July 12, 2000
(House)
H.R. 4811 - FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS APPROPRIATIONS BILL, FY 2001
(Sponsors: Young (R), FL; Callahan (R), AL)
This Statement of Administration Policy provides the Administration's views
on the Foreign Operations, Export Financing and Related Programs
Appropriations Bill, FY 2001, as reported by the House Committee. Your
consideration of the Administration's views would be appreciated.
The President's FY 2001 Budget is based on a balanced approach that
maintains fiscal discipline, eliminates the national debt, extends the
solvency of Social Security and Medicare, provides for an appropriately
sized tax cut, establishes a new voluntary Medicare prescription drug
benefit in the context of broader reforms, expands health care coverage to
more families, and funds critical investments for our future. An essential
element of this approach is ensuring adequate funding for discretionary
programs. To this end, the President has proposed discretionary spending
limits at levels that we believe are necessary to serve the American
people.
Unfortunately, the FY 2001 congressional budget resolution provides
inadequate resources for discretionary investments. We need realistic
levels of funding for critical government functions that the American
people expect their government to perform well, including education,
national security, law enforcement, environmental protection, preservation
of our global leadership, air safety, food safety, economic assistance for
the less fortunate, research and technology, and the administration of
Social Security and Medicare. Based on the inadequate budget resolution,
this bill fails to address critical needs of the American people.
Despite the Subcommittee's efforts to provide increases over last year's
funding levels for certain programs, the funding provided is inadequate,
and many provisions of the Committee bill, such as the international family
planning provision, are highly objectionable. The President's senior
advisers would recommend that the President veto the bill if it were
presented to him in its current form.
Attached is a discussion of the Administration's specific concerns with the
bill. We look forward to working with the House to resolve these concerns.
Attachment
Attachment
FOREIGN OPERATIONS, EXPORT FINANCING, AND
RELATED PROGRAMS APPROPRIATIONS BILL, FY 2001
(As Reported by the House Committee)
International Debt Reduction
The House Committee bill would cut the FY 2001 request of $262 million for
debt reduction programs by $180 million. This shortfall is greatly
exacerbated by the failure of Congress to provide any of the $210 million
FY 2000 supplemental request for debt reduction. Full funding of both the
FY 2001 and FY 2000 requests is critical. Funding at a low level would
stall multilateral and bilateral debt relief efforts under the Enhanced
HIPC Initiative. The lack of a substantial U.S. contribution to the HIPC
Trust Fund would mean that there would be insufficient resources to provide
debt relief to many of the poorest countries in Latin America and Africa
that have undertaken macroeconomic reforms. Other bilateral donors have
previously stated that they would base their future contributions to the
HIPC Trust Fund on a substantial U.S. contribution. It is clear, at a
minimum, that without a substantial U.S. contribution, HIPC debt relief
would not be provided to Latin American HIPC countries. In addition,
funding at this level would also significantly limit the ability of the
United States to encourage countries to invest in their tropical forests
through innovative debt treatment mechanisms under the Tropical Forest
Conservation Act.
International Family Planning
The Committee's actions on the international family planning issue are a
great disappointment to the Administration. First, the Committee's
decision to maintain the unnecessary restrictions on international family
planning providers is highly objectionable. As we have stated before, we
should not impose limitations on foreign non-governmental organizations's
use of their own money or their ability to participate in the democratic
process in their own countries. Second, we strongly oppose the Committee's
decision to freeze assistance at the FY 2000 level of $385 million. The
requested increase of $156 million over the FY 2000 enacted level, for an
FY 2001 funding level of $541 million, would help millions of additional
women bear their children at the healthiest times for both mother and baby.
The requested increase would also greatly reduce the number of unintended
pregnancies, abortions, and deaths of mothers and children. Therefore, we
strongly urge the House to drop these restrictions and restore funding to
the requested level.
