This is an archived USAID document retained on this web site as a matter of public record.
Testimony of Administrator J. Brian Atwood
Before the House Appropriations Subcommittee on Foreign Operations
Washington, D.C., March 18, 1998
U.S. Agency for International Development
Chairman Callahan, Congresswoman Pelosi, and other members of the
Subcommittee, I am pleased to be here today to present to you President Clinton's
budget request for foreign assistance programs for fiscal year 1999. The President is
requesting $20.1 billion for programs in international affairs, of which the U.S.
Agency for International Development (USAID) will manage $7.3 billion. That figure
represents 36 percent of the international affairs account and includes both USAID
programs and programs which our Agency administers in cooperation with other
agencies.
Before I get into the breakdown of these figures, let me express my gratitude to
the members of this Subcommittee for all they have done to support U.S. assistance
programs. You acted in an extremely responsible and bipartisan way last year to pass
the foreign assistance appropriation bill -- by a record House vote.
In particular, I want to congratulate you, Chairman Callahan, and the
Subcommittee for your leadership in the field of child survival and disease
prevention. We have responded to your urging by including in our budget request a
separate Child Survival and Disease Programs account.
I also commend this Subcommittee for resisting earmarks in the foreign
operations appropriations bill. As you know, earmarks and "directives" limit our
flexibility to carry out our mission in the most efficient and effective manner. I also
appreciate your efforts to ensure that the final House budget bill was free of earmarks.
I know that many of you on the Subcommittee have worked very hard to help
educate constituents and opinion leaders about the importance of American leadership
in strengthening democracy and sustainable economic development in order to build
the kind of world we want to leave for our children and grandchildren. Your
commitment to continued American engagement and a robust foreign policy has
helped the American public to understand our nation's role in the post-Cold War
world and in the rapidly-approaching 21st century.
President Clinton's request for FY 1999 programs managed by USAID provides
a very modest $300 million increase over FY 1998 funding. The funding requested,
however, is critical to our future. It is crucial to promoting American interests in developing countries, and in nations making the transition to democracy and free
markets around the globe. Highlights of this request include:
* Three new initiatives, the Africa Trade Reform and Growth Initiative and the
Americas Summit Initiative, for which the Administration is requesting $30
million and $20 million respectively under the Development Assistance and
Child Survival accounts, and the African Great Lakes Justice Initiative, for
which the Administration is requesting $35 million under the Economic Support
Fund. In addition, we are asking for an additional $1 million to our food
security initiative for Africa, bringing those funds to $31 million for FY 1999.
* An additional $155 million for programs in the New Independent States of the
former Soviet Union;
* $94 million more for the Economic Support Fund;
* A separate request of $503 million for the Child Survival and Disease Program;
* A $15 million increase in International Disaster Assistance for transition
initiatives for countries coming out of crisis;
* An increase of $37 million for other worldwide development assistance
programs; and,
On balance, the USAID budget represents less than one-half of one percent of
the federal budget. In many respects, this is a bare-boned and balanced approach to
development and humanitarian programs that will significantly contribute to achieving
the administration's foreign policy objectives.
In this request, the agency's operating expense budget remains essentially level.
With the exception of two increases for initiatives in Africa and Latin America and a
small increase in funding to protect our environment, the 1999 request for
Development Assistance is essentially the same as the level appropriated for FY 1998.
I believe this budget mirrors the growing consensus within the Congress regarding the
best role for foreign assistance programs in advancing U.S. foreign policy.
As Secretary Albright noted in June 1997, "In the wake of the Cold War, it is
not enough to for us say that Communism has failed...we must heed the lessons of the
past, and take advantage of the opportunity that now exists to bring the world together
in an international system based on democracy, open markets, law, and a commitment
to peace." USAID is doing its part to meet these historic challenges.
Before I continue discussing USAID's budget request, I would like to take a
moment to urge the members to act quickly on both replenishing the International
Monetary Fund and paying United States' arrears to the United Nations. Both these
matters are vital to the national interest and have unfortunately become entangled in
the debate over voluntary international family planning programs. The debate over
family planning programs is a legitimate one, and deserves to stand or fall on its own
merits. However, this discussion has no relationship to either the International
Monetary Fund or U.N. arrears -- these are entirely separate issues. It is regrettable
that the resolution of these issues, which are so critical to American leadership in the
world and to our economy, could be endangered by an unrelated ideological dispute.
As to the discussion of our family planning programs themselves, there is still a
great deal of misinformation circulating that distorts the real issues. I want to just
state a few facts about what USAID's family planning programs do -- and what they
do not. The most important fact about our family planning programs is that they are
saving the lives of millions of women and children each year. Contrary to what many
people seem to think, USAID does not provide funds for abortions. The debate is not
whether American taxpayers should pay for abortions abroad -- that is not happening.
Another important fact to remember is that USAID assists countries with family
planning only at their request -- and we do not permit programs we support to coerce
anybody to accept any particular method of family planning.
