SPEAKERS CONTENTS INSERTS
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42–924 CC
1997
AID ACTIVITIES IN ASIA AND THE CENTRAL ASIAN REPUBLICS
HEARING
BEFORE THE
SUBCOMMITTEE ON
ASIA AND THE PACIFIC
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
MARCH 5, 1997
Printed for the use of the Committee on International Relations
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COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM GOODLING, Pennsylvania
JAMES A. LEACH, Iowa
HENRY J. HYDE, Illinois
DOUG BEREUTER, Nebraska
CHRISTOPHER SMITH, New Jersey
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
CASS BALLENGER, North Carolina
DANA ROHRABACHER, California
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
PETER T. KING, New York
JAY KIM, California
STEVEN J. CHABOT, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York
TOM CAMPBELL, California
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JON FOX, Pennsylvania
LINDSEY O. GRAHAM, South Carolina
JOHN McHUGH, New York
ROY BLUNT, Missouri
JERRY MORAN, Kansas
KEVIN BRADY, Texas
LEE HAMILTON, Indiana
SAM GEJDENSON, Connecticut
TOM LANTOS, California
HOWARD BERMAN, California
GARY ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. McKINNEY, Georgia
ALCEE L. HASTINGS, Florida
PAT DANNER, Missouri
EARL HILLIARD, Alabama
WALTER CAPPS, California
BRAD SHERMAN, California
ROBERT WEXLER, Florida
STEVE ROTHMAN, New Jersey
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BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff
Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAMES A. LEACH, Iowa
DANA ROHRABACHER, California
PETER T. KING, New York
JAY KIM, California
MATT SALMON, Arizona
JON FOX, Pennsylvania
JOHN M. McHUGH, New York
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
HOWARD L. BERMAN, California
ENI F.H. FALEOMAVAEGA, American Samoa
ROBERT E. ANDREWS, New Jersey
SHERROD BROWN, Ohio
MATTHEW G. MARTINEZ, California
ALCEE L. HASTINGS, Florida
WALTER H. CAPPS, California
ROBERT WEXLER, Florida
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MIKE ENNIS, Subcommittee Staff Director
RICHARD KESSLER, Democratic Professional Staff Member
DAN MARTZ, Counsel
HEIDI L. HENNIG, Staff Associate
C O N T E N T S
WITNESSES
The Honorable Thomas A. Dine, Assistant Administrator for Europe and the Newly Independent States, U.S. Agency for International Development
Mr. Charles Weden, Deputy Assistant Administrator for Asia, U.S. Agency for International Development
Dr. Nancy Lubin, President, JNA Associates, Inc.
Ms. A. Rani Parker, Director, Woman/Child Impact Program, Save the Children
APPENDIX
Prepared statements:
Hon. Thomas A. Dine
Mr. Charles Weden
Dr. Nancy Lubin
Ms. A. Rani Parker
Additional material submitted to the record:
Answers submitted to the record by Mr. Charles Weden
AID ACTIVITIES IN ASIA AND THE CENTRAL ASIAN REPUBLICS
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WEDNESDAY, MARCH 5, 1997
House of Representatives,
Subcommittee on Asia and the Pacific,
Committee on International Relations,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:08 p.m., in room 2200, Rayburn House Office Building, Washington, DC, Hon. Doug Bereuter (chairman of the Subcommittee) presiding.
Mr. BEREUTER. The Subcommittee on Asia and the Pacific meets today to examine U.S. foreign assistance to Asia and the Central Asian Republics. I would note that today's hearing marks the first exercise of the Subcommittee's new jurisdiction over the Central Asian Republics of the Newly Independent States.
This addition to our jurisdiction was added at my request, and Chairman Gilman agreed to that readily. This is an extremely critical geographic and political area—one about which the American people tend to be woefully ignorant, I am sorry to say. Hopefully, we can begin to help correct this condition with the hearing today.
The last Congress, the acrimonious and heated debate over foreign aid spending revolved predominantly around two questions, it seems to me. How much should we spend on foreign assistance? And, what agency is allocating the foreign assistance funds to expend?
It now appears that in the Fiscal Year 1998, again, these two questions, at least for another year or two, have been partially answered. AID will continue to play—that's A-I-D—will continue to play a significant role in administering our foreign aid programs, and funding for the 150 account will likely, although not certainly, go below last year's level of $18.3 billion. In fact, it will probably increase modestly.
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Therefore, it appears we will be able to focus more on the issue of how much we spend on foreign aid and who spends it to actually examine the type of programs and activities our international affairs spending should support. And that is in the form of changing priorities or an examination of the programs. This is certainly a welcome development because some important issues have been sorely neglected.
For example, there is renewed attention to the issue of funding for our presence abroad in State Department embassies and consulates. Our ranking member has spoken on this subject and written very eloquently on it. In a wide range of locations across the world, there seems to be an emerging consensus that our properties are in disrepair and are not able to support our activities there.
In the Asia-Pacific region and the Central Asian Republics, there are many other serious foreign assistance questions that should be asked. For example, where should the United States continue to have a field presence? With declining resources, what AID missions should be closed? Moreover, should U.S. foreign assistance to the region attempt to serve as a catalyst to tap the unprecedented private sector capital flows, or should our resources be spent on basic human needs where the greatest number of poor people in the world live?
In recent years, there has been a debate over whether the United States should spend its limited AID funds on countries that fall farther and farther behind—in other words, the failed States—or whether we should target our resources on those nations where we can have a measurable impact. Should U.S. foreign assistance be spent in countries which have serious human rights and civil liberties problems? How should we attempt to stem the massive environmental degradation that will flow from a region that is racing to catch up with the industrialized world?
These are just a few of the general question areas that I think we should begin to examine today. And, to help us examine these and other questions we are pleased to have as our two witnesses from the Agency for International Development, Mr. Thomas Dine, Assistant Administrator for Europe and the Newly Independent States, and Mr. Charles Weden, Deputy Assistant Administrator for Asia and the Near East.
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Mr. Dine is a 31-year veteran of foreign policy and national security affairs, having worked from both inside and outside of the U.S. Government. He has worked as a Senate staffer for 10 years and was a fellow at both the Brookings Institution and Harvard University. Mr. Weden has served at the Agency for International Development since 1965 in various important capacities. Most relevant to our inquiry today is the fact that Mr. Weden recently returned from his director responsibilities in Indonesia.
For our second panel of experts, we are delighted to have Dr. Nancy Lubin, president of JNA, Inc., and Ms. A. Rani Parker of Save the Children.
Dr. Lubin has extensive relevant experience on the subject of today's hearing. She is widely recognized as an expert on the Central Asian Republics. She is currently director of the project on the Newly Independent States to conduct a 3-year assessment of U.S. assistance to the NIS.
Ms. Parker is the director of Woman/Child Impact area at Save the Children where she develops and evaluates programs in health, education, economic opportunity and humanitarian response. Her particular expertise is rooted in gender-based approaches in making AID effective.
Ladies and gentlemen, we look forward to all of your testimony and ask that you keep your remarks to no longer than 10 minutes each. Your entire written statement will be made a part of the record, so you may summarize as you see fit.
But first I would like to turn to my colleague, the gentleman from California, for any comments he might have before we begin today's hearing.
Mr. BERMAN. Well, thank you, Mr. Chairman. We have somehow worked our markup hearing to just the point where we are going to hear from the witnesses, and I have to run to a meeting. I guess that is inevitable. But I will be back as soon as my meeting is over.
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I just want to congratulate you for holding the hearing and also welcome the additional oversight responsibilities that include now the Central Asian Republics. I think there are some very interesting things going on there. There is a great potential for American business there, and there is also the seed for conflict between our interests and those of other States in that particular part of the world. And, by and large, we are spending relatively paltry amounts in both the Asian countries and in the Central Asia regions, given the importance with which we pay lip service to these areas and then what we produce in terms of foreign assistance.
Turkmenistan, it is a nation of only four million people, which has the world's fourth largest natural gas reserves. Kazakstan has enormous oil reserves. The Kyrgyz Republic claims to have the world's fourth largest gold reserves. There will be many years before these resources are fully exploitable. In the meantime, we have an opportunity through our assistance to frame the political and economic structure of these new States in a direction compatible with our democratic and free market principles.
We propose to give in our Fiscal Year 1998 bilateral assistance program $148 million for the five republics and our aid to East and South Asia is less than $400 million. Compare this to the fact that 3 years ago Japan was providing Indonesia $1.3 billion.
In these hearings, the Administration usually testifies about how it is able to feed so many with so little. And, Congress asks why it cannot feed more with less. Everyone leaves the table hungry. Perhaps it is time for us to be realistic.
Our AID dollar is now stretched way too thinly. Any more of a decline in our international programs is, in effect, a tacit decision that the United States is not really up to being a world power anymore. The President's budget proposal is a first important step to reverse that direction and a major effort to sustain American leadership in the world, and I am hoping that Congress will support him.
And, I am also glad to see as one of our first witnesses that I will immediately walk out on, an old friend of mine from AID, Tom Dine. And, Tom, I welcome you to the Committee and I will hopefully get back to hear the end of your testimony.
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Mr. DINE. Thank you very much. That was a great opening statement.
Mr. BERMAN. Thank you. Thank you, it was.
[Laughter.]
Mr. BEREUTER. Thank you very much, Mr. Berman.
And I have the wrong spelling on your name. I had W-E-Y, sorry, and it is Weden; is that correct?
Mr. WEDEN. That is right, it is.
Mr. BEREUTER. Administrator Dine, we look forward to your testimony. You may proceed as you wish.
STATEMENT OF THOMAS A. DINE, ASSISTANT ADMINISTRATOR FOR EUROPE AND THE NEWLY INDEPENDENT STATES, UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. DINE. Thank you, Mr. Chairman. I am pleased to come before this subcommittee this afternoon to discuss assistance efforts in the five Central Asian Republics of Kazakstan, Kyrgyzstan, Uzbekistan, Turkmenistan and Tajikistan. And, I congratulate all of you for adding these countries to your jurisdiction.
U.S. assistance in the countries of Central and Eastern Europe, in the former Soviet Union, including those in Central Asia, is intended to help bolster the national independence of these newly sovereign States and to help move them into normal market economies and functioning democracies, and to further commercial partnerships with American business. Mr. Chairman, we are on the road to getting there.
Just 5 years after Congress passed the Freedom Support Act authorizing U.S. aid to the NIS, at least two-thirds of the population of the former Soviet Union are now on the road not traveled before. The people now live in countries where government officials are accountable to the people who elected them; where courts mediate civil affairs; where markets determine prices; and market-based institutions such as stock exchanges and proliferating small privately owned businesses are functioning as underpinnings of economic life. I am proud to say that USAID has played a major role in each of these developments.
