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48–460 CC






MARCH 5, 1998

Printed for the use of the Committee on International Relations

BENJAMIN A. GILMAN, New York, Chairman
HENRY J. HYDE, Illinois
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CASS BALLENGER, North Carolina
EDWARD R. ROYCE, California
JAY KIM, California
TOM CAMPBELL, California
JON FOX, Pennsylvania
LINDSEY GRAHAM, South Carolina
ROY BLUNT, Missouri
SAM GEJDENSON, Connecticut
TOM LANTOS, California
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PAT DANNER, Missouri
BRAD SHERMAN, California
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff
MARK KIRK, Counsel


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    Mr. Brian J. Atwood, Administrator, U.S. Agency for International Development
Prepared statements:
The Honorable Benjamin A. Gilman, a Representative in Congress from New York and Chairman, Committee on International Relations
The Honorable Dan Burton, a Representative in Congress from Indiana
Mr. Brian J. Atwood
Additional material submitted for the record:
Letter dated January 30, 1998 submitted by The Honorable Dan Burton
Questions submitted by The Honorable Gary Ackerman and answered by USAID
Questions submitted by The Honorable Sherrod Brown and answered by USAID
Questions submitted by The Honorable Matt Salmon and answered by USAID

House of Representatives,
Committee on International Relations,
Washington, DC.
    The Committee met, pursuant to notice, at 10:10 a.m., in room 2172, Rayburn House Office Building, Hon. Benjamin Gilman (chairman of the Committee) presiding.
    Chairman GILMAN. The Committee will come to order. We meet today to hear the testimony of Brian Atwood, the very able Administrator of the Agency for International Development, in support of the President's budget request for Fiscal Year 1999. We are pleased that we have some very special guests with us today who have been very much interested in support of microenterprise, Valerie Harper and Blair Brown, two stalwart advocates for microenterprise, and also known for their being leaders in the entertainment field. Thank you for being here today.
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    Brian, I think it's only fair to say that we have been through some very difficult times. We have had our differences. But I would like to take a moment to highlight the growing bipartisan consensus on several key issues on which we may have differed in the past. A few years ago, we differed on the shape and management of the foreign aid program. We differed on the size of the international affairs budget. We differed on whether there should even be a USAID. I have been supportive, as you know.
    Today we have come together on a number of these issues. Management, through the Results Act, setting and achieving goals rather than just measuring how much is spent on a given project or on a given country. Modest increases in the international affairs budget to maintain our leadership role in the world. And State Department consolidation, folding USIA and ACDA into the State Department, but not USAID. These achievements have been due in no small measure to your calm and your considered leadership. Even so, concerns remain over the administration of a number of our assistance programs. Permit me to mention a few that have been raised by some of our Members; a few on which work is still required.
    As a strong proponent of microenterprise development, we were pleased to welcome the First Lady back to Capitol Hill last year into our hearing room for the signing of the Microenterprise Initiative. I am also pleased that the President is going to visit a FINCA microenterprise project when he travels to Uganda in a few weeks. While the President and First Lady now appear to be committed to promoting microenterprise development, the Administration first sought to cut these programs. Then it merely level-funded them, even as it requested a billion-dollar increase of the international affairs budget.
    I have long resisted efforts to earmark microenterprise funding. However, faced with an Administration that appears to be willing to highlight micro projects but not to provide the additional needed funding, I am leaning toward reconsidering our position with regard to earmarking. I hope that you would help us resolve that issue by assuring us of appropriate funding.
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    Next, I am particularly concerned about USAID's persistence in staying with the New Management System computer. Your IG told you not to buy that, but apparently there was some feeling within your Administration to continue with the development of that computer. We urged you to reconsider your position, but we would welcome hearing your thoughts on where you stand with regard to that New Management System computer.
    Now your own Assistant Administrator for Management has been replaced, and your consultants have advised you to throw out parts of that system, and again, we would welcome your thoughts with regard to that recommendation. Apparently your agency lost millions of dollars, and USAID will be unable to comply with a number of Federal statutes until the next century because of the problems in auditing your records.
    Brian, if USAID were a private sector company, I think the shareholders would be very critical. It is my understanding that you are fixing your system, and I urge you again to use a Commercial Off-The-Shelf (COTS) system if needs be to address your immediate needs.
    I am also concerned about our programs, and a number of my colleagues join with me, with respect to Haiti, North Korea, Bolivia, and Colombia. The Administration proposes to double aid to Haiti, even though the international community is holding up hundreds of millions of dollars in aid already approved to that country. We would welcome any thoughts you might have about what is in the pipeline right now, and how best the new funding that's being proposed will be able to be effectively utilized.
    While I understand the Administration is proposing to channel most aid away from the Government in Haiti, I can not think of aid being successfully used in any country that lacks an effective government. After years of experience in development assistance, I would hope that you have learned and we have learned the lesson that the policy environment has to be positive, otherwise too much of that aid would be wasted. We have cut aid programs in many countries where the government was a problem. The Administration, I would hope, would take another look before doubling aid to Haiti.
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    As to North Korea, a week ago we were prepared to initiate military action against a nation that wanted to remove Americans from U.N. weapons-monitoring teams. While we may have demonstrated our resolve in Iraq, we have not done so with regard to the prohibition on monitors in North Korea. We provided $5 million to UNICEF. Three Americans were due the long-term monitoring as part of that funding. The North Koreans refused to take Americans for long-term monitoring, and only allowed some very short visits. Regrettably, the Administration has agreed to do this. Permit me to note that the teams monitoring food aid deliveries to North Korea are assembled. They must have Korean-speaking Americans or the probability is we would oppose funding for that program. North Korea must not be permitted to dictate who monitors distribution of the food that's been provided by American taxpayers.
    Finally, in Bolivia and in Colombia, some in the Administration have claimed that the congressional support for fighting narcotics by providing Black Hawk helicopters has led to a cut in alternative development programs for these countries. That's absolutely not the case. I assure you, the congressional leadership will make certain that those alternative development programs are not going to be cut.
    I would ask if any of our Members have any opening statements. Mr. Menendez? Judge Hastings? Mr. Hyde, any opening statement?
    Mr. HYDE. No, sir. You said it all.
    Chairman GILMAN. Thank you, Chairman Hyde.
    Mr. Smith.
    Mr. SMITH. Thank you, Mr. Chairman. I want to welcome our good friend, Mr. Atwood, to our Full Committee, and look forward to reviewing the Administration's request, with a very keen ear to how do we eliminate poverty, promote humanitarianism around the world. Certainly USAID is very much a part of that effort. While we may disagree on some issues at some times, there are many areas where there is a very strong consensus, and I look forward to working with Mr. Atwood on those.
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    Chairman GILMAN. Thank you, Mr. Smith.
    Mr. Rohrabacher.
    Mr. ROHRABACHER. Well, I wish I could be as pleasant as Mr. Smith. I will be brief, Mr. Chairman. I am appalled at this Administration. I have tried to work with this Administration on several fronts and found this Administration in this area of foreign aid and helping with humanitarian assistance to be exactly on the wrong track. Frankly, I am going to relate right now my most recent involvement with the Administration.
    It seems to me that whenever I have been involved with trying to support a group of people who are struggling for freedom, and there is a group of tyrants or gangsters in charge of a country, this Administration is trying its hardest to be even-handed to the point that the gangsters get the help and the innocent victims are left empty-handed and even more without hope after seeing what the United States is doing.
    For the last 4 months, I have been trying to get this Administration to send humanitarian support to 4 million people who are basically blockaded in central Afghanistan by the forces of the Taliban. The Taliban are, as you may be aware, that group of armed men who believe that women are chattel and are probably the greatest abusers of women's rights in the world. This Administration time and time again has found a reason not to help anyone who is an enemy of the Taliban.
    Anyone who is opposing this fascist rule, this as I say, the Taliban are to women what the Nazis were to Jews during the 1930's, but this Administration with all the rhetoric, has gone in exactly the opposite direction and is, as far as I am concerned, an accomplice in blockading supplies to those people who are opposing the Taliban.
    We were told that there was no urgent need. So this Congressman and his staff raised through private funds the money necessary and the support necessary to send six planeloads of medical supplies to these individuals in central Afghanistan. The doctors that we sent came back with exactly the opposite analysis that was given to us by the State Department. The doctors we sent said that had we not helped these people, 400,000 people would be starving to death, mainly women and children, by the time the thaw comes in Afghanistan. Those people, I might add, are still starving. We had six planeloads of help we had to raise through private sectors because this Administration didn't want, in reality, what was their motivating factor, they did not want to cross the Taliban because the Taliban were in control of the government.
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    Mr. Chairman, the same is true in Cambodia. I have no reason to believe it's not true elsewhere in the world where there are thugs and dictators in charge of the government. Our foreign aid is not designed to help anyone who would oppose that government. I think we have got our values all mixed up. I would like to hear more about this as the hearing goes on. Thank you very much.
    Chairman GILMAN. Thank you, Mr. Rohrabacher.
    Mr. Hilliard.
    If there are no further statements, I want to welcome Brian Atwood, the man most mentioned in the Washington Post for possible nominations to become an ambassador to a number of countries. We hope you finally make a proper selection. Brian is a former chairman of the National Democratic Institute, a former Assistant Secretary of State. He has worn so many hats it's hard to keep up with his new Administrations. But Brian, we welcome you as head of our USAID, and we'll welcome your thoughts. Your full statement can be put in the record. You may summarize, whichever you deem appropriate. Thank you for appearing today.
    Mr. ATWOOD. Thank you very very much, Mr. Chairman, for your warm welcome and your kind words, even some of your admonitions I will try to address. Last year, you welcomed me with a cabbage in honor of a diet that I was on. This year, you have welcomed me with Valerie Harper in the room back here. I want to say that it's getting better each year to come here for hearings. We have a nice photograph of Valerie Harper and myself. So I am pleased about that. I am pleased about her support for microenterprise programs and for the work that we do at USAID. I know she has been a long-time supporter of yours, Mr. Chairman.
    I have submitted a formal statement as I indicated. I hope that it will be included as part of the record. I want to provide you today with a little more personal view of where I think we stand, and also some discussion of the budget request that we have before you. I want to thank the Committee for its support for the International Relations budget over the years. We have been through very difficult years as we have attempted to eliminate our fiscal deficit. The Chairman and the Ranking Member of this Committee, indeed, I think a very strong majority of this Committee, have always reflected an understanding of what was at stake with respect to our international affairs budget. Your appeals to the Budget Committee not to cut further the 150 account demonstrated the expertise of this Committee and its staff and your commitment to American leadership abroad.
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    In this regard, Mr. Chairman, we need to call on you once more. The Secretary of State asked me to convey her deep concern over a proposed $1-billion cut for the 150 account that the Budget Committee, at least in a draft budget is considering. We understand that the reduction is based on an interpretation of the budget agreement, but this size of a cut would devastate our foreign affairs account at a time when we are beginning to build it back up. So I really would appreciate once again, Mr. Chairman, your intervention with the Budget Committee. I know from discussing this with you yesterday that you are prepared to do that, and you are in negotiations at the staff level over that amount.
    Mr. Chairman, in May of this year, I will have served as Administrator for 5 years. That is a very long time in a job like this. It hasn't always been pleasant, as you indicated in your opening remarks. But I have to say that it has always been satisfying at least. Many people ask me why I continue defending a program that has never been politically popular, but frankly, I know that they ask you who vote for foreign aid the same question. I usually ask people to think about our foreign policy challenges over the past 5 years and ask themselves whether history would have been written the same way without the contribution that we at USAID have made.
    I visited Bosnia, for example, last month. USAID has been the lead donor there. There is no dispute about that. Our last military commander, Major General Bill Nash, called USAID ''an essential element of force protection.'' I never thought I would hear that kind of praise from the military, but consider why he said that. We have helped create 14,000 jobs in that country. The economy has grown by 55 percent in the federation in the first year, and 35 percent last year. Vital infrastructure has been repaired. People and goods can be transported over repaired bridges and railroad trestles. Water and electricity are flowing. Opposition political parties who espouse a multi-ethnic Bosnia are gaining strength, and a new press is beginning to challenge the government to do better.
    Obviously, there is a long way to go in Bosnia, but the prospects for a lasting peace would not be so bright without the contribution that we have made. Now this budget contains a $25 million increase for Bosnia. I hope that you will approve this. This is an effort to respond to the very positive change that we have seen in that country. In particular, in the election of Prime Minister Dodak in the Republic of Serbska.
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    I was also recently in Guatemala, where the peace accords are working, and where USAID has made a major contribution. Our Office of Transitions Initiatives staff planned and helped implement the demobilization of the guerrilla force. Our mission has worked with the Arzu Government to create jobs and fix the judicial system, and to provide education and health care to people who have never had it before.