Multilateral Development Banks
Every dollar in U.S. contributions leverages nearly $60 in development
assistance from the Multilateral Development Banks (MDBs). The Committee's
$536 million, or 40 percent, cut would substantially reduce MDBs lending
for education, health, infectious disease prevention, and other social
programs in the world's poorest countries. The reduction would also
severely undermine our ability to influence new policy directions, such as
the fight to bring the HIV/AIDS pandemic under control. Moreover, this cut
would nearly double U.S. arrears to over $800 million, reversing the
progress made with bipartisan support in the FY 1998 and FY 1999
appropriations towards meeting our past-due obligations to these
institutions. Of particular concern are the proposed cuts to the following
institutions:
- International Development Association (IDA). IDA is the primary
concessional lender for most of the world's neediest countries, with
80 percent of its lending going to countries where people earn less
than two dollars a day. The $259 million, or 31 percent, cut in
funding made by the Committee would have a devastating impact on IDA's
ability to finance priority investments in health, clean water
supplies, education, and other infrastructure needed for lasting
poverty reduction. Moreover, a low contribution would significantly
diminish U.S. leadership as we approach IDA-13 replenishment
negotiations early next year.
- Global Environment Facility (GEF). The U.S. commitment to the
GEF, begun under President Bush on a bipartisan basis, supports GEF's
unique ability to finance environmental projects that cross country
borders while promoting sound environmental policy in developing
countries. The Committee's $140 million, or 80 percent, cut in
funding would severely impair GEF's ability to play a prominent and
cost-effective role in areas such as conservation of biodiversity and
protection of fisheries. GEF's financial situation is precarious
because its commitment authority is expected to run out late this year
if financing is not made available. Given that each dollar we provide
leverages $10 in co-financing, a low contribution would have a
negative and cumulative effect on project work that benefits the
global environment. In addition, this low level of funding would
undermine U.S. credibility when negotiations for the next
replenishment (GEF-3) begin later this year.
- African Development Bank (AfDB). As part of the last capital
increase, the AfDB agreed to a series of major institutional reforms
designed to strengthen the financial security and corporate governance
of the institution. The $3 million, or 49 percent, cut made by the
Committee would limit our ability to exercise the leadership necessary
to ensure that the bank continues on the path of reform.
- Other Concerns. The Committee's cuts to the Asian Development
Fund ($53 million), African Development Fund ($28 million), and the
Inter-American Investment Corporation ($26 million) would limit the
ability of these institutions to provide programs to reduce poverty in
countries of critical interest to the United States and would call
into question the willingness of other donors to continue their
support for these institutions. In addition, the Administration is
seriously concerned about the amendment added during the Committee
mark-up that links the payment of 10 percent of the U.S. contributions
to the international financial institutions to specific and
problematic changes in procurement and financial management. Such an
amendment would hinder our efforts to reach the international
consensus needed to push for such reforms.
Nonproliferation, Anti-terrorism, Demining, and Related Programs
The Committee bill cuts the Administration's request of $352.7 million by
$111.1 million, or 32 percent. A reduction of this magnitude cannot be
made without jeopardizing programs vital to our nonproliferation and
anti-terrorism efforts. In particular, the Committee recommends a cut of
$20 million from the $55 million request for the Korean (Peninsula) Energy
Development Organization, leaving insufficient funds to purchase necessary
shipments of fuel oil, which we are required to provide under the 1995
Agreed Framework. The Committee's recommendation of $25 million for
science centers in Russia, Ukraine, and Kazakhstan is $20 million, or 44
percent, below the Administration's request. This massive reduction would
result in less support for scientists with expertise in weapons of mass
destruction, thus increasing the risk of experts being hired by nations of
concern. In addition, the Committee has not responded positively to the
Administration's budget amendment that added $41.2 million for a U.S.
contribution to the incremental costs of the trial of the suspected Libyan
terrorists in the 1988 bombing of Pan Am flight 103 over Lockerbie,
Scotland. The Administration is disappointed that the House Committee has
not included requested funding for the Center for Anti-terrorism Security
Training. The initiative is an integral part of the Administration's plans
to address the growing worldwide terrorist threat.