Millions of mothers and their children die each year in developing countries due
to complications from births that are too close together or too early or too late in a
woman's life. Each day, more than 31,000 children under age five die, many from
low birthweight or other pregnancy-related complications. Each year, more than
585,000 women die -- at least one woman every minute every day -- of causes related
to pregnancy and childbirth, and at least 99 percent of those deaths occur in
developing countries. Family planning programs such as those supported by USAID
can prevent one-fourth of all infant deaths by spacing births at least two years apart.
Family planning can also prevent at least one in four maternal deaths by allowing
women to delay motherhood, avoid unintended pregnancies and unsafe abortions.
In recent years, as we have been able to offer women family planning services
in countries which had long used abortion instead of modern contraceptives, the proof
is coming in -- good family planning services prevent abortions. In places like Russia
and Ukraine and Kazakhstan, where women previously had repeat abortions because
they had no access to modern contraceptives, we are seeing dramatic declines in
abortion rates now that we have been able to get in there and provide family planning
services. In Russia, from 1990 to 1994, as contraceptive use increased from
19 percent to 24 percent, the number of abortions dropped from 3.6 million to 2.8
million.
More than 50 million couples in the developing world use family planning as a
direct result of USAID's efforts. Because they can plan the births of their children for
the maximum health and well-being of their families, they are better able to feed,
clothe, educate and provide health care for their children. Hundreds of thousands of
women and children are alive today because of these programs.
In looking at the broad range of the agency's programs, I am most proud of the
direct impact USAID's programs have on people -- from saving lives to building more
prosperous societies to creating jobs for the American people. For example, USAID
emergency relief programs provided food and other assistance to more than 28 million
disaster victims in 1996. Our health and child survival programs which you,
Chairman Callahan and Congresswoman Pelosi, have so strongly championed, helped
to save more than five million lives last year alone. Severe food shortages were
averted in seven African countries, thanks to USAID efforts to establish regional
capacities to anticipate and prevent famine. U.S. exports to developing countries,
most of them former or current aid recipients, grew by $155 billion from 1990 to
1996, supporting roughly 1.5 million additional jobs in the United States.
We responded rapidly to support transitions from crises, helping Guatemala
implement a historic Peace Accord and demobilize former combatants. Our programs
in Eastern Europe and the New Independent States helped privatize more than 26,000
state-owned enterprises in 1996 alone. In addition, we supported free and fair
elections in 14 countries around the globe and assisted in the drafting and adoption of
new constitutions in three countries. More than a million people received USAID
microenterprise loans last year, and more than half of those clients were women. We
helped farmers in Latin America choose alternatives to growing drugs, and cut the
acreage in Peru devoted to coca production by 27 percent. USAID also contributed
significantly to improving conservation on over 21,000 square miles of land in 14
different countries.
With your help, Mr. Chairman, we took a major step toward the worldwide
eradication of polio with our support for national immunization days in Africa and
Asia. The agency continued to help finance innovative public-private partnerships,
such as the one that helped create vaccine vial monitors -- simple heat-sensitive tags
that indicate when vaccines have become unusable, resulting in health savings in
excess of $10 million a year.
The Congress and the American taxpayer have every right to demand results
for the dollars they put into foreign assistance, and I feel USAID is doing a better job
than ever before in producing results that make a difference in today's world.
The Budget Squeeze
As you are well aware, the agency is called on from many quarters to work on
a wide range of issues around the world and I would like to point a perennial problem
that makes effective management, setting the right priorities and dealing with those
issues appropriately increasingly difficult. Every day we are faced with challenges
that could consume our entire budget: the 800 million people who face hunger around
the globe, the millions of children who die from easily preventable causes, the 1.3
billion people who live on less than a dollar a day, the emergence of new strains of
deadly diseases, and the tens of millions of refugees from war and conflict.
All of these are desperate problems. Each deserves thorough attention, as do
many other issues. Equally clearly, every issue has passionate proponents who make
convincing arguments that their issue is the single most important element of the
development challenge. This agency cannot address all of the world's problems, but
we must develop sound, integrated strategies that holistically attack the largest
development problems at their roots. We must focus our efforts in countries that
show a commitment to reform. Unfortunately, our ability to implement effective
overall approaches to the most severe development problems is often hindered by
earmarks, directives and other limitations that constrain our flexibility. I again would
like to thank you, Chairman Callahan, and you, Congresswoman Pelosi, for keeping
your appropriations bill earmark-free. In the end, however, when the final bill
accumulates more and more limitations, each of which may be entirely well-intentioned, it becomes more and more difficult to carry out our work.
Past earmarks and "directives" establishing floors for regional allocations have
squeezed our development assistance programs in Asia, where huge numbers of people
are still in poverty. USAID strongly supports microenterprise programs, and some of
the best opportunities for poverty alleviation through microenterprise lending are in
the Asia and Near East region.
