PUBLIC POLICY UPDATE

May 13, 2011

WASHINGTON UPDATE

House Subcommittee Allocations Released: Cuts to SFOps Continued

This week House Appropriations Chair Rogers released his discretionary funding allocations for
the appropriations subcommittees for FY2012. The allocation for the State, Foreign Operations
Subcommittee was $39.569 billion for regular funding. It was also indicated that separate,
additional funding would be provided for what the administration calls Overseas Contingency
Operations (OCO) funding and what the House is calling Global War on Terrorism (GWOT) funds,
at the level of $7.6 billion (which is full funding of the administration’s OCO request if the Pakistan
Counterinsurgency Capability Fund is funded in the Defense bill, as the House is proposing).

The total House FY2012 SFOps subcommittee allocation, including OCO, is thus $47.169 billion.

On the one hand, this is about $8.5 billion more than the House budget resolution (from Budget
Chair Ryan) recommended for SFOps.

On the other hand, it’s 19 percent ($11.2 billion) less than the administration requested for
FY2012 (including OCO).

While a comparison to FY2011 enacted shows this 302(b) to be just a 2 percent cut, the FY2011
bill itself was already a significant cut on the prior year.

If we compare to FY2010 total enacted (including supps), the FY2012 302(b) is a 17 percent cut.
If you remove the OCO from the 302(b) and compare that to FY2010 regular enacted (without
supps), the cut is 22 percent.

Bottom line: this FY2012 subcommittee allocation continues the radically downward trend
in spending for international affairs begun in FY2011.

The following table lists each appropriations subcommittee and shows how its House allocation
for FY2012 compares to the administration’s FY2012 request (with OCO amounts included in
these calculations). It makes clear that SFOps did not receive the worst cut (relative to the
request), but was certainly on the deeper end of things.

Subcommittee Comparison: 302(b) relative to administration request:

Defense -1%
Military Construction, VA -2%
Homeland Security -7%
Legislative Branch -11%
Interior -12%
Commerce, Justice,
Science -13%
Energy and Water -16%

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 State, Foreign Operations -19%
Agriculture -23%
Financial Services -23%
Labor, HHS, Education -23%
Transportation, Housing -36%

Overall, the House’s total “discretionary plus OCO” allocation is $97 billion, or 8 percent less
than the administration request (including OCO) (request:$1.243 trillion; House:$1.146 trillion).
That 8 percent figure provides some perspective for judging the individual subcommittee cuts, and
make clear that the subcommittees toward the bottom of the list take a bigger percentage hit so
that Defense, Military Construction/VA, and Homeland Security could take lighter hits.

House State, Foreign Operations Mark-ups Scheduled

This week the House Appropriations Committee released its schedule for consideration of all the
FY2012 appropriations bills. State, Foreign Operations is scheduled last of all the bills: it will have
its subcommittee mark-up on July 27, and its full committee mark up on August 3.

UPCOMING HEARINGS

Hearing: Strategic Implications of Pakistan and the Region

Committee: Senate Foreign Relations Committee
Witnesses: Gen. James Jones Jr. (retired), Former National Security Advisor
When: Tuesday, May 17, 2011, 10:00 a.m.
Where: 419 Dirksen Senate Office Building
Contact: 202-224-4651 http://foreign.senate.gov

Hearing: Evaluating Goals and Progress in Afghanistan and Pakistan

Committee: Senate Foreign Relations Committee
Witnesses: Secretary of State Hillary Clinton
When: Thursday, May 19, 2011, 10:00 a.m.
Where: 419 Dirksen Senate Office Building
Contact: 202-224-4651 http://foreign.senate.gov

Hearing: Next Steps in Cote D’Ivoire

Committee: Senate Foreign Relations Committee
Witnesses: William Fitzgerald, deputy assistant secretary of state, Bureau of African Affairs;
Nancy Lindborg, assistant administrator in the Bureau of Democracy, Conflict, and Humanitarian
Assistance, USAID; Michael McGovern, director of graduate studies of African studies, Yale
University; Jennifer Cooke, director of Africa studies, Center for Strategic and International
Studies; and Raymond Gilpin, director of the Center for Sustainable Economies, United States
Institute of Peace
When: Thursday, May 19, 2011, 2:30 p.m.
Where: 419 Dirksen Senate Office Building
Contact: 202-224-4651 http://foreign.senate.gov

