Public Policy Update_4!26!13

7/30/2019 Public Policy Update_4!26!13

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PUBLIC POLICY UPDATEApril 26, 2013

WASHINGTON UPDATE

ittees continued holding hearings about the prerator Rajiv Shah testified before three committenate Foreign Relations Committee, and the HState and Foreign Operations. He outlined the

ongress about the importance of investing in de hearings.

heard oral arguments in the case United Stateance for Open Society International (No. 12-10

l money to combat AIDS overseas may be reque U.S. government. The New York Times coverentators argued that that the federal governmes in exchange for federal financing, including th White House Press Secretary Dana Perino. I

n a piece in Monthly Developments Magazine tn's position on it.

UPCOMING HEARINGS

. On Tuesday, May 7, the Senate Foreign Relae nominations of James Knight to be the Amba

ay Jones to be the Ambassador to Libya.

HEARING SUMMARIES

ropriations State, Foreign Operations Subco

. April 24, 2013.

reign Relations hearing: International Develop

l 24, 2013.

mmittee hearing: The FY2014 Budget Reques

Strategy. April 25, 2013.

sidents FY2014es the Houseousepresidentsvelopment. See

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Budget Hearing United States Agency for International DevelopmentHouse Committee on Appropriations State and Foreign Operations Subcommittee

April 24, 2013

Witness:

Rajiv Shah, administrator, USAID

Opening Statements:

Chairwoman Kay Granger (R-TX)

Remarked about the funds for the subcommittee. Requested assurance from USAID that government officials will be safe abroad. Requested more information about food aid reform.

o Committee will consider the proposal for food aid reform.o Basic education must be included in international aid.

Ranking Member Nita Lowey (D-NY)

USAID has been a pillar of strength because of its people around the world. The president is committed to eradicating extreme poverty.

o The only way to achieve this is through a strong USAID. Pleased with increase in maternal and child health.

o Disappointed with low request for basic education.o Without literary skills there is no way to build countries that can lift themselves out

of poverty.o It directly impacts the success of improvements of countries around the world.

Food aid program is important, but Congress should not take away funding from alreadyexisting programs because of it.

Reconstruction in Haiti has been too slow.

USAID must continue to focus on the status of women globally.o Gender-based violence, especially in the Middle East and North Africa, must beaddressed.

Wants to know the impacts of the budget cuts on USAID programs.

Rajiv Shah

After a decade of war, the U.S. needs to focus on development around the world as a partof its national security.

Discussed his recent trip to Somalia.o Children are dying from starvation.o U.S. has been in Somalia trying to end the hunger and has made many gains,

showing there is hope in their new model of diplomacy.

Feed the Future Programo Cut funding for many countries to focus on 19 most needy countries.o Have made many gains in these countries.

Partnership to end preventable child deatho Had to cut funding for some countries to focus on most needy 24, and it has made

a difference.o USAID is looking to expand a similar model to other programs.

USAID has been able to hire more people, thanks to the U.S. government and taxpayers,which has been necessary.


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o The agencys work has been made transparent.o The budget for this years food aid program after the presidents reform should

extend to an additional 2-4 million children without additional funds. Thanked USAID staff and recognized those personnel who have died in the field. FY2014 overall budget request is 6 % lower than FY2012 request.

o USAID still has big aspirations even with a cut in funding.o Ending extreme hunger and preventable child deaths are at the forefront of their

focus.

Questions:

Chairwoman Kay Granger (R-TX)1. The administration is focused on increasing the amount of assistance provided directly to

governments and local organizations, and has a policy limiting competition to localorganizations. How can you justify actively excluding U.S. organizations from competing? Howmany times were U.S. organizations excluded during the last fiscal year? Shah:

o We look at local solutions because they often cost less and are more sustainable.

In the past, we were routinely critiqued for not learning from best practices.o Noncompetitive awards are a very small percentage of our total actions of 14,000

contract actions, fewer than 0.05% were noncompetitive. We do about 5,000 assistance grants each year, and 2.3% were

noncompetitively awarded 84 went to U.S. organizations; 34 to localorganizations.

Vast majority of our resources and processes for contracts and grantawards are not only open to, but preferentially go to, U.S. partners at a farhigher rate.

2. USAID conducts risk assessments. Special Inspector General testified that USAID officialsasked him not to provide assessments of Afghanistan to the U.S. government. Will you makethose available? Shah:

o USAID has conducted 33 assessments around the world.o In Afghanistan the majority of assistance to the Afghan government goes to a trust

fund that is run by the World Bank.o It is transparent.o Those assessments are available to the subcommittee.o USAID provides very little resources to local organizations, only after they have

been assessed thoroughly.o Larger scale awards goes to the trust fund for Afghan reconstruction

3. Reforms of food assistance have been considered for years. Why did the administrationdecide this year to change the system and put forward the reform proposal now? Shah:

o In the most critical areas the flexibility to act differently allows USAID to assist inmore dangerous places.

o USAID felt that this is the appropriate time.

Ranking Member Nita Lowey (D-NY)1. This administration reprioritized basic education. FY2014 funding for basic education is less

than FY2012. Why isnt the U.S. prioritizing this sector when we know it will be beneficial forthe U.S.? Why not put more money through channels like global education?


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Shah:o Thanked Lowey for making U.S. the biggest supporter for basic education around

the world.o USAID has elevated the importance of basic education.o Improving workforce training.o Getting 15 million additional kids in school.o New partnerships have been working on improving education and have been

successfulo Room to Learn brings together USAID funding in a leveraged way in countries for

education.o The budget is not where USAID wants it to be for education.

2. Dissatisfaction in the reconstruction of Haiti. Only 50% of the funds made available for thefunds for Haiti have been dispersed. U.S. must move faster. Has the Haitian governmenttaken a leadership role? How are governance changes affecting the development process?What progress has been made in terms of education? Shah:

o There has been significant progress in Haiti. There have been many resignations, which have raised concerns. USAID believes there have been significant improvements and

reconstruction. Haiti resignations are troublesome.

o Transparency and private investments have been brought to the Haitiangovernment.

