[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE FY 2014 BUDGET REQUEST: U.S. FOREIGN
ASSISTANCE PRIORITIES AND STRATEGY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 25, 2013
__________
Serial No. 113-62
__________
Printed for the use of the Committee on Foreign Affairs
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida GRACE MENG, New York
DOUG COLLINS, Georgia LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina TULSI GABBARD, Hawaii
TED S. YOHO, Florida JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
C O N T E N T S
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Page
WITNESSES
The Honorable Rajiv Shah, Administrator, U.S. Agency for
International Development...................................... 5
The Honorable Daniel W. Yohannes, Chief Executive Officer,
Millennium Challenge Corporation............................... 13
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Rajiv Shah: Prepared statement..................... 7
The Honorable Daniel W. Yohannes: Prepared statement............. 15
APPENDIX
Hearing notice................................................... 56
Hearing minutes.................................................. 57
The Honorable Eliot L. Engel, a Representative in Congress from
the State of New York: Prepared statement...................... 59
Questions submitted for the record by the Honorable Edward R.
Royce, a Representative in Congress from the State of
California, and chairman, Committee on Foreign Affairs, and
responses from:
The Honorable Rajiv Shah....................................... 62
The Honorable Daniel W. Yohannes............................... 94
Responses from the Honorable Rajiv Shah to questions submitted
for the record by the Honorable Eliot L. Engel, a
Representative in Congress from the State of New York.......... 97
Responses from the Honorable Daniel W. Yohannes to questions
asked during the hearing by the Honorable Ileana Ros-Lehtinen,
a Representative in Congress from the State of Florida......... 103
Responses from the Honorable Rajiv Shah to questions submitted
for the record by the Honorable David Cicilline, a
Representative in Congress from the State of Rhode Island...... 106
Responses from the Honorable Rajiv Shah to questions submitted
for the record by the Honorable Luke Messer, a Representative
in Congress from the State of Indiana.......................... 110
Questions submitted for the record by the Honorable Joseph P.
Kennedy III, a Representative in Congress from the Commonwealth
of Massachusetts, and responses from:
The Honorable Rajiv Shah....................................... 113
The Honorable Daniel W. Yohannes............................... 115
THE FY 2014 BUDGET REQUEST: U.S. FOREIGN ASSISTANCE PRIORITIES AND
STRATEGY
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THURSDAY, APRIL 25, 2013
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:49 a.m., in
room 2172 Rayburn House Office Building, Hon. Edward Royce
(chairman of the committee) presiding.
Chairman Royce. This hearing on the Committee on Foreign
Affairs will come to order.
Today, we hear from the heads of the U.S. Agency for
International Development and the Millennium Challenge
Corporation, and together these agencies account for $21.3
billion or 41 percent of the President's $52 billion
international affairs budget request. Especially given our
chronic Federal deficit, we must be rethinking how, where, and
why we provide foreign aid. To be justified, the bar is high.
Aid must support our national security, it has to support our
economic interests, it must be efficient, and it has to be
effective. It must advance democratic principles and develop
reliable trade partners. And it must be implemented in a way
that breaks the cycle of dependency.
Over the past decade, USAID has seen its mission chipped
away. The global AIDS coordinator who manages the largest U.S.
global health program in history is housed in the State
Department. The MCC has been created as an independent agency
with a mandate to reduce poverty through economic growth. So it
has been a challenging time for USAID. Indeed, the Bush
administration stood up MCC, Millennium Challenge, as an
alternative, a way to break with the tired, old development
approaches that for decades have failed. But MCC has had its
challenges, too. So-called compacts in the early days were big.
They were complicated. They were overly optimistic. This has
improved some, but MCC must stay true to itself. Getting pulled
into countries where you don't belong could ruin MCC's recipe
for success.
By demanding that countries we are aiding have good
policies in place and by strictly monitoring and elevating
impact, MCC has served as a lab for what does and does not
work. It is getting countries on a path toward graduation from
foreign assistance. And that is why many of the
administration's new initiatives are borrowing from the MCC
model. This is progress if it is well implemented.
The President's proposal to reform the International Food
Program, helping more at less cost, is a bright spot in the
budget request. For much of our food aid, this proposal would
remove conditions that commodities be U.S. bought and U.S.
shipped. Studies have shown that these conditions only make for
a slow and inefficient program and I will add that in terms of
being U.S. flagshipped, those ships are owned by foreign
carriers in Scandinavia anyway.
It is elementary that buying food closer to where the
humanitarian crisis is taking place is faster, it is cheaper,
and it helps save more lives. Only in recent years has the U.S.
been able to experiment with a small pilot program to buy food
close to the crisis. This local and regional purchase effort
has been found to be 11 to 14 weeks faster. It has also been
found to be 25 to 50 percent cheaper. Essentially, the
administration's proposal would end a process called
monetization. This is when Washington buys American grain,
gives it to international charities who, in turn, sell it in
poor countries. Congress' investigative arm called this process
inherently inefficient and found that it resulted in the loss
of $219 million over 3 years. That is an average of 25 cents on
every taxpayer dollar. It is not just the waste that should
bother us, but the harmful impact of dumping such commodities
which can destroy local farming and, in turn, increase the
dependency on aid that we would like to see end.
So I look forward to working with Ambassador Shah, as well
as the ranking member, to advance this ambitious and timely
program. And I will now turn to Mr. Sherman of California to
recognize him for his opening remarks.
Mr. Sherman. Thank you, Mr. Chairman, and I don't know if
any of my Democratic colleagues would like me to yield 1 minute
to them, but if they indicate that, I will. If not, I will give
a hastily created opening statement.
Chairman Royce. In the absence of Mr. Engel, that opening
statement is appreciated.
Mr. Sherman. And its quality will reflect the number of
seconds I have had to prepare it. Our development aid is the
right thing to do and that is reason enough for us to pay for
it. But the American people are also told that it achieves our
foreign policy objectives. One of those objectives is to lift
all the boats in the world because it is in our foreign policy
and economic interest that the countries of the world be able
to afford our products. It is said often by the proponents of
foreign aid that it is the most poor and dispossessed that
become terrorists and wage war against us. But the vast
majority of the 9/11 hijackers came from one of the wealthiest
countries in the Middle East.
One element of improving our image in the world is whether
we tell people who are getting our aid that it is, in fact,
American aid. One thing that disturbs me with our aid with
regard to Syria, but also other places, is that we are
deliberately obscuring the fact that the aid comes from the
United States. The American people will occasionally face a
Hobson's choice, do you provide aid to people who live in
communities where there is such antagonism to America that if
they knew the aid came from the United States they may not want
it? And yet, Syria is, of course, a difficult situation for us.
So I will be asking our witnesses what we are doing to make
sure that the recipients of the aid know that this comes from
the generosity of the American people and where there are
circumstances where in order for the aid to be accepted, in
order for people to be willing to work with us, or in order for
aid workers to be safe, we have to obscure that fact.
Picking up on the chairman's comments about local sourcing,
I will want to hear your comments there. One thing to keep in
mind is that one element of the coalition in support of
American food aid is American agriculture. Do we give up some
of that support in order to be more efficient, perhaps spending
a few less dollars a lot more efficiently to provide food aid
around the world?
As Mr. Royce points out, selling our commodities in Third
World countries as part of a U.S. Government program may drive
prices down and disrupt local markets.
There are also circumstances, particularly where there is
disaster nearby, where we have to buy food where buying a lot
of food, which might seem to help the local economy, can
disrupt it and bid up the cost of food. Those analyzing the
Arab Spring have pointed out that it may have been caused as
much as anything by the increase in food prices in the Arab
world that occasioned world-wide increase in commodity prices.
I yield the remainder of my time to Mr. Bera from
California.
Mr. Bera. Thank you, Mr. Sherman, and thank you, Mr.
Chairman, for calling this hearing. I look forward to the
testimony. Obviously, USAID supports the moral values of our
country. As a nation of abundance, one of our best approaches
to diplomacy is sharing that abundance with the rest of the
world. The Food for Peace program obviously has been a
wonderful program, not only for the agriculture sector, not
only for our farmers, but for the good will of the United
States.
And I look forward to the testimony. I look forward to
looking at how to make this the most efficient program
possible, as well as continuing to support American diplomacy
through the USAID program. So I am very interested in the
testimony and looking for ways that Congress continues to
partner with USAID. So with that, I will yield back.
Ms. Ros-Lehtinen [presiding]. Thank you. Thank you so much.
And the chair is pleased to yield 2 minutes for an opening
statement from Mr. Smith, the chairman of the Global Health
Subcommittee.
Mr. Smith. Thank you very much, Madam Chair. I would like
to express my deepest appreciation to you, Dr. Shah, for your
extraordinary leadership on so many fronts and the emphasis
that USAID is giving to nutrition and food security and in
particular our foreign assistance to ensure proper nutrition in
the first 1,000 days of children's lives--from conception to
the second birthday--to reduce the impact of malnutrition that
leads to a myriad of health problems including the stunted
growth in development of an estimated 165 million under the age
of 5 in the world today.
In September 2010, I joined seven African first ladies in
New York City at a roundtable launch of this initiative. What
was abundantly clear then has only been reinforced by empirical
data that shows that the first 1,000 days of life is a unique,
once in a lifetime window of opportunity for better health and
it is without parallel. Much has been achieved. Obviously, must
more needs to be done.
UNICEF just issued a landmark report, an extraordinary call
for further action, called ``Improving Child Nutrition, the
Achievable Imperative for Global Progress.'' UNICEF's Executive
Director Anthony Lake says, ``The legacy of the first 1,000
days of a child's life can last forever. The right start in
life is a healthy start and it is only the start from which
children can realize their promise and potential.'' He says,
``We owe it to every child everywhere.''
The report further reinforces a growing international
consensus that this nutritional focus deserves a much higher
priority in international development initiatives than was
generally or previously realized. The UNICEF report emphasized
and I quote it here,
``Ensuring adequate micronutrient status in women of
reproductive age, pregnant women and children,
improving the health of expectant mothers, the growth
and development of unborn children, and the survival
and physical and mental development of children up to 5
years of age.''
USAID's Feed the Future's strategic focus on improving
nutrition during the first 1,000 days of life is one of the
most important contributions that our foreign assistance can
make to global health and it works synergistically with
initiatives to mitigate malaria, HIV/AIDS, TB, and other
devastating diseases around the world, but including and
especially on the subcontinent of Africa. I thank you, Madam
Chair.
Ms. Ros-Lehtinen. Thank you very much, Mr. Smith, and our
last opening statement will be made by Mr. Cicilline of Rhode
Island for 1 minute.
Mr. Cicilline. Thank you, Madam Chair, and thank you to our
witnesses and welcome to the committee. I just want to begin by
thanking you for your leadership and work. And as we all know,
our investments in development and aid are not only important
for us to do in terms of our national security, but they are
important because the American people benefit when we help to
create a more stable and more democratic world.
I particularly want to compliment you on the work that is
being done to reform our food aid, the whole USAID Forward,
which I am anxious to hear more about, and the great work that
the MCC has done in Cape Verde and in other places around the
world. And this is an opportunity, I think, for us to really
reinforce our responsibility to make these kinds of investments
around the world, which is one of the great strengths of
America that we bring these values and the democratic values
that we all share. And I just want to compliment both of our
witnesses for your outstanding work and look forward to your
testimony. I yield back.
Ms. Ros-Lehtinen. Thank you very much. And this morning we
are joined by Rajiv Shah, the Administrator of USAID; and
Daniel Yohannes, the Chief Executive Officer of the MCC. Dr.
Shah is the 16th Administrator of USAID. Previously, he served
as Under Secretary of Research, Education, and Economics at
USAID and Chief Scientist at the U.S. Department of
Agriculture. Welcome, Dr. Shah.
Then we will hear from Dr. Yohannes, who was confirmed as
the CEO of the MCC in 2009. Prior to his appointment, he held
positions in the financial services sector, including as the
vice chair of the Management Committee of the U.S. Bank.
