Order Code RL30211
CRS Report for Congress
Received through the CRS Web
Appropriations for FY2000: Foreign Operations,
Export Financing, and Related Programs
Updated August 4, 1999
Larry Nowels
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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Appropriations are one part of a complex federal budget process that includes budget
resolutions, appropriations (regular, supplemental, and continuing) bills, rescissions, and
budget reconciliation bills. The process begins with the President’s budget request and is
bounded by the rules of the House and Senate, the Congressional Budget and Impoundment
Control Act of 1974 (as amended), the Budget Enforcement Act of 1990, and current program
authorizations.
This report is a guide to one of the 13 regular appropriations bills that Congress considers
each year. It is designed to supplement the information provided by the House and Senate
Foreign Operations Appropriations Subcommittees. It summarizes the current legislative
status of the bill, its scope, major issues, funding levels, and related legislative activity. The
report lists the key CRS staff relevant to the issues covered and related CRS products.
This report is updated as soon as possible after major legislative developments, especially
following legislative action in the committees and on the floor of the House and Senate.
NOTE: A Web version of this document with
active links is available to congressional staff at
http://www.loc.gov/crs/products/apppage.html

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Appropriations for FY2000:
Foreign Operations, Export Financing, and Related Programs
Summary
The annual Foreign Operations appropriations bill is the primary legislative
vehicle through which Congress reviews the U.S. foreign aid budget and influences
executive branch foreign policy making generally. It contains the largest share —
over two-thirds — of total U.S. international affairs spending.
For FY2000, President Clinton requests $14.6 billion for programs falling under
the provisions of the Foreign Operations Appropriations bill. The President’s
proposal is about $1.2 billion, or 9% higher than the “base” Foreign Operations
spending level Congress approved for FY1999. Congress has further enacted an
additional $2 billion in two FY1999 emergency supplementals for Central American
hurricane relief, Kosovo humanitarian assistance, and a series of other foreign aid
accounts. Compared with the $15.4 billion total FY1999 Foreign Operations
spending — the “base” plus supplementals — the FY2000 request is about $850
million, or 5.5% less than current amounts.
Congressional action on the FY2000 budget resolution has resulted in
preliminary funding allocations for Foreign Operations programs well below the
requested amount. H.Con.Res. 68, which cleared Congress on April 15, cuts the
$20.9 billion overall foreign policy discretionary budget request to $17.7 billion, 15%
less than the President seeks. Because Foreign Operations funds represent over two-
thirds of the foreign policy budget, a reduction of this order, substantially limits
amounts available for Foreign Operations programs. In late May and June, the House
Appropriations Committee set Foreign Operations spending at $10.356 billion, 29%
less than the request; the Senate panel allocated $12.7 billion, a cut of 12.8%.
In addition to total funding levels, five issues seem likely to be among those that
receive the most attention during the FY2000 debate, and in some cases, may result
in the sharpest split between House and Senate, and Congress-Executive branch
positions: 1) U.S. development aid policy and spending priorities; 2) population aid
and international family planning policy; 3) regional aid allocations; 4) U.S. funding
for North Korea’s heavy fuel oil and broad U.S.-North Korean policy; and 5)
competing initiatives to reduce debt owed to the United States and other creditors by
the world’s poorest and most highly indebted nations.
On June 30, the Senate approved S. 1234, the FY2000 Foreign Operations
spending measure. It provides $12.7 billion for FY2000, an amount about $1.9
billion, or 13%, less than the President requested. Compared to FY1999 levels, the
recommendation is about $700 million, or 5%, below the “base” foreign aid
appropriation (regular Foreign Operations funding approved in the FY1999 Omnibus
spending bill (P.L. 105-277), but over $2.7 billion, or 17.7%, under total Foreign
Operations appropriations for FY1999 that includes large Central America and
Kosovo emergency relief supplementals. On Aug. 3, the House approved a $12.6
billion companion measure (H.R. 2606), including two competing family planning
provisions. Because of the reduced funding levels and the House-passed abortion
restrictions, the White House says the President would veto either bill.

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Key Policy Staff
Area of Expertise
Name
CRS Division
Tel.
Coordinator
Larry Nowels
FDT
7-7645
Africa Aid
Raymond Copson
FDT
7-7661
Agency for Intl Development
Larry Nowels
FDT
7-7645
Agency for Intl Development
Curt Tarnoff
FDT
7-7656
Bosnia
Julie Kim
FDT
7-3692
Development Assistance
Larry Nowels
FDT
7-7645
Development Assistance
Curt Tarnoff
FDT
7-7656
Drug Control Programs
Raphael Perl
FDT
7-7664
Export-Import Bank
James Jackson
FDT
7-7751
Family Planning Programs
Larry Nowels
FDT
7-7645
International Affairs Budget
Larry Nowels
FDT
7-7645
International Monetary Fund
Patricia Wertman
FDT
7-7748
Kosovo Humanitarian Asst
Lois McHugh
FDT
7-7627
Middle East Assistance
Clyde Mark
FDT
7-7681
Military Aid/Arms Sales
Richard Grimmett
FDT
7-7675
Multilateral Development Banks
Larry Nowels
FDT
7-7645
Nagorno-Karabakh
Carol Migdalovitz
FDT
7-2667
NIS/East Europe Aid
Curt Tarnoff
FDT
7-7656
Nonproliferation
Robert Shuey
FDT
7-7677
North Korea/KEDO
Larry Niksch
FDT
7-7680
Overseas Private Investment Corp
James Jackson
FDT
7-7751
Peace Corps
Curt Tarnoff
FDT
7-7656
Peacekeeping
Marjorie Browne
FDT
7-7695
Refugees & Humanitarian Aid
Lois McHugh
FDT
7-7627
Terrorism
Raphael Perl
FDT
7-7664
Trade and Development Agency
Susan Epstein
FDT
7-6678
U.N. Voluntary Contributions
Lois McHugh
FDT
7-7627
CRS Division abbreviation: "FDT" = Foreign Affairs, Defense, and Trade Division.

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Foreign Operations Funding Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Foreign Operations, the FY2000 Budget Resolution, and
Section 302(b) Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Foreign Operations Appropriations Request for FY2000 and
Congressional Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Funding Issues for Foreign Operations Appropriations, FY2000 . . . . . . . . 7
Total Foreign Operations Funding Levels . . . . . . . . . . . . . . . . . . . . . . 7
Funding for Selected Foreign Operations Accounts . . . . . . . . . . . . . . 7
Funding for Country Aid Programs . . . . . . . . . . . . . . . . . . . . . . . . . 10
Congressional Debate on Foreign Operations Spending . . . . . . . . . . . . . . 10
Major Policy and Spending Issues in the Foreign Operations Debate . . . . 13
Policy Priorities of U.S. Development Aid . . . . . . . . . . . . . . . . . . . . 14
Population and Family Planning Assistance . . . . . . . . . . . . . . . . . . . . 17
Regional Allocations of U.S. Foreign Aid and the Request for an
Africa-specific Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Korean Energy Development Organization (KEDO) and U.S.
North Korea Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Debt Reduction Initiatives for Poor Countries . . . . . . . . . . . . . . . . . 26
FY1999 Supplemental Appropriations and Foreign Operations . . . . . . . . 28
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Selected World Wide Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Appendix — Detailed Foreign Operations Accounts . . . . . . . . . . . . . . . . . . . . 31
List of Figures
Figure 1--International Affairs Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
List of Tables
Table 1. Status of Foreign Operations Appropriations, FY2000 . . . . . . . . . . . . 3
Table 2. Foreign Operations Appropriations, FY1993 to FY1999 . . . . . . . . . . . 4
Table 3. Summary of Foreign Operations Appropriations . . . . . . . . . . . . . . . . . 8
Table 4. Leading Recipients of U.S. Foreign Aid: FY1998 - FY2000 . . . . . . . . 9
Table 5. USAID Sustainable Development Programs . . . . . . . . . . . . . . . . . . . 15
Table 6. Regional Allocations of U.S. Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table 7. Foreign Operations Appropriations:Discretionary Budget Authority . 31

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Appropriations for FY2000: Foreign Operations,
Export Financing, and Related Programs
Most Recent Developments
On August 3, 1999, the House passed (385-35) a $12.6 billion FY2000 Foreign
Operations spending measure (H.R. 2606). During consideration, the House adopted
two competing, and possibly conflicting, international family planning amendments.
The first, by Representative Smith (NJ), would reimpose modified “Mexico City”
abortion-related restrictions on foreign recipients of USAID population aid grants.
The other, by Representative Greenwood, restates current policy that foreign NGOs
and international organizations cannot use U.S. funds to perform abortions or lobby
to change abortion laws in foreign countries. It further requires that NGOs support
programs to reduce the incidence of abortion as a method of family planning. The
House also approved amendments that cut $8 million from the World Bank’s
International Development Association because of a recent loan to China that affects
Tibet (Gilman), and increases by $8 million the U.S. contribution to the African
Development Fund (Campbell). The House also rejected (13-414) an amendment
by Representative Campbell cutting economic aid to Israel and Egypt to amounts
proposed by the Administration.
The funding level in H.R. 2606 is about $2 billion, or nearly 14% below the
President’s request for FY2000. The amount, however, represents a sizable increase
from the initial $10.36 billion Foreign Operations allocation made by the
Appropriations Committee in June. Earlier, the Senate passed (97-2) S. 1234 on
June 30, providing$12.7 billion for Foreign Operations.
Funding for Child Survival/Disease programs is one of the highest priorities in
H.R. 2606, while the Senate’s main initiative is $430 million for Balkan
reconstruction. But for most other programs, funding is both bills is either below the
President’s request or under FY1999 amounts. The largest cuts in H.R. 2606 fall on
USAID operating expenses, aid to Russia and other former Soviet states, and the
World Bank’s International Development Association and other multilateral
development banks (MDBs). S. 1234 cuts aid to the former Soviet Union and
MDBs, plus reduces funds for the Peace Corps and counter-narcotics. S. 1234
excludes all funding for the Wye River-Middle East peace accord ($1.3 billion
request for Israel, Jordan, and the Palestinians in FY1999/2000), while H.R. 2606
includes $100 million for Jordan. Due to reduced funding, congressional earmarks,
and the House-passed family planning restrictions, White House officials say they
would recommend a presidential veto of either bill.

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CRS-2
Introduction
The annual Foreign Operations appropriations bill is the primary legislative
vehicle through which Congress reviews and votes on the U.S. foreign assistance
budget and influences executive branch foreign policy making generally.1 It contains
the largest share — about 70% — of total international affairs spending by the United
States (see Figure 1). The legislation funds all U.S. bilateral development assistance
programs, managed mostly by the U.S. Agency for International Development
(USAID), together with several smaller independent foreign aid agencies, such as the
Peace Corps and the Inter-American and African Development Foundations. Foreign
Operations includes separate accounts for aid programs in the former Soviet Union
(also referred to as the New Independent States (NIS) account) and Central/Eastern
Europe, activities that are jointly managed by USAID and the State Department.
Security assistance (economic and military aid) for Israel and Egypt is also part of the
Foreign Operations spending measure, as are smaller security aid programs
administered largely by the State Department, in conjunction with USAID and the
Pentagon. U.S. contributions to the World Bank and other regional multilateral
development banks, managed by the Treasury Department, and voluntary payments
Figure 1--International Affairs Budget
International Affairs Budget Request - FY2000
Discretionary Budget Authority by Appropriation Bills
Foreign Operations
$14.6 billion 69.9%
Agriculture-Food aid
$0.8 billion 3.8%
State Dept/Commerce
$5.5 billion 26.3%
An additional $13 million for the US Institute for Peace is in the Labor/H bill.
Figure excludes $0.4 billion for UN arrears in State/Commerce.
1Although the Foreign Operations appropriations bill is often characterized as the “foreign
aid” spending measure, it does not include funding for all foreign assistance programs. Food
aid, administered under the P.L. 480 program and managed by USAID, is appropriated in the
Agriculture appropriations bill. Further, the Foreign Operations measure includes funds for
one activity—the Export-Import Bank—that is not regarded as “foreign assistance,” but
rather as a U.S. government activity promoting trade opportunities for American businesses.
In most years, this results in a Foreign Operations appropriation (including the EximBank)
that is slightly less (1.5% in FY1998) than the official “foreign aid” budget. Throughout this
report, references to Foreign Operations and foreign aid are used interchangeably.

