Order Code RL31712
CRS Report for Congress
Received through the CRS Web
The Global Fund to Fight AIDS, Tuberculosis, and
Malaria: Background and Current Issues
Updated March 24, 2005
Raymond W. Copson and Tiaji Salaam
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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The Global Fund to Fight AIDS, Tuberculosis, and
Malaria: Background and Current Issues
Summary
The Global Fund to Fight AIDS, Tuberculosis, and Malaria, headquartered in
Geneva, Switzerland, is an independent foundation intended to attract and rapidly
disburse new resources in developing countries for the struggle against infectious
disease. The Fund is a financing vehicle, not a development agency, and its grants
are intended to complement existing efforts rather than replace them.
The origins of the concept of an independent funding mechanism to fight AIDS
and other diseases lie partly in a French proposal made in 1998, in ideas developed
in the 106th Congress, and in recommendations made by U.N. Secretary General Kofi
Annan in April 2001. President Bush made the “founding pledge” of $200 million
for a disease fund in May 2001. The Global Fund was established in January 2002,
following negotiations involving donor and developing country governments, non-
governmental organizations (NGOs), the private sector, and the United Nations.
Through four rounds of grant awards, the Global Fund has approved 313
projects in 127 countries. Proposals are submitted to the Global Fund by Country
Coordinating Mechanisms (CCMs) based in the recipient countries and including
representatives of the public and private sectors, NGOs, people living with the
diseases, and others. Grants are made to Principal Recipients (PRs), which may be
NGOs or government agencies, and their operations must be audited. PRs are also
monitored by Local Funding Agents (LFAs), which may be accounting firms or other
independent organizations, and which report to the Global Fund. Contributions to
the Fund to date total $3.4 billion, and the Fund has disbursed just over $1 billion.
The Fund estimates that it needs $2.2 billion in 2005 to cover grant renewals and new
grants, while $1.4 billion has been pledged to date.
The Administration has requested $300 million for a U.S. contribution to the
Global Fund in FY2006. Appropriations for FY2005 provided $435 million,
including $87.8 million carried over from FY2004 due to a legal requirement
limiting U.S. contributions to 33% of total contributions. Many supporters of the
Fund advocate a larger U.S. contribution, but others respond that the United States
is already doing a great deal through the bilateral President’s Emergency Plan for
AIDS Relief (PEPFAR).
Critics of the Fund have raised concerns about programs in Burma and other
authoritarian countries, an allegedly slow pace of disbursements, and other issues.
Supporters respond that the Fund has instituted a number of safeguards to assure
accountability and is taking steps to enhance its capabilities. They regard the Fund
as an innovator in malaria treatment and other areas. The Global Fund notes that it
is required to maintain a large financial reserve in order to assure that treatment
programs already approved are not interrupted. This report will be updated as
needed. For further information, see CRS Report RS21181, HIV/AIDS International
Programs: Appropriations, FY2003-FY2005; CRS Issue Brief IB10050, Aids in
Africa; and CRS Report RL32252, AIDS Orphans and Vulnerable Children (OVC):
Problems, Responses, and Issues for Congress.

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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Origins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Process and Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Resource Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
U.S. Contributions and Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Absorptive Capacity Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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The Global Fund to Fight AIDS,
Tuberculosis, and Malaria:
Background and Current Issues
Background
The Global Fund to Fight AIDS, Tuberculosis, and Malaria, was established in
Geneva, Switzerland, in January 2002. The Fund makes grants in developing
countries aimed at reducing the number of HIV, tuberculosis (TB), and malaria
infections, as well as the illness and death that result from such infections. The Fund
is an independent foundation, and its board of directors consists of representatives
of seven donor countries and seven developing countries. The board also includes
one representative from a developed country non-governmental organization (NGO),
a developing country NGO, the private sector, a contributing private foundation, and
the community of people living with HIV/AIDS, tuberculosis or malaria.