The combination of funding floors and the overall scarcity of economic growth
funds is forcing other program disruptions. In FY 1999 we have had to cut our
request for programs in Sri Lanka -- which are focused on financial markets and
improved trade and investment policies -- by 50%. In Bangladesh alone, agribusiness
investment and employment will be put aside, microenterprise lending likely will be eliminated for 1,100 businesses, and the start-up of important fisheries will be
delayed.
When overall budgets are cut and earmarked items remain intact, or when
earmarks increase faster than the overall budget increases, important development
programs are jeopardized. A case in point is Indonesia, where beginning in 1995 the
combination of decreased Operating Expense funds and the scarcity of program funds
for economic growth activities led to the decision to curtail USAID's large and diverse
policy and institutional reform programs. This included the early termination of
programs that provided, among other things, advisors to the Security and Exchange
Commission to improve the regulatory framework for capital markets, and advisors to
the Ministries of Plan and Finance.
I am not suggesting that USAID could have prevented Indonesia's financial
crisis. But we would have been in a much better position to respond to the crisis if
our advisors had stayed engaged in promoting the financial sector reforms that were
needed. The further irony, of course, is that the scarcity of funds for economic growth
activities was in part the result of our mutual commitment to ensure adequate funding
for child health programs. Sadly, Indonesia today faces a potential child health crisis
as millions of family wage-earners find themselves out of work, food supplies are
disrupted and basic health services are curtailed.
Another section of the squeeze is our agricultural budget. We have seen a
steady erosion of our capacity to support programs that encourage governments to
reform their agricultural sector, privatize their agribusiness industries, provide needed
credits to farmers, promote land reform and create distribution systems for their
products. We have also cut back drastically our support for agricultural research --
the life-blood of progress -- not only for the developing world, but for our own
farmers.
We have requested a small increase for agriculture in this budget. This request
will move our expenditures back over the $300 million level. I have taken note that
my good friend, Peter McPherson, AID administrator during the Reagan
Administration and now president of Michigan State University, has joined a group of
university presidents in calling for a $500 million international agriculture budget for
USAID. If such an increase were to be included in this year's budget, other vital
programs would be squeezed out. But Peter McPherson is right in advocating a
$500 million budget for agriculture and I support his efforts. My hope is that over the
next few years we can meet that goal in a budget that grows overall to serve vital
U.S. interests.
There is critically important work we could be doing in other areas of economic
growth, but these areas are pinched between the constant competition for our limited
resources. The regional squeeze put on allocations is just one example of the many
pressures USAID's budget has fallen under in recent years. There are many other
examples that I will not single out. I also want to acknowledge that pressures on our
budget do not come only from the Congress; the difficult choices are also of our own
making. Nevertheless, retaining some leeway in the discretionary budget is a crucial
part of an effective development program. I thank this Subcommittee for supporting
us in providing flexibility in your bill last year, and I urge you to do the same for FY
1999. We must let our development experts on the ground drive the development
process, using their best judgment. Solutions imposed from Washington do not make
the best recipe for success.
Account Structure
The FY 1999 budget request brings with it a slightly different account
structure. USAID is requesting 1999 funding for a separate Child Survival and
Diseases account at a level of $502.8 million, which reflects strong support both
within the Administration and this Subcommittee. The account includes $226 million
for child survival activities, $121 million to combat AIDS, $30 million for infectious
diseases and $27 million for related health activities that complement our activities in
child survival and infectious disease. Also included is $98.2 million in basic education
programs. Education programs are one of the most powerful means we possess to
promote lasting social and economic progress in the developing world.
While this request of $502.8 million compares to a 1998 appropriated level of
$550.0 million, I want to make one thing absolutely clear: this decrease is not meant
to signal a reduction in the importance USAID places on child survival programs. It
has been our experience that to effectively combat both infant mortality and the spread
of disease, we also need to address the underlying social and economic conditions that
allow child mortality and infectious diseases to flourish, such as poverty, malnutrition,
illiteracy, poor sanitation, overcrowding and environmental degradation.
Just to cite one example, our urban programs that work in some of the worlds'
largest and increasingly crowded mega-cities are not considered part of the child
survival account. Yet these programs are helping to provide clean water and waste
treatment facilities to millions of poor families, an effort that clearly improves the
lives of children and reduces the spread of disease. Or consider education programs
that appear in this account but do not fall under a strict definition of child survival
programs: research shows that the children of a mother who has even a single year of
education, has a 9 percent better chance to live to the age of five. Gains increase substantially with each additional year of schooling. So when you look at our
programs in terms of child survival, I think we need to focus on their broad impact.
The Development Assistance Account: The Africa Trade and Investment Initiative and
the Summit of the Americas
President Clinton's upcoming trip to Africa, in which I will participate, offers
an excellent opportunity for the world to focus on the immense potential and
considerable challenges on the continent. USAID wants to be an active partner in
Africa's future. This trip will offer ample evidence of what I have long argued -- that
Africa is the world's last great developing market. As part of the Partnership for
Economic Growth and Opportunity in Africa, announced in June 1997, USAID will
help Africa integrate into the world markets through increased openness to
international trade and investment. This type of reform and assistance program has
already been proven to be a major ingredient in the recipe for economic progress and
growth in other parts of the developing world.
