Appropriations for FY2004: Foreign Operations, Export Financing, and Related Programs

CRS Report for Congress
Appropriations for FY2004:
Foreign Operations, Export Financing, and
Related Programs
Updated March 23, 2004
Larry Nowels
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

The annual consideration of appropriations bills (regular, continuing, and supplemental) by
Congress is part of a complex set of budget processes that also encompasses the
consideration of budget resolutions, revenue and debt-limit legislation, other spending
measures, and reconciliation bills. In addition, the operation of programs and the spending
of appropriated funds are subject to constraints established in authorizing statutes.
Congressional action on the budget for a fiscal year usually begins following the submission
of the President’s budget at the beginning of the session. Congressional practices governing
the consideration of appropriations and other budgetary measures are rooted in the
Constitution, the standing rules of the House and Senate, and statutes, such as the
Congressional Budget and Impoundment Control Act of 1974.
This report is a guide to one of the 13 regular appropriations bills that Congress considers
each year. It is designed to supplement the information provided by the House and Senate
Appropriations Subcommittees on Foreign Operations.. It summarizes the status of the bill,
its scope, major issues, funding levels, and related congressional activity, and is updated as
events warrant. The report lists the key CRS staff relevant to the issues covered and related
CRS products.
NOTE: A Web version of this document with active links is
available to congressional staff at
[http://www.crs.gov/ products/ appropri ati ons/ apppage.sht m l ].

Appropriations for FY2004:
Foreign Operations, Export Financing, and
Related Programs
Summary
The annual Foreign Operations appropriations bill is the primary legislative
vehicle through which Congress reviews the U.S. foreign aid budget and influences
executive branch foreign policy making generally. It contains the largest share —
about two-thirds — of total U.S. international affairs spending.
President Bush asked Congress to appropriate $18.89 billion for FY2004
Foreign Operations. The budget proposal was $2.7 billion, or 16.7% higher than
regular (non-supplemental) Foreign Operations appropriations for FY2003. If
enacted, the President’s recommendation would have resulted in one of the largest
increases of regular Foreign Operations funding in at least two decades. Congress
subsequently approved in mid-April an additional $7.5 billion FY2003 supplemental
foreign aid spending in P.L. 108-11, for Iraq reconstruction, assistance to coalition
partners, and other activities supporting the global war on terrorism. Including the
supplemental, Foreign Operations appropriations totaled $23.67 billion in FY2003.
The FY2004 budget blueprint continued to make funding in support of the war
on terrorism as the highest priority, with about $4.7 billion recommended. The
submission also sought funding for four new aid initiatives which together accounted
for most of the $2.7 billion increase over regular FY2003 levels. Combined, the
Millennium Challenge Account, a new foreign aid concept, the State Department’s
Global AIDS Initiative, and two new contingency funds, totaled $2.05 billion. Other
Foreign Operations programs were left with a more modest 4% increase.
In total, the request included $1.2 billion for HIV/AIDS, about $350 million
more than enacted for FY2003, and $7.1 billion for military and security-related
economic aid, up nearly $650 million or 10% from regular FY2003 appropriations.
“Core” bilateral development assistance funding, however, would have fallen by 8%,
although recipients of these accounts would be expected to benefit significantly from
the new Millennium Challenge Account (MCA) and Global AIDS Initiative.
On July 23, the House passed H.R. 2800, appropriating $17.12 billion. The
Senate passed the legislation on October 30, providing $18.4 billion. Foreign
Operations was merged into H.R. 2673, the Consolidated Appropriations Act, 2004,
a bill that passed the House on December 8 and the Senate on January 22, 2004. The
enacted measure provides $17.48 billion, a total that includes a 0.59% across-the-
board rescission. This is about $1.4 billion, or 7.4% less than the President
requested. The enacted measure increases resources for international HIV/AIDS by
about $400 million and cuts the request for the MCA by $300 million.
The FY2004 Foreign Operations debate has included discussion of several
significant policy issues, including foreign aid as a tool in the global war on
terrorism, the Millennium Challenge Account, programs to combat HIV/AIDS,
international family planning programs, and Afghan reconstruction.

Key Policy Staff
Area of ExpertiseNameTel.E-Mail
General: Policy issues & budgetLarry Nowels7-7645lnowels@crs.loc.gov
General: Policy issuesCurt Tarnoff7-7656ctarnoff@crs.loc.gov
Afghanistan reconstruction aidRhoda Margesson7-0425rmargesson@crs.loc.gov
Africa AidRaymond Copson7-7661rcopson@crs.loc.gov
Agency for Intl DevelopmentLarry NowelsCurt Tarnoff7-76457-7656lnowels@crs.loc.govctarnoff@crs.loc.gov
Andean Regional InitiativeLarry Storrs7-7672lstorrs@crs.loc.gov
Debt ReliefLarry Nowels7-7645lnowels@crs.loc.gov
Development AssistanceLarry NowelsCurt Tarnoff7-76457-7656lnowels@crs.loc.govctarnoff@crs.loc.gov
Disaster aidRhoda Margesson7-0425rmargesson@crs.loc.gov
Drug/counternarcotics programsRaphael Perl7-7664rperl@crs.loc.gov
Drug/counternarcotics, ColombiaNina Serafino7-7667nserafino@crs.loc.gov
Export-Import BankJames Jackson7-7751jjackson@crs.loc.gov
Family planning programsLarry Nowels7-7645lnowels@crs.loc.gov
Health programsRhoda MargessonTiaji Salaam7-04257-7677rmargesson@crs.loc.govtsalaam@crs.loc.gov
HIV/AIDSRaymond Copson7-7661rcopson@crs.loc.gov
International affairs budgetLarry Nowels7-7645lnowels@crs.loc.gov
International Monetary FundJonathan SanfordJeff Hornbeck7-76827-7782jsanford@crs.loc.gov jhornbeck@crs.loc.gov
Iraq reconstructionCurt TarnoffRhoda Margesson7-76567-0425ctarnoff@crs.loc.gov rmargesson@crs.loc.gov
Kosovo/Yugoslavia aidCurt Tarnoff7-7656ctarnoff@crs.loc.gov
MicroenterpriseCurt Tarnoff7-7656ctarnoff@crs.loc.gov
Middle East assistanceClyde Mark7-7681cmark@crs.loc.gov
Military aid/Arms salesRichard Grimmett7-7675rgrimmett@crs.loc.gov
Multilateral Development BanksJonathan Sanford7-7682jsanford@crs.loc.gov
North Korea/KEDOLarry Niksch7-7680lniksch@crs.loc.gov
Overseas Private Investment CorpJames Jackson7-7751jjackson@crs.loc.gov
Peace CorpsCurt Tarnoff7-7656ctarnoff@crs.loc.gov
PeacekeepingMarjorie Browne7-7695mbrowne@crs.loc.gov
Refugee aidLarry Nowels7-7645lnowels@crs.loc.gov
Russia/East Europe AidCurt Tarnoff7-7656ctarnoff@crs.loc.gov
TerrorismRaphael PerlAudrey Cronin7-76647-7676rperl@crs.loc.govacronin@crs.loc.gov
Trafficking in Women/ChildrenFrancis Miko7-7670fmiko@crs.loc.gov
U.N. Voluntary ContributionsVita Bite7-7662vbite@crs.loc.gov

Contents
Most Recent Developments..........................................1
In troduction ......................................................2
Status ...........................................................3
Foreign Operations Funding Trends...................................4
Foreign Operations, the FY2004 Budget Resolution, and
Sec. 302(b) Allocations.....................................8
Foreign Operations Appropriations Request for FY2004 and
Congressional Consideration....................................10
Request Overview............................................10
Fighting the War on Terrorism..............................11
New Initiative: The Millennium Challenge Account..............12
New Initiative: The Global AIDS Initiative.....................12
New Initiative: The Famine Fund............................12
New Initiative: The U.S. Emergency Fund for Complex Crises.....13
Other Key Elements of the FY2003 Request....................13
Leading Foreign Aid Recipients Proposed for FY2004................15
House Consideration..........................................17
Senate Consideration..........................................19
Conference Agreement........................................21
Iraq War Supplemental for FY2003 and Foreign Operations Funding........23
Reconstruction Efforts.........................................23
Congressional Action on Iraq Reconstruction...................24
International Assistance........................................29
Congressional Action on International Assistance...............30
DOD Authorities to Provide Military Aid..........................32
Congressional Action on DOD Authorities.....................33
Selected Major Issues in the FY2004 Foreign Operations Debate...........33
Foreign Aid to Combat Terrorism................................33
Anti-Terrorism Assistance (ATA)............................36
Terrorist Interdiction Program (TIP)..........................36
Counterterrorism Engagement with Allies.....................37
Terrorist Financing........................................37
USAID Physical Security...................................37
Aid Restrictions for Terrorist States..........................38
Congressional Action......................................38
Millennium Challenge Account..................................40
Congressional Action (Appropriations)........................42
Congressional Action (Authorization).........................42
Development Assistance, Global Health Priorities, and HIV/AIDS......48
Congressional Action......................................52
International Family Planning and UNFPA Funding..................58

“Mexico City” Policy......................................61
Congressional Action......................................63
Afghanistan Reconstruction.....................................65
Current Operating Environment.............................66
Tokyo Pledging Conference.................................68
Subsequent U.S. Aid Transfers, FY2002 and FY2003............68
FY2004 Regular Afghanistan Aid Request.....................69
FY2004 Supplemental Request..............................69
Congressional Action..........................................69
FY2004 Regular Afghanistan Appropriation....................69
FY2004 Supplemental.....................................71
Iraq Reconstruction...........................................72
FY2004 Supplemental Proposal.................................73
Reconstruction Overview.......................................74
Reconstruction Concerns and Critical Assessment...............75
Congressional Action......................................81
For Additional Reading............................................81
Selected World Wide Web Sites.....................................84
List of Figures
Figure 1. Foreign Policy Budget, FY2004
Enacted Regular Appropriation Bills - $s billions.....................3
Figure 2. Foreign Operations Funding Trends............................5
Figure 3. Supplemental Funding for Foreign Operations...................7
List of Tables
Table 1. Status of Foreign Operations Appropriations, FY2004 .............4
Table 2. Foreign Operations Appropriations, FY1995 to FY2004............6
Table 3. Foreign Operations New Initiatives FY2004....................11
Table 4. Summary of Foreign Operations Appropriations.................15
Table 5. Leading Recipients of U.S. Foreign Aid........................16
Table 6. Iraq Reconstruction, International Aid, and Related Activities......25
Table 7. Proposed Recipients of Supplemental Foreign Aid...............31
Table 8. U.S. Assistance to Front-Line States in War on Terrorism.........35
Table 9. Selected Counter-Terrorism Program Funding...................39
Table 10. Comparison of MCA Authorization Legislation................45
Table 11. Development Assistance Funding............................49
Table 12. USAID “Core” Development Assistance Funding...............51
Table 13. U.S. International HIV/AIDS Programs.......................54
Table 14. “Core” Development Aid Accounts — Congressional Action......55
Table 15. Selected Development Aid Funding Targets —
Congressional Action..........................................56
Table 16. U.S. Assistance to Afghanistan, FY2002-FY2004...............70

Table 18. Iraq Supplemental: Sector Allocation.........................73
Table 19. Foreign Operations: Discretionary Budget Authority ............87

Appropriations for FY2004:
Foreign Operations, Export Financing,
and Related Programs
Most Recent Developments
On January 22, 2004, the Senate passed (65-28) the conference report on H.R.
2673, the Consolidated Appropriations Act, 2004. Division D of the legislation
includes a reconciled version of Foreign Operations funding for FY2004 as approved
earlier by the House and Senate as H.R. 2800. The House approved (242-176) the
conference agreement on December 8. President Bush signed the measure on
January 23 (P.L. 108-199).
The conference agreement on H.R. 2673 provides $17.48 billion for Foreign
Operations, a figure that includes a 0.59% across-the-board rescission and additional
amounts for the Millennium Challenge Account specified in Division H of the bill.
This represents a $1.4 billion, or a 7.4% reduction from the President’s request, but
$1.3 billion, or 7.9% higher than approved in regular Foreign Operations spending
for FY2003. The actual reduction to the executive’s budget FY2004 proposal,
however, is unlikely to be as significant as this comparison suggests. By utilizing
funds provided in the Iraq reconstruction supplemental (P.L. 108-106) and authority
included in H.R. 2673 to transfer Iraq reconstruction money for requested regular
Foreign Operations programs, the President could make available as much as $575
million to fund his original FY2004 proposal without drawing on the $17.48 billion
provided in H.R. 2673. If the Administration chooses to utilize these resources from
the Iraq reconstruction supplemental, the difference between the FY2004 request and
the conference agreement would be about $850 million, or a 4.5% cut.
Despite the overall reduction, the conference agreement increases spending for
international HIV/AIDS, malaria, and tuberculosis programs to $1.646 billion. When
this amount is combined with appropriations in the pending Labor/HHS/Education
appropriation (Division E of H.R. 2673), the total for global HIV/AIDS and other
infectious diseases is $2.4 billion, or roughly $400 million above the President’s
request. Conferees further agreed to a $400 million contribution to the Global Fund
for AIDS, Malaria, and Tuberculosis that together with an additional $150 million
for the Fund in Division E, would bring the total level to $550 million, rather than
the Administration’s $200 million proposal.
The conference agreement further authorizes and appropriates funds for the
Millennium Challenge Account (MCA), one of the top Presidential aid initiatives.
Division D of H.R. 2673 provides $650 million for the MCA, while Division H
includes an additional $350 million, for a total MCA appropriation of $1 billion. On
another major policy matter, the conferees dropped Senate language that would have

effectively reversed the President’s “Mexico City” abortion-related restrictions
placed on international family planning programs during the Bush Administration.
The conference agreement further appropriates $34 million for the U.N. Population
Fund (UNFPA), but under the same conditions (“Kemp-Kasten” amendment) that
has led to the withholding of U.S. contributions to the UNFPA the past two years
because of the organization’s program in China.
Introduction
The annual Foreign Operations appropriations bill is the primary legislative
vehicle through which Congress reviews and votes on the U.S. foreign assistance
budget and influences major aspects of executive branch foreign policy making¹
generally. It contains the largest share — about two-thirds — of total international
affairs spending by the United States (see Figure 1).
The legislation funds all U.S. bilateral development assistance programs,
managed mostly by the U.S. Agency for International Development (USAID),
together with several smaller independent foreign aid agencies, such as the Peace
Corps and the Inter-American and African Development Foundations. Most
humanitarian aid activities are funded within Foreign Operations, including USAID’s
disaster program and the State Department’s refugee relief support. Foreign
Operations includes separate accounts for aid programs in the former Soviet Union
(also referred to as the Independent States account) and Central/Eastern Europe,
activities that are jointly managed by USAID and the State Department.
Security assistance (economic and military aid) for Israel and Egypt is also part
of the Foreign Operations spending measure, as are other security aid programs
administered largely by the State Department, in conjunction with USAID and the
Pentagon. U.S. contributions to the World Bank and other regional multilateral
development banks, managed by the Treasury Department, and voluntary payments
to international organizations, handled by the State Department, are also funded in
the Foreign Operations bill. Finally, the legislation includes appropriations for three
export promotion agencies: the Overseas Private Investment Corporation (OPIC),
the Export-Import Bank, and the Trade and Development Agency.

¹ Although the Foreign Operations appropriations bill is often characterized as the “foreign
aid” spending measure, it does not include funding for all foreign aid programs. Food aid,
an international humanitarian aid program administered under the P.L. 480 program, is
appropriated in the Agriculture appropriations bill. Foreign Operations also include funds
for the Export-Import Bank, an activity that is regarded as a trade promotion program, rather
than “foreign aid.” In recent years, funding for food aid and the Eximbank have been about
the same, so that Foreign Operations and the official “foreign aid” budget are nearly
identical. Throughout this report, the terms Foreign Operations and foreign aid are used
interchangeably.

Figure 1. Foreign Policy Budget, FY2004
Enacted Regular Appropriation Bills - $s billions
Total = $26.9 billion
^S^t^at^e^D^e^p^t^/^C^o^m^m^e^r^c^{e -}^$8^.¹⁷⁸^F^ood^Aⁱ^d^,^A^g^ri^c^u^l^t^u^r^e^-^$1.²³⁵
³⁰^.⁴^%^4.⁶^%
⁶⁵^.⁰^%
^F^o^r^eⁱ^{gn O}^p^e^r^atⁱ^o^ns^-^$1^7.⁴⁷⁷
For nearly two decades, the Foreign Operations appropriations bill has been the
principal legislative vehicle for congressional oversight of foreign affairs and for
congressional involvement in foreign policy making. Congress has not enacted a
comprehensive foreign aid authorization bill since 1985, leaving most foreign
assistance programs without regular authorizations originating from the legislative
oversight committees. As a result, Foreign Operations spending measures developed
by the appropriations committees increasingly have expanded their scope beyond
spending issues and played a major role in shaping, authorizing, and guiding both
executive and congressional foreign aid and broader foreign policy initiatives. It has
been largely through Foreign Operations appropriations that the United States has
modified aid policy and resource allocation priorities since the end of the Cold War.
The legislation has also been the channel through which the President has utilized
foreign aid as a tool in the global war on terrorism since the attacks of September 11,
2001. The appropriations measure has also been a key instrument used by Congress
to apply restrictions and conditions on Administration management of foreign
assistance, actions that have frequently resulted in executive-legislative clashes over
presidential prerogatives in foreign policy making.

Status
Table 1. Status of Foreign Operations Appropriations, FY2004
Subcomm.Conf. Report
Markup HouseRe por t^* HouseP assage Senat eRe por t^* Senat eP assage Conf .Re por t^* Approval PublicLaw
H ouse Senat e H ouse Senat e

7/217/23 7/17 11/25 12/08 01/22 108-

7/10 — H.Rept.370-50 S.Rept.10/30 H.Rept.242-176 65-28 199
108-222 108-106 108-401 1/23
^*^T^h^{e Hou}^s^{e Foreig}ⁿ^Operation^s^{bill w}^a^s^H.R^.^{2800, w}^h^{ile th}^{e Sen}^a^{te w}^a^s^{S. 1426. Fore}^igⁿ^Operation^s^w^a^s^m^e^rg^edⁱⁿ^to
^t^h^{e con}^f^eren^{ce ag}^reem^en^t^on^H^.^R^.^{2673, t}^h^{e C}^oⁿ^s^olⁱ^d^at^{ed A}^ppropri^a^tⁱ^oⁿ^s^A^c^t^,^2004.
President Bush submitted his FY2004 federal budget request to Congress on
February 3, 2003, including funding proposals for Foreign Operations Appropriations
programs. Subsequently, on March 25, the White House requested FY2003
emergency supplemental funds for 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. House and Senate Appropriations Committees held several hearings on
both the FY2004 and FY2003 supplemental requests, and approved the supplemental
(P.L. 108-11) on April 12. Subsequently, the Administration requested on September
17 another Iraq military operations and reconstruction supplemental for FY2004
(H.R. 3289) which Congress cleared on November 3 (P.L. 108-106).
For the regular FY2004 Foreign Operations bill, the House Foreign Operations
Subcommittee marked up draft legislation on July 11, while the full House panel
approved the legislation on July 16 and reported the measure on July 21. The House
passed H.R. 2800 on July 23 (370-50). The Senate Committee reported its
companion bill, S. 1426, on July 17, and passed the measure as H.R. 2800 on
October 30. On November 17, a Foreign Operations conference committee met and
reached agreement on most, but not all issues in disagreement. Conferees adjourned
pending the resolution of the outstanding matters, most of which related to
international family planning funding and policy issues.
After resolving these remaining issues, however, instead of filing a separate
conference report on H.R. 2800, the House and Senate Appropriation Committees
decided to incorporate the Foreign Operations bill into H.R. 2673, the Consolidated
Appropriations Act, FY2004. H.R. 2673 included seven appropriation bills that had
not received final action as separate measures. The House approved the conference
report on the Consolidated Appropriations bill on December 8, followed by the
Senate on January 22, 2004. The President signed the bill on January 23.

Foreign Operations Funding Trends
As shown in Figure 2 below, Foreign Operations funding levels, expressed in
real terms taking into account the effects of inflation, have fluctuated widely over the
past 27 years.² After peaking at over $33 billion in FY1985 (constant FY2004
dollars), Foreign Operations appropriations began a period of decline to $13.9 billion
in FY1997, with only a brief period of higher amounts in the early 1990s due to
special supplementals for Panama and Nicaragua (1990), countries affected by the
Gulf War (1991), and the former Soviet states (1993).
Figure 2. Foreign Operations Funding Trends
Arguing that declining international affairs resources seriously undermined U.S.
foreign policy interests and limited the ability of American officials to influence
overseas events, Clinton Administration officials and other outside groups vigorously

² Some of these swings, however, are not the result of policy decisions, but due to technical
budget accounting changes involving how Congress “scores” various programs. For
example, the large increase in FY1981 did not represent higher funding levels, but rather the
fact that export credit programs began to be counted as appropriations rather than as “off-
budget” items. Part of the substantial rise in spending in FY1985 came as a result of the
requirement to appropriate the full amount of military aid loans rather than only the partial
appropriation required in the past. Beginning in FY1992, Congress changed how all Federal
credit programs are “scored” in appropriation bills which further altered the scoring of
foreign aid loans funded in Foreign Operations.All of these factors make it very difficult
to present a precise and consistent data trend line in Foreign Operations funding levels.
Nevertheless, the data shown in Figure 2 can be regarded as illustrative of general trends in
Congressional decisions regarding Foreign Operations appropriations over the past 25 years.

campaigned to reverse the decade-long decline in the foreign policy budget. Foreign
aid spending increased slightly in FY1998, but beginning the following year and
continuing to the present, Foreign Operations appropriations have trended upward
due in large part to the approval of resources for special, and in some cases
unanticipated foreign policy contingencies and new initiatives. Although funding for
regular, continuing foreign aid programs also rose modestly during this period,
supplemental spending for special activities, such as Central American hurricane
relief (FY1999), Kosovo emergency assistance (FY1999), Wye River/Middle East
peace accord support (FY2000), a counternarcotics initiative in Colombia and the
Andean region (FY2000 and FY2002), aid to the front line states in the war on
terrorism and Iraq-war related assistance (FY2003), was chiefly responsible for the
growth in foreign aid appropriations. The average annual funding level during the
FY1999-FY2002 period of $17.29 billion represents a level 24% higher than the low
point in Foreign Operations appropriation in FY1997.
Although Foreign Operations appropriations had been rising for five consecutive
years, amounts approved in FY2003 and FY2004 have reached unprecedented levels
over the past 40 years. Regular appropriations approved in these two years have
roughly been on par with amounts of the previous few years. But substantial
supplementals of $7.5 billion and $21.2 billion, respectively, for assistance to the
front line states in the war on terrorism and Afghanistan and Iraq reconstruction, have
pushed spending upward. The regular Foreign Operations bill, signed by the
President on January 23, 2004, combined with an earlier Iraq supplemental approved
in November 2003 (P.L. 108-106), bring current year appropriations to $38.7 billion,
the highest level, in real terms, since the early 1960s.
Supplemental resources for Foreign Operations programs, which in FY2004
exceed the regular funding amount, have become a significant channel of funding for
U.S. international activities. Due to the nature of rapidly changing overseas events
and the emergence of unanticipated contingencies to which it is in the U.S. national
interest to respond, it is not surprising that foreign aid and defense resources from
time to time are the major reason for considering and approving supplemental
spending outside the regular appropriation cycle. Supplementals have provided
resources for such major foreign policy events as the Camp David accords (FY1979),
Central America conflicts (FY1983), Africa famine and a Middle East economic
downturn (FY1985), Panama and Nicaragua government transitions (FY1990), the
Gulf War (FY1991), and Bosnia relief and reconstruction (FY1996).
Table 2. Foreign Operations Appropriations, FY1995 to FY2004
(discretionary budget authority in billions of current and constant dollars)
^FY⁹⁵^FY⁹⁶^FY⁹⁷^FY⁹⁸^FY⁹⁹^FY⁰⁰^FY⁰¹^FY^{02 FY}⁰³^FY⁰⁴
ⁿ^o^mⁱⁿ^a^l^$s^13.61^12.46^12.27^13.15^15.44^16.41^16.31^16.54^23.67^38.69
^con^s^t^aⁿ^t^F^Y^{04 $s}^16.12^14.46^13.95^14.76^17.08^17.71^17.17^17.21^24.15^38.69
^No^tes:^{FY1999 ex}^clu^d^es^{$17.861 billion}^f^o^{r th}^{e IMF.}
^{FY2004 in}^clu^d^es^$19.⁴²^billion^f^o^{r Iraq reco}ⁿ^s^tru^c^tion^.^W^ith^ou^{t Iraq f}^uⁿ^d^s^,^FY2004
^totals^{$19.27 billion}^.

But after a period of only one significant foreign aid supplemental in eight years,
beginning in FY1999 Congress has approved Foreign Operations supplemental
appropriations exceeding $1 billion in each of the past six years. Relief for Central
American victims of Hurricane Mitch, Kosovo refugees, and victims of the embassy
bombings in Kenya and Tanzania in FY1999 totaled $1.6 billion, and was followed
in FY2000 by a $1.1 billion supplemental, largely to fund the President’s new
counternarcotics initiative in Colombia. As part of a $40 billion emergency
supplemental to fight terrorism enacted in September 2001, President Bush and
Congress allocated $1.4 billion for foreign aid activities in FY2001 and FY2002.
Another $1.15 billion supplemental cleared Congress in FY2002 to augment Afghan
reconstruction efforts and assist other “front-line” states in the war on terrorism.
Figure 3. Supplemental Funding for Foreign Operations
40
35
30
25
20
15
10
5
0
'9 8 '9 9 '0 0 '0 1 '0 2 '0 3 '0 4
Supplem en tal R egu l ar
Until FY2003, these additional resources have accounted for between 7% and
11% of total Foreign Operations spending. The $7.5 billion Iraq War supplemental
for FY2003, however, went well beyond these standards, representing nearly one-
third of the FY2003 Foreign Operations budget, and surpassed, as noted above, only
by FY2004 supplemental appropriations.
As a share of the entire $2.24 trillion U.S. budget for FY2003, Foreign
Operations represented a 1.06% share, significantly higher than the traditional level
of around 0.75%. This was due largely to enactment of the $7.5 billion
supplemental for Iraq reconstruction, aid to coalition partners, and assistance to other

front-line states in the war on terrorism. The total FY2004 Foreign Operations
appropriation level, including the Iraq and Afghanistan reconstruction supplemental,
is projected to further increase foreign aid as a percent of U.S. federal spending to
1.66%. As a portion of discretionary budget authority — that part of the budget
provided in annual appropriation acts (other than appropriated entitlements) —
Foreign Operations consumed 2.8% in FY2003, a level that will rise significantly to
about 4.45% in FY2004. By comparison, at the previous high point of Foreign
Operations spending in FY1985, foreign aid funds represented 2% of the total U.S.
budget and 4.6% of discretionary budget authority.
Data Notes
Unless otherwise indicated, this report expresses dollar amounts in terms of
discretionary budget authority. The Foreign Operations Appropriations bill
includes one mandatory program that is not included in figures and tables —
USAID’s Foreign Service retirement fund. The retirement fund is scheduled to
receive $43.9 million for FY2004.
In addition, funding levels and trends discussed in this report exclude U.S.
contributions to the International Monetary Fund (IMF), proposals that are enacted
periodically (about every five years) in Foreign Operations bills. Congress
approved $17.9 billion for the IMF in FY1999, the first appropriation since
FY1993. Including these large, infrequent, and uniquely “scored” IMF
appropriations tends to distort a general analysis of Foreign Operations funding
trends. Although Congress provides new budget authority through appropriations
for the full amount of U.S. participation, the transaction is considered an exchange
of assets between the United States and the IMF, and results in no outlays from the
U.S. treasury. In short, the appropriations are off-set by the creation of a U.S.
counterpart claim on the IMF that is liquid and interest bearing. For more, see
CRS Report 96-279, U.S. Budgetary Treatment of the IMF.
Foreign Operations, the FY2004 Budget Resolution, and
Sec. 302(b) Allocations
Usually, Appropriations Committees begin markups of their spending bills only
after Congress has adopted a budget resolution and funds have been distributed to the
Appropriations panels under what is referred to as the Section 302(a) allocation
process, a reference to the pertinent authority in the Congressional Budget Act.
Following this, House and Senate Appropriations Committees separately decide how
to allot the total amount available among their 13 subcommittees, staying within the
functional guidelines set in the budget resolution. This second step is referred to as
the Section 302(b) allocation. Foreign Operations funds fall within the International
Affairs budget function (Function 150), representing in most years about 65% of the
function total. Smaller amounts of Function 150 are included in four other
appropriation bills.

How much International Affairs money to allocate to each of the five
subcommittees, and how to distribute the funds among the numerous programs are
decisions exclusively reserved for the Appropriations Committees. Nevertheless,
overall ceilings set in the budget resolution can have significant implications for the
budget limitations within which the House and Senate Foreign Operations
subcommittees will operate when they meet to mark up their annual appropriation
bills.
On April 11, 2003, the House and Senate agreed to a budget framework for
FY2004 (H.Con.Res. 95) that included $784.7 billion in discretionary budget
authority. The discretionary budget authority target for the International Affairs
function was $28.65 billion, the same as the President’s request (as re-estimated by
CBO). This means that the House and Senate Appropriations Committees received
sufficient resources to fully fund the Administration’s foreign policy budget proposal,
including the Foreign Operations request.
The Committees, however, could choose to allocate the $28.65 billion among
the five subcommittees with jurisdiction over the International Affairs programs
differently than what the President proposed or to alter the overall amount for foreign
policy activities. Depending on other competing priorities, the final allocations can
be quite different from those assumed in the budget resolution.
For a number of weeks following passage of H.Con.Res. 95, Appropriation
Committee leaders debated how to distribute the discretionary funds under their
jurisdiction, and especially how to absorb what they identified as a roughly $5 to $7
billion gap in spending requirements and amounts available. Departing from
traditional practices where House and Senate Committees work separately on
subcommittee allocations, Committee leaders negotiated across both houses with
their leadership and with the White House to establish a common framework within
which to base their initial allocations.
On June 11, House and Senate Appropriations Committee Chairmen announced
an agreed package which would free-up sufficient resources to address the funding
gap and remain within the overall FY2004 discretionary budget cap of $784.7 billion.
As approved by all parties, including the President, the Appropriations Committees
reduced Defense spending by $3 billion and moved $2.2 billion in FY2004 advance
appropriations to FY2003.
The House Appropriations Committee, which also released its allocation for all

13 subcommittees on June 11, made further alternations beyond the basic framework.

