Skip to main content
Skip to sub-navigation		 About USAID Our Work Locations Policy Press Business Careers Stripes Graphic USAID Home

USAID: From The American People
USAID's 50th Anniversary

This is an archived USAID document retained on this web site as a matter of public record.

Testimony of J. Brian Atwood Administrator

before the Senate Appropriations Subcommittee on Foreign Operations
April 29, 1999

Chairman McConnell, Senator Leahy, and distinguished members of the committee. It's a pleasure to be here this morning. As you know, Mr. Chairman, I have a dual mission today: first, at Senator Stevens' request, to continue the discussion we began on Tuesday of the President's supplemental request for humanitarian assistance to the Kosovo refugees. And, second, to present the President's budget request for foreign assistance programs for fiscal year 2000.

Mr. Chairman, I know that you visited Cambodia and Indonesia last month, and we are grateful for the time you spent with our projects in those countries and for the interest you have shown in our work. Also, as one who recently returned from Albania and Macedonia, I thank you for your support of the air campaign against the Serb aggressors.

Senator Leahy, we are also grateful for the leadership you have shown in many areas, including our programs to support child survival and microenterprise and to benefit the victims of war. We are particularly pleased that the Patrick J. Leahy War Victims Fund, which USAID administers, is now ten years old and currently has fourteen projects underway in nine countries. Many of its programs, of course, benefit the victims of land mines, not only by providing prostheses, but also by supporting the awareness training and public policy initiatives that can prevent new casualties. The Fund is a great humanitarian milestone, benefiting thousands of innocent victims of war who need and deserve our help. We are proud to be associated with it.

This may be the last time I will testify before this subcommittee, after six years at USAID, and it is for me a time for reflection. Fifty years ago, in the aftermath of the greatest war in history, leaders like President Truman and General Marshall had the vision to see that it was in our national self-interest to help Western Europe rebuild and to support social and economic development all around the world. In time, other nations followed our leadership, and today all the leading nations of the world recognize the importance of international development - and the world is demonstrably a better place because of it. Our leadership has rarely faced a greater challenge than it does today with the crisis of the Kosovo refugees.

I have just returned from Albania and Macedonia, where I met with refugees, relief workers, diplomats, officials of the frontline states, representatives of nongovernmental organizations, and leaders of NATO. On the basis of what I saw and heard, I feel strongly that the refugee crisis must be seen in the context of the entire military and political crisis in the Balkans. The humanitarian aid we propose is an integral part of the total NATO undertaking.

Let me repeat a point I made on Tuesday, Mr. Chairman: The refugees are not a byproduct of the war. They are the central fact of the war. Slobodan Milosevic has cruelly forced these people from their homeland, and when it suits his purpose he cynically turns their exodus on and off like a spigot. He is attempting not only to seize their homeland but also to use their plight as a weapon to destabilize other countries in the region. His actions are ruthless and criminal and cannot be permitted to succeed. That is why the funding we propose in the supplemental is intended not only to meet the urgent needs of the refugees but to strengthen this entire region as it confronts this unprecedented challenge.

It is difficult to convey the scope of this disaster and the horror that has been inflicted on these innocent people. Something like 700,000 men, women and children have been forced from their homes and have crossed the borders into Albania, Macedonia and Montenegro. No one knows how many are still in hiding in Kosovo -- estimates go as high as 800,000 or more -- or how many have been executed.

The refugees are in bad shape, physically and psychologically. They have been traumatized by the brutality of Serb military forces. Many have seen their friends and loved ones killed and their homes burned to the ground. They have been herded onto trains, or forced to flee on foot, and deported from their country. Many have been tortured. Parents are desperately concerned about the fate of their children, and thousands of children have become separated from their parents. By some estimates, two-thirds of those in the camps are children. To see these people's courage in the face of such adversity is to realize that we must pursue our humanitarian mission just as vigorously as we pursue the military actions that will end this aggression and bring these people home.

I cannot say enough about the heroic performance of the aid workers I met. Some are American, others are from many other nations, and all are working tirelessly to bring life and hope to the refugees. I'm particularly proud of USAID's two Disaster Assistance Reponse Teams that are in the area, one in Albania and one in Macedonia. These teams serve as our eyes and ears on the ground, gathering invaluable information in support of our relief efforts.