Welcome to both of our witnesses. Without objection, the
witnesses' full prepared statements will be made part of the
record, and members may have 5 days in which to submit
statements, questions, and extraneous material for the record.
Gentlemen, please feel free to summarize your statements
and we will begin with Dr. Shah.
STATEMENT OF THE HONORABLE RAJIV SHAH, ADMINISTRATOR, U.S.
AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. Shah. Thank you. Thank you, Chairman Emeritus Ros-
Lehtinen. We appreciate your leadership and your guidance over
the past several years as we have conducted our reforms and
improved our performance. I just want to take this moment to
thank Chairman Royce and Ranking Member Engel for their
leadership and support and Representatives Sherman, Smith, and
others, Cicilline and Bera, who have made important opening
comments.
I want to thank you for the continued partnership to ensure
that America has the capacity to effectively project its values
around the world through our development and humanitarian
activities and to do so in a manner that advances our national
interests while delivering real results. We believe this is an
important moment for development. We are drawing down from a
decade of war and have the ability to rethink and reimagine how
America projects itself and its values around the world.
President Obama and Secretary Kerry, like Secretary Clinton
before him, have repeatedly commented on the importance of
elevating development as part of our national security strategy
and as part of our foreign policy, including as part of our
economic competitiveness strategy.
I note that perhaps the most significant moment I have had
in this role was an opportunity to visit a refugee camp in
Dadaab, Kenya on the border of Somalia during last year's
tragic famine. In that context, I had the opportunity to meet
women who had been through extraordinary challenges in efforts
to bring their literally starving children to safety. Some made
it. Some were able to bring their children. Others were not.
But in that context, I had the chance to see firsthand that
when they walked through the camp and got into a place that was
safe, it was American humanitarian effort and American
development partnerships that, in fact, gave them hope.
And as tragic as that moment was, just a few months ago I
had a chance to visit Mogadishu. And I got a chance to see the
other side of the hope that is taking fruit there. I noted that
the day before my visit USAID had worked with the local
partners to install more than 600 solar street lights and for
the first time in two decades, people were able to come out
peacefully and celebrate in the evenings.
We are replacing piracy on the coast with small-scale
fishing infrastructure and helping people leave IDP and refugee
camps to go back to their communities supporting the
revitalization of their own agriculture in more than 400
communities in that country. That path from dependency to self
sufficiency, and ultimately dignity and growth, is what our aid
and assistance should be about. And I hope we get to discuss
today whether this approach is delivering results. We believe
it is.
Our signature Feed the Future program, which started when
we cut back on agricultural investments in 23 countries to
focus on 19 where we thought we could make the biggest impact,
has reached more than 7 million farm households and is helping
to reduce stunting, as Chairman Smith noted, in more than 12
million children who previously lacked effective nutrition.
In our Feed the Future countries, we are seeing extreme
poverty being reduced at an average annual rate of 5.6 percent,
significantly higher than in counterpart nations. We are
working with the private sector to motivate $3.5 billion of
private investment to become complementary to our investments,
including having raised more than $500 million through the
Development Credit Authority to this purpose. And we are
implementing real policy reforms along the way.
This is just one example of how large scale, modern,
results-oriented efforts can work and deliver critical
outcomes. It is the result of a reform effort we call USAID
Forward which I am eager to describe to you in terms of our
progress today. Thanks to the support of this committee, we
have been able to rebuild our staff, bringing in more than
1,100 Foreign Service Officers to USAID over the course of my
tenure. We have been able to implement an evaluation policy
that is recognized as best in class. And today, you can go to
the Apple app store and download an application on your iPad or
iPhone and pull down more than 180 high-quality evaluations
that describe, in an adulterated, independent manner, how our
programs are working or not working and what we are learning as
we seek to make improvements.
We have expanded our investments in local solutions that
can at times be less costly and more sustainable in delivering
these results. And I am very eager to discuss with you today
our efforts to reform food aid to bring this approach about
efficiency and effectiveness to efforts to reach an additional
4 million children without spending additional resources and to
do a better job of savings lives while renewing the partnership
with American agriculture.
So I thank you for the chance to be here today and look
forward to this dialogue, learning from you and continuing this
important partnership.
[The prepared statement of Mr. Shah follows:]
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Ms. Ros-Lehtinen. Thank you so much, Dr. Shah.
Mr. Yohannes.
STATEMENT OF THE HONORABLE DANIEL W. YOHANNES, CHIEF EXECUTIVE
OFFICER, MILLENNIUM CHALLENGE CORPORATION
Mr. Yohannes. Thank you, Madam Chairman, and members of
this committee for the opportunity to appear today with my
friend and colleague, Dr. Shah, to discuss the Fiscal Year 2014
budget request.
I would like to summarize my statement and submit the full
version for the record.
Ms. Ros-Lehtinen. Without objection.
Mr. Yohannes. Thank you. The present request of $898.2
million would allow the Millennium Challenge Corporation to
continue advancing prosperity, stability and American values
around the world. MCC does this by reducing poverty through
sustainable economic growth. Our partners are rigorously
selected countries that have a track record of sound democratic
and economic governance. We ask them to prioritize their
economic needs and to develop and implement cost-effective
solutions that make a measurable difference.
We are selective about which investments we make because
Americans deserve to see their tax dollars deliver a high rate
of return. We sign compacts with our partner countries spelling
out the terms of our assistance. During compact implementation,
we monitor and evaluate progress and require that programs be
completed in 5 years. We will stop the flow of development
dollars if countries fail to respect human rights or democratic
values. Lastly, we measure program effectiveness to see what
did and did not work. This is part of our evidence-based
approach, and because we are committed to transparency and
accountability we make our findings public.
Madam Chairman, MCC is delivering real achievements for the
world's poor. Transportation networks are stimulating trade
with regional impact. Projects in land security, food security,
energy security and water security are connecting the poor to
economic growth and opportunity. And MCC-inspired reforms are
empowering women, advancing civil rights, and promoting
democratic principles.
Your constituencies are also benefitting as policy reforms
and targeted investments foster an enabling environment for
American businesses to succeed. Last fall, MCC released the
first set of independent impact evaluations. These use rigorous
statistical methods to measure changes in farm and household
incomes of project participants. In El Salvador, for example,
evaluators found that dairy farmers doubled their farm incomes.
In Ghana, the annual crop income of farmers in the northern
region increased significantly relative to the control group
over and above any impacts recorded in other zones. Even when
the findings are not all positive, this helps us improve the
design and evaluation of future projects as we continue to
learn and hold ourselves and our partners accountable.
In December 2012, MCC's Board of Directors selected five
countries as eligible to develop a compact: Liberia, Morocco,
Niger, Sierra Leone, and Tanzania. Our request also includes
funding for threshold programs with Guatemala and Nepal to help
them reform policies and institutions that will move them
closer to qualifying for compacts. The five newly eligible
countries are home to over 100 million of the world's poorest
people. They represent an opportunity to reduce poverty and
advance U.S. interests. These countries have taken concrete
steps to reform, improve governance, and qualify for MCC
compacts. This is what many call the MCC Effect. In fact, a
recent study of government officials in developing countries
worldwide ranked the influence of MCC's policy performance
scorecards greater than any other external measurement system.
MCC's modest request for Fiscal Year 2014 will not allow us
to fund compacts with all five countries, so some will have to
compete for future funding. It is important to note, however,
that the MCC Effect depends on having sufficient resources to
incentivize and sustain policy changes. If our funding is cut,
that effect is diminished.
Madam Chairman, with the committee's support, MCC and our
partner agencies will continue to play a key role in fighting
global poverty.
Thank you, and I welcome your questions.
[The prepared statement of Mr. Yohannes follows:]
----------
Ms. Ros-Lehtinen. Thank you to both gentlemen for excellent
testimony. And I thank Chairman Royce and Ranking Member Engel
for calling this important and timely hearing.
Once again, we are having this hearing amidst the backdrop
of economic uncertainty, both here and abroad. But here, it is
incumbent upon us to be responsible stewards of the tax dollars
of hard-working Americans. We want to ensure that these hard-
earned dollars are spent wisely and strategically, while
advancing our national security interests and addressing our
foreign policy priorities. Which brings me to the
administration's request of $370 million for West Bank and Gaza
assistance.
With Prime Minister Fayyad's resignation casting a greater
shadow in the future makeup of the PA and with the knowledge
that corruption is rampant within that body, Dr. Shah, do you
believe that the PA possesses adequate internal controls to
effectively deliver any U.S. aid? And what assurances have we
received that no money will be diverted to Hamas and other
terrorist organizations?
In addition, Dr. Shah, I continue to be concerned over the
administration's attempts to cut much needed democracy programs
to the Cuban people. Forty pro-democracy activists remain on
hunger strikes in Cuba to call attention to the dozens of
Cubans who are being detained by Castro's state security
forces. These brave heroes are risking their lives, yet we are
cutting their support, which is not prudent, especially at a
time when the crackdown by Castro's thugs is actually on the
rise on the island.
And Mr. Yohannes, with the Millennium Challenge
Corporation, we must ensure that the founding principles of the
MCC continue to be upheld and do not fall under the trap of
providing more and more assistance without an end in sight.
Instead, we have got to focus our efforts on economic growth
and the graduation of countries away from being dependent on
our assistance.
As chairman of the Subcommittee on the Middle East and
North Africa, I note that the MCC compact with Jordan is coming
to an end this year and I wanted to know if you would comment
on that. We will be meeting with the leaders of Jordan later
today. Also, Morocco continues to be an important ally to the
United States and is a strategic partner in the region. We must
further seek ways to reiterate the strong bonds that tie our
two nations and promote our shared values and vision for
stability in that region.
With that in mind, and shifting to another region, Mr.
Yohannes, I am concerned about the MCC's attempt to seek a
second compact with El Salvador. American investors continue to
have problems accessing their assets. There is a lack of
public-private partnerships and endemic corruption issues are
still prevalent in El Salvador. According to reports, the
current Presidential candidate for the FMLN celebrated the
terrorist attack on 9/11 and burned an American flag. So I
believe that the MCC compact should not be used as a political
tool as Presidential elections draw near. I would urge the MCC
to wait until after the elections before proceeding with that
compact.
So, Dr. Shah, if you could address the PA assistance issue
and the Cuba issue.
Mr. Shah. Certainly. Thank you. And thank you for your
strong leadership on the range of issues here. On West Bank/
Gaza, the goals of our effort there are very specific. They are
about creating economic opportunities to underpin a peace
process to support basic social services and we have been able
to reach more than 200,000 people with food and more than
75,000 connected to improved water systems and some core
humanitarian priorities as needs arise.
We do have very strict controls in how any specific
transfers to the Palestinian Authority are conducted and we are
confident that that will continue to go forward as we have run
it in the past, very strict.
Ms. Ros-Lehtinen. Thank you. And on Cuba?
Mr. Shah. And on Cuba, again, the goals there are support
for civil society and democracy with some small humanitarian
efforts and we have worked closely with our partners. We
believe the President's budget of $15 million reflects an
appropriate investment that they have the capacity to
implement. We recognize and take some faith in the fact that
GAO reviewed our approach to implementing this program and very
strongly commented on the effective reports we put in place to
have a clear and compelling implementation strategy for this
effort.
Ms. Ros-Lehtinen. Thank you. And Mr. Yohannes, I have not
left you much time for Morocco, Jordan, and El Salvador, but
maybe you could reply in writing. I don't wish to rush those
answers because they are important. Thank you very much.
I am pleased to yield 5 minutes to our substitute ranking
member for the substitute chair, Mr. Sherman.
Mr. Sherman. Thank you and thank you, Chairman Emeritus,
for your questions particularly with regard to the Palestinian
Authority and democracy in Cuba. I want to associate myself
with your concerns.
NGOs just are there to try to provide relief for
development. USAID focuses also on our foreign policy
objectives.
Administrator Shah, how do you coordinate with the State
Department to get--to have our foreign policy and a foreign
policy and national security objectives affect what you do?