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CRS-3
to international organizations, handled by the State Department, are also funded in the
Foreign Operations bill. Finally, the legislation includes appropriations for three
export promotion agencies: the Overseas Private Investment Corporation (OPIC),
the Export-Import Bank, and the Trade and Development Agency.
From the perspective of congressional oversight and involvement in U.S. foreign
aid policy making, the Foreign Operations bill has taken on even greater significance
during the past decade. Congress has not enacted a foreign aid authorization bill since
1985, leaving most foreign assistance programs without regular authorizations
emanating from the legislative oversight committees. As a result, Foreign Operations
spending measures increasingly have expanded their scope beyond spending issues
and played a major role in shaping, authorizing, and guiding both executive and
congressional foreign aid and broader foreign policy initiatives. It has been largely
through Foreign Operations appropriations that the United States has modified aid
policy and resource allocation priorities since the end of the Cold War. The
legislation has also been a key tool used by Congress to apply restrictions and
conditions on Administration management of foreign assistance, actions that have
frequently resulted in executive-legislative clashes over presidential prerogatives in
foreign policy making.
Status
Table 1. Status of Foreign Operations Appropriations, FY2000
Subcommittee
Conf. Report
Markup
House
House
Senate
Senate
Conf.
Approval
Public
Report Passage Report Passage Report
Law
House Senate
House Senate
HR 2606
S. 1234
8/3/99
6/30/99
7/14
NA
(H.Rept.
(S.Rept.
--
--
--
--
385-35
97-2
106-254)
106-81)
President Clinton submitted his FY2000 federal budget request to Congress on
February 1, 1999, including funding proposals for Foreign Operations Appropriations
programs. Subsequently, House and Senate Foreign Operations Subcommittees have
held a series of hearings, including testimony from Secretary of State Albright,
Treasury Secretary Rubin, and USAID Administrator Atwood. Skipping a formal
subcommittee markup, the Senate Appropriations Committee reported on June 17,
S. 1234. The full Senate approved the bill on June 30 by a vote of 97-2. The House
Foreign Operations Subcommittee marked-up its bill on July 14, followed by full
Committee approval of H.R. 2606 on July 20. The House approved the legislation
on August 3.

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CRS-4
Foreign Operations Funding Trends
As the United States has adjusted its foreign and defense policy to a post-Cold
War environment, one of the major foreign assistance challenges for Congress and
executive branch policymakers has been to formulate the most effective foreign aid
program amidst a tightening resource base.
After peaking at $20.7 billion in FY1985, Foreign Operations appropriations
began a period of decline, falling to about $12.3 billion in FY1997. Foreign aid
spending cuts were especially sharp in FY1996 when Congress cut funding by $1.15
billion, nearly 9% from the previous year. Many government and non-government
experts argued that these budget reductions seriously undermined U.S. foreign policy
interests and limited the ability of American officials to influence overseas events.
After Foreign Operations funding levels fell again in FY1997 — although by much
smaller amounts — the State Department and other executive agencies launched an
aggressive campaign in to reverse the decade-long decline in the foreign policy
budget. This effort coincided with congressional approval of a near $1 billion increase
for FY1998, setting Foreign Operations appropriations at $13.15 billion. Foreign
Operations funds rose again to $13.8 billion in FY1999 when lawmakers, at the
urging of the White House, added nearly $900 million in the final days of the 105th
Congress.
As shown in Table 2, the amount for FY1999 is the highest in five years,
bolstered especially by $2.1 billion supplemental funding for Central America
hurricane relief, Kosovo humanitarian aid, and several other foreign assistance
emergencies. Currently, Foreign Operations represent 0.87% of the entire federal
budget and 2.6% of total discretionary budget authority. By comparison, these same
figures in FY1985 were 2% and 4.6%, respectively.
Table 2. Foreign Operations Appropriations, FY1993 to FY1999
(discretionary budget authority in billions of current dollars)
FY1993
FY1994
FY1995
FY1996
FY1997
FY1998
FY1999*
$13.901
$14.298
$13.611
$12.456
$12.267
$13.147
$15.423
* The amount for FY1999 includes the “base” Foreign Operations Appropriations (the regular
appropriation approved in P.L. 105-277) plus $2.1 billion in emergency supplementals enacted in
P.L. 105-277 and P.L. 106-31. It excludes, however, $17.861 billion for the IMF.
Over the past 20 years, Foreign Operations spending has experienced three
distinct trends when calculated in real terms, taking into account the effects of
inflation. The first period was marked by a steady growth in Foreign Operations
appropriations levels during the early 1980s when the United States rapidly expanded
security-related aid programs in Central America, Pakistan, and to countries providing
the U.S. with military bases. Funding peaked in FY1985 at $31.9 billion (in FY1999
dollars) followed by a sharp cut in FY1986 as the effects of the Gramm-Rudman
deficit reduction initiative took hold and limited federal spending in most areas. For
the next five years, during a second phase of Foreign Operations budget trends,
appropriations remained relatively stable at about $19.5 billion per year (real terms).

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CRS-5
Towards the end of the Cold War, foreign aid spending in real terms began to
fall steadily — from about $16.7 billion in FY1992, to $15 billion in FY1995, to $13
billion in FY1997. Appropriations for FY1997 were the lowest since 1975 when
Congress slashed foreign assistance spending during the U.S. withdrawal from
Vietnam. FY1999 Foreign Operations spending is about 29% below the average
appropriation level approved by Congress during the late 1980s, 17% less than
FY1992, a year that might be considered the first post-Cold War foreign aid budget,
and 8% less than FY1995 when the majority in Congress changed.
Data Notes
Unless otherwise indicated, this report expresses dollar amounts in
terms of discretionary budget authority. The Foreign Operations
Appropriations bill includes one mandatory program that is not included
in figures and tables — USAID’s Foreign Service retirement fund. The
retirement fund is scheduled to receive $44.6 million for FY1999.
In addition, funding levels and trends discussed in this report exclude
U.S. contributions to the International Monetary Fund (IMF), proposals
that are enacted periodically (about every five years) in Foreign
Operations bills. Congress approved $17.9 billion for the IMF in
FY1999, the first appropriation since FY1993. Including these large,
infrequent, and uniquely “scored” IMF appropriations tends to distort a
general analysis of Foreign Operations funding trends. Although
Congress provides new budget authority through appropriations for the
full amount of U.S. participation, the transaction is considered an
exchange of assets between the United States and the IMF, and results in
no outlays from the U.S. treasury. In short, the appropriations are off-set
by the creation of a U.S. counterpart claim on the IMF that is liquid and
interest bearing. For more, see CRS Report 96-279, U.S. Budgetary
Treatment of the International Monetary Fund.
Foreign Operations, the FY2000 Budget Resolution, and Section
302(b) Allocations
In most years, Appropriation Committees do not begin markups of their
spending bills until Congress has adopted a budget resolution and funds have been
distributed to the Appropriations panels under what is referred to as the Section
302(a) allocation process, a reference to the pertinent authority in the Congressional
Budget Act. Following this, House and Senate Appropriations Committees separately
decide how to allot the total amount available among their 13 subcommittees, staying
within the functional guidelines set in the budget resolution. This second step is
referred to as the Section 302(b) allocation. As noted above, foreign policy funds are
appropriated within four bills with Foreign Operations having the largest share of
around 68-70% in most years.
How much foreign policy money to allocate to each of the four subcommittees,
and how to distribute the funds among the numerous programs remain decisions

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CRS-6
exclusively reserved for the Appropriations Committees. Nevertheless, overall
ceilings set in the budget resolution can have significant implications for the budget
limitations within which the Foreign Operations subcommittees will operate when
they meet to mark up their annual appropriation bills.
The FY2000 budget resolution that cleared Congress on April 15 (H.Con.Res.
68) strongly suggested that the Foreign Operations subcommittees would receive a
significantly reduced section 302(b) allocation than assumed in the President’s budget.
H.Con.Res. 68 set a $17.7 billion target for total international affairs budget, a figure
15% below the request.
In late May 1999, House and Senate Appropriations Committees approved
section 302(b) funding allocations for each of their 13 appropriation bills, setting
amounts for Foreign Operations programs sharply below the President’s $14.6 billion
request and the $13.3 billion “base” appropriation for FY1999.2 The Senate
Committee initially provided $12.5 billion in budget authority but later raised the
amount to $12.7 billion. It is 12.8% less than the budget proposal and 4.8% below
the current Foreign Operations “base.” The House Appropriations panel originally
allocated $10.36 billion for Foreign Operations, 29% below the President’s request
and 22% under the “base.” After shifting funds among several subcommittee
accounts, the House panel subsequently increased the Foreign Operations amount by
over $2.2 billion, resulting in a $12.625 billion level.
Limitations on outlays under the section 302(b) allocation are also problematic.3
Congress can only influence “new” outlays — those that will spend-out in FY2000
as a result of enactment of new budget authority. House and Senate outlay
allocations provide about the same amount in controllable, or “new” outlays — $5.43
billion and $5.25 billion, respectively. These levels are about 11% less than the
request. Moreover, funding limits at these levels have constrained the ability of the
Appropriations Committees to respond to new aid initiatives such as the Wye River--
Middle East peace package, expanded debt reduction for the world’s poorest nations,
and in the case of the House, to Kosovo reconstruction efforts. Secretary of State
Albright told the Senate Appropriations Committee on May 20 that “cuts of this
magnitude would gravely imperil immediate and long-term American interests.”
2 The “base” appropriation refers to amounts funded in the regular Foreign Operations
Appropriations for FY1999, as included in Division A of the Omnibus Appropriations Act,
FY1999 (P.L. 105-277). Congress approved additional Foreign Operations funds in two
supplemental measures: about $411 million for Child Survival programs, aid to Russia,
victims of the Kenya/Tanzania embassy bombings, counter-narcotics, counter-terrorism, and
Y2K upgrades (Division B of P.L. 105-277); and about $1.633 billion for Central America
hurricane relief, Kosovo humanitarian assistance, counter-narcotics, and the administration
of three foreign affairs commissions. All but about $5 million of the supplementals were
declared “emergencies” and do not count against the Foreign Operations FY1999 allocation
limits.
3 Budget authority, or appropriation, is the legal authority to incur financial obligations. It
normally results in the “outlay” or actual expenditure of federal government funds.

