Supplemental Appropriations FY2003: Iraq Conflict, Afghanistan, Global War on Terrorism, and Homeland Security
Report for Congress
Supplemental Appropriations FY2003:
Iraq Conflict, Afghanistan, Global War on
Terrorism, and Homeland Security
Updated May 5, 2003
Specialist in U.S. Defense Budget
Foreign Affairs, Defense, and Trade Division
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
Supplemental Appropriations FY2003:
Iraq Conflict, Afghanistan, Global War on Terrorism,
and Homeland Security
On March 25, 2003, President Bush requested $74.8 billion in the FY2003
Emergency Supplemental for ongoing military operations in Iraq, postwar
occupation, reconstruction and relief in Iraq, international assistance to countries
contributing to the war in Iraq or the global war on terrorism, the cost of the
continued U.S. presence in Afghanistan, and additional homeland security.
On April 12, 2003, the House and Senate passed the conference version of the
FY2003 supplemental (H.R. 1559/H.Rept. 108-76/P.L. 108-11). It includes $78.49
billion, $3.7 billion more than requested by the President. Additions made by
Congress include $3.1 billion for assistance to the airlines, $749 million more for
homeland security programs, and $369 million in food aid for Iraq and other
The Administration asked Congress to approve funding that would be lodged
in several large emergency funds where agencies could determine the actual
allocation of funds to particular purposes or specific countries. The conference
version distributes most of these funds to regular appropriations accounts and
generally requires additional notifications to Congress of transfers in cases where the
Administration is given additional flexibility.
The largest fund proposed was $59.9 billion for the DOD’s Defense Emergency
Response Fund that would cover the costs associated with the war in Iraq, the
continued U.S. presence in Afghanistan, enhanced security at U.S. military bases, and
postwar occupation in Iraq. The conference includes $15.7 billion in a new Iraq
Freedom Fund but distributes the remaining funds to specific accounts.
Congress further provides $2.475 billion for an Iraq Relief and Reconstruction
that will fall under the authorities of regular foreign assistance programs usually
managed by the State Department and the U.S. Agency for International
Development (USAID). H.R. 1559, however, extends considerable flexibility to the
President, allowing him to directly apportion funds to several federal agencies,
including the Defense Department. The FY2003 Emergency Supplemental also
includes $4.7 billion in international assistance for about 22 countries which have
contributed in some fashion to the war in Iraq or the global war on terrorism. This
includes substantial increases in current aid levels for Israel, Egypt, Jordan,
Afghanistan, Pakistan, and Turkey. Israel, Egypt and Turkey would also receive U.S.
government guaranteed loans.
The Administration also requested that substantial appropriations be provided
en bloc for homeland security, including $2 billion for the Department of Homeland
Security (DHS) for grants to states and enhancements of security, and $500 million
for a DHS Counterterrorism Fund for investigations and operations. The conference
provides $749 million more for homeland security but allocates funds to specific
Most Recent Developments..........................................1
Congressional Action on Administration Request.................2
Amendments During Floor Debate............................4
Congressional Action on the Department of Defense’s Request..............7
Issues in the DOD Request......................................8
Conference Resolution of Issues..................................9
Balancing Flexibility with Congressional Oversight...............9
Flexibility to Fund Foreign Militaries in the Global War on
Increasing Compensation for War Duty.......................17
Defining DOD’s Postwar Role: Natural Resources Risk
Remediation Account and Other Reconstruction............18
Short and Long-Term Costs and Effects of the War..............18
Previous Congressional Action..................................21
Floor Debate in the House and Senate.........................21
House and Senate Markup of Department of Defense Request......22
Proposals to Maximize Flexibility............................24
Allocation of DOD Funding by Phase of Operations.............28
Allocation of DOD Funding by Major Type of Expense...........30
Iraq Reconstruction and International Assistance........................33
Key Issues Regarding Iraq Reconstruction and International Assistance..43
Executive Flexibility and Congressional Oversight...............43
Costs of Iraq Reconstruction and the Impact on Other Aid
DOD Authorities to Provide Military Aid......................47
Support to State and Local Governments for Terrorism Prevention
and Security Enhancements.................................50
Departments of Justice and Homeland SecurityCounterterrorism Funds..53
Emergency Response Funds for the Executive andLegislative Branches..54
Aviation Industry Relief........................................54
List of Tables
Table 1. Emergency Iraq War Supplemental Summary....................2
Table 2. Amount Of Flexibility For DOD In FY2003 Supplemental,
Request and Congressional Action...............................10
Table 2a. Ceilings and Floors Within DOD’s Iraq Freedom Fund in
Enacted Version of FY2003 Supplemental .........................11
Table 2b. Funding Allocations or Appropriations in FY2003 Supplemental
for DOD: Request, House and Senate Action, and Enacted............12
Table 3. DOD Estimate of Adequacy of FY2003 Supplemental for
the War in Iraq and Afghanistan.................................20
Table 4. DOD FY2003 Supplemental Request by Phase..................29
Table 5. FY2003 DOD Supplemental, by Purpose, Based on DOD’s
Table 6. Iraq Reconstruction, International Aid, and Related Activities......36
Table 7. Proposed Recipients of Supplemental Foreign Aid...............42
Table 8. Homeland Security........................................49
Supplemental Appropriations FY2003:
Iraq Conflict, Afghanistan, Global War on
Terrorism, and Homeland Security
Most Recent Developments
On April 12, the House and Senate approved the conference version of the
FY2003 Supplemental (H.R. 1559/H.Rept. 108-76) providing $78.49 billion to cover
the costs of military operations in Iraq, relief and reconstruction of Iraq, ongoing U.S.
costs in Afghanistan, additional aid to coalition partners and nations cooperating in
the global war on terrorism, and homeland security. This total is $3.74 billion more
than the request and roughly $500 million more than the $77.93 billion passed by the
House and the $77.95 billion passed by the Senate. The conference version includes
a $3.1 billion airline industry relief package that was not requested by the President.1
President Bush signed the legislation on April 18 (P.L. 108-11).
Reflecting Congressional priorities, the conference version of the bill includes
additional funding for homeland security programs, such as customs and border
protection and baggage and passenger screening. H.R. 1559 further includes $700
million for protecting high-threat urban areas, up substantially from $50 million
requested by the Administration. The Emergency Supplemental also provides $2.23
billion for first responders, about 10% higher than requested.
On international assistance issues, the conference version generally provides
amounts proposed, but adds $369 million for food aid for Iraq and elsewhere, and
drops $150 million for a Presidential crisis fund. The $2.475 billion Iraq Relief and
Reconstruction Fund will follow the authorities of regular foreign aid programs that
are usually managed by the Department of State and the U.S. Agency for
International Development (USAID). Nevertheless, Congress agreed to the
President’s request for broad discretion in the allocation of Iraq reconstruction money
that allows direct apportionment to several Federal agencies, including DOD.
For defense spending, H.R. 1559, as enacted, funds the $62.6 billion requested
by the Administration but appropriates all but $15.7 billion in regular appropriations
1 See Congressional Record, April 12, 2003, p. H. 3400 for tables showing total costs.
These totals include only direct appropriations for airline industry relief and do not include
the cost of suspending airline security service fees and extending unemployment benefits
to eligible airline employees. These elements do not require an appropriation but will result
in the loss of revenue from fee collections and higher unemployment benefit costs. As
estimated by CBO, the inclusion of these additional airline-related costs push the
supplemental total up to $79.19 billion, as enacted, and $78.98 billion as passed by the
accounts rather than providing $59.9 billion, as requested, in the Defense Emergency
Response Fund to be spent at DOD’s discretion. Instead, Congress appropriated
$15.7 billion in a new Iraq Freedom Fund, where DOD will have spending flexibility
as long as it stays within several ceilings and floors and provides 5-day advance
notifications of transfers. Congress also increased combat pay and separation
allowances for U.S. forces, costing an estimated $650 million.
Within days of the initiation of U.S. military operations in Iraq, President Bush
sent Congress a $74.75 billion supplemental package largely divided into three parts
— defense, Iraq reconstruction and foreign aid, and homeland security, as shown in
Table 1. Emergency Iraq War Supplemental Summary
Request H ouse Senat e Enact e d
Dept of Defense$62.587$62.464$62.558$62.583
Iraq reconstruction and international
assistance $7.791 $7.983 $8.451 $8.179
Aviation industry relief - directa
appropriations — $3.170$1.475$2.396
Aviation industry relief - fees & benefitsa
costs — $0.000[$1.030][$0.695]
Other — $0.016 $0.321$0.208
TOTAL, Supplemental without Aviationb
fee and benefits costs$74.753$77.923$77.949$78.490
TOTAL, Supplemental including Aviation
fee and benefits costs$74.753$77.923$78.979$79.185
Sources: House and Senate Appropriations Committees and Congressional Budget Office.
a The aviation industry relief initiative, as structured in S. 762, as passed the Senate, provided a
combination of direct appropriations for grants to the airlines and changes in fees and
unemployment benefits for airline workers that do not require direct appropriations. The
enacted version of H.R. 1559 follows the Senate framework of direct appropriations and other
items, although at different levels. Amounts shown in brackets for the Senate and enacted levels
represent CBO estimates of the costs of fee changes and unemployment benefits. b
Includes only direct appropriations and excludes the non-appropriated costs of the airline industry
package shown in brackets.
Congressional Action on Administration Request. As passed on April
3 in both bodies, the bills were at (Senate) or just below (House) the request for
defense. Both bills increased appropriations for Iraq reconstruction and other foreign
aid — the House slightly, to $7.98 billion, and the Senate more significantly, to $8.45
billion, mainly due to a $600 million amendment for additional food aid for Iraq. For
homeland security, the House measure was slightly below the President’s request,
mainly because of the denial of funding for the White House’s proposed emergency
fund, while the Senate increased homeland security by about $770 million to $5.14
billion. H.R. 1559 provided $3.2 billion for airline industry relief while S. 762
included an estimated $3.5 billion.2
As requested, the conference version of the bill provides $62.58 billion for
defense but, as recommended by appropriators in both houses, the enacted legislation
reduces the flexibility in using those funds that was requested by the Administration.
As passed, H.R. 1559 appropriates most of the funds to regular appropriations
accounts. However, it also sets up a new $15.7 billion Iraq Freedom Fund to give
DOD additional flexibility. Within the new fund established for Iraqi Relief and
Reconstruction, the conference bill appropriates funds to the President, giving him
the flexibility to allocate those funds to various agencies, including the Department
of Defense. In response to Administration concerns, the conference version
eliminated restrictions that would have prevented DOD from administering any of
these funds. The enacted appropriation, however, provides that the funds are to be
designated as bilateral economic assistance and spent consistent with the Foreign
Assistance Act of 1961.3
For homeland security, the conference version provides $5.12 billion, $749
million more than requested. For airline relief, the final bill provides for a $3.1
billion package, including direct appropriations, authority to extend by 26 weeks
unemployment compensation for displaced workers, and a temporary suspension of
certain passenger and air carrier security fees from June 1 to September 30, 2003.4
While details of each of these components are discussed below, one overriding
theme that was apparent throughout the supplemental package was the President’s
desire for the maximum degree of flexibility in managing and allocating these
resources. Under the proposal, most of the funds would be have been placed in
emergency response funds which the President, the Secretaries of Defense, Justice,
and Homeland Security could draw upon. Purposes for which the resources would
be used were justified in general terms, but extensive discretion would have been
allotted to executive officials. Among the proposed emergency funds were:
!Defense Emergency Response Fund — $59.9 billion
!Iraq Relief and Reconstruction Fund — $2.4 billion
!Department of Homeland Security Counterterrorism Fund — $1.5
!Department of Justice Counterterrorism Fund — $500 million
2 See footnote in Table 1, above, regarding costs of the airline industry relief package.
These estimates are based on those issued by the Congressional Budget Office.
3 H.Rept. 108-76, p. 15 and p. 70-72.
4 Airline relief funding costs are based on CBO estimates that include both direct
appropriations and the costs of fee changes and unemployment benefits extension.
!Executive Office of the President Emergency Response Fund —
!Legislative Branch Emergency Response Fund — $125 million.
Administration officials argued that such flexibility was needed due to
constantly changing circumstances in and around Iraq and uncertainty over the
duration and magnitude of the military campaign, the demands posed for near-term
humanitarian relief, and longer-term reconstruction of the country, and the ongoing
“global war on terrorism.”
In the enacted legislation, reflecting both House and Senate action, funds are
generally directed for more specific purposes than proposed by the White House.
The Iraqi Relief and Reconstruction Fund is the exception where Congress gives the
President flexibility to allocate funds to five federal agencies, including the
Department of Defense. Previous versions of the supplemental appropriation, as
passed by the House and the Senate, would have limited the President’s ability to
apportion the funds directly to DOD, and required that Fund be managed by the State
Department and the U.S. Agency for International Development (USAID).
For defense, the conference version allocates much of the $59.9 billion
requested by the Department of Defense in the Defense Emergency Response Fund
to regular appropriations accounts, reserving $15.7 billion in a new Iraq Freedom
Response Fund to be allocated by the President subject to various ceilings and floors
set in the bill.
H.R. 1559 substitutes the President’s request for two Department of Homeland
Security Funds totaling $3.5 billion with specific allocations for port security, state
and local government law enforcement, and National Guard reimbursements,
checked baggage explosive detection systems at airports, among others. The
conference report also allocates most of these funds to specific accounts.
The enacted supplemental also distributes nearly all of the $500 million
proposed Justice Department Counterterrorism Fund among several activities,
allocating a portion for FEMA disaster relief. H.R. 1559 further requires advance
notification of how the money will be spent and directs the Administration to
reimburse foreign aid accounts that have previously been drawn upon to fund pre-
conflict needs in Iraq.
Amendments During Floor Debate. During floor debate, lawmakers
considered amendments affecting each of the three main areas of the President’s
supplemental request. Defense-related proposals that were adopted included:
!Stevens amendment to increase combat pay ($650 million estimated
cost) — adopted by voice vote and included in the conference
!Allard amendment to create a panel to examine claims of sexual
misconduct at the Air Force Academy — adopted by voice vote and
included, with modifications, in the enacted legislation.
!Within Stevens amendment (SA 522), a section that would prohibit
contracts for military airlift services to any carrier that is “not
effectively controlled by citizens of the United States.”5 The
amendment, with modifications, remained in the enacted legislation.
The Senate also rejected an amendment by Senator Landrieu that would have added
$1.05 billion for National Guard and Reserves procurement (tabled 52-47).
House and Senate amendments regarding Iraq reconstruction and international
assistance focused generally on efforts to add humanitarian resources for Iraq, cut aid
to Turkey and Colombia, and restrict eligibility of reconstruction contractors. The
Senate approved an amendment by Senator Kohl adding $600 million for PL480 title
II food assistance programs, including a requirement that $155 million be used to
reimburse food accounts from which resources had been previously taken for Iraq.
H.R. 1559 provides $250 million for these same purposes. The enacted bill provides
$369 million for food assistance. The House defeated three amendments cutting
!Cunningham amendment to delete $1 billion in aid to Turkey.
