Foreign Policy Budget Trends: A Thirty-Year Review

CRS Report for Congress
Foreign Policy Budget Trends:
A Thirty-Year Review
Updated June 20, 2006
Larry Nowels
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

Foreign Policy Budget Trends: A Thirty-Year Review
There have been sharp debates over the past three decades concerning the
appropriate level of funding for U.S. foreign policy programs, and it is likely that
these debates will continue as Congress reviews the President’s FY2007 budget
proposal. The past 30 years have witnessed wide swings in the amounts of U.S.
resources committed to advancing foreign policy and national security interests,
reflecting changes in global challenges faced by the United States. Efforts to
promote peace in the Middle East, to confront Soviet influence, to support new
democracies in the post-Cold War era, to fight poverty and disease affecting poor
nations, to combat global terrorism, and to stabilize fragile or failed states have had
a substantial impact on levels of foreign policy resources.
Key highlights of international affairs spending trends include:
!After a substantial decline during the mid-1990s, total foreign policy
spending has grown significantly since the terrorist attacks of
September 11, 2001. Not only has the United States allocated large
amounts of resources for fighting the global war on terror, the Bush
Administration has launched two major new foreign aid initiatives
— the Millennium Challenge Account and the President’s
Emergency Plan for AIDS Relief (PEPFAR). The $53.8 billion
(constant FY2006 dollars) budget for FY2004, which included Iraq
reconstruction funds, represented by far the highest level of spending
during the past three decades.
!Although the amount of spending for international activities has
grown significantly since September 11, compared to changes in the
overall size of the federal budget, the share allocated for foreign
policy programs has declined (with the exception of FY2004) due
to increases in defense, homeland security, and, in FY2005 and
FY2006, Hurricane Katrina relief.
!“Core” bilateral development assistance funding accounts — those
focusing on long-term poverty reduction and economic growth —
have more than tripled since FY2000.
!The $5.9 billion in U.S. aid to Africa estimated for FY2006 is the
largest level in three decades and totals over two and a half times the
$2.2 billion annual average since FY1977. President Bush pledged
to double U.S. assistance to Africa between 2004 and 2010.
!Funding for State Department personnel, embassy security, public
diplomacy, and dues for international organizations has increased
steadily over the past three decades, peaking in FY2006 at $12.2
billion (constant dollars), including operational costs in Iraq.
This report will be updated as new data become available.

Overview ........................................................1
Data Scope and Sources.........................................2
Budget Scorekeeping Changes and Problems with Precise Analysis of
Spending Trends..........................................3
International Affairs Discretionary Budget Authority......................4
International Affairs Budget as a Percent of Total U.S. Discretionary Funds....8
Foreign Assistance Component of the International Affairs Budget..........10
Breaking Down Bilateral Foreign Aid Spending Patterns..................13
“Core” Bilateral Development Assistance..........................13
Humanitarian Assistance.......................................16
Political/Security Economic Assistance............................18
Military Assistance...........................................20
Foreign Assistance to Africa....................................23
State Department and Public Diplomacy...............................26
Budget Data Appendix.............................................29
List of Figures
Figure 1. International Affairs Spending................................7
Figure 2. International Affairs Budget as a % of Total U.S. Budget Authority...9
Figure 3. Foreign Aid Discretionary Budget Authority....................12
Figure 4. “Core” Bilateral Development Assistance Spending..............15
Figure 5. Humanitarian Assistance Spending...........................17
Figure 6. Political/Security Economic Aid Spending.....................19
Figure 7. Military Aid Spending.....................................22
Figure 8. Africa Assistance.........................................25
Figure 9. State Department & Public Diplomacy Spending................28
List of Tables
Table 1. International Affairs Discretionary Budget Authority.............29
Table 2. International Affairs Budget As a % of Total Discretionary
Budget Authority.............................................30
Table 3. Foreign Assistance Discretionary Budget Authority..............31
Table 4. “Core” Bilateral Development Assistance Discretionary Budget
Authority ...................................................32
Table 5. Humanitarian Assistance Discretionary Budget Authority..........33
Table 6. Political/Security Economic Aid Discretionary Budget Authority....34
Table 7. Military Assistance Program Size.............................35

Table 9. State Department and Public Diplomacy Budget Authority and
Fee Collections...............................................37

Foreign Policy Budget Trends: A Thirty-Year
There have been sharp debates over the past three decades in Congress and
differences between the executive and legislative branches on the appropriate level
of funding for U.S. foreign policy programs. These debates are continuing in 2006
as Congress reviews the President’s FY2007 budget proposal.
The past 30 years have witnessed wide swings in the amounts of resources the
United States has committed to advancing foreign policy and national security
interests, reflecting changes in global challenges faced by the United States. Efforts
to promote peace in the Middle East, to confront Soviet influence, especially in the
developing world, to support new democracies in the post-Cold War era, to fight
poverty and disease affecting poor nations, to combat global terrorism, and to
stabilize fragile or failed states have had a substantial impact on levels of foreign
policy resources.
International affairs funding decisions, however, are influenced not only by
overseas requirements, but also by the overall U.S. budget environment and
constraints that exist particularly during periods of deficits or when unforseen events
demand reallocation of spending priorities. Congress and the executive branch have
reduced foreign policy resources — occasionally to a greater extent than other sectors
of the budget — when fiscal austerity or domestic requirements were deemed to be
of greater importance. Likewise, during times of international crisis and especially
since the terrorist attacks of September 11, 2001, international affairs spending has
been one of the most rapidly increasing areas of the U.S. budget.
Foreign policy spending supports a variety of U.S. government programs and
activities, including foreign economic and military assistance, contributions to
international organizations and multilateral financial institutions, diplomatic
operations, public diplomacy, counter-terrorism and narcotics initiatives, and export
This report serves as a resource for the annual congressional debate on foreign
policy spending, providing context and a trend analysis of the past 30 years. It
considers the full scope of the International Affairs Budget, or Budget Function 150,
as foreign policy spending is designated within the context of the Congressional
Budget Resolution. It also illustrates spending trends of the major components that
make up Budget Function 150. Other relevant “snapshots” of international spending
are also examined, including how foreign aid resources have been allocated across

several sub-categories and trends that are especially applicable to current funding
priorities such as confronting global health problems and increasing aid to Africa.
Data Scope and Sources
Unless otherwise noted, dollar figures are expressed as discretionary budget
authority, representing the amount of funds Congress maintains direct control over
through enactment of annual appropriation bills. Data trends begin with FY1977 due
to the consistency and availability of figures. While some data on Federal spending
regarding outlays and mandatory programs are available prior to FY1977, OMB
publishes discretionary budget authority figures only beginning with FY1976.
Because FY1976 was a 15 month “transition” year in which the beginning date of the
fiscal year changed from July 1 to October 1, this analysis starts with FY1977 so that
each year covers the same period of time.
In addition, beginning in FY1996 the data include foreign policy resources
available for the State Department derived from fees collected through the Machine
Readable Visa, Enhanced Border Security/Visa Fraud, Expedited Passport,
Commercial Service, Visa Fingerprint, Affidavit of Support, Diversity Lottery,
Defense Trade Control, and International and Educational Exchange programs.
Excluded are amounts for mandatory Foreign Service retirement programs, as well
as resource flows of the Foreign Military Sales Trust Fund and other mandatory
accounts that are not regulated through the appropriations process. Data also exclude
funding for International Monetary Fund quota increases and for other IMF facilities,
amounts that Congress has approved on five occasions in the past 30 years.1
Each figure illustrates major events influencing sharp changes in foreign policy
spending levels and identifies a few key budget trends over the past three decades.
The discussion also references a baseline representing the 30-year annual average of
spending that can be compared with actual amounts for any specific year, thereby
providing a degree of context for assessing the current budget request. For the most
part and unless otherwise noted, data are expressed in constant FY2006 dollars taking
into account the effects of inflation over time. Tables attached to the report as an
appendix provide specific numbers used in the analysis, expressed in both current
and constant terms.
Much of the data are drawn from the Office of Management and Budget’s
(OMB) annual Historical Tables volume that accompanies each new budget request
made by the Administration. Other sources, where appropriate, include the

1 The United States participates in the expansion of IMF resources or the creation of a new
IMF facility, at irregular intervals. Although Congress provides new budget authority
through appropriations for the full amount of U.S. participation, the transaction is
considered as 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 offset by the creation of
a U.S. counterpart claim on the IMF that is liquid and interest bearing. Including budget
authority figures for the IMF creates “spikes” in selected years and tends to blur continuing
trends in funding levels. Because of this, and the fact that IMF budget authority does not
result in an outlay or have any impact on the federal deficit or surplus, amounts are excluded
from this report.