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 HEARING SUMMARIES
Steps Needed for a Successful 2014 Transition in Afghanistan
Senate Foreign Relations Committee
May 10, 2011

Witnesses:
 David Kilcullen, president and CEO, Caerus Associates
 Seth Jones, senior political scientist, RAND Corporation
 Stephen Biddle, Roger Hertog senior fellow for defense policy, Council on Foreign
Relations

Chair John F. Kerry (D-MA) opened with the committee’s goal: to outline specific steps for
transitioning security responsibilities to Afghan forces while preserving American interests. Osama
bin Laden’s death could potentially create the necessary momentum for a political solution.
Currently, the U.S. spends an unsustainable $10 billion per month in Afghanistan. At the same
time, the chair believes that withdrawing from the country entirely will jeopardize the gains U.S.
forces and agencies have made over the past 10 years. A successful transition will require a
solution all parties agree upon as “good enough,” one which takes into account a variety of
factors: the degree of centralization; autonomy of local officials; and corruption, predatory
behavior and incompetence among security forces.

Ranking Member Richard G. Lugar (R-IN) recognized the symbolic importance of success in
Afghanistan, but questioned the strategic viability of the investment, given the nature of global
challenges today. He believes that Afghanistan is no longer the most serious threat in terms of
support for extremists. The mission there has become an overambitious nation-building endeavor
that is doomed to fail. Lugar believes the president should put forward a new plan for the region
with a clear definition of success and relevant measures to judge progress.

David Kilcullen focused his testimony on delineating what has to happen on the ground. In his
opinion, the Taliban is not the source of problems in Afghanistan, but a symptom of a much wider
circle of instability, including corruption stemming from the drug economy and lack of
accountability in aid: corruption leads to abuse by local officials; abuse creates rage and
resentment amongst the general population; that rage and resentment fuels support for the
insurgent groups forming the Taliban. The U.S. can break this circle through a combination of
counter-terrorism strategies, stabilization policies, and the brokering of a national reconciliation
between the fighting parties.

Seth Jones testified that the goals in Afghanistan should be limited to defeating the remaining al-
Qaeda cells and denying them a safe haven and allied government. These goals can be
accomplished through a limited counter-terrorism operation, a comprehensive counterinsurgency
strategy, or a combination of each. In his opinion, the two preceding strategies should be
combined to create an Afghan-led counterinsurgency: arming police and military personnel while
continuing development work. Success will be achieved if al-Qaeda is destroyed, the Taliban
breaks its ties with the terrorist group, or the Afghan military can hold them off.

Stephen Biddle stated that a clear end-state needs to be established for a successful transition
in 2014. The real and narrow interests of the U.S. include fighting al-Qaeda and preventing the
spread of instability into Pakistan. A decentralized version of the 2001 national government may
be helpful in establishing stability. A mixing of autonomies may limit the access of terror groups
and lower corruption.

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Questioning:

Chair Kerry asked each of the experts why the U.S. should be in Afghanistan and what its
interests in the country were. Kilcullen answered that the goal of U.S. policy is to defeat al-Qaeda
in the region. Currently the U.S. strives to make Afghanistan stable enough that the American
presence can be reduced without a drop in security. Jones and Biddle agreed with this response
and added that the U.S. also does not want anymore terrorist attacks stemming from the region.

Ranking Member Lugar asked why Afghanistan had to be the primary focus of anti-terror
operations. Jones stated that al-Qaeda still enjoys strong support in Afghanistan and a support
base must be preempted. Biddle answered that Afghanistan’s proximity to Pakistan—a country
with nuclear arms—makes it essential for the U.S. remain in the country. Instability in Pakistan
could lead to its collapse.