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The President's request of $900 million for the Newly Independent States' program in Fiscal Year 1998, of which $148 million is proposed for Central Asia, is a recognition of our accomplishments in the region, but also the fact that our work has quite a distance to go. That is clearly the case in the Central Asian Republics, an area of great and increasing significance to the United States for several reasons.
Central Asia is a rich source of energy. Kazakstan, Turkmenistan and Uzbekistan all boast large petroleum reserves. Turkmenistan contains the world's fourth largest deposit of natural gas. Kazakstan has already received more U.S. private investment than any other country in the NIS, including Russia.
Mr. BEREUTER. Mr. Dine, I apologize. May I interrupt just a second here?
Mr. DINE. Sure.
Mr. BEREUTER. We are fighting too much heat and too much noise, and so we are going to close the door so the audience can hear. And, I am going to take off my jacket and welcome anybody to take off any clothes within reason.
[Laughter.]
Mr. BEREUTER. I apologize, but maybe we will all be more comfortable because of that break.
Mr. Dine, thank you. Please continue.
Mr. DINE. Central Asia is a strategic crossing point within the huge Eurasia land mass, adjacent to Russia, Iran, Afghanistan, China, and the Indian subcontinent. Events in these five republics can affect events from the Middle East all the way to East Asia, and vice versa, as, for example, today's political turmoil in China's western providence of Xinjiang.
U.S. commercial interests in Central Asia are currently substantial and will be much greater as the region lives up to its potential, enters the world's markets in a serious way and joins the ranks of major exporting and importing nations.
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USAID's program in the Central Asian region is focused on four areas: economic restructuring, democratic governance, social stabilization and regional cooperation. Although we have only been operating in this part of the world a short time, we have results I am pleased to share with you in each of these areas.
First is economic restructuring. U.S. business people frequently tell my colleagues and myself that unpredictable and unfair tax policies in the five republics are constraints to investment and contribute heavily to corruption. In response, USAID helped Kazakstan and Kyrgyzstan to develop and implement comprehensive tax reform. When fully implemented, these new tax codes will be integral parts of a sound fiscal policy; fair, transparent, enforceable, and as much as we can, make them practical.
USAID helped design, write and start up tax codes in Kazakstan and Kyrgyzstan, and a new tax code waits enactment in Uzbekistan. In both Kazakstan and Kyrgyzstan new stock exchanges, created with our technical help, have been established under the regulation of independent security commissions, which we also developed.
In the Caspian Sea context, which has the largest new petroleum potential in the world, USAID is currently helping to establish an oil and gas legal, regulatory and environmental framework based on international standards to further private investment. Up to $50 billion today, $100 billion tomorrow are at stake.
At the other end of the business and economic restructuring scale are micro lending projects. For instance, new micro enterprise in Kyrgyzstan has already started to show amazing success in mobilizing resources for the growth of micro enterprises, focused primarily on women entrepreneurs.
The USAID-supported FINCA Program has created 264 village banks with trained staff and an active membership of over 3,000 depositors. These community institutions have lent $500,000 to over 8,000 micro entrepreneurs in the past year. The range of loans is from $60 to $5,000.
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Incorporated in July 1994, with authorized capital of $150 million, the Central Asian-American Enterprise Fund's mandate is to generate income and promote private sector development in Central Asia by investing in profitable small- and medium-sized business.
Of the ten enterprise funds in Europe in the NIS, the Central Asian-American Enterprise Fund is currently the fastest moving. According to the fund's annual report of 1996, the fund had approved $44.9 million in loans and equity investments, above $100,000 each, to 29 large enterprises. By the end of 1996, its small business company, the Asian Cross-Roads Loan Company, has made $4.7 million in small loans to 55 enterprises.
The second is democratic governance. The five Central Asian Republic countries are having a difficult time breaking free from the Soviet past and entering the representative world of democracy. According to Freedom House, Kazakstan and Kyrgyzstan have the region's most open political systems, while Uzbekistan, Kyrgyzstan, and Turkmenistan remain tightly controlled.
Turkmenistan is not a democracy, but USAID is providing support for a democratic future, developing country-wide citizen's initiatives. We are providing this support through the effective American NGO, ISAR, to environmental nongovernmental organizations. Another nongovernment organization, CATENA, provides internet access to information from around the world, which helps gets around the Ashgabat Government's ban on the import of foreign newspapers and magazines.
The Eurasia Foundation has invested roughly $6 million throughout the five republics to support reform-minded grass roots initiatives such as the liberalization of laws governing media and the free press; the development of new modes of citizen/government relationships and the strengthening and expansion of the nonprofit sector through newly established NGO resource centers. It has opened a satellite office in Almaty that broadens its outreach ability.
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Third is social stabilization. In Kazakstan, the State-owned pharmaceutical distribution and retail system known as Farmatsiza, has been almost completely privatized. Of 1,378 pharmacies, 691 have been auctioned and 562 were bought by the end of 1996.
USAID has allocated $22 million since 1993 to reduce high maternal mortality in the Central Asian Republics related to high fertility and the use of abortion for fertility control. As a result, a single center, the Marriage and Family Center in Bishkek, Kyrgzy Republic, reported an almost 50-percent decrease in the number of abortions since 1994. Throughout the region, then, we are making progress in changing a terrible situation in which for decades abortion has been the most common form of birth control.
Fourth is regional cooperation in water policy. Covering all these categories—economic, political and social—is one project of which I am particularly proud, USAID's Aral Sea initiative.
The Aral Sea in both Uzbekistan and Kazakstan is an inland body of water the size of Maine. Until recent years, over 3 million people depended on its tributaries for safe drinking water, and the fishing industry employed over 60,000 people. By the time of the Soviet Union's collapse, however, the Aral Sea had been almost finished off through Stalinist irrigation policies that utterly disregarded environmental impact.
In 1960, the Aral Sea received over 50 billion cubic meters of water annually from its two tributary rivers, the Amu Darya and the Syr Darya. By 1975, this amount had fallen by 80 percent, and by the mid 1980's, flows to the sea had slowed to a trickle. Once thriving fishing ports were left 40 miles from the shore, and all other industries depending upon the sea's water supplies, from manufacturing to tourism, collapsed. Unemployment jumped to 60 percent. When I visited the Uzbek town of Nukus in July 1995, Mr. Chairman, few shops and sidewalk kiosks existed. Few people were on the streets. Unemployment was the issue of most concern to officials, not saving the Aral Sea.
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The situation worsened with the Soviet Union's breakup as rivalries among the five new republics prevented consensus on a water management solution. USAID worked with the Central Asian States to turn this situation around; first, by helping to get clean potable water to the most critical crisis areas; then by working to forge water sharing agreements among the Aral Basin countries and begin rational pricing of water.
The result was not more water flowing to the Aral Sea, but regional cooperation by Central Asian governments to avoid conflict and to deal directly with the problems of poor water management, health of the people and the economic prosperity of the region as a whole. USAID, using technical expertise and environmental diplomacy, has been the catalyst.
The countries of Central Asia are working through a far-reaching economic and political transition. This process is taking longer than predicted. Still, much has been accomplished. Providing U.S. know-how remains absolutely critical for creating capital markets, strong financial systems, tax codes which are fair and transparent, regulatory bodies, and legal systems able to enforce contracts and combat crime.
Mr. Chairman, I am confident that the United States is on the right road of reform. The interests of our citizens are in the process of being served in this important area of the world. With this Subcommittee's support and the Full Committee's support, my USAID colleagues and I are determined to finish the job of building free market economies, political democracies, and robust trading and investment partners, and, finally, independent nation States.
Thank you.
[The prepared statement of Mr. Dine appears in the appendix.]
Mr. BEREUTER. Thank you very much, Mr. Dine, for your very interesting statement.
Now, we would like to hear from Charles Weden, Deputy Assistant Administrator for Asia and the Near East from USAID.
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You may proceed as you wish.
STATEMENT OF CHARLES F. WEDEN, DEPUTY ASSISTANT ADMINISTRATOR FOR ASIA AND THE NEAR EAST, UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. WEDEN. Thank you, sir.
Thank you, Mr. Chairman. I am pleased to be here today to discuss the foreign assistance programs in Asia managed by the U.S. Agency for International Development. I would like to start by saying a few words about the connection between USAID's development programs and U.S. economic interests.
There is a significant connection between U.S. exports and USAID's development programs. U.S. exports are growing much more rapidly to some developing countries than to others. What can account for these differences? The major portion of the variation is explained by progress in terms of improved policies and institutions, i.e, the enabling environment for markets. USAID-assisted countries have been among those that have made the greatest progress in policy and institutional reform over the past decade.
As you know, Mr. Chairman, Asia is a region of contrast and challenges. It includes the tigers of Korea, Taiwan, Hong Kong, Singapore and Thailand, and at the same time some of the world's most stagnant economies. USAID works primarily with countries in between these two extremes. These nations, which include the bulk of the region's population possess tremendous economic potential. Most are moving toward market economies but are not yet assured of sustained growth.
Nearly all are dogged by the global challenges of population growth, environmental pollution and the growing pandemic of HIV/AIDS. Nearly all are attempting with varying degrees of determination to bring about more representative transparent government, without which their continued stability cannot be assured.
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Finally, all are well disposed to the United States and look to USAID as a principal source of technical assistance on how to achieve sustainable development and more representative government.
In Southeast Asia, Indonesia and the Philippines have the potential to replicate the remarkable economic success of the region's tigers. They also represent enormous potential for U.S. trade and investment. While per capita income in the Philippines and Indonesia has grown to about $1,000 apiece, poverty remains a serious issue in both nations. Around 40 percent of the Philippines population falls below the poverty line.
In Indonesia, poverty has declined to about 15 percent, but this represents in and of itself 25 million people.
Indonesia and the Philippines face other challenges, including rapid population growth, environmental degradation of forest and coastal resources, severe urban pollution, and the beginnings of HIV/AIDS epidemics. These problems place an added burden on the development budget of both countries and could constrain future development. They also represent significant global threats.
In the area of democratization, the Philippines has advanced well beyond Indonesia. The United States has a considerable stake in consolidating democratic governance in the Philippines, and in ensuring a peaceful transition to democratic rule in Indonesia.
Mr. Chairman, in my written testimony I have included a number of examples of the assistance we are providing to these two countries. In the interest of time I will not cover them now, but I am prepared to discuss them in greater detail.
Until recently, the economies of South Asia have lagged beyond the others in Asia. Compared to East Asia, in particular, India, Nepal, Bangladesh, and Sri Lanka are relative newcomers to market reform. All four nations, however, are now moving in the right direction and are benefiting from employment growth, rising GDP levels and a rise in trade. Growth rates in South Asia have been in the 5- to 6-percent range for the last several years, and the potential for further market growth in the region is enormous.