Food progress has been up 60% and it drives economic development. There has been a lot of economic growth.

Rep. Mario Diaz-Balart (R-FL)1. The Syrian conflict has caused many to flee to Jordan. Is the U.S. doing anything to help with

refugees in Jordan? What can this committee do to help? Shah:

o In Syria, we are providing almost $400 million in direct support of humanitarian aid.o We have provided $300 million dollars to support the burdens of having so many

refugees in Jordan.o USAID has assisted with education in Jordan for refugeeso Water supply has been expanded.o Longstanding investments do yield real results in crisis situations.

Rep. Henry Cuellar (D-TX)1. Would it make sense for the U.S. to spend more money in assistance to countries like

Mexico? USAID funding for Latin America has been cut. U.S. knows the problems in Mexico. Shah:

o Transforming crime in Mexico would yield tens of millions of dollars for the U.S.o The FY2014 budget proposal for USAID represents a 6% decrease.o In Latin America there has been a 29% increase in funding.o Mexico shows progress when they are willing to work with USAID.

Rep. Ander Crenshaw (R-FL)1. Describe the reforms we have been hearing about and how that would impact U.S. agriculture

and shippers.


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Shah:o This reform is focused on Food for Peace is implemented by USAID.o It will allow us to have more flexibility in the program.o 55% would be tied to American product and distribution.

Rep. Debbie Wasserman Schultz (D-FL)

1. Pink Ribbon Red Ribbon is a partnership run in conjunction with PEPFAR and various othergroups. What progress have you seen in this program since its inception? Shah:

o Pink Ribbon Red Ribbon is a great example of partnerships.o In places like Tanzania, it is greatly expanding access to screening for cancer and

intervention.o Global Health has been fortunate to have some of these partnerships.

2. Through the 1,000 Days campaign, USAID emphasized the importance of food with highnutritional value. What are the implications on maternal and child nutrition reform with thiscampaign? Shah:

o 1,000 Days focuses on child nutrition interventions based on scientific evidence.o Around the world, there are a lot of children whose growth is stunted, leaving a

permanent impact on their long-term development.o Food aid reform proposal would make more nutritious foods more available.

Rep. Kevin Yoder (R-KS)1. U.S. food aid changes: What would be the exact impact on American agriculture? Local

methods are not necessarily cheaper than American agriculture. Shah:

o Thirteen independent studies have demonstrated how much more efficient it is togrow locally. In terms of reaching beneficiaries with the nutrition they need, theywould receive a 50% increase in efficiency.

o All major NGOs believe this is the best way to go.

Rep. Barbara Lee (D-CA)1. How many minority contractors is USAID using? Shah:

o USAID will produce that data.2. Multiyear commitment to the Global Fund to Fight AIDS, Tuberculosis and Malaria how

important is it? Shah:

o We have put forward $1.64 million to the Global Fund.

Rep. Adam Schiff (D-CA)

1. In Georgia there is a very impoverished Armenian population. Could you give us a progressreport? Shah:

o USAID believes the Armenian community has been great to work with.o No immediate updates yet.


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International Development Priorities in the FY2014 BudgetSenate Committee on Foreign Relations

April 24, 2013

Witness:

Rajiv Shah, administrator, USAID

Opening Statements

Chairman Robert Menendez (D-NJ)

Benefits of investments abroad far outweigh the costs. Hope to hear how we can maximize the effectiveness of aid and reform programs. We want to ensure all reforms focus on best practices and results. USAID Forward is an example of a reform that has achieved results.

Ranking Member Bob Corker (R-TN)

Hope you will explain why, after so many decades, we are still providing day-to-dayassistance and countries dont have the capacity themselves to do what needs to be done.

Development is taking place in areas that are not secure. We had problems in Iraq, andwill have greater problems when people look through what we did in Afghanistan.

o We will be dealing with similar issues in Syria. We want to monitor these programsproperly.

There is a goal that Latin American countries will graduate by 2013. Hope that there is aplan to make this happen.

Need a permanent Inspector General of USAID.

Rajiv Shah

Rethinking how we project power in the world.

Want to elevate development as part of our national security and economic strategy. Visited Somalia again a few months ago and saw a more hopeful picture, including

American investments in a new government and a flourishing civil society. New approach includes ensuring development builds self-sufficiency and dignity. It is

delivering real results.o Feed the Future: We cut agricultural programs in 23 countries in order to focus in

19. In those countries, poverty has been reduced by over 5%.o Ending preventable child deaths: We cut programs in some countries so that we

could focus on countries that need it most.o Citizen security efforts.

The presidents FY2014 budget includes a proposal to reform food aid. The presidentsproposal should reach 4 million additional children. The approach retains and renews a

partnership with the U.S. agricultural industry.

Questioning:

Chairman Robert Menendez (D-NJ)1. Are we right-sizing our aid presence in Pakistan and Afghanistan to reflect our security

concerns and oversight challenges? What steps are sustainable and achievable? Shah:

o The gains that have resulted have been real:


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There have been 9% growth rates in the past few years. Eight million kids are now in school and 35% are girls compared to

no girls in school under the Taliban regime. Launched the A3 initiative, which included a full partner vetting and

local cost auditing system.o Some of these efforts will be at risk during the transition. We will be doing it

with more local staff and with local protection forces.2. Do you believe that, in the programs moving forward, you will be able to follow the criteria

that the committee set out, particularly sustainability? Shah:

o Yes. We have a Mutual Accountability Framework with the government ofAfghanistan requiring them to show real progress, fair and free elections,etc., for pledges to be met.

3. USAID went through a 20-year decline in personnel and dispersion of work to otherentities, such as the Millennium Challenge Corporation (MCC). How would you assessyour agencys progress in restoring its capacities under USAID Forward? Describe the endgoals of these efforts as you move forward.