The Committee’s distribution added funding beyond the President’s request for
several subcommittees, including Homeland Security (up $1 billion), VA/HUD (up
$600 million), and Commerce, Justice, and State (up $229 million). In addition to
the $3 billion reduction for Defense, the House Committee further cut Foreign
Operations by $1.769 billion to $17.12 billion. This 9.4% cut from the President’s
request was the largest percentage reduction for any of the 13 subcommittees.
The Senate Appropriations Committee on June 19 agreed to its allocations,
differing from House levels in several areas, including Foreign Operations. The
Senate panel provided $18.09 billion for foreign assistance, an amount that was

subsequently raised to $18.446 billion on October 29 in order to accommodate
additional funds for international HIV/AIDS. The Senate amount was about $450
million, or 2.3%, below the President’s request, but $1.3 billion more than the House.
Although Senate levels were easier to accommodate, conferees meeting to
resolve funding and other differences between the two bills received a relatively low
revised allocation of $17.2 billion. The actual reduction to the executive’s budget
proposal, however, is unlikely to be as significant as a comparison between the
request — $18.9 billion — and the final allocation. Congress included in the Iraq
reconstruction supplemental (P.L. 108-106) roughly $700 million in additional funds
for Pakistan, Jordan, and Afghanistan that will allow the President to fully fund the
FY2004 proposals for these countries using resources from both the supplemental
and the regular Foreign Operations measure. As such, less money will need to be
drawn for these country aid programs from the Foreign Operations bill than originally
anticipated. Moreover, during final negotiations over the conference agreement of
H.R. 2673, the Consolidated Appropriations Act, 2004, to which Foreign Operations
became attached, conferees added $350 million for the Millennium Challenge
Account, an amount that is in addition to the $17.2 billion allocation. Consequently,
taking into account funding in the supplemental plus the add-on for the MCA, the cut
to the President’s overall request may be closer to $1 billion, or 5%.
Nevertheless, a cut of this size for Foreign Operations required substantial trade-
offs among Administration priorities as well as foreign aid programs of high interest
to Congress. With most of the Foreign Operations increases slated for new
initiatives, including the Millennium Challenge Account and the Global AIDS
program, cuts were necessary for some of these new proposals and for continuing
activities. During several months of debate, the White House repeatedly emphasized
that the budget package should not reduce funding for his top spending priorities.
The White House had been most critical of proposed reductions for the Millennium
Challenge Account and successfully convinced House-Senate conferees to restore
some of the 50% cut initially recommended by the conference agreement on H.R.

2800.

Foreign Operations Appropriations Request for
FY2004 and Congressional Consideration
Request Overview
On February 3, 2003, President Bush asked Congress to appropriate $18.89
billion for FY2004 Foreign Operations. The budget proposal was $2.7 billion, or
16.7% higher than regular Foreign Operations appropriations for FY2003, as enacted
in P.L. 108-7. If enacted, the President’s recommendation would have resulted in
one of the largest increases of regular (non-supplemental) Foreign Operations
funding in several decades. Congress subsequently approved in mid-April an
additional $7.5 billion FY2003 supplemental foreign aid spending in P.L. 108-11, for
Iraq reconstruction, assistance to coalition partners, and other activities supporting
the global war on terrorism. Including the supplemental brought Foreign Operations
appropriations in FY2003 to $23.67 billion.

The FY2004 budget blueprint continued to highlight foreign aid in support of
the war on terrorism as the highest priority. But a notable characteristic of the
submission was the request for funding four new foreign aid initiatives which
together accounted for most of the $2.7 billion increase over regular FY2003 levels.
Combined, the Millennium Challenge Account (a new structure for delivering foreign
aid), the State Department’s Global AIDS Initiative, and two new contingency funds
(Famine and Complex Crises), totaled $2.05 billion. Other Foreign Operations
programs were left with a more modest 4% increase.
Table 3. Foreign Operations New Initiatives FY2004
FY2003FY2004FY2004 +/-
Enac t e d* Request F Y 2003
Foreign Operations$16.192$18.88916.7%
New Initiatives for FY2004:
Millennium Challenge Acct — $1.300 —
Global AIDS Initiative — $0.450 —
Famine Fund — $0.200 —
Complex Crises Fund — $0.100 —
Total New Initiatives FY2004 — $2.050 —
Foreign Operations, Less New Initiatives$16.192$16.8394.0%
^*^En^acted^r^e^g^u^l^ar^ap^p^r^o^p^r^iatioⁿ^s^{. Ex}^clu^d^{es $}⁷^.⁵^b^illioⁿ^ap^p^r^o^p^r^iated^f^o^r^Fo^r^e^igⁿ^Op^er^atioⁿ^s^an^d^f^o^o^d
^ai^{d i}ⁿ^t^h^{e Iraq War s}^u^ppl^em^en^t^a^l^(P.L^{. 108-}^11).
Fighting the War on Terrorism. Since the terrorist attacks in September
2001, American foreign aid programs have shifted focus toward more direct support
for key coalition countries and global counter-terrorism efforts. In total, Congress
appropriated approximately $17.9 billion in FY2002 and FY2003 Foreign Operations
funding to assist the 26 “front-line” states in the war on terrorism, implement anti-
terrorism training programs, and address the needs of post-conflict Iraq and other
surrounding countries. Nearly half of all Foreign Operations appropriations the past
two years has gone for terrorism or Iraq war-related purposes.
The FY2004 budget continued the priority of fighting terrorism with $4.7
billion, or 25% of Foreign Operations resources assisting the front-line states. Unlike
a year ago when the President’s FY2003 budget was viewed by many as an
inadequate request, especially for Afghanistan, the FY2004 proposal included
substantial aid packages for a number of the front-line states. Although the levels for
most countries would not increase much beyond what was provided from regular
FY2003 foreign aid funding, the request largely sustained amounts that had grown
substantially during the past two years. Anti-terrorism training and technical
assistance programs also would rise by 45% above FY2003 levels.
The FY2004 submission did not, however, include follow-on funding for Iraq
relief and reconstruction. Congress approved $2.5 billion in FY2003 supplemental

resources, an amount many viewed as a down payment of long-term needs in Iraq.
With great uncertainty surrounding the costs of Iraq reconstruction, how much of the
financial burden the United States will shoulder, and the process by the
reconstruction operations will be managed, the Administration did not amend its
pending FY2004 request to include additional amounts. Instead, the White House
proposed in September 2003 a $21.5 billion supplemental spending package for Iraq
reconstruction and additional aid for Afghanistan. (See discussion below regarding
Iraq and Afghanistan reconstruction funding issues.)
New Initiative: The Millennium Challenge Account. The largest of the
new initiatives was the Millennium Challenge Account (MCA), a program designed
to radically transform the way the United States provides economic assistance to a
small number of “best performing” developing nations. The request for FY2004 was
$1.3 billion with a promise that the MCA will grow to $5 billion by FY2006 and
remain at least at that level in the future. Some MCA supporters argued that the
FY2004 level was too low, saying that the President pledged to implement the
initiative in equal installments over three years and that an appropriation of $1.67
billion was what they had anticipated. The Administration said that the added MCA
funding would be in addition to and not a substitute for existing U.S. economic aid,
but development advocates were concerned that given the tight budget environment,
trade-offs between regular economic programs and the MCA might be required. (See
separate page under Funding and Policy Issues for more discussion of the MCA.)
New Initiative: The Global AIDS Initiative. In his January 2003 State of
the Union address, President Bush pledged to substantially increase U.S. financial
assistance for preventing and treating HIV/AIDS, especially in the most heavily
inflicted countries in Africa and the Caribbean. The President promised $15 billion
over 5 years, $10 billion of which would be money above and beyond current
funding. The Global AIDS Initiative, which will be housed in the State Department,
represented a portion of that pledge — $450 million in FY2004 — that when
combined with other resources managed by USAID and the Department of Health
and Human Services (HHS), would raise total international HIV/AIDS resources in
FY2004 to about $1.9 billion. Some observers noted, however, that this fell well
short of the anticipated $3 billion per year implied in the President’s speech and
would represent only $500 million in new money to fight AIDS above the FY2003
level. Some further questioned whether the State Department should be coordinator
of international HIV/AIDS programs, as envisioned in the Initiative, rather than
USAID or HHS. (See separate page under Funding and Policy Issues for more
discussion of the Global AIDS Initiative.)
New Initiative: The Famine Fund. This new contingency fund, with $200
million requested for FY2004, would allow the Administration to provide, under
more flexible authorities, emergency food and other disaster relief support as needs
arise. Executive officials argued that greater flexibility would permit them to
respond rapidly to the human consequences of natural disasters and conflict without
having to divert resources from other economic aid accounts. Critics noted, however,
that the existing international disaster assistance account and P.L. 480 food aid
program, plus legislative authorities that allow for temporary borrowing of funds
from other aid accounts, perform the same functions as the proposed Famine Fund
and questioned whether it is necessary.

New Initiative: The U.S. Emergency Fund for Complex Crises. The
Administration proposed to establish within the Executive Office of the President a
$100 million contingency fund allowing the United States to respond quickly to
unforseen complex foreign crises. The resources would not be used to address
victims of natural disasters, but rather would support peace and humanitarian
intervention in conflict situations, including acts of ethnic cleansing, mass killing, or
genocide. In the past, Congress has been reluctant to approve this type of
contingency fund over which it can apply little oversight. The Administration had
asked lawmakers to launch the Complex Crisis Fund with $150 million as part of the
FY2003 Iraq War supplemental. Congress, however, chose to defer consideration
of establishing such a Fund until the FY2004 appropriation cycle, and instead
allocated the requested resources among various accounts for Iraq reconstruction and
aid to regional states affected by the war.
Other Key Elements of the FY2003 Request. Beyond these specific and
prominent issues, the Foreign Operations proposal for FY2004 sought to substantially
increase aid activities in a few areas while cutting resources for several programs.
Significant appropriation increases when compared with regular FY2003
appropriations (excluding the Iraq War supplemental) included:
^!Security assistance — Economic Support Fund and Foreign
Military Financing. These two core security aid accounts that aim
to support countries strategically important to the U.S., would have
grown by a combined $648 million, or 10% above regular FY2003
levels. Much of the add-on was targeted for a $250 million security
aid package for Turkey and a $145 million new Middle East
Partnership Initiative.
^!Peace Corps funding would have risen by $64 million, or 22% in an
effort to place 10,000 volunteers by the end of FY2004 and to keep
on track the President’s longer term plan of having 14,000
Americans serving in the Peace Corps by FY2007.
^!Contributions to the World Bank and other international financial
institutions would have grown by $259 million, or 17%, covering all
scheduled U.S. payments to the multilateral development banks, plus
clearing $196 million of U.S. arrears owed to these institutions. The
request further included an 18% increase for the World Bank’s
International Development Association and the African
Development Fund as a “results-based Incentive Contribution” that
had been promised last year if the banks implemented certain
reforms.
^!Debt reduction, which received no funding in FY2003 except by a
transfer of $40 million from another aid account, would have grown
to $395 million under the Administration’s budget submission.
There were three components to the request: $300 million to cancel
bilateral debt owed by the Democratic Republic of the Congo under
the Heavily Indebted Poor Country (HIPC) initiative; $75 million as
a contribution to the HIPC Trust Fund to make up for unanticipated

shortfalls in implementing the program; and $20 million for the
Tropical Forestry Conservation debt relief activity.
^!International narcotics control would have grown by $89 million,
or 45%, largely to expand significantly programs in Pakistan and
Mexico. The Administration further sought $731 million for the
Andean Counterdrug Initiative (ACI), an increase from the $700
million regular appropriation for FY2003. The ACI proposal would
have generally restored amounts that were cut from the FY2003
request for Colombia, Ecuador, Brazil, Venezuela, and Panama.
The largest reduction proposed in the President’s Foreign Operations budget
targeted assistance to Former Soviet states and Eastern Europe. Collectively, aid
to these countries would have declined by $179 million, or 24% from FY2003 levels.
The request reflected a reorientation in the former Soviet aid account to focus more
on Central Asian states, linked to the war on terrorism, and to begin the process of
graduation for Russia and Ukraine. Aid to these two nations would have fallen by
40% from FY2003 allocations. The request further would have cut Armenia’s aid
by nearly half, from $89 million to $49 million. For Eastern Europe, aid levels
would have fallen for nearly every recipient, with some of the largest reductions
scheduled for Serbia, Montenegro, and Macedonia.
Funding for the Export-Import Bank would also have declined under the
President’s budget — from $565 million to $43 million in FY2004 (as re-estimated
by CBO). But because of substantial “carry-forward” resources that were not spent
in prior years, Eximbank officials said that Bank lending could total $14.6 billion in
FY2004, which was at least $2 billion higher than the anticipated level for FY2003.
Assessing the Administration’s request for bilateral development and health
assistance was more complicated and led to varying interpretations. With
implementation of the President’s new Global AIDS Initiative in FY2004,
development and health resources, including funds from USAID’s “core” accounts
for development assistance and child survival/health, and the State Department’s
Global AIDS Initiative, would have increased by $205 million, or 6.4% over regular
FY2003 levels. Depending on the purposes for which Millennium Challenge
Account funds are spent, further additions to development and health programs
would also be expected from MCA allocations.
But excluding the new Global AIDS Initiative and MCA from the equation,
overall funding for USAID’s two “core” accounts would have declined in FY2004
by a combined $245 million, or 7.6%. The implication of this reduction was that
with the exception of HIV/AIDS, nearly all other development programs, including
those for agriculture, basic education, family planning, malaria and tuberculosis, and
democracy programs would have been at or slightly below amounts allocated for
FY2003. Some critics charged that this violated the executive’s pledge that MCA
funding would be in addition to and not in place of continuing economic aid
programs. Others expressed concern that the growth in HIV/AIDS resources came
at the expense of other key health activities for which resources would decline.

Table 4. Summary of Foreign Operations Appropriations
(Discretionary funds — in millions of dollars)
Bill Title & ProgramFY2002Enacted*FY2003Regular*FY2003Supp*FY2003TotalFY2004 Request
Title I - Export Assistance528369 — 369(103)
Title II - Bilateral Economic10,39910,0945,32215,41612,642
Aid
Development/Child Survival2,6123,205903,2952,960
aid
Global AIDS Initiative — — — — 450
Iraq Relief & Reconstruction — — 2,4752,475 —
Israel/Egypt 1,375 1,207 300 1,507 1,055
Millennium Challenge Acct — — — — 1,300
Title III - Military Assistance4,2324,2392,1596,3984,601
Israel/Egypt3,3403,3781,0004,378 3,460
Title IV - Multilateral Aid1,3831,490 — 1,4901,749
Total Foreign Operations16,54216,1927,48123,67318,889
^Source:^Ho^u^s^{e A}^p^p^r^o^p^r^iatioⁿ^s^Co^m^m^{ittee an}^d^{CRS calcu}^latioⁿ^s^.
^*^{FY2002 lev}^e^lsⁱⁿ^clu^d^{e $15.346 billion}ⁱⁿ^reg^u^l^ar^Fo^reigⁿ^Operation^s^appropr^iation^s^en^{acted in}^P^.^L^.
^107-^{115 plu}^s^{$1.1 b}^illion⁽ⁿ^{et $50 m}^illionⁱⁿ^res^c^is^sⁱ^on^s⁾^,^prov^idedⁱⁿ^P^.^L^.^107-^{206, th}^{e FY2002}
^em^erg^eⁿ^c^y^s^u^ppl^em^en^t^a^l^appropri^a^tⁱ^oⁿ^.^F^Y^{2003 reg}^u^l^{ar i}ⁿ^cl^u^d^es^am^ouⁿ^t^s^p^r^ovⁱ^d^{ed i}ⁿ^P.L^.
^108-⁷^an^{d are adj}^u^s^t^{ed f}^o^{r a 0.65%}^acros^s^-^t^h^e-^{board res}^cⁱ^s^sⁱ^on^requⁱ^r^{ed by}^t^h^e^A^c^t^.^F^Y²⁰⁰³
^s^u^ppl^em^en^t^a^lⁱⁿ^cl^u^d^es^am^ouⁿ^t^s^provⁱ^d^{ed i}ⁿ^P.L^.^108-^11.
Leading Foreign Aid Recipients Proposed for FY2004
Israel and Egypt remain the largest U.S. aid recipients, as they have been for
many years. However, in the aftermath of the September 11 terrorist attacks, foreign
aid allocations have changed in several significant ways. The request, and
subsequently the allocations for FY2004 largely continued the patterns of aid
distribution of the past two years.
Since September 11, the Administration has used economic and military
assistance increasingly as a tool in efforts to maintain a cohesive international
coalition to conduct the war on terrorism and to assist nations which have both
supported U.S. forces and face serious terrorism threats themselves. Pakistan, for
example, a key coalition partner on the border with Afghanistan, had been ineligible
for U.S. aid, other than humanitarian assistance, due to sanctions imposed after India
and Pakistan conducted nuclear tests in May 1998 and Pakistan experienced a
military coup in 1999. Since lifting aid sanctions in October 2001, the United States
has transferred over $1.9 billion to Pakistan. Jordan, Turkey, Indonesia, the
Philippines, and India also are among the top aid recipients as part of the network of
“front-line” states in the war on terrorism.

The other major cluster of top recipients are those in the Andean region where
the Administration maintains a large counternarcotics initiative that combines
assistance to interdict and disrupt drug production, together with alternative
development programs for areas that rely economically on the narcotics trade.
Several countries in the Balkans and the former Soviet Union — Serbia and
Montenegro, Kosovo, Russia, Ukraine, Armenia, and Georgia — would continue to
be among the top recipients, although at somewhat lower funding levels.
Table 5. Leading Recipients of U.S. Foreign Aid
(Appropriation Allocations; $s in millions)
F Y 2002 F Y 2003 F Y 2003 F Y 2003 F Y 2004 F Y 2004 F Y 2004
Ac t u al Regular Supp Tot a l Regular Supp Tot a l
Iraq25102,4752,485 — 18,43918,439
Israel2,7882,6821,0003,6822,624 — 2,624
Egypt1,9561,9043002,2041,865 — 1,865
Afghanistan 527 322^b 325 647 405 1,364 1,769
Colombia40652768595574 — 574
J ordan 355 449 1,106 1,555 449 100 549
Paki stan 1,045 295 200 495 184 200 384
Liberia511 — 11 — 203203
Peru197179 — 179160 — 160
Turkey253201,0001,020145 — 145
Serbia &165151 — 151135 — 135
Montenegro
Bolivia134138 — 138134 — 134
Indonesia137132 — 132121 — 121
Ukraine1671432145106 — 106
Russia164149 — 149100 — 100
Philippines131886014896 — 96
India8093 — 9391 — 91
Georgia12491 — 9184 — 84
Armenia9798 — 9880 — 84
Kosovo11885 — 8579 — 79
Kazakstan5851 — 5179 — 79
West Bank/Gaza72755012575 — 75
^Source:^{U.S. Dep}^a^rtm^eⁿ^t^o^f^State.
^No^te^:^F^Y^{2002 i}ⁿ^cl^u^d^es^f^uⁿ^d^s^al^l^o^cat^{ed f}^r^om^t^h^{e reg}^u^l^{ar F}^o^rei^gⁿ^O^p^eratⁱ^oⁿ^s^appropri^a^tⁱ^oⁿ^,^pl^u^s^f^uⁿ^d^s^drawⁿ^f^r^om^t^h^e
^E^m^e^r^g^eⁿ^c^y^R^e^s^p^oⁿ^s^e^F^uⁿ^d^a^p^p^r^o^p^rⁱ^a^t^e^dⁱⁿ^P.L^.^107-³⁸^aⁿ^d^a^l^l^o^c^a^t^e^d^f^r^o^m^t^h^e^F^Y^{2002 S}^u^ppl^em^en^t^a^l
^A^ppropri^a^tⁱ^oⁿ^(P.L^{. 107-}^{206). F}^Y²⁰⁰³^r^e^g^u^l^a^r^a^p^p^r^o^p^rⁱ^a^tⁱ^oⁿⁱⁿ^c^l^u^d^e^s^a^m^o^uⁿ^t^s^a^l^l^o^c^a^t^e^d^f^r^o^m^t^h^e^F^o^r^eⁱ^gⁿ
^O^p^eratⁱ^oⁿ^s^A^ppropri^a^tⁱ^oⁿ^,^F^Y^{2003 (P.L}^{. 108-}^{7). F}^Y^{2003 s}^u^ppl^em^en^t^a^lⁱⁿ^cl^u^d^es^f^uⁿ^d^s^al^l^o^cat^{ed f}^r^om^t^h^{e Iraq}
^{War S}^u^ppl^em^en^t^a^l^(P.L^{. 108-}^11). ^F^Y^{2004 reg}^u^l^{ar appropri}^a^tⁱ^oⁿⁱⁿ^cl^u^d^es^am^ouⁿ^t^s^al^l^o^cat^{ed f}^r^om^t^h^e
^C^oⁿ^s^olⁱ^d^at^{ed A}^ppropri^a^tⁱ^oⁿ^s^,^F^Y²⁰⁰⁴^(P.L^.^108-^{199). F}^Y^{2004 s}^u^ppl^em^en^t^a^lⁱⁿ^cl^u^d^es^f^uⁿ^d^s^al^l^o^cat^{ed f}^r^om^t^h^e
^P.L^.^108-^106.

House Consideration
On July 23, the House passed (370-50) a $17.12 billion spending bill — H.R.

2800 — for FY2004 foreign aid programs. The amount was $1.8 billion, or 9.4%

below the President’s request, but $900 million, or 5.6% higher than regular
(excluding supplemental) Foreign Operations spending approved for FY2003. As
one of its top priority, the House Committee approved $1.27 billion for international
HIV/AIDS, $30 million above the President’s request and $390 million higher than
FY2003 levels. The HIV/AIDS total included $400 million for the Global Fund,
compared with the President’s request of $100 million. Combined with parallel
funding approved in the House Labor-HHS spending measure, the House bill
provided in both bills $1.9 billion for HIV/AIDS, $20 million less than the
Administration’s proposal. Out of this, $500 million would be available as a U.S.
contribution to the Global Fund for which the President proposes $200 million. The
bill also restored cuts to bilateral tuberculosis and malaria proposed by the President,
increasing spending for non-HIV/AIDS infectious diseases from $104 million to
$156 million.
For overall “core” bilateral development programs, including HIV/AIDS and
other non-health activities, the House measure was about $140 million higher than
the President’s request and $350 million above regular FY2003 amounts. The House
bill, however, reduced non-health programs by nearly $30 million from the
Administration’s request and $63 million from FY2003 amounts. This would have
resulted in small cuts for activities such as agriculture, economic growth,
environment, and democracy promotion. The House measure, however, placed high
priority on trade capacity building activities, increasing funding to $195 million, $35
million higher than in FY2003. Spending on basic education would have also risen
under the House measure, with $259 million specified out of the bilateral
development aid funds. In FY2003, USAID allocated $217 million for basic
education and requested $212 million for FY2004. Across all Foreign Operations
accounts, the House bill directed a total of $350 million for basic education.
On other major issues, the House measure:
^!reduced the President’s $1.3 billion request for the new Millennium
Challenge Account to $800 million.
^!set family planning resources at $425 million as requested
^!provided $25 million for the U.N. Population Fund (UNFPA), but
with conditions that could reduce or eliminate the contribution.
^!fully funded at the requested levels amounts for Israel, Egypt, and
Jordan.
^!provided $731 million for the Andean Counterdrug Initiative, as
proposed, but reduced by $43 million funding for regular
counternarcotics programs.
^!set Peace Corps funding at $314 million, $19 million higher than
FY2003 levels but $45 million under the Administration’s budget.
^!provided $576 million for the former Soviet Union, as requested,
but $179 million less than FY2003.

^!increased the President’s request for East European assistance by
$17 million, with the additional funds set for Bosnia, Serbia, and
Montenegro.
^!included current contributions for several multilateral development
banks, including the World Bank’s International Development
Association (IDA) and the Global Environment Fund, but
excluded arrearage payments and “incentive” contributions for IDA
and the African Development Bank sought by the Administration.
^!excluded funds for two new Presidential contingency funds for
Famine and emergency complex crises. The House bill, however,
increased international disaster assistance to $315.5 million,
directing that $80 million be used for famine relief, prevention, and
mitigation.
^!deleted $300 million sought for extending debt relief to the
Democratic Republic of Congo. The legislation, however, fully
funds the requests for HIPC debt relief and for tropical forest
conservation.
During House floor debate on July 16, lawmakers adopted several amendments
to H.R. 2800, including:
^!a proposal by Congressman Kolbe to clarify the role of the new State
Department HIV/AIDS Coordinator, with the intent to grant the
Coordinator adequate authority to “coordinate” U.S. government
efforts to combat AIDS globally while allowing the traditional
agencies that have managed such programs for many years —
USAID and the Centers for Disease Control and Prevention — to
continue their work without excessive micromanagement by the
Coordinator.
^!an amendment by Congressman Hefley that reduced funding for the
International Military Education and Training (IMET) program by
$600,000. The intent of the proposal was to cut IMET assistance to
Indonesia because of lack of progress in the investigation of an
August 2002 ambush that left two Americans and an Indonesian
from an international school dead. Some believe the Indonesian
military may have been involved. While cutting the IMET account
by the amount requested for Indonesia, the amendment itself did not
limit the State Department’s ability to fund an IMET program for
Indonesia in FY2004.
^!a proposal by Congresswoman Bigger to authorize U.S. participation
in the 13^th replenishment of the International Development
Association (IDA), the World Bank’s concessional lending facility.
Congress approved funding for IDA-13, including $850 million in
H.R. 2800, but the money could not be transferred without a
congressional authorization.
^!an amendment by Congressman Alcee Hastings stating a sense of
Congress that the President should use all diplomatic tools available

to ensure that North Korea does not engage in the proliferation of
nuclear weapons.
A central theme of House debate — both on the floor and in Committee — were
efforts to increase assistance proposed in the bill for Africa, especially to increase
funding for HIV/AIDS, malaria, and tuberculosis from the roughly $2 billion level
contained in Foreign Operations and Labor, HHS, and Education appropriation bills
to something closer to the $3 billion amount Congress previously authorized in P.L.
108-25. Although numerous amendments were offered and debated, none were
adopted. Among specific proposals considered to increase aid to Africa and
programs combating HIV/AIDS were:
^!a Congresswomen Lowey amendment at full Committee markup to
add $1 billion in “emergency” funds (an amount that would not
count against the bill’s spending cap) for additional HIV/AIDS
programs, much of which would be delivered in Africa, failed 28-33;
^!a Committee amendment proposed by Congresswomen Kilpatrick
to transfer $500 million from the Millennium Challenge Account to
HIV/AIDS lost 27-28. Amendment supporters argued that the MCA
could not utilize all funds appropriated in H.R. 2800 in the first year,
and that Africa would benefit more from HIV/AIDS programs than
from MCA resources for which a few African countries might
qualify. A similar amendment to transfer $300 million from the
MCA to HIV/AIDS lost during House floor debate (192-228).
^!an amendment by Congressman Jackson in Committee markup to
shift $200 million from the MCA to HIV/AIDS and provide $588
million in “emergency” funding for more African economic
assistance, Congo debt relief, and a higher amount for the African
Development Fund failed on a voice vote. A similar proposal by
Congressman Jackson was ruled out of order during House debate.
^!a House floor amendment by Congressman McGovern to shift $75
million from the Andean Regional Initiative to HIV/AIDS programs
lost on a vote of 195-226.
Senate Consideration
On October 30, the Senate approved an $18.38 billion spending bill for FY2004
foreign aid programs. (The Senate Appropriations Committee had approved an
original bill, S. 1426, on July 17 but passed the House bill, H.R. 2800, with
numerous amendments.) The amount was $500 million, or 2.7%, below the
President’s request, but $2.2 billion higher than regular (excluding supplemental)
Foreign Operations spending approved for FY2003. Because of a higher “302(b)
allocation,” S. 1426 was nearly $1.3 billion more than the House bill.
As one of its top priorities, the Senate provided $1.47 billion for international
HIV/AIDS, about $230 million above the President’s request and $590 million higher
than FY2003 levels. The HIV/AIDS total included as much as $250 million for the

Global Fund, compared with the President’s request of $100 million. (The President
also requested $100 million for the Global Fund in the Labor/HHS appropriation
measure.) Unlike the House bill, the Senate included HIV/AIDS funds in both the
Child Survival/Health (CS/H) and Global AIDS Initiative accounts. The Global
AIDS Initiative account was a new request for FY2004, funding programs managed
by a new State Department Coordinator. The House bill kept nearly all HIV/AIDS
funds in the CS/H account, consistent with past practice. The Senate-passed bill also
restored cuts to bilateral tuberculosis and malaria proposed by the President,
increasing spending for non-HIV/AIDS infectious diseases from $104 million to
$185 million.
The issue of funding for HIV/AIDS became one of the primary issues of debate
during Senate floor consideration. The Senate approved an amendment by Senator
Dewine, increasing total resources by $287 million. The Senate, however, rejected
proposals by Senator Durbin to add $200 million more for HIV/AIDS, and by
Senator Bingaman to boost spending by $200 million, with a corresponding reduction
of $200 million for the Millennium Challenge Account.
For overall “core” bilateral development programs, including HIV/AIDS, other
non-health activities, and UNICEF contributions, the Senate measure was about $550
million higher than the President’s request and $415 million above the House bill.
Besides increasing health programs, the Senate bill also added to the request for other
development activities, providing about $80 million more than requested and over
$100 million more than the House. Basic education programs received $220 million
under H.R. 2800, as approved in the Senate, while environmental activities ($485
million) and microenterprise ($180 million) were other areas emphasized in the
Senate bill that are above the President’s request.
On other major issues, the Senate bill:
^!reduced the President’s $1.3 billion request for the new Millennium
Challenge Account to $1 billion. The Senate further attached
legislation authorizing the MCA, drawing text from S. 925, which
had been debated, amended, but not passed by the Senate in mid-
July.
^!set family planning resources at $445 million, $20 million higher
than the request.
^!included text that would effectively overturn the President’s
“Mexico City” abortion-related restrictions.
^!provided $35 million for the U.N. Population Fund (UNFPA), but
with conditions that could reduce or eliminate the contribution.
^!fully funded at the requested levels amounts for Israel, Egypt, and
Jordan.
^!reduced to $660 million funding for the Andean Counterdrug
Initiative, but provided full funding for regular counternarcotics
programs.
^!set Peace Corps funding at $310 million, $15 million higher than
FY2003 levels but $49 million under the Administration’s budget.
^!provided $596 million for the former Soviet Union, $20 million
above the request and roughly the same as for FY2003. The

additional funds would off-set proposed reductions for Russia and
Armenia.
^!increased the President’s request for East European assistance by
$10 million.
^!provided the total request, including arrears payments and an
“incentive” contribution for the World Bank’s International
Development Association (IDA). Most other multilateral
development bank contributions were set at or near the President’s
request.
^!appropriated $100 million for one of the two new Presidential
contingency accounts — the Famine Fund — but deletes funding
for the emergency complex crises fund.
^!provided $100 million of $300 million sought for extending debt
relief to the Democratic Republic of Congo. S. 1426 allocated funds
sought for Congo debt relief for other pressing needs in Africa. The
legislation, however, fully funded the requests for HIPC debt relief
and for tropical forest conservation.
Conference Agreement
On November 17, a conference committee on the Foreign Operations bill met
and reached agreement on most, but not all issues in disputes. Conferees adjourned
pending the resolution of the outstanding matters, most of which related to
international family planning funding and policy issues. Subsequently,
Appropriation Committee leaders merged the Foreign Operations measure into the
conference agreement on H.R. 2673, the Consolidated Appropriations Act, 2004.
The text of the Foreign Operations bill can be found in Division D of H.R. 2673,
while an additional appropriation for one Foreign Operations account — the
Millennium Challenge Corporation — can be found as Section 134 of Division H.
On December 8, the House passed H.R. 2673, with the Senate following on January

22, 2004. The President signed the consolidated appropriation on January 23 (P.L.