!DeFazio amendment to cut aid to Turkey by $207 million,
transferring the funds to establish National Guard Weapons of Mass
Destruction Civil Support Teams (defeated 113-312).
!McGovern amendment eliminating $61 million in counter narcotics
funds for Colombia and increasing appropriations for the Office of
Domestic Preparedness (defeated 209-216).
On aid contracting and related issues, the House approved (voice vote) a proposal by
Congressman Kennedy (MN) that prohibits the use of funds for Iraq reconstruction
to purchase goods or services produced by France, Germany, Russia, or Syria,
although U.S. subsidiaries of companies organized in those countries would be
eligible. Two Senate amendments related to this issue were withdrawn:
!Ensign amendment to prohibit reconstruction funds in a way that
would benefit businesses and citizens of France and Germany unless
physically located in the U.S.
!Landrieu/Mikulski amendment to require that American flag
commercial ships be used to transport U.S. assistance.
H.R. 1559, as enacted, however, deleted the House-passed Kennedy amendment.
Most amendments considered in both houses focused on increased spending for
homeland security purposes. The Senate adopted a modified proposal by Senator
Bayh adding $105 million for grants to States for smallpox and other bioterrorism
inoculation programs. Originally, the amendment would have provided $340
million. The conference version of H.R. 1559 includes $100 million for such
inoculation programs. The Senate further agreed to an amendment by Senator
Specter (65-32) adding $200 million to the Office for Domestic Preparedness (ODP)
and rearranging ODP funds so that resources for high-threat urban areas would grow
5 S.Amdt. 522 in Congressional Record, April 3, 2003, Part II, p. S 4868.
from $100 million, as reported in S. 762, to $600 million. H.R. 1559, as approved,
raises this total to $700 million. The Senate also adopted an omnibus amendment by
Senator Stevens that included provisions increasing homeland security by about $150
million, mainly for DOE nuclear security programs. Conferees generally supported
these DOE activities. But the House and Senate rejected several other efforts to add
to the President’s request for homeland security:
!Senator Hollings amendment to add about $1 billion for port security
— tabled 52-47.
!Senator Breaux amendment to add about $2.67 billion for various
homeland security programs — tabled 52-46.
!Senator Schumer amendment to increase ODP funding by $2.33
billion — tabled 51-46.
!Senator Boxer amendment to earmark $30 million for R&D and
deployment of technology to protect commercial airliners from man-
portable defense systems — tabled 50-47.
!Congressman Obey amendment to add $2.5 billion for homeland
security — ruled out of order.
!Congressman Nadler amendment to increase port security funds by
$15 billion — ruled out of order.
The Senate also rejected an amendment by Senators Byrd and Hollings that would
not have increased homeland security spending, but would have allocated resources
to specific accounts rather than leaving the Secretary of Homeland Security with
The Administration generally supported actions by the House and Senate, but
raised objections in a few areas, largely related to executive flexibility matters. The
White House suggested that Senate language allocating defense funds to specific
accounts might “slow timely and effecting funding of urgent needs.” The
Administration raised the same concern regarding House text that allocated homeland
security resources to specific activities rather than placing the money in a central
fund. This, the White House claimed, would “hinder” the Homeland Department’s
Secretary from applying the funds to the most critical threats. The executive further
expressed concerns about the House bill which directed that Iraq Relief and
Reconstruction Fund resources be managed by the State Department and the U.S.
Agency for International Development (USAID), removing Presidential flexibility
over involving multiple agencies in reconstruction operations. Finally, the White
House considered the airline industry relief packages in both bills “excessive.”6
Details concerning each of the supplemental’s major components are discussed
6 Executive Office of the President, Office of Management and Budget. Statement of
Administration Policy on the Emergency Supplemental Appropriations, FY2003. April 2,
Congressional Action on the
Department of Defense’s Request
The Administration requested $62.6 billion for the Department of Defense
(DOD) for the cost of the war in Iraq, continued U.S. operations in Afghanistan and
the global war on terrorism, and enhanced security at military bases in the United
States. The DOD FY2003 supplemental request funded the deployment and
redeployment of U.S. forces and equipment to the Persian Gulf and the prosecution
of a short, intense conflict. In addition, the request included funding for an
occupation force in Iraq for the remainder of FY2003, repair and re-stocking of
military equipment and munitions, as well funds to conduct firefighting and restore
and repair Iraqi oil fields, and a small amount of funding for humanitarian
assi st ance.7
Although DOD did not specify the amount, its request also included funds to
cover the cost of U.S. forces in Afghanistan (Operation Enduring Freedom) as well
as the cost of enhanced security in the United States (Operation Noble Eagle) for the
remainder of the fiscal year.8 DOD received $6.1 billion to cover its expenses for
these missions in the first part of the year in the FY2003 Consolidated
Appropriations Resolution (P.L. 108-7/H.J.Res. 2).9 DOD has estimated expenses
for the remainder of the FY2003 to be about $6 to $8 billion.10
Citing the “unpredictable nature of the U.S. conflict in Iraq,” the Department of
Defense requested that $59.9 billion, 96% of its total, be appropriated to the Defense
Emergency Response Fund (DERF), a transfer account, where DOD could exercise
discretion in spending the money for purposes that it considers appropriate and move
funds into the relevant appropriation accounts.11 Although DOD’s proposed
language required quarterly reports to Congress about the allocation of actual
expenditures, some Members of Congress expressed concerns about the extent of
flexibility that DOD would have in allocating almost $60 billion. In response to these
7 Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq and
the Global War on Terrorism, March 25, 2003; see
8 Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq and
the Global War on Terrorism, March 25, 2003; see
[ h t t p : / / www.defenselink.mil/comptroller/defbudget/fy2004/DoD_J u s t i f i c a t i o n -F Y 03_Ira
qi_Freedom_Supplemental.pdf] and Senior Defense Official, Background Briefing on
Budget Supplemental, March 24, 2003; see
9 See Division M, P.L. 108-7.
10 In a recent press conference, OSD Comptroller Dov Zakheim estimated that the cost of
Afghanistan and the global war on terrorism was running about $1.1 billion per month.
11 Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq
and the Global War on Terrorism, March 25, 2003, p.7; see
[ h t t p : / / www. d e f enselink.mil/comptroller/defbudget/fy2004/DoD_J ustif i c a t i o n -F Y 03_Ira
concerns, the enacted version of the supplemental appropriated 75% of the funding
in the supplemental to specific accounts and added various reporting requirements.
To give DOD flexibility to develop and exploit cooperative military
relationships with other nations in the global war on terrorism, the Defense
Department requested $1.4 billion for military and logistical support to Pakistan,
Jordan, and other “key cooperating nations” in the war on terrorism, $150 million to
support indigenous or irregular foreign military forces and $50 million to support the
regular forces of foreign nations working with the United States in the global war on
terrorism. Some of these proposals were controversial and Congress rejected DOD’s
request for indigenous forces and reduced and limited the request for regular forces
but agreed to provide the $1.4 billion for military and logistical support with
additional reporting requirements.
The request also proposed to raise current statutory limits on the amount of
funds to be used at the discretion of the Secretary of Defense and combatant
commanders for unanticipated military requirements including support for foreign
military forces. DOD again cited the war in Iraq and the global war on terrorism as
the rationale for these changes. The request also proposed a major increase from $2
billion to about $9 billion in the total amount of funding that DOD could transfer
between appropriations after notifying the appropriations committees.12 The enacted
version raises the statutory limits and gives DOD additional transfer authority but at
levels lower than requested.
In remarks at the Pentagon, President Bush characterized the FY2003
supplemental as urgent, and DOD officials called for quick passage to ensure that
DOD does not face shortages in operating expenses. DOD characterized $30.3
billion of its $62.6 billion request as costs incurred for the buildup phase of the Iraqi
war including expenses such as transportation of equipment and personnel, or as
committed costs, such as those for the return of troops and equipment theater of
operations.13 In the enacted version of the supplemental, Congress appropriated these
costs in regular appropriations accounts rather than providing them in the Defense
Emergency Response Fund as requested by DOD.
Issues in the DOD Request
The major issues that arose during Congressional consideration of the
supplemental and that are discussed below included the following.
!Balancing Congressional oversight and DOD Flexibility: DOD
requested that $59.9 billion be provided in the Defense Emergency
Response Account (DERF) where DOD would have discretion to
12 See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental
Appropriations Request, March 25, 2003, general provisions; see estimate no. 4 on OMB
web site: [http://www.whitehouse.gov/omb/budget/amendments/supplemental_3_25_03.pdf]
13 DOD Press Release, “Supplemental Calls for $62.6 billion for Defense,” March 25, 2003;
DOD Press Release, “Bush Calls Wartime Supplemental Budget Request ‘Urgent’”, March
spend the funds, flexibility reduced by Congress because of concerns
!Flexibility to fund foreign military forces: DOD requested funds
for foreign military forces who cooperate with the U.S. in combating
terrorism, and Congress responded by adding reporting
!Compensation for war duty: Congress increased combat pay and
family separation allowances for military personnel in theater
because of concerns about adequacy;
!Defining DOD’s postwar role: The Administration request allowed
the President to allocated funds for reconstruction and relief
activities in Iraq to any agency, including DOD, and Congress
!Costs and other effects of the war: Costs beyond FY2003 and
effects on DOD’s readiness and forces over the longer-term are
unclear from DOD’s request and remain concerns of Congress.
There was little debate about the total amount requested by DOD for FY2003
although Congressional action adjusts the mix of funds requested by the
Administration and reduces DOD’s flexibility (see Tables 2, 2a, and 2b and
discussion below). Further details about the Administration’s request are in the
section entitled DOD’s Funding Request by Appropriation Account.
Conference Resolution of Issues
The conference version of H.R. 1559/P.L. 108-11 addressed the issue of
flexibility by reducing the extent and type of funding flexibility for DOD. Congress
did establish a new Iraq Freedom Fund Account with $15.7 billion in funding where
DOD would have discretion over about $10 billion to $11 billion of those funds (see
Table 2 below). The enacted version also allows the Administration to give DOD
a large new role in postwar reconstruction and relief activities (see section on
Defining DOD’s Postwar Role and Key Issues in Iraq Reconstruction and
International Assistance below).
There was little controversy about the total funding level requested for DOD and
the enacted version generally provides amounts consistent with DOD’s request (see
Table 2b below).
Balancing Flexibility with Congressional Oversight. The conference
version of the bill blends the approaches used by the two houses to reduce DOD’s
14 For information about historical precedents for funding flexibility during war, see CRS
General Distribution Memo, “Prior Administration Requests for Funding Flexibility in
Financing Military Operations,” April 3, 2003 by Stephen Daggett, available on request
from author or Amy Belasco.
flexibility in funding. The conference adopted the Senate’s recommendation to
appropriate most of DOD’s funds in regular appropriations accounts and the House’s
proposal to set up a new flexible general fund for expenses incurred later in the war.
(See section on Previous Action by the House and Senate for further details.)
Table 2. Amount Of Flexibility For DOD In FY2003
Supplemental, Request and Congressional Action
F undi ng De f e ns e St ability Senat e : Iraq
Level/Amount ofEmergencyOperations, andDERFaFreedom
In billions of dollars
Re gu l a r $2.7 $37.0 $51.5 $46.9
T OT AL $62.6 $62.5 $62.6 $62.8
As Percent of Total Funding
Flexible Fund 95.7%40.7%17.6%25.1%
Re gu l a r 4.3% 59.3% 82.4% 74.9%
T OT AL 100.0% 100.0% 100.0% 100.0%
Sources: Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq and
the Global War on terrorism, March 25, 2003; see
[http://www. d e fe nse link. mil/c o mptroller/defbudget/fy2004/DoD_Justification-FY03_Iraqi_Freedo
m_Supplemental.pdf]. House and Senate version of H.R. 1559, H.Rept. 108-56, .S.Rept. 108-33, and
Conference Report, H.Rept. 108-76.
a Within the DERF, DOD can transfer funds to specific appropriations accounts at its discretion.
b Within its new Operation Iraqi Freedom Response Fund, the House created this new fund where
DOD would have flexibility to transfer funds to specific appropriations accounts as long as
certain ceilings and floors established in the bill were met (see Table 2a below).c
The enacted version of H.R. 1559 gives DOD flexibility to transfer funds within the new Iraq
Freedom Response Fund as long as certain ceilings and floors established in the bill are met (see
table 2a below).d
In addition to appropriations to regular accounts, the House bill set transfer ceilings which limited
DOD’s flexibility within the new Iraqi Freedom Response Fund except for the $$25.4 billion
in the Combat, Stability Ops, and Reconstitution Fund.
Restrictions Within The New Iraq Freedom Fund. To give DOD more
specific spending guidance, the conference version of the bill appropriates 75% or
$46.9 billion of DOD’s total request of $62.6 billion to regular appropriation
accounts. The remaining $15.7 billion was placed in a new Iraq Freedom Fund
account where DOD can spend the monies for combat, stability operations,
reconstituting forces, replacing munitions and equipment, and other costs as long as
DOD stays within several ceilings and floors that are set within the bill. Any funds
not needed for the Iraqi conflict are to be returned to the Iraq Freedom Fund.
If DOD met the floors and spent up to the ceilings, these restrictions would
affect $5.2 billion of the $15.7 billion in the fund (see Table 2a below).
Table 2a. Ceilings and Floors Within DOD’s Iraq Freedom Fund
in Enacted Version of FY2003 Supplemental
(in billions of dollars)
Floor for classified programs1.770
Floor for increased fuel costs in Defense Working Capital Fund 1.100
Ceiling for coalition support1.400
Ceiling for Natural Resource Risk Remediation Fund 0.489
Ceiling for RDT&E0.058
Ceiling for Transfer to Coast Guard Operations0.400
Ceiling for Counter terrorism training for foreign military forces0.025
Total of Ceilings and Floors5.242
Minimum Unallocateda 10.437
Total: Iraq Freedom Fund15.679
Source: Conference Report on FY2003 Supplemental, H.Rept. 108-76.
a CRS calculation assuming that DOD spent up to the ceiling amounts set in P.L. 108-11; if DOD
spent less than the ceiling amounts, the unallocated total would be greater.
If DOD met the floors and spent up to the ceiling levels, DOD would be still
able to transfer at least $10.4 billion from the fund to various appropriation accounts
at their discretion. That funding flexibility could be larger if DOD spent below the
ceilings. In a recent press conference, DOD Comptroller Dov Zakheim stated that
DOD would have “unfettered flexibility” for about $10.5 billion to $11 billion.15
DOD is still, however, required to notify Congress 5 days in advance of transferring
funds and to submit quarterly reports on transfers beginning on July 1, 2003.16 Except
for funding for the Coast Guard and counter-terrorism training, the ceilings and floors
follow DOD’s request (see Table 2b below).
15 DOD, Transcript of Under Secretary of Defense (Comptroller) Briefing, April 16, 2003,
p. 1. See [http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html].
16 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 6-p.7 and p. 62-p.63.