    Despite the continuing problems with the Middle East peace process, USAID has given some hope to people in the West Bank and Gaza with our work on housing, water, and waste treatment, and job creation. Because of the fall in per capita income of Palestinians, some 33 to 35 percent due to the security situation and the Israeli border closings, we are asking for an increase of $25 million for the West Bank and Gaza. We believe this request will directly improve the security situation in the region and for Israel.
    There is no doubt in my mind that the transition in South Africa would not have gone so smoothly had USAID not contributed so much in that country. Despite the political crisis in Haiti, our programs there have lowered infant mortality rates. They have created jobs and opportunity. They have helped reconcile differences. They have begun to repair the environment. Now we're asking for a major increase in our Haiti program as an investment in peace and democracy. I will be happy to discuss that at greater length.
    We have made major progress in helping the nations of Central and Eastern Europe and the former Soviet Union transform their political and economic systems. The Central European nations are ready to graduate from our program. One day soon, they will enter the European Union. Major progress is being made in Romania and Bulgaria and the Balkans now that we're working with pro-reform governments in those areas.
    I believe that the democratic and market changes in Russia are now irreversible. Much more needs to be done, but the roots have taken hold.
    Now I have only touched on the surface of USAID's contribution to our national interest in discussing these specific countries and regions. We have also served American interests in other ways. For example, we are the world leaders in the battle against infectious diseases like tuberculosis, polio, malaria, and HIV/AIDS. Our child survival programs have helped to reduce infant mortality by 33 percent in developing countries over the past 30 years.
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    We are world leaders in education reform and the delivery of basic education. Despite serious cuts in our agriculture budget, we have maintained our capacity to lead in food production techniques and in creating the right kind of policy environment for agriculture.
    We are the undisputed leaders in the field of microcredit. I want to make very clear here that this Administration did not want to cut the microenterprise program. I believe you may have seen some iteration of our budget that came from very low levels, but we had never intended to cut this program. We have attempted to mainstream this so that our own missions would be doing even more. We have set a very modest goal of $135 million for this year. We expect to exceed it. I am delighted to be able to report that we spent almost $30 million out of our Title II P.L. 480 program last year on microenterprise programs, which brought the total to around $161 million in 1997.
    Now we have stimulated economic growth around the world by providing advice on macroeconomic reform and the creation of capital markets and banking systems. We have helped lower trade and investment barriers by helping nations create the right kind of legal and regulatory environment. Our environment programs are the best in the world, helping nations to achieve economic growth, while reducing greenhouse gases and cleaning up urban pollution.
    We continue to be world leaders in democracy and governance doing more than any other nation to strengthen legal and political institutions and civil society and democratic values. We respond to humanitarian crises more effectively than any agency in the world with our excellent PVO partners.
    In that regard, I just want to say to Congressman Rohrabacher I want to get more of the details of his concerns. I can tell you that in Afghanistan in a conflict situation, part of the worries that we have is that we might inadvertently contribute to the conflict. I don't know all the details in this case. I certainly want to look at it. But I am preparing on Friday to celebrate International Women's Day, to be highly critical of the Taliban Government. I'll do so here today. I agree with you entirely in your characterization of that government. We are trying our best to respond to a humanitarian crisis with very little ability to get into this country and to see exactly what the problem is, but again, I want to look into this more and I promise you I will do that.
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    The key word in this recitation of USAID's contribution is leadership. We have maintained our role as the premier donor agency in the world, despite the deep budget cuts we have taken. We have used our influence to work with the Development Assistance Committee of the OECD, to create goals for the entire donor community for the first part of the 21st century. We forged a new transatlantic alliance with the European Union and created a common agenda with Japan. Most importantly, other donors have followed our lead in reforming their operations and in emphasizing development results.
    I am most pleased that we have been able to transform the bureaucratic processes and management mechanisms of USAID to give the agency a results orientation. When we design new programs today, we focus on what we can achieve with the taxpayers' dollars, not on the perceived need to get the money out the door. We have re-engineered the agency to emphasize partnerships with other governments, NGO's, and other donors.
    People are always asking about the proposed reorganization of the foreign affairs agencies, and whether USAID will be merged into the State Department. What I tell them is that the State Department and USAID have never been closer. The relationship is working better than it has in 40 years. The Secretary and I are personal friends, but it is more than just friendship that causes this relationship today. We are today operating off well coordinated and completely compatible strategic plans. Sustainable development is part of our foreign policy. It is discussed under the national interest portion of the overall international affairs plan. If ambassadors and others want more detail, they can refer to USAID's strategic plan.
    We are more responsive than ever before to the State Department's foreign policy needs. A key reason for this is the success of two innovations we introduced. One is the Office of Transitions Initiatives, which I have mentioned before. We are asking for a $15-million increase in this very vital program. Also the Democracy Governance Center, which has greatly enhanced our central capacity to do democracy work and has supported many field improvements in an area of great concern to the State Department.
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    We have made great progress reforming USAID and have been able to reduce its size considerably while preserving its effectiveness. That reform was to have been supported by new information and financial management systems. You referred to these earlier, Mr. Chairman. When I came to USAID in 1993, USAID had over 60 information systems, and we were spending $50 million annually on our information technology systems. We could not describe comprehensively how the U.S. taxpayers' money was producing results. The previous Administration had proposed an information systems plan that was to have fixed this problem. The estimated cost of the new system was $110 million over its life cycle.
    With reference to your point about the IG, I just want to say one thing. The IG has been very helpful to me in this process. They have criticized us for not doing adequate testing before deploying the system. But they didn't recommend against the system. In fact, the IG thought that the concept was a very valid concept, just to be clear on that point.
    Now we have been very open with the Congress on our efforts to build a new system, Mr. Chairman. We have admitted that we underestimated the difficulty of transferring data from the old systems. We told you about our communications problems. We informed you when we decided last year to shut down the financial management system overseas because of these problems. We have now shared with you the result of an extensive study of the software problems we're having with our financial system, the AWACS system. Mr. Chairman, we are working this problem as carefully and as responsibly as we can. It's not fair to suggest that we have wasted taxpayers dollars. Today we have a system. Three of the modules give us much of what we need. The fourth, the AWACS module is not sufficient, clearly. But still it's a better system than the multitude of systems we inherited. AWACS apparently needs to be replaced. We're not asking for additional resources to do this. We have spent approximately $76 million to date on the NMS system, and last year we projected the overall cost to be $109 million. We now estimate the need over the next 2 to 3 years to spend an additional $10 to $20 million to fix the system. We're still in the ballpark of what the 1993 study estimated a new system would cost.
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    More importantly, when we get there we will have eliminated most of the old legacy systems. We're going to continue to consult with you on this. You will know how we will proceed and why we have chosen a particular course of action. All I ask today is that we avoid politicizing this important undertaking and that we not throw the baby out with the bath water. We have made progress. We were clearly too ambitious. We tried to rush this difficult development challenge. But we have learned a great deal in the process. I want you to know that I would benefit greatly from the clarity of hindsight.
    Let me conclude, Mr. Chairman, by suggesting that the resources we are requesting are really investments in our children's future——
    Chairman GILMAN. Mr. Atwood, if I might interrupt a moment. I am being called for a roll call around the corner. I am going to ask Mr. Goodling, the Ranking Member, to take over the Committee until I return. Mr. Goodling.
    Mr. ATWOOD. Thank you, Mr. Chairman. May I continue, sir? Thank you.
    Let me conclude by suggesting that the resources we are requesting are really investments in our children's future. The benefits we are deriving today in increased trade and the expansion of democracy are the result of investments made over the past 30 years. What is significant is that we were able to expand markets, lower infant mortality, increase literacy, and feed the world even though that 30-year period was characterized by a lot of experimentation, inadequate coordination among donors, excessive paternalism toward recipient countries, a highly stovepipe approach to development, and a constant ideological struggle that led many poor countries to adopt statist economic policies.
    Today we have what I have called an era of convergence. It's an era characterized by an agreement among donors on our common goals, agreement that our purpose is to direct private capital flows to the developing world as a consequence of our development work, agreement that democratic governance and market economics are the only paths to development, agreement on common global problems that can only be dealt with through cooperation, agreement that we need to use development to encourage the flow of private capital to the huge infrastructure needs of the developing world, agreement that we shouldn't work with governments that do not embrace democratic or market reform programs or governments who abuse their own people. Finally, agreement among a growing number of developing countries that aid dependency is unacceptable.
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    Mr. Chairman, all this adds up to a much better deal for the American taxpayer. We can feel confident today that development dollars can achieve more than at any time in the post-World War II period. This era of convergence would never have occurred without American leadership in the development and humanitarian fields. This Committee deserves credit for supporting that leadership when it was not easy or popular to do so. Today it should be even easier, it seems to me, to do what is right. Thank you very much.
    [The prepared statement of Mr. Atwood appears in the appendix.]
    Mr. GOODLING. Thank you, Mr. Atwood. Mr. Smith.
    Mr. SMITH. Thank you very much, Mr. Chairman.
    Mr. Atwood, thank you very much for your testimony. I have a couple of questions I would like to ask him again. Because of time restraints I'll lay the questions out and ask you if you would be kind enough to respond.
    The first, why is the Administration requesting a 10-percent cut in child survival funds? As you know, I have worked on that issue since 1983 and have been trying to boost the amount. Mr. Callahan, the chairman of the Foreign Operations Subcommittee has been very successful in creating a child survival account, and you do request it specifically. I do appreciate that and I know he will too and others will, like Tony Hall. But there is a 10-percent decrease in the child survival, and yet a 10-percent increase in development assistance in the aggregate. While answering that, if you could tell us of the $503 million in the child survival and disease fund, how much is for direct interventions to save children's lives, such as oral rehydration and immunizations, and how much of that is used for child spacing programs?
    Second, I would like to ask your opinion of the announcement in the Wall Street Journal today that AZT, the price cut by Glasso is going to be cut very significantly, which is I think a very wonderful thing. How much money do you think USAID might be willing to put toward that regimen? As it's pointed out in this article and from other sources, the transmission of HIV can be reduced by as much as two-thirds from mother to infant with the long course, and even with the short course, it can be cut almost in half. There is a study showing, according to today's report that just a 3-week regimen can significantly reduce the transmission. So there's this low-cost drug now out there, an incredible need as we all know, especially in Africa. Can we look forward to money being used, especially to alleviate this dire situation?
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    Third, I recently returned from a trip to Russia on human rights and religious freedom in particular. But while there, I did visit the Sakharov Foundation. Congratulations to USAID for its $200,000-grant. In talking to its director, Yuri Samadorov, I asked him what are your needs, what are your funding streams? He said the Duma looks like it's going to put a big stop sign and not put a dime up, which was the hope for a funding stream to carry them forward.
    I would just ask that USAID look very favorably at perhaps when this ends on September 1, 1998, that an additional grant, its modest amount of money, they got $200,000 last time, be extended to that museum for the Sakharov foundation. I was very impressed, as you probably were. I think you may have seen it in the past, with its documentation of the prisoners during the worst and most bleak days of the Soviet gulag system with names, pictures, artifacts. It is a grim reminder of never again, and to see it under-funded or not funded would be a horrible thing.
    Fourth, on Peru, last week we had a very extensive hearing, as you know, on the Peruvian coercive sterilization program. We heard from two women who suffered from coerced sterilization, one doctor who came as a whistle blower to tell us what was going on with bonuses and all of the other problems associated with coercing poor women to get sterilized as a means of alleviating poverty. Your representative gave a good testimony and talked about the fact that the Peruvian Government said they are going to stop it, and they are going to even try to find those women who had been abused which they belittled in terms of number. We believe that they grossly understated it.
    But then we heard from Ministry of Health people, including the Minister of Health, and certain reporters that it really isn't much of a problem. They are going to go full-scale, great guns in doing their sterilization program, maybe change it around the edges a little bit. So if you could touch on that. Do you think it's a big problem in Peru? Are we on the side of human rights trying to stop that problem? So those issues, if you could address those I would appreciate it.
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    Mr. ATWOOD. Thank you, Mr. Smith. Thank you for your support of our program generally. On the question of the Child Survival and Diseases account, I want to note that for the past 3 years we have not asked for a separate account for child survival and diseases. In each of these years the Congress has insisted on an account. We are listening. We have now this year submitted a request for a child survival account. So that is a positive sign.
    You indicate that there is a 10-percent decrease in that account. Obviously we are trying to put a lot of things together in this budget that comprise the development package that we think is balanced. This does not indicate a lack of interest in children because in the 10-percent increase in the overall development assistance account, there are a lot of programs that benefit children beyond the age of 5, which is the main focus of the Child Survival and Diseases account. A lot of the resources in that account of course go to the vital medications and immunizations that are needed to avoid childhood diseases. We appreciate and accept that focus.
    There really are no resources, as I understand it, in our budget this year for child spacing programs even though we believe that that has a direct benefit to child survival as well. But we also have basic education as part of that $503 million.
    Extremely important, but then again, education and a lot of other programs that relate to children between the ages of 5 and 20 are included in the overall budget. So I think that the program is very much of a child-oriented program in its entirety.