108-199).

The conference agreement on H.R. 2673 provides $17.48 billion for Foreign
Operations, a figure that includes a 0.59% across-the-board rescission and additional
amounts for the Millennium Challenge Account specified in Division H of the bill.
This represents a $1.4 billion, or an 7.5% reduction from the President’s request, but
$1.3 billion, or 7.9% higher than approved in regular Foreign Operations spending
for FY2003.
The actual reduction to the executive’s budget FY2004 proposal, however, is
unlikely to be as significant as this comparison suggests. Congress included in the
Iraq reconstruction supplemental (P.L. 108-106) $300 million for Pakistan and
Jordan, amounts that were not requested, plus higher funding than proposed for
Afghanistan. Further, the conference agreement on H.R. 2673 includes authority for
the President to transfer $130 million from Iraq reconstruction funds in P.L. 108-106
for economic aid for Turkey ($100 million) and the Middle East Partnership Initiative
($30 million). Consequently, by utilizing these additional funds and transfer
authorities for requested regular Foreign Operations programs, the President could

use about $550 million to fund his original FY2004 proposal without drawing on the
$17.48 billion provided in H.R. 2673. If the Administration chooses to utilize these
resources, the difference between the FY2004 request and the conference agreement
would be about $850 million, or a 4.5% cut. (Note that figures mentioned below
for specific programs are the actual amount appropriated in H.R. 2673, and do not
reflect the 0.59% rescission that will be applied to each item.)
Despite the overall reduction, the conference agreement increases spending for
international HIV/AIDS, malaria, and tuberculosis programs to $1.646 billion. When
this amount is combined with appropriations in the pending Labor/HHS/Education
appropriation (Division E of H.R. 2673), the total for global HIV/AIDS, malaria, and
tuberculosis is $2.4 billion, or roughly $400 million above the President’s request.
Conferees further agreed to a $400 million contribution to the Global Fund for AIDS,
Malaria, and Tuberculosis that together with $150 million in Division E would bring
the total level to $550 million, rather than the Administration’s $200 million
proposal.
The conference agreement further authorizes and appropriate funds for the
Millennium Challenge Account (MCA), one of the top Presidential aid initiatives.
Division D of H.R. 2673 provides $650 million for the MCA, while Division H
includes an additional $350 million, for a total MCA appropriation of $1 billion. The
President had proposed $1.3 billion for the MCA, a program that is planned to grow
to $5 billion by FY2006.
On another major policy matter, the conferees dropped Senate language that
would have effectively reversed the President’s “Mexico City” abortion-related
restrictions placed on international family planning programs during the Bush
Administration. The conference agreement further appropriates $34 million for the
U.N. Population Fund (UNFPA), but under the same conditions (“Kemp-Kasten”
amendment) that has led to the withholding of U.S. contributions to the UNFPA the
past two years because of the organization’s program in China. The Senate bill had
recommended changes in the Kemp-Kasten conditions. The White House had said
the President would veto the bill if either of the Senate provisions on international
family planning had remained in the final bill. The conference agreement also
provides for $432 million for bilateral family planning assistance, a compromise
between the $425 million proposed by the President and passed by the House, and
$445 million recommended by the Senate.
In other decisions made by conferees, the final Foreign Operations bill includes:
^!$3.2 billion for USAID’s “core” aid accounts of Child
Survival/Health and Development Assistance, $380 million higher
than the request.
^!$255 million for international disaster and famine aid, rejecting the
proposal to establish a separate Famine Fund account.
^!$326.5 million across all accounts for basic education programs, an
increase over the President’s approximate request of $303.5 million.

^!$731 million for the Andean Counter Drug Initiative, as requested.
^!full funding for the President’s requests for aid to Israel, Egypt, and
Jordan.
^!$405 million for Afghanistan, an amount that could be lowered from
the $600 million earmarked in both House and Senate bills because
of additions made in the Iraq/Afghanistan reconstruction
supplemental.
^!$325 million for the Peace Corps, including a $15 million transfer
from the HIV/AIDS account.
^!$95 million for debt reduction, including full funding for “topping
up” the HIPC initiative and for the Tropical Forest debt program, but
no funds for bilateral debt forgiveness for the Democratic Republic
of Congo.
^!$913 million for the World Bank’s International Development
Association (IDA), an amount that will fully fund the first U.S.
contribution to the new IDA replenishment but which will provide
no funds to cover past payment arrears ($27 million) and only
partially fund with $63 million the President’s $100 million
“incentive” contribution for IDA management reforms.
Iraq War Supplemental for FY2003 and
Foreign Operations Funding
On March 25, 2003, the President requested a nearly $75 billion FY2003
supplemental that included $7.6 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 USAID administrative expenses. 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 6, was roughly divided into two components: Iraq relief and
reconstruction (about $2.85 billion) and aid to coalition partners and other nations
engaged in the war on terrorism (about $4.7 billion).³
Reconstruction Efforts
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 proposal

³ OMB documents estimated 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.

stimulated immediate controversy. A number of critics, including Members of
Congress, argued 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 funding
from the U.S. military. This, they contended, would hamper relief activities.
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 the conflict.
As with other parts of the supplemental dealing with defense and homeland
security resources, the White House wanted to maintain maximum flexibility over
the distribution of the appropriations so that it could respond to changing
circumstances and unanticipated contingencies. Executive officials, who
acknowledged that some or all of the funding would be transferred to DOD, argued
that the military would be best situated following the conflict to immediately launch
the reconstruction efforts. Moreover, the Administration noted that the Defense
office in charge of reconstruction operations would most likely re-direct most of the
resources to the State Department and USAID who would then be responsible for
managing rehabilitation projects. Officials further argued that it was too early to
identify specific reconstruction activities and that it was possible to only provide the
most general outlines of how the money would be spent until assessment teams could
report on the extent of needs throughout the country.
Congressional Action on Iraq Reconstruction. As cleared by Congress,
H.R. 1559 appropriated $2.475 billion for the Relief and Reconstruction Fund,
slightly higher than requested. The President was able to apportion Fund resources
directly to five federal agencies: the Departments of Defense, State, Health and
Human Services, Treasury, and USAID. Subsequently the funds were allocated to
the Coalition Provisional Authority, headed by Ambassador Paul Bremer, who
reports to the Secretary of Defense. 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.

CRS-25
Table 6. Iraq Reconstruction, International Aid, and Related Activities
(in millions of dollars)
Activity Request H ouse Senate Enacted
ief and Reconstruction:
$2,443.3 $2,483.3 $2,468.3 $2,475.0
which:
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$200.0fully^a$260.0 fully
ⁱ^{ki/CRS-RL31811}n 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
^le^ak
^://wikibursement to USAID’s Child Survival/Health account for previously drawn upon$40.0$40.0 $90.0 $90.0
^h^ttp
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
orldwide.
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

CRS-26
Activity Request H ouse Senate Enacted
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
uarantees.
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
ⁱ^{ki/CRS-RL31811}kistan military grant and law enforcement aid.^c$200.0$200.0 ^d $200.0
^g/w
^s^.oribouti economic and military grants.$30.0NSNSNS^e
^le^ak^e
an military grant.$62.0NSNSNS
^://wikihrain military grant.$90.0NSNSNS^e
^h^ttp
lombia military and counter-narcotics grants to support unified campaign against drugs and^f$71.0NSNS NS^e
.
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 NS^g
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

CRS-27
Activity Request H ouse Senate Enacted
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 —
ⁱ^{ki/CRS-RL31811}ergency response — $30.6 — —
^g/w
^s^.orent embassy construction$20.0$71.5 $82.0 $149.5
^le^ak
which:$20.0 — $20.0$61.5
^://wikiporary facilities in Iraq.
^h^ttpofficial 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
erican citizens.
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

CRS-28
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The enacted bill further directed 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 directed “full and prompt”
reimbursement of USAID and State Department accounts from the Iraq Fund. The
supplemental provided $143.8 million for international disaster assistance, $112.5
million of which would restore funds diverted previously for Iraq. The remaining
balance augmented 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.
International Assistance
The Administration’s supplemental appropriation proposal, which was only
slightly modified by Congress, 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. See the table below for a complete
list of proposed recipients. Among the largest and most complex aid packages were:
^!Jordan — $700 million in economic grants and $406 million in
military transfers. This was 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 millions
of dollars — associated with these economic stabilization loans.
Conditions on how the funds would be spent, 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 proposed 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, included $4.52 billion in additional aid to countries and regional programs,
about $180 million less than requested. Nearly all of this reduction, however, came
from Congress’ decision not to fund the President’s $150 million emergency account
for complex crises. In most other cases, the Administration was able to allocate these
foreign aid resources as it had intended. Congress earmarked funding at the
requested levels for Israel, Egypt, Jordan, and Pakistan, while adding resources for
Afghanistan and the Philippines. Turkey may receive “not to exceed” $1 billion in
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
facilitating the movement of 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, combined 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 included the full $9 billion
proposal, but added conditions not included in the Administration’s proposal. Loans
may be issued in $3 billion allotments in each of FY2003 to FY2005, a provision that
would allow the President to reduce disbursements in the second and third years if
Israel violated any of the loan conditions. One such condition added by Congress
prohibited 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
($s millions)
Economic Loans Military Ant i -Terrorism Narcotics/Law TO TAL
Jordan$700^a — $406^a — — $1,106
Israel — [$9,000]$1,000^a — — $1,000
Turkey$1,000^a[$8,500]* — — — $1,000
Afghanistan$127^b — $170^a$28^a — $325
Egypt$300^a[$2,000]* — — — $300
Pakistan — — $175^a — $25^a$200
Bahrain — — $90 — — $90
Colombia — — $37 — $34^a$71
Oman — — $62 — — $62
Palestinians$50 — — — — $50
Djibouti$25 — $5 — — $30
Philippines — ^c — $30 — — $30
Czech Rep. — — $15 — — $15
Hungary — — $15 — — $15^d
Poland — — $15 — — $15
Romania — — $15 — — $15
Slovakia — — $6 — — $6^d
Bulgaria — — $5 — — $5^d
Slovenia — — $5 — — $5^d
Estonia — — $3 — — $3^d
Latvia — — $3 — — $3^d
Lithuania — — $3 — — $3^d
^*^Up^to^th^is^am^o^uⁿ^t^{. L}^o^an^{s w}^o^u^l^dⁿ^o^{t r}^e^q^u^ir^{e ad}^d^itioⁿ^a^{l ap}^p^r^o^p^r^iatioⁿ^s^sin^{ce eco}ⁿ^o^mⁱ^{c g}^r^an^{ts w}^o^u^l^d
^{be u}^s^{ed to pay}^f^o^{r loan}^f^ees^.
^{a. A}^m^ouⁿ^t^w^a^s^earm^a^rk^{ed or recom}^m^eⁿ^d^edⁱⁿ^th^{e en}^{acted s}^u^pplem^en^{tal appropriation}^.
^{b. T}^h^{e en}^{acted s}^u^pplem^en^{tal appropriation}^prov^{ided $167 m}^illion^.
^{c. T}^h^{e en}^{acted s}^u^pplem^en^{t appropriation}ⁱⁿ^clu^d^ed^{$30 m}^illion^f^o^{r econ}^o^mⁱ^c^aid^f^o^r^th^{e P}^h^ilippin^e^s^.
^d^.^Fo^llo^wⁱⁿ^g^en^actm^eⁿ^t^o^f^th^{e su}^p^p^l^em^en^{tal, th}^{e A}^d^mⁱⁿⁱ^str^a^tioⁿ^h^a^{s m}^o^dⁱ^fⁱ^ed^{its p}^l^an^{s to}^allo^cate
^f^uⁿ^d^s^f^o^{r th}^es^{e recipien}^ts^{. See f}^ootn^o^{te “}ⁱ^{” in}^T^a^{ble 6, abov}^{e, f}^o^{r th}^{e allocated am}^ouⁿ^t^s^.

While most of the President’s request for international assistance was 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 of earmarks and additions for Afghanistan and 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
requested.
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. These alterations appear to reflect Administration views on the
extent to which selected countries supported or did not support U.S. operations in
Iraq. See footnote “i” in Table 6 above for specific amounts allocated to each
recipient.
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.”⁴ 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 of State 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 to Kurdish and other forces, and that the $150 million would provide
a “hedge” in case of a more prolonged conflict. In last year’s supplemental
appropriation debate, DOD 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. At that time, 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
had the necessary authorities under existing foreign aid laws to undertake the
requested activities.⁵
Congressional Action on DOD Authorities. H.R. 1559, as enacted,
provided the $1.4 billion for nations supporting U.S. military operations in the global
war on terrorism, but did not authorize the $150 million for aid to indigenous forces.
Selected Major Issues in the FY2004 Foreign
Operations Debate
While the Foreign Operations appropriations bill can include virtually any
foreign policy issue of interest to Congress, the annual debate usually focuses on
several major policy and spending issues. For FY2004, substantial debate has
focused on the following.
Foreign Aid to Combat Terrorism
Since the September 11, 2001 terrorist attacks and the initiation of military
operations in Afghanistan, combating global terrorism has become one of the top
priorities of American foreign assistance. Indeed, Secretary of State Powell has said
at several 2003 congressional hearings that fighting terrorism is the most important
objective of the FY2004 Foreign Operations request.
While there is disagreement regarding the extent to which foreign aid can
directly contribute to reducing the threat of terrorism, most agree that economic and
security assistance aimed at reducing poverty, promoting jobs and educational
opportunities, and helping stabilize conflict-prone nations can indirectly address
some of the factors that terrorists use in recruiting disenfranchised individuals for
their cause. As illustrated in the table below, the United States has provided more
than $5.9 billion to 26 so-called “front-line” states in the global war on terrorism in

⁴ U.S. Office of Management and Budget, FY2003 Request for Supplemental
Appropriations, March 25, 2003.
⁵ H.Rept. 107-480, May 22, 2002.

immediate post-September 11 and FY2002 appropriations, while FY2003 regular and
supplemental spending bills have provided $7.4 billion. The Administration
proposed $4.7 billion for the “front-line” states in FY2004, plus $1.2 billion in
additional reconstruction funds for Afghanistan enacted in P.L. 108-106, for a total
of $5.9 billion. (None of these figures include post-conflict reconstruction assistance
for Iraq which totals about $21 billion enacted in FY2003 and FY2004
supplementals.)
While increased levels of foreign aid are only one sign of the importance the
United States assigns to the support provided by these front-line states, the amounts
allocated since September 11 are in sharp contrast to the $3.4 billion provided to
these 26 countries prior to the attacks in regular FY2001 appropriations. Additional
economic and military assistance has been particularly evident in a few countries,
including Jordan, Pakistan, Afghanistan, Turkey, the Philippines, Kyrgyzstan,
Tajikistan, Uzbekistan, Oman, Yemen, and Djibouti.
Foreign aid can be programmed in a number of ways that contribute to the war
on terrorism. Assistance can be transferred, as has occurred in Pakistan and
Afghanistan, to bolster efforts of a coalition-partner government, to counter domestic
dissent and armed attacks by extremist groups, and to promote better health care,
education, and employment opportunities to its people. Security assistance can
finance the provision of military equipment and training to nations facing threats
from their own internally-based terrorist movements.
While there has been congressional support for additional foreign aid resources
aimed at countering terrorism, some warn that the United States needs to be cautious
about the risks of creating a close aid relationship with governments that may have
questionable human rights records, are not accountable to their people, and are
possibly corrupt. Some Members have been especially critical of Administration
efforts to include in aid proposals for “front-line” states legislative language that
would waive all existing restrictions and prohibitions on the transfers. Instead, these
critics argue, the Administration should specifically identify any obstacles to
proceeding with a country aid program and seek a congressional waiver for those
particular problems. For example, in late 2001 when the Administration wanted to
provide Pakistan with $600 million in fast-disbursing economic aid, instead of
providing a blanket waiver of legislative obstacles, Congress approved in P.L. 107-57
specific waivers of aid prohibitions that applied to countries that engaged in missile
proliferation, whose leaders came to power through a military coup, and which were
behind in debt payments to the United States.

Table 8. U.S. Assistance to Front-Line States in War on
Terrorism
($s in millions)
F Y 2001^a F Y 2001^a F Y 2002 F Y 2003 F Y 2004
P re-9/11 Post-9/11 Enacted Enacted Estimate
Egypt1,992 — 1,9562,2041,865
Afghanistan 32 194 492 590 1,769
Jordan229 — 3551,556559
Paki stan 5 993 153 502 390
Turkey220 2331,021145
Ethiopia144 — 103408135
India138 — 174139111
Indonesia133 — 137161128
Philippines49 — 13115396
Georgia109 — 1249886
Bangladesh127 — 1139480
Armenia93 — 9810280
Kenya86 — 789477
Uzbeki stan 31 80 80 53 48
Kyrgzstan 364814643
Azerbaijan41 — 565949
Kazkhstan 512565142
Tajikistan30 — 943732
Oman1 — 268226
Yemen5 — 301729
Morocco17 — 181620
Djibouti1 — 3446
Turkmenistan9 — 20109
Tunisia5 — 5612
Malaysia1 — 121
Algeria0 — 211
TOTAL 3,367 1,293 4,619 7,545 5,839
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^prog^ram^s^uⁿ^d^{er j}^u^ri^s^dⁱ^c^tⁱ^oⁿ^of^t^h^{e F}^o^rei^gⁿ^O^p^eratⁱ^oⁿ^s^s^p^en^diⁿ^g^m^eas^u^r^{e, pl}^u^s^f^{ood as}^sⁱ^s^t^an^ce
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^pos^t^-^S^e^pt^em^{ber 11 are am}^ouⁿ^t^s^di^s^t^ri^bu^t^e^{d f}^r^om^t^h^{e Em}^erg^eⁿ^c^y^R^e^s^pon^s^e^F^uⁿ^d^{, fund}ⁱ^{ng f}^o^r
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Beyond substantial amounts of bilateral aid for “front-line” states, the Foreign
Operations appropriation bill funds several global programs specifically aimed at
anti-terrorism efforts overseas and the provision of security for USAID employees
living abroad.
Anti-Terrorism Assistance (ATA). Since FY1984, the State Department
has maintained the ATA program designed to maximize international cooperation in
the battle against global terrorism. Through training, equipment transfers, and
advice, the ATA program is intended to strengthen anti-terrorism capabilities of
foreign law enforcement and security officials. Since its initiation in 1984, over
23,000 officials from 112 countries have participated in ATA projects. ATA funding
is included within the Foreign Operations account of Non-proliferation, Anti-
terrorism, Demining, and Related Programs (NADR).
Resources for the $38 million annual ATA program (FY2001) rose sharply
following September 11, with an additional $45.5 million allocated out of the
Terrorism Emergency Response Fund. Congress approved $38 million for FY2002
and $64.2 million for FY2003. Increased funding for FY2003 is intended to finance
three ATA program strategies:
^!expanding existing U.S.-based training activities;
^!initiating new in-country programs in participant nations; and
^!adding program flexibility to respond rapidly to changing global
circumstances.
For FY2004, the State Department sought $106.4 million for ATA programs,
up nearly two-thirds from existing levels. Most FY2004 training would continue for
training of officials from the “front-line” states, with a focus on in-country training
in Afghanistan, Pakistan, and Indonesia. The ATA program further planned to
launch a Mobile Emergency Training Teams (METT) initiative ($10 million) which
would deliver in-country instruction for VIP protection, bomb squads, and crisis
response operations. The State Department had planned to begin METT in FY2002
but reprogrammed a $20 million appropriation in order to provide protective service
for Afghan President Karzai.
Terrorist Interdiction Program (TIP). As one response to the 1998
bombings of American embassies in East Africa, the State Department launched the
TIP, an activity intended to restrict the ability of terrorists to cross international
borders, launch attacks, and escape. TIP strengthens border security systems in
particularly vulnerable countries by installing border monitoring technology, training
border security and immigration officials in its use, and expanding access to
international criminal information to participating nations. Like ATA, funds for TIP
are part of the NADR account in the Foreign Operations spending bill.
Since September 11, the State Department has expanded from 34 to 60 the
number of countries where it believes TIP would immediately contribute to the
global counterterrorism campaign. The $4 million TIP budget doubled for FY2001
following September 11, and grew to $14 million in FY2002. After falling back to
$5 million for FY2003, the request for FY2004 was $11 million. The Administration

planned to expand operations in up to ten new countries with the additional
resources.
Counterterrorism Engagement with Allies. Following the September 11
attacks, the United States began to conduct Senior Official Policy Workshops and
multilateral conferences in order to better respond to terrorist incidents involving
weapons of mass destruction overseas. With $3 million from emergency FY2002
supplemental spending, the State Department conducted workshops in 18 countries
as well as several regional conferences. The $2.5 million budget request for FY2004
would finance ten scheduled workshops, including three in Greece in advance of the

2004 Olympic games.

Terrorist Financing. In December 2001, an interagency review group
identified 19 countries where a significant terrorist financing threat existed, and with
$3 million allocated from the Emergency Response Fund, launched a training and
technical assistance program. The State Department allocated $10 million out of the
FY2002 supplemental appropriation to expand the program, while the Treasury
Department is utilizing approximately half of its $10 million FY2003 “Technical
Assistance” program for these purposes. In FY2004, Treasury proposed $5 million
for combating terrorist financing activities.
USAID Physical Security. USAID maintains about 97 overseas facilities
where much of its workforce — including both Americans and foreign nationals —
is located. Many missions are based in places where there is a high threat of terrorist
activity, and especially since the 1998 embassy bombings in Kenya and Tanzania,
agency officials have been concerned about insuring adequate security. In countries
where USAID is or is scheduled to be co-located with the U.S. embassy, the State
Department’s Foreign Buildings Operations office had been responsible for financing
USAID secure facilities. These funds are appropriated in the Departments of
Commerce, Justice, and State appropriations. Nevertheless, there have been serious
construction delays for USAID co-located facilities — especially in Uganda — due
to competing State Department building priorities and conflicting congressional
directives.
In an effort to overcome these problems, USAID requested for FY2003 a new
Foreign Operations account — the Capital Investment Fund — that would support
enhanced information technology ($13 million) and facility construction ($82
million) specifically at co-located sites where security enhancements are needed.
USAID planned to use the money in FY2003 for construction projects in Kenya,
Guinea, Cambodia, and Georgia. Congress, however, reduced funding for this
account to $43 million, with $30 million assumed for Kenya and $10 million for a
new facility in Afghanistan.
With reductions made to the FY2003 request, USAID proposed a $146.3 million
Capital Investment Fund request for FY2004. Of the total, $20 million would
support information technology needs, while the balance would finance construction
of seven co-located facilities where the State Department is already building new
embassies. In addition to Guinea, Cambodia, and Georgia, which went unfunded in
FY2003, USAID requested resources for co-located missions in Zimbabwe, Armenia,
Mali, and Uganda. For construction of co-located missions at embassies where

building will begin in FY2004 or later, resources for USAID facilities would be
drawn from State Department appropriations under the Capital Surcharge Proposal.
Security upgrades for the 64 overseas missions situated some distance from
American embassies have been provided out of USAID operating expenses, a
Foreign Operations account that has been under funding stress in recent years due to
agency relocation costs in Washington, D.C., replacement of failed financial
management systems, and dwindling non-appropriated trust funds used to finance
some in-country costs. As a result, security upgrades for some USAID missions have
been deferred due to funding shortfalls. For FY2003, USAID estimated that it will
spend $7.1 million for security needs out of its operations account, compared to
$6.75 million in FY2002. USAID requested the same amount — $7.1 million — for
FY2004 as it had available for FY2003.
Aid Restrictions for Terrorist States. Annual Foreign Operations
spending bills routinely include general provisions prohibiting U.S. assistance to
countries engaged in terrorist activities or providing certain types of support to
terrorist groups. Included in the FY2003 funding measure were two:
^!Sec. 527 prohibited bilateral U.S. assistance to any country that the
President determined grants sanctuary from prosecution to any
individual or group which has committed an act of international
terrorism, or otherwise supports international terrorism. The
President could waive the restrictions for national security or
humanitarian reasons.
^!Sec. 543 prohibited U.S. aid to a government which provides lethal
military equipment to a country that the Secretary of State
determined is headed by a terrorist supporting government. The
President could waive the requirement if it is important to U.S.
national interests.
Despite these restrictions, however, certain types of humanitarian foreign assistance
could be provided “notwithstanding” other provisions of law, which would override
the terrorism restrictions. Disaster and refugee relief, child survival and HIV/AIDS
programs, emergency food and medicine, and demining operations are among the
categories of U.S. assistance that could potentially be provided to a country that
would otherwise be ineligible.
Congressional Action. For specific counter-terrorism programs, the Foreign
Operations conference agreement provides amounts as shown in Table 9.

Table 9. Selected Counter-Terrorism Program Funding
($s — millions)
P r ogram F Y 2003Enacted F Y 2004Request F Y 2004House F Y 2004Senat e F Y 2004Conf erence
Anti-Terrorism Aid64.2106.490.0106.497.0
Terrorist Interdiction5.011.05.011.05.0
Engagement with Allies — 2.50.00.00.0
Terrorist Financing5.05.010.06.010.0
USAID Security43.0146.349.3100.082.2
For USAID construction, the Foreign Operations conference agreement includes full
funding for new USAID buildings in Cambodia, Uganda, Guinea, and Mali, as
requested, but resources for other facilities in Armenia, Georgia, and Zimbabwe
appear to be less certain.
More generally, the conference agreement, similar to earlier actions by the
House and Senate, largely but not totally supports bilateral security and military aid
requests for the “front-line” states. Congress makes small reductions in the two
Foreign Operations accounts from which most assistance for the 26 “front-line” states
is drawn: the Foreign Military Financing (FMF) and the Economic Support Fund
(ESF) accounts. As shown in Table 8 (above), country allocations based on the
enacted FY2004 appropriation largely follow amounts requested by the
Administration. The major exception is Turkey, where the proposed $256 million
aid package is reduced to $145 million. P.L. 108-119 gives the President authority
to transfer an additional $100 million in economic aid for Turkey, but the money
must be drawn from the Iraq reconstruction program. Many believe it is unlikely the
Administration will implement such a transfer.
Previous House action on the FY2004 Foreign Operations bill (H.R. 2800)
would have posed more difficult decisions for the Administration in funding some
of the “front-line” states. The House reduced the ESF recommendation by $275
million (10.8%), but the impact on certain countries, including some “front-line”
states, would have been more significant. About 70% of the ESF appropriation was
earmarked at or above levels requested for countries of special congressional interest,
including the “front-line” nations of Afghanistan, Egypt, and Jordan. On the other
side of the equation, the legislation reduced by $100 million amounts available for
Middle East Partnership Initiative (MEPI). Of the remaining ESF funds, at the
House-passed level the Administration would have needed to cut non-earmarked
countries collectively by about 21%. Among these non-earmarked ESF recipients
were the “front-line” states of Pakistan ($200 million requested), Turkey ($200
million), Indonesia ($60 million), the Philippines ($20 million), and India ($20
million), which would most likely have had to absorb some of the ESF reductions.
A similar situation existed in the Senate bill, although with an ESF cut of only
$120 million (5%) the impact on “front-line” states would have been less significant.

