/DRL). USAID/DG and USAID/OTI maintain staff at the U.S. embassy in Burma, while State/DRL manages its projects in the country from its headquarters in Washington, D.C., and through the human rights officer at the embassy, consistent with State/DRL practice.

USAID/DG: Supports U.S. foreign policy in Burma by promoting democracy and respect for the rule of law and human rights, building transparent and accountable governance systems, supporting independent media, and fostering a vibrant, tolerant civil society.

USAID/OTI: Supports U.S. foreign policy objectives by promoting stability, peace, and democracy through fast, flexible, short-term assistance targeted at key political transition and stabilization needs. USAID/OTI works to enhance the ability of key stakeholders to engage in the peace process, support civil society to advance reforms, and reduce the influence of drivers of intercommunal conflict.

State/DRL: Supports U.S. foreign policy by promoting democracy, protecting human rights and international religious freedom, and advancing labor rights globally.

U.S. Strategies for Democracy Promotion in Burma

The Burma Democracy Strategy developed by USAID and State in 2015 includes five strategic goals: 1. Develop the capacity of influential entities to employ principles of a well-governed democratic state that is inclusive, accountable, and responsive to its people. 2. Support and strengthen civil society, and strengthen societal foundations and institutions at all levels to reflect the will, concerns, and participation of the Burmese people. 3. Encourage responsible investment and greater respect for human rights by the private sector. 4. Support Burma’s peace process, while engaging the military on human rights issues. 5. Promote tolerance and support legitimate and sustainable processes, which enable domestic stakeholders to pursue national reconciliation and the establishment of a stable, inclusive democratic union.

USAID and State also rely on two other, broader U.S. strategies when developing their democracy projects for Burma, according to U.S. officials.

The Burma Integrated Country Strategy: An interagency, multiyear, overarching strategy that encapsulates U.S. policy priorities and objectives and the means by which foreign assistance, among other things, will achieve these priorities.

USAID’s Strategy on Democracy, Human Rights, and Governance: A framework to support the establishment and consolidation of inclusive and accountable democracies.

See appendix III for more information on how these strategies align with the Burma Democracy Strategy.

USAID and State Have Funded 34 Democracy Projects in Burma since 2012, but Coordination of These Projects Has Been Incomplete

USAID and State Have Funded 34 Democracy Projects in Burma since 2012

USAID and State have obligated over $113 million in funding for 34 democracy projects in Burma, according to agency officials, since 2012, when the USAID Mission in Burma reopened. Specifically, USAID/DG and USAID/OTI obligated about $104 million from fiscal years 2012 through 2016, while State/DRL obligated about $9 million over the same period. See table 1 for a breakout of USAID and State obligations for democracy projects in Burma.

USAID/DG has initiated eight democracy projects in Burma since 2012, with obligations totaling more than $60 million. Total obligations for each project have ranged from less than $1.2 million to $17.6 million, and the projects have had an average duration of 3-1/2 years. According to USAID officials, USAID/DG projects have focused on civil society participation, particularly on the elections held in November 2015, and strengthening democratic institutions. For example, one project focuses on strengthening core democratic institutions at different governmental levels to address capacity limitations.

USAID/OTI has initiated two projects that included more than 400 democracy activities in Burma since 2012, with obligations totaling more than $43 million, according to USAID/OTI officials. USAID/OTI officials said that the activities generally have lasted for 3 to 6 months, with some lasting up to a year. The projects have primarily focused on finding opportunities to bring government and civil society together and supporting the ongoing peace process, according to USAID officials. For example, USAID/OTI provided assistance to an implementing partner for a human rights defenders’ skill-building forum and assisted another implementing partner with three workshops in three cities in the Mandalay region during the International Day of Peace 2016.

State/DRL has initiated 24 democracy projects in Burma since 2012, according to State/DRL officials, with obligations totaling more than $9 million. Obligations for these projects have averaged approximately $500,000, and the projects typically have lasted 12 to 15 months, according to State/DRL officials. Current State/DRL priorities in Burma include addressing communal violence, inclusive economic growth, and corruption and public financial management, according to a State/DRL official. For example, one State/DRL project’s goal is to reduce ethnic conflict and build social cohesion by bringing together influential people of diverse backgrounds and training them in conflict resolution.

As of September 30, 2016, USAID and State had 13 active democracy projects in Burma (6 USAID/DG projects, 1 USAID/OTI project, and 6 State/DRL projects). See table 2 for information on the projects, including the responsible office or bureau and the projects’ total estimated cost. Appendix IV provides additional information on all 13 currently active USAID and State projects.

In reviewing the scopes of work of USAID/DG’s, USAID/OTI’s, and State/DRL’s 13 active democracy projects, we found that either the purpose or objectives of each project support the strategic goals of the Burma Democracy Strategy. The following are examples:

USAID/DG’s “Accountable to All: Strengthening Civil Society and Media in Burma” project supports the strategy’s goal of strengthening civil society.

USAID/OTI’s “Burma Transition Initiative-II” project supports the goal of developing the capacity of key individuals to employ good governance principles.

State/DRL’s “Multi-Religious Networks Promoting Religious Diversity and Tolerance” project supports the goal of promoting tolerance and supporting national reconciliation.

