< Back to Current Version

Foreign Aid: An Introduction to U.S. Programs and Policy

Changes from February 10, 2011 to January 29, 2016

This page shows textual changes in the document between the two versions indicated in the dates above. Textual matter removed in the later version is indicated with red strikethrough and textual matter added in the later version is indicated with blue.


Foreign Aid: An Introduction to U.S. Programs and Policy Curt Tarnoff Specialist in Foreign Affairs Marian Leonardo Lawson Analyst in Foreign Assistance February 10, 2011 Congressional Research Service 7-5700 www.crs.gov R40213 CRS Report for Congress Prepared for Members and Committees of Congress Foreign Aid: An Introduction to U.S. Programs and Policy Summary Foreign assistance is a fundamental component of the international affairs budget and is viewed by many as an essential instrument of U.S. foreign policy. Since the terrorist attacks of September 11, 2001, foreign aid has increasingly been associated with national security policy. U.S. foreign aid policy has developed around three primary rationales: national security, commercial interests, and humanitarian concerns. These broad rationales are the basis for the myriad objectives of U.S. assistance, including promoting economic growth, reducing poverty, improving governance, expanding access to health care and education, promoting stability in conflictive regions, promoting human rights, strengthening allies, and curbing illicit drug production and trafficking. In FY2010, U.S. foreign assistance totaled $39.4 billion, or 1.1% of total budget authority. In real terms, this was the highest level of U.S. foreign assistance since 1985. The U.S. Agency for International Development and the State Department, the primary administrators of U.S. foreign assistance, provided $10.38 billion in security-related assistance; $10.93 billion for health, education, and social welfare programs; $3.64 billion for governance programs; $5.21 for economic growth activities; and $4.98 in humanitarian assistance. Assistance can take the form of cash transfers, equipment and commodities, infrastructure, or technical assistance, and, in recent decades, is provided almost exclusively on a grant rather than loan basis. Key foreign assistance trends in the past decade include growth in development and humanitarian aid, particularly global health programs, and, in the wake of the September 11, 2001, terrorist attacks, increased security assistance directed toward U.S. allies in the anti-terrorism effort. In FY2010, Afghanistan, Israel, Pakistan, Egypt, and Haiti were the top recipients of U.S. aid, reflecting long-standing aid commitments to Israel and Egypt, the strategic significance of Afghanistan and Pakistan, and emergency earthquake-related assistance to Haiti. Africa is the top recipient region of U.S. aid, at 29%, with the Near East and South and Central Asia each receiving 26%. This is a significant shift from FY2000, when the Near East received 60% of U.S. aid, and reflects significant increases in HIV/AIDS-related programs concentrated in Africa and the expansion of security assistance to Afghanistan and Pakistan. Other notable trends since FY2000 include the increasing role of the Department of Defense in foreign assistance and aid targeted at countries that have demonstrated a commitment to good governance, exemplified by the creation of the Millennium Challenge Corporation. This report provides an overview of the U.S. foreign assistance program by answering frequently asked questions on the subject. It is intended to provide a broad view of foreign assistance over time, and will be updated periodically. For more current information on foreign aid funding levels, see CRS reports on State, Foreign Operations and Related Programs appropriations. Congressional Research Service Foreign Aid: An Introduction to U.S. Programs and Policy Contents Foreign Aid: An Introduction to U.S. Programs and Policy ..........................................................1 Foreign Aid Purposes and Priorities.............................................................................................2 What Are the Rationales and Objectives of U.S. Foreign Assistance? ....................................2 Rationales for Foreign Aid ..............................................................................................2 Objectives of Foreign Aid ...............................................................................................3 What Are the Major Foreign Aid Funding Accounts?.............................................................7 Assistance Serving Development and Humanitarian Purposes .........................................7 Assistance Serving Both Development and Special Political/Strategic Purposes ..............8 Assistance Serving Security Purposes..............................................................................9 What Are the Recent Priorities and Trends in U.S. Foreign Aid?.......................................... 11 Trends in Types of U.S. Aid .......................................................................................... 11 Trends in Programs and Sectors of Special Interest........................................................ 12 Which Countries Receive U.S. Foreign Aid? ....................................................................... 13 Foreign Aid Spending ............................................................................................................... 15 How Large Is the U.S. Foreign Assistance Budget and What Have Been the Historical Funding Trends? .............................................................................................................. 15 How Much of Foreign Aid Dollars Are Spent on U.S. Goods? ............................................. 18 How Does the United States Rank as a Donor of Foreign Aid? ............................................ 19 Delivery of Foreign Assistance.................................................................................................. 20 What Executive Branch Agencies Administer Foreign Aid Programs? ................................. 21 U.S. Agency for International Development .................................................................. 21 U.S. Department of State............................................................................................... 21 U.S. Department of Defense.......................................................................................... 22 U.S. Department of the Treasury ................................................................................... 22 Millennium Challenge Corporation ............................................................................... 22 Other Agencies ............................................................................................................. 23 What Are the Different Forms in Which Assistance Is Provided? ......................................... 23 Cash Transfers .............................................................................................................. 23 Equipment and Commodities ........................................................................................ 23 Economic Infrastructure................................................................................................ 24 Training ........................................................................................................................ 24 Expertise....................................................................................................................... 24 Small Grants ................................................................................................................. 24 How Much Aid Is Provided as Loans and How Much as Grants? What Are Some Types of Loans? Have Loans Been Repaid? Why Is Repayment of Some Loans Forgiven?......................................................................................................................... 25 Loan/Grant Composition............................................................................................... 25 Loan Guarantees ........................................................................................................... 25 Loan Repayment ........................................................................................................... 25 Debt Forgiveness .......................................................................................................... 26 What Are the Roles of Government and Private Sector in Development and Humanitarian Aid Delivery?............................................................................................. 26 Congress and Foreign Aid ......................................................................................................... 27 What Congressional Committees Oversee Foreign Aid Programs?....................................... 27 What Are the Major Foreign Aid Legislative Vehicles?........................................................ 27 Congressional Research Service Foreign Aid: An Introduction to U.S. Programs and Policy Figures Figure 1. Aid Program Composition, FY2010............................................................................ 11 Figure 2. Shifts in Program Emphasis (FY2000-2010)............................................................... 12 Figure 3. Regional Distribution, FY2000 and FY2010............................................................... 15 Figure 4. U.S. Foreign Aid: FY1946-FY2010 ............................................................................ 16 Figure 5. U.S. Foreign Aid: FY1946-FY2010 ............................................................................ 17 Figure 6. U.S. Budget Outlays, FY2010 Est............................................................................... 17 Figure 7. Foreign Aid Funding Trends, FY1977-FY2010........................................................... 18 Figure 8. Official Development Assistance From Major Donors, 2009....................................... 20 Tables Table 1. State/USAID Assistance by Objective and Program Area: FY2006-FY2010 ...................5 Table 2. Traditional Foreign Assistance, FY2001-FY2010 ...........................................................7 Table 3. Top Recipients of U.S. Foreign Assistance, FY2000 & FY2010 ................................... 14 Table A-1. Program Composition, FY2001-FY2010 .................................................................. 29 Table A-2. Foreign Aid Funding Trends..................................................................................... 29 Appendixes Appendix A. Data Tables........................................................................................................... 29 Appendix B. Common Foreign Assistance Acronyms and Abbreviations ................................... 32 Contacts Author Contact Information ...................................................................................................... 33 Congressional Research Service Foreign Aid: An Introduction to U.S. Programs and Policy Foreign Aid: An Introduction to U.S. Programs and Policy U.S. foreign aid is a fundamental component of the international affairs budget, for decades viewed by many as an essential instrument of U.S. foreign policy.1 Each year, it is the subject of extensive congressional debate over the size, composition, and purpose of the program. The focus of U.S. foreign aid policy has been transformed since the terrorist attacks of September 11, 2001. In 2002, a National Security Strategy for the first time established global development, a primary objective of U.S. foreign aid, as a third pillar of U.S. national security, along with defense and diplomacy. A 2010 policy document reiterated that notion, arguing that development “is as central to advancing America’s interests as diplomacy and defense.”2 This report addresses a number of the more frequently asked queries regarding the U.S. foreign aid program, its objectives, costs, organization, the role of Congress, and how it compares to those of other aid donors. It attempts not only to present a current snap-shot of American foreign assistance, but also to illustrate the extent to which this instrument of U.S. foreign policy has evolved over time. Data presented in the report are the most current, reliable figures available, usually covering the period through FY2010. Dollar amounts are drawn from a variety of sources, including the Office of Management and Budget (OMB), U.S. Agency for International Development (USAID), and from annual State, Foreign Operations and other appropriations acts. As new data become obtainable or additional issues and questions arise, the report will be modified and revised. Foreign aid acronyms and Policy January 29, 2016 (R40213) Jump to Main Text of Report

Contents

Summary

Foreign assistance is a fundamental component of the international affairs budget and is viewed by many as an essential instrument of U.S. foreign policy. On the basis of national security, commercial, and humanitarian rationales, U.S. assistance flows through many federal agencies and supports myriad objectives, including promoting economic growth, reducing poverty, improving governance, expanding access to health care and education, promoting stability in conflictive regions, countering terrorism, promoting human rights, strengthening allies, and curbing illicit drug production and trafficking. Since the terrorist attacks of September 11, 2001, foreign aid has increasingly been associated with national security policy. At the same time, foreign aid is seen by many Americans, and Members of Congress, as an expense that the United States cannot afford given current budget deficits.

In FY2015, U.S. foreign assistance, defined broadly, was estimated at $48.57 billion, or 1.3% of total federal budget authority. About 43% of this assistance was for bilateral economic development programs, including political/strategic economic assistance; 35% for military aid and non-military security assistance; 16% for humanitarian activities; and 6% to support the work of multilateral institutions. Assistance can take the form of cash transfers, equipment and commodities, infrastructure, or technical assistance, and, in recent decades, is provided almost exclusively on a grant rather than loan basis. The United States is the largest foreign aid donor in the world, accounting for about 24% of total official development assistance from major donor governments in 2014 (latest year for which this data is available).

Key foreign assistance trends in the past decade include growth in development aid, particularly global health programs; increased security assistance directed toward U.S. allies in the anti-terrorism effort; and high levels of humanitarian assistance to address a range of crises, from the earthquake in Haiti to the violence in Syria. Adjusted for inflation, annual foreign assistance funding over the past decade was the highest it has been since the Marshall Plan in the years immediately following World War II. In FY2015, Afghanistan, Israel, Iraq, Egypt, and Jordan were the top recipients of U.S. aid, reflecting long-standing aid commitments to Israel and Egypt, the strategic significance of Afghanistan and Iraq, and the strategic and humanitarian importance of Jordan as the crisis in neighboring Syria continues to unfold. Africa was the top aid recipient region in FY2015, at 32%, followed by the Near East, at 31%, and South and Central Asia, at 25%. This was a significant shift from a decade prior, when Africa received only 17% of aid and South Central Asia 12%, reflecting significant increases in HIV/AIDS-related programs concentrated in Africa and large increases in aid to Afghanistan and Pakistan between FY2005 and FY2015. The drawdown of U.S. military forces in Iraq and Afghanistan led to reduced military assistance starting in FY2011, but growing concern about the Islamic State in Iraq and elsewhere may stall or reverse this trend.

This report provides an overview of the U.S. foreign assistance program by answering frequently asked questions on the subject. It is intended to provide a broad view of foreign assistance over time, and will be updated periodically. For more current information on foreign aid funding levels, see CRS appropriations reports, particularly those on State, Foreign Operations, and Related Programs appropriations.

Foreign Aid: An Introduction to U.S. Programs and Policy

Foreign Aid: An Introduction to U.S. Programs and Policy

U.S. foreign aid is a fundamental component of the international affairs budget, for decades viewed by many as an essential instrument of U.S. foreign policy.1 Each year, it is the subject of congressional debate over the size, composition, and purpose of the program. The focus of U.S. foreign aid policy has been transformed since the terrorist attacks of September 11, 2001. Global development, a major objective of foreign aid, has been cited as a third pillar of U.S. national security, along with defense and diplomacy, in each national security strategy since 2002.2

This report addresses a number of the more frequently asked queries regarding the U.S. foreign aid program; its objectives, costs, and organization; the role of Congress; and how it compares to those of other aid donors. It attempts not only to present a current snap-shot of American foreign assistance, but also to illustrate the extent to which this instrument of U.S. foreign policy has evolved over time.

Data presented in the report are the most current, consistent, and reliable figures available, usually covering the period through FY2015. Dollar amounts are drawn from a variety of sources, including the Office of Management and Budget (OMB), U.S. Agency for International Development (USAID), and from annual State, Foreign Operations and other appropriations acts. As new data is obtained or additional issues and questions arise, the report will be modified and revised.

Foreign aid acronyms and abbreviations
used in this report are listed in Appendix B. How Is "U.S. Foreign Aid" Defined and Counted?

In its broadest sense, U.S. foreign aid is defined under the Foreign Assistance Act of 1963 (FAA) (§634(b)) as

any tangible or intangible item provided by the United States Government [including "by means of gift, loan, sale, credit, or guaranty"] to a foreign country or international organization under this or any other Act, including but not limited to any training, service, or technical advice, any item of real, personal, or mixed property, any agricultural commodity, United States dollars, and any currencies of any foreign country which are owned by the United States Government....

For many decades, nearly all assistance annually requested by the executive branch and debated and authorized by Congress was ultimately encompassed in the foreign operations appropriations with the international food aid title of the agriculture appropriations making up the rest. In the U.S. federal budget, these traditional foreign aid accounts have been subsumed under the 150 (international affairs) budget function. The Office of Management and Budget (OMB) has designated development and humanitarian assistance accounts as falling under subfunction 151 and security assistance accounts as subfunction 152. The foreign operations appropriations came to be commonly characterized as "the foreign aid bill," an appellation it maintains to the present.3

By the 1990s, however, it became increasingly apparent that the scope of U.S. foreign aid was not fully accounted for by the total of the foreign operations and international food aid appropriations. Many U.S. departments and agencies had adopted their own assistance programs, funded out of their own budgets and commonly in the form of professional exchanges with counterpart agencies abroad—the Environmental Protection Agency, for example, providing water quality expertise to other governments. These aid efforts, conducted outside the purview of the traditional foreign aid authorizing and appropriations committees, grew more substantial and varied in the mid-1990s with the multi-billion dollar Department of Defense (DOD) Nunn-Lugar effort to secure and eliminate nuclear and other weapons and Department of Energy activities to control and protect nuclear materials—both aimed largely at the former Soviet Union. Growing participation by DOD in health and humanitarian efforts and expansion of health programs in developing countries by the National Institutes of Health and Centers for Disease Control and Prevention, especially in response to the HIV/AIDS epidemic, followed. During the past dozen years, DOD-funded and implemented aid programs in Iraq and Afghanistan to train and equip foreign forces and win hearts and minds through development efforts were often considerably larger than the traditional military and development assistance programs provided under the foreign operations appropriations. The recent decline in DOD activities in these countries has sharply decreased non-traditional aid funding. In FY2010, non-traditional sources of assistance, at $13.3 billion, represented 25 percent of total aid obligations. By FY2013, they fell to $6.1 billion and 15 percent of total aid; still a significant sum.

While the executive branch has continued to request and Congress to debate most foreign aid within the parameters of the foreign operations legislation, both entities have sought to ascertain a fuller picture of assistance programs through improved data collection and reporting. Significant discrepancies remain between data available for traditional versus non-traditional types of aid and, therefore, the level of analysis that can be applied to each (see text box, "A Note on Numbers and Sources," below.) Nevertheless, to the extent possible, this report tries to capture the broadest definition of aid throughout.

A Note on Numbers and Sources

The numeric measures of foreign assistance used in this report come from a variety of sources. Different sources are necessary for comprehensive analysis, but can often lead to inconsistencies from table to table or chart to chart.

  • One reason for such variation is the different definitions of foreign assistance used by different sources, including:
  • The Budget of the United States historical tables data on foreign assistance include only those programs that fall under the traditional 151 and 152 subfunctions of the International Affairs (function 150) budget.4 This excludes various programs run by federal agencies outside of the traditional Foreign Operations plus food aid framework.
  • Stretching back to 1946 with program sector breakdowns from 2001, USAID's U.S. Overseas Loans & Grants database (Greenbook), in contrast, uses a broad definition of foreign aid, which includes reporting from 30 agencies, encompassing Departments of Defense and Energy nonproliferation assistance and other U.S. agency accounts not previously classified as foreign assistance.5
  • The State Department's ForeignAssistance.gov website uses a similar broad definition, but is currently incomplete and differently organized.
  • Official Development Assistance (ODA), reported by the Organization for Economic Cooperation and Development (OECD), differs from both U.S. Budget and Greenbook numbers primarily because it excludes all military assistance and aid to developed countries.

Apparent discrepancies also arise due to funding being recorded at different points in the process. U.S. Budget historical tables represent budget authority, funds appropriated by fiscal year, whereas the Greenbook reports funds obligated and disbursed by fiscal year. ForeignAssistance.gov is attempting to include all of these funding phases, plus requested, or "planned," data. The reporting calendar may result in discrepancies as well—ODA figures, unlike budget and Greenbook numbers, are reported by calendar year rather than fiscal year.

The differences between sources make precise comparisons difficult. For the purposes of this report, CRS primarily uses the FAA definition of aid, as reported by the Greenbook in the form of obligations. Because the most recent Greenbook data is updated only through FY2013, in some instances, we provide FY2014 and FY2015 estimates based on appropriations. ODA data is only used in the section comparing U.S. assistance levels to those of other donor countries.

Foreign Aid Purposes and Priorities What Are the Rationales and Objectives of U.S. Foreign Assistance?

Foreign assistance is predicated on several rationales and supports a great many objectives. Both rationales and objectives have changed in importance and emphasis over time.