    I will look into this question and have our scientists look at this business of the medication that you mentioned for AIDS treatment. We clearly would be very interested in that. I would say as a general proposition that our program has been emphasizing prevention as opposed to trying to treat people who already have the disease. That becomes a very expensive proposition. We believe we can make more of an impact with prevention in general.
    I will certainly look at the grant for the Sakharov Foundation. He was a heroic figure. That museum does portray the worst of the abuses of the Soviet regime. I will look into that question.
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    On the Peru sterilization issue, I have seen the same reports, including newspaper reports that you have seen, and that troubled me. We looked into this to make sure that the letter that was delivered on the day of your hearing was accurate. We have been reassured that it was accurate. I think that this is a great tribute to your work and to the work of USAID working with you, because when this program first started, we told the Peruvian Government this was not the way to do this business, that you are going to find that forced sterilization will result. That is totally unacceptable to us. We moved away from the program. We have sent them letters to that effect, as you know. Your staff person went down and looked into this and came back with a very balanced report on this.
    We will continue to be vigilant. We think this is exactly the wrong approach to family planning. We do appreciate the contribution that you have made on this issue.
    Chairman GILMAN. [presiding] Thank you, Mr. Smith.
    Mr. Hamilton.
    Mr. HAMILTON. Mr. Chairman, thank you very much. I apologize to you and Mr. Atwood for not being here when you opened up the session. I want to join the Chairman in welcoming you, Mr. Administrator, and also to commend you for your leadership at USAID. I think you have made very substantial improvements in our assistance programs during your tenure in office. You have given it good management. The organization works better. It's more effective. You have had several important initiatives. You have done that at a time when I know the agency has been in some turmoil because of reorganization proposals which are always very distracting. So I commend you for your leadership and want to be fully supportive of your requests here.
    May I just observe that we in this institution, the Congress, spend so much time on the hotspots of the world like Bosnia and Haiti and a lot of others, that I don't think we are reminded frequently enough of just how much good is done in the ordinary work of your agency. You have reminded us of that this morning. It's an important thing for all of us to keep in mind. You do an awful lot of good all around the world in the delivery of humanitarian services.
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    Now I strongly support your budget request. It calls for an increase of $1 billion over last year's enacted level. What I think we in this institution have to understand is that we're in the process of restoring funding to a level that can support U.S. interests around the world. If you look at the charts in real terms, the foreign policy funding levels for USAID development assistance, from Fiscal Year 1995 to Fiscal Year 1999, assuming that you get your full request, would still mean a 20-percent reduction in real terms for development assistance.
    In terms of your total programs, you have about an 8-percent reduction. In the international affairs budget, 1995 to 1999, you have a 9-percent reduction. Again, in real terms. So what you are really doing here with your request is trying to restore this funding level so that USAID can play an important role in American foreign policy and meet our interests around the world.
    Specifically may I say that I support the increase in funding for the New Independent States and for Russia. In this institution of course you know there is a pretty tough attitude toward Russia at the moment. We have some real problems with Russia. But I support that request level. I think it's an important one.
    Likewise, may I say to you that I support the assistance programs in the West Bank and Gaza, and for the Middle East and the North African bank. I believe that part of the peace process there is to try to give some hope to those people. Through your programs we can do it. The peace process I think can lead to an improvement in the lives of people.
    I welcome the increase that you have for Africa. In several new assistance initiatives, if we calculate correctly here, you have about a $70-million increase for Africa. I applaud that.
    So I just want you to know that I welcome your budget this morning. I will be fully supportive of it and try to be helpful in all that I do. Let me ask you one question, if I may. I was kind of intrigued by some of your comments in your statement a moment ago. I am interested in seeing the relationship between your program and American foreign policy interests. In other words, how does USAID fit into the advancement of the American national interest across the globe? What makes it unique? What is distinctive about what you do in your agency and how it advances the interests of the United States? I know your statement went to that point, but I would like you to kind of sum that up for us, if you would, please.
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    Mr. ATWOOD. Thank you, Mr. Hamilton, for your comments and your support over the years. Let me try to address it this way. The foreign policy challenges that we face today are somewhat different than those we faced during the cold war. We are faced with, especially in the developing world, a constant array of crises. In the midst of these crises, our agency attempts to mitigate them by dealing with the humanitarian problems that result from the crisis. In particular, the disasters that occur, the need for emergency food, the need for medicine, et cetera. So there is this mitigation aspect.
    We have I think acquired, especially in the last 4 years, a capacity now to deal with the post-conflict transition. So the diplomacy that we would employ as we did in the case of the Dayton Accords or the Guatemala Peace Accords or the dispute between Ecuador and Peru American diplomacy, is indispensable in reaching agreement on how to solve the conflict. But then the transition situation is a very fragile situation. We needed to develop a capacity to move quickly to solve problems. So we created the Office of Transitions Initiatives to, among other things, demobilize forces, try to implement those provisions of the peace agreement that might call for elections, try to deal with hate radio by putting on radio programs that are offering reconciliation as a message. Doing all of those things that are transitional.
    Then in terms of crisis prevention, again, USAID has a role in its sustainable development programs. If people's lives are better, they are not feeling as desperate; if their economy is growing, if their healthcare problems and education needs are met, the tendency is to have a more stable peaceful society and a more democratic one. So in each of these areas, USAID plays an absolutely essential role in supporting the foreign policy of the United States.
    Chairman GILMAN. Thank you, Mr. Hamilton.
    Mr. Hyde.
    Mr. HYDE. Thank you, Mr. Chairman. I am concerned about North Korea. I understand they are in dire straits over there. Of course we want to be of help. So we come up with $5 million. Of course, God forbid, we should disburse it over there. We give it to UNICEF. I understand their function, they immunize these sensitive sovereignty concerns that a country has by being an international intermediary. But I don't think it's asking too much as we have asked to monitor the spending of that, because some of these countries, particularly tyrannies, have a way of taking the money we give for humanitarian purposes and diverting it to less benign uses. We, of course, asked that U.S. monitors watch where this money goes so it goes to its intended beneficiary. That won't do. The North Koreans object. On a short-term basis, I guess we can send a few in there to give the appearance of monitoring, but there will be no U.S. monitors there. He must have a hot line to Saddam Hussein, who objects to U.S. monitors.
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    We caved in. It's not an elegant way to phrase it, but we yielded to the North Korean demands that American monitors not monitor American money, although passed through to UNICEF. Can you justify that? Maybe you didn't make that decision. I don't know who made the decision. But the North Korean Government is responsible for the welfare of its people. We want to help. We are helping. But they put a condition on that. Frankly, if I asked 10 people on the street, I'm sure it would be 10 to nothing against these terms. So I just wonder, Mr. Atwood, if you can justify that.
    Mr. ATWOOD. Thank you, Mr. Hyde, for giving me the opportunity to discuss this. First of all, there is no cave-in. I want to make one point clear. This Government of North Korea is a despicable government. They don't like us. We don't like them. But we are responding to a humanitarian need of the people that is a very serious one. This $5 million is as important as the multitude of millions of dollars that we are sending over in food aid, because people don't have medicine and children are dying. So the initiative that was agreed to by Congress, in fact, Congress in this case pointed out this problem, I think was a very valid one.
    Let me talk about the details. UNICEF negotiated with the North Korean Government, and the State Department and USAID participated in this negotiation. Now Americans will be involved in the monitoring of all U.S. Government humanitarian assistance programs, including the medical and health assistance that will go through UNICEF. Three American representatives of the five U.S.-based NGO's that are implementing our programs in North Korea will monitor the deliveries and ensure that commodities are reaching the appropriate beneficiaries. These monitors will arrive in-country as each of the three deliveries arrive and remain for a 2-week period. Now three non-American NGO representatives will serve as longer-term implementers of the program, and will remain in North Korea throughout the project implementation program.
    Let me just say, obviously the North Korean Government said we don't want Americans. UNICEF is using the five U.S.-based NGO's to implement this program. We reached agreement on adequate monitoring of the humanitarian assistance. That's what is most important. These goods will be delivered under the auspices of Americans. The long-term monitoring will be done by non-Americans who are working for American organizations. We think that it was a compromise that was reasonable. This is not the same kind of situation as Iraq where expertise is so important, and the fact that the United Nations couldn't compromise with Saddam on an issue like this. Here we had to worry about whether or not those children would ever get the medicine that they needed. So I think it was unfortunate that the North Korean Government took a position on this as they did, but we didn't really compromise on the principle. We have Americans involved in this, including American organizations.
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    Mr. HYDE. You are satisfied that the money will go as intended under this regime?
    Mr. ATWOOD. I am satisfied that it will be monitored. I don't trust the North Korean Government at all. That is why we insist that when these items are delivered, that we'll have people there watching it. That's why over the long term we are going to watch to make sure that that medicine goes to where it is supposed to go. It's the old phrase in the arms control business, trust but verify. We don't even trust them, but we are going to verify, I can assure you.
    Mr. HYDE. Very well. One other point. Will the American monitors for the 2 weeks they will be there, will they be Korean-speaking?
    Mr. ATWOOD. Yes. I believe that was a criteria that we thought was extremely important, that your Committee has insisted upon as well.
    Mr. HYDE. OK. I am almost out of time so I won't burden you with a long question. But the other concern I have is with Haiti. I don't think that has been a spectacular result. I am certainly not blaming us for it. But apparently our answer to their failures is to double the amount of aid from $70 million to $140 million. I just wonder if you think that's going to solve the long-term problems that apparently plague Haiti.
    Chairman GILMAN. Would the gentleman yield on that a moment?
    Mr. HYDE. Yes.
    Chairman GILMAN. I understand there's $170 million that's been blocked by international financial institutions that have already been approved for Haiti in addition to what we're talking about now of doubling Haiti. So I hope you would give us some response with regard to Mr. Hyde's question and with regard to that. Thank you.
    Mr. ATWOOD. I will, Mr. Chairman. I will attempt to address the issue you raised on the pipeline as well.
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    We do have a political crisis in Haiti. We have a stalemate between the Parliament and the executive. The executive has not been able to get a Prime Minister approved. But it's not quite the same kind of political crisis we experienced here a few years ago. In other words, government is operating. We do have decisions being made by ministers. We have a privatization program moving along. We have just privatized fully the flour company there and the keys have been turned over to Seaboard Company, which is going to be taking that over. Progress is being made on the cement factory as well.
    The political crisis has stopped the government from fully implementing the IMF agreement, which means that approximately $170 million to $200 million of international financial institution money can't flow into Haiti. Nonetheless, we are still able to make progress with our program. We want to try to avoid the problem of trying to get ourselves mixed up in this conflict that goes on between the two major political parties of Haiti. We are very very pleased that there has been a decentralization of government in Haiti so that local mayors and others at the local level, including NGO's, are able to do a lot more legally under the new system. So our request for additional resources is to be able to implement fully that program.
    Now we'll continue to work on the justice system with the Federal Government there. But for the most part, we are going to start working to try to create jobs and deal with the poverty problem around the country. We believe we can deal successfully with that, and I think we have gotten a lot of results over the last few years in improvements, which is why you don't see people getting into boats and why you don't see a lot of riots in the streets in Haiti. If we can achieve success with this additional money, we believe that it will have a positive impact on the political environment in Port-au-Prince.
    I am not suggesting that this crisis is going to go on forever. It has to end. Certainly long before we receive the additional resources we have requested, I am positive this crisis will end. But it is a problem of a new democracy, a people not knowing how far to push. It's also a problem of political leaders who represent constituencies that don't understand IMF agreements, who don't understand the importance of privatization, and who are less willing, it seems to me, to end a crisis just in order to release a lot of money coming from international financial institutions that they find somewhat obscure anyway.
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    I am not saying they are right. They are absolutely wrong. They are harming their country by this political crisis. We are trying to use as much influence as we can to get it ended. But we have made a lot of progress. We don't have millions of people getting ready to leave a country. The mass killings have stopped. The government-sponsored paramilitary units have been disbanded. Since 1994, inflation has been cut in half. Price controls have been abolished. We're using our agriculture and microenterprise programs to create 750,000 jobs. 2.3 million people are receiving health services through our NGO programs. Infant mortality rates have dropped by 25 percent. Seven thousand primary school teachers and administrators have been trained. Sixty thousand children have received textbooks. A 5,200-member civilian Haitian national police force now exists. It isn't perfect, but when people abuse human rights, they get arrested for it. Haitians today enjoy unprecedented freedom of expression and association.
    So that is the answer. That is why we don't have people getting into boats. That is why we don't have riots in Haiti. Because the situation has improved. Despite the problems, which we readily concede are very very serious, we feel that if we can double our effort there, that we will have 5 years from now, an even better story to tell you.
    Chairman GILMAN. Thank you, Mr. Hyde.
    Mr. Menendez.
