[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE AGENCY FOR INTERNATIONAL DEVELOPMENT
AND THE MILLENNIUM CHALLENGE
CORPORATION: FISCAL YEAR 2012 BUDGET
REQUESTS AND FUTURE DIRECTIONS IN FOREIGN ASSISTANCE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
MARCH 16, 2011
__________
Serial No. 112-11
__________
Printed for the use of the Committee on Foreign Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
______
U.S. GOVERNMENT PRINTING OFFICE
65-301PDF WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON FOREIGN AFFAIRS
ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California
DAN BURTON, Indiana GARY L. ACKERMAN, New York
ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California BRAD SHERMAN, California
STEVE CHABOT, Ohio ELIOT L. ENGEL, New York
RON PAUL, Texas GREGORY W. MEEKS, New York
MIKE PENCE, Indiana RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina ALBIO SIRES, New Jersey
CONNIE MACK, Florida GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas DENNIS CARDOZA, California
TED POE, Texas BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio ALLYSON SCHWARTZ, Pennsylvania
BILL JOHNSON, Ohio CHRISTOPHER S. MURPHY, Connecticut
DAVID RIVERA, Florida FREDERICA WILSON, Florida
MIKE KELLY, Pennsylvania KAREN BASS, California
TIM GRIFFIN, Arkansas WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
VACANT
Yleem D.S. Poblete, Staff Director
Richard J. Kessler, Democratic Staff Director
C O N T E N T S
----------
Page
WITNESSES
Rajiv Shah, M.D., Administrator, U.S. Agency for International
Development.................................................... 13
Mr. Daniel Yohannes, Chief Executive Officer, U.S. Millennium
Challenge Corporation.......................................... 22
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Ileana Ros-Lehtinen, a Representative in Congress
from the State of Florida, and chairman, Committee on Foreign
Affairs: Prepared statement.................................... 4
Rajiv Shah, M.D.: Prepared statement............................. 16
Mr. Daniel Yohannes: Prepared statement.......................... 24
APPENDIX
Hearing notice................................................... 66
Hearing minutes.................................................. 67
Questions submitted for the record by the Honorable Ileana Ros-
Lehtinen and written responses from:
Mr. Daniel Yohannes............................................ 69
Rajiv Shah, M.D................................................ 95
Written responses from Rajiv Shah, M.D., to questions submitted
for the record by the Honorable Gus Bilirakis, a Representative
in Congress from the State of Florida.......................... 126
Written responses from Mr. Daniel Yohannes to questions submitted
for the record by the Honorable Dana Rohrabacher, a
Representative in Congress from the State of California........ 135
Written responses from Rajiv Shah, M.D., to questions submitted
for the record by the Honorable Albio Sires, a Representative
in Congress from the State of New Jersey....................... 136
Questions submitted for the record by the Honorable Donald M.
Payne, a Representative in Congress from the State of New
Jersey, and written responses from:
Mr. Daniel Yohannes............................................ 137
Rajiv Shah, M.D................................................ 138
Questions submitted for the record by the Honorable Jeff Duncan,
a Representative in Congress from the State of South Carolina,
and written responses from:
Mr. Daniel Yohannes............................................ 172
Rajiv Shah, M.D................................................ 174
THE AGENCY FOR INTERNATIONAL DEVELOPMENT AND THE MILLENNIUM CHALLENGE
CORPORATION: FISCAL YEAR 2012 BUDGET REQUESTS AND FUTURE DIRECTIONS IN
FOREIGN ASSISTANCE
----------
WEDNESDAY, MARCH 16, 2011
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10 o'clock a.m.,
in room 2172 Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the committee) presiding.
Chairman Ros-Lehtinen. The meeting will come to order. I
will recognize myself and then my good friend, the ranking
member Mr. Berman for 7 minutes each for our opening
statements. Then I will recognize any of our members who would
like to offer an opening statement for 1 minute each.
We will then hear from our witnesses and I ask that you
please summarize your prepared statements in 5 minutes each
before we move to questions and answers with our members under
the 5-minute rule.
Without objection the witnesses' prepared statements will
be made a part of the record and members may have 5 legislative
days to insert statements and questions for the record subject
to the limitations of the rules.
The Chair now recognizes herself for 7 minutes.
There is little that is discussed here in the Congress
these days that does not immediately run up against the issue
of our Nation's fiscal situation. Today's hearing is no
exception. Our Government's vast annual deficit, the rapid run-
up of the public debt, the borrowing and, indeed, the outright
printing of dollars to pay that deficit and debt, have become
extraordinarily critical issues.
This is not simply a crisis at the Federal level, but also
a crisis for state and local governments, and many individual
Americans as well. On a personal note, our county mayor was
recalled by 88 percent of the electorate based on this budget
crisis just yesterday.
It is a crisis that appears in newspaper stories every day,
with headlines like: ``From California to New York, States are
Facing Monstrous Deficits, and Cities in Debt Turn to States,
Adding Strain.''
With such stories in mind, it is easy to understand why the
American people are demanding that we carefully scrutinize our
Government spending, both domestic and foreign, both large and
small.
A rate of increasing our budgets, such as the 2-year
increase of an estimated 57 percent in USAID's budget between
Fiscal Year 2008 and Fiscal Year 2010 or the estimated 147
percent increase in USAID's budget between Fiscal Year 2001 and
Fiscal Year 2010, is just not feasible in light of what is
happening here at home. As I said in our hearing with Secretary
Clinton this month, we must make difficult decisions in light
of the unfortunate fiscal priorities facing us.
Those who complain about diminished levels of U.S. aid
funding need to ask themselves: How much less would an
insolvent United States be able to do? There are, in fact,
freezes or cuts that can be made that would actually help us
maintain our efforts to help the most impoverished people
abroad who truly need our help.
We can take greater steps toward using small-scale
education vouchers of just a few dollars or less to help
parents in poor countries choose their children's schools. This
will help them get around the wasteful, corrupt bureaucracies
that tend to expend large sums while not always providing poor
children with a good education.
If we cut our Development Assistance funding, we can move
some of that funding to USAID's Development Credit Authority
program, which has a proven track record of leveraging about
$28 dollars in private funds in support of development for
every dollar provided by USAID.
As we cut elsewhere, we can move more funding to USAID's
Global Development Alliance program, which, again, leverages
private capital in support of development, focusing on
partnerships with corporations and major private donors, who
can contribute large, matching sums again cutting our
Government's cost.
We can freeze further increases in personnel. USAID's
staffing alone has already grown by an estimated 22 percent in
just the past 2 years, for example. We can require the reform
of the several international development aid agencies run by
the U.N., ending the waste caused by staffing and program
duplication that ultimately comes out of American taxpayers'
pockets.
We can insist that governments in developing countries that
receive our assistance be as committed to helping their own
people as we are, and end purchases of things like self-
flattering monuments that fly in the face of our taxpayers
efforts to help. We should not be giving aid to corrupt,
unaccountable governments to begin with. The focus should be
from the grassroots up.
Our hearing this morning is about the budget requests for
USAID and MCC and the need to ensure maximum return on our
investments. This hearing also concerns the lessons learned
since USAID's creation 50 years ago, as well as the need for a
new assistance concept, which led to the creation of the
Millennium Challenge Corporation in the year 2004.
In that regard, concerns have been raised as to whether the
MCC will remain a unique agency that focuses on economic growth
and the graduation of countries from dependence on our aid, or
if it will begin to fall into the trap of providing more and
more assistance agreements with foreign governments,
irrespective of U.S. requirements or priorities.
After more than five decades of providing aid to other
countries, we know that assistance can produce dependency and
corruption. Ms. Dambisa Moyo, an economist and critic of our
current assistance program, made these comments in 2009:
``The African Union estimated that corruption was
costing the continent [of Africa] $150 billion a year,
as international donors were apparently turning a blind
eye to the simple fact that aid money was inadvertently
fueling graft.''
And she continues:
``A constant stream of `free' money is a perfect way
to keep [a] bad government in power. The aid system
encourages poor-country governments to pick up the
phone and ask the donor agencies for [the] next capital
infusion.''
And she ends with this:
``It is no wonder that across Africa, over 70 percent
of the public purse comes from foreign aid.''
We know that economic growth is ultimately the only way
that development in impoverished countries can be sustained
after our assistance programs end and, at some point, they need
to end.
Today, we have before our committee two leaders of United
States aid agencies who are working hard to meet the challenge
of preventing cycles of aid dependency and to create the kind
of economic development in those countries that will do just
that, develop while helping those most in need.
At this point I would like to recognize my friend and
colleague, Congressman Berman, the ranking member of this
committee, for his opening statement.
[The prepared statement of Chairman Ros-Lehtinen
follows:] deg.
Mr. Berman. Thank you very much, Madam Chairman. I do
appreciate the opportunity to review the Fiscal Year 2012
budget request for USAID and MCC, and to explore the steps each
agency is taking to make our aid programs more effective and
more efficient. I want to welcome both Dr. Shah and Mr.
Yohannes here.
This is Mr. Yohannes' first chance to testify before the
committee.
When Dr. Shah last testified before this committee, he had
only been in the job for a few months. Immediately he was
caught up in coordinating the U.S. Government's response to the
earthquake in Haiti. Understandably much of the hearing was
devoted to examining the status of those relief efforts.
At that time the administration was also in the midst of
conducting its QDDR and simultaneously a review of development
policy, so we did not get much of a chance to get into the
specifics about his plans for reform.
Thankfully, Dr. Shah did not let the press of all this
other business deter him from pursuing an overhaul of the
agency. In the year since he last appeared before us, he has
embarked on a very ambitious reform agenda aptly named ``USAID
Forward.''
The aim of this effort is to change fundamentally the way
the agency does business. It encompasses reforms in nearly
every aspect of the agency's programming and operations. Under
Dr. Shah's leadership USAID is taking aggressive steps to
harness science, technology, and innovation in support of
development. He is exploring new ways of partnering with the
private sector to leverage resources and achieve break-
throughs.
Likewise, the MCC finds itself at a pivotal juncture.
Created by President George W. Bush as a new approach to
development, the MCC forms partnerships with poor but well-
governed countries to eliminate constraints to growth.
Given that the MCC was established by Republicans for the
explicit purpose of creating a new model for development
assistance, I find it astonishing that H.R. 1, the Republican
CR, slashes funding for the MCC by nearly 30 percent from the
Fiscal Year '10 enacted levels. Even the development credit
authority--cited by my chairman as a small but effective way of
leveraging dollars--is cut in H.R. 1, not expanded.
Now that the MCC's first two compacts have been completed
in Honduras and Cape Verde, and final evaluations are being
conducted, we have an opportunity to assess the added value of
the MCC. Many aspects of the MCC's innovative model in such
areas as country ownership, transparency and accountability,
and managing for results are already being adopted by other
foreign affairs agencies as a result of the QDDR.
Yet, the MCC has not been content to sit on its laurels. It
is continually proposing new ways to improve and strengthen its
effectiveness including a new initiative to expand partnerships
with the private sector.
I share the view of everyone on this committee that in this
difficult economic climate we have an obligation to ensure that
every tax dollar is put to the best possible use and that we
are receiving a meaningful return on our investments. No area
of the budget should be exempt from scrutiny.
I must say that I am concerned by the unrealistic
expectations, often based on misinformation, that cuts in
foreign assistance will fix the deficit. A poll last fall by
the Kaiser Family Foundation found that four in 10 Americans
erroneously believe that foreign aid is one of the two biggest
areas of spending in the Federal budget.
A December poll by the University of Maryland showed that
when asked to estimate the amount of Federal budget that is
devoted to foreign aid, the average American says 25 percent.
When asked how much would be an appropriate percentage, the
median response is 10 percent. Of course, what we actually
spend is about 1 percent.
What is particularly interesting about this poll is that
over the 15 years it has been conducted, the amount Americans
think is spent on foreign aid has gone up from 20 to 25
percent, while the amount they think should be spent has
remained steady at 10 percent. Even during this time of
economic distress, people still think we should be spending
about 10 times as much on foreign assistance as we actually
are.
As members of this committee, I think we have a special
obligation to exert leadership to help correct some of these
misunderstandings. The U.S. Agency for International
Development and the Millennium Challenge Corporation provide
the bulk of our development assistance around the world. They
use different approaches, work with a different though
sometimes overlapping pool of countries, but they both seek to
reduce global poverty by promoting economic growth.