Comparison of Funding Levels. Because DOD will have flexibility to
allocate over $10 billion of the funding in the FY2003 supplemental, the final
distribution of funding is not yet available. Based on DOD’s initial request and
Congressional action, Table 2b below shows the Administration’s request, House
and Senate action and the enacted version of funding for the Department of Defense.
Congress provided $62.58 billion, the same as the amount requested and close to
the amounts provided by the House and the Senate. The slightly lower level in the
House reflects smaller amounts for military construction. The House recommended
$62.46 billion and the Senate Appropriations Committee (SAC) recommended
Based on the illustrative breakdowns of expense that appear to be included in
DOD’s request, it appears that the enacted supplemental generally adopts DOD’s
projections for various types of expenses. The enacted version, however, includes
over $3 billion more than DOD proposed for military personnel, reflecting
discussions with the services, and possibly concerns about whether DOD’s request
assumed adequate troop levels for occupation (see Table 2b). Since DOD did not
include the assumptions underlying its cost estimates in terms of troop levels or the
duration of the war, comparisons and assessments are difficult.
Table 2b. Funding Allocations or Appropriations in FY2003
Supplemental for DOD: Request, House and Senate Action,
(in billions of dollars)
Amount Appropriated or RequestHouseSenate Enacted
Defense Emergency Response Funda
(DERF) 59.863 0 11.019 0
Operation Iraqi Freedom Responseb
Combat, Stability Operations andb
Iraq Freedom Fundc00015.679
Floor for Classified[1.717]a[1.817]bNS[1.772]c
Ceiling for Coalition Support[1.400]d[1.400]b[1.400]d[1.400]c
Floor for Defense Working Capital Fund[.430]a[1.100][.550]e[1.100]c
Ceiling for Natural Resources Risk
Ceiling for RDT&E[.058]a[.102]b[.058]c
Ceiling for Counter-terrorism training[.050]a[.025]c
Ceiling for Transfer to Coast Guardbc
Operations [ 0] [ .400] [ 0] [ 0.400]
Military Personnel, Army[6.321]a[6.975]b7.7257.700
Military Personnel, Navy[1.384]a[1.984]b1.7841.600
Amount Appropriated or RequestHouseSenate Enacted
Military Personnel, Marine Corps[1.355]a[1.835]b1.2551.200
Military Personnel, Air Force[1.335]a[1.835]b2.8352.800
Reserve Personnel, Armya[.003]b.006.003
National Guard Personnel, Armya[.093]b.110.100
Operation and Maintenance, Army[20.790]a[10.482]b16.14316.000
Operation and Maintenance, Navy[6.411]a[3.940]b5.2975.100
Operation and Maintenance, Marineab
Corps [ 3.744] [1.384] 1.753 1.650
Operation and Maintenance, Air Force[9.970]a[3.668]b7.2097.100
Operation and Maintenance,cce
Defensewide 1.400 1.400 4.008 1.200
Operation and Maintenance, Armyab
Reserve [ .003]  0 .003
Operation and Maintenance, Navyab
Re s e r ve [ 0]  .015 .007
Operation and Maintenance, Marineab
Operation and Maintenance, Army Nat’lab
Gd [ 0 ] [.053] .088 .075
Operation and Maintenance, Air Nationalab
Gua r d [ 0]  .020 .020
Natural Resource Risk Remediation Fund0.489[.489]b.489[.489]f
Aircraft Procurement, ArmyNS[.004]bg.004.004
Missile Procurement, ArmyNS[.003]bg.003.003
Proc. of Weapons and Tracked Combatbg
Procurement of Ammunition, ArmyNS[.448]bg.448.448
Other Procurement, ArmyNS[.242]bg.242.242
Other Procurement, Air ForceNS[.114]bg.114.114
RDT&E, Air Force[.010]ab00
Defense Working Capital Fund.4301.100.550[1.100]f
Drug Interdiction and Counter Drug.034.034.034.034
Amount Appropriated or RequestHouseSenate Enacted
Reimbursement for Afghan Drawdownh.18.104.22.168
Military Construction, Navy.048.048.048.048
Military Construction, Air Force .129.051.127.153
Family Housing O&M, Air Force0.002.002.002
Defense Cooperation Account.028.0280.028
Rescission 0 0 -.003 -.003
TOTALi 62.587 62.464 62.559 62.580
Notes: [ ] Square brackets identify allocations of funds within appropriated amounts. Total includes
NS = Not specified.
Source: Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq and
the Global War on terrorism, March 25, 2003; see
[ h t t p : / / www. d e fe n s e l i n k . mil/comptroller/defb ud get/fy2004/DoD_J ustification-FY03_Iraqi _ F r e e d o
m_Supplemental.pdf]. House and Senate version of H.R. 1559, H.Rept. 108-56, .S.Rept. 108-33, and
Conference Report, H.Rept. 108-76.
a DOD requested $59.7 billion in the Defense Emergency Response Fund (DERF) and included
proposed allocations; CRS calculated the distributions to accounts using DOD materials.b
House bill set up a new Operation Iraqi Freedom Fund and then recommended various allocations
to individual accounts, and set ceilings and floors including $25.4 billion for the Combat,
Stability Operations and Reconstitution Costs account where DOD would have considerable
Conference bill sets up a new Iraq Freedom Fund, and designates ceilings and floors within that fund
affecting about $5 billion with the remainder to be allocated at DOD’s discretion.d
Funding for military and logistical support or coalition support for “key cooperating nations” in the
war on terrorism was included in O&M Defense wide in request and House and Senate version
but was included in Iraq Freedom Fund in enacted .e
Funded in a direct appropriation, see below.f
Conference bill sets a ceiling within Iraq Freedom Fund of $489 million for Natural Resources Risk
Remediation Fund and a floor of $1.1 billion for fuel purchases through the Working Capital
House version provided that an additional $4.2 billion may be spent on procurement from $25.4
billion placed in the Combat Stability Operations, and Force Reconstitution fund within the
Operation Iraqi Freedom Fund where DOD generally has flexibility.h
Funded through O&M appropriations accounts. i
May not add to total due to rounding.
Additional Transfer Authority and Reporting Requirements. In
addition to setting up the new Iraq Freedom Fund, Congress gives additional
flexibility by allowing DOD to transfer up to $2 billion of the funds in the
supplemental to different appropriation accounts as long as normal notification
procedures are followed. Although this ceiling on transfers is less than the $9 billion
requested by the Administration, it is proportionately six times greater than the
transfer limit set in the FY2003 DOD Appropriations Act (P.L. 107-248).17
To increase the information available for oversight, Congress also requires that
DOD submit to the defense committees a financial analysis on FY2003 spending that
covers not only the FY2003 supplemental but also the regular FY2003
appropriations, and the additional funding received by DOD in the FY2003
Consolidated Appropriations Resolution.18
Increasing Flexibility In Use of Military Construction Funds. DOD
requested $128 million for Air Force and $48 million for Navy military construction
of several projects in Guantanamo Bay, and the Persian Gulf, including an $85
million project called Millennium Village for headquarters, billeting and other
support facilities for some 2,000 military and civilian personnel at a classified19
Although the conference version lists the particular projects to be funded within
the $201 million appropriated, the enacted version gives more flexibility than normal
by permitting DOD to transfer up to $150 million to the contingency construction
account and then allocate funds from there to individual projects as long as the
defense committees are given notifications seven days in advance and cost estimates
and documentation 15 days after obligating funds. The enacted bill provides $11020
million for Millennium Village.
Flexibility to Fund Foreign Militaries in the Global War on Terrorism
Increases. Another area of controversy was DOD’s request for additional
flexibility in reimbursing foreign military forces who cooperate with the U.S. in
combating terrorism. The conference version of the FY2003 Supplemental gives
DOD some but not all of the flexibility requested.
Coalition Support. Although Congress allows DOD to spend up to the $1.4
billion requested by the Administration to reimburse foreign military forces of “key
cooperating nations” for their military and logistical support in the global war on
17 The $2 billion transfer limit allows DOD to transfer up to 4.3% of the $46.9 billion in the
supplemental that is appropriated to regular accounts; transfer out of the Iraq Freedom Fund
are not subject to this limit. The limit on reprogrammings or transfers between
appropriations accounts in the FY2003 bill is less than 1% (.007%). See also DOD,
Transcript of Under Secretary of Defense (Comptroller) Briefing, April 16, 2003, p. 3;
18 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 61.
19 Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq
and the Global War on terrorism, March 25, 2003, p. 17; see
qi_Freedom_Supplemental.pdf], and OMB, Transmittal to Speaker of the House, J. Dennis
Hastert, FY2003 Supplemental Appropriations Request, March 25, 2003, general provisions;
see estimate no. 4 on OMB web site:
[ h t t p : / / www.whi t e house.go v/ omb/ budget / a me ndment s / s uppl ement a l _3_25_03.pdf ]
20 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p 30 and p. 88-p. 89.
terrorism, P.L. 108-11 also requires that DOD notify Congress 15 days in advance
of payments and provide a financial plan for the expenditure of these funds by July
1, 2003. If DOD does not provide the financial plan, any unobligated funds for
coalition support will revert to the Treasury. As the Administration proposed, DOD
must get the concurrence of the Secretary of State and consult with the Office of
Management and Budget about these transfers.21 The $1.4 billion provided is
substantially more than the $490 million DOD already received in the two previous
supplemental, giving DOD additional funding to use to work out cooperative
relationships with foreign militaries.
In addition, Congress caps DOD’s total spending for coalition support at $1.4
billion in the FY2003 supplemental plus the $490 million previously appropriated for
these purposes in earlier supplementals (P.L. 107-206 and P.L. 107-117).22
According to the DOD request, some of these funds are to reimburse Pakistan for
patrolling its borders to search for terrorists, and some for Jordan, other nations, and
could be used within Iraq. DOD’s plans may become clearer when it submits its
financial plan to Congress on July 1, 2003.23 Appropriating funds to reimburse DOD
for military equipment already provided to Afghanistan from its stocks was not
controversial because these actions were endorsed in previous legislation.24
DOD Support of Regular and Irregular Foreign Military Forces.
Another tool that DOD requested to help establish cooperative relationships with
foreign military forces was $150 million in funding for support of irregular or
indigenous forces. A controversial proposal, this request was rejected by both houses
and not included in the final version.
In response to DOD’s request for $50 million to support regular foreign military
forces, the enacted supplemental permits DOD to spend up to $25 million, and
restricts the funding to counter-terrorism training. In addition, DOD is required not
only to get concurrence from the State Department but also to notify the25
Congressional defense committees 15 days in advance. (For House and Senate
provisions, see section, “Previous Congressional Action,” below.)
Discretionary Funds for the Commanders in Chief and the
Secretary of Defense. In the enacted supplemental, Congress agrees to DOD’s
21 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 11.
22 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 11 and CRS Report
RL31406, Supplemental Appropriations for FY2002: Combating Terrorism and Other
Issues, p. 69 and H.Rept. 107-350, p. 426.
23 DOD, Transcript of Under Secretary of Defense (Comptroller) Briefing, April 16, 2003,
p. 5; See [http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html]. See also
Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq and
the Global War on Terrorism, March 25, 2003; see
24 DOD is provided $165 million to replenish its stocks using the Afghan Drawdown
Authority, which was authorized in the Afghanistan Freedom Support Act of 2002..
25 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 6.
request to double from $25 million to $50 million the amount available for
combatant commanders in the CINC (Commanders-in-Chief) Initiative Fund to use
for training, contingencies, operations, joint exercises, military education and
training, activities that could help cement relationships with foreign military forces.
Within that $50 million for , P.L. 108-11 also increases current spending limits for
different types of purchases. The limits change as follows:
!For equipment, from $7 million to $10 million;
!For joint exercises, from $1 million to $10 million; and
!For military education and training, from $1 million to $10 million.26
Congress also expands the funding available for the Secretary of Defense for
“emergencies and extraordinary expenses,” from the current $34.5 million limit to
$50 million, less than the doubling requested. According to DOD’s justification
materials, these funds could be used for “joint warfighting capabilities in support of
military operations in Iraq and the global war on terrorism,” activities that could
involve initiatives in support of either U.S. or foreign militaries.27
Increasing Compensation for War Duty. In the enacted supplemental,
Congress increases imminent danger pay and family separation allowances for those
forces deployed for the Iraqi conflict, an increase in compensation that was not
proposed by DOD. Based on the Stevens-Durbin amendment that was unanimously
adopted in the Senate (S.Amdt. 436 as modified), combat pay increases 50% from
$150 a month to $225 a month, and family separation allowances increases 150%
from $100 a month to $250 month, retroactively to the beginning of FY2003.
These increases are intended to provide additional compensation for military
personnel, including activated reservists, for their service in the Iraq war. Senator
Durbin, who originally proposed higher levels, emphasized that these levels have not
been adjusted since 1991 after the first Gulf War in 1991. The levels adopted
represent a compromise between higher levels originally proposed by Senator Durbin28
and those offered by Senator Stevens.
These higher levels could offset some of the difficulties experienced by
activated reservists serving longer than anticipated tours, an issue of concern to29
Congress. Cost estimates for this change range from $650 million to $825 million
for FY2003. Although this change is only in effect for FY2003, the armed services
26 See Section 1304 in H.Rept. 108-76, p. 9.
27 See Section 1305 in H.Rept. 108-76, p. 9 and Department of Defense, FY2003
Supplemental Request for Military Operations in Iraq and the Global War on terrorism,
March 25, 2003; see
[ h t t p : / / www. d e f e nselink.mil/comptroller/defbudget/fy2004/DoD_J ustifi c a t i o n -F Y 03_Ira
28 Congressional Record, April 2, 2003, p. S4662-S4663.
29 See p. 12 of H.Rept. 108-55 for requirement that DOD conduct a comprehensive study of
the effects of longer mobilization on reservists.
committees are likely to address the issue of making the change permanent in the
context of the FY2004 budget. DOD will cover the cost within the supplemental.30
Defining DOD’s Postwar Role: Natural Resources Risk Remediation
Account and Other Reconstruction. DOD requested funding for repair of
Iraq’s oil wells in a new Natural Resources Risk Remediation Account and also
requested flexibility to use any foreign contributions either to this new fund or to the
Defense Cooperation Account that was set up during the first Gulf War. (Funds in
the Defense Cooperation Account can be transferred to the new account). In the
enacted version, Congress agrees to provide the $489.3 million for a new Natural
Resources Risk Remediation Account to repair and rebuild Iraq’s oil wells and
Before spending these funds, DOD is to use any foreign contributions to this
fund or from the Defense Cooperation Account. DOD would not need to return to
Congress for specific appropriation of any foreign contributions, a reversal of the
requirement in current law. That requirement was adopted after the first Gulf War
to ensure Congressional monitoring of foreign contributions.31 The scope of foreign
contributions to Iraqi reconstruction is currently unclear.
In addition to the amounts requested for the new account, the Administration
requested $2.4 billion for Iraq Relief and Reconstruction Fund with the President
having discretion about who would manage these funds (see section “Reconstruction
Efforts” below). From Administration actions, it appears that DOD may play a major
role in managing these funds.
