On December 20, 2001, Congress cleared for the President's signature a$15.35 billion Foreign Operations Appropriations for FY2002 ( H.R. 2506 ). President Bush signed the measure on January 10, 2002 ( P.L. 107-115 ). Passage of the bill broke a month-long impasse over House-Senate disagreementsconcerning international family planning and abortion issues. As enacted, H.R. 2506 drops Senate language that would have overturned thePresident's abortion restrictions on bilateral U.S. population assistance, butappropriates funding for family planning programs closer to the higher amountsrecommended by the Senate: $446.5 million for USAID activities and $34 million forthe U.N. Population Fund (UNFPA). Subsequently, the White House placed a holdon UNFPA funds while it reviews the organization's program in China. No decisionon how much, if any, of the $34 million will be released has been made. The $15.35 billion appropriation is roughly midway between levels passed earlier by the House ($15.17 billion) and the Senate ($15.52 billion), and $178million higher than requested by the President. This marks one of the few occasionswhen Congress has approved more spending for Foreign Operations than sought bythe Administration. The amount is about $400 million, or 2.7% higher than forFY2001 (excluding the $1.1 billion for Foreign Operations programs allocated fromthe terrorism emergency supplemental measure; P.L. 107-38 ). Highlights of theenacted bill include: $779 million for the Export-Import Bank, nearly $100 millionmore than requested; $475 million for HIV/AIDS, up from the $429 million proposal;and $625 million for the Andean Counternarcotics Initiative, a cut of $106 millionfrom the request. H.R. 2506 further allows the President to waiverestrictions on aid to Azerbaijan through at least December 31, 2002. Azerbaijanis one of several regional states that has offered support in the war againstterrorism. The measure also provides Armenia with $90 million in economic aid and$4.3 million in military assistance. 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 two-thirds -- of total international affairs spending by theUnited States (see Figure 1 ). The legislation funds all U.S. bilateral developmentassistance programs, managed mostly by the U.S. Agency for InternationalDevelopment (USAID), together with several smaller independent foreign aidagencies, such as the Peace Corps and the Inter-American and African DevelopmentFoundations. Most humanitarian aid activities are funded within Foreign Operations,including USAID's disaster program and the State Department's refugee reliefsupport. (2) Foreign Operations includes separateaccounts for aid programs in theformer Soviet Union (also referred to as the Independent States account) andCentral/Eastern Europe, activities that are jointly managed by USAID and the StateDepartment. Security assistance (economic and military aid) for Israel and Egypt isalso part of the Foreign Operations spending measure, as are smaller security aidprograms administered largely by the State Department, in conjunction with USAIDand the Pentagon. U.S. contributions to the World Bank and other regionalmultilateral development banks, managed by the Treasury Department, and voluntarypayments to international organizations, handled by the State Department, are alsofunded in the Foreign Operations bill. Finally, the legislation includes appropriationsfor three export 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 policymaking, the Foreign Operations bill has taken on even greatersignificance during the past 16 years. 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 developed by the appropriationscommittees increasingly have expanded their scope beyond spending issues andplayed a major role in shaping, authorizing, and guiding both executive andcongressional foreign aid and broader foreign policy initiatives. It has been largelythrough Foreign Operations appropriations that the United States has modified aidpolicy and resource allocation priorities since the end of the Cold War. Thelegislation has also been a key tool used by Congress to apply restrictions andconditions on Administration management of foreign assistance, actions that havefrequently resulted in executive-legislative clashes over presidential prerogatives inforeign policy making. Table 1. Status of Foreign OperationsAppropriations, FY2002 President Bush submitted his FY2002 federal budget request to Congress on April 9, 2001, including funding proposals for Foreign Operations Appropriationsprograms. House and Senate Appropriations Committees are holding hearings on theproposal prior to marking up funding legislation. The House Foreign OperationsSubcommittee adopted a draft spending bill on June 27, a measure that was amendedand approved by the full Appropriations Committee on July 10. The bill -- H.R. 2506 -- was reported on July 17. The House passed H.R. 2506 on July 24 after adopting several amendments. The SenateAppropriations Committee ordered reported its FY2002 Foreign OperationsAppropriations measure on July 26, but did not file its report until September 4. TheSenate passed H.R. 2506 on October 24, adopting numerousamendments, including some addressing anti-terrorism issues. Conferees met onNovember 14 to work out differences between the two bills, but could not finalizea few issues in dispute until December 19 when a conference report was filed. TheHouse passed the conference measure on the same day (356-66), while the Senateadopted it on December 20 by voice vote. President Bush signed the legislation onJanuary 10, 2002 ( P.L. 107-115 ). Earlier, the Senate, as part of H.R. 2216 (FY2001 Supplemental Appropriations Act), voted to include $100 million for an initial U.S. contributionto a new Global Fund to Fight HIV/AIDS, Malaria, and Tuberculosis. Confereesapproved the additional $100 million for the Global Fund, partially offsetting the newresources with $20 million rescissions in prior year Child Survival and ESFappropriations. Congress cleared the measure on July 20 ( P.L. 107-20 ). TheAdministration requested $200 million, $100 million of which would be drawn fromForeign Operations spending, but for FY2002, not from FY2001 as P.L. 107-20 provided. In real terms, taking into account the effects of inflation, Foreign Operationsfunding levels have fluctuated widely over the past 25 years. Some of these swings,however, are not the result of policy decisions, but due to technical budgetaccounting changes involving how Congress "scores" various programs. Forexample, the large increase in FY1981 did not represent higher funding levels, butrather the fact that export credit programs began to be counted as appropriationsrather than as "off-budget" items. Part of the substantial rise in spending in FY1985came as a result of the requirement to appropriate the full amount of military aidloans rather than only a partial appropriation required in the past. Beginning inFY1992, Congress changed how all Federal credit programs are "scored" inappropriation bills which further altered the scoring of foreign aid loans funded inForeign Operations. All of these factors make it very difficult to present a precise and consistent data trend line in Foreign Operations funding levels. Nevertheless, the data shown inFigure 2 can be regarded as illustrative of general trends in Congressional decisionsregarding Foreign Operations appropriations over the past 25 years. After peaking at nearly $33 billion in FY1985 (constant FY2002 dollars), Foreign Operations appropriations began a period of decline to $13.6 billion inFY1997, with only a brief period of higher amounts in the early 1990s due to specialsupplementals for Panama and Nicaragua (1990), countries affected by the Gulf War(1991), and the former Soviet states (1993). Table 2. Foreign Operations Appropriations, FY1995 to FY2002 (discretionary budget authority in billionsof current dollars ) * FY1999 excludes $17.861 billion for the IMF. FY2001 and FY2002 exclude $5 million and $1.188 billion, respectively, allocated from the terrorism emergencysupplemental appropriation ( P.L. 107-38 ) for Foreign Operations programs. With a much smaller supplemental ($80 million for the Global Health Fund) enacted for FY2001, Foreign Operations fell to $15.4 billion, in real terms. The FY2002 enacted amount is $15.35 billion, slightly less than FY2001, calculated usingconstant FY2002 dollars. Table 2, above, presents the enacted Foreign Operationsfunding levels for recent years, expressed in nominal, or current dollars that does nottake into account the effects of inflation. Examined in nominal terms, the FY2002amount represents a 2.7% increase over FY2001. As a share of the entire $1.9 trillion U.S. budget for FY2001, Foreign Operations represented a 0.79% share. As a portion of discretionary budget authority-- that part of the budget provided in annual appropriation acts (other thanappropriated entitlements) -- Foreign Operations consumed 2.3%. By comparison,at the high point of Foreign Operations spending in FY1985, foreign aid fundsrepresented 2% of the total U.S. budget and 4.6% of discretionary budget authority. Usually, Appropriation Committees begin markups of their spending bills only after Congress has adopted a budget resolution and funds have been distributed to theAppropriations panels under what is referred to as the Section 302(a) allocationprocess, a reference to the pertinent authority in the Congressional Budget Act. Following this, House and Senate Appropriations Committees separately decide howto allot the total amount available among their 13 subcommittees, staying within thefunctional guidelines set in the budget resolution. This second step is referred to asthe Section 302(b) allocation. Foreign Operations funds fall within the InternationalAffairs budget function (Function 150), representing in most years about 65% of thefunction total. Smaller amounts of Function 150 are included in three otherappropriation bills. How much International Affairs money to allocate to each of the four subcommittees, and how to distribute the funds among the numerous programsremain decisions exclusively reserved for the Appropriations Committees. Nevertheless, overall ceilings set in the budget resolution can have significantimplications for the budget limitations within which the House and Senate ForeignOperations subcommittees will operate when they meet to mark up their annualappropriation bills. In March and April 2001, the House and Senate, respectively, adopted different versions of an FY2002 budget blueprint ( H.Con.Res. 83 ). ForInternational Affairs, the House-passed measure supported the Bush Administrationrequest of $23.9 billion in discretionary budget authority. The resolution adopted bythe Senate increased foreign policy spending to $24.2 billion, by adopting anamendment by Senator Frist to boost international HIV/AIDS resources by $200million in FY2002 and $500 million in FY2003. The Senate further approved aKerry amendment adding $50 million annually for 10 years for international climatechange programs. The conference agreement on H.Con.Res. 83 , as passed by both Houses during the week of May 7, however, modified the approach taken by Houseand Senate-approved resolutions. The approved version of H.Con.Res. 83 set discretionary budget authority for each budget function, including InternationalAffairs, at the CBO baseline estimate. (The CBO baseline estimate was roughly theFY2001 level plus inflation.) Based on the CBO baseline estimate, the InternationalAffairs discretionary budget for FY2002 in H.Con.Res. 83 was $23.2billion, an amount $700 million below the President's