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While economic reform is progressing, overpopulation, poverty, environmental degradation, and more recently, HIV/AIDS, threatens the foundation of economic growth in the subregion. Populations living below the poverty line in Bangladesh, India and Nepal exceed that of sub-Saharan Africa. The prevalence of malnutrition in South Asia of children in the 1- to 5-year age group in 1995 ranged between 66 and 84 percent. Approximately half of South Asia's population does not have access to safe water. India, which has the tenth's largest industrial sector in the world, is one of the top ten greenhouse gas-emitting countries in the world. Finally, for the first time more than 50 percent of the world's new HIV/AIDS infections are taking place in Asia, with the epicenter of the epidemic in India.
With regard to democratization in South Asia, India has a longstanding, if imperfect, democracy. And the other nations of South Asia are moving to more representative forms of government.
The USAID is targeting in South Asia assistance, as it is in the Philippines and Indonesia, to maximize economic growth while simultaneously attacking the deep-seated problems such as population, health, the environment and HIV/AIDS. In India, for example, USAID is working with the Securities and Exchange Board to increase market transparency and efficiency. In addition, USAID is supporting the development of a municipal bond market to finance desperately needed urban infrastructure projects.
In the power industry, USAID has provided technical assistance to State electricity boards, and in the central governments to facilitate the evaluation and processing of the numerous private power investment proposals, many of which are from the United States.
The USAID has supported programs in Bangladesh, such as the banking sector reforms, which have opened the door for 26,000 poor families to gain access to credit. Also, USAID-funded credit programs gave more than 30,000 women access to loans, generating more than 70,000 jobs.
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Also, in Bangladesh, diets of the poor have been nutritionally enhanced by USAID through a combination of food aid and technical assistance which directed food from ineffective and inefficient government distribution channels into targeted food programs.
In India, USAID is focusing on improving the quantity and quality of family planning services. USAID also supports efforts to improve maternal and child nutrition and health, thereby reducing mortality rates and influencing fertility.
Finally, we say it is programs to strengthen the capacity of Nepal's public and private organizations; to reduce the rate of sexually transmitted diseases has become a model for STD prevention and control practices.
Cambodia and Mongolia are making the transition from Communist societies with command economies to democracies, with free market economies. Cambodia is recovering from nearly three decades of civil war, during which its educated population was murdered or exiled, its institutions destroyed and its society ravished.
Mongolia has had a more peaceful transition, but its economy and energy sector, in particular, have suffered greatly and are in need of considerable attention.
Both programs are ESF-funded, our clear recognition that their progress and stability are of high political importance in the United States.
In Cambodia, USAID is continuing to concentrate on strength in democracy and the rule of laws through support for elections, the judicial system and local democracy an human rights NGO's. USAID is also providing technical and commodity assistance for child health, family planning and AIDS prevention, along with support for land mine victims, primary school teacher training, and the development of clusters of primary schools to increase community involvement. In addition, USAID has helped increase rice production and rural incomes in three Federal provides previously controlled by the Khmer Rouge. Last, USAID assistance has strengthened environmental legislation and policymaking.
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In Mongolia, USAID provides emergency support and technical assistance to power plants and coal mines. USAID is now poised to move to more sustainable energy activities such as renewable energy and metering. In economic growth, the USAID-funded economic advisor literally sits in the office of the Prime Minister to advise on policy.
Democracy activities in Mongolia are provided through nongovernment organizations with a focus on women's groups, which in turn lobby on women's and other national issues.
Secretary Albright recently called the Asia region the second highest priority for the United States, and many donors in Europe and Japan are increasing assistance to the area. This is not surprising. Asia contains 60 percent of the world's population, 75 percent of its poor, 46 percent, if you exclude China, and is at the same time the most dynamic market in the world for exports from the industrialized world.
Since 1990, U.S. economic assistance to Asia has fallen by over 65 percent. Part of the decline is due to the successful completion of our Thailand program, the termination of assistance to countries like Pakistan and Burma, and the completion of special activities such as the multilateral assistance initiative in the Philippines. However, even after allowing these factors, the dropoff can only be characterized as significant.
Despite the dramatic drop in sources, USAID still retains considerable influence in the region with host governments and other donors. The reason is clear: we are providing top quality technical assistance, whether it be for economic reform, trade policy, the environment, population, HIV/AIDS, or democracy in governance.
Other donors provide funding for infrastructure, equipment relief commodities and the like, but USAID is Asia's top provider of technical assistance. When Asian nations look for technical assistance, they turn to us.
With almost universal movement in Asia toward economic and sector policy reform, American advisors are in high demand. One reason USAID's technical assistance is so effective is the fact that 30 to 60 percent of our assistance is provided directly to nongovernmental organizations in most of the region's nations. This is particular true in the health, environmental and democracy sectors.
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Mr. Chairman, the President's Fiscal Year 1998 budget request for USAID includes a total of $325.7 million in development assistance and economic support funds for programs in Asia. This level is absolutely essential if we are to continue to support political and economic reform in the region and to address global issues which will affect all of our futures.
As indicated earlier, the relatively small investments we make now will not only have a significant impact on the development in the region, but also will bring benefits to the United States in future trade opportunities, domestic jobs, and a cleaner and healthier environment. Our assistance levels in the region are low. Further reductions would compromise our ability to be a major contributor to Asia's development at a critical juncture in its history. We greatly appreciate the support of this committee in the past. I strongly urge you to continue to play a supportive role so that USAID can maintain its leadership and effectiveness in this important region.
Thank you very much.
[The prepared statement of Mr. Weden appears in the appendix.]
Mr. BEREUTER. Thank you very much, Mr. Weden and Mr. Dine. Thank you both for your testimony here today. Mr. Hastings and I will have questions, and Mr. Berman may rejoin us soon.
The USAID has closed 26 missions in the last 3 years, and it plans, I am told, to close six more by the end of the next fiscal year.
Are you aware if any of those proposed closeouts are in Central, South or East Asia or the Pacific?
Mr. DINE. There will be no closings in Central Asia.
Mr. BEREUTER. OK.
Mr. WEDEN. We hope that is the case, and we do not expect there will be any further closeouts in Asia.
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Mr. BEREUTER. Would you at this point know if any of the six are slated to be in the Asia-Pacific region?
Mr. WEDEN. No.
Mr. BEREUTER. You would not know?
Mr. WEDEN. I know. But, no, they are not included.
Mr. BEREUTER. When was the mission closed, I think it was, in Papua, New Guinea?
Mr. WEDEN. That was in 1995, I believe.
Mr. BEREUTER. Do you recall what the rationale was, that was suggested for that closing?
Mr. WEDEN. This was a little before I got to my present job, but as I recall, it was a question of a decline in resources. At the same time, we also had a reduction in our operating expense budget. We had to look at where we could most effectively marshal our human resources as well as our financial resources, and the amount of activity that we were doing in Papua, New Guinea really did not justify a presence there.
We still continue, by the way, to have some small activities in the region, funded by our Global bureau, but we do not have a physical presence there.
Mr. BEREUTER. It is one of the most impoverished countries. You have people living as close as you can on the earth to the Stone Age in parts of Papua, New Guinea. It is interesting that we made that decision to pull back, and at the same time we pull back our resources in other areas. So I was told, for example, that our ambassador to Papua, New Guinea, during the last ambassador's tenure there had a chance to meet with the Prime Minister twice in the course of that whole period of time the ambassador served there, which suggests, I guess, that they think we are no longer interested, so we pull back those resources. It raises the question about what we are doing to our national interest in that region.
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Mr. WEDEN. I do not disagree, Mr. Chairman. These are the types of hard choices we have been forced into making for some time in Asia.
Mr. BEREUTER. Mr. Dine, you are here to help us with the issues primarily related to the Central Asian Republics, but I am wondering, are there any activities that we fund for the NIS generally, and if so, what would they be, that would have an impact on the Central Asian Republics, things that might be in part geared for Russia or the Caucus Republics? Are there things that we do for the whole NIS that have relevance to the Central Asian Republics?
Mr. DINE. There is no one program.
Mr. BEREUTER. It is all country-specific now?
Mr. DINE. Yes, we do think regionally in certain projects, as I tried to indicate in my opening statement. But, for instance, when you deal with Russia, you are dealing with 11 time zones, so programs in northwest Russia, around St. Petersburg or above, programs near the Ukraine border, and programs in the Russian Far East really do not relate to each other. So, Central Asia and the Caucasus are the closest we come to regional programs.
Mr. BEREUTER. I was particularly interested in what you have focused upon and as something where you——
Mr. DINE. Excuse me. I had another thought, if you do not mind.
Mr. BEREUTER. OK, go ahead.
Mr. DINE. So many of our programs, I am thinking again of Russia, are model programs. If they are successful, then we can use them as pilot programs and encourage others—other cities, other oblasts—to get involved. Well, you know, that is important.
Mr. BEREUTER. Your mention of the Aral Sea initiative, which you feel we are making a significant contribution——
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Mr. DINE. Yes.
Mr. BEREUTER [continuing]. caught my attention.
Mr. DINE. Ironically, as we start the disaster——
Mr. BEREUTER. Yes. I am geographer by training originally, and so I have been interested in the Aral Sea and the disaster we have had there. I think it is probably the best known disaster in the world that relates to a water body at least. And I gather that what we are doing there is not just consulting service from U.S. water experts, but do we not have in fact American government personnel there working from one of the agencies? And if so, what would it be? Do you recall?
Mr. DINE. I do not think we have government personnel living there.
Mr. BEREUTER. Oh, we do not?
Mr. DINE. Their being on the northern shore in Kazakstan, the southern shore.
Mr. BEREUTER. Are we doing any work as a government in that project?
Mr. DINE. Only managing it from Tashkent.
Mr. BEREUTER. When you are looking at the way the water release pattern has affected the Aral Sea by using power generation all winter long, I think you said, and the compensation now in the form of cash payments and transfer of coal and gas that is going to the republic, does the compensation come from within the region or is that part of our contribution that is used for compensation?
Mr. DINE. Are you talking about the Caspian Sea oil and gas?
Mr. BEREUTER. No, I am talking about the Aral Sea.
Mr. DINE. All of our programs are technical assistance. There is no cash involved at all.
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Mr. BEREUTER. Mr. Weden, I noticed a comment here that struck me when you said it. Secretary Albright recently called the Asia region the second highest priority for the United States.
Any kind of words went with that? That sounds like something that we would not ordinarily say. I mean, is it second highest priority for something or was that just a fast statement?
Mr. WEDEN. I think she made it. It has been awhile since I looked at her statement. As I recall, she made the statement about the rising importance of Asia to the United States in terms of our diplomacy but also in terms of our economic interest as well.
Mr. BEREUTER. We will have to ask about that one, I guess.
Mr. WEDEN. Yes, I can check that further for you.
[Mr. Weden's answer appears in the appendix.]