Established by the President in January 2003 as the “nerve center” of U.S.
postwar activities, the new Office of Reconstruction and Humanitarian Assistance
was placed within the Department of Defense and is headed by Lt. General Jay M.
Garner (ret.) who reports to General Tom Franks, the Commander of the U.S. Central32
Command and the Secretary of Defense. Although responsibilities for
reconstruction activities remain unclear, the role of the State Department and USAID
appears to be less than in the past.
Short and Long-Term Costs and Effects of the War. During a recent
press conference, DOD Comptroller Dov Zakheim suggested that the $62.6 billion
for DOD would be adequate to fund DOD’s costs for the war in FY2003. Based on
the estimates provided at that press conference, the cost of the Iraq war for DOD
30 Estimate cited by Senator Stevens in the Congressional Record, April 2, 2003, p. S4662
and p. S4676, and higher DOD estimate cited by DOD Comptroller in Transcript of Under
Secretary of Defense (Comptroller) Briefing, April 16, 2003, p. 5; See
31 CRS, General Distribution Memo, “Prior Administration Requests for Funding Flexibility
in Financing Military Operations, April 3, 2003 by Stephen Daggett; available from author
or Amy Belasco.
32 testimony of Douglas J. Feith, Under Secretary of Defense for Policy before the Senate
Foreign Relations, February 11, 2003.
could range from $57.3 billion to $65.0 billion, with the midpoint of $60.2 billion
(see Table 3 below).33
The adequacy of the supplemental may depend on how many U.S. troops need
to be kept in Iraq now that hostilities have ended. Assessing the adequacy of the
supplemental for the remainder of the year (or the potential cost in FY2004) is
difficult because DOD has not provided its assumptions about troop levels. That may
become possible when DOD submits reports of its expenditures for the war, as well34
as a financial plan covering all of FY2003. Recently, the Pentagon suggested that
the U.S. may need to keep 125,000 troops in Iraq for the next year.35
33 CRS calculations based on DOD, Transcript of Under Secretary of Defense (Comptroller)
Briefing, April 16, 2003, p. 5; See
34 Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 6-p.7 and p. 61-p.62.
35 USA Today, “Postwar Force Could be 125,000,” April 28, 2003.
Table 3. DOD Estimate of Adequacy of FY2003 Supplemental for
the War in Iraq and Afghanistan
(in billions of dollars)
FY2003 -FY2003 -
Category Low e r Higher
Spent thus far - thru March 200319.021.0
Return of troops and equipment5.07.0
Monthly personnel and personnel support costs @ range ofa21.024.0
$3.5 billion to $4.0 billion per month
Support of coalition allies b1.41.4
Afghanistan and Global War on Terrorism @$1.1 billion toc7.78.4
$1.2 billion per month
Congressional changes to DOD’s Request
Increase in combat pay and family separation allowancesd0.70.8
Additional fuel allocatione0.70.7
Additional military personnel allocationf0.01.7
Note: CRS calculations based on DOD Press Transcript, Dov Zakheim, OSD/Comptroller, April 16,
2003; see [http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html].
a Covers personnel and personnel support costs for second half of FY2003; first half is covered in
category, “Spent Thus Far.”b
Provides military and logistical support to Pakistan, Jordan and other “key cooperating” nations in
the global war on terrorism.c
DOD estimates cost of Afghanistan and global war on terrorism runs about $1.1 billion to $1.2
billion per month; CRS assumes the last seven months of costs are covered in the FY2003
supplemental with the previous months funded in the $6 billion received by DOD in the FY2003
Consolidated Appropriations Resolution (P.L. 108-7)d
DOD and Senator Steven’s estimates of effect of Congressional action to increase imminent danger
pay and family separation allowances for deployed troops for FY2003 in P.L. 108-7.e
Congress set a floor of $1.1 billion for fuel costs due to higher prices compared to the $430 million
assumed by DOD in its request.f
Congress allocated $1.7 billion more for military personnel than DOD included in its request (see
H.Rept. 108-56, p. 10); however, if DOD’s estimates are correct and the funding is not needed,
DOD can transfer the funds elsewhere.
For the long-term, the chief cost issue is likely to be the number of troops who
remain in Iraq. According to a recent study, if U.S. troop levels declined from a level
of 75,000 in the first year to 25,000 by the third year, the five-year cost of that
occupation force would be $45 billion.36 Unlike the experience in Bosnia and
Kosovo, it is unlikely that the U.S. will share these costs with other countries.37
Some observers have also suggested that keeping significant numbers of troops
in Iraq could also affect the readiness of U.S. forces by putting strains on U.S. forces,
both actives and reserves. Those effects are, however, difficult to measure and could
be offset, to some extent, by the elimination of patrolling of Iraqi airspace in
Operations Northern Watch and Southern Watch, missions that have been carried on
for the past ten years.
Previous Congressional Action
The sections below give details on previous action in the House and Senate.
Floor Debate in the House and Senate. During floor debate on the
FY2003 Supplemental, the House did not adopt any amendments affecting the
Department of Defense.
During floor debate, the Senate added an amendment that increased imminent
danger pay from $150 to $225 per month and increased family separation allowances
from $100 to $250 per month, changes that were retained in the conference version.
The Senate also adopted the Allard amendment (S.Amdt. 451) establishing a seven-
member panel to review and report to the Secretary of Defense and the armed
services committees within 90 days about the effectiveness of policy and actions
taken at the Air Force Academy in response to allegations about sexual assaults.38
This amendment was included in the final version.
A more controversial Senate amendment — adopted by the Senate but dropped
during conference — was the Stevens amendment “to make certain improvements”
(S.Amdt. 522), including a provision that would prohibit any funding in the bill going
to airlift contracts to any firm that is not U.S. controlled.39 A sense of the senate
amendment offered by Senator Hollings (S.Amdt. 479) that would require the
President to submit a proposal to raise revenues to pay for the cost of the FY200340
supplemental was rejected (79 to 18).
Both the House and the Senate supported the funding requested by the
Administration but provided different ways to increase Congressional oversight about
the allocation of those funds (see discussion below).
36 Center for Strategic and Budgetary Assessments, Backgrounder, “ Potential Cost of a War
With Iraq and Its Post-War Occupation,” by Steven M. Kosiak, February 25, 2003, p. 3.
37 For additional information, see section on costs in CRS Report RL31715, Iraq War:
Background and Issues Overview.
38 Congressional Record, April 2, 2003, p. S4719 and p.4697.
39 BNA, Daily Executive, “‘Extraneous’ Add-ons Slow Conferees’ Work
On Finalizing $80 Billion ‘War’ Supplemental
40 Congressional Record, April 3, 2003, p. S4781-p. S4785.
House and Senate Markup of Department of Defense Request.
During markup, the House Appropriations Committee recommended appropriations
of $62.464 billion and the Senate Appropriations Committee (SAC) recommended
$62.559 billion, both close to the $62.587 billion requested by the Administration.
Both committees, however, devised different ways to restrict funds to specific
accounts rather than providing the bulk of the funds in the Defense Emergency
Response Fund as requested by the Administration. In some cases, the appropriators
also added notification requirements before obligation of funds or reporting
requirements after funds are spent (see below).
Compared to the Administration’s request for flexibility for $59.9 billion, the
House version gave flexibility in the use of $25.4 billion as long as DOD stayed
within certain ceilings while the Senate distributed all but $11.0 billion of the funds
in the DERF to specific appropriation accounts. At the same time, the House version
required a seven-day advance notification for transfers from the new fund while the
Senate permitted DOD to allocate those funds with quarterly after-the-fact reporting
as proposed by the Administration.
House Appropriations Committee (HAC) Limits. House appropriators
established a new Operation Iraqi Freedom Response Fund totaling $59.7 billion.
Within that fund, the HAC allocated funds by:
!setting limits on DOD’s subsequent transfers to various
appropriations accounts for $34.3 billion in funding;
!appropriating $2.6 billion into specific accounts; and
!setting up a third category for $25. 4 billion for the later stages of the
war where DOD would have flexibility to allocate funds as long as
it stayed within various floors and ceilings set in the bill.
Under the HAC’s transfer limits, DOD could spend less than or equal to the
ceilings for specific appropriation accounts outlined in the bill. (See Table 2b
above).41 The House appropriators allocated $1.7 billion more than the
Administration requested for Military Personnel accounts based on their belief that
the services would need additional amounts to cover such expenses as imminent42
danger pay, family separation allowances and the cost of mobilizing reservists.
Within the new Operation Iraqi Freedom Response Fund, the HAC set aside
$25.4 billion that would be available for “Combat, Stability Operations, and Force
Reconstitution costs,” a new category included in the bill, and required 7-day
advance notification to Congress of DOD’s transfers of these funds to individual
appropriation accounts. This category appeared to cover costs that would occur later
in the war or during an occupation phase.
Within this $25.4 billion category, the House appropriators:
!reserved $4 billion that DOD could not spend until July 1, 2003 for
additional Military Personnel or Defense Health costs in 2003;
!set a floor of $1.8 billion for classified programs;
41 See H.R. 1559 as passed by the House and H.Rept. 108-55, p.7 - p.23
42 H.Rept. 108-55, p. 15-p.16.
!set a ceiling on total Operation and Maintenance of $20.2 billion;
!set a ceiling on procurement of munitions and equipment of $4.2
!set a ceiling on RDT&E accounts of $57 million; and
!set a ceiling of $400 million for DOD to transfer to the Department
of Homeland Security for Coast Guard operating expenses.43
Since the total funding for all the ceilings and floors in the bill was $30.7
billion, over $5 billion more than the $25.4 billion reserved for Combat, Stability
Operations, and Force Reconstitution Costs, DOD would have had to fund some
accounts below the ceilings.
Senate Appropriations Committee (SAC) Limits. The Senate
Appropriators reduced the Administration’s $59.9 billion request for the Defense
Emergency Response Fund to $11 billion, transferring the remaining $51.2 billion
to other specific appropriations accounts. Based on discussions with DOD, the SAC
transferred funds that DOD characterized as incurred costs, for example for
deployment of troops and equipment or setting up base camps (see Table 2 and
Table 2a below) as well as other funds where expenses could be more predictable.44
Both House and Senate appropriators provided amounts requested by the
Administration for counter drug activities in Colombia ($34 million) and for
reimbursement for drawdown in its funds and stocks for the Afghan Army.
For procurement, the Administration’s request can only be broken out at the
service level rather than by individual accounts. The House and Senate bills appear
to distribute some of the $3.7 billion requested by the Administration for munitions
and equipment replenishment in Procurement, Defensewide to individual services.
Support of Foreign Military Forces. Both the House and the Senate
appropriators agreed to the Administration’s request that $1.4 billion be made
available for military and logistical support to Pakistan, Jordan or other “key
cooperating nations,” in the war on terrorism but each house proposed different
restrictions. In addition to quarterly reporting on the use of funds, the HAC required
a 7-day notification in advance and required that DOD provide a report within 30
days of enactment about their plans for using the funds or the funds would revert to
the Treasury. The SAC required a 15-day advance notification for use of these funds.
Neither the House nor the Senate approved the Administration’s request that the
Secretary of the Defense be allowed to spend $150 million to support irregular or
indigenous forces. In response to the Administration’s request that the Secretary of
Defense, with the concurrence of the Secretary of State, be allowed to spend $50
million to support the regular forces of other nations who cooperate in the war on
terrorism, the Senate approved the requested new authority with advance notification
but the House did not include any provision for this funding.
43 H.R. 1559, p. 15 and H.Rept. 108-55, p. 13 - p. 21.
44 See S. 762 as reported and S.Rept. 108-33, p. 7 - p.14.
As requested, appropriators in both houses gave the combatant commanders and
the Secretary of Defense flexibility to use certain funds at their discretion. Both the
HAC and the SAC recommended that the combatant commanders (CINCs) be
allowed to double from $25 million to $50 million the amount that they could spend
from the CINC Initiative Fund that could be used to support either U.S. or foreign
military forces. The HAC and the SAC also agreed with the Administration’s request
to increase the amount available to the Secretary of Defense to spend at his discretion
for emergency and extraordinary expenses; the House increased the ceiling from
$34.5 million to $69.0 million as requested and the Senate agreed to raise the amount
to $45.0 million.
Use of Defense Cooperation Account and Natural Resources Risk
Remediation Account. In response to DOD’s request to be able to use
immediately any foreign contributions to the Defense Cooperation Account,
originally set up to receive donations from foreign nations in the first Gulf War, both
the HAC and the SAC set conditions on use of any contributions. The HAC required
prior approval of any transfers from the fund to an appropriation account. The SAC
retained current statute, which requires that contributions be appropriated in
subsequent appropriations acts before DOD can use the funds.
Both the HAC and the SAC approved the $489 million for the new Natural
Resources Risk Remediation Account to cover the cost of firefighting and repair of
Iraqi oil wells (see below). For use of foreign contributions, the SAC agreed to allow
DOD to use any contributions without restrictions. The HAC, however, required
prior approval of any transfers of contributions.
Request for Higher Total on Transfers. In response to the
Administration’s request that the total amount that DOD can transfer annually
between appropriations accounts be raised from $2 billion to almost $9 billion, the
HAC retained the current ceiling and the SAC capped transfers at $3.5 billion per
To maximize flexibility, the Defense Department’s FY2003 supplemental
requested almost all of its $62.6 billion in funding in the Defense Emergency
Response Fund (DERF) transfer account.
Proposals to Maximize Flexibility. Although most of DOD’s funding in
the FY2002 supplemental for Afghanistan and enhanced security was also provided
in the DERF transfer account - based on the same rationale that DOD needed
flexibility in its efforts to combat terrorism after September 11th attacks — the $11
billion in funding was substantially smaller than the current request. DOD also
requested various changes to existing law to increase its flexibility to provide aid to
foreign militaries and to transfer funds between accounts.
Ceilings Within DERF Account . To place some limits on the $62.6 billion
requested in the DERF, DOD proposed ceilings and floors within the DERF account
in the categories below:
!a cap of $3.7 billion for munitions replenishment;
!a cap of $1.0 billion for procurement and RDT&E necessary for war
with Iraq and global war on terrorism;
!a cap of $50 million to support the military operations of foreign
!a floor of $53.346 billion for military operations in Iraq and the
global war on terrorism.
It is not clear, however, how these caps (or floors) could be enforced because the
categories were not defined.
According to DOD, the $59.9 billion in the DERF appropriation account was
intended to cover costs incurred in the war with Iraq — deployment of forces and
equipment and re-deployment costs when they return, DOD’s estimated costs of a
“short but extremely intense” war, repair and replenishment of equipment and
munitions damaged or used during the war, mobilization of reserve forces, and some
RDT&E, as well as other expenses for the war on terrorism.45 As in the FY2002
supplemental, DOD provided illustrative allocations of DERF funds but these
allocations were not binding (see Table 2c above).
Funds for Coalition Support. Continuing a practice begun in the FY2002
supplemental, DOD is requested $1.4 billion in the Operation and Maintenance,
Defense wide account to fund coalition support. According to DOD, that support
would include payments of $1.3 billion to Pakistan, Jordan and countries providing
logistical support to the U.S. in Afghanistan, and payments of $.1 billion for
logistical support to those supporting military operations in Iraq. The proposed
language did not bind DOD to any specific amounts for individual countries.