Reducing global poverty is not a matter of altruism, though
it would be the right thing to do even if it brought us no
direct benefits. The truth is that addressing hunger, disease,
and human misery abroad is a cost-effective way of making
Americans safer here at home. Our foreign assistance benefits
us as much as it does our local partners.
Let me offer a few examples. Anyone who had the experience
of suffering the H1-N1 flu last year, which fortunately turned
out to be much less deadly than we feared at first, can tell
you that it is worth investing in surveillance, detection and
prevention systems abroad.
For just pennies a dose, we can rid the world of polio,
which was one of the most dreaded childhood diseases of the
20th Century in the United States.
More than one in every five U.S. jobs is linked to exports
and imports of goods and services, and approximately half of
all U.S. exports go to developing countries. If those countries
are not stable enough to serve as reliable trading partners, we
lose our overseas markets. And if these people don't have a way
of earning income, they won't be able to afford our products.
Dramatic increases in food prices in 2007-2008 created a
global crisis and led to political and economic instability
around the world. If we are not helping to increase global food
production, addressing the impact of climate change, and
enabling couples to plan the size of their families, these
problems are only going to get worse.
The recent democracy movements across North Africa and the
Middle East have demonstrated not only the benefits of our
security assistance, but also the importance of contingency
funds for a flexible response. Countries that descend into
chaos and anarchy provide breeding grounds for extremism and
training grounds for terrorists. Just a small investment in
supporting stable and peaceful transitions to democracy could
yield far greater gains for U.S. national security than
billions for developing new weapons.
Since my time has expired, even though my statement has not
ended, I will ask unanimous consent to include my entire
statement in the record and I will forego describing the work
of our foreign aid programs in Iraq, Afghanistan, and a number
of other countries as part of our national security strategy.
Thank you, Madam Chair.
Chairman Ros-Lehtinen. Without objection. Thank you, Mr.
Berman.
Chairman Smith, who chairs the Africa, Global Health, and
Human Rights Subcommittee, is recognized for 1 minute.
Mr. Smith. Thank you very much, Madam Chair.
Dr. Shah, in your testimony you state that USAID supports
faith-based organizations. Last week I chaired a hearing on the
Democratic Republic of the Congo and Catholic Relief Services'
Sexual and Gender-Based Violence Advisor Francisca Vigaud-Walsh
testified that she has repeatedly seen rape survivors in the
eastern Congo walk many kilometers from their displacement camp
to the nearest parish for assistance.
They do so not only to avoid stigmatization by going to
services available within the camp, but also because they trust
the church. This scenario is played out repeatedly throughout
Africa. Many people trust the churches and faith-based
organizations and will seek them out even when non-FBO services
are closer or readily available.
A Gallup Poll asked sub-Saharan Africans in 19 countries
about their confidence in eight social and political
institutions. Seventy-six percent responded they were most
confident in their religious organizations in their countries.
Not only are faith-based organizations culturally important
in places like Africa, often they are the primary provider of
healthcare services. I am concerned and I hope, Dr. Shah, you
speak to this, that as the Global Health Initiative is unveiled
and as it evolves, what is being done to ensure that grants are
not discriminated against in terms of going to faith-based
organizations because they----
Chairman Ros-Lehtinen. Thank you.
Mr. Smith [continuing]. Do not include population control?
Chairman Ros-Lehtinen. Mr. Ackerman, the ranking member of
the Subcommittee on Middle East and South Asia.
Mr. Ackerman. Thank you, Madam Chairman. I fear that we
have forgotten how to reason. When we were kids we used to
tease each other and ask silly-seeming questions like, ``Do you
walk to school or take your lunch?'' It seems to me that is the
question that has been placed before us today. As I only have
30 seconds left, I will try to unwind the puzzle when I have my
5 minutes. I yield back.
Chairman Ros-Lehtinen. Thank you so much.
Mr. Rohrabacher, the Subcommittee on Oversight and
Investigations chair.
Mr. Rohrabacher. Thank you very much, Madam Chairman. Early
this morning I was called by our U.S. Ambassador to Pakistan.
He was on a plane escorting a U.S. Government employee, Raymond
Davis, out of Pakistan. This is a cause for joy and happiness
and we are very grateful that he has been released.
That a recipient of U.S. aid would treat our people in such
a way is shocking and should suggest that we take a close look
at the fundamentals of who we give our aid to and whether or
not they are our friends or whether they are treating us like
suckers. Thank you very much, Madam Chair.
Chairman Ros-Lehtinen. Thank you.
Mr. Payne, the ranking member on the Subcommittee on
Africa, Global Health, and Human Rights is recognized.
Mr. Payne. Thank you very much. I also think that we need
to review how our so-called friends treat us. However, we also
need to evaluate how our representatives behave in foreign
countries. I think everything has to be held in balance.
Let me just say that if these cuts continue, we will
certainly see an impact on not only our U.S. economy but
national security, and our Nation's moral standing. These cuts,
in my opinion, go too deep. We all know that we will have to
tighten the belt. We all agree with that and we think we should
move but I do not want to see us being a pound wise and a penny
foolish.
Some of the increases in staff at USAID is because they are
taking away from contractors and in the long run there will be
saving of funds. Once again, thank you very much, Ms. Chair.
Chairman Ros-Lehtinen. Thank you, Mr. Payne.
Mr. Chabot, Subcommittee on Middle East and South Asia
chairman.
Mr. Chabot. Thank you, Madam Chair. Let me just remind my
colleagues on the other side of the aisle when they continue to
rant against H.R. 1 and they were slashing and cutting and
burning and all the rest that we are broke and that is the
reason we are trying to be responsible and do the right thing.
As far as the American people not understanding exactly how
much is being paid out, there are all kinds of things floating
out there that Members of Congress get free medical care and do
not pay into Social Security. There are a lot of things and a
lot of misinformation out there.
I have got a judiciary hearing. I probably will not be able
to stick around and leadership has a jobs forum. There is a lot
going on so let me just ask either during this hearing or in
follow-up on questions, I am interested in funding. The USAID's
political party policy explicitly states, ``Assistance to non-
Democratic political parties is prohibited.''
The vagueness of the policy, however, raises a couple of
questions. I just want to know what the policy is relative to
the Muslim brotherhood in Egypt. Thank you.
Chairman Ros-Lehtinen. Thank you, Mr. Chabot.
Mr. Meeks, the ranking member on the Subcommittee on Europe
and Eurasia.
Mr. Meeks. Thank you, Madam Chairman. Let me just say that
it is vision sometimes that we have to have. Yes, we have got
to tighten our belt. We have to look at what our colleagues,
what our allies in Great Britain did. They tightened their
belt.
They are having a fiscal crisis but yet they had vision
enough to know not to cut substantially their foreign aid
budget because the world is a much smaller place and we are now
moving in that direction where we are working with other folks
and that is what we need to do.
It is pay me now or pay me later. It is either have short-
term gain or long-term pain. If we slash the way we are talking
about slashing, we are going to feel the pain in the long-term.
We should have some vision and understanding of the entire
world that we live in because we don't live in this world by
ourselves. I yield back.
Chairman Ros-Lehtinen. Thank you.
Mr. David Rivera of Florida.
Mr. Rivera. Thank you, Madam Chairman. I hope as we get
into our question and answer period that you will address a
major concern of mine which is USAID's treatment of its own
subcontractors in hostile environments such as Cuba.
I think the reason Alan Gross' situation speaks to this, it
is my understanding that USIAD recently or is now basically
abdicating its concern for our workers who are in our service
and are exercising their duties on behalf of this country by
requiring the signing of waivers for NGOs and for
subcontractors, waivers over their own safety of this
personnel.
I think it is outrageous that we would basically wash our
hands over our own people in the service of this country for
USAID's development programs and democracy building programs. I
hope we will address that in the hearing.
Chairman Ros-Lehtinen. Thank you so much.
Mayor Cicilline.
Mr. Cicilline. Thank you, Madam Chairman. Welcome to the
witnesses. We heard recently from the Secretary of State about
the three pillars of our foreign policy; diplomacy,
development, and defense. I recognize that all three of those
are important parts of it and particularly look forward to
hearing about the development component today.
I think we need to all be reminded that the commitments we
make and the investments we make in this area of our foreign
policy are not only describe our values as a country in
promoting freedom and democracy around the world, but also
ultimately enhance our national security interest by creating a
safer world. I look forward to your testimony and welcome you
to the committee. I yield back.
Chairman Ros-Lehtinen. Thank you.
Mr. Mike Kelly is vice chair of the Subcommittee on Asia
and the Pacific.
Mr. Kelly. Thank you, Madam Chair.
Thank you for being here today. I have got to tell you,
though, we are the only country in the world that gives more
than anybody else, 1 percent of our budget, toward what
everybody else does. If we would quit going around the world
going mea culpa, mea culpa, mea maxima culpa, we just don't do
enough, I think we would get a lot more accomplished.
I don't think that we are talking about not helping foreign
countries. I think we are talking about doing what's prudent
for the American people. I wish the people on the other side of
the aisle would stop going around the world and telling
everybody how terrible America is. We should be talking about
how great we are. Nobody does more than we do for the world.
Thank you.
Chairman Ros-Lehtinen. Thank you.
Mr. Keating. Oh, Mr. Connolly. Sorry. Thank you.
Mr. Connolly. Thank you. I want to say to my friend wearing
the green tie with an Irish name who just admonished the other
side of the aisle, at least I don't know Democrats who go
around the world saying mea culpa, mea culpa, mea maxima culpa.
I speak Latin, Mr. Kelly, so I know whereof you speak.
I will say this. If we continue to slash the foreign
assistance budget irresponsibly as your side of the aisle did
in H.R. 1, we are going to cripple our ability to exercise
diplomacy. Then we are going to say requiescat in pace. We need
a vibrant robust foreign assistance program as Secretary Gates
said in the Bush administration when he was in that
administration and as Secretary Clinton said just a few weeks
ago before this very committee. I wish Mr. Chabot was still
here because I want to respond to him, too, since he directly
addressed----
Chairman Ros-Lehtinen. Perhaps in the afterlife.
Mr. Connolly [continuing]. This side of the aisle.
Chairman Ros-Lehtinen. Right now, Mr. Mack, Subcommittee on
the Western Hemisphere chairman, is recognized.
Mr. Mack. Thank you, Madam Chairman. I appreciate the
hearing today because I have some big concerns when it comes to
the Millennium Challenge Corporation and what messages we might
be sending around the world. I would like to also just add my
two cents into this back and forth. I do not speak Latin so I
am not going to do any of that but I will tell you this.
I think what I do speak is what the American people are
saying is, ``We are broke. We are broke. Every time we spend
more money, we borrow it from somewhere else.'' We cannot
afford to continue to do that. I will agree with my colleagues
that we have a lot of priorities but so far what I've seen on
the other side of the aisle is they haven't found something yet
that they would like to cut.
Every time we go to a hearing all we hear is, ``We are
slashing. We are slashing.'' But you haven't offered anything
to cut and we are in this predicament because of the leadership
of the other side.
Chairman Ros-Lehtinen. Thank you.
Mr. Mack. I don't know where Latin fits into that but thank
you, Madam Chair.
Chairman Ros-Lehtinen. Thank you.
Mr. Murphy of Connecticut.
Mr. Murphy. Thank you, Madam Chair.
I look forward to your testimony. I think part of the
frustration comes from the fact that a lot of us don't
understand the distinction that gets made between a scared cow,
which is the Department of Defense, and the State Department
and USAID budget that seems ripe for targeting.
I think every country in the industrialized world has
figured out that a national security strategy involves being
very strong when it comes to tanks and guns but being very
strong when it comes to foreign aid as well. I think that we
see a double standard that doesn't make sense with how most
national security experts would describe a safe nation in the
long run.
My one query as you make your comments is back to Mr.
Kelly's point in part. I want to make sure that when we are
putting aid into these communities, how do we make sure that we
get credit for it? How do we make sure that it has an American
face--to the degree that we can--so that people understand the
commitment that we are making here. I know it is an ongoing
conversation and something I am very interested in hearing
about.
Chairman Ros-Lehtinen. Thank you.
Ms. Buerkle of New York who is the vice chair of the
Subcommittee on Terrorism, Nonproliferation, and Trade.