request. Conferees, however,noted in their report ( H.Rept. 107-55 ) that figures for each budget function wereincluded for "presentation" purposes, and except for the defense function whichassumes the President's request, the amounts "do not reflect any specific policyorientation." Instead, House and Senate Appropriations Committees becameresponsible for allocating total discretionary budget authority to each of their 13subcommittees to "address specific policy priorities." The only requirement was thatthe Appropriation Committees remained within the $661.3 billion total discretionarybudget authority level approved in the resolution. Prior to marking up the first of the 13 appropriation bills for FY2002, House and Senate Appropriation Committees issued their initial Sec. 302(b) allocations. TheHouse panel provided $15.168 billion, the same amount as President Bush's request. The Senate Committee provided $15.524 billion, $357 million more than theproposal. This marked the first time in several years that the initial ForeignOperations allocation had been set at or above the President's request. Morecommon had been the practice of setting the early mark $1-$2 billion below thebudget recommendation, a level that was later revised upwards. The differenceearlier this year was that both Committees had sufficient funds during their initialmark-ups to accommodate, if they chose, the President's request, and in the Senate'scase, some additional funding initiatives. While the overall level basically matchedor exceeded the Executive's proposed budget, the House made several changes inhow the funds would be allocated among the various accounts and programs, as didthe Senate Appropriations Committee when it met in late July. Post-Terrorist Attack Foreign Operations Allocation. Even before the September 11 terrorist strikes,Congress was debating whether to increase the $561 billion discretionary budgetceiling for FY2002 in order to augment funding for defense, education, and severalnatural disasters. Following the attacks, congressional leaders and the White Houseagreed to add $25 billion to accommodate increasing spending needs, a movepushing the ceiling up to $686 billion. Under a revised 302(b) subcommitteeallocation, Foreign Operations received $15.35 billion, midway between the earlierHouse and Senate levels, and reflecting the amount available for conferencecommittee negotiators when they met to reconcile differences between House andSenate versions of the Foreign Operations spending bill. In April 2001, President Bush asked Congress to appropriate $15.167 billion for FY2002 Foreign Operations. He subsequently amended the request on June 11,adding $200 million for a U.S. contribution to the new Global Fund to FightHIV/AIDS, Malaria, and Tuberculosis. (Since the entire amount consists of transfersfrom existing requests and prior year appropriations, including $100 million from theHealth and Human Services request, there is no change to the overall amount ofForeign Operations.) The amended Foreign Operations FY2002 request stands at$15.167 billion, an amount 1.5% higher than enacted FY2001 appropriations. (3) Incontrast, foreign policy resources for State Department, U.N. assessed contributions,and other non-foreign aid activities in the Commerce, Justice, and State Departmentsappropriation bill would increase by 13.2% from FY2001 in nominal terms. Although the overall FY2002 Foreign Operations proposed increase was relatively small -- $224 million, or 1.5% -- some activities funded in FY2001 eitherdid not need new appropriations or would require smaller resources in FY2002,thereby freeing up funds for other initiatives. For example, FY2001 totals includedone-time funding for southern Africa flood relief ($135 million) and compensationto China for the mistaken bombing of its embassy in Belgrade ($28 million). A tenyear plan to reduce aid to Israel and Egypt will enter its fourth year, resulting in a netreduction of $100 million for the two largest American aid recipients. The third andfinal year of U.S. pledged contributions to the Heavily Indebted Poor Country (HIPC)debt initiative required roughly half the amount appropriated in FY2001 ($435million). After revising the FY2001 base amount to reflect these reduced fundingrequirements that did not alter current policy, the request represented a somewhathigher increase for Foreign Operations -- $698 million, or 4.8% more, in nominalterms. The FY2002 Foreign Operations request set most accounts at or near FY2001 funding levels, while largely concentrating proposals to increase spending in a fewareas: Disaster aid would grow by 22% to $200 million. International narcotics control funding, including the new Andean initiative, would nearly triple to $948 million. Global Fund to Fight HIV/AIDS, Malaria, and Tuberculosis would receive $200 million, a new initiative for FY2002, for which$100 million would be drawn from Foreign Operations, and $100 million from theHealth and Human Services budget. (Congress accelerated the U.S. contribution byincluding $100 million from Foreign Operations spending in the FY2001Supplemental Appropriations; P.L. 107-20 .) Contributions to the World Bank and other international financial institutions would increase by 6% to $1.2 billion and cover all scheduledU.S. payments to the multilateral development banks. The request, however,included no funds for the $500 million arrears owed by the UnitedStates. Likewise, the budget submission recommended cutting appropriations significantly in two accounts, only the first of which represented a policy shift: Export-Import Bank funds would drop by 24.5% to $687 million. Debt reduction resources for the Heavily Indebted PoorCountry (HIPC) initiative would fall by one-half to $224 million, but were sufficientto fully fund the pledged U.S. contribution to the multi-year debt reliefprogram. Table 3. Summary of Foreign Operations Appropriations (Discretionary funds - in millions of dollars) Source: House and Senate Appropriations Committee and CRS calculations. * FY2000 and FY2001 levels have been adjusted to reflect reductions enacted for each year. The FY2000 sequestration reduced the enacted Foreign Operations total by $47 million whilethe FY2001 0.22% rescission cut the enacted Foreign Operations by $33 million. FY2001has been adjusted in include supplemental spending in P.L. 107-20 , but excludes $1.1 billionfor Foreign Operations programs provided in the terrorism emergency supplemental ( P.L.107-38 ). FY2002 has been adjusted to reflect the June 11 budget amendment. a Includes $1.225 billion in supplemental Wye River Middle East peace support. For two counter-terrorism programs managed by the State Department -- Anti-Terrorism Assistance and the Terrorist Interdiction Program -- the FY2002request was the same amount of funding ($38 million and $4 million, respectively)as appropriated for FY2001. Following the September 11 terrorist attacks, Congressenacted a $40 billion emergency relief and counter-terrorism spending measure ( P.L.107-38 ), out of which the Administration allocated an additional $98 million forvarious counterterrorism purposes. Table 4. Leading Recipients of U.S. Foreign Aid (Appropriation Allocations; $s in millions) a Includes regular amounts for Israel, Egypt, Jordan, and the Palestinians, plus the Wye River peace accord: Israel -- $1.2 billion; Egypt -- $25 million; Jordan --$200 million; Palestinians -- $400 million. b Earmarked in P.L. 107-115 for FY2002. c Much of these amounts were drawn from the Emergency Response Fundappropriated in P.L. 107-38 . Amounts for Afghanistan exclude $112 million in foodaid pledged at the Tokyo reconstruction donor conference in January 2002. Note: Data exclude food aid, a program not appropriated in the Foreign Operations bill. With food aid included, the rank order above would change. Except in one area, the FY2002 budget requested few changes in the list of top U.S. foreign aid recipients. Israel, Egypt, and Jordan remained, as they have for anumber of years, the leading recipients. Several countries in the Balkans and formerSoviet Union -- FRY, Kosovo, Russia, Ukraine, and Georgia -- would continue tobe among the top recipients, although at somewhat lower funding levels. The majorchange for FY2002, as shown in Table 4, was the significant increase in assistancefor Latin American drug producing nations. Due to the Administration's AndeanCounterdrug Initiative, Colombia, Peru, and Bolivia would be among the leading 12recipients of U.S. aid. In the aftermath of the September 11 terrorist attacks, the planned allocation of foreign aid funds changed in a few and significant ways. The Administration hasused economic and military assistance as an additional tool in efforts to maintain acohesive international coalition to conduct the war on terrorism. Pakistan, forexample, a key coalition partner on the border with Afghanistan, had been ineligiblefor U.S. aid, other than humanitarian assistance, due to sanctions imposed after Indiaand Pakistan conducted nuclear tests in May 1998 and Pakistan experienced amilitary coup in 1999. President Bush lifted the nuclear sanctions on September 22and used a special authority (Sec. 614(a) of the Foreign Assistance Act of 1961) totransfer $100 million to Pakistan in late September and October. At the President'srequest, Congress approved ( S. 1465 ; P.L. 107-57 ) a waiver throughFY2003 for existing sanctions on aid to Pakistan leading to the release of anadditional $500 million in economic aid. This $600 million total is part of a $1billion Pakistan aid package announced by President Bush on November 10 that willinclude debt relief, IMF loans, and trade assistance. The Administration has alsoallocated assistance for other coalition partners, especially some of the "front-line"states, with additional aid. Uzbekistan received $40 million in economic assistance,Turkey and Uzbekistan got $45 million in military support, and several Central Asianstates shared $6 million in conflict prevention assistance. Assistance planned forIndia, another "front-line" state, rose from $67 million requested to $78 millionallocated. House Consideration. As passed by the House on July 24, H.R. 2506 included $15.167 billion for ForeignOperations, but altered the allocation of money among several programs. Theapproved legislation restored about half of the President's proposed cut for theExport-Import Bank, reduced by $56 million the Andean Regional Initiative, butincreased development aid activities by $155 million above the Administration'sproposal. H.R. 2506 included the full Foreign Operations portion ($100million) of the U.S. $200 million contribution to the new Global Fund to FightHIV/AIDS, Malaria, and Tuberculosis. Overall, the legislation included about $487million for combating HIV/AIDS, roughly $58 million more than proposed. Fundinglevels for Israel, Egypt, and Jordan were provided at the requested amounts, butPalestinian assistance was conditioned on the PLO's compliance with its policy torenounce terrorism and to take action against PLO officials involved in terrorist acts. The House further made available $100 million in earthquake relief for El Salvador,two-thirds of which would be drawn from various accounts in the FY2002 bill andthe remainder from FY1999 and prior spending bills. Earlier on June 27, by voice vote, the Foreign Operations Subcommittee rejectedan amendment that would have overturned President Bush's abortion restrictionsapplied to international family planning programs. The bill, however, assumed thefull $425 million requested for population aid and $25 million for the U.N.Population Fund. The family planning issue was not