With the end of the first session of the 110 th Congress at hand and only the defense appropriation legislation enacted, Congress passed a consolidated spending measure for all remaining appropriations bills. H.R. 2764 , the State, Foreign Operations, and Related Programs Appropriations bill, became the vehicle for a $555 billion omnibus spending bill that included funding for domestic agencies. Congress completed action on the bill the week of December 17, 2007, and the President signed it on December 26 ( P.L. 110-161 ). The bill included some of the emergency supplemental funding requested by the White House. The State Department operations and foreign aid programs comprise and total $35 billion, including $2.4 billion in emergency supplemental funds. The international affairs budget, also known as Function 150, funds a variety of U.S. government programs and activities, including foreign economic and military assistance, contributions to international organizations and multilateral financial institutions, State Department and U.S. Agency for International Development (USAID) operations, public diplomacy, and international broadcasting programs. Figure 1 provides a percentage breakout of the FY2008 budget request, including food aid that is appropriated in the Department of Agriculture appropriations bill. The rationale for foreign affairs programs has transitioned from a largely anti-communist orientation for some 40 years following World War II to a more recent focus on anti-terrorism in the post September 11, 2001 environment. During the Cold War, foreign aid and diplomatic programs also pursued a number of other U.S. policy goals, such as reducing high rates of population growth, promoting economic development in general, advancing U.S. trade interests, expanding access to basic education and health care, and protecting the environment. In the 1990s, other goals included stopping nuclear weapons proliferation, curbing the production and trafficking of illegal drugs, expanding peace efforts in the Middle East, achieving regional stability, protecting human rights and religious freedom, and countering trafficking in persons. A defining change in focus came following the September 11 terrorist attacks in the United States. Since then, U.S. foreign aid and diplomatic programs have taken on a more strategic sense of importance, and have been frequently cast in terms of contributing to the war on terrorism. In 2002, President Bush released his National Security Strategy that for the first time established global development as the third pillar of U.S. national security, along with defense and diplomacy. Development was again underscored in the Administration's re-statement of the National Security Strategy released on March 16, 2006. Also in 2002, foreign assistance budget justifications began to highlight the war on terrorism as the top foreign aid priority, emphasizing amounts of U.S. assistance to 28 "front-line" states—countries that cooperate with the United States in the war on terrorism or face terrorist threats themselves. Large reconstruction programs in Afghanistan and Iraq, which peaked in FY2004, are also part of the emphasis on using foreign aid to combat terrorism. State Department efforts focused extensively on building coalitions to assist in the war on terrorism and finding new and more effective ways of presenting American views and culture through public diplomacy. In the context of the post 9/11 environment, the Bush Administration announced significant initiatives relating to diplomacy and foreign aid. A new transformational diplomacy initiative, announced in 2006, would reposition diplomats to global trouble spots, create regional public diplomacy centers, localize small posts outside of foreign capitals, and train diplomats in new skills. (See " Transformational Diplomacy " section for more information.) Also announced in 2006 was the creation of a new position at the State Department, the Director of Foreign Assistance (DFA), who serves concurrently as USAID Administrator. Heading up the new "F bureau" at State, the DFA has created a new Strategic Framework for Foreign Assistance with the objectives of providing more coordination, coherence, transparency, and accountability for aid programs. (See Transformational Development section for more information.) Other presidential initiatives address development and global health concerns. The Millennium Challenge Corporation is a new aid delivery concept, proposed by President Bush in 2002, authorized by Congress (Title VI, Division D of P.L. 108-199 ), and established in early 2004. It is intended to concentrate significantly higher amounts of U.S. resources in a few low- and low-middle income countries that have demonstrated a strong commitment to political, economic and social reforms. The President initially pledged $5 billion annually by FY2006, although funds requested and appropriated have never reached this level. With regard to global health issues, President Bush announced in 2003 a five-year, $15 billion commitment to combat HIV/AIDS. Known as the President's Emergency Plan for AIDS Relief, or PEPFAR, the initiative has focused significant funds in 15 focus countries, largely in Africa. Subsequently, the President launched a new initiative in mid-2005 aimed specifically at malaria (President's Malaria Initiative, or PMI), pledging $1.2 billion in additional resources through 2010. These initiatives, which have benefitted African nations, have contributed to fulfilling the Administration's pledge to double aid to Africa in the 2004-2010 period. In May 2007, the President announced a second phase commitment of an additional $30 billion through FY2013. Beyond these recently emerging foreign policy goals relating to terrorism and global health concerns, other prominent objectives have continued since the early 1990s including supporting peace in the Middle East through assistance to Israel, Egypt, Jordan, and the Palestinians; fostering democratization and stability for countries in crisis, like Bosnia, Haiti, Rwanda, Kosovo, Liberia, and Sudan; facilitating democratization and free market economies in Central Europe and the former Soviet Union; suppressing international narcotics production and trafficking through assistance to Colombia and the Andean region; and alleviating famine and mitigating refugee situations in places throughout the world. The international affairs budget can be divided into two components—State Department/Diplomacy/Broadcasting and Foreign Operations. Both components are analyzed separately in the rest of this report. Taken together, the international affairs budget has fluctuated in real terms in response to changing global events. Table 1 shows appropriations for the last decade in both current and constant dollars. The Administration's FY2008 budget request for the Department of State is $10.014 billion, representing a 10.5% increase over the FY2007 estimate, but a decline of 4.3% as compared with the FY2006 actual appropriation (the most recent enacted appropriation for the Department of State), including rescissions and supplementals. For international broadcasting, the FY2008 request of $668.2 million represents a 3.8% increase over the FY2007 estimate, but a 1.7% decline from the FY2006 level, including rescissions and supplementals. Related agencies, which are also funded in the State and Foreign Operations Appropriations bill, include the Broadcasting Board of Governors (BBG), and U.S. assessed contributions to United Nations (U.N.), International Organizations, and U.N. Peacekeeping. Also included are funding for the Asia Foundation, the National Endowment for Democracy, and several other small educational and exchange organizations, as well as resources for international commissions, and the U.S. Institute of Peace. Table 2 shows appropriations for the last decade in both current and constant dollars. On January 18, 2006, Secretary of State Condoleezza Rice announced her vision for U.S. diplomacy in the 21 st Century. She said that to match President Bush's bold mission of "supporting democracy around the world with the ultimate goal of ending tyranny in our world," the United States needs "an equally bold diplomacy that not only reports about the world as it is, but seeks to change the world itself." The Secretary referred to this as "transformational diplomacy." (For more detail on transformational diplomacy, see CRS Report RL34141, Diplomacy for the 21 st Century: Transformational Diplomacy , by [author name scrubbed] and [author name scrubbed].) Specific aspects of Secretary Rice's Transformational Diplomacy include: Global repositioning. Beginning in FY2006 and continuing through FY2007, the Department of State has decided on more than 200 positions to be moved largely from Europe and Washington, DC, to strategically critical areas in Africa, South Asia, East Asia, the Middle East and elsewhere in FY2007. Additional jobs are to be targeted by the summer. Regional focus. The Department is creating regional public diplomacy centers in Europe and the Middle East, as well as regional centers for information technology to perform management support activities such as human resources or financial management. Localization. As part of the U.S. public diplomacy mission, American Presence Posts (APP) are to be operated by one diplomat working away from the embassy in key population centers of a country; Virtual Presence Posts (VPP) are to provide an Internet site enabling millions of local citizens, particularly young people, to interact with embassy personnel. IT Centralization would provide the State Department workforce with real-time and cutting-edge information whether at their desks or traveling. Creative use of the Internet would enhance America's presence through the Internet interactive online discussions such as Café USA/Seoul. Plans for new skills challenges including enhanced training for technology and languages; multi-region expertise requiring diplomats to be experts in at least two regions and fluent in two languages; post assignments criteria requiring diplomats to serve in at least one of the more challenging posts; hands-on practice for diplomats to be more involved in helping foreign citizens, promoting democracy, running programs, starting businesses, improving healthcare, and reforming education—overall recognizing public diplomacy as an important part of every diplomat's job. Empowering diplomats to work with other federal agencies—especially with the U.S. military deployed abroad. Within the Department of State's FY2008 budget, the Administration is requesting $124.8 million for Transformational Diplomacy. Included is $39.9 million for repositioning of jobs, $20.8 million for language, public