FOREIGN AID AUTHORIZATION: THE TECHNICAL ASSISTANCE, TRADE PROMOTION, AND ANTI-CORRUPTION ACT OF 2000

CRS Report for Congress
Foreign Aid Authorization:
Anti-Corruption Act of 2000
Updated October 12, 2000
Larry Nowels
Coordinator
Foreign Affairs, Defense, and Trade Division

Congressional Research Service The Library of Congress

Foreign Aid Authorization: The Technical Assistance,
Trade Promotion, and Anti-Corruption Act of 2000
Summary
For one of the few times during the past 15 years, legislation was reported in the
Senate authorizing broad portions of U.S. foreign assistance programs. In the
absence of foreign aid authorizations, Congress has overseen and funded the program
through annual Foreign Operations appropriations bills. S. 2382, the Technical
Assistance, Trade Promotion, and Anti-Corruption Act of 2000, as reported by the
Senate Foreign Relations Committee on April 7, selectively authorizes a range of
foreign aid activities, updates permanent foreign assistance laws, expands several aid
initiatives such as those to combat the spread of HIV/AIDS and tuberculosis, launches
new initiatives, and repeals obsolete legislation. S. 2382 incorporates a number of
provisions previously approved by the Senate or some that have been enacted
annually within appropriation bills, but never in permanent statute. Although S. 2382
is not a comprehensive foreign assistance authorization bill addressing each aid
program, it represents the first broad foreign aid measure reported by the Senate
Foreign Relations Committee since 1995, and would be the first of this type of
legislation debated by the full Senate in a decade.
S. 2382 is selective in its approach. It authorizes amounts for HIV/AIDS,
tuberculosis, and microenterprise programs for FY2001, but does not set funding
ceilings for overall development assistance spending out of which these three
programs will be drawn. It provides no authorizations for several other major
economic aid accounts. S. 2382 provides a more comprehensive authorization for
military assistance than for other foreign aid activities. It establishes funding levels
for both Foreign Military Financing and International Military Education and Training
activities and for several nonproliferation programs, earmarking amounts for selected
countries, and updating various security assistance authorities. S. 2382 further
incorporates a number of aid and foreign policy initiatives approved previously by the
Senate, including the Trade Sanctions Reform and Export Enhancement Act, the
Sudan Peace Act, and the Serbia Democratization Act. The bill would also enact into
permanent law a number of provisions approved each year in Foreign Operations
Appropriation bills. S. 2382 addresses about one-third of the President’s proposed
$15.1 billion foreign assistance budget for FY2001. Funding for each program
included in S. 2382 is authorized at or above levels requested by the Administration.
Within the security aid accounts, S. 2382 earmarks specific amounts for certain high
priority recipients, including Israel, Egypt, Greece, Turkey, and new NATO members.
Some major issues addressed in S. 2382 are: sanctions policy reforms for
agriculture and medicine, population aid, Sudan, HIV/AIDS initiatives, tuberculosis
control efforts; biotechnology in agriculture, debt relief for the world’s poorest
nations, World Bank and IMF operations, Serbia sanctions and democratization aid,
microenterprise assistance, nonproliferation and export control aid, and assistance to
Israel. The bill also addresses many other topics, not covered in this report.
While further Senate action on S. 2382 has stalled, Congress has considered, and
in a few cases enacted as separate bills, several of the major issues initially
incorporated in S. 2382.

CRS Policy Analysts Contributing to this Report
Issue Name Telephone
Biotechnology in AgricultureDonna Vogt7-7285
Debt Relief and HIPCLarry Nowels7-7645
HIV/AIDSRaymond Copson7-7661
Israel AidClyde Mark7-7681
Microenterprise AssistanceCurt Tarnoff7-7656
NonproliferationRobert Shuey7-7677
Population AssistanceLarry Nowels7-7645
SerbiaSteven Woehrel7-2291
Sanctions PolicyDianne Rennack7-7608
SudanTed Dagne7-7646
TuberculosisLois McHugh7-7627
World Bank and IMF Jonathon Sanford7-7682

Contents
Most Recent Developments........................................1
Introduction ................................................... 1
Roadmap to the Technical Assistance, Trade Promotion, and Anti-Corruption
Act of 2000 (S. 2382)........................................3
Major Policy Issues Addressed in S. 2382.............................5
Trade Sanctions Reform and Export Enhancement Act of 2000.........5
Population Assistance Certification..............................6
Sudan Peace Act............................................7
Assistance to Countries With Large Populations Having HIV/AIDS......8
International Tuberculosis Control Act of 2000....................10
Advancing the Global Opportunities for Biotechnology in Agriculture Act
of 2000..............................................10
Debt Relief Under the Heavily Indebted Poor Countries (HIPC)
Initiative .............................................. 11
International Financial Institutions Anticorruption and
Accountability Standards.................................13
Serbia Democratization Act...................................15
Microenterprise Assistance...................................16
Nonproliferation and Export Control Assistance...................17
Assistance for Israel.........................................18
List of Tables
Table 1. Titles and Major Programs Authorized by S. 2382...............3
Table 2. Funding Authorizations in S. 2382...........................4

Foreign Aid Authorization:
The Technical Assistance, Trade Promotion, and
Anti-Corruption Act of 2000
Most Recent Developments
What began as one of the few attempts during the past 15 years for Congress
to debate a single bill proposing broad changes to U.S. foreign aid policy has been
re-directed to a process of considering numerous individual measures dealing with
issues included in the Technical Assistance, Trade Promotion, and Anti-Corruption
Act of 2000. After the Foreign Relations Committee reported S. 2382 in early April,
the bill was referred to the Banking Committee and further Senate debate on the
broader legislation stalled. Subsequently, however, Congress has considered, and
in a few cases enacted as separate bills, several of the major issues initially
incorporated in the omnibus foreign aid authorization legislation. In August,
President Clinton signed an HIV/AIDS authorization measure (H.R. 3519; P.L. 106-
264) and in early October he approved broad security assistance authorizing
legislation (H.R. 4919; P.L. 106-280). Congress cleared on October 6 a bill the
President is expected to sign increasing the size and scope of microenterprise
programs administered by the United States in developing nations (H.R. 1143).
Each Chamber has passed different bills promoting democracy initiatives in Serbia
(S. 720 and H.R. 1064) and House and Senate conferees agreed on October 6 to
trade sanction reforms in H.R. 4461, the Agriculture Appropriations Act, FY2001.
Each of these initiatives are major components of S. 2382. New legislation on poor
country debt relief and international financial institution accountability has been
introduced (S. 3129), but the issue remains under negotiation between congressional
sponsors and the Administration.
Introduction
For one of the few times during the past 15 years, legislation was reported in the
Senate authorizing broad portions of U.S. foreign assistance programs. S. 2382 or
the Technical Assistance, Trade Promotion, and Anti-Corruption Act of 2000, as
reported by the Senate Foreign Relations Committee on April 7, selectively authorizes
a range of foreign aid activities, updates permanent foreign assistance laws, expands
several aid initiatives such as those to combat the spread of HIV/AIDS and
tuberculosis, launches new initiatives, and repeals obsolete legislation. S. 2382
incorporates a number of provisions previously approved by the Senate or some that
have been enacted annually within appropriation bills, but never in permanent statute.
Although S. 2382 is not a comprehensive foreign assistance authorization bill
addressing each aid program, it represents the first broad foreign aid measure