Department of State, the U.S. Agency for International Development (USAID), the
Congressional Budget Office (CBO), and House and Senate Appropriations
Committees. Constant dollar calculations are made by CRS.
Budget Scorekeeping Changes and Problems with Precise
Analysis of Spending Trends
Following enactment of the Budget Enforcement Act of 1990, the United States
began applying in FY1992 different procedures for appropriating funds for credit
programs. Prior to FY1992, Congress would appropriate the full value of direct
loans issued by the U.S. government. For commercial loans guaranteed by the
United States, Congress placed annual limitations on the total amount of these
guarantees, but was not required to appropriate any funds. Under the terms of “credit
reform,” Congress began in FY1992 to appropriate the subsidy value of both direct
loans issued and loan guarantees backed by the government. In simple terms, the
subsidy value, as determined by OMB, is an amount that represents the risk to the
U.S. government in issuing or backing the loan, plus the extent to which, if any, the
loan carries a concessional interest rate below market value. Accordingly, there are
inherent problems with comparing trends before and after FY1992 for any element
of discretionary spending that includes credit programs.
Several credit programs operate within Budget Function 150: direct loans under
Foreign Military Financing (FMF) and (prior to FY1999) P.L. 480 food programs;
loan guarantees issued by USAID; and direct loans and loan guarantees managed by
the Export-Import Bank and the Overseas Private Investment Corporation. Two
examples illustrate the mixed impact on appropriation requirements of the “credit
reform” policy changes that took effect for FY1992. In FY1997, Congress enacted
a $60 million subsidy appropriation for FMF direct loans, an amount that allowed the
Defense Department to issue military aid loans with a total face value of $540
million. Prior to FY1992, Congress would have had to appropriate the full $540
million instead of the $60 million subsidy that backed the loans. On the other hand,
in the case of a loan guarantee, Congress approved in FY1997 a $3.5 million subsidy
appropriation permitting USAID’s Urban and Environmental Credit program to
guarantee $29.4 million in loans. These represent loans issued by commercial
lenders for which the United States government guarantees repayment. Before
FY1992, no appropriation would have been required. Thus, Congress appropriated
in FY1997 $63.5 million in support of these two programs, whereas budget rules that
existed prior to the 1992 credit reform would have required an appropriation of $540
million to implement these same two activities.
Because OMB has not adjusted its figures for pre-FY1992 credit programs,
comparisons between the two time periods cannot be totally precise. Nevertheless,
an assessment of funding trends before and after FY1992 is still useful in identifying
an illustrative pattern of spending decisions. While the application of post-credit
reform procedures, on balance, probably tends to overstate somewhat the degree of
reductions in Function 150 spending during the mid-1990s, the extent of this
overstatement does not appear to be sufficient to override the general conclusion that
cuts in the international affairs budget were substantial during that period.
Comparison of the increases in FY1999- FY2006 for Function 150 resources with

pre-1992 levels face the same methodological problems. For selected sub-categories
of the international affairs budget, however, where no credit programs exist, such as
for State Department and public diplomacy programs, the credit reform changes have
no effect on measuring and comparing discretionary spending.
International Affairs
Discretionary Budget Authority
International Affairs discretionary budget authority, measured in real terms, has
experienced several cycles over the past three decades. There were periods of rapid
growth followed immediately by sharp declines during the mid-1980s. After several
years in the late 1980s and early 1990s of relative stable budget levels, amounts fell
— at first gradually, and then sharply — through FY1997. The foreign policy
budget rose slightly in FY1998 but significantly in FY1999 and FY2000 compared
to amounts during the mid-1990s. Growth in the Function 150 budget continued
following the terrorist attacks of September 11, 2001, reaching by FY2004 the
highest level of foreign affairs spending in three decades.
The early-to-mid 1980s were marked by a steady increase in foreign policy
spending, largely the result of rising amounts of security aid allocated for strategic
purposes in Central America, Pakistan, and “military base rights countries” such as
the Philippines. At the same time that growth in security aid peaked in FY1985,
Congress approved two major supplementals: a $2.25 billion economic aid package
for Israel, Egypt, and Jordan, and about $1 billion in famine relief for Africa. All of
these factors combined to set foreign affairs discretionary budget authority at $38.96
billion, in FY2006 dollars, a level about 5% higher than the FY2006 amount.
Absent the unique combination of these international demands that spiked aid
spending in FY1985, and with intensifying pressure in Washington to reduce the
federal deficit, Function 150 discretionary spending, like other federal spending, fell
abruptly in FY1986, and declined further in the next two years to a point more than

25% less than where the foreign policy budget had stood just three years earlier.

The following period — FY1988 through FY1993 — marked a relatively stable
level of foreign affairs budget authority, ranging in most years roughly between $28
and $29 billion annually, as calculated in FY2006 dollars. To a considerable extent,
this steady period can be attributed to annually negotiated budget agreements
between the Administration and Congress for major discretionary spending
categories, one of which was international affairs. A small, temporary upsurge
occurred in FY1990/1991, primarily the result of a supplemental appropriation for
aid to Panama and Nicaragua, additional costs associated with the Persian Gulf War,
including supplemental assistance for Israel and Turkey, and added expenses for U.S.
agencies operating in the Gulf region.
Although the foreign affairs budget had been on a long downward trend since
FY1985, the drop in FY1994 was the first significant annual decrease in real terms
since FY1988. The 3.8% real cut for FY1994 was followed by two years of
increasingly larger reductions for foreign policy programs. FY1995 discretionary

budget authority dropped 5.5% below FY1994, followed by an 11.3% cut in FY1996.
Reductions continued for FY1997, although at a more modest 1.3% level.
This downward cycle reversed in FY1998, with international affairs budget
authority rising by 4% in real terms over FY1997, followed by a far more significant
rise — 21.4% — in foreign policy spending for FY1999. In addition to approving
modest increases for programs throughout the Function 150 account, Congress
further agreed to nearly $1 billion for U.S. arrearage payments to various
international organizations and multilateral development banks, about $1.5 billion
for security upgrades at American embassies and missions around the world
following the embassy bombings in Kenya and Tanzania, and large supplementals
for Central American victims of Hurricane Mitch ($1 billion) and for Kosovo
humanitarian aid relief ($1.1 billion). A similarly large supplemental in FY2000
supporting a $1.8 billion one-time aid package in support of the Wye River/Middle
East peace accord and about $1 billion for a Colombian counternarcotics program,
plus rising budgets for a number of regular and continuing foreign affairs programs
in FY2001 kept foreign policy spending at around $27.4 billion during the FY1999-

2001 period, one-quarter higher than the low point of FY1997.