    Mr. MENENDEZ. Thank you, Mr. Chairman. I want to welcome the Administrator. As you know, Mr. Administrator, I have been an unabashed supporter of your program, knowing that in the limited tools of peaceful diplomacy, your tools that you use are one of the most important tools that we have. I must say that after looking at this budget, I was refining in preparation of today's presentation by you, I thought I had a better results for the Latin America, which is something I have always raised. Now looking at the numbers, as I go to the Congressional Hispanic Caucus this afternoon on an issue that they have consistently been concerned about, raised it with Frank Reyes at OMB, on what we do in Latin America, I see that what I thought was a particularly good beginning is not that good because all of this money is going to Haiti. It's within the Latin America and Caribbean account.
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    So I don't understand having read your presentation where you said in reference to the region, ''Democratic governments throughout the region are pre-requisites for significant progress toward regional economic integration, pollution reduction, ameliorating global warming, preserving biological diversity, halting narcotics trafficking, preventing the spread of communicable diseases.'' I would add on my own really for all those who care about illegal immigration, controlling the flow so that people who don't come to this country only because they flee civil wars in their own countries and/or the lack of economic opportunity in their own country, that that is another aspect.
    How is it possible that when I look at the accounts of Latin America and the Caribbean, it seems to me we are going backwards. We have a $13-million increase in development assistance. We have a $9-million reduction in child survival and disease. We have a $6-million reduction in Public Law 480, title II. Then we have a $72-million increase in economic support funds. But as I understand it, $70 million of that is going to Haiti.
    So therefore, the bottom line is I have as it relates to the rest of the region, a deficit, a negative. Now I don't understand how we reconcile your words and that of the Administration with that type of expenditure. I don't understand, although I am supportive of what we are trying to do in Haiti, I don't understand how you can spend $70 extra million there and have a negative effect for the rest of the region.
    Second, on another issue that I am concerned about, and I'll have you hopefully answer these, with reference to the $25 million that is proposed for the Great Lakes region. I understand that the program is intended to strengthen the mechanism for justice and reconciliation in the region. However, given the ongoing military and political situations in the region, the lack of governmental authority and transparency, how do you intend to carry out any program, and how do you intend to avoid the appearance that the U.S. Government is taking sides, particularly as it pertains to our military justice program?
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    Mr. ATWOOD. Thank you, Mr. Menendez. Let me just say that I would have to analyze all of the accounts that go to Latin America to give you a rationale. But each of these accounts has a different purpose. As Latin America has developed its own economies and democratic systems, including health care systems and other things, it may well be that there is a rationale in each case for the decisions that have been made. But we clearly did not want the additional resources that are going to Haiti to be taken away from Latin American countries.
    I can't tell you about FMF military kinds of expenditures that are made in Latin America, but I can tell you that we did increase the development assistance account and want to be able to be responsive to the agreements reached at the summit in April. So there is an additional $20 million that will be made available in fiscal year 1998 and a further increase in fiscal year 1999, so that we can join the rest of Latin America in our pursuit of poverty reduction and an effort made to accentuate education programs in that region.
    I would hesitate to get into issues that relate to other accounts that I'm not responsible for, but I do hear you and you do obviously have to be concerned about the bottom line. I understand that.
    Mr. MENENDEZ. Mr. Administrator, let me interrupt you for a moment. Fifty percent of the people in the hemisphere still live below the poverty level. So democracy in and of itself is not a solution to their problems.
    It is in our interest to make sure that we don't have people crossing the border into the United States. Part of the reason that they flee is economic opportunity. Last, we create markets in the process.
    I am looking at your numbers. I am looking at your chart. Your chart says of all of the USAID programs, there is 10 percent goes to Latin America and the Caribbean. Forty three percent goes to Asia and the Near East. Now I just simply do not understand within the context of our own region, within the context of our own backyard, how it is possible to generate $70 million to Haiti, and to all of the other countries of this hemisphere, to simply say that we will produce a net deficit, because the development assistance account that you remarked about the $20 million, I am looking at your documentation. It says the Fiscal Year 1998 estimate is $212,450,000. The Fiscal Year 1999 request is listed as $225,185,000. That's about, rounding off, a $13-million difference.
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    Now I just don't understand how we continue to have such neglect to the region, which is clearly in our own interest. Now as someone who has been supportive of USAID, I must say that my support is waning as it relates to after 5 years of trying to get USAID to recognize the region, to recognize our own interests in this regard. Clearly there is no response. I am upset at the Administration who led the Congressional Hispanic Caucus to believe that in fact they were getting a significant increase in comparison to the history of the account before. Now to find out that that increase is in essence for Haiti.
    Mr. ROHRABACHER. [presiding] If the gentleman would give the witness a chance to answer, and then——
    Mr. ATWOOD. I think Mr. Menendez knows that I agree with him, that overall for several years now, including the first I think it was Fiscal Year 1994 when we had the drastic reduction for Latin America, that I considered to be much too much, when, as you suggest, over 40 percent of the people are still living in poverty. That's a threat to democracy. That's a threat to market economics in the region. I think it is in our interest to do more.
    I have this fight every year. It's no secret within the Administration. This year I believe that we pretty much held the line. My figures show that we gave $536 million to Latin America in Fiscal Year 1998, and that we requested $606 million for Fiscal Year 1999, but that includes the $140 million for Haiti, so that's a status quo budget. (These figures include PL 480.)
    Of course we don't account for what we would provide under the P.L. 480 programs because we respond to contingencies and crises in that regard. So I can't give you the overall amount until after we have gone through Fiscal Year 1999. But I am not disagreeing with your general thrust. I can understand your frustration, but the budget game isn't just involving a single agency. It is an effort to try to fit everything into a very narrow box, especially when we have a budget agreement which seeks to balance that budget.
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    With respect to the Great Lakes region, the $25 million, you talk about a lack of government authority. We do have governments that have emerged from major crises, whose major problems are justice systems, who are having a hard time reconciling the experience of going through a genocide and have several thousand people in prison that haven't been tried yet. That is certainly the case in Rwanda. The funds under the initiative will go for training and institution building in the justice sectors of the countries in the Great Lakes region, such as Rwanda, Uganda, Burundi and Congo. Obviously in Burundi, until we reach agreement with them on the way they are going to pursue their own internal matters, we will be reluctant to spend money in that country.
    Mr. ROHRABACHER. OK. Thank you, Mr. Atwood. Because I have taken over the Chair, and by the way, I was the next on the list to ask questions. I will proceed with my time period. Mr. Menendez might be interested in my first question, at least, because this is a question which nobody ever seems to be willing to ask on this Committee. It explains why there are certain priorities and why certain areas don't get more than a certain amount of money. That question is, how much of the budget continues to go to Egypt and Israel, Mr. Atwood?
    Mr. Menendez, you might pay attention to this because this is where the huge money is being siphoned off the program that would go to other parts of the world. I don't know what you support in terms of priorities, but we seem to have an ongoing commitment that will never end to these two countries of Egypt and Israel. How much of our overall foreign aid budget goes to these two countries?
    Mr. MENENDEZ. Mr. Chairman, just before he responds, I have paid attention for over 5 years.
    Mr. ROHRABACHER. OK. Thank you. Mr. Atwood, could you look into that for us?
    Mr. ATWOOD. Mr. Chairman, the amount in our budget for Israel, not including the military assistance, is $1.2 billion. The amount for Egypt is $815 million.
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    Mr. ROHRABACHER. So it's about $2 billion to these two countries out of an overall budget of what?
    Mr. ATWOOD. Approximately $7 billion.
    Mr. ROHRABACHER. So $2 billion out of $7 billion goes to these two countries. The population of Israel is what?
    Mr. ATWOOD. Is this a Jeopardy question?
    Mr. ROHRABACHER. I am guessing it's 4 million people.
    Mr. ATWOOD. Yes, OK. I'll accept that.
    Mr. ROHRABACHER. Four or five million people. So we've got how much was that again to Israel?
    Mr. ATWOOD. $1.2 billion.
    Mr. ROHRABACHER. $1.2 billion. You know, when you have a limited budget and you are spending $1.2 billion on 5 million people. Then you've got another billion dollars that you have got to spend on Egypt because this is part of our agreement or whatever. That's going to prevent these other areas you are concerned about from getting more money.
    Chairman GILMAN. [presiding] Would the gentleman yield?
    Mr. ROHRABACHER. I certainly will.
    Chairman GILMAN. I wonder if the gentleman has been apprised of the fact that Israel has made an offer now to cut back all economic aid within a 10-year period starting this year based upon the status of their economy.
    Mr. ROHRABACHER. Well, I was aware of that, Mr. Chairman. I know it's your seat so I better watch out here. But for one thing, I would hope that it is even before a 10-year period. I would that we could fulfill this goal of bringing peace to that part of the world so even our aid can be scaled back even sooner. I believe that maybe I should ask another controversial question.
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    Considering that the Administration is upset right now with the Netanyahu Government in its reaction to some of the peace commitments that were made by perhaps the former regime in Israel, is there any reflection in that displeasure in this foreign aid budget?
    Mr. ATWOOD. Mr. Rohrabacher, we can't afford, in trying to deal with the Middle East peace process, to show the emotion of upset. We have got to work with the parties. No, we don't condition this. The $1.2 billion and the $815 million that we had agreed to many years ago was to compensate these countries for the Camp David process. Egypt in its case gave up billions of dollars of money from the oil-producing Arab States because of that agreement. Israel obviously had major security issues that it had to address.
    I think it's been worth the price. But I am encouraged that Israel has come forward now to suggest that its own economy is strong enough to begin to phase down this program and to redistribute it.
    Mr. ROHRABACHER. I would hope there is a peace of understanding that is implemented and comes to fruition within the next few years so this skewing of our spending to these two countries which has been going on now for years, can be dealt with, and Mr. Menendez won't have to be upset any more that we have ignored certain regions of the world.
    Mr. HAMILTON. Would the gentleman yield?
    Mr. ROHRABACHER. No. I really have a couple more minutes here that I want to make two more points because I am going to lose my time. I'm sorry.
    The first point I made in the hearing, and I would like to address that rather than this Israeli thing, which I knew would be controversial. I am referring to the U.S. policy in dealing with Afghanistan, Cambodia and Burma. In those particular countries, what I see is that the United States, while trying to be evenhanded in our relationship between the parties that are at play in these countries, is ending up in reality not helping people who are struggling for freedom, whose values more closely align to those of the United States of America.
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    For example, in Cambodia and in Afghanistan in particular, where I tried to get some help for those people being blockaded by the Taliban and was turned down, I had sent our own private people in and they told me that when they came back with a report, that tens of thousands, if not hundreds of thousands of people are starving to death in the Hazarajat region.
    It seems to me that shouldn't we have a policy in our foreign aid at least to be trying to direct our support toward those people who are struggling for freedom and democracy and share our values, rather than trying to be even-handed with the leaders of regimes that have just the opposite values?
    Mr. ATWOOD. The answer is yes. The short answer, we should and we do, I believe. In the case of Afghanistan, we don't have relations with the government. We don't have an embassy there. We don't have a USAID mission there. We don't even have a USAID mission any longer in Pakistan. So it's been extremely difficult for us to get information. I do appreciate that your NGO group was able to come back with information.
    Most of the humanitarian assistance that we have provided in Afghanistan has been through U.N. organizations. We try to assure that that assistance does not go to anyone who practices gender discrimination and attempts to abuse women to the extent that they have done that. We have provided over the last 5 years $75 million in food——
    Mr. ROHRABACHER. Mr. Atwood, I just want you to know about where your aid is going in Afghanistan. It's going through these NGO's and the United Nations and elsewhere to areas controlled by the Taliban. Those who are not controlled by the Taliban are not receiving the aid. So all of this verbiage about opposing this horribly repressive anti-women Taliban regime is so much verbiage. Because in the end, our aid is going to their areas and not to the areas of the people who are opposed to the Taliban. I wish I could say that this was inconsistent with what I found in Cambodia and Burma, but it's not. It's totally consistent with that, because the Taliban controls the government. We end up basically playing with these guys rather than dealing with the people who are trying to overthrow them.
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    Mr. ATWOOD. Well we're not helping the Taliban Government. We are helping the people that are suffering from humanitarian problems, again, you say within their regions. I am not sure that we want to restrict it within their regions, but it does become a question of physical necessity when you don't have the ability to work in a country to the extent we have in other countries.
    We are supporting the opposition parties in Burma. Many of them are living on the Thai-Burmese border. We are not supporting the government. In Cambodia, we are providing humanitarian and other assistance to opposition forces and human rights monitors and NGO's in hopes that we'll see a change in the situation there.
    Chairman GILMAN. Mr. Sherman.
    Mr. SHERMAN. Thank you, Mr. Chairman. First I would like to address Mr. Rohrabacher's comments about our aid to Israel and Egypt. I think, given the potential for very destructive wars in that area that could eventually involve the United States and its vital interests, our foreign aid to that area is rather modest. As the chairman pointed out, Israel has now put forward a program to reduce its aid. U.S. aid to Israel on the economic front simply pays the interest that they have incurred on acquiring weapons from the United States. Most of our allies who have had severe security problems similar to Israel and had been in similar economic circumstances would have received those weapons and other military supplies for no cost, and accordingly would not have a debt.