Mr. Shah. Well, thank you, Representative Sherman. I guess
I will offer a general point and a specific one. In terms of
coordination, I think under the Obama administration, under
Secretary Clinton, and now under Secretary Kerry, it has been
both very transparent and much improved. We develop country
assistance strategies for each country. They are carefully
vetted through USAID and State. We jointly approach the
priorities and define them in a specific way and then measure
results and make those outcomes as public and transparent as
possible.
We have implemented a foreign assistance dashboard that has
excellent data from USAID, from State, and from MCC that meets
our International Aid Transparency Initiative commitments and I
believe that has been very strong coordination. One important
example of that, I think, that speaks to your opening comment,
is Syria. We have worked hand in glove to make sure that we
provide now nearly $400 million of humanitarian support inside
of Syria. Sixty-five percent of that reaches opposition-
controlled areas. We are reaching 2.4 million people with
critical services and doing that----
Mr. Sherman. Administrator, I am going to have to go on to
a few other things and ask you to supplement your answer for
the record, although the fact that the flag is not on the bag
in Syria is of great concern to me.
I would like you to, for the record, describe what
regulations or policies you have for your people in the field
as to when they must emphasize that the aid is coming from the
United States, literally put a big flag on the bag of food,
etcetera, and when they are allowed to depart from those
policies.
I would also like you to provide for the record some key
studies or examples to illustrate what is the difference in
cost between a local sourcing on the one hand and U.S.
sourcing, U.S.-flag carrier delivery on the other. I am sure
that there will be a wide variation in the differences in costs
depending upon where the aid is going.
As to Pakistan, we have provided $2.8 billion in
nonmilitary assistance since 2009. The Islamabad Government has
its own objectives, but we need to win over all of the people
of Pakistan and I focused my attention on the Sindh Province.
To what degree does Islamabad determine where our aid is
focused within Pakistan? And then in writing maybe you could
provide a description of what we are doing in the Sindh
Province. Who picks the projects and the locations, you, or the
Pakistani Government?
Mr. Shah. Thank you. Let me just say with respect to
Pakistan first, and Sindh, in particular, we have very
important partnerships. We design them together. We absolutely
retain the capacity and authority to both select projects and
oversee their implementation. One example is we made a
commitment to help them produce 1,200 megawatts of energy. We
have already seen through and successfully produced 800
megawatts and that has been seen as a tremendous success.
Second, we have invested quite a lot of effort in a
comprehensive branding strategy for anywhere in the world.
Pakistan, I think, is a good example where, as a result of our
efforts, we have data that shows that the awareness of American
assistance efforts in Pakistan has gone up three-fold. There
have been 3,000 locally placed----
Mr. Sherman. I am going to try to sneak in one more
question, but please give us that analysis of what is going on
in Sindh. I am somewhat concerned that the administration
request cuts aid to Armenia. I think you ought to increase that
instead. And if you are looking for a source of funds, you
could look at U.S. aid of all types to Azerbaijan, which is
thwarting our development efforts for the area by threatening
to shoot down civilian aircraft that go into Stepanakert's new
airport.
I have talked to Mr. Yohannes about the Javakheti region of
Georgia. We provide very substantial aid to Georgia and I hope,
as I have discussed with him, and now I have a chance to
discuss with you, that a significant part of our aid would go
to that otherwise neglected region.
And I will ask, if I have got a chance, Mr. Yohannes to
describe what is the status of our second compact with Georgia,
and will Javakheti be a strong focus if that compact is
concluded?
Mr. Yohannes. The investment proposal is proceeding
extremely well and should be presented to the board sometime in
June of this year. And Mr. Congressman, please know that there
is some funding set aside for Armenian language and also for a
number of schools in that region.
Ms. Ros-Lehtinen. Thank you very much, Mr. Sherman.
Mr. Smith is recognized.
Mr. Smith. Thank you very much, Mr. Chair. Five minutes and
so many questions to ask but let me just ask you, Dr. Shah, 2
days ago Dr. Frieden testified before my subcommittee. Of
course, you work very closely with CDC and he does head up that
very important agency. We focused on superbugs and the
parasites as well as antimicrobial resistance, and how this is
becoming more and more of a problem.
I would just ask you, if you could to speak to the issue of
tuberculosis. MDR and XDR TB is becoming, it always has been,
but even more of a problem. I know it is probably OMB, but
there is a cut of $45 million in the budget. Hopefully, that
can be restored and maybe even enhanced because it is so
important.
And on the issue of malaria, we had a great discussion,
disturbing discussion, that artemisinin resistance in Southeast
Asia portends a very dangerous possibility of that expanding
into Africa and we also know that bed nets and all the rest of
the efforts that have been Herculean in combating malaria need
to be renewed, new bed nets provided. There are 104 malaria-
endemic countries. You might want to speak briefly to that and
more so for the record.
Secondly, before you came out, we talked about the issue of
child survival and the vital importance of ORT, 1,000 days,
immunizations, all of the important things to save lives. You
had indicated you had just been in India and you might want to
speak to the issue.
A new documentary film was released yesterday. It is
entitled, ``It's a Girl.'' It notes a U.N. figure that there
are 200 million missing girls on the planet directly
attributable to sex selection abortion, and to a lesser extent
infanticide. China and India are the two most egregious
violators. These are gender crimes, extermination of a girl
child in the womb or at birth has not only in and of itself led
to this destruction of girls, but it led to more sex
trafficking and that has sky rocketed in India and in China, in
particular. But you did talk about the nexus with child
survival with some of the health ministers and if you could
speak to that very quickly.
Mr. Shah. Thank you, Chairman Smith, and thank you for your
strong leadership on these issues for decades in child survival
in particular.
With respect to child survival, last year we pulled
together partner countries from around the world to get
everyone to make a commitment to end preventable child death
worldwide. The United States signed the pledge, as did others,
and today, there are more than 150 countries producing data-
driven report cards and score cards tracking progress. There
are about 7 million children under the age of 5 who die every
year. As the President noted in the State of the Union address,
we are committed to taking that down to as close to zero as
possible within two decades.
In India, in particular, I think it is a good example of
this public/private partnership model of work coming together.
We have private companies making investments to track data and
report on outcomes. We have private companies expanding zinc
mining precisely to create zinc syrups and other products that
can be helpful to children who would die otherwise of diarrhea.
We know these efforts are generating results as these ministers
came together to brief me on their progress, but also to
describe how it is correlated with the sex selection problem to
which you speak and how that needs to be incorporated into the
approach.
Let me just say on that though, I think the most amazing
thing is we are not driving this process through big, new
investments of American taxpayer dollars. It is really American
leadership and a focus on science and technology and
measurement and results that is allowing us to partner with
others to achieve that kind of an outcome.
With respect to tuberculosis, I appreciate your comments
and we are very focused on multi-drug resistant and also XDR TB
which I am sure Tom Frieden spoke about. He is one of the
world's experts on that for many decades now.
There are three foreign assistance accounts that provide
our tuberculosis support so we have limited some of our funding
in one account. We are expanding our efforts in HIV-related TB
and in using the Global Fund for AIDS, TB, and Malaria to make
sure that our investments crowd in resources from other donors
and allow for more sustainability over time.
Finally, to your point on malaria, I think this with your
strong leadership, has been one of the big success stories
America can take great pride in. Independent evaluations by
Boston University and others have shown that there are, as a
result of this annual investment we make of less than $700
million, as many as 200,000 children under the age of five who
don't die every year in sub-Saharan Africa because we have an
evidence-based, clearly measured, targeted approach and it
serves as the basis for our efforts to further reduce
preventable child death in that region. So thank you for your
leadership.
Ms. Ros-Lehtinen. Thank you so much, Mr. Smith.
Mr. Kennedy is recognized.
Mr. Kennedy. Thank you, Madam Chair.
Ms. Ros-Lehtinen. I am so sorry. I am out of touch.
Mr. Cicilline.
Mr. Kennedy. I appreciate the thought though.
Mr. Cicilline. I would yield to Mr. Kennedy, of course.
Ms. Ros-Lehtinen. Mr. Cicilline is recognized.
Mr. Cicilline. Thank you, Madam Chairman. I am not sure
whether the proper way to address is Ambassador or
Administrator or Doctor. I am not sure which of those is best,
but I think Ambassador is what I will use.
I want to first thank you for your great leadership at
USAID. And the issue I would like to hear a little bit more
about is that we have seen, and I have certainly learned about,
the decline in personnel at USAID over the last 20 years or so
and kind of the breaking up of some of the functions with
different agencies within the government and the on-going use
of contracting services. The impact that that has had, I think,
has been detrimental to our development and aid efforts around
the world and I think you have recognized that in your forward
AID initiative.
And so I would like you to sort of talk a little bit about
what is the end goal of that, where you are in the
implementation of that, and whether or not there are things
that we can do on the legislative side to protect that kind of
rebuilding of both budgeting policy, and personnel capacities
of USAID, which I think is reflective in some of the questions
that people are asking about: People understanding what role we
are playing in aid and development around the world.
So I will stop there and you can go first with that
question.
Mr. Shah. Thank you, Congressman, and thank you for your
leadership and that accurate reflection of the situation that
emerged over 15 years. Between 1990 and 2005, our staffing was
reduced by more than 40 percent, the policy and budget
activities ceased to exist, and the Agency did engage, in my
view, in quite a lot of no-bid contracting with very little
oversight, often in war zones where that can lead to all kinds
of unintended consequences. So in response to that, we launched
USAID Forward. And it was basically an Obama administration
effort to help USAID rebuild as America's premier development
humanitarian entity. With your and Congress' strong support, we
have been able to hire 1,100 new officers into the Agency
during my tenure. Those officers have helped us fill a 40
percent staffing gap in Africa.
We have, in fact, cut a large number going from almost 800
down to 520 specific programs around the world so we could
focus our efforts in those places where we deliver the best
results. We have reshaped and repositioned our staff, closing
more than 14 missions around the world in order to advance the
focus and selectivity we think is critical to delivering
results.
USAID Forward has three major components: A partnership
component that says we should be working efficiently and
effectively with partners that can create the conditions where
aid is no longer needed. And we released a detailed report
about 1\1/2\ months ago that shows we have in a thoughtful and
rigorous way been able to expand our engagements with local
partners by more than 50 percent over the last few years. We
have a focus on innovation and science and technology. Last
year, we opened, in partnership with seven American
universities, development innovation laboratories. Those
laboratories are producing new technologies and insights like a
Cell Scope that Chairman Smith would be interested in, I am
sure, but it takes an iPhone and connects to a plastic
microscope. It allows you to take essentially a photograph of a
blood smear and then run a software algorithm to diagnose
malaria and hopefully some day tuberculosis. Taking laboratory
diagnostics out of treatment and care in the context where we
work would be a major cost reducer and would allow us to add to
the list of success stories in terms of serious disease
reductions in difficult parts of the world.
And finally and most importantly, there has been an effort
that really attempts to focus on delivering real results. So
today, you can, as I noted, download an application that would
show you all of the evaluation data that we put forward. We
actually produce annual reports on our Feed the Future program,
on our child survival efforts, and on our malaria program. That
just came out a few days ago. And we think it is important to
be transparent with the American people because the capacity to
support this work, I think, is much stronger when people see
clear direct results and they are now able to do that.
Mr. Cicilline. Thank you. I am also very pleased that this
budget reflects the administration's commitment to political,
economic, social, and cultural equality for women and girls and
I would just ask you, maybe in written response, to tell us a
little more about the progress that you are making with respect
to those issues and particularly how investing in gender
equality is helping to reduce poverty and create development
opportunities around the world. I am particularly interested in
learning more about our efforts to reduce violence against
women all over the world and I know that that is work that is
ongoing and would like to hear more about that in written
response.
And just for my last 7 seconds, I wanted to say to Mr.
Yohannes, thank you for second Millennium Compact for Cape
Verde which is helping the country improve water delivery and
sanitation. I know very well the great success that they are
having in Cape Verde and thank you again for your leadership in
that area. And I yield back the negative 10 seconds I have.
Ms. Ros-Lehtinen. Thank you very much, Mr. Cicilline.