The most defining change in U.S. foreign policy spending, however, came
following the September 11, 2001, terrorist attacks in the United States. Since 9/11
American foreign aid and diplomatic efforts have taken on a more strategic sense of
importance and have been cast frequently in terms of contributing to the global war
on terrorism, including assistance to about 30 “front-line” states in the terrorism war
— countries that cooperate with the United States in the war on terrorism or face
terrorist threats themselves.2 Through a series of emergency supplemental
appropriations, by FY2003 Congress had boosted the international affairs budget
following the 9/11 attacks to $37.4 billion, in real terms.
At roughly the same time that fighting terrorism became the leading concern of
U.S. foreign policy, the Bush Administration announced other significant initiatives
that have added to a growing foreign affairs budget. The Millennium Challenge
Account (MCA) is a new aid delivery concept, authorized by Congress and
established in early 2004, that is intended to concentrate significantly higher amounts
of U.S. resources in a few low- and lower-middle income countries that have
demonstrated a strong commitment to political, economic, and social reforms. MCA
funding had been expected to grow to $5 billion annually by FY2006, although actual
appropriations — $1.77 billion in FY2006 — have been far more modest.
Addressing global health problems has further become a core U.S. aid objective
in recent years. Congress created a separate appropriation account for Child Survival
and Health activities in the mid-1990s and increased funding for international
HIV/AIDS and other infectious disease programs. President Bush’s announcement
at his 2003 State of the Union message of a five-year, $15 billion effort to combat

2 According to the State Department, these “front-line” states include Afghanistan, Algeria,
Armenia, Azerbaijan, Bangladesh, Colombia, Djibouti, Egypt, Ethiopia, Georgia, Hungary,
India, Indonesia, Jordan, Kazakhstan, Kenya, Oman, Pakistan, Philippines, Poland, Russia,
Saudi Arabia, Tajikistan, Tunisia, Turkey, Turkmenistan, Uzbekistan, and Yemen.

AIDS, malaria, and tuberculosis (Presidential Emergency Plan for AIDS Relief —
PEPFAR) has added greater emphasis to this primary foreign assistance objective and
contributed to higher international affairs spending.
Resources committed to fighting terrorism and rebuilding Afghanistan and Iraq,
plus the launch of the MCA and PEPFAR initiatives pushed U.S. foreign policy
spending in FY2004 to $53.8 billion, in real terms, the highest level in over three
decades. Even excluding the $18.45 billion for Iraq reconstruction from the total,
FY2004 remains one of the largest international affairs budgets during this period.
Without the significant Iraq reconstruction appropriation of FY2004, the FY2005
foreign affairs budget dropped back to $36.8 billion, although it represented an 11%
increase for international activities other than Iraq. Another large emergency
supplemental for FY2005 dealing with other foreign crises — tsunami disaster relief,
a Palestinian aid package, conflict in the Darfur region of Sudan, and accelerated
Afghan reconstruction efforts — pushed Budget Function 150 to its highest level
(excluding Iraq) since FY1985.
As overall budget pressures increased in the 109th Congress and the
unanticipated emergency to address the victims and destruction of Hurricane Katrina,
for the first time during the Bush Administration, Congress reduced — by $2.1
billion or 6.4% — the President’s regular foreign policy request. Subsequently,
however, Congress approved emergency supplemental spending of $4.25 billion for
Iraq, Afghanistan, and various humanitarian crises around the world. At $36.96
billion, the international affairs budget for FY2006 is one of the highest in three
decades and is 21% higher than the annual average over the past 30 years.

Note: Unless otherwise stated, figures are expressed
in constant FY2006 dollars.!The $36.96 billion FY2006 foreign policy budget is the
largest for all but four years during the past three decades.
!Spending in FY2006 is 21% higher than the $30.48 billion
annual average level since 1977.Figure 1. International Affairs Spending

!International affairs spending for FY2006 is nearly two-
thirds higher than in FY1997, when the budget reached its
lowest point in 30 years.
!The five foreign policy budgets since 9/11 represent the
largest sum total of any period since 1977.
!FY2004, which includes $18.4 billion for Iraq
reconstruction, was by far the largest budget in 30 years.
iki/CRS-RL33262!Due to embassy security and Central American disaster aid
g/wsupplementals, spending surged by 21% in FY1999 from
leakthe previous year, the largest increase in a decade.
!Foreign policy resources declined steadily for six years
://wikifollowing the end of the Cold War.
http!Budget reduction pressures pushed foreign policy and most
Federal resources down sharply during the late 1980s.
!Large Middle East and Africa aid supplementals, coupled
with continued growth of security assistance, pushed the
FY1985 foreign policy budget to the highest level, except
for FY2004, over the 30 year period.
!Spending grew during the early 1980s largely due to
increasing security aid for Central America and countries
that granted the U.S. military base access.

International Affairs Budget as a Percent of Total
U.S. Discretionary Funds
Another way of analyzing trends in international affairs resources is to draw
relationships between foreign policy spending and overall funding for total federal
discretionary programs. This is relevant especially for the present debate over
budgetary priority-setting decisions since it is within the roughly $840 billion non-
emergency discretionary budget for FY2006 that international affairs requirements
must compete.
One of the most striking differences between measuring the international affairs
budget as a percent of total federal discretionary spending (shown in Figure 2) or as
the level of total dollars appropriated (Figure 1) is the trend for each in recent years.
Although the amount of spending for international activities has grown significantly
since September 11, compared to changes in the overall size of the federal budget,
the share allocated for foreign policy programs has declined (with the exception of
FY2004 and the $18.45 billion supplemental for Iraq). The estimated level for
FY2006 is 3.41%, the lowest level for any year in the last three decades and about
one-eighth less than the 3.96% annual average since FY1977. If, however, the
“surge” in spending for Iraq in FY2004 is folded into the entire post-9/11 period, the
annual average of the past four years equals the historic 3.96% average for the
international affairs account.
This recent trend, which is somewhat counter-intuitive, results from even larger
increases in U.S. government spending in non-international sectors, especially for
defense, homeland security, and domestic disaster relief. Defense spending, which
accounted for roughly half the discretionary budget authority prior to 9/11, grew to
more than 54% by FY2004. What the United States now defines as “homeland
security” spending, a category that did not exist prior to 9/11, has risen by about one-
third. A series of emergency supplementals — totaling about $82.1 billion — for
relief of Hurricane Katrina victims pushed shares for other budget activities,
including Function 150, down for FY2005 and FY2006.
For the period prior to the terrorist attacks of September 11, the patterns in
Figures 1 and 2 for foreign policy spending are similar, although the degree of sharp
growth and decline are muted somewhat when measuring discretionary BA as a %
of total budget authority. One of the most notable trends is the substantial continuity
in the amount of the budget authority devoted to international affairs during an eight
year period, FY1988 to FY1995. Although dollar amounts for foreign affairs may
have risen somewhat in FY1991 due to the Gulf War, and fallen through the next
four years, Function 150’s proportion of total discretionary budget authority deviated
only slightly from a sustained level of 4% annually. In short, even though the foreign
policy budget fell steadily in the early- to mid-1990s, it declined at roughly the same
pace as the total for all other programs funded through discretionary spending. But
in FY1996, this 4% share that had been sustained for eight years ended, and Function

150’s proportion fell to 3.63%. In FY1997 and FY1998 it fell further to about 3.6%

of discretionary BA. Thus, at a time when Congress and the President had reduced
total discretionary budget authority, resources for foreign policy programs declined
faster than other federal programs.