Sen. Bob Corker (R-TN) asked the witnesses whether the U.S. should condition aid to Pakistan
on its cooperation in Afghanistan. Kilcullen answered yes, and that it has been in the Kerry-Lugar
Pakistan bill. The current problem is the lack of a trustworthy interlocutor to determine which
elements in the country have been supporting insurgent groups. Biddle stated that part of the
problem is Pakistan hedging against what it perceives as unrealistic U.S. goals. Clarity in this
realm would help ease some of Pakistan’s nervousness.

Sen. Jeanne Shaheen (D-NH) asked about what mechanisms have been put into place to
preserve the rights of Afghan women should a political settlement be reached. Kilcullen
responded that the Taliban has shifted its position of the education of Afghan women. While this
may simply be a tactical move, it still reflects popular support for it. Jones admitted that positions
among leaders have changed significantly and that more progress has been made since 2001
than in the many years before it. The U.S. must proceed with caution in the more conservative
areas of the country to avoid backlash.

Kerry asked what a political solution could look like. Kilcullen stated that the coming expiration of
President Karzai’s final term will provoke a constitutional crisis that could serve as an opportunity
to institute badly needed political reforms. Jones does not believe a political settlement is possible
and that Pakistan must be brought in to play a critical role. Biddle believes that decentralizing
nominal authority and centralizing actual power will put limits on local authorities.

Governance, Democracy, Human Rights, and the Millennium Challenge Corporation in

Africa: The FY2012 Proposed Budget
House Foreign Affairs Subcommittee on Africa, Global Health, and Human Rights
May 10, 2011

Witnesses:
 Johnnie Carson, assistant secretary of state, Bureau of African Affairs, U.S. State
Department
 Sharon Cromer, senior deputy assistant administrator, Bureau for Africa, USAID
 Patrick Fine, vice president for compact implementation, Department of Compact
Operations, MCC

Chair Christopher Smith (R-NJ) outlined the purpose of the hearing: to examine the Obama
administration’s FY2012 budget request for democracy, governance, human rights and MCC
programming for sub-Saharan Africa. Since global health accounts for three-fourths of U.S.
foreign assistance to sub-Saharan Africa, there will be a separate hearing later this month to

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discuss the topic. Smith lamented current domestic economic concerns but insisted that the
dramatic rise in U.S. foreign assistance to sub-Saharan Africa from FY2002 ($1.1 billion) to
FY2010 ($8.8 billion) stems from more than just America’s generosity: it also comes from a
sobering look at its strategic interests on the continent, such as oil supplies, failed states,
transnational crime, climate change, food security and mineral reserves.

Ranking Member Donald Payne (D-NJ) asserted that even in lean economic times for the U.S.,
events in North Africa show that U.S. security, democracy and governance assistance are still
imperative. He implored the witnesses to ensure that the U.S. government is prepared to deal with
the short- and long-term destabilizing impacts of food shortages and rapid population growth in
Africa, emphasizing his support for U.S. conflict prevention efforts. For every $1 spent on conflict
prevention, $60 is saved in crisis response after a conflict emerges. He expressed concerns about
a reduction in U.S. assistance to emerging African democracies like Niger and Guinea, and
praised the MCC’s efforts in Africa to foster sustainable and substantive reforms.

Rep. Karen Bass (D-CA) extolled the economic benefits of U.S. foreign assistance to sub-
Saharan Africa. She stated that half of all U.S. exports go to the developing world and that smart
U.S. investment in Africa is mutually beneficially and has yielded marked returns. Although the
future of Africa is in the hands of Africans, she believes the U.S. should play a major role in
ensuring democratic and economic reforms.

Johnnie Carson stated that the U.S. has five overarching priorities for sub-Saharan Africa:
1) strengthening democratic institutions and rule of law;
2) encouraging long-term development and growth, including food security;
3) enhancing access to quality health care and education;
4) assisting in the prevention, mitigation, and resolution of conflicts; and
5) working with African nations and leaders to address transnational challenges such as terrorism,
maritime security, climate change, narco-trafficking, and trafficking in persons.