The Executive Director of the Global Fund is Dr. Richard Feachem, a British
physician who has held teaching and administrative positions in international health
in the United States and Britain. The Chairman of the Global Fund’s Board of
Directors is Tommy Thompson, chosen when he was serving as the U.S. Secretary
of Health and Human Services (HHS). Thompson, who stepped down from his
HHS post in January 2005, is expected to leave the Global Fund chairmanship at the
end of the next board meeting, slated for April 21-22 in Geneva. Under the Global
Fund bylaws, the two-year chairmanship will then rotate from the group of donors
to the group consisting of developing countries and NGOs. Randall Tobias, the U.S.
Global AIDS Coordinator, who heads the Global AIDS Initiative at the Department
of State, will replace Thompson as the U.S. representative on the board.
The Global Fund’s efforts are intended to mitigate the impact of infectious
disease on countries in need and thus to contribute to a reduction in poverty. The
Fund projects that over five years, the 313 grants it has approved in 127 countries
will result in 1.6 million patients receiving antiretroviral (ARV) therapy for the
treatment of AIDS, as well as the treatment of 3.5 million additional cases of TB
through the highly effective DOTS1 strategy.2 In addition, the Global Fund projects
that 52 million clients will be reached through voluntary counseling and testing
services for preventing the spread of HIV, over one million orphans will receive
support, and 145 million malaria patients will receive the new artemisinin-based
combination drug treatments (ACT). Artemisinin-based treatments have been found
effective in dealing with drug-resistant varieties of malaria. The Fund is also
1 Directly Observed Treatment, Short-Course.
2 Global Fund, Progress Report. January 21, 2005, at [http://www.theglobalfund.org].

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CRS-2
financing the purchase and distribution of 108 million insecticide-treated bed nets to
prevent the spread of the disease.
Global Fund documents emphasize that it is a financing instrument
complementing existing programs and that it is intended to attract, manage, and
disburse additional resources, rather than re-channel existing resources. The Fund
is a fiduciary agent designed to direct new resources to programs in countries in need,
rather than an agency that implements projects. The Global Fund is not a United
Nations agency, although it works closely with U.N. agencies, as well as with other
aid agencies and NGOs involved in the struggle against the three diseases. The
World Bank serves as the Global Fund’s trustee, receiving contributions made by
donors and disbursing funds as the Global Fund directs.
Origins
The concept of an independent funding mechanism to fight infectious disease
has a number of roots. France proposed an international fund to provide AIDS
treatment in the developing world at the 1998 G-8 summit, held in Birmingham,
England, reportedly to a cool reception.3 In August 1999, during the 106th Congress,
Representative Barbara Lee introduced the AIDS Marshall Plan Fund for Africa Act
(H.R. 2765). This bill, which did not come to a vote, would have established an
AIDS Marshall Plan Fund for Africa Corporation as an independent U.S. agency able
to receive contributions from foreign governments as well as private sources. In
January 2000, again in the 106th Congress, Representative James Leach introduced
the Global AIDS and Tuberculosis Relief Act of 2000 (H.R. 3519), which passed
both the House and Senate and was signed into law (PL. 106-264) in August 2000.
H.R. 3519 included provisions supporting the creation of a World Bank AIDS Trust
Fund. Had it been created along the lines indicated in H.R. 3519, this fund would
have made grants to governments and NGOs in order to stem the spread of AIDS and
promote affordable access to treatment. The Foreign Operations Appropriations
legislation for FY2001,4 enacted in late October 2000, provided up to $20 million for
a U.S. contribution to an international HIV/AIDS fund.
U.N. Secretary General Kofi Annan urged the creation of an independent
funding vehicle on April 26, 2001, in a speech to African leaders gathered at a
summit on HIV/AIDS and other infectious diseases in Abuja, Nigeria. Annan
introduced the term “Global Fund” and said there should be a “war chest” of $7
billion to $10 billion per year for the struggle against AIDS. (Subsequently, experts
said that $7 billion to $10 billion was the amount required by 2005 from all sources,
not just the Global Fund.) Annan’s proposal attracted considerable attention, and
on May 11, 2001, Annan came to the White House, with Nigeria’s President
Olusegun Obasanjo, to hear President George W. Bush make a “founding pledge” of
$200 million to a global fund. The President added that more would follow “as we
3 “France Continues Pressure for Global AIDS Fund,” Reuters, June 30, 1998.