Mr. BEREUTER. You might have noticed that we have passed a resolution commending Nepal, Bangladesh and India from this subcommittee in the early markup, and one we passed last year too. And I notice you have in your statement some comments about our work in Nepal.
Mr. WEDEN. Yes.
Mr. BEREUTER. Where we are promoting private sector investments.
Mr. WEDEN. Right.
Mr. BEREUTER. I hope you can keep us more informed about that.
Mr. WEDEN. I would be delighted.
Mr. BEREUTER. It seems to me that is a basis for Nepal and India to cooperate on a number of things.
Mr. WEDEN. This has a potential of growing much larger, and right now what we have is one advisor that is helping out the Nepalese government, but at a very important time when the Nepalese have the potential of providing power generation resources not only to India, but also to China. And this person is very well placed to help bring this about in a positive way, and in a way that is environmentally correct as well.
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Mr. BEREUTER. One more question, and then I will turn to you, Mr. Hastings.
Mr. HASTINGS. Thank you, Mr. Chairman.
Mr. BEREUTER. The comments on page eight where you are talking about how we are spending our money in Asia, we are the top provider of technical assistance in Asia.
Mr. WEDEN. Right.
Mr. BEREUTER. I think that is appropriate, and I think that is where our riches lie today——
Mr. WEDEN. I agree.
Mr. BEREUTER [continuing]. technical assistance. The fact that we are not providing as much in infrastructure is well noted by engineering and architectural and design firms and construction firms across our country, and oftentimes we think that some of our countries inside and outside the region, European, Japanese and so on, Korean, do tie their aid. And so while we are doing the technical assistance and the humanitarian efforts, and have reduced our infrastructure projects, the result is they get more financial return from their investment.
What would you like to say about that? I will ask the second panel to comment on that, too.
Mr. WEDEN. I do not think that is necessarily correct. If you build a power plant, for example, let us say the Japanese build a power plant, they have built a plant. If, on the other hand, you provide technical assistance which provides the policy framework within which private power can be financed, oftentimes by U.S. financiers, you have provided the framework for a tremendous amount of private financial infrastructure in the future.
Let me give you another example. In the case of waste water activities, in Asia it will not be possible for governments there to keep up with the infrastructure demands of their growing cities. They cannot be financed through government resources, nor can they be financed through foreign donor resources. The only way that infrastructure needs can be met is by turning to the private sector. And, again, this is another area where we are providing the technical assistance that is going to provide the framework for these deals to take place in the future, under BOO/BOT ventures.
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Mr. BEREUTER. Thank you.
We will ask the second panel to think about that question, too.
I would like to turn to Mr. Hastings.
Mr. HASTINGS. Thank you very much, Mr. Chairman.
Mr. BEREUTER. Take as much time as you would like.
Mr. HASTINGS. Thank you, and thank you very much for holding the hearing. I did not prepare adequately, Mr. Chairman. But in listening to the witnesses several things come to mind. And I ask for information, Mr. Dine, if you will, with reference to your comments on the Central Asian-American Enterprise Fund.
When you refer to the fund providing equity and loan funds to—sufferate the pronunciation—Dos American Beverage Company in Tajikistan, and you go further on to say that that company operates under the license of Pepsi-Cola, obviously economic development and our involvement in the politics of any company are vital, and I understand that.
Then in the next paragraph you speak of frozen Central Asia copy centers in Uzbek, and that one is under the aegis of Xerox.
Coming from Belle Glade, a place where Peace Corps volunteers trained because it was the closest thing to the Third World at the time of the development of the Peace Corps, what do I say to my constituents that USAID is involved in equity and loan involvement with Pepsi-Cola and Xerox, ultimately allowing that it redounds to their benefit as well as the good that it does that ultimately redounds to the world and to the citizenry in the countries that the aid is directed toward, but can you suffer with me what happens when I am talking to my constituents and they cannot get an equity loan, and they cannot receive consideration on the local level, and then I come up here and support USAID, which means I am supporting Pepsi-Cola and Xerox?
How do you help me to reconcile my politics with this support that I give to USAID?
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Mr. DINE. I think, it seems to me, Mr. Hastings, there are two parts to your point, and it is a good point.
First, why should I, an American taxpayer, support foreign assistance appropriations? Second, why should I support that appropriations to help the big corporation?
On the first point, I, like so many others who have been involved in development work over the last 30-plus years, believe that as the world gets smaller, the American Republic is affected more and more by what takes place abroad. And so, unlike the time when I was a Peace Corps volunteer in the early sixties, this is a global economy, this is a political community now that is unbelievably close because of electronics and airplane rides and the way we talk to each other.
So everything that an American does today, getting up, going to work, going to lunch, coming home, something foreign enters that person's life several times. And so we have a tremendous interest in what takes place abroad, what comes here from abroad, and what goes from our country to those many, many places.
On the second point, most of the investment abroad by American companies is from the large ones. I wish there were more small- and medium-size investments from abroad. We try to encourage that in the Newly Independent States arena because I think that is what is really proliferating there. There are small, very small to small, slightly medium-size enterprises. And it would be good to match up, have joint ventures among the small to the small. That would be my overall hope and certainly so many of our programs go into that.
In the case of the Central Asian-American Enterprise Fund, one reason it has gotten off to a very quick and promising start, unlike some of the other enterprise funds, is that it has aimed a number of its transactions in the five countries of Central Asia to the smaller one, and has not tried to marry up with the big to the big.
And as I mentioned in my oral testimony, the Central Asian-American Enterprise Fund has established a $10 million subsidiary, the Asian Cross Roads Company, which provides small business loans, and it has already made those up to the tune of $4.7 million.
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So, I think your constituents could support such an effort abroad knowing that eventually it is going to directly affect their lives, their quality of life, and I think it is a persuasive case.
Mr. HASTINGS. Let me cut across your time and say something then that ought to obtain. I think of the people with the wherewithal or some of the multinationals and I in this particular instance only because they were cited as examples of being participants, and I applaud Pepsi-Cola and Xerox in that regard.
But where you have limited resources now to publicize the good things that can be replicated at home, they have more resources and more reason to be involved in that. So I would hope at some point, maybe not USAID, but a lot of us would be encouraging them, at least to tout the good things that we do.
Let me turn away from you for a moment to Mr. Weden, and ask, you, Mr. Weden, in consideration of planning for both of you, all of us, the chairman especially, have longstanding periods that we have studied problems that we are working on, and we try to make sure that USAID funds are going to impact in a meaningful way. So when you all are sitting in the airy lofts of your offices and writing out plans, is anybody in the Central Asian theater, for example, or China, or India, taking into consideration that 100 years is a blip, or in some of those countries in the mindset of the culture and the religion? And it seems that USAID, for example, does 5-year planning, and, man, you have all just gotten through doing great planning. Has anybody done any 10-year planning? Any 25-year planning? Is that off the charts? Am I asking something that does not make sense?
It makes sense to me. That is one of my frustrations here. As an analog, Mr. Chairman, if you will permit me, we talk about balancing a budget by 2002. What the hell are we going to do in 2020? And nobody is talking about it. You cannot get these people to talk beyond the next election cycle. And I am curious, dealing with countries like China and like India and like Indonesia where times seems to just stretch, are we, when we look for impact, looking for that 5-year budget, matching grant turnaround frame or are we looking long range, too?
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And I honestly do not know. I do not know how you all contemplate that. I know how we do it over here. We do it every year, every other year, and this is election time; we cannot do it this year, you know, so we will do it next year, which is tiring, quite frankly, but at least I am patient to the extent that I keep trying to get it across how important it is to plan much longer than we do.
Mr. WEDEN. Mr. Hastings, in the 30 years that I have been involved in development, one thing that I have learned is that it is a long-term proposition. Development does not take place quickly or easily. In fact, if I can say so with candor, I think one of the difficulties that we (USAID) have with the Congress is trying to demonstrate that we have accomplished something in a short period of time, because many of the worthwhile things that we do oftentimes takes 10 years or more to accomplish. So I think, if anything, we might be accused of looking too long-term rather than short-term.
What we try to do with governments is to try to convince them that the deep-seated problems they face need to be addressed today. Whether the issue is population growth, HIV/AIDS or whatever, we need to find solutions before the problem gets out of hand, and I think we spend a lot of time doing that
Mr. HASTINGS. I appreciate that.
Mr. Chairman.
Mr. DINE. I would like to try to address that, Mr. Hastings, in a different perspective.
Mr. HASTINGS. I am sorry.
Mr. DINE. There is so much talk now about merging USAID into the State Department. This is not a new idea. Mort Halperin wrote a book in 1971–72 on the bureaucratic politics of foreign policy, and one chapter includes merging USAID into the State Department.
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Well, one thing I can tell you after 3 years in USAID, and I had never been in AID before this, although it had been previously in my younger years in the American Embassy in New Delhi, is that there is quite a difference between diplomacy today, this afternoon, now, and development, and sometimes the twain do not meet. And, this is going to be a very tough merger, if it ever happens, because one wants money to deal with a minister today, Fritz wants money to deal with the problems in Indonesia 10 years from now, and the two do not sometimes know what each other are talking about.
And, certainly some of the pressure, and you have already indicated that, Mr. Hastings, is that Congress wants results. Rightly so, and here we have only been 5 years in Central Asia. These folks were never nation States before. Under the czar, it was known as Turkestan, but it was not a nation State as we know it in terms of 19th century international relations.
Not only are they getting used to their own sovereignty, but they have got to get used to individual responsibility, and I used the phrase in my opening statement on the Aral Sea environmental horror that these were ''Stalinist policies.'' By that I mean not just policies qua policies, but attitudes. Everything starts at the top and ends at the top, central planning. And, it makes no sense. So we are trying to help people, and this is a long-term process. We are trying to help people take individual responsibility if they are part of a private company to teach them that you are responsible for buying and selling and setting business plans and making profits and do not rely on government.
So, we are talking about two different worlds, Mr. Hastings.
Mr. HASTINGS. I hear you.
Mr. DINE. And somebody has got to help expand them.
Mr. HASTINGS. Thank you, Mr. Chairman.
Mr. BEREUTER. Thank you. Mr. Hastings, you share some of the frustrations I have about the short-term perspective there. I am a planner by training, and we try to reach out for long-term planning, at least 20 years. I have been privileged to serve here ten terms, and if I had known it was going to be 20 years, if a little bird had told me earlier, I would have planned my life here a lot differently.
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[Laughter.]
Mr. DINE. You would have bought a house.
Mr. BEREUTER. Fortunately, I did that.
[Laughter.]
Mr. BEREUTER. I have a number of country-specific questions I would like to go over with each of you in turn briefly.
Mr. WEDEN. OK.
Mr. BEREUTER. And as quickly as we can.
Bangladesh first, Mr. Weden, page five of your report, you got a reference in our programs in Bangladesh related to the issuance of credit, giving access to credit to 26,000 poor people.
Mr. WEDEN. Right.