Rationales for Foreign Aid

During the past 70 years, there have been three key rationales for foreign assistance:

Appendix B. 1 Other tools of U.S. foreign policy are the U.S. defense establishment, the diplomatic corps, public diplomacy, and trade policy. American defense capabilities, even if not employed, stand as a potential stick that can be wielded to obtain specific objectives. The State Department diplomatic corps are the eyes, ears, and often the negotiating voice of U.S. foreign policymakers. Public diplomacy programs, such as the Fulbright program and Voice of America, project an image of the United States that may influence foreign views positively. U.S. trade policy—through free trade agreements and Export-Import Bank credits, for example—may directly affect the economies of other nations. Foreign aid is probably the most flexible tool—it can act as both carrot and stick, and is a means of influencing events, solving specific problems, and projecting U.S. values. 2 Quote in Department of State and U.S. Agency for International Development, Quadrennial Diplomacy and Development Review, Leading Through Civilian Power, December 2010, p. 21. Development is underscored both Bush and Obama national security strategies of 2002, 2006, and 2010: U.S. National Security Strategy 2002 and 2006, available at http://georgewbush-whitehouse.archives.gov/nsc/nss/2006/, and, National Security Strategy, May 2010, available at http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf. Congressional Research Service 1 Foreign Aid: An Introduction to U.S. Programs and Policy A Note on Numbers and Sources The numeric measures of foreign assistance used in this report come from a variety of sources. Different sources are necessary for comprehensive analysis, but can often lead to discrepancies from table to table or chart to chart. One reason for such variation is the different definitions of foreign assistance used by different sources. The Budget of the United States historical tables data on foreign assistance, for example, includes only those programs that fall under the traditional 151 and 152 subfunctions of the International Affairs (function150) budget. This excludes various programs run by federal agencies outside of the traditional State/USAID framework. USAID’s U.S. Overseas Loans & Grants database (Greenbook), in contrast, uses a broad and evolving definition of foreign aid, which in past years has included Departments of Defense and Energy nonproliferation assistance and other U.S. agency accounts that some would not classify as foreign assistance. Official Development Assistance (ODA), reported by the Organization for Economic Cooperation and Development (OECD), differs from both U.S. Budget and Greenbook numbers primarily because it excludes all military assistance. Apparent discrepancies also arise due to funding being recorded at different points in the process. U.S. Budget historical tables represent budget authority, funds appropriated by fiscal year, whereas the Greenbook reports funds obligated by fiscal year. The reporting calendar may result in discrepancies as well—ODA figures, unlike budget and Greenbook numbers, are reported by calendar year rather than fiscal year. The differences between sources make precise comparisons difficult. For this reason, CRS has attempted not to mix sources within figures and tables, with the exception of Table A-2 (on which Figure 5 is based), which was necessary because no single source offers data from 1946 through to 2010. Though imperfect, this compilation of data is useful for depicting long-term trends in U.S. foreign assistance levels. Foreign Aid Purposes and Priorities What Are the Rationales and Objectives of U.S. Foreign Assistance? Foreign assistance is predicated on several rationales and supports a great many objectives. Both rationales and objectives have changed in importance and emphasis over time. Rationales for Foreign Aid During the past 65 years, there have been three key rationales for foreign assistance. • National Security has been the predominant theme of U.S. assistance programs. From a beginning in rebuilding Europe after World War II and under the Marshall Plan (1948-1951) and through the Cold War, U.S. aid programs were viewed by policymakers as a way to prevent the incursion of communist influence and secure U.S. base rights or other support in the anti-Soviet struggle. After the Cold War, the focus of foreign aid shifted from global anti-communism to disparate regional issues, such as Middle East peace initiatives, the transition to democracy of eastern Europe and republics of the former Soviet Union, and international illicit drug production and trafficking in the Andes. Without an overarching security rationale, foreign aid budgets decreased in the 1990s. However, since the September 11, 2001, terrorist attacks in the United States, policymakers frequently have cast foreign assistance as a tool in the global war on terrorism, U.S. counter-terrorism strategy, increasing aid to partner states in the counter-terrorism warefforts and funding the substantial reconstruction programs in Afghanistan and Iraq. As noted, global development has been featured as a key element in U.S. national security strategy in both Bush and Obama Administration policy statements Congressional Research Service 2 Foreign Aid: An Introduction to U.S. Programs and Policy • Commercial Interests. Foreign assistance has long been defended as a way to either promote U.S. exports by creating new customers for U.S. products or by improving the global economic environment in which U.S. companies compete. Humanitarian Concerns. Humanitarian concerns drive both short-term assistance in response to crisis and disaster as well as long-term development assistance aimed at reducing poverty, hunger, and other forms of human suffering brought on by more systemic problems. Providing assistance for humanitarian reasons has generally been the least contestedmost broadly supported purpose of aid by the American public and policymakers alike. Objectives of Foreign Aid The objectives of aid are thought to fit within these rationales. Aid objectives include promoting economic growth and reducing poverty, improving governance, addressing population growth, expanding access to basic education and health care, protecting the environment, promoting stability in conflictive regions, protecting human rights, promoting trade, curbing weapons proliferation, strengthening allies, and addressing drug production and trafficking. The expectation has been that, by meeting these and other aid objectives, the United States will achieve its national security goals as well as ensure a positive global economic environment for American products and demonstrate the humanitarian nature of the U.S. people. Generally its people. Generally speaking, different types of foreign aid support different objectives. But there is also considerable overlap among categories of aid. Multilateral aid serves many of the same objectives as bilateral development assistance, although through different channels. Military assistance, economic security aid—including rule of law and police training—and development assistance programs may support the same U.S. political objectives in the Middle East, Afghanistan, and Pakistan. Military assistance and alternative development programs are integrated elements of American counter-narcotics efforts in Latin America and elsewhere. Depending on how they are designed, individual assistance projects on the ground can also serve multiple purposes. A health project ostensibly directed at alleviating the effects of HIV/AIDS by feeding orphan children may also stimulate grassroots democracy and civil society while through support of indigenous NGOs while additionally meeting U.S. humanitarian objectives. Microcredit programs may help develop local economies while at the same time providingenabling client entrepreneurs to provide food and education to thetheir children. of entrepreneurs. Water and sanitation improvements both mitigate health threats and stimulate economic growth by saving time previously devoted to water collection, raising school attendance for girls, and facilitating tourism, among other effects. In an effort to rationalize the assistance program more clearly, the Director of Foreign Assistance (DFA) at the State Department developed a framework (Table 1) in 2006 that organizes bilateral U.S. foreign aid—or at least that portion of it that is managed by the State Department and/or USAID—U.S. foreign aid around five strategic objectives, each of which includes a number of program elements, also known as sectors (Table 1)..3 The five objectives are Peace and Security; Investing in People; Governing Justly and Democratically; Economic Growth; and Humanitarian Assistance. 3 The framework, representing about 90% of the traditional foreign aid program budget in FY2010 (including supplementals), does not include the Millennium Challenge Corporation, Peace Corps, other independent agencies, or international financial institutions. It also excludes non-traditional foreign aid programs, such as DOD-funded activities. The framework also cannot show how programs may cut across multiple objectives or sectors. To some extent, the decision on how to categorize an aid activity remains a subjective one. Congressional Research Service 3 Foreign Aid: An Introduction to U.S. Programs and Policy Generally, these objectives and sectors do not correspond to any one particular budget account in appropriations bills. 4 Peace and Security The Peace and Security objective is composed of six program areas: counter-terrorism; combating weapons of mass destruction; stabilization operations and security sector reform; counternarcotics; transnational crime; and conflict mitigation and reconciliation. These types of programs have been promoted by both Bush and Obama Administrations as essential to the war on terrorism and building stability in failing states that may become permissive environments for terrorism. For FY2010, the Peace and Security objective was funded at $10.4 billion, up 42% from $7.3 billion in FY2006. Major portions of these funds were allocated to Israel, Egypt, Afghanistan, Iraq, Pakistan, and Jordan. Were the DFA framework to include all foreign aid, regardless of source, the DOD training and equipping of Iraqi and Afghan security forces would add $10.2 billion in FY2010 under this objective. Investing in People The Investing in People objective is composed of three program areas: health, education, and social services and protection for vulnerable people. For FY2010, the objective was funded at $10.9 billion, double the amount provided in FY2006. Most of the funding, 83%, falls in the health program area, particularly those programs addressing HIV/AIDS, which, at $5.7 billion, itself accounts for more than half of the Investing in People objective in FY2010. Health programs also include funds for combating avian influenza, tuberculosis, and malaria. A significant portion of health funds are provided for maternal and child health, family planning and reproductive health programs. Investing in people also encompasses most non-agricultural water and sanitation assistance efforts. The objective further includes education programs with the majority of funds focusing on basic education needs, especially in Africa, but increasingly in south and central Asia and the Middle East. Governing Justly and Democratically This objective includes a number of program areas related to promoting the rule of law and human rights, good governance, political competition, and civil society. The two largest components for FY2010 were the rule of law and good governance. Program goals include strengthening the performance and accountability of government institutions, such as the judiciary and police, combating corruption, and supporting elections. Funding levels have grown significantly in recent years; the objective totaled $3.6 billion in FY2010, more than double the amount provided in FY2006. Two-thirds of this aid in FY2010 went to five countries of special political or strategic interest—Afghanistan (40% alone), Iraq, Mexico, Pakistan, and Haiti. 4 Most are funded through several appropriations accounts. For instance, the objective of Governing Justly and Democratically and each of its individual sectoral elements (see Table 1) are funded through portions of the Development Assistance, AEECA, ESF, INCLE, and Democracy Fund accounts. Congressional Research Service 4 Foreign Aid: An Introduction to U.S. Programs and Policy Table 1. State/USAID Assistance by Objective and Program Area: FY2006-FY2010 (in millions of current dollars) Aid Objectives and Program Areas Peace and Security FY2006 FY2007 FY2008 FY2009 FY2010 7,318.9 8,684.6 7,522.6 9,599.6 10,380.0 Counter-Terrorism 157.0 242.1 188.2 225.0 462.4 Combating WMD 229.9 228.0 253.7 410.9 320.6 Stabilization/Security Sector Reform 5,652.3 6,668.6 5,574.3 6,964.5 7,276.9 Counter-narcotics 1,020.1 1,148.1 1,133.7 1,295.3 1,470.4 60.2 51.2 75.6 93.0 100.9 199.3 346.6 297.1 611.1 748.8 5,421.4 6,659.4 8,573.3 10,286.1 10,929.6 4,594.7 5,705.1 7,243.0 8,224.3 9,014.8 Education 689.8 754.5 928.8 1,057.5 1,254.3 Social Services/Protection of Vulnerable 136.9 199.8 401.4 1,004.3 660.5 Governing Justly & Democratically 1,758.1 2,141.3 2,258.5 2,702.0 3,644.2 Rule of Law & Human Rights 437.5 532.0 612.4 699.3 1,088.5 Good Governance 637.6 763.2 761.9 1,088.4 1,596.8 Political Competition 203.3 305.4 295.2 432.7 312.1 Civil Society 479.8 540.8 593.3 481.7 646.8 3,449.2 3,212.2 3,279.0 3,973.8 5,212.8 Macroeconomic Growth 474.1 591.5 590.1 335.9 287.3 Trade & Investment 416.7 331.6 204.1 216.7 264.6 Financial Sector 280.2 176.8 198.2 142.4 125.4 Infrastructure 755.9 723.9 945.8 1,017.3 1,101.0 Agriculture 567.0 538.1 474.3 1,083.1 1,685.8 Private Sector Competitiveness 530.5 385.4 388.1 563.9 670.1 Economic Opportunity 132.7 127.0 155.1 237.3 241.4 Environment 292.1 337.8 324.2 377.1 837.3 2,451.7 3,097.4 4,071.8 4,883.9 4,975.8 2,294.9 2,963.7 3,888.9 4,658.9 4,483.0 Disaster Readiness 87.3 78.2 125.6 151.1 99.8 Migration Management 69.6 55.5 57.2 74.0 42.0 Transnational Crime Conflict Mitigation Investing in People Health Promoting Economic Growth & Prosperity Humanitarian Assistance Protection, Assistance & Solutions Source: USAID and Department of State budget documents; ForeignAssistance.gov. Notes: Figures encompass State and USAID appropriations only, including supplementals and Iraq and Afghanistan programs. Congressional Research Service 5 Foreign Aid: An Introduction to U.S. Programs and Policy Promoting Economic Growth & Prosperity The Economic Growth objective, amounting to $5.2 billion in FY2010, a 51% increase since FY2006, includes a wide range of program areas that are believed to contribute to economic growth in developing economies. Agriculture programs focus on reducing poverty and hunger, trade-promotion opportunities for farmers, and sound environmental management practices for sustainable agriculture. Private sector development programs include support for business associations and microfinance services. Programs for managing natural resources and protecting the global environment focus on conserving biological diversity; improving the management of land, water, and forests; promoting environmentally sound urban development; encouraging clean and efficient energy production and use; and reducing the threat of global climate change while strengthening sustainable economic growth. Were the DFA framework to encompass all foreign aid, regardless of funding source, the economic growth objective would likely include most of the Millennium Challenge Corporation, adding perhaps another $1.0 billion in FY2010, and much of the Commander’s Emergency Response Program (CERP), the latter funded by DOD at roughly $1.2 billion in FY2010. Humanitarian Assistance Humanitarian assistance responds to both natural and man-made disasters as well as problems resulting from conflict associated with failed or failing states. Responses include protection and assistance to refugees and internally displaced persons and provision of emergency food aid. Programs generally address unanticipated situations and are not integrated into long-term development strategies. In FY2010, humanitarian programs were funded at roughly $5.0 billion, double the FY2006 level. Foreign Assistance:Traditional and Non-traditional For decades, most U.S. foreign assistance was defined by discrete authorized accounts, funded by specific annual appropriations legislation, and implemented by foreign policy-focused departments and agencies. In the U.S. federal budget, these traditional foreign aid accounts have been subsumed under the 150, international affairs, budget function. The Office of Management and Budget (OMB) has designated development and humanitarian assistance accounts as falling under subfunction 151 and security assistance accounts as subfunction 152. In FY2009, roughly $35 billion was obligated from traditional aid accounts. Over the years, individual U.S. government departments and agencies began supporting programs that also might be characterized as foreign aid but are formulated and implemented outside of the sphere of U.S. foreign policy agencies and their traditional aid budgets. For instance, in the 1980s, EPA, using its own authorized and appropriated funds, cooperated on joint research with China on the health effects of various pollutants and conducted workshops in India on wastewater treatment in an effort to clean up the Ganges River. Many other U.S. departments and agencies maintain similar technical relationships with other country governments, often in the course of fulfilling their domestic mandates and providing shared benefits to both parties. It is estimated that these non-traditional sources of assistance equaled about $12.6 billion in obligated funds in FY2009, raising total aid from all sources to $47.5 billion. The role of non-traditional aid likely has become more pronounced since the mid 1990s, in particular because of the role of the Department of Defense (DOD) in the aid programs of Iraq and Afghanistan; of DOD and the Department of Energy in nuclear non-proliferation programs, especially in the former Soviet Union; and of the National Institutes of Health (NIH) and Centers for Disease Control (CDC) in the global HIV/AIDS program. These three distinct efforts make up the bulk ( 89%) of FY2009 non-traditional aid obligations. Iraq and Afghanistan alone represented nearly three quarters of all non-traditional aid in that year. The anomalous nature of non-traditional aid activities in Iraq and Afghanistan (see text box below), together with inconsistent historic reporting of non-traditional aid, may distort aid trends. Therefore, this report focuses on traditional foreign assistance, which remains the vast majority of total assistance, in its discussion and charts and graphs. Such assistance corresponds closely to the foreign operations and food aid appropriations in Table 2. Nonetheless, the role of non-traditional aid is raised where appropriate throughout this report, as policymakers in the State Department and Congress contend with how to most efficiently leverage these funds to meet U.S. foreign policy purposes. Congressional Research Service 6 Foreign Aid: An Introduction to U.S. Programs and Policy Table 2.Traditional Foreign Assistance, FY2001-FY2010 (appropriations, in billions of current U.S. $) Foreign Operations P.L. 480 Food Aid Traditional Aid, Total FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 16.31 16.54 23.67 39.05 23.45 23.13 26.38 26.89 34.32 37.49 0.93 0.85 1.81 1.24 1.50 1.59 1.66 2.06 2.42 1.90 17.24 17.39 25.48 40.29 24.95 24.72 28.04 28.95 36.74 39.39 Source: Appropriations legislation; Congressional Budget Justifications. What Are the Major Foreign Aid Funding Accounts? The framework introduced by the Director of Foreign Assistance organizes assistance by foreign policy objective. But there are many other ways to categorize foreign aid, one of which is to sort out and classify foreign aid accounts in the U.S. budget according to what they are expected to accomplish and in what form they are provided. While imperfect—these accounts support a variety of different aid agencies and serve multiple functions—this methodology encompasses all traditional aid, a larger universe than that in the DFA framework. However, as noted, the Department of Defense and some other government agencies undertake assistance programs with funding outside traditional foreign aid budget accounts. These non-traditional programs are not captured in this discussion (see text box above). Assistance Serving Development and Humanitarian Purposes A wide range of aid programs address development and humanitarian concerns. These are provided both bilaterally and multilaterally. In FY2010, $20 billion—53% of U.S. assistance— focused on mitigating human suffering and poverty in developing countries. Bilateral Development Assistance Development assistance programs are designed chiefly to foster sustainable broad-based economic progress and social stability in developing countries. For FY2010, Congress appropriated $12.3 billion in such assistance, an amount accounting for 32% of total foreign aid appropriations. A significant proportion of these funds—largely encompassed by the Development Assistance and the Child Survival & Health accounts—is managed by the U.S. Agency for International Development (USAID) and is used for long-term projects in the areas of economic reform and private sector development, democracy promotion, environmental protection, population control, and improvement of human health. Development activities that have gained more prominence in recent years include basic education, water and sanitation, and support for treatment of HIV/AIDS and other infectious diseases. Other bilateral development assistance goes to distinct institutions, such as the Peace Corps, Inter-American Development Foundation, African Development Foundation, Trade and Development Agency, and Millennium Challenge Corporation. Congressional Research Service 7 Foreign Aid: An Introduction to U.S. Programs and Policy Multilateral Development Assistance A relatively small share of U.S. foreign assistance—7% in FY2010—is combined with contributions from other donor nations to finance multilateral development projects. For FY2010, Congress appropriated $2.6 billion for such activities implemented by international organizations, such as the United Nations Children’s Fund (UNICEF) and the United Nations Development Program (UNDP), and by multilateral development banks (MDBs), such as the World Bank. On average, U.S. contributions represent about 23% of total donor transfers to the MDBs. Humanitarian Assistance For FY2010, Congress appropriated $5.1 billion, 13.5% of assistance, for humanitarian aid programs. 5 Unlike development assistance programs, which are often viewed as long-term efforts that may have the effect of preventing future crises from developing, humanitarian aid programs are devoted largely to the immediate alleviation of humanitarian emergencies. A large proportion of humanitarian assistance goes to programs, administered by the State Department and funded under the Migration and Refugee Assistance (MRA) and the Emergency Refugee and Migration Assistance (ERMA) accounts, aimed at addressing the needs of refugees and internally displaced persons. These accounts support, with about $1.9 billion in FY2010, a number of refugee relief organizations, including the U.N. High Commission for Refugees and the International Committee of the Red Cross. The International Disaster Assistance (IDA) 6 account managed by USAID totaled $1.3 billion in FY2010. It provides relief and rehabilitation assistance to victims of man-made and natural disasters, such as the 2010 Haiti earthquake. Food assistance supplements both programs (about $1.9 billion in FY2010). The food aid program, generically referred to as P.L. 480 (after the law that authorizes it) or the Food for Peace program, provides U.S. agricultural commodities to developing countries. USAID-administered Title II (of the public law) grant food aid is mostly provided for humanitarian relief, but may also be used for development-oriented purposes by private voluntary organizations (PVOs) or multilateral organizations, such as the World Food Program. Title II funds are also used to support the “farmer-to-farmer” program, which sends hundreds of U.S. volunteers as technical advisors to train farm and food-related groups throughout the world. The McGovern-Dole International Food for Education and Child Nutrition Program, a program begun in 2002, provides commodities, technical assistance, and financing for school feeding and child nutrition programs ($210 million in FY2010).7 Assistance Serving Both Development and Special Political/Strategic Purposes Two aid accounts are distinctive in that their primary purpose is to promote special U.S. economic, political, or security interests. Programs funded through these accounts generally aim to promote political and economic stability, often through activities indistinguishable from those 5 Because of the unanticipated nature of many disasters, humanitarian aid budget allocations often increase throughout the year as demands arise. Figures listed here include supplemental funds provided at various stages throughout the year as of the end of FY2010. 6 The IDA account was previously known as the International Disaster and Famine Assistance account (IDFA). 7 Until FY1998, food provided commercially under long-term, low-interest loan terms (Title I of P.L. 480) was also included in the foreign assistance account. Because of its export focus, it is no longer considered foreign aid. Congressional Research Service 8 Foreign Aid: An Introduction to U.S. Programs and Policy provided under regular development and humanitarian programs. 