Still, aid to non-earmarked recipients would have fallen collectively by about 18%
below requested amounts and include the same “front-line” nations cited above. The
Senate measure had also acknowledged the contributions made by several countries
in the war in Iraq — including Albania, El Salvador, Macedonia, Mongolia, East
Timor, and Uganda — and encouraged the Administration to increase military
assistance to these nations.
Millennium Challenge Account
In a speech on March 14, 2002, at the Inter-American Development Bank,
President Bush outlined a proposal for the United States to increase foreign economic
assistance beginning in FY2004 so that by FY2006 American aid would be $5 billion
higher than three years earlier. The funds would be placed in a new Millennium
Challenge Account (MCA) and be available to developing nations that are pursing
political and economic reforms in three areas:
^!Ruling justly — promoting good governance, fighting corruption,
respecting human rights, and adhering to the rule of law.
^!Investing in people — providing adequate health care, education,
and other opportunities promoting an educated and healthy
population.
^!Fostering enterprise and entrepreneurship — promoting open
markets and sustainable budgets.
If fully implemented, the initiative would represent one of the largest increases in
foreign aid spending in half a century, outpaced only by the Marshall Plan following
World War II and the Latin America-focused Alliance for Progress in the early

1960s.

The concept is based on the premise that economic development succeeds best
where it is linked to free market economic and democratic principles and policies.
Conditioning assistance on policy performance and accountability by recipient
nations is not new to U.S. aid programs. Since the late 1980s at least, portions of
American development assistance have been allocated to some degree on a
performance-based system. What is different about the MCA is the size of the
commitment; the competitive process that will reward countries for what they have
already achieved not just what is promised for the future; the pledge to segregate the
funds from U.S. strategic foreign policy objectives that often strongly influence
where U.S. aid is spent; and to the decision to solicit program proposals developed
solely by qualifying countries.
If Congress fully funds the President’s MCA request and assuming that FY2003
will be the baseline from which to compare growth in foreign aid spending during
implementation of the MCA, a $5 billion increase by FY2006, combined with other
announced foreign aid initiatives, would result in a $19.3 billion foreign aid budget.
In real terms (constant FY2003 dollars), taking into the account the estimated effects
of inflation, U.S. economic assistance in FY2006 would be $18.2 billion, the highest
amount since FY1979 and the signing of the Camp David Middle East peace accords,
and FY1985, an unusual year in which the United States responded to special Middle
East economic stabilization and African famine requirements. The nominal increase

between FY2003 and FY2006 would be about 47%, while in real terms, FY2006
funding would be nearly 38% more. These figures are less than Administration
claims of a 50% increase in funding due to the MCA, a figure that is apparently
calculated using the $10 billion aid level in FY2000 as the base year. Because of the
size of the U.S. economy and continued growth projected over the next several years,
the MCA increases will have minimal impact on the amount of U.S. aid as a percent
of GDP. According to current projections, assistance would rise from the 2002 level
of 0.12% of GDP to 0.15%.
During the first year of the MCA, participation will be limited to the 74 poorest
nations that are eligible to borrow from the World Bank’s International Development
Association and have per capita incomes below $1,435. The list will expand to
include all lower-middle income countries by FY2006 with per capita incomes below
$2,975. Participants will be selected largely based on 16 performance indicators
related to the three categories of good governance, economic freedom, and investing
in people. Countries that score above the median on half of the indicators in each of
the three areas will qualify. Emphasizing the importance of fighting corruption,
however, should a country fall below the median on the corruption indicator (based
on the World Bank Institute’s Control of Corruption measure), it will be
automatically disqualified from consideration.
To manage the MCA, the Administration has proposed the creation of a
Millennium Challenge Corporation (MCC), a new independent government entity
separate from the Departments of State and the Treasury and from the U.S. Agency
for International Development (USAID). The White House envisions a staff of about

100, drawn from various government agencies and non-governmental organizations,

led by a CEO confirmed by the Senate. A review board, chaired by the Secretary of
State and composed of the Secretary of the Treasury and the Director of OMB, would
oversee operations of the MCC.
The decision to house the MCA in a new organization was one of the most
debated issues during early congressional deliberations of the President’s foreign aid
initiative. The Administration argued that because the MCA represents a new
concept in aid delivery, it should have a “fresh” organizational structure,
unencumbered by bureaucratic authorities and regulations that would interfere in
effective management. Critics, however, contended that if the MCA is placed
outside the formal U.S. government foreign aid structure, it would lead to further
fragmentation of policy development and consistency. Some believed that USAID,
the principal U.S. aid agency, should manage the MCA, while others say that the
MCA should reside in the State Department where more U.S. foreign policy entities
have been integrated in recent years. At least, some argued, the USAID
Administrator should be a member of the MCC Board, possibly in place of the OMB
Director.
For FY2004, the Administration sought $1.3 billion for the MCA’s first year
and remained committed to a $5 billion budget by FY2006. Some believed,
however, that the FY2004 request was less than promised in 2002. At the time,
Administration officials implied that funding might be phased in over three years in
equal increments, resulting in a $1.67 billion program in FY2004, a $3.34 billion
level in FY2005, and $5 billion in FY2006. In the President’s budget submission this

year, however, budget officials said the pace at which resources would rise was never
specifically set, and that only the $5 billion target for FY2006 is a firm commitment.
Congressional Action (Appropriations). H.R. 2800, as passed by the
House, provided $800 million for the Millennium Challenge Account in FY2004,
while the Senate, included $1 billion. Both were below the $1.3 billion request. The
Senate further incorporated into H.R. 2800 authorizing legislation that had been
debated, amended, but not passed by the Senate on July 9 and 10. (See below for
details on the authorizing text, as originally included in S. 925).
Needing to find additional resources for international HIV/AIDS funding and
for other priorities, House-Senate conferees tentatively agreed on November 17 to
provide $650 million for the MCA in FY2004, half the level requested.
Appropriation Committee leaders said that because the program was new and would
require some months to begin operations, larger amounts were not necessary in the
first year of the MCA. The White House, however, strongly objected to the reduced
appropriation and convinced lawmakers to add back $350 million as part of a
package of additional spending needs that were offset by a rescission of prior year
defense appropriations and an across-the-board cut for non-defense FY2004
programs. The conference agreement on H.R. 2673, the Consolidated Appropriations
Act, 2004, into which Foreign Operations has been incorporated, includes a total of
$1 billion for the MCA, $650 million of which is made available in Division D of the
bill (Foreign Operations) and $350 million in Division H (Miscellaneous
Appropriations and Offsets). The House passed H.R. 2673 on December 8, but the
Senate most likely will not consider the conference agreement until Congress returns
on January 20, 2004 for the second session.
Congressional Action (Authorization). In legislation related to the
Foreign Operations appropriations bill, the Senate and House debated separate bills
to authorize the Millennium Challenge Account. When these efforts stalled,
however, the authorizing text was added to the Senate-passed Foreign Operations
measure, and ultimately incorporated into the conference agreement on H.R. 2673.
Earlier, on May 29, 2003, the Senate Foreign Relations Committee reported S.
1160, legislation providing $1 billion for the MCA in FY2004, $2.3 billion in
FY2005, and $5 billion in FY2006. On a vote of 11-8, the Committee further
approved an amendment by Senators Biden and Hagel that would establish the MCA
inside the State Department under the direction of the Secretary of State. The
legislation abandoned the separate corporation proposal put forward by the
Administration. Secretary of State Powell wrote the Committee saying he would
advise the President to veto the legislation if this provision to locate the MCA in the
State Department remained in the bill.
Senator Lugar, who opposed the Biden-Hagel amendment, proposed an
alternative structure in new legislation. S. 1240, as introduced on June 11, would
create a Millennium Challenge Corporation, headed by a CEO who would report to
the Secretary of State. Senator Lugar intended that such an arrangement would
provide the Corporation with the same degree of independence and status as USAID,
but establish a chain of command that would permit the Secretary of State to exercise
broad authority over the MCA. S. 1240 created a Board of Directors, made up of the

Secretary of State (Chairman), the Secretary of the Treasury, the USAID
Administrator, the U.S. Trade Representative, and the MCC CEO. The full Senate
adopted the general approach proposed by Senator Lugar when it voted on July 9 to
incorporate a modified text of MCA authorizing legislation into S. 925, the Foreign
Affairs Authorization, Fiscal Year 2004. The revised composition of the Board of
the Directors proposed in S. 1240 was included. The approved text further
strengthened the explicit relationship between the Corporation and the Secretary of
State by adding that the CEO shall “report to and be under the direct authority and
foreign policy guidance of the Secretary.” The Administration did not express
objection to the revised legislation.
S. 925, as amended, also would have permitted low-middle income nations to
participate in the MCA program only if appropriations in FY2006 and beyond
exceeded $5 billion annually. In such years, these relatively wealthier countries
could compete for only 20% of the total appropriation. In many other areas,
however, the legislation adopted the broad concepts recommended by the executive.
On June 12, the House International Relations Committee reported an MCA
authorizing measure — H.R. 2441 — containing at the time significant differences
with the Senate and the Administration. The legislation authorized $1.3 billion for
FY2004, as requested, $3 billion for FY2005, and $5 billion for FY2006. Unlike the
original Senate measure, H.R. 2441 created a new Millennium Challenge
Corporation sought by the President, but altered the composition of the Board of
Directors and the authority of the MCC’s Chief Executive Officer. The Board, as
designed under H.R. 2441, included the Secretary of State as Chairman and the
Secretary of the Treasury, as proposed, but deleted the Director of OMB and added
the USAID Administrator, the U.S. Trade Representative, and the CEO of the MCC.
The bill also included four additional members, to be appointed by the President from
a list submitted by the majority and minority leaders of the House and Senate. The
Board would have further included as non-voting ex-officio members the CEO of
OPIC, and the Directors of the Trade and Development Agency, Peace Corps, and
OMB.
Additionally, H.R. 2441 designated the CEO of the Corporation as the
individual responsible for determining eligible countries rather than the Board of
Directors, as recommended by the Administration. The House bill allowed low-
middle income countries to participate in the MCA beginning in FY2006 regardless
of the amount of money appropriated, but limited the allocation to these relatively
wealthier countries to 20% of MCA assistance. Similar to the Senate, the House
incorporated a slightly modified version of H.R. 2441 as Division A in H.R. 1950,
an omnibus foreign policy authorization bill. The House passed H.R. 1950 — now
called the “Millennium Challenge Account, Peace Corps Expansion, and Foreign
Relations Authorization Act of 2003” — on July 16.
As noted above, the Senate added its MCA authorizing legislation, as amended
in S. 925, to the Foreign Operations Appropriations measure (H.R. 2800) during
debate in late October. Subsequently, H.R. 2800 was incorporated into H.R. 2673,
the Consolidated Appropriations Act, 2004, in which conferees resolved House and
Senate differences in the earlier versions of MCA authorizing legislation. On key
issues, conferees agreed to:

^!create a Millennium Challenge Corporation, headed by a CEO who
would report to the Board of Directions, rather than the Secretary of
State (Senate) or the President (House).
^!include on the Board the Secretary of State (chairman), the Secretary
of the Treasury, the U.S. Trade Representative, the USAID
Administrator, the MCC CEO, and four others from lists submitted
by congressional leaders and nominated by the President.
^!allow low-middle income countries to participate in MCA programs
beginning in FY2006, as proposed, but caps the total amount funds
that can be allocated to these countries at 25% of the MCA
appropriation. The House had proposed a 20% cap, while the Senate
had recommended a 20% ceiling but only when MCA appropriations
exceeded $5 billion.
^!authorize “such sums as may be necessary” for FY2004 and
FY2005, with no mention of FY2006. House and Senate bills had
included specific amounts for the first two years and an FY2006
authorization of $5 billion.
Table 10, below, summarizes these and other key MCA issues under debate in
authorizing legislation.
Because the MCA authorization was not enacted until January 23, 2004 (P.L.
108-199), and the bills’ requirement for consultation with Congress and public
disclosure of eligibility criteria and methodology, it appears that MCA operations
will begin much later than originally anticipated. The conference agreement requires
a period of at least 90 days between naming “candidate countries” — those that meet
basic income and other criteria — and “eligible countries,” those that are judged to
be the best performers and selected to receive MCA assistance. During this period,
the eligibility criteria, performance indicators, and overall methodology of the
selection process must be notified to Congress and published in the Federal Register.
Public hearings may be held and public comments will be received. As a result, it
appears likely that MCA eligible countries will not be named before May 1, 2004, at
the earliest. The selection of program proposals and initial implementation of
projects would be expected several months beyond that date.

CRS-45
Table 10. Comparison of MCA Authorization Legislation
IssueAdministrationSenate (S. 925)^aHouse (H.R. 1950)^aConference (H.R. 2673)
Board of Directors, chaired byBoard of Directors, chaired by
Board of Directors, chaired bySec. of State, with Treasury,USTR, USAID, MCC CEO, andSec. of State, with Treasury,
Board of Directors, chaired bythe Sec. of State, with4 others nominated by theUSTR, USAID, MCC CEO,
A oversightSec. of State, with TreasuryTreasury, USAID, USTR, andPresident from a Congressionaland 4 others nominated by the
and OMBthe MCA’s Chief Executivelist. Non-voting membersPresident that may come from
Officer (CEO)include OPIC, OMB, Peacelist submitted by Congressional
Corps, and TDA.leaders.
ⁱ^{ki/CRS-RL31811}Independent Millennium
^g/wChallenge Corporation whose
^s^.orIndependent MillenniumCEO reports to and be underIndependent MillenniumIndependent Millennium
^le^akanizationChallenge Corporationthe direct authority and foreignChallenge CorporationChallenge Corporation
policy guidance of the Sec. of
^://wiki St at e
^h^ttp
CEO “manages” theCEO “manages” the
Corporation, reporting to andCEO “heads” the Corporation,Corporation, reporting to and
CEO of Corporationunder the direct authority andreporting to the Presidentunder the direct authority and
foreign policy guidance of theforeign policy guidance of the
Sec. of StateBoard of Directors.
— Board of Directors may appoint
a confirmed U.S. Government
terim CEO — — official to serve as interim
CEO until a CEO has been
confirmed by the Senate.

CRS-46
IssueAdministrationSenate (S. 925)^aHouse (H.R. 1950)^aConference (H.R. 2673)
Board of DirectorsBoard of DirectorsCEO of CorporationBoard of Directors
Nine members named by the
CEO to advise on MCA policy,
CC AdvisoryNoneNonereview eligibility criteria,None
evaluate the MCC, assess MCC
capabilities, and make
recommendations to the CEO.
FY2004 - IDA eligibleFY2004 - IDA eligible
ⁱ^{ki/CRS-RL31811}FY2004 - IDA eligibleFY2005 - per cap GNP lessFY2004 - IDA eligible
^g/wthan $1,435FY2005 - per cap GNP less thanFY2005 - per cap GNP less
^s^.or incomeFY2005 - per cap GNP less $1,435than $1,435
^le^akibilitythan $1,435FY2006 - per capita GNP less
FY2006 - per capita GNP less
^://wikiFY2006 - per capita GNP lessthan $2,975 only if fundsFY2006 - per capita GNP lessthan $2,975; low-middle
^h^ttpthan $2,975exceed $5 billion; low-middlethan $2,975; low-middle incomeincome countries capped at
income countries capped atcountries capped at 20%25%

20%

A government, including aA national government, regionalor local government, an NGO,A national government,
ible entityNone statedlocal or regional government,an international organizationregional or local government,
or an NGO or private entity.and trust funds.or an NGO or private entity.
10% of MCA funds available15% of MCA funds availablefor countries demonstrating a10% of MCA funds available
d to “near-miss”General supportfor countries failing to qualifydevelopment commitment butfor countries showing a
because of inadequate data orfail to meet a sufficient numbercommitment to MCA criteria
missing one indicatorof performance indicatorsbut fail to qualify

CRS-47
IssueAdministrationSenate (S. 925)^aHouse (H.R. 1950)^aConference (H.R. 2673)
Establishes a period of at least
95 days during which Congress
will receive the list of
“Candidate countries,” the
eligibility criteria and method-
CEO consultation with Congressology for making a final selec-tion, and the list of “eligible”
Disclosure in Federal Registeron eligibility criteria;notification 15 days in advancecountries (those that will
and on the Internet of eligibleon grants exceeding $5 million;receive MCA assistance).
ersight andMCA contracts andperformance posted on thecountries, programs supported,and performance; proposed“Compacts” with countriesConsultation with congres-sional committees will occur
Internet.performance indicators open topublished in Federal Registerand on the Internet; advanceduring this period and the
ⁱ^{ki/CRS-RL31811}public comment; annual reportnotification of aid termination;information will be published
^g/wto Congressannual reports to Congress fromin the Federal Register.
^s^.orthe CEO and Advisory Council
^le^ak “Compacts” with countries
will be notified to Congress
^://wikiand published in Federal
^h^ttp Re gi s t e r .
Annual report by March 31.
FY2004 - $1.3 billionFY2004 - $1 billionFY2004 - $1.3 billionSuch sums as may be necessary
FY2005 - no decisionFY2005 - $2.3 billionFY2005 - $3 billionfor FY2004 and FY2005.
FY2006 - $5 billionFY2006 - $5 billionFY2006 - $5 billion
^h^{e s}^t^atu^s^of^th^{e Sen}^a^{te bill is}^bas^e^{d on}^{S. 925, th}^{e Foreig}ⁿ^A^f^f^a^irs^A^c^{t, Fis}^{cal Year 2}^004,^as^a^m^eⁿ^d^e^d^d^u^rⁱⁿ^g^d^e^b^a^t^e^oⁿ^J^u^l^y⁹^aⁿ^d¹⁰^.^S^.^{925 rem}^aⁱⁿ^s^pen^dⁱⁿ^gⁱⁿ^t^h^{e S}^eⁿ^a^t^e^.
^P^r^ev^io^u^s^ly^{, th}^{e Sen}^a^{te Fo}^r^e^igⁿ^R^e^latioⁿ^s^Co^m^m^{ittee h}^a^d^ap^p^r^o^v^ed^legⁱ^slatioⁿ^au^th^o^r^izin^g^th^{e Millen}ⁿⁱ^u^m^Ch^allen^g^e^A^cco^uⁿ^tⁱⁿ^S.^{1160. A}^m^odi^fⁱ^{ed t}^e^x^t^of^S^.^{1160 w}^a^s
^s^u^bs^equ^eⁿ^tlyⁱⁿ^{corporated in}^{to S. 925 as}^Di^vi^sⁱ^oⁿ^C^on^J^u^ly^9.^T^h^{e Hou}^s^{e bill, H.R}^.^{1950, is}^als^o^{a com}^bⁱⁿ^{ed f}^o^reigⁿ^policy^au^th^o^r^izatioⁿ^m^easu^r^{e to}^w^h^ich^ear^lier^MCA
^au^t^h^ori^zⁱⁿ^g^t^e^x^t^w^a^s^{added. T}^h^{e H}^o^u^s^{e In}^t^e^rn^atⁱ^oⁿ^a^l^R^e^l^a^tⁱ^oⁿ^s^C^o^m^mⁱ^t^t^{ee h}^a^{d report}^e^{d H}^.^R^.^{2441, w}^hⁱ^c^h^w^a^sⁱⁿ^co^r^p^o^r^a^t^{ed, w}ⁱ^t^h^m^odi^fⁱ^catⁱ^oⁿ^s^{, t}^o^H^.^R^.^{1950, an}^{d pas}^s^e^{d by}
^t^h^{e H}^o^u^s^{e on}^Ju^l^y^16.

Development Assistance, Global Health Priorities, and
HIV/AIDS
A continuing source of disagreement between the executive branch and
Congress is how to allocate the roughly $3-$3.8 billion “core” budget for USAID
development assistance and global health programs. Among the top congressional
development aid funding priorities in recent years have been programs supporting
child survival, basic education, and efforts to combat HIV/AIDS and other infectious
diseases. The Administration has also backed these programs, but officials object to
congressional efforts to increase funding for children and health activities when it
comes at the expense of other development sectors. Most recently during the
FY2003 and FY2004 budget cycles, some Members of Congress have argued that it
has been the executive branch that has added funds for Administration priorities by
cutting resources for other development activities.
In years when Congress has increased appropriations for its priorities, but not
included a corresponding boost in the overall development aid budget, resources for
other aid sectors, such as economic growth and the environment, have been
substantially reduced. This was more problematic during the mid-to-late 1990s when
world-wide development aid funding fell significantly. In more recent years, and
especially for FY2003 and FY2004, Congress increased overall development
assistance so that both congressional and executive program priorities could be
funded without significant reductions for non-earmarked activities. Nevertheless,
Administration officials continue to argue that such practices undermine their
flexibility to adjust resource allocations to changing global circumstances.
In 2001, the Bush Administration set out revised USAID core goals for
sustainable development programs focused around three “spheres of emphasis” or
“strategic pillars” that include Global Health, Economic Growth and Agriculture, and
Conflict Prevention and Developmental Relief. The Administration further
introduced a new initiative — the Global Development Alliance (GDA) — in an
effort to expand public/private partnerships in development program implementation.
Under the initiative, USAID identifies good development opportunities being
conducted by private foundations, non-governmental organizations, universities, and
for-profit organizations, and provides parallel financing to leverage resources already
committed to these activities. USAID officials envisioned that the agency would
become much more of a coordinating and integrating institution to expand and
enhance development efforts of these non-governmental development partners.
Although it started out as a much more ambitious project — USAID requested $160
million for FY2002 — the GDA has received relatively modest funding allocations:
$20 million in FY2002 and $14.9 million in FY2003. The FY2004 request sought
$15 million.
Underscoring the importance of the debate over funding allocations of
development aid resources has been an elevation by the Administration of the value
of foreign economic assistance as an instrument of U.S. foreign policy since the
terrorist attacks of September 11, 2001. President Bush announced plans to launch
two major foreign aid initiatives — the Millennium Challenge Account and the
Global AIDS Initiative — that if approved by Congress, would significantly boost

funding for development assistance programs. Moreover, the President’s September

2002 National Security Strategy established global development, for the first time,

as the third “pillar” of U.S. national security, along with defense and diplomacy.
For FY2004, the President sought a substantial increase in overall development
assistance, although the programs are configured differently than they have been in
the past, raising questions in some observers’ minds about the Administration’s
commitment to broad-based, worldwide development. For “core” development
assistance — programs that match the current structure of USAID’s “strategic
pillars” and Foreign Operations appropriation accounts for Development Assistance
and Child Survival and Health Program Fund — the Administration proposed $2.84
billion, as shown in Table 11. This represented a $245 million, or 8% reduction from
amounts for FY2003. With the exception of HIV/AIDS, democracy programs, and
to a far less extent agriculture and economic growth activities, all other development
sectors would have received less funding in FY2004 than appropriated for FY2003.
Table 11. Development Assistance Funding
($s millions)
^FY²⁰⁰²^Actua^l^FY²⁰⁰³^E^s^ti^m^a^te^FY²⁰⁰⁴^Request^FY^{04 +}^/^{- FY}⁰³^{$ %}
^U^S^A^I^D^“C^{ore D}^e^vel^o^p^m^en^{t” Program}^s^:
^Econ^omⁱ^c^G^r^ow^t^h^a^$1,031.6^$1,151.2^$1,132.9⁽^$18.3)^-¹^.6%
^Glo^b^a^{l Health}^b^$1,347.5^$1,705.4^$1,495.0⁽^$210.4)^-^12.3%
^Dem^o^cr^acy^/Coⁿ^f^lict/Hu^m^an^itarⁱ^an^a^$146.4^$213.9^$211.9⁽^$2.0)^-⁰^.9%
^{Subtotal, “Core Developm}^ent”^$2,^525.5^$3,085.4^$2,839.8⁽^$245.6)^-8.0%
^{Global A}^I^{DS In}^itiativ^e^—^—^$450.0^$450.0^—
^Millenⁿⁱ^u^m^C^h^allen^g^e^A^ccouⁿ^t^—^—^$1,300.0^$1,300.0^—
^T^O^T^A^L^,^D^e^vel^o^p^m^en^{t A}ⁱ^d^$2,^525.5^$3,085.4^$4,589.8^$1,504.4^48.8%
^So^urce^{: USA}^I^D.
^{a. USA}^I^D’^{s “}^s^tr^ateg^{ic p}^illar^s^{” f}^o^r^Ecoⁿ^o^m^ic^Gr^o^w^th^an^d^Dem^o^cr^acy^co^r^r^esp^oⁿ^d^to^th^{e Dev}^e^lo^p^m^en^t
^A^{ssistance acco}^{unt in title I}^I^o^f^{annual Fo}^r^e^{ign Op}^er^atio^{ns ap}^p^r^o^p^r^iatio^{ns b}^ills.
^b^.^USA^I^D’^{s “}^s^tr^ateg^ic^p^illar^”^f^o^r^Glo^b^a^l^Health^co^r^r^esp^oⁿ^d^s^to^th^{e Ch}^ild^Su^r^v^iv^{al an}^d^Health^P^r^o^g^r^a^m
^Fund^acco^{unt in title I}^I^o^f^{annual Fo}^r^e^{ign Op}^er^atio^{ns ap}^p^r^o^p^r^iatio^{ns b}^ills.
Two new initiatives proposed for FY2004 that would be managed outside of
USAID “core development” programs, however, pushed overall U.S. development
assistance well above FY2003 levels. With the additions of the Global AIDS
Initiative and the Millennium Challenge Account, for which $450 million and $1.3
billion, respectively, were requested, total development aid in FY2004 would grow
to $4.6 billion, or 49% higher than FY2003 amounts.

While development assistance supporters applauded the increases sought for the
new initiatives, they remained concerned over the reductions proposed for USAID’s
“core” development accounts. The latter are worldwide activities that serve multiple
development needs in over 55 countries that range from nations with a sound
commitment to economic and democratic reforms, to countries emerging from
conflict, to failed states that confront humanitarian crises. The HIV/AIDS and MCA
proposals, on the other hand, are more narrowly focused. The Global AIDS
Initiative, implementing prevention, treatment, and care projects, are to focus largely
on 14 priority countries in Africa and the Caribbean. The Millennium Challenge
Account will likely support programs in the first year in perhaps as few as 8-10 “best-
performing”countries that have demonstrated progress in the areas of governance,
economic freedom, and social investments in people. The Administration further had
said that MCA funding would be in addition, not a substitute for continuing “core”
development activities. Critics charged that the FY2004 budget request violated that
pledge by cutting amounts for “core” programs.
What some observers found most problematic about the FY2004 development
assistance request was that increases for selected areas, especially those for
HIV/AIDS, to some extent resulted from reductions in other development programs.
(See Table 12.) Among health programs, each sub-sector was cut, except for
HIV/AIDS. Funding for other infectious diseases, including tuberculosis and
malaria, would have fallen by one-third under the President’s budget request, child
survival activities would be cut by 11%, reproductive health would drop by 5%, and
vulnerable child programs would be reduced from $27 million to $10 million. The
Administration recommended similar reductions in its FY2003 budget request last
year, but Congress restored most of the funds that would have been lost under the
President’s recommendation. For example, USAID had sought $110 million for non-
HIV/AIDS infectious diseases out of the Child Survival and Health Program Fund
account for FY2003, an amount that rose to $154.5 million due to subsequent
congressional additions in the Foreign Operations appropriation.
Aside from global health programs, USAID proposed a mix of budget increases
and cuts for other “core” development sectors. Those scheduled for higher spending
included:
^!Agriculture programs would increase by 4% to $268 million.
^!Economic growth activities, including trade and investment
programs, would rise less than 1%.
^!Democracy and local governance would grow by 20%, although
large increases for Afghanistan and Pakistan would leave similar
programs in Africa and Latin America below FY2003 levels.
Funding for other “core” development areas would decline:
^!Environmental activities would drop by 6% to $286 million.
^!Basic education, a high congressional priority for a number of years,
would fall by 2% to $212 million, and resources for higher education
would be cut by 17%.
^!Human rights and conflict prevention programs would be reduced
collectively by over one-third.

Resources for some or all of these sectors, however, could rise, and in some cases
significantly, when MCA programs are selected. The $1.3 billion sought by the
President in FY2004 will be allocated among a selected few “best performing,” low
income countries, supporting the highest development priority identified by the
participant nation.
Table 12. USAID “Core” Development Assistance Funding
($s millions)
^St^ra^t^e^gⁱ^{c “}^P^illa^r”^FY²⁰⁰¹^Actua^l^FY²⁰⁰²^Actua^l^FY²⁰⁰³^Actua^l^FY²⁰⁰⁴^Request^FY²⁰⁰⁴^Ena^c^t^e^d
^E^c^on^omⁱ^c^$844.3^$1,031.6^{$1,151.2 $1,132.9}^$1,152.9
^G^r^ow^th^/^A^gri^c^u^l^tu^re/^T^r^ad^e
^A^g^ri^cu^l^t^u^re^$160.4^$201.9^$258.8^$268.4^$268.3
^E^nvi^r^o^nm^eⁿ^t^$274.1^$285.6^$302.5^286.4^$293.8
^[of^w^h^ich^g^l^{obal clim}^{ate ch}^an^g^e^]^[$112.7]^[$110.0]^[$109.3]^[$109.0]
^T^r^ade&^In^v^e^s^t^m^eⁿ^t/Econ^Grow^th^$246.6^$331.8^$313.2^$315.8^$313.5
^[of^w^hⁱ^c^h^mⁱ^cro-^en^t^e^rpri^s^e^]^[$90.7]^[$79.0]^[$79.0]^[$79.0]
^Basⁱ^{c Edu}^catⁱ^oⁿ^f^o^{r C}^hⁱ^l^d^ren^$102.8^$150.0^$216.6^$212.0^$216.8
^Hⁱ^g^h^e^{r Edu}^catⁱ^oⁿ^an^{d T}^r^aiⁿⁱⁿ^g^$60.4^$62.3^$60.1^$50.3^$60.5
^G^l^ob^al^Heal^th^$1,214.5^$1,^347.5^$1,705.4^$1,495.0^$1,824.2
^C^hⁱ^l^d^S^u^rvⁱ^v^al^/^M^at^ern^a^l^H^eal^t^h^$295.4^$337.0^$321.9^$284.6^$327.9
^V^u^lⁿ^erabl^e^C^hⁱ^l^d^ren^$29.9^$25.0^$26.8^$10.0^$28.0
^H^I^V^/^A^I^D^S^(bi^l^a^t^e^ral⁾^$289.3^$395.0^$587.7^$650.0^$513.5
^{Global Fu}ⁿ^d^f^o^{r A}^I^{DS, T}^B^{, &}^$100.0^$40.0^$248.4^$100.0^$397.6
^Malaria
^O^t^h^e^{r In}^f^ectⁱ^o^u^s^Dⁱ^s^eas^es^$123.7^$165.0^$154.5^$104.4^$183.9
^F^a^mⁱ^l^y^Pl^anⁿⁱⁿ^g^$376.2^$385.5^$366.1^$346.0^$373.3
^Dem^o^{cracy, Conflict, &}^$156.5^$146.4^$213.9^$211.9^$211.5
^Hu^m^aⁿⁱ^tari^an
^D^e^m^o^cracy^&^L^o^cal^G^o^v^e^rn^an^ce^$131.3^$119.4^$139.0^$164.8^$159.4
^H^u^m^aⁿ^Rⁱ^g^h^t^s^$25.2^$27.0^$26.8^$19.5^$25.0
^C^oⁿ^f^lⁱ^c^t^—^—^$48.1^$27.6^$27.1
^[G^{lobal Developm}^{ent Alliance]}^{[ — ]}^[^$20.0]^$14.9^[^$15.0^]^[$15.0^]
^T^O^T^A^L^,^D^e^vel^o^p^m^en^{t A}ⁱ^d^$2,215.³^$2,525.5^$3,085.4^$2,839.8^$3,188.6
^Source:^USA^I^D.
^No^te:^A^m^ouⁿ^t^sⁱⁿ^th^is^{table ref}^l^{ect lev}^e^ls^{allocated f}^r^om^USA^I^D’^s^“^c^{ore” dev}^e^lopm^en^{t aid accou}ⁿ^t^s^:
^Dev^e^lopm^en^{t A}^s^sⁱ^s^t^an^{ce an}^{d th}^{e C}^h^{ild Su}^rv^iv^{al an}^{d Health}^P^r^og^ram^Fuⁿ^d^{. In}^additi^oⁿ^t^o^fi^gur^es
^s^h^owⁿ^h^e^{re, f}^uⁿ^d^s^{are draw}ⁿ^f^r^om^ot^h^e^r^econ^o^mⁱ^c^ai^d^prog^ram^s^—^Econ^omⁱ^c^S^u^pport^F^uⁿ^d^{, ai}^{d t}^o
^Eas^t^ern^Eu^{rope, an}^{d f}^o^rm^er-^S^ov^{iet as}^sⁱ^s^t^an^{ce — th}^{at are co-}^m^an^ag^ed^b^y^U^S^AI^D^an^{d th}^{e State}
^Dep^a^r^t^m^eⁿ^t^{. Fo}^r^activ^{ities su}^ch^{as b}^a^{sic ed}^u^catioⁿ^an^d^g^l^o^b^a^{l h}^ealth^{, m}^o^st^f^uⁿ^dⁱⁿ^g^co^m^e^s^f^r^o^m^th^ese
^“^c^ore”^dev^e^lopm^en^{t accou}ⁿ^t^s^.^In^oth^e^{r areas}^{, h}^o^w^e^v^e^{r, es}^pecially^econ^o^mⁱ^c^g^r^ow^th^,^ag^ricu^ltu^re,^an^d
^dem^o^cracy^{, a s}ⁱ^{zable am}^ouⁿ^t^of^res^o^u^r^ces^{are draw}ⁿ^f^r^om^th^es^{e n}^oⁿ^-^“^c^{ore” accou}ⁿ^t^s^.^C^o^m^p^{lete data}
^f^o^{r all y}^ears^acros^s^{all accou}ⁿ^t^s^{are n}^o^t^cu^rren^tly^av^a^{ilable. C}^oⁿ^s^equ^eⁿ^tly^{, it is}^on^ly^pos^sⁱ^ble^to^draw
^com^p^aris^on^s^f^o^{r “}^c^{ore” dev}^e^lopm^en^{t aid res}^o^u^r^ces^.

International HIV/AIDS. By far, the largest growth area for development
assistance was for HIV/AIDS prevention, treatment, and care programs (Table 13).
Resources requested under the Foreign Operations bill for HIV/AIDS in FY2004
totaled $1.24 billion, a 41% increase over $877 million appropriated for FY2003.
Moreover, the Administration sought another $680 million for international
HIV/AIDS from non-Foreign Operations accounts, most importantly for the Centers
for Disease Control and Prevention funded under the Labor/HHS/Education
appropriation bill. The total request across all appropriation measures for FY2004
was $1.92 billion. (The Administration frequently used a total of $2 billion in its
estimates of FY2004 funds requested for international HIV/AIDS programs. These
executive estimates included USAID resources for tuberculosis and malaria that are
not calculated in the $1.92 billion level shown in Table 13.)
A controversial issue was the President’s proposal for a $200 million
contribution to the Global Fund to Fight AIDS, Tuberculosis, and Malaria — $100
million each from Foreign Operations and Labor/HHS/Education appropriation
measures. For FY2003, Congress increased the U.S. contribution to $350 million
and subsequently authorized “up to” $1 billion for FY2004 in P.L. 108-25, the United
States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003.
Congressional Action.
House Debate. On July 23, the House approved $3.43 billion for “core”
bilateral development programs, an amount about $140 million higher than the
President’s request and $350 million above regular FY2003 amounts. The bill (H.R.
2800), while adding over $320 million to FY2003 totals for the Child Survival and
Health account, reduced non-health programs by nearly $30 million from the
Administration’s request and $63 million from FY2003 amounts. At these levels,
this have would resulted in small cuts for activities such as agriculture, economic
growth, environment, and democracy promotion.
For one of the highest Administration and congressional foreign aid priorities,
the House provided $1.27 billion for international HIV/AIDS, $30 million above the
President’s request and $395 million higher than FY2003. Combined with parallel
funding approved in the House Labor-HHS spending measure, the House provided
in both bills $1.9 billion for HIV/AIDS, $20 million less than the Administration’s
proposal. Out of this, $500 million would be available as a U.S. contribution to the
Global Fund ($400 million would come from the Foreign Operations bill). The
President proposed $200 million for the Global Fund, $100 million from each bill.
The House measure also restored funding for bilateral tuberculosis and malaria
programs — amounts that are not included in those for AIDS spending above — that
the President’s budget had scheduled for cuts. The House bill increased amounts for
non-HIV/AIDS infectious diseases from $104 million to $156 million.
H.R. 2800, within the Development Assistance account, placed high priority on
trade capacity building activities, increasing funding to $194 million, $35 million
higher than in FY2003. Spending on basic education would also rise under the
House measure, with $259 million specified out of the bilateral development aid
funds. In FY2003, USAID allocated $217 million for basic education and requested

$212 million for FY2004. Across all Foreign Operations accounts, the House bill
directed a total of $350 million for basic education.

CRS-54
Table 13. U.S. International HIV/AIDS Programs
($s millions)
^Program^FY²⁰⁰²^Actua^l^FY²⁰⁰³^Estⁱ^m^a^t^e^FY²⁰⁰⁴^Request^FY²⁰⁰⁴^Hou^s^e^FY²⁰⁰⁴^Sena^t^e^FY²⁰⁰⁴^Ena^c^t^e^d^a
^A^I^{D C}^h^{ild S}^u^rv^iv^al/Health^accouⁿ^t^f^o^{r bilateral prog}^ram^s^$395.0^$587.6^$650.0^$840.8^$500.0^$513.4
^A^I^{D C}^h^{ild S}^u^rv^iv^al/Health^accouⁿ^t^f^o^{r th}^{e Global F}^uⁿ^d^$50.0^$248.4^$100.0^$400.0^$250.0^$397.6
^A^I^{D oth}^e^{r econ}^o^mⁱ^{c as}^sⁱ^s^t^an^{ce accou}ⁿ^t^s^$40.0^$38.5^$40.0^$30.0^$50.0^$36.0^b
^r^e^igⁿ^Militar^y^Fin^aⁿ^cⁱⁿ^g^—^$²^.⁰^$¹^.⁵^$⁰^.⁰^$²^.⁰^—
^eⁿ^t^Global^A^I^{DS In}^itiativ^e^—^—^$450.0^c^$739.0^$488.1
^ons^{appropriations}^$485.0^$876.5^{$1,241.5 $1,270.8}^$1,541.0^$1,435.1
ⁱ^{ki/CRS-RL31811}^C^G^l^obal^A^I^D^S^Prog^ram^{$143.8 $182.6}^$293.8^$242.6^$292.6^$291.9
^g/w^C^In^t^e^rn^atⁱ^oⁿ^a^l^A^pplⁱ^e^{d Prev}^en^tⁱ^oⁿ^R^e^s^earch^$11.0^$11.0^$11.0^$11.0^d^$11.0^d^$11.0^d
^s^.or^d^d^d
^le^ak^H^In^t^e^rn^atⁱ^oⁿ^a^l^R^e^s^earch^$218.2^$252.3^$274.7^$274.7^$274.7^$274.7
^://wiki^I^{DS prev}^en^tion^edu^cation^w^ith^A^f^rican^m^ilitaries^$14.0^$7.0^—^—^—^—
^h^ttp^A^I^{DS in}^th^{e W}^o^rk^{place In}^itiativ^e^$8.5^$9.9^—^—^$10.0^$9.9
^D^A^S^ectⁱ^oⁿ^{416(b) F}^{ood A}ⁱ^d^$25.0^$24.8^—^—^$25.0^$24.8
^obal^F^uⁿ^d^con^t^ri^bu^tⁱ^oⁿ^f^r^om^N^I^H^/^H^H^S^$125.0^$99.3^$100.0^$100.0^$150.0^$149.1
^T^A^L^$1,030.5^$1,463.4^{$1,921.0 $1,899.}¹^$2,304.3^$2,196.5
^:^H^o^u^s^{e an}^{d S}^eⁿ^a^t^e^A^ppropri^a^tⁱ^oⁿ^s^C^o^m^mⁱ^t^t^ees^{, D}^e^part^m^eⁿ^t^s^of^S^t^at^{e an}^{d H}^H^S^{, U}^S^A^I^D^,^an^{d C}^D^C^.
^h^{e D}ⁱ^vⁱ^sⁱ^on^H^of^t^h^{e C}^oⁿ^s^olⁱ^d^at^{ed A}^ppropri^a^tⁱ^oⁿ^A^c^t^,^{2004 (P.L}^{. 108-}^199;^H^.^R^.²⁶⁷³⁾^requⁱ^r^es^an^acros^s^-^t^h^e-^board^res^cⁱ^s^sⁱ^on^of^{0.59% f}^o^{r each}^accouⁿ^t^,^am^ouⁿ^t^s^th^at^are^calcu^lated
^f^o^r^lin^{es in}^th^{is co}^lu^mⁿ^.
ⁿ^c^l^ud^e^s^t^h^e^A^I^DS-^r^{elated portion}^of^{$53.5 m}^illion^earm^a^rk^ed^f^o^{r A}^I^{DS, tu}^bercu^l^os^is^{, an}^{d m}^a^{laria in}^Eas^t^ern^Eu^{rope an}^{d th}^e^B^a^{ltics, as w}^e^{ll as u}ⁿ^ear^m^a^r^k^ed^assistan^{ce t}^h^r^o^u^g^h
^ot^h^e^{r prog}^ram^s^.
^h^{e Hou}^s^{e bill (H.R}^{. 2800) did n}^o^{t f}^uⁿ^d^th^isⁿ^e^w^accouⁿ^t^f^o^r^th^{e Global A}^I^{DS In}^itiativ^{e, bu}^{t in}^s^t^{ead prov}^{ided addition}^a^{l am}^o^uⁿ^t^sⁱⁿ^th^{e C}^h^{ild Su}^rv^iv^al/Health^accouⁿ^t^{, abov}^e.
^h^{is am}^o^uⁿ^t^{is n}^o^{t sp}^ecifⁱ^edⁱⁿ^th^{e leg}ⁱ^slatioⁿ^,^b^u^{t o}^v^er^{all p}^r^o^g^r^a^m^f^uⁿ^dⁱⁿ^g^ap^p^ear^{s su}^f^fⁱ^cien^{t to}^m^{eet th}^{is tar}^g^et.

Senate Debate. In H.R. 2800 (originally reported as S. 1426), the Senate
provided about $3.85 billion in overall “core” bilateral development programs. The
Senate measure was about $560 million higher than the President’s request and $420
million above the House bill.
As one of its top priorities, the Senate provided $1.54 billion for international
HIV/AIDS, $300 million above the President’s request and $665 million higher than
FY2003 levels. The HIV/AIDS total included as much as $250 million for the
Global Fund, compared with the President’s request of $100 million. (The President
also requested $100 million for the Global Fund in the Labor/HHS appropriation
measure.) Unlike the House bill, the Senate included HIV/AIDS funds in both the
Child Survival/Health (CS/H) and Global AIDS Initiative accounts. The Global
AIDS Initiative account is a new request for FY2004, funding programs managed by
a new State Department Coordinator. The House bill kept nearly all HIV/AIDS
funds in the CS/H account, consistent with past practice. The Senate bill also
restored cuts to bilateral tuberculosis and malaria proposed by the President,
increasing spending for non-HIV/AIDS infectious diseases from $104 million to
$185 million. Of that total, tuberculosis was to receive $80 million, while malaria
funding was set at $85 million.
Besides increasing health programs, the Senate bill also added to the request for
other development activities, providing about $80 million more than requested and
over $100 million more than the House. Basic education programs received $220
million under bilateral development assistance, while environmental activities ($485
million) and microenterprise ($180 million) were other areas emphasized in the
Senate bill that were set above the President’s request.
Table 14. “Core” Development Aid Accounts — Congressional
Action
($s millions)
^A^ccouⁿ^t^FY²⁰⁰³^FY²⁰⁰⁴^Request^FY²⁰⁰⁴^Hou^s^e^FY²⁰⁰⁴^Sena^t^e^FY²⁰⁰⁴^Ena^c^t^e^d*
^C^hⁱ^l^d^S^u^rvⁱ^v^al^/^H^eal^t^h^$1,794.6^a^$1,495.0^$2,115.8^a^$1,435.5^$1,824.2
^{Global A}^I^{DS In}^itiativ^e^{— $450.0}^b^$989.0^$488.1
^D^e^v^e^l^opm^en^t^Aⁱ^d^$1,380.0^$1,345.0^$1,317.0^$1,423.0^$1,376.8
^T^O^T^A^L^$3,174.6^$3,290.0^$3,432.8^$3,847.5^$3,689.1
^Source:^Ho^u^s^{e an}^d^Sen^a^{te A}^p^p^r^o^p^r^iatioⁿ^Co^m^m^ittees.
^*^Fig^u^r^esⁱⁿ^th^{is co}^lu^mⁿ^h^a^v^e^b^een^adj^u^s^t^ed^{to ref}^l^{ect a 0.59% acros}^s^-^th^e-^{board res}^c^is^sⁱ^on^requ^ired
ⁱⁿ^Dⁱ^vⁱ^sⁱ^on^H^of^H^.^R^.^{2673, t}^h^{e C}^oⁿ^s^olⁱ^d^at^{ed A}^ppropri^a^tⁱ^oⁿ^s^A^c^t^,^{2004 (P.L}^{. 108-}^199).
^a^.^U^N^I^C^E^{F con}^t^ribu^tion^s^of^{$120 m}^illion^h^a^v^e^been^dedu^{cted f}^r^om^th^es^{e f}ⁱ^g^u^r^esⁱⁿ^{order to be}
^con^s^is^ten^t^w^ith^th^{e F}^Y^{2004 requ}^es^{t, S}^eⁿ^a^{te, an}^{d C}^oⁿ^f^eren^{ce accou}ⁿ^t^totals^.
^b^.^T^h^{e Ho}^u^s^{e b}^{ill in}^clu^d^ed^f^uⁿ^dⁱⁿ^g^f^o^r^th^{e Glo}^b^a^l^A^I^{DS I}ⁿ^itiativ^{e in}^th^{e Ch}^ild^Su^r^v^iv^al/Health
^accouⁿ^t^.

Conference Agreement. In conference consideration — added as Division
D of H.R. 2673, the Consolidated Appropriations Act, 2004 — lawmakers set total
funding for development aid “core accounts” at $3.7 billion, about $400 million or
12% higher than the President’s request. While much of the increase is directed for
HIV/AIDS and other infectious disease programs, funding for other development
priorities also rose, most notably for basic education, family planning, and
biodiversity programs. Table 15 lists 29 programs for which Congress set specific
funding targets in the final legislation.
The top development aid funding priority for House-Senate conferees was the
$1.46 billion agreed to for international HIV/AIDS (See Table 13, above). With the
addition of resources for malaria and tuberculosis, the total for these infectious
diseases comes to $1.64 billion in the Foreign Operations measure. When combined
with appropriations in the Labor/HHS/Education bill (also included in the
Consolidated Appropriations Act, 2004, H.R. 2673, as Division E), Congress will
have recommended a total of $2.4 billion for global HIV/AIDS, malaria, and
tuberculosis. (The final amount is slightly less than this due to a 0.59% across-the-
board rescission required in Division H of the Consolidated Appropriation
conference agreement.) The Foreign Operations portion is about $300 million above
the President’s request. Conferees further agreed to a $400 million contribution to
the Global Fund for AIDS, Malaria, and Tuberculosis that together with $150 million
in Division E of H.R. 2673, would bring the total level to $550 million, rather than
the Administration’s $200 million proposal.
Table 15. Selected Development Aid Funding Targets —
Congressional Action
($s millions)
^FY²⁰⁰³^FY²⁰⁰⁴^FY²⁰⁰⁴^FY²⁰⁰⁴^a
^Estⁱ^m^a^t^e^Hou^s^e^Sena^t^e^Conference
^E^c^on^omⁱ^c^G^r^ow^th^/^A^gri^c^u^l^tu^re/^T^r^ad^e
^T^r^{ade C}^a^paci^t^y^Buⁱ^l^dⁱⁿ^g^$159.0^b^$194.0^b^—^$190.0^b
^cc^c
^Microen^t^erpris^e^$180.0
^Pl^an^t^Bi^ot^echⁿ^o^l^o^g^y^R^&^D^$24.8^—^$40.0^d
^e^e
^Dairy^Dev^e^lo^p^m^en^t^$15.0^$15.0
^Wom^eⁿⁱⁿ^D^e^v^e^l^opm^en^t^$11.0^$11.0^$15.0^$11.0
^W^o^m^eⁿ^’^s^L^eaders^h^{ip C}^a^pacity^f^$11.0^—^$11.0
^Basⁱ^{c Edu}^catⁱ^oⁿ^f^o^{r C}^hⁱ^l^d^ren^$216.6^$250.0^g^$220.0^$235.0^g
^A^m^er^ican^Sch^o^o^l^{s &}^Ho^sp^itals^$17.9^$20.0^$20.0^$19.0
^Ab^r^o^a^d
^En^vⁱ^ron^m^en^t^$302.5^—^$325.0^h^—
^Bi^odi^v^e^rsⁱ^t^y^&^T^r^opi^cal^F^o^res^t^ry^$144.1^$110.0^$165.0^$155.0

^FY²⁰⁰³^FY²⁰⁰⁴^FY²⁰⁰⁴^FY²⁰⁰⁴^a
^Estⁱ^m^a^t^e^Hou^s^e^Sena^t^e^Conference
^D^rⁱ^nki^{ng W}^a^t^e^rⁱ^—ⁱⁱ
^j^jj
^Eⁿ^e^r^gy^Co^nse^r^va^tⁱ^o^n/^Clⁱ^m^a^t^e^—
^Cha^nge
^G^l^ob^al^Heal^th
^C^hⁱ^l^d^S^u^rvⁱ^v^al^/^M^at^ern^a^l^H^eal^t^h^$321.9^$324.0^$345.0^$330.0
^Vaccin^e^F^uⁿ^d^$59.6^$60.0^$60.0^$60.0
^Iodiⁿ^e^D^e^fⁱ^ci^en^cy^Dⁱ^s^o^rder^$2.5^$2.0^k^$2.0^k^—
^Mi^cron^u^t^ri^en^t^s^$29.8^$30.0^$30.0^—
^Polⁱ^o^Eradi^catⁱ^oⁿ^$27.3^$25.0^$30.0^—
^V^u^lⁿ^erabl^e^C^hⁱ^l^d^ren^$26.8^$27.0^$30.0^$28.0
^Blⁱⁿ^{d C}^hⁱ^l^d^ren^$1.5^$1.5^$1.5^—
^H^I^V^/^A^I^D^S^(bi^l^a^t^e^ral⁾^$587.6^l^$840.8^l^$1,239.0^l^$1,007.5^l
^Mi^crobi^ci^des^$17.9^$24.0^$22.0^$22.0
^In^tern^ation^a^{l A}^I^{DS Vaccin}^e^In^itiativ^e^$10.4^$15.0^$18.0^$26.0
^U^N^A^ID^S^$17.9^—^$28.0^$26.0
^f^—^$75.0^m^$75.0
^In^j^ectⁱ^oⁿ^&^Bl^{ood S}^a^f^e^t^y^Prog^ram^s
^f
^A^I^{DS Or}^p^h^an^{s &}^HI^{V P}^o^sitiv^e^$20.0^—^—
^Ch^ild^r^eⁿ
^{Global Fu}ⁿ^d^f^o^{r A}^I^{DS, T}^B^{, &}^$248.4^$400.0^$250.0^$400.0
^Malaria
ⁿⁿⁿ
^T^u^bercu^l^osⁱ^s^$64.6^$92.5
^Mal^a^ri^a^$64.6^o^$85.0^$92.5^o
^Fa^mⁱ^l^y^P^l^aⁿⁿⁱ^ng/^Re^p^r^o^d^u^c^tⁱ^v^e^$366.1^p^$368.5^p^$375.5^p^$375.0^p
^Health
^Dem^o^{cracy, Conflict, & Hum}^a^nitarian
^Victim^s^of^T^o^rtu^r^{e T}^r^eatm^eⁿ^t^$8.0^$10.0^$11.0^—
^Ce^nte^r^s
^Source:^Ho^u^s^{e an}^d^Sen^a^{te A}^p^p^r^o^p^r^iatioⁿ^Co^m^m^{ittees; USA}^I^D.
^No^te:^A^m^o^uⁿ^t^{s in}^th^{is tab}^l^{e r}^e^f^l^{ect p}^r^o^g^r^a^m^f^uⁿ^dⁱⁿ^g^tar^g^{ets sp}^ecifⁱ^edⁱⁿ^Ho^u^s^{e a}ⁿ^d^S^eⁿ^a^{te Fo}^r^e^igⁿ
^Op^eratioⁿ^s^b^{ills an}^d^Co^m^m^{ittee rep}^o^r^{ts. T}^a^rg^e^t^s^a^r^eⁿ^o^t^{set f}^o^{r all p}^r^o^g^ram^sⁱⁿ^each^b^{ill, b}^u^{t are}
^selectiv^ely^id^en^tif^ied^,^o^f^ten^to^estab^lish^mⁱⁿⁱ^m^u^m^am^o^uⁿ^t^{s f}^o^r^d^e^v^e^lo^p^m^en^{t aid}^activ^{ities o}^f^sp^ecial
^con^g^r^es^sⁱ^on^{al im}^po^r^t^an^{ce. A}^m^ouⁿ^t^s^s^h^owⁿⁱⁿ^th^{e colu}^mⁿ^s^{are allocated f}^r^om^USA^I^D/State
^Departm^eⁿ^t^“^c^{ore” dev}^e^lopm^en^{t aid accou}ⁿ^t^s^:^Dev^e^lopm^en^{t A}^s^sⁱ^s^t^aⁿ^c^e^,^t^h^e^C^h^{ild Su}^rv^iv^{al an}^{d Health}
^P^r^o^g^r^a^m^Fuⁿ^d^{, an}^d^th^{e Glo}^b^a^{l A}^I^{DS I}ⁿ^itiativ^{e. I}ⁿ^ad^d^itioⁿ^t^o^fⁱ^g^u^r^{es sh}^o^wⁿ^h^e^r^e^{, f}^uⁿ^d^{s ar}^{e d}^r^awⁿ
^f^r^om^ot^h^e^{r econ}^o^mⁱ^{c ai}^{d prog}^ram^s^—^Econ^omⁱ^c^S^u^pport^F^uⁿ^d^{, ai}^{d t}^o^Eas^t^ern^Eu^{rope, an}^{d f}^o^rm^er-
^So^vⁱ^{et assistan}^{ce. See f}^o^o^tⁿ^o^{tes b}^e^lo^w^f^o^r^ad^d^itioⁿ^a^{l in}^f^o^r^m^atioⁿ^r^e^g^a^r^dⁱⁿ^g^f^uⁿ^dⁱⁿ^g^tar^g^ets^acr^o^{ss all}
^Foreigⁿ^Operation^s^accouⁿ^t^s^f^o^{r each}^prog^ram^.

^a.^A^m^o^uⁿ^t^sⁱⁿ^th^{is co}^lu^mⁿ^ar^{e n}^o^t^adj^u^s^t^{ed to ref}^l^{ect th}^{e 0.59% acr}^o^ss-the^-^b^o^a^r^d^r^e^sc^issioⁿ^tha^t^the
^con^f^eren^{ce ag}^reem^en^t^of^H^.^R^.^{2673 requ}ⁱ^r^es^.
^{b. A}^c^ros^s^{all F}^o^reigⁿ^Operation^s^accouⁿ^t^s^f^o^r^T^r^{ade C}^a^pacity^Bu^ildin^g^,^th^{e F}^Y^{2003 es}^tim^{ate w}^a^s
^{$449.1 m}^illion^;^th^{e Hou}^s^e^bill^prov^{ided $517 m}^illioⁿ^;^th^{e con}^f^eren^{ce ag}^reem^en^{t prov}^ides^$503
^m^illioⁿ^.
^{c. T}^h^{e F}^Y^{2003 es}^tim^{ate acros}^s^{all F}^o^reigⁿ^Operation^s^account^{s f}^o^{r Microen}^t^erpris^{e prog}^ram^s^w^a^s
^{$160 m}^illion;^th^{e Hou}^s^{e A}^ppropriation^s^C^o^m^m^{ittee report “}^e^x^p^ects^“^USA^I^{D to f}^uⁿ^d
^Micr^o^e^nt^e^r^p^r^is^{e prog}^ram^s^{at th}^{e au}^th^{orized lev}^e^{l f}^o^{r FY2004 ($200 m}^illion⁾^{; th}^{e con}^f^eren^ce
^ag^reem^en^{t “}^s^u^pports^{” th}^{e Sen}^a^{te A}^ppropriation^s^C^o^m^m^{ittee report reg}^a^rdin^g^Microen^t^erpris^e
^p^o^lⁱ^c^y^aⁿ^d^fundⁱ^ng.
^{d. A}^c^ros^s^{all Foreig}ⁿ^Operati^o^ns^accouⁿ^t^s^f^o^r^P^l^an^{t B}ⁱ^otechⁿ^o^log^y^{, th}^{e con}^f^eren^{ce ag}^reem^en^t
^prov^ides^{$25 m}^illion^.
^{e. A}^c^ros^s^all^F^o^reigⁿ^Operation^s^accouⁿ^t^s^f^o^{r Diary}^Dev^e^lopm^en^{t, th}^{e F}^Y^{2003 es}^tim^{ate w}^a^s^$24.8
^m^illion^;^th^{e Sen}^a^{te A}^ppropriation^s^C^o^m^m^{ittee s}^a^id^th^{at FY2004 f}^uⁿ^dⁱⁿ^g^f^o^{r dairy}^dev^e^lopm^en^t
^s^h^ou^l^dⁱⁿ^creas^{e ov}^{er F}^Y^{2003 l}^e^v^e^l^s^.
^f^.^{No es}^tim^{ate av}^ailable.
^g^.^A^c^ros^s^{all Foreig}ⁿ^Operatioⁿ^s^accouⁿ^t^s^f^o^{r B}^a^sⁱ^{c Edu}^cation^,^th^{e Hou}^s^{e bill prov}^{ided $350 m}^illion^;
^th^{e con}^f^eren^{ce ag}^reem^en^{t prov}^ides^{$326.5 m}^illion^.
^h^.^A^c^ros^s^{all Foreig}ⁿ^Operation^s^accouⁿ^t^s^f^o^{r E}ⁿ^vⁱ^ron^m^en^{t activ}^ities^,^th^{e Sen}^a^{te bill prov}^{ided $485}
^m^illioⁿ^.
^{i. A}^c^ros^s^{all Foreig}ⁿ^Opera^tion^s^accouⁿ^t^s^f^o^{r Dr}ⁱ^nki^ng^W^a^t^e^{r activ}^ities^,^th^{e FY2003 es}^tim^{ate w}^a^s
^$99.4^m^illion^;^th^{e Sen}^a^{te bill prov}^{ided $100;}^th^{e con}^f^eren^{ce ag}^reem^en^{t prov}^ides^{$100 m}^illion^.
^j^.^Ac^ros^s^{all Foreig}ⁿ^Operatioⁿ^s^accouⁿ^t^s^f^o^{r En}^erg^y^C^oⁿ^s^erv^a^tion^/^C^lim^{ate C}^h^an^g^e^{, th}^{e FY20}⁰³
^es^tim^{ate w}^a^s^{$173.9 m}^illion^;^th^{e Sen}^a^{te bill prov}^ided^$185^m^illion^;^th^{e con}^f^eren^{ce ag}^reem^en^t
^prov^ides^{$180 m}^illion^.
^k^.^A^c^ro^{ss all Fo}^reigⁿ^Op^eratioⁿ^s^acco^uⁿ^t^{s f}^o^{r Io}^dⁱⁿ^e^Defⁱ^cien^cy^Diso^rd^er,^th^e^Ho^u^s^e^an^d^Sen^a^{te b}^ills
^p^r^o^v^id^ed^$³^.⁵^m^illioⁿ^.
^l.^A^c^ros^s^{all F}^o^reigⁿ^Operation^s^accouⁿ^t^s^f^o^{r b}^{ilateral HIV/A}^I^DS^prog^ram^s^{, th}^{e F}^Y^{2003 es}^tim^{ate w}^a^s
^{$628.1 m}^illion^;^th^{e Hou}^s^{e bill pr}^ov^{ided $870.8 m}^illion^;^th^{e Sen}^a^te^{bill prov}^{ided $1.291 billion}^;
^th^{e con}^f^eren^{ce ag}^reem^en^{t prov}^ides^{$1.035 billion}^.
^m^.^T^h^{e Sen}^a^{te bill prov}^{ided tw}^{o s}^e^{parate targ}^ets^:^{$29 m}^illion^f^o^{r In}^j^ection^Saf^e^ty^P^r^og^ram^s^an^d^$46
^m^illion^f^o^{r B}^l^{ood Saf}^e^ty^P^r^og^ram^s^.
ⁿ^.^A^c^ro^ss^all^Fo^reigⁿ^Op^eratioⁿ^s^acco^uⁿ^t^{s f}^o^{r b}^{ilateral tu}^b^e^rcu^l^o^s^{is p}^r^o^g^ram^s^{, th}^{e Ho}^u^s^{e b}^{ill p}^r^o^v^id^ed
^$85.1^m^illion^;^th^{e Sen}^a^{te bill prov}^{ided $80}^m^illion^;^th^{e con}^f^eren^{ce ag}^reem^en^{t prov}^ides^$101
^m^illioⁿ^.
^{o. For bilateral Malaria prog}^ram^s^{, th}^{e Hou}^s^{e b}^{ill prov}^{ided n}^o^t^les^s^th^an^th^{e FY2003 f}^uⁿ^dⁱⁿ^g^lev^e^l.
^A^c^ros^s^{all F}^o^r^eⁱ^gⁿ^Operation^s^accouⁿ^t^s^f^o^{r b}^{ilateral Malaria prog}^ram^s^{, th}^{e con}^f^eren^ce
^ag^reem^en^{t prov}^ides^{$101 m}^illion^.
^{p. A}^c^ros^s^{all F}^o^reigⁿ^Operation^s^accouⁿ^t^s^f^o^{r F}^a^m^ily^P^l^anⁿⁱⁿ^g^/^R^e^produ^ctiv^{e Health}^{, th}^{e F}^Y²⁰⁰³
^es^tim^{ate w}^a^s^{$446.5 m}^illioⁿ^;^th^{e Hou}^s^{e bill prov}^{ided $425 m}^illion^;^th^e^Sen^a^{te bill prov}^ided
^{$445 m}^illion^;^th^{e con}^f^eren^{ce ag}^reem^en^{t prov}^ides^{$432 m}^illion^.
International Family Planning and UNFPA Funding
U.S. population assistance and family planning programs overseas have sparked
continuous controversy during Foreign Operations debates for nearly two decades.
For FY2004, the Administration requested $425 million for bilateral population
assistance, the same as proposed last year, but below the $446.5 million appropriated
by Congress for FY2003. Although funding considerations have at times been
heatedly debated by Congress, the most contentious family planning issues addressed
in nearly every annual congressional consideration of Foreign Operations bills have
focused on two matters: whether the United States should contribute to the U.N.
Population Fund (UNFPA) if the organization maintains a program in China where
allegations of coercive family planning have been widespread for many years, and
whether abortion-related restrictions should be applied to bilateral USAID population
aid grants (commonly known as the “Mexico City” policy).

UNFPA Funding. The most contentious issue usually concerns the abortion
restriction question, but most recent attention has focused on UNFPA and a White
House decision in July 2002 to block the $34 million U.S. contribution to the
organization. During the Reagan and Bush Administrations, the United States did
not contribute to UNFPA because of concerns over practices of forced abortion and
involuntary sterilization in China where UNFPA maintains programs. In 1985,
Congress passed the so-called Kemp-Kasten amendment which has been made part
of every Foreign Operations appropriation since, barring U.S. funds to any
organization that supports or participates “in the management” of a program of
coercive abortion or involuntary sterilization. In 1993, President Clinton determined
that UNFPA, despite its presence in China, was not involved in the management of
a coercive program. In most years since 1993, Congress has appropriated about $25
million for UNFPA, but added a directive that required that the amount be reduced
by however much UNFPA spent in China. Consequently, the U.S. contribution has
fluctuated between $21.5 million and $25 million.
For FY2002, President Bush requested $25 million for UNFPA. As part of a
larger package concerning various international family planning issues, Congress
provided in the FY2002 Foreign Operations bill “not more than” $34 million for
UNFPA. While members of the Appropriations Committees say it was their intent
to provide the full $34 million, the language allowed the President to allocate
however much he chose, up to a $34 million ceiling. According to February 27,

2002, testimony by Arthur Dewey, Assistant Secretary of State for Population,

Refugees, and Migration before the Senate Foreign Relations Committee, the White
House placed a hold on UNFPA funds in January 2002 because new evidence
suggested that coercive practices were continuing in Chinese counties where UNFPA
concentrates its programs. A September 2001 investigation team, sponsored by the
Population Research Institute, concluded that a consistent pattern of coercion
continued in “model” UNFPA counties, including forced abortions and involuntary
sterilizations. Refuting these findings, a UNFPA-commissioned review team found
in October 2001 “absolutely no evidence that the UN Population Fund supports
coercive family planning practices in China or violates the human rights of Chinese
people in any way.” (See House International Relations Committee hearing,
Coercive Population Control in China: New Evidence of Forced Abortion and
Forced Sterilization, October 17, 2001. See also testimony of Josephine Guy and
Nicholaas Biegman before the Senate Foreign Relations Committee, February 27,

2002.)

Although most observers agree that coercive family planning practices continue
in China, differences remain over the extent to which, if any, UNFPA supports
involuntary activities and whether UNFPA should operate at all in a country where
such conditions exist. Given the conflicting reports, the State Department sent its
own investigative team to China for a two-week review of UNFPA programs on May
13, 2002. The team, which was led by former Ambassador William Brown and
included Bonnie Glick, a former State Department official, and Dr. Theodore Tong,
a public health professor at the University of Arizona, made three findings and
recommendations in its report dated May 31:

Findings:
^!There is no evidence that UNFPA “knowingly supported or
participated in the management of a program of coercive abortion or
involuntary sterilization” in China;
^!China maintains coercive elements in its population programs; and
^!Chinese leaders view “population control as a high priority” and
remain concerned over implications of loosening controls for
socioeconomic change.
Recommen d a ti on s:
^!The United States should release not more than $34 million of
previously appropriated funds to UNFPA;
^!Until China ends all forms of coercion in law and practice, no U.S.
government funds should be allocated to population programs in
China; and
^!Appropriate resources, possibly from the United States, should be
allocated to monitor and evaluate Chinese population control
programs.
Despite the team’s recommendation to release the $34 million, Secretary of
State Powell decided on July 22, 2002, to withhold funds to UNFPA and to
recommend that they be re-directed to other international family planning and
reproductive health activities. (The authority to make this decision had been
delegated previously by the President to the Secretary of State.) The State
Department’s analysis of the Secretary’s determination found that even though
UNFPA did not “knowingly” support or participate in a coercive practice, that alone
would not preclude the application of Kemp-Kasten. Instead, a finding that the
recipient of U.S. funds — in this case UNFPA — simply supports or participates in
such a program, whether knowingly or unknowingly, would trigger the restriction.
The team found that the Chinese government imposes fines and penalties on
families that have children exceeding the number approved by the government, a
practice that in some cases coerces women to have abortions they would not
otherwise undergo. The State Department analysis concluded that UNFPA’s
involvement in China’s family planning program “allows the Chinese government
to implement more effectively its program of coercive abortion.” (The full text of the
State Department’s analysis is online at the State Department’s web site at
[http://www.state.gov/g/prm/rls/other/12128.htm]. The State Department’s
assessment team report is also online, at [http://www.state.gov/g/prm/rls/rpt/

2002/12122.htm] .)

Critics of the Administration’s decision opposed it not only because of the
negative impact it may have on access to voluntary family planning programs by
persons in around 140 countries where UNFPA operates, but also because of the
possible application of the determination for other international organizations that
operate in China and to which the U.S. contributes.
For FY2003, the President proposed no funding for UNFPA, although $25
million was requested in “reserve” for the account from which UNFPA receives its
funding. Presumably, this could have been made available to UNFPA if it was found

not to be in violation of Kemp-Kasten. Following several legislative attempts to
reverse the Administration’s denial of UNFPA — in both FY2002 supplemental
appropriations and regular FY2003 Foreign Operations measures — Congress
approved in P.L. 108-7, the Consolidated Appropriations Act for FY2003, a
provision allocating $34 million to UNFPA, the same as in FY2002, so long as
several conditions were met. The most significant requirement was that the President
must certify that UNFPA is no longer involved in the management of a coercive
family planning program.
Since the July 2002 determination, the Administration has transferred to USAID
$34 million from FY2002 appropriations and $25 million from FY2003 that would
have otherwise been provided to UNFPA in order to fund USAID bilateral family
planning programs for which UNFPA has no involvement. The State Department’s
justification of its September 25, 2003 letter to Congress regarding the FY2003
resources noted that the “factual circumstances” do not support making a
determination that UNFPA no longer supports or participates in the management of
a program of coercive abortion or involuntary sterilization. Section 572 of the
FY2003 Foreign Operations Appropriations required the President to issue such a
statement before restoring U.S. funding to UNFPA.
Like for FY2003, the FY2004 Foreign Operations request did not propose
funding for UNFPA, but placed $25 million in “reserve” for unidentified voluntary
contributions to international organizations.
“Mexico City” Policy. The debate over international family planning policy
and abortion began nearly three decades ago, in 1973, when Congress added a
provision to the Foreign Assistance Act of 1961 prohibiting the use of U.S.
appropriated funds for abortion-related activities and coercive family planning
programs. During the mid-1980s, in what has become known as the “Mexico City”
policy (because it was first announced at the 1984 Mexico City Population
Conference), the Reagan Administration, and later the George H. W. Bush
Administration restricted funds for foreign non-governmental organizations (NGOs)
that were involved in performing or promoting abortions in countries where they
worked, even if such activities were undertaken with non-U.S. funds. Several groups,
including International Planned Parenthood Federation-London (IPPF-London),
became ineligible for U.S. financial support. In some subsequent years, Congress
narrowly approved measures to overturn this prohibition, but White House vetoes
kept the policy in place. President Clinton in 1993 reversed the position of his two
predecessors, allowing the United States to resume funding for all family planning
organizations so long as no U.S. money was used by those involved in abortion-
related work.
Between 1996 and 2000, the House and Senate took opposing positions on the
Mexico City issue, actions that repeatedly held up enactment of the final Foreign
Operations spending measures. The House position, articulated by Representative
Chris Smith (N.J.) and others, supported reinstatement of the Mexico City policy
restricting U.S. aid funds to foreign organizations involved in performing abortions
or in lobbying to change abortion laws or policies in foreign countries. The Senate,
on the other hand, rejected in most cases House provisions dealing with Mexico City
policy, favoring a position that left these decisions in the hands of the

Administration. Unable to reach an agreement satisfactory to both sides, Congress
adopted interim arrangements during this period that did not resolve the broad
population program controversy, but permitted the stalled Foreign Operations
measure to move forward. The annual “compromise” removed House-added Mexico
City restrictions, but reduced population assistance to $385 million, and in several
years, “metered” the availability of the funds at a rate of one-twelfth of the $385
million per month.
In FY2000, when the issue became linked with the separate foreign policy
matter of paying U.S. arrears owed to the United Nations, a reluctant President
Clinton agreed to a modified version of abortion restrictions, marking the first time
that Mexico City conditions had been included in legislation signed by the President
(enacted in the Foreign Operations Act for FY2000, H.R. 3422, incorporated into
H.R. 3194, the Consolidated Appropriations Act for FY2000, P.L. 106-113).
Because the President could waive the restrictions for $15 million in grants to
organizations that refused to certify, there was no major impact on USAID family
planning programs in FY2000, other than the reduction of $12.5 million in
population assistance that the legislation required if the White House exercised the
waiver authority.
When Congress again came to an impasse in FY2001, lawmakers agreed to
allow the new President to set policy. Under the FY2001 Foreign Operations
measure, none of the $425 million appropriation could be obligated until after
February 15, 2001.
Subsequently, on January 22, 2001, two days after taking office, President Bush
issued a Memorandum to the USAID Administrator rescinding the 1993
memorandum from President Clinton and directing the Administrator to “reinstate
in full all of the requirements of the Mexico City Policy in effect on January 19,
1993.” The President further said that it was his “conviction that taxpayer funds
should not be used to pay for abortions or to advocate or actively promote abortion,
either here or abroad.” A separate statement from the President’s press secretary
stated that President Bush was “committed to maintaining the $425 million funding
level” for population assistance “because he knows that one of the best ways to
prevent abortion is by providing quality voluntary family planning services.” The
press secretary further emphasized that it was the intent that any restrictions “do not
limit organizations from treating injuries or illnesses caused by legal or illegal
abortions, for example, post abortion care.” On February 15, 2001, the day on which
FY2001 population aid funds became available for obligation, USAID issued specific
policy language and contract clauses to implement the President’s directive. The
guidelines are nearly identical to those used in the 1980s and early 1990s when the
Mexico City policy applied.
Critics of the certification requirement oppose it on several grounds. They
believe that family planning organizations may cut back on services because they are
unsure of the full implications of the restrictions and do not want to risk losing
eligibility for USAID funding. This, they contend, will lead to higher numbers of
unwanted pregnancies and possibly more abortions. Opponents also believe the new
conditions undermine relations between the U.S. Government and foreign NGOs and
multilateral groups, creating a situation in which the United States challenges their

decisions on how to spend their own money. They further argue that U.S. policy
imposes a so-called “gag” order on the ability of foreign NGOs and multilateral
groups to promote changes to abortion laws and regulations in developing nations.
This would be unconstitutional if applied to American groups working in the United
States, critics note.
Supporters of the certification requirement argue that even though permanent
law bans USAID funds from being used to perform or promote abortions, money is
fungible; organizations receiving American-taxpayer funding can simply use USAID
resources for permitted activities while diverting money raised from other sources to
perform abortions or lobby to change abortion laws and regulations. The certification
process, they contend, closes the fungibility “loophole.”
Since reinstatement of the Mexico City policy in early 2001, several bills have
been introduced to reverse the policy, but except for language included in the Senate
FY2004 Foreign Operations appropriations bill (see below), none has passed either
the House or Senate, and no measure has been enacted into law.
Congressional Action. On July 23, the House approved in H.R. 2800 $425
million for bilateral family planning programs, as requested. For UNFPA
contributions, the House bill provided $25 million, available only under certain
conditions:
^!none of the funds can be used in China;
^!funds must be maintained by UNFPA in a separate account and may
not commingle amounts;
^!UNFPA does not perform abortions;
^!UNFPA does not provide any resources for the Chinese State
Planned-Birth Commission or its regional affiliates; and
^!U.S. contributions will be reduced by whatever amount, if any,
UNFPA spends in China.
In addition, the terms of the Kemp-Kasten amendment continued to apply, the terms
of which resulted in a cut-off of U.S. contributions in FY2002.
On July 17, the Senate Appropriations Committee approved its FY2004 Foreign
Operations (S. 1426), including several significant changes regarding international
family planning funding and policy that were opposed by the Administration. (The
Senate, on October 30, subsequently passed the legislation, approving the House bill,
H.R. 2800, without making changes to the Committee-reported text concerning
international family planning issues.)
For bilateral family planning activities, the Senate bill provided $445 million,
$20 million above the President’s request. In Section 691, the bill effectively
reversed the Administration’s Mexico City policy. Specifically, the provision stated
that foreign NGOs shall not be declared ineligible for U.S. funds solely on the basis
of health or medical services they provide (including counseling and referral services)
with non-U.S. government funds. This exemption would apply so long as the
services do not violate the law of the country in which they are performed and that
they would not violate U.S. laws if provided in the United States. Section 691 further

provided that non-U.S. government funds used by foreign NGOs for advocacy and
lobbying activities would be subject to conditions that also apply to U.S. NGOs.
Since it is largely held that American NGOs would not be subject to these restrictions
under the Constitutional protection of free speech, it was possible that this latter
exemption would have lifted current prohibitions that apply to overseas NGOs. In
the White House “Statement of Administration Policy” for S. 1426, the executive
said that the President would veto the bill if it included this provision.
For UNFPA, the Senate bill provided $35 million in FY2004, but made these
funds, together with those appropriated for FY2002 and FY2003, subject to Kemp-
Kasten limitations and current restrictions that apply in FY2003.
The conference agreement on H.R. 2673, the Consolidated Appropriations Act,

2004 (P.L. 108-199), within which Foreign Operations is included as Division D,

earmarks $432 million for bilateral family planning assistance, $7 million higher than
the request, deletes the Senate provision reversing the Mexico City policy, and
modifies House and Senate-passed text regarding UNFPA.
For UNFPA, the legislation earmarks $34 million, subject, however, to the
Kemp-Kasten conditions that resulted in the withholding of funds the past two years.
More specifically, the bill specifies that:
^!none of the funds can be used in China;
^!funds must be maintained by UNFPA in a separate account and may
not be commingled with other sums; and
^!UNFPA does not perform abortions;
The conference agreement further directs how the previously withheld money will
be disbursed, thereby resolving a long-standing dispute over whether to commit these
resources to other development programs or place them in a reserve account in case
UNFPA again becomes eligible for U.S. support. H.R. 2673 specifies that the $34
million withheld in FY2002 shall be used for family planning programs in twelve
countries, including Congo, Ethiopia, Uganda, Haiti, and Russia. The $25 million
in FY2003 funds that was earmarked but not transferred to UNFPA will now be
made available for a new initiative within the Child Survival and Health account
assisting young women, mothers, and children who are victims of trafficking in
persons.
In authorizing legislation related to portions of the Foreign Operations
appropriation bill, the House voted on July 15 (216-211) to delete a committee-
approved amendment added to H.R. 1950 that sought to restore U.S. funding to
UNFPA. On May 8, the International Relations Committee had approved a provision
offered by Congressman Crowley that authorized $50 million for a U.S. contribution
to UNFPA for each of FY2004 and FY2005. The Crowley amendment further would
have altered existing law for determining UNFPA eligibility by requiring that the
President find that UNFPA does not “directly” support or participate in coercive or
involuntary activities. This would appear to make it more difficult for the President
to block funding for UNFPA than under conditions that apply for this year. Not only
would the Crowley amendment have added the word “directly,” but also defined the
circumstances under which UNFPA would be found ineligible as “knowingly and

intentionally working with a purpose to continue, advance or expand the practice of
coercive abortion or involuntary sterilization, or playing a primary and essential role
in a coercive or involuntary aspect of a country’s family planning program.”
In another authorizing bill — S. 925, the Foreign Relations Authorization for
FY2004 — the Senate added on July 9 an amendment by Senator Boxer that, like S.
1426, would effectively reject the President’s Mexico City policy. Senate opponents
had tried to table the Boxer amendment, an effort that failed on a vote of 43-53. The
Administration strongly opposes the Boxer amendment and says the President would
veto the bill if it remains in the legislation. The Senate has not resumed
consideration of S. 925.
Afghanistan Reconstruction⁶
Congress considered simultaneous requests in 2003 for additional reconstruction
aid for Afghanistan. In the regular FY2004 Foreign Operations budget proposal,
submitted in February 2003, the Administration asked for $550 million for economic
and military support for Kabul. More recently, as part of the President’s $87 billion
FY2004 supplemental request, most of which would support U.S. military operations
in Iraq and Afghanistan, and Iraq reconstruction, the White House proposed $799
million additional aid for Afghanistan. (The Administration further planned to re-
program $390 million prior year DOD, State Department, and USAID appropriations
for Afghan reconstruction.) The Emergency Supplemental Appropriations Act for
Defense and Reconstruction of Iraq and Afghanistan (P.L. 108-106) appropriated
$1.164 billion to Afghanistan. The Consolidated Appropriations Act, 2004 (H.R.
2673; P.L. 108-199), within which FY2004 Foreign Operations regular spending was
incorporated, provides $405 million for humanitarian and reconstruction assistance
to Afghanistan. This brings the total FY2004 aid package for Afghanistan to nearly
$1.6 billion.
The conditions in Afghanistan represent a challenging mix of ongoing security
concerns, infrastructure destruction, and humanitarian needs likely requiring a robust
and sustained intervention. While the hunt for Al Qaeda forces within Afghanistan
continues, transitional and reconstruction assistance are well underway. An
examination of the progress of reconstruction efforts and aid priorities since
December 2001 reveals the complexity of the tasks at hand and the important roles
to be played by the United States and the international community. The case of
Afghanistan may present a special category of international crisis response, in which
the United States and others pursue the war on terrorism in a country while
simultaneously providing humanitarian and reconstruction assistance.
So far, the international community has continued to provide large amounts of
aid and resources for the reconstruction effort. A long-term commitment will likely
be necessary to ensure that a stable, democratic Afghanistan emerges and will not fall
prey to the twin evils of drugs and terrorism. The outcomes of the international
donors conference in January 2002 and other donor conferences since then indicate
a strong willingness on the part of the international community to assist in the

⁶ This section was prepared by Rhoda Margesson.

restoration of Afghanistan. However, reconstruction costs are estimated by some to
be more than $15-$30 billion over the next decade.
Current Operating Environment. Key developments since September 11,
2001 and the collapse of the Taliban focus on three main pillars: First, the
development of plans for security including the presence of an International Security
Assistance Force (ISAF), the establishment and training of an Afghan National Army
and police force, the demobilization of private militias, and the formation of
provincial reconstruction teams; second, establishing the political framework through
the Bonn Conference and Afghanistan Interim Administration (AIA), the loya jirga
and Islamic Transitional Government of Afghanistan (ITGA), and renewed
diplomatic ties with the international community; and third, the creation of a strategy
for reconstruction beginning with the Tokyo Reconstruction Conference in January
2002. The current operating environment continues to highlight the importance of
these three themes and the work that remains to be done to assure Afghanistan’s
recovery.
The most serious challenge facing Afghanistan today is the lack of security.
Former commanders maintain control over their own areas and continue fighting with
their rivals, making difficult the extension of control by the national government, the
provision of humanitarian assistance, and progress on reconstruction. The ISAF,
created by the Bonn agreement, has reached its agreed strength of about 5,500.
NATO assumed command of the 30-nation force in August 2003. Because of
ongoing threats to Afghanistan’s internal security, there have been calls for ISAF
expansion and deployment to other cities. In October 2003, the U.N. Security
Council formally backed an expansion of ISAF outside of Kabul by adopting
Resolution 1510.
U.S. forces, with participation from French and British forces, are continuing
to train a new Afghan National Army that it is hoped will ultimately allow the Kabul
government to maintain security on its own, and enable foreign forces to depart
Afghanistan. The targeted size of the army is 70,000, but it is expected to take
several years to achieve full strength. With the continued fighting and insecurity, the
Japan and UN-led process of demobilization and integration of combatants has also
been slow.
Ensuring a secure environment for reconstruction gained greater attention with
an initiative by the Pentagon to expand the role of the U.S. military in Afghanistan.
In December 2002, DOD announced that it would be setting up “provincial
reconstruction teams” (PRTs), composed of U.S. combat and civil affairs officers,
to provide security for reconstruction workers and to extend the influence of the
Kabul government. Plans call for eight to ten PRTs. Six of these PRTs are already
in operation (including one run by Britain, one by New Zealand, and one by
Germany) and observers say NGOs are gravitating to areas where they are present
due to improved security. This marks a departure from the previous policy of relying
solely on security through the development of an Afghan national army or expansion
of the ISAF, and engages U.S. forces beyond military action to oust the Taliban and
Al Qaeda.

Still, factional fighting and increased criminal activity have undermined relief
and reconstruction operations. In some cases, where operations were directly
targeted, this has led to the temporary suspension of U.N. missions or withdrawal of
aid agencies from certain areas. The United Nations has begun a database to record
national security incidents and to provide more effective, timely information and
situation assessments to the aid community.
The strength and influence of the central government is viewed as a key factor
that will determine the success of the intervention and assistance on the part of the
international community. Humanitarian and reconstruction programs face the
challenge of maintaining their foothold despite the complex humanitarian
requirements (such as population returns and resettlement, food security, shelter, and
winter assistance) and reconstruction problems (such as rebuilding the infrastructure,
economy and agricultural base; addressing landmines and environmental damage;
and reestablishing health, education, and community centers.) Afghanistan is
beginning to prepare for presidential elections to take place in 2004, followed by
parliamentary elections one year later. A loya jirga began in mid December 2003 to
consider a draft permanent constitution that was publicly unveiled on November 3.
After a constitution is adopted, U.S., Afghan, and international attention will turn to
the holding of elections.
Apart from the security problems, the current operating environment presents
a number of other urgent challenges. The collapsed infrastructure, rugged terrain, and
extreme weather are significant factors with regard to access, food aid, logistics,
reconstruction and must be understood in the context of the continuing vast numbers
of refugees and IDPs, the differences among the regions in which they are located,
and the political and security situation throughout the country. There is a need for
stronger links between humanitarian and reconstruction projects so that Afghans can
begin to move beyond initial reintegration to more permanent resettlement. UNHCR
continues to assist refugees and IDPs, although some have raised concerns that the
infrastructure may not yet be able to support this many returnees.
The United States has international help in carrying out the reconstruction of
Afghanistan. The United States is training the new army and about 9,000 U.S. troops
continue to combat Taliban/Al Qaeda remnants. The U.S. Treasury Department is
advising the government on its budget and other financial affairs. Among
contributions by other countries, Italy is providing advice on judicial reform and
Germany is helping establish a national police force. The United States, Japan and
Saudi Arabia are financing the rebuilding of the Kabul-Qandahar-Herat major
roadway.
There have been some reports that Afghanistan officials have complained about
the slow pace at which pledged funds were being paid. In a similar vein, in the past
the United States has been critical of other donors for not meeting their “fair share”
of the cost of recovery and for not doing enough on a multilateral level. On the one
hand, determining the “fair share” of the costs of reconstruction for any one country
or group of countries varies from conflict to conflict and depends in part on the
resources being spent on conflicts elsewhere. On the other hand, the way in which
funds are distributed — be it multilaterally through U.N. agencies or bilaterally with
funds supporting international organizations and NGOs directly — has a direct

impact on implementation. Others are concerned that international donors might
shift their focus to Iraq reconstruction, and lose interest or run too low on resources
to continue to participate in Afghan reconstruction.
If progress on security, road construction, and reconstruction efforts are made
in advance of the planned 2004 elections, it could increase the chances of the success
of moderates in those elections. Additional funding could also have an impact on
decisions by the international community possibly resulting in larger contributions.
It could also help efforts of the Afghan government to expand ISAF, which is now
limited only to Kabul.
Increased funding could also have negative implications. There are concerns
that it could add to the already high levels of corruption. Some experts are concerned
about absorption capacity and whether additional funds can be allocated quickly and
effectively. If progress is not achieved, the increase could be seen as largely
symbolic and ineffective. Others have raised the possibility that the United States
will be seen giving too much support to the Karzai government in advance of the

2004 elections.

Tokyo Pledging Conference. The International Conference on
Reconstruction Assistance to Afghanistan held in Tokyo in January 2002 gave the
Afghan Interim Authority (AIA) a chance to demonstrate its commitment to the next
phase of Afghanistan’s recovery and provided the international donor community an
opportunity to come together and formally demonstrate support for this initiative.
The sixty-one countries and twenty-one international organizations represented
pledged $1.8 billion for 2002. The U.S. government pledged $297 million, drawn
from existing sources — either from the $40 billion Emergency Terrorism Response
supplemental (P.L. 107-38) that was passed shortly after the September 11, 2001
attacks or from regular FY2002 appropriations. The total pledged at Tokyo was $4.5
billion, with some states making pledges over multiple years and commitments to be
carried out in different time frames. Some countries offered support in kind but
placed no monetary value on that.
Subsequent U.S. Aid Transfers, FY2002 and FY2003. Since the Tokyo
pledging conference, through supplemental and regular appropriation bills, Congress
has approved an additional $970 million in U.S. assistance to Afghanistan, making
Kabul one of the largest recipients of American aid. An emergency FY2002
supplemental measure (P.L. 107-206) added $258 million for Afghanistan to amounts
previously allocated, bringing the total amount of U.S. assistance in FY2002 to $686
million, well in excess of funding pledged at the Tokyo conference. In FY2003,
Congress passed in regular (P.L. 108-7) and supplemental (P.L. 108-11)
appropriation acts over $700 million, of which $647 million came under Foreign
Operations programs. In each of these actions, Congress increased levels beyond
those requested by the Administration. The $40 million add-on in P.L. 108-11
allowed USAID to accelerate the Kabul-Qandahar-Herat road construction project
that is jointly financed with Japan and Saudi Arabia.
In related legislation, the Afghanistan Freedom Support Act of 2002 (P.L. 107-
327, S. 2712), passed by Congress on November 15, 2002, and signed by the
President on December 4, 2002, authorizes an additional $3.3 billion for Afghanistan

over four years. Included is $2 billion for humanitarian, reconstruction, and
enterprise fund assistance through FY2006 and $300 million in drawdown from U.S.
military stocks of defense articles and equipment for Afghanistan and other countries
and organizations participating in restoring Afghan security. The legislation also
includes a Sense of Congress that calls for an expanded International Security
Assistance Force with an authorization of an additional $1 billion over two years.
FY2004 Regular Afghanistan Aid Request. For FY2004 Regular
Appropriations, the Administration requested $550 million for Afghanistan.
Although the FY2004 proposal was less than for FY2002 and FY2003, when funding
for humanitarian programs in FY2004 (food, refugees, disaster relief) are added, the
total sum is nearer the aid amounts of previous years. (Humanitarian funds are
usually not allocated on a country basis until the fiscal year begins.)
FY2004 Supplemental Request. Subsequently, as part of an $87 billion
FY2004 supplemental proposal, mainly to fund continuing military operations and
reconstruction programs in Iraq, the Administration’s requested in September 2003
$1.2 billion in additional Afghanistan assistance. Of the total, $799 million would
be for new appropriations and $390 million would come from previously
appropriated DOD, State Department, and USAID funds. The new funding more
than doubled U.S. assistance to Afghanistan in FY2003. The proposal came at a time
of growing criticism over delays in aid delivery, deteriorating security conditions, and
concern that U.S. and international attention was shifted to Iraq. Key features of the
$799 million in new appropriation included targeting projects that would have the
most immediate impact on the lives of the Afghan population, such as:
^!$402 million for security, with funding included to train and support
police, border patrol, the military and counter-narcotics forces,
disarmament and de-mobilization programs, and courthouse
construction in Kabul;
^!$129 million to reinforce the authority of the Government of
Afghanistan with budget support for high priority projects, technical
experts placed in Afghan ministries, and voter registration and
election support;
^!$105 million for completion of the Kabul-Kandahar-Herat major
highway, a program jointly financed by the United States, Japan, and
Saudi Arabia; and
^!$163 million for social programs and critical infrastructure,
including education, health, and local projects.
An additional $390 million was planned to come from reallocated, prior-year funds,
but the Administration did not specified how they would be used. The White House
also asked that the $300 million limit on military drawdowns from DOD stocks
enacted in the Afghanistan Freedom Support Act of 2002 (P.L. 107-327) be increased
to $600 million.
Congressional Action
FY2004 Regular Afghanistan Appropriation.In mid-July 2003, the
House approved not less than $600 million for Afghan reconstruction in FY2004 in

the Foreign Operations funding measure (H.R. 2800). This level was $50 million
higher than the Administration’s request, although the President’s proposal did not
reflect funds drawn from the refugee and disaster relief Foreign Operations accounts
which could count towards the $600 million House target. The House
Appropriations Committee further urged the State Department Coordinator of
Assistance to Afghanistan and USAID to allocate at least $10 million ($5 million
from funds in H.R. 2800) to support Afghan women, to include the construction of
17 Women’s Centers that provide legal and protective services, computer and literacy
classes, and vocational courses.
The Senate measure — S. 1426, as amended and passed as H.R. 2800 — also
provided $600 million. The Senate Appropriations Committee highlighted several
aspects of U.S. reconstruction efforts for continued support: training for the Afghan
National Army and national police, combating narcotics production, bolstering
democratic institutions, protecting and strengthening opportunities for Afghan
women in the economy and politics of the country, including support for women-led
Afghan NGOs, supporting the Afghan Human Rights Commission and the Judicial
Reform Commission, targeting aid on Afghan communities and families who were
victims of military operations, and removing mines, ordnance, and munitions in
Afghanistan.
Subsequently, Foreign Operations spending was incorporated as Division D into
the Consolidated Appropriations Act, 2004, (H.R. 2673) legislation that includes 7
appropriation measures for FY2004. The enacted text of H.R. 2673 provides $405
million be made available for humanitarian and reconstruction assistance for
Afghanistan. Because of the nearly $400 million in additional funds over the
President’s request for Afghanistan provided in the FY2004 Iraq/Afghanistan
reconstruction supplemental (see below), conferees could reduce amounts in the
regular Foreign Operations measure for Afghanistan below the $600 million
recommended in House and Senate-passed bills and still meet or exceed the
Administration’s aid recommendation. (See Table 16.)
Table 16. U.S. Assistance to Afghanistan, FY2002-FY2004
($s millions)
^FY²⁰⁰²^FY²⁰⁰³^FY²⁰⁰³^FY²⁰⁰³^FY²⁰⁰⁴^FY²⁰⁰⁴^FY²⁰⁰⁴
^Actua^l^Reg^u^la^r^Supp^To^t^a^l^Supp^Reg^u^la^r*^To^t^a^l
^D^e^v^e^l^opm^en^t^/^H^eal^t^h^39.7^89.9^—^89.9^—^171.0^171.0
^Dⁱ^s^a^s^t^{er rel}ⁱ^e^f^191.0^94.0^—^94.0^—^35.0^35.0
^F^{ood ai}^d^159.5^26.7^—^26.7^—^—^0.0
^R^e^f^u^g^{ee rel}ⁱ^e^f^—^55.0^—^55.0^—^72.0^72.0
^Econ^omⁱ^c^-^E^S^F^105.3^49.5^167.0^216.5^672.0^75.0^747.0
^Aⁿ^ti-^ter^r^o^rⁱ^sm^/^43.4⁵^.0^28.0^33.0^35.0^—^35.0
^D^e^mⁱⁿⁱ^ng
^Nar^c^o^tics/L^a^w^66.0^—^—^0.0^170.0^—^170.0
^En^f^o^rcem^en^t
^Military^aid^57.3^21.3^170.0^191.3^287.0^50.0^337.0

^FY²⁰⁰²^FY²⁰⁰³^FY²⁰⁰³^FY²⁰⁰³^FY²⁰⁰⁴^FY²⁰⁰⁴^FY²⁰⁰⁴
^Actua^l^Reg^u^la^r^Supp^To^t^a^l^Supp^Reg^u^la^r*^To^t^a^l
^P^eacek^eepin^g^23.9⁴^.9^—^4.9 ^a^—⁰^.⁰
^Oth^e^r^—^—^—^—^—²^.⁰²^.0
^T^O^T^A^L^686.1^346.3^365.0^711.3¹^,164.0^405.0^b^1,567.0
^*^A^m^o^uⁿ^t^s^ref^l^ect^l^e^v^e^l^s^provⁱ^d^{ed i}ⁿ^t^h^{e C}^oⁿ^s^olⁱ^d^at^{ed A}^ppropri^a^tⁱ^oⁿ^s^A^c^t^,^{2004 (H}^.R^{. 2673;}^P.L^.^108-^199).
^{a. T}^h^{e FY2004 s}^u^pplem^en^{tal prov}^ides^{$50 m}^illion^f^o^{r peacek}^eepin^g^activ^itiesⁱⁿ^both^{Iraq an}^{d A}^f^g^h^aⁿⁱ^s^t^an^.
^{b. T}^h^{e C}^oⁿ^s^{olidated A}^ppropriation^s^A^c^{t, 2004, earm}^a^rk^s^{$405 m}^illion^f^o^{r A}^f^g^h^aⁿⁱ^s^t^an^{. T}^h^{e s}^p^ecifⁱ^{c accou}ⁿ^t^allocation^s
^lis^{ted in}^th^{e con}^f^eren^{ce report’}^s^Statem^en^{t of}^Man^a^g^e^rs^{, h}^o^w^e^v^e^{r, totals}^{$403 m}^illion^.
In addition to specifying how the $405 million should be allocated across
various Foreign Operations bill accounts, conferees earmarked amounts for several
priority activities within these accounts:
^!$2 million for reforestation activities;
^!$2 million for the Afghan Judicial Reform Commission;
^!$5 million to support the needs of Afghan women; and
^!$2 million to assist Afghan communities and families suffering
losses as a result of military operations
Because Congress appropriated higher-than-requested amounts for counter narcotics,
law enforcement, and peacekeeping programs in the FY2004 reconstruction
supplemental appropriation (P.L. 108-106), conferees did not provide funding for
these activities in H.R. 2673.
FY2004 Supplemental. S. 1689, as passed the Senate on October 17,
approved the President’s $799 million Afghan reconstruction proposal largely along
the lines proposed (See Table 17). The House measure (H.R. 3289), which also
cleared on October 17, increased spending in Afghanistan to $1.174 billion. The
add-ons for Kabul come from transfers in what House lawmakers deemed to be low
priority items requested for Iraq. House and Senate conferees agreed on October 29
to fund Afghan reconstruction at roughly the higher House-approved levels.
Table 17. Afghanistan FY2004 Supplemental: Sector Allocation
($ in millions)
Sect or/ P rogram Request Senat e H ouse Enact ed
Economic Reconstruction:
Disarmament, Demobilization,$60$60$30$30
Reintegration
Govt of Afghanistan support$37$37$70$70
Elections/Governance $37 $37 $69 $69
^aa
Experts/Policy $20 $20
Roads $105 $105 $191 $181
Schools/Education $40 $40 $95 $95

Sect or/ P rogram Request Senat e H ouse Enact ed
Health Services and Clinics$28$28$49$49
Provincial Reconstruction Teams$50$50$50$58
Private Sector/Power Generation$45$45$95$95
Water Projects — — $23$23
Economic Reconstruction Total$422$422$672$672
Security/Military Assistance:
Police/Rule of Law$120$120$170$170
Afghan National Army$222$222$297$287
Karzai Protection/Anti-Terrorism$35$35$35$35
Security/Military Aid Total$377$377$502$492
TOTAL, Afghanistan^b$799$799$1,174$1,164
^{a. T}^h^{e Ho}^u^s^{e b}^{ill an}^d^coⁿ^f^er^en^c^e^a^g^r^eem^en^{t in}^clu^d^ed^f^uⁿ^dⁱⁿ^g^f^o^r^Ex^p^e^r^t^{s an}^d^P^o^licy^w^ithⁱⁿ^th^e
^categ^ory^of^Election^s^an^{d Im}^prov^{ed Gov}^e^rn^an^ce.
^{b. T}^o^{tal does}ⁿ^o^tⁱⁿ^clu^d^e^$61^m^illion^prov^ided^by^th^{e Sen}^a^{te f}^o^{r a USA}^I^{D in}^terim^f^acilityⁱⁿ^Kabu^l,
^$⁴⁴^m^illioⁿ^p^r^o^v^id^edⁱⁿ^th^{e Ho}^u^s^{e b}^{ill f}^o^r^an^anⁿ^e^x^to^th^{e U.S. em}^b^a^ssyⁱⁿ^Kab^u^l,^o^r^$56.6
^m^illioⁿ^p^r^o^v^id^edⁱⁿ^th^{e co}ⁿ^f^er^en^{ce ag}^r^eem^en^{t f}^o^r^USA^I^{D o}^p^e^r^a^tin^g^ex^p^eⁿ^s^{es in}^A^f^g^h^aⁿⁱ^stan^,
^{a USA}^I^{D in}^terⁱ^m^f^acilityⁱⁿ^Kab^u^{l, an}^d^th^{e USA}^I^{D I}ⁿ^sp^ecto^r^Gen^e^r^a^l.
As shown in Table 17, the enacted legislation increased the overall
reconstruction funding from new appropriations by $365 million with significant
changes over the Administration’s request in allocations for infrastructure
(particularly power generation and road construction), governance, and social
services. Of note, the legislation included a $60 million ESF earmark for women’s
programs, including technical and vocational education, programs for women and
girls against sexual abuse and trafficking, shelters for women and girls, humanitarian
assistance for widows, support of women-led NGOs, and programs for and training
on women’s rights. (For more details on the Afghan supplemental issue, see CRS
Report 32090, FY2004 Supplemental Appropriations for Iraq, Afghanistan, and the
Global War on Terrorism: Military Operations and Reconstruction Assistance.)
Iraq Reconstruction⁷
Responding to mounting concerns regarding delays, impact, and expansion of
Iraq reconstruction activities, President Bush submitted to Congress on September
17, 2003, a $20.3 billion request in additional Iraq reconstruction and security
funding. The resources were part of an $87 billion package covering U.S. military
costs and smaller amounts for accelerating rehabilitation efforts in Afghanistan. This
new supplemental followed earlier approval in April of roughly $3 billion for the
purposes of relief and reconstruction in Iraq in the Emergency Wartime Supplemental
Appropriations Act, 2003 (P.L. 108-11; H.R. 1559). Of the total provided in P.L.

⁷ This section was prepared by Curt Tarnoff and Rhoda Margesson.

108-11, $2.48 billion was placed in a special Iraq Relief and Reconstruction Fund
supporting efforts in a wide range of sectors, including water and sanitation, food,
electricity, education, and rule of law. The FY2003 supplemental also provided
$489.3 million through the Department of Defense budget for repair of oil facilities.
FY2004 Supplemental Proposal
The FY2004 supplemental was intended to fund the most pressing, immediate
needs in Iraq, with the aim of having a noticeable impact on the two greatest
reconstruction concerns that have been raised since the occupation of Iraq began —
security and infrastructure. More than $5 billion would be targeted at improving the
security capabilities of the Iraqi people and government — including training and
equipment for border, customs, police, and fire personnel, and to develop a new Iraqi
army and a Civil Defense Corps. Enhanced efforts to reform the judicial system
would also be made.
Most of the remaining supplemental reconstruction request would go toward
rapid improvements in infrastructure, including electricity, oil infrastructure, water
and sewerage, transportation, telecommunications, housing, roads, bridges, and
hospitals and health clinics. These, according to Administration officials,
represented the most urgent needs over the next 12 months, but by no means
addressed total reconstruction requirements in 2004. Other concerns in such areas
of government reform, agriculture, economic development, education, and civil
society were not included in the Administration request. A relatively small amount
of funds — $300 million — were requested for programs designed to encourage the
growth of the private sector and jobs training.
Table 18. Iraq Supplemental: Sector Allocation
(billions of dollars)
Sect or Request Senat e H ouse Enact ed
Security$5.136$4.561$4.561 ^a$4.561
Public safety, including border$2.100 — — —
enforcement, police, fire, & customs
Security forces and Iraq Civil Defense$2.100 — — —
Corps
Justice and civil society development$0.900 — — —
Reconstruction $15.168 $13.888 $14.088 $13.878
Electric power rehabilitation$5.675$5.560$5.560^b$5.560^b
Oil infrastructure rehabilitation$2.100$1.900$2.100$1.890^c
Water and sewerage services repair$3.710$4.332 ^d$4.332^de$3.557
and improvement
^dd^e
Water resources improvement$0.875$0.775
Transportation and$0.835$0.500$0.500^f$0.500^f

telecommunications rehabilitation

Sect or Request Senat e H ouse Enact ed
Housing, building, road, and bridge$0.470$0.370$0.370^g$0.370^g
repair/reconstruction
Health facility construction and$0.850$0.793$0.793^h$0.793^h
medical equipment replacement
Private sector business initiatives and$0.353$0.153$0.153ⁱ$0.153ⁱ
job training programs
Refugee aid, local governance, other$0.300$0.280$0.280^j$0.280^j
human rights/civil society
TOTAL $20.304 $18.449 $18.649 $18.439
^Source:^Of^fⁱ^{ce of}^th^{e C}^o^alition^P^r^ov^is^ion^a^{l A}^u^th^ority^R^e^p^r^e^s^eⁿ^tativ^{e, Septem}^{ber 8, 2003, OMB}^,
^F^Y^{2004 S}^u^ppl^em^en^t^a^l^A^ppropri^a^tⁱ^oⁿ^requ^es^t^,^Se^p^t^em^{ber 17, 2003, an}^{d H}^o^u^s^{e an}^{d S}^eⁿ^a^t^e
^A^p^p^r^o^p^r^iatioⁿ^Co^m^m^ittees.
^{a. T}^h^{e con}^f^eren^{ce ag}^reem^en^t^ex^clu^d^{ed $50 m}^illioⁿ^f^o^{r Iraq traf}^fⁱ^{c police,}^redu^{ced by}^{$300 m}^illion
^f^uⁿ^dⁱⁿ^g^f^o^{r t}^w^{o pri}^s^on^s^,^an^{d redu}^{ced s}^e^v^e^ral^ot^h^e^{r i}^t^e^m^s^.
^{b. Ex}^clu^d^{ed $25 m}^illion^f^o^{r con}^s^u^ltan^t^s^to^plan^f^o^r^con^tin^u^e^d^dev^e^lopm^en^{t an}^{d bu}^ildin^g^reh^a^bilitation
^an^{d redu}^{ced am}^ouⁿ^t^s^f^o^{r electric g}^eⁿ^e^ration^.
^{c. R}^e^du^{ced f}^uⁿ^d^s^f^o^{r em}^erg^eⁿ^c^y^s^u^pplies^of^refⁱⁿ^e^{d oil petroleu}^m^produ^cts^by^{$210 m}^illion^.
^d^.^Ho^u^s^{e an}^d^Sen^a^{te b}^{ills co}^m^bⁱⁿ^ed^th^{e categ}^o^r^{ies o}^f^W^a^ter^an^d^sew^e^r^a^g^e^ser^v^ice^s^aⁿ^d^W^a^ter
^res^o^u^r^ces^{. T}^h^e^H^o^us^{e am}^ouⁿ^t^ex^clu^d^{ed $153 m}^illion^f^o^{r s}^o^{lid w}^a^s^t^{e m}^aⁿ^a^g^e^m^eⁿ^t^{, in}^clu^dⁱⁿ^g
^{40 tras}^h^tru^c^k^s^an^{d $100 m}^illion^f^o^{r en}^vⁱ^ron^m^en^{tal res}^t^oration^(m^ars^h^{) proj}^ects^.
^{e. T}^h^{e con}^f^eren^{ce ag}^reem^en^{t ex}^clu^d^{ed $153 m}^illion^f^o^{r s}^o^{lid w}^a^s^t^{e m}^aⁿ^a^g^e^m^eⁿ^t^,ⁱⁿ^clu^dⁱⁿ^g^{40 tras}^h
^tru^c^k^s^an^{d $100 m}^illion^f^o^{r en}^vⁱ^ron^m^en^{tal res}^t^oration^(m^ars^h^{) proj}^ects^.
^f^.^Ex^clu^d^ed^$⁴^m^illioⁿ^f^o^r^{a n}^a^tioⁿ^w^id^{e telep}^h^oⁿ^{e n}^u^m^b^e^rⁱⁿ^g^sy^stem^{, $}⁹^m^illioⁿ^f^o^r^p^o^s^{tal in}^f^o^r^m^atioⁿ
^arch^itectu^r^{e an}^{d zip codes}^,^an^{d $10 m}^illion^f^o^{r te}^levⁱ^sⁱ^on^an^{d radio in}^du^s^t^ry^m^odern^ization^.
^g^.^Ex^clu^d^{ed $100 m}^illion^f^o^{r s}^e^v^eⁿ^h^o^u^sⁱⁿ^g^com^m^uⁿ^ities^.
^h^.^Ex^clu^d^{ed $150 m}^illion^f^o^{r a ch}^ildren^’^s^h^o^s^pⁱ^t^a^lⁱⁿ^B^a^s^r^{a an}^{d $7 m}^illion^f^o^{r A}^m^erican^an^{d Iraqi}
^h^ealth^c^a^r^e^o^r^ga^nization^partn^e^rs^hⁱ^ps^{, bu}^{t in}^clu^d^{ed an}^addition^a^{l $100 m}^illion^f^o^{r clin}^ics^an^d
^h^o^sp^{ital m}^o^d^e^rⁿ^izatioⁿ^.
^{i. Ex}^clu^d^{ed $200 m}^illion^f^o^{r an}^A^m^erican^-^I^{raqi En}^terpris^e^Fuⁿ^d^{, bu}^{t added $45 m}^illⁱ^oⁿ^fo^r^mⁱ^cro-
^sm^a^ll-m^e^dⁱ^um^eⁿ^te^r^p^rⁱ^se^s.
^j^.^Ex^clu^d^ed^$90^m^illion^f^o^r^P^u^{blic In}^f^o^rm^ation^C^eⁿ^t^ersⁱⁿ^{Iraq m}^uⁿⁱ^cipalities^,^bu^{t added $90 m}^illion
^f^o^{r edu}^cation^.
Reconstruction Overview
Among the key policy objectives laid out by the Bush Administration in
conjunction with the war in Iraq were the restoration of basic human services and the
economic and political reconstruction of the country. While immediate overall
responsibility for the war and management of U.S. military activity in post-war Iraq
belongs to the Commander of U.S. Central Command, the Coalition Provisional
Authority (CPA) is responsible for the administration of Iraq and implementing
assistance efforts there. The Authority is headed by L. Paul Bremer, appointed by
the President on May 6. He reports to Defense Secretary Rumsfeld. The CPA is
staffed by officials from agencies throughout the U.S. government as well as
personnel from other coalition member nations. A Coalition Coordinating Council
provides liaison with NGOs, donor countries, and UN agencies and directs
humanitarian affairs.

The CPA has initiated a process intended to lead to Iraqi self-rule. It has
appointed a 25-member Iraqi Governing Council and provided it with specific
powers and duties, including the choosing of a cabinet to serve as ministers under the
supervision of CPA advisors and the responsibility to set in motion formulation of
a national constitution. It has encouraged establishment of councils in villages and
cities throughout the country to run local affairs and identify community needs. With
CPA funding and encouragement, institutions of civil and economic society have
been reconstituted. Schools, including universities, hospitals and health clinics, are
functioning. The oil-for-food program continues to provide basic foodstuffs. New
police and security forces are being trained. Programs to renovate and repair electric
power, water, oil production, roads and bridges, airports, and the seaport were
launched. Jobs programs have been instituted to help stimulate the economy and
lessen unemployment.
Although much has been accomplished since the U.S. occupation began in
April, the occupation authority in the view of many has failed to successfully
reestablish order and security, restore infrastructure, and introduce political and
economic reform, including Iraqi self-governance, in a timely manner. These
problems are interlinked; the successful conduct of much reconstruction work is
contingent on an environment of order and stability, and the lack of visible progress
in restoring basic infrastructure and institutions of security opens the door to political
discontent and opposition. The $20.3 billion supplemental request sought to address
those infrastructure and security concerns that have made insufficient progress and
on which other U.S. objectives in Iraq hinge.
Until mid-2003, the Administration had suggested that the cost of reconstruction
up to the end of 2003 could largely be met by Iraqi and already previously
appropriated U.S. resources. A national budget for Iraq covering the rest of the year,
announced by the CPA on July 7, estimated expenditures of $6.1 billion and the
creation of a Central bank currency reserve of $2.1 billion, for a total budget of $8.2
billion. New oil revenue, taxes, and profits from state owned enterprises would make
up $3.9 billion of these costs, according to the CPA’s analysis. The remaining deficit
of $4.3 billion would be covered by recently frozen and seized assets ($2.5 billion),
the Development Fund for Iraq ($1.2 billion), and $3 billion in already appropriated
U.S. assistance. Iraq was projected to have $1.1 billion remaining for reconstruction
by end of December 2003.
The Administration request suggested that a reassessment of Iraq’s immediate
reconstruction needs demanded greater outlays of revenue than projected in July. It
also suggested that presumed sources of additional revenue in 2004 — chiefly, oil
export production and international donor contributions — might not be as large as
originally anticipated. In any case, the result was a supplemental reconstruction
request nearly 20% larger than the size of the entire national budget for Iraq projected
on an annualized basis in early July.
Reconstruction Concerns and Critical Assessment.
Total Reconstruction Costs. As noted above, the supplemental request
was intended to meet only the most important, immediate needs in Iraq in the 2004
fiscal year. Until October 2003, the cost of Iraq reconstruction was based on

speculation and educated guesswork. However, as part of the lead-in to an
international donors conference held in Madrid on October 24, the World Bank and
the U.N. Development Program released a needs assessment they conducted of 14
Iraqi economic and social sectors.⁸ The Bank/UNDP assessments put the cost of
reconstruction for the 14 sectors at $36 billion over four years, a figure that does not
include $19.4 billion estimated by the CPA for security, oil, and other critical sectors
not covered by the Bank assessments.⁹ Total Bank/CPA projected reconstruction
costs through 2007 amount to $55 billion, $17.5 billion in 2004 alone. If Iraqi oil
revenues are not sufficient to meet the projected needs — which appears likely in the
near term by most accounts — and other international donors do not pledge
significant contributions, the United States may face increased financial demands, if
it seeks to meet projected Iraqi needs.
Iraqi Oil Revenues and Financing Reconstruction. Until mid-2003, the
Administration had expected most costs of reconstruction to be borne by Iraq through
receipts from its oil exports. While the decrepit state of oil production infrastructure
and recurrent sabotage to pipelines and facilities have forced experts to downgrade
expectations of potential exports and receipts, any sustained increase in production
will assist the reconstruction effort. Current rates of production are nearing 2 million
barrels/day, but Iraqis do not expect to reach 2.5 million barrels until spring and 3
million until the end of 2004. Administration estimates of the prewar level range
between 2.5 and 3 million barrels. Ambassador Bremer indicated at a Senate hearing
on September 22 that he expected Iraq to produce sufficient oil in 2005 to take care
of its basic needs and provide additional funds for capital investment.¹⁰
Undersecretary of State Larson projected $12 billion in revenue in 2004 and $19
billion in 2005.¹¹ An association of leading banks and financiers, the Institute of
International Finance, predicted that oil revenue will be insufficient to cover the Iraqi
operational budget in 2004, leaving nothing for reconstruction.¹²
Roughly $503 million had been allocated by September 2003 from the FY2003
Emergency Wartime Supplemental for repair of oil facilities and restoration of
production and distribution systems. The Administration request for these purposes
under the FY2004 supplemental was $2.1 billion. Additional sums for Iraqi security
forces were in part intended to create an Iraqi force that would prevent pipeline and
other oil facility sabotage.

⁸ For the full text of the report online, see the World Bank website at
[http://lnweb18.worldbank.org/ mna/mena.nsf/Attachments/Iraq+J oint+Needs+Assessme
nt/$File/J oint+Needs+Assessment.pdf].
⁹ “UN/World Bank Present Iraq Reconstruction Needs to Core Group.” World Bank/United
Nations press release no. 2004/100/S, October 2, 2003.
¹⁰ Testimony to Senate Appropriations Committee. September 22, 2003.
¹¹ “Donors Weigh Political Cost of Paying for Iraq’s Economic Revival,” Financial Times,
October 3, 2003. “The Struggle for Iraq,” New York Times, October 5, 2003. “Iraq Donors’
Meeting to be Multilateral, State’s Larson Says,” Foreign Press Center Briefing, October

22, 2003.

¹² “Donors Heed EU Plea to Pay Through Trust Fund,” Financial Times, October 3, 2003.

Loans vs. Grants for Reconstruction. Closely related to the issue of Iraqi
oil revenues as a means of financing reconstruction projects was the question of
whether assistance could be extended on a loan rather than grant basis. Some argued
that, given the substantial amount of oil revenues that Iraq will generate at some point
in the future, Baghdad would have the means to service debt incurred for the purpose
of rebuilding its infrastructure. Loans, either extended bilaterally or through some
sort of trust fund, possibly managed by the World Bank, would be repaid at some
point, thereby reducing reconstruction costs to the United States, they said.
The Administration, which proposed that the entire $20.3 billion supplemental
be offered as grants, argued repeatedly during congressional hearings against adding
to Iraq’s already substantial debt obligations. Witnesses asserted that Iraq owed
roughly $200 billion in pre-war debts, reparations, and other claims. G7 leaders
agreed informally at the June 2003 summit to suspend through 2004 the requirement
for Iraq to service any existing debt, giving time to construct some sort of multilateral
debt restructuring arrangement.¹³ Further, U.N. Security Council Resolution 1483
stated that Iraqi oil exports or proceeds could not be attached by creditors through

2007 unless authorized by the Council.

Beyond the matter of whether Iraq should incur more debt obligations in the
near term was the question over who could legally assume responsibility for new
sovereign debt. Although it would be possible that the World Bank could manage
an Iraq reconstruction trust fund that would receive contributions from international
donors, if the Bank were to use these resources for project lending, it would almost
certainly require, as it has in the past, that some sort of sovereign Iraq authority
assume the debt obligation. Until such time that legal authority is transferred to Iraqi
hands, the Coalition Provisional Authority is the temporary government of Iraq and
would be the one signing for the loans. Most legal scholars take the position that an
occupying power has no authority to incur new debts on behalf of the displaced
sovereign.¹⁴ Some contend, however, that there is an exception in which a new
government would be responsible for the debt if it can be shown that the loans were
required for the welfare of the occupied territory and the terms were fair and¹⁵
reasonable.
This issue was closely examined by lawmakers. The Senate adopted (51-47) an
amendment by Senators Bayh and Nelson on October 16 converting $10 billion of
reconstruction grants to loans, which could be later restored as grants if foreign

¹³ See, for example, testimony of Secretary of Defense Rumsfeld before the Senate
Appropriations Committee on September 22 and L. Paul Bremer before the House Foreign
Operations Appropriations Subcommittee on September 24.
¹⁴ See, for example, Pieter H.F. Bekker, “The Legal Status of Foreign Economic Interests
in Occupied Iraq.” ASIL Insights. American Society of International Law. July 2002.
Available at the ASIL web site at [http://www.asil.org/insights/insigh114.htm]. See also
Gerhard von Glahn. The Occupation of Enemy Territory...A Commentary on the Law and
Practice of Belligerent Occupation. Minneapolis: University of Minnesota Press, 1957, p.

159, citing various sources.