USAID and State Democracy Projects Are Primarily Coordinated through an Interagency Working Group Represented by Embassy Officials That Has Not Directly Included State/DRL

The U.S. embassy in Burma’s Assistance Working Group (AWG), the primary mechanism for coordinating agencies’ democracy projects in Burma, according to USAID officials, consists of representatives from each agency located at the embassy, including USAID, State, and the Department of Defense. Agencies submit all potential projects to the AWG, which is co-chaired by the embassy’s Deputy Chief of Mission and the USAID Mission Director. The AWG meets biweekly to review and approve assistance projects and coordinate assistance among U.S. agencies. The AWG ensures that all democracy projects align with relevant strategies and address the legal and policy restrictions on U.S. assistance, including projects that propose working with the government of Burma, according to embassy officials.

According to embassy officials, the embassy does not directly include State/DRL in AWG proceedings because its policies allow only entities (including agencies, bureaus, or offices) with staff at the embassy to participate. Embassy officials told us that entities without embassy-based staff, including State/DRL, are not directly included in the AWG because of the high number of project proposals and the logistical difficulties of coordinating meeting times with entities in different locations around the world. Instead, embassy officials noted, the embassy assigns each entity without embassy-based staff, including State/DRL, an embassy representative who presents the entity’s project proposals at the AWG. Embassy officials also noted that the human rights officer at the embassy serves as the representative for State/DRL in the AWG and that State/DRL channels all proposal documents for embassy feedback to its representative through the Burma desk in Washington, D.C., and has contact with its representative through monthly phone calls and quarterly visits to Burma.

However, while the documents that State/DRL submits for project proposals to the AWG contain all the information required by the AWG for review, there is no formal mechanism for State/DRL to present its analysis of the proposals as part of the AWG review, according to State/DRL officials. Further, because State/DRL channels all proposal documents through the Burma desk rather than directly to the State/DRL embassy representative, the representative has not always had all the necessary knowledge or information to fully represent State/DRL’s proposals to the AWG, according to a State/DRL official. State/DRL also lacks the opportunity to provide direct input on other agencies’ democracy projects at the AWG, according to State/DRL officials. Moreover, State/DRL does not always have the opportunity to provide input into projects led by the embassy that are developed and implemented quickly. State/DRL officials told us that the bureau has requested to participate directly in AWG meetings via teleconference but that the embassy has denied those requests. According to embassy officials, representatives from any entity without an embassy presence, including State/DRL, may attend the AWG if they are in Burma for official duty. In addition, according to the embassy, other agencies and offices providing democracy assistance at the embassy work to coordinate with State/DRL outside of the AWG process through one-on-one consultations with State/DRL officials and by allowing State/DRL to review technical proposals prior to AWG review.

USAID officials told us that, while the AWG is the primary coordination mechanism for U.S. agencies’ democracy projects in Burma, the agencies conducting these projects use other methods to coordinate with State/DRL. For example, according to USAID officials, USAID participates in coordination meetings with State/DRL during the latter’s regular visits to Burma, joins monthly calls between the embassy and State/DRL, solicits and receives State/DRL input on democracy project designs, and conducts ad hoc meetings and calls with State/DRL.

However, because State/DRL cannot regularly attend AWG meetings, officials noted that they have not always received feedback on AWG decisions on their projects. Embassy officials told us that for approved projects, they do not provide additional information. For projects that the AWG does not concur with, the embassy provides written feedback to the Burma desk officer to share with State/DRL. A State/DRL official told us that State/DRL had not received this feedback in the past. State officials told us that starting in fiscal year 2016, this feedback has been provided verbally to State/DRL as part of State/DRL’s project review process. In addition, in May 2017, officials from the embassy, the Burma desk, and State/DRL stated that they had recently initiated a process to identify more efficient and inclusive methods for coordinating with and obtaining State/DRL’s input on future democracy program decisions, partly as a result of our review.

We assessed the embassy’s AWG in relation to key features of interagency collaboration that GAO previously identified and found that the AWG generally displayed six of the seven features. For example, we found that the AWG had clearly defined roles, responsibilities, and leadership, outlined in documents that were circulated to, and approved by, all participating bureaus and offices within the embassy. However, prior to the recent actions taken to improve coordination, the AWG had not adequately ensured that relevant participants were included in collaborative efforts. If State’s recent efforts to improve coordination with State/DRL are properly implemented, these efforts could potentially address this feature of effective collaboration for the AWG.

USAID and State Have Taken Steps to Help Ensure That Democracy Projects and the Burma Democracy Strategy Address and Support the Specified Purposes and Groups, Respectively, for Burma Assistance Funding

Several annual appropriations acts have stated that assistance for Burma shall be made available for certain types of activities. For example, the Consolidated Appropriations Act, 2016, states that appropriated funds for assistance for Burma shall be made available to strengthen civil society organizations in Burma, including as core support for such organizations; for projects to promote ethnic and religious tolerance, including in Rakhine and Kachin states; and for the implementation of the Burma Democracy Strategy.

Other annual appropriations acts from 2012-2015 contained similar specified purposes for Burma assistance funding, with some variations.

USAID and State take several actions to ensure that their democracy projects support these purposes. USAID officials stated that as new project activities are designed, annual appropriations act language for Burma is taken into account as part of the project design process. A State/DRL official told us that State/DRL chooses the projects it pursues in Burma based on overall State/DRL policy objectives, which are in general alignment with the purposes found in annual appropriations acts for the types of projects that shall receive funding. In addition, in reviewing proposed assistance projects, the AWG works to ensure that USAID and State projects address these purposes.

Through our analysis of project documents, we found several examples of USAID and State democracy projects where the stated objectives of the project generally addressed one of the specified purposes in the Consolidated Appropriations Act, 2016. See table 3 for examples.