8 For FY2010, Congress appropriated $9.6 billion, 25% of total assistance, through these accounts. The bulk of these funds—$8.8 billion in FY2010—was provided through the Economic Support Fund (ESF). For many years, following the 1979 Camp David accords, most ESF funds went to support the Middle East Peace Process. A significant amount of funding still goes to Egypt, the West Bank, Lebanon, and Jordan—$1.2 billion in FY2010. Since 9/11, however, ESF has largely supported countries of importance in the war on terrorism. In FY2010, for example, about $5.0 billion in ESF was directed at Iraq, Afghanistan, and Pakistan. The Assistance to Europe, Eurasia and Central Asia account (AEECA) combines two aid programs that were established at the demise of the Soviet empire to meet particular strategic political interests. The SEED (Support for East European Democracy Act of 1989) and the FREEDOM Support Act (Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992) programs were designed to help Central Europe and the newly independent states of the former Soviet Union (FSA) achieve democratic systems and free market economies. In FY2010, roughly $742 million was appropriated. Over the years, funding has decreased significantly as countries in the region graduate from U.S. assistance, many joining the European Union. Assistance Serving Security Purposes A number of U.S. civilian and military-implemented aid programs directly address national security concerns, most seeking to strengthen the military capacity and civilian law enforcement competence of U.S. allies and cooperating developing countries. Civilian Security Assistance Two State Department-managed accounts are aimed at global concerns that are considered threats to U.S. security and well-being—terrorism, illicit narcotics, crime, and weapons proliferation. They have addressed each concern with aid programs that provide a range of law enforcement activities, training, and equipment. Especially since 2001, policymakers have given greater weight to these programs. In FY2010, the International Narcotics and Law Enforcement (INCLE) account represented about $2.8 billion in foreign aid appropriations. This account has grown substantially in FY2010 as the State Department takes on the burden of training police forces in Iraq. The Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR) account received $754 million in appropriations in FY2010. Anti-terrorism programs include detecting and dismantling terrorist financial networks, establishing watch-list systems at border controls, and building developing country anti-terrorism capacities. Nonproliferation efforts include support to the International Atomic Energy Agency and building capacity to detect and interdict transfer of weapons and delivery systems over borders. 8 The DFA estimates that about 93% of ESF is implemented by USAID. CRS estimates that in FY2007, more than 59% of AEECA funds went to development purposes. Congressional Research Service 9 Foreign Aid: An Introduction to U.S. Programs and Policy While both accounts focus on security threats, they each support programs of a development or humanitarian nature. INCLE helps develop the judicial system—assisting judges, lawyers, and legal institutions—of many developing countries and the NADR program funds humanitarian demining programs. Military Assistance The United States provides military assistance to U.S. friends and allies to help them acquire U.S. military equipment and training. Congress appropriated $4.7 billion for military assistance in FY2010, 12.5% of total U.S. foreign aid. There are three main programs, administered by the Department of State, but implemented by DOD. Foreign Military Financing (FMF), $4.3 billion in FY2010, is a grant program that enables governments to receive equipment from the U.S. government or to access equipment directly through U.S. commercial channels. Most FMF grants support the security needs of Israel and Egypt. The International Military Education and Training program (IMET), $108 million, offers military training on a grant basis to foreign military officers and personnel. Peacekeeping funds, $332 million in FY2010, are used to support voluntary non-U.N. operations as well as training for an African crisis response force. As noted earlier, since 2002, DOD appropriations, not included in counts of traditional foreign aid, have supported FMF and IMET-like programs in Afghanistan and Iraq at a level of more than $10 billion in FY2010. Iraq and Afghanistan Reconstruction Funding Between 2002 and 2010, reconstruction assistance to Iraq and Afghanistan from all U.S. sources accounted for $104 billion and has, perhaps, disproportionately shaped the portrait of the U.S. foreign aid program. Nearly $21 billion of the total was funneled through an Iraq Relief and Reconstruction Fund in just two fiscal years, FY2003 and FY2004. Another $57 billion of the total has been provided under the DOD budget, not traditionally included in foreign aid totals, and, therefore, unless otherwise noted, not captured in the context of this report. While traditional foreign aid amounts noted in this report include figures for Iraq and Afghanistan reconstruction, it is important to keep in mind that these traditional aid efforts—$5 billion in FY2010—might overshadow and obscure key trends in changing aid budget and policy priorities for the period FY2002-2010. Therefore, at various points throughout the text, notations state what a particular amount would equal if Iraq and/or Afghanistan assistance was excluded. Congressional Research Service 10 Foreign Aid: An Introduction to U.S. Programs and Policy What Are the Recent Priorities and Trends in U.S. Foreign Aid? Tracking changes in the amount of funds distributed to each objective, sector, type of assistance, or funding account is one means of measuring the relative priority placed by the executive branch on any of the aid activities represented by that category of assistance. Because Congress closely examines the executive’s distribution of bilateral economic resources and in a number of cases modifies the President’s proposed budget plan, funding trends also characterize congressional aid priorities and areas of special concern.9 Trends in Types of U.S. Aid Figure 1. Aid Program Composition, FY2010 Source: U.S. Department of State, Summary and Highlights, International Affairs, Function 150, FY2011; House and Senate Appropriations Committees; CRS calculations. As shown in Figure 2 (and Table A-1), there have been shifts in the use of different types of U.S. assistance in response to world events and changing priorities. Grouping aid in the categories noted above, a number of notable trends over the last decade can be identified. Increase in development/humanitarian aid. Between FY1990 and FY1995, development/humanitarian-related aid rose steadily from a 38% share to nearly 48%. The growth of more politically driven economic programs in central Europe and the former Soviet Union, plus sizeable cuts to development aid in FY1996/FY1997 and increased emphasis on civilian security concerns drove the share down to an average of 41% during the late 1990s through FY2002. The approval of significant amounts of funding for two new presidential aid priorities, the Millennium Challenge Corporation and the President’s Emergency Plan for AIDS Relief (PEPFAR), boosted development/humanitarian assistance to over half of total U.S. foreign aid by FY2006, its highest proportion since 1980. In FY2010, its share was at 53%. Increase in health aid. Most of the increase in development/humanitarian aid can be attributed to the rise in health assistance. The proportion of total foreign aid represented by health programs has gone from about 5% of aid in the late 1990s to 21% of all aid in FY2010. Increase in civilian security aid. A modest decline in the portion of aid allocated to securityrelated assistance over the past decade, from about 28% to 30% of total aid at the end of the 1990s to 22% in FY2010 tells two countervailing stories. One is the decline in military aid discussed below. The other is the significant increase in civilian security programs during this period. In the late 1990s, anti-terror and counter-narcotics programs represented around 3% of 9 It is important to note that the amount of resources allocated to any single development sector relative to other sectors in any given year is not necessarily a good measure of the priority assigned to that sector. Different types of development activities require varying amounts of funding to have impact and achieve the desired goals. Democracy and governance programs, for example, are generally low-cost interventions that include extensive training sessions for government officials, the media, and other elements of civil society. Economic growth programs, on the other hand, might include infrastructure development, government budget support, or commodity import financing, activities that require significantly higher resources. What may be a better indicator of changing priorities is to compare funding allocations over time to the same objective or sector. Congressional Research Service 11 Foreign Aid: An Introduction to U.S. Programs and Policy total U.S. assistance. As a result of the Andean Counter-Narcotics Initiative launched in FY2000 and the strengthening of anti-terror programs following the September 11, 2001, terrorist attacks, civilian security programs rose to 9% of total aid by FY2010. Decline in military aid. For more than two decades, military assistance as a share of total aid has declined, a trend that began after military aid peaked at 42% in FY1984. Despite increases in other forms of assistance in the period from FY1999 through FY2004, because the United States provided additional support to many of the partner states in the war on terrorism and other countries that might face new external threats due to the pending conflict in Iraq, military aid averaged 26% of total aid. From FY2005, however, its share continued to fall, largely due to the rise in relative prominence of development/humanitarian aid. In FY2010, military assistance represented 13% of total aid. However, with new Department of Defense authority to train and equip foreign militaries, especially in Iraq and Afghanistan, and with increased anti-narcotics activities in Latin America and Afghanistan, funding for security aid programs has to a large extent shifted from the traditional foreign aid budget to the defense budget. Figure 2. Shifts in Program Emphasis (FY2000-2010) (as % of total U.S. foreign assistance appropriations) Source: U.S. Department of State and CRS calculations. Notes: To illustrate the impact of Iraq funding on the aid program, the column “FY04 without Iraq” excludes the anomalous $18.4 billion in Iraq Relief and Reconstruction Fund (IRRF) aid provided in that one year. Trends in Programs and Sectors of Special Interest At various times, congressional and public attention centers on one or another slice of the aid effort. For instance, the large community of non-governmental organizations (NGOs) working on international sustainable development activities most often concerns itself with what some call “core accounts,” usually defined as those most poverty-focused.10 Collectively, these accounts 10 Different organizations would count different programs as poverty-focused, but most would likely include Global Health, Development Assistance, Millennium Challenge Corporation, International Organizations & Programs, Transition Initiatives, Disaster Assistance, Migration and Refugee Assistance, and Food Aid. Congressional Research Service 12 Foreign Aid: An Introduction to U.S. Programs and Policy have grown exponentially over the 10-year period from 2000 to 2010, from $3.8 billion to $17.0 billion (a 348% increase), largely due to the launching of the HIV/AIDS and MCA programs, as well as a substantial rise in humanitarian aid funding. As noted earlier, one of the most striking changes in the distribution of economic aid resources in recent years has been the sharp growth in funding for health programs, especially in the area of HIV/AIDS and other infectious diseases (see Table 1). In 2004, the Bush Administration launched a five-year Global AIDS Initiative, the President’s Emergency Plan for AIDS Relief (PEPFAR), with the goal of treating 2 million HIV-infected individuals, and caring for 10 million infected people and AIDS orphans that eventually provided over $18 billion. The program was reauthorized in 2008 (P.L. 110-293) at $48 billion for FY2009 through FY2013 to support prevention and treatment of HIV/AIDS, malaria, and tuberculosis. Encompassing all health programs, a Global Health initiative introduced by President Obama in 2009 promises expenditures of $63 billion between 2009 and 2014. Overall, traditional health funding has gone up more than 550% since FY2001. Spending on TB and malaria has increased by 400% since FY2004. Funding has also risen notably for Child Survival and Maternal Health projects that aim to reduce infant mortality, combat malnutrition, improve the quality of child delivery facilities, and raise nutritional levels of mothers. Funding for these activities has grown by 160% in the past 10 years. Public support and congressional and Administration action often raise the priority given to specific sectors or programs. In recent years, high-profile programs include support for microenterprise, basic education, clean water and sanitation. Congress helped boost each of these specific interests through legislative directives in the annual foreign aid appropriations legislation. Funding for microenterprise went from $58 million in FY1988 to $154 million in FY1999 and $267 million in FY2009. Basic education programs were funded at about $95 million in FY1997; the level rose to $981 million in FY2010. Funding for drinking water supply and sanitation projects was an estimated $215 million in FY2002; in FY2009, it reached $514 million. Some sectors once strongly favored by Congress and the executive branch lost out in the funding competition in recent decades. Yet, with support from the Obama Administration, they are making a notable rebound. Agriculture programs saw significant decreases from the 1970s and 1980s when they represented the bulk of U.S. development assistance. In FY1984, agriculture and rural development received an appropriation of $725 million from the development assistance account, compared to $315 million in FY1998 and $473 million in FY2008 from all USAID/State accounts. The FY2010 level is $1.7 billion, reflecting a 2009 Feed the Future presidential initiative to provide $3.5 billion in agriculture funding over three years. Programs managing natural resources and protecting the global environment fell from $504 million in FY2002 to $324 million in FY2008. Environmental programs received $837 million in FY2010, more than doubling in just two years. Which Countries Receive U.S. Foreign Aid? In FY2010, the United States is providing some form of foreign assistance to about 149 countries.11 Table 3 identifies the top 15 recipients of U.S. foreign assistance for FY2000 and 11 Generally, assistance to a country is funneled, in various forms, to the country’s private sector, non-governmental organizations, local communities, individual entrepreneurs, and other entities. Assistance is provided directly to the government of a country where the intention is to effect policy reforms, improve governance, or work with a sector in (continued...) Congressional Research Service 13 Foreign Aid: An Introduction to U.S. Programs and Policy FY2010, respectively. Assistance, although provided to many nations, is concentrated heavily in certain countries, reflecting the priorities and interests of United States foreign policy at the time. As shown in the figures below, there are both similarities and sharp differences among country aid recipients for the two periods. The most consistent thread connecting the top aid recipients over the past decade has been continuing U.S. strategic interests in the Middle East, with large programs maintained for Israel and Egypt and relatively smaller programs for Jordan and West Bank/Gaza. Table 3.Top Recipients of U.S. Foreign Assistance, FY2000 & FY2010 (in millions of current US$) FY2000 FY2010 Israel 4,069 Afghanistan 4,102 Egypt 2,053 Israel 2,220 Colombia 899 Pakistan 1,807 West Bank/Gaza 485 Egypt 1,296 Jordan 429 Haiti 1,271 Russia 195 Iraq 1,117 Bolivia 194 Jordan 693 Ukraine 183 Kenya 688 Kosovo 165 Nigeria 614 Peru 120 South Africa 578 Georgia 112 Ethiopia 533 Armenia 104 Colombia 507 Bosnia 101 West Bank/Gaza 496 Indonesia 94 Tanzania 464 Nigeria 68 Uganda 457 Source: Department of State, Foreign Operations CBJ FY2002, FY2011. Note: Includes supplementals and Millennium Challenge Corporation Compact disbursements in FY2010. The biggest difference in the leading aid recipients since FY2000 is the emergence of three countries connected to the impact of the terrorist attacks on September 11, 2001. Afghanistan, Pakistan, and Iraq do not appear on the FY2000 list; they are among the top six recipients of U.S. assistance in FY2010. Another striking difference is the disappearance in FY2010 of any Europe and Eurasia recipients. In FY2000, six of the top 15 recipients were from this region, representing the effort to transform the former communist countries to democratic societies and marketoriented economies. Taking their place in FY2010, are six African countries, all focus countries (...continued) which the government is the predominant element, such as in healthcare where the Ministry of Health would play a determinative role. Often, in cases where a government is believed to be taking action contrary to U.S. interests, Congress has specified that assistance to that government be prohibited or limited, while not affecting overall assistance to the country. Congressional Research Service 14 Foreign Aid: An Introduction to U.S. Programs and Policy under the initiative to address the HIV/AIDS epidemic. Haiti’s presence in the FY2010 list is due to the humanitarian response to the January 2010 earthquake. On a regional basis, the Middle East has for many years received the bulk of U.S. foreign assistance. With economic aid to the region’s top two recipients, Israel and Egypt, declining since the late 1990s and overall increases in other areas, however, the share of bilateral U.S. assistance consumed by the Middle East fell from nearly 60% in FY2000 to nearly 26% by FY2010. Figure 3. Regional Distribution, FY2000 and FY2010 Source: USAID and Department of State. Notes: Based on appropriated levels. Figures include supplemental appropriations, Iraq and Afghanistan. Since September 11, 2001, South and Central Asia has emerged as a significant recipient of U.S. assistance, rising from a roughly 2% share 10 years ago to about 26% in FY2010, largely because of aid to Afghanistan and Pakistan. Similarly, the share represented by African nations has increased from a little less than 9% to nearly 29% in 2010, largely due to the HIV/AIDS Initiative, that funnels resources mostly to African countries. With the graduation of many East European aid recipients in recent years and the phasing down of programs in Russia, Ukraine, and other former Soviet states, the Europe/Eurasia regional share has fallen significantly, from a little more than 13% in FY2000 to under 4% in FY2010. Latin America, despite a renewed effort to deter illicit narcotics production and trafficking with large aid programs, is a region where the proportion of total U.S. assistance has remained about level at around 13%, as has the proportion of assistance provided to East Asia, accounting for 3% in FY2010. Foreign Aid Spending How Large Is the U.S. Foreign Assistance Budget and What Have Been the Historical Funding Trends? There are several methods commonly used for measuring the amount of federal spending on foreign assistance. Amounts can be expressed in terms of budget authority (funds appropriated by Congress), obligations (amounts contractually committed), outlays or disbursements (money actually spent), as a percentage of the total federal budget, as a percentage of total discretionary Congressional Research Service 15 Foreign Aid: An Introduction to U.S. Programs and Policy budget authority (excluding mandatory and entitlement programs), or as a percentage of the gross domestic product (GDP) (for an indication of the national wealth allocated to foreign aid). By nearly all of these measures, foreign aid resources fell steadily over several decades since the historical high levels of the late 1940s and early 1950s. This downward trend was sporadically interrupted, largely due to major foreign policy initiatives such as the Alliance for Progress for Latin America in 1961, the infusion of funds to implement the Camp David Middle East Peace Accords in 1979, and a spike in military assistance in 1985. The lowest point in U.S. foreign aid spending since World War II came in 1996 and 1997, when foreign assistance obligations fell to below $15 billion (in 2010 dollar terms). Figure 4. U.S. Foreign Aid: FY1946-FY2010 Sources: U.S. Overseas Loans and Grants (Greenbook), Office of Management and Budget Historic Budget Tables, FY2011; annual appropriations legislation and CRS calculations. Notes: The data in this table for FY1946-FY1976 represent obligated funds reported in the USAID Greenbook (the most reliable source available for pre-1970s data), while FY1977-FY2010 are budget authority figures from the OMB Historic Budget Tables, reflecting the 151 and 152 budget subfunctions. The Greenbook accounts included in the total have been selected by CRS to correlate with the function 151 and 152 budget accounts, allowing for fairly accurate comparison over time. FY1976 includes both regular FY1976 and transition quarter (TQ)funding. Congressional Research Service 16 Foreign Aid: An Introduction to U.S. Programs and Policy While foreign aid represented over 1% of Figure 5. U.S. Foreign Aid: FY1946-FY2010 U.S. annual gross domestic product from 1946 through the mid-1950s, it has ranged between 0.5% and 0.25% for the past three decades. Foreign assistance spending represents, on average, around 3% of discretionary budget authority and just over 1% of total budget authority each year since 1977, though the percentages have varied considerably from year to year and have generally declined. Foreign aid dropped from nearly 4.5% of discretionary budget authority in 1984 to 2% in 2002, before rising rapidly Source: Historic Budget Tables, FY2011; CRS in conjunction with U.S. activities in calculations. Afghanistan and Iraq starting in 2003. As a portion of total budget authority, foreign assistance reached 2% in 1979 and 1985, but hovered under 1% throughout the 1990s. (Figure 5). In 2010, foreign assistance accounted for 3.2% of discretionary budget authority and 1.1% of total budget authority (Figure 6). Figure 6. U.S. Budget Outlays, FY2010 Est. Since the September 11, 2001, terrorist attacks, foreign aid funding has been closely tied to U.S. strategy in Iraq and Afghanistan. Bush and Obama Administration global health initiatives have driven funding increases as well. Figure 7 shows how trends in foreign aid funding in recent decades can be attributed to specific foreign policy events and presidential initiatives. Source: U.S. Historic Budget Tables, FY2011. Congressional Research Service 17 Foreign Aid: An Introduction to U.S. Programs and Policy Figure 7. Foreign Aid Funding Trends, FY1977-FY2010 Source: Budget of the United States Government: Historic Tables Fiscal Year 2011, Table 5.1: Budget Authority by Function and Subfunction, 1976-2013; appropriations acts for FY2010. Note: MCC = Millennium Challenge Corporation; PEPFAR = President’s Emergency Plan for AIDS Relief; GHI = Global Health Initiative. How Much of Foreign Aid Dollars Are Spent on U.S. Goods? Most U.S. foreign aid is used to procure U.S. goods and services, although amounts of aid coming back to the United States differ by program. For some types of aid, the legislative requirements or program design make it relatively easy to determine how much aid is spent on U.S. goods or services, while for others, this is more difficult to determine: • USAID. Most USAID funding (Development Assistance, Global Health, Economic Support Fund) is implemented through grants and cooperative agreements with implementing partners. While many implementing partner organizations are based in the United States and employ U.S. citizens, there is little information available about what portion of the funds used for program implementation are used for goods and services provided by American firms. • Food assistance commodities are purchased wholly in the United States, and generally required by law to be shipped by U.S. carriers,12 suggesting that the vast majority of food aid expenditures are made in the United States. • Foreign Military Financing, with the exception of certain assistance allocated to Israel, is used to procure U.S. military equipment and training.13 • Millennium Challenge Corporation. The MCC uses procurement regulations established by the World Bank, which calls for an open and competitive process, with no preference given to donor country suppliers. As a result, MCC contracts 12 The Cargo Preference Act, P.L. 83-644, August 26,1954. For the research, development and procurement of advanced weapons systems, not less than $583.86 million of aid to Israel in FY2010 could be used for offshore procurement (about 11% of total Foreign Military Finance for that year). 13 Congressional Research Service 18 Foreign Aid: An Introduction to U.S. Programs and Policy are sometimes awarded to firms from developed countries other than the United States, which has been a source of some controversy. • Multilateral development aid. Multilateral aid funds are mixed with funds from other nations and the bulk of the program is financed with borrowed funds rather than direct government contributions. As a result, the U.S. share of procurement financed by MDBs may even exceed the amount of the U.S. contribution. The Foreign Assistance Act of 1961 limits the expenditure of foreign assistance funds outside the United States.14 Aid conditioned in this way on the procurement of goods and services from the donor-country is sometimes called “tied aid,” and has become increasingly disfavored in the international community.15 Studies have shown that tying aid increases the costs of goods and services by 15%-30% on average, and up to 40% for food aid, reducing the overall effectiveness of aid flows.16 The United States joined other donor nations in committing to reduce tied aid in the Paris Declaration on Aid Effectiveness in March 2005, and the portion of tied aid from all donors fell from 70% of total bilateral development assistance in 1985 to 12.5% in 2008. However, 25% of U.S. bilateral development assistance in 2008 was tied, perhaps reflecting the perception of policymakers that maintaining public and political support for foreign aid programs requires ensuring direct economic benefit to the United States.17 In addition to the direct benefits derived from aid dollars used for American goods and services, many argue that the foreign aid program brings significant indirect financial benefits to the United States. First, it is argued that provision of military equipment through the military assistance program and food commodities through P.L.480, the Food For Peace program, helps to develop future, strictly commercial, markets for those products. Second, as countries develop economically, they are in a position to purchase more goods from abroad and the United States benefits as a trade partner. How Does the United States Rank as a Donor of Foreign Aid? With the exception of several years between 1989 and 2001, during which Japan periodically ranked first among aid donors, the United States has led the developed countries in net disbursements of economic aid, or “Official Development Assistance (ODA)” as defined by the international donor community. 