Carson stated that the Obama administration’s FY2012 for U.S. foreign assistance towards sub-
Saharan Africa increased by 10 percent from FY2010 total enacted levels due to President
Obama’s special initiatives in climate change, food security, and global health. Furthermore, U.S.
economic interests in Africa are clear and compelling, as U.S. oil imports from West Africa
increase and as population growth opens market opportunities for U.S. businesses. He completed
his opening statement by outlining the continued challenges (HIV/AIDs, food security, etc.) African
countries face.

Sharon Cromer stated that USAID is becoming more selective about its partner countries and the
sectors on which it focuses. Furthermore, she spoke about the USAID Forward initiative and its
movement toward practices that achieve measurable development results, creating conditions
where U.S. assistance is no longer needed. Cromer then extolled the promise of scientific and
technological innovation to bolster development outcomes. She mentioned that USAID envisions
a future where market-led development replaces foreign assistance, and that agricultural growth
is vital in reducing poverty. She closed with brief descriptions of President Obama’s three
signature development initiatives: the Global Health Initiative, the Feed the Future Initiative, and
the Global Climate Change Initiative.

Patrick Fine began his opening statement by citing that two-thirds of MCC funds go to sub-
Saharan Africa. He asserted that the MCC is a specialized U.S. instrument that works with poor
but well-governed countries, and that the selective nature of the MCC incentivizes countries
interested in financial assistance to improve their governance. Countries signing MCC compacts

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must make policy reforms before funding begins, and the MCC reserves the right to suspend or
even cancel programs if reforms are not sustained once assistance begins. Fine then briefly
outlined the Obama administration’s FY2012 budget request for the MCC: $1.125 billion that will
go towards compacts in Zambia, Cape Verde, and Ghana.

Questioning:

Smith expressed concerns and questioned what he perceived to be dramatic shifts in U.S. foreign
assistance towards countries in sub-Saharan Africa. He cited increases of 20 percent or more in
countries like Cameroon, Ghana and Mali; 50 percent cuts in countries like Burundi and Guinea;
and cuts in education and water and sanitation programs. Smith also asked about progress on
combating human trafficking in Africa, as well as the status of AFRICOM. Finally, he praised the
Feed the Future Initiative and the 1,000 Days campaign on nutrition.

Carson stated that funding for sub-Saharan African countries were based upon President
Obama’s key development initiatives and the five aforementioned U.S. priorities for Africa, but that
he would give the subcommittee a fuller briefing about specific countries and sectors if necessary.

Regarding trafficking, both Carson and Cromer explained the U.S.’s tiered rating system for
assessing countries’ progress on combating human trafficking, and that the four priority African
countries for USAID assistance in this area are the Democratic Republic of the Congo, Zimbabwe,
Senegal and Mauritania. Carson especially praised South Africa’s efforts to combat human
trafficking during last year’s World Cup and added that AFRICOM’s current focus is on
professionalizing armed forces on the African continent.

Fine addressed food security and agriculture projects in sub-Saharan Africa, stating that 44
percent of MCC investments in any given compact go toward the agriculture sector.

Payne focused his comments and questions on African elections in 2011 and 2012, as well as
Southern Sudan, Somalia, and Lord Resistance Army’s leader Joseph Kony. Regarding elections,
Payne specifically cautioned for the U.S. not to allow situations where a power-sharing
government is created when the incumbent loses an election but refuses to cede power, as
Gbagbo did in Ivory Coast this year.

Carson cited U.S. electoral assistance and diplomatic support in Nigeria, Niger, Guinea and Ivory
Coast as evidence of effective U.S. support for democracy. Carson argued that Somalia is a
domestic, regional, and global problem and that the U.S. is addressing the country through
support of the African Union Mission in Somalia (AMISOM) peacekeeping mission, the tenuously
ruling Transitional Federal Government (TFG) in Mogadishu, and independent groups that are not
allied with the TFG or the al-Shabaab terrorist organization.

As for efforts to capture Joseph Kony, Carson mentioned that the U.S. has stepped up its
engagement with the Ugandan government and is building the capacity of regional actors like the
Democratic Republic of Congo and the Central African Republic to go after Kony.