Further, the Consolidated Appropriations Act, 2014, required that the Burma Democracy Strategy include support for civil society, former prisoners, monks, students, and democratic parliamentarians. We reviewed the Burma Democracy Strategy and determined that it includes language regarding supporting all of the specified groups, as shown in table 4.

USAID and State Make Some Efforts to Prevent U.S. Democracy Assistance from Being Provided to Prohibited Entities and Individuals, but Partners Indicate They Could Benefit from Further Guidance, and USAID/DG and State Do Not Review Partners’ Procedures

Annual appropriations acts have included provisions that state U.S. democracy assistance may not be provided to certain categories of prohibited entities and individuals. We found that USAID/DG, USAID/OTI, and State/DRL inform their implementing partners about these restrictions and include due diligence requirements in their award agreements to address these restrictions. However, some partners indicated that they could benefit from additional guidance on how to conduct these activities, and USAID/DG and State/DRL do not review implementing partners’ due diligence procedures. We found that some implementing partners do not conduct due diligence, while others use a range of approaches and expressed concerns about whether they are meeting their responsibilities. Standards for Internal Control in the Federal Government call for management to periodically review policies, procedures, and related control activities for continued relevance and effectiveness in addressing related risks. Providing only some guidance on how to conduct due diligence to partners unclear on appropriate procedures for undertaking such procedures, and not conducting reviews of partners’ due diligence processes, may limit USAID’s and State’s ability to avoid making U.S. democracy assistance available to prohibited entities and individuals.

Appropriations Acts Prohibit U.S. Democracy Assistance from Being Provided to Prohibited Entities and Individuals in Burma

Annual appropriations acts have included provisions that state that U.S. assistance cannot be provided to certain categories of entities and individuals. These restrictions have varied over the years in number, breadth, and applicability. Depending on the project’s purpose, funding year, and source of funds for each democracy project, different restrictions apply.

The active democracy projects we reviewed were funded by funds from a variety of fiscal years and accounts to which different restrictions apply. However, as an illustrative example, the Consolidated Appropriations Act, 2016, states that assistance may not be made available for budget support for the Government of Burma; to any successor or affiliated organization of the SPDC controlled by former SPDC members that promotes the repressive policies of the SPDC; to any individual or organization credibly alleged to have committed gross violations of human rights, including against Rohingya and other minority groups; to any organization or individual the Secretary of State determines and reports to the appropriate congressional committees that advocates violence against ethnic or religious groups and individuals in Burma, including such organizations as Ma Ba Tha.

USAID and State Provide Information about Prohibited Entities and Individuals and the Need for Due Diligence

USAID/DG and USAID/OTI have taken various steps to inform all implementing partners of the restrictions, including by providing a description of certain categories of entities and individuals that are prohibited from receiving assistance in all of their award agreements and responding to questions from implementing partners about the restrictions, according to USAID officials. Specifically, USAID/DG and USAID/OTI have both included language regarding the restriction against providing assistance to any individual or organization credibly alleged to have committed gross violations of human rights in all of the project awards for the active projects in 2016. In addition, the USAID Mission’s legal advisor held several training sessions on the restrictions, including on the need to conduct due diligence, during events such as post-award conferences and standalone training sessions.

According to a State/DRL official, for programmatic reasons, State/DRL started including information on the restriction against providing assistance to any individual or organization credibly alleged to have committed gross violations of human rights in its project awards in 2016, in response to language in the Consolidated Appropriations Act, 2016. State did this even though the projects utilized funding for which this restriction was not applicable. Three of the five awards signed in 2016 included information specifically about the need for conducting due diligence to identify potential recipients alleged to have committed gross violations of human rights. In addition, one award signed prior to 2016 included an amendment in September 2016 that added similar information on the restriction and the need to conduct due diligence. This project utilized funding for which the restriction against providing assistance to any individual or organization credibly alleged to have committed gross violations of human rights was applicable. State/DRL officials told us that they are considering the bureau’s approach going forward on due diligence requirements for implementing partners.

According to USAID and State, the restrictions in the annual appropriations acts can change from year to year, and their applicability can vary depending on, for example, the funding account or purpose of the program. USAID and State/DRL said that they review the legal restrictions each year and inform implementing partners of any changes in the restrictions. USAID officials also said that they update their training materials with current information as part of their annual review or in response to partner questions.

We found that all 13 of USAID/DG’s, USAID/OTI’s, and State/DRL’s current implementing partners were generally aware of the current restrictions and the need for them to conduct due diligence on potential assistance recipients, where restrictions were applicable.

USAID and State Provide Some Guidance on Due Diligence, but USAID/DG and State/DRL Do Not Review Partners’ Processes

USAID and State have provided some guidance to their implementing partners on how to conduct due diligence to address appropriations acts restrictions. However, USAID/DG and State/DRL do not review partners’ due diligence processes, according to agency officials. USAID/OTI communicates frequently with its partner about conducting due diligence. According to USAID/OTI officials, they are in daily contact and hold three weekly meetings with the partner about activity design, which involves partner selection for the activities and conducting due diligence. In addition, USAID/OTI officials stated that they conferred with the partner regarding due diligence procedures as appropriate during weekly “Senior Management Team” meetings. USAID/DG officials stated that they used trainings and individual meetings with partners to provide guidance and answer questions on conducting due diligence. In the USAID Mission’s March 2016 training session, the USAID legal advisor provided information on, for example, using U.S. government websites to check for prohibited entities and individuals. However, training on how to conduct due diligence to identify parties alleged to have committed gross violations of human rights was limited to instructing partners to “search public sources” and providing several search terms. Since the March 2016 training, USAID/DG has not provided additional written information to its implementing partners on how to conduct due diligence. Similarly, State/DRL has provided some guidance to only a few implementing partners on conducting due diligence. We found that three of the four State/DRL awards we identified earlier as including information on the restriction against providing assistance to any individual or organization credibly alleged to have committed gross violations of human rights stated that a review of open-source documents must be conducted, with nothing further on due diligence. The fourth award included more detailed language on the due diligence process, including requirements to check recipients against existing sanctions lists and conduct searches in both Burmese and English. State/DRL did not provide any other written guidance to its implementing partners on how to conduct due diligence, according to agency officials.