18 In 2009, the most recent year for which data are available, the United States disbursed $28.83 billion in ODA, or 24% of the $120 billion in net ODA disbursements that year from the 29 members of the Organization for Economic Cooperation and 14 Section 604 of the Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. §2151)—often referred to as the “Buy America” provision—requires that funds be spent “only in the United States, the recipient country, or developing countries” unless the assistance requires commodities or services that are not available in any such country or the President determines that procurement from an otherwise excluded country is necessary. 15 OECD Report on The Developmental Effectiveness of Untied Aid, p.1, available at http://www.oecd.org/dataoecd/5/ 22/41537529.pdf. 16 Id., p. 1. 17 2010 OECD Development Cooperation Report, p. 225. 18 The OECD Glossary of Statistical Terms defines ODA as “flows of official financing administered with the promotion of economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25%. By convention, ODA flows comprise contributions of donor government agencies, at all levels, to developing countries and to multilateral institutions.” ODA does not include military assistance. Congressional Research Service 19 Foreign Aid: An Introduction to U.S. Programs and Policy Development’s (OECD’s) Development Assistance Committee (DAC), representing the world’s leading providers of economic aid. France ranked second at $12.60 billion, Germany at $12.08 billion, and the United Kingdom at $11.49 billion. Japan, which has significantly scaled back its foreign aid program in recent years, gave $9.47 billion in 2009. Figure 8. Official Development Assistance From Major Donors, 2009 (in millions, US$) Source: OECD/DAC. Includes all countries providing at least $2 billion in ODA in 2009. Even as it leads in dollar amounts of aid flows to developing countries, the United States often ranks low when aid transfers by developed country donors are calculated as a percentage of gross national income (GNI). 19 In 2009, the United States ranked third from last among major donors at 0.20% of GNI, slightly higher than Japan (0.18%) and Italy (0.16%). Sweden ranked first at 1.12% of GNI, while the United Kingdom dispensed 0.52%, France 0.46%, and Germany 0.35%. The average for all DAC members in 2009 was 0.31%, up from .22% in 1999. Delivery of Foreign Assistance How and in what form assistance reaches an aid recipient can vary widely, depending on the type of aid program, the objective of the assistance, and the agency responsible for providing the aid. 19 Gross National Income (GNI) comprises GDP together with income received from other countries (notably interest and dividends), less similar payments made to other countries. Congressional Research Service 20 Foreign Aid: An Introduction to U.S. Programs and Policy What Executive Branch Agencies Administer Foreign Aid Programs? U.S. Agency for International Development For 50 years, the bulk of the U.S. bilateral economic aid program has been administered by the U.S. Agency for International Development (USAID). USAID is directly responsible for most bilateral development assistance and disaster relief programs, including economic growth, global health, many democracy programs, and Title II of P.L. 480 (Food for Peace program) food assistance. In conjunction with the State Department, USAID also manages most of the ESF and AEECA programs, which frequently support development activities as a means of promoting U.S. political and strategic goals.20 USAID also administers more than half of the Global HIV/AIDS funding appropriated to the State Department. USAID’s staff in late 2010 totaled 8,844, of which more than 70% (6,368) were working overseas, managing the implementation of hundreds of projects undertaken by thousands of private sector contractors, consultants, and nongovernmental organizations.21 Funding for programs administered by USAID totaled about $22.0 billion in FY2010.22 U.S. Department of State In addition to those programs jointly managed with USAID, the Department of State directly administers activities dealing with international narcotics control and law enforcement, terrorism, weapons proliferation, democracy promotion, non-U.N. peacekeeping operations, refugee relief, and voluntary support for a range of international organizations such as UNICEF. In FY2010, total funding for these programs was about $12.03 billion. State is also home to the Office of the Global AIDS Coordinator (OGAC), created to manage President Bush’s Global AIDS Initiative, which administered $5.4 billion in FY2010 for international HIV/AIDS, tuberculosis, and malaria programs. Most of these programs, however, are implemented by USAID, the National Institutes of Health, and the Centers for Disease Control. In addition, the State Department, through its Bureau of Political-Military Affairs, has policy authority over the Foreign Military Financing (FMF), International Military Education and Training (IMET), Peacekeeping Operations (PKO), and the Pakistan Counterinsurgency Capability Fund (PCCF), which totaled $4.7 billion. These programs are administered by the Department of Defense. Police training programs, traditionally the responsibility of the International Narcotics and Law Enforcement (INL) Office in the State Department, have, in the case of Iraq and Afghanistan, been undertaken by DOD, mostly with DOD’s own appropriations. In FY2010, the State Department began a process to assume responsibility for police training in Iraq. State is also the organizational home to the Director of Foreign Assistance (DFA), a position created in 2006 to coordinate U.S. foreign assistance programs. The DFA has authority over most 20 The State Department determines the policy on distribution of funds from these accounts. 21 Semi-Annual USAID Worldwide Staffing Pattern Report, September 30, 2010. Of total staff, 3,377 were U.S. direct hires, 4,508 were nationals of the foreign countries in which they work, and 703 were U.S. personal service contractors. 22 This includes 93% of ESF, 70% of AEECA, and 60% of State Global HIV/AIDS accounts. Congressional Research Service 21 Foreign Aid: An Introduction to U.S. Programs and Policy State Department and USAID programs, and is also tasked with providing “guidance” to other agencies that manage foreign assistance activities. However, major foreign aid programs, such as the Millennium Challenge Corporation and the Office of the Global AIDS Coordinator, remain outside of the DFA’s authority. U.S. Department of Defense As noted above, DOD administers all traditional aid-funded military assistance programs—FMF, IMET, PKO, and PCCF—following the policy guidance of the Department of State. The Defense Security Cooperation Agency is the primary DOD body responsible for these programs. In FY2010, funding for these assistance programs totaled $4.7 billion. DOD also carries out an array of state-building activities, funded through defense appropriations legislation, which are usually in the context of training exercises and military operations and are not counted as foreign assistance for the purposes of this report. These sorts of activities, once the exclusive jurisdiction of civilian aid agencies, include development assistance to Iraq and Afghanistan through the Commander’s Emergency Response Program (CERP) and the Iraq Relief and Reconstruction Fund, and elsewhere through the Defense Health Program, counter-drug activities, and humanitarian and disaster relief. Training and equipping of Iraqi and Afghan police and military, though similar in nature to some traditional security assistance programs, has also mostly been funded through DOD appropriations. U.S. Department of the Treasury The Treasury Department’s Under Secretary for International Affairs administers U.S. contributions to and participation in the World Bank and other multilateral development institutions. Presidentially appointed U.S. executive directors at each of the banks represent the United States’ point of view. Treasury also deals with foreign debt reduction issues and programs, including U.S. participation in the Highly Indebted Poor Countries (HIPC) initiative, and manages a technical assistance program offering temporary financial advisors to countries implementing major economic reforms and combating terrorist finance activity. For FY2010, funding for activities falling under the Treasury Department’s jurisdiction totaled about $2.7 billion. Millennium Challenge Corporation The Millennium Challenge Corporation (MCC) was created in February 2004 with the purpose of concentrating significantly higher amounts of U.S. resources in a few low- and lower-middle income countries that have demonstrated a strong commitment to political, economic, and social reforms. A significant feature of the MCC effort is that recipient countries formulate, propose and implement mutually agreed multi-year U.S.-funded project plans known as compacts. Compacts in the 22 recipient countries selected to date have emphasized construction of infrastructure. The MCC is a U.S. government corporation, headed by a Chief Executive Officer who reports to a Board of Directors chaired by the Secretary of State. The Corporation maintains a relatively small staff of about 300. The MCC managed a budget of just over $1.1 billion in FY2010. Congressional Research Service 22 Foreign Aid: An Introduction to U.S. Programs and Policy Other Agencies A number of other government agencies play a role in implementing foreign aid programs. The Peace Corps, an autonomous agency with an FY2010 budget of $400 million, supports about 8,655 volunteers in 77 countries. Peace Corps volunteers work in a wide range of educational, health, and community development projects. The Trade and Development Agency (TDA) finances trade missions and feasibility studies for private sector projects likely to generate U.S. exports. Its budget in FY2010 was $55.2 million. The Overseas Private Investment Corporation (OPIC) provides political risk insurance to U.S. companies investing in developing countries and the new democracies and finances projects through loans and guarantees. It also supports investment missions and provides other pre-investment information services. Its insurance activities have been self-sustaining, but credit reform rules require a relatively small appropriation to back up U.S. guarantees and for administrative expenses. For FY2010, Congress appropriated $29 million to OPIC. The Inter-American Foundation and the African Development Foundation, appropriated $23 million and $30 million, respectively, in FY2010, finance smallscale enterprise and grassroots self-help activities aimed at assisting poor people. What Are the Different Forms in Which Assistance Is Provided? Most U.S. assistance is now provided as a grant (gift) rather than a loan, but the forms a grant may take are diverse. Cash Transfers Although it is the exception rather than the rule, some countries receive aid in the form of a cash grant to the government. Dollars provided in this way support a government’s balance-ofpayments situation, enabling it to purchase more U.S. goods, service its debt, or devote more domestic revenues to developmental or other purposes. Cash transfers have been made as a reward to countries that have supported the United States in its war on terrorism (Turkey and Jordan in FY2004), to provide political and strategic support (both Egypt and Israel annually for decades after the 1979 Camp David Peace Accord), and in exchange for undertaking difficult political and economic reforms. The Philippines, Pakistan, Jordan, Egypt, and Uganda received aid in the from of cash transfers in FY2010.23 Equipment and Commodities Assistance may be provided in the form of food commodities, weapons systems, or equipment such as generators or computers. Food aid may be provided directly to meet humanitarian needs or to encourage attendance at a maternal/child health care program. Weapons supplied under the military assistance program may include training in their use. Equipment and commodities provided under development assistance are usually integrated with other forms of aid to meet objectives in a particular social or economic sector. For instance, textbooks have been provided in both Afghanistan and Iraq as part of a broader effort to reform the educational sector and train teachers. Computers may be offered in conjunction with training and expertise to fledgling 23 Information provided by USAID LPA, February 2, 2011. Congressional Research Service 23 Foreign Aid: An Introduction to U.S. Programs and Policy microcredit institutions. In recent years, antiretroviral drugs (ARVs) provided to individuals living with HIV/AIDS have been a significant component of commodity-based assistance. Economic Infrastructure Although once a significant portion of U.S. assistance programs, construction of economic infrastructure—roads, irrigation systems, electric power facilities, etc.—was rarely provided after the 1970s. Because of the substantial expense of these projects, they were to be found only in large assistance programs, such as that for Egypt in the 1980s and 1990s, where the United States constructed major urban water and sanitation systems. In the past decade, however, the aid programs in Iraq and Afghanistan have supported the building of schools, health clinics, roads, power plants, and irrigation systems. In Iraq alone, more than $10 billion has gone to economic infrastructure. Economic infrastructure is now also supported by U.S. assistance in a wider range of developing countries through the Millennium Challenge Corporation. In this case, recipient countries design their own assistance programs, most of which, to date, include an infrastructure component. Training Transfer of know-how is a significant part of most assistance programs. The International Military and Educational Training Program (IMET) provides training to officers of the military forces of allied and friendly nations. Tens of thousands of citizens of aid recipient countries receive short-term technical training or longer-term degree training annually under USAID programs. More than one-third of Peace Corps volunteers are English, math, and science teachers. Other aid programs provide law enforcement personnel with anti-narcotics or anti-terrorism training. Expertise Many assistance programs provide expert advice to government and private sector organizations. The Treasury Department, USAID, and U.S.-funded multilateral banks all place specialists in host government ministries to make recommendations on policy reforms in a wide variety of sectors. USAID has often placed experts in private sector business and civic organizations to help strengthen them in their formative years or while indigenous staff are being trained. While most of these experts are U.S. nationals, in Russia, USAID has funded the development of locally staffed political and economic think tanks to offer policy options to that government. Small Grants USAID, the Inter-American Foundation, and the African Development Foundation often provide aid in the form of grants that may then be used by U.S. or indigenous organizations to further their varied developmental purposes. For instance, grants are sometimes provided to microcredit organizations, which in turn provide loans to microentrepreneurs. Through the USAID-funded Eurasia Foundation, grants are provided to help strengthen the role of former Soviet Union nongovernmental organizations in democratization and private enterprise development. Congressional Research Service 24 Foreign Aid: An Introduction to U.S. Programs and Policy How Much Aid Is Provided as Loans and How Much as Grants? What Are Some Types of Loans? Have Loans Been Repaid? Why Is Repayment of Some Loans Forgiven? Under the Foreign Assistance Act of 1961, the President may determine the terms and conditions under which most forms of assistance are provided. In general, the financial condition of a country—its ability to meet repayment obligations—has been an important criterion of the decision to provide a loan or grant. Some programs, such as humanitarian and disaster relief programs, were designed from the beginning to be entirely grant activities. Loan/Grant Composition During the past two decades, nearly all foreign aid—military as well as economic—has been provided in grant form. While loans represented 32% of total military and economic assistance between 1962 and 1988, this figure declined substantially beginning in the mid-1980s, until by FY2001, loans represented less than 1% of total aid appropriations. In 2009, the most recent years for which data are available, the United Stated provided no official development assistance in the form of loans. The de-emphasis on loan programs came largely in response to the debt problems of developing countries. Both Congress and the executive branch supported the view that foreign aid should not add to the already existing debt burden carried by these countries. Loan Guarantees Although a small proportion of total current aid, there are two significant USAID-managed programs that guarantee loans. A Development Credit Authority program loan guarantee, in which risk is shared with a private sector bank, can be used to increase access to finance in support of any development sector. Under the Israeli Loan Guarantee Program, the United States has guaranteed repayment of loans made by commercial sources to support the costs of immigrants settling in Israel from other countries and may issue guarantees to support economic recovery. 24 Loan Repayment Between 1946 and 2009, the United States loaned nearly $109 billion in foreign aid, and while most foreign aid is now provided through grants, $15.0 billion in loans to foreign governments remained outstanding at the end of 2009.25 For nearly three decades, Section 620q of the Foreign Assistance Act (the Brooke amendment) has prohibited new assistance to any country that falls more than one year past due in servicing its debt obligations to the United States, though the President may waive application of this prohibition if he determines it is in the national interest. Currently, countries in violation of Brooke are Argentina, Democratic Republic of Congo (DRC), 24 Israel has not drawn on any loan guarantees since FY2004. U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945-September 30, 2008 (Greenbook). 25 Congressional Research Service 25 Foreign Aid: An Introduction to U.S. Programs and Policy Somalia, Sudan, Syria, and Zimbabwe. However, for FY2010, restrictions were waived in whole or in part for the DRC, Somalia, and Zimbabwe. 26 Debt Forgiveness The United States has also forgiven debts owed by foreign governments and encouraged, with mixed success, other foreign aid donors and international financial institutions to do likewise. In total, the United States forgave about $24.9 billion owed by foreign governments between 1990 and 2008 through legislative and bilateral negotiation.27 In some cases, the decision to forgive foreign aid debts has been based largely on economic grounds as another means to support development efforts by heavily indebted, but reformminded, countries. The United States has been one of the strongest supporters of the Heavily Indebted Poor Country (HIPC) Initiative. This initiative, which began in the late 1990s and continues in 2010, includes participation of the World Bank, the International Monetary Fund, and other international financial institutions in a comprehensive debt workout framework for the world’s poorest and most debt-strapped nations. The largest and most hotly debated debt forgiveness actions have been implemented for much broader foreign policy reasons with a more strategic purpose. Poland, during its transition from a communist system and centrally planned economy (1990—$2.46 billion); Egypt, for making peace with Israel and helping maintain the Arab coalition during the Persian Gulf War (1990—$7 billion); and Jordan, after signing a peace accord with Israel (1994—$700 million), are examples. Similarly, the United States forgave about $4.1 billion in outstanding Saddam-era Iraqi debt in November 2004 and helped negotiate an 80% reduction in Iraq’s debt to Paris Club members later that month. What Are the Roles of Government and Private Sector in Development and Humanitarian Aid Delivery? Most development and humanitarian assistance activities are not directly implemented by U.S. government personnel but by private sector entities, such as individual personal service contractors, consulting firms, non-profit non-government organizations (NGOs), universities, or charitable private voluntary organizations (PVOs). Generally speaking, government foreign service and civil servants determine the direction and priorities of the aid program, allocate funds while keeping within legislative requirements, ensure that appropriate projects are in place to meet aid objectives, select implementers, and monitor the implementation of those projects for effectiveness and financial accountability. In recent years, USAID has sought to increase its workforce and technical capacity28 in part to reduce its reliance on private sector implementers. At the same time, both USAID and the State Department have promoted the use of public-private partnerships, in which private entities are not paid implementers, but rather contributing partners with interests that coincide with development priorities. For example, USAID has partnered with 26 Information provided to CRS by the State Department, February 1, 2011. 27 U.S. Department of the Treasury and the Office of Management and Budget. U.S. Government Foreign Credit Exposure as of December 31, 2008, p. 22. 28 The Development Leadership Initiative, begun in 2008, is intended to realize this transition. Congressional Research Service 26 Foreign Aid: An Introduction to U.S. Programs and Policy the Heinz corporation in Egypt to train farmers in a particular method of producing processing tomatoes that are suitable for use in Heinz products. The farmers learned to grow a higher-value crop, raising their income potential in furtherance of USAID objectives. Heinz, which provided technical assistance as well as funding for a local processing plant at a later stage of the process, strengthened its supply chain. Congress and Foreign Aid What Congressional Committees Oversee Foreign Aid Programs? Numerous congressional authorizing committees and appropriations subcommittees maintain responsibility for U.S. foreign assistance. Several committees have responsibility for authorizing legislation establishing programs and policy and for conducting oversight of foreign aid programs. In the Senate, the Committee on Foreign Relations, and in the House, the Committee on Foreign Affairs, have primary jurisdiction over bilateral development assistance, ESF and other economic security assistance, military assistance, and international organizations. Food aid, primarily the responsibility of the Agriculture Committees in both bodies, is shared with the Foreign Affairs Committee in the House. U.S. contributions to multilateral development banks are within the jurisdiction of the Senate Foreign Relations Committee and the House Financial Services Committee. Traditionally, most foreign aid appropriations fall under the jurisdiction of the State-Foreign Operations Subcommittees, with food assistance appropriated by the Agriculture Subcommittees. As noted earlier, however, a growing segment of military activities that could be categorized as foreign aid have been appropriated through the Defense Subcommittees in recent years. What Are the Major Foreign Aid Legislative Vehicles? The most significant permanent foreign aid authorization laws are the Foreign Assistance Act of 1961, covering most bilateral economic and security assistance programs (P.L. 87-195; 22 U.S.C. 2151); the Arms Export Control Act (1976), authorizing military sales and financing (P.L. 90-629; 22 U.S.C. 2751); the Agricultural Trade Development and Assistance Act of 1954 (P.L. 480), covering food aid (P.L. 83-480; 7 U.S.C. 1691); and the Bretton Woods Agreement Act (1945), authorizing U.S. participation in multilateral development banks (P.L. 79-171; 22 U.S.C. 286).29 In the past, Congress usually scheduled debates every two years on omnibus foreign aid bills that amended these permanent authorization measures. Although foreign aid authorizing bills have passed the House or Senate, or both, on numerous occasions, Congress has not enacted into law a comprehensive foreign assistance authorization measure since 1985. Instead, foreign aid bills have frequently stalled at some point in the debate because of controversial issues, a tight legislative calendar, or executive-legislative foreign policy disputes.30 29 Separate permanent authorizations exist for other specific foreign aid programs such as the Peace Corps, the Millennium Challenge Corporation, the Inter-American Foundation, and the African Development Foundation. 30 A few foreign aid programs that are authorized in other legislation have received more regular legislative review. Authorizing legislation for voluntary contributions to international organizations and refugee programs, for example, are usually contained in omnibus Foreign Relations Authorization measures that also address State Department and public diplomacy issues. Food aid and amendments to P.L.480 are usually considered in the omnibus “farm bill” that (continued...) Congressional Research Service 27 Foreign Aid: An Introduction to U.S. Programs and Policy In lieu of approving a broad authorization bill, Congress has on occasion authorized major foreign assistance initiatives for specific regions, countries, or aid sectors in stand-alone legislation or within an appropriation bill. Among these are the SEED Act of 1989 ( P.L. 101-179; Governing Justly and Democratically; Economic Growth; and Humanitarian Assistance. Generally, these objectives and sectors do not correspond to any one particular budget account in appropriations bills.6 Annually, the Department of State and USAID fit their Foreign Operations budget request into this framework, allowing for an objective and program-oriented viewpoint for those who seek it. An effort to obtain reporting from all departments and agencies of the U.S. government on aid levels categorized by objective and sector is on-going. Currently, however, ten of the nearly 30 departments and agencies with aid programs are reporting on the foreignassistance.gov website and most of that reporting is only partial and for the last few years. Table 1. Department of State and USAID Foreign Assistance by Objective and Program Area: FY2015