Note: Unless otherwise stated, figures are expressedKEY TRENDS
in constant FY2006 dollars.
!The FY2006 foreign policy budget’s share of total Federal
discretionary budget authority is 3.41%, substantially
smaller than the 30 year annual average of 3.96%.Figure 2. International Affairs Budget as a % of Total U.S.
Budget Authority

!Including the Iraq reconstruction supplemental, the FY2004
5.54% share of total spending was the largest for Budget
Function 150 in three decades.
!Despite the significant increases in foreign policy resources
since September 11, except for FY2004, the share of
iki/CRS-RL33262Function 150 of total U.S. discretionary spending has
g/wdeclined. This is largely due to a more rapid rise in defense
leakand homeland security appropriations, and, in FY2005 and
FY2006, relief for victims of Hurricane Katrina.
http!With the exception of the years following two large
“spikes” associated with the Camp David/Middle East peace
accord (FY1979) and Iraq reconstruction (FY2004), the
single-year cut for foreign policy spending of 11.3% in
FY1996 was the largest in three decades and nearly six
times larger than cuts for the rest of the budget.

Foreign Assistance Component of the International
Affairs Budget
The largest single element of the foreign policy budget supports a broad range
of development, humanitarian, security/economic, and military assistance programs.
In most years, foreign aid makes up about two-thirds of Budget Function 150.3
With such a large portion of the international affairs budget supporting foreign
assistance, the patterns and trends for foreign aid are quite similar to the entire
Function 150. Following the September 11 terrorist attacks, reconstruction initiatives
in Afghanistan and Iraq, plus more general assistance to countries supporting U.S.
efforts in the global war on terror, have pushed foreign aid spending levels up
significantly. During this same period, President Bush launched two major aid
initiatives: the President’s Emergency Plan for AIDS Relief (PEPFAR), a five year,
$15 billion activity; and the Millennium Challenge Account, anticipated to grow to
a $5 billion annual program concentrating on countries that have performed well on
governance, economic, and social measures. Combined with responses to
unanticipated international emergencies in recent years, including the Indian Ocean
tsunami and conflict in the Darfur region of Sudan, the foreign aid budget has grown
from $18.4 billion just prior to 9/11 to $25.2 in FY2006 (constant dollars), more than
a one-third increase in only four years. FY2004 was the largest year, post-9/11, at
$43.3 billion, although this included an unusually large $18.45 billion supplemental
for Iraq.
Prior to 9/11, foreign aid spending had already been growing since FY1997
when funding hit its lowest point over the past 30 years. While resources for
continuing foreign aid programs rose modestly during the period, levels were pushed
higher — nearly 21% between FY1997 and FY2001 — by a series of new initiatives
and humanitarian crises. Considerable amounts were programmed for the Wye
River/ Middle East peace effort; the United States cleared most of its accumulated
arrears owed to the U.N. and World Bank; the Clinton Administration joined other
donors in expanding debt relief for the world’s poorest nations; and the Bush
Administration launched a major counter-narcotics effort in Colombia — that later
evolved into a program for the entire region — the Andean Counterdrug Initiative
(ACI). The United States also responded to several humanitarian emergencies,
including those for the victims of Hurricane Mitch in Central America and the
violence in Kosovo.
The low point in foreign aid spending — FY1997 — came following a steady
decline over a decade-long period that began with passage in 1985 of the Gramm-
Rudman-Hollings deficit reduction act. The foreign aid budget fell by nearly 24%
(real terms) between FY1985 and FY1986, and continued to decline in subsequent
years as Congress and the President worked towards reducing discretionary spending.
With the fall of the Berlin Wall, the collapse of the Soviet Union, and the end of the
Cold War, much of the rationale used for supporting U.S. foreign assistance during

3 Budget Function 150 is divided into several sub-functions. Foreign aid corresponds to
Subfunction 151, or International Development and Humanitarian Assistance, and to
Subfunction 152, or International Security Assistance.

the previous four decades disappeared. With the exception of FY1991 when
Congress approved additional resources for countries affected by the Persian Gulf
War, the foreign aid budget continued its steady decline through FY1997. By that
point, foreign assistance resources, in real terms, stood 54% below levels of a decade
The first term of the Reagan Administration saw a steady, large increase in
foreign aid spending culminating in FY1985 when resources reached $33 billion, the
third highest single year level in the past three decades. Growth occurred not because
of policy consensus over the importance of foreign assistance, but rather because of
significant policy differences between the executive and legislative branches. Early
in the Reagan Administration, officials attempted to reduce multilateral development
contributions, while at the same time increasing strategic types of foreign assistance.
Congress blocked efforts to cut multilateral and other economic aid, but also
approved much of the funds sought by the executive for security assistance programs
in Central America and aid to countries that provided U.S. access to military bases.
The peak year of FY1985 included a large supplemental package for Israel, Egypt,
and Jordan, payment of arrears owed to the World Bank, and humanitarian relief for
victims of a severe famine in Africa.

Note: Unless otherwise stated, figures are expressed!Foreign aid spending — the combined resources for
in constant FY2006 dollars.development, humanitarian, security/ economic, and
military assistance — has grown significantly since 9/11,
augmented by the launch of two major aid initiatives for
HIV/AIDS and the Millennium Challenge Account.
!The $25.2 billion total for FY2006 is about 9% higher thanFigure 3. Foreign Aid Discretionary Budget Authority

the $23.1 billion annual average since FY1977.
!FY2004, including Iraq reconstruction, was the highest
foreign aid budget in 30 years.
!Foreign aid spending declined substantially following the
collapse of the Soviet Union and the end of the Cold War.
Between FY1990 and FY1997, funding for foreign
iki/CRS-RL33262assistance fell by 31%, to a 30-year low of $15.2 billion.
g/w!During the first term of the Reagan Administration, foreign
leakaid grew at a steady pace. Larger contributions to the World
Bank, increased assistance to Central America and countries
://wikiproviding the U.S. with military base access, famine relief
httpin Africa, and an economic stabilization package for Israel
culminated in FY1985 with the third largest foreign aid
budget in 30 years.
!The following year, Congress enacted the Gramm-Rudman-
Hollings deficit reduction act and foreign assistance, like
most other federal spending programs, fell sharply.
!The one-year costs of security assistance in support of the
Camp David Accord pushed foreign aid in FY1979 to the
highest point, other than FY2004.

Breaking Down Bilateral Foreign Aid Spending
As noted above, foreign assistance includes a wide-breadth of programmatic
tools utilized in support of various, and in some cases, divergent U.S. foreign policy
objectives. Spending patterns for different components of foreign aid have varied
considerably over the past three decades, as illustrated in the charts that follow.
Although there is no precise definition of major bilateral foreign aid categories,
this discussion divides programs into four clusters: 1) “core” development assistance
that generally employs long-term poverty reduction and economic growth strategies;
2) humanitarian relief activities that aim to save lives and provide basic services
immediately following a natural or man-made disaster, or support the needs of
refugee populations over an extended length of time; 3) political/security economic
aid, intended to help bolster the economies of countries of special strategic interest
to the United States or nations undergoing transitions to democratic and market
economic systems, such as the states of the former Soviet Union; and 4) military
assistance that helps American friends and allies strengthen their defense capabilities.
“Core” Bilateral Development Assistance
The growth in spending since FY2000 on “core” bilateral development
assistance programs represents perhaps the most dramatic increase of any component4
of the international affairs budget. The $6.9 billion total for FY2006 is the largest
in 30 years and more than three times larger, in real terms, than the $2.13 billion
budget for FY2000. Current spending is also well more than double the annual
average funding level over the past three decades.
The most important components of for this sizable increase have been the
launching of two new bilateral development aid initiatives by the Bush
Administration. The Millennium Challenge Account (MCA), promising to
eventually total $5 billion annually, and the President’s Emergency Plan for AIDS
Relief (PEPFAR), adding $10 billion in new assistance over five years, each began
in FY2004 and has grown in subsequent years. Annual increases over the previous
year level of spending on bilateral development aid have risen, in real terms by 44%
in FY2004, 21% in FY2005, and 13.5% in FY2006.
While the MCA and PEPFAR contributed significantly to “core” bilateral
development assistance spending, funds were rising prior to FY2004. Congress