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CRS-7
A major reason why the Foreign Operations allocation, as well as the allocation
for several other spending measures is so low, is the Congressional and White House
desire to stay within discretionary spending “cap” limits agreed to in 1997. These
caps, which were negotiated at a time of budget deficits, were intended to provide the
means to balance the U.S. budget by FY2002. With the far earlier emergence of a
budget surplus, some lawmakers, including members of the Appropriations
Committees, are calling for revisions to the budget caps so that a portion of the
surplus can be used to ease the spending limitations posed by the current ceilings.
Other Members, however, argue that the surplus is largely made up of social security
resources; that Congress must not endanger the future of social security by utilizing
part of the surplus, nor should it abandon the spending discipline established by the
1997 budget agreement.
Foreign Operations Appropriations Request for FY2000
and Congressional Consideration
Funding Issues for Foreign Operations Appropriations, FY2000
Total Foreign Operations Funding Levels. President Clinton is asking
Congress to appropriate $14.6 billion for Foreign Operations programs in FY2000.
This proposal is about $1.2 billion, or 9% higher than the “base” Foreign Operations
spending level Congress approved for FY1999 (see footnote 3). Congress has further
enacted an additional $2.1 billion in two FY1999 emergency supplementals for
Central American hurricane relief, Kosovo humanitarian assistance, and a series of
other foreign aid accounts. Compared with the $15.4 billion total FY1999 Foreign
Operations spending — the “base” plus supplementals — the FY2000 request is about
$850 million, or 5.5% less than current amounts. (See below for discussion of the
supplemental/advance appropriation requests.)
Funding for Selected Foreign Operations Accounts. For the most part,
portions of the $1.2 billion increase above the “base” sought for FY2000 are spread
out over many Foreign Operations accounts, resulting in small boosts for these aid
activities. Development assistance would grow by about $175 million (9%) above the
“base,” non-proliferation and counter-terrorism programs would increase by $3
4
3
million (17%), military training funds would rise by $2 million (4%) and military aid
grants would move up by $100 million (3%). The military aid grant hike mainly
would provide additional support to Israel. The budget request also includes a few
large increases from FY1999, representing special priorities of the Administration:
4 See below for a detailed discussion of development assistance funding strategies, the
President’s request to re-establish a special account for Africa (Development Fund for
Africa), and the continuing controversy over population aid and international family planning
programs. Comparisons of development aid figures include a $45 million budget amendment
submitted on July 19 for additional HIV/AIDS funding.

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CRS-8
! Export promotion programs are slated for an increase of $92 million (11.6%),
mainly to provide the Export-Import Bank with the resources to meet what it
believes will be increased demands in FY2000.
! Debt reduction funds would grow from $33 million to $120 million in order to
launch two new debt relief initiatives for FY2000. (See below for more
discussion of this issue.)
! Peace Corps funding would rise by $30 million (12.5%) to maintain the plan
to increase the number of Peace Corps volunteers from 6,700 to 10,000 within
the next few years. (See CRS Report RS20082, Peace Corps: 10,000
Volunteer Goal, by Curt Tarnoff.)
Table 3. Summary of Foreign Operations Appropriations
(Discretionary funds -- in millions of dollars)
FY1999
FY2000
House
Senate
FY2000
Bill Title & Program
Enacted
Request H.R. 2606 S. 1234
Enacted
Title I - Export Assistance
660.7
685.0
595.5
620.5
--
Title II - Bilateral Economic Aid
9,616.2*
8,388.2
7,374.3
7,425.5
--
Development aid
2,321.5*
2,259.7
2,093.9
2,111.0
--
Africa aid
730.0
740.0
735.0
--
--
Israel/Egypt economic aid
1,855.0
1,645.0
1,695.0
1,695.0
--
Former Soviet Union
847.0*
1,032.0
725.0
780.0
--
Title III - Military Assistance
3,507.5*
3,956.0
3,585.5
3,534.0
--
Israel/Egypt
3,160.0
3,220.0
3,220.0
3,220.0
--
Title IV - Multilateral Aid
1,638.3
1,587.4
1,068.7
1,111.8
--
MDB arrears
514.0
168.3
0.0
75.0
--
Title VI - Intl Monetary Fund
17,861.0
-.-
--
--
--
Total/“Base” Appropriation
13,401.0
14,616.6
12,624.0 12,691.8
--
Total/with FY99 Supplemental 15,422.7
14,616.6
12,624.0 12,691.8
--
Total/with Supp. & IMF
33,283.7
14,616.6
12,624.0 12,691.8
--
Source: House and Senate Appropriations Committees and the State Department.
* Includes “base” appropriations plus emergency supplementals enacted in P.L. 105-277 and P.L.
106-31.
! U.S. assistance to Russia and the former Soviet states would grow by $179
million (21%), the result of a new Administration program — the Expanded
Threat Reduction Assistance Initiative — addressing the security implications
of the economic crisis in Russia and other NIS states. (See below under
regional aid priorities for more discussion.)

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CRS-9
! Peacekeeping for non-U.N. missions would increase by $54 million (71%),
mainly due to recommendations to boost funding from $10 million to $43
million for the OSCE Kosovo operation, and for smaller increases in Africa
and OSCE Bosnia/Croatia peacekeeping activities.
! For the first time in several years, the Administrations seeks funding ($5.1
million) for the African Development Bank, an institution that has had its
operations suspended until recently due to administrative and economic
problems in the region.
In one area, the FY2000 Foreign Operations request proposes a small program
reduction — U.S. assistance to Eastern Europe would drop by $37 million (-8.6%)
with most of the cuts coming in aid to Bosnia.
Table 4. Leading Recipients of U.S. Foreign Aid: FY1998 - FY2000
(Appropriation Allocations; $s in millions)
FY1998
FY1999
FY2000
Actual
Allocation
Estimate
Israel
3,000
2,940
3,150**
Egypt
2,117
2,076
2,016
Jordan
78
298*
328**
Russia
139
178
301
Ukraine
233
203
227
West Bank/Gaza
85
75
200**
Bosnia
225
205
176
Bolivia
74
92
88
Georgia
98
84
87
Peru
63
115
84
Haiti
71
72
73
Armenia
96
81
73
Bangladesh
56
45
59
Kazakhstan
20
49
58
Guatemala
54
59
56
*Includes $100 million supplemental appropriation in P.L. 106-31.
** Includes regular request for Israel, Jordan, the Palestinians, plus amounts for Wye peace accord:
Israel--$300 million; Jordan--$100 million; Palestinians--$100 million.
Note: Data exclude food aid, a program not appropriated in the Foreign Operations bill. With food
aid included, the rank order above would change somewhat. Food aid projected for FY2000 includes
Peru—$50 million; Haiti—$26 million; Bangladesh—$25 million; and Guatemala—$17 million.
Moreover, because of a large food aid program, Ethiopia, India and North Korea (FY1998/99) would
also rank among the lower 10 of this top 15 list.

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CRS-10
Funding for Country Aid Programs. At the country level, the FY2000
proposal recommends generally the same roster of major recipients as for FY1999.
The proposal reflects continuing U.S. policy emphasis on Middle East peace,
democratic transition in the former Soviet Union, implementation of the Dayton Peace
accords in Bosnia, and to a somewhat lesser extent, efforts to counter the drug trade
in Latin America. Israel ($2.85 billion) and Egypt ($2 billion) would continue to be
the largest recipients, although levels would decline as the United States continues to
implement a reduction in economic assistance to both countries.5 Russia, and to a
lesser extent Ukraine, are scheduled for increases in FY2000, mainly due to the
Expanded Threat Reduction Assistance Initiative. U.S. assistance to Israel, Jordan,
and the Palestinians (West Bank/Gaza) could rise significantly in FY2000 if Congress
agrees to a request of $500 million to back the Wye Memorandum peace accord.
Congressional Debate on Foreign Operations Spending
House and Senate debate on the Foreign Operations request for FY2000 has thus
far resulted in decisions to spend roughly the same amount of money overall, but at
a level less than appropriated in FY1999 and well below the President’s request.
There are, however, some significant differences in how the two bills allocate funds
among the various foreign aid accounts.
The Senate Appropriations Committee launched the beginning of formal
congressional consideration of the Foreign Operations request for FY2000 on June
17, 1999, by recommending $12.7 billion (S. 1234). The amount is about $1.9 billion,
or 13%, less than the President’s request. Compared to FY1999 levels, the
recommendation is about $700 million, or 5%, below the “base” foreign aid
appropriation (regular Foreign Operations funding approved in the FY1999 Omnibus
spending bill (P.L. 105-277), and over $2.7 billion, or 17.7%, under total Foreign
Operations appropriations for FY1999 that includes large Central America and
Kosovo emergency relief supplementals. The full Senate, in passing S. 1234 on June
30, altered the Committee funding decisions only slightly by cutting $9.4 million from
the U.S. contribution to the World Bank’s International Development Association.
It had been expected that the House Appropriations panel would be far more
limited in its spending parameters than the Senate due to an initial $10.4 billion budget
authority allocation (see discussion above under the section on 302(b) allocations and
Foreign Operations). Immediately prior to the House Committee markup on July 20,
however, the panel revised the Foreign Operations figure upwards to $12.6, making
available roughly the same amount of money as passed the Senate in June. As passed
in the House on August 3, H.R. 2606 appropriates $12.624 billion in discretionary
funds, $1.99 billion, or 13.6 % less than the FY2000 request. It is $777 million below
the “base” FY1999 appropriation, and $2.8 billion (18%) under the total Foreign
Operations enacted amounts for this year, including both “base” funding and
emergency supplementals.
In
5
FY1999, the United States began and 10-year initiative to reduce U.S. assistance to Israel
and Egypt. For further information, see discussion beginning on page 17.

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CRS-11
Each bill identifies a main, but different funding priority. The primary Senate
initiative is the earmark of $430 million for Kosovo, Albania, Macedonia,
Montenegro, and other regional states affected by the Balkan crisis. The President’s
budget, prepared before the outbreak of hostilities, included only $152 million for the
region. Under the terms of S. 1234, in order to fund initial reconstruction needs at
these amounts, USAID would reduce its planned program in Bosnia from $175
million to $130 million and would likely draw on development and other economic
aid accounts to meet the Senate earmarks. The Senate measure further allocates $20
million to train and equip a Kosovo security force. The Administration strongly
opposes this provision, believing that the language might be interpreted as a
requirement to arm the Kosovo Liberation Army (KLA), a policy in conflict with the
KLA agreement to disarm under NATO supervision. The House-reported measure
does not include earmarked funds for a Kosovo and regional reconstruction initiative.
The major priority set by the House spending measure centers on an effort to
protect and increase funding for the Child Survival and Disease account, a category
of development aid created by the House panel three years ago. Overall, H.R. 2606
increases the account from the “base” FY1999 appropriation of $650 million and the
original $655 million FY2000 request to $685 million.6 The House recommendation
would increase from $50 to $75 million spending on infectious diseases, such as
yellow fever and malaria. Although this would provide USAID with more funds than
it requested for children and disease programs, the House measure reduces the
amount for other bilateral development aid activities, including family planning,
environment, democracy, and economic growth projects, by about $65 million. The
Senate bill also emphasizes child survival and disease programs, but unlike the House,
does not create a separate funding account.
Senate and House measures also increase aid to Israel and Egypt beyond the
Administration’s regular funding request. The President’s budget had proposed
accelerating to $150 million the agreed-upon ten-year, $100 million per year pace for
reducing U.S. assistance to the two countries. The bills increase the request by $50
million, restoring the ten-year, $100 million per year reduction. Under S. 1234 and
the House bill, Israel would receive $2.88 billion and Egypt $2.035 billion. During
floor debate, the House rejected (13-414) an amendment by Representative Campbell
that would have reduced economic aid to Israel and Egypt back to the amounts
requested by the President.
The House and Senate bills, however, defer approval of most, and in the case of
the Senate, all of a separate $500 million request supporting the Wye River peace
accord signed last year. At the time, the U.S. pledged $900 million in FY1999 and
$500 million for FY2000 in additional assistance to Israel, Jordan, and the
Palestinians. At a time when little progress was made by the parties in implementing
the Wye accord, Congress approved only $100 million in the FY1999 Supplemental
Appropriations for Jordan. With the more recent meetings between President Clinton
and newly elected Israeli Prime Minister Ehud Barak, the Administration is once again
pressing Congress to approve expeditiously the remaining FY1999 and FY2000 Wye
6 On July 19, the White House amended its FY2000 Child Survival request by seeking an
additional $45 million to support a presidential AIDS initiative aimed primarily on Africa.