Eastern Europe
The Administration appreciates the Committee's earlier support for FY 2000
emergency supplemental funds for programs in the Balkans. However, the
shortfall from the supplemental request, when combined with the Committee's
$75 million reduction to the FY 2001 request for the Assistance to Eastern
Europe and the Baltic States account ($610 million to $535 million), would
result in a reduction of $220 million, or 27 percent, below the funding
needed to establish a stable and durable peace. In addition, the
Administration opposes the provision limiting funds available for Kosovo to
15 percent of funds pledged by other donors as of January 1, 2001. This
cut-off date would restrict U.S. funding for Kosovo since many donors will
not make funding decisions until after that date, thus undercounting other
donor pledges. While burdensharing is a key component of our Kosovo
policy, the 15-percent cap would arbitrarily make U.S. funding dependent on
the decisions of others. The full funding request will support critical
programs to revitalize Kosovo's civil society and economy, and reduce the
need for prolonged U.S. presence in Kosovo as part of the Kosovo Force.
Assistance to the Independent States
The Committee mark is $96 million below the FY 2000 enacted level of $836
million. The Administration strongly opposes the Committee's decision to
cut funding for critically important programs to foster economic and
democratic reforms in the former Soviet Union. These carefully targeted
programs work with reform-minded governments and help foster grass roots
support for reforms by working with small businesses and non-governmental
organizations. These programs are helping citizens of the region make the
transition to market democracies -- a transition clearly in our long-term
national security interests. We also strongly object to cuts in the
request for Expanded Threat Reduction Initiative (ETRI) programs. The
Administration's ETRI request will advance important nonproliferation
objectives in the former Soviet Union. A cut in this request will
undermine our ability to prevent the spread of nuclear weapons and the
illicit trafficking in WMD and missile related technologies. The
Administration strongly opposes any prohibition of assistance to the
Government of the Russian Federation in response to Chechnya and
Conventional Forces in Europe (CFE) Treaty limit. Denial of funding would
seriously undermine our efforts to work with the Russian Government to
prevent the spread of nuclear weapons, to engage Russian scientists who
would otherwise work on projects in countries of proliferation concern, and
to honor its CFE Treaty-related commitments to withdraw its forces from
Georgia and Moldova.
U.S. Export-Import Bank
We appreciate the Committee's action to provide adequate program and
administrative expense allocations for the Export-Import Bank.
Nevertheless, the bill cuts the Administration's request of $963 million
for program resources by $138 million, or 14 percent, which would reduce
the Export-Import Bank's ability to support U.S. exports by 11 percent
($1.8 billion) from the FY 2000 enacted level and by 14 percent ($2.2
billion) from the President's FY 2001 request. Lower export levels
translate directly into lower employment opportunities for U.S. workers and
lower revenues for U.S. companies. The requested level is necessary to
help the Export-Import Bank pay for the higher cost of international
lending caused by higher risk levels resulting from the international
financial crisis and represents only a modest increase over the Bank's
capacity for FY 2000. The Committee's mark, therefore, represents a de
facto reduction in the Bank's capacity to support U.S. exports when
compared to the FY 2000 enacted level.
Peacekeeping Operations
The bill cuts the Administration's request of $134 million by $16 million,
or 12 percent, which would impair our peacekeeping efforts around the
world, requiring cuts to programs such as the U.S. component of the
civilian police contingent in East Timor, support to regional peacekeeping
initiatives in Africa, and our efforts to train African militaries for
peacekeeping operations. Such a reduction could additionally leave us
without the means to pay our fair share of the Organization for Security
and Cooperation in Europe mission assessment for elections and governance
programs directly supporting the peace processes in Bosnia and Kosovo.
Economic Support Fund (ESF)
The bill cuts the Administration's request of $2.3 billion for ESF by $79.1
million, or three percent. When combined with the Middle East and various
other earmarks, these reductions would result in a 12-percent cut to other
crucial foreign policy programs. Such a cut would have an adverse impact
upon regional programs, particularly in Africa, and upon human rights and
democracy programs worldwide.
International Organizations and Programs (IO&P)
We are concerned about the $8.5 million reduction to the Administration's
request for IO&P. After taking into account funding for UNICEF and the
Global Alliance for Vaccines Initiatives, which were requested under this
heading but funded under other accounts in the Committee bill, the
reduction represents a six-percent reduction in the remaining programs,
including important democracy and environmental programs.
Foreign Military Financing (FMF) and International Military Education
and Training (IMET)
The Administration appreciates the Committee's positive response to the
request for authority to disburse planned Egyptian outlays early in the
fiscal year. However, the bill cuts the Administration's request for FMF
of $3.5 billion by $28.2 million. After taking into account funding levels
for vital Middle East programs, this reduction is a 17-percent decrease in
grant funding for the rest of the world. This reduction would decrease our
ability to support military reform and NATO inter-operability in the
Balkans and South-East Europe, decrease our ability to strengthen
capabilities and vital ties with the militaries of new NATO nations
(Poland, Hungary, and the Czech Republic), and hamper our ability to
support the Philippines, Tunisia, Morocco, and Mongolia, and build the
peacekeeping capabilities of African nations.
The Committee has not accepted the Administration's proposal that the
appropriations language requiring obligation upon apportionment for Foreign
Military Financing be deleted. The Administration continues to request the
deletion of this language. In addition, the Committee bill reduces the
funding for administration of FMF programs by $2.5 million from the request
and reduces the Administration's request for IMET by $2.5 million, or five
percent. These reductions would further hamper these programs, in the face
of increasing administrative and training costs.
International Narcotics Control and Law Enforcement (INL)
The Committee bill cuts the Administration's request by $7 million and
provides the same level of funding as in FY 2000. International crime in
the former Soviet Union, Asia, the Caribbean, Latin America, and elsewhere
is a serious threat to U.S. interests. This account funds numerous
long-term programs in a number of countries. Many of these initiatives are
just getting off the ground and are starting to show beneficial results. A
cut of $7 million could jeopardize these results in a number of programs
now underway and negate the benefits of our initial investment.
U.S. Agency for International Development (USAID)
The bill cuts the Administration's request of $2.124 billion for
development assistance and health programs by $207 million, or 10 percent.
While the Administration notes that the Committee has provided a slight
increase over the FY 2000 operating year budget level, the bulk of this
increase is for health programs. The FY 2001 level for development
assistance is inadequate to meet growing development needs worldwide. The
overall reduction from the request in funding is compounded by the number
of Committee directives, which would have the effect of further reducing
funds available to promote economic growth, protect the environment, and
support democracy. For example, at the Committee's funding level, it would
be impossible to fully fund the Administration's requests for increased
assistance to preserve biodiversity in tropical forests and to promote
clean energy technology without cutting deeply into these other activities.
The combination of Committee directives and reduced funding levels for
development assistance would mean that economic growth activities would be
underfunded further, even though the Committee's report states that such
activities are necessary if health and family planning programs are to have
more than a marginal impact in poor countries.
The bill provides only $23 million of the $65 million increase requested
for USAID's HIV/AIDS programs in the Child Survival and Disease Programs
Fund. The failure to fund this request fully would set back the
Administration's effort to build program momentum that is urgently needed
to address the rapid spread of HIV/AIDS in Africa where it has become the
leading cause of death, where infection rates often exceed 30 percent of
the adult working population, and where it is undermining decades of effort
to reduce mortality, improve health, expand educational opportunities, and
lift people out of poverty. We urge the Committee to provide the full $244
million requested for HIV/AIDS programs.
The bill reduces the $50 million request for the Global Alliance for
Vaccines and Immunizations to $37.5 million. This would undermine this
public-private partnership's ability to leverage funds from international
donors and the private sector to reach millions of children in need of
critical vaccines.
The Committee's proposed $15 million (27 percent) cut in funding for the
Office of Transition Initiatives (OTI) would severely impair the Office's
ability to respond to time-sensitive transition situations and stave off
crisis -- in places such as Indonesia, Nigeria, Colombia, and Kosovo -- and
prevent OTI from helping to lay the foundations for peaceful democracy.
The Committee reduction from the requested $520 million to $509 million for
operating expenses would make it more difficult for USAID to implement the
much needed improvements in its financial management capabilities and
overall information technology -- a goal the Administration and the
Committee both share -- and would also make it difficult for the Agency to
maintain the staffing level needed to provide adequate program oversight.
In addition, the Committee should be aware that House report language
accompanying the State Department appropriations bill (H.R. 4690)
specifically prohibits the expenditure of $50 million in funds requested by
the Administration for buildings to house USAID employees on embassy
compounds safely. Safeguarding the lives of USAID employees would thus go
unfunded because costs now required could not be absorbed within the
President's request for the USAID operating expenses account.
Finally, while the Administration appreciates the Committee's efforts to
provide sufficient administrative expenses to run USAID's credit programs,
the drastic cut in transfer authority for USAID's Development Credit
Program would impede the Agency's ability to mobilize local private capital
for development purposes, including microenterprises in the countries in
which it works.
Community Adjustment and Investment Program (USCAIP)
The Committee bill provides none of the $10 million requested for the
USCAIP. The funds requested are important if the program, which provides
financial assistance to U.S. communities with significant job losses due to
the implementation of NAFTA, is to become fully productive.
International Technical Assistance Programs
The Committee bill cuts the Administration's request of $7 million by $5
million, or 71 percent. Less than full funding will limit our efforts to
provide technical assistance in support of key reform-minded countries
around the world.
Kyoto Protocol
The Administration opposes Committee bill language relating to the Kyoto
Protocol. The language, which purports to prohibit implementation of the
Kyoto Protocol, is unnecessary, as the Administration has no intention of
implementing the Protocol prior to ratification.
Phalcon Sale to China
The Administration would oppose any amendment that may be offered to
condition the disbursement of $250 million in FMF assistance to Israel
until the Secretary of Defense certifies to Congress that the proposed
transfer by Israel to China of equipment and technology associated with the
"Phalcon" radar system does not pose a threat to the national security of
the United States or has been canceled. We do not view the fencing off of
funds in a situation such as this as an effective way to achieve our
objectives.
Constitutional Concerns
Several provisions of the Committee bill raise constitutional issues. The
Department of Justice has provided views as follows:
- Sections 514 (Surplus Commodities), and 564 (Restrictions on Assistance
to Countries Providing Sanctuary to Indicted War Criminals) purport to
direct the vote of the United States representatives to international
financial bodies. As provisions that purport specifically to direct
the President on how to proceed in negotiations with international
organization could be construed to interfere with the President's
exclusive power to control diplomatic negotiations, these provisions
would be construed as precatory should they be enacted.
- Section 565 (To Prohibit Foreign Assistance to the Government of the
Russian Federation Should It Enact Laws Which Would Discriminate
Against Minority Religious Faiths in the Russian Federation) and the
section entitled "Contribution to the International Development
Association," could be read to infringe upon the President's authority
over diplomatic negotiations. These provisions, if enacted, would
also be construed as precatory.
- Finally, in order to avoid intrusion into the President's negotiation
power and his ability to maintain the confidentiality of diplomatic
negotiations, section 566 (Greenhouse Gas Emissions) would not be
interpreted to require the President to disclose either the contents
of diplomatic communications or specific plans for particular
negotiations in the future.
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