    Speaking of Israel's involvement in our foreign aid, Mr. Atwood, I would like to ask you about the CDP program under which Israel uses its expertise at very modest cost to the United States to provide aid to countries for which it can offer particularly effective technological assistance. I would like to know whether in your budget you anticipate fully funding USAID's portion of the CDP program.
    Mr. ATWOOD. We are intending to fund that program at $4.0 million, Mr. Sherman, and have always valued that particular partnership. They deliver a good product. We can assure the Congress that we can achieve results through this program. They are the real experts in some aspects of agriculture and other things that they do. We are encouraging them to do even more in their own region, which is helpful to the peace process as well, but it's a good program.
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    Mr. SHERMAN. Shifting to another region of the world, the Congress provided $12.5 million for humanitarian aid in Nagorno Karaban. I would like you to explain when we will start seeing this aid being used for people physically within the Republic of Nagorno Karaban.
    Mr. ATWOOD. Mr. Sherman, we have sent a team into that region to identify the humanitarian problems that people there are experiencing. We now are in the process of evaluating that team's conclusions and will be happy to provide you with information when we have made decisions as to exactly what we will be focusing on.
    I am told here that in February we sent a notification to the Hill that we would be spending the first million dollars to fund a project for emergency humanitarian assistance in the region, and the focus will be on health, sanitation, refugees, displaced persons, and tuberculosis, a health problem that they are experiencing there.
    Mr. SHERMAN. When you say the region, you mean inside Nagorno Karaban?
    Mr. ATWOOD. Nagorno Karaban.
    Mr. SHERMAN. Not the general area.
    Mr. ATWOOD. That's right.
    Mr. SHERMAN. We have through section 907 and through the Humanitarian Corridors Act, sought to force nations that are blockading Armenia and Nagorno Karaban to at least allow our aid to get through. Does USAID experience additional costs because aid to Nagorno Karaban and to Armenia can not pass through Turkey and Azerbaijan?
    Mr. ATWOOD. I don't believe so, Mr. Sherman, but I do think that that's the kind of question that deserves more consultation with the experts. I take it that we can move things through Armenia into Nagorno Karaban.
    Mr. SHERMAN. Yes. The real question is getting into Armenia which is land locked. Georgia being a friendly country with a port has some significant difficulties of its own. Perhaps you could, for the record, indicate whether there are examples of additional costs being incurred in flying aid into Armenia that could otherwise go through ports in Turkey.
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    Mr. ATWOOD. I will be happy to do that.
    Mr. SHERMAN. That concludes my questions. Thank you.
    Chairman GILMAN. Thank you, Mr. Sherman. We are going to continue as long as we can.
    Mr. Payne.
    Mr. PAYNE. Thank you very much. I understand there was some discussion regarding the doubling of the assistance to Haiti. I understand Mr. Hyde raised a question and also Mr. Menendez. Let me say very clearly and unequivocally, I certainly strongly support the Administration's request to double aid to Haiti. I first of all think that the Haiti program is successful. We don't have refugees coming up to the shores. We don't have people being eaten by sharks. We don't have people being killed in large numbers as we did with the military regime.
    A country that has been under tremendous restraints, tremendous handicaps for many years, much of which have been as a result of U.S. policy, can not overcome in a few years what has been a stranglehold for many many years. As you know, our U.S. military actually occupied Haiti for 15 or 20 years. We sort of allowed people like Papa Doc and Baby Doc to become dictators with the support of our CIA.
    So I get very annoyed when I hear people talk about in 1 year or 2 years or 3 years with experience, experiment of democracy that we are very very critical. If we had the same standard, we would be reducing aid to Russia, we would be stopping assistance in Bosnia when it became difficult. We asked us to send more troops, and we allocated more money to Bosnia. So I applaud your recommendation. I wish that those objectives were here so that we could take a look at the standard and see if a standard is being applied unilaterally.
    Also, I understand that the Ranking Member on the Subcommittee on Africa felt that $25 million being spent in the Great Lakes region was wrong. I totally differ with him. I think that we need to work on attempting to get governance and to try to end the cycle of violence. I think we need to shore up a strong police or a security force that can attempt to stop the cycle of violence. So once again, I disagree wholeheartedly with the comments of the previous speakers.
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    I of course still feel that the Development Fund for Africa should be a—what's the word I'm looking for, should be the line item. Also, I don't know if it was brought up, back in 1991 or 1992, we had authorized $1.1 billion for the Development Fund for Africa (DFA). We had appropriations up to $830 million. We have almost gone down to 50 percent. We are crawling back. My question is, do you anticipate additional funds for the DFA in the future? Second, how can we ensure without the earmark of the DFA that the funds will go toward those programs?
    Mr. ATWOOD. Mr. Payne, we have in our Congressional Presentation document, identified the amount that would go to Africa in the development assistance account. It's a $30-million increase. I can assure you that for the record here, that that money will go to Africa. That is where we have both the most urgent needs as well as the best opportunities for development. So the President's trip will underscore this. There will be announcements of several initiatives that would be undertaken with the money that is in the budget if we get the request, as well as with the 1998 monies that we have available already.
    But this is an extremely important area of the world. I think we should be doing more. I would like to see more of our ESF resources going into Africa because we have a lot of transitions in Africa that are political transitions as well.
    With respect to the DFA, while we didn't request a line item this year, the authorities of the DFA continue to apply to our program in Africa. That gives us a little more ability to spend the money in some of the poorer countries in a more flexible way. So I don't think a lot is lost, but I do understand your concern and even share it with respect to the DFA itself.
    Mr. PAYNE. Thank you. They tell me I only have 1 minute to go to vote, so if I return I have 2 minutes left on my time when I return. May I pick it back up? OK, let me go vote. Thanks.
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    Mr. SMITH. [presiding] Mr. Sanford.
    Mr. SANFORD. Can I just follow up on Congressman Payne's thoughts on Africa? I noticed in looking down the budget numbers that South Africa has what, $50 million, I had it here before me, $50 million I believe. I thought South Africa was supposed to sunset this year or next year. I thought it was supposed to be sunset.
    Mr. ATWOOD. The sunset date was 2005, Mr. Sanford.
    Mr. SANFORD. I thought it was originally 1998, the original sunset.
    Mr. ATWOOD. I don't believe so. I don't know whether—there are a lot of papers that fly around this town, but the problem there of course is not that South Africa isn't a wealthy country. The problem of course is apartheid where there were really two societies, one a very under-developed one. That is where we are working.
    Mr. SANFORD. But my understanding that part of that extension, at least maybe it's an illusory extension, part of that funding was to go toward global warming issues. Is that correct, in South Africa?
    Mr. ATWOOD. Some of it is to work on environment programs in South Africa which has an industrial base, could produce greenhouse gases that would affect global warming. But for the most part, that money has been reduced significantly. Perhaps what you are talking about is the original $600-million commitment when Mandela first came into office right after apartheid ended, was to end in 1998. That's certainly happening. This is the last year of that commitment. The program will be reduced from $200 million a year down to the levels that you have in the request.
    Mr. SANFORD. I guess what some of us struggle with is again, going back to Congressman Payne's thoughts, is you have a fairly well-developed country like South Africa. You have got sub-Saharan Africa where you have got needs, at least from an economic standpoint that are far greater. Yet South Africa gets funded. Then you hear reports again that because it's industrialized they have some global warming issues that need to be dealt with.
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         Yet you look at for instance, I was down in South America last spring, and as part of, I suppose, counter-narcotics efforts, but nonetheless funded through USAID, there had been a road built into jungles so that farmers might be able to get their crops out of the jungle. Yet the environmental community was inflamed that you have a road going into the jungle that in essence will lead toward the destruction of rain forests and the beginning of agricultural practices there that will in fact lead toward the greenhouse effect.
    So on one hand you have got industrialized South Africa and the need to control industrial output there. On the other hand, you have a road going in to the jungles of South America that will lead toward greater greenhouse gases. What some of us struggle with as we look at USAID overall, is certainly not your efforts, which have been courageous, but does one hand know what the other one is doing? When you see that kind of back and forth, we get confused when we talk to our voters back home. They say, what are these guys doing? We're like, well we're not sure. What are your thoughts on that paradox that often seems to show itself?
    Mr. ATWOOD. My first thought is, welcome to my world. I mean I have to deal with these kinds of contradictions all the time. There are legitimate arguments that can be made, for example, that if you are going to get cash crops out to a market, you need to have a road system. But in each case where we involve ourselves with an infrastructure program, we also have to be aware of what the impact will be on the environment. We do study that very carefully. The case I think you are referring to may be Panama; if the watershed around that canal is damaged, then we are going to have silt in the Panama Canal. We won't be able to use it, and they won't be able to have a major economic asset available to them. So all of these things have to be weighed very very carefully.
    In the South Africa situation, I mean it's a worthwhile investment. The investment is in the people who had been left out of the system. If they can make it work and join with the whites that have participated so well over the years, we can perhaps create the engine that will affect all of the countries certainly in southern Africa, and maybe eventually the rest of Africa.
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    So we have got both a South African strategy and a regional strategy to try to create markets and networks among people who believe in democracy and market economics that we think is going to benefit the entire region.
    I hope that as you wrestle with these issues that we could share with you the strategies that we have for these countries, which I think makes sense. If they didn't make sense, we wouldn't propose them. But I do think that we try every day to wrestle with the kinds of issues that you have raised this morning. I hope to come up with the right professional judgments about it.
    Mr. SANFORD. I doodled here three little notes. One is, and I would be curious just to get your thoughts on each. Do you think there ought to be greater sunsetting of existing USAID packages? It seems like we see a lot of the same names over and over and over when we look at these budgets. Two, do you think sunsets would enhance the effectiveness of USAID packages? I noticed the blip there on Cuba. I was curious as to what exactly it was funding. Three, inasmuch as the Chairman had pointed out that there is going to be the beginning of a possible draw down on the Israel account, what has Egypt said on its side?
    Mr. ATWOOD. Yes, I believe we should set sunset agreements with these governments. We seek to engage them more than ever before in deciding with us what results we can achieve with the money we give them. Part of it has to be that they don't want aid dependence, that they don't want to be dependent on external aid after a certain point. When we set sunset agreements, close-out dates as we call them, we then begin pursuing a path where we are both working together to stop the program and the point when they can take it over and it will become sustainable.
    I think we obviously need a little bit of flexibility. What's happened in Asia is an example of that. We had a sunset agreement, if you will, with Indonesia for the year 2002. I don't think it applies any more. I don't know how they are going to resolve the crisis that they are in now, but they have got some major weaknesses. We need obviously to work with them as they work through the crisis. But I agree that we should have close-out dates. It does provide an incentive for both us and them to get moving with a strategy for achieving sustainability.
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    Mr. SANFORD. Could I ask one very quick question? I know I'm burning over all my time. But for instance, I would love to get the answer to the other two questions on Cuba and Egypt, but for instance, in Indonesia, what would the aid—in other words, if the aid was toward infrastructure regardless of an economic downturn or not, the infrastructure is still there. In other words, what would necessitate despite economic downturn, us going back in for funding?
    Mr. ATWOOD. I don't want to create a negative self-fulfilling prophecy because we hope that they can come out of this economic crisis, but if they don't abide by the IMF agreement, if they go off on their own and create major problems for the rupiah, their currency, they are going to fall into major poverty again. They are a country that had succeeded in creating a middle class to a large extent. Development had worked. But the weaknesses of their political system and the weaknesses of their banking system, et cetera, have now created a lack of confidence in their currency. They are going to have to work their way out of that. So I am not saying that we would change the date. I am just saying we have to watch it very closely.
    The Cuba amount that we are requesting is a continuation of a program that I think has been very effective in attempting to help those who are the advocates of democracy and human rights inside Cuba, with fax machines, with other things, with democratic materials that they can use to use the little space that exists there and hopefully the Pope's visit will have created more space to try to create a more democratic environment. I am feeling very good about the programs that we have recommended to the Congress on this. I hope that we can continue to pursue these.
    The last point you mentioned was Egypt. They have been well aware that we will have to reduce their program eventually. There is an understanding that we would do this on a proportional basis. We have been working very hard to get them to reform their economy because while a lot of things we have done in Egypt have worked, the fact of the matter is they haven't moved quickly enough, at least up until recently, to privatize their economy and liberalize it so that they can trade more easily with the rest of the world.
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    They started to do that. The so-called Gore-Mubarak Commission has enabled us to go in at the highest levels of the government to get support for changes. Those changes are beginning to take place. I think they can see the day when they will need less aid because they will be trading more. Their economy is now growing at the rate of 5 percent a year. They finally reached that 5-percent growth rate. About 3 years ago, it was zero. So the economic reforms internally have produced this kind of growth rate. We hope that we'll be able to reduce our program in the near future.