raised as an amendment duringfull House debate in July. In most areas, the House bill matched the President's request, although for a few programs, amounts were reduced: Economic aid under the ESF account to non-Camp David countries fell $55 million below the request; Aid to the former Soviet Union was set $40 million less than proposed; Contributions to the World Bank's Global Environment Facility fell $25 million under the request. The House measure fully supported the President's request for Anti-Terrorism Assistance ($38 million) and the Terrorist Interdiction Program ($4 million). During two days of debate (July 19 and 24), the House adopted several amendments that changed funding amounts for several accounts but did not alter theoverall $15.167 billion bill total. Key amendments included: Preventing mother-to-child HIV/AIDS transmission -- earmarking $5 million (Millender-McDonald). Vulnerable children and HIV/AIDS funding -- adding $5 million for vulnerable children and $13 million for HIV/AIDS, offset by cuts for theExport-Import Bank ($18 million) (Visclosky). Tuberculosis funding -- adding $20 million to the $70 million directed by the Committee-reported bill, offset by $10 million reductions to each ofthe Multilateral Investment Guarantee Agency and the Asian Development Fund(Brown, OH). South Asia disaster relief -- adding $1 million for developing an emergency response capability in South Asia, offset by a cut of $1 million in theAndean Counternarcotics Initiative (Crowley, as amended byKolbe). Illegal trafficking in persons -- earmarking $30 million drawn from six accounts to fund the Trafficking Victims Protection Act (Smith,N.J.). U.S. Civilian and military personnel involved in the Andean Counternarcotics Initiative -- establishing an aggregate limit of 800 personnel(Conyers). Andean Counternarcotics Funding -- withholding of $65 million until the Secretary of State reports on the April 20, 2001 Peruvian Air Forcejet downing of a civilian aircraft in which two Americans were killed(Hoekstra). The House rejected three amendments, two of which sought to add additional health-related funding while reducing Andean Counternarcotics Initiative (ACI)appropriations. An amendment increasing the U.S. contribution to the global healthtrust fund by $60 million and cutting ACI funds by $38 million and military aid by$22 million failed 188-240 (Lee). Another proposed amendment to increase childhealth and tuberculosis programs by $50 million each, offset by a $100 million ACIfunding reduction, lost 179-249 (McGovern). A final amendment (Paul) to cut allfunding for the Export-Import Bank failed 47-375. Senate Consideration. The Senate Appropriations Committee, on July 26, ordered reported a $15.524 billion ForeignOperations measure, an amount $341 million higher than the House bill and thePresident's request, and $581 million more than FY2001 levels. The Senate panelfiled its report on September 4 ( S.Rept. 107-58 ) and, following several weeks ofdelay, the Senate passed H.R. 2506 on October 24. Although Senateamendments to the committee bill did not alter the overall total spending level of$15.524 billion, increases for HIV/AIDS and other health programs, debt relief forYugoslavia, and higher contributions to the U.N. Population Fund resulted inreductions for the Export-Import Bank, aid to the former Soviet states, anti-drugassistance under the Andean Counternarcotics Initiative, and contributions to theMultilateral Investment Guarantee Agency. Highlights of the Senate bill, as passed,included: Export-Import Bank -- like the House, restored about half of the funding cut in the President's request. Child Survival and other development assistance -- set funding at $2.76 billion, $232 million higher than the House and $387 million more thanrequested. HIV/AIDS -- included $485 million, $55 million more than requested; provided up to $90 million for the Global Fund to combat AIDS, TB, andmalaria. Disaster aid -- increased by 23% the President's request to $245 million, providing additional funds for relief in El Salvador, Afghanistan,Sudan, and elsewhere. Country earmarks -- set spending for selected countries at or above the President's request: Israel ($2.76 billion, as proposed); Egypt ($1.956billion, as proposed); Jordan ($228 million, as proposed); Ukraine ($180 million, upfrom the $169 million proposed economic aid); Armenia ($95 million, higher thanthe $70 million request); and Georgia ($90 million, asproposed). Andean Counternarcotics Initiative -- cut the drug-related initiative to $547 million, $128 million less than the House and $184 million belowthe Administration's request. Alternative development for the Andean region wasset at $151 million, as requested. Family planning policy and funding -- increased population aid to $450 million, set U.N. Population Fund level at $40 million, and includedlanguage that would effectively overturn the President's abortion restrictions on U.S.grants to foreign NGOs implementing family planningactivities. Counter-terrorism -- provided full funding for the FY2002 request of $38 million for Anti-Terrorism Assistance and $4 million for TerroristInterdiction. Senate debate on H.R. 2506 occurred after the September 11 terrorist attacks, providing the opportunity to attach several amendments aimed atpost-attack relief and response. The most actively debated amendment dealt withefforts to set aside prohibitions on U.S. assistance to Azerbaijan. For nearly adecade, section 907 of the Freedom Support Act ( P.L. 102-511 ) has banned all butsome export promotion, humanitarian, and democracy building U.S. aid toAzerbaijan until it ceases blockades and use of force against Armenia and Karabakh. According to the State Department, Azerbaijan has joined the international coalitionto fight terrorism and granted the United States overflight rights, the use of its airbases, and has provided important intelligence cooperation. The section 907 ban,however, stood in the way of utilizing the Azerbaijan government support. TheSenate amendment, sponsored by Senator Brownback and modified by SenatorMcConnell, allowed the President to waive section 907 until December 31, 2002, ifhe certified that it was necessary to counter terrorism and that any U.S. aid would notundermine or hamper ongoing efforts to negotiate a peaceful settlement betweenArmenia and Azerbaijan or be used for offensive purposes against Armenia. ThePresident could extend the waiver annually after the end of 2002. In addition, theSenate adopted an amendment by Senator McConnell earmarking $4.6 million inmilitary aid and training to Armenia. The Administration had not requested militaryassistance for Armenia. (4) (For a listing of other Senate amendments adopted on October 23 and 24 relating to terrorism issues, see discussion immediately below under Terrorism Issues in ForeignOperations.) Conference consideration. On November 14, House and Senate conferees met and resolved all issues but thoserelated to international family planning. Over a month later -- on December 19 --conference managers reached agreement on these remaining matters in dispute, andCongress cleared H.R. 2506 for the White House on December 20. As enacted, the $15.35 billion appropriation is roughly midway between levels passed earlier by the House ($15.17 billion) and the Senate ($15.52 billion), and $178million higher than requested by the President. This marks one of the few occasionswhen Congress has approved more spending for Foreign Operations than sought bythe Administration. The amount is about $400 million, or 2.7% higher than forFY2001 (excluding the $1.1 billion for Foreign Operations programs allocated fromthe terrorism emergency supplemental measure, P.L. 107-38 ). On the final issue in dispute, conferees agreed to drop Senate language that would have overturned the President's abortion restrictions on bilateral U.S.population assistance, but to fund family planning programs closer to the higheramounts recommended by the Senate: $446.5 million for USAID activities and $34million for the U.N. Population Fund. (See below for further details on familyplanning provisions.) Major funding and policy changes made in the enacted bill from earlier executive and congressional positions include: Export-Import Bank -- $779 million, $131 million less than FY2001, but nearly $100 million more than requested. Development assistance -- $2.6 billion, nearly $300 million more than appropriated in FY2001 and about $245 million higher than therequest. HIV/AIDS -- $475 million, up from the $300 million FY2001 appropriation and the $429 million request. The bill provides for a $100 million U.S.contribution to the Global HIV/AIDS, Malaria, and Tuberculosis Health Fund, butdraws $60 million from non-HIV/AIDS resources making more funding available fordirect HIV/AIDS activities. Andean Counternarcotics Initiative -- $625 million, a cut of $106 million from the request. H.R. 2506 further allows the President to waive restrictions on aid to Azerbaijan through at least December 31, 2002, as proposed bythe Senate. The measure also provides Armenia with $90 million in economic aidand $4.3 million in military assistance. Terrorism Issues in Foreign Operations. The annual Foreign Operations appropriations measureaddresses terrorism issues at four levels: providing funds for two internationalcounter-terrorism programs managed by the State Department; augmenting USAID'sphysical security needs at its overseas missions; assisting overseas victims of terroristacts using weapons of mass destruction; and restricting assistance to countries thatengage in terrorist activities or aid governments and organizations that do. In thewake of the September 11 terrorist attacks in the United States and enactment onSeptember 18 of a $40 billion supplemental ( P.L. 107-38 ), the President andCongress have allocated an additional $1.188 billion for Foreign Operationsprograms aimed at countering terrorism, assisting refugees and other victims of thewar in Afghanistan, and aiding selected countries backing the international coalitionto fight terrorist groups. Anti-Terrorism Assistance (ATA). Since FY1984, the State Department has maintained the ATA program designed tomaximize international cooperation in the battle against global terrorism. Throughtraining, equipment transfers, and advice, the ATA program is intended to strengthenanti-terrorism capabilities of foreign law enforcement and security officials. Between1984 and 1999 (the most recent year for which ATA data are available), over 23,000officials from 112 countries participated in ATA programs. Two years ago, ATAconducted training programs in 32 countries, with the largest number of studentscoming from 11 Middle East nations. The proposed FY2002 program wouldcontinue its Middle East focus, but augment training in Colombia and Ecuador, andseveral former Soviet states where emphasis would be placed on terrorist threats togas pipelines and other energy sector targets. In FY1999, the ATA program addeda new element specifically aimed at countering the use of weapons of massdestruction (WMD) - chemical, biological, radiological, nuclear - by terrorists. Following the 1998 terrorist bombings of U.S. embassies in Kenya and Tanzania,ATA funding more than doubled - to $41 million. Congress appropriated $38million for FY2001 and the State Department requested the same amount forFY2002. About $1 million would support WMD activities. ATA funding isincluded within the Foreign Operations account of Non-proliferation, Anti-terrorism,Demining, and Related Programs (NADR). Terrorist Interdiction Program (TIP). As one response to the 1998 bombings of American