The Partnership includes the following USAID components:
-- Technical assistance to help African governments liberalize trade and improve
the investment environment for the private sector;
-- Assistance to catalyze relationships between U.S. and African firms through a
variety of business associations and networks; and,
-- Funding of non-project assistance in conjunction with other bilateral and
multilateral donors to help alleviate the budget crunch in nations embracing
aggressive, market-friendly reforms.
The second regional initiative included in the Development Assistance account
focuses on Latin America. As part of our effort to capitalize on regional cooperation,
the budget proposal includes funds to support the initiatives to be endorsed at the
second Summit of the Americas planned for April 1998. USAID helped to define the
agenda for the upcoming Summit, where the region's 35 presidents will focus on
regional challenges, including economic integration, education, democratic institution
building and poverty alleviation through microenterprise activities. USAID is
requesting $20 million to support initiatives aimed at achieving these goals which will
help remove the barriers to the participation of the poor in the national life of the 34
democracies represented at the second Summit of the Americas.
The Development Assistance Account: Climate Change, Biodiversity and the
Development Credit Authority
The Development Assistance account also includes an increase of $44 million
for environment programs to address biological preservation in Africa, and for the
President's Initiative on greenhouse gases in the Asia region, including India,
Philippines, Indonesia and through the U.S. Asia Environmental Partnership. In June
1997, at the United Nations General Assembly Special Session on Environment,
President Clinton announced that the United States would devote at least $1 billion
over the next five years to help developing nations achieve clean growth. USAID is
making our nation's commitment a reality through its Climate Change Initiative.
Beginning in fiscal year 1998, USAID will devote at least $150 million in non-credit assistance per year, for five years, to climate change-related programs. These
programs will emphasize energy and land use sector efforts that promote "climate
friendly" development, and activities to promote developing country participation in
the Framework Convention on Climate Change. Activities will be focused in nine key
countries and three regions: Brazil, Mexico, India, Indonesia, the Philippines, Russia,
Ukraine, Poland, South Africa, Central Asia, Central America and Central Africa.
I also want to note the importance of Development Credit Authority (DCA) in
the fiscal year 1998 Foreign Operations Appropriations legislation. I realize, Mr.
Chairman, that you and your staff have had concerns about this authority. I want you
to know that USAID is working hard to address those concerns by meeting the
management milestones to which we and OMB have agreed. USAID/Russia has
identified a number of potential DCA projects and local banks are interested. In
addition to stretching our development dollars, this transfer authority will also
encourage more financial discipline on the part of developing countries. I have asked
the Deputy Administrator, the Honorable Harriet C. Babbitt, to oversee the
implementation of this authority. We will keep you and your staff fully informed of
our progress as you consider our FY 1999 request.
The environmental sector is one area that is well suited for this type of funding.
USAID's strategy on climate change includes complementing our grant assistance with
a credit program in the fiscal year 1999 budget. This credit will be funded by
transferring up to $15 million from Development Assistance account and the
Assistance for Eastern Europe and the New Independent States' account to the
Development Credit Authority. Projects that promote clean energy production as well
as environmentally sound infrastructure and industry are good candidates for our
credit programs. We are also developing projects in Central and Eastern Europe and
the New Independent States. Opportunities for credit-worthy projects are more likely as these countries make the transition to market-based economies and attract private
capital.
We continue to work with OMB to implement credit management
improvements to ensure that USAID has the capacity to manage our existing loan
programs and this new authority well. I will guarantee that no money will be obligated
under this authority until we have the capacity to manage it. I am pleased to report
that we have made significant progress on the milestones set out for us by OMB to
date and I am confident we can get this certification before the end of the year.
An Increased Emphasis on Agriculture and Education
The Agency has intensified our strategic focus during the last year on two
important areas of development: agriculture and education. Agriculture is now being
pursued as a part of USAID's economic growth goal by refocusing on the links
between agriculture, economic growth and food security. As part of this effort,
USAID, at the World Food Summit in November 1996, highlighted the continuing
food security issues of the over 800 million chronically undernourished people in the
developing world. The proposed budget allocations for food aid are part of this
Administration focus. Education has been promoted to the level of one of the
agency's primary goals. USAID is working to improve basic education for both girls
and boys, particularly in the poorer countries of sub-Saharan Africa. An important
part of this effort is our continued focus on advocating that no children should be
denied access to an education because of their gender, ethnicity or social status.
Increased Transition Activities
Within USAID's 1999 budget is a $15 million increase to the International
Disaster Assistance Account for Office of Transition Initiatives (OTI) efforts. This
will increase the U.S. government's capacity to bring fast, direct, flexible assistance to
priority countries in their transition from conflict, by addressing fundamental needs.