Ms. Buerkle. Thank you, Madam Chair.
Good morning and thank you for being here this morning. I
agree with the gentleman, Mr. Connolly, who said we need a
vibrant foreign affairs policy. However, that policy needs to
be one that is prudent with the American taxpayer's money when
it is accountable to the American taxpayer's money and what is
in the best interest of this country. I look forward to the
hearing this morning. Thank you.
Chairman Ros-Lehtinen. Thank you so much.
Judge Poe, the vice chair of the Subcommittee on Oversight
and Investigations, to wrap up.
Mr. Poe. Thank you, Madam Chair. In my opinion the foreign
aid process is a mess. Fifty years after a Foreign Aid
Authorization Act the process is still what President Kennedy
called bureaucratic, fragmented, awkward, and slow. It is no
surprise that our aid in real dollars is now at the highest
level since 1985 and that in FY 2009 we gave twice as much
money away as any other country.
We need to bring transparency and accountability back to
the process. In typical Washington fashion all of our foreign
aid is done at once in one bill. We either pass the bill for
everybody or no one gets it. I am introducing legislation today
that breaks this process up. It changes House rules so members
are able to vote on each individual country one at a time.
For every dollar handed out we will be able to ask, How
does this further the interest of the United States? If a
country can justify that it is critical to U.S. interest, then
it will pass. If not, the bill should not pass. I think it is
time we show some accountability as Members of Congress and
account for the money we spent overseas. Thank you, Madam
Speaker.
Chairman Ros-Lehtinen. Just the way it is. Thank you,
Judge.
The Chair is pleased to welcome our two esteemed witnesses.
Dr. Shah is the Administrator of the United States Agency for
International Development. He was nominated by President Obama
and sworn in as the 16th USAID Administrator in December 2009.
Previously Dr. Shah served as Under Secretary for Research,
Education, and Economics, and as Chief Scientist for the U.S.
Department of Agriculture. He has also served as the Director
of Agricultural Development in the Global Development Program
at Bill and Melinda Gates' Foundation. Dr. Shah earned his
medical degree from the University of Pennsylvania Medical
School and a master's degree in health economics from the
Wharton School of Business.
Dr. Shah, thank you for attending.
Then we will hear from Mr. Daniel Yohannes, the Chief
Executive Officer of the Millennium Challenge Corporation. He
was nominated for this position of CEO by President Obama in
2009. Mr. Yohannes is an active philanthrophist and a former
banker previously serving as vice chair of the U.S. Bank.
Immediately prior to his confirmation Mr. Yohannes served
as president of NMR Investment, a firm specializing in
financial services and the renewable energy sector. From '92 to
'99 Mr. Yohannes also served as president and CEO of Colorado
National Bank and prior to that held numerous leadership roles
at the Security Pacific Bank now called Bank of America.
It is also a pleasure to have you here, Mr. Yohannes.
Please feel free to summarize your statements. Your statements
in full will be made part of the record.
Thank you, Dr. Shah. We will begin with you.
STATEMENT OF RAJIV SHAH, M.D., ADMINISTRATOR, U.S. AGENCY FOR
INTERNATIONAL DEVELOPMENT
Dr. Shah. Thank you very much Madam Chairman, Ranking
Member Berman, and members of the committee. I am honored to
join you here today in support of the President's Fiscal Year
2012 Foreign Operations Budget Request.
First, I want to briefly comment on USAID's response to the
devastating earthquake and subsequent tsunami that hit Japan
last Friday. As we speak today, a disaster assistance response
team and two urban search and rescue teams from Fairfax and LA
County, the same men and women that responded so bravely and
effectively to last year's tragic earthquake in Haiti, are
working to save lives in Japan. I would like to thank these
teams for their courage.
In the Middle East our humanitarian response experts are
currently on the Tunisian border and in Egypt helping
coordinate and deliver assistance to the tens of thousands of
people that are fleeing the conflict in Libya meeting immediate
needs and returning foreign workers safely to their countries
of origin.
Madam Chairman, 1 year ago in this chamber, you asked me to
increase our private sector engagement to harness the power of
technology and to expand the use of our development credit
authority to more effectively leverage private investment.
Ranking Member Berman, you emphasized the importance of
ensuring that aid reaches those who need it most and that it is
delivered with maximum effectiveness and efficiency. I have
taken these concerns to heart. Consistent with the President's
Policy Directive on Global Development and the Quadrennial
Diplomacy and Development Review, we have launched a series of
comprehensive reforms we call USAID Forward, designed to cut
red-tape, improve accountability, and deliver better results.
We are also placing a renewed emphasis on economic growth,
driven by private sector investment as demonstrated through our
Feed the Future Food Security Initiative. Groundbreaking new
partnerships with Pepsi-co and General Mills will deliver tens-
of-millions of dollars in investment in African agriculture
achieving tremendous leverage for our taxpayers and helping to
create stability in places where food riots and famines are all
too familiar.
Our FY 2012 budget request doubles the capacity for
development credit authority and more than doubles the ceiling
on loan guarantees allowing us to generate $28 of private
investment for every single dollar of taxpayer funds applied.
And across our portfolio, we are seeking new ways to
harness the power of technology for development. In Haiti,
rather than rebuilding brick-and-mortar banks devastated by the
earthquake, we are partnering with the Gates Foundation to
begin a mobile banking revolution in the country.
In India we help farmers access solar powered micro-
irrigation systems that are in part produced in the United
States and improving food security abroad while creating jobs
in Georgia and Michigan.
The FY 2012 budget includes dedicated funding for these
innovative approaches to development while outlining a number
of specific and significant cuts. This budget eliminates
bilateral development assistance in 11 countries and shuts down
USAID missions in three. It cuts development assistance in at
least 20 countries by more than half. It reallocates almost
$400 million in assistance and shifts more than 30 Foreign
Service positions toward priority countries and initiatives
designed to align with our national security and keep us safe.
This year, for the first time, the President's budget
presents USAID war funding in a separate account called the
Overseas Contingency Operations, or ``OCO'' Account. This
transparent approach distinguishes between temporary one-time
war costs and our enduring budget.
USAID's logo is a handshake accompanied by the motto ``From
the American People.'' Now more than ever, we are delivering
benefits for the American people.
In the most volatile regions of Afghanistan and Pakistan
USAID is working side by side with the military playing a
critical role in stabilizing key terrain districts, building
responsive local governance, improving the lives of local
citizens, and ultimately paving the way for American troops to
return home safely.
As General Pertaeus warned just yesterday, inadequate
resourcing of our civilian partners, State and USAID, could, in
fact, jeopardize the accomplishment of the overall mission.
USAID's work also strengthens America's economic security.
By establishing links to consumers at the bottom of the
pyramid, we can effectively position our country and our
companies to sell more goods and services in the markets of
tomorrow.
Best of all, we deliver these benefits for the American
people for less than 1 percent of our Nation's total budget.
Putting these values into action will deliver real results for
the American people, making us safer and more prosperous.
I thank you and I look forward to your comments and
questions.
[The prepared statement of Dr. Shah follows:]
Chairman Ros-Lehtinen. Thank you so much.
Mr. Yohannes.
STATEMENT OF MR. DANIEL YOHANNES, CHIEF EXECUTIVE OFFICER, U.S.
MILLENNIUM CHALLENGE CORPORATION
Mr. Yohannes. Madam Chairman, congratulations on taking the
gavel of the House Foreign Affairs Committee. We look forward
to working with you and Congressman Berman, and every member of
the committee to advance American interests and values and
reduce poverty in developing countries around the world.
I am especially pleased to be appearing here today
alongside my good friend Dr. Shah. We speak on a regular basis
about how our agencies can collaborate, avoid duplication, and
leverage our comparative advantages.
If there are no objections, I would like to submit my full
testimony for the record and summarize it for you now.
Let me offer my view of what makes the MCC so effective and
distinctive. Republicans and Democrats, including some of you,
worked together to create MCC in 2004. You outlined a new
vision for development, one based on accountability and a
business-like approach.
My own background is in banking. I bring a banker's
perspective to my role as CEO of MCC. I have a client, the U.S.
taxpayer. I have a partner, the countries receiving MCC
assistance and the citizens they represent. I have a goal, to
get the best return.
We focus on economic growth, sustainability, country
ownership, transparency, and results. I am very pleased that
the principles that MCC was founded on and have implemented for
the past 7 years are central to the administration's new global
development policy and to the priorities that we have heard
from Congress.
In deciding where to invest, MCC measures whether a country
has created a policy environment for sustained economic growth.
This focus on economic growth and a transparent selection
process allow us to say no to those countries that are not
accountable to their people and not pursuing policies that
promote markets and economic growth.
We believe that engaging with developing countries in a
targeted selective way is a good way to achieve development
impacts. This is fiscally responsible and it is critical for
helping poor countries attract private sector investment which
I believe is the only path to ending reliance on assistance.
MCC also puts a laser focus on results. All donors and host
countries are interested in achieving results. What sets MCC
apart is our rigorous, systematic, and transparent methods of
evaluating the impact of our programs. From the beginning, our
projects are subjected to a thorough analysis to ensure that
there will be an economic rate of return.
From MCC's current investments we expect more than 170
million people and the poorest countries will benefit. We
expect incomes to rise by over $12 billion over the life of
those investments. Those projects are underway and on track.
We do have early data that is extremely promising. Let me
give you an example. In Honduras preliminary data collected by
program implementers of our agriculture program suggest that
farmers receiving assistance from MCC saw their annual net
income rise 88 percent on land being cultivated with new
practices from $1,880 per hectare to $3,550 per hectare.
I want to stress that this is early data and we will know
much more when independent evaluations are complete. This is
the kind of strong return on the U.S. taxpayer's investment
that MCC is working to deliver.
Looking ahead President Obama has requested $1.125 billion
to fund MCC in the next fiscal year. This amount would enable
MCC to sign compacts with Indonesia, Georgia, and Ghana. These
countries were selected because of their strong policy
performance, their status as important emerging markets, and
their strategic importance to the United States.
With that, Madam Chairman, I would like to again state my
appreciation for your support and this committee's support for
MCC. I look forward to our discussion. Thank you.
[The prepared statement of Mr. Yohannes follows:]
Chairman Ros-Lehtinen. Thank you very much for excellent
testimony and they will be made part of the record.
I wanted to ask some questions. I don't think we will have
time for answers but would love to have them in writing later
if I could and we will provide those for you.
On Honduras, thank you for mentioning that country. While I
was disappointed that the Honduran Government was unable to
qualify for a second compact due to the wrongdoings of its
predecessor government headed by Manuel Zelaya, I recognize the
principal decision of MCC. I commend MCC's commitment to
working with the current Government of Honduras to advance its
efforts in support of accountable governance, enhanced
management of public resources and fiscal transparency.
However, our State Department is continuing to impose
pressure tactics and unjust visa policies against those who
defended the sanity of the Honduran constitution and the rule
of law against Zelaya's attacks more than a year after
President Lobo took office.
So our State Department that is harassing those who uphold
the rule of law in Honduras are really undermining the very
investments that MCC and USAID have made, are making, and plan
to make. One is punishing and the other one is trying to help.
So what steps is MCC taking to compensate for the time lag
under its corruption indicator for future determinations?
My second question is for Dr. Shah and that is about the
announcement of a U.S. enterprise fund for Egypt. Yesterday
Secretary Clinton said in Cairo that she will seek a quick
congressional approval of an enterprise fund for Egypt funded
at $60 million. Monies from such funds come out of AID's budget
as a rule.
Our committee has not been consulted but was only told
informally yesterday when we inquired there are serious issues
involving some of our earlier enterprise funds. In one case the
executives of the funds were allowed to set up a stock option
plan and when they closed down the fund's operations, the CEO
reportedly gave himself $22 million, the chief financial
officer was awarded $9 million, the managing director
reportedly got over $8 million, and other executives got
between $1 million and $4 million each.
Meanwhile, $200 million of that fund's cash was transferred
to a legacy foundation. The taxpayers got back a grand total of
$27.5 million. The oversight of this legacy foundation's set-up
by enterprise funds as they have closed down operations have
been questionable to say the least. Why would we do this again
now in Egypt given these issues?
Lastly, and you can get back to me in writing, on
Afghanistan. In early 2010 the Washington Post reported that
the Kabul bank with its ties to the Karzai family and sometimes
questionable practices played a part in what they say is,
``Crony capitalism that enriches politically connected insiders
and dismays the Afghan populous.''