As in the FY2002 supplemental, the proposed language required that the
Secretary of Defense consult with the Director of OMB, and receive concurrence
from the Secretary of State before providing funds to allies. The current proposal did
not, however, include the 15-day notification to congressional committees before
making payments that was included in the FY2002 supplemental.46
New Natural Resource Remediation Fund. DOD requested $489.3
million for a new transfer fund, the Natural Resource Remediation Fund for
emergency fire fighting, repairing damage to oil facilities and infrastructure and
preserving distribution capability, and ensuring availability of fuel to the Iraqi people.
The fund was also to also receive foreign contributions. Some observers were
45 Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq
and the Global War on Terrorism, March 25, 2003, p. 2;
[http://www.defenselink.mil/comptroller/defbudget/fy2004/DoD_J ustification-FY03_Ir a
46 See Conference Report on FY2002 Supplemental for Further Recovery From and
response to Terrorist Attacks, H.Rept. 107-593, p. 17, and See OMB, Transmittal to Speaker
of the House, J. Dennis Hastert, FY2003 Supplemental Appropriations Request, March 25,
[ h t t p : / / www.whi t e house.go v/ omb/ budget / a me ndment s / s uppl ement a l _3_25_03.pdf ] .
concerned about the nature and extent of DOD’s role, including the potential for
“mission creep,” the expansion of DOD’s role beyond its traditional missions.
DOD also proposed that any contributions to the Defense Cooperation Account,
set up after the first Gulf War for foreign contributions would be considered to have
been approved in the FY2003 Supplemental Appropriations Act. This proposal to
give DOD discretion in advance to use foreign contributions was not consistent with
the practice in the past when Congress approved the transfer of allied contributions
to specific accounts.
Requests in Specific Accounts. DOD requested funds a total of $2.6
billion for specific accounts including:
!$430 million to cover higher oil costs that DOD experienced in the
early months of the year because of the initial spike in oil prices
related to the war;
!funding for several military construction projects in Guantanamo
and at several undisclosed locations overseas;
!an additional $34 million for counter drug activities in Colombia;
($34 million is also provided for the Andean Counter Drug Initiative
in the State Department section.); and
!$165 million for reimbursement to the services for expenses already
incurred in training, and equipping the Afghan Army as well as
Proposed Changes to Current Law To Increase DOD Flexibility.
DOD requested several changes to current law to increase DOD’s management
flexibility contending that such changes are necessary to allow DOD to adapt quickly
to the demands of the war on terrorism. Several controversial proposals included:
!two proposals to permit the Secretary of Defense to provide monies
to regular foreign militaries and to irregular “ indigenous” forces;
!two proposals to increase the amounts available to combatant
commanders and the Secretary of Defense to respond to
unanticipated expenses where funds could be used to provide
support to foreign military forces; and
!a large increase from $2 billion to about $9 billion in the ceiling set
on the total amount of funds that could be transferred between
Providing Aid to Regular and Irregular Foreign Forces. The
supplemental request also included a general provision that would have allowed
DOD to use up to $150 million of funding in the supplemental to support indigenous
forces assisting U.S. operations in support of the global war on terrorism. The
provision was intended to “clarify DOD’s authority to promote military cooperation
in the global war on terrorism.”47 (See additional discussion in section on Foreign
Within the DERF account, DOD also proposed that up to $50 million could be
used to support the regular military forces of foreign nations to further the “global
war on terrorism” as long as the Secretary of State concurred with the Secretary of
Defense in providing funds. According to DOD, this new provision would have
enabled DOD to provide aid to foreign forces “rapidly, in response to emerging,
unanticipated emergency requirements.”48
The request also raised the total amount available to the combatant commanders
in the Commanders In Chiefs (CINC) Initiative Fund from $25 million to $50
million. This fund is available to combatant commanders for a wide variety of
activities including not only training and selected operations of U.S. military
personnel but also education, training and personnel expenses of foreign defense
personnel in cooperative programs.49
To increase DOD’s flexibility in carrying out these purposes, the supplemental
request also proposed raising the limits that currently apply:
!to purchases, from $7 million to $15 million;
!to payments to foreign countries participating in exercises, from $1
million to $10 million; and
!to military education and training of foreign nationals, from $2
million to $10 million.50
All these proposals would have given DOD additional authority to reimburse
foreign military forces for expenses, including procurement, personnel costs, and
exercises. Although the Secretary of Defense would need the concurrence of the
Secretary of State in order to spend the additional $200 million in funding — $50
million for regular foreign forces and $150 million for irregular forces — the request
did not provide a mechanism for congressional oversight of these activities before
they occur. The Administration’s proposal did include after-the-fact reporting, on a
47 Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq
and the Global War on Terrorism, March 25, 2003, p. 31-p.32;
[http://www.defenselink.mil/comptroller/defbudget / f y2004/ DoD_J u s t i f i cat i on-FY03_Ira
48 Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq
and the Global War on Terrorism, March 25, 2003, p. 23-p.24;
49 Title X, U.S. Code, Section 166. See Department of Defense, FY 2003 Supplemental
Request for Military Operation in Iraq and the Global War on Terrorism, March 25, 2003,
p. 29 for proposed change.
50 Title X, U.S. Code, Section 166a. See Department of Defense, FY 2003 Supplemental
Request for Military Operation in Iraq and the Global War on Terrorism, March 25, 2003,
p. 29 for proposed change.
quarterly basis, for both types of reimbursement.51 The final version rejects DOD’s
request for $150 million for irregular forces and reduced the request for regular
forces to $25 million.
Requested Change in Ceiling on Transfers. DOD proposed a large
increase in the annual ceiling set on the total amount of funds that can be transferred52
between appropriation accounts after enactment from $2 billion to about $9 billion.
DOD reprograms or shifts funds between appropriation accounts after enactment to
reflect changes in priorities. DOD stated that this additional flexibility, along with a
lifting of the midyear deadline on reprogramming requests, would help DOD to53
respond to “emerging requirements, particularly in Iraq.” In the enacted bill,
Congress provides $2 billion in transfer authority for funds in the FY2003
Allocation of DOD Funding by Phase of Operations. DOD provided
a breakout of the $62.6 billion according to several phases of operations as shown in
Table 4 below. In its justification material and recent press statements, DOD
characterized the $30.3 billion of expenses for “coercive diplomacy” as incurred
“Coercive Diplomacy”. Almost half of the $30.3 billion was for personnel
expenses including activation of reservists, and special pay for active-duty military
in combat and support of those personnel for both the Iraqi conflict, Afghanistan, and
enhanced security in the United States. Another $7 billion was for the deployment
and re-deployment of personnel to and from the theater.
Major Conflict. DOD’s estimate of the cost of the war itself appeared to
assume a short, intense conflict of about a month. Using plans for deployments and
military operations developed by the combatant commanders, DOD estimated these54
costs relying on a model developed in the mid-1990s for contingency operations.
Assumptions about these plans underlay DOD’s estimates of costs.
Transitional and Stability. DOD included its postwar operational costs in
this category, including funding to repair Iraqi oil facilities, and “Lower Intensity
Operations” that may include the operational costs of an occupation force. The initial
size and possible phase down of this force was not specified.
51 See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental
Appropriations Request, March 25, 2003, provisions on the DERF and general provisions;
52 The proposed language permits DOD to transfer up to 2.5% of the $355.1 billion
appropriated in the FY2003 DOD Appropriations Act (P.L. 107-248) or $8.878 billion.
53 See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental
Appropriations Request, March 25, 2003, general provisions; see estimate no. 4 on OMB
54 See DOD Financial Management Regulation, Volume 12, Chapter 23; on DOD website,
Although DOD included little funding in its request for the postwar phases of
the Iraqi War, a controversy developed about the Administration’s plans to transfer
funds to DOD from reconstruction funds requested for the Executive Office of the
President (see section on Reconstruction Efforts below).
Reconstitution. Reconstitution referred to the repair of damaged equipment
and replenishment of munitions, spare parts, or equipment lost in a war.
Table 4. DOD FY2003 Supplemental Request by Phase
(in billions of dollars)
Phase of OperationsFY2003FY2003Subtotals
Coercive Diplomacy Subtotal 30.3
Transportation To & From Theater Of Operations 7.1
Consumables used to datec2.3
Other e 1.2
Major Conflict Subtotal13.1
Spare Parts, Logistics support, Consumables4.7
Transportation Within Theater1.6
Military Personnel (included above)NA
Transitional and Stability Subtotal12.0
Natural Resources Remediation Fundf1.2
Lower Intensity Operationsg11.4
Weapons of Mass Destruction ContainmentNA
Reconstitution h 7.2
Depot Maintenance and Other Reconstitution3.7
Sources: Under Secretary of Defense (Comptroller), Briefing to the Congressional Oversight
Committees, FY2003 Emergency Supplemental: Military Operations in Iraq and the Global War on
Terrorism, March 25, 2003; see
[ h t t p : / / www. d e f e n s e l i n k . m il/co mp tr o ller /d e fb ud ge t/f y2004/Do D_ Justification-FY03_Iraqi_Freedo
a Includes additional pay for active-duty military personnel in combat (e.g. hazardous duty pay), cost
of activating reservists, and personnel support.
b Specific definition not provided; includes setting up overseas bases.
c Consumables include paying higher prices for fuel than anticipated, expended munitions, and food
and medical supplies.d
Includes request of $1.4 billion for payments to Pakistan, Jordan, and “other key cooperating
nations” for logistical and military support in the war on terrorism in Afghanistan; also includes
$0.1 billion for Free Iraqi Forces and $0.2 billion for the Afghan Army.e
“Other” includes enhancements to White House and other communications systems, improvements
to the Navy base at Guantanamo Bay housing prisoners from Afghanistan, logistics support,
other projects and replenishment of equipment.f
DOD is requesting $489 million for emergency firefighting, repair of damage to Iraqi oil fields, ande
providing fuel to the Iraqi people.g
May be operational costs of occupation force.h
Includes replacement of expended munitions and equipment, and depot maintenance for equipment.
Allocation of DOD Funding by Major Type of Expense. Although
DOD’s justification materials included illustrative allocations of expenses to be
covered in the DERF account by appropriation account, these allocations were not
binding, and could be changed in response to the course of the war in Iraq or changes
in DOD priorities. Table 5 shows these potential allocations.
Personnel and Personnel Support. Personnel costs accounted for much
of the total cost of the war in Iraq, continued expenses in Afghanistan, and enhanced
security in the United States. They reflected both increases in overall strength levels
of active-duty military and activation of reservists. The expense breakdown below
did not, however, show either the number of reservists that DOD plans to activate
over the rest of the fiscal year or the allocation of personnel among the different
missions funded in the supplemental or the types of tasks that these personnel carry
Starting in January 2003, DOD rapidly increased the number of reservists being
called up for the Iraqi war. Before the buildup, about 50,000 to 55,000 reservists
were on active-duty to provide support for operations in Afghanistan or enhanced
security in the United States, a decrease from the 80,000 called up in the months after
the September 11th attacks. The current level of activated reservists is over 200,000,
according to the Defense Department. DOD’s estimates of cost in Table 5 are built
on assumptions about the number of reservists needed during the war with Iraq and
for the occupation force that would remain afterwards but those numbers are not
provided in its justification material.
Military Operation Support. According to various sources, DOD
anticipated a short, intense war of about one month, which would be roughly
consistent with the $14 billion in operating support shown below. (This estimate was
considerably higher than a recent CBO estimate of $10 billion based on current force
levels.)55DOD’s estimated cost of $100 million reflected its expectation that its role
in funding humanitarian assistance would be limited.
55 CBO revised its estimates based on current deployments, see CBO, An Analysis of the
President’s Budgetary Proposals for Fiscal Year 2004, March 2003, p. 4; see
[http://www.cbo.gov]. CBO’s methodology uses cost factors of the services.
Procurement. DOD did not specify the mix of munitions or equipment which
it expected would need to be replaced. Although there was clearly considerable
uncertainty about replacement costs, the $3.7 billion estimate was predicated on
assumptions about likely loss rates.
Table 5. FY2003 DOD Supplemental, by Purpose,
Based on DOD’s Justification Material
(in billions of dollars)
Purpose/Type of ExpenseFY2003FY2003Subtotals
Military Personnel Expenses Subtotal10.398
Active-Duty Military Personnel Special Pays2.000
Higher Active-Duty Levels 1.450
Cost of Mobilizing Reservists6.948
Personnel Support (O&M funded) Subtotal5.240
Active-Duty Personnel Support3.365
Mobilized reserve Support 1.541
Defense Health Program0.302
Other personnel costs0.032
Military Operation Support (O&M Funded) Subtotal37.760
T r ansportation 10.804
Facilities/Base Support 6.992
Command, Control, Communications and Intelligence3.177
Guantanamo Bay Improvements0.010
Working Capital Fund: For Higher Oil Prices0.430
Military Construction Subtotal0.177
Military Construction, Navy 0.048
Military Construction, Air Force 0.129
Natural Resource Risk Remediation Fund0.489
Operation and Maintenance, Army0.035
Operation and Maintenance, Navy0.075
Operation and Maintenance, Air Force 0.055
Operation and Maintenance, Defense-wide1.400
Drug Interdiction and Counter-Drug Activities0.034
Source: Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq and
the Global War on Terrorism, March 25, 2003;
[ h t t p : / / www. d e f e n s e l i n k . mi l / c o m p t r o l l e r / d e f b u d g e t / f y 2004/Do D_ Justificatio n-FY03_Iraqi_Freedo
Iraq Reconstruction and International Assistance
The President’s supplemental proposal included $7.79 billion for near-term Iraq
reconstruction and relief, additional aid to coalition partners and other states
cooperating in the global war on terrorism, and related State Department and USAID
administrative expenses. Most of the funds — $7.6 billion — fell under the
jurisdiction of Foreign Operations appropriations programs. By comparison, the
supplemental request totaled a little less than half of the $16.2 billion appropriated
previously by Congress for FY2003 Foreign Operations activities.
The proposal, as detailed below in Table 5, was roughly divided into two
components: Iraq relief and reconstruction (about $2.85 billion)56 and aid to coalition
partners and other nations engaged in the war on terrorism (about $4.7 billion).
Under the Administration’s plan, the bulk of Iraqi reconstruction funds would
be deposited in a special Iraq Relief and Reconstruction Fund, which would be
managed by the White House. Out of this $2.44 billion Fund, resources would be
drawn and transferred to implementing agencies to pay the costs of immediate
humanitarian relief and reconstruction activities over a 12-month period following
the end of hostilities.
Normally, it would be presumed that transfers for reconstruction and post-
conflict aid would be made to USAID, the State Department, and other traditional
foreign assistance management agencies. But with plans for the Defense Department
to oversee the governing of Iraq immediately after the end of hostilities, the White
House wanted to have maximum flexibility over the distribution of resources so the
President could transfer some or all of the funding to DOD. The proposal stimulated
immediate controversy with a number of critics, including Members of Congress,
arguing that aid programs should remain under the policy direction of the State
Department and under the authorities of a broad and longstanding body of foreign aid
laws. They pointed out that during other recent reconstruction initiatives in Bosnia
and Kosovo, resources and policy decisions flowed through the Secretary of State.