4 H.R. 5526, enacted by reference in Sec. 101(a) of P.L. 106-429.

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CRS-3
learn where our support can be most effective.”5 Moreover, he emphasized that the
fund should be a public-private partnership, drawing upon the contributions of
private corporations, foundations, faith-based organizations, and NGOs.
The creation of a Global Fund was endorsed by the United Nations General
Assembly Special Session on HIV/AIDS (UNGASS), held in June 2001, and by the
Group of Eight (G-8) summit of industrialized countries plus Russia, meeting in
Genoa, Italy, in July 2001. The G-8 partners affirmed that the Global Fund would
be a public-private partnership, and their final communique stated that “we are
determined to make the fund operational by the end of the year.”6 In October 2001,
a Transitional Working Group (TWG) was convened, which included representatives
of developing and donor countries, NGOs, the private sector, and the United Nations.
In December, the TWG reached agreement on documents related to Global Fund
governance, accountability, and other issues. The Global Fund held its first board
meeting in January 2002.
Grants
On November 18, 2004, the Global Fund announced that it would launch a fifth
round of the grant application and award process in March 2005. The United States
and other Global Fund board members had been concerned that initial plans to launch
Round 5 in November were too ambitious in view of the Fund’s resource constraints
(see below). Final approvals for Round 5 will be announced in September 2005.
Round 5 grants, like those approved in the four earlier rounds, are slated to last
for five years and will be subjected to a thorough review after two years before
additional funds are provided. The Global Fund stresses that it is a “performance-
based” agency, and funds are disbursed in increments as the recipients achieve goals
they have set for themselves in their proposals. The Global Fund will make grants
only if it has funds on hand to cover the first two years of the proposed projects —
an approach known as the Comprehensive Funding Policy. The policy is designed
to avoid disruptions to projects due to funding shortages. This is regarded as a
particularly important consideration with respect to antiretroviral therapy, since
interruptions in treatment can lead to the emergence of resistant strains of HIV and
to the deaths of patients. Funding for the third through fifth years of the projects is
dependent on new contributions to the Global Fund by donors.
The Global Fund’s earlier grants are now beginning to pass through the two-year
evaluation process. Of the 26 projects evaluated to date, 22 have been approved for
the second, three-year phase of funding, although six of these approvals include
conditions requiring improvements in performance. Further funding for a malaria
project in Senegal was not approved because no disbursements had yet been made
5 Remarks by the President, May 11, 2001.
6 Communique dated July 22, 2001.

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CRS-4
to subcontractors who would do the actual work. Three other projects remain under
review.7
In July 2004, the Global Fund reported the results of an analysis of the 25
projects that had been in existence for at least one year. The projects, in 15 countries,
had achieved an average of 80% of their targets, according to the Fund.8 The analysis
found that 12 of the 25 grants could be accorded “Status A,” indicating that they were
on track to meet or were substantially exceeding the targets set in the original
proposal.9 These included an ARV therapy project in Haiti that was treating 25%
more patients than initially targeted and a similar project in Honduras that was 80%
over target. In Honduras, the Fund-supported project is providing ARV drugs,
supporting renovations at clinics, purchasing medical equipment, and paying the
salaries of additional doctors and nurses.10 Meanwhile, Madagascar, with Global
Fund support, has distributed more than twice as many bed nets as targeted. The
Fund’s analysis placed eight programs in “Status B,” indicating that they show
substantial progress but are still falling somewhat short of targets; while five fell into
“Status C,” substantially underachieving against agreed targets.11
Through four rounds of grant-making, the Global Fund has directed 61% of its
funding to sub-Saharan Africa; 18% to East Asia and the Pacific; and 9% to Latin
America and the Caribbean. Approximately 7% has gone to Eastern Europe and
Central Asia, while the remaining 5% has been directed to South Asia and the Middle
East/North African regions.12 Approximately 56% of funding has gone to fighting
HIV/AIDS, 31% to malaria, and 13% to TB. According to the Fund, about 51% of
the funding approved is being directed through government-run projects, one quarter
through NGOs and community-based organizations, and one quarter through other
entities, including faith-based organizations and communities living with the
diseases.