Bass focused her questions on transnational crime issues in sub-Saharan Africa and U.S. efforts
to combat it. Carson stated the Central and South American cocaine traffickers use West African
countries like Guinea-Bissau as a transit point on their way to Western Europe, while East African
countries with major airports, such as Ethiopia and Kenya, serve as a point of entry for heroin
coming from Afghanistan. He said that U.S. assistance is focused on training investigators,
forensic scientists, and customs investigations in air and sea ports.

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Smith closed the hearing by expressing his deep concern about a relatively recent Ethiopian law
increasing the regime’s authority over NGOs that receive foreign funding. He asked whether the
law impedes the activities of human rights civil society organizations. Carson stated that he has
consulted with the Ethiopian government about the issue and hopes that the legislation will be
reviewed. Carson went on to explain that human rights groups have not been banned and that
U.S. funds are not being diverted to Ethiopian government front groups; rather, U.S. assistance is
going to legitimate civil society groups that do a range of things, including microcredit and finance.

USAID: Following the Money

House Committee on Oversight and Government Reform—Subcommittee on National Security,
Homeland Defense, and Foreign Operations
May 11, 2011

Witnesses:
 Rajiv Shah, administrator, USAID
 Donald Gambatesa, inspector general, USAID

Chair Jason Chaffetz (R-UT) encouraged the subcommittee to examine USAID’s capacity to
account for spending in U.S. foreign assistance. USAID is currently responsible for $18 billion in
aid to 80 different countries, the largest recipients being Afghanistan, Pakistan, Iraq and Haiti. The
chair expressed concern over the agency’s apparent lack of accountability in much of its
contracting, and its inability to deliver information to the appropriate oversight committee in a
timely manner. He cited an inspector general (IG) finding that almost a third of USAID’s partners
reported findings that were false, overstated or unverifiable. In addition, USAID has been slow in
many of its project areas. It has only managed to clean up 5 percent of the rubble in Haiti 16
months after the earthquake. Furthermore, locals in Pakistan do not seem to recognize the
amount of aid given to them by the U.S. The American people are not getting top dollar results for
their investment in foreign aid.

Ranking Member John Tierney (D-MA) stated that USAID’s operations are essential to the
functioning of U.S. foreign policy, with many military leaders supporting its ability to prevent
conflict through development. With no natural constituency, cuts to foreign aid, and USAID in
particular, are easy. While he supports the full funding of USAID, Tierney remains wary of
international implementing partners and the lack of internal oversight within the agency. He is
hopeful that USAID Forward will bring needed procurement, oversight, transparency, and
planning reform.

Rajiv Shah testified that USAID constitutes a core pillar of U.S. national security and foreign
policy. USAID Forward, an outcome of the QDDR, emphasizes transparency, accountability, and
results. Actions have been taken to improve policy formation and international implementing
partner vetting. Modern contracting processes have improved transparency with smaller contracts
and more local partners. Finally, results of USAID projects are now being reported by independent
third party organizations.

Donald Gambatesa outlined the IG’s role in assisting USAID and Shah in combating waste and
fraud. It has recently improved these efforts by sending more staff into project areas to perform
audits and reviews on site, where results can be better authenticated. Gambatesa believes the
Agency is responding well to these efforts and he feels greatly encouraged by reform efforts like
USAID Forward.

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Questioning:

Chair Chaffetz asked Shah if the IG’s report of a third of USAID projects with questionable results
was accurate. Shah stated that he did not think so. He believes that U.S. foreign assistance has
been heavily skewed toward identifying the number of beneficiaries, money spent, and other
process data that can be unreliable. USAID is now focusing on impact analysis, evaluating how
projects impact the lives of people in the area in which they are performed.

Chaffetz asked Gambatesa about the IG report and what his department does about fraud.
Gambatesa responded that not every case in that category was a case of fraud. Instead, there
was a collection of reasons for inclusion, such as insufficient data or conflicting reports. When
fraud is discovered, the IG office conducts its own investigation and then asks the Department of
Justice to prosecute the offenders.

Ranking Member Tierney asked about the progress of the proposed increase in direct hire
personnel. Shah responded that USAID has hired more than 600 Foreign Service Officers in the
last three years. It has also taken steps to increase the number of staff in program design and
implementation, monitoring, accountability, and oversight.