(planned allocations in millions of current dollars)

Aid Objectives and Program Areas

FY2015

Aid Objectives and Program Areas

FY2015

Peace and Security

9,070.00

Investing in People

9,870.00

Counter-Terrorism

1,260.00

Health

8,700.00

Combating Weapons of Mass Destruction

288.95

Education

783.88

Stabilization/Security Sector Reform

6,560.00

Social Services/Protection of Vulnerable

386.12

Counter-narcotics

555.33

   

Transnational Crime

91.24

Governing Justly & Democratically

2,430.80

Conflict Mitigation

311.60

Rule of Law & Human Rights

644.28

   

Good Governance

1,050.00

Promoting Economic Growth

3,795.65

Political Competition

233.43

Macroeconomic Growth

284.80

Civil Society

501.72

Trade & Investment

170.25

   

Financial Sector

104.72

Humanitarian Assistance

4,680.00

Infrastructure

550.85

Protection, Assistance & Solutions

4,500.00

Agriculture

1,180.00

Disaster Readiness

149.78

Private Sector Competitiveness

522.32

Migration Management

30.50

Economic Opportunity

271.30

   

Environment

711.41

   

Source: ForeignAssistance.gov; CRS calculations.

What Are the Major Foreign Aid Funding Categories and Accounts?

The framework introduced by the Department of State organizes assistance by foreign policy strategic objective and sector. But there are many other ways to categorize foreign aid, one of which is to sort out and classify foreign aid accounts in the U.S. budget according to the types of activities they are expected to support, using broad categories such as military, bilateral development, multilateral development, non-military security, humanitarian, and political/strategic activities. While imperfect—these accounts support a variety of different aid agencies and serve multiple functions—this methodology can be applied to all traditional aid within the State, Foreign Operations appropriations and the international food aid title of the Agriculture appropriations as well as to the DOD and other government agency assistance programs with funding outside traditional foreign aid budget accounts. In FY2015, these many aid accounts provided $48.57 billion in assistance.7

Figure 1. Aid Program Composition, FY2015

Source: U.S. Department of State, Summary and Highlights, International Affairs, Function 150, FY2016; CRS calculations.

Assistance Serving Development and Humanitarian Purposes

A wide range of aid programs address development and humanitarian concerns. These are provided both bilaterally and multilaterally. In FY2015, roughly $26.4 billion—54% of total estimated U.S. assistance—focused exclusively on mitigating human suffering and poverty and addressing environmental, governance, and other concerns in developing countries.

Bilateral Development Assistance

For FY2015, Congress appropriated about $15.8 billion in bilateral development assistance, or 32% of total foreign aid, primarily through the Development Assistance, Global Health (Global Health-USAID and Global Health-State) and the administrative accounts that allow USAID to operate (Operating Expenses, Capital Investment Fund, and Office of the Inspector General). Other bilateral development assistance accounts support the development efforts of distinct institutions, such as the Peace Corps, Inter-American Development Foundation, African Development Foundation, Trade and Development Agency, Millennium Challenge Corporation (MCC), and the National Endowment for Democracy (NED).

Development assistance programs are designed chiefly to foster sustainable broad-based economic progress and social stability in developing countries. This aid is managed largely by the U.S. Agency for International Development (USAID) and is used for long-term projects in a wide range of areas. Many programs share the objective, as in the State Department framework, of "promoting economic growth and prosperity." Agriculture programs focus on reducing poverty and hunger, trade-promotion opportunities for farmers, and sound environmental practices for sustainable agriculture. Private sector development programs include support for business associations and microfinance services. Programs for managing natural resources and protecting the global environment focus on conserving biological diversity; improving the management of land, water, and forests; encouraging clean and efficient energy production and use; and reducing the threat of global climate change. Programs supporting the objective of "governing justly and democratically" include support for promoting rule of law and human rights, good governance, political competition, and civil society. Programs with the objective of "investing in people" include support for basic, secondary, and higher education, improving government ability to provide social services, water and sanitation, and health.

By far the largest portion of bilateral development assistance—61% in FY2015—is devoted to global health, in particular support for treatment of HIV/AIDS and other infectious diseases, maternal and child health, family planning and reproductive health programs, and strengthening the government health systems that provide care. Most funding for HIV/AIDS, malaria, and tuberculosis is directed through the State Department's Office of the Global AIDS Coordinator to other agencies, including USAID and the Centers for Disease Control and Prevention. The latter agency and the National Institutes for Health also conduct programs drawn from Labor-Health and Human Services (HHS) appropriations. (For more information on global health assistance, see CRS Report R43115, U.S. Global Health Assistance: FY2001-FY2016, by [author name scrubbed].)

In addition to its more well-known role in humanitarian aid, a portion of the Title II P.L. 480 (after the 1954 law that authorized it) international food aid program—also known as Food for Peace—funded under the Agriculture appropriations, provides non-emergency food commodities to private voluntary organizations (PVOs) or multilateral organizations, such as the World Food Program, for development-oriented purposes. Generally, U.S. agricultural commodities are sold on local markets ("monetized") and the proceeds are used for development projects. In some cases, food can be purchased locally. P.L. 480 Title II funds are also used to support the "farmer-to-farmer" program, which sends hundreds of U.S. volunteers as technical advisors to train farm and food-related groups throughout the world. In addition, the McGovern-Dole International Food for Education and Child Nutrition Program, a program begun in 2002, provides commodities, technical assistance, and financing for school feeding and child nutrition programs. (For more information on international food aid programs, see CRS Report R41072, U.S. International Food Aid Programs: Background and Issues, by [author name scrubbed] .)

Multilateral Development Assistance

A share of U.S. foreign assistance—6% in FY2015—is combined with contributions from other donor nations to finance multilateral development projects. Multilateral aid is funded largely through the International Organizations and Programs (IO&P) account and individual accounts for each of the Multilateral Development Banks (MDBs) and global environmental funds. For FY2015, Congress appropriated $2.8 billion for development activities implemented by international organizations and financial institutions, including contributions to the United Nations Children's Fund (UNICEF); the United Nations Development Program (UNDP); and MDBs, such as the World Bank. The U.S. share of donor contributions to each of the MDB concessional and non-concessional loan windows varies widely. For the largest MDB, the World Bank, the United States has contributed about 20.6% to the non-concessional lending window (the International Development Associations [IDA]) and about 15.9% to the non-concessional lending window (the International Bank for Reconstruction and Development [IBRD]). (For more information on MDBs, see CRS Report R41170, Multilateral Development Banks: Overview and Issues for Congress, by [author name scrubbed].)

Humanitarian Assistance

For FY2015, Congress appropriated $7.6 billion, 16% of total assistance, for humanitarian aid programs. Unlike development assistance programs, which are often viewed as long-term efforts that may have the effect of preventing future crises from emerging, humanitarian aid programs are devoted largely to the immediate alleviation of humanitarian emergencies, both natural and man-made disasters as well as problems resulting from conflict associated with failed or failing states. A large proportion of humanitarian assistance goes to programs, administered by the State Department and funded under the Migration and Refugee Assistance (MRA) and the Emergency Refugee and Migration Assistance (ERMA) accounts, aimed at addressing the needs of refugees and internally displaced persons. These accounts support a number of refugee relief organizations, including the U.N. High Commission for Refugees and the International Committee of the Red Cross. The International Disaster Assistance (IDA) account managed by USAID provides relief and rehabilitation assistance to victims of man-made and natural disasters, such as the 2010 Haiti earthquake and the economic and social dislocations caused by the 2014/2015 Ebola epidemic. A portion of IDA is used for food commodities, including food locally procured through cash purchases. The Department of Defense provides disaster relief under the Overseas Humanitarian, Disaster, and Civic Assistance (OHDACA) account of the DOD appropriations. (For further information on humanitarian programs, see CRS Report RL33769, International Crises and Disasters: U.S. Humanitarian Assistance Response Mechanisms, by [author name scrubbed].)

The bulk of food assistance provided under Title II of P.L. 480 in the Agriculture appropriations—$1.2 billion in FY2015—is used by USAID, mostly to purchase U.S. agricultural commodities, for emergency needs, supplementing both refugee and disaster programs.8 (For more information on food aid programs, see CRS Report R41072, U.S. International Food Aid Programs: Background and Issues, by [author name scrubbed].)

Assistance Serving Both Development and Special Political/Strategic Purposes

One aid account is distinctive in that its primary purpose is to promote special U.S. economic, political, or security interests. Programs funded through the Economic Support Fund (ESF) account generally aim to promote political and economic stability, often through activities indistinguishable from those provided under regular development programs.9 For FY2015, Congress appropriated $5.4 billion, 11% of total assistance, through this account.

For many years, following the 1979 Camp David accords, most ESF funds went to support the Middle East Peace Process. A significant amount of funding still goes to Egypt, the West Bank, and Jordan—27% in FY2015. Since the September 2001 terrorist attacks, however, ESF has also largely supported countries of importance in the U.S. counterterrorism strategy. In FY2012, for example, nearly half of the ESF appropriation was directed at Afghanistan and Pakistan (29% in FY2015).

Over the years, other accounts have been established to meet specific political or security interests and then were dissolved once the need was met. One example is the Assistance to Eastern Europe and Central Asia (AEECA) account, established in FY2009 to combine two aid programs that met particular strategic political interests arising from the demise of the Soviet empire. The SEED (Support for East European Democracy Act of 1989) and the FREEDOM Support Act (Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act of 1992) programs were designed to help Central Europe and the newly independent states of the former Soviet Union (FSA) achieve democratic systems and free market economies. With funding decreasing as countries in the region graduated from U.S. assistance, the account was eliminated in the FY2013 appropriations. Increasing requests and appropriations for countries in the former Soviet Union threatened by Russia, however, have led to its re-emergence in the FY2016 State, Foreign Operations appropriations.

In addition to these traditional aid accounts, two DOD-funded programs directed at Afghanistan also support development efforts. The Commander's Emergency Response Program (CERP) and the Business Task Force, at $10 million and $4 million respectively in FY2015, are winding down as the U.S. military presence in that country declines. Both had earlier iterations in Iraq.

Assistance Serving Security Purposes

A number of U.S. civilian and military-implemented aid programs directly address national security concerns, most seeking to strengthen the military capacity and civilian law enforcement competence of U.S. allies and cooperating developing countries. They encompass the array of programs whose objective is "peace and security" in the State Department framework. Together they accounted for $16.8 billion, 35% of total U.S. assistance, in FY2015.

Non-Military Security Assistance

Several U.S. government departments support programs to address global concerns that are considered threats to U.S. security and well-being, such as terrorism, illicit narcotics, crime, and weapons proliferation. In the past two decades, policymakers have given greater weight to these programs. In FY2015, they amounted to $3 billion, 7% of total assistance.

Since the mid-1990s, three U.S. departments—State, DOD, and Energy—have provided funding, technical assistance, and equipment to counter the proliferation of chemical, biological, radiological, and nuclear weapons. Originally aimed at the former Soviet Union under the rubric cooperative threat reduction (CTR), these programs seek to ensure that these weapons are secured and their spread to rogue nations or terrorist groups prevented. (For further information on nonproliferation efforts, see CRS Report R43143, The Evolution of Cooperative Threat Reduction: Issues for Congress, by [author name scrubbed] and [author name scrubbed].)

In addition to nonproliferation efforts, the Nonproliferation, Anti-Terrorist, Demining and Related Programs (NADR) account, managed by the State Department, encompasses civilian anti-terrorism efforts such as detecting and dismantling terrorist financial networks, establishing watch-list systems at border controls, and building developing country anti-terrorism capacities. NADR also funds humanitarian demining programs.

The State Department is the main implementer of counternarcotics programs. The State-managed International Narcotics Control and Law Enforcement (INCLE) account supports counternarcotics activities, most notably in Afghanistan, Pakistan, Peru and Colombia. It also helps develop the judicial system—assisting judges, lawyers, and legal institutions—of many developing countries, especially in Afghanistan. DOD and USAID also support counternarcotics activities, the latter by offering alternative crop and employment programs. (For more information on counternarcotics efforts, see CRS Report RL34543, International Drug Control Policy: Background and U.S. Responses, by [author name scrubbed].)

Military Assistance

The United States provides military assistance to U.S. friends and allies to help them acquire U.S. military equipment and training. At $13.5 billion, military assistance accounted for about 28% of total U.S. foreign aid in FY2015. The Department of State administers three programs, with corresponding appropriations accounts, that are then implemented by DOD. Foreign Military Financing (FMF) is a grant program that enables governments to receive equipment and associated training from the U.S. government or to access equipment directly through U.S. commercial channels. Most FMF grants support the security needs of Israel, Egypt, Jordan, Pakistan, and Iraq. The International Military Education and Training program (IMET) offers military training on a grant basis to foreign military officers and personnel. Peacekeeping funds (PKO) are used to support voluntary non-U.N. peacekeeping operations as well as training for an African crisis response force. Since 2002, DOD appropriations have supported FMF-like programs, training and equipping security forces in Afghanistan and Iraq.10 The DOD programs in these two countries accounted for more than 40% of total military assistance in FY2015.

What Are the Recent Priorities and Trends in U.S. Foreign Aid? Tracking changes in the amount of funds distributed to each objective, sector, type of assistance, or funding account is one means of measuring the relative priority placed by the executive branch on any of the aid activities represented by that category of assistance. Because Congress closely examines the executive's distribution of bilateral economic resources and often modifies the President's proposed budget plan, funding trends also characterize congressional aid priorities and areas of special concern.11 Trends in Types of U.S. Aid As shown in Figure 2, there have been shifts in the use of different types of U.S. assistance in response to world events and changing priorities. Grouping aid in the categories noted above, a number of notable trends over several decades can be identified.

Increase in bilateral development aid. Reflecting a period of broad budget cuts in the mid-1980s and again in the mid-1990s as well as the loss of a key rationale for assistance in the wake of the collapse of communism, total bilateral development aid fell by 21% in real terms (2015 dollars) between FY1985 and FY2000. Since then, however, funding encompassed by this category of assistance has more than tripled in real terms, an increase mirrored in the expanding role of bilateral development aid as a proportion of the total U.S. aid program. A large measure of that rise can be attributed to approval of significant sums for two new presidential aid priorities in 2004, the Millennium Challenge Corporation and the President's Emergency Plan for AIDS Relief (PEPFAR). PEPFAR and the Obama Administration's Global Health Initiative, begun in FY2009, have increased aid spending on health programs from 4% in FY2000 to about 20% of all aid in FY2015. Growth in development aid may also be seen as an acknowledgement of the role of poverty and instability in the generation of terrorism.

Increase in humanitarian aid. Historically, humanitarian aid levels have fluctuated with the occurrence of natural and man-made disasters. In the early to mid-1980s, levels rose to address the drought in the Sahel region of Africa, but then subsided. However, from the early 2000s, humanitarian aid increased significantly and has remained high, more than quadrupling in real terms in order to address a continuing flow of crises, including the 2004 Indian Ocean tsunami, the 2010 Haiti earthquake, the 2014 Ebola epidemic, and the current plight of Syrian refugees.

Figure 2. Shifts in Total Aid Program Emphasis, FY1985-FY2015

(as a percentage of total U.S. foreign assistance appropriations)

Sources: Department of State and USAID, Congressional Budget Justifications; CRS calculations.

Increase in non-military security aid. Since the early-1990s, when anti-terror and counter-narcotics programs represented around 1% of total U.S. assistance, there has been a significant increase in non-military security programs. As a result of the 1990s Nunn-Lugar Cooperative Threat Reduction Program, the Andean Counter-Narcotics Initiative launched in FY2000, and the strengthening of counter-terrorism programs following the September 11, 2001, terrorist attacks, these security programs represented about 10% of total aid in the first decade of the 2000s. Although the relative proportion drops to 7% in FY2015, funding levels in FY2015 are four times more than those of 1995 in real terms.

Shifts in military aid. Making up about one-third of the aid program in FY1985, military assistance as a share of total aid has declined modestly to about 28% of aid since then. The story behind that figure is the sharp decline—50% in real terms—in traditional FMF military aid between FY1985 and FY2015. More than making up for that shortfall has been the increase in DOD-funded military aid, especially in Afghanistan and Iraq. Factoring in that assistance, military aid reached its all-time peak in FY2007 at $18.3 billion. The FY2015 level represents a 34% decrease in real terms from that FY2007 level.

Trends in Programs and Sectors of Special Interest

At various times, congressional and public attention centers on one or another slice of the aid effort. For instance, the large community of non-governmental organizations (NGOs) working on international sustainable development activities most often concerns itself with what some call "core accounts," usually defined as those most poverty-focused.12 Collectively, these accounts have grown significantly over the 13-year period from FY2002 to FY2015, from $4.8 billion to $20.2 billion (a 227% increase in real terms [2015 dollars]), largely due to the launching of the HIV/AIDS and MCC programs, as well as a substantial rise in humanitarian aid funding.

As noted earlier, one of the most striking changes in the distribution of economic aid resources in recent years has been the sharp growth in funding for health programs, especially in the area of HIV/AIDS and other infectious diseases. In 2004, the Bush Administration launched a five-year Global AIDS Initiative, the President's Emergency Plan for AIDS Relief (PEPFAR), with the goal of treating 2 million HIV-infected individuals and caring for 10 million infected people and AIDS orphans, that eventually provided over $18 billion. The program was reauthorized in 2008 (P.L. 110-293) at $48 billion for FY2009 through FY2013 to support prevention and treatment of HIV/AIDS, malaria, and tuberculosis. Encompassing all health programs, a Global Health Initiative introduced by President Obama in 2009 promised expenditures of $63 billion between 2009 and 2014. Overall, health funding has increased 245% in real terms since FY2002. Spending on tuberculosis and malaria has increased by 374% in real terms in the past 10 years alone. Funding has also risen notably for child survival and maternal health projects that aim to reduce infant mortality, combat malnutrition, improve the quality of child delivery facilities, and raise nutritional levels of mothers. Funding for these activities has grown by 70% in real terms since FY2005.

Public support and congressional and Administration action often raise the priority given to specific sectors or programs. Congress has been instrumental in boosting funding for microenterprise, basic education, and clean water and sanitation through legislative directives in the annual foreign aid appropriations legislation. Funding for microenterprise went from $58 million in FY1988 to $154 million in FY1999 and $222 million in FY2013. Congress recommended a level of $265 million for FY2015. Basic education programs were funded at about $95 million in FY1997; the level rose to $981 million in FY2010. Congress set a level of $800 million in FY2015. Funding for clean drinking water supply and sanitation projects was roughly $215 million in FY2002; in FY2009, it reached $514 million but declined to $360 million in FY2013, as much of the funding rests on large aid programs in places such as West Bank/Gaza, Jordan, and Afghanistan, as well as MCC programs. Congress directed a level of $382.5 million in FY2015.

Some sectors that had lost out in the funding competition in recent decades made a notable rebound with support from the Obama Administration. Agriculture programs saw significant decreases from the 1970s and 1980s, when they represented the bulk of U.S. development assistance. In FY1984, agriculture and rural development received an appropriation of $725 million from the development assistance account, compared to $315 million in FY1998 and $474 million in FY2008 from all USAID/State accounts. Agriculture-related programs were expected to receive about $1.6 billion in FY2015, reflecting the Feed the Future presidential food security initiative, launched in 2009. Congress recommended a level of not less than $1 billion in FY2015. Programs managing natural resources and protecting the global environment fell from $504 million in FY2002 to $324 million in FY2008. Environmental programs received $733 million in FY2010, more than doubling in just two years. In FY2014, they were expected to receive about $820 million.