    Mr. SANFORD. Thank you.
    Mr. SMITH. Ms. McKinney.
    Ms. MCKINNEY. Thank you, Mr. Chairman. Mr. Administrator, you know that I am indeed a supporter of USAID, and I am definitely a very strong supporter of yours as well. I am however, somewhat concerned about the implications of your language on page four after your discussion about earmarks. You specifically point to programs in Africa and Latin America. Are you suggesting that on a per capita basis, Africa gets too much?
    Mr. ATWOOD. Not at all. I'm sorry you read that. I better get back and read that testimony more carefully. I don't believe that at all. Let me take a look at it. I think I know what you are referring to. You are referring to the fact that Latin America and Africa both had had the benefit of an earmark. I would never of course suggest that we take money out of Africa and give it to Asia. But the problem I was trying to represent here was that when we faced the crisis in Asia, we didn't have any flexibility. We had to take it out of just Asia. I didn't mean we would ever take it out of Africa, nor I guess with Mr. Menendez around, I wouldn't take it out of Latin America either. But the fact of the matter is, we need more flexibility here in these situations. That is the main point of the thrust of what I was saying about earmarks.
    Ms. MCKINNEY. Following on the remarks of my colleague, Mr. Rohrabacher, I just found it somewhat interesting that Africa and Asia were highlighted in that regard, where other areas of the world were not.
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    I have a question about privatization assistance. Is there privatization assistance in Africa?
    Mr. ATWOOD. Yes. In fact, in order to help implement the President's trade and investment initiative, we are going to be dedicating a certain amount of money, I believe it's, I'm not sure, it's about $30 million to try to help governments remove obstacles to trade and investment. So clearly part of one of the obstacles is the need to privatize in many of these countries. So there will be funding available to help them do that.
    Ms. MCKINNEY. Do you know if the privatization program envisioned by the Africa trade imitative differs in any way from privatization programs in other parts of the world, for instance, France, Israel, Russia, Albania or Peru?
    Mr. ATWOOD. I don't believe it does, but before I put a final period on that statement, I would have to ask if I could provide something for the record on it. Obviously situations, laws are different in different countries. The extent of the government's control over public companies is different. So we would have to fashion it for the country we were working in.
    I am told that there is a total of $164 million out of the program in Africa that would be promoting economic growth generally.
    [The information below was supplied following the hearing.]

    Privatizations need to be tailored to circumstances in individual countries. Experience in other parts of the world helps to reinforce three general conclusions:
    1. Use an open, competitive process. The best privatization programs involve open tenders or sales to a controlling, often new, owner-manager. Other approaches, such as the voucher privatizations of most large enterprises in Russia and other former Communist States, have dispersed shares quickly but broadly among the general public, workers, and other non-controlling interests. Voucher privatizations may have served a valid political need but generally left the existing managements in charge and did not lead to productivity gains. In contrast, competitive tenders, which are typical of the large privatizations in Africa, tend to produce greater improvements in efficiency following privatization.
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    2. Don't drag it out too long. Some enterprises set for privatization, such as in the UK during the 1980's, are preceded by extensive restructuring and improved cost-efficiency before being broken up and/or offered to the private sector. This enables tough political decisions (e.g., closing uneconomic coal mines) to be made by the government, reduces risks to new owners, and may raise more privatization revenue. But most developing countries—including African countries—do not have deep enough managerial talent and capacity in the public sector to take this approach.
    3. Privatization of utilities or other ''natural monopolies'' often requires prior development of public regulatory laws and institutions that will help to maximize competition among firms in providing low-cost, high-quality services in the sector after privatization. This is an area where assistance by USAID can be helpful—e.g., in the transport and telecommunication sectors in southern Africa or the electric power sector in Russia. For countries with a small domestic market and limited internal competition, privatization should often be accompanied by reduction of import barriers. International competition can then play an important role in stimulating better performance by newly privatized companies with lower prices and better quality for consumers.
    The privatization programs in Zambia, Malawi, and the SADC region that USAID has been assisting under our current programs offer good examples of what we might support in the future.
    In Zambia, USAID has assisted the Zambian Privatization Agency (ZPA) since 1994 with its comprehensive program to privatize about 350 parastatal companies that once dominated most sectors of the economy. Over 220 companies have been privatized to date, enabling the Zambian Government to cut operating deficits of State Owned Enterprises (SOE's) from $47.5 million in 1993 to less than $2 million in 1997. Privatization of SOE's has raised over $100 million of sales proceeds to date.
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    The program has shifted many medium-sized companies into hands of former management and workers or other local entrepreneurs. In 1997–98, ZPA has been selling components of Zambia's financially struggling but huge copper mining complex to private consortia of international and regional companies. If all of these mining privatizations go through (one major deal faltered in April 1998), they are projected to attract about $2.8 billion in new foreign investment over the next 5 to 7 years.
    In Malawi, USAID has been funding a Railways Restructuring Project for several years. One accomplishment has been a Rolling Stock Information System to allow efficient use (and avoid shortages) of rail cars throughout southern Africa. A major goal and milestone of the Malawi project for 1998 is the Privatization Commission's plan to award a contract to a private company to operate the Malawi railways for the next 20 years.
    In the SADC region, USAID's regional Telecommunications Project sets privatization as a major goal. The project has developed a model telecommunications law for all SADC countries to promote entry and competition from new providers. The project is also assisting Zambia with its plan to privatize and regulate its current, State-owned telephone company, ZAMTEL. These types of legal and privatization initiatives are needed to help Africa bring down the costs of voice, data, and e-mail communication and, thereby, to become more competitive in the world market.

    Ms. MCKINNEY. Finally, I would like to know what the expected breakdown of the Great Lakes Initiative monies are by country.
    Mr. ATWOOD. I am not sure that we have broken it down that way because by the time we get the money, there may be changed circumstances that would have us moving money around differently. Clearly we know that Rwanda is going to be a major focus because of the justice sector problems there. But I don't think we have broken it down in the request, Ms. McKinney. I will be happy to give you more information again on that later if we do have more information on it.
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    Ms. MCKINNEY. I would like to have more information. I understand that the Rwandans are spending about $20 million on those 120,000 prisoners that they have. Certainly they can't afford to carry that kind of burden.
    Mr. ATWOOD. Yes. Absolutely.
    Ms. MCKINNEY. Thank you. Thank you, Mr. Chairman.
    [The information below was supplied following the hearing.]
    At this stage, the country by country funding breakdown for the Great Lakes Justice Initiative (GLJI) has not been finalized. The GLJI will be designed and implemented in partnership with the countries of the Great Lakes region. Following the conclusion of ongoing discussions among the NSC, the State Department, USAID, and other relevant agencies, there will be meetings held in the region. Once this planning process is completed, it will be possible to provide estimates of how much each country will receive with GLJI funding as well as any cross-cutting regional activities.
    The countries that will be initially targeted include Rwanda, Congo, and Burundi. Given the current USAID Democracy and Governance program with the Government of Rwanda and the existing legislative restrictions on assistance to the Congo and Burundi, it is anticipated that Rwanda will be the initial focus of the GLJI.

    Chairman GILMAN. [presiding] Thank you, Ms. McKinney.
    Mr. Payne was halfway through his questioning. Mr. Payne.
    Mr. PAYNE. Thank you very much. As I indicated earlier, the concern I had with Haiti and the Great Lakes region and just the funding for Africa in general.
    The programs that although you are not directly involved, Mr. Atwood, there is a concern that refugee allocations for Africa, which are very low, 7,000, have not been met last year. We only received 6,000 refugees from all of sub-Saharan Africa. I am wondering is there any way that USAID could, if they are in the region, be of assistance? Evidently the refugee operation in sub-Saharan Africa is not coming up with the numbers. Evidently our U.S. embassies do not take this as a priority. Do you have any thought on that? I know it's a little outside of your realm, but displaced people certainly create problems and USAID involves itself in those programs.
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    Mr. ATWOOD. Well, when you consider the number of refugees in Africa, I must admit I heard this from you yesterday for the first time. I am surprised that we couldn't meet a quota of 7,000. I don't know all the details, but I'll be happy to talk to Assistant Secretary Taft who runs the refugee office at the State Department. If of course there is anything we can do to help identify these opportunities for refugees, we'll be happy to undertake that.
    Mr. PAYNE. Thank you. Just finally, El Nino has been bothering parts of Africa too, as you know, in Kenya, Somalia. There has been a tremendous amount of rain in areas where there has been no rain before or generally no rain. We have seen an increase in cholera and other diseases that are related to unclean water. Zanzibar is a country we do not actually have very much relations with. But they are also suffering from a tremendous cholera problem. Through our work in Tanzania, since Zanzibar is related to Tanzania sort of in a federation, first, is there any direct attention that is being given to that problem? Second, is it possible that Zanzibar somehow could be included?
    Last, you had a preventative program as it relates to food security, where you would try to anticipate problems of food security and particularly around the Horn region. I think several years ago that planning helped prevent serious problems that could have occurred. Is that program still in effect and how successful is it going?
    Mr. ATWOOD. It all relates, all of these things you have raised are related. They are related to the El Nino phenomenon and constant droughts in certain parts of Africa that have been true for many years. About 4 years ago, we launched what we called the Greater Horn of Africa Initiative, a Presidential initiative to try to deal with the food shortages that were being created by a drought at the time. We were able to avoid a famine not only because of the way in which we brought in emergency food, but also the efforts that we have had underway with governments there to help them increase food production and trade food across borders, countries that can produce more than others. There was a moment there when Kenya was buying food from Uganda, and Uganda was providing surpluses so that that could happen. Then of course there was a political friction between the two countries and that ended, but it's starting up again now. We are encouraging increased trade between the two countries.
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    I think that is all part of a food security initiative which has been funded at about $30 million and will continue to be funded about that amount in the future. I am hopeful and expect the President to address that issue when he is in Uganda this time.
    I will make sure that we ask our mission in Tanzania that's responsible for Zanzibar to look into this cholera epidemic. If there is one, then it becomes an emergency that our own Bureau of Humanitarian Response can respond to, and we will do so.
    Mr. PAYNE. Thank you very much. Thank you, Mr. Chairman.
    Chairman GILMAN. Thank you, Mr. Payne. Mr. Berman. I'm sorry. Mr. Fox has been waiting.
    Mr. FOX. Thank you, Mr. Chairman. Good morning, Mr. Atwood.
    Mr. ATWOOD. Good morning.
    Mr. FOX. Thank you for your leadership and your appearance here today. I wanted just to make a point of clarification. Before I know that Mr. Rohrabacher had had some questions about Israel. Just for my purposes, Israel for me, and I think for most of us on this Committee and those Members of the House and the Senate, has certainly been America's best ally in the Middle East and the linchpin to the Middle East peace process. So I think Chairman Gilman well pointed out that voluntarily Israel has requested less economic aid, as was promised by Prime Minister Netanyahu in his last address before Congress. So just thought it should be noted for the record. I don't think we need to pit one country against the other. If other countries need aid, they should be looking for the assistance that they deserve from the United States and not be saying that we need to denigrate one country for another. They each have their own assistance needs that we should respect and carefully analyze.
    In that respect, I wanted to point out that Ukraine has built a solid foundation for strong democracy and free market economy. Their domestic reforms have stemmed inflation, introduced a new currency and privatized numerous enterprises. Internationally, this past year alone Ukraine successfully signed treaties with many of its neighbors. Their objectives like ours are for peace, stability, and democracy.
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    Don't you believe that sustained foreign assistance will further reform efforts in Ukraine and provide peace and stability in that region?
    Mr. ATWOOD. Yes. I certainly do. We have requested $224 million for Ukraine, which is the same level we requested in 1998. That becomes one of the largest programs we have in the world, I think the third largest behind Israel and Egypt. President Kuchma has a comprehensive reform program. It's meeting some resistance from their socialist-led Parliament. We need to work our way through that. The Administration has raised strong concerns about the pace of reform and corruption in the country. We have got some disputes involving U.S. businesses and a requirement to report back to Congress by a certain time. Just yesterday the Secretary of State, I saw it in the paper this morning, warned Ukraine once again, that unless we resolve these business disputes, we will have to cut our aid in half.
    So we want to send that message to the Ukrainian Government, but this is an important country. That is why we are asking for $224 million. We hope that we will be able to spend all of it. We need the cooperation of——
    Mr. FOX. Which disputes do you speak of that have to be settled? Which disputes?
    Mr. ATWOOD. These are disputes with a number of U.S. companies that have had their own interests interfered with in Ukraine.
    Mr. FOX. I think as a result of the U.S. foreign assistance, Ukraine has continued its macro economic progress by curbing inflation to 10 percent in 1997 and by stabilizing the Ukrainian monetary unit. Will the United States be helping to maintain the fair and free elections that are upcoming on March 29?
    Mr. ATWOOD. Yes, absolutely. We have devoted some of our democracy funds to helping them run a free and fair election, Mr. Fox.