Others argued that groups which would play a significant role in post-war
rehabilitation efforts — non-governmental organizations (NGOs), foreign donors,
and international organizations — would be reluctant to take direction and funding57
from the U.S. military. This, they contended, would hamper relief activities.
56 OMB documents estimate the total amount for Iraq reconstruction was $3.5 billion, a
figure that included nearly $500 million from DOD funding for the repair of oil facilities.
57 See, for example, U.S. Bureaucratic Battle Over Postwar Aid to Iraq Heats Up, Agence
Furthermore, the placement of reconstruction funding in a Presidential account
appeared to grant the White House significant discretion in responding to changing
and unanticipated demands, unencumbered by specific programmatic allocations.
The Administration said only that $543 million would cover humanitarian expenses,
$1.7 billion would be set aside for reconstruction needs, and up to $200 million
would be available to reimburse foreign aid accounts from which funds were drawn
prior to conflict.
According to Administration documents, reconstruction funds would focus
initially on the most urgent needs to restore minimal services to the Iraqi population.
Emphasis would be placed on rebuilding water and sanitation capacity, restoring
public health facilities, refurbishing seaports and airports in order to move
humanitarian supplies into the country, reestablishing a food distribution system, and
generating emergency electricity. Following this early stage, the White House plan
called reconstructing broad economic and institutional capacity. This second phase
would target the restoration of roads, schools, hospitals, markets, irrigation systems,
and electrical generation, together with the construction of a framework within which
to operate education, economic, agriculture, and good governance institutions.
Apart from the Relief and Reconstruction Fund, the Administration also sought
$200 million to replenish refugee, disaster, and other economic aid accounts that had
already financed the costs of food and other commodities. A portion of these funds
would also bolster the size of humanitarian accounts so that future “borrowings”
from other aid sources to meet the needs in Iraq would be minimized. The State
Department and USAID further requested appropriations to establish safe and secure
temporary facilities in Iraq and to eventually build an embassy and aid mission in
Congressional Action on Iraq Reconstruction. As cleared by Congress,
H.R. 1559 appropriates $2.475 billion for the Relief and Reconstruction Fund,
slightly higher requested. The President will be able to apportion Fund resources
directly to five federal agencies: the Departments of Defense, State, Health and
Human Services, and Treasury, and USAID. In previous congressional debate, the
House and Senate had each expressed their expectations that these funds would be
channeled to the Secretary of State, and in most instances, further directed to USAID.
The report accompanying S. 762 specifically noted that the funds were not expected
to be transferred to the Secretary of Defense. Nevertheless, the White House
continued to argue for greater flexibility and authority to place reconstruction
resources under DOD auspices, and ultimately conference committee members
agreed. The enacted legislation, however, specifies that the Iraq Fund will fall under
the authorities of the Foreign Assistance Act of 1961 and that Congress will be
notified five days in advance of any obligation of amounts from the Fund. Further,
these advance notifications will be reviewed under the same terms as regular foreign
aid notifications to the Appropriation Committees, a process through which
Members may place “holds” on the obligation of resources pending further
France-Presse, April 2, 2003; and Congress: Powell Should Control Postwar Spending,
USA Today, April 4, 2003, p. A.06.
consultation. H.R. 1559, as approved, also strengthens congressional oversight of the
Fund by requiring two reports within the first 45 days of enactment regarding how
the Fund will be organized and other issues such as reconstruction and government-
creation strategies, coordination with other donors, and overall costs. Beginning in
mid-July 2003, H.R. 1559 requires quarterly status reports on Fund operations.
Table 6. Iraq Reconstruction, International Aid, and Related Activities
(in millions of dollars)
Act i vi t y Request H ouse Senat e Enact ed
ief and Reconstruction:
$2,443.3 $2,483.3 $2,468.3 $2,475.0
water and sanitation, seaports/airports, food-$1,700.0 — — —
s, and electricity. Post-conflict emphasis on education, governance,
ic institutions, agriculture, and infrastructure repair.
manitarian aid, refugee and displaced persons relief, demining$543.0 — — —
bursement to USAID’s Development, Child Survival and ESF aid accounts previously$200.0fullya$260.0 fully
iki/CRS-RL31829n upon to provide food commodities.reimburse reimburse
g/wbursement to USAID’s International Disaster Assistance account for previously drawn
s.orainly through the UN WFP, and for immediate$80.0$160.0 $112.5 $143.8
://wikibursement to USAID’s Child Survival/Health account for previously drawn upon$40.0$40.0 $90.0 $90.0
bursement to USAID’s Economic Support Fund account for previously drawn upon$40.0 — $40.0 $40.0
ergency relief and non-health reconstruction.
imbursement of PL480 food assistance, including the Bill Emerson Humanitarian Trust — $319.0$600.0 $369.0
ent of the Emergency Refugee and Migration Aid (ERMA) fund to restore $17.9
illion that has been drawn down for Middle East contingencies and to have funds available$50.0$80.0 $75.0 $80.0
eeping funds for coalition partners engaged in post-conflict Iraq$200.0$115.0 $150.0 $100.0
nstruction$2,853.3$3,197.3 $3,535.8 $3,297.8
Act i vi t y Request H ouse Senat e Enact ed
oalition Partners & Cooperating States in War on Terrorism
ilitary grant.$1,000.0$1,000.0 $1,000.0 $1,000.0
ic loan guarantees. Israel will pay all fees associated with the cost of $9 billion[$9,000.0]b[$9,000.0]b[$9,000.0]b[$9,000.0]b
ypt economic grant, a portion of which can be used for up to $2 billion in loan guarantees.$300.0$300.0 $300.0 $300.0
rdan economic and military grants.c$1,106.0$1,106.0 $1,106.0 $1,106.0
ic grant.$50.0NS NS NS
rkey economic grant, a portion of which can be used for up to $8.5 billion in direct loans.$1,000.0$1,000.0 $1,000.0 $1,000.0
ic and military grant.$30.0NS $80.0 $60.0
iki/CRS-RL31829kistan military grant and law enforcement aid.c$200.0$200.0 d $200.0
s.oribouti economic and military grants.$30.0NSNSNSe
an military grant.$62.0NSNSNS
://wikihrain military grant.$90.0NSNSNSe
lombia military and counter-narcotics grants to support unified campaign against drugs andf$71.0NSNS NSe
ghanistan economic, military, anti-terrorism, and demining grants.$325.0$325.0 d $365.0
ast Partnership Initiative and Muslim World Outreach.h$200.0$105.0 d NSg
ntral Europe military grants.i$84.1NS d NSi
Emergency Fund for Complex Foreign Crises — aid to support contingencies for coalition$150.0$0.0$150.0$0.0
lition Partners & Cooperating States$4,698.1$4,488.1$4,604.0$4,518.1
Act i vi t y Request H ouse Senat e Enact ed
ate Department Administration & Other Activities
ent Diplomatic and Consular Affairs$101.4$106.4 $93.4 $98.4
whi c h: $5.0 $5.0 NS $5.0
sk Force Surge Support operations.
hdad embassy reopening; enacted amount includes diplomatic security$17.9$17.9$17.9$35.8
$15.6 $15.6 $15.6 $15.6
upgrades $10.0 $10.0 $10.0 $10.0
isa fee shortfalls$35.0$35.0$30.0$32.0
— — $2.0 —
iki/CRS-RL31829ergency response — $30.6 — —
s.orent embassy construction$20.0$71.5 $82.0 $149.5
which:$20.0 — $20.0$61.5
://wikiporary facilities in Iraq.
httpofficial facilities frequented by U.S. citizens overseas — — $10.0$10.0
in Rome, Italy — — — $78.0
D mission in Iraq, and, as enacted, IG monitoring of the Iraq Fund, and USAID security$22.0$23.0 $23.6 $24.5
istan, Afghanistan, and Indonesia.
tential emergency evacuations of US government employees, families, and private$65.7$65.7 $40.0 $50.0
to Iraq and Middle East Television Network$30.5$30.5 $62.5 $30.5
es Tribunal and investigations into war crimes allegations — — $10.0$10.0
tment & Other$239.6$297.1 $311.5 $362.9
on, International Aid, & Related Activities$7,791.0$7,982.5 $8,451.3 $8,178.8
e House Appropriations Committee stated that up to $495 million in reimbursements was included in H.R. 1559.
unds ($1.3 billion) were requested and enacted for Jordan, Pakistan, and other “key cooperating states” providing logistical and military support to U.S. military operations
in Iraq and in the global war on terrorism.
quest “supported” in Senate bill.
though the enacted supplemental does not set a specific level for this country, the Administration has allocated the full amount requested.
unds ($34 million) were also requested and enacted for drug interdiction and counter-drug activities in Colombia.
e to Congressional reductions in overall ESF funding and increases for Afghanistan and the Philippines, the Administrations allocated $100 million for MEPI.
use bill funded an Islamic Partnership and Outreach Program.
e Administration requested funds for 10 Central European nations but has altered the list of recipients and the allocation of military grants following enactment of the supplemental,
as follows: Poland ($15 million requested and allocated); Hungary ($15 million requested; $8 million allocated); Czech Republic ($15 million requested and allocated); Estonia
($2.5 million requested, $2.75 million allocated); Latvia ($2.5 requested, $2.75 million allocated); Slovakia ($6 million requested, $6.5 million allocated); Romania ($15 million
requested and allocated); Slovenia ($5 million requested, $0 allocated ); Lithuania ($3.5 million requested, $4 million allocated); Bulgaria ($5 million requested, $10 million
allocated); Albania $0 requested, $3 million allocated); Macedonia ($0 requested, $1 allocated); and Ukraine ($0 requested, $1.5 million allocated).
The enacted bill further directs higher and more specific amounts that should be
used to replenish several foreign aid accounts that had been drawn upon in order to
preposition food and medicine stocks in the region and for other pre-conflict
humanitarian purposes. The conference agreement directs “full and prompt”
reimbursement of USAID and State Department accounts from the Iraq Fund. The
supplemental provides $143.8 million for international disaster assistance, $112.5
million of which will restore funds diverted previously for Iraq. The remaining
balance will augment USAID disaster relief resources to respond to foreign
contingencies that may arise through the end of FY2003. Similarly, Congress
increased the State Department’s refugee reserve account from the $50 million
requested to $80 million in order to address needs in the Persian Gulf region as well
as other global requirements. H.R. 1559 also includes $369 million to reimburse
food aid accounts from which commodities for Iraq were drawn. This includes $69
million to replenish stocks in the Bill Emerson Humanitarian Trust. The House had
added $250 million additional food aid while the Senate, by way of an amendment
by Senator Kohl, had recommended $600 million. In total, the enacted legislation
provides roughly $920 million for reimbursing these foreign aid accounts, more than
double the Administration’s $410 million request.
International Assistance. The supplemental appropriation proposal would
have provided about $4.7 billion in additional aid to 23 countries and regional
programs that are contributing to the war in Iraq and cooperating in the global fight
against terrorism. Table 6 provides a complete list of proposed recipients. Among
the largest and most complex aid packages would be:
!Jordan — $700 million in economic grants and $406 million in
military transfers. This would be on top of Jordan’s regular $452 aid
package from the U.S.
!Israel — $1 billion in supplemental military aid (on top of the $2.7
billion regular FY2003 assistance) and $9 billion in economic loans
guaranteed by the U.S. government over the next three years. Israel
would pay all costs — fees that may total several hundred of million
dollars — associated with these economic stabilization loans.
Conditions on the loans, similar to those that were applied in the
early 1990s when Israel drew on a $10 billion U.S.-backed loan
package, would be employed.
!Turkey — $1 billion for economic grants which could be applied to
fees associated with $8.5 billion in direct loans or loan guarantees.
!Afghanistan — $325 million in economic grants, anti-terrorism,
demining, and military transfers. This would be in addition to
roughly $350 million already scheduled for Afghanistan this year.
!Egypt — $300 million for economic grants, a portion of which could
be used to gain access to up to $2 billion in loan guarantees.
Depending on the terms of the loan, if Egypt chose to receive the full
$2 billion, about $120 million or more of the $300 million would be
applied to the costs faced by the United States of guaranteeing the
loans. The Administration further proposes to reprogram $379.6
million in previously appropriated commodity import program aid
to Egypt as a cash transfer. The supplemental would come on top of
$1.9 billion in regular U.S. aid to Egypt.
!Pakistan — $200 million in military grants and law enforcement
assistance. Pakistan currently receives $305 million in FY2003.
The Administration further requested $150 million to initiate a U.S. Emergency Fund
for Complex Emergencies, a contingency account that would allow the President to
address quickly unforseen needs of coalition partners. The Fund, which would be
managed by the White House, had originally been proposed for an FY2004 startup
of $100 million.
Congressional Action on International Assistance. H.R. 1559, as
approved, includes $4.52 billion in additional aid to countries and regional programs,
about $180 million less than requested. Nearly all of this reduction, however, comes
from Congress’ decision not to fund the President’s $150 million emergency account
for complex crises. In most other cases, the Administration will be able to allocate
these foreign aid resources has it had intended. Congress earmarked funding at the
requested levels for Israel, Egypt, Jordan, and Pakistan, while adding resources for
Afghanistan and the Philippines (see Table 6). Turkey may receive “not to exceed”
$1 billion, aid that is conditioned on a requirement for the Secretary of State to certify
that Turkey is cooperating with the United States in Operation Iraqi Freedom,
including the facilitation of moving humanitarian aid into Iraq, and has not
unilaterally deployed forces in northern Iraq. The restriction on Turkey’s aid
package, the size of which could grow to $8.5 billion if the loan option is
implemented, combines text in House and Senate-passed bills. Earlier, the House
had defeated two amendments that would have eliminated aid to Turkey or reduced
it by $207 million.
For Israeli loan guarantees, the enacted supplemental includes the full $9 billion
proposal, but adds conditions not included in the proposal. Loans may be issued in
$3 billion allotments in each of FY2003 to FY2005, a provision that will allow the
President to reduce disbursements in the second and third years Israel violate any of
the loan conditions. One such condition added by Congress prohibits loan resources
from supporting any activity in geographic areas that were not administered by Israel
prior to June 5, 1967. This is similar to a condition attached to the 1992 $10 billion
loan guaranty package for Israel, some of which was not disbursed because of
continued Israeli settlement activity in the West Bank area.