Moreover, for those projects active in 2016, USAID/DG and State/DRL did not review their implementing partners’ due diligence procedures, leaving it to the partners to design and conduct their own procedures, according to USAID/DG and State/DRL officials. These officials told us that implementing partners report the results of due diligence only when they have found derogatory information about an individual or organization, as is required of the partners by the agreements for those projects that were active in 2016; the AWG then makes a final determination of that individual’s or organization’s eligibility for assistance.

Standards for Internal Control in the Federal Government states that management should periodically review policies, procedures, and related control activities for continued relevance and effectiveness in addressing related risks. By providing only some guidance on how to conduct due diligence and by not reviewing partners’ procedures, USAID/DG and State/DRL miss opportunities to help partners strengthen their due diligence efforts. Further, the agencies limit their ability to address any risks that assistance may be provided to prohibited entities and individuals.

Implementing Partner Representatives Expressed Concern about Adequacy of Due Diligence Procedures and That They Could Benefit from Additional Guidance

Representatives of the USAID/DG, USAID/OTI, and State/DRL implementing partners active in 2016 told us they use a variety of procedures to conduct due diligence, and some expressed concerns about the due diligence process. These partners ranged from large, international nongovernmental organizations to smaller, more locally based groups. One USAID implementing partner stated that their organization did not conduct any due diligence, despite a requirement to do so. Representatives of the other partners reported using a variety of due diligence procedures. Examples included conducting open-source searches, using personal networks to check on individuals’ credentials, or using their organization’s established due diligence procedures that are used in all relevant countries.

Implementing partner representatives also expressed concerns about the adequacy of their organizations’ due diligence procedures and about how to conduct due diligence in certain situations, such as the following:

One representative told us they had requested, but had not received, additional information beyond the training session held by the USAID Mission’s legal advisor. The representative noted that the term “substantive checking” was not explained in USAID due diligence procedures and that USAID had not responded to a request for an explanation.

Another representative said that they were unsure whether their organization’s due diligence procedures were sufficient to satisfy their obligations under their award from USAID and expressed a desire for more guidance.

Another representative said that their organization lacked the capacity to conduct Internet searches in Burmese because it does not employ local staff.

Another representative observed that many people in Burma have the same name or have multiple names, which can complicate the due diligence process, and expressed uncertainty about the correct procedure in those situations.

Several representatives told us about instances in which their organizations received the attendee list for a project activity, such as a training class, just prior to the event. The representatives said that their organizations lacked the ability to quickly conduct due diligence on these attendees and instead had to complete due diligence after the event, if at all. Similarly, another representative said that the need to assist a local project can arise quickly, allowing little time for his organization to conduct due diligence on potential recipients.

In addition, USAID Mission officials stated that conducting due diligence to identify those credibly alleged to have committed gross violations of human rights is burdensome and creates a large compliance issue for implementing partners while syphoning off resources from the projects.

Conclusions

Since 2012, the U.S. government has committed increasing diplomatic and financial resources to helping Burma transition to a democratically elected civilian government, obligating over $113 million for 34 democracy projects. USAID and State have taken some actions to ensure that their democracy projects support the specified purposes of annual appropriations act provisions regarding assistance to Burma. However, some partner representatives are concerned about the sufficiency of guidance they have received from State and USAID regarding how they should conduct due diligence to ensure that U.S. assistance is not provided to prohibited entities and individuals. Further, the lack of USAID/DG and State/DRL review of partners’ due diligence procedures limits the agencies’ ability to help strengthen these efforts. Additional agency involvement in the due diligence process could better ensure that implementing partners do not provide U.S. democracy assistance to prohibited entities or individuals. The importance of this is highlighted by the history of human rights abuses in Burma and the reported clashes between Burma’s military and various ethnic groups in Burma.

Recommendations for Executive Action

To better ensure that sufficient due diligence is undertaken by implementing partners of U.S. democracy assistance in Burma, where appropriate, to help ensure that assistance is not made available to prohibited entities or individuals, we are making the following two recommendations:

We recommend that the Administrator of USAID direct the Mission in Burma to review its procedures and practices regarding due diligence for democracy projects to determine whether additional guidance or reviews of implementing partners’ due diligence procedures would be appropriate.

We recommend that the Secretary of State direct the Bureau of Democracy, Human Rights, and Labor to review its procedures and practices regarding due diligence for Burma democracy projects to determine whether additional guidance or reviewing implementing partners’ due diligence procedures would be appropriate.