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CRS-12
accord aid pledges. The House bill provides an additional $100 million for Jordan but
does not address funds for Israel or the Palestinians. S. 1234 contains no funds for
the Wye agreement.
For nearly all other programs, the Senate and House bills recommend reductions
— in some cases sharp cuts:
! USAID operating expenses for staff salaries and living expenses abroad are cut
significantly, especially in the House measure. Many believe that the $480
million House appropriation ($37 million under the request) would force the
agency to implement a reduction-in-force similar to what USAID experienced
in 1997. Administration officials also claim that the House-passed level would
make it impossible for USAID to finish replacing its financial management
systems and initiate security renovations at its facilities overseas. S. 1234
makes a small cut ($13 million) and provides requested authority for voluntary
separation incentives for agency employees.
! ESF assistance (other than earmarks for Israel, Egypt and Jordan), which is
aimed primarily at democracy, education, and environmental programs in
various regions, is cut roughly 42% from the request in both bills.
! Aid to Russia, scheduled at $295 million, would fall significantly under House
and Senate recommendations. Under S. 1234, Russian funds would be
squeezed because of a $250 million cut from the request for overall aid to
former Soviet states and earmarks which allocate assistance at or above
amounts requested for Ukraine, Armenia, and Georgia. Russian aid is further
conditioned in the Senate bill on Russian peacekeepers in Kosovo not being
given a zone of operational control and having them fully integrated under
NATO unified command and control. The House makes a deeper cut in the
regional account for the former Soviet Union — $307 million under the
request — although the bill does not earmark selected countries to receive
higher than proposed amounts. An amendment by Representative Traficant,
adopted during floor debate, limits assistance to the Russian government to
$172 million. Funding at either the Senate’s $780 million mark for the account
or the House level of $725 million would jeopardize full funding for the
Administration’s new $241 million Expanded Threat Reduction program.
! Peace Corps funding in S. 1234 is cut to $220 million, $50 million less than the
request. The House bill sets the level at $240 million, the same as FY1999, but
falls short of funds needed to achieve the Administration’s 10,000 volunteer
goal.
! Counter-narcotics aid is reduced significantly in the Senate-passed legislation,
to $215 million, $80 million below the budget recommendation. Nevertheless,
this account had received $257 million in supplemental funding in FY1999 that
might reduce somewhat the impact of the funding level proposed in S. 1234.
The House measure recommends $285 million, only a slight reduction from the
request.

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CRS-13
! Peacekeeping contributions (non-U.N.) are set at $80 million in S. 1234 and
$76.5 million in the House bill, $50 million and $53.5 million, respectively
under the proposal. The Senate measure assumes that no funds will be used
in Haiti.
! Funding for Multilateral Development Banks (MDB) is set well below the
President’s request in both bills. S. 1234 provides $942 million, about $450
million below the President’s request. The House mark of $902 million is
nearly $500 million less. Most significantly effected is the U.S. contribution
to the World Bank’s International Development Association (IDA). S. 1234
reduces the President’s $803 million request to $777 million, $8.4 million of
which represents the presumed U.S. contribution to an IDA-financed project
that would resettle poor Chinese farmers into a traditionally Tibetan area. The
House bill reduces IDA funding to $569 million, a 29 % cut, and if sustained,
would result in the accumulation by the U.S. of substantial arrears to the
organization. Other significant MDB reductions include those for the Global
Environment Facility and in the Senate bill, contributions to the African
Development Fund and the Asian Development Fund.
! Debt reduction for poor countries and to help protect tropical forests,
proposed at $120 million in FY2000, is reduced significantly in both bills. S.
1234 provides $43 million, while the House measure includes $33 million.
Under terms set in the House bill, the Administration would be able to fund
bilateral debt reduction for the poorest countries, mostly in Africa, and partially
finance debt write-offs in nations willing to protect their tropical forests. The
U.S. could not, however, contribute $50 million to the World Bank’s trust
fund that is intended to help regional development banks cancel loans to poor
developing nations.
Major Policy and Spending Issues in the Foreign Operations Debate
In addition to funding decisions made by Congress in the Foreign Operations
appropriation bill, the annual spending measure also includes a wide range of policy
provisions that frequently raise contentious foreign policy disagreements between the
President and Congress. As mentioned above, because Congress has not enacted
foreign aid authorization bills for over a decade, the Foreign Operations legislation
often becomes the vehicle for debate on the conduct of U.S. foreign policy more
generally. Many of these policy provisions take the form of conditions or restrictions
on how the President can use money included in the spending bill. Many of these
provisions are opposed by the Administration as excessively limiting his ability to
manage American foreign policy. The legislative-executive policy differences have
in the past delayed the enactment of the Foreign Operations bill or have prompted a
presidential veto.
Among the most significant funding and policy issues expected to be raised
during congressional debate this year on the Foreign Operations appropriation
measure concern conflicting executive-legislative branch development assistance
strategy priorities, restrictions on international family planning programs, regional aid
allocations, competing initiatives to reduce debt burdens of the poorest developing

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CRS-14
countries, and the terms and conditions under which the United States provides heavy
fuel oil to North Korea.
Policy Priorities of U.S. Development Aid. Since the end of the Cold War, a
recurring debate has focused on what should replace the anti-communist foreign aid
rationale of the past 50 years. A more fundamental question raised by some,
especially critics of development assistance, is whether the United States needs to
maintain an active, globally focused economic aid program. Many of these critics
argue that aid can be transformed into a smaller, more targeted, and often privatized
instrument to support only the highest priority U.S. foreign policy interests.
Although there has been no definitive consensus on priorities, the Clinton
Administration has strongly supported the retention of an activist foreign aid policy
which can be used to bolster a variety of U.S. foreign policy initiatives around the
world. In early 1994, USAID released its blueprint for a post-Cold War development
aid policy, based around the goal of “sustainable development,” and its four strategies
of promoting economic growth, stabilizing global population, protecting the
environment, and advancing democracy. More recently, USAID added a fifth strategy
aimed at developing human capacity through education.
USAID has maintained since adopting these strategies in 1994 that they operate
as inter-linked, mutually re-enforcing elements of an overall U.S. effort to promote
the advancement of market economies and democratic transitions in the developing
world. Officials argue that U.S. assistance is justified until countries reach a point of
sustainability that no longer requires external aid. Funding reductions, congressional
restrictions, and fluctuating Administration priorities, however, have required USAID
to alter the mix of resources devoted to each of the strategies, raising questions over
whether the integrative, mutually reinforcing principles can be maintained. Congress,
for example, limited development aid for population programs in FYs1996-99 to
roughly two-thirds the amount provided in FY1995. (See below for more discussion
on family planning restrictions.) Further, the State Department’s Bureau of Global
Affairs places a high priority on environment programs and presses USAID to allocate
the maximum amount possible to such activities. As a result, the environment sector
of sustainable development probably has not declined as much as it might have
otherwise.
At the center of this issue for the past four years has been differences between
Congress and the executive branch regarding funding levels for programs supporting
child survival, basic education, and efforts against HIV/AIDs and other infectious
diseases. Despite cutting overall development aid in FYs1996-97 by about 23% from
FY1995 levels, Congress earmarked children and disease programs at amounts equal
to or somewhat greater than those allocated in FY1995, making the cuts on all other
elements of sustainable development closer to 30%. Congress boosted development
aid appropriations for FY1999 by about $20 million beyond the President’s request,
but lawmakers set funding targets for bilateral child survival and infectious disease
activities at about $460 million, $85 million more than the Administration proposed.

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CRS-15
As a result, USAID cut funding for economic growth programs by $47 million and
environment projects by $42 million below what the agency had planned for FY1999.7
Congressional proponents of the child survival priority argue that even though
budget pressures require the United States to reduce or hold the line on foreign aid
spending, the protection of children remains a core American value demanding that
cuts should be implemented without putting at risk the lives and well-being of small
children in developing nations. They further point out that the spread of infectious
diseases poses a direct threat to U.S. citizens, and that American national interests
require continued support for global efforts to reduce or eliminate such illnesses.
Table 5. USAID Sustainable Development Programs
(in millions of dollars)
FY1998
FY1999
FY2000
Goals/Targets
Estimate
Estimate
Request**
$s
% of total
$s
% of total
$s
% of total
Economic Growth
415
24.1%
416
23.3%
460
24.3%
Microenterprise
49
2.8%
67
3.7%
75
4.0%
Agriculture
149
8.6%
134
7.5%
148
7.8%
Other Economic Growth
217
12.6%
214
12.0%
237
12.5%
Population/Health
799
46.3%
846*
47.3%
845
44.6%
Child Survival
245
14.2%
276*
15.4%
236
12.5%
HIV/AIDs
121
7.0%
135*
7.5%
172**
9.1%
Family Planning
343
19.9%
339
18.9%
355
18.8%
Infectious Diseases
54
3.1%
50
2.8%
50
2.6%
Other health
36
2.1%
46
2.6%
32
1.7%
Human Capacity/Basic Ed.
125
7.3%
131
7.3%
148
7.8%
Environment
244
14.2%
248
13.9%
290
15.3%
Global Climate Change
92
5.3%
88
4.9%
112
5.9%
Democracy
142
8.2%
148
8.3%
150
7.9%
Total Sustainable Develop.
1,724
100%
1,789
100%
1,893
100%
Source: USAID. Amounts in this table only apply to USAID “development aid” programs and do
not include funds used for the same purposes, although to a lesser extent, in other accounts,
including Economic Support Fund (ESF), East Europe and former Soviet aid programs. For
example, USAID estimates that it will spend in FY1999 $385 million across all accounts for family
planning programs and about $331 million across all accounts for Child Survival activities.
* Includes $40 million for Child Survival and $10 million for HIV/AIDs provided in supplemental
appropriations.

7 Selected elements of economic growth programs that have broad congressional support, such
as microenterprise and agriculture activities, were unaffected by reductions elsewhere in this
sector.