diplomacy, and technology training, $34.5 million for Foreign Service modernization, and $15 million for public diplomacy. The FY2007 budget request included $102.8 million for Transformational Diplomacy. The State Department's mission is to advance and protect the worldwide interests of the United States and its citizens through the staffing of overseas missions, the conduct of U.S. foreign policy, the issuance of passports and visas, and other responsibilities. Currently, the State Department coordinates with the activities of 50 U.S. government agencies and organizations in operating more than 260 posts in over 180 countries around the world. Currently, the State Department employs approximately 30,000 people, about 60% of whom work abroad. Highlights follow. The D&CP account funds overseas operations (e.g., motor vehicles, local guards, telecommunications, medical), activities associated with conducting foreign policy, passport and visa applications, regional bureaus, under secretaries, and post assignment travel. Beginning in FY2000, the State Department's Diplomatic and Consular Program account included State's salaries and expenses, as well as the technology and information functions of the former U.S. Information Agency (USIA) and the functions of the former Arms Control and Disarmament Agency (ACDA). For D&CP's FY2008 budget, the Administration is requesting $4,942.7 million, 14.5% above the estimated FY2007 level, but a 13.2% decline from the FY2006 funding level of $5,692.3 million, reflecting rescissions and supplementals. Within the FY2008 request, $964.8 million is designated for worldwide security upgrades. The estimated FY2007 funding level is $4,314.0 million, of which more than $700 million is for supporting worldwide security upgrades. This account supports the maintenance, rehabilitation, and replacement of facilities to provide appropriate, safe, secure and functional facilities for U.S. diplomatic missions abroad. Early in 1998, Congress had enacted $640 million for this account for FY1999. However, following the embassy bombings in Africa in August 1998, Congress agreed to more than $1 billion (a supplemental funding bill) for the Security and Maintenance account by establishing a new subaccount referred to as Worldwide Security Upgrades. The Administration seeks $792.5 million for FY2008 for regular ESCM and $806.9 million for worldwide security upgrades, for a total account level of $1,599.4 million, a 7.4% increase over both the FY2007 and FY2006 ESCM total appropriations level of $1,489.7 million, reflecting rescissions. This account funds programs authorized by the Mutual Educational and Cultural Exchange Act of 1961, such as the Fulbright Academic Exchange Program, as well as leadership programs for foreign leaders and professionals. Government exchange programs came under close scrutiny in past years for being excessive in number and duplicative. After the September 11 th attacks, the Department of State began to emphasize public diplomacy activities in Arab and Muslim populations. The Bush Administration is requesting $486.4 million for exchanges in FY2008. This represents a 9.1% increase over the FY2007 estimate and a 12.8% increase over the FY2006 enacted level of $431.3 million. In addition, Congress, in the FY2006 appropriation, designated $329.7 million in the D&CP funds for public diplomacy. The estimated FY2007 funding level for public diplomacy within D&CP is unclear at this time. CIF was established by the Foreign Relations Authorization Act of FY1994/95 ( P.L. 103-236 ) to provide for purchasing information technology and capital equipment that would ensure the efficient management, coordination, operation, and utilization of State's resources. The FY2008 budget request includes $70.7 million for CIF, which is 21.7% higher than both the enacted FY2006 and estimated FY2007 levels of $58.1 million. The request seeks no funding for the Centralized Information Technology Modernization Program, which was funded in FY2006 at $68.5 million. In addition, the FY2006 conference report ( H.Rept. 109-272 ) stated that the conferees expect $116 million from expedited passport fee collections would be used for Technology Investments in FY2006. The Revised Continuing Appropriations Resolution, FY2007 ( P.L. 109-289 , as amended by P.L. 110-5 ) explicitly stated no funding would be provided for the Centralized Information Technology Modernization Program in FY2007. In recent years, U.S. contributions to the United Nations and its affiliated agencies (CIO) and peacekeeping activities (CIPA) have been affected by a number of issues. These have included the withholding of funds related to international family planning policies; issues related to implementation of the Iraq Oil for Food Program and the findings and recommendations of the Volcker Committee Inquiry into that program; alleged and actual findings of sexual exploitation and abuse by personnel in U.N. peacekeeping operations in the field and other misconduct by U.N. officials at U.N. headquarters in New York and at other U.N. headquarters venues; and efforts to develop, agree to, and bring about meaningful and comprehensive reform of the United Nations organization, in most of its aspects. Since 2004, congressional attention has often been directed to ways to ensure comprehensive U.N. reform, through legislative proposals fashioned after extensive hearings. Current legislative issues include follow-up and oversight of reforms initiated by the United Nations membership in September 2005 and throughout its fall General Assembly session and the possibility of increasing the 25% legislative cap on U.S. contributions to U.N. peacekeeping assessments to 27.1%. CIO provides funds for U.S. membership in numerous international organizations and for multilateral foreign policy activities that transcend bilateral issues, such as human rights. Maintaining a membership in international organizations, the Administration argues, benefits the United States by advancing U.S. interests and principles while sharing the costs with other countries. Payments to the U.N. and its affiliated agencies, the Inter-American Organizations, as well as other regional and international organizations, are included in this account. The President's FY2008 request totaling $1,354.4 million for this account represents a 17.6% increase over the estimated FY2007 level and the FY2006 enacted appropriation of $1,151.3 million, including rescissions. The United States supports multilateral peacekeeping efforts around the world through payment of its share of the U.N. assessed peacekeeping budget. The President's FY2008 request totals $1,107.0 million. This represents nearly a 4% decline from the FY2006 actual funding level of $1,152.1 million and a smaller decline of 2.5% below the estimated FY2007 CIPA funding level of $1,135.3 million. The International Commissions account (in the State Department budget, but not in the 150 account) includes the U.S.-Mexico Boundary and Water Commission, the International Fisheries Commissions, the International Boundary Commission, the International Joint Commission, and the Border Environment Cooperation Commission. The FY2008 request of $113.5 million represents a 100.8% increase over the FY2006 level of $66.5 million and a 99% increase over the estimated FY2007 level of $67 million. The increase is largely due to plans for a water treatment project near San Diego, California. The Asia Foundation is a private, nonprofit organization that supports efforts to strengthen democratic processes and institutions in Asia, open markets, and improve U.S.-Asian cooperation. The Foundation receives both government and private sector contributions. Government funds for the Asia Foundation are appropriated to, and pass through, the State Department. The Administration request for FY2008 is $10 million, the same as requested a year earlier, but 27.5% below the enacted FY2006 level of $13.8 million (with rescissions). The estimated government funding level for FY2007 is $13.8 million for the Asia Foundation. The conferees added language in the FY2004 conference agreement for the Consolidated Appropriations Act, FY2004, to establish a permanent trust fund for the International Center for Middle Eastern-Western Dialogue. The act ( P.L. 108-199 ) provided $6.9 million for perpetual operations of the Center, which is to be located in Istanbul, Turkey. From FY2004 to FY2006, appropriations provided $18.75 million as seed money. The Center's funds each year are the total amount of interest and earnings from the Trust. The Administration requested spending $850,000 of interest and earnings from the Trust Fund for program funding in FY2006. For FY2007, the Administration requested appropriation authority to spend $750,000 of interest and earnings from the Trust Fund to be used for programming activities and conferences at the Center. The FY2008 budget contains a request for $875,000 from the Trust for the program account. The National Endowment for Democracy, a private nonprofit organization established during the Reagan Administration, supports programs to strengthen democratic institutions in more than 90 countries around the world. NED proponents assert that many of its accomplishments are possible because it is not a government agency. NED's critics claim that it duplicates U.S. government democracy programs and either could be eliminated or could operate entirely with private funding. The Administration's FY2008 budget request of $80 million for NED is the same as its FY2005, FY2006, and FY2007 requests. The FY2008 request represents an 8.1% increase over the enacted $74.0 million (after rescissions) for FY2006. In addition, however, the 109 th Congress created a Democracy Fund in the FY2006 Foreign Operations Appropriations ( P.L. 109-102 ) which provided an additional $15.25 million for NED that year. The estimated FY2007 funding level is estimated to be $74 million. The Center for Cultural and Technical Interchange between East and West (East-West Center), located in Honolulu, Hawaii, was established in 1960 by Congress to promote understanding and cooperation among the governments and peoples of the Asia/Pacific region and the United States. The Center for Cultural and Technical Interchange between North and South (North-South Center) is a national educational institution in Miami, Florida, closely affiliated with the University of Miami. It is to promote better relations, commerce, and understanding among the nations of North America, South America and the Caribbean. The North-South Center began receiving a direct subsidy from the federal government in 1991. Congress has not funded the North-South Center since FY2001, noting that it should be funded by the