Mr. Chabot of Ohio is recognized. He is the chair of our
Asia Subcommittee.
Mr. Chabot. Thank you, Madam Chair. Mr. Sherman has already
raised the issue, but I want to emphasize something that he
said, which is the fact that the U.S. is the most generous
country on earth, by far, in providing aid around the world. I
find it particularly annoying that we oftentimes have to hide
the source of that aid which is the American taxpayer because
we might offend some people who, let us face it, hate America.
We should proudly and prominently display and, in fact, trumpet
the generosity and the goodness of the American people. If this
offends someone and they turn the aid down, fine. We will give
it to somebody else who would appreciate it.
Now, as chair of the Asia and Pacific Subcommittee, I have
a couple of questions; one on Indonesia, one on China, and one
on Vietnam.
Mr. Yohannes, I believe the Millennium Challenge account,
the sustainability, economic growth mission is how all of our
foreign assistance should be modeled because in a number of
cases it is proven to be far more successful than many of the
foreign assistance programs administered through USAID.
In 2006, Indonesia was named eligible for the MCC threshold
program which seeks to reduce corruption by bolstering several
key anticorruption institutions including the Supreme Court and
the Anti-Corruption Commission. Last year, Indonesia's ranking
on the corruption perceptions index unfortunately fell from 100
in 2011 to 118 out of 176 countries polled. Relative to other
countries polled, Indonesia remains in the ``cluster of
countries with significant corruption problems.''
Considering the MCC has been in Indonesia for a few years
now, could you discuss how the MCC has helped fight corruption
and some of the challenges you are confronting in meeting your
program goals? I also understand in this particular case,
Indonesia has been a reluctant partner in implementation which
questions the sustainability of the program once the MCC
leaves. Can you discuss this particular issue and how MCC is
working to address the problem? Thank you.
Mr. Yohannes. Thank you, Congressman. Corruption is a major
obstacle to economic growth and we have absolutely zero
tolerance for corruption. Let me say that all of the countries,
including Indonesia, were selected because they passed our
corruption indicators. We look to see if, in fact, corruption
is institutionalized. We know that despite efforts to cut down
on corruption, corruption exists, not only in Indonesia and in
a lot of our partner countries, but we also know that
corruption exists in developed countries. But we look in terms
of is it institutionalized? Do they honor contracts? Do they
abide by the rule of law? Are the judges independent from the
executive branch of government? Are they creating the best
environments for businesses to succeed?
We look for trends to make sure that they are creating a
very friendly environment for businesses to succeed. Part of
our $600 million compact is to help that country to fight
corruption primarily by helping open procurement opportunities
in their countries. In fact, they had to do a special decree to
set up an MCC affiliate in that country because previously all
aid was funded directly from the government. We don't even only
give a dime directly to the government. In fact, after the
President decreed this new MCC entity, it had to be approved.
This was the first time it was ever done in the country.
Mr. Chabot. Thank you. Let me cut you off there just
because I have two other quick questions I would like to
present to Administrator Shah. One is on China. USAID has
requested $4.5 million in economic support funds for China.
Right now they own an estimated $1.7 trillion of U.S. debt and
they hold over $3.25 trillion in foreign cash reserves. How do
you justify this, particularly when we have a $16.8 trillion
debt?
Finally, relative to Vietnam, we had a staff codel over
there last month. Their human rights record, unfortunately, is
not good. And unfortunately, many would argue is getting worse.
It has been requested an $18 million increase over the past
year. How do you justify that? And you have got 15 seconds to
answer both questions.
Mr. Shah. Thank you. With respect to China, we don't
provide any support to the Government of China. The $4.5
million is specifically to help Tibetan communities improve
livelihoods, promote sustainable development and preserve
cultural traditions and is absolutely no correlation or flow to
the Chinese Government whatsoever.
With respect to Vietnam, I would note that compared to the
Fiscal Year 2012 real number, the Fiscal Year 2014 request is
an overall 12 percent reduction in our investment there. And
our focus there is to maintain our support for the PEPFAR HIV/
AIDS effort as well as to support civil society and in
particular, people with disabilities in addition to the dioxin
remediation activities that have been an ongoing commitment of
the United States.
Mr. Chabot. Thank you.
Chairman Royce [presiding]. Thank you. We will go now to
Mr. Eliot Engel, our ranking member on the committee.
Mr. Engel. Thank you, Mr. Chairman. I would like unanimous
consent to insert my statement into the record, but I want to
just talk about some things. In this difficult fiscal
environment, some reflexively turn to the foreign assistance
budget as the first place to make cuts and I think that is
regrettable. I really wanted to say that because I think it is
important.
I want to commend the administration for its food aid
reform proposal. Our current food aid programs waste millions
of taxpayers' dollars and often harm agricultural markets in
the countries we are trying to help. The Secretary of
Agriculture has said this reform initiative will have little or
no effect on American farmers. So I would like to, after I say
a few more words, I would like to ask Dr. Shah to comment on
the administration's plans to restructure our food aid programs
to make them more efficient and affordable.
I want to say in terms of global health, I was pleased to
see the small overall increase in funding for global health
programs at USAID, especially for PEPFAR. I think that is very,
very important.
Mr. Yohannes, I think it is a testament to MCC that many of
the reforms being pursued by USAID and the State Department are
based in large part on the MCC model. I think that is very,
very good. But I am interested in hearing your thoughts on how
MCC can address my longstanding concern about how we work with
countries that lack data on their respective score cards. As
you know, I have been very disappointed in MCC's handling of
Kosovo, a country recognized by the United States, but not a
member of the U.N. because of MCC's dependency on U.N. agencies
for much of the data it uses. Kosovo was left with multiple,
empty failed boxes on its score card, essentially keeping it
from competing for a compact or threshold program. I thought
this was very unfair to Europe's newest country. And while I
recognize MCC's willingness to accept supplementary data, it is
unclear at best how MCC uses this information to calculate a
country's scores and unlike the rest of MCC's process, there is
nothing transparent about this approach.
So, I really hope MCC addresses this problem so that future
countries in Kosovo's position will be evaluated and able to
compete the same way as all of the countries. And the last
point before I ask both of you to answer the questions is that
Congress has been appropriating unprecedented sums for the
Palestinians and the Palestinian Authority for the past several
years. This is important for maintaining a semblance of
stability in the West Bank in Israeli-Palestinian relations as
well for humanitarian reasons. But it is no coincidence that
this increase in U.S. assistance has occurred during Salam
Fayyad's tenure as prime minister, a man who won great respect
for his emphasis on budget transparency and other aspects of
good governance. Fayyad, unfortunately, in my opinion, resigned
last week and we anticipate a replacement will be named soon.
And I wanted to take this opportunity to urge President
Abbas of the Palestinians in considering Fayyad's replacement
to appoint someone who can continue the positive aspects of
Fayyad's approach. Without continued budget transparency,
further U.S. assistance for the Palestinian Authority will not
be possible.
So I am wondering, first, Dr. Shah, we have met many times
and you know I am an admirer of yours. I support the
administration, like Chairman Royce. I support the
administration's plans to restructure our food aid programs to
make them more efficient and affordable. So could you elaborate
for us the potential taxpayer savings this plan will generate?
Do you believe it will have any impact on American farm income?
And has DoD signaled their concerns about the proposal in
regard to its impact on military readiness and deployment
capacity?
Mr. Shah. Thank you, Mr. Ranking Member, and thank you for
your leadership across the range of these issues and for the
extra efforts you have put in to help us do our work better and
more effectively.
With respect to the food reform proposal, it is geared
around the absolute intention to reach 4 million additional
children without spending additional resources. We recognize
these are very difficult budget times and the Fiscal Year 2014
request is actually in total 6 percent lower than the Fiscal
Year 2012 request.
With respect to what is happening right now, why this is
urgent, because of the incredible commitment to Syria, Syrian
refugees, and the food needs in that context, what limited
flexibility we have had in this program has been absorbed in
that context. As a result, there are many other parts of the
world--post-famine Somalia, the DRC, Pakistan--where we are
reverting kids from programs that have been supported through
the more flexible local and regional procurement program back
to the more restrictive Title 2 program. And in the context of
doing that, we are having to reduce services to hundreds of
thousands of beneficiaries.
We believe we need the flexibility embedded in the proposal
and have studied carefully the impact on American agriculture.
The truth is over the last decade this program has been
shriveling up because of the changing cost structure of the
effort. We used to ship 5.5 metric tons, now we ship 1.8
million metric tons. As Secretary Vilsack has noted, this is
less than \1/2\ of 1 percent of the total value of U.S.
agricultural exports and we are only proposing a diminishment
from 85 percent to 55 percent in terms of tied U.S. commodities
as part of the program. There have been more than a dozen
studies that have validated the efficiency gains of taking this
approach in a number of respects and we believe this will help
us renew the partnership between American agriculture and
American humanitarian communities to maintain American food
security and hunger leadership around the world. Thank you.
Mr. Engel. Thank you. And if the chairman will indulge me.
Mr. Yohannes, I mentioned that it is really a testament to
MCC that many of the forms being pursued by USAID are doing it
in large part based on the MCC model because clear metrics and
transparent benchmarks should be the hallmark of all of our
foreign assistance programs, so I commend you for that.
I would like your comments on Kosovo. It has been a long-
stranding frustration of mine.
Mr. Yohannes. Congressman, thank you. When Kosovo became
independent in 2008, it presented a different challenge for us.
We simply did not have a lot of the indicators from the
indicator companies, but since 2008 we have worked very closely
with all the indicator organizations that provide us with that
information. And today, we have more information about Kosovo
than we ever had in the past. The only agency that is not
providing this information is the United Nations, but we have
been able to get supplemental information directly from them.
We have been actively engaged. I sent one of my best economists
to that country last year and today, they only passed 8 out of
the 20 indicators.
Having said that, we are working with them very closely to
make sure that they understand what needs to be done. And the
good news and the bad news, Congressman, is that they have
graduated to the higher income bracket in the last 2 years and
if they continue to make that progress, they may not be
eligible for our program. But we work with them and I would be
more than happy to work with you, Congressman, on what we need
to do in the future in cases like this one.
Mr. Engel. Thank you. I want to work closely with you on
that. And finally, before I relinquish, I would like to just
add my voice to Mr. Smith's comments about cutting TB funding
by $57 million. It is really extremely short sighted. And I
really think that we have to sufficiently fund our efforts to
treat and eliminate tuberculosis. And I just wish you would
take that into consideration. Thank you very much. Thank you,
Mr. Chairman.
Chairman Royce. Thank you, Mr. Engel. I wanted to go just
for a minute to this issue of food aid reform. And Ambassador
Shah. I am very encouraged by this reform proposal. It is one
that had been made in the prior administration as well or had
been suggested. And I remember talking to Andrew Natsios about
your predecessor in your position about some of the challenges
that he had and his feeling that both hands were tied behind
his back. As he shared with us at one point when we had a
devastating food crisis in Africa and in Asia, he said food aid
often gets there after everyone is dead. He was clearly very,
very perturbed by the circumstances and the delays.
And one of the things that he said is that people can't eat
shipping costs as he was commenting on the reality of the
burdensome way that the system operated. When it takes months
for food aid to arrive or when you have a situation where you
have seen the United States dump food into markets that
undermine local production, and drive the population into
deeper poverty, it really gives you pause in terms of our
current method of operation.
When I chaired the Africa Subcommittee, we had the
President of Mali here. This was probably about a decade ago.
He testified how it was undermining his farmers and how
agricultural subsidies were undermining his society. There is a
negative impact our western agricultural subsidies have on
African farmers and we need to be responsible here. And the
framework for your proposal, I think, has been found to save
time, money, certainly lives, and I think it promises to reduce
the deficit going forward over the next 10 years by about $\1/
2\ billion.
I was going to ask you a question and this goes to the
issue of aid to refugees from Syria. I understand that the
requirement of a U.S. ship recently delayed a food shipment to
Syria and I was going to ask you about that, Mr. Shah.