embassies in East Africa, theState Department launched the Terrorist Interdiction Program, an activity intendedto restrict the ability of terrorists to cross international borders, launch attacks, andescape. TIP strengthens border security systems in particularly vulnerable countriesby installing border monitoring technology and training border security andimmigration officials in its use, and by expanding access of international criminalinformation to participating nations. While the State Department has identified 34countries as possible TIP recipients, programs in only five countries had beenplanned for each of FY2001 and FY2002. The Administration requested $4 millionfor TIP in FY2002, the same amount appropriated for FY2001. Like ATA, funds forTIP are part of the NADR account in the Foreign Operations spending bill. USAID Physical Security. USAID maintains about 97 overseas facilities where much of its workforce - both Americansand foreign nationals - is located. Many missions are based in places where there isa high threat of terrorist activity, and especially since the 1998 embassy bombings inKenya and Tanzania, agency officials have been concerned about the lack ofadequate security. In countries where USAID is or is scheduled to be co-located withthe U.S. embassy, the State Department's Foreign Buildings Operations officebudget, which is appropriated in the Departments of Commerce, Justice, and State,has included $50 million for FY2001 and FY2002 to construct facilities to houseUSAID operations. The money has not been released, however, delaying especiallythe construction of a building for USAID at the new embassy in Kampala, Uganda. Security upgrades for the 64 overseas missions situated some distance from American embassies are provided out of USAID operating expenses, a ForeignOperations account that has been under funding stress in recent years due to agencyrelocation costs in Washington, replacement of failed financial management systems,and dwindling non-appropriated trust funds used to finance some in-country costs. The total USAID operating expense appropriation for FY2001 was $533 million,with $549 million approved for FY2002. Funding for USAID physical security requirements drawn from the operating expenses account peaked in FY2000 at $22.6 million, but fell to $12.5 million inFY2001, and would decline further to $10.6 million in FY2002. The Administrationsays that the reduction is the result of a "variation in USAID's relocation expensesto move to more secure temporary facilities or to co-locate" with an embassy. (5) Someestimate that USAID needs over $140 million to bring its overseas facilities, otherthan those co-located with U.S. embassies, up to government security standards. Approximately 90% of USAID overseas staff work at locations situated outsideAmerican embassy compounds. USAID disaster relief. USAID's Office of Foreign Disaster Assistance (OFDA) provides emergency relief to overseasvictims of natural disasters and conflict, and specifically maintains the capacity to aidvictims of terrorist attacks, including those that involve weapons of mass destruction(WMD). The OFDA budget for FY2001 totaled $165 million, of which $0.8 millionwas allocated for terrorism-related purposes. The enacted total for FY2002 is $235.5million, $1 million of which was requested for defending against WMD incidentsstaged by terrorists. Aid restrictions for terrorist states. Annual Foreign Operations spending bills routinely include general provisionsprohibiting U.S. assistance to countries engaged in terrorist activities or providingcertain types of support to terrorist groups. Included in the FY2002 funding measureare two: Sec. 527 prohibits bilateral U.S. assistance to any country that the President determines grants sanctuary from prosecution to any individual orgroup which has committed an act of international terrorism, or otherwise supportsinternational terrorism. The President may waive the restrictions for national securityor humanitarian reasons. Sec. 544 prohibits any U.S. aid to a government which provides lethal military equipment to a country that the Secretary of State has determined isheaded by a terrorist government. The President may waive the requirement if it isimportant to U.S. national interests. Despite these restrictions, however, certain types of humanitarian foreign assistance may be provided "notwithstanding" other provisions of law, which would overridethe terrorism restrictions. Disaster and refugee relief, child survival and HIV/AIDSprograms, emergency food and medicine, and demining operations are among thecategories of U.S. assistance that could potentially be provided to a country thatwould otherwise be ineligible. Additional aid, debt relief, and the relaxation of sanctions to countries supporting U.S. counter-terrorism efforts. As theUnited States attempts to build a strong international coalition of nations to combatterrorism, steps have been take to augment levels of economic and security assistanceand debt relief planned for FY2002 and beyond. This is consistent with previoussituations, such as the Persian Gulf War during which the United States cancelled$6.7 billion of debt owed by Egypt and increased bilateral aid to Israel and Turkey. Pakistan, which has pledged full support to the United States, has said it needs financial aid and debt cancellation to bolster its ailing economy. Pakistan owes theUnited States roughly $3 billion and was scheduled to receive economic aid totaling$7 million in FY2002 to support democracy promotion and basic educationprograms. Pakistan, however, was barred from receiving non-humanitarian bilateralforeign aid due to two Foreign Operations restrictions of assisting countries that haveundergone a military coup and which are more than a year in arrears on debtpayments to the United States. The President used his special but limited authority(Sec. 614(a) of the Foreign Assistance Act of 1961) on September 28 and October16 to channel $100 million in economic assistance to Pakistan. But he requiredlegislative authority - as provided in S. 1465 that passed Congress andwas signed by the President on October 27 ( P.L. 107-57 ) - to provide more assistancein the face of the two Foreign Operations restrictions. The President furtherannounced on November 10 a $1 billion aid package for Pakistan that will includedebt relief, IMF loans, and trade assistance. Direct U.S. economic aid for Pakistantotals $600 million (including $100 million from the earlier release) of the $1 billionpackage. The Administration has also allocated $91 million in additional economicand military support for Uzbekistan, Turkey, and other Central Asian states. All ofthese amounts are drawn from the $40 billion Anti-Terrorism EmergencySupplemental Appropriations ( P.L. 107-38 ) the Congress approved in September. Congress further added an additional $50 million for humanitarian and reconstructionneeds in Afghanistan when it allocated ( H.R. 3338 ) the second $20billion portion of P.L. 107-38 funds. Congressional debate. Prior to the terrorist attacks of September 11, Congress, in preliminary action on H.R. 2506 , had fully supported the President's Anti-TerrorismAssistance ($38 million) and Terrorist Interdiction Program requests ($4 million). House and Senate bills further provided the requested total for USAID operatingexpenses which would permit the agency to move forward with its $10.6 millionphysical security plans for FY2002. These same levels are sustained in the enactedtext of H.R. 2506 . H.R. 2506 further continues for FY2002the same two general provisions regarding aid restrictions for countries supportingterrorism (Sections 527 and 544). As noted above, Congress agreed to the Senateprovision lifting the ban on U.S. aid to Azerbaijan until at least December 31, 2002,if the President certifies that the assistance is necessary to support Americancounterterrorism efforts. Finally, H.R. 2506 as passed includes a Senateamendment earmarking $15 million for programs to foster democracy, human rights,press freedoms, and the rule of law in countries with a significant Muslim population(Sec. 584). Conferees dropped from the bill several other terrorism-related amendments added by the Senate, choosing instead to address the issues in the conference report: A report on U.S. military aid to Uzbekistan and the extent to which, if any, Uzbek military units engaged in human rights violations (Sec. 585 ofthe Senate bill); A sense of the Senate regarding the delivery of humanitarianaid to Afghanistan (Sec. 586 of the Senate bill); A sense of the Senate concerning the important role of Afghanwomen in the country's reconstruction (Sec. 589 of the Senate bill); A study by the Peace Corps to determine the feasibility ofincreasing the number of Peace Corps volunteers in countries with large Muslimpopulations (Sec. 593 of the Senate bill). President Bush has further allocated substantial sums for foreign aid programs from the $40 billion emergency terrorism supplemental appropriation ( P.L. 107-38 )enacted on September 18. Nearly all additional spending for Foreign Operationsprograms came from the first $20 billion portion that was under control of thePresident. In several allocations announced since September 21, the Presidentdistributed $1.1 billion for Foreign Operations activities, including: $75,000 for relocating the Export-Import Bank's New York office. $17.4 million for USAID to enhance emergency communications in Washington, to provide for the potential evacuation at sixhigh-risk USAID overseas posts, and for security upgrades at USAID overseasmissions. $6.5 million for the evacuation of Peace Corps volunteers at nine posts and to provide for the potential evacuation at other high-risk Peace Corpslocations. $100 million for Afghan refugees and $96 million for other humanitarian assistance in Afghanistan. $600 million for economic aid and $73 million for enhanced border security to Pakistan. $40.5 million for economic and law enforcement support for Uzbekistan and $6 million for Central Asian regional conflictprevention. $45 million in economic and military aid to Turkey and Uzbekistan. $108 million for a variety of counter-terrorism training programs and demining in Afghanistan. $3 million to train governments to combat terrorist financing. The final $20 billion allocation, notified to Congress on October 16, did not include additional funds for Foreign Operations programs, but did propose the transfer of $50million from FY2001 State Department embassy security funds to USAID for theconstruction of secure USAID facilities in Kenya and Uganda. As enacted as part ofthe Defense Department Appropriation bill ( H.R. 3338 ), Congress didnot approve the $50 million transfer, but did add $50 million for additional USAIDhumanitarian and reconstruction efforts in Afghanistan. Export-Import Bank. (6) TheExport-Import Bank is the chief U.S. government agency that helps finance Americanexports. With a budget of nearly $1 billion, the Bank finances around 2% of U.S.exports a year. Eximbank provides guarantees and insurance to commercial banks tomake trade credits available to U.S. exporters. The Bank also offers direct financingto U.S. exporters on a limited basis, primarily to counter subsidized trade creditsoffered to foreign exporters by their governments. Such government-sponsored trade financing, however, has long been controversial. One rationale for the Export-Import Bank is the acknowledgedcompetition among nations' official export financing agencies. Most economistsdoubt, however, that a nation can improve its welfare over the long run bysubsidizing exports. Economic policies within individual