Table 7. Proposed Recipients of Supplemental Foreign Aid
Economic Loans Military Ant i -Terrorism Narcotics/Law TO TAL
Jordan$700a — $406a — — $1,106
Israel — [$9,000]$1,000a — — $1,000
Turkey$1,000a[$8,500]* — — — $1,000
Afghanistan$127b — $170a$28a — $325
Egypt$300a[$2,000]* — — — $300
Pakistan — — $175a — $25a$200
Bahrain — — $90 — — $90
Colombia — — $37 — $34a$71
Oman — — $62 — — $62
Palestinians$50 — — — — $50
Djibouti$25 — $5 — — $30
Philippines — c — $30 — — $30
Czech Rep. — — $15 — — $15
Hungary — — $15 — — $15d
Poland — — $15 — — $15
Romania — — $15 — — $15
Slovakia — — $6 — — $6d
Bulgaria — — $5 — — $5d
Slovenia — — $5 — — $5d
Estonia — — $3 — — $3d
Latvia — — $3 — — $3d
Lithuania — — $3 — — $3d
* Up to this amount. Loans would not require additional appropriations since economic grants would
be used to pay for loan fees.
a Amount is earmarked or recommended in the enacted supplemental appropriation.
b The enacted supplemental appropriation provides $167 million.
c The enacted supplement appropriation includes $30 million for Philippine economic aid.
d Following enacted of the supplemental, the Administration has modified its plans to allocate funds
for this recipient. See footnote “i” in Table 6, above, for the allocated amounts.
Although most of the President’s request for international assistance is
supported in the enacted emergency supplemental, the Administration had to reduce
economic assistance in one instance. Congress cut Economic Support Fund
appropriations by $20 million, but because earmarks and additions for Afghanistan,
the Philippines, and $10 million to investigate possible Iraqi leadership war crimes,
executive officials had $100 million less than requested in economic assistance for
countries not protected by legislative directives. Non-earmarked programs included
$50 million for the Palestinians, $25 million for Djibouti, and $200 million for the
Middle East Partnership Initiative. The Administration chose to fully allocate
amounts for the Palestinians and Djibouti, but cut resources for the Middle East
Partnership Initiative (including Muslim Outreach) to $100 million, half of the level
The State Department also chose to modify its distribution of military aid grants
to several Central Europe states. Most significantly, the executive branch decided
to add funds (not requested) for Albania, Macedonia, and Ukraine, and increase
amounts above the requested levels for Estonia, Latvia, Lithuania, and Bulgaria. As
off-sets, the State Department cut funds for Hungary and eliminated the $5 million
request for Slovenia. See footnote “i” in Table 6 above for specific amounts
allocated to each recipient.
Key Issues Regarding Iraq Reconstruction and International
The proposed supplemental raised a number of issues and concerns, including
those focusing on the extent of executive flexibility sought by the President, how
much more Iraq reconstruction might cost and whether these demands would erode
funding for other foreign aid priorities, whether the purposes and amounts of country
assistance were appropriate, and whether DOD’s request for authority and funds to
aid indigenous forces was consistent with traditional U.S. military assistance
programs managed by the State Department.
Executive Flexibility and Congressional Oversight. Throughout the
supplemental request, in both the defense and Iraq reconstruction/international
assistance sections, the President sought authorities that would maximize flexibility
in responding to fluid and rapidly changing demands. Among the most significant
authorities affecting the use of foreign aid funds were:
!Iraq Relief and Reconstruction Fund — The Administration’s budget
justification for the White House managed $2.44 billion Fund
offered only broad purposes for which the money would be used and
divided the money into three general categories. Iraq reconstruction
plans submitted by the State Department to Congress offered some
details on specific sectors, how the U.S. would respond, and the
timing of actions over the next year. Funding amounts for each
activity, however, were not provided, as is usually the case with
foreign aid justifications. Moreover, since the funds would be
appropriated into a Presidential fund, it would be possible for the
White House delegate the resources to any agency, including the
Defense Department, for reconstruction implementation. As noted
above, this prospect of DOD management raised disputes within the
Administration and the American international NGO community,
with critics arguing that it would be inappropriate for the military to
control a civilian operation. The proposal to establish a central Fund
most closely resembled how the Administration programmed U.S.
relief for victims of Hurricane Mitch in Central America in 1999 and
Bosnia reconstruction efforts in 1996. In both cases Congress
appropriated money into special funds, but placed them under the
control of USAID and added numerous directives over how portions
of resources should be used and various notifications for informing
Congress in advance of committing the money. Moreover, the
supplemental request for the Relief and Reconstruction Fund would
make the appropriations available “notwithstanding any provision of
law.” This would remove any of the numerous restrictions and
conditions that generally apply to U.S. foreign assistance, including
provisions relating to human rights, proliferation, government
legitimacy, contract negotiations, among others. Waivers of these
restrictions are generally applied only to humanitarian programs.
Congress rejected a similar request last year for supplemental
economic and military aid to the front-line states in the war on
!U.S. Emergency Fund for Complex Crises — For many years,
Administrations have asked Congress for various types of
contingency resources that can be drawn upon immediately to
address unanticipated foreign policy emergencies. Except in the
case of humanitarian situations, however, Congress has been
reluctant to support such requests, stating that the President has other
mechanisms and special authorities for temporarily “borrowing”
funds from other aid accounts over which Congress can more closely
maintain scrutiny and consult in advance as the purposes of the
transfers. The President’s $100 million FY2004 request to create the
Crises Fund had already raised concerns among some Members
during hearings on next year’s budget request.
!Transfer of funds among different accounts — The supplemental
proposed that up to $200 million of international assistance, State
Department money, and the Iraq Relief and Reconstruction Fund
could be transferred between the accounts for any purpose.
Longstanding foreign aid laws place percentage caps on the amount
that can be taken from most accounts (10%) and how much the
receiving account can increase (20%).58 Annual Foreign Operations
appropriations further require the President to consult and justify the
transfer in advance with House and Senate Appropriations
Committees. In some circumstances, the Administration’s
supplemental proposal could have resulted in transfers exceeding the
percentage caps. The request further did not require any
congressional notification or consultation.
As noted above, the enacted supplemental establishes the Relief and
Reconstruction Fund proposed by the President, but with added oversight
58 Section 610 of the Foreign Assistance Act of 1961.
mechanisms put in place. While the President may apportion resources directly to
DOD, as well as the Departments of State, Treasury, Health and Human Resources,
and USAID, the Iraq Fund falls under the authority of existing foreign aid laws. H.R.
1559 also adds several reporting requirements, as mentioned above, and requires
notification 5 days in advance of any Fund obligations. The enacted supplemental
further deletes appropriations for the President’s emergency fund for foreign crises
and limits to $100 million the amount that can be transferred among the various aid
Costs of Iraq Reconstruction and the Impact on Other Aid
Programs. Like the costs of military operations, it is nearly impossible to estimate
what the longer-term expenses of humanitarian relief and reconstruction in Iraq will
be. The Administration’s $3.5 billion included in the supplemental request
represented a general projection of needs over the next 12 months. But State
Department activity justifications cautioned that the timetable was tentative,
dependent largely on the extent of damage that resulted from the conflict and how
future assessments might alter aid priorities. Some believed that reconstruction needs
beyond this initial allotment would be met largely through proceeds from the sale of
Iraqi oil and the release of frozen assets. The international aid community is
currently discussing how post-conflict relief efforts will proceed, but there is a great
deal of uncertainty over the Administration’s intentions and the actual final outcome.
How soon and in what amounts Iraq might gain access to borrowing from the
International Financial Institutions will also be a factor in how much additional
resources will be needed or expected from the United States.59
In the meantime USAID and the State Department have been drawing resources
for Iraq from emergency refugee and disaster relief accounts, and from other
economic aid programs that had been intended for other countries and purposes. As
of March 25, USAID had utilized an estimated $506 million, including drawdowns
from the Child Survival and Health (CS/H), Development Assistance (DA), and
Economic Support Fund (ESF) accounts. For Child Survival and Development
programs, amounts diverted to Iraq contingency activities represented nearly 8% of
FY2003 appropriations. The supplemental request included about $410 million for
either replenishing CH/H, DA, and ESF accounts, or increasing disaster and refugee
resources so that future “borrowings” might be avoided and adequate funds would
be available for contingencies that might arise later in the year in other regions. But
the supplemental did not appear to fully cover USAID transfers already made for Iraq
programs. Moreover, the supplemental provided “up to $200 million may be used”
out of the Relief and Reconstruction Fund to repay these accounts. This discretionary
language left the final decision up to the White House as to whether these funds
would be available for the purposes and programs for which they were originally
59 For more discussion of these issues see CRS Report RL31814, Humanitarian Issues in
Post-War Iraq: An Overview for Congress; CRS Report RL31759, Reconstruction
Assistance in Afghanistan: Goals, Priorities, and Issues for Congress; and CRS Report
RL31833, Iraq: Recent Developments in Humanitarian and Reconstruction Assistance.
The conference agreement on H.R. 1559 adds substantial amounts, as noted
above, for replenishing foreign aid accounts from which money has been drawn for
Iraq operations. The enacted supplemental provides over $900 million to restore
funds for several programs, including the addition of $369 million in food assistance
that had not been requested.
Country Assistance. The Administration asked not only for funds to assist
coalition partners and nations that face significant economic and political risks due
to the Iraq conflict, but also to augment support for a broader set of countries
cooperating in the global war on terrorism. Some questioned whether a supplemental
appropriation intended to provide resources specifically related to the Iraq situation
should include nearly $700 million for this latter group, especially since Congress
approved in mid-February FY2003 money for this purpose (P.L. 108-7). Among the
countries covered by the request, but which are outside the conflict in Iraq were:
!Afghanistan — The Administration proposed $325 million to “meet
immediate shortfalls” in Afghanistan’s FY2003 program, including
resources for the Kabul-Kandahr-Herat road, budget support for the
Afghan government, President Karzai’s protective detail, demining,
and military training and equipment costs. Although the
Administration did not submit an official FY2003 Afghan aid
request, Congress increased assistance to over $300 million.
!Pakistan — The supplemental proposed an additional $175 million
in military aid to strengthen Pakistan’s ability to track and disable
terrorists operating in its own territory and $25 million for better
!Colombia — Included in the supplemental request was $71 million
in military and counter-narcotics assistance for supporting
Colombia’s unified campaign against drug cartels and terrorists.
The proposal also included an additional $34 million of DOD funds
for narcotics interdiction operations. In the FY2003 Foreign
Operations Appropriation, Congress approved $700 million for the
Andean Counter-narcotics Initiative for Colombia and other
countries in the region, $31 million less than the President had
!Palestinians — The request would extend $50 million to support
Middle East peace objectives generally, and specifically for
humanitarian activities in the West Bank and Gaza and for
Palestinian civil reforms. Congress had appropriated in August 2002
a similar $50 million package, together with $200 million for Israel,
in the FY2002 Supplemental Appropriation. President Bush chose
not to spend the funds because they were part of a much larger
appropriation for programs he had not requested. Instead, he
amended the FY2003 Foreign Operations request to include the
Palestinian and Israeli funds but Congress did not increase overall
appropriations to accommodate these additions.
!Philippines — The $30 million in military support would allow the
Philippines to upgrade its counterterrorism capabilities. Like the
Palestinian funds above, Congress provided $30 million for the
Philippines in the FY2002 supplemental which the President chose
not to spend.
!Slovenia — Not a member of the coalition, Slovenia would receive
$5 million in military assistance in recognition of its efforts in
providing access and overflight rights in Operating Enduring
Freedom and contributing to the Afghan National Army and
Beyond this list, some questioned the Administration’s $1 billion request for
Turkey that could be converted into as much as $8.5 billion in loans. The United
States had negotiated with the Turkish government for months over allowing the
deployment of U.S. forces in Turkey for military operations for a second front in
norther Iraq. Reportedly, the United States offered a $6 billion aid package that
could be leveraged into $26 billion in combined grants and loans. On March 1,
however, the Turkish parliament rejected the U.S. request to base troops for
operations in Iraq and the United States withdrew the aid offer. Turkey’s government
has subsequently granted U.S. overflight rights for the Iraq campaign. The
Administration justifies the $1 billion request on the basis of Turkey’s role as an ally
and frontline state in the war on terrorism, and for the significant political and
economic risks faced by Ankara due to the Iraq conflict.
As noted above, the enacted supplemental, for the most part, supports the
President’s foreign aid allocations for requested countries. Conditions are added to
funds for Turkey but amendments to eliminate or reduce the $1 billion package failed
in the House. H.R. 1559, as approved, however, will require the Administration to
make some economic aid reductions for some countries and programs not earmarked,
possibly including those for the Palestinians, Djibouti, Turkey, or the Middle East
DOD Authorities to Provide Military Aid. Under sections relating to
Defense Department funds and authorities, the supplemental proposed two items that
drew particular congressional attention. The key issue was whether they infringed
on congressional oversight and the State Department’s traditional role in directing
foreign aid policy and resource allocations. They were both similar to proposals
made last year in the FY2002 supplemental that focused on the war on terrorism and
were closely scrutinized by Congress.
The first would provide $1.4 billion for the Defense Department,
“notwithstanding any provision of law,” to pay Jordan, Pakistan, and other nations
that have provided logistical and military-related support to U.S. military operations
in Iraq or in the global war on terrorism. In the past, Defense officials argue,
competing demands on regular military aid resources have delayed reimbursement
to key friends that provide services to American forces. Congress approved funding
in the FY2002 supplemental for this purpose, but included a 15-day prior notification
requirement that is not part of the FY2003 supplemental draft legislation.
The more controversial authority concerned DOD’s request for $150 million to
support “indigenous forces” assisting U.S. military operations, including those aimed
at the global war on terrorism. Decisions to draw on these funds would be made by
the Secretary of Defense, with the concurrence of the Secretary of State. The
Defense Department defines indigenous forces as “irregular forces and resistance
movements” and notes that such forces “generally conduct military and para-military
operations in enemy-held or hostile territory and conduct direct offensive low-
intensity, cover, or clandestine operations.”60 Although it was unclear from the
budget justification and bill text exactly what groups and under what scenarios the
Administration would utilize these resources, a senior Administration official
suggested that the intent was to have resources available for groups in Iraq. Deputy
Secretary Richard Armitage testified on March 27 that because of the uncertainty of
the war’s duration, it might be necessary to transfer additional arms and equipment
for Kurdish and other forces, and that the $150 million would provide a “hedge” in
case of a more prolonged conflict.61 In last year’s supplemental appropriation debate,
DOD had asked for $30 million to support indigenous forces, funds that would be
exclusively under the control of the Secretary of Defense. Congress rejected the
proposal, however. The House Appropriations Committee observed in deleting the
request that the Secretary of State’s primary responsibility over U.S. military
assistance programs is well established and that the Administration has the necessary
authorities under existing foreign aid laws to undertake the requested activities.62
H.R. 1559, as enacted, provides the $1.4 billion for nations supporting U.S.
military operations in the global war on terrorism but does not authorize the $150
million for aid to indigenous forces.
The smallest component of the supplemental proposal covered additional
resources for homeland security. Some critics of Administration homeland security
policy, including some Members of Congress, believe that key domestic preparedness
measures have been under-funded and argue for additional resources. In some cases,
as discussed elsewhere in this report, Members offered amendments increasing
amounts for homeland security. Details of congressional action on homeland security
funding matters are included in Table 8.
60 U.S. Office of Management and Budget, FY2003 Request for Supplemental
Appropriations, March 25, 2003, no pagination. Available on the OMB Web site at
61 House Appropriations Subcommittee on Foreign Operations, Hearing on the Iraq War
Supplemental, testimony of Richard Armitage, Deputy Secretary of State, March 27, 2003.