private sector. The Administration's FY2008 request is for $10 million for the East-West Center, a decrease of 47.4% from the FY2006 funding level of $19.0 million (including rescissions). The FY2007 funding level is currently set at $19 million. The U.S. Institute of Peace (USIP) was established in 1984 by the U.S. Institute of Peace Act, (Title XVII of the Defense Authorization Act of 1985 P.L. 98-525 ). USIP's mission is to promote international peace through activities such as educational programs, conferences and workshops, professional training, applied research, and dialogue facilitation in the United States and abroad. Prior to the FY2005 budget, USIP funding came from the Labor, HHS, Education and Related Agencies appropriation. In the FY2005 budget process, it was transferred to the Commerce, Justice, State and related agencies appropriation primarily for relevancy reasons. For FY2008, the Administration is requesting $30 million, up nearly $8 million from the FY2007 estimated level of $22.07 million, after rescissions. The United States International Broadcasting Act of 1994 reorganized within USIA all U.S. government international broadcasting, including Voice of America (VOA) radio and television, Broadcasting to Cuba, Radio Free Europe/Radio Liberty (RFE/RL), Radio Free Asia (RFA), and the Middle East Broadcasting Network. The 1994 Act established the Broadcasting Board of Governors (BBG) to oversee all U.S. government broadcasting; abolished the Board for International Broadcasting (BIB), the administering body of RFE/RL; and recommended that RFE/RL be privatized by December 31, 1999. This recommendation was repealed in 1999 by P.L. 106-113 . During the reorganization debate in 1999, the 106 th Congress agreed that credibility of U.S. international broadcasting was crucial to its effectiveness as a public diplomacy tool. Therefore, Congress agreed not to merge broadcasting functions into the State Department, but to maintain the Broadcasting Board of Governors (BBG) as an independent agency as of October 1, 1999. For FY2008 international broadcasting activities the President is requesting $668.2 million, an increase of 3.8% over the FY2007 estimate of $644 million, but a decrease of 1.7% from the FY2006 enacted level of $679.6 million, including rescissions and supplementals. Of the $668.2 million request, $618.8 million would be for broadcasting operations, such as VOA, $10.7 million for Capital Improvements, and $38.7 million for Broadcasting to Cuba. The BBG is planning to eliminate several VOA services including Uzbek, Greek, and Cantonese as well as the RFE/RL Macedonia service. BBG also plans to reduce several others, such as VOA and RFE/RL service in Ukrainian, Tibetan, and Romanian. (Reportedly, eleven former VOA directors are appealing to Congress to reverse the proposed Administration cuts.) At the same time, BBG's FY2008 request would increase Middle East Broadcasting network funds by some $20 million. Along with the FY2008 budget request, the White House sent to Congress two supplemental funding requests—one for FY2007 amounting to $1.168 billion for State and $10 million for international broadcasting; another for FY2008 amounting to $1.935 billion for the Department of State. Both requests are primarily for U.S. operations in Iraq and Afghanistan. Currently, the U.S. Embassy in Iraq has over 1,000 American and locally engaged staff representing about 12 agencies. 156 U.S. direct hires and 155 locally engaged staff represent the Department of State (DOS) in the U.S. Mission. The bulk of the FY2007 supplemental and FY2008 emergency requests would fund State Department operations in Iraq. The Bush Administration revised its original FY2008 emergency supplemental request and sent it to Congress October 22, 2007. The Administration increased its original request of $1.882 billion to $2.283 billion for ongoing U.S. Mission operations in Iraq (an increase of $401.4 million); added $160.0 million in the request for Embassy security in Kabul, Afghanistan; and added $723.6 million for Contributions for International Peacekeeping Activities (CIPA) to facilitate delivery of humanitarian assistance in Darfur, Sudan. In addition, the previously requested amount of $35 million for Migration and Refugee Assistance (to help Palestinian refugees in Lebanon, West Bank, and Gaza) was increased to $230.0 million. The increase of $195 million is entirely for social services to Iraqi refugees. On April 25 and 26, the House and Senate passed the conference report ( H.Rept. 110-107 ) for the FY2007 Supplemental ( H.R. 1591 , U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007) that provided $1.275 billion for State Department operations. The bulk of the funds ($871 million) would support U.S. operations, security, and mission in Iraq, and other world wide security upgrades. Also included was $20 million for educational and cultural exchanges, $10 million for international broadcasting, and $338 million for contributions to international organizations and peacekeeping activities. After the President vetoed the bill, Congress passed H.R. 2206 , which the President signed on May 25. It provided $1.27 billion including $871 million for State Department operations in Iraq, and $333 million for contributions to international organizations and peacekeeping activities. It also included $20 million for educational and cultural exchanges, and $10 million for international broadcasting. Last year the Bush Administration requested an FY2006 Emergency Supplemental of $1.497 billion within State's Diplomatic and Consular Programs budget account to cover Iraq operations and security. The House and Senate passed the emergency supplemental conference report ( H.R. 4939 . H.Rept. 109-494 ) in June 2006. The final measure included $1.529 billion for D&CP in Iraq, $25.3 million for State's Inspector General, $5 million for exchanges in Iran, $178 million for U.N. peacekeeping, and $36.1 million for international broadcasting in Iran. The President signed the measure into law ( P.L. 109-234 ) on June 15, 2006. The Foreign Operations budget comprises the majority of U.S. foreign assistance programs, both bilateral and multilateral. (See tables at the back of this report for Foreign Operations accounts and funding levels.) The annual Foreign Operations Appropriations bill funds all U.S. bilateral development assistance programs, managed mostly by USAID and the State Department, together with several smaller independent foreign aid agencies such as the Millennium Challenge Corporation, the Peace Corps, and the Inter-American and African Development Foundations. It also includes funds for the Export-Import Bank, whose activities are regarded more as trade promotion rather than foreign aid. Food aid, such as the P.L. 480 Food for Peace program, is funded in the Agriculture Appropriations bill, although it is also considered foreign aid. The FY2008 request for food aid programs totals $1.319 billion. The foreign operations budget request for FY2008 totals $24.4 billion in foreign assistance programs, representing a 12% increase from the previous year's enacted level of $21.7 billion. This level of increase is the largest within the budget request government-wide, and continues the general trend of increases since September 11, 2001. Table 3 provides funding levels for foreign operations since FY1999 in both current and constant dollars. A new dimension to this year's budget request is the Administration's transformational development agenda and the creation of the new State Department position of Director of Foreign Assistance (DFA). The DFA, who is also concurrently the USAID Administrator, has been given authority over foreign assistance programs managed by the State Department and USAID. In addition, the DFA is to "provide guidance" for foreign assistance delivered through other government agencies. Randall Tobias, previously the State Department's Global AIDS Coordinator, served as the DFA and USAID Administrator until April 27, 2007. The DFA is charged with two missions: to develop a coordinated foreign assistance strategy; and to direct a transformation of foreign assistance to achieve the President's Transformational Development Goals. To that end, he presented a new Strategic Framework for Foreign Assistance that links aid programs to U.S. strategic objectives. Countries are grouped in categories representing common development challenges. (See Appendix B for a list of countries and their categories.) The FY2008 budget is the first opportunity to evaluate the effects of the reform plan on funding levels for accounts, sectors and specific countries. The Strategic Framework creates five categories of countries. The first—Rebuilding—includes countries in, or emerging from, internal or external conflicts. Transforming countries include low and lower-middle income countries that meet certain performance criteria based on good governance and sound economic policies. The category of Developing countries includes low and lower-middle income countries that are not yet meeting performance criteria. Sustaining Partnership countries include upper-middle income countries with which the United States maintains economic, trade, and security relationships beyond foreign aid. Restrictive countries include authoritarian regimes with significant freedom and human rights issues, most of which are ineligible for U.S. aid. Programs in these countries operate through non-governmental organizations or through entities outside the country. A sixth category was created to encompass global or regional programs that transcend any one country's borders. Each category represents common development challenges around which aid programs are to be designed and coordinated. Strategic objectives have been created and linked to country categories. Strategic objectives include peace and security; governing justly and democratically; investing in people; economic growth; and humanitarian assistance. Table 4 illustrates the linkages between country category and aid objective. Countries in each category are expected to receive most of their assistance based on a primary objective, but they may in fact receive assistance under several or all objectives. Despite a proposed 12% increase in the foreign aid budget, most of the additional funds are concentrated in a few areas. The FY2008 budget continues a focus on the war on terrorism and reconstruction in Afghanistan and Iraq, as well as assistance to front-line states. Other areas that would see large increases include three of the President's cornerstone initiatives—the Millennium Challenge Corporation, the President's Emergency Plan for AIDS Relief (PEPFAR), and the President's Malaria Initiative. Africa continues to see