Process and Procedure
The Global Fund accepts grant proposals from national Country Coordinating
Mechanisms (CCMs), which the Fund describes as “national consensus groups.”13
According to the Fund, CCMs should be inclusive and seek representation from all
stakeholders, including government; the NGO community; the private sector; people
living with HIV/AIDS, tuberculosis, and/or malaria; religious and faith groups; the
7 “Phase II Grant Performance Reports,” at [http://www.theglobalfund.org].
8 “The Global Fund Reports Its First Country Results,” press release, July 11, 2004.
9 Global Fund, A Force for Change, The Global Fund at 30 Months (2004), p. 25.
10 A Force for Change: The Global Fund at 30 Months, p.42.
11 A Force for Change: The Global Fund at 30 Months, p. 26.
12 “Distribution of Funding After Four Rounds,” at [http://www.theglobalfund.org].
13 The Global Fund to Fight AIDS, Tuberculosis, and Malaria, Guidelines for Proposals,
March 2003, p. 5.

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CRS-5
academic sector; and United Nations agencies represented in the applicant country.14
The Fund views CCMs as essential in assuring true partnerships that involve all
relevant actors in developing a grant proposal, sharing information, and
communicating with one another on Global Fund issues. CCMs can also serve as
forums through which national efforts on AIDS, tuberculosis, and malaria can be
coordinated and strengthened.15 Applications from individual organizations, such as
NGOs, are permitted only from countries without legitimate governments or in other
exceptional circumstances.
A May 2003 report by the U.S. Government Accountability Office (GAO),
while praising the Global Fund for “noteworthy progress in establishing essential
governance and other supporting structures” and for “responding to challenges,”
noted several problems with respect to the CCMs.16 These included difficulties in
communication between the CCMs and Global Fund headquarters; misperceptions
within CCMs about the roles and responsibilities of the CCM itself and of CCM
members; and, in some CCMs, a lack of information sharing and infrequent
meetings. However, the GAO report also noted that the Fund was addressing these
problems through enhanced communication, holding workshops, including language
describing the duties of CCMs in grant agreements, and other measures.17 In a July
2004 report, the Global Fund acknowledged that the membership of CCMs continued
to be dominated by governments, that people living with the three diseases tended to
be under-represented, and that few CCMs had followed guidelines on gender
balance.18
Some in the NGO community and among AIDS activists have urged that the
Global Fund impose a set of requirements on CCMs with respect to these and other
issues, insisting that NGO representatives be included in all CCMs, for example.19
Governments in recipient countries tend to oppose such requirements,20 and at its
June 2004 meeting, the Global Fund board decided to continue to deal with these
matters through recommendations.21 However, at its November 2004 meeting, the
board decided to impose some requirements on CCMs, to take effect with Phase 2
renewals from June 2005 and for new grants from Round 5 onwards. Under these
requirements,
14 Guidelines for Proposals, p. 6.
15 Guidelines for Proposals, p. 5.
16 GAO Report GAO-03-601, Global Health: Global Fund to Fight AIDS, TB, and Malaria
(May 2004), p. 3-4, 15-18.
17 Global Health: Global Fund to Fight AIDS, TB, and Malaria, p. 18.
18 A Force for Change: The Global Fund at 30 months, p. 17.
19 See the recommendations of the Partnership Forum of participants in Global Fund
programs: “Draft Report of the Global Fund ‘Partnership Forum’” (July 7- 8, 2004),
available at the Global Fund website [http://www.theglobalfund.org].
20 “Draft Report of the Global Fund ‘Partnership Forum.’”
21 Global Fund Observer Newsletter (Issue 29), July 9, 2004. Available at
[http://www.aidspan.org].