reported by the Senate Foreign Relations Committee since 1995 and would be the
first of this type of legislation debated by the full Senate in a decade.
Until the mid-1980s, Congress typically would consider two comprehensive
foreign assistance bills each year. Largely under the jurisdiction of the House
International Relations and Senate Foreign Relations Committees, the first piece of
legislation would authorize U.S. economic and military aid programs: setting the
maximum amount that could be spent on various activities, establishing congressional
funding and policy priorities mainly by amending the Foreign Assistance Act of 1961
and the Arms Export Control Act, restricting executive branch management of aid
programs in selected areas, and launching new assistance initiatives. These foreign
aid authorization bills, which were sometimes enacted annually and sometimes
biennially, often allowed Congress to debate broader policy issues beyond aid matters,
and became important vehicles for congressional influence over executive foreign
policy making in general. Following enactment of these authorizing measures,
Congress would also approve an annual bill appropriating funds for foreign assistance
programs.
Although this represented the traditional foreign aid legislative process,
authorization measures became increasingly difficult to enact due to sharp policy
differences between Congress and the President, first during the Vietnam War, and
later regarding U.S. Central America policy. The executive branch objected strongly
to aid restrictions and conditions imposed by Congress through authorization bills,
believing that they eroded the President’s ability to effectively manage foreign policy
matters. The last comprehensive foreign aid authorization bill signed into law came
in 1985 – the International Security and Development Cooperation Act of 1985.
Since then, the House and Senate individually have passed authorizing measures on
several occasions, but the bills have either not been taken up by the other body or
have died in the face of a presidential veto threat. In 1994, the Clinton Administration
submitted draft legislation proposing to substantially re-write U.S. foreign aid laws,
but Congress did not act on the initiative.
In the absence of foreign aid authorizing legislation, Congress has approved
funding levels and influenced policy decisions through annual enactment of the
Foreign Operations Appropriations bill. Like the authorization measures, these bills
frequently have generated controversy between the two branches, resulting in some
years in a presidential veto or funding through a continuing resolution. But ultimately
each year Congress has enacted some type of foreign aid appropriations bill that has
become the major vehicle through which lawmakers oversee and influence U.S.
foreign aid programs, and foreign policy more generally.
After the Senate Banking Committee sought referral of S. 2382, all action on the
bill stopped when the legislation became embroiled in a dispute regarding provisions
authorizing U.S. participation in the Heavily Indebted Poor Country Debt (HIPC)
Initiative and World Bank/IMF reforms. In an effort to continue debate on specific
elements of S. 2382, the Foreign Relations Committee marked up and reported
several individual bills addressing the same issues as included in the omnibus foreign
aid authorization measure. Two – those dealing with HIV/AIDS programs and
security assistance – have been enacted into law, while a microenterprise bill is
awaiting the President’s signature. Bills recommending similar positions to those in

S. 2382 regarding Serbia democratization and trade sanctions reform have also
advanced, but have not been finalized. The current status of each of these issues is
noted in Table 1 below, and discussed in a box note under each section of this report.
Roadmap to the Technical Assistance, Trade Promotion,
and Anti-Corruption Act of 2000 (S. 2382)
Table 1. Titles and Major Programs Authorized by S. 2382
(bill sections are shown in “( )”)
TitleMajor Programs AuthorizedStatus in Other
in S. 2382Legislation
I - Promoting Trade* Private sector enterprise funds (101)
& Protecting U.S.* Aid, U.S. exports, and jobs (111-114)
Jobs* Trade Sanctions Reform Act (121-129)* Agriculture App, HR 4461
II - Economic* Development aid (201-204, 206-208)
Assistance* Population aid certification (205)
* Africa aid allocations (209
* Nonmilitary ed. & anticorruption aid (210)
* Disaster aid (211-212)
* Sudan Peace Act (221-233)
* HIV/AIDS assistance (241-249)* P.L. 106-264
* Tuberculosis control (251-253)* P.L. 106-264
* Biotechnology in agriculture (261-267)
III - Peace Corps* Redesignation as Peace Corps of US (301)
IV - Strengthening* Debt relief under HIPC (410)* S. 3129
Anticorruption* Multilateral development bank funds (402)
Measures and* Intl financial institution policies (403)
Accountability
V - Serbia* Support democratic opposition (511-513)S. 720 and H.R. 1064
Democratization Act* Aid to victims (521-523)
* “Outer wall” sanctions (531-532)
* Other sanctions (541-549)
VI - Microenterprise* Microenterprise authorizations (601-609)H.R. 1143
VII - Defense and*Foreign Military Financing (701)P.L. 106-280
Security Assistance*Intl Military Education & Training (721)
*Nonproliferation & export control (731-34)
*Antiterrorism (741)
*Natl security aid strategy (751-752)
*Aid for new NATO members (761), Greece/
Turkey (762), Israel/Egypt (763),others (764)
* Israel security aid, FY2001-2008 (781)
*Naval vessel transfers (791-796)
VIII - Special* Aid prohibition to governments that export
Authorities lethal weapons to terrorist states (801)
* Administration of justice (804)
* Repeal of obsolete provisions (807)