higher levels of assistance than other regions, but most of the funds are concentrated in HIV/AIDS programs, with other types of assistance, such as basic education and agriculture, decreasing. One major change in the FY2008 budget was the decision to transfer some Development Assistance (DA) funds to Economic Support Fund (ESF). This was a strategic decision that resulted from the new Framework—some programs previously funded with DA were considered to fit better with the strategic objectives that are to be primarily funded with ESF. Consequently, ESF increases by 35% from FY2007, while DA decreases by 31%. A similar change occurs in the Andean Counterdrug Initiative (ACI) with funds for alternative development transferred to ESF. Those programs scheduled for significant increases include the Millennium Challenge Corporation (up 71%); International Narcotics Control and Law Enforcement (up 35%); Non-proliferation, Anti-terrorism, Demining and Related Programs (up 14%); Global HIV/AIDS Initiative (up 28%); and debt restructuring (up 223%). Programs that would see significant decreases include Child Survival and Health (down 9%); International Disaster and Famine Assistance (down 18%); Assistance to the Independent States of the Former Soviet Union (down 22%); Migration and Refugee Assistance (down 7%); and International Organizations and Programs (down 11%). The U.S. contribution to the Global Fund for HIV/AIDS, TB, and Malaria is scheduled for a 58% reduction, from $724 million to $300 million. Unlike in previous years when the contribution was taken from Child Survival and Health (CSH), the Global HIV/AIDS Initiative (GHAI), and the Department of Health and Human Services (HHS), the Administration proposes that the entire $300 million would come from HHS. The CSH contribution was $247.5 million in FY2007; if this transfer is taken into account, the CSH request would represent a 5% increase over last year's level. With the exception of Africa, few regions see large increases when excluding funds from Millennium Challenge Compacts. (Such compacts are large grants that go to a few countries in each region. ) Africa would benefit from a 37% increase from FY2007, largely in HIV/AIDS funds, with other programs cut. Those cuts occur in the sectors of basic education, agricultural sector productivity, water supply and sanitation, and family planning and reproductive health.  South and Central Asia would see a slight increase of nearly 7%, largely due to assistance to Afghanistan and Pakistan. The Near East would receive a 5% increase, mainly due to Iraq assistance. Other regions would receive either static funding or see decreases in aid. A 12% decrease for Europe and Eurasia is a result of some countries in Europe graduating from aid programs. Latin America's decrease of 4% mainly affects basic education, environment, and humanitarian assistance. Funding to the East Asia and the Pacific region would increase by 2%. One of the major focuses of the FY2008 budget is a continuation of funding to address the HIV/AIDS pandemic in many countries with high prevalence rates. The 15 PEPFAR focus countries are the main beneficiaries, although CSH funds are used in non-focus countries as well. When PEPFAR money from the Global HIV/AIDS Initiative (GHAI) account are included in totals, most regions receive slight increases (with the exception of Africa, which receives a very large increase), or slight decreases from FY2006 levels. (See Figure 2 .) A concern of some aid analysts is the effect that this focus has on other types of development assistance. The largest effect can be seen in Africa. If GHAI funds are excluded, then Africa would see a 2% decrease in aid rather than a 37% increase in aid for FY2008. Two Latin American and Caribbean countries benefit from PEPFAR—Haiti and Guyana—raising the region's foreign aid totals. If these funds are excluded, aid to Latin America and the Caribbean would decrease by 5% from FY2007. Similarly, if Vietnam's AIDS funding were subtracted, aid levels to East Asia and the Pacific would fall by nearly 5%. A long-running debate in the foreign assistance community is whether the ratio of "core" development assistance to security and economic assistance is appropriate. Proponents of core development define it as those programs having a primary focus on poverty alleviation and health concerns. The accounts that fund these types of programs are Development Assistance (DA), Child Survival and Health (CSH), and the Global HIV/AIDS Initiative (GHAI). Some observers also include the Millennium Challenge Account, and some of the contingency accounts that respond to emergencies, such as Migration and Refugee Assistance, Emergency Refugee and Migration Assistance, Transition Initiatives, and International Disaster and Famine Assistance. For the most part, non-governmental organizations tend to exclude Economic Support Funds (ESF) from their definition of core development assistance for two reasons. First, there is the perception that ESF is given to strategic allies regardless of need, largely due to historic levels of ESF that have gone to such countries as Egypt and Israel. Second, a sizeable portion of ESF funds has been used for budget support rather than development projects. On the ground, the characterization that ESF does not promote development is difficult to make because some ESF-funded programs have the same or similar purposes as those funded by DA. The FY2008 budget request proposes a major change by transferring some programs funded by DA into the ESF account. This change complicates the analysis because ESF no longer cleanly fits in the non-core development assistance category, if it ever really did. Table 5 compares the FY2008 request with FY2007 estimates based on accounts with ESF disaggregated by budget support and development. When including the three major development accounts (Development Assistance, Child Survival and Health, and the Global HIV/AIDS Initiative), development assistance is proposed to increase in FY2008 by 4.5% from FY2007. The largest portion of this increase is in the HIV/AIDS initiative, with both DA and CSH falling from last year's levels. If one also includes other accounts (Millennium Challenge, Transition Initiatives, disaster and famine aid, food aid, and migration and refugee assistance), the increase from last year is 13%. However, virtually all of this increase can be attributed to the 71% increase in funds for the Millennium Challenge Corporation. All other accounts receive the same or decreased funding. Dividing the ESF account into budget support versus program funding helps clarify the debate of how to characterize ESF. Of the amount requested for Economic Support Fund, approximately $478 million would go for budget support with the remainder presumably funding development projects. Using this scenario, the ratio of core to non-core for FY2008 is 86% to 14%. The Administration prefers that the focus be on strategic objectives rather than accounts. Table 6 provides a breakout of funding for each objective. It is plausible to conceptualize Investing in People, Economic Growth, and Humanitarian Assistance as correlating to core programs, although some would argue that since Economic Growth receives ESF funding, it should not be included. The proposal to transfer some Development Assistance funds to ESF makes casting Economic Growth as a core program unavoidable. Over the years, Congress has expressed interest in various aid sectors, such as education, democracy, human rights, trade, maternal and child health, family planning and reproductive health, agriculture and environment. Table 7 provides the funding levels for many of these sectors for FY2006 and the FY2008 request. Some sectors are cut significantly, as listed below, while others receive sizeable increases. Increases in health-related programs, up nearly 50%, occur largely in HIV/AIDS, malaria, and avian flu programs. Two sub-sectors—maternal and child health, and family planning and reproductive health—see hefty decreases. Funds in the Peace and Security objective are targeted for increases, particularly for counter-terrorism and rule of law programs. The Bush Administration has made several pledges for multi-year increases in foreign aid that affect the FY2008 budget. Two initiatives focus on health issues—HIV/AIDS and malaria—while another promises to double assistance to Africa. The Millennium Challenge Corporation, launched in 2004, administers performance-based aid to countries showing a strong commitment to sound economic policies and good governance. In launching this five-year initiative in 2003, the President pledged to provide a total of $15 billion by FY2008. With the $4.15 billion request in Global HIV/AIDS Initiative (GHAI) funds, $346 million in CSH, and a $300 million contribution to the Global Fund from the Department of Health and Human Services, total funding over the five year period would meet the pledge. On May 30, 2007, President Bush announced a follow-on plan to provide a total of $30 billion through FY2013. The President announced an increased focus on malaria in 2006, pledging that the United States would spend an additional $1.2 billion over a five-year period (FY2006-FY2010). Congress appropriated $122 million in FY2006 and $248 million in FY2007. The President's request for FY2008 is $388 million, keeping the pledge on target. Prior to the 2005 G-8 Summit, the Administration announced that it would double U.S. assistance to Africa by 2010. The FY2008 request keeps the doubling pledge on track. Excluding Millennium Challenge compacts, bilateral assistance to the region would increase by 37% in 2008 from FY2007, largely driven by HIV/AIDS funds with decreases in other sectors, such as agricultural productivity, water supply and sanitation, and family planning and reproductive health. In announcing the creation of the new independent Millennium Challenge Corporation, the President pledged $5 billion annual funding by FY2006. In fact, requests have never topped $3 billion a year, which is also the amount requested for FY2008. Congress has consistently cut the MCC request with some Members expressing concern that the program was slow to get started, and has not disbursed much of its existing funding. Increased levels of funding for HIV/AIDS and TB programs drive the overall increase in the foreign aid budget. Funded through a number of accounts, the largest share is managed by the State Department's Office of the Global HIV/AIDS Coordinator for PEPFAR-focus countries. Other AIDS funding is provided through the Child Survival and Health, ESF, SEED, and FSA accounts. Other funds are provided in the Departments of Labor, Health and Human Services, and Education appropriations bills