4 “Core” bilateral development assistance is defined as funds provided currently through
four appropriation accounts: Development Assistance Fund, Child Survival and Health,
Global AIDS Initiative, and the Millennium Challenge Account. Previously, “core”
accounts also included the Development Fund for Africa (FY1988-FY1994), Population
Assistance (FY1977-FY1994), Sahel Development Program (FY1977-FY1979), and the so-
called “functional development” accounts that Congress created in the New Directions
legislation of 1973, providing bilateral development aid for agriculture, health, population,
education, and technical assistance (FY1977-FY1992). These latter accounts were replaced
with the current account configuration.

began increasing the President’s request for both the Development Assistance Fund
and the Child Survival and Health account in FY2001, adding resources for such
programs supporting basic education, HIV/AIDS, malaria, and tuberculosis.
Following the September 11, 2001 terrorist attacks, the Administration added
Development, along with Defense and Diplomacy, as the three pillars of U.S.
national security, which also assigned greater importance to bilateral development
assistance and its role in the global war on terrorism. Annual increases over the
previous year, FY2001-FY2003, totaled 19%, 9%, and 24%, respectively.
Prior to the most recent surge in bilateral development aid spending, levels for
much of the period beginning in FY1977 remained relatively stable. In real terms,
development assistance resources experienced small increases in the late 1970s when
the Carter Administration made Africa an aid priority and during the early 1980s
when all components of U.S. foreign aid rose during the first term of the Reagan
Administration. After falling to $2.6 billion in FY1986, development aid budgets
remained steady, growing somewhat to $3 billion by FY1991as Congress sought to
double U.S. development assistance to Africa over a period of years. With the end
of the Cold War and shifting congressional budget priorities in the mid-1990s,
however, development aid, like most other categories of American foreign aid,
declined sharply, dropping to $2.03 billion (FY2006 dollars) by FY1997, the lowest
point during the past 30 years.

Note: Unless otherwise stated, figures are expressedKEY TRENDS
in constant FY2006 dollars.
!“Core” bilateral development assistance funding accounts
— currently consisting of the Development Assistance
Fund, Child Survival/Health, Global AIDS Initiative, and
the Millennium Challenge Account — have increased byFigure 4. “Core” Bilateral Development Assistance
more than 3 times since FY2000.Spending

!The FY2006 level of $6.9 billion is the largest during the
past 30 years, and is well more than twice the size of the
annual average over this three decade period.
iki/CRS-RL33262!Development aid spending fell sharply following the end of
g/wthe Cold War, reaching a 30-year low point in FY1997 at
leak$2.03 billion.
://wiki!For a 13 year period beginning in FY1977, development
httpassistance resources remained relatively stable, ranging in
several of these years between $2.7 billion and $2.8 billion.

Humanitarian Assistance5
The United States, consistently a large contributor to international disaster and
humanitarian relief operations, has spent unprecedented amounts on global
humanitarian emergencies in recent years. The confluence of several natural
disasters — Hurricane Mitch which struck Central America in late 1998, drought in
Ethiopia and elsewhere in Africa since 2002, the Indian Ocean tsunami which struck
in December 2004, and the October 2005 earthquake in Pakistan — plus continuing
conflicts around the world — Kosovo (1999), Liberia (until 2003), Afghanistan
(2002), pre-Iraq war (2003), Haiti (2004), and Darfur (since 2003) combined to push
foreign aid spending on humanitarian crises to their highest levels in three decades.6
The $3.83 billion humanitarian aid budget for FY2003 was the largest since FY1977,
and slightly higher than the $3.73 billion funding level for FY2005. Resources for
FY2006 ($3 billion) are lower than the recent peak years, although they remain one
of the largest totals over the past 30 years.
In only two years prior to FY1999 have humanitarian aid funding levels come
close to recent totals. For FY1980-FY1981, large supplementals for Indochina and
Soviet/East European refugee resettlements brought amounts to around $2.8 billion.
In FY1985 humanitarian relief spending exceeded $2.75 billion, largely due to a
substantial U.S. response to a major famine in Africa. Assistance to populations
affected by the Gulf War in 1991 and to victims of conflict in Bosnia, Haiti, and
Rwanda in 1994 represented other “surge” years for humanitarian aid budgets.

5 While there is no “official” definition of what constitutes U.S. humanitarian assistance,
this discussion is based on spending appropriated in the current Foreign Operations and
Agriculture accounts for International Disaster and Famine Assistance, Transition
Initiatives, Migration and Refugee Assistance, Emergency Migration and Refugee
Assistance Fund, and title II of P.L. 480 food assistance. In addition, in selected years,
Congress has created special accounts for specific relief efforts, such as the Tsunami
Recovery and Reconstruction Fund (2005) and Central America and the Caribbean
Emergency (1999). Figures do not include amounts funded outside Budget Function 150,
such as the Defense Department’s Overseas Humanitarian, Disaster, and Civic Action
account provided in annual DOD appropriations. For more information regarding U.S.
international humanitarian aid, see CRS Report RL32714, International Disasters and
Humanitarian Assistance: U.S. Government Response, by Rhoda Margesson.
6 Because many humanitarian emergencies continue well beyond the year in which they first
arise, aid programs may be ongoing for several of these cases.

Note: Unless otherwise stated, figures are expressedKEY TRENDS
in constant FY2006 dollars.
!Due to the unforeseen and unpredictable nature
of events requiring humanitarian relief, spending
patterns have been highly erratic over the pastFigure 5. Humanitarian Assistance Spending

30 years.

!In general, however, resources committed for
food, disaster, and refugee support have been
growing for the past two decades. Amounts
have been especially large in several years since
!FY2006 appropriations for humanitarian aid
iki/CRS-RL33262programs, at $3 billion, fall below recent years
g/w— FY1999, FY2003, and FY2005.
leak!For the entire 30-year period, FY2006 spending
://wikion humanitarian relief operations is nearly 30%higher than the $2.32 billion annual average, but
httponly slightly larger than the annual average
since FY1999.

Political/Security Economic Assistance7
The United States utilizes several types of economic assistance in pursuit of
strategic objectives that do not have as their primary goal long-term economic
growth, poverty reduction, or humanitarian relief. These latter purposes may be of
secondary importance in providing strategic assistance, but nevertheless, the ways in
which either type of aid is delivered may be the same. In general, the specific
rationale of why the assistance is provided determines whether it falls into primarily
development/humanitarian aid accounts or into another set of political/security-
related assistance programs.
The primary channel for transferring political/security economic assistance is
through the Economic Support Fund (ESF), an account previously referred to as
Security Supporting Assistance and Defense Support. ESF resources have been used
in support of Middle East peace efforts since Camp David in FY1979, for helping the
U.S. gain access to military bases in the Philippines and elsewhere during the 1980s,
for backing Central American governments during conflicts in the mid-1980s,
assisting Panama and Nicaragua stabilize following government changes in 1990, and
most recently, supporting a group of about 30 nations regarded as the “front-line”
states in the Global War on Terror (GWOT). Other types of political/security
economic programs include those authorized in the early 1990s for helping the
countries of Eastern Europe and the former Soviet Union transition to democratic and
market economic states. Counter-narcotics efforts, which became a major initiative
in Colombia and elsewhere in the Andean region, non-proliferation programs, and
anti-terrorism activities are other types of political/security economic assistance. The
large amount of reconstruction assistance provided to Iraq in FY2003, FY2004, and
FY2006 also falls within this category.
Budget “spikes” for political/security economic assistance tend to occur
following major new international events, including peace agreements and the
termination of hostilities in conflict-stricken areas, several of which are noted above
and illustrated in Figure 6 below. Continuing, year-to-year political/security
economic aid, on the other hand, has remained more steady than other types of U.S.
foreign aid, ranging in “non-peak” years between $4 billion and $6 billion, in real
The current (FY2006) $6.9 billion political/security assistance budget is not
large compared with levels approved in FY2003 and FY2004, but is the sixth highest
amount during the past 30 years. FY2006 levels are 4.5% larger than the 30-year
annual average, although if Iraq reconstruction funds are excluded, FY2006 is nearly

10% below the three decade annual average.