Which Countries Receive U.S. Foreign Aid? In FY2015, the United States provided some form of bilateral foreign assistance to about 144 countries.13 Table 2 identifies the top 15 recipients of U.S. foreign assistance for FY1995, FY2005 and FY2015. Assistance, although provided to many nations, is concentrated heavily in certain countries, reflecting the priorities and interests of United States foreign policy at the time. Table 2. Top Recipients of U.S. Foreign Assistance From All Sources, FY1995, FY2005 and FY2015

(in millions of current U.S. dollars)

FY1995

 

FY2005

 

FY2015

Israel

3,010

 

Iraq

7,767

 

Afghanistan

5,452

Egypt

2,318

 

Israel

2,713

 

Israel

3,100

Russia

543

 

Egypt

1,791

 

Iraq

1,829

Turkey

528

 

Afghanistan

1,730

 

Egypt

1,456

Ukraine

261

 

Russia

1,577

 

Jordan

1,088

Greece

251

 

Sudan

1,025

 

Pakistan

805

Palau

245

 

Colombia

736

 

Kenya

739

India

166

 

Pakistan

712

 

Nigeria

692

Haiti

157

 

Jordan

647

 

Ethiopia

650

Rwanda

139

 

Ethiopia

629

 

Tanzania

647

Peru

128

 

West Bank/Gaza

347

 

Uganda

521

Kazakhstan

121

 

Honduras

287

 

South Sudan

497

Bangladesh

110

 

Uganda

287

 

Mozambique

457

Armenia

106

 

Indonesia

231

 

Zambia

441

South Africa

101

 

Kenya

224

 

South Africa

436

SourceS: FY1995 and FY2005 data: USAID, U.S. Overseas Loans and Grants (Greenbook) obligations from all sources; FY2015 data: Department of State, 653(a) planned appropriations allocations, USAID PL480 reporting, MCC disbursements, DOD allocations to Afghanistan and Iraq, and CRS calculations.

As shown in the table above, there are both similarities and sharp differences among country aid recipients for the three periods. The most consistent thread connecting the top aid recipients over the past two decades has been continuing U.S. strategic interests in the Middle East, with large programs maintained for Israel and Egypt and relatively smaller programs for Jordan and West Bank/Gaza. Two key countries in the U.S. counterterrorism strategy, Afghanistan and Pakistan, made their first appearances on the list in FY2002 and continue into FY2015. Iraq joined the list in FY2003.

In FY1995, only one sub-Saharan African country appeared among leading aid recipients; in FY2015, 9 of the 15 are sub-Saharan African. Many are focus countries under the initiative to address the HIV/AIDS epidemic; South Sudan receives support as a newly independent country with multiple development needs. In FY1995, four countries from Eastern Europe and the former Soviet Union made the list, as many from the region had for much of the 1990s, representing the effort to transform the former communist nations to democratic societies and market-oriented economies. None appear in the FY2015 list. In FY1995 and FY2005, two Latin American countries make the list; no countries from the region appear in FY2015.

On a regional basis (Figure 3), the Near East (a State Department category that includes the countries of the Middle East and North Africa) has for many decades received the bulk of U.S. foreign assistance. Although economic aid to the region's top two recipients, Israel and Egypt, began to decline in the late 1990s, the dominant share of bilateral U.S. assistance consumed by the Near East region was maintained in FY2005 by the war in Iraq. Despite the continued importance of the region, its share slipped substantially by FY2015 as the effort to train and equip Iraqi forces has diminished.

Figure 3. Regional Distribution of Aid, FY1995, FY2005, and FY2015

Sources: FY1995 and FY2005 data from USAID, U.S. Overseas Loans and Grants (Greenbook) obligations from all sources; FY2015 data from Department of State, 653(a) planned appropriations allocations, USAID P.L. 480 reporting, MCC disbursements, DOD allocations to Afghanistan and Iraq, and CRS calculations.

Notes: EAP = East Asian/Pacific; EE = Europe/Eurasia; SCA = South/Central Asia; LAC = Latin American/Caribbean.

Since September 11, 2001, South and Central Asia has emerged as a significant recipient of U.S. assistance, rising from a roughly 5% share 20 years ago to 12% in FY2005 and 25% in FY2015, largely because of aid to Afghanistan and Pakistan. Similarly, the share represented by African nations has increased from 11% and 17%, respectively, in FY1995 and FY2005, to 33% in FY2015, largely due to the HIV/AIDS Initiative that funnels resources mostly to African countries and to a range of other efforts to address the region's development challenges. Meanwhile, the share of aid to Europe/Eurasia, which greatly surpassed that of Africa in FY1995, has declined significantly in the past decade, to about 3% in FY2015, with the graduation of many East European aid recipients and the termination of programs in Russia. The Ukraine is responsible for almost half of remaining aid to that region. East Asia has declined only slightly during the past two decades, from about 5% to 3%, while Latin America has seen a somewhat more significant decline in its share of aid, from 14% in FY1992 to 7% in FY1995 and 6% in FY2015, as aid has shifted to regions of more pressing strategic interest.

For more information on foreign aid to select countries or regions, see CRS Report RL33222, U.S. Foreign Aid to Israel, by [author name scrubbed]; CRS Report R44113, U.S. Foreign Assistance to Latin America and the Caribbean: Recent Trends and FY2016 Appropriations, by [author name scrubbed]; and CRS Report RS22967, U.S. Foreign Aid to the Palestinians, by [author name scrubbed].

Foreign Aid Spending How Large Is the U.S. Foreign Assistance Budget and What Have Been the Historical Funding Trends?

There are several methods commonly used for measuring the amount of federal spending on foreign assistance. Amounts can be expressed in terms of budget authority (funds appropriated by Congress), obligations (amounts contractually committed), outlays or disbursements (money actually spent), as a percentage of the total federal budget, as a percentage of total discretionary budget authority (excluding mandatory and entitlement programs), or as a percentage of the gross domestic product (GDP) (for an indication of the national wealth allocated to foreign aid).

By nearly all of these measures, foreign aid resources fell gradually on average over several decades since the historical high levels of the late 1940s and early 1950s (Figure 1 and the Appendix). This downward trend was sporadically interrupted, largely due to major foreign policy initiatives such as the Alliance for Progress for Latin America beginning in 1961, the infusion of funds to implement the Camp David Middle East Peace Accords in 1979, and a spike in military assistance in 1985. The lowest point in U.S. foreign aid spending since World War II came in 1997, when foreign assistance obligations fell to below $20 billion (in 2015 dollar terms).

Figure 4. U.S. Foreign Aid: FY1946-FY2015 Est.

(obligations in billions of constant 2015 dollars)

Sources: U.S. Overseas Loans and Grants (Greenbook) through FY2013; FY2014 and FY2015 estimates are based on appropriations from the foreign operations, P.L. 480 food aid, and select DOD, HHS and DOE accounts consistent with recent Greenbook obligation reporting from those departments. See Appendix A for the full data.

Notes: FY1976 includes both regular FY1976 and transition quarter (TQ) funding. FY2013 current dollar data from Greenbook was converted to constant 2015 dollars using the non-defense deflators in the historic budget tables, FY2016. Because this data reflects obligations, it sometimes shows sharp, short-term increases in congressional appropriations as longer, less sharp surges in spending, For example, $18.4 billion in funding for Iraq Reconstruction and Rehabilitation, appropriated in FY2004, was obligated over several years.

Figure 5. Aid as a Percentage of the Federal Budget and GDP, FY1977-FY2015 Estimate

Sources: OMB Historic Budget Table FY2016; Greenbook; appropriations legislation; CRS calculations.

Figure 6. FY2015 Budget Authority by Major Category

Source: OMB Historic Budget Table FY2016; CRS calculations.

While foreign aid consistently represented over 1% of U.S. annual gross domestic product in the decade following World War II, it fell gradually to between 0.2% and 0.4% for most years in the past three decades. Foreign assistance spending has comprised, on average, around 3% of discretionary budget authority and just over 1% of total budget authority each year since 1977, though the percentages have sometimes varied considerably from year to year. Foreign aid dropped from 5% of discretionary budget authority in 1979 to 2.4% in 2001, before rising sharply in conjunction with U.S. activities in Afghanistan and Iraq in 2003 and 2004. As a portion of total budget authority, foreign assistance reached 2.5% in 1979, but has hovered below 1.5% since 1990. In 2015, foreign assistance is estimated to account for 4.4% of discretionary budget authority and 1.3% of total budget authority (Figure 5; Appendix).

As previously discussed, since the September 11, 2001, terrorist attacks, foreign aid funding has been closely tied to U.S. counterterrorism strategy, particularly in Iraq, Afghanistan, and Pakistan. Bush and Obama Administration global health initiatives, the creation of the Millennium Challenge Corporation, and growth in counternarcotics activities have driven funding increases as well. More recently, enactment of the Budget Control Act of 2011, and the drawdown of U.S. military forces in Iraq, and to some degree Afghanistan, led to a notable dip in aid obligations in FY2013. While total funding appears to be on the rise again in FY2014 and FY2015, it is important to note that the data for these years is only estimates based on appropriations, and actual obligations may be quite different. Figure 7 shows how trends in foreign aid funding in recent decades can be attributed to specific foreign policy events and presidential initiatives.

Figure 7. Foreign Aid Funding Trends, FY1977-FY2015 Estimate

(obligations in billions of constant 2015 dollars)

Sources: U.S. Overseas Loans and Grants (July 1, 1945-Septmeber 30, 2013) for 1977-2013 data; foreignassistance.gov for FY2014 and FY2015 estimate; CRS conversion to constant 2015 dollars using non-defense deflators from the Historic Budget Tables, FY2016.

Notes: MCC = Millennium Challenge Corporation; PEPFAR = President's Emergency Plan for AIDS Relief; GHI = Global Health Initiative; BCA = Budget Control Act.

What Does Overseas Contingency Operations (OCO) Mean?

The Obama Administration's FY2012 international affairs budget proposed that the overseas contingency operations (OCO) designation, which had been applied since 2009 to war-related Defense appropriations for years, including to DOD assistance programs such as ISFF, ASFF and CERP, be extended to include "extraordinary, but temporary, costs of the Department of State and USAID in the front line states of Iraq, Afghanistan and Pakistan." Congress not only adopted the OCO designation in the FY2012 State-Foreign Operations appropriations legislation, but expanded it to include funding for additional accounts and countries. In every fiscal year since, a portion of certain foreign assistance accounts – primarily ESF, FMF, IDA, MRA and INCLE – has been appropriated with the OCO designation.

The OCO designation is important because the Budget Control Act of 2011 (BCA), which set annual caps on discretionary funding from FY2013 through FY2021, specified that funds designated as OCO do not count toward the budget caps established by the act. OCO designation makes it possible to keep war-related funding from crowding out core international affairs activities within the budget allocation. The OCO approach is reminiscent of the use of supplemental international affairs appropriations for the first decade after the September 11, 2001 terrorist attacks. Significant emergency supplemental funds for foreign operations and Defense assistance programs were appropriated every year from FY2002 through FY2010 for activities in Iraq, Afghanistan, and elsewhere, and were not counted toward subcommittee budget allocations. Since the OCO designation was first applied to foreign operations in FY2012, there have been no supplemental appropriations for foreign aid.14

How Much of Foreign Aid Dollars Are Spent on U.S. Goods?

Congress historically sought to enhance the domestic benefits of foreign aid by requiring that most U.S. foreign aid be used to procure U.S. goods and services.15 The conditioning of aid on the procurement of goods and services from the donor-country is sometimes called "tied aid," and while quite common for much of the history of modern foreign assistance, has become increasingly disfavored in the international community.16 Studies have shown that tying aid increases the costs of goods and services by 15%-30% on average, and up to 40% for food aid, reducing the overall effectiveness of aid flows.17 The United States joined other donor nations in committing to reduce tied aid in the Paris Declaration on Aid Effectiveness in March 2005, and the portion of tied aid from all donors fell from 70% of total bilateral development assistance in 1985 to an average of 16% in 2013. However, 37% of U.S. bilateral development assistance in 2013 was tied, perhaps reflecting the perception of policymakers that maintaining public and political support for foreign aid programs requires ensuring direct economic benefit to the United States.18

A considerable amount of U.S. foreign assistance funds remain in the United States, through domestic procurement or the use of U.S. implementers, but the portion differs by program and is hard to identify with any accuracy. For some types of aid, the legislative requirements or program design make it relatively easy to determine how much aid is spent on U.S. goods or services, while for others, this is more difficult to determine:

  • USAID. Most USAID funding (Development Assistance, Global Health, Economic Support Fund) is implemented through contracts, grants and cooperative agreements with implementing partners. While many implementing partner organizations are based in the United States and employ U.S. citizens, there is little information available about what portion of the funds used for program implementation are used for goods and services provided by American firms. Procurement reform efforts initiated by USAID in 2010 have aimed to increase procurement and implementation by host country entities as a means to enhance country ownership, build local capacity, and improve sustainability of aid programs
  • Food assistance commodities, until recently, were purchased wholly in the United States, and generally required by law to be shipped by U.S. carriers,19 suggesting that the vast majority of food aid expenditures are made in the United States. Starting in FY2009, a small portion of food assistance is authorized to be purchased locally and regionally to meet urgent food needs more quickly. The Obama Administration and several members of Congress have proposed even greater flexibility in the food aid program, potentially increasing aid efficiency but reducing the portion of funds flowing to U.S. farmers and shippers. To date, these proposals have been largely unsuccessful.
  • Foreign Military Financing, with the exception of certain assistance allocated to Israel, is used exclusively to procure U.S. military equipment and training.20
  • Millennium Challenge Corporation. The MCC bases its procurement regulations on those established by the World Bank, which calls for an open and competitive process, with no preference given to donor country suppliers. As of the end of FY2015, roughly 15% of the value of all MCC compact contracts were awarded to U.S. firms.
  • Multilateral development aid. Multilateral aid funds are mixed with funds from other nations and the bulk of the program is financed with borrowed funds rather than direct government contributions. Information on the U.S. share of procurement financed by MDBs is unavailable.

In addition to the direct benefits derived from aid dollars used for American goods and services, many argue that the foreign aid program brings significant indirect financial benefits to the United States. For example, it is argued that provision of military equipment through the military assistance program and food commodities through the Food For Peace program helps to develop future, strictly commercial, markets for those products. More broadly, as countries develop economically, they are in a position to purchase more goods from abroad and the United States benefits as a trade partner. An increasing majority of global consumers are outside of the United States, and some business leaders assert that establishing strong economic and trade ties in the developing world, using foreign assistance as a tool, is key to U.S. economic and job growth.21

How Does the United States Rank as a Donor of Foreign Aid? Since World War II, with the exception of several years between 1989 and 2001, during which Japan ranked first among aid donors, the United States has led the developed countries in net disbursements of economic aid, or "Official Development Assistance (ODA)" as defined by the Organization for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC).22 In 2014, the most recent year for which data are available, the United States disbursed $32.73 billion in ODA, or about 24% of the $136.16 billion in total net ODA disbursements by DAC donors that year. The United Kingdom ranked second at $19.39 billion, Germany followed at $16.25 billion, and France ranked fourth at $10.37 billion. Japan rounded out the top 5 donor list, which has not changed significantly in recent years, with $9.19 billion in 2014 (see Figure 8).

Figure 8. Top 10 Bilateral Donors of Official Development Assistance, 2014

(in billions of U.S. dollars)

Source: OECD/DAC, preliminary data available at http://www.oecd.org/dac/stats/documentupload/ODA%202014%20Tables%20and%20Charts.pdf.

Even as it leads in dollar amounts of aid flows to developing countries, the United States often ranks low when aid is calculated as a percentage of gross national income (GNI).23 This calculation is often cited in the context of international donor forums, as a level of 0.7% GNI was established as a target for donors in the 2000 U.N. Millennium Development Goals. In 2014, the United States ranked at the bottom among major donors at 0.19% of GNI, tied with Japan (0.19%). Sweden ranked first among top donors at 1.10% of GNI, followed by Norway at 0.99%, while the United Kingdom ratio was 0.71%, France 0.36%, and Germany 0.41%.

Delivery of Foreign Assistance

How and in what form assistance reaches an aid recipient can vary widely, depending on the type of aid program, the objective of the assistance, and the agency responsible for providing the aid.

What Executive Branch Agencies Implement Foreign Aid Programs?

Federal agencies may implement foreign assistance programs using funds appropriated directly to them or funds transferred to them from another agency. For example, significant funding appropriated through State Department and Department of Agriculture accounts is used for programs implemented by USAID. The funding data in this section reflects the agency that implemented the aid, not necessarily the agency to which funds were originally appropriated.

U.S. Agency for International Development

For 50 years, the bulk of the U.S. bilateral economic development and humanitarian aid program has been implemented by the U.S. Agency for International Development (USAID). USAID directly implements the Development Assistance, International Disaster Assistance, and Transition Initiatives accounts, as well as a USAID-designated portion of the Global Health account. Jointly with the State Department, USAID co-manages ESF, AEECA, and Democracy Fund programs, which frequently support development activities as a means of promoting U.S. political and strategic goals.24 Based on historical averages, according to USAID, the agency implements more than 90% of ESF, 70% of AEECA, 40% of the Democracy Fund, and about 60% of the Global HIV/AIDS funding appropriated to the State Department. USAID also implements all of Title II of P.L. 480 (Food for Peace program) food assistance funded through Agriculture appropriations.

USAID obligated an estimated $17.46 billion to implement foreign assistance programs and activities in FY2013.25 The agency's staff in late September 2014 totaled 9,355, of which about 70% were working overseas, overseeing the implementation of hundreds of projects undertaken by thousands of private sector contractors, consultants, and non-governmental organizations.26 (For more information on USAID, see CRS Report R44117, U.S. Agency for International Development (USAID): Background, Operations, and Issues, by [author name scrubbed].)

U.S. Department of Defense

DOD implements all traditional aid-funded military assistance programs—FMF, IMET, PKO, and PCCF—in conjunction with the policy guidance of the Department of State. The Defense Security Cooperation Agency is the primary DOD body responsible for these programs. DOD also carries out an array of state-building activities, funded through defense appropriations legislation, which are usually in the context of training exercises and military operations. These sorts of activities, once the exclusive jurisdiction of civilian aid agencies, include development assistance to Iraq and Afghanistan through the Commander's Emergency Response Program (CERP), the Iraq Relief and Reconstruction Fund, and the Afghanistan Infrastructure Fund, and elsewhere through the Defense Health Program, counter-drug activities, and humanitarian and disaster relief. Training and equipping of Iraqi and Afghan police and military, though similar in nature to some traditional security assistance programs, has been funded and implemented primarily through DOD appropriations, though implementing the Iraq police training program was a State Department responsibility from 2012 until it was phased out in 2013.

In FY2013, the Department of Defense implemented an estimated $8.25 billion in foreign assistance programs.27

U.S. Department of State

The Department of State manages and co-manages a wide range of assistance programs. It is the lead U.S. civilian agency on security and refugee related assistance, and has sole responsibility for implementing the International Narcotics and Law Enforcement (INCLE) and Nonproliferation, Antiterror, and Demining (NADR) accounts, the two Migration and Refugee accounts (MRA and ERMA), and the International Organizations and Programs (IO&P) account. State is also home to the Office of the Global AIDS Coordinator (OGAC), which manages the State Department's portion of Global Health funding in support of HIV/AIDS programs, though many of these funds are transferred to and implemented by USAID, the National Institutes of Health, and the Centers for Disease Control and Prevention.

In conjunction with USAID, the State Department manages the Economic Support Fund, AEECA assistance to the former communist states, and Democracy Fund accounts. For these accounts, the State Department largely sets the overall policy and direction of funds, while USAID implements the preponderance of programs. In addition, the State Department, through its Bureau of Political-Military Affairs, has policy authority over the Foreign Military Financing (FMF), International Military Education and Training (IMET), and Peacekeeping Operations (PKO) accounts, and, while it was active, the Pakistan Counterinsurgency Capability Fund (PCCF). These programs are implemented by the Department of Defense. Police training programs have traditionally been the responsibility of the International Narcotics and Law Enforcement (INL) Office in the State Department, though programs in Iraq and Afghanistan were implemented and paid for by the Department of Defense for several years.