    Mr. FOX. I would ask also with regard to Colombia, I have a constituent of my own being held by the FARC, the narco terrorists in southwest Colombia, who obviously seek to destroy Colombian democracy. Do you know when further aid may come to that country to assist us in these anti-terrorist and anti-drug efforts?
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    Mr. ATWOOD. Well, we of course have decertified Colombia, so we don't provide direct aid, with certain exceptions. There is a mandate from Congress. Mr. Gilman has been very interested, as have you, that we provide Black Hawk helicopters to Colombia. We are still looking at how we can do that without affecting some of the other good programs that we have in Latin America, including the Alterative Development Programs in both Bolivia and Peru. But we understand the position of Congress on this issue.
    Mr. FOX. Yes. Someone talked to me in my office about the problem with have with my constituent being held hostage. I would appreciate your usual good leadership efforts in this regard. I would appreciate that.
    Finally, I would ask, USAID has developed a well-publicized project to export gourmet Haitian blue coffee. How much funds have been invested in aspects of this project? How much income is going directly to the farmers who are growing the coffee? What will the cost be to the taxpayers of this particular program?
    Mr. ATWOOD. This is a great program because it does what we want to do. It creates employment in the rural areas of Haiti. It also deals with the environment problem that country faces because you need shade trees if you are going to grow coffee. If we can help these people to export coffee to our markets then it's a good thing for the development of Haiti because money is being earned and they will spend some of that money, at least, to buy American exports.
    Mr. FOX. Thank you very much again. I thank the Chairman for allowing me this time.
    Chairman GILMAN. Thank you, Mr. Fox.
    Mr. Berman.
    Mr. BERMAN. Thank you very much, Mr. Chairman.
    I'm sorry, Mr. Atwood, that I was not here to hear your initial testimony, but I had a chance to look through some of it and to speak with you earlier about some of these issues. I want to just associate myself with the remarks that I did hear from our Ranking Democrat on this Committee, Lee Hamilton, in terms of what you have done at USAID.
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    A couple of points. I gather when I wasn't here, there was some discussion about the lack of assistance going to the Western Hemisphere countries, development assistance. There was the issue of Israeli foreign assistance as sort of the solution to that problem. I would suggest a different solution. No, not by you, by another Member of the—God forbid, another Member of the Committee.
    We also, the staff has passed out for us selected foreign policy funding trends which show that in Fiscal Year 1995, the international affairs budget was $22 billion, almost $22.2 billion, just under that. USAID-managed programs, $7.9 billion. USAID development assistance, $2.2 billion. In Fiscal Year 1998, the year we are in now, the year in which you are trying to marshall resources to meet the many different demands, that budget has gone down almost $3 billion for international affairs. In terms of general aid, about $800 million or well over 10 percent. In terms of U.S development assistance, $500 million. In terms of development assistance, an even larger cut since Fiscal Year 1995.
    I would suggest the answer to some of the stretched resources is the lack of adequate priority we are giving to this function of the Federal Government into the important work that needs to be done in the area that you are managing.
    I also might just add that if you went back to Fiscal Year 1985, where in 1985 dollars, we were spending approximately the same amount as we spent in 1995, substantially higher than we are now, you would really get a sense of just how drastic the cut has been over the past 12 years.
    Mr. ATWOOD. Mr. Berman, the building that USAID now occupies is named after former President and Governor of your State, Ronald Reagan. I would only ask that if we are going to be in that building, we should get the same amount of money that he had to spend on foreign aid in his tenure as President.
    Mr. BERMAN. That's right. I'm sure if he were asking this Congress—well, never mind.
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    Mr. BERMAN. Probably not even he could get this Congress to do what we should be doing in this area.
    There is a lot of interest in my area on microenterprises generally in the form of development assistance. I was asked to seek your opinion about microenterprises generally, the microcredit summit, and to the extent to which USAID thinks this is useful, important, and what it plans to do to contribute to the goal of that summit reaching 100 million of the world's poorest families with credit and other financial and business services by the year 2005?
    Mr. ATWOOD. That's a very worthy goal. There is another goal that all the donors have agreed to which is by the year 2015, to reduce by half the number of people living in absolute poverty, which is 1.3 billion today. We'll never get there unless we can really give more impetus to this microcredit revolution. It is indeed a revolution. It was started in Bangladesh by Mohammed Unis. It's an extremely important way of getting at people who have been traditionally outside the formal economy, mainly women, obviously poor people who want loans of $300 or less in order to start a new business. It's a very very successful program.
    A lot of people focus on how much we spend each year, and I appreciate that. We do, I think, more than any other donor agency in the world. We are the most effective in carrying out the programs because of our partnerships with groups like FINCA, whose leader is in the audience here today. But what people don't focus on so much is that the fact that over the years our investments in this have created a revolving fund. We charge interest rates, the commercial interest rates for these loans. They are paid back at the average of 98 percent. But they also give money back into the banks and the other village groups that actually start them. So we have created millions of dollars beyond what the taxpayers appropriated, funds that are now available for poverty lending in these countries.
    Bank de Sol we started at $4 million. It now has a portfolio for lending of about $60 million. This is in Bolivia. So the poor people in that country have access to monies they never thought they would have access to before. In fact, some of them are actually opening savings accounts in that very bank.
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    It's an extremely effective program. It's one that we have sought at USAID to mainstream, to make sure that we do more in the European area, we need to do more in the African area. But we also need to work on the policy frameworks within some of these countries so that they will allow that kind of lending program to develop.
    We got that in Bolivia, and that's how Bank de Sol was created. We need to work on that as well, so not all of the money that we have can be spent just on the $300 loans. It also has to be spent on creating the environment so that we can create banks that will even do more of this.
    Mr. BERMAN. I see your point.
    Mr. Chairman, I know my time is up. I just want to make one comment.
    Chairman GILMAN. Without objection.
    Mr. BERMAN. I gathered earlier this morning you were asked to continue your support, your strong support over the years for the CDR/CDP program. I am very fond of this program. I take great pride of authorship of the original program, more pride than I take in some other things I have authored, and I just hope that USAID's support for this will continue, and that you will also help us in terms of the State Department's never-ending desire to divert some of their funds to other things. Thank you.
    Mr. ATWOOD. We will support the program, Mr. Berman.
    Chairman GILMAN. Thank you, Mr. Berman. I have withheld my questions until the very end here. With regard to Kosovo, Mr. Atwood, you'll recall that within a few days of the outbreak of hostilities in Bosnia, tens of thousands of refugees needed assistance. Now we understand there's been some widespread fighting that's broken out today in Kosovo between the Serb army and the Muslim minority. Can you indicate to us that you are going to be convening a task force to review the humanitarian situation in Kosovo to make certain that the refugees from the conflict are going to be properly cared for?
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    Mr. ATWOOD. The conflict is a serious one and we're following it on a day-to-day basis in our watch center in the Office of Foreign Disaster Assistance. But before it broke out, this was one of the poorest places on the face of the earth. It's horribly poor and we already planned to provide food and other disaster assistance to the tune of about $5.7 million. So we are watching this situation very very carefully, everyone is. I discussed it with the Secretary of the State Department on Monday. She had a special meeting on Kosovo. It is serious. We're obviously wanting the Government of Yugoslavia to cease and desist in its use of force to attempt to put down the people of Kosovo. So we are looking at the humanitarian consequences of this crisis.
    Chairman GILMAN. Besides looking at the consequences, are we trying to do anything to head off the problem? Is the Administration looking into that?
    Mr. ATWOOD. Yes. As I mentioned, we are in contact with the government and are trying to get them to remove some of the large force that they put into Kosovo, which seems to us exacerbating the problem.
    Chairman GILMAN. We would hope that the Administration is going to pay close attention to what is happening today and yesterday and try to avoid tomorrow with regard to the tremendous amount of hostility that's broken out there.
    Mr. ATWOOD. I see that our special representative in the region, Bob Gelbard, has been quoted in today's newspaper saying that over the next few days, there will be some very serious action to register a U.S. and allied protest. So it's clear that we're working on this assiduously.
    Chairman GILMAN. I hope you will be paying close attention.
    Mr. Atwood, the April 1997 elections in Haiti deadlocked and the electoral process is not politically balanced or prepared to hold any new election. We're still without a Prime Minister there. Elections for legislative and local offices are proposed to be held in November. Is it possible to try to establish a balanced competent election council to ensure broad-based political participation and then help to organize the elections between now and November? What specific programs and level of funds does USAID plan to invest to achieve those goals between now and the upcoming Haitian elections?
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    Mr. ATWOOD. We won't invest a dime if they don't create an election commission that both of the parties can agree to. But it's part of the political dispute that's going on. There were two seats, in particular Senate seats, that were in dispute. That's the basic core of the political crisis that exists there now. Clearly as part of the discussion of this, the opposition party wanted to assure that the election commission would be a fair one. That needs to be created before they can have another election. If it is created, we will assume that that is the first step in resolving the political crisis. If that occurs, clearly we'll support the election commission and the holding of another election. But if it isn't, then we have nothing that we can offer.
    Chairman GILMAN. Is there anything we can do to enhance the political process there in the meantime?
    Mr. ATWOOD. We have done a lot, Mr. Chairman. We have sent envoys, both public and even some more discreet, to try to deal with the parties, to try to urge them to solve the problem, to point out the difficulties of not being able to receive the IFI money. We thought we had an agreement in hand at one point. It slipped away from us. We now are hopeful that the parties understand that this has gone on too long. They have heard from both friends and people who threaten to cut off further aid. It's our judgment that threats are not going to help resolve this crisis. They have got to deal with this as any democracy does.
    I guess I'm not going to predict how it will be resolved. Frankly, after 7 months of frustration in watching this and seeing the country suffer in the process, I can't offer you a ray of hope today. I can only say that I think some of the parties are beginning to realize that this is hurting the people that they represent.
    Chairman GILMAN. With the amount of money we're talking about, a doubling the funds for Haiti, $170 million in the pipeline, isn't that some leverage we can use to enhance what we want to do, what we would like to see done in Haiti?
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    Mr. ATWOOD. There is a great deal of leverage one would think if one were thinking rationally. But I am not sure that this political crisis has its roots in rationality. There is a power struggle. There are some emotions involved here. There is the need to save face. That is why I think creative people are attempting to give some suggestions as to how the face can be saved.
    In situations like this, where you have got new democracies and people find it easy in a very poor and desperate country to be demagogues, the threat of cutting off aid I don't think has the kind of effect that you would want it to have. So we believe the best way to deal with this situation is to change the reality on the ground, to get out of Port-au-Prince, to start empowering some of these mayors that are already in office and who are looking desperately to help develop their own cities and towns.
    So that's the approach that we would take. We fully expect that this political crisis having said that, will be resolved by the time we have our hands on this $140 million.
    Chairman GILMAN. We hope you are going to be successful. It certainly needs a lot more attention than we've given in the past.
    Mr. Atwood, with all the anxiety and press conferences by the administration of the Bolivian Government over reported Fiscal Year 1998 shortfall in counter-narcotics aid to Bolivia to prevent drugs from coming to our Nation, could you tell me if we can expect an early reprogramming request with regard to the funding that would help out Bolivia as well as keeping assistance to Colombia?
    Mr. ATWOOD. Mr. Chairman, my understanding is that the resources we are talking about come out of the international narcotics account. The mandate that we have been given by Congress is to purchase the Black Hawks for Colombia. One interpretation of that mandate is that we would have to spend money out of the INL account in order to purchase those Black Hawks. There are other interpretations as well. So I hope that we can be as creative as possible. With your help, perhaps we will be. So that we don't have to reduce the Bolivian alternative development program by 45 percent and the Peruvian program by 25 percent.
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    I think you know because of your leadership in this field, better than anyone, that it takes the three legs of the stool to get this narcotics problem solved. One is interdiction. The Black Hawks are an example of what is needed for that. Another is eradication of the crops, the coca crops. The third is alternative development. You have no incentive obviously to replace coca if you don't have another way to make a living if you are a farmer. The alternative development program, which is a much more comprehensive program than just providing alternative crops, it provides a whole development approach, has been working in certain parts of Bolivia and Peru. So we need it desperately. I hope we can resolve this crisis that we're in. It presents us all with a dilemma.
    Chairman GILMAN. All of these programs are sound and all need funding. But let's not take it out of borrowing from Peter to pay Paul. Colombia needs help. Bolivia needs help. Because we wanted some choppers to go into Colombia, don't reduce the assistance to Bolivia at the same time that you are providing choppers for Colombia. They all need assistance. Right now we understand that 80 Colombian soldiers died just this week, 30 still unaccounted for, because they are fighting the battle there. They all need help. The Vice President of Bolivia who was here this week couldn't understand why as they are making progress, we are cutting off assistance to them. He makes a good argument. So I would hope you'll take a look at keeping some proper balance in funding all of these at the same time, and not taking it from one to pay for the others' needs.