The United States continues to face the challenge of responding to increasing numbers
of countries with complex emergencies. Many of these complex emergencies have
come to be high priority foreign policy concerns of this Administration, such as those
in Haiti, Bosnia, Congo, Liberia and Angola. Although relatively new and with
limited resources to date, OTI has demonstrated a successful track record in assisting
transitional countries: disbanding 200,000 paramilitary troops in Guatemala and
demobilizing and resettling nearly 3,000 guerrillas; reaching 1.9 million people with
mine awareness and helping create 590 projects in 270 villages in Angola; and
implementing 650 grants in Bosnia to promote independent media and democratic
reconciliation.
We have learned from experience how valuable it is to have the resources and
the flexibility of the International Disaster Assistance account in place to deal with
these crises. It is an invaluable, innovative and cost-effective means to advance U.S.
interests in these very dynamic settings. I also want to assure the Subcommittee that
by increasing the funding for OTI, we in no way, shape or form are lessening the
ability of our agency to provide immediate life-saving humanitarian relief through our
Office of Foreign Disaster Assistance -- still one of the world's premier organizations
for providing such assistance on the ground.
Infectious Diseases
For fiscal year 1998, Congress, under this Subcommittee's leadership, provided
funding for USAID to take part in a global initiative to combat infectious diseases,
joining with other U.S. Government agencies in this effort. USAID has developed a
strategy for the initiative as an important complement to the other four objectives
leading to USAID's goal to stabilize world population and protect human health,
particularly efforts in child survival, maternal health and AIDS prevention. USAID's
strategy has been developed in consultation with a wide cross section of global health
experts, including staff from other U.S. government agencies, UNICEF, the World
Health Organization, non-governmental organizations, academia and the private sector.
In the spirit of true collaboration, these discussions with other agencies brought
consensus about the directions for USAID in this endeavor, and clarification about
USAID's role and contributions.
USAID's strategy has four technical elements:
-- Slowing the emergence and spread of antimicrobial resistance, targeted at the
principal microbial threats in the developing world: pneumonia, diarrhea,
sexually transmitted diseases, tuberculosis and malaria.
-- Testing, improving and implementing options for tuberculosis control.
-- Implementing new and effective disease prevention and treatment strategies
focused on malaria and other infectious diseases of major public health
importance.
-- Strengthening health surveillance systems by building capacity at the country
level to help create a global early warning system for disease.
USAID's strategy is being finalized with further extensive consultations with
our partners. Programming of the funds into specific activities will follow shortly. The Centers for Disease Control and Prevention, the World Health Organization and
UNICEF, among others, will certainly play key roles in our program, and a new
Infectious Diseases objective has been included in the health portion of our request.
Economic Support Funds
Our FY 1999 budget request includes an additional $94 million for Economic
Support Funds. Of this increase, $70 million is slated for Haiti to continue the
difficult process of establishing a democratic government with a freely elected
President and Parliament and achieving a more sustainable economic base. It has
taken Haiti longer than anticipated to work through these processes. We
underestimated the time and pace needed to secure reforms and the democratic
transition. The transition in Haiti remains vital to our regional interests and is a key
part of securing lasting democracy in the Americas. To stand back and let Haiti slide
back toward chaos and internal conflict would be wrong-headed and the cost, in the
long-run would be far greater than to provide assistance now to help local
communities to reach the poor with jobs and services and further help in the process
of decentralizing and strengthening Haiti's institutional and political structures, and to
reach. The 1999 request for Haiti does not come at the expense of other programs in
Latin America and the Caribbean.
During this uncertain period, we want to significantly increase support to help
generate short-term economic activity and reform to maintain the momentum for
change. We also plan to provide for basic human needs by responding directly to
individuals and local institutions, and by building local capacity. Haiti has extremely
weak institutions which we are trying to strengthen over time. We want the benefits of
the still ongoing democratic transition to be felt tangibly by the poorest populations by
expanding services and jobs through local entities. We believe that in this way we can
help keep Haiti from sliding back into autocratic and violent behavior under the
pressures of modernization.
The Administration is requesting $35 million under the Economic Support Fund
for the African Great Lakes Justice Initiative. The objective of the Great Lakes Justice
Initiative is to contribute to efforts in the Democratic Republic of the Congo, Rwanda,
and Burundi to bring an end to the culture of impunity. Recognizing that justice is
one critical element, the initiative is designed to support an expanded effort to help the
public and private sectors in those nations to develop justice systems that are
impartial, credible, and effective, and to help promote inclusiveness, coexistence, and
security. The balance of the increase in Economic Support Funds (ESF) will be used
to support other high priority Administration foreign policy initiatives, particularly in
Africa and the Middle East.
The request for overall ESF assistance in the Middle East remains the same as
in previous years. As Secretary of State Madeleine Albright has said, we welcome
the initiative of the Israeli government in beginning discussions with the United States
on a gradual reduction, and eventual phase-out of economic support funds to Israel.
The current projections, of course, do not reflect any discussions along those lines.