---

CRS-16
** Includes a July 19 budget amendment seeking $45 million more to support a presidential AIDS
initiative aimed primarily at sub-Saharan Africa.
Although agreeing with the importance of child survival and infectious disease
programs, USAID officials apply a broader definition to the terms, arguing, for
example, that efforts to protect small children go well beyond immunizations and
access to other health services. The quality of a child’s life, they assert, also is
determined by an array of other factors, including the degree of relative stability in
society, protection of the surrounding environment, access to adequate shelter, and
implementation of sound economic policies that will ensure jobs and economic
opportunities in the future. Consequently, they contend, that the “squeeze” that these
targets place on other areas of sustainable development partially undermines the
success of programs that also benefit children.
As has been the pattern the past few years, USAID’s sustainable development
request for FY2000 reduces or maintains at current levels funding for several
congressional priorities while increasing development aid overall by $59 million, or
about 3%. The $1.89 billion request would cut funds for child survival programs by
$40 million from FY1999 appropriations, and hold spending for other infectious
diseases activities at the current allocation of $50 million.8 Due to a $45 million July
19 budget amendment to support a new White House initiative, the Administration’s
request for HIV/AIDS programs would rise by $33 million. Environmental funds,
especially those for global climate change programs, would grow the most under the
Administration’s request — up $42 million (17%) from existing amounts. Family
planning spending would also increase slightly, rising by $16 million (5 %) from
FY1999 levels. Other congressional development aid priorities would also receive
higher funding under the President’s budget for FY2000. For example,
microenterprise, agriculture, and basic education programs each would grow by 10-
12% next year.
Congressional Action. Senate and House bills reduce the amended USAID
development aid account by $101 million and $110 million, respectively, while at the
same time increase funds for selected activities. Some of the largest development
assistance and child survival earmarks and recommendations include:
! international population aid — $425 million in the Senate; H.R. 2606 places
a cap on family planning assistance of $385 million.
! infectious diseases — $225 million, of which $150 million is for HIV/AIDS in
S. 1234, and $227 million, including $127 million HIV/AIDS in the House
measure.
! maternal health — $50 million in S. 1234.
! polio eradication — $25 million in both bills.
! basic education — $110 million and $98 million in Senate and House bills,
respectively.
USAID
8
contends, however, that the request for child survival and HIV/AIDs is the same as
the FY1999 “base” appropriation enacted by Congress in the regular Foreign Operations bill
that was incorporated into the Omnibus Appropriations (P.L. 105-277). Under the
Emergency Supplemental division of P.L. 105-277, Congress added $50 million for child
survival and HIV/AIDs programs that USAID does not include in its “base.”

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CRS-17
! displaced children and orphans — $30 million in H.R. 2606.
! agriculture — $305 million (from all economic aid accounts) in S. 1234.
! microenterprise — $152 million in the House measure, while S. 1234 directs
USAID to increase microenterprise funding above FY1999 levels.
The net result of the overall reduction to development assistance, plus increases for
selected Senate and House priorities, would likely be lower funding levels for other
sustainable development activities. Economic growth and private sector programs,
environmental activities, and democracy promotion programs are the most likely areas
to face funding cuts under the two bills.
Population and Family Planning Assistance. Another aspect of the discussion
regarding policy priorities of U.S. development aid is the continuing controversy
regarding international family planning restrictions. For FY2000, the President seeks
$400 million for USAID population programs, a $15 million increase over FY1999
levels. The principal dispute over population assistance, however, goes well beyond
funding issues, centering more directly on abortion-related activities of foreign
recipients of USAID grants. For over a decade, Congress has engaged in contentious
debates over U.S. international family planning policy, often as part of the Foreign
Operations Appropriations. Twice, congressional positions on this issue have been
one of the major reasons prompting a presidential veto.
U.S. international family planning programs had been one of the largest growth
areas of the foreign aid budget in the 1990s. From an average of about $250 million
in the late 1980s, FY1995 spending across all Foreign Operations accounts totaled
approximately $548 million. In the following years, when Congress deadlocked over
abortion-related restrictions and U.S. population aid policy, a situation that blocked
movement of the entire Foreign Operations bill, lawmakers adopted interim provisions
that, among other things, strictly limited the amount of funding for USAID family
planning programs. The appropriation cap of $385 million enacted in each of
FY1997-1999 is roughly two-thirds the amount provided in FY1995. As a result of
the impasse over abortion restrictions, Congress established a delayed timetable for
making these funds available, a schedule that included monthly apportionments or
“metering” of the appropriation.
A second issue in the population aid debate, and one directly connected to
funding reductions and metering of the past four years, deals with abortion restrictions
and the eligibility requirements for foreign organizations receiving funds to implement
U.S.-sponsored family planning programs. During the mid-1980s, in what has
become known as the “Mexico City” policy, the Reagan, and later the Bush,
Administration, restricted funds for foreign non-governmental organizations that were
involved in performing or promoting abortions in countries where they worked, even
if such activities were undertaken with non-U.S. funds. Several groups, including
International Planned Parenthood Federation-London (IPPF), became ineligible for
U.S. financial support. In some years, Congress narrowly approved measures to
overturn this prohibition, but White House vetoes kept the policy in place. President
Clinton in 1993 reversed the position of his two predecessors, allowing the United
States to resume funding for all family planning organizations so long as U.S. money
was not used in abortion-related work.

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CRS-18
During the past four years, the House and Senate have taken opposing positions
on the Mexico City issue that in each case held up enactment of the final Foreign
Operations spending measure. The House position, sponsored by Representative
Smith (N.J.) and others, supported reinstatement of the Mexico City policy restricting
U.S. aid funds to foreign organizations involved in performing abortions or in
lobbying to change abortion laws or policies in foreign countries. The Senate, on the
other side, has rejected House provisions dealing with Mexico City policy, favoring
a policy that leaves these decisions in the hands of the Administration. Moreover,
Administration officials have stated that President Clinton would veto any bills that
include the House-passed Mexico City restrictions, a threat he carried out in October
1998 when he rejected legislation authorizing family planning programs that included
Mexico City policy (H.R. 1757).
Unable to reach an agreement satisfactory to both sides, Congress has adopted
interim arrangements for FY1996-99 that do not resolve the broad population
program controversy, but has permitted the stalled Foreign Operations measure to
move forward. It was hoped that the arrangement, which neither side liked, would
provide incentives for those involved in the debate to find a middle ground. Under
the terms of the FY1999 temporary arrangement, as included in P.L. 105-277,
Congress deleted the House-supported Mexico City restrictions, limited population
aid funding to $385 million, down from $435 million passed by the Senate, and
delayed, or “metered” the availability of the funds at a rate of one-twelfth of the $385
million per month.
Congress further enacted for FY1999 a ban on U.S. contributions to the U.N.
Population Fund (UNFPA), a prohibition that had been in place during the Reagan
and Bush Administrations but which was lifted by President Clinton in 1993. At issue
are UNFPA programs in China, a country where there have been continuing reports
for many years of coercive family planning practices. During the mid-1990s,
Congress reduced UNFPA contributions by an amount the organization spent in
China, but when UNFPA ended its China program in 1997, the controversy subsided.
UNFPA, however, reinstituted activities in China soon thereafter, resulting in the
withholding in FY1998 of $5 million for UNFPA and the enactment for FY1999 of
a total prohibition on the U.S. $25 million contribution, so long as the organization
remained active in China. Nevertheless, the Clinton Administration is seeking $25
million for the UNFPA in FY2000.9
In
9
related legislative action, the House International Relations Committee on April 29, 1999,
reported an omnibus State Department authorization bill, H.R. 1211, that earmarks $25
million for UNFPA in FY2000. U.S. contributions, however, would be conditioned on how
UNFPA operates in China; namely, that UNFPA programs focus on improving the delivery
of voluntary family planning information and services, and that UNFPA works only in
counties where participant quotas and targets have been abolished and coercive practices
terminated. The full Committee overturned a subcommittee recommendation to prohibit U.S.
contributions to UNFPA, unless the President certified that UNFPA had withdrawn from
China or that China no longer engaged in coercive family planning practices. In subsequent
debate on a revised, substitute bill (H.R. 2415), the House rejected an amendment by
Representative Smith that would have restored the subcommittee prohibition and instead
adopted a Campbell amendment authorizing $25 million for the UNFPA, but making it subject
(continued...)

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CRS-19
A new element in the family planning issue added during the FY1999 debate
emerged following reports that Peru, where USAID has population aid programs, had
established national targets for tubal ligations and vasectomies There were also
allegations that some Peruvian health workers may have conditioned the receipt of
food and medical care on the acceptance of sterilizations. USAID maintains a policy
of strict voluntarism for family planning programs it supports, and opposes the use of
performance-based quota systems. The Agency says that Peru’s government has
instituted significant reforms in its family planning programs, including criteria that
ensure voluntary informed consent. To reinforce U.S. policies opposing programs
based on coercive practices or quota systems, Congress adopted for FY1999 an
amendment by Representative Tiahrt that more precisely defines the term, voluntary
family planning programs, and establishes criteria for USAID to apply regarding the
voluntary nature of its population projects. (For more information, see CRS Issue
10
Brief 96026, U.S. International Population Assistance, Issues for Congress, by Kerry
Dumbaugh and Larry Nowels.)
Congressional Action. S. 1234, as approved by the Senate, increases family
planning funds within the development aid account from the $355 million request to
$425 million. Across all accounts, including ESF, NIS, and SEED programs, the
Senate recommendation would set population aid at about $470 million, a $70 million
increase above the Administration’s overall $400 million recommendation.. The bill
further earmarks UNFPA funding at $25 million, as requested.
The House measure, like previous bills, caps family planning assistance at $385
million. But unlike enacted Foreign Operations laws the past few years, the House
bill would not “meter” the availability of these funds. An amendment offered by
Representative Pelosi at the House Committee’s markup restored the $25 million
request for the U.N. Population Fund, but made it subject to a reduction by whatever
amount UNFPA spends in China in 2000.
During floor debate, the House adopted two competing and possibly conflicting
amendments affecting U.S. international family planning policy. On a 228-200 vote,
the House approved a modified Mexico City policy amendment by Representative
Smith (NJ) prohibiting U.S. funds to foreign NGOs that perform abortions or lobby
to change abortion laws in foreign countries, regardless of whether such activities are
financed with U.S. funds. The House also adopted (221-208) a counter amendment
by Representative Greenwood permitting U.S. grants to foreign NGOs as long as they
do not use U.S.-provided money to perform abortions or violate abortion laws in
(...continued)
9
to a dollar-for-dollar reduction by however much UNFPA spends in China.
Following
10
adoption of the Tiahrt amendment in the 105th Congress, the House, on March 23,
1999, passed a non-binding resolution (H.Res. 118) re-emphasizing the voluntary nature of
international family planning programs. The resolution is aimed at an upcoming meeting of
the U.N. General Assembly in late June that will review and appraise the implementation of
the program of action of the 1994 International Conference on Population and Development.
Sponsors of H.Res. 118 reportedly want to signal the conference that Congress believes that
all family planning programs should be completely voluntary, avoid numerical targets, and
provide recipients complete information on methods.