Mr. BEREUTER. Or families, pardon me.
We all know about the famous bank there, the Grameen Bank.
Mr. WEDEN. The Grameen Bank, yes.
Mr. BEREUTER. Does this relate to it? Is it assigned to it or is it any relation to it?
Mr. WEDEN. We in the past have provided some support to the Grameen Bank, but this is a separate venture. It is in many respects quite similar. For example, it is mostly directed to women as the Grameen Bank activity is.
Mr. BEREUTER. Yes.
Mr. WEDEN. But we put a little more stress on business training along with the financing that we provide. The Grameen Bank places more emphasis on credit qua credit. So we try to make sure, for example, that the women entrepreneurs who are borrowing have a business plan, know how to maintain their books and that sort of thing.
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Mr. BEREUTER. Can you give us a little bit more information in writing on that subject?
Mr. WEDEN. Sure, I would be happy to.
[The answer appears in the appendix.]
Mr. BEREUTER. On Mongolia, you mention that on page six of your testimony we earmarked $10 million, we as a Congress—not specifically this subcommittee—for Mongolia——
Mr. WEDEN. Right.
Mr. BEREUTER [continuing]. for the current fiscal year. There are many of us, myself included, that are interested in our success story there thus far in Mongolia, and we seem to be getting a lot of results for a relatively small amount of attention and money.
What are you planning to do there in Fiscal Year 1998 for $8.4 million, and does that amount really——
Mr. WEDEN. $8.8——
Mr. BEREUTER. $8.4 million, that is the request, I think for——
Mr. WEDEN. The request for Mongolia for 1998 is $7 million, as I recall.
Mr. BEREUTER. Less than we have here as information.
Mr. WEDEN. Yes.
Mr. BEREUTER. Is that enough to do what you might like to do there?
Mr. WEDEN. Could I address that from both a 1997 and a 1998 perspective, because I think it will give you——
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Mr. BEREUTER. Please. How are you targeting the money specifically for next time, for example?
Mr. WEDEN. Right. I just visited Mongolia in January, having negotiated this year's agreement with the Mongolians. They continue, and I think you will see from my testimony, that there has been a continued problem in the energy sector there. Mongolia was left by the departing Russians with power plants that were literally falling apart. And, what we have done over the last several years is to bring in spare parts, emergency supplies to keep the lights on in Mongolia, and literally that is what we have accomplished over the last couple of years.
Now, in the meantime the World Bank, the Japanese Government, and the ADB are getting ginned up, and putting in major energy programs. By June 1998, we expect that there will no longer be a risk of catastrophic failure of the system, so that we can start putting less money into short-term energy and more money into longer-term energy policy considerations, such as rationalizing the tariff structure and so on.
All of this goes by way of saying that for 1997, we are putting about $7 million into energy, about $2 million into economic growth policy change, and about $1 million into democracy activities.
Next year we think that the energy requirements will be less. We would like to continue very strongly our work on economic policy work and in the democracy area. That is basically what we are planning.
Mr. BEREUTER. OK. Ambassador Yang was just in my office this morning, executive director on the Asian Development Bank. How would you like to see them change their policies or their direction in general, if at all? Here is your chance for some free advice.
Mr. WEDEN. Across the region?
Mr. BEREUTER. Right.
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Mr. WEDEN. Free advice to the ADB. We work quite closely with the ADB in many countries, Mongolia being an example. I sometimes wish that they would check in with us a little more, but they probably argue the same thing about us. I think we probably have a closer working relationship with the World Bank in many cases.
Mr. BEREUTER. In South Asia, we have received a greater amount of resources apparently scheduled there now than had been the case in the past. We have here at least an increase of 30 percent or more under the Fiscal Year 1998 development aid request.
What will the higher allocations for these five countries allow us to do in Fiscal Year 1998 if Congress approves it?
Mr. WEDEN. Actually, I am not sure about the numbers you cite.
Mr. BEREUTER. Pretty big answer for you to give at this point, I guess, but a big question to answer. So if you want to just provide the information, that is fine.
Mr. WEDEN. Fine, I would be happy to.
[The answer appears in the appendix.]
Mr. BEREUTER. OK. Cambodia, let us see, the Administration is requesting $37 million. Is all of the money for projects or is some for budgetary support?
Mr. WEDEN. No, none for budgetary support. We provide no budgetary support. In fact, no money goes directly to the Cambodian Government. A very large percent of the money goes through NGO's and PVO's, and the remainder gets channeled through contractors.
Mr. BEREUTER. OK. Do we contribute through AID to the demining process?
Mr. WEDEN. In the past we helped to develop the Cambodian mining organization institutionally. They are at a point now where they have the ability to demine professionally. The remaining question is financing. We have not provided any specific financing for demining for a year or so, although in connection with the Route 4 which we have repaved, there was some demining associated with that.
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Mr. BEREUTER. Thank you.
Mr. Dine, last month four workers of the UNHCR were kidnapped by Tajikistan opposition forces. Red Cross and U.N. military observers have been kidnapped. The Administration has requested $15.4 million for the next fiscal year for assistance at Tajikistan, but the AID workers are not safe there.
Is the funding request therefore reasonable or is it conditional, and can you tell us briefly how it would be spent if we are able to spend it?
Mr. DINE. First of all, on the security situation in Tajikistan, I think things have calmed down this past week, although the talks in Moscow were held to bring the government and the opposition parties together and to make some kind of peaceful coexistence pact, those fell apart at the end of last week.
Having said that, the embassy has an alert out. Most of our—well, our one direct hire person did leave. Some of the American nongovernmental organization workers left; some stayed. So it is mixed. And our foreign service nationals have been quite shaken up. Two American Embassy guards were killed. The wife of one of our employees was assaulted. And the basic message was, anybody associated with the Americans was going to be on their hit list. Nothing over the last week, thankfully, has happened, but we are all concerned and we are all on alert.
Having said that, civil war has been occurring in this place for many years now, ever since the Soviet Union fell apart, and established government in 1992 fell apart. The United Nations has been the focal point for the international effort to bring some kind of political stability and humanitarian assistance.
When I was there 2 years ago, I thought we were not doing enough, to tell you the truth, because peoples' lives were really disrupted by the brutal political violence that was taking place, and often clan versus clan within the same village.
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I think we can do more. I think we need to do more. We need to bring some political stability to the place. We are not going to be able to do it as an outside force if we are not there. We need to bring economic stabilization to Dushanbe. It has not really occurred. The IMF, the World Bank, bilateral donors like ourselves have been involved. We need to work on this particular problem.
If nothing else, this particular country joins Afghanistan, Uzbekistan, Kyrgyzstan, Pakistan and China. Now, this is the cross roads of cross roads, if you will, and it seems to me we have to think again broadly and long range. What are we trying to do here and for what reasons? First, for the people themselves, for the ideals and ideas and institutions that the United States stands for, and also for regional stability, and hopefully economic intercourse.
So, Tajikistan needs more technical assistance from the United States, from the European Union, other donors. It needs a lot more attention from the international investment community.
Mr. BEREUTER. Mr. Dine, the Central Asian Republics of the former Soviet Union were the sites of some very important nuclear research facilities. What American assistance is going to the region to try to assure that those facilities and people working at them are not the source of assistance of rogue regimes or the sale of component parts of weapons of mass destruction to terrorists who may be not nationally motivated but otherwise?
Mr. DINE. That program is basically funded through the Nunn/Lugar effort. AID does not manage that. That is managed out of the Pentagon.
Mr. BEREUTER. Do you have any relationship with AID to that effort?
Mr. DINE. In this respect, Semipalatinsk in Kazakstan was the site of so much open nuclear explosions and all kinds of research. We are working in that particular city to try to help the mayor; I have met the mayor; his lieutenants run a city in a modern way: municipal financing, how do you get participation of citizens into the decisionmaking; again, decentralization, and then further decentralization?
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Mr. BEREUTER. You are just trying to improve the quality of life there as——
Mr. DINE. And governance in as democratic a way as possible. Again, going against the past.
There are no nuclear power stations in the five republics except a research one that is on the Caspian Sea; again, the most western part of Kazakstan, and there we have had some programs to try to help channel some of the workers into a new field, if you will, and to make sure that they do not go south to Iran.
Mr. BEREUTER. Mr. Dine, a final question from me. The enterprise fund that is operative now in the Central Asian Republics, does it have any particular direction or limitations or changes that affects its operation as compared to the older enterprise funds in Eastern and Central Europe?
We are going to be holding a hearing soon on enterprise funds generally.
Mr. DINE. I know.
Mr. BEREUTER. And I would like to know since you spoke very highly of the funds you are involved in.
Mr. DINE. I am upbeat. I am upbeat. There are ten enterprise funds in the portfolio that I am responsible for, which includes the 27 countries that were formerly communist in the old regime. The two oldest enterprise funds, Hungary and Poland, are the most successful. Then we have to ask ourselves the question why? Is it because of age? Is it because of the countries they are trying to invest in? Is it because of management? And it is usually a little bit of all of the above. But more and more as I get into this it comes back to the people, just like a corporation or an organization, government, semi-government, or semi-public. The Polish-American Enterprise Fund is the key and most successful enterprise fund.
Your former colleague, Steve Solarz, is the chairman of the Central Asian-American Enterprise Fund. He and Richard Bernstein, the CEO of the Central Asian-American Enterprise fund, have gone to Warsaw, have looked at that operation, and that is how the small loan window of the Central Asian-American Fund came about.
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Mr. BEREUTER. Yes.
Mr. DINE. Because they did not copy it word for word, line by line, but it is pretty close. So it has been an open, it has been a cooperative, it has been an aggressive enterprise fund, and that is why I was upbeat about it today. I think they have learned from others, but they have got their own style, again influenced by peoples' personalities, as well as experiences.
Mr. BEREUTER. Thank you very much.
Mr. Hastings, do you have any followup questions?
Mr. HASTINGS. Mr. Chairman, no followup questions, but I would like to ask if I could be supplied information regarding all of the ''stans'' and the relationship to Iran as it ratchets up and how USAID interfaces with overall foreign policy in that area.
I am damned concerned that nobody seems to be talking to these people, and it is pretty clear to me that Iran is pivotal in terms of what ultimately you do trying to help in that area, and I just need to know more about it. So if you could supply that information.
Mr. DINE. You know there are two schools of thought that have emerged over what the United States should be doing about Iran. It has been an interesting debate. One says completely isolate it, which is the policy of the United States, both legislative branch and executive branch. The other is for the reasons you just stated, we ought to be more engaged in various ways.
There was a fear with the breakup of the Soviet Union and the creation of these five new countries in Central Asia that there would be a relationship among Iran and the five countries, and there would be a contest between Iran and Turkey. Well, it turns out that, yes, these are Muslim societies, but they are Sunni Muslims.
Mr. HASTINGS. That is right.