for the Centers for Disease Control and Prevention, National Institutes of Health, and the Department of Health and Human Services (HHS). In previous budget requests, the Administration proposed making a contribution to the Global Fund for HIV/AIDS, Malaria, and TB from three accounts: the Global HIV/AIDS Initiative; Child Survival and Health; and the Department of Health and Human Services. The Administration's requests have totaled $300 million each year since FY2006, shared equally among the three sources. This year, the Administration proposes making the $300 million contribution entirely from HHS. In previous years, Congress has provided increased resources for the Global Fund beyond that requested by the Administration, providing it with $544.5 million in FY2006 and $625 million in FY2007. (These figures do not include the HHS portion of the contribution that has ranged between $99 million in fiscal years 2003, 2005, 2006, and 2007, and $149 million in FY2004.) This year's budget request includes a substantial increase for the Global HIV/AIDS Initiative (GHAI), the account that funds the 15 focus countries under the PEPFAR initiative. Funding for GHAI would reach $4.15 billion, up from $3.25 billion in FY2007. The CSH account would fund most other HIV/AIDS programs in non-focus countries at about $314 million. Funds to address tuberculosis would total $89.9, with most of the funds coming from the CSH account. Total foreign operations funding for AIDS and TB programs would top $4.5 billion. When first announced in 2002, the initiative was portrayed as being in addition to, not a substitute for, existing U.S. aid programs. This portrayal led to the expectation that a country that signed a Compact would not see funding for other programs decrease. As the program got up and running in 2004, and in subsequent fiscal years, a stronger argument can be made that Compact countries are seeing cuts in other types of aid programs. With the FY2008 budget request, the correlation between MCC and other types of assistance became more apparent with Administration officials stating the aid coordination process included linkages between the two aid sources. In addition, officials said that the promise made at the time of MCC's creation of it being additive in nature did not apply at the country level, but rather to overall U.S. foreign assistance funding levels. The new budgeting process created by State's F bureau sought to coordinate all foreign aid programs within State, USAID, and some related independent agencies, including MCC. Of the eleven compact countries, all but Vanuatu have seen cuts in other aid programs since FY2006. It should be noted, however, that Armenia and Georgia were already scheduled for reduced assistance as FSA (Assistance for the Independent States of the Former Soviet Union) countries are eventually graduated from aid. Table 8 provides compact countries and their levels of assistance for the last four years. USAID also provides assistance to help countries become eligible for the MCC program. Supplemental resources for Foreign Operations programs, which in FY2004 exceeded regular Foreign Operations funding, have become a significant channel of funds for U.S. international activities, especially those related to reconstruction efforts in Iraq and Afghanistan. Supplemental appropriations bills have often been used as vehicles to provide additional funding to respond to unanticipated emergencies or natural disasters. There has been some criticism that the Administration has relied too heavily on supplementals and that some items, particularly relating to Iraq, should be incorporated into the regular appropriations cycle. The Administration counters that given the nature of rapidly changing overseas events and unforeseen emergencies, it is necessary to make supplemental requests for unexpected and non-recurring expenses. Figure 3 shows the growing reliance on Foreign Operations supplementals. A supplemental request for FY2007 totaled $5.99 billion, including $350 million in P.L. 480 food aid. Congress approved a FY2007 supplemental bill ( H.R. 2206 ) that was signed by the President on May 25 providing $6.146 million in international affairs spending, including $460 million in international food assistance. With the FY2008 regular budget, the Administration also presented Congress with an FY2008 GWOT emergency request. On October 22, 2007, a second emergency supplemental request was sent to Congress. The first package, totaling $3.301 billion for international affairs, included $1.367 billion for foreign operations. Iraq and Afghanistan dominated the request, with $772 million for Iraq and $339 million for Afghanistan in ESF funds. Iraq would also receive $159 million in International Narcotics Control and Law Enforcement funds for human rights, anti-corruption, and rule of law programs. The total also included a $35 million request to assist Iraqi refugees in neighboring countries and conflict-affected populations in Iraq. Operating expenses for USAID would total $61.8 million for operations in Iraq and Afghanistan. The second request included an additional $1.961 billion, for a total of $3.328 billion in FY2008 supplemental funds. Iraq is proposed to receive an additional $265 million, and Afghanistan $500 million. The request also included $500 million in counter-narcotics funding for Mexico, and from the Economic Support Fund, $350 million in budget support for the Palestinian Authority, $106 million to support the Six Party Talks to denuclearize North Korea, and $70 million to support elections in Sudan and stabilization activities in Southern Sudan. Although not part of foreign operations appropriations, the request included $350 million in P.L. 480 food assistance, largely for Africa. Including both base budgets and supplemental appropriations, the share of U.S. bilateral foreign assistance going to Iraq and Afghanistan has increased sharply since FY2002. Foreign aid to Afghanistan mushroomed from $590 million in FY2003 to $1.799 billion the next year. Assistance to Iraq consisted of small sums to support Iraqi opposition groups in the early 2000s, but picked up precipitously in FY2004 to more than $17 billion, and then fell to $1.6 billion in FY2006 and roughly $2.5 billion in FY2007. Table 9 tracks funding to both countries from FY2002 through FY2008 and includes both regular budgets and supplemental funds. Amounts for FY2008 represent requested amounts. FY2007 regular and supplemental funding for Iraq and Afghanistan together comprises about 16% of total foreign aid spending. The share of the FY2008 budget would be just under 13%. As the end of the first session of the 110 th Congress approached, H.R. 2764 , the State, Foreign Operations, and Related Programs Appropriations bill, became the vehicle for a $555 billion omnibus spending bill that included funding for domestic agencies and for some of the FY2008 emergency supplemental funding requested by the White House. Congress completed action on the measure the week of December 17, 2007, and the President signed it on December 26, 2007 ( P.L. 110-161 ). Comprising Division J of the consolidated bill, funding for the international affairs budget totaled $33.1 billion, of which $10.3 billion was provided for State Department Operations and $22.9 was appropriated for Foreign Operations. Another $2.385 billion was provided in emergency FY2008 supplemental funds for international affairs. Until H.R. 2764 was enacted, government agencies continued to be funded under a series of continuing resolutions. The annual budget resolution is non-binding legislation that expresses Congressional intent with regard to broad spending issues, and provides guidance to the Appropriations Committees on spending limits. The Appropriations Committees use the budget resolution to arrive at discretionary allocations (called 302b allocations) for each of the spending panel's subcommittees which act as spending ceilings for each bill. On March 23, 2007, the Senate passed the FY2008 Budget Resolution ( S.Con.Res. 21 ) that included $39.8 billion in international affairs spending authority. This amount matches the President's request; the Senate resolution also provided his request for $3.3 billion in emergency funds for Iraq and Afghanistan. The Senate Budget Committee had reported out the budget resolution with a cut to the request. During floor consideration, the Senate approved an amendment to restore $2.2 billion to the foreign affairs budget. The House passed its version of the FY2008 Budget Resolution ( H.Con.Res. 99 ) on March 29, providing $35.3 billion for international affairs, and did not include the emergency request. The House level was $1.2 billion less than the President's request. The House and Senate approved the conference report on May 17, 2007 in which the lower House figure for international affairs was adopted. The overall budget sets a total discretionary figure of $954 billion from which allocations will be derived that will guide the Appropriations Committees in writing the FY2008 spending measures. On June 5, 2007, the House Appropriations Committee adopted its 302b allocations that set spending ceilings for each appropriations bill. The State Department, Foreign Operations, and Related Agencies allocation for discretionary spending is $34.243 billion, which is 9.5% above FY2007 levels. The allocation is 2% below the President's request of $34.943. The Senate's 302b allocation is equal to that of the House. On June 5, the House Appropriations Subcommittee on State, Foreign Operations, and Related Agencies marked up the FY2008 spending measure. The bill provides a total of $34.243 billion. Of the total, $10.76 billion is for Title I—State Department Operations, international broadcasting, and related agencies, and $23.62 billion is for foreign assistance programs. The total is $2.95 billion over last year's level and $700 million less than the President's request. On June 12, the full House Appropriations Committee reported out the bill after several amendments were considered. Those amendments are described in the relevant sections below. Within Title I, the House Appropriations Committee recommended $10.04 billion for the Department of State, which is $29.4 million less than the President's FY2008 request of $10.1 billion. The increase amounts to about a .3% increase. The recommendation, however, amounts to $1.05 billion (or nearly 12%) more than the FY2007 funding level for the Department of State. For international broadcasting, the committee recommended $682.3 million for FY2008. This is $14.1 million, about 2%, more than the President's request. The subcommittee recommendation is $38.3 million, nearly 6%, more than the FY2007 enacted amount. For