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CRS-20
foreign nations and they support programs to reduce the incidence of abortion as a
method of family planning. Because the Smith language is more restrictive
concerning foreign NGO eligibility for receiving USAID grants, it would be the
operative text if both amendments are enacted. Requirements in the Greenwood
provision that NGOs support programs reducing abortions as a method of family
planning and adhere to abortion laws in foreign countries, nevertheless, would also
apply should conferees adopt both positions. Theoretically, however, some foreign
NGOs that would be eligible recipients of USAID grants under the Greenwood
amendment would be barred from receiving U.S. population aid under the Smith
restrictions. The White House has said the President would veto any bill that included
the Smith language.
Regional Allocations of U.S. Foreign Aid and the Request for an Africa-
specific Account. Although the Middle East has received by far the largest
proportion of U.S. assistance over the past three decades — 55-63% of bilateral aid
appropriated in Foreign Operations spending measures in most years— allocations to
other regions have fluctuated considerably, especially since the end of the Cold War.
Asia, which received substantial assistance in the 1980s associated with the presence
of U.S. military bases in the Philippines, had its share drop to 16% to 4% by FY1997.
Latin America, where Central American governments were confronted with internal
conflict, had its share drop from 16% to 6%. Africa’s proportion remained about the
same — 7-8% — a development that disappointed those who argued that the world’s
poorest region should receive higher priority, especially with the reduction in
emphasis on security assistance. U.S. aid to the emerging democracies and market-
oriented economies in Eastern Europe and the former Soviet Union, where the United
States had no programs prior to 1990, grew to represent 14% of American bilateral
assistance funded in the Foreign Operations bill for FY1997.
A number of observers, including some Members and congressional committees,
believed these shifts in regional aid allocations had swung too far. This was
particularly true in the cases of Asia and Latin America, given the Asian financial
crises and significant U.S. interests to promote economic development in Latin
America in order to counter the trend of rising illegal immigration to the United
States. Foreign Operations appropriations measures the past two years have
emphasized the need to maintain or increase assistance to Latin America especially.
In the case of Africa, others argued that not enough has been reallocated to offer
sufficient help to meet the region’s unmet needs and to promote future U.S.-African
trade opportunities.
As the share of bilateral Foreign Operations funding for the Middle East
exceeded 60%, some in Congress began promoting the view that there should be
some limits to the amount provided and that if the Administration wanted to pursue
new Middle East peace initiatives using foreign aid as an implementing tool, resources
should be found within existing Middle East programs and not be taken from other
regions.
Accordingly, for FY1998 Congress took steps to legislate a cap on Foreign
Operations resources for the Middle East. At the initiative of Representative
Callahan, Chairman of the House Foreign Operations Subcommittee, lawmakers
stipulated in the FY1998 funding measure (Section 586 of P.L. 105-118) that selected

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Middle East nations and regional programs could not receive more than $5.4 billion
of the total appropriation. Following this, Israel put forth in January 1998 a plan to
cut its aid over the next ten to twelve years. The concept behind the Israeli initiative
to decrease assistance from the United States was first raised by Prime Minister
Netanyahu in a speech before a joint session of Congress on July 10, 1996. As
outlined to congressional and Administration officials by Israeli Finance Minister
Neeman in late January 1998, the United States would cut economic aid by $120
million each year for about ten years, while increasing military assistance by $60
million annually. At the end of the period, Israel would be receiving an annual
appropriation of $2.4 billion in military aid but no longer receiving any economic
assistance. If done over a ten-year period, U.S. aid to Israel would fall $60 million
each year in net terms, with a total savings of $600 million by 2009. For FY1999,
Congress supported the $60 million net reduction of aid to Israel, also adding a similar
$40 economic aid cut for Egypt.
Table 6. Regional Allocations of U.S. Aid
(in millions of dollars; % of bilateral total in Foreign Operations)
FY1998
FY1999
FY2000
Estimate
Estimate*
Request
$s
% of total
$s
% of total
$s
% of total
Africa
804
9.4%
883
9.0%
893
10.0%
Asia
338
3.9%
325
3.6%
424
4.8%
E. Europe/former Soviet
1,492
17.4%
1,642
16.7%
1,600
18.0%
Latin America
635
7.4%
1,535
15.6%
735
8.3%
Middle East
5,324
62.0%
5,471
55.5%
5,241
58.9%
Total, Bilateral Aid
8,593
100%
9,856
100%
8,893
100%
Source: USAID. Amounts in the this table exclude food aid funded in the Agriculture
Appropriations measure.
*FY1999 estimates include supplemental appropriations for Central America hurricane
reconstruction ($621 million), economic aid for countries surrounding Kosovo ($225 million),
and assistance to Jordan ($100 million).
The President’s FY2000 Foreign Operations request reflects several of these
regional allocation views expressed by Congress in recent years. Highlights of the
Administration’s recommendations include the following.
Creation of the Development Fund for Africa Account. After a three-year
absence, the President is asking Congress to re-establish a separate Foreign
Operations account for African aid and to increase funding slightly over FY1999
levels. Ten years ago, Congress and the Administration launched a joint initiative to
create special legislative authority for U.S. economic aid to Africa. The Development
Fund for Africa (DFA — authorized in Chapter 10 of the Foreign Assistance Act of
1961) was intended to extend more flexibility to USAID program managers and to
protect aid resources for Africa from being transferred to other regions as new foreign

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CRS-22
policy crises unfolded. At its peak, the United States channeled about $800 million
annually through the DFA.
Although the DFA authorization law remained in force, Congress ended the
practice of a direct DFA appropriation in FY1996, funding Africa’s assistance out of
worldwide development aid and child survival accounts. Following President
Clinton’s visit to Africa in 1998, during which he pledged to restore U.S. aid to higher
levels provided in previous years, the Administration has proposed a direct DFA
appropriation account for FY2000. The budget includes $745 million for African
development aid, including funds from both the DFA and Child Survival accounts.
Combined with funds requested under the Economic Support Fund, largely for
democracy and economic growth initiatives, and smaller amounts of military
assistance, the FY2000 budget includes $893 million for Africa. This compares to
FY1999 allocations of $883 million.
Increased Funding for Asia. The FY2000 foreign aid budget proposes
significant increases in assistance programs throughout the Asian region. The $424
million requested is nearly $100 million, or 30% higher than allocations for FY1999.
This represents the largest percentage increase sought in the FY2000 foreign aid
request for any of the five major regions under USAID’s portfolio. Much of the
increased funding is for a new East Asian economic recovery initiative. This multi-
year plan, administered by USAID, would support job creation opportunities, social
safety net programs, transparency and anti-corruption activities, and regional
economic recovery programs. The Administration plans to spend about $53 million
for the initiative out of both development aid and ESF accounts. The Administration
is also proposing an expansion of various East and South Asian regional programs
aimed at meeting global climate change goals and deterring forest and marine/coastal
zone degradation, and promoting democratization and governance initiatives in South
Asia. The FY2000 budget request further includes a new item: a $5 million program
to counter violence against women and to promote increased participation by women
in the political process.
Modest Increases for Most Latin America Programs; Central America
Reconstruction Supplemental. Excluding counter-narcotics assistance and
emergency Central American hurricane relief, Latin America would receive a modest
increase in U.S. assistance for FY2000. (The FY1999 Omnibus Appropriation Act
included a separate emergency supplemental for drug control programs — most of
which was earmarked for Colombia — that doubled the regular counter-narcotics
budget.) The $735 million proposed level for the region is roughly 8% higher than
the “base” allocations for FY1999, after adjusting for the supplemental drug and
Central America disaster funds. The most significant regional initiative Congress has
addressed this year is an FY1999 supplemental for reconstruction and other assistance
for the victims of Hurricanes Mitch and Georges, which struck Central America and
the Caribbean in 1998, and the more recent earthquake in Colombia. Of the $1 billion
appropriated for hurricane relief and reconstruction (enacted in P.L. 106-31), $621
million will finance a Central America and Caribbean Recovery Fund to assist
Nicaragua, Honduras, and other states to re-build their countries.
Middle East Aid Reduced for FY2000, but Large Supplemental Package
Sought for Wye Peace Accord. The President’s FY2000 foreign aid request for the

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Middle East reduces slightly U.S. assistance to the region — from $5.47 billion
enacted for FY1999 to $5.24 billion proposed for next year. The $230 million
reduction stems largely from larger-than-expected cuts in assistance for Israel and
Egypt. Many assumed when Congress first began this downsizing in FY1999, that
phased cuts would continue at a steady pace of $100 million per year for ten years.
The FY2000 proposal, however, recommends a cut of $150 million: $60 million for
Egypt and $90 million (net) for Israel. Administration officials say that they still
intend to follow the ten-year time period, but that they have not established a firm
pace at which amounts would be reduced. The budget also includes a $1.9 billion
supplemental/advance appropriation proposal — to be allocated over three years —
in support of the Wye Memorandum and the next phase in the Middle East peace
process. The $1.9 billion Wye Memorandum proposal would provide $900 million
in FY1999 and an advance appropriation of $500 million in both of FY2000 and
FY2001. Israel would receive $1.2 billion, the Palestinians and Jordan, $400 million
and $300 million, respectively.
Although the President had hoped that Congress would dispense with this
proposal as part of an FY1999 supplemental (P.L. 106-31), Congress only considered
$100 million requested for Jordan in FY1999, deferring the balance to subsequent
legislation, including the Foreign Operations measure for FY2000.
Sharp Increase in Aid to Russia and Other Former Soviet States. In dollar
terms, U.S. assistance to Russia and the other Newly Independent States (NIS) of the
former Soviet Union would grow more than for any other region. The $1.032 billion
FY2000 request for the NIS account is $185 million, or 22% higher than for this year;
aid to Russia would rise from $172 million in FY1999 to $295 million. The increase
sought for FY2000, however, is totally the result of a $241 million Expanded Threat
Reduction Assistance Initiative planned to be launched in Russia and other NIS
countries next year. The ETR initiative is aimed at reducing the risks of weapons
proliferation, weapons delivery systems, materials, and technology, and the transfer
of scientific and technical expertise. The $241 million requested in Foreign Operations
spending is part of a larger $1 billion Administration proposal for increasing amounts
dedicated to proliferation issues in the NIS, with the remaining funds coming from the
Departments of Defense ($486 million) and Energy ($265 million). (For more
information, see CRS Report RS20203, The Expanded Threat Reduction Initiative
for the Former Soviet Union: Administration Proposals for FY2000, by Amy Woolf
and Curt Tarnoff, and CRS Issue Brief 95077, The Former Soviet Union and U.S.
Foreign Assistance, by Curt Tarnoff.)
Congressional Action. S. 1234, as approved by the Senate, would result in
several changes to the President’s regional aid allocations proposed for FY2000:
! Kosovo and other Balkan reconstruction assistance would grow considerably
under the bill’s $430 million earmark for such aid.
! Aid to Russia and selected other former Soviet states would decline under the
$67 million cut to the region (from FY1999 levels, $250 million below the
request), although earmarks for Ukraine, Armenia, and Georgia would keep
those programs at or above requested amounts.

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CRS-24
! Middle East assistance, especially for Israel, Egypt, and Jordan, would be
funded at or above requested levels for regular aid programs. The Senate bill,
however, defers consideration of $500 million in FY2000 for support of the
Wye River Middle East peace accord.
! Given the worldwide reductions in S. 1234 under both the development
assistance and ESF accounts, it is likely that spending in Africa, Latin America,
and Asia would fall below the President’s request, although the decisions of
how to allocate the specific cuts would by up to the Administration. The
Senate bill further did not re-establish a separate Development Fund for Africa,
as proposed.
The House spending measure also alters the Administration’s regional and
country allocation plans:
! Sharper-than-Senate reductions in aid to states of the former Soviet Union
would likely cut assistance to many of these states. Because the House bill
does not earmark amounts for a few selected countries, Russia and several
other recipients would not necessarily absorb the bulk of the reductions if the
Administration chose not to, although direct assistance to the Russian
government is capped at $172 million.
! Aid to Africa would likely amount to $735 million, slightly ($5 million) more
than for FY1999, but $10 million less than requested. H.R. 2606 further, like
the Senate, does not re-establish a Development Fund for Africa.
! Regular assistance for Israel, Egypt, and Jordan, would be funded at or above
the President’s request. The House rejected a Campbell amendment (13-414)
to cut amounts for Israel and Egypt ($30 and $20 million, respectively) back
to the Administration’s request. H.R. 2606, however, includes only $100
million for Jordan out of the pending $1.3 billion initiative to back the Wye
River peace accord.
Korean Energy Development Organization (KEDO) and U.S. North Korea
Policy. At the heart of the Clinton Administration’s North Korea policy is the 1994
U.S.-North Korea Agreed Framework, an arrangement under which the United States
provides the DPRK with a package of nuclear, energy, economic, and diplomatic
benefits, in exchange for suspension by North Korea in the operations and
infrastructure development of its nuclear program. As part of the accord, two new
light water nuclear reactors will be constructed — financed largely by South Korea
and Japan — to replace the nuclear facilities shut down under the Agreed Framework
that have the potential to produce nuclear weapons grade material. While the new
reactors are being built, the United States and other nations have been contributing
funds to the Korean Energy Development Organization (KEDO) for the purchase of
heavy fuel oil to supplement North Korea’s power and electricity production.
Administration officials previously estimated that annual KEDO contributions,
appropriated in the Foreign Operations bill, would total about $20-$30 million.
The Administration’s policy of engagement with North Korea and the approach
outlined in the Agreed Framework have been a frequent source of controversy in