I wanted to ask if the accounting firm Deloitte or any
other USAID contractors reported incidences of malfeasance at
the bank, what was the damage estimate conducted as a result of
the run on the bank, and did USAID conduct a performance review
or audit of the Deloitte contract?
In my opening statement I pointed out that times are tough
and I want all of our agencies who appear before us, our agency
heads, to know that some of us are very serious about cutting
the budget. I had mentioned that the mayor of Miami Dade County
and a county commissioner--Miami Dade is a very large county--
was recalled by 88 percent of the electorate yesterday, an
amazing turn of events due in large part for approving a
bloated county budget that increased property taxes.
There were no problems of raft or corruption or ethical
issues involved in these two officials at all. Voters want
fiscal sanity. I would hope that all of our agencies when they
present their budgets keep that in mind and that this is a
serious issue and perhaps serious differences between some of
our parties.
Thank you, gentlemen, and look forward to getting your
questions later.
I now would like to turn to my ranking member, Mr. Berman,
for his questions.
Mr. Berman. Thank you very much, Madam Chairman. I'm going
to ask, for me anyway, a relatively short question. Not
completely short, but relatively short, to give both of you a
chance to take the remaining hopefully 4 minutes or so to
answer it.
Assume H.R. 1 was enacted into law, the House Republican
CR. In USAID's case there would be a 50-percent cut in disaster
assistance. The catastrophic damage in Japan serves as a
reminder of how important it is to have a flexible funding
ready and available to use in emergency. If this were in a poor
country how could we have responded in such a situation?
In MCC's case a nearly 30-percent cut in your budget would
mean reducing, delaying, or scrapping any number of compacts
that you spent years preparing for. How would that affect your
ability to leverage tough economic and political reforms?
I might point out in this case these cuts are totally
disproportionate, even if one were to accept the overall
reductions contained in the Fiscal Year '11 budget proposed by
the majority party here.
Dr. Shah first.
Dr. Shah. Thank you. The cuts to the humanitarian account
and the cuts in H.R. 1 overall for USAID would be absolutely
devastating. The humanitarian account allowed us to support the
recovery in Haiti. Just in the last few weeks it allowed us to
run three different humanitarian operations and respond quickly
and efficiently, transmitting our values and protecting our
national security and preventing the need to send in our
military. The option of using the military as the first line of
defense as opposed to civilian humanitarian response is very,
very costly and a far less effective way to address these
concerns.
I would also add that those cuts also would affect our food
security program, essentially shutting down Feed the Future,
which is a private sector-oriented program based on the
principles of selectivity and accountability and designed to
focus on precisely those countries and communities where the
link between food and security, food riots, and famines is
very, very strong.
It would reverse progress in malaria which, for example,
has seen a 30-percent reduction in all-cause child mortality as
a result of a program President Bush created and we have
continued. That would be reversed significantly and would
undermine our ability to conduct our procurement reforms which
allow us to reign in contractors and better manage resources.
The meta-story is, over a 15-year period, USAID staffing has
been cut by more than 40 percent.
The Agency is significantly diminished because of it and we
have outsourced at great cost to American taxpayers and large
inefficiencies some of the functions that absolutely need to be
conducted by U.S. direct hire staff. All of these reform
priorities, including our priorities in Afghanistan, Pakistan,
Iraq, Sudan, and Haiti would be significantly undermined.
Mr. Berman. Mr. Yohannes.
Mr. Yohannes. Thank you, Congressman Berman. We have been
working with Zambia, Indonesia, and Cape Verde. The proposed
cut would have a significant impact in Indonesia as Indonesia,
of course, is the most populous country in the world and the
largest Muslim country in the world. We have been working with
them primarily and it relates to the embarkment projects. This
would have measured consequences in terms of not getting those
projects complete if, in fact, the 30-percent cut is made
permanent. Thanks.
Mr. Berman. Thank you, Madam Chairman.
Chairman Ros-Lehtinen. Thank you very much.
Mr. Smith.
Mr. Smith. Thank you very much, Madam Chair.
Gentlemen, thank you for your testimony and for your
service to the country. Let me ask, or make a very brief
statement and then ask a few questions.
Secretary of State Hilary Clinton did, in my opinion, a
grave disservice in the struggle to reduce maternal mortality
worldwide when on March 1st before this committee testified
that 529,000 women die from complications in childbirth each
year.
Obviously any woman who loses her life in childbirth, or
for any reason, is a numbing loss, especially to her family. I
would respectfully submit that conveying false information,
misleading and inflated numbers, may have shock value but in
accuracy in assessing efforts to mitigate maternal mortality
and engaging in hyperbole is wrong.
The Secretary of State failed at first to acknowledge the
massive study on maternal mortality financed by the Gate
Foundation published in the Lancet last may that found
significant progress. It had dropped to 342,000. And if deaths
attributable to the HIV/AIDS pandemic were excluded, it drops
to 281,000. Still unconscionably high but not 529,000.
On September 15, 2010, WHO and several other U.N. agencies
announced that maternal deaths worldwide had dropped by a
third. That was the headline, dropped by a third. There
estimate is about 358,000.
Obviously still unconscionably high but, again, I would
respectfully submit false numbers expressed by Mrs. Clinton to
this committee undermines the initiatives that are working,
especially skilled birth attendants, safe blood, adequate
nutrition which I know, Dr. Shah, you have been a champion of,
as has the Secretary of State, and maternal health. We need to
be accurate in our numbers to the greatest extent possible. Two
major studies last year couldn't have been more clear that we
are indeed making progress.
Secondly, let me just say briefly that in late February Dr.
Bernard Nathanson, the founder of NARAL Pro-Choice America,
back in 1969 passed away. I would, again, respectfully submit
to this administration that a reappraisal, and I won't hold my
breath. It may not happen, but a reappraisal at least, about
the child in the womb and the inherent bigotry and prejudice
against that child in the womb that is inherent in the abortion
culture and the promotion of abortion worldwide by this
administration at least be taken a second look at.
What caused Dr. Nathanson to change his mind and go from
being the leading abortionist in the United States of America
to a leading pro-life advocate? He started doing prenatal
interventions, blood transfusions. He began to recognize,
especially working at St. Luke's Hospital in New York, that the
child in the womb ought to be regarded as a patient who if that
patient has a disability or a disease is in need of a
lifesaving intervention to enhance or to even save their life.
He saw the gross inconsistency of dismembering or
chemically poisoning a baby in one hospital room or clinic room
while helping that child with a medical intervention in the
other and he became a very strong prolifer. I would hope the
administration would take a second look at its embrace of
abortion globally because it really does undermine Millennium
Goal 4 which calls for mitigating child mortality.
Let's face it, abortion is child mortality and there are at
least 113 studies that show a significant association between
abortion and subsequent premature births. So even for the
babies who are born later there is an increase or risk of 36
percent of preterm birth after just one abortion and a
staggering 93 percent increased risk of prematurity after two.
Disability is attributable to some extent, a very large
extent, to that kind of prematurity or low birth weight. In a
developing world we promote abortion. Not only do those
children die, those mothers are wounded, there is also a
significant problem of disability that will be the deleterious
consequence to those children.
I'm closely out of time. Also, Dr. Shah, I asked you in the
beginning of my open statement about faith-based organizations.
We are very concerned, many of us, not everyone, that faith-
based organizations will be excluded because of their lack or
unwillingness to provide certain types of population control
and that whole integration effort, which I know is underway,
could preclude them from doing what they do best and that is
helping mothers and children and families in the developing
world.
Chairman Ros-Lehtinen. Thank you, Mr. Smith.
Mr. Ackerman, the ranking member on the Subcommittee on
Middle East and South Asia.
Mr. Ackerman. Thank you, Madam Chairman.
I wish we could all be that passionate about people who are
already born as we are about people who are yet to be born. I
don't know if I am more frustrated or amused when some of our
colleagues imagine things that aren't necessarily true and then
just rail against them. We seem to have a lot of that going on
lately.
I don't know anybody on our side of the aisle who goes
around the world disparaging our country but if you want to
imagine that and make it up, that is fine. If you would like to
name names, that is fine, too. For every Democratic name you
give us, or me, I will give you five Republican names who go
around disparaging our President and our administration. But to
the question of the day, whatever that might be, I think it is,
``Do you walk to school or take your lunch?'' That is really
the question I want to ask.
If you are mad about whatever it was your county
commissioner did or doesn't do, do you deny U.S. assistance to
people in another part of the world? I mean, what does one
thing have to do with the other? I am not entirely sure. I
think we have forgotten how to ask the questions or what the
policy implications of those questions might be.
Maybe it is that we are more afraid of our voters than we
are of international disasters or international terrorists, but
we have to approach these issues, which are big issues, with a
lot more intelligence than we seem to be prepared to do and
that is all of us.
I have heard a couple of people, at least, bemoan the
imagined fact that we are broke. We are not broke. We are the
richest nation in the world. We are the world's strongest
economy. We are doing pretty well. One of the reasons that we
are doing well is because we've done the right things. Not
always. We make mistakes.
The market went down. The market will come back up. We have
to figure out what the wrong things are and what the right
things are so that we can do the right things more consistently
and not do the wrong things at all if that is possible. If
there is one lesson we should have learned on 9/11 is that if
we don't visit bad neighborhoods, they will visit us.
How do you justify this disengaging from the world and its
problems, especially at a time when such change is coming to so
much of the world? Where we could have a major influence to get
things right to make ourselves safe or more secure, wealthier
if that is your goal, but enriched certainly, then we have to
continue with the kinds of programs that Dr. Shah and Mr.
Yohannes are talking about today, or hopefully talking about
today.
I think we seem to be here today mostly for our own
entertainment and you have not had a chance to say as much as
you thought you were going to say. Let me just ask the
question. Do you walk to school or do you take your lunch and
what does one thing have to do with the other?
Dr. Shah. May I respond to that, Madam Chairman?
Sir, I think we need to walk to school and take our lunch.
At the end of the day I just want to clarify that USAID does
not fund abortion abroad. No U.S. tax dollars go to that
purpose. Maternal mortality is a great example of where being
results-oriented, as Daniel has discussed, we are achieving
real impacts on the ground.
We have launched new partnerships with private sector
partners to leverage our money five-fold in that specific area
as the chairman has asked us to consider. At the end of the
day, when a woman is more likely to die in Southern Sudan in
childbirth than she is to complete grade school, that is not in
our national interest.
If we even once have to send our military into that type of
environment, it will cost more than decades of modest goal-
oriented, results-oriented investments that can be made with
partners, made with the private sector, achieve real results,
and be done accountably. We recognize the need to reform and
are committed to that. Now is our chance to realize some of
these important gains and results.
Chairman Ros-Lehtinen. Thank you very much.
Mr. Rohrabacher, Subcommittee on Oversight and
Investigations.
Mr. Rohrabacher. Thank you very much, Madam Chairman.
Let me just note that Mr. Smith, who has a passion on this
issue of the unborn, is one of the most compassionate Members
of Congress for children who are born as well. I find that the
little comment insinuating that he is not, to be not only
inaccurate but unfair, grossly unfair----
Mr. Ackerman. Would the gentleman yield?
Mr. Rohrabacher. I just have 5 minutes. As long as it is 15
seconds to apologize, I will yield.
Mr. Ackerman. I want to apologize that you misunderstood
everything that I said. I did not say Mr. Smith. I said us, you
and me.
Mr. Rohrabacher. Well, I didn't hear the us part but I
didn't hear Mr. Smith either and I think that many of us took
it that you were attacking Mr. Smith so thank you. I don't
think that criticism applies to any of us.
Frankly, for those of us who think we are doing pretty well
I think that the American people will try to figure that out
whether they think we are doing pretty well. We are having to
borrow 40 cents on every dollar that we spend. For a third year
in a row this administration has proposed about $1.5 trillion
more in spending than we are taking in.
With that type of policy our currency will collapse within
a short period of time. We are not doing pretty well. We have
set America on a course for the destruction of the well being
and quality of life of the American people. Unless we make some
very serious reforms and change the direction of our country,
all of our people will suffer. We are not doing pretty well.
Certainly all of us would like to be generous beyond our
means because Americans love to be benevolent toward other
people because we are free and we understand how when people
are struggling, because most of us come from families that were
poor at one point, but we can't give away money that we don't
have.