7 Foreign Operations appropriation accounts that make up political/security economic
assistance include the Economic Support Fund, International Fund for Ireland, Assistance
for Eastern Europe and the Baltic States (SEED), Assistance for the Independent States of
the Former Soviet Union (FSA), Democracy Fund, International Narcotics Control and Law
Enforcement (INCLE), Andean Counterdrug Initiative (ACI), and the Nonproliferation,
Anti-terrorism, Demining, and Related Programs (NADR).

Note: Unless otherwise stated, figures are expressed!Political/security-related economic programs generally
in constant FY2006 dollars.focus on countries or initiatives of strategic importance to
the United States, and funding levels tend to “spike” due to
new circumstances, including peace agreements or post-
conflict aid.Figure 6. Political/Security Economic Aid Spending

!FY2006 spending on political/security economic aid, at $6.9
billion, is lower than FY2003 and FY2004, but 4.5% larger
than the 30-year annual average.
!Peak years for political/security economic aid spending
coincide with specific events: Iraq reconstruction (FY2004
iki/CRS-RL33262and FY2006); pre-Iraq war aid for “front-line” states in the
g/wGlobal War on Terror (FY2003); the Wye River/Middle
leakEast Peace Accord (FY2000); large supplemental for Russia
and other states of the former Soviet Union (FY1993);
://wikigovernment changes in Panama and Nicaragua (FY1990);
httpa large supplemental for Israel, Egypt, and Jordan
(FY1985); and the Camp David Peace Accord (FY1979).
!Other than these peak years, political/security economic aid
resources have remained relatively stable at between $4
billion and $6 billion per year.

Military Assistance8
Through its military assistance programs, the United States provides friends and
allies with defense equipment and training, as well as contributing to non-U.N.
peacekeeping operations. Although low by historical trends, military aid budgets
during the post-September 11 period have been higher than at any time since the end
of the Cold War. Nevertheless, amounts for FY2006 — $4.9 billion — are nearly

30% less than the annual average since FY1977.

Military assistance spending in FY2005 and FY2006 would have been
significantly higher if not for an Administration decision, backed by Congress, to
fund with Defense Department resources $11 billion in programs to train and equip
Afghan and Iraqi security forces. In the previous three fiscal years, such activities
had been financed through the Foreign Military Financing (FMF) program and the
Iraq Relief and Reconstruction Fund (IRRF), both of which fall within the
international affairs budget function. Although this represents a substantial shift
from traditional State Department policy and budgetary authority over military
assistance, the Administration says that it intends to continue this financing structure
in future years.
Levels of military assistance declined steadily in the period following the end
of the Cold War as the United States ended most defense support to countries other
than Israel, Egypt, and a few East European/former Soviet states. This reduction,
however, had actually begun in FY1987 when countries such as Spain and South
Korea “graduated” as military aid recipients.
The early part of the 1980s witnessed a steady increase in military assistance
which became a primary tool for advancing the “Reagan Doctrine” policy of
supporting anti-communist insurgents around the world. This included a sharp rise
in military support to El Salvador and Honduras in Central America, to the
Philippines and other nations providing the United States access to overseas military
bases, and to Pakistan, a front-line state on the border with Soviet-occupied

8 Accounting for military assistance uses a different methodology than found elsewhere in
this report. While other budget trends are expressed in terms of discretionary budget
authority, military aid figures are expressed as total program size. This is because at times
during the past 30 years, and especially in the 1970s and 1980s, the United States provided
large amounts of military support in the forms of market-rate loans rather than as grants or
subsidized loans. Budgeting methods for military loans have changed several times in the
past three decades, at times requiring appropriations to equal the total face value of the
loans, yet in other years only requiring Congress to provide as little as 10% of the face value
of the loans. By using figures for the total volume of military aid provided, regardless of
the budget rules that may have applied at the time, allows for a more consistent trend
Current military assistance programs include Foreign Military Financing (FMF),
International Military Education and Training (IMET), and Peacekeeping Operations, each
managed by the State Department. For the most part, the State Department controls the
funds and sets program policy, while the Defense Department implements the activities.

Since the signing of the Camp David Peace Accord in 1978, promoting Middle
East peace has been a cornerstone of U.S. military assistance. In FY1979, military
aid reached its 30 year peak of $15.2 billion (in real terms), largely because of a
substantial military support package offered to Israel and Egypt as part of the
negotiations. From that point, these two countries have accounted for roughly two-
thirds of total U.S. military assistance.

!Even more so than political/security-related
economic assistance, military aid focuses on
countries and international initiatives of strategic
importance to the United States.
!The military aid budget for FY2006, at $4.9
billion, is the sixth lowest spending level in theFigure 7. Military Aid Spending

past three decades. It falls nearly 30% below the
annual average for this period.
!A significant factor as to why military assistance
has not been higher in the post-9/11 period, and
especially for FY2005 and FY2006, is the
Administration’s decision to shift funds to train
and equip security forces in Iraq and
iki/CRS-RL33262Afghanistan from the international affairs
g/wbudget to the defense budget. In these two
s.oryears, Congress appropriated $11 billion for
leaksuch purposes managed by the Defense
://wikiDepartment, which in previous years had beenfunded under State Department accounts.
http!Military assistance spending in FY2003 and
FY2004 was the highest since the end of the
Cold War.
!During the first term of the Reagan
Administration military aid resources more than
doubled with significant increases for friends in
Central America, countries that provided
military base access to the United States, Israel
and Egypt, Greece and Turkey, Pakistan, and
other strategic partners under the “Reagan
!FY1979, the year following the signing of the
Camp David Peace Accord, represented the
highest level of military aid funding during the
past 30 years.

Foreign Assistance to Africa
Over the past three decades, countries in sub-Saharan Africa have received
$72.2 billion (constant FY2006 dollars) in economic and military assistance from the
United States. While aid to the continent is sizable, Africa has never been the
primary target of American resources, especially compared with the Middle East
throughout the entire period and Asia and Latin America during the 1980s. In 2005,
however, considerable international attention focused on African development issues,
leading to appeals to sharply increase assistance for poverty reduction, post-conflict
stabilization, health needs, and other challenges facing the continent.
At the G-8 Summit in July 2005, the Bush Administration announced a pledge
to double U.S. bilateral assistance to Africa from $4.3 billion in 2004 to $8.6 billion
by 2010.9 If achieved, this would accelerate what has already been an increasing
emphasis and priority of American foreign aid resources to the region in recent years.
Already, U.S. assistance to Africa has more than doubled since FY2001, rising from
$2.4 billion to $5.9 billion in FY2006, and more than tripled since a $1.6 billion total
in FY1997.
The sizable increase in U.S. assistance to Africa since the late 1990s has been
the result of three factors. First, sub-Saharan Africa has been a principal beneficiary
of several new American foreign aid initiatives in recent years. A series of relatively
modest, but targeted aid activities launched during the Bush Administration have
included the Africa Education Initiative ($200 million over five years, beginning in
FY200110), the Congo Basin Forest Partnership ($53 million, FY2002-FY2005), the
Initiative to End Hunger in Africa (2002), Trade for African Development and
Enterprise Initiative (2001), Women’s Justice and Empowerment in Africa, among
others. Selected African nations will also benefit from the Millennium Challenge
Account (MCA) which began operations in FY2004. Madagascar, Benin, and Cape
Verde are among the eight countries selected thus far to receive multi-year grants in
recognition of sound economic and governance performance. A $1.2 billion, five-
year anti-malaria program, launched in FY2006, is also expected to provide
substantial amounts of additional assistance to the region through FY2010.
The President’s Emergency Plan for AIDS Relief (PEPFAR), however, has been
the most expansive of the Bush Administration foreign aid policies benefitting
Africa. Begun in FY2004, much of the five-year, $15 billion program will assist 15
“focus” countries that face the most serious threats from HIV/AIDS. Twelve of the
focus nations are in sub-Saharan Africa, receiving over $2.2 billion in the first three
years of the initiative for the prevention and treatment of the AIDS pandemic. Like

9 The 2004 estimate is based on data compiled by the Organization for Economic
Cooperation and Development (OECD) and does not match exactly the methodology used
in this report to total aid levels. Most importantly, the OECD figures are based on
disbursements of resources, while this report uses budget authority, or appropriated
10 The White House announced in June 2005 that this program will continue, providing $400
million FY2006-FY2010.

the MCA and malaria programs, PEPFAR resources are expected to rise in the near
term, providing additional amounts of aid to the region.
A second factor in the growing volume of U.S. assistance to Africa has been the
response to a number of humanitarian crises, including food shortages in Ethiopia
and elsewhere, and conflict in Liberia and Sudan. Food aid to countries in Africa
grew from an average of about $400 million annually in the late 1990s through
FY2002 to an annual average of about $1.1 billion, FY2003-FY2005.
A third reason for the rising level of assistance to Africa in recent years has been
the growing size of contributions to various peacekeeping operations in the region.
Funding for activities in Sierra Leone, the Democratic Republic of Congo, Liberia,
Sudan/Darfur, and Cote d’Ivoire, and efforts to better train and equip peacekeeping
forces of the African Union have been especially large. U.S. costs in support of these
missions have averaged about $835 million annually beginning in FY2002, or about
five times the annual average of the four previous years.
U.S. assistance to Africa fell sharply in the mid-1990s following the end of
support for a U.N. peacekeeping operation in Somalia, cuts in bilateral development
assistance, and a temporary suspension of contributions to the African Development
Bank and African Development Fund due to concerns over management issues at the
institutions. The $1.6 billion total U.S. aid package to Africa in each of FY1996 and
FY1997 was the lowest amount in real terms since FY1979.
During the 1980s, U.S. assistance to sub-Saharan Africa peaked in FY1985 at
$2.9 billion, largely due to a sizable food assistance supplemental responding to a
major famine in the region, plus higher levels of security-related economic assistance
(ESF) being programmed in African countries. Assistance, however, fell sharply the
next two years as ESF transfers declined or were re-directed to other, more strategic
areas of the world. Reflecting concern over the transfer of economic aid from Africa
to other regions, in FY1988 Congress created a separate appropriation account for the
region — the Development Fund for Africa (DFA) — so that aid levels for Africa
would be more clearly designated in spending bills. DFA resources grew from about
$500 million to nearly $800 million by FY1993, before beginning to slide downward
the next several years. Congress ended the separate DFA appropriation account in

Note: Unless otherwise stated, figures are expressed!The Bush Administration announced in July 2005 that the
in constant FY2006 dollars.United States would double bilateral aid to Africa, increasing
it from $4.3 billion in FY2004 to $8.6 billion by FY2010.
!The $5.9 billion in U.S. aid to Africa estimated for FY2006Figure 8. Africa Assistance

is the largest level in three decades and totals nearly three
times the $2.2 billion annual average since FY1977.
!Humanitarian crises in Ethiopia, Liberia, Sudan, and
elsewhere, large contributions to U.N. peacekeeping
operations in Sierra Leone, Democratic Republic of Congo,
Liberia, and Sudan/Darfur, and the launch of the President’s
iki/CRS-RL33262Emergency Plan for AIDS Relief (PEPFAR) resulted in
g/wsignificant increases in U.S. assistance to Africa since
leak FY2002.
://wiki!Reductions in development and food aid, coupled with a
httpsuspension of contributions to the African Development
Bank and Fund (AfDB) pushed U.S. assistance to Africa in
FY1996/97 to a near three-decade low.
!Following a two-year sharp reduction in U.S. aid to Africa
in the mid-1980s, Congress created in FY1988 a separate
appropriation account — the Development Fund for Africa
— to bring more clarity to funding decisions for the region.
!Increasing demands for food due to famine conditions in
Africa, plus the growing use of the security-related
Economic Support Fund (ESF) pushed U.S. aid higher
during the early 1980s.

State Department and Public Diplomacy
Besides foreign aid, the other major component of the international affairs
budget supports diplomacy and American engagement in the international
community. Roughly one-third of the Function 150 budget targets salaries and
expenses of the U.S. diplomatic corps; the construction, maintenance, and security
of American embassies around the world; educational and cultural exchanges,
international broadcasting, and other aspects of public diplomacy; the costs of U.S.
membership in the United Nations and other international organizations; and11
assessed contributions to U.N. peacekeeping operations. In addition to appropriated
funds, this category also includes beginning in FY1996 fees that the State
Department collects for visa processing and other services. Over time, these have
become a source of sizable amounts of resources for the Department, growing to an
estimated level of nearly $1.2 billion in FY2006.
Over the past three decades, the funding level for the State Department and
public diplomacy has reflected generally an upward trend. Although there have been
a few brief periods of declining resources, appropriations continually climbed to their
highest level in FY2006 of $12.2 billion. Even without the $1.3 billion
supplemental for U.S. embassy operations in Bagdad, FY2006 represents the second
largest spending amount — behind FY2005 — for the State Department and public
diplomacy in 30 years. The FY2006 total is more than 75% higher than the thirty
year annual average of $6.9 billion.
From the outset of the George W. Bush Administration, then-Secretary of State
Colin Powell argued strongly within the executive branch and before Congress that
State Department resource needs had been neglected during the previous decade and
that significant increases were needed to improve technology and staffing challenges.
The Bush Administration’s first budget saw a jump from $8.7 billion in FY2001 to
$9.9 billion for FY2002 in State Department and public diplomacy spending. By
FY2004, the $10.3 billion (excluding Iraq) was 18% higher, in real terms, than at the
beginning of the Bush Administration.
Many of the spikes in funding for the State Department and public diplomacy
over the past 30 years have been related to overseas security issues. Since the
Vietnam War, American embassies have increasingly been the targets of hostile
action. Terrorist attacks grew in number in the 1970s, the decade ending with the
taking of American hostages in Tehran in 1979. Similarly, in the early 1980s, the

11 This category of the International Affairs budget is technically divided into two parts:
Conduct of Foreign Affairs, largely State Department operations and international
organization contributions, and Foreign Information and Exchanges. Assessing these two
parts separately over the past 30 years, however, became problematic when the U.S.
Information Agency (USIA), the lead agency for public diplomacy, was merged into the
State Department in FY1999. Prior to that point, USIA operating expenses had been part
of the Foreign Information and Exchanges category, but since the consolidation, these
resources are included in State Department salaries and expenses. Thus, because it is not
possible to present a consistent data set for the entire 30 year period, these two categories
are combined in this analysis.