Agency Comments

We provided a draft of this report to State and USAID for comment. In their written comments, reproduced in appendix V and VI, both State and USAID concurred with our recommendations. USAID disagreed with our characterization of their due diligence guidance, stating that it has provided extensive training to implementing partners on legal restrictions and due diligence requirements. We found that all USAID implementing partners we spoke with were aware of the current restrictions and the need for them to conduct due diligence. However, we note that several USAID partners were uncertain as to whether their actions to conduct due diligence were adequate. Further, USAID noted that some of the awards included in our assessment do not require implementing partners to conduct due diligence. We reported that USAID and State officials told us that due diligence is not a legal obligation under the annual appropriations acts but rather is a tool that is used to further implementation of legal restrictions or for risk mitigation. Moreover, we found that all current USAID projects included in this review contained language in the award agreements establishing a restriction against providing assistance to any individual or organization credibly alleged to have committed gross violations of human rights. State and USAID also provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of State, and the Administrator of the U.S. Agency for International Development.

If you or your staff have any questions about this report, please contact me at (202) 512-3149, or GootnickD@gao.gov . Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VII.

Appendix I: USAID and State Use Several Tools to Monitor and Evaluate Their Democracy Projects in Burma

The U.S. Agency for International Development (USAID) and the Department of State (State) use, among other things, written reports and site visits to monitor their democracy projects in Burma. We found that USAID’s implementing partners met all monitoring report requirements specified in the agreements, while State’s Bureau of Democracy, Human Rights, and Labor’s (State/DRL) implementing partners generally met the reporting elements. USAID and State require evaluative components in partners’ final reports, which partners provided. In addition, USAID and State have conducted some external evaluations.

USAID and State Use Written Reports and Site Visits to Monitor Democracy Projects in Burma, and Implementing Partners’ Reporting Generally Responded to Reporting Elements

USAID and State Use Several Tools to Monitor Their Democracy Projects

USAID Burma Mission’s Office for Democracy and Governance (USAID/DG), USAID’s Bureau for Democracy, Conflict, and Humanitarian Assistance’s Office of Transition Initiatives (USAID/OTI), and State/DRL stated that they use written reports, site visits, and frequent informal communications (such as e-mail, phone calls, meetings, and weekly reports in some cases) as parts of their monitoring efforts.

USAID/DG, USAID/OTI, and State/DRL rely on quarterly reporting by their implementing partners, as stipulated in their award agreements, as a component of monitoring projects in Burma. We reviewed the award agreements for all 13 active USAID/DG, USAID/OTI, and State/DRL projects and found that they all called for quarterly reporting. The reporting elements varied, as follows:

USAID/DG: All six award agreements included reporting elements focused on progress or results and problems or challenges encountered in the implementing partners’ quarterly reports. The other elements varied based on the individual award agreement.

USAID/OTI: The agreement calls for a summary of the country situation; political updates; program highlights, achievements, and major activities; budget information; a summary of grant implementation and appraisal; and problems encountered and proposed remedial actions.

State/DRL: Four of the six award agreements we reviewed requested that the same elements be included in the quarterly reporting. The other two agreements differed only slightly in what was to be included in the reports. All agreements called for a discussion of sustainability efforts.

Agency officials from all three entities told us that they work with implementing partners to develop monitoring and evaluation plans that include the use of indicators agreed upon by the respective entity and the implementing partner. In addition,

USAID/DG officials in Burma stated that the Mission conducts biannual portfolio reviews, and

USAID/OTI officials stated that they conduct internal assessment processes on average every three months.

USAID Implementing Partners Provided Information on All Reporting Elements, While State/DRL Implementing Partners Provided Information on Most Elements

USAID implementing partners reported on all requested elements in their monitoring reports, and State/DRL partners provided most of the requested elements. We reviewed all relevant fiscal year 2016 monitoring reports for the six active USAID/DG projects and found that all implementing partners had submitted their required reports, including a narrative report as well as progress toward their agreed-upon indicators. We also found that all reporting met the requirements as set out in the agreements. In addition, we reviewed all relevant fiscal year 2016 monitoring reports for the six active State/DRL projects and found that all partners had submitted the required reports, including both the narrative report and documentation showing progress against the required indicators. We also found that while implementing partners included most of the information requested, but not required, in the award agreements, implementing partners did not provide information on how the recipient was pursuing sustainability. However, a State/DRL official told us that sustainability efforts are discussed during site visits or in other channels of communication, and if the program officer is satisfied with the answer, he or she will not necessarily ask the implementing partner to go back and update their written reports to record that sustainability was in fact being considered. Further, State/DRL officials told us that sustainability is an important aspect of all State/DRL projects in Burma; not only does State/DRL request updates on sustainability efforts in the implementing partners’ reporting, but sustainability is also one of seven criteria against which all DRL project proposals are reviewed.

USAID and State Conducted Site Visits to Monitor Their Democracy Projects

USAID/DG, USAID/OTI, and State/DRL officials stated that conducting numerous site visits and communicating frequently with implementing partners were other components of monitoring their projects in Burma.

USAID/DG: Officials reported conducting 28 site visits in 2016, with each project getting at least 1 visit. A trip report from one of these site visits included information such as a discussion of observations from the USAID staff, as well as recommendations for project adaptations. Three of the six active projects received multiple site visits in 2016. The projects that only received one visit in 2016 were primarily projects located in difficult to reach or conflict-prone areas, such as Rakhine State. In addition to site visits, all active implementing partners reported frequent informal communication with USAID staff, and two reported providing informal weekly reporting to USAID.

USAID/OTI: Officials reported that USAID/OTI staff conducted seven official site visits in 2016. In addition, USAID/OTI officials reported that they hold three weekly in-person meetings with the implementing partner: an ideas meeting where new project ideas are raised and discussed, a management meeting where any administrative issues that need to be handled are discussed, and a portfolio review meeting where the ongoing activities for the project are discussed. In addition, USAID/OTI staff reported discussing activities with the implementing partner on a daily basis via email, telephone calls, and in-person meetings.