related agencies, the committee recommended $36.9 million, nearly $5 million (about 12%) below the President's FY2008 request of $41.8 million. This amount is nearly the same as the related agencies' FY2007 enacted level of $36.7 million. The House Appropriations Committee recommended $4.8 billion for State's Diplomatic and Consular Programs (D&CP). This funding level, which is $157.7 million below the request but $446.3 million above the FY2007 level, includes $964.8 million for worldwide security upgrades, as requested ($198.8 million greater than the FY2007 level) and $363.9 million for public diplomacy international information programs ($5 million above the request to pay for an international public diplomacy center). The committee included $1.3 billion from Machine Readable Visa fees to be used for border security, including processing of passports. Within the Manager's amendments, the committee expressed concern about the backlog in the Department of State's processing of passports since the January implementation of phase I of the Western Hemisphere Travel Initiative and requested quarterly reports from the Department on this issue. Right-sizing of U.S. overseas posts is another concern within D&CP. The committee expressed concern about the escalation of staff in Iraq. At the same time, the Manager's amendment package contained language to increase diplomatic resources in Central and East Africa. The committee encouraged the interagency cost-sharing system referred to as ICASS. For Educational and Cultural Exchange Programs, the committee recommended $501.4 million, $55.7 million more than the President's FY2008 request. Within this amount, the committee recommended $218.8 million for the Fulbright program. In addition, the Manager's amendments included language to expand exchanges with the Caribbean and encourage the Exchange bureau to work with the U.S. Olympic Committee. The House Appropriations Committee recommended a total of $1.6 billion for Embassy, Security, Construction, and Maintenance (ESCM)—$729.9 million for the regular budget and $806.9 million for worldwide security upgrades. The total is $62.6 million less than the request, taken from the regular ESCM budget. The total is $45.9 million below the FY2007 level. For Contributions to International organizations, the House committee recommended $1.35 billion, which is the same as the President's FY2008 request and is $204 million above the FY2007 enacted level. In this funding, the committee supported the U.N. regular budget and numerous other international organizations, such as the North Atlantic Treaty organization (NATO) and the World Health Organization. For Contributions for International Peacekeeping, the House committee recommended $1.3 billion, which is $195 million more than the request and $166.7 million more than the FY2007 funding level. In addition, the committee expressed concern that the Administration's request represents a 3% reduction from the FY2007 level, although it has sought to expand the U.N.'s peacekeeping missions in Lebanon and Darfur. For international Commissions, the House Appropriations Committee recommended a total of $148.8 million. This amount is $15.3 million above the FY2008 request and $82.2 million above the FY2007 enacted level. The funds will provide for International Boundary and Water Commission, United States and Mexico water construction projects, and flood control systems, among other things. The House committee recommended $96.8 million for various related agencies, including $10 million to the Asia Foundation and $80 million for the National Endowment for Democracy. The committee did not provide any funding for the East-West Center, which received $19 million for its FY2007 appropriation and had a FY2008 request of $10 million. The full committee noted that the center can compete for federal grants and outside contributions. The House Appropriations Committee recommended $25 million for USIP in FY2008. This is $5 million below the President's request but $2.9 million above the FY2007 funding level. (An agreed-to amendment would transfer $1 million to USIP from State Department's D&CP account, by offset, to revive the Iraq Study Group.) The House committee recommended $671.6 million for the Broadcasting Board of Governor's (BBG) International Broadcasting Operations. This level includes $33.7 million for Cuba Broadcasting. The recommended level is $14.2 million above the President's FY2008 request and $35.6 million above the FY2007 funding level. The committee noted the importance in getting information to the Middle East and expressed concern about recent programming decisions regarding Alhurra TV programming. The committee requested the Inspector General to report to the committee on this matter. (During floor action, the House agreed to a floor amendment that directs $10 million be used for expanded broadcasting to Venezuela and Latin America.) In addition to the above funding, the committee recommended $10.7 million for Broadcasting Capital Improvements, which would provide for maintenance, digital production development, and security upgrades at overseas transmitting stations. On June 19 and 20, 2007, the House considered numerous amendments to Title I. Those that were agreed to include transferring $36.7 million from State's D&CP account for funding Cuba democracy assistance and $1 million from State's D&CP account to USIP for reconvening an Iraq Study Group. Another amendment directs that $10 million of BBG funds to increase broadcasting to Venezuela and Latin America. Other Title I amendments would prohibit State Department funds for the visa lottery program, for visas to certain nationals, and for the U.N. Human Rights Council, and would limit funds for negotiating new countries to the visa waiver program. The Foreign Operations portion of the bill, which provides funding for bilateral economic and military aid, multilateral assistance, and export and investment assistance, comprises roughly two-thirds of the total bill. The House Appropriations Committee provided a total of $23.62 billion in foreign aid programs, a decrease of 3% from the request but an increase of $8.4 billion above last year's regular spending bill. An FY2007 supplemental appropriations bill ( P.L. 110-28 ) included $4.42 billion in additional funds, bringing the FY2007 foreign aid total to $26.2 billion. The bill approved by the House Appropriations Committee makes major changes from the President's request. It provides increased funding for health, including HIV/AIDS, and basic education programs. It cuts funding for the Millennium Challenge Corporation and Foreign Military Financing. The bill continues previous year restrictions on the use of family planning funds but allows for the provision of contraceptives by non-governmental organizations that would not otherwise be eligible for family planning funds. While the bill and accompanying report do not explicitly address the new Strategic Framework on Foreign Assistance, the committee did not adopt some of its major proposals, most notably, the shift of funds from Development Assistance to the Economic Support Fund. Health . The bill provides $1.957 billion, a 25% increase over the request and 14% over FY2007, for the Child Survival and Health (CSH) account for a wide range of health issues. In addition, the bill provides $4.45 billion for the Global HIV/AIDS Initiative (GHAI), an increase of 7% over the request and 37% over last year's level. Additional health funding would total $112.5 million, with $57.9 million in ESF, $2.4 million in SEED, and $52.2 million in FSA accounts. HIV/AIDS . The bill provides a total of $5.082 billion for HIV/AIDS prevention and treatment programs. In addition to the $4.45 billion in GHAI funding, the bill allocates $600 million in CSH funds—$250 million for the Global Fund (see below) and $350 million for bilateral assistance. An additional $32 million is from the ESF ($6 million) and FSA ($26 million) accounts. The allocation for GHAI is 7% above the request. Global Fund for AIDS, TB, and Malaria . The bill allocates $550 million for the Global Fund, $250 million from the CSH account and $300 million from GHAI. Unlike in previous years, the Administration did not request a Foreign Operations contribution for the Fund, but instead proposed a $300 million transfer from the Department of Health and Human Services. Malaria . The bill provides $352.5 million for malaria treatment and prevention programs, of which $270 million is designated for the President's Malaria Initiative. Of the total, $350 million is allocated from the CSH account, with the remainder from ESF. The Administration had requested $387.5 million for malaria programs. Tuberculosis . The bill provides $266 million for tuberculosis and extremely drug-resistant tuberculosis, of which $103 million is from the CSH account, $150 million from GHAI, $10 million from FSA, and $3 million from ESF. The Administration had requested $89.9 million. Avian Influenza . The bill includes $100 million for avian flu programs from the CSH account, an amount equal to the request. Family Planning and Reproductive Health . The bill provides $374.2 million for Child Survival and Maternal Health programs, and $441 million for Reproductive Health and Voluntary Family Planning, of which $375 million is from the CSH account. Contraceptives . New language (Section 622) exempts the provision of contraceptives from the March 28, 2001, Memorandum to the Administrator of USAID. The memo restored the Mexico City language that required foreign NGOs to certify that they do not perform or promote abortion as a method of family planning in order to receive U.S. family planning assistance. The bill retains language from previous years that restricts funding to organizations that support or participate in programs of coercive abortion or involuntary sterilization. The bill also retains language prohibiting funding for the performance of abortions. Development Assistance and Economic Support Fund . The bill provides $1.734 billion for the Development Assistance (DA) account, an increase of 67% over the request. The President's budget proposed a sharp decrease in DA, down 31% from FY2006, because of a shift of funds to the ESF account as a result of the Strategic Framework on Foreign Assistance. The President's budget called for a 35% increase in ESF. Instead, the bill provides $2.66 billion for ESF, a reduction of 20% from the request. Report language states that the DA account includes $365 million that had been requested in ESF, and the committee directs that this amount be provided to certain countries in addition to the requested DA amounts for Afghanistan ($150 million), Democratic Republic of Congo ($10 million), Liberia ($30 million), Pakistan ($30 million), and Sudan ($145 million). Basic Education . The bill provides a total of $750 million for basic education, and directs that $519 million come from the DA account. Of the total, $265 million is to be used to implement basic education assistance consistent with H.R. 2092 , the Education for All Act of 2007, as introduced on May 1, 2007. Millennium Challenge Corporation . The bill provides $1.8 billion for MCC, a cut of $1.2 billion from the request. An amendment offered in full committee to increase this amount by $200 million was withdrawn. Foreign Military Financing . The bill provides $4.46 billion for the FMF program, a 2% decrease from the request. Iraq . The bill provides no funding for the Administration's request for Iraq. The report notes that Congress provided $2.86 billion for Iraq in the FY2007 Supplemental, and that more than $3 billion remains unspent from the Iraq Relief and Reconstruction Fund. In full committee, an amendment to provide $133 million in Iraq assistance was defeated. In other full committee action, a number of amendments were approved to increase military assistance to Pakistan by $50 million; to require a report, rather than a certification, from the Secretary of State on human rights in Indonesia; to encourage the President to use $50 million for democracy promotion in Iran; to encourage the President to use $10 million in previous years' funds to protect Iraqi Christians; to direct the Secretary of State to review the need for enhanced facilities of the Haitian Parliament and to consider granting an exception to current Department policy, allowing a portion of the $23.9 million requested for democracy assistance to be used by Haiti to purchase the U.S. Embassy property adjacent to the Haitian Parliament; to clarify the dates on which the State Department must report to Congress with regard to restrictions on family planning funds; to require a report from the State Department on the evidence and criteria used if the Department should determine that an organization or program supports and participates in the management of a program of coercive abortion or involuntary sterilization; to recommend that Development Assistance funding for countries in the Western Hemisphere be increased by $56 million to restore country program levels to at least FY2006 levels. The House completed action on H.R. 2764 ( H.Rept. 110-197 ) on June 22, 2007, including several amendments. The overall funding levels remain the same as the committee-reported bill, but some amendments result in changes to funding levels for certain accounts. Other amendments added provisions restricting the use of certain funds. The amendments approved by the House include the following: An amendment to prohibit direct aid to the Palestinian Authority (PA) was adopted by a vote of 390-30. The bill includes $64 million in aid to the Palestinian Authority in the West Bank and Gaza. The amendment requires the President to certify that the PA has renounced terrorism, acknowledged the existence of Israel, and is abiding by previous agreements reached between the Palestinians and Israel before any aid can be released. An amendment to clarify bill language regarding the provision of donated contraceptives was adopted by a vote of 223-201. The amendment provides that no contract or grant for the exclusive purpose of providing donated contraceptives in developing countries would be denied to any non-governmental organization solely on the basis of the Mexico City policy, which bars U.S. aid to international family planning organizations that perform or promote abortions, even if they use their own funds to do so. An amendment to increase ESF funds for Cuba democracy programs was adopted by a vote of 254-170. The amendment adds $37 million, bringing the total up to the Administration's request of $45 million, and offsets the increase by reducing funds for the State Department's Administration of Foreign Affairs. An amendment to prohibit the use of funds for assistance to Saudi Arabia was adopted by a voice vote. The bill provides IMET and NADR assistance for Saudi Arabia. An amendment to expand notification requirements for contributions for international peacekeeping was adopted by voice vote. Current law requires peacekeepers who commit crimes to be held accountable; the amendment adds language calling on the U.N. to seek criminal prosecutions. An amendment to increase tuberculosis funding in the CSH account by $50 million was adopted by voice vote. Half of the amount would come from the CSH account, with the other half from ESF. An amendment that directs $5 million in CSH funds for improving the health infrastructure in Africa was adopted by voice vote. An amendment that directs $5 million in DA funds for Liberia was adopted by voice vote. An amendment that prohibits the United States from entering into a permanent basing rights agreement with Iraq was adopted by voice vote. An amendment that removes Liberia from the list of countries requiring special notification to Congress prior to the obligation of funds was adopted by voice vote. An amendment that prohibits funds in the bill to be used to enforce a 2001 State Department memo was adopted by voice vote. The memo sets out the protocol for meeting with Taiwanese officials. An amendment that prohibits assistance to any country whose government does not accept the transfer from the United States of citizens or nationals who have been issued a final removal order by U.S. Immigration and Customs Enforcement was adopted by voice vote. An amendment that designates $75 million in ESF funds to be used for basic education in Pakistan was adopted by voice vote. An amendment that prohibits the purchase of light bulbs that do not have an "Energy Star" designation was adopted by voice vote. Such light bulbs meet federal energy-efficiency guidelines. An amendment prohibiting ESF funds for Ethiopia was adopted by voice vote. Ethiopia is scheduled to receive $5 million in ESF funding in FY2008. An amendment to prohibit funds for the International Seabed Authority was adopted by voice vote. An amendment to prohibit funds to send or pay for the attendance of more than 50 employees from a federal department or agency at any single conference outside the United States was adopted by voice vote. An amendment to increase funding for the U.N. Democracy Fund by $14 million and the U.N. Innovation and Entrepreneurship Initiative by $6 million was adopted by voice vote. The increase in funds would come from the U.N. Development Program. A number of amendments failed passage on the floor. Such amendments included the following: An amendment to increase funding for assistance to Iraq failed by a vote of 205-219. The bill provides no assistance to Iraq; the amendment would have provided $158 million. Three amendments to reduce the bill's total funding level failed. One amendment, to reduce discretionary spending by 0.5%, failed by a voice vote of 179-241. A second amendment to reduce discretionary spending by 1% failed by a vote of 168-252. A third amendment to reduce funding by nearly $3 billion also failed, by a vote of 152-268. An amendment to bar funds to recruit and send students to the Western Hemisphere Institute for Security Cooperation failed to pass by a vote of 203-214. An amendment to remove the bill's restrictions on $200 million in FMF funding for Egypt failed by a vote of 74-343. An amendment that eliminated language in the bill regarding the provision of donated contraceptives to NGOs otherwise ineligible to receive funds under the Mexico City policy was defeated by a vote of 205-218. An amendment that eliminated language in the bill mandating that 33% of GHAI funds be used for abstinence education was defeated by a vote of 200-226. An amendment to reduce U.S. contributions to international organizations by $203 million failed by a vote of 137-287. An amendment to transfer $20 million from U.S. contributions to the United Nations to the NADR account failed by a vote of 192-232. On June 28, 2007, the Senate Appropriations Committee reported out its version of the FY2008 State, Foreign Operations and Related Programs bill. It was passed by the full Senate on September 6 by an 81-12 vote. The Senate version provides a total of $34.2 billion in discretionary spending, the same as the House-passed bill. Several provisions of the Senate bill differ from those of the House version. The Senate appointed conferees also on September 6. The Senate Appropriations Committee recommended $10.08 billion for State Department operations (including NED funds). This represents $71 million more than the House-passed appropriation. In addition, the Senate committee recommended $673.4 million for international broadcasting, nearly $9 million below the House-passed level. It approved $35.7 million ($2.2 million below the House level) for related agencies. Some key differences from the House-passed bill include the following: The Senate bill provides $102 million for NED, $22 million more than the House or the FY2007 levels. The Senate bill also moves the NED funding to Title III under the heading Democracy Fund, rather than fund it in State Department Operations, Title I, where it traditionally has been funded and where it is in the House bill. The Senate bill provides $48 million more than the House for Diplomatic and Consular Programs, but $55 million less for worldwide security upgrades within that account. The bill renames the subaccount Worldwide Security Protection. The Senate bill recommends $509.5 million (about $8 million more than the House bill) for Educational and Cultural Exchanges. The funding provides $222.6 million for the Fulbright Program (the House bill provides $218.8 million) and $2 million for a new Senator Paul Simon Study Abroad Foundation, as requested by the President. The Senate bill recommends $50 million more than the House bill for Contributions to International Peacekeeping Activities. The Senate report accompanying the bill ( S.Rept. 110-128 ) notes that the administration request was unrealistically low and states that additional missions are expected in FY2008, including in Chad, the Central African Republic, Somalia, and possibly Darfur. The Senate bill provides $20 million for the East-West Center, whereas the House bill provides no funding. The Senate bill provides $662.7 million ($8.9 million less than the House) for international broadcasting. The Senate funding measure, however, does not include funds to continue expansion of Alhurra TV broadcasting to the Middle East, started by $10 million in the Iraq war supplemental ( P.L. 110-28 ). The committee expressed concern about recent reports of Alhurra allowing terrorist affiliates air time and