State Department recognized a greater need to tighten security after the 1983
bombing of the U.S. Marine barracks in Beirut, Lebanon, and the bombing of the
embassy annex in Beirut in 1984. In 1985, a report by the Advisory Panel on
Overseas Security, headed by Admiral Bobby Inman, set new standards for security
measures at U.S. facilities around the world. In 1986 Congress provided an embassy
supplemental appropriation to meet those standards, and State Department/public
diplomacy resources grew to $6.7 billion, in real terms. Again in August 1998,
another major attack occurred on U.S. embassies in Kenya and Tanzania. Later that
year, Congress passed an emergency supplemental that sharply increased total State
Department spending to $8.94 billion.
The Clinton Administration generally believed in a multilateral approach to
handling international problems and sought an expansion of U.N. involvement in
international peacekeeping. In 1994, the Administration requested supplemental
funding for U.N. peacekeeping to provide more help with Cyprus and African
regional efforts, as well as Angola, Iraq, Yugoslavia, Somalia, Haiti, and
Mozambique. Congress appropriated $670 million for the peacekeeping
supplemental in 1994, more than doubling the international peacekeeping account
that year. Overall this raised the State Department and public diplomacy budget to
$7.9 billion (FY2006 dollars).
During this same period in the 1990s, both Congress and the Administration
struggled to reduce the federal deficit. Some Members contended that, with the end
of the Cold War, a peace dividend could be derived, and believed that foreign policy
agency funding could be trimmed to help meet growing budget pressures.
Reorganization of the international broadcasting entities, beginning in 1994, and later
the consolidation of the foreign policy agencies into the Department of State in
FY1999, reflected the mood in Congress to streamline these foreign policy agencies,
thereby realizing some degree of budgetary savings. Reductions in broadcasting and
educational and cultural exchange programs were especially large during the mid-
1990s when funding for these programs fell by more than 30%, bringing the $6.3
billion State Department/public diplomacy budget in FY1996 to a six-year low.

Note: Unless otherwise stated, figures are expressed
in constant FY2006 dollars.!Funding for State Department personnel, embassy security,
public diplomacy, and dues for international organizations
has increased steadily over the past three decades, peaking
in FY2006 at $12.2 billion (constant dollars), includingFigure 9. State Department & Public Diplomacy Spending

costs for a U.S. embassy operations in Iraq.
!Emphasis on State Department staffing and technology
upgrades during the early Bush Administration pushed
spending upward from $7.8 billion in FY2000 to $9.5
billion by FY2003.
iki/CRS-RL33262!The bombings of U.S. embassies in Kenya and Tanzania
g/w(1998) and the Inman Report on embassy security standards
leak(1985) led to sizable supplemental spending.
://wiki!During the mid-1990 decline in overall U.S. foreign policy
httpspending, resources for international exchange programs
and broadcasting fell by over 30%.
!Significant contributions to UN peacekeeping operations,
including Somalia, pushed funding for State Department
and public diplomacy to $7.9 billion in FY1994, the highest
level in 18 years.

Budget Data Appendix
Table 1. International Affairs Discretionary Budget Authority
($s - billions)
Fiscal YearFunction 150Current $s Function 150Constant FY2006 $s
1978 10.780 29.807
1979 14.504 36.964
1980 11.619 26.835
1981 12.235 25.597
1982 14.383 28.184
1983 16.396 30.690
1984 18.294 32.882
1985 22.374 38.957
1986 20.279 34.357
1987 18.800 30.822
1988 18.079 28.596
1989 18.537 28.207
1990 20.027 29.460
1991 21.321 30.092
1992 20.927 28.514
1993 21.194 28.091
1994 20.854 27.097
1995 20.166 25.560
1996 18.237 22.658
1997 18.333 22.352
1998 19.289 23.300
1999 23.82428.377
2000 23.871 27.748
2001 24.660 28.023
2002 25.685 28.727
2003 34.141 37.414
2004 50.312 53.832
2005 35.663 36.843
2006 (est)36.96136.961
Sources: OMB, House and Senate Appropriations Committees, and CRS calculations. FY2006
includes supplemental appropriations and 1% rescission of regular appropriations.

Table 2. International Affairs Budget As a % of Total
Discretionary Budget Authority
Fiscal YearFunction 150%-Discretionary BA






























2006 (est)3.409%

Sources: Office of Management and Budget, Congressional Budget Office, and CRS calculations.

Table 3. Foreign Assistance Discretionary Budget Authority
($s - billions)
Fiscal YearForeign AidCurrent $s Foreign AidConstant FY2006 $s
1979 14.526 37.020
1981 10.129 21.191
1982 12.110 23.730
1983 13.884 25.988
1984 15.478 27.821
1985 18.931 32.962
1986 14.808 25.088
1987 13.993 22.941
1988 13.602 21.514
1989 13.944 21.218
1990 15.032 22.112
1991 16.083 22.699
1992 14.932 20.346
1993 15.048 19.945
1994 14.036 18.234
1995 14.111 17.885
1996 12.576 15.625
1997 12.474 15.208
1998 13.259 16.016
1999 15.39418.336
2000 16.278 18.922
2001 16.170 18.375
2002 16.537 18.496
2003 25.266 27.689
2004 40.456 43.286
2005 23.880 24.836
2006 (est)25.24325.243
Sources: OMB, House and Senate Appropriations Committees, and CRS calculations. FY2006
includes supplemental appropriations and 1% rescission of regular appropriations.

Table 4. “Core” Bilateral Development Assistance Discretionary
Budget Authority
($s - billions)
Bilateral DevelopmentBilateral Development Aid
Fiscal YearAidConstant FY2006 $s
Current $s
1999 1.8202.168
2006 (est)6.9056.905
Sources: Department of State, USAID, House and Senate Appropriations Committees, and CRS
calculations. FY2006 includes supplemental appropriations and 1% rescission of regular
appropriatio ns.

Table 5. Humanitarian Assistance Discretionary Budget
($s - billions)
HumanitarianHumanitarian Assistance
Fiscal YearAssistanceConstant FY2006 $s
Current $s
1999 3.0963.688
2006 (est)2.9972.997
Sources: Department of State, USAID, House and Senate Appropriations Committees, and CRS
calculations. FY2006 includes supplemental appropriations and 1% rescission of regular
appropriatio ns.

Table 6. Political/Security Economic Aid Discretionary Budget
($s - billions)
Political/SecurityPolitical/Security Economic
Fiscal YearEconomicConstant FY2006 $s
Current $s
1999 4.6865.582
2004 21.593 23.104
2006 (est)6.9096.909
Sources: Department of State, House and Senate Appropriations Committees, and CRS calculations.
FY2006 includes supplemental appropriations and 1% rescission of regular appropriations.

Table 7. Military Assistance Program Size
($s - billions)
Fiscal YearMilitary AssistanceCurrent $s Military AssistanceConstant FY2006 $s
1999 3.6744.376
2006 (est)4.8954.895
Sources: Department of State, House and Senate Appropriations Committees, and CRS calculations.
FY2006 includes supplemental appropriations and 1% rescission of regular appropriations.

Table 8. Africa Assistance
($s - billions)
Fiscal YearAfrica AssistanceCurrent $s Africa AssistanceConstant FY2006 $s
1999 1.5791.881
2006 (est)5.9035.903
Sources: Department of State, USAID, House and Senate Appropriations Committees, and CRS
calculations. FY2006 includes supplemental appropriations and 1% rescission of regular
appropriatio ns.

Table 9. State Department and Public Diplomacy Budget
Authority and Fee Collections
($s - billions)
Fiscal YearState/Public DiplomacyCurrent $s State/Public DiplomacyConstant FY2006 $s
1999 7.5098.944
2004 10.350 11.074
2005 11.615 12.014
2006 (est)12.20212.202
Sources: Department of State, House and Senate Appropriations Committees, and CRS calculations.
FY2006 includes supplemental appropriations and 1% rescission of regular appropriations. Beginning
in FY1996, figures also include fees collected by the State Department for Visa processing and other