countries are the primefactors which determine interest rates, capital flows, and often exchange rates, which,in turn, largely determine the overall level of a nation's exports. This means that, atthe national level, subsidized export financing merely shifts production amongsectors within the economy, rather than adding to the overall level of economicactivity, and subsidizes foreign consumption at the expense of the domestic economy. This also means that promoting exports through subsidized financing or throughgovernment-backed insurance and guarantees will not permanently raise the level ofemployment in the economy, but it will alter the composition of employment amongthe various sectors of the economy. Some Eximbank opponents argue that the Bank's programs serve only to aid the richest American firms. Nevertheless, the Bank also is attempting to make itsprograms more accessible to small businesses, which account for 12 to 15% of theBank's total authorizations. Some opponents further argue that, by providingfinancing or insurance for exporters that the market seems unwilling, or unable, toprovide, Eximbank's activities draw from the financial resources within the economythat would be available for other uses. Another consideration is that subsidizedexport financing raises financing costs for all borrowers by drawing on financialresources that otherwise would be available for other uses, thereby possibly crowdingout some borrowers from the financial markets. This crowding-out effect mightnullify any positive impact subsidized export financing may have on the economy. Eximbank supporters maintain that the Bank's programs are necessary for U.S. exporters to compete with foreign subsidized export financing and also to pressureforeign governments to eliminate concessionary financing. As a result, Eximbank isrequired in the Bank's Act to provide U.S. exporters with financing terms that are"competitive" with those offered by other official trade financing institutions. These,and other supporters of the Bank, also stress that deficiencies in financial marketsbias those markets against exports of high value, long-term assets. For FY2002, the Bush Administration proposed a $223 million, or 25% cut in spending for the Export-Import Bank. The Administration estimated that about $120million of the reduction was the result of lower risks in countries where theEximbank would lend. Because the level of risk and prospects for repayment arefactors in determining how much must be appropriated, this part of the proposed cutwould not affect the level of Bank financing. But the remaining reduction of about$100 million would limit the Export-Import Bank's ability to meet continuingdemands from American exporters. The Administration said that Bank lendingwould focus on U.S. businesses that have no access to private financing and wouldseek to increase the risk sharing with the private sector. Export coalitions opposedthe proposed funding reduction arguing that it would result in fewer U.S. exports, lostAmerican jobs, and would come at a time when major trading competitors wereincreasing their own export credit activities. Congressional Debate. The House in H.R. 2506 provided $787 million for the Export-Import Bank, aboutmid-way between the amounts for FY2001 and the Administration's proposed cut forFY2002. The House Appropriations Committee had recommended $805 million, alevel it believed would permit the Bank to maintain authorizations about $2 billionhigher than this year and $1 billion more than proposed for FY2002. The full Houseadopted an amendment (Visclosky) reducing the appropriation level by $18 million,an action some estimated would cut Eximbank loan guarantees by $275 million fromwhat the Committee recommended. Amendment proponents argued that last year,over the objections of the White House and some lawmakers, the Bank extended an$18 million loan guarantee package to Benxi Iron and Steel in China. This, theyclaimed, hurt American workers in the steel industry by extending credits to aChinese firm that was involved in an anti-dumping case before the InternationalTrade Commission. Critics of the amendment argued that reduced Eximbankfunding would have little impact on the loan guarantee issued last year to Benxi Ironand Steel, but would cut into resources available to other American exporters tryingto compete internationally. The Senate bill, as reported from Committee, had provided a somewhat higher funding level than the House - $806 million - an amount the Committee believedwould increase Bank financing in support of about $1 billion more exports than inFY2001. An amendment offered during Senate debate on H.R. 2506 ,however, reduced the Bank's funding level to $780 million, slightly below the Houseamount. The reduction was part of larger package of off-sets for increases inHIV/AIDS and other global health funding. As enacted, H.R. 2506 provides $779 million, slightly below House and Senate-passed levels, but $92 million higher than the request. Conferees notedthat the appropriation would provide the Exim Bank with an authorized operationlevel of $10.6 billion, about 15% higher than for FY2001. As an interim measure,the Foreign Operations Appropriations further extends the Bank's operatingauthority, which had expired on September 30, 2001, to March 31, 2002. Pendinglegislation in the House and Senate ( H.R. 2871 and S. 1372 ) would extend the authority through 2005 and 2006, respectively. Development Aid Policy Priorities. Since the end of the Cold War, a recurring debate hasfocused on what should replace the anti-communist foreign aid rationale. A morefundamental question raised by some, especially critics of development assistance,is whether the United States needs to maintain an active, globally focused economicaid program. Many of these critics argue that aid can be transformed into a smaller,more targeted, and often privatized instrument to support only the highest priorityU.S. foreign policy interests. A perspective promoted by Senator Helms and otherssuggests that development assistance could have a more significant impact if it wasmanaged to a greater extent by non-governmental organizations - especiallyfaith-based groups - rather than by the U.S. Agency for International Development(USAID). Senator Helms, for a number of years, has advocated the abolishment ofUSAID, the creation of a separate foundation that would issue development aid blocgrants to NGOs, universities, and other private groups, and transfer the remainingresponsibilities of USAID to the State Department. The Clinton Administration strongly supported the retention of an activist foreign aid policy which was used to bolster a variety of U.S. foreign policyinitiatives around the world. During the 1990s, USAID based its program strategiesaround the principle of "sustainable development," and the goals of promotingeconomic growth, stabilizing global population and protecting health, protecting theenvironment, advancing democracy, developing human capacity through education,and providing humanitarian relief. Congress maintains its own development aid funding priorities that in recent years have emphasized programs supporting child survival, basic education, andefforts to combat HIV/AIDS and other infectious diseases. The Administration alsobacked these programs, but officials objected to congressional efforts to increasefunding for children and health activities at the expense of other development sectors. When Congress increased appropriations for its priorities but cut the overalldevelopment aid budget, some areas including, economic growth and theenvironment, received substantially reduced funding. For FY2002, the Bush Administration sought $2.368 billion for development aid funded in the two Foreign Operations accounts of Child Survival/HealthPrograms and Development Assistance. This represented an increase of $133million, or 6% over FY2001 levels. Most of the additional resources would fall inthree areas. Bilateral HIV/AIDS funding would grow by $30 million to $329 million, basic education for children would increase by $20 million to $123 million, and $80million would be available for a new Global Fund to Fight HIV/AIDS, Malaria, andTuberculosis. (The Global Fund contribution would total $200 million with $100million coming from the Department of Health and Human Services budget and $20million from the FY2001 Foreign Operations bill.) During testimony at hisconfirmation hearing on April 25, USAID Administrator-designee Andrew Natsiosexpressed strong support for agriculture and food security programs, areas that wouldalso receive additional funding in the FY2002 request. For most other developmentaid activities, it appeared that spending would remain the same or decline. Beyond budget issues, USAID has re-aligned the core goals of sustainable development of the previous Administration and will allocate funds around three"spheres of emphasis" that include Global Health, Economic Growth andAgriculture, and Conflict Prevention and Developmental Relief. The BushAdministration further planned to launch a new initiative - the Global DevelopmentAlliance - in an effort to expand public/private partnerships in development programimplementation. Under the proposal, USAID would identify good developmentopportunities being conducted by private foundations, non-governmentalorganizations, universities, and for-profit organizations, and provide parallelfinancing to leverage resources already committed to these activities. USAIDofficials envision that the agency will become much more of a coordinating andintegrating institution to expand and enhance development efforts of thesenon-governmental development partners. Roughly $160 million would be set asidein FY2002 to finance these projects. On the issue of USAID reorganization,Secretary of State Powell told several congressional committees that he would listento proposals to abolish USAID or merge it into the State Department, but that he wasnot inclined to propose any change in the current organizational alignment. Congressional Debate. Legislation passed by the House included $2.523 billion in development assistance for FY2002,a level $155 million above the request and nearly $200 million higher than amountsfor FY2001. (7) The House considered severalamendments - adopting some andrejecting others - that proposed increases beyond Committee-recommended levelsfor health programs. (See above under House consideration of H.R. 2506 .) The House bill fully funded the proposed $100 million U.S. contribution forthe Global Fund to Fight HIV/AIDS, Malaria, and Tuberculosis. (This amount ismade up of $80 million in H.R. 2506 and $20 million from the FY2001appropriation. Another $100 million for the Fund was considered and adopted in theLabor/HHS spending bill. Earlier, Congress approved $100 million in ForeignOperations money for the Fund as part of the FY2001 Supplemental Appropriations; P.L. 107-20 ). The legislation provided $487 million overall to combat HIV/AIDS. H.R. 2506 , as passed the House, further blocked USAID's major new initiative -- the Global Development Alliance (GDA). The HouseAppropriations Committee expressed support for agency's efforts to expandcooperation with private entities and found the GDA concept "intriguing." TheHouse panel, however, felt that it had not received sufficient details about the scopeand operations of the proposed GDA and therefore directed that no programs fundsin the FY2002 bill or prior Foreign Operations Appropriations acts could be set asideto implement the initiative. Table 5. Funding for Selected USAID Programs (tentative estimates across all accounts - in millionsof dollars) a