As noted above, S. 2382 does not authorize all U.S. foreign aid programs in the
same way that authorization bills had done until 1985. The legislation authorizes
amounts for HIV/AIDS, tuberculosis, and microenterprise programs for FY2001, but
does set funding ceilings for overall development assistance spending out of which
these three programs will be drawn. There are no authorizations for several other
major economic aid accounts, including disaster assistance, counternarcotics, Eastern
Europe, the former Soviet Union, and the Economic Support Fund. Relative to other
aspects foreign assistance, S. 2382 provides a comprehensive authorization for
military assistance, establishing funding levels for both Foreign Military Financing and
International Military Education and Training activities and for several
nonproliferation programs, earmarking amounts for selected countries, and updating
various security assistance authorities. S. 2382 further incorporates a number of aid
and foreign policy initiatives that have been approved previously by the Senate,
including the Trade Sanctions Reform and Export Enhancement Act, the Sudan Peace
Act, and the Serbia Democratization Act. The bill would also enact into permanent
law a number of provisions approved each year in Foreign Operations Appropriation
bills. Table 1 illustrates the broad range of foreign aid activities authorized in S. 2382.
Table 2. Funding Authorizations in S. 2382
($s – millions)
FY2000 FY2001 FY2001 Other
enactedrequestS. 2382Legislation
HIV/AIDS (USAID programs)$200.0$259.0$300.0$300.0^a
Global Alliance for Vaccines &–-$50.0$50.0$50.0^a
Immunizations
Intl AIDS Vaccine Initiative–-–-$10.0$10.0^a
HIPC Trust Fund (debt relief)$0.0$150.0$600.0^b$600.0^c
Serbia Democracy Act$25.0$41.5$50.0$55.0^d
Microenterprise $135.0 $135.0 $150.0 $155.0^f
Foreign Military Financing$4,788.9^g$3,538.2$3,627.0$3,550.0^h
Intl Military Education & Training$49.8$55.0$65.0$55.0^h
Nonproliferation & Export Control$124.8$110.0$129.0$129.0^h
Antiterrorism $38.0 $72.0 $73.0 $72.0^h
TOTAL $5,361.5 $4,410.7 $5,054.0 NA
^a Authorized in PL 106-264.
^b Authorization for four years, FY2000-2003. The Administration requested $600 million over
threes years.^c
Authorized in S. 3129.^d
Authorized in HR 1064.^f
Authorized in HR 1143.^g
Includes a one-time only $1.8 billion appropriation for the Wye River/Middle East Peace accord.^h
Authorized in PL 106-280.

On funding issues, S. 2382 addresses about one-third of the President’s proposed
$15.1 billion foreign assistance budget for FY2001. As shown in Table 2, funding for
each program included in S. 2382 is authorized at levels requested by the
Administration or more. Within the security assistance accounts, S. 2382 earmarks
specific amounts for certain high priority recipients, including Israel, Egypt, Greece,
Turkey, and new NATO members.
Major Policy Issues Addressed in S. 2382
Trade Sanctions Reform and Export Enhancement Act of 2000¹
The Trade Sanctions Reform and Export Enhancement Act of 2000 (Title I,
subtitle C) most closely reflects the intent of the “Food and Medicine for the World^th
Act,” a measure introduced in several forms in the first session of the 106 Congress
and nearly enacted in last year’s agriculture appropriations bill.²
The Trade Sanctions Reform and Export Enhancement Act of 2000 prohibits the
President from restricting or denying other countries access to U.S. agricultural
commodities, agricultural assistance, medicine, and medicine-related devices for
foreign policy or national security reasons unless he justifies such restrictions to
Congress, and Congress enacts a joint resolution supporting the sanction. It further
requires that existing sanctions regimes be adjusted to allow for most agricultural and
medical commerce with the sanctioned country. The President retains the authority
to restrict food assistance programs, or the availability of agricultural commodities,
medicine, or medical devices under current law in some cases, and may also prohibit
agricultural and medicine transactions in times of war or armed conflict. Any
sanctions imposed to restrict access to U.S. agricultural commodities or medicine,
however, would terminate two years after their imposition unless the President, once
again, justified their continuance and Congress enacted a joint resolution supporting
the policy.

¹ More than 100 bills have been introduced in the 106^t^h Congress that pertain to the use of
economic sanctions in foreign policy. They are chronicled in Economic Sanctions:^th
Legislation in the 106 Congress, CRS Report RL30384, by Dianne E. Rennack. Among
those hundred are bills that would limit the use of food and medicine in sanctions regimes,
exempt agriculture-related transactions from restrictions, prohibit selectively restricting the
sale or shipment of one agricultural commodity on which the targeted country might have a
dependency, or overhaul the use of sanctions in foreign policy altogether. See also: Economic
Sanctions and U.S. Agricultural Exports, CRS Report RL30108, by Remy Jurenas; and
Economic Sanctions to Achieve U.S. Foreign Policy Goals: Discussion and Guide to
Current Law, CRS Report 97-949, by Dianne E. Rennack and Robert D. Shuey.
² See S. 1233, Agriculture Appropriations for FY2000, amended by S.Amdt. 1499, into which
was incorporated a secondary amendment, S.Amdt. 1507 – the Ashcroft amendment. S.Amdt.
1507 was adopted in the Senate by voice vote on August 4, 1999. Similar language was also
adopted as S.Amdt 1516 by voice vote. S. 1233 went on to be incorporated into H.R. 1906,
which was signed into law as P.L. 106-78 without the food and medicine exemption.
Conferees dropped the food and medicine exemption after failing to agree on what the
availability of food and medicine should be to countries found by the Secretary of State to be
supporters of international terrorism, particularly to Cuba.

To some extent, the Clinton Administration has already minimized the impact
passage of such a bill would have. In April 1999, the President announced that the
United States would exempt commercial sales of agricultural commodities and
medicine from future unilateral sanctions imposed by the executive branch. The
President directed the Secretary of the Treasury to issue new regulations that would
allow commercial food and medical exports to Libya, Iran, and Sudan, three states
previously severely restricted from such transactions because they are on the State³
Department’s list of countries that support acts of international terrorism. Current
U.S. policy continues to restrict, to varying degrees, such exports to Cuba, Iraq, and
North Korea, although the United States provides food and medicine to these three
countries through other means, such as U.N.-mandated oil-for-food relief for Iraq,
U.N. World Food Program humanitarian assistance to North Korea, and humanitarian
donations to Cuba.
Congressional opinion has been uniformly positive on the matter of making
agricultural commodities and medicine universally available, except when the policy
is applied to countries found to be supporters of acts of international terrorism. Last
year’s efforts to enact the Food and Medicine for the World Act foundered on the
notion that, some day, Cuba could be removed from the terrorist list, and thus become
eligible for U.S. commodities, assistance and contracts. This measure provides for
the continued use of the Secretary of State’s authority to restrict access to U.S.
foreign assistance, export assistance, credits and credit guarantees under the Foreign
Assistance Act of 1961. Agricultural commodities and medicine may otherwise be
made available to a terrorist state by way of one-year licenses and without benefit of
Federal financing. How countries are put on or removed from the State Department’s
terrorist list, and what food or medicine is available to those countries while on the
terrorist list, are likely to be key contentious issues when this measure is considered
on the Senate floor.

Status of Trade Sanctions Reform in Other Legislation
A revised version of the Trade Sanctions Reform and Export Enhancement
Act of 2000 was agreed to by House/Senate conferees as part of the FY2001
Agriculture Appropriations (H.R. 4461). Differences between the conference
agreement and S. 2382 center on Cuba. The Agriculture Appropriations provision
bars any U.S. private financing of food or medical sales to Cuba and codifies
existing travel bans to Cuba.
³ Commercial transactions are restricted when a country is placed on the terrorist list required
by Section 6(j) of the Export Administration Act (50 U.S.C. app. 2405). Foreign assistance,
agricultural assistance, Peace Corps programs and Export-Import Bank financing are
similarly restricted pursuant to Section 620A of the Foreign Assistance Act of 1961 (22
U.S.C. 22 U.S.C. 2371), and government-to-government arms sales and deliveries are
similarly restricted pursuant to Section 40 of the Arms Export Control Act (22 U.S.C. 2780).