will consider funding in the future. The Senate completed action on H.R. 2764 ( S.Rept. 110-128 ) on September 6, 2007. Several floor amendments reduced funding for Department of State Diplomatic and Consular Affairs general administration to fund increases in some foreign aid accounts (see "Foreign Operations" section below). Other floor amendments included the following: A Leahy amendment to require the Secretary of State to establish visa processing facilities in Iraq within 180 days of enactment was adopted by unanimous consent. It also requires a report to Congress no later than 30 days after enactment on funding and security requirements for consular operations in Iraq in FY2008. A Cardin amendment to increase funding for the Commission on Security and Cooperation in Europe by $333,000 and to reduce funds for State's Diplomatic and Consular Affairs general administration by the same amount was adopted by unanimous consent. The foreign operations portion of the Senate bill, as it was reported out of committee, is similar to the House bill in many respects, including language that would allow the provision of contraceptives to NGOs who are ineligible to receive funding because of Mexico City restrictions. The White House has stated that it will likely veto a bill that contains this provision. Like the House bill, it does not provide assistance to Iraq. The Senate bill differs from the House version in several aspects. The Senate bill provides $1.2 billion for the Millennium Challenge Corporation, $600 million below the House level and $1.8 billion below the request. For a second year, the Senate bill incorporates all health-related funding from various accounts into one Global Health Programs account that totals $6.531 billion, including PEPFAR funds. The House bill maintains separate accounts. The Senate bill provides $4.479 billion for Foreign Military Financing, which is $20 million above the House level, and $57 million below the request. The Senate bill provides $2.915 billion for the Economic Support Fund, which is $258.5 million more than the House, but $404.6 million less than the request. The Senate bill continues funding for a Democracy Fund, not requested by the Administration, that would receive $177 million in FY2008. The House bill proposes no separate Democracy Fund account. The Senate completed action on H.R. 2764 ( S.Rept. 110-128 ) on September 6, 2007, and adopted several amendments, including a controversial repeal of the long-standing Mexico City policy. The overall funding level remains the same as the committee-reported bill and the House-passed measure. Major amendments approved on the floor include the following: A Boxer amendment to repeal the Mexico City policy was adopted by a vote of 53-41. The Mexico City policy bars U.S. aid to international family planning organizations that perform or promote abortions, even if they use their own funds to do so. A Brownback amendment to include language commonly referred to as the Kemp/Kasten provision to bar the use of funds from being made available to any organization or program that, as determined by the President, supports or manages a program of coercive abortion or involuntary sterilization was adopted by a vote of 48-45. A Coburn amendment to prohibit funding for the U.S. contribution to the United Nations unless copies of all grants, contracts, and other financial and procurement information are posted on a publicly available website was adopted by a vote of 92-1. A Vitter amendment to bar the use of funds by any international organization, agency, or entity, including the United Nations, that requires the registration of, or taxes, a gun owned by a citizen of the United States was adopted by a vote of 81-10. A Martinez amendment to increase funding for democracy promotion in Cuba from $15 million to $45.7 million, matching the Administration's request, was adopted by voice vote. A Lieberman amendment to increase funding for democracy promotion programs in Iran from $25 million to $75 million was adopted by unanimous consent. A Feinstein and Dodd amendment to increase funding for the Peace Corps by $10 million, from $323.5 million to $333.5 million, and reduce funding for Foreign Military Financing by the same amount was adopted by voice vote. A Leahy amendment to expand the existing human rights certification for assistance to Bolivia to include police forces was adopted by unanimous consent. A Leahy amendment to condition assistance to Morocco was adopted by unanimous consent. The provision requires that the Secretary of State certify that Morocco is ceasing to persecute, detain, and prosecute individuals for expressing their opinions with regard to the Western Sahara, and is providing unimpeded access to NGOs, journalists, and representatives of foreign governments. A Leahy amendment to add gross human rights violations to a provision that prohibits assistance to countries that grant sanctuary to any individual or group that has committed an act of international terrorism was adopted by unanimous consent. A Gregg amendment to prohibit any funds in the bill to be used for aid to Iraq was adopted by unanimous consent. Funds can be expended if the Secretary of State certifies that the Department of State and Department of Defense are providing the Committees on Appropriations full and unfettered access to programs in Iraq for oversight purposes. A Gregg amendment to require that recipient countries make public their budgets on an annual basis was adopted by unanimous consent. A Gregg amendment to permit the use of $500 million in ESF funds for Egypt for a U.S.-Egypt Friendship Endowment was adopted by unanimous consent. An Alexander amendment to increase funding for the Overseas Private Investment Corporation by $8 million and decrease contributions to the World Bank's International Development Association by the same amount was adopted by unanimous consent. A Brown amendment to increase global health funds for the treatment of drug-resistant tuberculosis by $90 million, and cut $65 million from the State Department's Diplomatic and Consular Affairs general administration and $25 million from the Asian Development Fund, was adopted by unanimous consent. An Obama amendment to require the President to propose a comprehensive nuclear threat reduction and security plan was adopted by unanimous consent. A Coleman amendment to prohibit U.S. funds for the U.N. Human Rights Council unless the President certifies that it is in the national interest, or the United States is a member, was adopted by unanimous consent. A number of amendments failed passage on the floor. Those amendments included the following: A Coburn amendment to bar the use of multilateral economic assistance funds for the World Bank's malaria control or prevention programs was rejected by a vote of 33-60. A Coburn amendment to redirect $106.8 million from the Global Environmental Facility to the President's Malaria Initiative and Child Survival and Health programs was rejected by a vote of 46-47. A Brownback amendment to strike language in the bill providing that no contract or grant to provide donated contraceptives in developing countries would be denied to any non-governmental organization solely on the basis of the Mexico City policy was rejected by a vote of 41-53. An Ensign amendment to strike a provision in the bill that increases the limit on the U.S. share of U.N. peacekeeping operations from 25% to 27.1% was rejected by a vote of 30-63. Appendix A. Acronyms Appendix B. Foreign Aid Country Categories The Restrictive country category includes those countries that have restrictions on the receipt of U.S. assistance either by statute or Secretarial determination. The State Department does not provide a list of restrictive countries, although the FY2008 Foreign Operations Congressional Budget Justification lists certain countries with no categorization: Belarus; Burma; China; Cuba; Iran; Libya; North Korea; Venezuela; West Bank and Gaza; and Zimbabwe. Appendix C. State Department and Related Agencies Appropriations (millions of current dollars) Appendix D. Foreign Operations Appropriation (millions of dollars)

Summary: The annual State, Foreign Operations and Related Agencies appropriations bill is the primary legislative vehicle through which Congress reviews the U.S. international affairs budget and influences executive branch foreign policy making in general. Funding for Foreign Operations and State Department/Broadcasting programs has been steadily rising since FY2002, and amounts approved for FY2004 in regular and supplemental bills reached an unprecedented level compared with the past 40 years. Emergency supplementals enacted since the September 11, 2001, terrorist attacks to assist the front-line states in the war on terrorism, fund Afghanistan and Iraq reconstruction, and upgrade State Department operations and security upgrades, also have pushed spending upward. This report analyzes the FY2008 budget request and funding trends, including major issues Congress may consider, and tracks congressional action. Major issues confronting the 110th Congress include: The overall size of the budget request that represents an 11% increase over FY2007 enacted levels; A foreign aid reform plan that seeks to align assistance with U.S. strategic objectives; Significant increases for Presidential initiatives; Continued costs relating to Iraq and Afghanistan; and Secretary Rice's Transformational Diplomacy initiative for the State Department. Congress completed action on all appropriations bills in the FY2008 Consolidated Appropriations Act (H.R. 2764) during the week of December 17, 2007. The President signed the Act on December 26 (P.L. 110-161). The act also included $2.4 billion in emergency supplemental funds for international affairs. The Senate-passed State, Foreign Operations, and Related Programs appropriations bill was the vehicle used for the consolidated bill. On February 6, 2007, the Administration sent to Congress its FY2008 budget that included significant increases for the international affairs budget. On June 5, 2007, the House Appropriations Subcommittee on State, Foreign Operations, and Related Agencies marked up the FY2008 measure providing a total of $34.243 billion; full committee consideration followed on June 12. The House passed the bill, H.R. 2764, on June 22. The Senate Appropriations Committee approved its version of the bill on June 28, and the Senate passed it on September 6, approving the same level of total funding as the House bill. The President sent an FY2008 supplemental request to Congress on October 22 seeking, among other funds, an additional $3.6 billion for international affairs. This report will be updated to further reflect congressional action.