Appropriated in P.L. 107-20 , the FY2001 Supplemental Appropriation. b Portions of the $100 million contribution to the Global Trust Fund to Combat HIV/AIDS, Malaria, and Tuberculosis were assumed to be drawn from theHIV/AIDS earmark. The House bill assumed $60 million would be drawn from the$487 million available for HIV/AIDS; the Senate bill assumed that $90 millionwould be drawn from the $485 million available for HIV/AIDS; the conferenceagreement assumes that $40 million will be drawn from the $475 million availablefor HIV/AIDS. c The requested figure represents funds only from the Child Survival account and is therefore lower than the other comparative figures. The House-passed bill forFY2002 level assumed an additional $20 million added by the Brown (OH)amendment to the Committee-reported $70 million target. d Amounts are from the development account and exclude funds drawn from other accounts. The Senate passed measure went further in additional resources for development activities, providing $2.76 billion, $232 million more than the House. Anamendment adopted during Senate debate on H.R. 2506 boosted fundingfor bilateral HIV/AIDS programs and the U.S. contribution to the global health fundto levels at or near those passed by the House. The amendment further added $10million each for malaria and tuberculosis programs. Amounts recommended orearmarked in the Senate measure for children and maternal health, populationassistance, polio, and biodiversity also exceed those passed by the House or proposedby the Administration. Table 5 compares several development and childsurvival/health program funding levels that received specific attention in both Houseand Senate versions of H.R. 2506 . Like the House, the SenateAppropriations Committee found merit with the concept of the Global DevelopmentAlliance but felt insufficient details had been provided. Pending furtherconsultations, the Committee directs that no program funds can be set aside for GDAactivities. As enacted, H.R. 2506 provides $2.6 billion for the two USAID core development assistance accounts, an amount roughly 12% higher than forFY2001 and the Administration's request for FY2002. Nearly every major programpriority, listed in Table 5, receives a significant funding boost over last year, and inmany cases above the President's budget proposal. Although amounts for HIV/AIDSare set at $475 million, below both the House and Senate levels, the conferencereport directs that fewer of these funds be transferred as part of a U.S. contributionto the Global Health Trust Fund for combating AIDS, tuberculosis, and malaria. Consequently, $435 million of the earmark remains for bilateral HIV/AIDS programsrather than $427 million assumed in the House bill and $395 million assumed in theSenate measure. Other significant increases above FY2001 levels enacted in H.R. 2506 include: UNICEF contribution - up 9% from FY2001 malaria - up one-third micronutrients - up 20% basic education - up 46% women in development - up 50% Conferees also opened the way for USAID to launch its Global Development Alliance initiative, although with conditions. USAID must first provide theAppropriations Committees with additional details about how the GDA wouldoperate and engage in further consultations, if necessary. The conference reportfurther limits to $20 million, rather than $160 million, amounts that USAID canallocate or reserve for GDA programs in FY2002 and requires the agency to notifythe Committees prior to obligating such funds. Family Planning and Abortion Restrictions. The debate over international family planning policyand abortion began nearly three decades ago when Congress added a provision to theForeign Assistance Act of 1961 prohibiting the use of U.S. appropriated funds forabortion-related activities and coercive family planning programs. During themid-1980s, in what has become known as the "Mexico City" policy (because it wasfirst announced at the 1984 Mexico City Population Conference), the Reagan, andlater the Bush, Administrations restricted funds for foreign non-governmentalorganizations (NGOs) that were involved in performing or promoting abortions incountries where they worked, even if such activities were undertaken with non-U.S.funds . Several groups, including International Planned ParenthoodFederation-London (IPPF-London), became ineligible for U.S. financial support. Insome years, Congress narrowly approved measures to overturn this prohibition, butWhite House vetoes kept the policy in place. President Clinton in 1993 reversed theposition of his two predecessors, allowing the United States to resume funding forall family planning organizations so long as no U.S. money was used by thoseinvolved in abortion-related work. During the past five 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 hand, has rejected in most cases House provisions dealing with Mexico Citypolicy, favoring a position that leaves these decisions in the hands of theAdministration. Unable to reach an agreement satisfactory to both sides, Congress adopted interim arrangements for FY1996-FY1999 that did not resolve the broad populationprogram controversy, but permitted the stalled Foreign Operations measure to moveforward. The annual "compromise" removed House-added Mexico City restrictions,but reduced population assistance to $385 million, and in several years, "metered"the availability of the funds at a rate of one-twelfth of the $385 million per month. The FY2000 debate, however, concluded far differently than the previous four years. As Congress and the White House searched in November 1999 for a finalFY2000 budget agreement, international family planning and population aid issuesbecame one of the last and most contentious aspects of the negotiations. Congressional leaders insisted that if the President wanted Congress to approvelegislation authorizing the payment of nearly $1 billion of U.S. arrears owed to theUnited Nations, the White House must also accept revised Mexico City languageadding abortion restrictions to U.S. population assistance policy. In order to removethe obstacles to U.N. arrears payments, a reluctant President Clinton agreed to theabortion restrictions, marking the first time that Mexico City conditions had beenincluded in legislation signed by the President. (Enacted in the Foreign OperationsAct for FY2000, H.R. 3422 , incorporated into H.R. 3194 ,the Consolidated Appropriations Act for FY2000, P.L. 106-113 ). Because thePresident could waive the restrictions up to a certain point, there was no majorimpact on USAID family planning programs in FY2000, other than the loss of $12.5million in population assistance that the legislation required if the White Houseexercised the waiver authority. Congress again came to an impasse in 2000 over the international family issue and agreed to allow the new President to set policy early in 2001. Under the FY2001Foreign Operations measure, none of the $425 million appropriation could beobligated until after February 15, 2001. Subsequently, on January 22, 2001, two days after taking office, President Bush issued a Memorandum to the USAID Administrator rescinding the 1993memorandum from President Clinton and directing the Administrator to "reinstatein full all of the requirements of the Mexico City Policy in effect on January 19,1993." The President further said that it was his "conviction that taxpayer fundsshould not be used to pay for abortions or advocate or actively promote abortion,either here or abroad." (8) A separate statement fromthe President's press secretarystated that President Bush was "committed to maintaining the $425 million fundinglevel" for population assistance "because he knows that one of the best ways toprevent abortion is by providing quality voluntary family planning services." Thepress secretary further emphasized that it was the intent that any restrictions "do notlimit organizations from treating injuries or illnesses caused by legal or illegalabortions, for example, post abortion care." (9) OnFebruary 15, the day on whichFY2001 population aid funds became available for obligation, USAID issued specificpolicy language and contract clauses to implement the President's directive. Theguidelines are nearly identical to those used in the 1980s and early 1990s when theMexico City policy applied. (10) For FY2002,President Bush seeks $425 million forUSAID population assistance, the same as appropriated for FY2001. (11) The Presidentalso proposed a U.S. contribution to the U.N. Population Fund (UNFPA) of $25million, the same as for FY2001. Critics of the certification requirement oppose it on several grounds. From an administrative standpoint, they say it increases USAID costs to manage familyplanning programs because of the additional paperwork and delays implementationof projects. (USAID has contracted with John Snow, Inc. to track the certificationprocess.) They further believe that family planning organizations may cut back onservices because they are unsure of the full implications of the restrictions and do notwant to risk losing eligibility for USAID funding. This, they contend, will lead tohigher numbers of unwanted pregnancies and possibly more abortions. Opponentsalso believe the new conditions undermine relations between the U.S. Governmentand foreign NGOs and multilateral groups, creating a situation where the UnitedStates challenges their sovereignty on how to spend their own money and imposesa so-called "gag" order on their ability to promote changes to abortion laws andregulations in developing nations. The latter, these critics note, would beunconstitutional if applied to American groups working in the United States. Supporters of the certification requirement argue that even though permanent law bans USAID funds from being used to perform or promote abortions, money isfungible; that organizations receiving American-taxpayer funding can simply useUSAID resources for permitted activities while diverting money raised from othersources to perform abortions or lobby to change abortion laws and regulations. Thecertification process, they contend, stops the fungibility "loophole." Congressional Debate. During subcommittee markup on June 27, the House Foreign Operations panel rejected byvoice vote an amendment by Representative Lowey that would have effectivelyreversed the President's Mexico City policy. The Lowey amendment would haveallowed groups to receive USAID funding so long as they did not violate U.S. lawsor the laws of the countries in which they operate. On funding issues, H.R. 2506 assumes the complete $425 million Administration requestfor population aid and $25 million for the U.N. Population Fund. The Mexico Cityissue was not raised during subsequent House consideration. The Senate-passed version of H.R. 2506 increased to $450 million family planning aid, plus $40 million for the U.N. Population Fund. A Committee amendment offered by Senator Leahy and adopted by the Senate panel would haveeffectively overturned the President's "Mexico City" policy. The Senate provisionblocked the White House from barring foreign NGOs' eligibility for USAID fundingsolely on the basis of health or medical services they offer with their own, non-U.S.Government provided funds so long as they did not violate U.S. laws or the laws ofnations where which they operate. Foreign NGOs would also not face limitations onadvocacy or lobbying activities using their own, non-U.S. Government funds thatwere more restrictive than those that apply to U.S. NGOs which receive U.S. foreignaid grants. This provision was very similar to a measure included by the SenateCommittee in the FY2001-reported Foreign Operations bill, to