Mr. DINE. They are not Shia Muslims.
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Mr. HASTINGS. Thank you, Mr. Chairman.
Mr. BEREUTER. You are welcome.
Mr. HASTINGS. If you could help me with that, Tom.
Mr. DINE. Sure.
Mr. BEREUTER. The gentleman is asking for information that is really of fundamental importance. I would like to see it as well because it is one of the reasons why I thought we ought to expand our jurisdiction, and I will be submitting some questions, Mr. Dine, if I may, about the relationship of Turkey to the Central Asian Republics.
Is there any advice or suggestion either of you would like to give us in a nutshell as we close this part of the hearing?
Mr. DINE. As elected politicians, can you look to the long term?
I was so pleased when Mr. Hastings brought that point up I could not resist and I cannot resist now. This is the first hearing we have had by any entity in the U.S. Government on Central Asia. Many American citizens are thinking more and more about it. You are going to hear two panelists now come up. One for sure will tell you about it, and I congratulate you again. Thank God it has finally happened.
Mr. BEREUTER. I am sorry to hear we are the first, but I am glad that it is us if we have to be the first.
Mr. WEDEN. At the risk of being parochial, as I have indicated in my statements, both oral and written, levels of assistance in Asia are pretty low. I think we can still get a pretty good bang for our buck, but if the level drops any lower we are going to start losing influence in a region where I think we should have strong influence.
Mr. BEREUTER. Thank you. That is an appropriate cautionary note, in my judgment.
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Gentlemen, thank you for your testimony.
Mr. WEDEN. Thank you.
Mr. DINE. Thank you.
Mr. BEREUTER. We appreciate it.
I would like now to call Panel No. 2. I have already introduced Dr. Nancy Lubin and Ms. Rani Parker, of JNA Associates, Inc., and Director of Save the Children, respectively. If you two ladies would come forward, we would like to hear your testimony.
[Pause.]
Mr. BEREUTER. Dr. Lubin, I am told that you flew in from Tajikistan just this morning. So if anybody needs to help you get to the table, why we will have staff help.
Ms. LUBIN. All right, thanks.
Mr. BEREUTER. That sounds like a fairly exotic and demanding trip.
Ms. LUBIN. Very long.
Mr. BEREUTER. As I mentioned, ladies, both of you will be able to have your entire testimony, if it is written, submitted and placed into the record. We would appreciate any summary you would like to give us.
And, Dr. Lubin, we will call on you first. You may proceed as you wish.
STATEMENT OF NANCY LUBIN, PRESIDENT, JNA ASSOCIATES, INC.
Ms. LUBIN. Great.
Mr. Chairman and members, thank you for the invitation to testify. I flew in late last night actually, not this morning, but that means that what I wrote here this morning is just a rough outline of some of the thoughts that have been going through my mind. I will be happy to provide something longer if that would help the Committee in the future.
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These remarks are based on two things. One, my own experience traveling, living in, working in Central Asia for over 20 years now; and second, the report you mentioned in your introduction that we have been working on for the past 3 years on the U.S. assistance effort to the former Soviet Union as a whole. We released the report last year (I can give it to the Committee), and have been asked to do an update this year, so we will be doing more on this topic in the months to come.
I, too, am delighted at the attention that you are turning now to Central Asia. Of all the regions in the former Soviet Union, it is potentially one of the most explosive, one of the most problematic in political and strategic terms, and definitely one of the least understood. It is also a region that is growing rapidly in importance for the United States for a number of reasons that include: The region's vast oil, gold, gas, and other natural resources; as mentioned earlier, especially in light of recent events its location between Russia, China, India, Pakistan, Afghanistan and Iran; its role as both the source and the transit route for narcotics and possibly for nuclear and other strategic materials; the fierce conflicts that have already occurred there, including in Tajikistan, and continue to this day; the region's ties allegedly to international organized crime; its vast size (it is larger than Eastern and Western Europe combined); its rapidly growing population of over 50 million; and the persistence of relatively corrupt and authoritarian governments that have brought new economic, political and human rights challenges in their wake.
All of these factors argue for increased U.S. engagement in this region to help develop stable, more open environments to pursue the full range of U.S. interests there.
The growth of U.S. assistance to the region is likewise a welcome addition as is its thrust. The proposed increase in funding, I think, is a good one; it represents an important shift in priorities, and the areas laid out in the Partnership for Freedom Program are also sound.
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What represents to me the biggest challenges we face, and I think requires the greatest scrutiny, is how these initiatives are carried out on the ground. While the five Central Asia Republics differ greatly from each other, their vast differences from other parts of the former Soviet Union and from South Asia—in terms of geography, history, politics, culture, economics, persistence of corruption and organized crime, informal economic structures, questions of clan, ethnicity, religion, and whatever—have shaped a very different set of challenges there than those found in other parts of the former Soviet Union, and make them a very different kind of place to work in.
The following few points I felt I would make as suggestions to make our efforts more coherent and more effective on the ground. I should note that they apply not just to USAID-administered projects, but to our assistance across the board.
My first point is that we have to try harder to fit programs to the Central Asian context. Projects and new initiatives have to be defined and shaped to fit the particular realities there—economic, political, strategic and culture—of these countries themselves. This often is not the case. For example, many projects aimed at improving water and land use, among the most sensitive and complex issues there, often focus primarily on the technical and the humanitarian sides, when the problems themselves are far more political and economic. I would include in that what occurs under the table as well as what occurs above the table.
As a few examples, our recent attempts to get at the policy and economic sides, such as the taxation or water pricing initiatives mentioned earlier, have not always fit local realities when they are enforced arbitrarily and spottily. Locals believe they are often used more as a stick against political disloyals than as an instrument for fundamental reform of water management or the economy.
Similarly, in a region torn apart by religious, ethnic and regional strife, these dimensions are rarely taken into account in evaluating our efforts there. I just returned from the Fergana Valley, one of the most potentially explosive regions of Central Asia, and have found that our assistance is not only exceptionally low there, but apparently is declining. While many small businesses and joint ventures in Uzbekistan, for example, were created from 1994 to 1996, the past year has seen thousands of closures because of larger economic policies. And the human rights successes that have been noted by USAID reports have often been far more rhetorical than they have been visible in practice. Shaping what we do there to fit these realities, I think, is a key recommendation.
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My second point is, in order to do that, we must focus on including regional experts. If our aim is to transform these societies, we have to have a better sense of what it is we are trying to transform. And yet in many programs on the ground people who can navigate those societies, who have had on-the-ground experience there, are deliberately excluded. I have heard often from USAID that there are not many of those kinds of people and consequently they cannot include them. I can tell you that there are many in this field, and they are either not hired or, when they are, they are marginalized.
The third question is one of followup. Many of our assistance efforts are focused on putting the physical and the legal infrastructure into place in order to carry out reforms. But even the best laws or technology will have little impact if they are not used.
We mentioned earlier the tax laws that have been put through in Kazakstan, and are being worked on in other Central Asian countries. And yet there have been many reports that American companies complain of selective application of these tax codes within Kazakstan itself and elsewhere.
You mentioned nuclear security earlier on. There has been a major Department of Energy effort to put nuclear safeguards in the major nuclear research reactor in Tashkent. And yet I was told by the Director when I visited literally 2 days ago that there is little money to hire people who will ensure that those safeguards are effectively employed. I can give more details if you would like.
Same with law enforcement programs: If close followup and accountability are not built into these programs, we are also in trouble. That is one of the areas I have worked on personally a great deal, and find that it is among the most controversial. We are consistently criticized for at least potentially providing the tools to take the most corrupt and the most repressive sectors of society and give them the tools to become even more corrupt and more repressive. Some people view our courses in money laundering, narcotics trafficking, and other areas, more as how-to courses for criminals than as efforts to stop these ills.
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Regarding coordination among programs, assessments of U.S. assistance efforts continue to emphasize the need for cooperation among donors. I would add to that the need for cooperation among projects and programs as well. Law enforcement efforts to fight corruption have to be tied to our rule of law programs, our media programs, privatization programs and whatever. To date so many of our programs have been stepping on each other's feet, working at cross-purposes, and sometimes seem to cancel each other out or diminish effectiveness.
Another question is that of joint design of programs. My sense from on the ground is that we are seen as erring in two directions. We have been criticized in the past for dominating our design and implementation of programs by international consultants, which is still often the case. But often we also go too far, I think, in the other direction by handing over too much prematurely and losing our leverage altogether.
I think the concentration on small partnerships (among for-profits and non-profits) is something that we have pushed in the past, and has yet to be emphasized in this region. I think it is the most effective way of providing aid.
I would add two more things that are not in the writtem testimony I gave to you. First, in your opening statement, Mr. Chairman, you mentioned a number of serious tradeoffs that we would have to choose between in our efforts on the ground and in Central Asia. We found in our own work that much of the funding is going to very large consortia: In the NIS as a whole, four companies have received close to half a billion dollars to carry out assistance projects there, and yet we found almost the same things were being done by very small projects and partnerships, often at 1 percent of that or a tiny proportion of that amount. Yet it is becoming increasingly difficult for these small partnerships to get funding. I think an emphasis on those kinds of things might help to spread the money more widely while still getting more bang for the buck.
Second, the Partnership for Freedom Program seems to draw a line between the activities of NGO's, businesses and governments as if they all do separate things. In my experience, some of the most important and most effective programs have been when American NGO's work with governments over there, or when American small businesses work with NGO's. The line between them, I think, should be blurred, but to this day those kinds of programs have the most difficulty getting funding, if they can at all. Last, I am constantly told, even on this last trip, that having Western functional experts, Western regional experts, and local experts all working together to shape projects and programs and then to implement them creates just the kind of synergy that many people believe is lacking from our assistance programs now.
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So I would like to, in closing, note that we do have many good programs on the ground. This is in no way meant to criticize so many of our programs, especially the smaller business and NGO programs that are out there. But especially for the bulk of the large programs and the bulk of our money, I hope these remarks could be instructive in helping to make our efforts more effective down the road as Central Asia becomes more of a focus of assistance in the future.
[The prepared statement of Dr. Lubin appears in the appendix.]
Mr. BEREUTER. Thank you very much. That is very helpful.
Ms. Parker, we look forward to your testimony. Thank you very much for taking the effort to come and share your ideas with us. What am I getting here?
Ms. PARKER. Not yet. I will get to it.
Mr. BEREUTER. OK. I am ahead of things.
[Laughter.]
STATEMENT OF A. RANI PARKER, DIRECTOR, WOMAN/CHILD IMPACT PROGRAMS, SAVE THE CHILDREN
Ms. PARKER. Thank you very much, Mr. Chairman, for this opportunity to offer testimony. For the record, I will be summarizing my prepared comments.
Save the Children supports child-centered and woman-focused programs in ten nations in Asia. In 40 countries around the world, Save the Children implements programs in economic opportunities, basic education, health care and humanitarian response.