If we have to borrow it from China and we saddle future
American children with paying the interest on this debt, we are
doing a huge disservice to them. We need to reexamine
everything including defense and I think that is a legitimate
criticism of many Republicans that were unwilling to try to
find savings in defense while we are willing to cut other
things.
We need to reexamine all of the spending and especially in
terms of what we are taking from the American people and giving
to someone else. That is what foreign policy and that is what
foreign aid is all about. We are taking from the American
people resources and wealth and giving it to other people. It
better be structured in the right way so it is efficient and we
better damn well know that there is a payback.
We end up with countries like Honduras. Madam Chairman, we
have American citizens whose property has been expropriated in
Honduras. They expect us to give them assistance and treat them
well while they expropriate the property of American citizens
and do not take the steps to make that whole and make those
Americans whole again.
I will be trying my best to see that Honduras doesn't get
one penny until it deals with the property expropriations of
Americans in Honduras. There is a big difference between
emergency aid and development aid. A huge difference. Indonesia
is grateful to us because we went there and helped them after
the tsunami. We should make sure we give emergency aid to those
people who are in crisis around the world. Development aid is a
whole different thing.
Mr. Berman. Would the gentleman yield?
Mr. Rohrabacher. You know what? I need to finish this
because I have a couple more seconds. Let me just note that I
don't see any reason why development aid can't be made in a way
that they are paid back. In recent days I have been trying to
get in touch with the freedom fighters in Libya who are
fighting the Gaddafi regime.
I have been informed by their representatives that any
money that the United States Government expends to help them
win their freedom they will repay that debt back to the people
of the United States of America. There is no reason in the
world why we shouldn't be working with other countries in that
same way.
If we are going to help them raise their standard of living
or win their freedom, let us get a payback so that the children
of this country aren't saddled with paying the interest on this
debt for the rest of their lives. I have used all but 4 seconds
and you are certainly welcome to comment for those 4 seconds.
Chairman Ros-Lehtinen. Thank you, Mr. Rohrabacher.
Mr. Payne, the ranking member on the Subcommittee on
Africa, Global Health, and Human Rights is recognized.
Mr. Payne. Mr. Berman, did you want a second or two? I will
yield.
Mr. Berman. I thank the gentleman for yielding. Even if one
accepts the premise of my friend from California, Mr.
Rohrabacher, it doesn't explain why we cut disaster assistance
in H.R. 1. I am not talking about traditional development
assistance; the Republican CR cuts disaster assistance by 50
percent, 50 percent that helps us do what we did in Indonesia
and in Haiti and in these places.
Mr. Payne. Thank you very much. It is certainly clear that
the world is interdependent. What has happened in Japan is
going to have an impact on us. Even tourism that would go to
our State of Hawaii will be reduced significantly because
Japanese will not be traveling as they will mourn for years and
years. If anyone doesn't see that the world is interdependent,
what has happened in Bahrain and Libya in oil? I just think
that we need to relook.
Let me just also talk about Secretary Clinton that my
friend Mr. Smith raised. The 529,000 number came from an
outdated fact book that the World Bank issued in 2006. Of
course, our programs are working and because the world is
paying closer attention, this number is now estimated at
360,000, 1,000 per day, which is still unacceptable but I would
like to get that information to Mr. Smith.
Let me just quickly----
Mr. Smith. Would the gentleman yield?
Mr. Payne. Yes.
Mr. Smith. The point was the Secretary presented to this
committee--I was not in the room at the time or I would have
raised it directly with her--that was the information as of
now.
Mr. Payne. She used outdated information.
Mr. Smith. Thank you.
Mr. Payne. Let me just quickly mention that--we could talk
about so many issues but the whole question of elections and I
would just like to say that in Africa there will be 16
elections coming up. I wonder what USAID is going to be able to
do as it relates to elections. We have the problem in Cote
d'Ivoire and I think we need to put more pressure on Gbagbo to
step down. We have elections coming up in Nigeria and other
parts of the country, DRC, and I am not sure that the
preparedness is there.
Also, let me mention that as we talk about being broke, we
are spending over $1 trillion a year in Afghanistan. We spend
hundreds of millions of dollars in Iraq and no one talks about
that. It makes no sense at all when we talk about spending less
than 1 percent of our GDP on trying to help people live. We
spend trillions of dollars on killing people. We are going in
the wrong direction. I think the morality of our national
direction needs to be questioned about the election, sir.
Dr. Shah. Thank you. I just want to say that across Africa
supporting democratic governance and effective elections is one
of our top priorities. I think what we were able to do in
Southern Sudan is a good example of how, when we coordinate
with the international community, coordinate with the efforts
of diplomacy, do joint planning with our military and, frankly,
be aggressive about prepositioning certain capabilities, voting
booths, ballots, even pencils and the mechanisms required to
conduct a successful, in this case, referendum, we can make a
difference.
Our team was able to successfully see that through. That is
the model of what we are trying to replicate throughout the
continent. Our investments in Africa matter a great deal. We
are seeing right now that we are being outstripped in our
investments in Africa by the Chinese on a regular basis. On a
year-on-year basis they are increasing their investments.
We have tried to present a budget between USAID, MCC, OPIC
and the other development partners in the Federal Government
that will reprioritize smart strategic investments in Africa
and do it in a way that holds leaders and governments and
governance systems accountable for real results.
One example of that is our Feed the Future Program, where
borrowing an MCC practice that is an absolute best practice, we
have limited the program to those governments that are willing
to double their own investment in agriculture and be
accountable for seeing that through. I will ask if Daniel wants
to add to that.
Mr. Yohannes. Approximately about 70 percent of our
investments are in the continent of Africa, about $5.2 billion,
and 60 percent of the funds are being utilized in agriculture
and infrastructure. This is an area that is key and vital for
trade investment opportunities. Ghana is one role model in the
region just to give you an example of how successful we were in
Ghana alone. The MCC-trained farmers for the first time sold
$300,000 of crops to the World Food Program. Not only are we
helping this country to become----
Chairman Ros-Lehtinen. Thank you.
Mr. Yohannes. Thank you, Madam Chair.
Chairman Ros-Lehtinen. Thank you.
Mr. Rivera.
Mr. Rivera. Thank you, Madam Chair. In light of the
situation with Alan Gross, U.S. citizen, which I believe is
being held hostage by the Castro dictatorship and recently
received a 15-year sentence for exercising democracy-building
programs in Cuba, what is the status of the Section 109
democracy programs with respect to Cuba?
Dr. Shah. Thank you. First, let me say with respect to Mr.
Gross that we have been in contact with and continue to work
aggressively, primarily through the State Department, to ensure
an effective outcome of that situation. I believe the Secretary
and others have spoken to that point specifically.
With respect to our Cuba program, we will be sending the
congressional notification up before the end of the month. As
you know, we have requested $20 million for the program. We
believe it aligns strongly against the congressional directions
that are offered. We intend to see that through and implement
it in a manner that allows for real transparency and results
with respect to how that program is implemented.
There has been a lot of work that has gone into it. Our
team is happy to offer a much more detailed briefing on the
specifics of the program going forward but our goals will be to
accelerate implementation, get that done in a timely way, get
the congressional notification up, and align all of the
investments with the basic objective of supporting civil
society and democratic space in that environment. Thank you.
Mr. Rivera. Thank you. What is the status of USAID's effort
to require liability waivers from NGOs involved in Cuba
democracy promotion programs?
Dr. Shah. I will have to come back to you with the specific
answer to that question. I will say in general we invest a
great deal of management effort. I personally engage directly
with our implementing partners around the world on issues with
respect to the safety of their staff. It is well known to this
committee that USAID officers, USAID Foreign Service Nationals
who are locally employed staff, and USAID implementing
partners, all take tremendous personal risks.
Every day I walk through my office there is a plaque on the
wall in our lobby that puts the names and the years of people
we have lost in service. That is also true for all of our
implementing partners. How we manage their security, our
efforts to design programs that allow for them to be safe and
effective, and our efforts to reach out and engage with our
community are very robust and have grown stronger through our
experiences in places like Afghanistan and Pakistan.
Mr. Rivera. Are we pursuing these liability waivers for
NGOs with any other country on the planet?
Dr. Shah. I will have to come back to you on liability
waivers specifically, sir.
Mr. Rivera. Are there any efforts? Are you familiar with
any efforts recently on liability waivers for NGOs on Cuba?
Dr. Shah. I don't know the specific answer to that so I
will come back in a letter with a very detailed response.
[The information referred to follows:]
Mr. Rivera. Okay. Thank you very much.
I will waive my time.
Chairman Ros-Lehtinen. Thank you very much, Mr. Rivera.
Mr. Meeks, the ranking member, the Subcommittee on Europe
and Eurasia.
Mr. Meeks. Thank you, Madam Chairman.
I didn't want to get into this but I just hope that folks
don't forget the baton they passed to us after 8 years of a
Republican administration, 6 years of a Republican majority in
both the House and the Senate, and a Republican President. What
was inherited we have got to fix and that is what we are trying
to do here. I hope we don't go back to foreign policies.
We heard before that Iraq was going to--it was not going to
cost the American people no money. They were going to pay us
all this back. We heard that before and we are hearing that
again that somebody is going to pay us back money. We haven't
gotten anything.
It is still costing us billions of dollars in Iraq. I hope
we don't go to the kind of diplomacy where we begin to change
names from such trivial things of French Fries to Freedom Fries
insulting our allies, calling them old Europe. I mean, those
are the kinds of policies that put us in a problem dealing with
the rest of the world.
I'm hoping that we don't ever go back to that kind of
policy to talking that way where we are alienating out allies.
We should be doing the kinds of things that you are doing,
bringing our allies together working together on this place
that we call Earth trying to save folks, not cutting about 67
percent from international disaster assistance, 45 percent from
migration and refugee assistance, and 41 percent from global
food relief. I mean, we are all human beings no matter what
country we come from and no matter where we are we should be
working together.
Now, I am going to try to leave that alone. I do want to
know from you because I want to give you a chance to ask
because I really wanted to come here and ask to get an update
on Haiti. There are elections there. We have talked about we
wanted to build it better. Can you tell us where we are with
Haiti? They are having elections. My colleague, Mr. Payne,
talked about some important elections that are coming up and we
need to do that also in Haiti.
Let me just pause for a second and ask you, where are we
with Haiti?
Dr. Shah. Thank you for that question. As you know, we have
been very committed to putting in place a more innovative, more
forward-looking development program and reconstruction program
in Haiti. There are a number of examples where we have tried to
build back better. We are building a mobile money platform that
already has three times as many participants in it actively
saving money and being part of a formal economy than existed in
the previous more traditional banking sector.
In agriculture we are making large scale supportive
investments to bring private investors including companies like
Coca-Cola that are now creating the Haiti Hope Product to
really help create well-managed value chains and supply chains
that can reach back to Haitian farmers and restart the Haitian
agricultural economy.
In housing we are down from 1.5 million people just a few
months ago in temporary housing down to 810,000. We are seeing
the slope of that curve continue to get steep. We think we are
being successful there.
In rubble removal we have removed more than 20 percent of
the rubble that was there from the earthquake and we have done
it at a pace that is roughly twice as fast as the pace from
which rubble was removed in the Aceh earthquake. In all of
those examples the United States leadership of the
international community, our focus and rigor around real
results and our efforts to work with local partners like in the
construction sector in particular, where we are literally
training local construction firms to build back to a higher
earthquake standard, use rebar from local materials to get wall
strength up to a higher level than what the traditional
construction methods were, are all having real affects.
I think the Haiti program should be judged over a multi-
year effort but we have tried to use that program to showcase a
more private sector-oriented, a more robust, and a more
efficient effort to reinvest in our neighbors.
Mr. Meeks. I'm going to throw a couple of questions out
there. You probably won't get a chance to answer them but on
the staffing needs I would just like to know whether or not it
makes some sense to make sure that you have decentralized in a
sense so that more people are on the ground who knows what is
going on. For example, there is a situation where in Chad if
you invest through the government it cost more to build a
school than by using, say, an NGO.
Whereas in Afghanistan the opposite might be true. Only
people on the ground would know that so are we utilizing the
individuals on the ground so that we can make those kinds of
decisions as opposed to just saying we are going to use an NGO?