State/DRL: Officials reported that they typically make three trips to Burma each year and attempt to visit each project at least once a year. In 2016, State/DRL made three site visits—one in February, one in July, and one in October. The trip reports from the October visit included high-level problems or concerns that needed to be brought to the attention of the front office, summaries and observations from program and site visits conducted during the trip, and any action items to follow up on after the trip. In addition to site visits, all active implementing partners reported frequent, informal communication with State/DRL staff.

USAID and State Require and Receive Evaluative Components in Implementing Partners’ Final Reports and Have Conducted Some External Evaluations of Their Democracy Projects in Burma

USAID and State/DRL Require Final Evaluative Reporting, and All Implementing Partners Met Reporting Requirements

USAID/DG, USAID/OTI, and State/DRL award agreements require that the final reports submitted by the implementing partners include several evaluative elements. Our review of final reports submitted shows that partners had provided these elements in their reports.

USAID/DG: The agreements we reviewed called for the final performance report to include, among other things, an overall description of the activities under the project and the significance of these activities; and results toward achieving the project objectives and the performance indicators, as well as an analysis of how the indicators illustrate the project’s impact.

USAID/DG conducted a total of 8 democracy projects in Burma since 2012, of which 3 had been completed, as of December 2016. We reviewed the final reports for two of the completed projects. Both of the final reports met all requirements specified in the agreements regarding evaluative components. Tools used by the various projects to evaluate the assistance included analysis of progress using both quantitative and qualitative data, surveys of participants, interviews, and focus group discussions.

USAID/OTI: The award agreement we reviewed required a final report that includes, among other things, program highlights, achievements, and major activities; a summary of grant implementation and an appraisal; and problems encountered and how they were solved.

USAID/OTI’s initial project in Burma was completed in mid-2016. Upon completion, a final report was submitted. We found that the report met all the required elements as specified in the initial award agreement. Tools used to evaluate the assistance included analysis of progress using both quantitative and qualitative data.

State/DRL: The agreements we reviewed called for the final performance report to include, among other things, an in-depth impact assessment and/or project evaluation.

State/DRL conducted a total of 24 democracy projects in Burma since 2012, of which 7 had been completed and had submitted final reports, as of August 2016. In reviewing the seven final reports, we found that all seven met the requirements specified in the award agreements. Tools used by the various projects to evaluate the assistance included analysis of progress using indicators, formal surveys of participants, semistructured interviews, and focus group discussions.

USAID and State Have Conducted Some External Evaluations

According to USAID policy, not all USAID/DG award agreements are required to have a final external evaluation. Plans for evaluations, if they are to be conducted, are developed in the project design phase as part of the monitoring and evaluation plan. We found that one final external evaluation had been completed as of December 2016. In addition, although not required in the agreements, USAID/DG completed a midpoint evaluation of one project in July 2015, and two USAID projects were undergoing midterm evaluations that were scheduled to be completed by April 2017.

The USAID/OTI award agreement we reviewed stated that within 3 months prior to close-out, USAID/OTI may organize, and the implementing partner will cooperate with and contribute to, a final external evaluation of the program. This final evaluation will include an assessment of the impact or results of activities managed by the implementing partner. An external evaluation was completed at the end of the first USAID/OTI award agreement.

According to a State/DRL official, external final evaluations were not required for any of the Burma projects because of the short-term nature and fairly small budgets of projects (for example, budgets less than $350,000). According to officials, under State/DRL guidance, an external evaluation is not a requirement for State/DRL projects, but proposals that include one tend to be rated more competitively by State/DRL. We found that two external evaluations had been completed as of December 2016. State/DRL does not typically conduct midterm evaluations, again because of the relatively short average length of the projects.

Both USAID and State officials told us that the nature of democracy projects makes measuring effectiveness difficult. Issues cited by officials included the long-term nature of the programs where results are often seen years later, and the difficulty in measuring the impact of democracy projects, particularly relative to other influencing factors. We have previously reported on the difficulties in evaluating democracy assistance.

Appendix II: Objectives, Scope, and Methodology

Our objectives were to examine (1) U.S. Agency for International Development (USAID) and Department of State (State) democracy projects, including coordination of those projects; (2) steps USAID and State have taken to ensure that U.S. democracy projects and the U.S. Strategy for the Promotion of Democracy and Human Rights in Burma (Burma Democracy Strategy) address and support the specified purposes and groups, respectively, for Burma assistance funding; and (3) USAID and State efforts to ensure that U.S. democracy assistance is not provided to prohibited entities and individuals. We also provide information about USAID’s and State’s monitoring and evaluation of their democracy projects in appendix 1, and appendix IV includes details on USAID and State democracy projects, including implementation and results. We conducted fieldwork in Hpa’ An, Mandalay, Mawlymyaing, Naypyidaw, and Rangoon, Burma, in October 2016 and November 2016.

To describe USAID and State democracy projects in Burma, we reviewed project award documents, including relevant modifications, for 13 projects funded by USAID and State’s Bureau of Democracy, Human Rights, and Labor (State/DRL) that were active as of September 30, 2016. We also obtained agency funding data on obligations for all USAID and State democracy projects that were active between fiscal years 2012 and 2016. To assess the reliability of those data, we interviewed knowledgeable agency officials and sent them a set of questions that asked about data collection, validation, and related issues. We determined thathese data are sufficiently reliable for the purpose of reporting USAID’s and State’s obligations to Burma between 2012 and 2016. In addition, we reviewed the award documents for the 13 projects that were active as of September 30, 2016, and created a table containing the total project values from them. These values were the initial award amounts and do not reflect any modifications that were made subsequently. We also interviewed officials from USAID and State in Washington, D.C., and Burma about their active projects. Additionally, we compared the purposes and objectives of USAID’s and State’s democracy projects with the goals of the Burma Democracy Strategy.