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congressional debates in recent years. But a series of actions in 1998 by the North
Korean government — missile sales to Iran, suspected construction of a new nuclear
site, and the launch of a rocket that traveled over Japanese airspace — prompted a
sharp reaction from congressional critics, during which the House voted to prohibit
the President’s FY1999 $35 million request for KEDO.
Although lawmakers ultimately agreed to provide the $35 million payment of
heavy fuel oil, Congress attached stiff conditions that had to be met in 1999 prior to
the full transfer of funds. Under terms provided in P.L. 105-277, the first $15 million
became available only after March 4, 1999, when the President certified that progress
was occurring on implementing several nuclear-related agreements with North Korea,
that the DPRK was cooperating fully in the canning and storage of all spent fuel from
its graphite-moderated nuclear reactors, that North Korea had not diverted any
assistance, and that the U.S. was moving ahead with efforts to block DPRK's
development and export of ballistic missiles.
The remaining $20 million became available June 1 following a second
presidential certification that progress has been made on the nuclear and ballistic
missile issues, and that the U.S. and North Korea had agreed on the means to satisfy
U.S. concerns about the DPRK's suspect underground construction. P.L. 105-277
further limits the President's "special" waiver authority (Section 614 of the Foreign
Assistance Act of 1961), blocking its use to provide more than $35 million to KEDO
in FY1999. In addition, Congress required the President to appoint a senior North
Korea Policy Coordinator by January 1, 1999, to review U.S.-DPRK policy and to
direct negotiations with North Korea. The President named former Secretary of
Defense William Perry to the position in late 1998.
The review of North Korean policy was delayed until after a visit by Secretary
Perry to North Korea in May and a separate visit by U.S. inspectors to the suspected
underground nuclear site. In a preliminary report, the inspectors said, that although
they found an extensive underground tunnel complex, work had ceased, the tunnels
were empty, and there was not evidence that North Korea was in violation of the
Agreed Framework. Reportedly, North Korea had been demanding payment for a
U.S. inspection, something the United States rejected. Nevertheless, shortly
following the mid-March announcement by the State Department that North Korea
had agreed to multiple site visits, officials said that the United States would proceed
with a bilateral pilot agricultural project designed to improve potato production in
North Korea and contribute an additional 200,000 metric tons of food aid to help
North Korea deal with its continuing food shortage and widespread starvation and
malnutrition. This was followed by an another 400,000 food pledge on May 17.
While officials argue that food assistance is based solely on humanitarian
considerations and need, some observers contend there is a connection between
arrangements to visit the suspected nuclear site and the food decision.
Beyond issues related to conditions in last year’s Foreign Operations measure
and the release of FY1999 funds for KEDO, Congress will consider this year the
Administration’s $55 million request for KEDO payments in FY2000. The proposal
is the highest since the U.S. first began financing heavy fuel oil in FY1995, largely due
to past shortfalls in U.S. funding and lower-than-anticipated contributions from other

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nations. (For further information, see CRS Issue Brief 91141, North Korea’s Nuclear
Weapons Program, by Larry Niksch.)
Congressional Action. S. 1234 reduces the President’s $55 million KEDO
request to $40 million and retains most of the conditions attached to last year’s
KEDO contribution. The Senate bill, however, drops requirements for the inspection
of underground construction sites. The House bill reduces the contribution further,
to $35 million, and adds new conditions that the Administration says might present
a problem in implementing the program as planned.
Debt Reduction Initiatives for Poor Countries. Providing debt relief to poor
developing nations that borrowed in the past from the United States, other creditor
governments, and international financial institutions has emerged as one of the key
issues in the Foreign Operations debate for FY2000, the result of several factors.
First, the Administration is requesting $120 million, nearly four times the amount
appropriated for FY1999, to support continuing debt reduction programs and to
launch two new activities in FY2000. Secondly, encouraged by various international
campaigns promoting more expansive debt relief that will target poverty reduction,
including the Jubilee 2000 movement,11 several congressional initiatives have been
introduced in 1999 that go beyond the President’s FY2000 request. Further, on
March 16, 1999, the White House announced more ambitious U.S. debt reduction
policies for the world’s most heavily indebted poor nations. At the G-7 Summit in
June, the President's new policy was largely endorsed by the other major creditor
governments. Finally, during World Bank/IMF meetings in late April, a strong
consensus emerged among donors and the institutions that the current debt relief
process — known as the Heavily Indebted Poor Country (HIPC) Initiative — was
insufficient and required reform.
For the past decade, the United States has engaged in various forms of debt relief
for developing nations, resulting in the cancellation of about $14.4 billion of foreign
debt. Much of it — $10.1 billion — resulted from special cases involving key U.S.
national interests: for Egypt in 1990 ($7 billion), for Poland in 1991 ($2.5 billion), and
for Jordan in 1995 ($635 million). U.S. debt reduction policy for other nations based
strictly on need has been guided by the principle that eligible countries must have
demonstrated a strong and sustained commitment to economic policy reforms prior
to receiving debt relief. Under budget rules instituted in 1992, Congress has had to
appropriate funds in advance representing the costs of canceling debt. The cost
determination methodology is based on a complicated formula that takes into account
among other things, the loan’s net present value, its interest rate, and the likelihood
the loan will be repaid. For especially poor countries with particularly large debt
overhangs, the appropriation requirement may be quite small relative to the loan’s
face value — perhaps 10% or less.

11 Launched at the June 1997 G-8 Denver Summit, the Jubilee 2000 campaign is spearheaded
primarily by Catholic and Protestant organizations from over 60 countries, together with other
religious and non-governmental organizations. The principal aim of Jubilee 2000 is to achieve
unconditional debt forgiveness for the most heavily indebted poor countries by the year 2000
on terms that will maximize the benefits for the poorest segments of the population.

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When it was first introduced in 1996, HIPC was hailed as the first arrangement
that included relief from debts owed to the World Bank, the IMF, and other
international institutions, organizations that hold over 25% of debt held by the most
heavily indebted nations. Previously, multilateral organizations had declined to
participate in debt cancellation, arguing that it would increase their costs of raising
new money to lend, expenses that would have to be passed on to borrowers. Forty-
one countries — mostly in Africa — are eligible for HIPC, although only 29 likely
have “unsustainable” debt, a further criterion for being a HIPC participant. Countries
deemed eligible for HIPC terms may have their bilateral public debt reduced by 80%
after they have maintained a record of strong economic performance for as much as
six years. At present, Uganda and Bolivia are the only nations that enjoy full HIPC
benefits.
Strong critics of HIPC have emerged, especially among non-governmental
organizations and religious groups working in developing countries. They charge that
HIPC terms are not deep enough — that 90% or 100% of bilateral debt owed should
be canceled and multilateral debt write-offs should go further — and that six years is
far too long a period for countries to qualify. They further believe that the non-
sustainable debt criteria, based largely on a ratio of a country’s debt-to-exports, is too
high and therefore excludes many countries that are also in need of debt relief. Some
critics oppose the economic reform requirements and argue for unconditional debt
reduction. A number of organizations further advocate instituting mechanisms that
would ensure that savings realized by debtor governments would be channeled into
spending on basic services, such as health and education, that would improve the
quality of life of the very poor. Many of these arguments are reflected in legislative
initiatives launched in 1999, including H.R. 1095 (Debt Relief Poverty Reduction Act
of 1999), H.R. 772 (Hope for Africa Act), and H.R. 2232 (Debt Relief and
Development in Africa Act of 1999). Complicating enactment of such bills, however,
is the large additional costs that would be associated with efforts to broaden, deepen,
and accelerate HIPC or U.S. bilateral debt reduction policies.
For FY2000, the President seeks $120 million for three debt reduction activities
funded under the Foreign Operations legislation:
! $20 million to continue U.S. bilateral debt relief agreements for reforming poor
countries. Of this total, $17 million would be available to support the
President’s Africa debt reduction initiative, launched in 1997, offering 100%
cancellation of concessional debt owed by Africa’s strongest performing
nations. This could, according to Administration officials, result in the
forgiveness of $115 million of face value of debt held largely by Guinea. The
other $3 million would be available for regular bilateral debt agreements, some
at HIPC terms, that could cancel up to $50 million of loans owed by several
poor nations.
! $50 million for the first U.S. contribution to the HIPC Trust Fund. While the
World Bank and the IMF will finance their own participation in HIPC, some
multilateral organizations, such as the African Development Bank, do not have
the necessary resources to extend debt relief to their debtors. The Trust Fund,
which has received contributions of over $450 million from about 19 countries,

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is designed to assist these international agencies to reduce debt owed by
eligible HIPC nations.
! $50 million for debt relief to countries that are committed to protecting their
tropical forests. Congress enacted last year the Tropical Forest Conservation
Act of 1998 (PL 105-214), authorizing the President to buy back, swap, or
cancel concessional U.S. economic and food aid loans in order to generate
local currencies that will be used to support tropical forest conservation
programs.
Beyond these Administration proposals for FY2000, between March and June
the White House expanded U.S. debt reduction policy addressing many of the
concerns expressed by HIPC critics. The President’s new initiative, much of which
was endorsed by other leaders at the June G-7 economic summit in Cologne, would
provide deeper debt relief to more poor developing countries. Some of these steps
are similar to those proposed in pending legislation — especially H.R. 1095 —
although all congressional initiatives would expand HIPC far beyond the
Administration’s revised policy. How soon the White House plans to launch these
initiatives — at least on a bilateral basis — is unclear. But if the plan is to move in
the near term, the FY2000 request would have to be amended and additional funding
sought.
Congressional Action. S. 1234 provides $43 million for debt reduction in
FY2000, well below the requested level. Because of funds carried in from FY1999,
the Administration may be able to meet its planned bilateral debt reductions for Africa
and other poor nations. But at the Senate level, full funding for tropical forest debt
initiative and the HIPC Trust Fund would not be possible. The House appropriation
of $33 million would make implementation of the Administration’s debt reduction
initiatives more problematic. In recommending $33 million, the House Appropriations
Committee assumes that most of funds will support bilateral debt cancellation for the
poorest countries, but that none of the money is available for the HIPC Trust Fund.
FY1999 Supplemental Appropriations and Foreign Operations
Congress considered several major FY1999 supplemental appropriation requests
as part of S. 544 and H.R. 1141, and a separate emergency Kosovo military and
humanitarian initiative. H.R. 1141, which cleared Congress and was signed by the
President on May 21 (P.L. 106-31), includes $1 billion for Central American and
Caribbean reconstruction aid in the wake of hurricanes that struck the region in late
1998; $100 million for Jordan, the most urgently sought portion of a $1.9 billion,
three-year aid package for Israel, Jordan, and the Palestinians to help implement the
terms of the Wye Memorandum negotiated in October 1998; and $819 million in
humanitarian and refugee aid to Kosovo and surrounding countries. All of the Middle
East and Kosovo assistance, and nearly $700 million of the Central American relief
package fall under the jurisdiction of the Foreign Operations measure.
Because of congressional decisions to offset the costs of the new spending,
however, the President threatened to veto preliminary House and Senate bills.
Proposed offsets — cuts to existing appropriations — affected Foreign Operations
programs especially in H.R. 1141. Among the most controversial offsets in the House