Population Assistance Certification
Population aid and abortion-related restrictions have been among the most
controversial foreign aid policy issues since the Supreme Court’s 1973 Roe v. Wade
decision. Since 1973, U.S. permanent law has prohibited Federal funds from being
used to perform abortions, involuntary sterilizations, or related biomedical research
in developing nations. At the 1984 Mexico City population conference, the Reagan
Administration broadened this restriction by requiring foreign non-governmental and
international organizations receiving U.S. family planning grants to certify that they
did not engage in the performance or promotion of abortions, even if no U.S.-supplied
funds were involved. Despite congressional attempts to overturn this policy – known
as “Mexico City” restrictions – these executive directives continued until early 1993
when the Clinton Administration lifted the Mexico City policy. Since 1995, when the
majority in Congress changed, lawmakers have attempted to restore the Mexico City
restrictions. Last year, President Clinton reluctantly agreed to accept modified
Mexico City conditions when Congress linked the issue with approval of U.N. arrears
payments. The White House will oppose efforts to renew these restrictions when they
expire at the end of FY2000. (For more information, see CRS Issue Brief IB86026,
Population Assistance and Family Planning Programs: Issues for Congress.)
Provisions in S. 2382 (Section 205) would not affect the current controversy
over whether to extend the revised Mexico City restrictions that expire at the end of
FY2000, but instead would add further conditions to the 1973 ban on the use of U.S.
funds for performing abortions and other related activities as part of international
family planning programs. Section 205 would require the USAID Administrator to
certify annually that any organization about to receive U.S. population aid funds had
not violated abortion, involuntary sterilization, and biomedical research restrictions
under permanent law first enacted in 1973. If any organization violated these
conditions, the group would be barred for ten years from receiving any U.S. foreign
aid funds authorized under the Foreign Assistance Act of 1961. Under current policy,
USAID, using discretionary authority, would most likely take remedial action or
suspend grants to any organization it found to be in violation of the abortion-related
restrictions. There is no Agency policy, however, regarding how this might affect an
organization’s eligibility for other, non-population foreign aid grants, nor is there a
specified penalty like that imposed by Section 205. Again, USAID administrators
would make determinations on a case-by-case basis, although it could be expected
that the relationship between the Agency and an offending organization concerning
future grants would be strained. The Administration, as well as family planning
organizations and pro-choice proponents will oppose these additional restrictions in
S. 2382 on the grounds that they undermine USAID discretionary authority, impose
excessive administrative burdens on agency officials, and represent yet another,
although perhaps symbolic, attack on international family planning programs.
Sudan Peace Act
For almost four decades, Sudan has been the scene of intermittent conflict. An
estimated two million people have died from war-related causes and famine in
southern Sudan, while millions more have been displaced. The Sudanese conflict,
Africa’s longest-running civil war, shows no sign of ending. The sources of the
conflict are deep and complicated. Religion is a major factor because of the Islamic

fundamentalist agenda of the current government, dominated by the mostly
Muslim/Arab north. Southerners, who are Christian and animist, reject the
Islamization of the country and favor a secular arrangement. Social and economic
disparities are also major contributing factors to the Sudanese conflict.
For over a decade, the United States has been at the forefront in providing
humanitarian assistance to millions of Sudanese, including more than $231 million in
fiscal year 1999. Congress has been actively engaged on Sudan and has passed a
number of resolutions over the years. In 1999, Congress gave the Clinton
Administration legislative authority to provide food to opposition forces in Sudan.
In February 2000, the Clinton Administration informed congressional leaders that it
has not taken a decision to use or reject the authority.
S. 2382 (Title II, Subtitle C) incorporates the Sudan Peace Act, legislation
passed unanimously in the Senate on November 11, 1999, calling for “viable,
comprehensive, and internationally-sponsored” negotiations to end the 17-year civil
war in Sudan. The Act supports the Inter-Governmental Authority for Development
(IGAD)-sponsored peace process and urges the Clinton Administration to provide
diplomatic and financial support to IGAD. The bill condemns the Government of
Sudan for human rights violations, including slavery, and for restricting the delivery
of food to affected areas in southern Sudan.
The Sudan Peace Act calls for reforms of Operation Lifeline Sudan (OLS),
encourages the Clinton Administration to provide more assistance to non-OLS non-
governmental organizations, and requests contingency plans for delivery of
humanitarian assistance outside the OLS system. The initiative allocates $16 million
for fiscal years 2000-2003 for the Administration’s Sudan Transition Assistance for
Rehabilitation (STAR) and provides additional authority to the President to administer
the program. The legislation also calls for a report on “options or plans for non-lethal
assistance” for opposition groups in Sudan.
Assistance to Countries With Large Populations Having HIV/AIDS
Many countries in sub-Saharan Africa have HIV/AIDS adult infection rates of
between 10% and 25%, and it is clear that the disease is already exacting an immense
toll in terms of human suffering and death. In coming years, HIV/AIDS is expected
to have serious economic, political, and security consequences as well, and there is
concern that problems on the scale Africa is facing could eventually occur in India,
China, or elsewhere. Several AIDS-related bills have been introduced since January
2000, and subtitle D of Title II reflects provisions in these bills, although in contrast
to some, it does not provide multi-year spending authorizations. (For further
information, see CRS Issue Brief IB10050, AIDS in Africa.) Subtitle D includes
provisions aimed at reducing mother-to-child transmission of AIDS, promoting the
development of an AIDS vaccine, supporting AIDS prevention efforts, and
encouraging programs to educate African AIDS orphans. The bill would also ensure
AIDS education for African armed forces through the U.S. Africa Crisis Response
Initiative, which provides training to potential African peacekeeping troops.
The specific authorizations in the subtitle are as follows.