As she pointed out, "Hopelessness is a great enemy of the region, for those
with faith in the future are far more likely to build peace than those immobilized by
despair." Water and jobs are major concerns for both sustainable economic growth
and long-term peace in the region, and these are major focuses of our programs.
A Historic Transformation Continues
The historic transformations occurring in Central and Eastern Europe and the
former Soviet Union remain critical to U.S. national interests, and our requests for the
Support for East European Democracy (SEED) and FREEDOM Support Act accounts
reflect this high priority. These nations with whom we were once in a dangerous,
expensive and ever-escalating arms race, are now emerging partners in the global
economy. In Central Europe, we are seeing some of our allies successfully make the
transition toward membership in NATO and the European Union. Across the region
we are helping these nations create democratic societies and market economies which
are increasingly based on Western values, and linked to us through trade and
investment and through people-to-people, grassroots relationships.
In Central and Eastern Europe, the SEED request is focused on continuing our
commitment to support the Dayton Peace Accords in Bosnia and Croatia. We are
promoting reconciliation on the ground through economic revitalization efforts, job
creation and democracy building efforts. It will take time to deepen and solidify this
process. We are also supporting police monitors and police reform in Bosnia, a
program critical to our ability to facilitate the return and reintegration of refugees and
displaced persons into their communities. The U.S. military presence and economic
assistance programs have been highly complementary, with peacekeeping troops
assuring a sufficiently stable environment for recovery to take root. In turn, economic
recovery is helping to bring about conditions that will make it possible for American
troops to come home.
In partnership with a number of pre-eminent American foundations, we are
proposing to begin in the next fiscal year a $100 million trust -- with half, or $50
million, to be funded over four years by the U.S. government -- to promote deeper
and more enduring civil societies in Eastern and Central Europe. We are joining with Rockefeller Brothers, Ford, Soros, Mott and others to create an evenly matched
public-private endowment to encourage a range of economic think tanks, professional
societies, chambers of commerce, interest groups and the like to be focussed and self-sustaining. Our goal ultimately is to stimulate an educated, activist citizenry that
demands accountability and value from its government. Also, by breathing life and
vibrancy into these new democracies, we can more readily count on their durability.
With Congressional concurrence, our initial contribution would be $12.5 million from
SEED funds, and we will be consulting with you on the best mechanisms for
Congressional oversight of this process.
In the New Independent States, we are requesting an increase in FREEDOM
Support Act funds of $155 million above the 1998 level to expand the Partnership for
Freedom initiative in Russia and across the New Independent States. In the 1998
budget, Congress endorsed the Partnership for Freedom's new focus on economic
growth, civil society, and partnerships which create bonds between non-governmental
organizations, businesses, universities, hospitals, professional associations and a
myriad of grassroots organizations in the United States and in the region.
FREEDOM Support Act funds will also help us redouble our efforts in Central
Asia to further develop the business, legal and regulatory environment necessary to
underpin the massive oil and gas investment which is likely over the next decade. As
this Subcommittee saw in its trip to the Caucasus last summer, Central Asia and the
Caucasus are critical to U.S. strategic interests and world energy supplies. We will
continue supporting the Administration's TransCaspian initiative to facilitate
appropriate East-West transport routes and environmentally sustainable approaches to
energy development through bilateral and regional technical assistance.
This will also allow us to fund reforms to promote energy restructuring, energy
efficiency and other actions to address global climate change. A third of the top focus
countries for USAID climate change activities are in the New Independent States,
including Russia, Ukraine and the Central Asian Republics. In Central Asia, we will
also increase efforts focussed on infectious disease and other health issues, including
tuberculosis. We plan to increase funding for health programs by $40 million.
An important part of our work throughout Central and Eastern Europe and the
New Independent States will be our anti-corruption efforts. USAID's assistance in the
area of crime and corruption addresses the underlying causes of corruption, and
complements the efforts of U.S. law enforcement agencies -- the Federal Bureau of
Investigation and the Departments of State, Treasury and Justice -- to address specific
crime and law enforcement needs. USAID helps set the rules of the road for
business, and opens up to public scrutiny government's regulatory processes and
businesses' decision-making. This means reducing inappropriate discretion exercised by government, so that opportunities for arbitrary, capricious or corrupt government
actions are reduced. This also means improving the transparency of commercial
transactions so corporate decisions are open to stockholder and public oversight and
helping to foster an independent media to inform public decision-making.
USAID Management
The Government Performance and Results Act directed that the foreign
assistance program be driven by strategic focus and by results. At USAID, we have
embraced this emphasis on results. USAID continues to introduce management
reforms designed to deliver assistance faster and achieve results more cost-effectively.