Throughout the region, relief workers are performing with exceptional courage in conditions of great personal danger. When I was in Albania, the relief community was deeply saddened by the death of two Americans, David and Penny McCall, board members of Refugees International, who were killed in an auto accident on the road to Kukes, along with the organization's European representative, Yvette Pierpaoli. They died as they had lived, while helping those in need. Their dedication was representative of thousands of relief workers around the world who place themselves in harm's way every day to relieve human suffering.

The relief effort has also seen a great outpouring of support from the American people. On April 1, USAID set up a web site to provide up to the minute information on the crisis and also to make available to list of private, nonprofit groups working in the region to those who want to donate funds. Thus far, more than 263,000 people have accessed the web site. Also, we and the Federal Emergency Management Agency have set up an 800 number - 1-800-USAID-RELIEF - which lists organizations to which donations can be made. Since April 5, this phone bank has received 45,000 phone calls from potential donors. USAID has also produced a public service announcement, in which First Lady Hillary Rodham Clinton appealed for donations to support the refugees; during its first week on the air the announcement was seen by an estimated twenty-four million Americans. We are extremely grateful for this support from the American people, as we are for the bipartisan support the relief effort has received in Congress.

As you know, the President on April 19 sent Congress a $6 billion emergency supplemental proposal to fund both humanitarian programs to aid the refugees and the military campaign against the Serbian aggressors. That supplemental request includes $591 million to be used for Function 150 humanitarian assistance for the refugees and for economic support for the frontline states for the rest of this fiscal year. These funds would support programs carried out by both USAID and the Department of State. The $591 million includes $386 million for humanitarian assistance to the refugees, such as food, shelter, water and medicine, and also to support essential programs carried out by nongovernmental organizations; it also includes $150 million for assistance to the frontline states; $30 million for security assistance; and $25 million for diplomatic operations of the Department of State and other agencies in the region. These requests were spelled out in the statement I presented on Tuesday and I will be glad to discuss them in more detail today.

For now, let me say that, based on what I saw in Albania and Macedonia, I add my voice to the many others, in Congress and across the nation, who believe it is imperative for Congress to pass this legislation and for us to move with unity and determination to meet both the humanitarian and military challenges we face in the Balkans.

Even before the Kosovo crisis, we had seen an outstanding example of American humanitarian leadership in the aftermath of Hurricane Mitch. The hurricane, and the flooding it caused, took at least nine thousand lives and did billions of dollars in damage to homes, farms, schools, health clinics, roads and entire communities in Central America last October. The United States, with bipartisan support in Congress, and working with other nations and private organizations, moved quickly to provide food, shelter and medicine. Now plans are underway for a massive reconstruction effort. The damage that these counties suffered came as several of them had emerged from civil war and were building democracies and open markets. It is therefore all the more urgent that we help them get back onto the road to political stability and economic growth, and I urge your support of the supplemental appropriation that the President has requested for reconstruction in Central America.

Mr. Chairman, for FY 2000, the President has requested $21.3 billion for programs in international affairs. Of that amount, USAID will manage $7.2 billion or 34 percent, which includes both programs that we administer and those we administer in cooperation with the Department of State and other agencies. The FY 2000 USAID budget request is an increase of $118 million, or less than two percent, over the previous year's appropriation.

Sustainable Development Assistance

The Administration is requesting a total of $1.848 billion for Sustainable Development programs in three accounts: the Development Assistance Account, at $780.4 million; the Child Survival/Diseases and Basic Education Account, at $555 million; and the Development Fund for Africa Account, at $512.6 million. The overall request is $109 million more than the amount appropriated in FY 1999, excluding the FY 1999 supplemental for Child Survival.

Development Assistance Account:

The requested $780.4 million is an increase from $733.86 million appropriated in FY 1999 (excluding Africa). Of this amount, $26.5 million will be used to address the Asian financial crisis. This account supports programs that promote economic growth and agricultural development, human capacity development, environmental sustainability, and democracy and governance in some of the poorest countries in the world.

Environmental funds, with overall funding of $290 million, support international efforts to reduce the threat of global climate change, conserve biological diversity, support sound energy services, and manage natural resources. Our environmental programs continue to be the best in the world, helping nations achieve economic growth while reducing greenhouse gasses and cleaning up urban pollution. Last year USAID launched its five-year, $1 billion Climate Change Initiative, to carry out President Clinton's commitment to reduce the threats posed by climate change in developing and transition nations. Through programs in 44 countries, we have helped developing nations to participate in the United Nations Framework Convention on Climate Change, to decrease net greenhouse gas emissions, and to adapt to climate vulnerability. The budget request includes $150 million from all USAID-managed accounts for this initiative, of which $112 million is Development Assistance.

Economic growth funds budgeted at $458 million, will expand and strengthen private markets, support agricultural development and microenterprise programs, and build access to economic opportunity for the rural and urban poor.

The importance of agriculture was underlined last year both by Hurricane Mitch, which devastated farming in Central America, and by the Asian financial crisis, which has increased food insecurity in that region. We continue to work closely with various U.S. private agricultural interests to develop a stronger public-private partnership and also gain access to markets for U.S. business. The new alliance with food companies for the worldwide Vitamin A program is an example of that partnership. We are refocusing on the links between agriculture, economic growth and food security. As was underscored at the 1996 World Food Summit, there are an estimated 800 million malnourished people in the world, and the United States, with the international community, is committed to cutting that figure in half in the next twenty years.

USAID's microenterprise program, budgeted at $135 million, from all accounts, works to increase the flow of credit to small businesses in developing countries. Helping poor but enterprising men and women build their own businesses is a key element of USAID's grassroots growth strategy. The microenterprise initiative started in 1994 with 331,000 low-income borrowers; in FY 1997, USAID's grants contributed to an estimated 1.4 million loans. About two-thirds of the recipients were women, and most of the loans were for $300 or less. A person with no collateral might first receive a loan of $50, and when that was repaid another loan of $100 might be extended. Often, these small loans can change people's lives.

In recent years, as loans have been repaid, a multiplier effect has taken place, as the same money is used over and over to make new loans and help new people. For example, the 1.4 million poor people who had active loans from USAID-supported institutions in FY 1997 represented an increase of 47 percent from the previous year. During the same period, the value of those loans increased from $301 million to $645 million, or 113 percent. Microenterprise development has emerged as an agency priority because it can so often help poor people work their way out of poverty, and we appreciate the strong bipartisan support it has enjoyed in Congress.

Family planning is budgeted for $400 million from all accounts, including $355 million in Development Assistance. Well over fifty million couples in the developing world use family planning as a direct result of USAID-supported programs. We estimate that as a result of USAID population programs there were 7.9 million fewer unwanted pregnancies, 3.2 million fewer abortions, 3.8 million fewer unwanted births, and 15,000 fewer maternal deaths last year. Since the mid-1960s, fertility rates in countries where USAID has been a major family planning donor - such as Indonesia, Bangladesh, Colombia, Mexico, Kenya and Egypt - have declined by more than a third.

Human Capacity Development, budgeted at $147 million, of which $110 million is requested within the Child Survival, Diseases and Basic Education Account, and $37 million is requested within Development Assistance, focuses on education as a central element of development. The program recognizes that for many poor people, and particularly women, illiteracy and the lack of a basic education are insurmountable barriers to a decent life. USAID is working with policymakers in several counties in Africa and Latin America to begin classroom programs designed to improve the quality of education for the poor and particularly for girls and women.

The status that women occupy in most developing countries not only contributes to individual suffering, but also represents a wasted resource and holds back economic growth. We are working to change this with technical assistance and leadership provided by our Global Bureau's Office of Women in Development (WID), which in 2000 is again budgeted at about $10 million. WID's goals include overcoming gender-based constraints to economic growth; improving education for girls; protecting women's legal rights; and creating greater consideration of gender in all aspects of the agency's work.

Democracy and Governance programs, budgeted at $149 million in Development Fund for Africa and Development Assistance funds, work to build democracy, support human rights, strengthen the rule of law, create a strong, politically active civil society, and combat corruption around the world. Never before in human history have more nations embraced democracy. More than fifty have successfully made the transition in the past fifteen years. But many fledgling democracies are vulnerable to military coups, corruption, organized crime, civil strife and economic chaos. Such counties are the focus of programs carried out by USAID's Center for Democracy and Governance and by our overseas missions.

Child Survival and Disease Programs.

The FY 2000 request includes $555 million for child survival and disease programs, an increase of $10 million from the FY 1999 level, excluding the supplemental. Of that amount, $445 million will be used for child survival, HIV/AIDS, infectious diseases and other health programs, and $110 million will be used for basic education. Since 1985, with the support of Congress, USAID has spent $3 billion on child survival programs. Experts say that these programs save more than three million lives a year, and have helped drop infant mortality rates in the developing world to their lowest levels ever.

The child survival request includes $25 million for the Polio Eradication Initiative. We have played a leadership role in the near-eradication of polio from the world. The Americas were certified polio free in 1994, and the number of reported cases elsewhere in the world has declined in the past decade from about 35,000 to about 3000 last year, with total eradication within view. In this campaign, USAID and Rotary International forged the most successful public-private partnership for public health in history. Last year, more than 450 million children were immunized against polio during national immunization days. In the largest public health event in history, India immunized more than 130 million children on a single day, December 7, 1997.

In the past year, in another area of child survival, we have worked with other nations, private companies and international organizations, to start a worldwide program to address the vitamin A deficiency that plagues many developing nations and costs millions of lives. Last month, the leaders of about fifteen major U.S. corporations met in Washington with Hillary Rodham Clinton to pledge their support for the program, which will include fortifying the food that children eat. In 1998, the VITA Alliance operated in eleven countries, and reached an estimated twelve million children and their mothers. We estimate that this program will save 650,000 lives each year by 2005.

This year USAID is proposing a new initiative that would be a first step in a global campaign against abusive child labor, an issue that I know is of great interest to Mr. Harkin and other members of the committee. It has been estimated that at least 250 million children are performing child labor around the world, many of them as young as eight or nine. School Works! will be a focused and coordinated effort to combat abusive child labor by helping communities and governments find long-term sustainable educational solutions aimed at keeping kids in school and out of hazardous work. USAID will establish pilot projects in regions with the worst record of abuse. The $10 million requested in FY 2000 would fund three-year pilot activities.

School Works! is the first time that the U.S. Government has made the reduction of child labor through improved access to basic education a specific focus of U.S. development assistance. USAID already invests $100 million yearly in basic education activities which target poor children in the developing world - those most at risk of becoming involved in abusive and exploitative working situations. School Works! will complement ongoing activities of the International Labor Organization's International Program for the Elimination of Child Labor.

We are requesting $10 million for a three-year program, with most of the money to be used to support several pilot projects around the world. The projects would include outreach and incentives to parents, improved teacher training, quality learning opportunities, and work with local communities. The goal would be to keep young people in school, or to get them back to school, at least to age fourteen.

USAID has been a leader in maternal health and nutrition, providing innovative in-service training for thousands of health workers, and other programs in more than twenty countries. We expect to spend about $50 million in FY 2000 for improving maternal health and reducing deaths as a result of pregnancy and childbirth. USAID works with international partners and other donor nations to support programs of nutrition, birth preparedness, treatment, and postpartum and newborn care. Since 1985, such programs have contributed to dramatic reductions in infant mortality rates. Immunization programs have reduced deaths among children under five by twenty to twenty-five percent. By its support of the development and delivery of oral rehydration solution (ORS), USAID has prevented one million childhood deaths from diarrheal diseases each year.

We continue to be the world leader in the battle against infectious diseases like tuberculosis, polio, malaria and HIV/AIDS. This budget requests $127 million to deal with HIV/AIDS, an increase of $2 million over the 1999 appropriation, excluding the supplemental. During my time at USAID, the agency has become the lead donor for the response to the global HIV pandemic. We have spent nearly $1 billion dollars for the prevention and mitigation of this epidemic in the developing world. USAID presently supports over 300 major activities in 47 countries around the world and over the next five years we expect to provide life saving services to over 50 million men and women.

The worldwide AIDS pandemic is extremely serious, but there have been signs of success in the battle against it. We now have abundant evidence that public health programs can change sexual behavior and thereby save lives. In Senegal, Philippines and Indonesia, early, comprehensive HIV intervention programs that USAID supported have helped prevent a major epidemic. In another set of countries - Uganda, Dominican Republic and Thailand - intensive HIV/AIDS programs were launched after major epidemics had begun, but the number of new infections is actually coming down. By our work in HIV/AIDS prevention abroad, we are not only reducing death and suffering there, we are lessening the dangers to our own country.

Regional Programs

Development Fund for Africa:

USAID is renewing its request for a separate appropriation for the Development Fund for Africa, or DFA. This reflects the high priority the Administration places on achieving sustainable growth in Africa, and has pursued with bipartisan support in Congress. The request for this account is $512.6 million. The total request for Africa of $818 million, which includes $232 million from the Child Survival and Diseases Program and $73 million from the Economic Support Fund, reflects the President's intent to return to historically high levels of support in Africa. The DFA request includes $233 million for economic growth and agricultural development, $34 million for human capacity development (other than basic education), $73 million for population programs, $99 million for management of the environment, and $72 million for building democracy. Within these categories, $45 million (an increase of $15 million over FY 1999) is included for an expanded African Food Security Initiative. This is the ten-year initiative announced by President Clinton during his 1998 trip to Africa. It is part of our response to the goals of the 1996 World Food Summit.

Two goals underlie U.S. foreign policy in Africa: to accelerate Africa's integration into the global economy and to combat serious transnational security threats, including HIV/AIDS and outbreaks of violence. In Africa today, we see extreme poverty, widespread hunger, a severe HIV/AIDS problem, political instability and war, and yet we also see economic growth and movement toward democracy. Great opportunities for progress exist, and we will continue to support improved agriculture, to work for an improved environment for investment and trade, and to encourage civil society and democracy.

Latin America and the Caribbean:

The budget request for the Latin America and Caribbean region for FY 2000 totals $519.7 million. Of this, $233 million comes from the Developmental Assistance Account, $76.2 million comes from the Child Survival and Disease Account, and $160.5 million is from the Economic Support Fund. In addition, $50 million is requested by the Department of State, for programs managed by USAID, from International Narcotics Control funds.

The funds will support programs to carry out the goals of the Summit of the Americas and its follow-up process. Additionally, the request will contribute to reconstruction in the Central American and Caribbean countries hard-hit by Hurricanes Mitch and Georges. The funds will also be used to promote democracy and human rights, to expand economic growth, to reduce illegal immigration into the U.S., for health care and education programs and to support sound environmental practices.

Asia and the Near East:

The Administration is requesting a total of about $2.4 billion for Asia and the Near East programs for FY 2000. Of this amount, $231 million is from the Development Assistance Account, $92.5 million is from the Child Survival Account, and $2.07 billion is from the Economic Support Fund. These funds will be used to continue support for the Middle East peace process, and to finance programs that facilitate economic reforms and increase access to markets, with particular emphasis on those countries hardest hit by the Asian financial crisis. The goal is to raise growth rates, create jobs, and promote the prosperity that is essential to free market economies. The funds will also be used to reduce population growth, improve maternal health, and combat the spread of HIV/AIDS; to improve energy efficiency, urban waste management and water resource management; improve the management of forest and coastal resources, and to reduce the growth of greenhouse gas emissions.

The FREEDOM Support Act Account

The FY 2000 request for the FREEDOM Support Act for the New Independent States totals $1.032 billion. This includes $241 million for the Expanded Threat Reduction Assistance Initiative, which will address security questions that may have been worsened by the economic crisis. The request for Freedom Support Act development funds totals $791 million, or $10 million less than the FY 1999 appropriation, not including emergency funding. Funds will be used to support the transition to democracy and free markets in the former Soviet states, including help for elections in several NIS countries this year. The NIS region has been hit hard by the Russian financial crisis. Programs will emphasize support for NGOs and the private sector, while reducing assistance to central governments.

Support for East European Democracy Account

The Support for Eastern European Democracy (SEED) Act is the cornerstone of U.S. assistance to Eastern Europe and the Baltic States. SEED is a transitional program, intended to aid Central and Eastern European countries through the difficult passage to democracy and market economies. The FY 2000 SEED request is $393 million, $37 million below the 1999 level. The request includes $175 million for reconstruction and democratic reform in Bosnia, $20 million below the 1999 level. The reduction is justified by the progress already made and by our commitment to a gradual reduction of assistance.

The request includes $218 million for other counties in the Southern tier, and for regional programs throughout Eastern Europe. These funds will be used for humanitarian support, community building, local elections and support of an independent media. The budget reflects the continuing shift in program activities from "graduating" Northern tier countries to Southern tier countries that began moving forward on their political and economic transformation more recently. Hungary and Latvia graduated from the SEED program in FY 1998. Lithuania and Slovakia will graduate in FY 1999. In FY 2000, Poland will graduate, and we are requesting no new funds for Northern tier country programs. Our focus will be support for democratic transition and market reforms in Romania, Bulgaria and Albania, transitions crucial to our goal of long-term peace and stability in the Balkans.

SEED is a transition program and we have a graduation plan for closing USAID missions. Still, it may take a generation for some formerly communist countries to make the transition to democracy and open markets. That is why USAID has proposed the Trust for Civil Society in Central and Eastern Europe. This is a proposed public-private partnership between our government and four American foundations. The Trust would offer challenge grants, training, and other services to non-profit organizations that would serve as a force for transparency, accountability and democracy in the region. It would operate for fifteen years, and USAID would match private contributions up to $50 million over a multi-year period. The Trust would enable us to continue as a force for democratic change in the area even after we no longer have missions there.