Shah:o End goal is to be the worlds premier development enterprise.o Focus on public-private partnerships has been unique and effective.o Have been able to rebuild our budget authority and policy work, and have

hired staff to support this. The FY2014 budget includes investment in ouroperating expenses that will allow us to continue rebuilding this agency.

Ranking Member Bob Corker (R-TN)1. What do you plan to do with the Inspector General?

Shah:o The White House is responsible for putting forth a nomination; we expect it

to be soon.2. How did you decide that 55% of emergency food aid will be procured from the U.S.?

Shah:o Over the last few years, the program has only allowed for 15% of

procurement flexibility. This year, that flexibility is being absorbed in Syria. We now have to take children off nutrition support because we are

reverting from the locally-procured program to U.S.-based program;155,000 kids will be subject to that this year in Somalia.

3. Is self-sufficiency your goal over time? Shah:

o Absolutely. Once countries are self-sufficient, they can be trading andcommercial partners in the future.

4. Are you going to get it into code, or are you going to do the easy route of talking to anappropriator?

Shah:o Will be happy to work with this committee.

5. What do you think USAID can do to tip the balance more toward the moderate sectoropposition groups inside Syria?

Shah:o Secretary Kerry announced a doubling of our aid and assistance to and

with the Syrian Opposition Council.


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o As part of that commitment to them, we will request that they protectwomens rights and human rights overall; they have made publicassurances to do so.

o This effort will be a critical part of the Syrian Opposition Council to provideservices. A lot of this effort this already taking place.

6. Can you assure us that our delivery methods to Syria and other places with security

problems are different? Shah:

o Yes: one example is Afghanistan. We have more than tripled our civilianpresence and implemented data and vetting systems. We are now theprimary partner of Syrian Opposition Council.

Sen. Ben Cardin (D-MD)1. Tell us how the reforms you see in Food for Peace work with the other programs,

particularly Feed the Future. Shah:

o Feed the Future is intended to be a model program, working in 19 countriesthat are making their own efforts to move to self-sufficiency by building their

agricultural capabilities. The Walmart partnership with Guatemala is asuccess stories.

2. The Office of Science and Technology requested an additional $85 million in this budget.What would those additional funds be used for if appropriated?

Shah:o Engage American universities and businesses in helping new scientific to

breakthroughs.o We created the Higher Education Solutions Network.o American technological breakthroughs have been at the core of many of

our biggest development successes around the world.3. We want to know that significant investment in Syria will get to its intended recipients.

Sen. Marco Rubio (R-FL)1. Concerned about cuts to PEPFAR. What is your take on the impact of this continuing

reduction of spending on this program, and what it would mean to undermine thepresidents goal of an AIDS-free generation.

Shah:o The U.S. spends more than $8 billion per year on global health, the majority

of which is spent on HIV/AIDS. Global health is the largest category offoreign assistance and the largest single item of the 150 account in thefederal budget.

o The request includes roughly $1.6 billion for the Global Fund to Fight AIDS,Tuberculosis and Malaria, which went through restructuring. It is amechanism to accelerate other donors commitments to this fight.

o There are more, not less, resources going to HIV/AIDS in countries wherewe work. One example is South Africa.

o Our goal is to reach 15 billion people globally.2. So is it fair to say that even though investment in PEPFAR has been eroded, the

difference is being made up locally (in countries)? Shah:

o Absolutely. Have met benchmarks earlier than the time indicates.


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3. As the U.S. withdraws from Afghanistan, development projects will be impacted. Pleasetalk about the impact of projects we have invested in that we are turning over to Afghaninstitutions that have little accountability, and more importantly, projects that are not goingto be completed or not happen at all because of the security situation.

Shah:o American investment has already allowed tripling of energy access.o Have to work responsibly with Afghan partners.

Sen. Tim Kaine (D-VA)1. The president talked about goal of eradication of extreme poverty in world in two decades

in his State of the Union speech. Please discuss hunger and preventable child deaths, aswell as the metrics and partnerships that you intend to leverage (NGO and other nations)to meet this goal.

Shah:o It is the first time in human history that this goal is achievable.o The goals of ending hunger and preventing child deaths are where we can

make the biggest contributions. Metrics: Hunger: We can look at number of farm households we reach and

agricultural GDP growth. We can correlate these to extreme povertyrates.

Child death and global health: the metric of under-5 child mortality isthe core measure of how many children are dying.

o Want to expand efforts in energy access, and believe it is possible todouble energy access in Africa.

o These objectives are only possible with setting big goals and working withother partners.

2. Talk about the leveraging you do with the NGO community and other partners. Shah:

o We have pursued USAID Forward, which allows us to partner withcompanies around the world.

o USAID has been recognized as leading in public-private partnerships.

Chairman Robert Menendez (D-NJ)1. Have you discussed the need to receive credit from the Syrian people about our

assistance? About not marking all aid, but still helping Syrians understand we are beingsupportive? Has there been any talk about changing the current approach (of goingthrough the UN) and possibly filtering the assistance through the opposition?

Shah:o Yes, there have been conversations about that. The $385 million in

humanitarian assistance provided by the U.S. goes through the UN, NGOsand private organizations.

o On the services side, we are working directly with the Syrian Opposition

Council.o Safety and security concerns are very real, as many people have been

killed (including UN employees).2. We have seen a continuing significant decline in our assistance to the Western

Hemisphere, particularly Latin American and the Caribbean concerned about a potentialincrease in undocumented immigrants because of civil unrest and dire economiccircumstances. We should try to create greater economic growth in our own hemisphere,but despite these realities and the movement away from democracy in the region, we


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continue to cut Western Hemisphere programs. We need to do the right thing now insteadof waiting for something huge to happen. How will we use the funding for FY2014, andhow to do we create policy reforms that will sustain this going forward?

Shah:o The budget has a 6% reduction. There have been critical areas like Central

America Regional Security Initiative (CARSI) (29% increase for that).o Our efforts have delivered real results, for example in Mexico and Peru.o Latin America has been the most successful for public-private partnerships.