    Let me just touch once again on microenterprise. We're appealing to you not to have just a flat line on microenterprise, but to try to raise some of the funding. You know how important the program is, how successful it's been, and the kind of support that we have from all segments of our communities with regard to microenterprise. It has been a very successful program. They need to increase funding, not decrease the funding and not flat lining it. So we hope that you are going to give some attention to our request for increasing the funding for microenterprise.
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    Mr. ATWOOD. We certainly will. We have heard the message loud and clear. But you are preaching to the choir. We believe very strongly in this. I want to just say that we work in a limited number of countries around the world, unfortunately more limited than when I arrived here. So when we push this microenterprise program in each of these countries, and we've increased the number of countries in which we have microenterprise programs by 30 percent, but at a certain point you are still waiting for proposals to come from within that country to do these programs. We do reach a saturation point here unless of course we can expand the number of countries even further, which we are trying to do. We are not proposing a ceiling for this program. We are suggesting that that's our floor, the $135 million, and that we really need obviously to keep pushing the program within USAID and in the countries in which we work. We hope that we'll be able to give you a very good answer later as to how much more than $135 million that we are actually spending.
    So I know that we have cooperated very well on this over the last few years. The microenterprise initiative, which is your initiative and that of Mr. Gedjenson, has been a real boon. It shows the trust that we have and the new partnership that we have between USAID and the Congress and between both of us and the NGO's that care so much about the program. I hope we can continue that kind of cooperation because I am not going to be here forever. I consider a microenterprise item that we provide in our budget to be a floor, but if it becomes an earmark, it could become a ceiling. That I wouldn't want to see either.
    Chairman GILMAN. Well thank you very much, Mr. Atwood, for your appearance here today and your thoughts. I am being called to the floor on an amendment. I am going to ask Mr. Smith if he would conclude the hearing. Thank you for being with us.
    Mr. Smith.
    Mr. SMITH. [presiding] Thank you, Mr. Chairman. Let me just ask some followup questions if I could, Mr. Atwood. Earlier you had indicated that none of the funds in the child survival account were being used for child spacing, family planning. Is that accurate?
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    Mr. ATWOOD. As a matter of fact someone gave me a note to the effect that it was not entirely accurate, Mr. Chairman. I am looking for that note now. I'll have to get you the information exactly on that, but there is a very small amount of money that's in there that is for child spacing, which I know you don't want me to spend your time making the case for that right now, but I do apologize for giving you an inaccurate answer. I was planning to make sure we corrected that for the record, but we got off on another subject.
    Mr. SMITH. OK. You know, since there is such limited funding available for child survival, I would hope that child survival would stay more focused on the traditional immunizations, and we have nowhere come close to accomplishing what need is out there or reaching that need, and it must be done over and over again as new children are born into the world.
    [The information below was supplied following the hearing.]
    Given the critical role that birth spacing plays in increasing the chances of child survival, USAID does fund some limited birth spacing activities from the Child Survival account. The relationship between short birth spacing (less than 24 months) and child mortality is well established. On average, babies born within 18 months of their next oldest sibling are twice as likely to die in their first year than those born after at least a 2-year interval. Recognizing this relationship, the U.S. Congress appropriately included in the 1985 Child Survival legislation such activities as education programs aimed at promoting birth spacing, expanded immunization programs, oral rehydration therapy (ORT) to combat diarrheal diseases, and programs aimed at improving nutrition and sanitation. Birth spacing has been included in Child Survival strategies since then and represents about 5 percent of USAID's total Child Survival funds.
    Activities so funded include: promotion of breastfeeding and the lactational amenorrhea method of family planning; education and counseling in the advantages of spacing births, and the risks associated with closely spaced pregnancies; and informational programs that demonstrate the importance to young womens' health of delaying first births. In guidance sent to all USAID missions, we have said that funding is permitted for child spacing only when those activities are conducted as part of a larger child survival effort under a mission objective to reduce infant and child mortality. Child survival funds may not be used for the purchase of contraceptives.
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    The $121 million for HIV/AIDS in the budget, what is that used for exactly? Would you consider, especially in light of this rather startling announcement today by Glaxo Welcome that they have slashed by upwards of 75 percent the cost of AZT. As they point out in this article, and the source is a U.N. program on HIV/AIDS, that of the $2.7 million children who have died from AIDS worldwide, 2.5 million died in sub-Saharan Africa. In 1997, 460,000 children died of AIDS worldwide, 430,000 of those were in sub-Saharan Africa. Then it points out that of the 1.1 million children who are living with HIV, 970,000 were living in sub-Saharan Africa; clearly showing that this is an acute problem, obviously as you know so well. It seems to me as you pointed out, we have been focusing on prevention. Treatment was admittedly astronomical, and even a short-term regimen seemed out of the means of doability. But with today's startling announcement, there is now a breathtaking opportunity to reach some of those kids who might otherwise die through mother-to-baby transmission.
    Can you commit some of that money, the $121 million or maybe a significant amount? I mean I would love to up the amount myself to make sure that we get more money targeted toward treatment now that it appears that the drug company is willing to cooperate.
    Mr. ATWOOD. Mr. Smith, we don't have any absolute rule against doing treatment here. So I don't hesitate to say that we will look at this very very carefully to see if it makes sense. Obviously we would like very much to use it in the case of children's HIV/AIDS problems in particular if we can.
    I understand that we discussed this yesterday with Dr. Piat of U.N. AIDS, and that we are going to be also pursuing whether or not the multilateral organizations can purchase some of this, if this indeed is a breakthrough. You said it was announced today or yesterday so it's obviously very new.
    Mr. SMITH. I hope we can work together on that.
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    What is the HIV/AIDS money being used for right now?
    Mr. ATWOOD. Again, it's prevention programs. The bulk of it is being used in Africa, although we have had some very dramatic impacts on other parts of the world. South Asia has a high incidence and Asia itself. But it is prevention programs wherein we're attempting to educate people as to safe sex. We are trying to provide advice to people who suffer, psychological advice. I visited an AIDS center in Uganda, which is the country where it all started. There was a troupe of people who were AIDS victims who went around to villages singing songs to teach people who are illiterate what they should and should not do.
    We have had real impact in doing these programs because we have seen the rate of AIDS go down considerably. So I think it's been a good program. If you want more detail than that, I'll be happy to provide that for the record.
    Mr. SMITH. I would appreciate that. Some perhaps to be made a part of the record, but I would like if we could, get some samples, details of what is being taught so we have a better understanding.
    [The information below was supplied following the hearing.]
    AIDS was first recognized by Ugandan physicians as a mysterious wasting condition called ''slim'' in 1982. By the end of 1986, the Ministry of Health had established an AIDS Control Program which began collecting data and conducting public information campaigns.
    By 1988, USAID began providing assistance to Uganda and the fledgling non-governmental organizations struggling to respond to the dual needs of preventing further infections and caring for those already infected with the virus.
     This 10-year collaboration between Uganda and USAID has produced remarkable results. The AIDS Support Organization, TASO, now recognized as the premier agency in sub-Saharan Africa providing care to persons living with AIDS, was first given USAID assistance in 1988, and TASO continues to receive USAID support.
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     By the end of 1997, TASO had cared for over 40,000 clients and their families and had trained hundreds of AIDS counselors in Uganda and elsewhere in Africa. TASO has also provided national leadership in reducing the stigma and discrimination typically associated with AIDS.
    By 1989, it became apparent that many Ugandans were knowledgeable about AIDS and were eager to learn whether they had already been infected. In the absence of HIV counseling and testing sites, people were donating blood to learn their HIV test results, creating a serious problem for the national blood transfusion service, which was not equipped to provide intensive counseling.
     Once again, USAID responded quickly, and in February 1990, the AIDS Information Center opened, the first program in Africa offering voluntary and anonymous HIV counseling and testing.
     By the end of 1997, over 350,000 clients had been served, an astonishing accomplishment not yet matched elsewhere in sub Saharan Africa. The important role of HIV counseling and testing in helping people adopt and maintain risk-reduction behaviors has now been documented not only in the United States but also in Uganda, Kenya, Tanzania, Rwanda, and Zambia.
    USAID provided leadership and assistance for other AIDS prevention efforts in Uganda as well, including the first ''AIDS in the Workplace'' project in Africa and one of the first ''AIDS in the Military'' projects.
     By 1992, USAID was also funding community AIDS education activities implemented by churches and mosques, and by 1995, these projects had recorded contacts with over 1 million individuals, most of them living in rural areas.
     Condom distribution has also been funded by USAID since 1987, and sales of USAID-subsidized condoms increased to almost 10 million by 1996.
    The cumulative impact of these intense and widespread efforts became apparent in 1994 and 1995, when behavioral surveys began documenting that Ugandans were reporting fewer casual sexual partners and increased condom use, and young people were reporting a delay in becoming sexually active. Social norms were also changing, with peer reinforcement of abstinence, faithfulness and condom use. Religious leaders and parents began demanding that young couples get tested before marriage, and now one-third of the clients at the USAIDS Information Center come as couples for pre-marital counseling and testing.
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     Most encouraging has been the documented decline in HIV infection rates in young pregnant women. Based on routine testing of pregnant women attending antenatal clinics in a number of locations in Uganda, beginning in 1989 and continuing to the present, there is increasing evidence that HIV prevalence in Uganda is declining, especially among young women. The declines are particularly pronounced among pregnant women age 15 to 19. For example, in one site in Kampala, 15- to 19-year-old women had an HIV prevalence rate of 26 percent in 1992, but this declined to 9 percent in 1996.

    I don't know if you saw the piece that was in the China News Agency. They issued a wire story on February 23. Some of us had heard some rumblings and this makes mention of that, that China may be moving toward a period of relaxation or some leniency on their one-child per couple policy. Regrettably, and I say this with great sadness, Peng Peiyun, the State family planning counselor, who oversees that draconian policy, points out that they will spare no efforts to pursue its strict family planning policy in the coming years. China will not slacken in its family planning policy. They claim that they are being praised all around the world for what they are doing. The UNFPA certainly praises them. But many of us see it as a gross human rights violation of women's rights and children's rights.
    I just raise this because all of a sudden there was this talk. The Chinese leadership itself has said nothing doing. They are moving in a decidedly opposite direction of actually tightening, which is what they have been doing ever since Tiananmen Square. So I just raise that as an issue.
    Mr. ATWOOD. It is a policy that produces multiple human rights abuses, Mr. Smith. We don't disagree at all on that. It's abhorrent.
    Mr. SMITH. I appreciate that. On the Sudan, does USAID believe that we can now provide development assistance to southern Sudan either through NGO's or through the de facto government, the SPLM?
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    Mr. ATWOOD. What we are trying to do with a minimum amount of money, about $3 million, is to give some capacity to all of the groups within that country that have been fighting a civil war in opposition to the government, which is a tyrannical terrorist-supporting government, to anticipate what they might need to do if they ever did take over power. Mainly it's democracy training. That's at least what we are contemplating. We are still surveying the situation carefully to make sure that we are not inadvertently contributing to a worse problem. But it's capacity-building help to groups that have been receiving humanitarian assistance over the years, or at least to the peoples who have been receiving humanitarian assistance, not the combatants.
    Mr. SMITH. Mr. Payne.
    Mr. PAYNE. Just on that subject. I had the opportunity several months ago to travel to southern Sudan and visit it with one of the local administrators, the superintendent of schools, the public health persons, the community organizing. I mean they have set up sort of a shadow government more or less. I would certainly urge that support be given through whatever means. That it not only continue, but perhaps be increased.
    Also, in the so-called Somaliland, we visited there several months ago. In that area the same thing is happening. As you know, they have declared themselves separate from Somalia—they met in Egypt for about 2 months, 28 different faction heads. I went to Egypt to meet with the groups. But prior to that, went to Somaliland, where they were saying that in the south they want to continue to have all this problem, we'd like to move forward with programs. But because they are a part of Somalia and not a recognized country, and I'm not suggesting recognition either necessarily, but I think that if there is some way that our NGO's, I know the embassy in Djibouti or the office in Djibouti has visited Somaliland and has had conversations with some of the leadership. But if there was some way that we could help them with economic development. They have some resources. They have mineral resources. I think they have oil and things that if they receive some sort of economic assistance, they may be able to at least continue to move forward until the people in Mogadishu make their minds up of what they want to do.
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    Mr. ATWOOD. Thank you, Mr. Payne. You have identified one of the problems. It's not a sovereign country or one that we recognize. But if we can do some of this work, if we're creative enough to do it, obviously we might be able to as in the case of Haiti, bring a little more enlightment to the capital city.
    Mr. SMITH. Thank you, Mr. Payne.
    Mr. Atwood, thank you very much for your testimony. It's been a very long morning, early afternoon. You were very gracious with your time. I would ask unanimous consent to have 5 days for Members to submit written questions to Mr. Atwood for the record.
    The hearing is adjourned. Thank you again.
    [Whereupon, at 12:34 p.m., the Committee was adjourned, subject to the call of the Chair.]


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