Further, I would like to know whether or not the proposed
continuing resolutions H.R. 1 whether or not you will be able
to continue your mandate of objectives in Afghanistan and
Pakistan if it goes through. Whether or not you will be able to
help support the democratic movements in Belarus or for the
needs of displaced African Latinos and indigenous populations
in Ecuador and Columbia.
Chairman Ros-Lehtinen. Thank you.
Mr. Kelly, the vice chair of the Subcommittee on Asia and
the Pacific.
Mr. Kelly. Thank you, Madam Chair. Not to continue to kick
a dead horse but I have got to tell you, I am trying to
understand because there is an old adage out there that charity
begins at home. I would say this: There is not one person in
America who does not have a passion to helping those who are in
need but we are in denial.
As Dana pointed out, when you are borrowing 40 cents on
every dollar you spend, understand that once you spend the
dollar, the dollar has been spent. Whether it is spent at home
or abroad or any place else the dollar is gone. Once it is gone
it is gone.
Now, I am looking over these figures and while we continue
to talk it is only 1 percent of our budget. Let me just point
this out. Maybe I am just not getting it because I just have a
bad habit of doing that being in business for yourself where
you have got to have your own skin in the game and every dollar
you give is your dollar.
In 2008 for USAID $5.9 billion. In 2009 $6.31 billion. In
2010 $8.03 billion. Now, I would hardly say that America is
being cheap. I think what the American people are asking us to
do is please, we don't want to stop helping other people around
the world but at what point do we come to the realization that
we are truly broke? We are in denial.
This country is not seeing what we need to see. We need
fiscal responsibility. Now, I am not saying stop being
philanthropic. I'm just saying when you spend a dollar, spend
it smart. Let us just spend it smart.
Let me ask you, Dr. Shah, I am looking over your testimony.
I am looking at some things here. Countries such as China which
has over $2.6 trillion in foreign cash reserves, yet has
received nearly $1 billion in assistance from the Global Fund
in the United States to finance its response to AIDS, malaria,
and TB. They should finance their own health programs.
How do we justify the $4 million request for China under
USAID's apportionment of the global health and child survival
account when China can and should finance its own health? I
mean, it is like me asking Bill Gates if he needs a loan. Where
are we going with this? Where does the common sense come in to
what we have to do to get through this crisis we are in?
If you could please help me out because I am so confused
right now as to what it is we are trying to do with those
dollars we spend. Listen, I will tell you right now. Everybody
wants to help. It is just when you are broke, you are broke. I
am asking if we are going to spend a dollar, let us spend it
really, really smart because this money does not belong to me
or to this Congress or to this government.
This is all taxpayer money. It is nice to be benevolent
with somebody else's money. I have done that out of my own
wallet so it is nice to give somebody else's money away. If you
could just help me. How do we justify giving China $4 million?
You know, we are going to borrow it from them and then give it
back to them. That does not make any sense to me.
Dr. Shah. Thank you, sir. I will say that the fiscal
responsibility point is something we are introducing in all of
our work at every level and let me give you an example starting
with China.
The $4 million is targeting XDR and MDR tuberculosis. That
is multi-drug resistant tuberculosis and a new strain of
tuberculosis called XDR TB that literally we do not as a global
community have a solution for that is efficient and effective
in terms of both the diagnosis and the treatment.
That effort is to try and identify new diagnostic
mechanisms and a new treatment methodology so that we can
essentially bring the cost down on how we treat TB patients all
around the world. The reason we have to do it there is that is
where these strains are and that is where the more innovative
solutions for diagnostics are.
If we were successful with that program, we would be able
to reduce the unit cost of treating TB by 30 or 40 percent on a
panel of millions of patients around the world. The truth is
the global community is currently not winning the fight against
global tuberculosis because of these new strains and because of
the lack of effective tools. The diagnostic technology we use
is almost 100 years old.
As others have pointed out, we don't do that in any other
area of fighting so we need new technologies and new
approaches. That is what that is about. I will also say on the
fiscal responsibility point that we are trying to look at this
from a macro perspective.
For the overseas contingency operation account, for
example, we have determined a $4 billion investment in that
capability allows for a reduction in DOD's OCO account by $41
billion. That is the kind of tradeoff that we think can allow
for real fiscal responsibility and stability while achieving
the objectives of keeping our troops safe and ensuring
stability in areas where we have vital national interest.
Mr. Kelly. Okay. I understand that. Do we have any
indication of anybody around the world that is sending money to
the United States to help us with our problems?
Dr. Shah. Well, a number of the programs that we do are
global research programs that do, in fact, attract resources
and put those investments in U.S. universities, U.S.
corporations, U.S. institutions. One good example is
partnerships with other countries----
Chairman Ros-Lehtinen. Thank you.
Mr. Connolly of Virginia is recognized.
Mr. Connolly. Thank you, Madam Chairman.
By the way, I think we did get some foreign assistance from
some countries during the Katrina crisis in the Gulf. There are
examples. I guess I am troubled by this line of questioning
that says, ``We are broke,'' whatever that means, as a great
country. Therefore, apparently we are supposed to conclude we
can't afford to do any of these investments. Any of them.
We can afford to continue to deny ourselves oil royalties
so we can give a break to the oil companies. The estimate of
our subcommittee was that total amount is $53 billion. If we
can afford to do that, we can afford to continue to provide $1
trillion a year in tax expenditures, tax breaks to a lot of
corporations that do business overseas, privileged groups
economically in the United States. If you want to be
consistent, we can't afford that. Maybe it was a good thing
once. We can't afford it.
The idea that the world's surviving superpower cannot
afford to back up its diplomatic efforts is to me a reckless
thought, an unacceptable thought. Frankly, provides the
American people with a false Hobson's choice, one I think the
Foreign Affairs Committee, of all committees, ought to reject.
Dr. Shah, the continuing resolution that was passed by the
House majority a few weeks ago proposed a 19-percent cut to the
2011 requested levels of development assistance. Could that
impair your ability to do your job from your perspective?
Dr. Shah. Yes, sir. That would.
Mr. Connolly. I can't hear you.
Dr. Shah. Yes, sir. That would. I believe that would
undermine our ability to invest in our procurement reforms and
reign in and better manage our contracts and grants programs
around the world. I think it will undermine some important new
initiatives like our accountable assistance for Afghanistan
program that does require greater management resources in order
to get out and evaluate projects.
We have just launched a new evaluation policy that I think,
borrowing from MCC, will be the best in the world. It insist
that every single project we do gets an independent third party
evaluation and that evaluation is made public at 3 months
within the completion of that program but it will take some
investments and our capabilities in order to implement that
policy around the world.
Perhaps most critically it will reduce significantly our
ability to run the Feed the Future program which will reach 18
million people in 5 years, moving them out of poverty and
hunger in precisely those places where poverty and hunger leads
to food riots, famines, and threatens our sense of stability
and our natural security.
Mr. Connolly. But you are the head of AID. What about this
compelling argument we just can't afford it? Those might be
nice things to do but we just can't afford it. What is your
answer?
Dr. Shah. Well, sir, I believe it is far more costly for us
to deal with the instability and the riots that result. It is
even more costly frankly for us to give away food to starving
people than it is to invest----
Mr. Connolly. So what you are contending is that sometimes
when we don't make relatively modest investments up front we
can pay huge cost down the line having forgone that
opportunity. Is that what you're arguing?
Dr. Shah. Yes, sir. I will give you one example. Before I
got to USAID programs that should have been done as fixed cost
contracts but it requires more up-front contracting capacity to
write a fixed-cost contract were done as cost reimbursement
contracts where you don't have the ability to essentially
control cost.
You can lose in a single poorly managed contract hundreds
of millions of dollars and you can frankly with that same
investment in doing it more efficiently, more effectively with
more business like approach up front, save those resources and
generate better results for American taxpayers.
Mr. Connolly. By the way, that same CR cut humanitarian
assistance 42 percent. Does humanitarian assistance affect what
is going on in Libya or even the tragedy in Japan?
Dr. Shah. Yes. The humanitarian account is supporting all
of the relief efforts. In Japan it's a good example. It is also
supporting our ability to get members of the Nuclear Regulatory
Commission and other technical agencies out there to provide
support and engage with our partners. Those are the types of
things we put at risk.
Mr. Connolly. Thank you. My time is up, Madam Chairman.
Chairman Ros-Lehtinen. Thank you so much.
Mr. Mack, the chairman on the Subcommittee on the Western
Hemisphere is recognized.
Mr. Mack. Thank you, Madam Chairman. Again, thank you for
this hearing.
First of all, I have some questions about Honduras. So we
have heard that we are doing pretty good. I think the elections
were pretty clear this last election that the American people
don't think we are doing pretty good. Then we hear that we are
not broke.
All you have to do is look at this graph and if we continue
with the current policy that was pushed by the Democrats, we
are talking about close to 800 percent debt, over 800 percent
held by the public as a percentage of the GDP. I don't know
where some people are coming from. Too bad they left but we are
broke and we are not doing pretty good and we have got to be
serious about where we spend our dollars.
I would also like to say this. I agree that we need to
stand up for U.S. businesses throughout the world. The case of
a U.S. business in Honduras has been going on for over 7 years
and needs to be solved. The Honduran Embassy in the U.S. has
been engaged in my office on this issue that they inherited
with the Lobo administration. I would just suggest to those
that it is time to get together to solve that problem.
I am very concerned about the current state of affairs in
Honduras. President Obama, his administration, and the State
Department have been applying enormous pressure on Honduras.
Why Honduras? Because Honduras decided to stand up for what
they believe in, stand up for their constitution and they did
the right thing by removing Zelaya. For some reason our
Government has decided they shouldn't do what is right for
their country but they should do what we tell them to do.
Specifically the State Department has been doing everything
in its power to force Honduras to succumb to the U.S. demands
revoking visas, cutting off critical defense support,
suspending MCC funds. My question is this: Isn't it true that
this is nothing more than punishing a small country that we
aren't happy with?
Mr. Yohannes. Mr. Congressman, a couple of things. Number
one, the MCC funds were not suspended by the State Department.
In fact, Honduras did an outstanding job in getting the first
compact completed. The only reason why they did not get the
second compact is because they did not qualify. They did not
pass the corruption indicators which----
Mr. Mack. Let me say this. The corruption indicators are
perception based. Correct?
Mr. Yohannes. They are perception based but having said
that I have had----
Mr. Mack. Weren't they in the margin of error?
Mr. Yohannes. That is absolutely correct but let me say
this. I have had conversations with President Lobo and his
administration. They recognize----
Mr. Mack. I am sorry. Was not this corruption that is
perception based, that you acknowledge is perception based, and
it was in the margin of error, isn't it true that this
corruption occurred under Zelaya and the very person that the
administration tried to bring back to power after its country
said we are not going to continue with the corruption?
Mr. Yohannes. Again, corruption is corruption. It does not
matter which government----
Mr. Mack. Isn't it true that the new government in Honduras
has been making large strides in reducing corruption?
Mr. Yohannes. In fact, they are and they understand what
has happened in the last couple years and----
Mr. Mack. So the message--sorry but I have a little bit of
time here. So the message we are sending is that if you do the
right thing, if you stand up for your constitution, if you
believe in the rule of law, if you do those right things we are
going to punish you.
But if a country like Nicaragua who invaded Costa Rica, we
are going to continue to allow you to have funds. Doesn't this
send a message to people in Latin American countries and Latin
America that there is not a consistent way that our foreign
policy is being delivered in Latin America?
Mr. Yohannes. We are working with the Lobo administration.
They have set aside a 2-year program to strengthen the anti-
corruption areas primarily by strengthening the audits and
primarily management of public resources so we are continuing
to get engaged with them.
Mr. Mack. If it was in the margin of error and all that
Honduras had done to try to eliminate the corruption that was
under the former President who this administration tried to
bring back to power, wouldn't it be the right thing to do to
continue with the MCC compact?
Mr. Yohannes. We have a very limited source of funding.
Chairman Ros-Lehtinen. Thank you very much.
Mr. Yohannes. We have a lot of countries that are competing
for it so----
Chairman Ros-Lehtinen. Thank you.
Mr. Yohannes [continuing]. At the end of the day we have to
make the best decision.
Chairman Ros-Lehtinen. Thank you.
Mr. Cicilline of Rhode Island is recognized.