State is also the organizational home to the Office of U.S. Foreign Assistance Resources (formerly the Office of the Director of Foreign Assistance), known as "F", which was created in 2006 to coordinate U.S. foreign assistance programs. The office establishes standard program structures and definitions, as well as performance indicators, and collects and reports data on State Department and USAID aid programs.

The State Department implemented about $5.39 billion in foreign assistance funding in FY2013,28 though it has policy authority over a much broader range of assistance funds.

U.S. Department of Health and Human Services

The U.S. Department of Health and Human Services implements a range of global health programs through its various component institutions. As an implementing partner in the President's Emergency Plan for Aids Relief (PEPFAR), a large portion of HHS foreign assistance activity is related to HIV prevention and treatment, including technical support and preventing mother to child transmission of HIV/AIDS. The Centers for Disease Control and Prevention participates in a broad range of global disease control activity, including rapid outbreak response, global research and surveillance, information technology assistance, and field epidemiology and laboratory training. The National Institutes of Health (NIH) also conduct international health research that is reported as assistance.

In FY2013, HHS institutions implemented $3.08 billion in foreign assistance activities.29

U.S. Department of the Treasury

The Treasury Department's Under Secretary for International Affairs administers U.S. contributions to and participation in the World Bank and other multilateral development institutions. In this case, the agency manages the distribution of funds to the institutions, but does not implement programs. Presidentially appointed U.S. executive directors at each of the banks represent the United States' point of view. Treasury also deals with foreign debt reduction issues and programs, including U.S. participation in the Highly Indebted Poor Countries (HIPC) initiative, and manages a technical assistance program offering temporary financial advisors to countries implementing major economic reforms and combating terrorist finance activity.

For FY2013, the Treasury Department managed foreign assistance valued at about $2.67 billion.30

Millennium Challenge Corporation

The Millennium Challenge Corporation (MCC) was created in February 2004 with the purpose of concentrating significantly higher amounts of U.S. resources in a few low- and lower-middle income countries that have demonstrated a strong commitment to political, economic, and social reforms. A significant feature of the MCC effort is that recipient countries formulate, propose, and implement mutually agreed multi-year U.S.-funded project plans known as compacts. Compacts in the 25 recipient countries selected to date have emphasized construction of infrastructure. The MCC is a U.S. government corporation, headed by a chief executive officer who reports to a board of directors chaired by the Secretary of State. The Corporation maintains a relatively small staff of about 300.

The MCC obligated about $1.12 billion in FY2013.31 (For more information on MCC, see CRS Report RL32427, Millennium Challenge Corporation, by [author name scrubbed].)

Other Agencies

A number of other government agencies play a role in implementing foreign aid programs. Most of these are funded through agency-specific line items in the foreign operations appropriation, making current year funding estimates possible. The Peace Corps, an autonomous agency with a FY2016 appropriation of $410 million32, supports about 6,900 volunteers in 63 countries. Peace Corps volunteers work in a wide range of educational, health, and community development projects. The Trade and Development Agency (TDA) finances trade missions and feasibility studies for private sector projects likely to generate U.S. exports. Its FY2016 appropriation is $60.0 million.33 The Overseas Private Investment Corporation (OPIC) provides political risk insurance to U.S. companies investing in developing countries and finances projects through loans and guarantees. It also supports investment missions and provides other pre-investment information services. Its insurance activities have been self-sustaining, but credit reform rules require a relatively small appropriation to back up U.S. guarantees and for administrative expenses. For FY2016, as for most prior years, OPIC receipts are anticipated to exceed appropriations, resulting in a net gain to the Treasury. The Inter-American Foundation and the African Development Foundation, appropriated $22.5 million and $30.0 million, respectively, in FY201634, finance small-scale enterprise and grassroots self-help activities aimed at assisting poor people. (For more information on these agencies, see CRS Report RS21168 , The Peace Corps: Current Issues by [author name scrubbed], and CRS Report 98-567, The Overseas Private Investment Corporation: Background and Legislative Issues, by Shayerah Ilias.)

What Are the Different Forms in Which Assistance Is Provided?

Most U.S. assistance is now provided as a grant (gift) rather than a loan, so as not to increase the heavy debt burden carried by many developing countries. However, the forms a grant may take are diverse.

Cash Transfers

Although it is the exception rather than the rule, some countries receive aid in the form of a cash grant to the government. Dollars provided in this way support a government's balance-of-payments situation, enabling it to purchase more U.S. goods, service its debt, or devote more domestic revenues to developmental or other purposes. Cash transfers have been made as a reward to countries that have supported the United States' counterterrorism operations (Turkey and Jordan in FY2004), to provide political and strategic support (both Egypt and Israel annually for decades after the 1979 Camp David Peace Accord), and in exchange for undertaking difficult political and economic reforms.

Equipment and Commodities

Assistance may be provided in the form of food commodities, weapons systems, or equipment such as generators or computers. Food aid may be provided directly to meet humanitarian needs or to encourage attendance at a maternal/child health care program. Weapons supplied under the military assistance program may include training in their use. Equipment and commodities provided under development assistance are usually integrated with other forms of aid to meet objectives in a particular social or economic sector. For instance, textbooks have been provided in both Afghanistan and Iraq as part of a broader effort to reform the educational sector and train teachers. Computers may be offered in conjunction with training and expertise to fledgling microcredit institutions. In recent years, antiretroviral drugs (ARVs) provided to individuals living with HIV/AIDS have been a significant component of commodity-based assistance.

Economic Infrastructure

Although once a significant portion of U.S. assistance programs, construction of economic infrastructure—roads, irrigation systems, electric power facilities, etc.—was rarely provided after the 1970s. Because of the substantial expense of these projects, they were to be found only in large assistance programs, such as that for Egypt in the 1980s and 1990s, where the United States constructed major urban water and sanitation systems. The aid programs in Iraq and Afghanistan supported the building of schools, health clinics, roads, power plants, and irrigation systems. In Iraq alone, more than $10 billion went to economic infrastructure. Economic infrastructure is now also supported by U.S. assistance in a wider range of developing countries through the Millennium Challenge Corporation. In this case, recipient countries design their own assistance programs, most of which, to date, include an infrastructure component.

Training

Transfer of know-how is a significant part of most assistance programs. The International Military and Educational Training Program (IMET) provides training to officers of the military forces of allied and friendly nations. Tens of thousands of citizens of aid recipient countries receive short-term technical training or longer-term degree training annually under USAID programs. More than one-quarter of Peace Corps volunteers are English, math, and science teachers. Other aid programs provide law enforcement personnel with anti-narcotics or anti-terrorism training.

Expertise

Many assistance programs provide expert advice to government and private sector organizations. The Treasury Department, USAID, and U.S.-funded multilateral banks all place specialists in host government ministries to make recommendations on policy reforms in a wide variety of sectors. USAID has often placed experts in private sector business and civic organizations to help strengthen them in their formative years or while indigenous staff are being trained. While most of these experts are U.S. nationals, in Russia, USAID funded the development of locally staffed political and economic think tanks to offer policy options to that government.

Small Grants

USAID, the Inter-American Foundation, and the African Development Foundation often provide aid in the form of grants that may then be used by U.S. or indigenous organizations to further their varied developmental purposes. For instance, grants are sometimes provided to microcredit organizations, which in turn provide loans to microentrepreneurs. Through USAID, grants are provided in Serbia to help strengthen the role of civil society organizations in democratization and private enterprise development and in Pacific islands to foster innovative climate change adaptation initiatives.

How Much Aid Is Provided as Loans and How Much as Grants? What Are Some Types of Loans? Have Loans Been Repaid? Why Is Repayment of Some Loans Forgiven?

Under the Foreign Assistance Act of 1961, the President may determine the terms and conditions under which most forms of assistance are provided. In general, the financial condition of a country—its ability to meet repayment obligations—has been an important criterion of the decision to provide a loan or grant. Some programs, such as humanitarian and disaster relief programs, were designed from the beginning to be entirely grant activities.

Loan/Grant Composition

During the past two decades, nearly all foreign aid—military as well as economic—has been provided in grant form. While loans represented 32% of total military and economic assistance between 1962 and 1988, this figure declined substantially beginning in the mid-1980s, until by FY2001, loans represented less than 1% of total aid appropriations. The de-emphasis on loan programs came largely in response to the debt problems of developing countries. Both Congress and the executive branch supported the view that foreign aid should not add to the already existing debt burden carried by these countries.

Loan Guarantees

Although a small proportion of total current aid, there are significant USAID-managed programs that guarantee loans. A Development Credit Authority loan guarantee, in which risk is shared with a private sector bank, can be used to increase access to finance in support of any development sector. Under the Israeli Loan Guarantee Program, the United States has guaranteed repayment of loans made by commercial sources to support the costs of immigrants settling in Israel from other countries and may issue guarantees to support economic recovery.35 USAID has also provided loan guarantees to improve the terms or amounts of financing from international capital markets for Ukraine and Jordan in recent years. In these cases, assistance funds representing a fraction of the guarantee amount are provided to cover possible default.36

Loan Repayment

Between 1946 and 2013, the United States loaned $112.7 billion in foreign economic and military aid to foreign governments, and while most foreign aid is now provided through grants, $10.8 billion in loans to foreign governments remained outstanding at the end of FY2013.37 For nearly three decades, Section 620q of the Foreign Assistance Act (the Brooke amendment) has prohibited new assistance to the government of any country that falls more than one year past due in servicing its debt obligations to the United States, though the President may waive application of this prohibition if he determines it is in the national interest. As of November 2015, countries in violation of Brooke are Somalia, Sudan, Syria, and Zimbabwe. However, restrictions have been waived for Somalia since 2007, and partially waived for Zimbabwe (allowing assistance in certain sectors and to assist vulnerable populations) since 2014.38

Debt Forgiveness

The United States has also forgiven debts owed by foreign governments and encouraged, with mixed success, other foreign aid donors and international financial institutions to do likewise. In some cases, the decision to forgive foreign aid debts has been based largely on economic grounds as another means to support development efforts by heavily indebted, but reform-minded, countries. The United States has been one of the strongest supporters of the Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). These initiatives, which began in the late 1990s and continues in 2015, includes participation of the World Bank, the International Monetary Fund, and other international financial institutions in a comprehensive debt workout framework for the world's poorest and most debt-strapped nations.

The largest and most hotly debated debt forgiveness actions have been implemented for much broader foreign policy reasons with a more strategic purpose. Poland, during its transition from a communist system and centrally planned economy (1990—$2.46 billion); Egypt, for making peace with Israel and helping maintain the Arab coalition during the Persian Gulf War (1990—$7 billion); and Jordan, after signing a peace accord with Israel (1994—$700 million), are examples. Similarly, the United States forgave about $4.1 billion in outstanding Saddam-era Iraqi debt in November 2004 and helped negotiate an 80% reduction in Iraq's debt to creditor nations later that month.

What Are the Roles of Government and Private Sector in Development and Humanitarian Aid Delivery?

Most development and humanitarian assistance activities are not directly implemented by U.S. government personnel but by private sector entities, such as individual personal service contractors, consulting firms, non-profit non-government organizations (NGOs), universities, or charitable private voluntary organizations (PVOs). Generally speaking, U.S. government foreign service and civil servants determine the direction and priorities of the aid program, allocate funds while keeping within legislative requirements, ensure that appropriate projects are in place to meet aid objectives, select implementers, and monitor the implementation of those projects for effectiveness and financial accountability. Both USAID and the State Department have promoted the use of public-private partnerships, in which private entities such as corporations and foundations are contributing partners, not paid implementers, in situations where business interests and development objectives coincide. (For more on the use of public-private partnerships in foreign assistance, see CRS Report R41880, Foreign Assistance: Public-Private Partnerships (PPPs), by Marian Leonardo Lawson.)

Congress and Foreign Aid What Congressional Committees Oversee Foreign Aid Programs?

Numerous congressional authorizing committees and appropriations subcommittees maintain responsibility for U.S. foreign assistance. Several committees have responsibility for authorizing legislation establishing programs and policy and for conducting oversight of foreign aid programs. In the Senate, the Committee on Foreign Relations, and in the House, the Committee on Foreign Affairs, have primary jurisdiction over bilateral development assistance, political/strategic and other economic security assistance, military assistance, and international organizations. Food aid, primarily the responsibility of the Agriculture Committees in both bodies, is shared with the Foreign Affairs Committee in the House. U.S. contributions to multilateral development banks are within the jurisdiction of the Senate Foreign Relations Committee and the House Financial Services Committee. The large non-traditional aid programs funded by DOD, such as Nunn-Lugar Cooperative Threat Reduction programs and the military aid programs in Afghanistan and Iraq, come under the jurisdiction of the Armed Services Committees. Some global health assistance, such as research and other activities done by the Centers for Disease Control and Prevention, may fall under the jurisdiction of the House Energy and Commerce and Senate HELP committees.

Traditionally, most foreign aid appropriations fall under the jurisdiction of the State-Foreign Operations Subcommittees, with food assistance appropriated by the Agriculture Subcommittees. As noted earlier, however, certain military, global health, and other activities that have been reported as foreign aid have been appropriated through other subcommittees in recent years, including the Defense and the Labor, Health and Human Services, Education and Related Agencies subcommittees. (For current information on State-Foreign Operations Appropriations legislation, see CRS Report R43901, State, Foreign Operations, and Related Programs: FY2016 Budget and Appropriations, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].)

What Are the Major Foreign Aid Legislative Vehicles?

The most significant permanent foreign aid authorization laws are the Foreign Assistance Act of 1961, covering most bilateral economic and security assistance programs (P.L. 87-195; 22 U.S.C. 2151); the Arms Export Control Act (1976), authorizing military sales and financing (P.L. 90-629; 22 U.S.C. 2751); the Agricultural Trade Development and Assistance Act of 1954 (P.L. 480), covering food aid (P.L. 83-480; 7 U.S.C. 1691); and the Bretton Woods Agreement Act (1945), authorizing U.S. participation in multilateral development banks (P.L. 79-171; 22 U.S.C. 286).39 In the past, Congress usually scheduled debates every two years on omnibus foreign aid legislation that amended these permanent authorization measures. Congress has not enacted into law a comprehensive foreign assistance authorization measure since 1985, although foreign aid authorizing bills have passed the House or Senate, or both, on numerous occasions. Foreign aid bills have frequently stalled at some point in the debate because of controversial issues, a tight legislative calendar, or executive-legislative foreign policy disputes.40

In lieu of approving a broad authorization bill, Congress has on occasion authorized major foreign assistance initiatives for specific regions, countries, or aid sectors in stand-alone legislation or within an appropriation bill. Among these are the SEED Act of 1989 (P.L. 101-179;
22 U.S.C. 5401); the FREEDOM Support Act of 1992 (P.L. 102-511; 22 U.S.C. 5801); the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (P.L. 108-25; 22 U.S.C. 7601); the Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008 (P.L. 110-293); the Millennium Challenge Act of 2003 (Division D, Title VI of P.L. 108-199); and the Enhanced Partnership With Pakistan Act of 2009 (P.L. 111-73; 22 U.S.C. 8401). In the absence of regular enactment of foreign aid authorization bills, appropriation measures authorization bills, appropriation measures considered annually within the State-Foreign Operations spending bill have assumed greater significance for Congress in influencing U.S. foreign aid policy. Not only do appropriations bills set spending levels each year for nearly every foreign assistance account, State-Foreign Operations appropriations also incorporate new policy initiatives that would otherwise be debated and enacted as part of authorizing legislation. (...continued) Congress re-authorizes every five years. Congressional Research Service 28 Foreign Aid: An Introduction to U.S. Programs and Policy Appendix A. Data Tables Table A-1. Data Tables Table A-1. Aid Program Composition, FY2001-FY2010 ( as % of total aid) 2001 2002 2003 2004 2004 w/out Iraq 43.8 41.3 34.1 24.6 47.0 47.9 50.6 50.9 55.4 49.4 52.9 21.9 20.3 14.8 13.6 25.9 26.7 31.7 34.1 35.7 30.5 32.4 9.1 8.6 6.6 4.3 8.3 6.4 6.7 4.7 5.5 5.2 7.0 Humanitarian 12.7 12.5 12.8 6.7 12.8 14.8 12.2 12.0 14.2 13.8 12.5 Political/Strategic Development 26.1 26.1 34.5 45.8 21.2 20.5 21.7 22.3 20.9 22.5 25.3 Security 30.2 32.5 31.4 29.6 31.8 31.6 27.7 26.8 23.6 28.1 21.8 4.4 8.4 5.2 4.1 7.8 8.7 7.2 7.1 6.1 7.0 9.3 25.8 24.1 26.1 25.5 24.0 22.9 20.5 19.8 17.5 21.1 12.5a Development/Humanitarian Bilateral Development Multilateral Development Civilian Security Assistance Military Assistance 2005 2006 2007 2008 2009 2010 Source: USAID, House and Senate Appropriations Committees, and CRS calculations. Notes: Table omits operational expense accounts. a. Does not include funding from FY2009 supplemental appropriations that were considered “forward funding” of the FY2010 request. Those numbers are reflected in the FY2009 number. Table A-2. Foreign Aid Funding Trends Fiscal Year 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 Billions of current US$ Billions of constant 2010 $ As % of GDP As % of Discretionary Budget Authority 3.08 6.54 2.87 8.00 5.92 7.34 6.64 4.72 4.59 3.72 4.25 3.99 3.38 4.23 4.21 32.04 68.67 26.65 77.32 53.86 62.36 52.16 36.59 32.45 27.89 32.00 28.83 22.89 28.97 27.66 1.4% 2.8% 1.1% 2.9% 2.2% 2.3% 1.9% 1.3% 1.2% 0.9% 1.0% 0.9% 0.7% 0.9% 0.8% - Congressional Research Service As % of Total Budget Authority - 29 Foreign Aid: An Introduction to U.S. Programs and Policy Fiscal Year 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976a 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Billions of current US$ Billions of constant 2010 $ As % of GDP As % of Discretionary Budget Authority 4.52 5.09 5.13 4.22 4.24 5.03 4.56 4.03 3.54 3.47 4.19 4.32 4.53 6.97 5.43 7.94 7.50 8.76 10.86 10.33 9.49 11.34 12.85 14.01 20.23 14.30 13.12 13.62 12.96 14.09 15.84 13.34 12.48 12.23 12.29 11.12 11.11 12.55 14.84 14.50 14.78 14.64 25.17 29.13 33.21 32.24 26.16 25.82 30.29 26.79 22.98 18.90 17.93 20.04 19.89 20.11 28.46 20.31 27.20 24.23 26.69 30.42 26.21 21.73 24.26 26.20 27.39 38.41 26.36 23.32 23.34 21.39 22.61 24.39 19.65 17.84 17.17 16.78 14.88 14.55 16.32 19.06 18.19 18.10 17.69 29.76 0.9% 0.9% 0.9% 0.7% 0.6% 0.7% 0.6% 0.5% 0.4% 0.3% 0.4% 0.4% 0.3% 0.5% 0.3% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.4% 0.4% 0.4% 0.5% 0.3% 0.3% 0.3% 0.2% 0.2% 0.3% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.2% 0.1% 0.1% 0.1% 0.2% 3.3% 3.0%. 3.4% 3.9% 3.3% 2.8% 3.2% 3.3% 3.3% 4.4% 3.3% 2.9% 3.0% 2.8% 2.8% 2.9% 2.5% 2.4% 2.4% 2.5% 2.2% 2.2% 2.4% 2.6% 2.5% 2.2% 2.0% 3.0% Congressional Research Service As % of Total Budget Authority 1.5% 1.6% 1.7% 1.9% 1.5% 1.3% 1.4% 1.5% 1.5% 2.0% 1.4% 1.3% 1.2% 1.1% 1.1% 1.1% 0.9% 0.8% 0.8% 0.8% 0.7% 0.7% 0.7% 0.8% 0.8% 0.8% 0.7% 1.1% 30 Foreign Aid: An Introduction to U.S. Programs and Policy Fiscal Year 2004 2005 2006 2007 2008 2009 2010 Est. Billions of current US$ Billions of constant 2010 $ As % of GDP As % of Discretionary Budget Authority 38.18 21.95 23.60 26.85 28.20 36.42 39.39 44.02 24.50 25.50 28.30 28.68 37.09 39.39 0.3% 0.2% 0.2% 0.2% 0.2% 0.3% 0.3% 4.2% 2.2% 2.4% 2.5% 2.4% 2.4% 3.2% As % of Total Budget Authority 1.6% 0.8% 0.8% 0.9% 0.8% 0.9% 1.1% Source: U.S. Overseas Loans and Grants (Greenbook), Office of Management and Budget Historic Budget Tables, FY2011; annual appropriations legislation and CRS calculations. Notes: The data in this table for FY1946-FY1976 represent obligated funds reported in the USAID Greenbook (the most reliable source for pre-1970s data), while FY1977-FY2010 are budget authority figures from the OMB Historic Budget Tables, reflecting the 151 and 152 budget subfunctions. The Greenbook accounts included in the total have been selected by CRS to correlate with the function 151 and 152 budget accounts, allowing for fairly accurate comparison over time. a. FY1976 includes both regular FY1976 and transition quarter (TQ) funding, and the GDP calculation is based on the average FY1976 and TQ GDP. Congressional Research Service 31 Foreign Aid: An Introduction to U.S. Programs and Policy Appendix B. Common Foreign Assistance Acronyms and Abbreviations AEECA Assistance to Europe, Eurasia, and Central Asia DA Development Assistance DOD Department of Defense ERMA Emergency Refugee and Migration Assistance ESF Economic Support Fund FMF Foreign Military Financing FSA FREEDOM (Freedom for Russia and Emerging Eurasian Democracies and Open Markets) Support Act of 1992 GDP Gross Domestic Product GNI Gross National Income HIPC Heavily Indebted Poor Country IBRD World Bank, International Bank for Reconstruction and Development IDA World Bank, International Development Association IDA International Disaster Assistance IMET International Military Education and Training IMF International Monetary Fund INCLE International Narcotics Control and Law Enforcement MCC Millennium Challenge Corporation MDBs Multilateral Development Banks MRA Migration and Refugees Assistance NADR Non-Proliferation, Anti-Terrorism, Demining and Related Programs NGO Non-Governmental Organization ODA Official Development Assistance OECD Organization for Economic Cooperation and Development OFDA Office of Foreign Disaster Assistance OPIC Overseas Private Investment Corporation OTI Office of Transition Initiatives PEPFAR President’s Emergency Plan for AIDS Relief P.L. 480 Food for Peace/Food Aid PVO Private Voluntary Organization SEED Support for East European Democracy Act of 1989 TDA U.S. Trade and Development Agency UNDP United Nations Development Program UNICEF United Nations Children’s Fund USAID U.S. Agency for International Development Congressional Research Service 32 Foreign Aid: An Introduction to U.S. Programs and Policy Author Contact Information Curt Tarnoff Specialist in Foreign Affairs ctarnoff@crs.loc.gov, 7-7656 Congressional Research Service Marian Leonardo Lawson Analyst in Foreign Assistance mlawson@crs.loc.gov, 7-4475 33