Ranking Member Bob Corker (R-TN)1. The move toward self-sufficiency is a good one, but can create political risk and require us

to deal with governments involved in corruption. Talk about your concerns and plans toalleviate those. Will you move ahead with this effort if you see countries with corruption?Will you withdraw due to their lack of accountability and responsibility?

Shah:o USAID Forward has been the agency's signature reform effort.o We want to create institutional strength to sustain results after we leave.

We have moved more resources to local partners. In all cases, we have

conducted country assessments to see if countries have the capacity to betransparent. If they arent transparent, we do not partner with them.

o Local solutions are different everywhere.2. Would you consider putting effort into a coordinated trade effort so that we can help

leverage self-sufficiency? Shah:

o Absolutely. This will be an increased focus, specifically in Africa, as well asin Jordan, Afghanistan and Haiti.

In Afghanistan, we can help clean up process by which customs arecollected to improve revenue collection. We have seen this done inJordan.

o In East Africa, we are expanding the focus on regional trade. Tanzania has

forgone export bans on agriculture.

Sen. Bob Casey (D-PA)1. Food aid reform would allow us to reach an additional 2-4 million people with the same

funds. How do you ensure that the potential recipients of this aid get the nutritious foodsthey need even if they cant be bought in local markets?

Shah:o Local and regional procurement has been recorded in a database and

shows that we can use such tools as local foods, new food formulationsand vouchers that empower people in settings where we cant physicallyreach them for security reasons.

When we buy food locally, it has the same brand value as anything

else. Each packet is labeled as American. Evidence stronglyindicates that this kind of flexibility will achieve the 4 millionadditional children.

2. How will you make sure food aid gets to civilians in areas controlled by the Syriangovernment, or refugees in places like Turkey?

Shah:o $4 million in humanitarian support has already been provided. We are

providing food and clean water inside of Syria.
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o We are providing aid through a range of partners. We have provided directsupport to Jordan to help them absorb 42,000 children who are joining thepublic schools.

o Access inside Syria is the biggest challenge. Secretary Kerry noted anadditional $250 million commitment to the Syrian Opposition Council thisweekend. The Syrian opposition has worked with us to make commitments

to respect womens rights, gender considerations, and promote opennessin their approach to governance.

Sen. Marco Rubio (R-FL)1. Cuban democracy programs have taken a disproportionate (25%) cut over the past few

years. Cuba hates democracy programs and our colleagues held this program up withendless questions about it. It is important we be clear this money will be spent ondemocracy, not on grassroots movements, etc.

2. I believe in foreign aid. It gives us influence, allows us to impact events around the world,and is an important tool in furthering our national interest. I am concerned about Egypt.Our foreign aid should be conditioned on our national interest and values, particularly insupporting governments in their economic programs. Its not a charity. Its not paying

tribute to another government. What are your thoughts on what we can do to ensure ourforeign aid is an incentive for governments to move their societies in a direction that isgood for them and more importantly good for us?

Shah:o We would be eager to work with you to articulate forms of conditionality.o Egypt is a good example. We have focused on a handful of issues and

have conditioned particular efforts. Weve focused on youth employment,leading to 7.9 million loans to small-scale businesses that create jobs foryouth. Weve focused on women and minorities as well by ensuring spaceremains open for civil society organizations.

Sen. Chris Coons (D-DE)

1. How can African trade hubs be expanded to create more interregional trade? How can wecreate more trade in Africa?

Shah:o Trade hubs in West Africa, Southern Africa, and Eastern Africa have

improved in interregional trade.o Core ways the trade hubs can be improved (currently pursuing these) are

tying these closely to agricultural programs and trade efforts, linking theseto efforts to fight corruption, and tying them to efforts to expand access toenergy.

2. Discuss reforms to Food for Peace programs included in Senate version of last years farmbill. What proposals are in the presidents budget, and how do you deal with inefficienciesin programs and protect Americans as well?

Shah:o This budget gives us more flexibility. We have a strong database that

shows recipeients of local food assistance have the same appreciation of itas aid coming from the U.S.

o Majority of food will still be bought from Americans.o Traditional commodity gifts are less useful.o Pipeline of 10-12 new products and technologies, which will be the future of

a science-based food program.


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o Shipping concentration in this industry. Our use of a few firms. Wedesigned that to be able to ensure that these partners receive supportduring transition and retain jobs.

Sen. Chris Murphy (D-CT)1. Disappointed to see new Russian disposition on USAID and American NGOs. What do

you see as our future disposition with that nation? Shah:

o We have been focused on maintaining space for civil society organizations.Our ambassador and State Department team in Russia are focused on thiselement of the partnership with that country. There are a range ofmechanisms they can use to continue to provide support throughinternational organizations.

o Concerned about continued restrictions of these organizations.o State Department will continue, but USAID will not.

2. Afghanistan has transportation issues that cause difficulty getting products to markets.Talk about this problem and how that gets better or worse as we decrease our militarypresence in Afghanistan?

Shah:o The central challenge is sustaining the huge gains that have already been

made and replacing international aid with private activity and investment.Private investment cant thrive in an environment that has so many erraticpoints of engagement.

o Have implemented the Tokyo Mutual Accountability Framework. Future aidcommitments will be contingent on this. One of these focuses ontransportation.

o We work with them on trying to implement programs that address thesethings.

o We make sustainable agricultural investments.

Sen. Ben Cardin (D-MD)1. How does your budget compliment the presidents initiative on rebalanced Asia? You

opened an office in August of last year in Burma. Can you update us as to the progressbeing made in that country?

Shah:o The FY2014 request reflects a 7% increase to Asia.o President Obama went to Burma and opened an office and created a

partnership while he was there.o Focuses:

Improving the economic climate and supporting public-privatepartnerships that were recently launched.

Health, education and agriculture.

Peace process and ethnic conflict.2. PEPFAR accounts for more than half of the U.S. aid programs in Vietnam. The HIV/AIDS

rate in Vietnam is less than .05%. Is that the best use of our foreign aid resources? Shah:

o The presidents budget reflects some of those tough tradeoffs. The actualbudget committed to that will decrease by 20%. We wanted to increaseresources in other areas of investment.


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o One of the top priorities we do want to capture is Vietnamese participationin the Trans-Pacific Partnership (TPP). Our investment reflects that.

Sen. Tim Kaine (D-VA)1. Honduras is a democracy today and its less safe now than it was before it was a

democracy. We pulled the Peace Corps out of Honduras because it has the highest

murder rate in the world. U.S. demand for drugs is a huge part of the security situation.China is rebalancing toward the Americas. They see it as an opportunity area. This is anarea we need to be very concerned about.

Shah:o We have worked hard to have a dramatic investment in the CARSI program

and to enhance public-private partnerships, specifically for El Salvador,Guatemala and Honduras.

o There is a close tie between what happens in this country and citizensecurity in that region. The number one constraint to growth is citizensecurity.

o We have attempted to do this in a coordinated way with the military.

Chairman Robert Menendez (D-NJ)1. On CARSI, what are you going to use the additional 2014 funding for? What are we doing

about helping or engaging the Central American governments in their fiscal and policyforms that are necessary to sustain the results of USAID programs?

Shah:o Our funding goes to specific elements of CARSI. Some of the things weve

supported include mapping and community crime prevention strategies.2. Are you focusing more on the activities you are already doing or is there something new?

Shah:o The areas we are most effective in are the areas where we will pursue

increased resources.

Sen. Chris Murphy (D-CT)1. Talk about the tools at our disposal at USAID over the next few years to help Ukraine

make the decision of which way they orient (turning toward the West or East). Shah:

o Have expanded Peace Corps presence and supported governanceprogramming.

o Have longstanding relationships with organizations in that community,many of which have matriculated into government.

o Traditionally, weve had a larger health investment (focus on TB). Morerecently, we have focused on trying to attract private investment.

The FY2014 Budget Request: U.S. Foreign Assistance Priorities and StrategyHouse Foreign Affairs Committee

April 25, 2013

Witnesses:

Rajiv Shah, administrator, USAID Daniel Yohannes, CEO, Millennium Challenge Corporation (MCC)


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Opening Statements

Chairman Ed Royce (R-CA)

Aid must support our national security, be implemented in a way that breaks cycle ofdependency.

This is a challenging time for aid. MCC was created by former President Bush as way to break with the old way of giving aid,

but its had challenges, too. Getting pulled into countries where it doesnt belong has ruined MCCs recipe for success. MCC has gotten countries on the path to graduation from aid; many new initiatives are

borrowing from its ideas. Food aid reform buying food closer to humanitarian crisis is faster, cheaper, saves more

lives:o 25-50% cheaper.o 11-14 weeks faster.o Administration proposal would end monetization, too.

Rep. Brad Sherman (D-CA)

Development aid is the right thing to do that is reason enough to pay for it. It is disturbing that in Syria were obscuring the fact that aid comes from U.S. Will ask witnesses what were doing to let recipients know aid from U.S., when we need to

obscure. Food aid American agriculture is part of coalition supporting this; do we give up their

support to become more efficient?

Rep. Ami Bera (D-CA)

Food for Peace is a wonderful program, has built goodwill for U.S. Looks forward to looking at how to make it as efficient as possible.

Rep. Chris Smith (R-NJ)

Thanks USAID for emphasis on nutrition for young children. Data shows first 1,000 days of life once in a lifetime opportunity for better health. UNICEF issued landmark report on child nutrition, called for further action. This is one of the most important contributions U.S. foreign assistance can make to global

health.

Rep. David Cicilline (D-RI)

American people benefit when foreign assistance develops a more stable, democraticworld.

Opportunity to reinforce our responsibility to make these investments around world.

Rajiv Shah

Thanks for continued partnership on foreign assistance. Drawing down from decade of war; chance to rethink how the U.S. projects its values

around world. Secretary of State Kerry and others have talked repeatedly about elevating development

as part of foreign policy.


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Visited Mogadishu, where things are looking more hopeful: replacing piracy, helpingpeople leave IDP and refugee camps to return to communities and agriculture.

This path from dependency to self-sufficiency is what aid assistance should be about;believe its delivering results.

Feed the Future cut back on investments in 23 countries to focus on 19 reachingmillions of households, reducing extreme poverty.

Working with private partners to raise money as well. Shows how modern, results-oriented methods can work. USAID Forward:

o Have rebuilt staff 1,100 new Foreign Service officers hired since his tenurebegan.

o Implemented new evaluation process can download apps that show howprograms work.

o Expanded investment in local solutions less costly, more sustainable way to getresults.

Food aid reform can reach additional 4 million children without spending more.

Daniel Yohannes

$898 million request for FY2014 would allow MCC to keep doing its work. MCC partner countries have sound track records; selective about where MCC invests. Sign compacts spelling out terms of assistance:

o Monitoring and evaluation.o Programs must be completed in five years.o Countries must support democratic values.o Committed to transparency; make findings public.

El Salvador dairy farmers doubled their income there. Ghana has seen great improvement, too. Even when findings about MCC compacts are not good, it helps us learn. Five newly eligible countries are home to 100 million of worlds poorest people:

o These countries have taken concrete steps to reform, improve government toqualify for MCC compact.o This is the MCC effect.

MCC effect needs sufficient resources its impacts are diminished if funding is cut.

Questioning:

Rep. Ileana Ros-Lehtinen (R-FL)1. Must be responsible stewards of money. $370 million is recommended in the budget for

West Bank/Gaza, but corruption there is rampant. Does the Palestinian Authority (PA)possess internal controls to deliver U.S. aid? How do we know money will not be divertedto Hamas, etc.?

Shah:o Goals in West Bank are about supporting social services, helping peace process.

We have been able to supply food, water, core humanitarian priorities. There arestrict controls on transfers to PA.

2. Concerned about attempts to cut democracy programs to Cuba. Shah:

o Goals around Cuba are support for civil society/democracy. Believe the presidentsbudget represents an appropriate investment they have the capacity to implement.


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3. MCC must ensure founding principles are upheld dont try to provide more and moreassistance without an end in sight. Jordan compact ending this year comment?

4. Concerned about second compact with El Salvador corruption there is still endemic.MCC should wait till after elections there. Yohannes:

o Will reply in writing to MCC questions.

Rep. Brad Sherman (D-CA)1. How do you coordinate with the State Department to have foreign policy objectives affect

what you do? Shah:

o Country assistance strategies developed jointly; define priorities together.o Foreign Assistance Dashboard meets our international transparency commitments.o Have worked hand-in-glove on Syria with State Department.

2. What regulation is there for USAID employees in field when they must or must notemphasize whether food aid is coming from the U.S.? This is a great concern in Syria.

3. Whats the difference in cost between U.S. and local sourcing?4. Weve provided Pakistan with $2.8 billion since 2009 in nonmilitary assistance to what

degree does Islamabad determine where our aid is focused? Does USAID or the Pakistanigovernment pick projects, locations? Shah:

o These are designed together with Pakistan, but we maintain control of projects.o Invested in comprehensive branding strategy throughout the world.o Awareness of U.S. efforts in Pakistan have increased threefold.

5. Administration request cuts in aid to Armenia we should increase instead. Could cut aidto Azerbaijan, whose threatening to shoot down civilian airport.

6. We provide substantial aid to Georgia. Whats the status of our second compact withthem? Yohannes:

o This proposal is going well. It will be submitted to the MCC board this year.

Rep. Chris Smith (R-NJ)1. Antimicrobial resistance is a problem can you speak about TB? There is a cut of $45

million to TB in budget; hope it can be restored. Shah:

o Focused on multidrug resistant TB. Three different accounts actually support TB;while some has been limited in this account, expanded support in Global Fund toFight AIDS, Tuberculosis and Malaria, and HIV-related TB.

2. Malaria disturbing possibility of resistance in Southeast Asia expanding to Africa. Shah:

o Big success story thanks to your leadership less than $700 million per year hassaved 200,000 children per year in Africa.

3. Child survival can you speak to experiences in India? There are 200 million missinggirls due to sex-selective abortions. China and India are the worst countries in thisrespect. This represents gender crimes. It has led to more sex trafficking, especially inthese countries. Shah:

o Last year, we pulled together partner countries to end preventable child deathsworldwide 150 countries are tracking progress, producing report cards on this.We are trying to get as close to zero as possible in two decades.


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o In India, they are tracking data, and reporting on outcomes these efforts aregenerating results. It is correlated with sex-selection problem.

Rep. David Cicilline (D-RI)1. There has been a decline in personnel at USAID the last several years, and ongoing use

of contracting has been detrimental to our efforts around the world. What is the end goal?

What are things Congress can do to protect the budget and help rebuild USAIDspersonnel roster? Shah:

o This is accurate. Staffing at USAID had fallen by 40%. There was lots ofcontracting with no oversight, often in war zones.

o Launched USAID Forward in response to this, to help USAID rebuild.o Have been able to hire 1,100 new officers in my tenure. Cut from 800 to 520

programs to deliver better results. Closed some missions.o Three major components to USAID Forward:

Partnership (to create situation where aid is no longer needed). ReleasedUSAID Forward progress report last month increased local partnershipsby 50%.

Innovation. Delivering real results. Produce reports on Feed the Future, child survival,

etc.o Important to be transparent with American people now they can see results

clearly.2. Progress for equality for women and girls? How is it helping reduce poverty? Want to hear

about reducing violence against women? Please give written response.3. Thank you for compact with Cape Verde having great success there.

Rep. Steve Chabot (R-OH)1. U.S. is the most generous aid donor country in the world. It is annoying that we have to

hide this because we might offend some who hate America. We should trumpet the

goodness of American people; if some dont want it, aid can go to someone else.2. MCC this is how all our aid should be modeled. Its more effective than USAID.

Indonesias ranking on corruption index fell last year. How has MCC helped fightcorruption there? What are challenges? Yohannes:

o Zero tolerance for corruption. All countries selected for MCC passed corruptionindicators.

3. USAID requested support for China, but China owns $1.7 trillion of U.S. debt. How do youjustify this, given our debt level? Shah:

o No support goes to Chinese government its to help Tibetan communities.4. Vietnam did a staff CODEL there last month. Human rights record is poor. $18 million

increase requested how do you justify this? Shah:

o FY2014 request is actually a 12% reduction in our investment there. Its to supportcivil society and people with disabilities or HIV/AIDs.

Ranking Member Eliot Engel (D-NY)1. In this difficult fiscal environment, some think foreign assistance is the best place to make

cuts.


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2. Commend the administration for food aid reform proposal. Can Dr. Shah comment onthese plans?

3. Global Health pleased to see increases, especially to PEPFAR.4. Congress has appropriated unprecedented sums to Palestinians. Needed for humanitarian

reasons, but its happened during Prime Minister Salam Fayyads term with increasedtransparency. We should urge Abbas to appoint a successor who will continue budget

transparency.5. Support food aid restructuring. Can you elaborate on taxpayer savings? Impact on

farming? Has the Department of Defense signaled concerns? Shah:

o Food aid reform is an urgent issue because of commitment to Syria, other partsof world are suffering because of lack of flexibility, being reverted to Title IIprogram, reducing services.

o Need the flexibility thats embedded in the new proposal.o There will only be a decrease of from 85-55% of U.S. commodities share under the

new proposal.o Will help renew partnership between agriculture and humanitarian communities.