Mr. Shah. Thank you, Mr. Chairman. And thank you for your
very strong and effective leadership on this topic in
particular.
The Syria crisis has, in fact, precipitated an urgency
around the need for this reform because, in opposition-
controlled parts of Syria traditional food convoys would be
targeted. We have had more than 150 deaths across humanitarian
workers in that context and because, as we have used what
limited flexibility we have had in and around Syria and it has
been effective in that context, we have eliminated our capacity
to use that same flexibility in places like Somalia and the
DRC.
So all of the basic points you have made, I think, are the
core rationale for this effort and we know that we can get a 30
to 50 percent cost reduction on natural product purchases. We
know there is an 11- to 14-week shipping delay in pursuing the
traditional model. We know that shipping costs have increased
by a factor of more than three over the last decade, which is,
in part, why the metric tons of food that we buy and ship have
fallen from 5.5 million metric tons to 1.8 million metric tons.
And as a result, American leadership on this issue around the
world has also fallen. And today, we service less than half of
the beneficiaries we did when President Bush and Andrew Natsios
made a version of this proposal 10 years ago.
I also want to validate and highlight the challenges of the
practice of monetizing food assistance. When we try to support
a wonderful partner like CARE or World Vision or Catholic
Relief Services in the Democratic Republic of Congo by shipping
food from here to there, giving them the food, asking them to
sell it in precisely the markets where they are then turning
around and using the cash to help farmers produce value, they
both create strong disincentives and frankly lose 50 percent of
the value in that case of the resource compared to what we
spent buying the food on this end of the world. So there is a
strong consensus around a data-driven approach here and we are
trying to put this proposal forward in a way that manages and
maintains the important coalitions required to renew American
leadership on hunger.
Chairman Royce. Let me bring up one other issue. I am
deeply concerned about the growing number of land seizures
taking place in the Philippines. Property rights are essential
to an individual's personal and economic security, but it is
also essential in terms of economic growth.
And Mr. Shah, I see the request for development assistance
in the Philippines includes an increase up $6.6 million for a
total of $87.7 million. Will any of these funds be directed
toward securing and protecting property rights and if not, why
not?
Mr. Shah. Our intention is to ensure that we work on the
range of those types of issues in the context of these
programs. I would have to provide more specific details perhaps
in writing.
Chairman Royce. I will be in consultation with you
afterwards.
Mr. Shah. Thank you.
Chairman Royce. Mr. Yohannes, MCC has $434 million in its
compact with the Philippines and that is nearly 2 years into
implementation. And I appreciate your commitment to raising the
land seizure issue with the government there. Is this not an
issue of commitment to rule of law that is central to your
mission?
Mr. Yohannes. Mr. Chairman, it is very important, the rule
of law. And we have communicated our concerns to the
government. I think it is also extremely important for economic
growth, and I know they are very committed in the fight against
corruption. But also, they need to do something different on
this one; and based on the conversations we have had with them,
they understand the problems and they are willing and committed
to finding solutions for this problem.
Chairman Royce. Mr. Yohannes, thank you for your efforts.
And Mr. Shah, we appreciate it. We are going to go now to Dr.
Bera.
Mr. Bera. Thank you, Mr. Chairman. And thank you, Dr. Shah,
and Mr. Yohannes, for being here.
As a doctor, I recognize the important work that USAID does
in global health including seeking to prevent child and
maternal death through the transmission of AIDS, particularly
in the Global Health Initiative and through their PEPFAR
funding, very important programs that have really relieved
human suffering.
Obviously, one of the goals of both the MCC and USAID is to
help the countries that we are interacting with become self
sufficient. That is always one of our goals. In my
conversations with the Government of India and with the State
of California, as we are looking at the issue of food security
and helping India feed its own population, I was astonished at
the amount of food loss that occurs in India. It is upwards to
40 percent of the food gets lost in a nation where hundreds of
millions go to bed hungry every night. A lot of this is around
issues of cold storage and issues of lack of infrastructure for
taking the food and moving it to market.
I would be interested in hearing from either one of you on
some effort working with the Government of India to improve
both the storage issue and then the movement issue.
Mr. Shah. Thank you. I will just address a few of those
points. I think with respect to food security in India, when
President Obama visited during his state visit, he launched a
Partnership for an Evergreen Revolution with Prime Minister
Manmohan Singh. And that partnership was really designed to
have both countries partner along technical and other lines as
opposed to having the United States make significant
investments in India because India has plenty of resources in
its agricultural sector. As a result of that, three things have
happened. One is there has been a much expanded technical
exchange across universities, some from California, like Davis,
along with partner universities in India, many of which we had
a strong role in helping to develop decades ago.
Second, the Indian Government has tried to pass legislation
to allow for American companies like Wal-Mart and others to be
involved in essentially professionalizing the food chain and
creating and bringing the technologies and logistics
capabilities of those companies to address exactly the issues
you raise like cold storage and reducing post-harvest losses.
We have been a technical partner in that effort and between
USAID, USDA, and the Government of India that is moving
forward.
So those types of activities have been very important.
The third and final thing I would note is there are a range
of technology partners in India that have joined this effort
and are now actually partnering with the United States,
investing their own resources in tackling hunger in sub-Saharan
Africa through our Feed the Future partnership. And we think
that is emblematic of a new model where India places a larger
role bringing some of its technology and businesses to partner
with us on this challenge in sub-Saharan Africa.
Mr. Bera. Mr. Yohannes, would you like to respond?
Mr. Yohannes. About 40 percent of MCC's investments are
tied primarily to help many of our partner countries become
food secure. So for example, in agriculture, we not only are
training farmers how to become self sufficient, but also
providing them with a lot of opportunities. We are building
roads so that communities will have access to markets. We are
building cold storage facilities for the foods that have been
produced by those farmers are not spoiled before they ship
overseas. And last year, we just completed five impact
evaluations with five of our countries, which relate to farmer
training. And we are seeing great results.
In the past, most development agencies measured outputs and
outcomes as a result of farmer training. But what we are
learning is to take this one step further. For example, in El
Salvador, dairy farmers doubled their income as a result of our
investments. In Nicaragua, they increased their income by 30
percent. In Ghana, they increased their income significantly,
by 40, 50 percent. And what we do next is we know it is very
difficult to see if our investments are increasing household
incomes, which is very difficult to do, but we will know more
in the next 2, 3 years. But we have seen great results from our
investment with the program.
Mr. Bera. Great. Well, Dr. Shah, Mr. Yohannes, I think that
is exactly what we should be doing. As we help people become--
and countries become more self-sufficient, obviously we help
save lives or governments. We help promote our democratic
values. It also is good business sense. Dr. Shah, as you
pointed out, we have technologies. The university to university
partnerships that are occurring with my home university at UC-
Davis, as well as with our entrepreneurs and innovators,
certainly we can take what we are doing here and export that
and help other countries. So I look forward to working with
both of you. I yield back.
Chairman Royce. We will go now to Mr. Rohrabacher of
California.
Mr. Rohrabacher. Thank you very much, Mr. Chairman. Let us
before we can have an honest discussion about this, people need
to face the reality of what our fundamentals are right here in
the United States. Dr. Shah, do you know what the proposed
level of deficit spending is by the administration in their
budget? Not foreign aid, but the overall, no, you don't.
And Mr. Yohannes, do you know? Well, we are going to at
least expend $1 billion more than we are taking in and we have
been doing this for 5 years. If that is not corrected within a
very short period of time we won't be able to do any of these
noble things that you are talking about. So in order to do our
responsibility here, we need to be confronting that basic
truth. And so how do we do that? Yes, it is a trillion, not a
billion, excuse me. A trillion, billion, billion.
So before every expenditure that we are talking about, we
need to put in front of this, is this worth the United States
borrowing this money from China in order to expend it; wherever
we are going to do it. Because that is what we are talking
about. We are talking about borrowing money from a foreign
power, probably China or Japan, in order to give it to someone
else. And if we can't answer, honestly answer that, we should
not be doing that project. That is for sure.
I personally believe that we need to restructure aid
considering this so that our aid is no longer developmental
aid. And Mr. Yohannes is doing a great job in that; he is
insisting on, with his organization, changes in the fundamental
status quo that has created the hardship in those countries,
rather than just giving aid which will then not do any good at
all because if they are not changing the status quo in the way
you do things, it will go right back to what it was. But we
need to basically restructure our whole concept into
developmental aid; it is no longer our responsibility because
we can't afford it. Borrowing from someone else in order to
help another country develop is not right. And our aid should
be basically emergency humanitarian aid in cases of natural
disasters. That is what we can afford. That is it. Maybe that
is worth borrowing from another country in order to save people
who are in a desperate situation. Otherwise, we are going to
put our own people in a desperate situation.
A couple questions on specifics about your request this
year. Dr. Shah, you visited China last week. We were involved
in a new working group on climate change that was announced,
that U.S. was going to cooperate in developing these new
technology, clean technology projects. We have been borrowing
money in order to give to China for these technologies. Is that
over or does your announcement mean we are going to continue
giving aid to China that we are actually borrowing from China?
Mr. Shah. Thank you, Congressman. Just to clarify, sir, I
was not in China and I am certainly not a part of that.
Mr. Rohrabacher. Thank you.
Mr. Shah. But I would also highlight that our request with
respect to China is solely focused on Tibetan communities and
it is the----
Mr. Rohrabacher. Okay, thank you very much. Good answer.
Let me just announce right here that we should not be giving
aid to countries that are hostile to the United States or can
be seen that their governments have committed actions that have
supported international terrorism.
That is why, Mr. Chairman, I would announce today that I
plan to offer an amendment to whatever foreign aid bill comes
to the floor that suggests that Pakistan should get not one
penny of support for anything until Dr. Afridi, the man who
helped us bring to justice Osama bin Laden, is freed from a
Pakistani dungeon. The American people need to be outraged that
Pakistan is holding Dr. Afridi in the first place after giving
safe haven to Osama bin Laden, the murderer of 3,000 of our
citizens. But for us then to give them aid on top of that is
absolutely unconscionable and so, Mr. Chairman, I will be
offering an amendment. And until Dr. Afridi is freed, we
shouldn't even consider giving them one penny. There are other
countries that are hostile to us and we should not be giving
money to those countries while their governments are hostile to
the United States. Thank you very much.
Chairman Royce. Thank you, Mr. Rohrabacher. Now we go to
Ms. Lois Frankel from Florida.
Ms. Frankel. Thank you very much. I want to just first of
all thank the panel for being here. I want to preface my
remarks first by saying that I do believe that foreign aid is a
good purchase when it is spent correctly. And so with that said
I do want to talk to you about Afghanistan because from what I
have read and what I have heard, is that much of the aid that
we have given, and I am not even talking about military now,
has just been very wasteful. It has lined the pockets of bad
actors. It has been used for bribery. It has made folks there
more reliant on the United States and less reliant on
themselves.
In that regard, I would like you to comment on that, but I
want to ask you some questions to go along with that that you
could also comment on. Who is in charge of development in the
world? You can use Afghanistan as the example. Is it the
military, who seems to be doing similar functions? Is it USAID?
Is it the State Department? What do you measure your outputs,
if you build a school, do you actually determine whether
anybody is getting educated? And how would you avoid the kind
of waste that we have heard about in Afghanistan in the future?
Mr. Shah. Thank you, Congresswoman, and thank you for your
preface because foreign aid is less than 1 percent of our
budget and for that we believe we deliver critical and national
security results and economic opportunities that sustain
American leadership around the world and will for decades.
With respect to Afghanistan, I just want to step back for a
moment and articulate that I believe the collective development
investment in Afghanistan has created some basic conditions
that allow our troops to come home and allow us to aspire for a
stable and secure country that is not a terrorist threat to us
in the future. We have seen annualized rates of growth of 9 to
10 percent over the last several years. We have seen a more
than tripling of electricity access due to large part because
of our specific investments, including helping the Afghan
utility company use mobile payments to increase their own
generation of revenues by more than 300 percent. We have helped
build 1,900 kilometers of road that has contributed directly to
improve economic activity and business investment. And today,
there are 8 million kids in school, including 3 million girls,
when there were zero girls in school under the Taliban. The
fastest and most significant reductions in child death and
maternal death during childbirth anywhere in the world over the
last decade have been in Afghanistan, have been verified by
independent studies that were released last year, and create a
basis for some degree of stability as we look ahead.
That said, sustaining these gains in the context we are in
and fighting corruption are absolutely our priorities. I was on
the call earlier this week with General Dunford and we have a
very close, tightly integrated, civilian-military plan. And we
need to have that kind of tight integration. The military has
matched any civilian development investment and far exceeded
that investment. So doing it together is critical to being able
to deliver those results and being able to fight corruption.
We last year brought together the international community
to pledge sustained support for Afghanistan, but also to
implement what we created as the Tokyo Mutual Accountability
Framework. And if Afghanistan does not meet clear criteria on
free and fair transparent elections on fighting corruption and
recovering assets from the Kabul Bank crisis, on efforts to
provide rights for women and girls, including the 25 percent
quota for women in the Parliament, then we will pull back our
aid and assistance and we will do that in concert with more
than a dozen other international partners. And it is that kind
of serious conditional accountability framework that we believe
is the best way to make sure that we sustain the gains, allow
our troops to come home, and recognize that 2 percent of the
total Afghanistan investment that is represented by development
will ultimately play a much larger percentage impact on whether
there is a stable future for that country and a terrorist
threat to us.
Ms. Frankel. Thank you and I yield, Mr. Chair.
Chairman Royce. We go to Mr. Ted Poe of Texas.
Mr. Poe. Thank you, Mr. Chairman. Thank you, both, for
being here.
Dr. Shah, after sequestration took place, the
administration notified the military that they were going to
cut the military tuition assistance program. Congress rectified
that in the Continuing Resolution. The military assistance
tuition program, as you know, helps military who are currently
on active duty to finish their education. It helps them. It
helps the military, and of course, it helps the state of
readiness. But at the same time, after sequestration took
place, USAID notified Congress that $41 million would be sent
to Pakistan to help pay for scholarships for Pakistani
students. So it just seems to me, we don't have money to help
our own military go to school because of sequestration, after
sequestration takes place. We do have the money to help
Pakistani kids go to school. I can tell you that has not sat
well for a lot of folks.
Can you walk me through this decision and why it was made
and if we are still going to help those students in Pakistan?
Mr. Shah. Thank you. Thank you, Representative, and I
appreciate your comments and leadership on these issues and on
transparency and results reporting in our portfolio work as
well.
I will just say that sequestration has affected USAID and
foreign assistance as severely as any other part of the budget.
And we are recognizing and feeling that every day. There has
been more than $70 million reduction to our food aid and
assistance, more than $400 million reduction to our economic
and development assistance, and nearly $470 million reduction
to our operating expenses. And we, like many other parts of the
government, are putting in place strict measures to achieve
those forced and required savings in the context where 75
percent of our staff are in international context.
Mr. Poe. Excuse me, Dr. Shah, I understand sequestration
has affected USAID, but zero in specifically on the money we
are sending to Pakistan for their students to finish their
education. If you could just zero in on why that decision was
made?
Mr. Shah. I would have to go back and get you a specific
answer, but my understanding would be that the Fiscal Year 2013
budget has been reduced significantly in Pakistan, in fact, far
more than the sequester amount, as well as in many other parts
of the world. I would presume that that was well before maybe
Fiscal Year 2011 or 2012, but let me come back to you on that,
sir.
Mr. Poe. I would appreciate that. As you know, Dr. Shah, I
filed a bill called the Foreign Aid Transparency and
Accountability Act. What it does is have us, the government,
USAID, evaluate foreign aid to see if it is actually working. I
was surprised to learn until I filed that legislation that
generally over the years of foreign assistance we have never
evaluated programs that work and help and programs that don't
work and are still not working. But we are still giving them
money, in some cases because none of this has been evaluated.
The legislation did pass the House last year. The Senate
blocked it. It didn't come up for a vote before the end of the
year.
Could you weigh in on transparency, maybe the bill, maybe
not, but the whole concept of Americans sending money to other
nations, Americans want to see if the money that we are sending
to NGOs and governments, etcetera, is working or not working.
Would you just weigh in on that whole concept of transparency
and accountability?
Mr. Shah. Absolutely, sir. It is essential and I want to
congratulate you on your leadership on that and also express
our very strong support for the bill and in particular the
version that passed in the House.
The administration has made the first ever commitment to
the International Aid Transparency Initiative and Daniel and I
are leading the charge to ensure that all of our assistance is
very transparent in that context. Both of us publish all of our
financial data on the Foreign Assistance Dashboard, which is an
online Web site. The MCC this year published a series of very
important impact evaluations. We at USAID put more than 180
high-quality evaluations on a site where you can download it on
an app and look at the projects. In both cases, the data shows
real, significant, important results in many cases and in some
cases show the programs did not work. In our case, more than 50
percent of the programs were adjusted based on the initial
evaluation data and I know the MCC has the same kind of
learning approach that allows us to be better and more
effective in how we do our work. And so we are all very
supportive of this move. This administration has tried to lead
in this space and I think we have used modern technology to
help to be more transparent than any prior administration ever
has on development and humanitarian investments.
Mr. Poe. Thank you, Dr. Shah. Mr. Yohannes, I was going to
have you weigh in on that, too, but my time is up. So thank
you. I yield back, Mr. Chairman. Thank you.
Chairman Royce. Thank you. We are now going to Mr.
Schneider of Illinois.
Mr. Schneider. Thank you, Mr. Chairman. Thank you, Dr. Shah
and Mr. Yohannes, for joining us and sharing with us your
experience, insights, and priorities.
Let me add the emphasis of the importance of the work you
do, the fact that you are focused on mission, the selectivity
in deciding where to apply our resources, and the
accountability. It is very much appreciated.
One of my areas of concern we see in the Middle East, the
region is having a lot of challenges, in particular between the
Israelis and the Palestinians with the announced resignation of
Prime Minister Fayyad, which in many ways is related to the
support and aid we give.
Moving forward, as Mr. Fayyad moves on or wherever he goes,
I would be interested in your sense of the impact that is going
to have in our aid in the region.
Mr. Shah. Well, thank you for that question. Secretary
Kerry spoke to this specifically and indicated that we are
moving forward with a process that he believes can deliver a
positive outcome over time and our aid and assistance in this
region is very tied to that process. Currently, the priorities
are building the kind of public/private investment partnerships
that can create economic activity and some hopefulness in an
alternative path forward for many in the region.
We continue to pursue both humanitarian assistance in the
West Bank, as well as support for the Palestinian Authority.
The way we structure that program has very careful partner
vetting, so we know who we are giving resources to and who we
are not. It has a very specific degree of financial flows that
Mr. Fayyad help put in place with us where the resources
essentially go to Israeli Bank and first pay off debts that the
Palestinian Authority has with those Israeli banks. So we have
a high degree of confidence, but we will be vigilant about
making sure that the protections we built with Fayyad continue
on and, of course, that will continue to be a condition on our
continued assistance there.
Mr. Schneider. What is the plan moving forward with Fayyad
moving on? The institutions he has started to build, the
frameworks that we are going to provide for potentially a
future state, that those continue to get the development
support they need in the ways you outlined holding people
accountable?
Mr. Shah. Absolutely, and in fact, while we do have a lot
and have had a lot of confidence in Fayyad specifically, these
have been institutional efforts. Every year we go through a
very rigorous process to ensure that these institutional checks
are in place, that we are building these institutions in a
rigorous way, and that we can track and trace our resources. So
it is important that his replacement abides by those principles
and stands for those principles, but if they can't, then we
won't be able to go forward with what we do. But we have every
reason to believe that this focus on building strong,
transparent credible institutions, paying off debts that are
accrued, and doing it in a transparent way will continue to be
the sort of hallmark of this relationship.
Mr. Schneider. Great. Thank you. Shifting gears, Mr.
Yohannes, I am going to my colleague's former question because
what you are doing with MCC, the emphasis on accountability,
help us understand a little more the impact that is having and
looking forward how we will make decisions to maintain
effectiveness in the high return on the investment you guys are
making?
Mr. Yohannes. Our approach to development is like a
business. We use evidence-based, decision-making processes for
how we select countries, how we do constraint analysis, how we
make investment decisions; we primarily invest in those
countries that really accept American values. And also the
investment I expect to have the best return for American
taxpayers.
And once investments are made, we have the most rigorous
evaluation and monitoring to make sure that the investments are
producing the desired results. In addition to what has been
done traditionally by most aid agencies, we go one step further
and do a very thorough impact evaluation by independent
parties. That tells us if, in fact, the investments that have
been made have increased income. And we have seen a lot of
successes. We have also seen what needs to be changed as a
result of what we have seen from the independent impact
evaluations.
I think the most beautiful part of the whole process is we
are learning and building evidence about what needs to be
changed and what is working; what is not working informs in
terms of how we should design and implement future programs as
a result of these rigorous impact evaluations, we are learning,
and we hold our partners accountable. All the programs are
country owned. We only have two American hires on the ground.
They are responsible. They want to replace aid investment with
the private sector. We help them to become self sufficient.
And let me tell you, I was in Tanzania last week and I saw
many of the works that have been completed. Even by American
standards, those are very complex projects. But you know what?
They have been done on time and they want to prosper. And we
are creating commercial and investment opportunities because
these countries are also creating an investment climate that is
very conducive for American companies to invest in those
countries.
So they are great partners and they are the future. And
investments in those countries also will be able to help here
at home for American companies to create more jobs, and they
are our future. Thank you.
Mr. Schneider. Great. Thank you very much. I yield.
Chairman Royce. Go now to Mr. Tom Marino of Pennsylvania.
Mr. Marino. Thank you, Chairman. Gentlemen, thank you for
what you do. You are both extraordinary men. I appreciate that.
Doctor, if I could for a moment, as a prosecutor handling
cases, my theory was follow the money. And it always ended up
in convictions. Would you explain to the taxpayers how
specifically you follow the money to see how it is spent?
Because there is a perception out there that we wire millions
of dollars over to the government into their account and then
we do not see it any more.
Mr. Shah. You know, I very much appreciate both your
prosecutorial background in that question because I think it is
very, very important. The United States, when I started, the
amount of money we provided to foreign governments was 9
percent of our total expenditure. That compares to all of our
peer organizations around the world where they are somewhere
between 60 and 80 percent in terms of how they do that.
We have since moved up to 14.8 percent, still orders of
magnitude behind other partners, but in a more direct and
specific way.
When we do that, we do very careful assessments of
countries that are receiving resources. Often the assessments
will result in us not being able to move forward with
partnering directly with the country. But even more importantly
most of the resources we provide are provided on what we call a
``fixed amount reimbursement agreement,'' which means countries
have to implement a program, invoice the costs they incur, and
send the invoices in. We do a third-party monitoring of ``has
the activity been conducted effectively?'' And then pay the
bill for it per an initial agreement we may have made.
In addition to that, in some difficult to work in settings
like Afghanistan or elsewhere, if we do that, we will also use
geospatial monitoring and data and third party monitoring to
further verify that the resources are being shepherded in an
effective way.
I would also point out because I think there is a
misperception that we provide a lot of direct assistance to the
Governments of Afghanistan and Pakistan. In Afghanistan, almost
the great majority of our investment that is labeled that way
goes to a World Bank trust fund called the Afghan
Reconstruction Trust Fund that has been studied by any number
of partners including Harvard and MIT and found to be very,
very effective at both tracing and tracking resources and
ensuring that it delivers real results.
Mr. Marino. Mr. Yohannes, I know you touched on that a
little bit. Do you care to elaborate on that, please, for me?
Mr. Yohannes. A couple of things. Number one, we don't
transfer a single dime to the government directly. And all
payments are made directly to vendors. We have international
procurement agents. We have international fiscal agents, and we
pay the vendors after all the projects have been completed.
We are very careful with American taxpayers' money. We
don't want to spend even a dime on corruption or on corrupt
practices. So we do have a workshop that we teach to a lot of
our affiliates on how to detect fraud and corruption, and we
have an open line, an anonymous line, that comes directly to
the IG if, in fact, they smell some kind of corruption. But we
have control after control to make sure that American
taxpayers' funds are not spent on corruption or corrupt
practices.
Mr. Marino. And Mr. Yohannes, I believe I read or through a
conversation learned that you have a process whereby you inform
the respective countries or entities that there is a time
period by which the proceeds or the aid may stop because there
is not improvement and because there is not an initiative on
the part of the government. Would you explain that a little
bit, please?
And Doctor, if I have time, I am going to ask you to touch
on that, please.
Mr. Yohannes. We hold our partners accountable. A lot of
the commitments are made for 5 years. And if they don't get it
done within 5 years, then definitely they lose the funding. But
during that 5 years, we expect partners to continue to commit
to good economic governance, continue to be committed to
democratic governance. And in some cases, for example, in
Malawi, about 1\1/2\ years ago, they did not abide by the same
commitment that helped them to qualify for a compact and the
project was suspended.
Mr. Marino. Good.
Mr. Yohannes. And after the new President came in and she
complied with many of our requests, including the request from
her constituencies, the Board lifted the suspension.
Mr. Marino. Thank you. I am going to move on to the Doctor.
Does USAID have such a program?
Mr. Shah. Absolutely. We have actually increased
suspensions and debarments of partners of all kinds by more
than fivefold relative to the prior administration. We have
been very, very focused on accountability in that context and
in fact, just this past weekend, we pulled together all of the
international partners for Afghanistan to use the Afghan
accountability framework to make joint judgments about should
we be continuing to invest or pulling back some resources if
the Afghans do or don't do a certain number of things. And we
think that is a hallmark of good aid effectiveness.
Mr. Marino. Thank you, gentlemen. I yield back.
Chairman Royce. We will go to Mr. Ted Deutch of Florida.
Mr. Deutch. Thank you, Mr. Chairman. Dr. Shah and Mr.
Yohannes, thanks for being with us today and answering all
these questions.
Dr. Shah, I want to thank USAID and State as well for the
vital and often underappreciated role of providing humanitarian
relief to the Syrian people. I agree that the administration
should remain focused on helping those in need and protecting
our aid workers. Obviously, and you have heard here today, the
concern about extremist organizations is growing and there is
some frustration that despite our efforts we still hear that
the Syrian people don't always feel that the U.S. with them.
I would point out the article that sparked much of this
debate included some other important details that haven't been
getting that much attention: The feeding of 210,000 people a
day by flour purchased by the United States, which has helped
resolve the acute shortage of bread. Extra food rations have
been distributed to more than 400,000 people. One hundred
sixty-eight thousand people sleep under U.S.-provided blankets.
One hundred forty-four field hospitals funded by the United
States--this is something we should be proud of. It is the
right thing to do. Can you tell us how you are working to
strengthen our relationship and enhance our reputation with the
Syrian people?
Mr. Shah. Thank you. Thank you very much for asking that
question and referencing that data and information that I think
is critical.
We are addressing those needs in three primary ways. First,
we do try to brand and make visible our humanitarian assistance
wherever possible. In fact, in this context, and one thing the
article did not capture is, we have actually worked with the
Syrian Opposition Council to create television content and
radio content that we use and communicate throughout
opposition-controlled areas, highlighting the efforts. We are
not at all concerned about highlighting the extent to which
America is providing this assistance. In fact, we are seeking
to do that.
What we are trying to do is avoid consequences and attacks
on our humanitarian partners. Many of these NGOs, including
people like Syrian-American trauma surgeons, are taking
tremendous personal risks and we know they are being targeted.
Bakeries in opposition-controlled parts of Aleppo are targeted.
There have been 143 deaths among medical personnel in and
around hospitals who are trying to provide surgical support to
people that have been harmed because of the brutality of the
Assad regime. There have been other deaths of U.N. workers and
others. So with that safety consideration in mind, we are doing
absolutely everything we can.
Furthermore, Secretary Kerry announced this past weekend an
acceleration of our direct support to the Syrian Opposition
Council of $250 million. That investment is designed to help
the SOC with our co-branded partnership deliver basic services
in opposition-controlled areas: Provide everything from garbage
and trash removal to helping to restart electricity grids and
provide generators and fuel. And those are the types of things
that we also believe ought to be co-branded so America is
recognized as standing with people in opposition-controlled
areas in Syria.
Mr. Deutch. Absolutely, right. I appreciate your
highlighting that. In the short time I have, it gets
frustrating sometimes, frankly, to hear some of the criticism
of foreign aid, this false choice that we are given, that we
can invest in schools abroad or we can invest in schools here.
We can invest in infrastructure abroad; we can invest in
infrastructure here. It is a false choice. You rightly pointed
out that our entire foreign aid budget is less than 1 percent
of the overall budget. Both of you, Mr. Yohannes, you are a
good example, too. You work with the poorest countries in the
world, right? Dr. Shah, you are involved--I went to that app
that you referenced and the thousands of projects all around
the world. Tell me in the short time I have left, put the
papers aside, why do you do this? Why does it matter so much
for us to be engaged the way we are every place in the world?
Mr. Shah. I will just say very briefly, this is in our core
national security interest and we have seen this over and over
again. It is in our national security interest in Pakistan
which is a nuclear power about to go through what we believe
will be the first civilian election and hopefully peaceful
transition of power. They have experienced post-independence.
It is in our national security interests in Afghanistan where
it brings our troops home. And as Daniel has spoken about, it
is in our national interest in Africa----
Mr. Deutch. Dr. Shah, I am sorry, I only have a couple of
seconds left.
Mr. Yohannes, speak to that, please.
Mr. Yohannes. The same thing. It is in our national
interest. If you look in terms of many of the countries that
were assisted by us, whether South Korea, Thailand, and Taiwan,
they have now become our major trading partners. We are doing
the same thing. Many of the countries that we are helping today
are going to be our major trading partners in the next 15, 20,
30 years. It is about creating jobs here. It is also about
increasing the dividends, at that same time also helping those
countries and really creating the best trading partners for us
in the future. So it is in our national interest. It is about
our security. It is about our prosperity.
Mr. Deutch. Thank you, both. Thank you, Mr. Chairman.
Chairman Royce. Let us go to Mr. Yoho of Florida.
Mr. Yoho. Thank you, Mr. Chairman, and I appreciate you
gentlemen being here. Thanks for your input. My question, I
guess, is coming from a representative of the people of the 3rd
Congressional District of North Central Florida and I
appreciate Mr. Deutch's comments, that it is only 1 percent.
When I go back to the district, you know, I come from a
district that has 85 percent of the people say they want to end
all foreign aid period. I have got to sell this to them and I
can tell them it is only 1 percent. What difference does it
matter? When I have the mother struggling to send her child to
school at a university, or they have to pay out of state
tuition and she says they can't do it and we have got $41
million going to Pakistan, it is a hard sell. To ask people in
this time and this economy in our country that we are going to
give this aid to them, but yet, you are getting laid off
because of sequestration in our country.
I think of the words of Ronald Reagan, ``Unless a nation
puts its own financial and economy house in order, no amount of
aid will produce progress.'' We have been doing this--I don't
want to say a game--but our policies have been going on for
over 30, 35, 40 years, longer than that, but I have been paying
attention to that. And I see some improvement, but I see a lot
of stuff going in the wrong direction. When you see countries
and I kind of resonate the words of Mr. Chabot that we send
aid, but yet we don't want to tell it where it is coming from.
I stand with him in putting a big red, white, and blue flag on
any aid that goes over there, whether it is a bushel of wheat
or a bushel of corn. That says this product was produced by,
paid for by, and sent by the American people. Because to go
down the path that we are going down it is a hard sell when I
go back and face the people at home.
I know you guys are doing a job that you talk about and you
are putting forth the effort to expand economic development.
You were talking about the economic development in El Salvador,
it is growing 9 percent, or in Nicaragua, yet our economic
development in this country is not going really well. I am
reverberating the frustration that I hear at home.
And you talk about the transparency and the accountability
in these programs and you were saying, Mr. Yohannes, that you
run your organization like a business. And Dr. Shah, you talk
about how you are at the top of your organization. Who holds
the person at the top of those accountable when we come up with
the fraud, the waste, or the abuse? Who answers to that? That
really wasn't a question that you can answer. It is more of a
rhetorical. I guess my question is, what direction do you see
the American Government going as far as foreign aid? And what
should our role really be? Are we looking at economic
development or are we looking at just giving foreign aid that
becomes more of a foreign welfare in which case it does no
good?
Mr. Shah. I believe and the President has spoken about this
very consistently and this budget reflects that these are tough
times. We have presented a budget that is 6 percent lower than
it has been for that purpose.
We also believe that foreign assistance should be about
creating the conditions where aid is no longer needed. This
pathway from dependency to self sufficiency and dignity should
be at the core of what we do. The single most important
reflection of that principle in this budget that has been sent
to Congress by the President is the food aid reform proposal.
It has bold and important reforms embedded in it to allow us to
reach 4 million additional people while also achieving $500
million of mandatory budget savings. It allows us to actually
expand the effectiveness of our effort, saving more lives and
difficult situations, while moderating and having as Secretary
Vilsack has noted, no significant perceptible impact on
American agricultural produce and value.
We know that we can do a better job and when we can, some
of these programs are six decades old, we want to work with you
to have a reform approach that allows us to be more effective
and efficient because I think we all want to be able to go back
to the American taxpayer and say, however, we conducted our
mission, our priority was getting the most value for money we
possibly could.
Mr. Yoho. I am going to cut you off there and I appreciate
that. I do hope you pare those programs down. And Mr. Yohannes,
if you can jump in there for the next remaining few minutes,
seconds?
Mr. Yohannes. My colleague Raj and I have two different
purposes and we both promote U.S. Government interests
worldwide. We work with countries that are poor, but well
governed, countries that have embraced American values,
countries that have taken responsibility for their own growth.
These are countries, we believe, that will be our future
trading partners because they want to replace aid with the
private sector. Countries that are really committed to reform,
which is very difficult to do, but countries that are creating
the best investment climate that will help American businesses
in the long term because we need some trading partners. Like I
said earlier, many of the countries that we supported in the
past are now our major trading partners. With South Korea, we
do over $100 billion in trade investment-related activities.
Mr. Yoho. I appreciate your time. My time has expired and I
will yield what time I don't have back. Thank you.
Chairman Royce. Okay, we will go to Ms. Karen Bass of
California.
Ms. Bass. And thank you, Mr. Chair, for holding this
hearing today. I appreciate it very much. And I want to thank
both of you for your excellent work from your organizations. I
wanted to take issue with my good colleague from California who
says that we shouldn't use tax dollars for development, but
only for emergency aid. And both of you, I think, have been
doing a great job today explaining the work of your
organizations, but I am going to ask you in a minute to give
examples of specific projects instead of the 10,000-foot level.
I disagree with the part that says that we should only
focus on emergency aid because I believe that the work of both
of your organizations really leads to us--well, really leads to
preventing the type of emergencies that take place. And I think
that Mr. Yohannes was just referencing that and I think the
example of Korea is a wonderful example. And I see that future
in Africa.
Dr. Shah, I would love for you to talk about Feed the
Future and Africa's long-term goal, our long-term goal.
And Mr. Yohannes, I first want to thank you for sending
Cassandra Butts to Los Angeles. She did a wonderful job
speaking with small businesses in my district about how this is
about business relationship between the United States and
Africa. So if you could both give an example of how the work of
your organization leads to us in the long term not needing to
have the level of foreign aid that we do now, how development
leads to that with a specific Feed the Future example.
And then Mr. Yohannes, if you could talk about Benin and
the port and regional integration in Africa.
Mr. Shah. Thank you. With respect to Feed the Future, this
was a program that President Obama asked us to create and
implement in order to move people from dependency to self
sufficiency using agriculture to address extreme poverty. We
have implemented the program in 19 countries. We have actually
focused our efforts to cut and eliminate agriculture programs
in 23 other countries. In each country we work in, they adhere
to a set of commitments and reforms, some of which are to
increase domestic expenditure on agriculture by 10 percent,
some of which are to avoid export bands in the sector so that
there can be more trade in investment.
As part of this effort, last year at Camp David, President
Obama brought together the American industry along with this
and said what we can do to accelerate the partnership with
private investment and get companies to commit $3.5 billion of
agricultural investment to these countries. And today, we are
seeing the results. In Ethiopia, in a partnership with USAID
and DuPont and the people of Ethiopia, we are doubling maize
yields and significantly improving access to improved crop
varieties.
Ms. Bass. Thank you. I saw an example in Kenya of U.S.
companies that were essentially lending their scientific
expertise as well as products that was helping Kenya move
forward.
Mr. Yohannes?
Mr. Yohannes. Thank you, Madam Congressman. About 70
percent of our investments is concentrated in the continent of
Africa. We are building the infrastructure for those countries.
We are building the roads, the bridges. Like in Benin, we were
able to spend about $180 million to expand the port. That port
has been able to get additional investment from the private
sector for $20 billion. That port is a lifeline for Benin and
for many of the countries in that region. And as a result of
our investment in Benin, we have seen commerce increase
significantly in the region.
I just came back from Tanzania where we inaugurated a major
road that links Tanzania with Kenya. The same road has also
been used by other countries in the region that are simulating
trade and investment activities. So unless you build the
infrastructures of those countries, the water, the energy, the
roads and so forth, it becomes extremely difficult for some of
those countries to compete globally. And they are competing
today. And again, we are working with my good friend Raj to
help some of those countries to become food secure.
To give an example, in Senegal, where we are building the
infrastructure for irrigation, USAID is providing the training.
In Ghana, where we are building many, many schools, the teacher
training is also being provided by USAID. So we are working in
partnership to make sure that many of those countries become
self sufficient, wending my way from aid to major policy
reforms by creating the best environments for businesses to be
invested in those countries.
So we are complementing AGOA. I know, Madam Congressman,
you have been very much involved in AGOA, and we are a good
complement for AGOA. Without infrastructure, it is very
difficult for many African countries to take advantage of the
opportunities that exist.
Ms. Bass. I appreciate that and we actually just had a
breakfast earlier this morning talking about AGOA. And one of
the things we consistently hear from African countries is that
they want to move beyond aid. It is about trade. To the extent
that the countries are developed around the world, that is more
business for our companies in the United States. Thank you very
much.
Chairman Royce. Thank you, Ms. Bass. We now go to Mr. Cook
of California.
Mr. Cook. Thank you, Mr. Chairman. A previous question was
asked about the corruption of Afghanistan. I went on a visit
over there and I was impressed with actually the military,
impressed with the Afghan Army and some of the aid programs
that had been done. Corruption is a big problem and I know
there is kind of a wink-wink, nod-nod when you start talking
about the poppy and the drug situation, which is almost
analogous to Colombia. I am kind of a cynic on this and I am
very surprised the way things have turned out in Colombia.
Because of the political situation there and this variable,
can you address that, the poppy? Because they are talking about
this year is going to be a bumper crop over there again and
whether money that might be intended for other programs is
going to go to support that underground economy, which is
obviously very, very successful.
Mr. Shah. Thank you. Thank you for your visit to
Afghanistan and for taking the time to engage with our USAID
team and look at those projects. This is part of an important
shared civilian-military effort to help establish a degree of
stability, both economically, socially, and from a military
perspective to allow our troops to come home and to reduce the
long-term national security threat.
Poppy is a huge challenge. We have seen big ups and downs.
The core drivers and we have learned this, from Peru, from
Colombia, from other areas where we have had successful
alternative agriculture or alternative development programs,
the core drivers of getting people out of that illicit economy
into the licit one is making the opportunities in the licit
economy more productive and more economically rewarding.
So one of our major areas of partnership and investment has
been in agriculture in Afghanistan. We help with improving
wheat yields, for example, bringing more high-value
agriculture, working for export opportunities to the Gulf and
to other countries in the area. And really one of the few
things that has been really effective at getting people out of
poppy and these other areas is creating those market and
economic opportunities that are safe and legal and financially,
fiscally rewarding to small-holder producers and to small
businesses there.
And we have seen some real progress in that setting, but it
continues to be a major challenge.
Mr. Cook. And thank you for that answer, but can you also
address the fact that, I was under the assumption, which is
always dangerous, that the poppy was going to the Western
countries, but now the big market or part of it is Russia and
that avenue is somewhat open. If you could just address that
very briefly, too.
Mr. Shah. Sure. That is accurate and part of our approach
is to help manage and bring much more transparency to--and
fight corruption at trading posts and border crossings, both
for combating poppy trade and revenue flow from that. But also
just to help the Afghan Government collect real Customs revenue
in a transparent way so they can have domestic revenue replace
aid over time as they really take on the sustainability efforts
on their own. So all those things go together and cause a real
focus on regional trade and that brings you quickly to trade
and Customs posts.
Mr. Cook. Thank you very much for answering my questions. I
yield back.
Chairman Royce. We will go now to Gerry Connolly of
Virginia.
Mr. Connolly. Thank you. Thank you, Mr. Chairman, and
welcome to both of our panelists. It is a great honor to be the
very last questioner out of 18.
Mr. Shah, the Foreign Assistance Act was written in 1961.
It is 52 years later. I heard you talk about the need to sort
of revisit the way we do business. The goals that maybe were
relevant half a century ago, but maybe less so today. I assume
by extension from those remarks you would be amenable to a
rewrite of that Act?
Mr. Shah. Absolutely. Secretary Kerry in front of the panel
also implied an enthusiasm to see new authorizing legislation
go forward. We would be eager to work with you on that.
Mr. Connolly. You are familiar with the effort our former
ranking member and former chairman of this committee, Mr.
Berman, and I undertook and in fact introduced legislation in
the previous Congress.
Mr. Shah. Yes.
Mr. Connolly. And do I understand from your remarks that
you are committing the agency and yourself to working with us
on that reform legislation as we get ready to reintroduce it in
this Congress.
Mr. Shah. Yes.
Mr. Connolly. We really want to work with you. We see it as
something we hope will streamline efforts and more logically
align the goals and directives. I have the privilege of, if you
can call it that, having been one of the only surviving human
beings who wrote the last foreign aid authorization bill that
became law, 1986. I was a staffer in the Senate. If I were the
aid administrator, I might like the existing law because there
were over 250 objectives and priorities and goals and
everything else because we just added to it over the 50 years.
But I am not sure it is a good way to really go forward.
And so I very much welcome your statement because we want
to make sure aid is part of the process; and it is my
understanding that, in the past, aid has maybe been sidelined
or stayed on the sideline. I don't want to see that. We are
trying to be partners with you on the legislative end to enable
the agency to go forward. So thank you.
Mr. Shah. Thank you.
Mr. Connolly. I look forward to working with you and your
team as we move forward. We are getting ready to reintroduce
the bill and I have already talked to the chairman about
hopefully at least having some hearings perhaps about aspects
of it and see if we can't try to do this on a bipartisan basis.
Let me ask, what is your understanding, Dr. Shah, and Mr.
Yohannes, yours as well. You and I had a private conversation
about this, but I have to admit I am not quite sure I fully
understand the different missions between your two
organizations. So very briefly if you can share that with us
and then tell us how you coordinate. How do you make sure that
if you are pulling out of a country, they are not getting in
it, if there is a substantive reason for withdrawal and how do
you make sure that we don't have resources competing against
each other or contradicting each other in a structural way?
Mr. Shah. Let me echo Secretary Kerry on this one. As
Secretary Kerry has noted publicly and privately, we have the
same mission. Our mission is to elevate the role of development
and humanitarian assistance in the context of our foreign
policy and in advancing our national security agenda. To do
that, we have to have a broad range of tools and capabilities
that can be applied in setting those as diverse as Cape Verde
and Afghanistan. And so, the MCC, the broad range of
capabilities that USAID has through different programs
including Food for Peace, which has been an important part of
today's conversation; OPIC, the Overseas Private Investment
Corporation; the Export-Import Bank, which are playing a
critical role on energy efforts in sub-Saharan Africa, are all
important components of that and we all seek to work together
toward that ultimate and singular and the exact same mission.
Daniel can speak to some really good examples where we have
worked hard to make sure that we have an integrated approach in
the field as well.
Mr. Yohannes. We both work to promote the government's
interest. We have a very specific, narrow mission, which is, we
work with countries that are poor, but those that are well
governed, countries that have embraced our American values,
that are committed to good governance, economic governance,
democratic governance, and countries that are committed to
investing in their constituencies. These are countries we want
to be the next emerging markets. So we have a scorecard system
they have to pass--many of those scorecard indicators in three
buckets--in order to be considered for our program.
In terms of coordination, Raj and I work very closely. We
talk almost on a weekly basis. A lot of our people speak on a
weekly basis, or daily, and many of our projects are well
coordinated. Like I talked about earlier in Ghana, we are
building a school, they are providing teacher training. And in
some cases like in Jordan, the water project that was begun
earlier by USAID, is now a scale-up from what they have begun.
Moldova, the same thing. We are doing the infrastructure for
water and they are providing the department training. So, we
work very closely making sure that we don't duplicate each
other but rather complement each other.
Mr. Connolly. Thank you, and Mr. Chairman, if you will
allow me just 30 seconds since I am the last----
Chairman Royce. Mr. Connolly, I will allow you several
minutes.
Mr. Connolly. You are wonderful, Mr. Chairman. Thank you.
Two points I would like to share with you, Mr. Shah. One is the
enthusiasm expressed by the chairman and the ranking member for
your Food for Peace reform, notwithstanding, a word of caution
as somebody who has been writing and supporting foreign
assistance for over 30 years. The coalition for foreign aid is
very fragile. And there are political aspects to what you
propose that with the best of intentions could actually damage
that fragile coalition. And I strongly urge you and the
administration to carefully vet that as you move forward
because you may win the battle and lose the war. You heard on
this committee people express well, we just can't afford
foreign aid. I agree with Ted Deutch, it is a false choice, but
there are lots of people here and back home, a lot of Americans
are under the impression that we can balance the budget just by
cutting foreign aid. You hear it all the time at town hall
meetings.
It is a fragile coalition getting votes up here to support
what you are both doing and we must be cognizant of the impact
of reforms that may do good, but that also fracture that
coalition.
And the second thing I would commend to you both is we have
to have a better narrative on success. Surely we have more to
talk about than Taiwan and South Korea after a half century, 60
years of actually making these investments. What works? What
doesn't? Give us some success stories that we can talk about.
That is why we have got to do it.
It isn't always self evident that it is in our national
interest. We can repeat that, but there is certainly a strain
of isolationism that has always been with us in the United
States that does not accept that rationale. The more we can
point to efficacy, ``here is what we were able to do in
reducing poverty and improving food production, extending
lifespan and ending this disease or that disease and actually
creating a market economy that is now a full-fledged member of
the international community.'' Those are very important success
stories, especially if we can tie them to the investments we
make in your respective agencies.
Thank you, Mr. Chairman. I really appreciate your
graciousness.
Chairman Royce. Thank you, Mr. Connolly. I will remind you
it is only 45 percent of the Food for Peace account that they
are talking about, so it is a compromise that these gentlemen
are suggesting and that is in the budget, a compromise which
will make that 45 percent far more costly to the overall
budget. So again, your other point was those who are concerned
about the cost, this is a reduction in cost, but those who are
concerned about the humanitarian impulse here, it gets the aid
there faster, more efficiently and does not depress the local
markets that impacts the local farmers.
I just wanted to take a moment and thank both of our
witnesses and indicate to you both we look forward to working
together, not only on food aid reform, but also on greater
transparency, greater effectiveness and we thank you again for
your willingness to come up and testify and we stand adjourned.
[Whereupon, at 11:58 a.m., the committee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing RecordNotice deg.