Rep. Raul Labrador (R-ID) expressed his exasperation with USAID’s inability to provide an
accurate count of how many projects it has started and completed in Afghanistan. No provision of
results has been reported other than the amount of money spent. Shah admitted that USAID
projects must be accountable for results and provided Labrador with information about the impact
of programs in Afghanistan.

Chaffetz stated his displeasure at the apparent slow removal of earthquake debris in Haiti.
Millions of dollars have been spent and only 5 percent of the rubble has been cleared away. Shah
responded that the amount of rubble cleared away was closer to 20 percent and that not enough
funding has been devoted to it. Rubble removal, though vastly important, is not a very “sexy”
project. Furthermore, USAID gets its direction from Interim Haiti Reconstruction Commission
(IHRC) and the government of Haiti.

Rep. Darrell Issa (R-CA) asked for an evaluation of USAID’s efforts in Haiti so far, after citing the
dramatic shortfall of temporary and transitional shelters—more than 1.5 million people do not
have a stable place to live. In his opinion, the effort has been a complete failure with more than a
50 percent shortfall in the number of shelters USAID wanted to construct. Shah responded that
the humanitarian effort in Haiti, where the majority of the relief funds were spent, was certainly not
a failure. He also stated that the U.S. goal in Haiti was never to build 1.5 million temporary homes.
USAID is pursuing reconstruction with the IHRC and the Haitian government, rehabilitating the
homes that escaped severe earthquake damage.

Tierney asked what the effects of the proposed $37 billion cut to USAID have on the reform
process. Shah answered that the 30 percent cut would end reform efforts, especially
procurement.

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 ARTICLES AND REPORTS
Foreign Policy
May 9: The Myth of 9 Billion
This week the UN Population Division revised its projections for the coming century, estimating
that world population will surpass 10 billion by 2100. Experts worry that this explosive growth will
exacerbate global problems like food and water shortages, and erase economic gains in Africa.

May: The New Geopolitics of Food

Surging food prices could be the result of food security beginning to be factored into global power
politics. Unless the underlying causes of these price increases are addressed—population growth,
shrinking water tables and climate change, among others—world hunger will continue to increase.

BBC News
May 9: Ivory Coast: Mass Graves Unearthed in Yopougon
The UN Human Rights chief announced that two new mass graves have been found in the
suburbs of Abidjan. The 10 graves discovered so far have contained the remains of 63 people.
Locals contend that Gbagbo supporters committed the massacres the day after he was arrested.

May 11: Sudan: UN Peacekeepers Attacked in Abyei

Four UN peacekeepers were attacked and wounded in the disputed Sudanese region of Abyei,
despite both sides agreeing to withdraw their forces from the area on Sunday. Clashes between
southern and northern Abyei residents have been happening since January.

May 12: Grameen Bank Founder Muhammad Yunus Quits Top Post
Muhammad Yunus resigned as Grameen Bank’s managing director after a long dispute with the
Bangladeshi government, whose Supreme Court has denied his appeal to be reinstated.
Providing small loans to the poor since the 1970s, Grameen’s model has been copied worldwide.

CNN.com
May 7: UN Warns about Standoff in Oil-Rich Sudan Region
The UN warns that violence in Abyei could undermine relations between the North and South as
the permanent separation draws near. Sudanese President Omar al-Bashir says he will not
recognize the government of Southern Sudan if it claims Abyei.

Devex
May 10: Valerie Amos Calls for Cease-fire to Allow Aid Delivery in Libya
The UN’s top humanitarian relief official has called for a temporary cease-fire in Libya to allow the
delivery of humanitarian aid and give civilians in the war-torn regions an opportunity to evacuate.
Amos also expressed concerns over the effect of international sanctions on Libya’s health sector.

Al Jazeera
May 12: Rape of Women in DR Congo “Tops 1000 a Day”
More than 1,100 women are raped every day in the Democratic Republic of Congo (DRC), 26
times higher than the rate reported by the UN last year, and experts state that even these new,
much higher figures are conservative estimates because of chronic underreporting.