S. 367 reported favorably on August 1, 2001, by the Senate Foreign Relations Committee,and to the Lowey amendment defeated during House subcommittee markup. After a month-long stalemate on family planning issues, conferees agreed on December 19 to delete Senate language that would have overturned theAdministration's Mexico City policy, but adopt funding levels for bilateralpopulation assistance and UNFPA closer to the Senate-passed higher figures. H.R. 2506 , as enacted, appropriates $446.5 million for U.S. bilateralfamily planning/ reproductive health programs in FY2002, only slightly less than the$450 million passed by the Senate. The legislation allocates the $20.5 million overallincrease from FY2001 and the FY2002 request in such a way that will add $10.5million family planning amounts to the Child Survival account and $10 million toother economic aid accounts. The conference agreement further provides a U.S.contribution to the UNFPA of "up to" $34 million, with the conditions that UNFPAnot fund abortions and that it segregate and not co-mingle U.S. funds with otherUNFPA money so they are not used for UNFPA programs in China. Confereesdropped the House restriction that would have reduced the contribution by whateverUNFPA spent in China. (12) Debt Reduction -- HIPC. In 1996, international creditors, including the World Bank and the IMF, agreed tolaunch a substantially expanded debt relief program for the world's poorest, mostseriously debt-strapped nations. The Heavily Indebted Poor Country (HIPC)initiative encompasses forty-one countries -- mostly in Africa -- that are potentiallyeligible for HIPC relief, although only those determined to have "unsustainable" debtand those that maintain a sound economic reform track record would qualify for themore generous HIPC debt relief terms. HIPC implementation, however, moved slowly in the late 1990s. Debt relief critics, including non-governmental organizations, religious groups, and some donorgovernments, charged that HIPC terms were not deep enough -- that 90% or 100%of bilateral debt owed should be canceled, and that six years was a far too longqualification period for full HIPC relief. They further believed that thenon-sustainable debt criteria, based largely on a ratio of a country's debt-to-exports,was too high and therefore excluded many countries that were also in need of debtrelief. A number of organizations further advocated instituting mechanisms thatwould ensure that savings realized by debtor governments would be channeled intospending on poverty programs, such as health and education, with decisions on howto spend the money made jointly by government and civil society. At the Cologne Summit in June 1999, G-7 leaders endorsed most of the HIPC reforms proposed by critics, and the World Bank and IMF, institutions that manageHIPC debt relief, adopted the enhancements in September. By the end of 2000, 22countries had qualified for at least preliminary debt reduction, although for nearly allnations, full HIPC relief is not expected for another year or more. For these 22 qualifiers, the HIPC initiative, together with existing debt relief mechanisms, will result in the cancellation of $53 billion of their total $74 billiondebt stock (nominal terms). Annual debt service for these 22 nations will fall byabout one-half, or $800 million each year during the period 2001-2003. Povertyprogram expenditures by the 22 HIPC qualifiers are estimated by the World Bank toincrease by $1.7 billion during the same time period. There are 19 other HIPCcountries, a few of which are expected to provisionally qualify this year or next. Fournations are considered to have "sustainable" debt without HIPC relief, while one isnot seeking HIPC terms. Several others remain involved in regional conflicts or havenot began required economic reform programs and are likely not to qualify in thenear term. Total creditor costs of the HIPC initiative are estimated at $29.3 billion. Because only about 3% of HIPC debt is owed to the United States, the U.S. financialcommitment is small relative to the cost to all creditors - roughly $800 million. (13) A number of NGOs, however, remain critical of the HIPC initiative, arguing that the terms are still not generous enough to ensure that poor countries will havesufficient resources to invest in health, education, and other poverty-oriented socialprograms. They contend that the World Bank and IMF should cancel 100% debtowed by HIPC in the same way as most bilateral creditors, including the UnitedStates. These critics point out that the degree of annual debt service relief fluctuateswidely among qualifying nations, and that for some, the savings will not besubstantial. Moreover, they claim that the amount of debt service will still exceedpoverty program expenditures even after HIPC relief. Many further say that thequalification criteria should be lowered so that heavily indebted countries likeBangladesh, Nigeria, and Haiti will also be able to benefit from the initiative. World Bank and IMF officials, as well as several creditor governments counter that these institutions do not have the resources to cancel total debt owed by HIPCnations. Unless donors, like the United States, would be willing to increasecontributions, further HIPC expansion of multilateral debt relief would wipe out bankreserves. They further express concern that cancellation of all debt owed by thesecountries would create "moral hazard" and argue that some payment obligationsshould remain. Congress acted in 1999 and 2000 authorizing and appropriating most, but not all funding for U.S. pledged contributions to the HIPC initiative. For FY2000,lawmakers provided $110 million for the cancellation of HIPC debt owed to theUnited States, followed by an FY2001 appropriation of $435 million, of which $75million will cover the costs of writing-off bilateral debt. The other $360 million isa contribution to the HIPC Trust Fund that assists the African Development Bank,Inter-American Development Bank and other multilateral creditors cover their costsof reducing debt owed by HIPC countries. Because of concerns that HIPC nationswould accumulate new debt and fall back into a debt trap, Congress stipulated thatcountries receiving benefits from U.S. contributions must first agree not to borrowat market rate terms for two years and endorsed consideration of a policy in whichthe World Bank's International Development Association would expand grantassistance to these governments. For FY2002, the Bush Administration sought $224 million that, together with $16 million available from prior year appropriations, would complete the U.S.commitment of $600 million for the HIPC Trust Fund. Congressional Debate. The House provided full funding - $224 million - for U.S. support of the HIPC initiative inFY2002. The House Appropriations Committee directed the Treasury Secretary topress other donors to agree to the creation of a grant aid facility at the World Bank'sInternational Development Association for HIPC beneficiary countries during thefirst three years following their qualification for HIPC debt relief terms. The Senatebill also recommended the full $224 million funding level for HIPC. In addition, both House and Senate versions of H.R. 2506 provided resources for another debt relief initiative - the Tropical Forestry Conservation Act(TFCA). The TFCA extends a menu of debt reduction options for countries whichare willing to expend resources and implement programs protecting their tropicalforests. The Administration did not request funds for FY2002 TFCA activities, butrather sought authority to transfer $13 million from USAID development assistanceresources. The House bill directed that $25 million from prior year appropriationsbe used for TFCA debt relief, while the Senate measure appropriated $11 million forthe TFCA and directed the use of $14 million in previously appropriated money, fora total funding level of $25 million. As enacted, H.R. 2506 provides $224 million for HIPC, as requested. The measure further appropriates $5 million for the TFCA and providesauthority for the Administration to use $20 million from unobligated debt relief fundsin prior appropriations. Andean Counterdrug Initiative. (14) The Bush Administration requested $731 million in FY2002 economic andcounter-narcotics assistance for Colombia and regional neighbors as part of the"Andean Counterdrug Initiative." The proposal differed from the FY2000 $1 billionPlan Colombia program in two keys ways: 1) economic and social program fundingwas roughly equal to the drug control and interdiction components, which had beenthe key focus of the Plan Colombia effort; and 2) more than half of the assistance wasdirected at neighboring countries that are experiencing the spill-over effects fromColombia of illicit drug and insurgency activities. Based on preliminary outlines ofthe initiative, funds (not including possible Defense Department resources) wouldhave been allocated as follows: Colombia : $399 million Socio-economic aid: $146.5 million for alternativedevelopment, judicial reform, human rights, anti-corruption measures, and supportfor the peace process. Counter-narcotics aid: $252.5 million for aviation andinfrastructure support for air assets provided under Plan Colombia, training andequipping security forces, and interdiction and eradicationefforts. Peru : $156 million Socio-economic aid: $79 million for alternative development,promotion of democracy, health and education programs. Counter-narcotics aid: $78 million for upgrading helicoptersand riverine interdiction efforts, eradication, and demand reduction and policydevelopment. Bolivia : $101 million Socio-economic aid: $47 million for alternative development,judicial reform, poverty alleviation, health and environment. Counter-narcotics aid: $54 million for ground-based and airinterdiction support, eradication efforts, counter-narcotics training, and narcoticsawareness and prevention programs. Ecuador : $39 million Socio-economic aid: $20 million for border area development,poverty reduction, judicial reform, and environmentalprograms. Counter-narcotics aid: $19 million for northern border security,law enforcement and border checkpoints, and sea and airport controlefforts. Brazil : $15 million Counter-narcotics aid: $15 million for training and equippingborder counter-narcotics forces, and for drug awareness and demand reductionprograms. Panama : $11 million Counter-narcotics aid: $11 million for upgrading interdictionand law enforcement personnel, and for modernizing criminal justiceinstitutions. Venezuela : $10 million Counter-narcotics aid: $10 million for law enforcement andinterdiction reforms, efforts to counter money-laundering, and demandreduction. Congressional Debate. The House-passed bill reduced the President's Andean initiative by $56 million to $675million. During Committee and floor debate, several House Members expressedconcern over the lack of success of the earlier Plan Colombia program, and arguedthat too much of the proposed Andean Regional Initiative would support militaryoperations rather than development needs. The House considered a number ofamendments seeking to reduce further funding for the initiative or limit U.S.involvement in military operations. Adopted were a Conyers amendment that cappedU.S. civilian and military personnel involved in the Andean CounternarcoticsInitiative at 800 and a Hoekstra amendment that would withhold $65 million until theSecretary of State reports on the April 20, 2001, Peruvian Air Force jet downing ofa civilian aircraft in which two Americans were killed. The House further decreasedACI funding by $1 million, but rejected other amendments that would have cutcounternarcotics resources by $38 million and $100 million in order to increasehealth programs. The Senate measure cut deeper into the President's ACI request, reducing funds to $547 million, $128 million less than the House and $184 million below theAdministration's proposed budget. Alternative development for the Andean region,however, was set at $151 million, as requested. An amendment offered by SenatorsGraham, Hagel, and Dodd that would have restored ACI funding to $731 million, asrequested, was voted out of order because it did not propose specific reductions tooffset the additional spending for counternarcotics. The enacted bill provides $625 million for the ACI, an amount between those passed by the House and Senate earlier. Conferees further authorized the transfer ofan additional $35 million from the regular International Narcotics account, subjectto congressional notification. Although the conference committee encouraged theAdministration to provide Bolivia with $86 million and Ecuador with $33 million inalternative development funding. The level for Bolivia is roughly the same amountas requested under the ACI and regular economic aid accounts, while the amount forEcuador falls below the $59 million proposed ACI and other economic assistance. H.R. 2506 , as passed, further limits to 800 the number of U.S. civilianand military personnel involved in the ACI and blocks funding for the resumption offlights in support of the Peruvian air interdiction program until a system of enhancedsafeguards is in place. The Bush Administration's FY2001 supplemental appropriations proposallargely included additional funds for defense and domestic farm relief, but sought noadditional resources for Foreign Operations programs. The Senate AppropriationsCommittee, however, added $100 million for a new Global Fund to Fight HIV/AIDS,Malaria, and Tuberculosis to its bill ( S. 1077 ) when it reported themeasure on June 21. (15) President Bush hadproposed $200 million in FY2002 for theGlobal Fund ($100 million from Foreign Operations and $100 million from Healthand Human Services). The request recommended, however, that all of the moneywould be transferred from previously enacted and proposed funding for FY2002. The House bill ( H.R. 2216 ) included no funds for the HIV/AIDS andother disease fund. Conferees meeting on H.R. 2216 approved the Senate provision and added $100 million for the Global Fund to the legislation. Congress cleared themeasure on July 20 ( P.L. 107-20 ). This action by Congress accelerated the U.S.contribution to the Global Fund, but required USAID to find $20 million in cuts fromprior year Child Survival and ESF programs. During initial debate on the bill, theSenate defeated an amendment by Senator Feingold that would have rescinded nearly$600 million for the Navy Osprey aircraft procurement and added $593 million foran additional U.S. contribution to the Global Health Fund. General/Overview CRS Report 98-916 . Foreign Aid: An Introductory Overview of U.S. Programs and Policy. CRS Report RS20855 . Foreign Policy Budget for FY2002. CRS Report RL30515(pdf) . International Affairs Budget Trends, FY1980-FY2000. CRS Report 97-62(pdf) . The Marshall Plan: Design, Accomplishments, and Relevance to the Present. Foreign Operations Programs CRS Report RS20329(pdf) . African Development Bank and Fund. CRS Issue Brief IB10050. AIDS in Africa. CRS Report RL30214(pdf) . Debt Reduction: Initiatives for the Most Heavily Indebted Poor Countries. CRS Issue Brief IB88093. Drug Control: International Policy. CRS Report 98-568 . Export-Import Bank: Background and Legislative Issues. CRS Report RL30793. Health in Developing Countries: The U.S. Response. CRS Report RS20622. International Disasters: How the United States Responds. CRS Report RL30830 . International Family Planning: The "Mexico City" Policy. CRS Report RL30932(pdf) . Microenterprise and U.S. Foreign Assistance. CRS Issue Brief IB96008. Multilateral Development Banks: Issues for the 107th Congress . CRS Issue Brief IB89150. Refugee Assistance in the Foreign Aid Bill: Problems and Prospects. CRS Issue Brief IB96026. U.S. International Population Assistance: Issues for Congress . Foreign Operations Country/Regional Issues CRS Issue Brief IB95052. Africa: U.S. Foreign Assistance Issues. CRS Report RL31016 . Andean Regional Initiative (ARI): FY2002 Assistance for Colombia and Neighbors. CRS Report RL30831(pdf) . Balkan Conflicts: U.S. Humanitarian Assistance and Issues for Congress. CRS Report RL30541 . Colombia: U.S. Assistance and Current Legislation. CRS Report RS20737 . The Federal Republic of Yugoslavia: U.S. Economic Assistance. CRS Issue Brief IB95077. The Former Soviet Union and U.S. Foreign Assistance. CRS Issue Brief IB85066. Israel: U.S. Foreign Assistance. CRS Report RL30453 . Kosovo: Reconstruction and Development Assistance. CRS Report RS20903. Middle East: U.S. Foreign Assistance, FY2000, FY2001, and FY2002 Request. CRS Report RS20895. Palestinians: U.S. Assistance. African Development Bank http://www.afdb.org/ African Development Foundation http://www.adf.gov/ CRS Current Legislative Issues: Foreign Affairs http://www.crs.gov/products/browse/is-foreignaffairs.shtml Export-Import Bank http://www.exim.gov/ Inter-American Development Bank http://www.iadb.org/ Inter-American Foundation http://www.iaf.gov/index/index_en.asp International Monetary Fund http://www.imf.org/ Overseas Private Investment Corporation http://www.opic.gov/ Peace Corps http://www.peacecorps.gov/ Trade and Development Agency http://www.tda.gov/ United Nations Children's Fund (UNICEF) http://www.unicef.org/ United Nations Development Program (UNDP) http://www.undp.org/ United National Population Fund (UNFPA) http://www.unfpa.org/ U.S. Agency for International Development http://www.info.usaid.gov/ U.S. Department of State http://www.state.gov/ World Bank http://www.worldbank.org/ World Bank HIPC website http://www.worldbank.org/hipc/ Table 6. Foreign Operations Accounts Discretionary Budget Authority (millions of dollars) Source: House and Senate Appropriations Committee and CRS calculations. a. Each account for FY2001 has been adjusted in reflect the across-the-board 0.22% rescission enacted in the Consolidated Appropriations Act, FY2001( H.R. 4577 ), signed into law on Dec. 21, 2000. The total amountreduced for Foreign Operations was $33 million. b. FY2002 request amended on June 11, 2001, to add an additional $200 million for HIV/AIDS, Malaria, and TB Global Fund. Of the total, $100 million was derivedby transfer from the Department of Health and Human Services and does not appearin the Foreign Operations budget. The other $100 million came from reductions tothe existing FY2002 Foreign Operations request: ESF(-$35 million); Peacekeeping(-$15 million); Child Survival (-$20 million that had been originally allocated forthe Global Fund); East European aid (-$5 million). The amendment further madeavailable $25 million from unobligated, prior year ESF and Child Survivalappropriations. Congress modified the President's request by approving $100million for the Global Fund under Foreign Operations funding in the FY2001Supplemental Appropriations ( P.L. 107-20 ; H.R. 2216 ). P.L. 107-20 further rescinded $20 million in prior year Child Survival and ESF appropriationsto partially offset the new Global Fund spending. For FY2002, the House, Senate,and enacted levels included $100 million for the Global Fund drawn from the ChildSurvival and other bill accounts. c. For FY2002, Congress proposed a modified structure for the Child Survival/Health (CSH) and Development aid (DA) accounts. Basic education, which had previouslybeen included in the CSH account, is transferred to the DA account. Familyplanning, previously enacted in the DA account, is moved to the CSH account. Further, funding for the Inter-American and African Development Foundations wasprovided in separate accounts (listed below) and not in the DA account as in recentyears. Amounts for FY2001 enacted and for FY2002 requested have been adjustedto be consistent with the congressional structure. d. Population and HIV/AIDS aid funding include small amounts from other Foreign Operations accounts. The figures here represent totals "across all accounts," notjust those within the Development Aid subtotal. e. The Administration request includes the Ireland Fund as part of the Economic Support Fund.

Summary: The annual Foreign Operations appropriations bill is the primary legislative vehicle through which Congress reviews the U.S. foreign aid budget and influences executive branch foreign policymaking generally. It contains the largest share -- over two-thirds -- of total U.S. internationalaffairs spending. President Bush requested $15.167 billion for FY2002 Foreign Operations, an amount 1.5% higher than enacted FY2001 appropriations. By comparison, foreign policy resources proposed forState Department, U.N. contributions, and other non-foreign aid activities would increase by 13.2%from FY2001, in nominal terms. Although the overall FY2002 Foreign Operations proposedincrease was relatively small -- $224 million -- some activities funded in FY2001 would either notneed new appropriations or would require smaller resources in FY2002, thereby freeing up funds forother initiatives. After adjusting the FY2001 base amount to reflect these reduced fundingrequirements that did not alter current policy, the request represented a higher increase for ForeignOperations -- $698 million, or 4.8% more, in nominal terms. The FY2002 Foreign Operations request set most accounts at or near FY2001 funding levels, while largely concentrating proposals to increase spending in a few areas -- disaster aid, globalhealth, international narcotics control, and contributions to the World Bank and other internationalfinancial institutions. Likewise, the budget submission recommended cutting appropriationssignificantly in two accounts -- debt reduction resources for the Heavily Indebted Poor Country(HIPC) initiative and the Export-Import Bank - but only the latter represented a policy shift. Except in one area, the FY2002 budget request represented few changes in the list of top U.S. foreign aid recipients. Israel, Egypt, and Jordan remained the leading recipients. The mostsignificant change was the increase in aid for Latin American drug producing nations. Under theAdministration's Andean Counterdrug Initiative, Colombia, Peru, and Bolivia would be among theleading 10 recipients of U.S. aid. Following nearly six months of debate, Congress cleared for the President on December 20, 2001, a $15.35 billion Foreign Operations Appropriations for FY2002 ( P.L. 107-115 ; H.R. 2506 ). The measure is roughly midway between levels passed earlier by the House($15.17 billion) and the Senate ($15.52 billion), and $178 million higher than requested by thePresident. This marks one of the few occasions when Congress has approved more spending forForeign Operations than sought by the Administration. The amount is about $400 million, or 2.7%higher than for FY2001 (excluding the $1.1 billion for Foreign Operations programs allocated fromthe terrorism emergency supplemental measure; P.L. 107-38 ). Highlights of the bill include: $779million for the Export-Import Bank, nearly $100 million more than requested; $475 million forHIV/AIDS, up from the $429 million proposal; and $625 million for the Andean CounternarcoticsInitiative, a cut of $106 million from the request. The enacted measure drops Senate-passedlanguage overturning the President's international family planning restrictions, but approved fundinglevels for population aid and UNFPA near the higher Senate-passed amounts.