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bill was the rescission of $648 million in callable capital appropriated prior to 1980
that is used by multilateral development banks to leverage borrowing in global
markets and to maintain their high credit ratings. Administration officials claimed this
might lead to higher borrowing costs by the World Bank and others, and thereby,
recommend that the President veto the legislation. H.R. 1141 would have further cut
existing funds for the Export-Import Bank and USAID development assistance
programs. As enacted, most of the Foreign Operations offsets were dropped, except
for a $25 million rescission of prior appropriations for U.S. contributions to the
Global Environment Facility, and $5 million in ESF funding. (For further information,
see CRS Report RL30083, Supplemental Appropriations for FY1999: Central
America Disaster Aid, Middle East Peace, and Other Initiatives, by Larry Nowels.)
For Additional Reading
Foreign Operations Programs
CRS Issue Brief 88093. Drug Control: International Policy, by Raphael Perl.
CRS Issue Brief 96008. Multilateral Development Banks: Issues for the 106th
Congress, by Jonathan Sanford.
CRS Issue Brief 86116. U.N. System Funding, by Vita Bite.
CRS Issue Brief 96026. U.S. International Population Assistance: Issues for
Congress, by Kerry Dumbaugh and Larry Nowels.
Foreign Operations Country/Regional Issues
CRS Issue Brief 95052. Africa: U.S. Foreign Assistance Issues, by Raymond
Copson.
CRS Issue Brief 95077. The Former Soviet Union and U.S. Foreign Assistance, by
Curt Tarnoff.
CRS Issue Brief 85066. Israel: U.S. Foreign Assistance, by Clyde Mark.
CRS Issue Brief 91141. North Korea’s Nuclear Weapons Program, by Larry Niksch.
Selected World Wide Web Sites
Asian Development Bank
[http://www.asiandevbank.org/]
CRS Foreign Affairs, Defense and Trade Division
[http://www.loc.gov/crs/foreign/fandpage.html]

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CRS-30
Export-Import Bank
[http://www.exim.gov/]
Inter-American Development Bank
[http://www.iadb.org/]
International Monetary Fund
[http://www.imf.org/]
Peace Corps
[http://www.peacecorps.gov/]
Trade and Development Agency
[http://www.tda.gov/]
United Nations Children’s Fund (UNICEF)
[http://www.unicef.org/]
United Nations Development Program (UNDP)
[http://www.undp.org/]
U.S. Agency for International Development
[http://www.info.usaid.gov/]
U.S. Department of State
[http://www.state.gov/]
World Bank
[http://www.worldbank.org/]

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CRS-31
Appendix — Detailed Foreign Operations Accounts
Table 7. Foreign Operations Appropriations:
Discretionary Budget Authority
(millions of dollars)
FY1999
FY2000
House
Senate
FY2000
Program
Enacted
Request
H.R. 2606*
S. 1234
Enacted
Title I - Export and Investment Assistance:
Export-Import Bank
790.00
881.0
799.0
825.0
--
Overseas Private Investment Corp.
(175.4)
(244.0)
(247.5)
(247.5)
--
OPIC-Emergency Y2K
2.1
--
--
--
--
Trade & Development Agency
44.0
48.0
44.0
43.0
--
Total, Title I - Export Aid
660.7
685.0
595.5
620.5
--
Title II - Bilateral Economic:
Development Assistance:a
Child Survival/Disease/UNICEF
650.0
700.0
685.0
--
—
Child Survival-Emergency Suppb
50.0
--
--
--
--
Development Asst Fund
1,225.0
817.1
1,201.0
1,928.5
--
Development Fund for Africa
-.-c
512.6c
--
—
—
Subtotal
1,925.0
2,029.7
1,886.0
1,928.5
--
Of which:
UNICEF
[100.0]
[100.0]
[110.0]
[105.0]
--
Population aid
[385.0]
[400.0]
--
[425.0]
--
Africa aid
[730.0]
[745.0]
[735.0]
--
—
Inter-American Foundation
[20.0]
[22.3]
[5.0]
--
--
African Development Foundation
[11.0]
[14.4]
[14.4]
[12.5]
--
International Disaster Aid
200.0
220.0
200.9
175.0
--
Central Amer Disaster-Emerg Suppb
25.0
--
--
--
--
Kosovo Disaster-Emergency Suppb
163.0
--
--
--
--
Micro/Small Enterprise programs
2.0
2.0
2.0
2.0
--
Urban/Environment credit program
6.5
8.0
5.0
5.5
--
Subtotal, Development Aid
2,321.5
2,259.7
2,093.9
2,111.0
--
USAID Operating Expenses
480.0
507.7
479.7
495.0
--
USAID-Emergency Y2Kb
10.2
--
--
--
--
USAID Inspector General
30.8
25.3
25.0
25.0
--
Economic Support Fund (ESF)
2,367.0
2,389.0d
2,177.0
2,195.0
--
ESF-Emergency Supp.-Kenya/Tanz.b
50.0
--
--
--
--
ESF-Wye River Accordb
50.0
150.0
50.0
0.0
--
ESF-Balkans Emergency Suppb
105.0
--
--
--
--
ESF-E. Timor Elections Suppb
6.5
--
--
--
--
ESF rescissionb
(5.0)
--
--
--
--
International Fund for Ireland
19.6
[19.6]d
19.6
--
--
East Europe
430.0
393.0
393.0
535.0
--

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CRS-32
FY1999
FY2000
House
Senate
FY2000
Program
Enacted
Request
H.R. 2606*
S. 1234
Enacted
E. Europe-Balkans Emergency Suppb
120.0
--
--
--
--
Former Soviet Union (NIS)
801.0
1,032.0
725.0
780.0
--
NIS-Emergency Supplementalb
46.0
--
--
--
--
Central America-Emergency Suppb
621.0
--
--
--
--
Debt reduction (Treasury)
33.0
120.0
33.0
43.0
--
Debt reduction-Emergency Suppb
41.0
--
--
--
--
Treasury Dept. technical asst
1.5
8.5
1.5
1.5
--
Treasury-IFI&IMF Comm Suppb
1.5
--
--
--
--
U.S. Community Adjustment Credits
10.0
17.0
0.0
--
--
Peace Corps
240.0
270.0
240.0
220.0
--
Intl Narcotics
261.0
295.0
285.0
215.0
--
Intl Narcotics-Emergency Suppb
232.6
--
--
--
--
Intl Narcotics-Emergency Suppb
23.0
--
--
--
--
Migration & refugee asst
640.0
660.0
640.0
610.0
--
Kosovo Refugees-Emergency Suppb
266.0
--
--
--
Emergency Refugee Fund (ERMA)
30.0
30.0
30.0
20.0
--
ERMA-Kosovo Emergency Suppb
165.0
--
--
--
--
Non-Proliferation/anti-terrorism
198.0
231.0
181.6
175.0
--
Terrorism-Emergency Suppb
20.0
--
--
--
--
Terrorism Commission-Suppb
0.8
--
--
--
--
Religious Freedom Comm.-Suppb
3.0
--
--
--
--
Total, Title II- Bilateral Economic
9,616.2
8,388.2
7,374.3
7,425.5
--
Title III - Military Assistance:
Intl Military Education & Training
50.0
52.0
45.0
50.0
--
Foreign Mil Financing (FMF) grants
3,330.0
3,430.0
3,420.0
3,410.0
--
FMF-Wye River Accordb
50.0
350.0
50.0
0.0
--
Foreign Mil Financing loan subsidy
20.0
0.0
0.0
0.0
--
Special Defense Acquisition Fund
(19.0)
(6.0)
(6.0)
(6.0)
--
Peacekeeping Operations
76.5
130.0
76.5
80.0
--
Total, Title III-Military Aid
3,507.5
3,956.0
3,585.5
3,534.0
--
Title IV - Multilateral Economic Aid:
World Bank-Intl Development Assc
800.0
803.4
568.6
776.6
--
World Bank-Environment Facility
192.5
143.3
50.0
25.0
--
of which arrears
[192.5]
[35.8]
[0.0]
[25.0]
--
WB Environment Fac.-rescissionb
(25.0)
--
--
--
--
of which arrears
[-25.0]
--
--
--
--
World Bank-Mult Invst Guaranty Ag
-.-
10.0
0.0
10.0
--
Inter-American Development Bank
96.8
79.1
25.6
25.6
--
of which arrears
[71.2]
[28.5]
[0.0]
[0.0]
--
Asian Development Bank
223.2
190.7
113.7
63.7
--
of which arrears
[187.0]
[77.0]
[0.0]
[50.0]
--

---

FY1999
FY2000
House
Senate
FY2000
Program
Enacted
Request
H.R. 2606*
S. 1234
Enacted
African Development Fund
128.0
127.0
108.0
0.0
--
of which arrears
[88.3]
[27.0]
[0.0]
[0.0]
--
African Development Bank
-.-
5.1
0.0
5.1
--
European Bank for R & D
35.8
35.8
35.8
35.8
--
Intl Organizations & Programs
187.0
193.0
167.0
170.0
--
Total, Title IV - Multilateral
1,638.3
1,587.4
1,068.7
1,111.8
--
of which Mult. Dev. Bank arrears
[514.0]
[168.3]
[0.0]
[75.0]
--
Title VI - IMF:
IMF New Arrangements to Borrowe
3,361.0
-.-
--
--
--
IMF Quota Increasee
14,500.0
-.-
--
--
--
TOTAL, “Base” Appropriationf
13,401.0
14,616.6
12,624.0
12,691.8
--
TOTAL, with FY99 Supplementals
15,422.7
14,616.6
12,624.0
12,691.8
--
TOTAL, with FY99 Supp. & IMF
33,283.7
14,616.6
12,624.0
12,691.8
--
* Amounts for H.R. 2606 reflect House amendments adopted on July 29.
a. The account structure for development aid differs among various versions of the bills. This table shows
a consistent and comparable account structure based on enacted development aid for FY1999.
b. Not enacted as part of the regular Foreign Operations Appropriations Act, FY1999. Approved as an
FY1999 supplemental appropriation or rescission in either P.L. 105-277 or P.L. 106-31.
c. For FY2000, the Administration is requesting a separate account under development assistance for Africa
(the Development Fund for Africa or DFA). African aid is also proposed within the Child Survival account.
The total amount for Africa, DFA plus Africa Child Survival, is $745 million. This compares to an FY1999
level of $730 million appropriated within the Child Survival and Development Assistance Fund accounts.
d. The Administration request includes the Ireland Fund as part of the Economic Support Fund.
e. IMF funding occurs only occasionally — about every five years. There is no request for FY2000.
f. The “Base” Appropriation refers to amounts funded in the regular Foreign Operations Appropriations for
FY1999, as included in Division A of the Omnibus Appropriations Act, FY1999 (P.L. 105-277). Congress
approved additional Foreign Operations funds in two supplemental measures: $411 million for Child Survival
programs, aid to Russia, victims of the Kenya/Tanzania embassy bombings, counter-narcotics, counter-
terrorism, and Y2K upgrades (Division B of P.L. 105-277); and $1.641 billion for Central America hurricane
relief, Kosovo humanitarian assistance, counter-narcotics, and the administration of three foreign affairs
commissions. All but about $5 million of the supplementals were declared “emergencies” and do not count
against the Foreign Operations FY1999 allocation limits. Under special allowances provided in the Balanced
Budget Act of 1997, Foreign Operations Appropriations for multilateral development bank arrearage
payments and IMF funds also did not count against the FY1999 allocation limits.

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