I want to begin with just a little bit about myself. My father was an orphan whose path crossed that of an American development worker, Dr. Parker. She took him into her home and sent him to school, and later helped him to access similar development funds to become a nurse. My mother comes from a large family headed by her mother, and development assistance helped educate my mother and her siblings. Today my siblings and I are a physician, a development worker, and a retail manager in this country. And as an immigrant, I am particularly pleased to have the opportunity to contribute additionally by participating in this forum.
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My family's experience is one of intergenerational impact, and some of you have already alluded to the importance of this. Recognizing, measuring and supporting this type of impact are among the topics I want to address today.
In my current capacity as director of Woman/Child Impact, I have responsibility for providing guidance and leadership in measuring the impact of our methodologies on the lives of women and children.
This committee has asked me to critique USAID programs in Asia. I think the best way I can do that is to speak a little bit about the context and how Save the Children works in Asia and in collaboration with USAID.
I would like to say a little about the interrelated needs of women and children, and present the case of Nepal as an example of how we work with USAID. Other examples are also presented in my written testimony.
Asia is known for its remarkable economic growth. The Asia that Save the Children interacts with remains a place of enormous inequality and profound poverty. It may be described as a region of silent crises.
The context in which Save the Children works has been transformed dramatically in recent years. Communities once isolated and insulated from much of the world are now affected by national and international policies. We recognize that individuals across cultures and across income levels exist in a network of social and economic relationships, and therefore effective programs must take these relationships into account.
You will see in front of you a small example of how these relationships come together. Unfortunately, we just have two and they are a little squashed. I can offer this to you when I am done. They got compressed in my luggage.
This is a Save the Children, co-developed with UNFPA, UNICEF and USAID, home birthing kit. It has a bar of soap, a string, a razor, a little disk and a plastic sheet in it. And this thing cost 27 cents, which on the one hand sounds very impressive. A lot of safe and sanitary births occurred at 27 cents a shot.
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On the other hand, the point I would like to make is that this is not just a 27-cent product. It occurred because Save the Children had offices there for an extended period of time. It occurred because USAID was there for an extended period of time. It occurred because we were relating to several groups of women and local organizations of all sorts. It occurred because the United States was there. It was the joint collaboration of all of us, all of us being there, all of us contributing to research that made this happen.
Finally, today, if we want one of these, we have to buy them from a Nepal organization. So this also occurred because there was a local NGO in Nepal that had the inspiration to take it and market it and to envision its potential.
So this is something that is very concrete that I thought you might be interested in.
Another example that I would like to illustrate of the interrelatedness in order to get this synergy, this long-term effect, is a 10-year retrospective that Save the Children did with a number of colleagues of our programs in Nepal. Basically, these were nonformal education programs for women, co-funded with USAID since 1983. So we are talking about 15 years here.
We found very, very significant impact on women who participate in these programs, some of which I describe in my longer statement, but most interesting is the impact of this program on people who are not directly involved in the program. We found that the behaviors that were being advocated for in the program were also being taken up by people who had no direct involvement with us.
An education/intervention, this nonformal education, has generated health results both in program participants and those who were not involved. USAID is a key partner in enabling Save the Children's Nepalese program to achieve the results that I have cited in my statement.
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Notably, the USAID mission in Nepal is the only one in the world with an explicit strategic objective on women's empower-ment. Clearly, an integrated approach of this type emphasizing women's empowerment has benefits beyond the parameters of this program.
Across generations there is reason to believe that impact increases exponentially, but since we do not have the funds to measure beyond the funding cycle, there is no systematic evidence to demonstrate these outcomes. While a 5-year period, as in the case of our matching grant from USAID, is significant, it is important to note that the positive results achieved in Nepal took 10 years to accomplish. Actually, it took longer, but the period measured in this study was 10 years.
The recognition that this does not occur until after the funding cycle has ended has implications for budget allocation. With foreign assistance remaining at 1 percent of the American budget, there is little room for this type of measurement and tremendous pressure for quick results.
In order to adequately address the complex nature of today's social and economic problems, development programs must increasingly take into account the interrelated needs of women and children as they represent the majority of the world's poor. Such programming takes time and requires a much, much more serious commitment on the part of the American Government and must be evidenced by substantial increases in foreign assistance.
Thank you again, Mr. Chairman, for this opportunity to present Save the Children's perspective on the use of American funds in Asia.
[The prepared statement of Ms. Parker appears in the appendix.]
Mr. BEREUTER. Thank you very much.
I like your program. I like your agency.
Ms. PARKER. We do too.
[Laughter.]
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Mr. BEREUTER. Mr. Hastings, I am going to let you have the first opportunity to comment.
Mr. HASTINGS. Thank you very kindly.
Mr. Chairman, I am impressed with both Ms. Lubin's and Ms. Parker's presentation. Moved so much that I am sitting here trying to figure out how all of this fits in the legislative scheme beyond appropriations. Somewhere along the lines in each of the areas of your expertise there has to be some kind of way to really do what both of you are saying needs to be done and get beneficial results, and that is coordination and long-term planning by all of the related agencies.
I guess the question that I have for both of you, and recognizing from your biographical sketches the extraordinary backgrounds that you have in the various agencies and institutions, academically and otherwise, that you have worked with, almost suggests to us, if you will, how you do this. I would imagine in Tajikistan there might be one set of players that you would put together, and in Bangladesh there may be another set of players totally unrelated. So if we tried to pass ''one size fits all, you need to coordinate,'' it might become imbalanced in some respects.
So I guess we should not be involved other than just to encourage what you are saying in the way of coordination and long-term strategic planning. I would just be interested in your views.
And what I think both of you must have run into is turf wars. That is what I run into at home. You know, I cannot get the NAACP to sit down with the ACLU, with the Baptist Church—so that we can coordinate, and I am interested if both of you would respond how best you think we might play a role in trying to cause where our money is spent, meaning the country's money is spent, that we get this coordinated effort, and that may not be a coherent question, but at least it is something on my mind, how we can develop a means of assisting that occurring.
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Ms. LUBIN. Yes. If I may answer first. You are right, across the board these kinds of issues are a major legislative challenge. I would just make a few notes, first with regard to coordination, and then with regard to existing legislation.
On the coordination side, you are absolutely right about turf wars, and they are often strongest in Central Asia and among Central Asian themselves. But two comments:
First, I have been so impressed, particularly among the NGO community or the small business community in an environment that is pretty alien, how much coordination there has been among them. With scarce funds among all of them, they have pooled their resources (both the small businesses and the NGO's working with locals), and it has been very impressive. And I have been struck by the contrast—we pointed out in our report—with some, not all, but with some of the huge programs that have, I think, just a very different agenda on the ground. So maybe learning from that smaller experience can tell us something about how in fact you do that.
A second point would be, having consulted for a number of the corporations, government agencies, and NGO's out in the field, I have often made proposals that called for bringing them together in some way, for bringing members from different disciplines together into one interdisciplinary kind of project. But these kinds of projects do not fit anywhere, so it is very hard to get something like that funded given the way that the assistance program is compartmentalized.
If there is a way to cut through that and encourage in some way these kinds of interdisciplinary types of projects, I think that could do a great deal toward the end of improved coordination.
The third point would be on the ground. I think a danger of going into a new place where so many of the players are unknown is that we have all found our favorite Uzbeks and our favorite Kazaks, and tend to dump everything onto them.
Mr. HASTINGS. Yes.
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Ms. LUBIN. And in some cases it has created new ''fiefdoms'' that are rivaling others. It is something, again, knowing the larger context, that we have to be particularly careful about and manage our funding better, rather than giving it to independent organizations or others that may be real or not—I do not think we include the capability all the time of assessing that. So on the coordination side, those are a few recommendations I would give there.
Overall, last year's appropriations bill does call, for example (I think it is Amendment 45), does call for requiring experts with prior on-the-ground experience in these regions, who know the languages, to be in key staff positions in every project as I recall—I do not know the exact wording—that goes out to the NIS. I, for one, would be interested to see the extent to which that has actually been carried out on our side.
The Request for Proposals and applications and certainly the job announcements I have seen usually treat that as a desirable qualification, but I have rarely seen it required. So that might be another area.
Mr. HASTINGS. Ms. Parker.
Ms. PARKER. Perhaps there are turf wars, but I think the reality is that people do work together. In the NGO community our mission is clear. And if something needs to be done that we do not do, we find out who does it, and we bring them together. I can give you the case of Anwara Begum, who is a woman I talked with at length in Bangladesh last month. She has been involved in Save the Children programs for years. We have not done programs in legal literacy. Today, she is the head of her own NGO. They do legal literacy. That is what they do. They train women and men in their rights vis-a-vis the Bangladesh legal system. They advocate for them with the courts. They are extremely adept at helping women go to the court system and get redress. So, yes, I think some turf wars exist, but on balance, I have seen much greater cooperation than not.
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I also believe it is important to say that with regard to the NGO community in Asia that I am familiar with, that on all levels the NGO community has grown dramatically, and their capacities have expanded unbelievably. And I believe that certainly in this part of the world, and I actually do not know anything about Central Asia, so I do not want to generalize too much, their capacities are very, very strong, and they are capable of doing a lot more.
At Save the Children we are shifting our emphasis to implementing less and less by ourselves and passing things more and more to local NGO's who have a much closer cultural connection and can adapt whatever we have been doing much more easily immediately, and make it much more directly relevant, and they are also much more cost effective.
I think that with the growth in the NGO community generally, you are getting a lot more for your dollar, and that is why we have been able to give you results, even though our funds have been cut.
Mr. HASTINGS. Mr. Chairman, I thank you and applaud you for holding this hearing, and the witnesses as well, I thank you. And with the chairman's permission, I beg your leave. I do have to, and I apologize to you for having to go. I guess this is just what Congresspeople do when they have to coordinate.
[Laughter.]
Mr. BEREUTER. Thank you, Mr. Hastings. Appreciate your participation.
Ms. Parker, I assume when you are talking about the capacity that is increasingly there in the NGO's, we are talking mostly about domestic NGO's?
Ms. PARKER. Right. I am talking about domestic, not international organizations.
Mr. BEREUTER. To what extent are foreign governments, including our own, involved in building that capacity?
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Ms. PARKER. Through us, they are very actively involved. Certainly in Bangladesh, certainly in Nepal, yes.
Mr. BEREUTER. Do we need to focus on——
Ms. PARKER. The Philippines.
Mr. BEREUTER [continuing]. building and further enhancing those NGO's or are they off and running now and we should put our money into programs?
Mr. HASTINGS. There is considerable variation. And, in fact, I see them as being linked. I would say you should put your money into programs, but part of making those programs work is having people who are able to do it.
Mr. BEREUTER. That will build the NGO's' capacity, we hope, in the process.