Mr. Cicilline. Thank you, Madam Chairman.
Mr. Yohannes, thank you for being here today to talk about
the important work of the Millennium Challenge Corporation. I
really would like to acknowledge the excellent work of the MCC
and the work that it is doing really to incentivize policy or
reform in good government in a number of countries all around
the world.
I want to express here my deep concern about the cuts that
are being proposed for funding for the MCC. The MCC has made
strategic investments in countries like El Salvador and
Honduras by improving infrastructure, strengthening property
rights, enhancing access to markets and assisting in business
development. These are investments that really are contributing
to the long-term sustainability in these countries.
I would also like to acknowledge the excellent work that
has been done through the MCC in Cape Verde. You might know my
district is home to a very vibrant and wonderful Cape Verdean
community and I am very proud that Cape Verde may well be the
first nation to receive a second compact with the MCC. They
have made incredible progress with the help of the MCC and I
just want to acknowledge that.
My question really is what can we do, what steps are being
taken, what can we do to ensure that countries like El Salvador
and Honduras who have made substantial progress in reforming
policies and strengthening their markets, improving their
governments, what can we do to help them continue on that path
so that they, too, might be eligible for a second compact and
what procedure is in place to continue that kind of support
that is both in their interest, obviously in their national
interest, but also in the interest of our country?
Mr. Yohannes. Thank you, sir. As you know, it is extremely
competitive to get to our program. We select countries that are
well governed, those that have accepted market principles, and
those countries that have made a tremendous commitment to
investing in their people. Those are the major criteria.
We are very selective. We only work with about 22 different
countries out of about a 100. We work with the best of the
best. This is primarily with the goal that we want to make sure
that this country is on a path to replace aid dollars with
dollars from the investment community.
Many of the investments we make in those countries are not
only used to improve the infrastructures and so forth but the
key is the policy reform which is extremely critical to create
the conditions and the environment for private sectors to
flourish.
Having said that, El Salvador has done an outstanding job.
In fact, I was there last year. I met with many of the
beneficiaries that have benefitted from our program, both men
and women. Also have seen the road that has been built which
will connect the north and the south that has been the dream of
the El Salvadoran people for the last 50 years.
I have been to Honduras. I have seen the benefits that have
been provided to both men and women in that country. In
addition, in Honduras we built 510 kilometers of road so that
the farmers could have access to markets. Having said that,
they also made a tremendous investment. They have set aside an
additional $30 million to maintain the roads.
They also passed a major legislation primarily in the
financial sector to make sure that people who do not own land
also have access to credit. There has been a lot of
accomplishments both in El Salvador and in Honduras. Again,
Honduras was not eligible this time but we are engaged with
them and would hope that if they continue to implement what
President Lobo and his administration have planned, there is no
reason why they should not be considered for a second compact.
Mr. Cicilline. I yield back, Madam Chairman.
Chairman Ros-Lehtinen. Thank you very much.
Ms. Buerkle, the vice chair of the Subcommittee on
Terrorism, Nonproliferation, and Trade, is recognized.
Ms. Buerkle. Thank you, Madam Chairman.
I would like to just begin my comments by Representative
Mack referred to a chart, and we have it over here on our
right, regarding the tidal wave of debt that we will continue
to incur if we continue on the path that we are on.
The first thing I do want to say is in defense of my very
good friend from New Jersey, Representative Smith, he is not
only a champion of the unborn, he is a champion for human
rights for all people, born and unborn, so I want to make sure
that is in the record loud and clear. Thank you.
I come from New York State and I represent upstate New
York. New York along with 43 other states is facing terrible
deficits and issues. There is no question they will be forced
to make a decision about whether or not they are going to be
able to pay their debt or pay their employees. Many states in
this country are just in dire straits when it comes to spending
and debt and whether or not they can keep their state alive. We
are all aware of that. We see articles regarding this all the
time.
My question to you is, and this piggybacks on Mr. Kelly's
question, Americans have suffered 20 months of 9 percent
unemployment and greater. We are facing fiscal crisis. As was
pointed out we are borrowing 40 cents on every dollar. We need
justification.
How do we go to the American people? American people many
of them are losing their homes. They are unemployed. How do we
justify spending this money in other countries and not having
it available for the American people?
Mr. Yohannes. Thank you, Madam Congresswoman. This is about
our future. This is about our security. This is about our
prosperity. This is building the next set of emerging
economies. This is about trade investment opportunities for
American businesses. This is about job creation here in
America. We are working to put these countries on the path to
become self-sufficient so they will never have to depend on
foreign aid again.
Having said that, if we leave these countries alone then,
in effect, we are giving these countries to our competitors.
Keep in mind after the war we had the Marshall Plan. We helped
a lot of countries. Today 75 percent of our trade is with those
countries that we supported. I really believe that the
countries we work with are poised to do the same in the next 10
years.
Ms. Buerkle. Thank you. Let me ask, and this question is
for both of you. Is there an end game with some of the aid that
is going to some of these countries? Will this aid end or does
it just go on indefinitely?
Dr. Shah. Let me address that in the context of our food
security programs or in our health programs. Our goal is to
basically put ourselves out of business by supporting a vibrant
civil society, a real vibrant private sector, or effective
public investments that are made locally that can carry out
these goals.
In malaria, for example, in sub-Saharan Africa, just 5 or 6
years ago we were all talking about how 1 million children
under the age of 5 died. Hospitals were overwhelmed.
Through a very smart program put in place by the Bush
administration and picked up and supported by our
administration, we have essentially gotten insecticide treated
bed nets to kids through schools, community centers, hospitals.
It is keeping them out of hospitals so the hospitals are now
able to see other types of patients.
As a result we have seen about a third of all those kids
who die under the age of five in sub-Saharan Africa are now
living. What that does is that allows families to invest in
their education. It allows people to invest in human capital,
and it is the pathway for growth that allows exactly what
Daniel said, countries to stand on their own two feet.
The thing I worry about is in the way that some of the cost
reductions are applied, in this case we would have to take 5
million of those kids and stop providing insecticide treated
nets to those kids. This is a $4 intervention. Unwinding some
of the more effective programs that lay the basis of
sustainable growth and real development will over time result
in the need for us to have a different approach, mostly
military, to areas that are insecure and unsafe.
Ms. Buerkle. Thank you. I have 15 seconds left. I want to
just end by saying that the American people are a generous
people and they want to help but we here in this Congress have
an ultimate responsibility of holding all agencies accountable
for how we spend the taxpayer's money and we have to be prudent
and we have to put their needs first. Thank you very much.
Dr. Shah. Thank you.
Chairman Ros-Lehtinen. Thank you.
Mr. Manzullo, the Subcommittee on Asia and the Pacific
chairman is recognized.
Mr. Manzullo. Thank you very much. Mr. Shah, in your
testimony at the end of page two and the beginning of page
three, you mentioned a new venture capital investment fund
called the Development Innovation Ventures Fund, DIV. On the
USAID Web page describing the fund it lists the E-Bike as one
of the fund's first grantees. The E-Bike, according to the Web
site, is a ``practical, scalable, pollution-free form of mobile
transportation.''
The Web site further says,
``USAID, borrowing from the private venture capital
model, will seek through a competitive process to
invest resources in promising, high-risk, high-return
projects that breakthrough innovations often require
that are often difficult to undertake using traditional
agency structures.''
Furthermore, according to Grants.gov, the Federal
Government's official Web site for announcing grants, it states
that the purpose of the fund is to, ``Institutionalize further
in USAID the serendipitous process by which great ideas are
conceptualized, developed, and refined to be real world
operational challenges.''
This is a venture fund, right, that the taxpayer could end
up losing money on?
Dr. Shah. Well, sir, it is a grant program that is
operating with principles that are modeled after a venture fund
so that we can get a higher return on our investment.
Mr. Manzullo. So it is a giveaway program? It is a grant?
Dr. Shah. Yes. We have----
Mr. Manzullo. And there is no basis for repayment?
Dr. Shah. No, we do not----
Mr. Manzullo. Alright. Then tell me about this E-Bike. Who
makes this E-Bike?
Dr. Shah. Well, all of the grantees of this program are
small entrepreneurs----
Mr. Manzullo. I asked, who makes the E-Bike?
Dr. Shah. I am not sure of the specific----
Mr. Manzullo. I think you should know that. This is the
first grantee.
Dr. Shah. There was a wave of grantees. We got thousands of
applications----
Mr. Manzullo. I understand that. So somebody is going to
take this solar-powered bicycle paid for by U.S. taxpayers'
funds and give it somewhere in the world and that is going to
help save the world?
Dr. Shah. No, that is not it, sir. We are investing in
developing new technologies that can be sold----
Mr. Manzullo. Oh, come on, please.
Dr. Shah [continuing]. In developing countries. One example
is the----
Mr. Manzullo. Where is this E-Bike going with U.S.
taxpayers' dollars? Where is it going?
Dr. Shah. Well, if it is developed and if it is a viable
business model, then a small U.S. entrepreneur could sell that
product in developing countries around the world just like----
Mr. Manzullo. And the U.S. taxpayer is supposed to pay for
that?
Dr. Shah. We are investing in the development of some of
those technologies.
Mr. Manzullo. The U.S. taxpayer is paying to buy E-
Bicycles, solar-powered bicycles, to give away to other
countries.
Dr. Shah. No, sir. We don't buy and give away any bicycles.
Mr. Manzullo. Where is the money going?
Dr. Shah. The investment goes into technology development.
Mr. Manzullo. Oh, come on. This bicycle was already
developed by the time your program started.
Dr. Shah. No, they have to be refined. They have to be
built into a business model and sold----
Mr. Manzullo. Then why are the U.S. taxpayers buying a
solar-powered bicycle? How is that going to help out the world?
Dr. Shah. Sir, U.S. taxpayers are not buying solar-powered
bicycles.
Mr. Manzullo. Wait a second. Just a second, Mr. Shah. You
said that it is a grant. Is that correct?
Dr. Shah. A grant to the entrepreneur to develop a business
model
Mr. Manzullo. And the grant money comes from the U.S.
taxpayer?
Dr. Shah. Correct.
Mr. Manzullo. So the U.S. taxpayer is buying an E-Bicycle.
Isn't that correct?
Dr. Shah. The U.S. taxpayers investing in business----
Mr. Manzullo. Will you answer the question, please? Don't
use the word ``investment.'' Use the word ``spend'' or
``paid.''
Mr. Berman. Madam Chairman, I think the gentleman should be
able to answer the questions in the words he choses.
Chairman Ros-Lehtinen. Thank you, Mr. Berman.
Mr. Manzullo. I understand. Are U.S. taxpayers' dollars
being used to buy this E-Bicycle? Yes or no?
Dr. Shah. No, we are not buying and giving away E-Bicycles.
Mr. Manzullo. So where is the money going?
Dr. Shah. To U.S. entrepreneurs----
Mr. Manzullo. So they can develop----
Dr. Shah. I can give you a number of examples. Another
partner we are working----
Mr. Manzullo. No, I am just asking about the bicycle. Okay?
U.S. taxpayers' dollars are being given to somebody to develop
this bicycle.
Dr. Shah. To develop a business to sell bicycles wherever
they can.
Mr. Manzullo. I understand. Does the taxpayer get
reimbursed on the sales of these bicycles?
Dr. Shah. No, these are small up-front grants that are
providing seed capital to develop businesses that can be scaled
through----
Mr. Manzullo. I understand, but this is the problem. This
is why the U.S. taxpayers are really upset. I don't know any
Americans that can afford to buy a solar-powered bicycle
themselves. Now the American taxpayers are buying solar-powered
bicycles and essentially giving them away to countries around
the world. This is a waste of taxpayers' dollars. The sooner
you guys wake up and understand that, the better off you are
going to be and take limited resources and use them for better
purposes.
Dr. Shah. Sir, the development innovation program is
focusing on those interventions that can reduce the cost of
achieving----
Chairman Ros-Lehtinen. Thank you, Dr. Shah.
Dr. Shah [continuing]. And we are seeing that work in a
number of----
Chairman Ros-Lehtinen. Judge Poe, the vice chair of the
Subcommittee on Oversight and Investigations is recognized.
Mr. Poe. Madam Chair, I am waiting for a poster. I would
yield to Mr. Fortenberry if that is agreeable to the chair.
Chairman Ros-Lehtinen. Absolutely.