USAID Credit Programs

USAID's credit programs address a variety of sustainable development objectives, including economic development, a sustainable environment, and protecting human health. USAID believes there are many instances when development priorities can best be funded through credit, especially in emerging market counties and those moving toward graduation status. Credit programs use the leveraging of private sector resources to support sustainable development and to enable USAID to reach people it would not otherwise be able to reach. The Urban and Environmental Credit Program, budgeted at $8 million for subsidy costs and administration, provides loan guarantees that help market based financial institutions and instruments needed to address key development issues such as the adequate provision of water, sewer, sanitation and housing for the urban poor. The budget also requests authority to transfer up to $15 million to the Development Credit Authority. We are working with OMB on the certification required by Congress and hope to obtain it soon. DCA authority, unlike other credit programs, is not restricted to any one sector and can be used where credit is the best vehicle to achieve development goals. The Micro and Small Enterprise Development Program request is $2 million for credit subsidies and program administration.

International Disaster Assistance Account

The FY 2000 request for International Disaster Assistance is $220 million, a $20 million increase over the FY 1999 appropriated level. This request includes $165 million for the Office of Foreign Disaster Assistance (OFDA) to support emergency relief and rehabilitation programs in response to natural and manmade disasters and other emergencies that displace large numbers of people. This compares to $160 million in FY 1999. In the post-Cold War era, there have been a growing number of civil conflicts, and OFDA has spent significantly more time and money confronting humanitarian needs caused by man rather than by nature. Our government's ability to respond rapidly to emergencies is known and respected worldwide, and was seen in Central America after Hurricane Mitch, and is now seen again during the Kosovo crisis. The budget request reflects a $5 million increase in disaster assistance to assist victims of nuclear, biological and chemical incidents abroad.

The Office of Transition Initiatives (OTI) is budgeted at $55 million for FY 2000, up from $40 million in FY 1999. This $55 million is in fact a straightlining of the FY 1999 budget, which included $40 million of Disaster Assistance money and $15 million of Development Assistance for Indonesia. OTI was established in 1994, in response to the fact that, in today's world, many nations are undergoing the difficult passage from war to peace. The United States has a vital interest in seeing nations successfully complete those transitions. OTI focuses on the recovery from disasters brought on by political conflict, such as those in Bosnia, Rwanda, Philippines and Guatemala. OTI has sponsored programs to help former combatants put down their arms and reenter civilian life, often aided by programs of education and job training.

When countries emerge from war, the presence of land mines may hinder or prevent refugees or displaced persons from returning home. Because bridges, roads and farmlands are typically targeted, removing mines is often a first step toward economic recovery - as well as to ending needless human suffering. Through the Office of Transition Initiatives, USAID supports programs in public mine awareness, mine removal, training in mine removal, and assistance to the victims of land mines.

In recent years, OTI has supported anti-mine initiatives in several countries, and the State Department has programs as well. In the former Yugoslavia, we funded the Landmine Survivors' Network to be an advocate for landmine survivors. In Angola, nearly two million people have been reached by mine awareness programs, more than eight hundred have been trained in mine removal techniques, and as a result mine accidents have been reduced. In Rwanda, USAID and the Defense Department have jointly funded a demining program that has thus far cleared more than 15,000 mines on more than a thousand square kilometers of land.

In Honduras and Nicaragua, floods and mudslides unleashed by Hurricane Mitch caused many land mines to be exposed and moved about, creating new dangers there. We are therefore gratified that Senate bill 544, the Central America and the Caribbean Emergency Disaster Recovery Fund, includes a minimum of $2 million for clearing unexploded landmines and other unexploded ordnance in those two nations.

Economic Support Fund Account

The Economic Support Fund, budgeted at $2.389 billion, will be used to support the Middle East peace process, to assist countries in transition, to promote democracy worldwide, and to promote stability in such countries as Ireland and Cyprus. Funds will also be used to support the Holocaust Fund and the Human Rights Fund, and to respond to global crises and such development priorities as child survival, public health, climate change and biodiversity. The request does not include the supplemental being requested in connection with the implementation of the Wye Memorandum to support Middle East peace.

In summary, the request includes:

Operating Expenses

The FY 2000 request for Operating Expenses is $507.7 million, which is used to manage USAID's $7.2 billion program. Of this amount, $7.7 million is for costs associated with the Office of Security, previously funded by the Inspector General, for which the Agency is assuming responsibility this year. The balance of the Operating Expense request -- $500 million -- covers the cost of salaries, benefits, and other administrative costs associated with USAID's worldwide programs, including efforts to improve the agency's information technology and financial management capabilities and improve training for agency staff.

Factoring in other funding sources, such as local currency trust funds and prior year funds carried forward, the increase from FY 1999 to FY 2000 in funds available for total recurring operating costs is less than 2%. With a projected FY 2000 Federal Pay Raise of 4.4%, the impact on FY 2000 costs of the FY 1999 Federal pay raise, combined with the impact of inflation in Washington and overseas on the cost of rent, utilities, travel, security guards, and other support costs, actual costs will increase considerably more than 2%.

To accommodate these increased costs, USAID will continue its efforts to reduce costs and increase efficiency in order to meet the most critical management challenges still facing us. These efforts include examining the potential for consolidating support activities in fewer locations, greater reliance on International Cooperative Administrative Support Services where this system will provide cost savings, and reducing redundant or lower priority work in Washington.

However, these economies alone will not be sufficient to offset expected cost increases, which means that the Agency will have to manage with fewer staff in order to operate at the requested level. Given that USAID has already reduced its U.S. direct hire staff by 35% since start of this Administration, determining precisely which parts of the Agency will have to absorb further reductions, and the size of each reduction, will be a difficult task. I have been actively engaged with senior managers of the Agency in reviewing various options for distributing further staff reductions, and I want to ensure that these reductions are made in a way that minimizes the impact on our most critical operations.

New Management System (NMS) and Y2K

A year ago, we received an independent assessment of NMS. The report detailed many recommendations for modernizing our information systems. Our analysis indicated that we couldn't implement the recommendations, including replacing our core accounting system, by September 1999. We knew we had a great deal of work to repair Year 2000 system problems.

I directed that we focus our information technology resources on three priorities: completing Y2K repairs for our mission-critical systems; moving to replace the core financial system; and ensuring that the NMS and our other systems continue to support our Agency's operations.

We strengthened our capacity to manage our information systems work by obtaining the services of a single prime contractor. We have improved the performance of NMS in support of agency operations in Washington. Our fiscal year-end closing process occurred a month earlier than the previous fiscal year and our financial reports were more accurately and efficiently prepared. The work on replacing the NMS core accounting system has been comprehensive and systematic. We are in the process of completing an agency-wide architecture or blueprint to guide our decision on this investment. We have completed an extensive review of our core accounting business processes. We have made progress in simplifying them so that we will be able to use a commercial, core accounting software product with fewer modifications. We transferred some of our core accounting functions to another federal agency and a private sector bank. We are creating a strong program management office under our new Chief Financial Officer to implement the new core accounting system.

It will not be possible to modernize or replace NMS and related systems all at once because of resource constraints. We are working on a modernization plan for our information systems using products from the commercial marketplace and at other federal agencies. We will sequence our investments in manageable increments to assure success. We are committed to implement a new core financial system in Washington during FY 2000 as the first incremental investment. Phased implementation overseas will occur in FY 2001 and FY 2002. The other components of NMS will also be addressed in this plan.

Y2K Compliance: Making our critical systems Y2K compliant is our top IT priority. As of today, four of five such systems are renovated and are being tested. We had planned that three of these systems would be fully implemented by the end of March but because of problems encountered during the testing phase it will take until May to implement the four systems. The fifth, NMS, is the largest and most complex of our mission-critical systems and Y2K repair work is almost completed. We hope to finish testing and implement the Y2K compliant version of NMS in July 1999, earlier than we had planned. The acceleration of the compliance date is due to our receipt of additional resources from the special Y2K supplemental.

Overseas, all of our field posts have reviewed their internal operations. We have set aside up to five percent of our development assistance program funds in FY 1999 for use in correcting Y2K problems discovered in IT applications that are part of our assistance programs. We have contacted more than 50 overseas posts to identify Y2K problems and develop solutions. These surveys also review the host-country environment to determine risks that might affect USAID operations. We are working closely with the Department of State and other agencies to assure that our operations will continue on January 1, 2000.

Security

We are concerned about the security of our missions overseas in the aftermath of last year's bombings in Kenya and Tanzania. The $3 billion advance appropriation requested by the Department of State addresses its planning for new construction and rehabilitation of about 45 diplomatic posts overseas. It does not explicitly include USAID-related costs. We are working with OMB and the Department of State to prioritize other planned projects, to identify specific USAID funding requirements, and to ensure that USAID is included in all future planning and funding requests.

We plan to use $27.5 million in security supplemental funds appropriated by FY 1999 to accomplish the most urgent re-location and security rehabilitation projects abroad. These funds have been allocated for enhanced security or relocation costs in Rabat, Luanda, Nairobi, and Kampala, with other locations under review; also for design or land purchase costs for new office buildings in Nairobi and Dar Es Salaam; and other security upgrades worldwide. Additionally, we have conducted a comprehensive review of all 82 current USAID facilities overseas. We expect that in the future, as the Department of State constructs new facilities that meet all security standards, USAID will be co-located in these new facilities.

With regard to our new offices in the Ronald Reagan Building, we recognized from the first that the building is required to be open to the public, as was provided for by Congress. However, in the portion of the building occupied by USAID, the security requirements established after the Oklahoma City bombing have been implemented, including 24-hour armed guard presence; package and visitor screening; and 24-hour closed circuit camera and alarm coverage. We continue to work with GSA to strengthen the overall security of the Ronald Reagan Building.

The Results Act

USAID is committed to managing for results and we have reformed the agency to focus more on results management. We have an interactive process that seeks to make marginal steps when experience and cost-benefit analysis justifies change. Over the past year, reporting of performance data by all operating units increased by a third. Despite challenges to performance reporting and data quality, there is a high level of agreement among technical staff reviewing field performance. The agency's results reporting system is not yet where it should be; this is in part due to a lack of timely, comprehensive and quality economic and social data available about developing countries. Our missions continue to process more information and we continue to consult with OMB, the Department of State and Congress on options for improvement.

Conclusion

It has been a privilege to head the U.S. Agency for International Development at this challenging time in its - and the world's - history. I don't expect ever to meet a more talented and dedicated group of men and women than my colleagues at USAID.

During the past six years, we have seen our share of controversy and criticism - that is inevitable. But we also need to step back and consider the remarkable progress we have made. In the past a half century, working with successive Congresses and with other nations, our efforts have played an important role in expanding the developing world's food production, eradicating smallpox and nearly eradicating polio, increasing literacy by fifty percent, reducing the average number of children born to women in the developing world from six to three, increasing life expectancy by more than twenty years, and expanding the world's wealth from a 1948 global GNP of $4.4 trillion -- measured in 1998 dollars - to $47.6 trillion last year.

There has never before been such progress in any fifty-year period in human history - and it exists in large part because of American leadership. During the past six years, despite severe budget restraints, we have been able to maintain American leadership in foreign assistance. We provide only about ten percent of all of the developed world's foreign aid, but other countries continue to follow our lead in defining the goals and techniques of assistance.

Perhaps the most important lesson we have learned is simply that strong, democratic and transparent institutions are the soundest vehicles for social progress. There is no limit to what we might achieve in the 21st century if we are willing to invest in the lessons of the past fifty years. To turn away from the great experiment we embarked on in 1948 would be a tragic mistake. The post-Cold War era offers unlimited possibilities for American political and economic leadership. If we turn away from the developing world, we invite more failed nations, more suffering, more disease, more civil wars and terrorism. We risk exposing ourselves to dangers from which all our military might cannot protect us.

In many situations, the military must be our last line of defense, but diplomacy and development should be the first line, and often they can prevent the need for military action. I hope to see the day when our foreign assistance budget is far greater than it is today. I think that is the best investment we could make in the future of our children and grandchildren.

I am proud to have spent these six years with an agency that does so much to improve the lives of people all over the world and I thank you and many others in Congress for all that you have contributed to our success.

This is an archived USAID document retained on this web site as a matter of public record.

 Digg this page : Share this page on StumbleUpon : Post This Page to Del.icio.us : Save this page to Reddit : Save this page to Yahoo MyWeb : Share this page on Facebook : Save this page to Newsvine : Save this page to Google Bookmarks : Save this page to Mixx : Save this page to Technorati : USAID RSS Feeds Star What's New : FOIA Requests : Privacy Policy : Email This Page : Plug-ins : FAQs : Help Desk : Contact Us : Site Map

Last Updated on: July 18, 2001