To examine how the projects are coordinated, we reviewed agency documents and interviewed agency officials about coordination and, in particular, the embassy in Burma’s Assistance Working Group (AWG). We reviewed the AWG as a coordination mechanism against GAO’s Key Considerations for Implementing Interagency Collaborative Mechanisms. We analyzed information collected from our document review, including the terms of reference for the AWG, and interviews with agency officials and compared this information against the seven key considerations listed in a prior GAO report. To assess the extent of interagency coordination, we compared the evidence we collected against the key considerations, which include outcomes and accountability, bridging organizational cultures, leadership, clarity of roles and responsibility, participants, resources, and written guidance and agreements. Two analysts independently completed this analysis, identifying characteristics, practices, or other evidence that generally aligned with the criteria for each key consideration. They then compared their responses and resolved any initial differences. They only judged a consideration to be lacking if no evidence of generally aligning with that characteristic was identified by either analyst.

To examine steps USAID and State have taken to help ensure that U.S. democracy projects and the Burma Democracy Strategy address and support the specified purposes and groups, respectively, for Burma assistance funding, we reviewed the specified purposes for Burma assistance funding in the Consolidated Appropriations Act, 2016, as well as the specified groups for the Burma Democracy Strategy in the Consolidated Appropriations Act, 2014. We also interviewed USAID and State officials in Washington, D.C., and at the embassy in Rangoon, Burma. We then analyzed the Burma Democracy Strategy to identify whether it supported each of the five specified groups: civil society, former prisoners, monks, students, and democratic parliamentarians. We also identified the purposes for which funds shall be made available in the Consolidated Appropriations Act, 2016. We analyzed project award documents for projects active as of September 30, 2016, that received fiscal year 2016 funding to which the purposes applied, and compared the stated purpose and objectives of the projects to the purposes for which funding shall be made available in the act. From this process we found examples, which we included in our report, where the project’s purpose and objectives were broadly consistent with the purposes specified in the act.

To examine USAID and State efforts to help ensure that U.S. democracy assistance is not provided to prohibited entities and individuals, we identified restrictions applicable to assistance funding for Burma in the Consolidated Appropriations Act, 2016, for illustrative purposes. We reviewed USAID documents, including presentations and emails, used to train implementing partners on the restrictions. We reviewed USAID’s and State’s active project awards for information related to the restrictions or the need to conduct due diligence to identify prohibited entities and individuals. We also interviewed officials from USAID and State to discuss, among other things, whether and how they provide information to implementing partners about the restrictions and the due diligence process. Further, we interviewed all 13 USAID and State implementing partners about their due diligence processes and their interactions with agency officials related to conducting due diligence for prohibited entities and individuals.

To examine USAID’s and State’s monitoring and evaluation of their democracy projects in Burma, we reviewed documents and interviewed agency officials in Washington, D.C., and at the U.S. embassy in Burma. We also interviewed all current implementing partners in Burma. We reviewed award agreements for 13 ongoing democracy projects as of September 30, 2016—6 USAID/DG projects, 1 USAID/OTI project, and 6 State/DRL projects—to identify any monitoring and evaluation requirements contained in the agreements. We then reviewed all fiscal year 2016 monitoring reports for those projects and analyzed them against the monitoring requirements stipulated in the agreements, to assess compliance. We also reviewed final reports from all USAID and State democracy projects that had been completed since 2012. We analyzed these reports against the requirements that we identified from the individual award agreements for each project, to assess compliance. These requirements include elements such as an overall description, results summary, and description of problems encountered. We had two analysts independently assess whether these elements were present or absent in the final reports and then meet to reconcile any initial differences. We did not make any attempt to evaluate the quality of the information included in the monitoring or final reports. Additionally, we interviewed agency officials about their use of other tools to monitor and evaluate their democracy projects, and reviewed trip reports from site visits, where relevant. We also discussed agency monitoring and evaluation efforts with the implementing partners from the 13 ongoing projects in-country to verify that their experiences matched up with what agencies reported doing.

To examine how the Burma Democracy Strategy aligns with other U.S. strategies, we analyzed and compared the goals of the Burma Democracy Strategy to the objectives of the Burma Integrated Country Strategy and the objectives of the USAID Strategy on Democracy, Human Rights, and Governance.

We conducted this performance audit from May 2016 through July 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix III: The U.S. Strategy for the Promotion of Democracy and Human Rights in Burma Aligns with Broader U.S. Strategies

The Consolidated Appropriations Act, 2014, required the Secretary of State, in consultation with the Administrator of the U.S. Agency for International Development (USAID), to submit a comprehensive strategy for the promotion of democracy and human rights in Burma, which became the Strategy for the Promotion of Democracy and Human Rights in Burma (Burma Democracy Strategy).

To examine how the Burma Democracy Strategy aligns with other relevant strategies, we reviewed its objectives and compared them to objectives contained in other relevant strategies (i.e., the Burma Integrated Country Strategy and USAID’s Democracy, Human Rights, and Governance Strategy). We also interviewed USAID and Department of State (State) officials in Washington, D.C., and at the U.S. embassy and USAID Mission in Rangoon, Burma.