6. Agree with Rep. Smiths comments on TB: we shouldnt cut funding.

Chairman Ed Royce (R-CA)1. Food aid reform talked w/former USAID Administrator Andrew Natsios about challenges.

He felt both his hands were tied behind his back on food aid and that it often arrives aftereveryone is dead. People cant eat shipping costs, Natsios said. When it takes monthsfor food to arrive, or selling our food undermines local markets, it gives us pause aroundhow we operate. The administrations food aid proposal promises to reduce deficit andsave lives. Is it true that requirements recently delayed food shipment to Syria? Shah:

o The Syria crisis has precipitated urgency around reform. Had to use limitedflexibility around Syria; effective in that context, but cant then use same flexibility inSomalia, DRC, etc.

o Your points are the core rationale for food reform proposal.o Care, World Vision, Catholic Relief Services are great partners, we want to support

them someplace like DRC but with monetization, we lose 50% of value. There isconsensus around a data-driven approach here.

2. MCC compact with the Philippines I appreciate your raising the land seizure issue there.Is the issue of rule of law central to the MCC mission? Yohannes:

o Yes: we have shared concerns with the Philippine government. Theyre continuingto fight corruption.

Rep. Ami Bera (D-CA)1. Global Health Initiative, PEPFAR are important; I recognize this as a doctor. Goals of

MCC, USAID are to help countries become self-sufficient.2. Astonished how much food is lost in India under current system. Cold storage, lack of

infrastructure. Any efforts to address these issues w/Indian government? Shah:

o Obama launched partnership for evergreen revolution with India, partnering alongtechnical lines, rather than U.S. making investments.

o Indian government is trying to pass legislation to professionalize the food chain.


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Yohannes:o Goal of the MCC is to help communities become self-sufficient. Example: building

roads, helps with transporting food. We are seeing results.

Rep. Dana Rohrabacher (R-CA)1. The U.S. has been expending more money than we have taken in for five years. If this

doesnt stop, we cant do any of these noble things in future. We need to confront thatbasic truth, and to ask if its worth the U.S. borrowing this money from China in order togive it to someone else.

2. Great that MCC is insisting on changes in status quo.3. Developmental aid no longer our responsibility; we cant afford it. We should just do

emergency humanitarian aid in cases of disaster.4. We shouldnt give aid to countries hostile to U.S., or those supporting terrorism. I will offer

an amendment to any foreign aid bill on floor saying Pakistan should get no aid until theman who helped track Osama Bin Laden is freed from prison there.

5. Giving aid to China when were borrowing from them are we continuing this? Shah:

o China request is solely for Tibet.

Rep. Lois Frankel (D-FL)1. Foreign aid has good purpose when it is spent correctly.2. Afghanistan much aid there has been wasteful, used for bribery, etc. This has made

citizens more reliant on the U.S. How do we avoid this waste in future? Shah:

o Yes, foreign aid does much good with 1% of budget.o Afghanistan there have been great decreases in child deaths, etc. Fighting

corruption, sustaining these gains are priorities. If Afghanistan doesnt meet goalson democracy, womens rights, etc., the U.S. will pull back our aid this isaccountability.

Rep. Ted Poe (R-TX)1. After sequestration, military tuition aid was cut, but scholarship aid will be given to

Pakistani students. We dont have money to help our military go to school, but we can helpPakistanis? Shah:

o Appreciate your leadership on transparency.o Sequestration has affected U.S. aid as severely as any other part of budget. There

has been a $400 million reduction to economic assistance, $70 million cut to foodaid, etc.

o Would have to get specific answer about Pakistan, but the FY2013 budget wasreduced significantly there. This program was probably before FY2013.

2. Last year, I introduced the Foreign Aid Transparency and Accountability Act evaluating aid

to see if its working. The bill passed the House, didnt a get Senate vote. Can you weighin on concept of transparency? Americans want to see if money we send overseas isworking. Shah:

o Transparency is essential. There is strong support for this bill.o USAID is leading charge for transparency for example, the agency is publishing

all USAID data to the Foreign Assistance Dashboard and adjusted 50% ofprograms based on evaluation data.


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Rep. Brad Schneider (D-IL)1. With Palestinian Prime Minister Salam Fayyad moving on, whats our plan?

Shah:o Have lots of confidence in him, but these have been institutional efforts. His

replacement must abide by these principles.

2. MCC emphasis on accountability; whats been the impact of this emphasis? Yohannes:

o MCC approach is like a business. Once investments made, rigorous monitoring tomake sure theyre getting desired results. Thorough impact evaluation. We areseeing what needs to be changed.

Rep. Tom Marino (R-PA)1. Can you explain how you follow the money so taxpayers understand?

Shah:o Money given to local entities has gone from 9% to 14%. If assessments show we

cant move forward, we dont. Countries must implement, invoice programs.o Misperception we give lots of direct investment to Afghanistan, Pakistan. Most

Afghanistan aid goes to international development bank. Yohannes:

o No MCC money is given to governments; it goes to vendors. MCC is very carefulwith American tax dollars.

2. Is it true that you tell countries aid will stop if things dont improve? Yohannes:

o MCCs commitments are made for five years. During this time, partner countriesare expected to be committed to democratic governance and other criteria. MCCcan suspend projects if this is not happening.

Shah:o USAID has increased suspensions, too; focused on accountability.

Rep. Ted Deutch (D-FL)1. Thank you for aid to Syrian people. Concern about extremist organizations growing there;

Syrians dont always feel the U.S. is with them. The U.S. feeds 210,000 people thereevery day. We should be proud of this. How are we working to strengthen our relationship,enhance our reputation? Shah:

o Worked with the Syrian Opposition Council to highlight efforts.o Trying to avoid attacks on our humanitarian partners. People are being targeted

medical personnel, etc. We are doing all we can in this context.o Additional investment just announced by Secretary Kerry will help.