I want to underscore the importance that USAID has been placing on managing for
results and improving program effectiveness. We were committed to this
performance-based budgeting long before Congress passed the Government
Performance and Results Act (GPRA) in 1993, reflecting our belief that Congress and
the American people must see the specific results of our programs if these activities
are to continue to receive your support. Some of USAID's activities -- such as
reducing the spread of infectious diseases in developing countries -- are easier to
quantify. Other equally important interventions -- such as assisting host governments
to take steps to move toward a stable, market-based economy -- take more time to
achieve. We are committed, however, to measuring, assessing, and reporting to
Congress on the results of all of our program activities.
During this last year, we have also continued to improve our working
relationships with the Department of State. Foreign policy and development strategy
are better coordinated at the policy level than ever before. USAID's Strategic Plan
supports specific U.S. national interests as defined in the International Affairs
Strategic Plan -- a document which the Department of State and USAID worked in
close cooperation to prepare. USAID and the Department of State have also agreed
upon ways to streamline and better align operations ranging from how we manage
facilities to how we coalesce around specific country objectives.
The cooperation between USAID and the Department of State is particularly
close in the area of democracy and governance assistance. The Department of State's
regional bureaus and its Bureau of Democracy, Human Rights and Labor (DRL)
consult with USAID in programming the ESF regional democracy funds. USAID
plays a prominent role in the DRL-chaired Democracy Core Group, an inter-agency
council that ensures the tight coordination of policy and programs in key transitions countries. And our two agencies work together in the annual reviews of USAID's
country programs to further strengthen the coherence of our diplomacy and assistance.
We recently submitted to Congress the initial version of USAID's Fiscal Year
1999 Annual Performance Plan. This plan provides specific benchmarks against
which our performance can be assessed at the end of fiscal year 1999. We will also
submit our self-assessment of performance through fiscal year 1999 at the end of
March 2000 through our Annual Performance Report. Our Performance Report will
comment on why we think our approaches did or did not work and what we will do to
improve our performance. These plans and reports are important tools for helping our
agency, and you, to determine the degree to which we have achieved the results that
we had set out for ourselves. We look forward to consulting with you on our
performance measuring and planning efforts.
In conjunction with the Department of State and other agencies having an
overseas presence, USAID implemented the International Cooperative Support
Services, or ICASS, system effective October 1, 1997. Under this system,
administrative support services at overseas posts will be provided by the agency best
able to provide effective service at a reasonable cost. While any major change such as
this is likely to face problems in the first year of implementation, the changeover from
the old Foreign Affairs Administrative Support system to ICASS appears to be going
very smoothly. All agencies, including USAID, are working to ensure that this new
system is a success and that it will result in the end in better administrative support for
all agencies at a lower cost.
In other areas of management, two USAID task forces identified ways to
streamline procurement processes and to better align our workforce to projected needs
in developing countries. Our workforce planning task force recommended reducing
the Washington staff over the next three years to meet tight Operating Expense levels
while protecting the USAID field presence and permitting expanded staff training.
These moves would not entail a reduction in force, but it is clear that managing
Washington with a reduced staff will require streamlined processes and greater
efficiency. The task force recommended that USAID field staff not be cut any
further, and that staffing remain at approximately 700 U.S. direct hires in the field.
However, we will be looking at how to more effectively manage our field presence.
The initial action plan on procurement addresses three areas: strengthened
teamwork, operational goals and administrative streamlining. We are reestablishing
the Procurement Policy Advisory Panel which will provide for a wider vetting and
understanding of procurement and assistance policies. Our operational goals are
intended to establish benchmark time periods for effecting actions, such as procurement planning and operational year budget allocation and distribution which
will hopefully stimulate earlier action on procurement and assistance actions, and even
out the workload over the fiscal year.
Completing the move of USAID headquarters to the Ronald Reagan
International Trade Center last year was a sizable logistical challenge, but having all
our agency's Washington staff together in one building -- for the first time in our
history -- has greatly improved teamwork and collaboration among employees.
Over the coming year, we will seek to further improve USAID's unique
comparative advantage to rapidly and innovatively respond to diverse development and
humanitarian needs. A further streamlining of USAID work processes could increase
the amount of time available to build and nurture partnerships and coalitions with
those willing to collaborate on development problems. It will also ensure that USAID
maintains the technical breadth and on-the-ground developing country expertise in
preparing responses closely attuned to local conditions.
USAID's recognized excellence as a pre-eminent bilateral development
organization will serve the United States well as we continue to lead other
development organizations. U.S. leadership helps create a shared vision on
development goals and approaches across the U.S. government, among donors, within
the nongovernmental and business communities and with the countries in which we
work. As hosts of the upcoming 30th anniversary Tidewater meeting of development
ministers, we now turn our energies to jointly implementing the Development
Assistance Committee 21st Century Strategy. Similarly, as part of the New
Transatlantic Agenda of the European Union and the United States, USAID is now
working closely with the European Commission on more than 60 joint development
activities.
The New Management System
I also must address an issue that has been of particular concern, especially to
this Subcommittee: the agency's New Management System (NMS). Last April, I
made the difficult decision to suspend overseas operations of two modules of the New
Management System. Communications problems, difficulties in transferring data and
system problems, particularly with the USAID Worldwide Accounting and Control
System (AWACS) financial management module, were forcing the agency to expend
an inordinate amount of time responding to problems, particularly at our overseas
missions.