¹⁵ von Glahn, citing (with comments) U.S. Army Judge Advocate General’s School. Law
of Belligerent Occupation. (JAGS Text No. 11) Ann Arbor: JAGS 1944, pp. ix, 277.

creditors cancel 90% of Iraq’s debt. Earlier, Senator Dorgan had offered
amendments in committee markup and on the Senate floor (tabled in both venues)
that would have created an authority to use Iraqi oil to secure reconstruction
financing and convert U.S. grants to loans. Senator Hutchison and others submitted
an amendment that did not come up for floor debate directing $10 billion of the total
reconstruction supplemental to a Trust Fund, to be established within the World
Bank, out of which loans and loan guarantees would be made.
On the House side, Representative Wamp proposed but later withdrew an
amendment during Committee markup that would have withheld one-half of Iraq
funds until after the election of a new Iraqi leader, at which time the remaining
money would be available in the form of a loan. Representative Obey offered an
amendment (defeated 25-36) that, among other things, would have transferred about
$7 billion of reconstruction funds to a World Bank-administered loan facility. A
further amendment by Representative Obey regarding a shift of grants to loans was
defeated in the House 200-226.
House and Senate conferees agreed to provide all Iraq reconstruction aid as
grants rather than loans.
Contracting Concerns. An Administration decision applied to the early
reconstruction contracts to waive the normal competitive bidding requirements and
request bids from specific companies which were seen to have preexisting
qualifications received considerable attention by the business community. The
closed bidding and lack of transparency disturbed a number of legislators, and some
Members of Congress asked the GAO to determine whether contracting agencies are
following appropriate procedures.
Some observers noted that, in addition to many American firms, a number of
international organizations and non-U.S. companies were excluded from the
selections made by USAID and other agencies, and even British companies were not
considered despite that country’s role in the war. U.S. officials pointed out that only
a few select firms possessed the particular skills that would qualify them for the job
specifications for Iraq reconstruction, and that time and security clearances were also
critical factors. Foreign entities, potentially excluded by “buy America” provisions
of law, and other U.S. firms could participate as sub-contractors to the selected
American firms. Sub-contractors are likely to compose half or more of the total cost
of each contract.
The Supplemental’s Impact on Other Donors. At the time, it appeared
possible that congressional action on the supplemental could influence the
contributions of international donors at the October donors’ conference, and
Administration officials encouraged Congress to complete debate on the spending
bill prior that date. Some argued that a large pledge of U.S. aid prior to the
conference might stimulate other donors to contribute more; diminution of the
Administration plan, they argued, could have the opposite effect. Opponents of
making U.S. aid for reconstruction in the form of loans also contended that other
donors might follow the American lead and offer loans rather than grants, adding
further to Iraq’s debt problems. In addition, the supplemental targeted sectors —
infrastructure and security — that other donors were less likely to support

themselves. In similar “nation-building” exercises elsewhere, donors have tended to
funnel contributions to the social sectors, such as education and health, and
grassroots democratization and economic development, all areas relatively untouched
by the supplemental.
Perhaps a more important factor in other donor calculations was the extent to
which they would have a say in the use of funds. Donors had been reluctant to
provide assistance because they were wary of being perceived as supporting a
unilateral U.S. policy. In response to this concern, donors discussed at a September

6 meeting in Brussels, the concept of creating Iraq reconstruction trust funds,

managed by the U.N. or World Bank, which would accept and distribute
contributions. Control over how the money was spent, according to Undersecretary
of State Alan Larson who represented the U.S. at the September 6 meetings, would
be handled by some sort of a multilateral management board that might include
officials from international organizations, major donors, and Iraqis representing
interim ministries.¹⁶
Management of Iraq Reconstruction Funds by U.S. Agencies.
Administrative control over Iraq reconstruction funds became a significant issue
during congressional debate on the $2.475 billion appropriation in P.L. 108-11. At
that time, most had expected 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 maintain 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. Although initial House and Senate decisions would have blocked
Administration efforts to place control of reconstruction funds with the Pentagon,
ultimately Congress agreed to allow the White House to allocate the resources among
five agencies, including DOD. Funds for the Iraq Relief and Reconstruction Fund
appropriated in P.L. 108-11 have been managed by L. Paul Bremer, head of the
Coalition Provisional Authority (CPA), and the U.S. civilian administrator in Iraq,
who reports to the Secretary of Defense.
The Administration proposed that the entire $20.3 billion be placed in the Iraq
Relief and Reconstruction Fund, as was the case with the previous supplemental, and
to continue Ambassador Bremer and the CPA’s role as administrators of the Fund
under DOD guidance. After submitting the supplemental, however, the White House
announced the establishment of a new “Iraq Stabilization Group,”headed by National
Security Advisor Condoleezza Rice. The Group was intended to help speed up
reconstruction efforts by identifying and resolving problems that had in some cases
been the source of decision-making disputes in Washington. Some analysts believed

¹⁶ Iraq Reconstruction an International Responsibility, Larson Says. Press briefing by
Under Secretary of State for Economic, Business, and Agricultural Affairs Alan Larson,
September 4, 2003 [http://usinfo.state.gov/topical/pol/terror/texts/03090434.htm].

that the move was also intended to allow the State Department a greater voice in
reconstruction policy. At the same time, the State Department staff serving under the
CPA in Iraq was expected to grow from 55 to about 110. Nevertheless, Ambassador
Bremer would continue to report to the Secretary of Defense.¹⁷
During congressional debate, the Senate tabled (56-42) an amendment by
Senators Leahy and Daschle that would have placed the CPA under the direct
authority and foreign policy guidance of the Secretary of State. The House bill,
however, added a provision barring the coordination of defense or reconstruction
activities in Iraq or Afghanistan by a U.S. government officer who was not subject
to confirmation by the Senate. The House Committee wanted to ensure that whoever
was in charge of coordination be available to testify at congressional oversight
hearings. Senator Leahy proposed a similar amendment for Senate consideration.
These proposals appeared to block the initiative of placing National Security Council
Advisor Rice, who is not subject to confirmation and who does not testify before
Congress, in charge of coordinating reconstruction. The White House, however,
contended that the new Iraq Stabilization Group did not affect control of
reconstruction efforts and that the job remains under control of the Defense
Department.¹⁸ In any case, the House provision requiring that the coordination of
reconstruction activities be headed by a confirmed U.S. official was deleted in
conference negotiations.
Reconstruction Priorities and Costs. The Administration said that the
request included only the most pressing, immediate needs for Iraq in FY2004.
However, the relative importance of certain items detailed in the request — ‘re-
engineering of postal service business practices’ and construction of seven residential
communities, for example — was challenged by Congress. Further, the costs
associated with reconstruction requests were subject to skepticism, with some
congressional staff reportedly suggesting that the price tag was intentionally inflated
so that the Administration would not have to return to Congress to ask for more funds¹⁹
in 2004. Several Senate amendments were offered but not adopted that would have
reduced funding for what the sponsors regarded as low-priority needs and redirected
the resources for domestic or other military programs in Iraq. The House bill
proposed a $1.655 billion cut in Iraq reconstruction funding, reducing or eliminating
resources for a wide range of activities that the House found to be un-executable, low
priority, or likely to receive funding from other international donors. A number of
these House recommendations for cuts were adopted in the conference agreement.
See Table 17 above for details of sector and project reductions recommended by
Congress.

¹⁷ “White House to Overhaul Iraq and Afghan Missions,” New York Times, October 6, 2003;
“Rice to Lead Effort to Speed Iraqi Aid,” Washington Post, October 7, 2003.
¹⁸ “Pentagon Still in Charge in Iraq, Rice Tells Reporters,” American Forces Information
Service, October 15, 2003.
¹⁹ “In GOP, Concern Over Iraq Price Tag; Some Doubt Need for $20.3 Billion for
Rebuilding,” Washington Post, September 26, 2003.

Congressional Action.
FY2004 Regular Foreign Operations Appropriations. The President
did not request, nor did either House or Senate bills provide, additional funding for
Iraq reconstruction in the regular FY2004 Foreign Operations Appropriations
measures. Although the House did not address Iraq reconstruction funding matters
in H.R. 2800, Sec. 572 of the legislation required that Iraq reconstruction contracts
awarded with appropriated funds be subject to full and open competition. Conferees
meeting on H.R. 2673 — the Consolidated Appropriations Act 2004 within which
Foreign Operations has been incorporated as Division D — decided, however, to
drop the House contract provision in Sec. 572, believing the issue had been
adequately addressed in the FY2004 supplemental measure (see below).
FY2004 Iraq Reconstruction Supplemental. As illustrated in Table 17
above, the Senate-passed measure (S. 1689) followed the general funding requests
proposed by the President, while the House bill (H.R. 3289) reduced the $20.3 billion
recommendation by $1.65 billion. Both bills further added sections requiring more
detailed reporting to Congress on reconstruction activities and placed limits on, but
not prohibiting non-competitive contracting procedures. The House measure also
prohibited reconstruction efforts to be coordinated by anyone not confirmed by the
Senate, apparently in reaction to the White House announcement establishing the Iraq
Stabilization Group, headed by national Security Advisor Rice.
House and Senate negotiators agreed to total Iraq reconstruction at levels similar
to House-passed amounts, reducing funds for a number of activities deemed too
expensive or of low priority. The conference agreement was approved in the House
on October 29.
Perhaps the most challenging issue for conference committee consideration was
whether to provide the entire reconstruction package as a grant, as proposed by the
President and H.R. 3289, or extend $10 billion in the form as a loan, as the Senate
bill recommends. The $10 billion loan in S. 1689 could later be converted to a grant
if international creditors agree to cancel 90% of Iraq’s debt. Under a threat of a
Presidential veto, House and Senate conferees agreed to provide the entire package
of aid as grants. (For more on Congressional action regarding the FY2004
supplemental, see CRS Report 32090, FY2004 Supplemental Appropriations for
Iraq, Afghanistan, and the Global War on Terrorism: Military Operations and
Reconstruction Assistance.)
For Additional Reading
Overview
CRS Report 98-916. Foreign Aid: An Introductory Overview of U.S. Programs and
Policy, by Curt Tarnoff and Larry Nowels.
CRS Report RL31959. Foreign Assistance Authorization Act, FY2005, by Larry
Nowels.

CRS Report RL32090, FY2004 Supplemental Appropriations for Iraq, Afghanistan,
and the Global War on Terrorism: Military Operations & Reconstruction
Assistance, by Stephen Daggett, Larry Nowels, Curt Tarnoff, and Rhoda
Margesson.
CRS Report RL31687. The Millennium Challenge Account: Congressional
Consideration of a New Foreign Aid Initiative, by Larry Nowels.
CRS Report RL31829, Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security, by Amy
Belasco and Larry Nowels.
Foreign Operations Programs
CRS Report RS20329. African Development Bank and Fund, by Raymond Copson.
CRS Issue Brief IB10050. AIDS in Africa, by Raymond Copson.
CRS Report RL32252. AIDS Orphans and Vulnerable Children (OVC): Problems,
Responses, and Issues for Congress, by Tiaji Salaam.
CRS Report RS21437. The Asian Development Bank, Martin A. Weiss.
CRS Issue Brief IB88093. Drug Control: International Policy and Approaches, by
Raphael Perl.
CRS Report 98-568, Export-Import Bank: Background and Legislative Issues, by
James Jackson.
CRS Report RL31712. The Global Fund to Fight to Fight AIDS, Tuberculosis, and
Malaria: Background and Current Issues, by Raymond Copson and Tiaji
Salaam.
CRS Report RS21181. HIV/AIDS International Programs: Appropriations, FY2002-
FY2005, by Raymond Copson.
CRS Report RS20622. International Disasters: How the United States Responds,
by Lois McHugh
CRS Report RL30830. International Family Planning: The “Mexico City” Policy,
by Larry Nowels.
CRS Report RS21330. The International Monetary Fund: Current Reforms, by
Martin A. Weiss.
CRS Report RL30932, Microenterprise and U.S. Foreign Assistance, by Curt
Tarnoff.
CRS Issue Brief IB96008. Multilateral Development Banks: Issues for the 108^th
Congress, by Jonathan Sanford.

CRS Report 98-567. The Overseas Private Investment Corporation: Background
and Legislative Issues, by James Jackson.
CRS Report RS21168. The Peace Corps: USA Freedom Corps Initiative, by Curt
Tarnoff.
CRS Report RL30545. Trafficking in Women and Children: The U.S. and
International Response, by Francis Miko.
CRS Issue Brief IB96026. U.S. International Population Assistance: Issues for
Congress, by Larry Nowels.
CRS Report RL31689. U.S. International Refugee Assistance: Issues for Congress,
by Rhoda Margesson.
CRS Report RL31433. U.S. Global Health Priorities: USAID’s Global FY2003
Budget, by Tiaji Salaam.
Country and Regional Issues
CRS Report RL31355. Afghanistan’s Path to Reconstruction: Obstacles,
Challenges, and Issues for Congress, by Rhoda Margesson.
CRS Report RL30883. Africa: Scaling up the Response to the HIV/AIDS Pandemic,
by Raymond Copson.
CRS Issue Brief IB95052. Africa: U.S. Foreign Assistance Issues, by Raymond
Copson.
CRS Report RL32021. Andean Regional Initiative (ARI): FY2003 Supplemental and
FY2004 Assistance for Colombia and Neighbors, by K. Larry Storrs and Connie
Veillette.
CRS Report RS21213. Colombia: Summary and Tables on U.S. Assistance, by Nina
Serafino.
CRS Issue Brief IB93087. Egypt-United States Relations, by Clyde Mark.
CRS Issue Brief IB96019, Haiti: Issues for Congress, by Maureen Taft-Morales.
CRS Report RS21751. Humanitarian Crisis in Haiti: 2004, by Rhoda Margesson.
CRS Report RL31833. Iraq: Recent Developments in Humanitarian and
Reconstruction Assistance, by Rhoda Margesson and Curt Tarnoff.
CRS Issue Brief IB85066. Israel: U.S. Foreign Assistance, by Clyde Mark.
CRS Issue Brief IB93085. Jordan: U.S. Relations and Bilateral Issues, by Alfred
Prados.

CRS Report RL31412. Mexico’s Counter-Narcotics Efforts Under Fox, December

2000 to April 2002, by K. Larry Storrs.

CRS Report RS21457. The Middle East Partnership Initiative: An Overview, by
Jeremy M. Sharp.
CRS Report RS21353. New Partnership for Africa’s Development (NEPAD), by
Nicholas Cook.
CRS Report RS20895. Palestinians: U.S. Assistance, by Clyde Mark.
CRS Report RL31759. Reconstruction Assistance in Afghanistan: Goals, Priorities,
and Issues for Congress, by Rhoda Margesson.
CRS Issue Brief IB98043. Sudan: Humanitarian Crisis, Peace Talks, Terrorism and
U.S. Policy, by Ted Dagne.
CRS Report RL31785. U.S. Assistance to North Korea, by Mark Manyin and Ryun
Jun.
CRS Report RL31362. U.S. Foreign Aid to East and South Asia: Selected
Recipients, by Thomas Lum.
CRS Report RL32260. U.S. Foreign Assistance to the Middle East: Historical
Background, Recent Trends, and the FY2005 Request, by Jeremy M. Sharp.
CRS Report RL32239. World Bank Activities in the Middle East and North Africa
(MENA), Martin A. Weiss.
Selected World Wide Web Sites
African Development Bank
[ h ttp://www.afdb.org/ home.htm]
African Development Foundation
[ h ttp://www.adf.gov/]
Asian Development Bank
[ h ttp://www.adb.org/ ]
CRS Current Legislative Issues: Foreign Affairs
[ h ttp://www.crs.gov/products/bro wse/is-foreignaffairs.shtml]
Export-Import Bank
[ http://www.ex im.gov/]
Global Fund to Fight AIDS, Tuberculosis, and Malaria
[ h ttp://www.theglobalfund.org/ en/]

Inter-American Development Bank
[ h ttp://www.iadb.org/ ]
Inter-American Foundation
[ h ttp://www.iaf.gov/index /index _ en.asp]
International Fund for Agricultural Development
[ h ttp://www.ifad.org]
International Monetary Fund
[ http://www.imf.org/ ]
Overseas Private Investment Corporation
[ http://www.opic.gov/]
Peace Corps
[ h t t p : / / www.peacecorps.gov/ ]
Trade and Development Agency
[ http://www.tda.gov/]
United Nations Children’s Fund (UNICEF)
[ h ttp://www.unicef.org/ ]
United Nations Development Program (UNDP)
[ http://www.undp.org/ ]
United Nations Population Fund (UNFPA)
[ h ttp://www.unfpa.org/ ]
United Nations Program on HIV/AIDS (UNAIDS)
[ http://www.unaids.org/ ]
U.S. Agency for International Development — Home Page
[ http://www.usaid.gov/]
U.S. Agency for International Development — Congressional Budget Justification
[ http://www.usaid.gov/policy/ budget/]
U.S. Agency for International Development — Emergency Situation Reports
[http://www.usai d.gov/our_work/humanitarian_assistance/disaster_assistance/cou
ntries/fy2003_index .html]
U.S. Agency for International Development — Foreign Aid Data (“Greenbook”)
[ http://qesdb.cdie.org/ gbk/index .html]
U.S. Department of State — Home Page
[ http://www.state.gov/]
U.S. Department of State — Foreign Operations Budget Justification, FY2004
[ http://www.state.gov/m/rm/rls/cbj/2004/]
U.S. Department of State — International Affairs Budget Request, FY2004
[ http://www.state.gov/m/rm/rls/iab/2004/]
U.S. Department of State — International Topics and Issues

[ http://www.state.gov/interntl/]
U.S. Department of the Treasury — Office of International Affairs
[http://www.ustreas .gov/offices /international-affairs/index .html]
World Bank
[ h ttp://www.worldbank.org/ ]
World Bank HIPC website
[ h ttp://www.worldbank.org/ hipc/]

CRS-87
Table 19. Foreign Operations: Discretionary Budget Authority
(millions of dollars)
ProgramFY2003Regular^aFY2003Supp.^aFY2003Total ^aFY2004RequestFY2004HouseFY2004SenateFY2004Enacted^bFY2004Supp ^cFY2004Total ^c
tle I - Export and Investment Assistance:
Import Bank564.4 — 564.442.637.441.438.5 — 38.5
erseas Private Invest Corp(242.5) — (242.5)(205.6)(206.6)(206.6)(207.0) — (207.0)
ade and Development Agency46.7 — 46.760.050.050.049.7 — 49.7
port Aid368.60.0368.6(103.0)(119.2)(115.2)(118.8)0.0(118.8)
ⁱ^{ki/CRS-RL31811}tle II - Bilateral Economic:
^g/wvelopment Assistance:
^s^.or^d^d^d^d^d^d
^le^akival & Health (CS/H)1,704.690.01,794.61,495.02,115.81,435.51,824.2 — 1,824.2^e
obal AIDS Initiative — — — 450.0989.0488.1 — 488.1
^://wiki
^h^ttpelopment Assistance Fund (DA)1,380.0 — 1,380.01,345.01,317.01,423.01,376.8 — 1,376.8
3,084.6 90.0 3,174.6 3,290.0 3,432.8 3,847.5 3,689.1 0.0 3,689.1
Famine Aid288.1143.8431.9235.5315.5235.5254.0110.0364.0^f^f^f
ine Fund — — — 200.0100.0 —
ansition Initiatives49.7 — 49.755.055.055.054.7 — 54.7
elopment Credit Programs7.5 — 7.58.08.08.08.0 — 8.0
t Aid3,429.9233.83,663.73,788.53,811.34,246.04,005.8110.04,115.8
D Operating Expenses 568.324.5592.8604.1604.1604.1600.540.0640.5
D Inspector General33.1 — 33.135.035.035.034.8 — 34.8
D Capital Investment Fund42.7 — 42.7146.349.3100.081.716.698.3

4,074.0 258.3 4,332.3 4,573.9 4,499.7 4,985.1 4,722.8 166.6 4,889.4

CRS-88
ProgramFY2003Regular^aFY2003Supp.^aFY2003Total ^aFY2004RequestFY2004HouseFY2004SenateFY2004Enacted^bFY2004Supp ^cFY2004Total ^c
ic Support Fund (ESF)2,255.22,422.04,677.22,535.02,240.52,415.02,119.9872.02,991.9
reland24.8 — 24.8[12.5]^g19.6 — 18.4 — 18.4
altic States521.6 — 521.6435.0452.0445.0442.4 — 442.4
er Soviet Union 755.1 — 755.1576.0576.0596.0583.5 — 583.5
ergency Fund for Complex Crises — — — 100.00.00.00.0 0.00.0
— 2,475.02,475.0 — — — — 18,649.018,649.0
alition Provisional Authority OE — — — — — — — 983.0983.0
ⁱ^{ki/CRS-RL31811}American Foundation16.1 — 16.115.215.216.316.2 — 16.2
^g/welopment Foundation18.6 — 18.617.717.718.718.6 — 18.6
^s^.or
^le^ak295.1 — 295.1359.0314.0310.0308.2 — 308.2
^h — 994.1
^://wiki Challenge Corporation — — — 1,300.0800.01,000.0994.1
^h^ttpent 195.7 25.0 220.7 284.6 241.7 284.6 240.3 170.0 410.3
arcotics — Andean Initiative695.534.0729.5731.0731.0660.0726.7 — 726.7
ration & Refugee Assistance781.9 — 781.9760.2760.2760.2755.7 — 755.7
ergency Refugee Fund (ERMA)25.880.0105.840.015.840.029.8 — 29.8
Proliferation/anti-terrorism 304.4 28.0 332.4 385.2 335.2 385.2 351.4 35.0 386.4
easury Dept. Technical Assistance10.7 — 10.714.019.012.018.9 — 18.9
— — — 395.095.0195.094.4 — 94.4
ilateral Economic9,974.55,322.315,296.812,521.811,132.612,123.111,441.320,875.632,316.9
tle III - Military Assistance:
Ed. & Training79.5 — 79.591.791.191.791.2 — 91.2

CRS-89
ProgramFY2003Regular^aFY2003Supp.^aFY2003Total ^aFY2004RequestFY2004HouseFY2004SenateFY2004Enacted^bFY2004Supp ^cFY2004Total ^c
n Mil Financing (FMF)4,045.52,059.16,104.64,414.04,314.04,384.04,268.7287.04,555.7
ech FMF loan — — — — 20.020.019.9 — 19.9
eeping Operations114.3100.0214.394.985.084.974.550.0124.5
tal, Title III-Military Aid4,239.32,159.16,398.44,600.64,510.14,580.64,454.2337.04,791.2
tle IV - Multilateral Economic Aid:
- Intl Develop. Assn844.5 — 844.5976.8850.0976.8907.8 — 907.8
ⁱ^{ki/CRS-RL31811}ank Environment Facility146.9 — 146.9185.0107.5171.0138.4 — 138.4
^g/w-Mult Invst Guaranty1.6 — 1.64.04.01.11.1 — 1.1
^s^.orAmer. Development Bank42.7 — 42.763.525.031.524.9 — 24.9
^le^ak
elopment Bank97.3 — 97.3151.9151.9136.9143.5 — 143.5
^://wikielopment Fund107.4 — 107.4118.1107.4118.1112.0 — 112.0
^h^ttp
elopment Bank5.1 — 5.15.15.15.15.1 — 5.1
for R & D35.6 — 35.635.435.435.435.2 — 35.2
Development14.9 — 14.915.015.015.014.9 — 14.9
anizations & Programs313.9 — 313.9314.6^c314.6322.6^c319.8 — 319.8
1,609.9 — 1,609.91,869.41,615.91,813.51,702.70.01,702.7
oreign Operations 16,192.37,481.423,673.718,888.817,139.418,402.017,479.421,212.638,692.0
House and Senate Appropriations Committee and CRS adjustments.

CRS-90
P.L. 108-7, the Consolidated Appropriations Act, 2003, an act within which regular Foreign Operations funds were enacted, most accounts
were reduced by 0.65%. Figures for each account in this column for regular FY2003 Foreign Operations include the 0.65% across-the-board rescission. ^F^Y²⁰⁰³
^s^u^ppl^em^en^t^a^lⁱⁿ^cl^u^d^es^f^uⁿ^d^s^appropri^a^t^e^{d i}ⁿ^P.L^.^108-^{11, t}^h^{e Iraq War S}^u^ppl^em^en^t^a^l^.
^m^ouⁿ^t^s^s^h^owⁿⁱⁿ^t^h^e^col^u^mⁿ^f^o^r^F^Y²⁰⁰⁴^en^act^ed^{are “}^r^eg^u^l^{ar” F}^o^rei^gⁿ^O^p^eratⁱ^oⁿ^s^f^uⁿ^d^sⁱⁿ^cl^u^d^{ed i}ⁿ^H^.^R^.^{2673 (P.L}^{. 108-}^199), the Consolidated Appropriations Act, 2004.
^P^u^rs^u^aⁿ^t^{to S}^{ec.168 of}^Divⁱ^sⁱ^on^{H of}^H.R^.^{2673, m}^o^s^t^accouⁿ^t^s^{are redu}^{ced by}^0.59%^{. F}ⁱ^g^u^r^es^f^o^{r each}^accouⁿ^tⁱⁿ^th^is^colu^mⁿ^f^o^r^reg^u^l^{ar F}^Y^{2004 F}^o^rei^gⁿ^O^p^eratⁱ^oⁿ^sⁱⁿ^cl^u^d^e
^th^{e 0.59% acros}^s^-^th^e-^{board res}^c^is^sⁱ^on^{. T}^h^{e 0.59% res}^c^is^sⁱ^on^repres^en^ts^{a $103.6 m}^illion^redu^ction^f^o^{r reg}^u^l^{ar FY2004}^Foreigⁿ^O^peration^s^f^r^om^th^e^{$17.564 b}^illion^approv^ed
ⁱⁿ^P.L^.^108-^199.
^h^e^FY2004^s^u^pplem^en^{tal are am}^ouⁿ^t^s^prov^{ided in}^P^.^L^.^108-^106,^f^uⁿ^dⁱⁿ^g^f^o^{r m}^ilitary^operation^s^an^{d recon}^s^tru^c^tionⁱⁿ^{Iraq an}^d^A^f^g^h^aⁿⁱ^s^t^an^{. T}^h^{e F}^Y^{2004 T}^o^t^a^l^col^u^mⁿ^repres^en^t^s
^t^h^{e s}^u^m^of^t^h^{e F}^Y^{2004 con}^f^eren^{ce an}^{d t}^h^{e F}^Y^{2004 s}^u^ppl^em^en^t^a^l^.
^{e pu}^rpos^es^of^con^s^is^ten^c^y^an^{d m}^a^kⁱⁿ^g^accu^{rate com}^p^aris^on^s^,^am^ouⁿ^t^s^f^o^r^th^e^C^h^{ild Su}^rv^iv^{al an}^{d Health}^(C^SH)^excludeⁱⁿ^each^colu^mⁿ^{a $120 m}^illion^con^t^ribu^tion^{to UNIC}^E^F.
^T^h^e^{FY2003 en}^{acted lev}^e^{l an}^{d th}^{e Hou}^s^e-^pas^s^e^{d FY2004 bill in}^clu^d^ed^UNIC^E^Fⁱⁿ^th^{e C}^S^{H accou}ⁿ^t^{, w}^h^{ile th}^{e A}^d^mⁱⁿⁱ^s^t^ration^’^s^FY2004^requ^es^{t an}^{d th}^{e Sen}^a^te-^p^as^s^e^{d m}^eas^u^r^e
^p^l^aced^{UNICEF f}^uⁿ^dⁱⁿ^gⁱⁿ^{title IV o}^f^th^{e b}^{ill w}^ithⁱⁿ^th^{e In}^tern^atioⁿ^a^{l Org}^aⁿⁱ^zatioⁿ^s^an^d^P^r^o^g^ram^s^(IO&^P⁾^acco^uⁿ^t^.^B^ecau^se^th^e^{FY2004 en}^{acted bill pl}^aces^UNIC^E^{F f}^uⁿ^dⁱⁿ^g
ⁱ^{ki/CRS-RL31811}^w^ithⁱⁿ^th^{e IO&}^P^accouⁿ^t^{, th}^{e FY2003 en}^{acted an}^{d Hou}^s^e-^pas^s^e^{d am}^ouⁿ^t^s^h^a^v^e^b^e^eⁿ^a^d^j^u^s^t^e^d^b^y^r^e^m^o^vⁱⁿ^g^{$120 m}^illion^f^o^{r UNIC}^E^{F an}^d^ad^dⁱⁿ^g^th^{at am}^o^uⁿ^t^to^th^{e lev}^e^{ls in}^th^{e IO&}^P^accouⁿ^t^lin^e.
^g/w
^s^.or^uⁿ^dⁱⁿ^g^f^o^r^th^{e Glo}^b^a^{l A}^I^{DS I}ⁿ^itiativ^{e in}^th^{e Ho}^u^s^e-^p^a^ssed^b^{ill w}^a^{s in}^clu^d^edⁱⁿ^th^{e Ch}^ild^Su^r^v^iv^{al an}^d^Health^A^cco^uⁿ^t^{. T}^h^e^S^eⁿ^a^t^e^-^p^a^s^s^e^{d a}^m^ouⁿ^tⁱⁿ^c^l^u^d^e^d^$289^m^illioⁿ^fo^r
^le^ak^H^I^V^/^A^I^D^S^t^h^at^w^a^s^{added i}ⁿ^s^ectⁱ^oⁿ^699K^.
^://wiki^h^{e Hou}^s^e-^pas^s^e^{d bill in}^clu^d^ed^$80^m^illion^f^o^r^f^a^mⁱⁿ^e^prev^en^tion^an^{d relief}ⁱⁿ^th^{e In}^tern^ation^a^{l Dis}^a^s^t^{er A}ⁱ^{d accou}ⁿ^t^{. T}^h^e^{FY2004 en}^{acted am}^ouⁿ^tⁱⁿ^clu^d^es^{$20 m}^illion^f^o^{r f}^a^mⁱⁿ^e
^h^ttp^prev^en^tion^an^{d relief}ⁱⁿ^th^{e In}^tern^ation^a^{l Dis}^a^s^t^{er A}ⁱ^{d accou}ⁿ^t^.
^h^{e A}^d^mⁱⁿⁱ^s^t^ratⁱ^oⁿ^requ^es^tⁱⁿ^cl^u^d^{ed t}^h^{e Irel}^aⁿ^d^F^uⁿ^d^as^part^of^t^h^{e Econ}^omⁱ^c^S^u^pport^F^uⁿ^d^.
^h^{e en}^acted^billⁱⁿ^clu^d^es^{$650 m}^illion^f^o^{r th}^{e Millen}ⁿⁱ^u^m^C^h^allen^g^e^A^ccouⁿ^tⁱⁿ^Divⁱ^sⁱ^on^{D of}^P^.^L^.^108-^{199, plu}^s^{$350 m}^illion^m^o^r^eⁱⁿ^Divⁱ^sioⁿ^{H, f}^o^r^{a to}^{tal MCA}^ap^p^r^o^p^r^iatioⁿ
^of^{$1 billio}ⁿ^.^T^h^{e 0.59% acros}^s^-^th^e-^{board res}^c^is^sⁱ^on^redu^ces^th^{total to $994.1 m}^illion^.