62 Making Supplemental Appropriations for Further Recovery from and Response to
Terrorist Attacks on the United States for FY2002. Report to accompany H.R. 4775.
H.Rept. 107-480, May 22, 2002.
Table 8. Homeland Security
Request H ouse Senat e Enact e d
Dept Homeland Security: Counterterrorism$1,500.0a $1,135.0$150.0
Dept of Homeland Security:
Operating expenses — $1.0 — $3.0
Secret Service — $30.0 — $30.0
Customs and Border Protection — $428.0 — $333.0
Immigration and Customs — $185.0 — $170.0
Transportation Security Administration — $390.0 — $665.0
Federal Law Enforcement Training Center — $2.0 — $2.0
Office of Domestic Preparedness — $2,200.0$2,200.0$2,230.0
Coast Guard — $230.0$580.0$228.0
Emergency Preparedness & Response — $45.0 — $45.0
FEMA Disaster Relief — — $109.5$54.8
Information Analysis & Infrastructure — $10.0 — $0.0
Total Department of Homeland Security$2,000.0$3,521.0$2,889.5$3,760.8
Dept of Justice:
Counterterrorism Fund$500.0$50.0 — $20.0
Salaries and Expenses — $5.0 — $5.0
Detention Trustee — $15.0$45.0$40.0
Inspector General — $2.5 — $2.5
US Marshals — $26.1 — $8.0
FBI — $398.9$73.0$367.2
Interagency Law Enforcement Support — — $72.0$0.0
State & Local Law Enforcement Assistance — — $91.0$0.0
Community Oriented Policing Services — — $114.5$54.8
Total, Department of Justice$500.0$497.5$395.5$497.5
Supreme Court — $1.5 — $1.5
US Court of Appeals — $1.0 — $1.0
US Court of International Trade — $0.1 — $0.1
Exec Office of President: Emergency Fund$250.0 — — $0.0
Legislative Branch Emergency Response Fund:
Salaries and Expenses — $11.0 — $11.0
Request H ouse Senat e Enact e d
Architect of the Capitol — — $34.4$23.8
Architect of the Capitol, Capitol Police — $63.8$40.1$40.1
Capitol Police — $37.8$38.2$37.8
Office of Compliance — $0.1$0.1$0.1
Library of Congress — $5.5$5.5$5.5
Congressional Research Service — $1.9$1.9$1.9
General Accounting Office — $4.9$4.8$4.8
Total Legislative Branch Emergency$125.0$125.0$125.0$125.0
Dept of Transportation, Maritime — — $50.0$25.0
Dept of Agriculture Research Service — — $98.0$110.0
Corps of Engineers, infrastructure security — — $29.0$39.0
Dept of Interior, Bureau of Reclamation — — $25.0$25.0
Dept of Energy, nuclear facility security — — $11.0$11.0
Dept of Energy, Natl Nuclear Security — — $61.0$67.0
Dept of Energy, Defense Nuclear — — $150.0$148.0
Dept of Energy, Defense Environment — — $6.0$6.0
Dept of Energy, Other Defense Activities — — $18.0$4.0
HHS, Public Health and Social Services — $94.0 — $100.0
HHS, compensation for smallpox — $50.0$35.0$42.0
HHS, grants to States for smallpox — — $105.0$0.0
National Commission on Terrorist Attacks — — $11.0$11.0
TOTAL, Homeland Security$4,375.0$4,290.1 $5,144.0 $5,123.9
a Included under Dept. of Homeland Security items below.
Support to State and Local Governments for Terrorism
Prevention and Security Enhancements63
The Bush Administration’s request for FY2003 supplemental appropriations
included $2 billion for the ODP. These funds would be distributed to state and local
63 This section was prepared by Ben Canada, Analyst in American National Government,
Government and Finance Division.
governments “... to support federally-coordinated terrorism prevention and security
enhancements at this time of heightened threat, and terrorism preparedness for first
responders.”64 The Department of Homeland Security projected that $1.5 billion
would go to the ODP formula grant program, $450 million to critical infrastructure
security grants, and $50 million to high threat urban areas.65 The Administration’s
request for $450 million for critical infrastructure security grants contained at least
one significant change to the current structure of federal first responder programs.
The request proposed allowing recipients to use these funds for personnel overtime
expenses, an activity not currently authorized in existing terrorism preparedness
Congressional Action. The House, in H.R. 1559, provided a total of $2.2
billion to ODP, $200 million above the Administration request, specifically
providing the following amounts.66
!$1.5 billion to ODP’s formula grant program, and
!$700 million “... to address security requirements in high threat, high
density urban areas with critical infrastructure.”67
In S. 762, the Senate Appropriations Committee recommended $2 billion for
ODP of which $1.42 billion would have gone to the formula grant program, $450
million to critical infrastructure security, $100 million to high threat urban areas, and68
$30 million to technical assistance. The full Senate passed an amendment,
however, that added an additional $200 million and allocated more funding to high69
threat urban areas. The Senate also added additional funding to FEMA and the
Community-Oriented Policing Services program (Justice Department) for
interoperable communications. S. 762, as passed by the Senate, provided a total of
$2.2 billion for ODP programs, matching the House amount. The Senate-passed bill
!$1.27 billion for the formula grant program,
!$300 million to critical infrastructure protection,
!$600 million to high threat urban areas,
64 OMB, FY2003 Request for Supplemental Appropriations.
65 U.S. Department of Homeland Security, “FY2003 Supplemental Budget Request Fact
Sheet,” March 25, 2003. Available at: [http://www.dhs.gov/dhspublic/display?content=533].
66 At least one amendment proposing additional funding for ODP programs was introduced
but not passed (H.Amdt. 30 to H.R. 1559).
67 House Appropriations Committee, “Full Committee Unanimously Reports Wartime
Supplemental,” press release, April 1, 2003. See the House Appropriations Committee Web
site [http://www.house.gov/appropriations/news/108_1/04warsuppsum.htm], visited April
68 U.S. Congress, Senate Committee on Appropriations, Report to Accompany S. 762, 108th
Cong., 1st sess., S.Rept. 108-33 (Washington: GPO, 2003), pp. 23-24.
69 S.Amdt. 515 to S. 762, enacted April 3, 2003. The Senate also considered, but did not
pass, at least one amendment to provide an additional $2.33 billion for first responder
preparedness (S. 514 to S. 762).
!$30 million for technical assistance and other activities, and,
!$219 million for interoperable communications (to FEMA and
The enacted supplemental (P.L. 108-11) provides $2.23 billion for ODP, which
is $230 more than the Administration request. In addition, the conference provided
roughly $109.5 million for interoperable communications programs. Total
supplemental funding for first responder preparedness comes to roughly $2.34
billion, which, when added to the FY2003 regular appropriation of $2.045 billion,
comes to a FY2003 grant total of $4.385 billion. Specifically, the conference
agreement provides the following amounts:
!$1.3 billion for ODP’s formula grant programs (80% must go to
!$200 million for critical infrastructure protection (no less than 50%
going to localities),
!$700 million to high threat urban areas,
!$30 million for technical assistance, and,
!$109.5 million interoperable communications (FEMA and COPS)70
A number of observers have argued that the current level of federal assistance
for first responders is insufficient and should be increased above current funding
levels. Other observers, however, point to evidence of slow state and local utilization
of federal grants as an indication that additional funding at this time is not
necessary.71 Still others have suggested that ODP’s distribution formula should be
adjusted to increase assistance to areas perceived to be high-risk.72 The conference
agreement addressed a number of these concerns. It instructed ODP to distribute
formula grant funds to states within 60 days of enactment, and further instructed
states to distribute 80% of funds to localities within 45 days of receipt. Similar
requirements for distribution were applied to the other ODP assistance programs.
Conferees also adopted several reporting requirements in the Senate bill (S. 762).
These include reports on risk assessments of high-threat urban areas, cost of securing
such areas, appropriation federal share of security costs, and proposals for new
distribution formulas.73 Conferees also required reports on overtime accountability
and a listing of all federal terrorism preparedness grant programs administered by
70 House Appropriations Committee, “Highlights of Wartime Supplemental Conference
report,” press release, April 12, 2003. Available at: [http://www.house.gov/
appropriations/news/108_1/04warsuppconf.htm], visited April 14, 2003.
71 Sam Dealey, “Anti-terror Funds Left Unspent,” The Hill, March 26, 2003, p. 1.
72 Dale Russakoff and Rene Sanchez, “Homeland Burden Grows for Cash-Strapped States,
Cities,” Washington Post, Apr. 1, 2003, p. A1.
73 S.Rept. 108-33, pp. 23-24.
74 H.Rept. 108-76, pp. 82-83.
Departments of Justice and Homeland Security
The Administration’s FY2003 supplemental request included $500 million to
reimburse Department of Justice organizations for the following purposes: (1) to
reestablish operational capabilities that were lost or weakened as a result of a terrorist
attack; and (2) to pursue counterterrorism investigations, including the payment of
rewards. The request for this account includes language that would authorize the use
of such funding to reimburse any federal agency for costs related to detaining a
terrorist suspect as well.
For the Department of Homeland Security’s Counterterrorism Fund, the
Administration’s FY2003 supplemental request included $1.5 billion to reimburse
any homeland security organization for counterterrorism investigations and
operations, including operations in support of the Department of Defense. Among
other things, such operations could include (1) increasing border and maritime
security; (2) enhancing elements of the strategic national stockpile; (3) providing
increased port security for military outloads; and (4) deploying various biological
attack detection technologies, related countermeasures, and response assets.
Congressional Action. As reported by the Senate Appropriations
Committee, S. 762 provided $500 million, as requested, for the Department of
Justice’s Counterterrorism Fund. However, as part of an omnibus amendment
proposed by Senator Stevens, the Senate voted to re-allocate these funds among
several Department of Justice programs, including FBI salaries and construction,
state and local law enforcement assistance, Community Oriented Policing Services,
and interagency law enforcement support. The Stevens amendment also took $109.5
million of the President’s request for the Counterterrorism Fund and made it
available for additional FEMA disaster relief operations. The House measure
appropriated $50 million for the Fund, and an additional $450 million for several
other Justice Department programs, including $399 million for the FBI. For
Homeland Security Counterterrorism Fund, the Senate recommended $1.135 billion
after shifting $580 million for the Coast Guard to a separate account, but including
$215 million for the President’s Emergency Response Fund. The President had
proposed resources for the emergency fund under a separate line-item.
As enacted, H.R. 1559 combines approaches taken in the House and Senate bills
of allocating most of the proposed $500 million DOJ Counterterrorism Fund to
specific accounts. The FBI receives $367 million, close to the House
recommendation, but Senate proposals for over $160 million for state and local law
enforcement and interagency law enforcement support were deleted. Similar to the
Senate bill, the conference agreement provides additional funds for FEMA, although
the $55 million appropriation is less than half the amount recommended in S. 762.
75 This section was prepared by William Krouse, Analyst in Social Legislation, Domestic
Social Policy Division.
Emergency Response Funds for the Executive and
Beyond the additional resources for the Departments of Justice and Homeland
Security to bolster their counterterrorism capabilities, the White House asked for a
$250 million fund that could be drawn upon to meet any emerging terrorist related
threat across the entire federal government. Among any authorized activity, this
highly flexible fund could be used to assist first responders and health care workers
who have suffered adverse reactions from voluntary smallpox vaccinations.
The Administration also proposed a $125 million emergency fund for the
legislative branch to meet emerging terrorist-prevention needs.
Congressional Action. House and Senate bills split on the issue of a White
House emergency response fund. S. 762 provided $215 million within Department
of Homeland Security funds, while the House did not include any resources for this
purpose. As enacted, H.R. 1559 does not provide funding for a White House
emergency response fund but includes $150 million for the Department of Homeland
Security’s Counterterrorism Fund. These resources can be used to reimburse any
Homeland Security organization for terrorism-related expenses. The conference
appropriation further includes $125 million for additional legislative branch security
requirements, with specific allocations spread over a number of accounts, as
illustrated in Table 8.
Aviation Industry Relief76
The onset of the war in Iraq has dramatically effected the airline industry. Air
travel in the short term has dropped approximately 10% according to the Air
Transport Association (ATA). More worrisome for the airlines, advance bookings
for the months ahead appear to be dropping approximately 30%. All of this is
happening against the backdrop of the events of September 11th, which also had a
huge negative impact on the industry. The airlines lost record amounts of money in
Among major airlines, only Southwest was profitable in 2002, and Southwest
is the only major carrier believed to have a chance at profitability in 2003. The
industry’s second largest airline, United, is operating in receivership and the
possibility exists that other carriers could find themselves in this position in the near
future. There is, therefore, considerable concern that the airline industry is likely to
go through a period of major structural change.
After September 11, Congress and the Bush Administration moved swiftly to
provide the airline industry with $15 billion in federal financial support (Air
Transportation Safety and System Stabilization Act (Stabilization Act), P.L. 107-42).
The first $5 billion provided direct aid to pay for industry losses associated with the
results of the September 11th attacks. The vast majority of these funds have already
76 This section was prepared by John W. Fisher, Specialist in Transportation.
been distributed to the airlines (a listing of airlines receiving funds is available from
the Department of Transportation (DOT), [http://ostpxweb.dot.gov/aviation/]). A
second source of funding, access to $10 billion in government backed loans, required
approval by the newly created Air Transportation Stabilization Board (ATSB).
Thirteen airlines applied for the loan program. The majority received some form of
assistance, but the largest single applicant, United, was denied a loan. Of the $10
billion authorized by this program only about $1.5 billion has been committed.
In the FY2003 Emergency Supplemental, Congress again proposed providing
some short term relief to the airline industry. The House-approved package totaled
$3.2 billion in direct assistance while the Senate proposed $3.5 billion, as estimated
by CBO. Both bills had the same intent, but there were significant differences in how
aid would be provided. Both the House and the Senate measures included
significant funding for security costs. In addition, S. 762 would provide a tax holiday
for collections of the existing $2.50 per flight segment security fee charged to airline
passengers. The Senate measure would also extend to the end of 2004 war risk
insurance provisions in existing legislation that expire at the end of this year. In
addition, the Senate bill provided additional unemployment insurance to displaced
airline industry employees. Both bills had provisions that would limit airline industry
The enacted emergency supplemental includes a relief package estimated by
CBO as totaling $3.1 billion for FY2003. Conferees adopted the Senate approach of
direct appropriations plus authority to temporarily suspend fees, and extend
unemployment and war risk insurance. As calculated by CBO, the airline industry
relief package breaks out as follows for FY2003:
!Grants to U.S. flag carriers for aviation security costs: $2.296 billion
!Compensation to air carriers for secure cockpit doors: $100 million
!Suspension of fees, June 1 to September 30, 2003: $570 million77
!Extension of unemployment benefits: $125 million77
77 OMB further estimates that the costs (budget authority) in FY2004 of suspending fees and
extending unemployment benefits will be $130 million and $135 million, respectively.