2. The idea that we can either invest here or abroad is a false choice. The entire foreign aidbudget less than 1%. Why does it matter so much for us to be engaged? Shah:

o Its in our national security interests. Example: Pakistan, Afghanistan, Africa. Yohannes:

o Agree. South Korea, Taiwan, etc., got U.S. aid, and are now major U.S. tradingpartners. Will be case with other countries we aid now in future.


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Rep. Ted Yoho (R-FL)1. Foreign aid is only 1% of budget. I need to sell this to my district. People are struggling

there, and its hard to explain $41 million going to Pakistan. Foreign aid policies have beengoing on for decades. Theres been some improvement, but theres also been lots thatsgone in the wrong direction. Its a problem that we dont want to tell where aid is comingfrom. Branding should be on all aid we send. What direction do you see U.S. foreign aid

going economic development, or more like welfare? Shah:

o Tough times the budget is 6% lower. Foreign assistance should be aboutcreating pathways to self-sufficiency. Food aid reform is the best example in thebudget. Want to work with you on reform.

Yohannes:o MCC works with poor but well-governed countries whove embraced American

values. These are future trading partners.

Rep. Karen Bass (D-CA)1. Disagree that we should only use tax money for emergency aid. I see a great future in

Africa. Can you talk about Feed the Future, and Africas long-term goals? Can you both

give examples of how your agencies work leads to us not needing to give aid in future? Shah:

o Feed the Future has been implemented in 19 countries. Last year, Obama lookedat how to get the private sector involved, got $3.5 billion in agricultural investmentfrom them.

Yohannes:o Investments in Ghana, Benin, Senegal (roads, water, schools, etc.) have been

beneficial. Building infrastructure of these countries, helping create goodenvironments for investments, getting them off aid.

Rep. Paul Cook (R-CA)1. Afghanistan corruption, drugs are a big problem. Can you address the poppy issue?

Shah:o We are trying to establish stability in Afghanistan. Poppy issue is a huge challenge.

The core drivers to do this are to make opportunities in a legitimate economy morerewarding. We are investing in agriculture.

Rep. Gerry Connolly (D-VA)1. The Foreign Assistance Act was written in 1961. Goals that were relevant half a century

ago are less so today. Assume youd be amenable to rewrite of Act? Shah:

o Absolutely. Secretary Kerry and I are enthusiastic, and want to work with Congresson that.

2. Are you familiar with Berman bill from previous Congress? Are you committing USAID to

working with Congress on reintroducing it? Shah:

o Yes.3. Good. Want to partner with you on legislative end to help agency move forward. Im

getting ready to reintroduce this bill, and hope to have hearings on some parts of it.4. Can you explain differences in mission between your agencies, how you coordinate?

Shah:


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o As Secretary Kerry says, its the same mission, to elevate role of development andhumanitarian assistance. Need broad range of tools to apply.

Yohannes:o Specific mission, working with countries that have embraced U.S. values those

who want to be the next emerging markets. Scorecard system they have to pass.Working not to duplicate, but to complement each other.

5. Coalition support for foreign aid is fragile. Carefully vet that before moving forward. Needbetter narrative on success; do you have more to talk about than just Taiwan, South Koreaafter all these decades? Give us better success stories. We need to be able to point toefficacy.

ARTICLES AND REPORTS

New York TimesApril 22: Justices Weigh Conditions in Awarding U.S. GrantsThe Court considered whether groups receiving federal money to combat AIDS abroad may berequired to adopt policies opposing prostitution.

April 22: Free Speech and an Anti-Prostitution PledgeThe New York Times editorial board argues that the First Amendment should prohibit the federalgovernment from compelling groups to have a policy explicitly opposing prostitution in order toreceive federal funding.

Fox NewsApril 22: The Supreme Court, the 'anti-prostitution pledge' and free speechThe author argues that No group, whether it's Republican, Democratic, religious, libertarian, orindependent should have to adopt the governments ideology as a condition of accepting federalfunds.

Global Post

April 24: USAID Administrator testifies on Capitol HillShah appeared before the U.S. Senate Committee on Foreign Relations to address the agencyspriorities in the 2014 fiscal year.

DevexApril 25: USAID chief defends budget in CongressUSAID Administrator Shah defended plans set out in President Obamas budget to cut the U.S.foreign aid budget by 6 percent. Appearing before Congress, Shah said proposed food aid reformwould provide greater flexibility and efficiency in the agencys overall activities.

Disclaimer: Articles linked in the Update are intended to provide a dashboard view of newsworthy andtopical issues from popular news outlets that will be of interest to readers of the Update. The articles are an

information sharing vehicle rather than an advocacy tool. They are in no way representative of the views ofInterAction or the U.S. NGO community as a whole.
http://www.nytimes.com/2013/04/23/us/politics/court-hears-case-on-attaching-condition-to-federal-grant.html?_r=0http://www.nytimes.com/2013/04/23/opinion/free-speech-and-an-anti-prostitution-pledge-at-the-supreme-court.htmlhttp://www.foxnews.com/opinion/2013/04/22/supreme-court-anti-prostitution-pledge-and-free-speech/http://www.globalpost.com/dispatches/globalpost-blogs/global-pulse/usaid-administrator-testifies-capitol-hill-senate-rajiv-shahhttps://www.devex.com/en/news/usaid-chief-defends-budget-in-congress/80790?source=ArticleHomepage_Headlinehttps://www.devex.com/en/news/usaid-chief-defends-budget-in-congress/80790?source=ArticleHomepage_Headlinehttp://www.globalpost.com/dispatches/globalpost-blogs/global-pulse/usaid-administrator-testifies-capitol-hill-senate-rajiv-shahhttp://www.foxnews.com/opinion/2013/04/22/supreme-court-anti-prostitution-pledge-and-free-speech/http://www.nytimes.com/2013/04/23/opinion/free-speech-and-an-anti-prostitution-pledge-at-the-supreme-court.htmlhttp://www.nytimes.com/2013/04/23/us/politics/court-hears-case-on-attaching-condition-to-federal-grant.html?_r=0

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