USAID contracted in the fall with a top-notch consulting team recommended by
the General Services Administration, and led by IBM, to conduct a thorough
assessment of the NMS. This independent assessment by the consulting team was
completed in January and has been shared with Committee staff. This analysis
identified the coding and software flaws that have plagued NMS, particularly the
AWACS module, and also identified areas where we could strengthen the management
of our information systems.
The report also carefully assessed the options for moving forward to complete
the initial four modules of NMS for the agency to comply with the Government
Performance and Results Act and other government-wide standards. The report
recommended options for modifications of the operations, budget and assistance and
acquisition modules, and replacement of the financial management module with one of
the now-available commercial off-the-shelf financial packages that would be modified
to meet agency needs and integrated with the other modules.
Our agency staff has put a lot of work into making the NMS system function
and I deeply appreciate their labors. This was not a wasted effort. The business area
analysis process established a solid base for the development of each of the NMS
modules. The vision of an integrated financial and information management
system that would meet our needs into the 21st Century was, and remains, the correct
vision. It is now clear, however, with the advantage of hindsight, that we were too
ambitious. We knew that our old systems were inadequate so we rushed the effort to
reach full compliance with government standards and with the business needs
identified in the business area analysis. Basically, we tried to do too much, too fast,
and did not adequately test the system before it was launched in October 1996.
Even as I acknowledge our mistakes, I must also point out that, when we began
this process in 1993 at the start of the Administration, everyone from the Office of
Management and Budget to Congress agreed that the agency's financial information
systems were badly flawed and that immediate action needed to be taken. At that
time, no commercial off-the-shelf packages existed that would meet our financial
information systems needs. Our intentions were good in overhauling the agency's
financial information systems, but our method was flawed. For that I accept
responsibility.
What are our next steps? We have completed our assessment of the
consultant's report and are defining a comprehensive plan that will assure us that the
mission critical systems will meet the year-2000 compliance standards. The second
priority is to have in place a financial management system that complies with federal
standards that can produce an auditable consolidated financial statement. Third, we must complete the basic functionality for all modules of NMS and provide for data
integration among them.
Our Management Bureau, in collaboration with the Capital Investment Review
Board, has laid out internal management and external contracting strategy to achieve
these goals. We are in the process of sharing that approach with this Committee, and
our other oversight Committees. We have invested significant resources in NMS
development, and it is disappointing that we are not where we had hoped to be. The
independent assessment, however, provides an invaluable analysis of our current
situation and a clear description of the steps that we must take to achieve the original
vision of the NMS. We now find ourselves with the opportunity to resolve our
difficulties with the NMS and create a system that will allow you the transparency and
accountability that should be the standard for government operations.
In Conclusion
We know that the United States cannot fulfill its leadership responsibilities or
pursue our values as a nation without an effective international cooperation program.
Ultimately, development assistance administered by USAID improves the lives of
people in developing countries and helps to strengthen their capacity to mobilize local
resources and take ever greater responsibility for their own destinies. Foreign
assistance is one of America's best and most cost-effective tools for building
relationships among peoples and institutions that can endure and advance our interests.
The lines between domestic and foreign affairs are increasingly blurred.
USAID bolsters America's domestic and foreign policy interests by capitalizing on the
challenges and opportunities that are inherent in increased globalization and
interdependence. When we look at the causes of the Asian financial crisis, we see
how important USAID's development work is. Many Asian countries embraced
aggressive economic reforms, but were slower to embrace the open and transparent
governance which is also essential for long-term economic growth and foreign
investment. USAID is investing in the institutional structures, market reforms and
grassroots development programs that lead to long-term stability and growth. These
programs are even more critical to America's future now than during the Cold War.
Referring to USAID's programs as foreign aid is increasingly anachronistic in
this kind of environment. Neither the world's problems nor America's economic
opportunities stop at our borders. Exports accounted for over one-third of America's
growth during the past four years. Developing and emerging market countries
accounted for more than half of that growth in exports. All spheres of activity in the United States demand an international reach, whether it be health, crime-prevention,
environmental protection or job creation. The benefits of international cooperation are
obvious -- the dangers of not cooperating to help other nations meet these challenges
are too great to risk.
Working with you to achieve as complete a consensus as possible between the
Congress and the Administration on the mission and strategy underlying our assistance
efforts is very high on my list of priorities for the coming years. I am very optimistic
about the potential our development assistance program has as an instrument of peace,
prosperity and human betterment in our world, in part because of the increasing
support from this Subcommittee for so many of our efforts and activities. Again, I
appreciate the opportunity to appear here today, and I look forward to working with
you to help fulfill that potential.
Thank you.
This is an archived USAID document retained on this web site as a matter of public record.
 |
Last Updated on: July 18, 2001
|
:
:
:
:
:
:
:
:
:
:
