President s International Affairs Budget for 2004
Secretary Colin L. Powell Testimony before the House Committee on Appropriations Subcommittee on Foreign Operations
Washington, DC March 13, 2003
As Prepared
Mr. Chairman, members of the subcommittee, I am pleased to appear before you to testify in support of the President s
International Affairs Budget for Fiscal Year 2004. Funding requested for FY 2004 for the Department of State, USAID, and
other foreign affairs agencies is $28.5 billion.
The President s Budget will allow the United States to:
* Target security and economic assistance to sustain key countries supporting us in the war on terrorism and helping us
to stem the proliferation of weapons of mass destruction; * Launch the Millennium Challenge Account a new partnership
generating support to countries that rule justly, invest in their people, and encourage economic freedom; * Strengthen
the U.S. and global commitment to fighting HIV/AIDS and alleviating humanitarian hardships; * Combat illegal drugs in
the Andean Region of South America, as well as bolster democracy in one of that region s most important countries,
Colombia; and * Reinforce America s world-class diplomatic force, focusing on the people, places, and tools needed to
promote our foreign policies around the world.
I am particularly proud of the last bullet, Mr. Chairman, because for the past two years I have concentrated on each of
my jobs -- primary foreign policy advisor to the President and Chief Executive Officer of the State Department.
Let me take just a moment or two and tell you about my three principal initiatives under my CEO hat. All of you sit on
the larger Appropriations Committee as well as this subcommittee. In that capacity, your strong support for these
initiatives would be much appreciated.
First, we have been reinforcing our diplomatic force for two years and we will continue in FY 2004. We will hire 399
more professionals to help the President carry out the nation s foreign policy. This hiring will bring us to the
1,100-plus new foreign and civil service officers we set out to hire over the first three years to bring the Department
s personnel back in line with its diplomatic workload. Moreover, completion of these hires will allow us the flexibility
to train and educate all of our officers as they should be trained and educated. So I am proud of that accomplishment
and want to thank you for helping me bring it about.
Second, I promised to bring state-of-the-art communications capability to the Department because people who can t
communicate rapidly and effectively in today s globalizing world can t carry out our foreign policy. We are approaching
our goal in that regard as well. In both unclassified and classified communications capability, including desk-top
access to the Internet for every man and woman at State, we are there by the end of 2003. The budget before you will
sustain these gains and continue our information technology modernization effort.
Finally, with respect to my CEO role, I wanted to sweep the slate clean and completely revamp the way we construct our
embassies and other overseas buildings, as well as improve the way we secure our men and women who occupy them. As you
well know, that last task is a long-term, almost never-ending one, particularly in this time of heightened terrorist
activities. But we are well on the way to implementing both the construction and the security tasks in a better way, in
a less expensive way, and in a way that subsequent CEOs can continue and improve on. I need your continued support for
the $1.5 billion for embassy security and construction and the $646.7 million in D funding for worldwide security upgrades.
Now, Mr. Chairman, let me turn to that part of the budget request for which this subcommittee has primary oversight
responsibility.
Funding America s Diplomacy Around the World
The FY 2004 budget proposes several initiatives to advance U.S. national security interests and preserve American
leadership. The FY 2004 Foreign Operations budget that funds programs for the Department State, USAID and other foreign
affairs agencies is $18.8 billion.
Today, our number one priority is to fight and win the global war on terrorism. The budget furthers this goal by
providing economic, military, and democracy assistance to key foreign partners and allies, including $4.7 billion to
countries that have joined us in the war on terrorism.
The budget also promotes international peace and prosperity by launching the most innovative approach to U.S. foreign
assistance in more than forty years. The new Millennium Challenge Account (MCA), an independent government corporation
funded at $1.3 billion will redefine aid . As President Bush told African leaders meeting in Mauritius recently, this
aid will go to nations that encourage economic freedom, root out corruption, and respect the rights of their people.
Moreover, this budget offers hope and a helping hand to countries facing health catastrophes, poverty and despair, and
humanitarian disasters. It provides $1.345 billion to combat the global HIV/AIDS epidemic, more than $1 billion to meet
the needs of refugees and internally displaced peoples, $200 million in emergency food assistance to support dire famine
needs, and $100 million for an emerging crises fund to allow swift responses to complex foreign crises. Mr. Chairman,
let me give you some details.
The U.S. is successfully prosecuting the global war on terrorism on a number of fronts. We are providing extensive
assistance to states on the front lines of the anti-terror struggle. Working with our international partners bilaterally
and through multilateral organizations, we have frozen more than $110 million in terrorist assets, launched new
initiatives to secure global networks of commerce and communication, and significantly increased the cooperation of our
law enforcement and intelligence communities. Afghanistan is no longer a haven for al-Qaeda. We are now working with the
Afghan Authority, other governments, international organizations, and NGOs to rebuild Afghanistan. Around the world we
are combating the unholy alliance of drug traffickers and terrorists who threaten the internal stability of countries.
We are leading the international effort to prevent weapons of mass destruction from falling into the hands of those who
would do harm to us and others. At the same time, we are rejuvenating and expanding our public diplomacy efforts
worldwide.
Assistance to Frontline States
The FY 2004 International Affairs budget provides approximately $4.7 billion in assistance to the Frontline States,
which have joined with us in the war on terrorism. This funding will provide crucial assistance to enable these
countries to strengthen their economies, internal counter-terrorism capabilities and border controls.
Of this amount, the President's Budget provides $657 million for Afghanistan, $460 million for Jordan, $395 million for
Pakistan, $255 million for Turkey, $136 million for Indonesia, and $87 million for the Philippines. In Afghanistan, the
funding will be used to fulfill our commitment to rebuild Afghanistan s road network; establish security through a
national military and national police force, including counter-terrorism and counter-narcotics components; establish
broad-based and accountable governance through democratic institutions and an active civil society; ensure a peace
dividend for the Afghan people through economic reconstruction; and provide humanitarian assistance to sustain returning
refugees and displaced persons. United States assistance will continue to be coordinated with the Afghan government, the
United Nations, and other international donors.
The State Department s Anti-Terrorism Assistance (ATA) program will continue to provide frontline states a full
complement of training courses, such as a course on how to conduct a post-terrorist attack investigation or how to
respond to a WMD event. The budget will also fund additional equipment grants to sustain the skills and capabilities
acquired in the ATA courses. It will support as well in-country training programs in Afghanistan, Pakistan, and
Indonesia.
Central Asia and Freedom Support Act Nations
In FY 2004, over $157 million in Freedom Support Act (FSA) funding will go to assistance programs in the Central Asian
states. The FY 2004 budget continues to focus FSA funds to programs in Uzbekistan, Kyrgyzstan and Tajikistan,
recognizing that Central Asia is of strategic importance to U.S. foreign policy objectives. The FY 2004 assistance level
for Uzbekistan, Kyrgyzstan and Tajikistan is 15 percent above 2003. These funds will support civil society development,
small business promotion, conflict reduction, and economic reform in the region. These efforts are designed to promote
economic development and strengthen the rule of law in order to reduce the appeal of extremist movements and stem the
flow of illegal drugs that finance terrorist activities.
Funding levels and country distributions for the FSA nations reflect shifting priorities in the region. For example,
after more than 10 years of high levels of assistance, it is time to begin the process of graduating countries in this
region from economic assistance, as we have done with countries in Eastern Europe that have made sufficient progress in
the transition to market-based democracies. U.S. economic assistance to Russia and Ukraine will begin phasing down in FY
2004, a decrease of 32 percent from 2003, moving these countries towards graduation.
Combating Illegal Drugs and Stemming Narco-terrorism
The President's request for $731 million for the Andean Counterdrug Initiative includes $463 million for Colombia. An
additional $110 million in military assistance to Colombia will support Colombian President Uribe's unified campaign
against terrorists and the drug trade that fuels their activities. The aim is to secure democracy, extend security, and
restore economic prosperity to Colombia and prevent the narco-terrorists from spreading instability to the broader
Andean region. Critical components of this effort include resumption of the Airbridge Denial program to stop internal
and cross-border aerial trafficking in illicit drugs, stepped up eradication and alternative development efforts, and
technical assistance to strengthen Colombia s police and judicial institutions.
Halting Access of Rogue States and Terrorists to Weapons of Mass Destruction
Decreasing the threats posed by terrorist groups, rogue states, and other non-state actors requires halting the spread
of weapons of mass destruction (WMD) and related technology. To achieve this goal, we must strengthen partnerships with
countries that share our views in dealing with the threat of terrorism and resolving regional conflicts.
The FY 2004 budget requests $35 million for the Nonproliferation and Disarmament Fund (NDF), more than double the FY
2003 request, increases funding for overseas Export Controls and Border Security (EXBS) to $40 million, and supports
additional funding for Science Centers and Bio-Chem Redirection Programs.
Funding increases requested for the NDF and EXBS programs seek to prevent weapons of mass destruction from falling into
the hands of terrorist groups or states by preventing their movement across borders and destroying or safeguarding known
quantities of weapons or source material. The Science Centers and Bio-Chem Redirection programs support the same goals
by engaging former Soviet weapons scientists and engineers in peaceful scientific activities, providing them an
alternative to marketing their skills to states or groups of concern.
Millennium Challenge Account
The FY 2004 Budget request of $1.3 billion for the new Millennium Challenge Account (MCA) as a government corporation
fulfills the President s March 2002 pledge to create a new bilateral assistance program, markedly different from
existing models. This budget is a huge step towards the President s commitment of $5 billion in annual funding for the
MCA by 2006, a 50% increase in core development assistance.
The MCA supplement U.S. commitments to humanitarian assistance and existing development aid programs funded and
implemented by USAID. It will assist developing countries that make sound policy decisions and demonstrate solid
performance on economic growth and reducing poverty.
* MCA funds will go only to selected developing countries that demonstrate a commitment to sound policies -- based on
clear, concrete and objective criteria. To become eligible for MCA resources, countries must demonstrate their
commitment to economic opportunity, investing in people, and good governance. * Resources will be available through
agreements with recipient countries that specify a limited number of clear measurable goals, activities, and benchmarks,
and financial accountability standards.
The MCA will be administered by a new government corporation designed to support innovative strategies and to ensure
accountability for measurable results. The corporation will be supervised by a Board of Directors composed of Cabinet
level officials and chaired by the Secretary of State. Personnel will be drawn from a variety of government agencies and
non-government institutions and serve limited-term appointments.
In FY 2004, countries eligible to borrow from the International Development Association (IDA), and which have per
capita incomes below $1,435, (the historical IDA cutoff) will be considered. In 2005, all countries with incomes below
$1,435 will be considered. In 2006, all countries with incomes up to $2,975 (the current World Bank cutoff for lower
middle income countries) will be eligible.
The selection process will use 16 indicators to assess national performance these indicators being relative to
governing justly, investing in people, and encouraging economic freedom. These indicators were chosen because of the
quality and objectivity of their data, country coverage, public availability, and correlation with growth and poverty
reduction. The results of a review of the indicators will be used by the MCA Board of Directors to make a final
recommendation to the President on a list of MCA countries.
Africa Education Initiative
With $200 million, the United States is doubling its five-year financial commitment to the African Education Initiative
it launched last year. The initiative focuses on increasing access to quality education in Africa. Over its 5-year life
the African Education Initiative will achieve: 160,000 new teachers trained; 4.5 million textbooks developed and
distributed; an increase in the
number of girls attending school through providing more than a quarter million scholarships and mentoring; and an
increase African Education Ministries capacity to address the impact of HIV/AIDS.
Increases in Funding for Multilateral Development Banks (MDBs)
The FY 2004 budget provides $1.55 billion for the MDBs, an increase of $110 million over the FY 2003 request of $1.44
billion. This includes $1.36 billion for scheduled payments to the MDBs and $195.9 million to clear existing arrears.
The request provides $950 million for the International Development Association (IDA) for the second year of the IDA-13
replenishment, $100 million of which is contingent on the IDA meeting specific benchmarks in the establishment of a
results measurement system. By spring 2003, the IDA is to have completed an outline of approach to results measurement,
presented baseline data, and identified outcome indicators and expected progress targets. By that same time, the IDA is
also to have completed specific numbers of reviews and assessments in the areas of financial accountability,
procurement, public expenditure, investment climate, and poverty.
World Summit on Sustainable Development (WSSD)
The WSSD engaged more than 100 countries and representatives of business and NGOs. Sustainable development begins at
home and is supported by effective domestic policies and international partnerships that include the private sector.
Self-governing people prepared to participate in an open world marketplace are the foundation of sustainable
development. These fundamental principals guide the U.S. approach to Summit initiatives. At the 2002 Summit the U.S.
committed to developing and implementing realistic results-focused partnerships in the areas of: Water for the Poor;
Clean Energy; Initiative to Cut Hunger in Africa; Preventing Famine in Southern Africa; and the Congo Basin Partnership.
At the end of the Summit new relationships and partnerships were forged and a new global commitment to improve
sanitation was reached. The FY 2004 Budget supports these partnerships with $337 million in assistance funding.
The U.S.-Middle East Partnership Initiative
The President s Budget includes $145 million for the Middle East Partnership Initiative (MEPI). This initiative gives
us a framework and funding for working with the Arab world to expand educational and economic opportunities, empower
women, and strengthen civil society and the rule of law. The peoples and governments of the Middle East face daunting
human challenges. Their economies are stagnant and unable to provide jobs for millions of young people entering the
workplace each year. Too many of their governments appear closed and unresponsive to the needs of their citizens. And
their schools are not equipping students to succeed in today s globalizing world. With the programs of the MEPI, we will
work with Arab governments, groups, and individuals to bridge the jobs gap with economic reform, business investment,
and private sector development; close the freedom gap with projects to strengthen civil society, expand political
participation, and lift the voices of women; and bridge the knowledge gap with better schools and more opportunities for
higher education. The U.S.-Middle East Partnership Initiative is an investment in a more stable, peaceful, prosperous,
and democratic Arab world.
Forgiving Debt -- Helping Heavily Indebted Poor Countries
The Administration request provides an additional $75 million for the Trust Fund for Heavily Indebted Poor Countries
(HIPC). These funds will go towards fulfilling the President's commitment at the G-8 Summit in Kananaskis, Canada to
contribute America s share to filling the projected HIPC Trust Fund financing gap. The HIPC Trust Fund helps to finance
debt forgiveness by the International Financial Institutions (IFIs) to heavily indebted poor countries that have
committed to economic reforms and pledged to increase domestic funding of health and education programs. In addition,
the President's request provides $300 million to fund bilateral debt reduction for the Democratic Republic of the Congo
under the HIPC Initiative, as well as $20 million for debt reduction under the Tropical Forest Conservation Act (TFCA).
The Administration believes that offering new sovereign loans or loan guarantees to indebted poor countries while
providing debt forgiveness to those same countries risks their return to unsustainable levels of indebtedness a
situation debt forgiveness seeks to resolve.
In order to address this situation, the Administration recently invoked a one-year moratorium on new lending to
countries that receive multilateral debt reduction. U.S. lending agencies have agreed not to make new loans or loan
guarantees to countries that receive debt reduction for one year. The measure will not be punitive. Should countries
demonstrate serious economic gains before the end of the moratorium, lending agencies may, with interagency clearance,
resume new lending. The Administration hopes that this policy will bring to an end the historically cyclical nature of
indebtedness of poor countries.
American Leadership in Fighting AIDS and Alleviating Humanitarian Hardships
This budget reaffirms America s role as the leading donor nation supporting programs that combat the greatest
challenges faced by many developing countries today. The FY 2004 budget proposes a number of foreign assistance
initiatives managed by USAID and other federal agencies to provide crucial resources that prevent and ameliorate human
suffering worldwide.
Fighting the Global AIDS Pandemic
The FY 2004 budget continues the Administration s commitment to combat HIV/AIDS and to help bring care and treatment to
infected people overseas. The HIV/AIDS pandemic has killed 23 million of the 63 million people it has infected to date,
and left 14 million orphans worldwide. President Bush has made fighting this pandemic a priority of U.S. foreign policy.
The President believes the global community can and must do more to halt the advance of the pandemic, and that the
United States should lead by example. Thus, the President s FY 2004 budget request signals a further, massive increase
in resources to combat the HIV/AIDs pandemic. As described in the State of the Union, the President is committing to
provide a total of $15 billion over the next five years to turn the tide in the war on HIV/AIDs, beginning with $2
billion in the FY 2004 budget request and rising thereafter. These funds will be targeted on the hardest hit countries,
especially Africa and the Caribbean with the objective of achieving dramatic on-the-ground results. This new dramatic
commitment is reflected in the Administration s $2 billion FY 2004 budget request, which includes:
* State Department -- $450 million; * USAID -- $895 million, including $100 million for the Global Fund and $150
million for the International Mother & Child HIV Prevention; and * HHS/CDC/NIH -- $690 million, including $100 million for the Global Fund and $150 million
for the International Mother & Child HIV Prevention.
In order to ensure accountability for results, the President has asked me to establish at State a new Special
Coordinator for International HIV/AIDS Assistance. The Special Coordinator will work for me and be responsible for
coordinating all international HIV/AIDS programs and efforts of the agencies that implement them.
Hunger, Famine, and Other Emergencies
Food Aid Historically the United States has been the largest donor of assistance for victims of protracted and
emergency food crises. Thanks to the help of this subcommittee, Congress provided $1.44 billion in urgently needed food
aid, an increase of $260 million over our FY 2003 request. Our FY 2004 food aid request of $1.19 billion will be
complemented with two new initiatives: a Famine Fund and an Emerging Crises Fund to address complex emergencies.
* Famine Fund The FY 2004 budget includes a new $200 million fund with flexible authorities to provide emergency food,
grants or support to meet dire needs on a case-by-case basis. * Emerging Crises Fund The budget also requests $100
million for a new account that will allow the Administration to respond swiftly and effectively to prevent or resolve
unforeseen complex foreign crises. This account will provide a mechanism for the President to support actions to advance
American interests, including to prevent or respond to foreign territorial disputes, armed ethnic and civil conflicts
that pose threats to regional and international peace and acts of ethnic cleansing, mass killing and genocide.
Summary
Mr. Chairman, members of the committee, to advance America s interests around the world we need the dollars in the
President s Budget for FY 2004. We need the dollars under both of my hats CEO and principal foreign policy advisor. The
times we live in are troubled to be sure, but I believe there is every bit as much opportunity in the days ahead as
there is danger. American leadership is essential to dealing with both the danger and the opportunity. With regard to
the Department of State, the President s FY 2004 budget is crucial to the exercise of that leadership.
Thank you and I will be pleased to answer your questions.
[End]
Released on March 13, 2003