^!$300 million for FY2001 for HIV/AIDS prevention and other
programs, including the development and implementation of
strategies to prevent mother-to-child transmission of HIV, in
cooperation with international agencies. The authorization is to be
in addition to funds otherwise available, and a formula specifies that
not less than 65% shall be provided through non-governmental
organizations.
^!$50 million in addition to amounts otherwise available for an FY2001
contribution to the Global Alliance for Vaccines and Immunizations,
an international partnership, and $10 million for the International
AIDS Vaccine Initiative, which provides financing for private sector
vaccine research in exchange for assured poor-country access to any
vaccine that is developed. The President would be required to
report on the effectiveness of the two programs, and he is urged to
begin negotiations on a multilateral fund to buy and distribute
vaccines for poor countries.
^!$100 million in FY2001 for the U.S. contribution to a World Bank
Trust Fund, to be established through negotiations, for AIDS
prevention and eradication.
^!$50 million in FY2001 for the U.S. contribution to a World Bank
Trust Fund, to be established through negotiations, for the education
of orphans in sub-Saharan Africa. Subtitle D would require the
President to coordinate the development of a multi-donor strategy
for supporting and educating African AIDS orphans.
U.S. spending on AIDS programs in Africa in FY2000 is projected to be
approximately $169 million, including $134 million through the U.S. Agency for
International Development and $35 million through the Department of Health and
Human Services. On January 10, 2000, Vice President Al Gore, chairing a session
of the United Nations Security Council, said that as part of the FY2001 budget, the
Administration would request an additional $100 million for AIDS programs,
principally in Africa but also in India and other countries. This increase, if approved,
would bring total FY2001 international AIDS spending to $325 million, again
principally in Africa.

Status of HIV/AIDS Program Authorization in Other Legislation
Congress approved and the President signed the Global AIDS and
Tuberculosis Relief Act of 2000 H.R. 3519; P.L. 106-264). The legislation closely
follows the policy and funding authorizations in S. 2382, but includes more specific
provisions on the establishment and implementation of the World Bank AIDS Trust
Fund.

International Tuberculosis Control Act of 2000
Title II, subtitle E of S. 2382 calls for a stepped up effort to control tuberculosis
(TB) around the world. The legislation authorizes $60 million for USAID in FY2001
to achieve the goals of detecting 70% of infectious tuberculosis and to cure by
December 31, 2010, 85% of those infected with TB in countries where USAID has
programs. In FY2000, USAID expects to spend $26 million on TB out of its Child
Survival/Health appropriation. The Agency plans to spend the same amount for
FY2001.
Proponents of the tuberculosis initiative are most concerned about the large
number of people infected (one-third of the world population), the ease of TB
transmission, its prevalence among HIV/AIDS infected persons, the growing numbers
of TB treatment resistant cases due to poor treatment programs, and rising travel,
trade, and migration with areas hosting large numbers of infected people. While TB
is receiving considerable attention from international health experts, USAID currently
funds a number of other programs dealing with serious diseases, including HIV/AIDS,
out of its Child Survival/health account. Some fear that increasing funds for TB as
well as HIV/AIDS programs without increasing the account overall, will result in
activities to control other devastating diseases being reduced or terminated.
Status of International Tuberculosis Program Authorization in Other
Legislation
Congress approved and the President signed the Global AIDS and
Tuberculosis Relief Act of 2000 H.R. 3519; P.L. 106-264). The legislation is
nearly identical to the tuberculosis policy and funding authorizations in S. 2382.
One difference is that P.L. 106-264 authorizes $60 million for each FY2001 and
FY2002, instead of just FY2001 as in S. 2382.
Advancing the Global Opportunities for Biotechnology in Agriculture
Act of 2000
Bioengineered foods, or genetically engineered foods (GE foods), refers to the
use of recombinant DNA and related techniques to alter the genetic makeup of living
organisms. These techniques allow scientists to identify and isolate genes of interest
from any organism and put them into other plants or animals. Currently, GE food
crops planted and marketed by U.S. farmers include corn, canola, rice, tomatoes,
potatoes, soybeans, and sunflowers. All U.S. food safety agencies – the Food and
Drug Administration, the U.S. Department of Agriculture (USDA), and the
Environmental Protection Agency – are involved in the regulatory process for GE
foods. Concerns have been raised about the effects of GE agricultural products. In
this country, some critics have questioned whether U.S. federal agencies have
scrutinized the long-term effects of these products on human and environmental
health. (For more information, see CRS Report RL30198, Food Biotechnology in the
United States: Science, Regulation, and Issues).

Overseas, this concern has become a trade issue. The European Union (EU), for
example, requires mandatory labels for products containing more than 1% of GE
material, and it has a moratorium on any new approvals of GE crops while it debates
the establishment of a new regulatory framework and a new EU food safety agency.
The EU has also been instrumental in influencing other countries to view
bioengineered foods with caution. On January 29, 2000, delegates from 140
governments (most signatories were developing countries) finalized the Biosafety
Protocol. The Protocol requires exporters of bio-engineered commodities used for
food, feed, or for processing to label shipments with a declaration that the product
“may contain” GE materials, and that the products that have seeds are not intended
for release into the environment. The Protocol does not require exporters to segregate
bioengineered products from traditional products. (For further information, see CRS
Report RS20507, Labeling of Genetically Modified Foods).
Title II, subtitle F of S. 2382 – the Global Opportunities for Biotechnology in
Agriculture – authorizes $6 million for USAID to establish technical exchange
programs. Such programs would bring foreign nationals to the United States to learn
about the U.S. regulatory process for GE foods and send U.S. experts to foreign
capitals to provide information on the scientific and regulatory process underlying
U.S. approval of GE foods. The programs are to encourage acceptance by those
countries of U.S. approved GE products. USAID would be required to create a group
of federal government experts to carry out this education program. The President,
acting through USAID, would coordinate a federal strategy to advance the benefits
of biotechnology in international fora. USAID and USDA would work to ensure that
foreign countries find GE grain and food acceptable food aid when it meets U.S.
standards. S. 2382 also expresses the Sense of Congress that the Secretary of State
should develop, through U.S. embassies, support from foreign governments for
approval of science-based trading regimes in multilateral forums and organizations.
The primary purpose of this provision is to spread acceptance of GE foods,
particularly among developing countries and international organizations, through a
variety of educational activities. It is unclear how other countries would interpret
these educational activities given the current level of controversy surrounding GE
foods. It has been suggested that the EU and others could interpret these activities
as an attempt by the United States to force its products and regulatory approval
system onto its trading partners, which could produce results counter to the goals of
this subtitle.
Debt Relief Under the Heavily Indebted Poor Countries (HIPC)
Initiative
Last year, major foreign aid donors agreed to expand significantly the Heavily
Indebted Poor Country Debt (HIPC) Initiative. HIPC, which was first implemented
in 1996, is an effort to lower the debt burden of the world’s most severely indebted
countries – many of which are in Africa – to sustainable levels and stimulate economic
policy reforms and poverty reduction efforts in debtor nations. Previously, HIPC had
been criticized for providing too little debt relief over a lengthy qualification period
for a limited set of countries. HIPC expansion, first endorsed by the G-7 in June 1999
and later approved by the World Bank and the IMF in September, also resulted in

substantial cost increases for creditor nations and international financial institutions
(IFIs) to which the debt is owed.⁴
The HIPC Initiative has two major components: cancellation of bilateral debt
owed to the United States and other creditor governments, and reduction of debt
owed to the World Bank, the IMF, and other regional IFIs. Creditor governments
cover their own expenses individually for the forgiveness of bilateral debt at the Paris
Club, an informal arena for negotiating debt reschedulings and reduction of publically
held loans. To finance the cancellation of multilateral debts, the World Bank and IMF
created the HIPC Trust Fund into which IFIs and aid donor governments would
deposit contributions. The Bank and the Fund will cover their own costs, but other
IFIs – especially the African Development Bank – do not have enough resources to
cover the losses of cancelled loan repayments. Donor governments have agreed to
make up the gap for those IFIs with insufficient funds. Although the IMF will not
draw from the Trust Fund, members agreed last year to permit the IMF to engage in
off-market gold transactions that would have the affect of revaluing IMF-held gold
at current world market prices (about $270 an ounce) rather than the original value
of $48 per ounce. The “profits” from these transactions would be invested, and the
IMF would use the earnings to finance the write-off of HIPC debt.
During consideration of the Foreign Operations Appropriations, FY2000,
Congress agreed to the bilateral debt component, but rejected the $600 million
proposed for HIPC Trust Fund contributions, FY2000-FY2003, and allowed the U.S.
to support only partial IMF use of the gold transactions profits (9/14ths) for debt
relief. The Administration has asked Congress in the FY2000 supplemental (H.R.
3908) to approve $210 million for the Trust Fund, and separately, to finance the
balance in FY2001 and 2002 appropriations and to agree to the full IMF gold
transaction plan. Officials say that the absence of a U.S. contribution has convinced
other creditor governments to hold back their own pledges until the U.S. acts. They
argue that while most of the existing pledges are earmarked for African nations that
will be among the earliest qualifiers, resources for Latin American debt relief – for
Bolivia, Nicaragua, and Honduras – are not available. Without a U.S. contribution,
they contend, debt workouts for these countries will be delayed. Critics of
multilateral debt relief, including some in Congress, believe that before the U.S.
contributes to the Trust Fund, IFIs should agree to suspend for a period of time new
lending to HIPC countries once they receive debt relief so that they do not return to
a severely indebted state.
S. 2382, Section 401, adopts both Administration requests. It authorizes, over
four years beginning in FY2000, a $600 million U.S. contribution to the HIPC Trust
Fund. The provision further repeals the limitation enacted last year regarding the IMF
gold transaction mechanism, thus permitting U.S. officials to fully support the plan.

⁴ For a full discussion of the HIPC initiative, see CRS Report RL30214, Debt Reduction:
Initiatives for the Most Heavily Indebted Poor Countries. See also, CRS Report RL30449,
Debt and Development in Poor Countries: Rethinking Policy Responses.

Status of HIPC Funding in Other Legislation
The Senate Foreign Relations reported legislation (S. 3129) on September 28
that is identical to HIPC debt relief provisions in S. 2382. Differences remain,
however, between some congressional leaders and the Administration, and
reportedly negotiations are continuing over whether to link HIPC Trust Fund
authorization and release of the additional gold to requirements for World Bank
and IMF reforms. Meanwhile, the House and Senate have included HIPC debt
relief funding in FY2001 Foreign Operations Appropriations bills. The House
approved $238 million for debt relief (H.R. 4811), while the Senate included $75
million (S. 2522).
International Financial Institutions Anticorruption and
Accountability Standards
Title IV of S. 2382 seeks to establish standards and procedures to assure that
money disbursed by the International Monetary Fund and the multilateral development
banks (MDBs) is used for the purposes intended. It instructs the U.S. Executive
Directors at the MDBs to seek the establishment of procedures in each bank to insure
that the funds disbursed by the banks are used as intended and in a manner that
complies with the conditions of the bank’s loan to the borrower countries. It also
stipulates that the General Accounting Office should be given sufficient access to
information and documents of the World Bank and IMF for it to audit and monitor
their operations. The GAO is also required to report annually to Congress as regards
the sufficiency of the audits of the MDBs conducted by persons or entities outside the
banks. The Secretary of the Treasury is required to certify that GAO has received
adequate access to Bank and Fund documents to perform these tasks and, if sufficient
access is denied, the Secretary must report to the appropriate congressional
committees the reasons why this information was not obtained. The Secretary is also
required to certify that the Bank and Fund have adopted procedures to prevent the
diversion of funds, to assure that countries must implement the reforms specified in
their loans before funds are disbursed, and to prevent their loans from displacing
private sector finance. The IMF should also take steps to assure that it is a catalyst
for private sector financing. The Secretary is also required to certify that loans from
the World Bank finance specific development programs rather than providing short-
term liquidity financing for borrower countries.
The provisions in Title IV aimed at preventing corruption and assuring that funds
disbursed by the IFIs are used for their intended purposes seem to be in line with
recent statements by top officials at the World Bank, International Monetary Fund and
U.S. Treasury Department. Likewise, Treasury Secretary Lawrence Summers and the
congressionally appointed International Financial Institutions Advisory Commission
(called the Meltzer Commission, after its chairman, Professor Allan H. Meltzer) have
both recommended that the Bank and Fund take care not to supplant the private

sector in their loan operations.⁵ They disagree, however, about what this principle
means in practice. This bill does not address the central issue of that debate. It
specifies [Sec. 401(c)(1)(B)(ii) and (C)(ii)] that the IMF and multilateral banks should
have policies assuring that their loans do not supplant private sector financing. But
it does not address the crucial related issue of whether private money would be
available at rates the developing countries can afford. It is not clear, from this bill or
the broader debate, whether the IFIs are supplanting private finance if they lend at
interest rates below those the private market would require.
Regarding the issue of GAO access to documents and information, the FY1999
Foreign Operations Appropriations Act (P.L. 105-277) required the Treasury
Secretary to certify that GAO hadfull access to financial records and management
procedures of the World Bank’s market-based and concessional loan programs for
audit purposes. GAO recently issued its final report. It is not evident, however, that
the World Bank is prepared to accept an annual audit of its books. The regional
development banks may not accept the idea that they should give GAO sufficient
access to their books to allow it to double check the audits conducted by their outside
auditors. The annual audits of the IMF are conducted by an external audit committee,
composed of three representatives from member countries, rather than by an
independent audit organization. The IMF may not welcome the suggestion that it
give GAO access to its internal financial records.
The bill says (Sec. 401(c)(1)(C)(v) that the IMF should concentrate chiefly on
short-term balance of payments financing. The bill does not say how countries should
be expected to make the types of institutional reforms needed to make crisis lending
effective. Most economists now agree that without major improvements in
countries’ budgetary, financial and monetary institutions, macroeconomic reforms⁶
will have limited (perhaps even counterproductive) effects. The Meltzer Commission
would have the IMF lend only to countries that qualify for its assistance in advance
by adopting major reforms in their financial systems. Secretary Summers says the
IMF should be able to make loans to countries with weak monetary and banking
systems, but it should expect them to undertake meaningful reforms as a condition for
access to its resources.
The bill specifies [Sec. 401(c)(1)(B)] that the World Bank should take steps to
assure that its funds are used to fund development projects, rather than short-term
balance of payments financing. This does not address the question of what role, if
any, the World Bank should play in helping countries institute institutional reforms in
the wake of a financial crisis. It would also challenge with current practice. The
World Bank has put considerable emphasis, in recent years, on programs that seek to
promote policy reform in borrower countries. In most instances, the proceeds from
the loans cannot be released until the borrower implements certain policies or takes

⁵ For a comparison and analysis of the recommendations of the Meltzer Commission and
Secretary Summers, see the CRS General Distribution Memorandum titled “Proposals for
Changing the IFIs,” by Jonathan E. Sanford, dated April 14, 2000.
⁶ For a discussion of the issue of institutional reforms and IFI loans, see CRS Report
RL30467, IMF and World Bank Activities in Russia and Asia: Some Conflicting
Perspectives, March 15, 2000.

certain steps. Generally, however, the money disbursed for the loan is not used to
fund the actual reforms – the costs of devising and implementing them is often much
less than the total value of the loan. Many of those costs are also incurred in the
country’s own currency, for which no foreign loan is required. The proceeds of the
loan go directly into the country’s central bank, where they can be used for general
budgetary support and current balance of payments financing. Many analysts believe
the multilateral banks might have a more difficult time persuading countries to
undertake difficult or politically awkward reforms if they are unable to offer short-
term financing of this type as a benefit for compliance with the goals of the loan.
Serbia Democratization Act
Title V of S. 2382, entitled the Serbia Democratization Act of 2000, is virtually
identical to S. 720, the Serbia Democratization Act of 1999. S. 720 was adopted by
the Senate by unanimous consent on November 4, 1999, but was not taken up by the
House. Title V authorizes $50 million in assistance to groups in Serbia and
Montenegro in FY2001 to promote democracy and free markets. It instructs the
Voice of America and Radio Free Europe to increase broadcasts to Serbia and
Montenegro. The legislation authorizes humanitarian and reconstruction aid for
Kosovo. It conditions the lifting of the existing “outer wall” of sanctions against the
Federal Republic of Yugoslavia (which includes blocking aid from international
financial institutions) on a presidential certification that the FRY has made progress
toward a settlement in Kosovo, compliance with the Dayton Peace Accords, internal
democratization, resolving succession issues arising from the collapse of prewar
Yugoslavia, and cooperation with the Yugoslav war crimes tribunal. The title also
enumerates other sanctions currently in effect, including the blocking of FRY assets
in the United States, prohibiting the entry of leading FRY and Serbian officials into
the United States, barring the sale of strategic exports to the FRY, forbidding U.S.
government and private loans and investments for companies controlled by FRY and
Serbian officials, and prohibiting military-to-military cooperation. Kosovo and
Montenegro are exempted from these sanctions. The President may waive the
sanctions for up to 12 months if he certifies that it is important to the national interest
of the United States or if the FRY makes significant progress toward establishing a
democratic government.
The title states that it is U.S. policy to “support fully and completely” the
indictment of Milosevic as a war criminal and to provide the International Criminal
Tribunal for the Former Yugoslavia with intelligence information on Milosevic’s
crimes. It condemns the persecution of ethnic Hungarians in the Vojvodina region of
Serbia and calls for NATO and the United States to devote attention during
negotiations on Kosovo’s status to establishing guarantees for the rights of ethnic
Hungarians and other minorities in Vojvodina. It also calls for a just resolution of the
disposition of diplomatic and consular properties owned by pre-war Yugoslavia. The
title, which authorizes transition assistance to a new democratic Yugoslav
government, requires the Administration to develop a plan for such assistance and
transmit it to the relevant Congressional committees. (For more on Serbian
democratization, see Serbia and Montenegro: Political Situation and U.S. Policy, CRS
Report RL30371, November 16, 1999.)

Status of Serbia Democracy in Other Legislation
S. 720, which passed the Senate in 1999 and upon which Title V of S. 2382
is based, remains pending. Meanwhile, the House, on September 25, 2000,
approved a companion measure, H.R. 1064, the Serbia Democratization Act of
2000. With the recent elections in Yugoslavia in which Slobodan Milosevic was
defeated by Vojislav Kostunica and the subsequent partial removal of U.S.
sanctions, however, many of the issues in House and Senate bills have been
overtaken by events.
Microenterprise Assistance
For more than two decades, the Agency for International Development (USAID)
has explored ways to provide credit and other assistance to “microentrepreneurs,”
those with businesses too small and with too few assets to be counted in the “formal”
economy. With little or no collateral, microentrepreneurs have had no access to
financial credit with which to start or expand their business, outside of the exorbitant
fees of moneylenders. Microenterprise programs provide credit (often using group
pressure to guarantee repayment), business skills training to microentrepreneurs, and
technical assistance to organizations that supply credit and other support to
entrepreneurs. The most successful microcredit institutions have become financially
self-sufficient. Microcredit programs are viewed by many as an effective way to help
those in poverty increase their income – the majority of beneficiaries are women who
use additional income to help their families and build their businesses.
The “Microenterprise for Self-Reliance Act of 2000", title VI of the S. 2382,
would formally authorize microenterprise programs that USAID has implemented for
many years. The legislation authorizes for FY2000 a level of $150 million, up from
the FY1999 and FY2000 targets of $135 million. The bill would ensure that
programs target the poorest of the poor, requiring that half of funds be directed at
those living in the bottom half below the poverty line with loans of $300 or less in
most of the world and somewhat higher amounts in more affluent regions. It also
authorizes establishment of a microfinance loan facility that would help microfinance
institutions avoid bankruptcy as a result of natural or other disasters. The measure
calls on USAID to use its leadership role on this issue to encourage expansion of
microcredit activities among international aid donors.
Since 1987, many in Congress have supported microcredit programs, either
through earmarking funds in the Foreign Operations appropriations, or by
recommending them in the appropriations committee report language. In 1994 and
again in 1997, USAID and Members of Congress approved a Microenterprise
Initiative that supported many of the principles embodied in the current proposed bill.
Several authorizing bills similar to the Senate version have been approved by the
House, most recently H.R.1143, which passed by voice vote on April 13, 1999.

Status of Microenterprise Initiatives in Other Legislation
On October 5, 2000, the House agreed to a Senate amendment to H.R. 1143
– the Microenterprise for Self-Help Reliance and International Anti-Corruption Act
of 2000 – thus clearing the bill for the President’s signature. H.R. 1143 closely
follows Title VI of S. 2382, but increases the authorization level for FY2001 and
FY2002 to $155 million. H.R. 1143 further adds a provision not in the Senate
Committee bill that expresses the sense of the Congress that Mexico should be
considered as a priority in USAID funding allocations for microenterprise
programs.
Nonproliferation and Export Control Assistance
Subtitle C of Title VII would add a new chapter to the Foreign Assistance Act
of 1961 authorizing the President to furnish assistance to help foreign countries halt
proliferation of nuclear, chemical, biological, and advanced conventional weapons,
providing guidance and limitations, and authorizing $129 million for these activities
in FY2001. The subtitle also specifies that of the total amount authorized, $2 million
may be used for training and educating foreign personnel in the United States; $59
million may be used to fund science and technology centers in the former Soviet
Union to help keep highly-trained personnel from emigrating to proliferating
countries; and $5 million may be used to establish a cargo x-ray facility in Malta, a
country that is frequently transited by proliferation-related shipments.
Most of these types of nonproliferation and export control assistance are
currently being provided by the State Department under the authority of the
FREEDOM Support Act (P.L. 102-511, as amended) and various other acts, with
funding provided by the Nonproliferation, Anti-Terrorism, Demining, and Related
Program account and Assistance for the New Independent States (NIS) of the Former
Soviet Union account. One change to current law that S. 2382 would make concerns
restrictions on U.S. aid to Russia. Pursuant to the Foreign Operations Appropriations
Act for FY2000 (included in H.R. 3194, P.L.06-113), assistance to Russia under the
NIS account is limited to 50% of the appropriated amount until the President certifies
that Russia has terminated certain proliferation activities. Assistance authorized under
the new chapter added by S. 2382, however, would make these funds available
“notwithstanding any other provision of law that restricts assistance to foreign
countries.” This would have the effect of circumventing the restriction on assistance
to Russia included in the appropriations act should Congress decide to continue the
current Foreign Operations text in the FY2001 bill.
Although S. 2382 would consolidate some of the legislation on nonproliferation
and export control assistance, other agencies will continue similar efforts: the
Department of Energy provides training of foreign officials in export control focused
on nuclear nonproliferation, and the Department of Defense conducts export control
and border security training programs in conjunction with the Customs Service and
conducts a counterproliferation and interdiction program with the Federal Bureau of
Investigation. The Department of State is responsible for coordinating with these
agencies, as well as with the Department of Commerce, which helps State Department

implement its export control assistance programs. For further information, see CRS
Issue Brief IB95077, The Former Soviet Union and U.S. Foreign Assistance; Issue
Brief IB98038, Nuclear Weapons in Russia: Safety, Security, and Control Issues; and
CRS Report 97-1027, Nunn-Lugar Cooperative Threat Reduction Programs: Issues
for Congress.
Status of Nonproliferation and Export Control Aid in Other Legislation
Title III of P.L. 106-280 (Security Assistance Act of 2000), enacted on
October 6, is similar to nonproliferation and export control provisions incorporated
in S. 2382. P.L. 106-280, like S. 2382, authorizes $129 million for such purposes
in FY2001, but increases the authorization to $142 million in FY2002. The
enacted legislation further extends the $2 million authorization for training and
educating foreign personnel in the U.S. for two years, and adds a $65 million
FY2002 authorization for science and technology centers in the former Soviet
Union.
Assistance for Israel
In 1996, Israeli Prime Minister Binyamin Netanyahu announced that Israel would
reduce its dependence on U.S. economic assistance. At the same time, Israel
maintained that it needed to buttress its military capabilities by seeking an increase in
U.S. military assistance. Israeli and U.S. officials agreed on a plan in 1998, by which
U.S. Economic Support Fund (ESF) aid, then running at $1.2 billion per year, would
be eliminated over a ten-year period (a reduction of $120 million per year), and U.S.
military assistance would be increased from the $1.8 billion level for FY1998 to $2.4
billion in ten years (an increase of $60 million per year). Subsequently, Congress
earmarked FY1999 ESF for Israel at $1.08 billion and $960 million for FY2000. The
Administration has requested $840 million for FY2001. Congress earmarked military
aid for Israel for FY1999 at $1.86 billion and $1.92 for FY2000. The Administration
requested $1.98 billion for FY2001. (In addition, the Administration requested $1.2
billion in FMF for FY2000 for Israel to implement the Wye Agreement. The $1.2
billion additional funding was included in the FY2000 appropriations bill passed by
Congress.)
Section 781 of S. 2382 codifies a schedule for the years FY2001 through
FY2008 that would reduce the ESF aid for Israel by equal annual increments of $120
million and would increase FMF assistance by equal annual increments of $60 million.
Thus, Section 781 would place into permanent law the ten-year plan begun in FY1999
to phase out economic aid to Israel, while increasing military assistance. Because the
language in S. 781 states that authorizations shall be “not less than” the amounts
specified, this could have the effect of denying future Administrations the opportunity
of reconfiguring the pace of the 10-year plan. In FY2000, the Administration
proposed, but Congress rejected, an acceleration of the reduction in ESF assistance
in order to gain funding for other aid activities. Likewise, in the past, Congress has
been reluctant to commit future Congresses to a course of action. It may be argued
that Section 781 closes the option of shortening the time period during which the ESF

aid will be phased out. Some Members of Congress have expressed the opinion that
the ESF reductions for Israel should be accelerated to perhaps five years, rather than
the ten years called for the Section 781. Section 781 also states that future
adjustments in the Israeli ESF and FMF accounts will not be subject to rescissions or
supplemental appropriations, as happened in FY2000. (See CRS Issue Brief
IB85066, U.S. Foreign Assistance, for further information on this issue.)

Status of Israeli Aid Authorization in Other Legislation
Section 513 of P.L. 106-280 (Security Assistance Act of 2000), enacted on
October 6, addresses the issue of modifying Israeli ESF and FMF annual aid
allocations, but in a more limited way than in S. 2382. Instead of codifying the
entire 10-year plan to decrease economic assistance and increase military aid, P.L.
106-280 authorizes a $120 million reduction in ESF and a $60 million increase in
FMF for each of FY2001 and FY2002 only. This would not alter the pace during
the next two years of Israeli aid modification envisioned in S. 2382 , but excludes
funding authorizations beyond FY2002. In addition, P.L. 106-280 authorizes for
FY2001 and FY2002 a similar aid modification plan for Egypt. Along with Israel,
Congress has been reducing Egypt’s ESF allocation by $40 million the past two
years. Section 514 of the enacted legislation authorizes the continuation of $40
million annual cuts in Egyptian economic assistance through FY2002. It further
authorizes $1.3 billion for military assistance in each year, a same level as
appropriated for FY2000.