Mr. Fortenberry first and then we will go to Judge Poe.
Mr. Fortenberry. Thank you, Madam Chair, for holding the
hearing.
Thank you, gentlemen, for coming today. Let me touch upon a
subject that was brought up earlier. It is sensitive but,
nonetheless, I think it needs to be unpacked further.
You are correct in stating that the United States does not
directly subsidize the procurement of abortion in our overseas
program. However, the United States does subsidize and
underwrite organizations that are directly involved in the
provision of abortion. That is a new position, a new policy of
this administration which is frankly troubling to me.
I think our development goals, our foreign policy
initiatives, should be built upon the consensus of values in
this country. My goodness, we have enough to do with meeting
basic humanitarian needs that we shouldn't be exporting our own
philosophical and cultural divides and imposing them on other
people. I would submit that for your consideration.
I think what you do is important. I think that it is
intimately related to national security, economic well being,
as well as what is the call really in the hearts of most
Americans to try to do something to help those who are in
vulnerable situations.
As we do that we develop relationships. We develop trust
and that helps with communication. That breaks down barriers
and that prevents the potential for conflict and it opens up
the possibility for economic well being between different
peoples. With that said, what works? What works best? What
doesn't work?
Dr. Shah. Thank you. We have restructured a number of our
major strategies to focus on exactly that question. We want to
invest in those things that work and move resources away from
those things that don't. We have just unveiled a new education
policy, for example, that is targeting 100 million children and
ensuring that they get improved learning outcomes.
For decades a lot of the investment and spending that has
gone into development assistance and education has been
somewhat effective but has not measured the educational
attainment of the kids. By measuring that attainment and
focusing and investing in those strategies whether it is
teacher training or getting kids access to better material and
curricula that work, we can demonstrate and document that we
are getting better outcomes.
That is one example. Across our health portfolio we are
reinvesting our resources in things like vaccines and
immunization, malaria prevention, HIV prevention, new TB
diagnostic technologies that can bring down the cost of
treatment and diagnosis because those things are, frankly, an
order of magnitude more efficient in achieving the outcomes
than the traditional way of doing business.
A lot of the innovations we are trying to pursue across all
of these areas are looking at what is more expensive and can we
find new ways to provide services and help achieve the same
outcomes at much lower cost.
Just last week we launched a partnership with the Gates
Foundation, Norway, the World Bank, and Canada where we
leverage our dollars. For every dollar we put in we raised four
from them. It is called Saving Lives at Birth and it focuses on
developing new innovations that allow community health workers
who are not paid.
They are trained but not paid to in people's homes and in
communities really help save lives in that critical 48 hours of
birth and immediate life. Those are the kinds of innovations
that we think can reduce the cost and get us better outcomes.
Mr. Fortenberry. Which become all the more important in
light of the fundamental purpose of this hearing to talk about
constraints in the budget which are very, very real and we are
all having to make very difficult decisions about priorities
and how we are going to tighten the belt. It is unsustainable
the pathway that we are on so we all have to embrace this
reality and do what we can with limited resources. What doesn't
work?
Dr. Shah. Well, I would say there are some things that
don't work. We have done, I think, far too much teacher
training without measuring outcomes so we are reducing our
investment in that area and focusing more on learning
attainment. When we do things like try to provide health
services through only hospitals, that is a very costly way to
provide health services in the lower-income parts of the world
and we should be looking for community-based solutions that are
cheaper so we are shifting resources from hospitals to
communities.
Mr. Fortenberry. I am running out of time so I need to cut
you off. So in that regard as well, do we make an attempt?
Perhaps it has to be subtle at points and sensitive that this
is a gift of the United States Government?
Dr. Shah. We try to be aggressive in pointing out that
these investments are from the American people. That is our
tagline. The logo goes on everything we do and we demand real
results. I think MCC----
Mr. Fortenberry. Let us turn to Millennium Challenge right
quick if you could answer the question as to what has worked
and what hasn't worked because it is a new framework--I have 10
seconds. It is a new framework for accountability and it is
very fascinating. I think we are starting to get evidence.
Mr. Yohannes. What makes MCC distinctive, so different from
any other development agency that our approach to development
is like a business? We do a very thorough----
Chairman Ros-Lehtinen. Thank you. Thank you very much.
Mr. Royce, the chairman on Subcommittee on Terrorism,
Nonproliferation, and Trade is recognized.
Mr. Royce. Thank you, Mr. Yohannes. Let me raise an issue
on Millennium Challenge that I have been concerned about for
some time and that is the $240 million contract with Senegal. I
will give you just one of many of the issues that I have raised
repeatedly with your agency and that is the fact that you have
a 160-foot tall North Korean-built statue being shipped in by
the 83-year-old President.
The cost, I would guess, is around $50 million and he gets
35 percent of that as a kickback. We are talking about the
President of the country gets 35 percent of that as a kickback
to a personal foundation. This is a guy who created a special
ministry for his son in order to pay his son. We have a
European diplomat who was given a gift of about $200,000
walking out of the country before a loan came in the other
direction.
I just wonder. It is not just that our aid dollars freed up
Senegalese funds to be used for a statue taller than the Statue
of Liberty, taller than the Redeemer statue in Brazil. This
thing is a colossus, North Korean art, sitting there. It is the
fact that the North Korean regime got the money. Our U.S.
taxpayers put money into Senegal and that frees up money for
this kind of an operation.
Frankly, you strip away everything else and we are
essentially rewarding a guy who is helping fund the regime in
North Korea, besides just the corruption that is going on
there. I have written repeatedly, raised this issue with the
Secretary of State, tried to get everybody to reevaluate the
$540 million over in Senegal. I know we say we are bringing up
these issues with him but he has extended his term to 7 years
in office.
Come on. Could you give me your take on what we are doing
right now with President Wade in Senegal?, which is certainly
moving in the wrong direction. I have been to Senegal. I was
there back when it was moving the right direction. Right now we
are doubling down on somebody who is back peddling as fast as
humanly possible in terms of the rule of law.
Mr. Yohannes. Thank you very much, Mr. Congressman. You
know, in terms of the statue, I mean, those things happen. We
are not happy about it but some of the poorest countries they
seem to be doing something like that which is stupid but,
nevertheless, that goes on.
In terms of looking at the country as a whole, when you
consider Senegal with other countries, primarily in the area of
corruption, in the area of good governance, in the area of
freedom of the press and economic policies and investment in
people, they do score extremely well.
Having said that, you know, a number of issues have come to
us in the last couple months. In fact, there was an incident
that happened a couple of months ago where President Wade
exempted a couple of the ministries from procurement processes
and we responded back and we worked in conjunction with the
State Department, the World Bank, and others.
We sent a message that if you decide to remove those
exemptions that will suspend or terminate our compact and they
reversed after they heard our complaint. It appears to be
sometimes a problem but we are responding to it. We are making
some changes. They are responding to us. After all, you know,
they have about $500 million. They don't want to do that.
Mr. Royce. I understand that but think on this, all right?
As I said, once they were moving in the right direction. They
had think tanks that were promulgating the right ideals. You
brought out these facts. The facts I look at is how
Transparency International sees it. They say that Senegal has
fallen from No. 71 in '07 to 105 out of 178 countries, 105 from
the list in their corruption ranking.
In other words, they are not moving in the right direction.
They are slipping about as fast as a country can slip. I would
argue that at some point in time you have to send a message and
you have got to send a message to other countries that you are
serious.
If Senegal isn't it, and if cutting this deal with the
North Koreans to bring in a statue taller than the Statue of
Liberty which 35 percent of the money gets kicked back to a
personal foundation of President Wade, if he has a relationship
with what he is doing with his son, if that isn't the red
light, I don't know what is. I would really suggest to you what
I have suggested in numerous blogs and letters----
Chairman Ros-Lehtinen. Thank you.
Mr. Royce [continuing]. And in meetings with the Secretary
of State please reverse this action. Thank you.
Chairman Ros-Lehtinen. Thank you.
Judge Poe, the vice chair of the Subcommittee on Oversight
and Investigations is recognized.
Mr. Poe. Thank you, Madam Chair. Thank you both for being
here. I want to make it clear that in your operation you are
doing what Congress has commissioned you to do. I have a chart
here that is furnished to us by the Department of Defense and
the State Department. It is off their Web site. A very simple
chart. All of the red represents countries that receive aid
from the United States whether it be foreign aid and maybe
military aid.
The green represents those countries in the world that
receive military aid from the United States. And those few
countries that are in blue they receive no aid from the United
States. As you can see, it is most of the countries in the
world. There are 192 countries in the world give or take those
last two who sometimes are countries and sometimes they are not
countries but we give aid to most of those countries.
I understand the reason. It is to promote humanitarian
goals in the interest of the United States and some of those
noble things. But it concerns me that we give aid to our
``friends'' Chavez in Venezuela; that we give aid to Cuba, that
we give aid to Russia and, of all things, we give aid to China,
the country that controls most of our debt. And the other
countries throughout the world receive some type of aid.
Many of these, I would guess most of these countries, they
don't even like us. They vote against our interest in the
United Nations. As my friend Louie Gohmert says we don't need
to pay people to hate us. They will do it on their own. Maybe
there is some truth to that. It seems to me that maybe we
should rethink the way that when we are talking about the
budget and foreign affairs and the State Department that we
allocate money.
Maybe each of these countries should stand or fall on their
own. As you know, we vote for foreign aid appropriations all
the countries together in one piece of legislation whether it
is Israel or whether it is some other country. I am a big
supporter of Israel. I think that most Members of Congress are.
I can't speak for them but I think most Members of Congress
would want to appropriate aid to Israel.
If we want to give aid to Israel, we have got to give it to
all of these other countries as well. So maybe the time has
some to let each of these countries stand or fall yearly on
their own with an up or down vote. Each country in the State
Department presents to us the arguments for, and maybe against,
continuing aid for each country one at a time. Maybe that is
our responsibility to rein in spending.
Foreign aid, you mention that. If I mention that in my
congressional district in Southeast Texas, people really just
get irritated about that. I understand the percentage of it
from the budget but people are concerned about foreign aid.
Dr. Shah mentioned that we are helping educate people
throughout the world. Well, we are at a time where many states
are cutting back education so why are we giving money to
countries to educate their kids when we are losing money, don't
have as much money to educate our own? It is questions like
that that I constantly get.
Dr. Shah, I don't want to commit you but what do you think
about that philosophy? Should we just let each country stand or
fall on its own or should we continue the same process?
Dr. Shah. Well, I would suggest and believe strongly that
our assistance is part of our national security strategy. When
you look at it in aggregate it is a very, very small investment
that yields relatively higher returns. In education in
Pakistan, for example, when we are able to get hundreds of
thousands of kids in FATA and Waziristan and other dangerous
parts of the countries in schools where they have an
alternative to madrassas, that is an outcome that is good for
our national security.
Mr. Poe. But isn't it true that in Pakistan we have now
issues with the Pakistan Government about giving safe haven to
the Taliban and maybe some of the money that we are giving them
is turning up in the hands of the bad guys? Doesn't that
outweigh educating the kids in Pakistan?
Dr. Shah. We have robust vetting and monitoring systems in
our Pakistan program and in other programs around the world so
that we can track where our resources have gone. I guess that
is the second point which is we are not just writing checks to
governments. A lot of this work, depending on where and under
which circumstances, supports civil society, often supports
democratic governance initiatives, supports the types----
Mr. Poe. Excuse me, Dr. Shah. I want to reclaim my time
with 16 seconds. Do you have an opinion about whether we should
put it all in one big massive bill or split them up country for
country regardless of what kind of aid it is?
Dr. Shah. I think we should be focused on reform and
results and think of this as part of our national security
strategy and based on that, make relative tradeoffs across the
entire portfolio.
Chairman Ros-Lehtinen. Thank you.
Mr. Poe. You cannot answer my question, or won't. Thank
you, Madam Speaker.
Chairman Ros-Lehtinen. Thank you. Thank you so much and I
want to thank first our members for excellent, thought-
provoking questions. Thank you to our two wonderful panelists.
We thank you for the time and we will move ahead and see where
we can meet each other between the fiscal realities that
confront us and the needs of our world. Thank you so much and
the meeting is adjourned.
[Whereupon, at 12:10 p.m., the Sub deg.Committee
was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing RecordNotice deg.