Ms. PARKER. And, in fact, they are able to do a great deal more than they have previously. I think it is the globalization, if you will, using it very generally—using that term very generally.
Mr. BEREUTER. Under the new House rules I should ask you, and it is important that I ask you, as a matter of fact for purposes of my next question to each of you, do you now receive U.S. Government funds for Save the Children?
Ms. PARKER. Yes, we do.
Mr. BEREUTER. And where are they coming from, which agencies?
Ms. PARKER. Actually, it is quite a long list so what I did was just bring it for you.
Mr. BEREUTER. Thank you. Will you leave that for us?
And then may I ask specifically, is AID one of them?
Ms. PARKER. Yes.
Mr. BEREUTER. How does it oversee its contribution to Save the Children? What kind of auditing requirements do you have levied upon you by AID?
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Ms. PARKER. There are the financial auditing requirements which I honestly could not give you details about. I know that we take those requirements seriously and our financial systems are fully responsive to those requirements.
The USAID matching grant that I head that supports Woman/Child Impact at 50 percent with a dollar-for-dollar private match also has program evaluation built into it. Basically, what happens is that about the third year there is a midpoint evaluation which, in this last instance, we did ourselves, and then there is a final evaluation which was done with external evaluators identified by USAID, and paid for out of a separate budget.
Mr. BEREUTER. Thank you.
Dr. Lubin, you are involved, as I noted earlier in a 3-year evaluation projection of the NIS countries; is that correct?
Ms. LUBIN. We were asked in June 1994 to take a look at the whole U.S. assistance program with an eye toward the smaller projects and partnerships.
Mr. BEREUTER. And who are you doing that for, Dr. Lubin?
Ms. LUBIN. That is through JNA Associates, and we are supported by five private foundations. There was no government money involved in that.
Mr. BEREUTER. And your reports then are to the sponsors of the organization?
Ms. LUBIN. That is correct. We issued a report last year, about a year ago. This is a copy of it here that I can leave behind.
Mr. BEREUTER. Good.
Ms. LUBIN. The report was also distributed to a number of congressional members, and to the Administration. And because of interest, our funders came back and asked if we would update it, so we should be coming out with another one in a few months.
Mr. BEREUTER. Thank you. That undoubtedly will be helpful to us.
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Does your organization receive Federal funds? Are you prepared to tell us what they are? And what are your funding sources?
Ms. LUBIN. We are not currently receiving any Federal funds, although we have in the past. Those have always been in a consultant capacity to advise rather than for any programs of our own.
Mr. BEREUTER. Do you have any impressions you would like to share about the assistance being rendered by nongovernmental organizations, bilateral assistance programs, including our own, plus the multilateral development institutions? Do you want to comment about the importance of it, the coordination, the lack of coordination, anything on that subject generally?
Ms. LUBIN. We spent a long time at first looking at the different mechanisms. I had worked in the past, and I do work sometimes, in an advisory capacity to the World Bank and other donor agencies to assess what they were doing, including what USAID is doing, and other government agencies and NGO's. We ended up focusing our own remarks on the small versus large rather than on the mechanisms themselves.
When some thing is tight, focused, and the people on the ground have a good sense of the whole picture and what they are trying to do, we just found that the impact seems to be so much stronger than when huge bureaucracies are created regardless of what mechanisms they are going through.
But the other thing we found is that there is nothing magical about a nonprofit, which is what NGO normally implies. Some of the larger nonprofits have been just as wasteful as some of the larger corporations, and some of the smaller, for-profit contracts have been very, very effective. So regarding the mix there, we found an artificial distinction when the main point should be focused on using certain elements that are important for project success.
Mr. BEREUTER. Do you have any general advice to us as to how we can make sure that our U.S. Government funds through AID and otherwise are used more effectively in the region? And I will focus just at this moment on the Central Asian region.
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Ms. LUBIN. I would say two things. One, from the U.S. side, I applaud this notion of even endowing some of the smaller foundations to work out there, especially at a time when almost all, except for one or two, of the umbrella organizations or the sort of foundations that were giving funding to smaller groups to work out there are dying or have already been killed. You know, there is World Learning, IREX, and a number of big umbrella groups that no longer have funding to give to small partnerships.
Mr. BEREUTER. Are you speaking specifically about foundations that are components of the enterprise funds?
Ms. LUBIN. No, I am talking about organizations such as the Eurasia Foundation, such as ISAR.
Mr. BEREUTER. I see.
Ms. LUBIN. That are intermediaries with a broad portfolio. I think it is unrealistic to expect AID to be giving out many small, $100,000 or $200,000 grants. These are normally passed through umbrella organizations to do that, like Eurasia, ISAR, World Learning and whatever. Most of these umbrella organizations, except for a couple, are in trouble. There are no longer funds to give out.
So I would applaud both the endowments, but also call for keeping some of those other organizations alive, particularly in this region where that mechanism seems to be more successful than others both locally and in supporting U.S.-local partnerships. These partnerships have been almost entirely killed, although I think they are probably the most important way to provide assistance in a region where I do not think across the board locals are ready to be managing U.S. taxpayer money in a way that could be any more effective.
On the other side, you asked earlier how this could be tied into U.S. foreign policy overall. It could make sense for this committee or for this Congress to also pay more attention on the extent to which we could encourage the regimes in the region to actually enforce the laws that they are creating, both in terms of the U.S. involvement and in terms of what happens on the ground.
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Mr. BEREUTER. It is certainly a worthy suggestion. Difficult to implement.
You certainly caught our attention before, Dr. Lubin, when you said, as I understand it, that either four companies or four consortia received nearly a billion dollars in assistance for private sector development.
Ms. LUBIN. Half a billion.
Mr. BEREUTER. Half a billion. Oh, all right. It is still a fair amount of money even by Dirksen's terms. And that you were suggesting, I think, that some of the smaller contractors or firms or consortia are getting a lot more for the buck, or delivering a lot more for the dollars allocated.
Can you identify a company, consortia, any further elaboration that you feel willing to make here on the open record? And if not here, we will give you a way to do it otherwise. Is there anything you would like to say at this point?
Ms. LUBIN. I could say more privately. We do have a chart in our report as of last year where four companies—KPGM—Peat Marwick, Arthur Andersen, Booz-Allen Hamilton, and Chemonics—among the four of them had gotten close to half a billion dollars, and one of the things we found was that it was very difficult to find out where any of that funding had gone.
We also make a contrast between some of the smaller groups like the ITIC, the International Tax Investment Center, which with a $250,000 grant had leveraged that to bring in more funding and was doing many of the same things on the ground as some of the others were.
Part of our call was for greater openness, transparency oversight on the U.S. side. I do not know why it is not openly available to see where taxpayer funds are going if it is a matter of half a billion dollars. But we do have a lot of off-the-record stories that I would be happy to share with you.
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I will note, by the way, that when we first started this report I just put out on the e-mail a note to anybody, working anywhere, if they would like to contribute anything on or off the record to get in touch with us in any way they wanted to, we received hundreds and hundreds of e-mails—horror stories and happy stories.
But almost all of them were off the record, just as background for us. The only person who went on the record said, ''You can use whatever you would like but please do not ruin my career.'' This notion—that if you give any kind of constructive criticism it will come back to haunt you or your funding will be stopped—I think is a dangerous one when there is a lot of constructive criticism out there that could help make a lot of positive change.
Mr. BEREUTER. Do you have any impressions to what extent universities, American universities, are working in the region on technical assistance programs? And if so, do you have any impressions of their success?
Ms. LUBIN. I think those are broader, longer term programs, especially within the academic community. There has been a lot—I was just at Osh State University in the middle of the Fergana Valley in Kyrgyzstan, you know, that has been receiving a lot of western support and has some partnerships set up. There are a few others.
I think those are good long-term projects that are effective in creating an infrastructure for generations to come, to be more involved. I would have two comments.
One, a lot are becoming more and more focused on business at the exclusion of other types of education. I do not know where the balance is now, but while I think the business side is critically important, so are the others.
Mr. BEREUTER. Are they working with small entrepreneurs?
Ms. LUBIN. There is a lot of business management, yes, and I think the real question there is when the business entrepreneurs then go out to do business. As I mentioned in my remarks, the environment has become so anti-small business recently that so many have closed their doors. So that has to be coordinated with our overall efforts at shaping the broader environment.
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And the second point I would make which I did not make in my remarks is on the U.S. side as well there are a number of experts in these regions who really can be better informing both our foreign policy and our projects on the ground. These experts have been training for a long time, for 10, 20, 30 years, usually with the support of Title VIII assistance funds through such organizations as the National Council for South and East European Research.
Mr. BEREUTER. Talking about geographic and functional experts both?
Ms. LUBIN. Exactly.
Mr. BEREUTER. That you would hope would work with local experts.
Ms. LUBIN. My understanding is that Title VIII is being slashed back. I think we have to be focused not only on creating experts there, but keeping the training of our own experts in place so that down the line we can continue to better inform our own policies as well.
Mr. BEREUTER. I have this picture of these experts having been stacked there on the shelf, standing closely, working, just like over in CRS sometimes or the Central Intelligence Agency. You ask and it is like somebody finally asked me for something. I have been preparing for 3 1/2 years for my next question.
Ms. LUBIN. There you go. They are called upon, just rarely, it seems, by the assistance community.
Mr. BEREUTER. Ms. Parker, I would like to ask maybe a final question for you, and that is, what can you tell me or any impressions you might have of the American bilateral programs for family planning in South Asia?
Ms. PARKER. I would say that they are extremely important for us, since we are primarily interested in children, child survival, and child survival is inextricably linked to a number of family planning activities such as birth spacing, for instance. So, I would say it is extremely important.
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If I might add, since this is my last question, the last question you are going to ask me, I do want to comment as somebody who comes from the nonprofit world that there is a very big difference in my mind between nonprofits and profit-making entities, though we are all good at doing what we do. Those of us in the nonprofit sector are driven by our values. We are not driven by the profit line, and I think that makes a very big difference in how we perceive and respond to development problems. This should, and I believe does in the American system, make a difference in terms of the kinds of decisions that we would have to make about the differences between profit-making and non-profit organizations.
So, that would be my statement.
Mr. BEREUTER. Ladies, I want to thank you very much for your contributions here today, and there are a couple of things we would like to follow up with questions. You mentioned one, for example, that you can assist us on, and we will take advantage of that.
Thank you so much for making the time available to us to testify today.
I want to mention that we have had people from AID listening here the whole time, and I appreciate that. So often when we have Administration witnesses they do not always stay to hear the second and third panels. And I think that kind of feedback should be important to them as well. So I commend you for taking the time to do that.
Ms. PARKER. Thank you.
Mr. BEREUTER. Thank you again, ladies.
This hearing is adjourned.
[Whereupon, at 4:07 p.m., the Subcommittee was adjourned.]