To continue moving Burma toward a well-governed democratic state that is inclusive, accountable, and responsive to its people, the Burma Democracy Strategy includes five strategic goals: 1. Develop the capacity of influential entities to employ principles of a well-governed democratic state that is inclusive, accountable, and responsive to its people. 2. Support and strengthen civil society, and strengthen societal foundations and institutions at all levels to reflect the will, concerns, and participation of the Burmese people. 3. Encourage responsible investment and greater respect for human rights by the private sector. 4. Support Burma’s peace process, while engaging the military on human rights issues. 5. Promote tolerance and support legitimate and sustainable processes, which enable domestic stakeholders to pursue national reconciliation and the establishment of a stable, inclusive democratic union.

We found that the Burma Democracy Strategy aligns with broader U.S. strategies on Burma and democracy promotion. For example, the strategic goals of the Burma Democracy Strategy align with objectives included in the U.S. embassy’s Burma Integrated Country Strategy. The Integrated Country Strategy is a multiyear, overarching strategy that encapsulates U.S. policy priorities and objectives and the means by which foreign assistance, among other things, will achieve these priorities in a country. U.S. embassy officials said that the requirements for the Burma Democracy Strategy in the Consolidated Appropriations Act, 2014, were already included in the Integrated Country Strategy. The current Burma Integrated Country Strategy runs through 2017, and embassy staff are revising the Integrated Country Strategy concurrent with the revision of the Burma Democracy Strategy.

Our analysis of the Burma Democracy Strategy and the Integrated Country Strategy found that each goal of the Burma Democracy Strategy aligns with at least two objectives from the Integrated Country Strategy. For example, the first goal of the Burma Democracy Strategy aligns with the fourth and fifth objectives of the Integrated Country Strategy, as shown in table 5 .

In addition, we found that the five goals of the Burma Democracy Strategy align with the development objectives in USAID’s Strategy on Democracy, Human Rights, and Governance (USAID’s DHRG Strategy). USAID’s DHRG Strategy provides a framework to support the establishment and consolidation of inclusive and accountable democracies and lays out USAID’s vision to support democracy, human rights, and governance as essential to achieving the agency’s broader social and economic development goals. USAID officials said that the Burma Democracy Strategy is derived from USAID’s broader, agency-wide DHRG Strategy.

Our analysis found that each goal of the Burma Democracy Strategy aligns with at least two development objectives in USAID’s DHRG Strategy. For example, the second goal of the Burma Democracy Strategy aligns with three objectives from USAID’s DHRG Strategy, as shown in table 6 .

Appendix IV: Summaries of Active USAID and State/DRL Democracy Projects in Burma as of the End of Fiscal Year 2016

The following is a summary of information on 13 democracy projects in Burma that were active as of July 1, 2016 — 6 U.S. Agency for International Development (USAID) Mission in Burma Office of Democracy and Governance (USAID/DG) projects; 1 USAID Office of Transition Initiatives project; and 6 Department of State (State) Bureau of Democracy, Human Rights, and Labor (State/DRL) projects. We reviewed the award agreements, modifications and obligation data as well as the fiscal year 2016 fourth quarter progress reports submitted by the implementing partners. We present an illustrative sample of activities reported in those progress reports for each project.

USAID/DG Democracy Projects in Burma (Active as of the End of Fiscal Year 2016)

Accountable to All: Strengthening Civil Society and Media in Burma

This award agreement totals $20,000,000 and runs from September 25, 2014, through September 24, 2018 (see table 7).

This award agreement totals $1,171,781 and ran from September 16, 2014, through February 16, 2017 (see table 8).

This award agreement totals $1,999,999 and runs from September 30, 2013, through October 15, 2017 (see table 9).

This award agreement totals $5,000,000 and runs from January 4, 2016, through July 3, 2018 (see table 10).

This award agreement totals $15,956,101 and runs from October 1, 2013, through September 30, 2018 (see table 11).

This award agreement totals $23,200,000 and runs from July 1, 2016, through June 30, 2021 (see table 12).

USAID/OTI Democracy Projects in Burma (Active as of the End of Fiscal Year 2016)

Burma Transition Initiative-II (Kann Let)

This award agreement has a ceiling total of $31,204,695, of which $5,750,000 has been obligated, and runs from March 2016 through March 2018 (see table 13).

State/DRL Democracy Projects in Burma (Active as of the End of Fiscal Year 2016)

Multi-Religious Networks Promoting Religious Diversity and Tolerance

This award agreement totals $396,039 and runs from August 11, 2015, through August 31, 2017 (see table 14).

This project’s obligated funding totals $792,078 and runs from September 3, 2013, through December 31, 2017 (see table 15).

This project’s obligated funding totals $817,500 and ran from September 19, 2013, through November 30, 2016 (see table 16).

This award agreement totals $371,287 and runs from May 13, 2016, through November 30, 2017 (see table 17).

This project’s obligated funding totals $469,874 and ran from August 14, 2015, through April 30, 2017 (see table 18).

This award agreement totals $517,028 and runs from August 14, 2015, through August 31, 2018 (see table 19).

Appendix V: Comments from the Department of State

Appendix VI: Comments from United States Agency for International Development

Appendix VII: GAO Contact and Staff Acknowledgments

GAO Contact:

Staff Acknowledgments:

In addition to the contact named above, Leslie Holen (Assistant Director), Michael Maslowski (Analyst-in-Charge), Christopher Hayes, Julio Jebo Grant, and Debbie Chung made key contributions to this report. In addition, Martin de Alteriis, Mark Dowling, Reid Lowe, Sarah Veale, and Alex Welsh provided technical assistance.