(as percentage of total aid)

 

1985

1990

1995

2000

2005

2010

2015

Development/Humanitarian

33.3

36.7

50.2

34.3

37.9

43.4

54.3

Bilateral Development

15.3

18.9

25.2

18.7

24.1

28.6

32.6

Multilateral Development

10.5

12.1

15.2

7.5

4.3

4.8

5.7

Humanitarian

7.5

5.7

9.8

8.1

9.5

10.0

16.0

Political/Strategic Development

33.5

26.4

24.7

24.2

16.4

19.7

11.2

Security

33.2

36.9

25.1

41.5

45.7

36.9

34.5

Non-Military Security Assistance

0.3

0.8

3.9

12.9

9.4

10.0

6.8

Military Assistance

32.9

36.1

21.2

28.7

36.2

27.0

27.8

Source: USAID Greenbook; CRS calculations.

Table A-2.Foreign Aid Funding Trends (Obligations)

Fiscal Year

Billions of current U.S. $

Billions ofconstant 2015 U.S. $

As % of GDP

As % of discretionarybudget authority

As % of total budget authority

1946

3,075,702,000

30,647,462,985

1.3%

-

-

1947

6,708,001,000

60,244,911,679

2.8%

-

-

1948

3,179,504,000

26,088,081,857

1.2%

-

-

1949

8,300,704,000

65,928,479,150

3.0%

-

-

1950

5,971,296,000

48,127,148,742

2.1%

-

-

1951

7,612,560,000

58,218,813,395

2.3%

-

-

1952

6,813,953,000

50,111,050,631

1.9%

-

-

1953

4,979,870,000

35,968,890,582

1.3%

-

-

1954

4,767,778,000

34,031,839,378

1.2%

-

-

1955

4,097,382,000

29,019,031,225

1.0%

-

-

1956

4,847,691,000

33,464,880,499

1.1%

-

-

1957

4,871,415,000

32,419,579,410

1.0%

-

-

1958

4,014,661,000

25,927,825,779

0.8%

-

-

1959

5,074,241,000

32,274,656,089

1.0%

-

-

1960

5,218,274,000

32,733,235,600

1.0%

-

-

1961

5,480,911,000

33,913,207,609

1.0%

-

-

1962

6,532,295,000

40,010,619,378

1.1%

-

-

1963

6,384,723,000

38,630,086,647

1.0%

-

-

1964

5,265,148,000

31,472,617,555

0.8%

-

-

1965

5,420,680,000

31,844,556,788

0.8%

-

-

1966

6,904,358,000

39,706,276,779

0.9%

-

-

1967

6,339,162,000

35,375,440,228

0.8%

-

-

1968

6,757,250,000

36,460,305,818

0.8%

-

-

1969

6,639,256,000

34,249,906,087

0.7%

-

-

1970

6,513,214,000

31,882,811,075

0.6%

-

-

1971

7,792,876,000

36,307,887,971

0.7%

-

-

1972

8,986,908,000

39,961,590,176

0.7%

-

-

1973

9,428,685,000

40,191,371,799

0.7%

-

-

1974

8,479,202,000

33,746,730,467

0.6%

-

-

1975

6,886,787,000

24,846,490,720

0.4%

-

-

1976a

9,609,495,000

32,164,904,042

0.4%

4.0%

1.9%

1977

7,756,101,000

24,410,395,127

0.4%

3.1%

1.7%

1978

8,999,414,000

26,534,082,884

0.4%

3.5%

1.8%

1979

13,837,318,000

37,769,757,689

0.5%

5.0%

2.5%

1980

9,681,780,000

24,306,743,677

0.3%

3.1%

1.4%

1981

10,517,411,000

24,054,498,004

0.3%

3.1%

1.4%

1982

12,166,665,000

26,037,951,289

0.4%

3.4%

1.5%

1983

13,836,455,000

28,360,993,942

0.4%

3.6%

1.6%

1984

14,864,489,000

29,429,748,771

0.4%

3.5%

1.6%

1985

18,106,876,000

34,698,100,355

0.4%

4.0%

1.8%

1986

15,815,716,000

29,631,636,048

0.3%

3.6%

1.6%

1987

13,872,898,000

25,424,629,683

0.3%

3.1%

1.3%

1988

13,963,153,000

24,791,259,885

0.3%

3.1%

1.3%

1989

14,443,414,000

24,661,655,858

0.3%

3.1%

1.2%

1990

16,002,892,763

26,367,977,749

0.3%

3.2%

1.2%

1991

16,959,737,549

26,987,705,149

0.3%

3.1%

1.2%

1992

15,725,968,426

24,426,493,647

0.2%

3.0%

1.1%

1993

16,549,513,929

25,109,278,212

0.2%

3.2%

1.1%

1994

16,202,682,385

24,058,307,416

0.2%

3.2%

1.1%

1995

15,555,497,605

22,617,623,721

0.2%

3.1%

1.0%

1996

14,457,039,244

20,635,832,128

0.2%

2.9%

0.9%

1997

13,909,513,421

19,510,049,299

0.2%

2.7%

0.8%

1998

14,922,848,704

20,676,457,527

0.2%

2.8%

0.9%

1999

18,323,182,970

25,069,751,159

0.2%

3.1%

1.0%

2000

17,111,919,577

22,938,332,432

0.2%

2.9%

0.9%

2001

15,791,569,693

20,668,636,825

0.1%

2.4%

0.8%

2002

18,794,140,792

24,209,726,990

0.2%

2.6%

0.9%

2003

29,060,488,986

36,732,459,081

0.3%

3.4%

1.3%

2004

32,220,033,794

39,741,778,843

0.3%

3.5%

1.3%

2005

34,331,323,997

41,056,836,001

0.3%

3.5%

1.3%

2006

37,060,978,423

42,925,174,883

0.3%

3.7%

1.3%

2007

39,542,311,232

44,593,144,472

0.3%

3.7%

1.4%

2008

46,545,299,805

51,428,507,815

0.3%

3.9%

1.4%

2009

46,421,332,969

50,696,553,435

0.3%

3.1%

1.1%

2010

48,201,620,658

52,186,773,621

0.3%

3.8%

1.4%

2011

48,530,410,872

51,536,239,828

0.3%

4.0%

1.4%

2012

49,557,689,450

51,721,861,521

0.3%

4.1%

1.4%

2013

40,107,873,764

41,236,725,384

0.2%

3.5%

1.2%

2014 Est.

45,153,000,000

45,729,173,000

0.2%

4.0%

1.2%

2015 Est.

48,571,000,000

48,571,000,000

0.2%

4.4%

1.3%

Sources: U.S. Overseas Loans and Grants (Greenbook); Office of Management and Budget Historic Budget Tables, FY2016; foreignassistance.gov; appropriations legislation; CRS calculations.

Notes: The data in this table for FY1946-FY2013 represent obligated funds (total economic and military assistance) reported in U.S. Overseas Loans and Grants (Greenbook). This obligations data is available only through FY2013, so FY2014 and FY2015 estimates were derived from totaling foreign operations, P.L. 480 food aid, and select DOD, HHS and DOE appropriations consistent with recent Greenbook obligation reporting from those departments. Budget authority data by function is not available prior to FY1976.

a. FY1976 includes both regular FY1976 and transition quarter (TQ) funding, and the GDP calculation is based on the average FY1976 and TQ GDP. Common Foreign Assistance Acronyms and Abbreviations

AEECA

Assistance to Europe, Eurasia, and Central Asia

CERP

Commanders Emergency Response Program

DA

Development Assistance

DAC

Development Assistance Committee of the OECD

DOD

Department of Defense

ERMA

Emergency Refugee and Migration Assistance

ESF

Economic Support Fund

FAA

Foreign Assistance Act of 1961

FMF

Foreign Military Financing

FSA

FREEDOM (Freedom for Russia and Emerging Eurasian Democracies and Open Markets) Support Act of 1992

GDP

Gross Domestic Product

GNI

Gross National Income

HHS

Department of Health and Human Services

HIPC

Heavily Indebted Poor Country

IBRD

World Bank, International Bank for Reconstruction and Development

IDA

World Bank, International Development Association

IDA

International Disaster Assistance

IMET

International Military Education and Training

IMF

International Monetary Fund

INCLE

International Narcotics Control and Law Enforcement

INL

State's Office of International Narcotics and Law Enforcement

IO&P

International Organizations and Programs account

MCC

Millennium Challenge Corporation

MDBs

Multilateral Development Banks

MDRI

Multilateral Debt Relief Initiative

MRA

Migration and Refugees Assistance

NADR

Non-Proliferation, Anti-Terrorism, Demining and Related Programs

NED

National Endowment for Democracy

NGO

Non-Governmental Organization

OCO

Overseas Contingency Operations

ODA

Official Development Assistance

OECD

Organization for Economic Cooperation and Development

OFDA

Office of Foreign Disaster Assistance

OGAC

Office of the Global AIDS Coordinator

OHDACA

DOD's Overseas Humanitarian, Disaster and Civic Assistance account

OMB

Office of Management and Budget

OPIC

Overseas Private Investment Corporation

OTI

Office of Transition Initiatives

PEPFAR

President's Emergency Plan for AIDS Relief

PKO

Peacekeeping Operations account

P.L. 480

Food for Peace/Food Aid

PVO

Private Voluntary Organization

SEED

Support for East European Democracy Act of 1989

TDA

U.S. Trade and Development Agency

UNDP

United Nations Development Program

UNICEF

United Nations Children's Fund

USAID

U.S. Agency for International Development

Author Contact Information

[author name scrubbed], Specialist in Foreign Affairs ([email address scrubbed], [phone number scrubbed])
[author name scrubbed], Specialist in Foreign Assistance Policy ([email address scrubbed], [phone number scrubbed])

Footnotes

1.

Other tools of U.S. foreign policy are the U.S. defense establishment, the diplomatic corps, public diplomacy, and trade policy. American defense capabilities, even if not employed, stand as a potential stick that can be wielded to obtain specific objectives. The State Department diplomatic corps are the eyes, ears, and often the negotiating voice of U.S. foreign policymakers. Public diplomacy programs, such as the Fulbright program and Voice of America, project an image of the United States that may influence foreign views positively. U.S. trade policy—through free trade agreements and Export-Import Bank credits, for example—may directly affect the economies of other nations. Foreign aid is a particularly flexible tool—it can act as both carrot and stick, and is a means of influencing events, solving specific problems, and projecting U.S. values.

2. U.S. National Security Strategy 2002 and 2006 available at http://georgewbush-whitehouse.archives.gov/nsc/nss/2006/; National Security Strategy 2010, May 2010, available at http://www.whitehouse.gov/sites/default/files/rss_viewer/national_security_strategy.pdf; National Security Strategy, February 2015, available at https://www.whitehouse.gov/sites/default/files/docs/2015_national_security_strategy.pdf. 3.

Included in its current form, since FY2008, as a part of the larger Department of State, Foreign Operations and Related Programs Appropriations Act.

4.

For a detailed analysis of recent foreign aid 150 budget function appropriations, see CRS Report R43901, State, Foreign Operations, and Related Programs: FY2016 Budget and Appropriations, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

5.

Greenbook data is now available as part of USAID's Foreign Aid Explorer site (https://explorer.usaid.gov), it provides aid obligation data by broad accounts from 1946 to 2013 and program sector breakdowns from 2001 to 2013. Also on this site is data categorized to fit the definitions of Official Development Assistance (ODA) which excludes military aid.

6. Most are funded through several appropriations accounts. For instance, the objective of Governing Justly and Democratically and each of its individual sectoral elements (see Table 1) are funded through portions of the Development Assistance, AEECA, ESF, INCLE, and Democracy Fund accounts, as well as by various programs run through non-traditional aid providers. 7.

The FY2014 and FY2015 figures used in this report are an estimate of total appropriations encompassing both traditional aid accounts—foreign operations appropriations titles as well as agriculture appropriations food aid—and those discrete non-traditional appropriations accounts and allocations that can be readily identified through U.S. Overseas Loans and Grants (Greenbook) reporting as foreign assistance—including the Afghanistan Security Forces Fund; the Commander's Emergency Response Program; DOD Counterterrorism Partnerships Fund; DOD counternarcotics programs; Iraq Train and Equip Fund; DOD humanitarian programs; DOD Cooperative Threat Reduction; DOE nonproliferation programs; CDC disease control, research and training programs; National Institutes of Health Research; and the National Endowment for Democracy.

While many non-traditional aid activities fail to merit a distinctive line item in their larger agency appropriations and, therefore, cannot be captured until they are reported some years later, non-traditional accounts that can be identified as foreign aid encompass more than 80% of the total. In all, the FY2015 appropriation figure used here likely accounts for more than 90% of total assistance in that year.

8.

Until FY1998, food provided commercially under long-term, low-interest loan terms (Title I of P.L. 480) was also included in the foreign assistance account. Because of its export focus, it is no longer considered foreign aid.

9.

USAID estimates that about 93% of ESF funds are implemented by USAID for development purposes.

10.

These programs and the accounts that fund them are called the Afghanistan Security Forces Fund (ASFF) and, through FY2012, the Iraq Security Forces Fund (ISFF). In FY2015, similar support was provided Iraq under the Iraq Train and Equip Fund.

11.

It is important to note that the dollar amount of resources allocated to any single development sector relative to other sectors in any given year is not necessarily a good measure of the priority assigned to that sector. Different types of development activities require varying amounts of funding to have impact and achieve the desired goals. Democracy and governance programs, for example, are generally low-cost interventions that include extensive training sessions for government officials, the media, and other elements of civil society. Economic growth programs, on the other hand, might include infrastructure development, government budget support, or commodity import financing, activities that require significantly higher resources. What may be a better indicator of changing priorities is to compare funding allocations over time to the same objective or sector.

12.

Different organizations would count different programs as poverty-focused, but most would likely include Global Health, Development Assistance, Millennium Challenge Corporation, Disaster Assistance, Migration and Refugee Assistance, and Food Aid.

13.

Generally, assistance to a country is funneled, in various forms, to the country's private sector, non-governmental organizations, local communities, individual entrepreneurs, and other entities. Assistance is provided directly to the government of a country where the intention is to bring about policy reforms, improve governance, or work with a sector in which the government is the predominant element, such as in healthcare where the Ministry of Health would play a determinative role. Often, in cases where a government is believed to be taking action contrary to U.S. interests, Congress has specified that assistance to that government be prohibited or limited, while not affecting overall assistance to the country.

14.

A supplemental request was made for FY2014 to address the Ebola crisis and the growing ISIS threat, but additional funding for these purposes was included in the FY2015 omnibus appropriation rather than discrete supplemental legislation.

15.

In what's known as the "Buy America" provision, the Foreign Assistance Act of 1961 (P.L. 87-195, Sec. 604), originally required that aid procurement be made within the United States unless a detailed determination of the need to procure elsewhere was made by the President. In FY1993, this section was amended to allow for procurement in the United States, the recipient country, or any developing country, but in developed countries only if necessary.

16.

Overseas Development Institute, The Developmental Effectiveness of Untied Aid, available at oecd.org/dac/evaluation/dcdndep/41537529.pdf.

17.

Ibid.

18.

Data available at http://www.oecd.org/dac/stats/statisticsonresourceflowstodevelopingcountries.htm.

19.

The Cargo Preference Act, P.L. 83-644, August 26,1954.

20.

For the research, development and procurement of advanced weapons systems, not less than $815.3 million of aid to Israel in FY2015 could be used for offshore procurement (about 14% of total Foreign Military Finance for that year).

21.

See "America's Global Leadership: A Strategic Investment for U.S. Jobs," U.S. Global Leadership Coalition, 2011, at http://www.usglc.org/wp-content/uploads/2011/07/USGLC-Economic-Brief.pdf.

22.

The OECD Glossary of Statistical Terms defines ODA as "flows of official financing administered with the promotion of economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25%. By convention, ODA flows comprise contributions of donor government agencies, at all levels, to developing countries and to multilateral institutions." ODA does not include military assistance or aid to developed countries, such as Israel and Russia.

23.

Gross National Income (GNI) comprises GDP together with income received from other countries (notably interest and dividends), less similar payments made to other countries.

24.

The State Department determines the policy on distribution of funds from these accounts.

25.

See the Foreign Aid Dashboard, at http://explorer.usaid.gov/aid-dashboard.html#2013.

26.

Semi-Annual USAID Worldwide Staffing Pattern Report, September 30, 2014.

27.

http://explorer.usaid.gov/aid-dashboard.html#2013.

28.

Ibid.

29.

http://explorer.usaid.gov/aid-dashboard.html#2013.

30.

Ibid.

31.

Ibid.

32.

See P.L. 114-113.

33.

Ibid.

34.

Ibid.

35.

Israel has not drawn on any loan guarantees since FY2004.

36.

The assistance provided to guarantee the loan varies depending on the risk. For example the Administration requested $275 million in ESF-OCO funds in FY2016 to support a $1 billion loan guarantee for Ukraine.

37.

U.S. Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945-September 30, 2013 (Greenbook), Standard Country Report.

38.

Information provided to CRS by USAID, December 16, 2015.

39.

Separate permanent authorizations exist for other specific foreign aid programs such as the Peace Corps, the Millennium Challenge Corporation, the Inter-American Foundation, and the African Development Foundation.

40.

A few foreign aid programs that are authorized in other legislation have received more regular legislative review. Authorizing legislation for voluntary contributions to international organizations and refugee programs, for example, are usually contained in omnibus Foreign Relations Authorization measures that also address State Department and public diplomacy issues. Food aid and amendments to P.L.480 are usually considered in the omnibus "farm bill" that Congress re-authorizes every five years.