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CRS-6
! All CCMs must demonstrate evidence of membership of people
living with and/or affected by the diseases;
! CCM members representing the NGO sector must be selected based
on a documented, transparent process developed within each sector;
! CCMs must establish a transparent, documented process to solicit
and review submissions for possible integration into proposals, to
nominate principal recipients, to oversee project implementation,
and to ensure that there is a broad range of stakeholders in the
proposal development and grant oversight process;
! When the principal recipient and the Chair or Vice Chairs of a CCM
are from the same entity, the CCM must have a written plan in place
to mitigate against the inherent conflict of interest.22
The CCM submits a single Country Coordinated Proposal (CCP) to the Global
Fund, where it is reviewed by the 22-member Technical Review Panel (TRP),
consisting of independent experts in the three diseases, as well as others with broader
global health experience. The TRP is tasked with identifying the proposals most
likely to have a “clear and demonstrable impact in the fight against AIDS, TB, and
malaria,”23 and refers those proposals to the Board for discussion and final decisions
on approval. All of the TRPs recommendations for the second round of grant awards
were approved by the Board.24
Within the recipient country, projects are implemented by one or more Principal
Recipients (PRs), which should be agencies or organizations that belong to the CCM.
The PRs are responsible not only for carrying out the project, but also for managing
its finances. Each PR must have an independent auditor acceptable to the Fund,25 but
the work of the PRs is also monitored by Local Fund Agents (LFAs), which represent
the Global Fund within the recipient country and are regarded as the Fund’s “eyes
and ears.” Each LFA is expected to have an in-country presence, enabling it to assess
the capabilities of the PRs and effectively evaluate their financial and program
reports.
The identification and selection of LFAs, carried out in conjunction with the
CCMs, was a prolonged process, but ultimately, private sector accounting firms,
management and consulting companies, and the U.N. Office for Project Services
were recruited to fill the LFA role in various countries.26 The LFAs are paid centrally
through the Global Fund, and their fees are not deducted from the grants. The GAO
notes that there are misunderstandings and resentments toward the LFAs in come
22 Global Fund Observer Newsletter (Issue 36), November 21, 2004.
23 Chrispus Kiyonga, then Board Chairman, quoted in Global Fund press release, March 11,
2002.
24 Technical Review Process at the Global Fund website.
25 Global Health: Global Fund to Fight AIDS, TB, and Malaria, p.21.
26 Global Health: Global Fund to Fight AIDS, TB, and Malaria, p.14.

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CRS-7
countries and that the Global Fund is trying to address these by encouraging local
participation in the work of the LFAs. The GAO is also concerned that it may be
difficult to maintain the independence of the LFAs in poor countries where the ranks
of trained accountants and other experts are thin. In such situations, LFAs may have
difficulty recruiting skilled personnel who are not already involved in the Global
Fund-supported program in one way or another.27
Resource Constraints
Table 1. Global Fund Contributions 2001- March 2005
(Amounts Paid Through March 18, 2005; $millions)
$ millions
%
United States
1,081.6
31.9
European Union and Members
1,667.0
49.2
Other National Donors
487.2
14.4
Gates Foundation
150.0
4.4
Other
4.3
.1
Total
3,390.1
100
Source: Global Fund, “Total Paid to Date,” from Pledges at the
Global Fund website, March 18, 2005.
A shortage of resources at the Global Fund for meeting current and future
commitments was a major focus of the 2003 GAO report,28 as well as a source of
concern before and during the November 2004 Global Fund board meeting. The
Global Fund has committed itself to spending $3.1 billion to cover the first two years
of the grants it has approved, and as Table 1 indicates, this sum is very close to the
total amount raised by the Global Fund to date. Making new grants and funding the
remaining three years of existing grants will depend almost entirely on new
contributions.
In March 2005, the Global Fund convened the first of three meetings on
replenishing its resources. Table 2 summarizes information released by the Global
Fund prior to this meeting on its resource needs. The estimate of the amount needed
for new grants is based on the Fund’s experience in previous rounds of grant-making.
According to the Global Fund, $800 million in additional funding is needed in 2005
alone, rising to $2.9 billion in additional needed pledges for 2006. According to a
summary of the March meeting, “Participants agreed to urgently consider additional
contributions in order to close this gap and to encourage contributions from new
donors.”29
27 Global Health: Global Fund to Fight AIDS, TB, and Malaria, p 24-25.
28 Global Health: Global Fund to Fight AIDS, TB, and Malaria, p. 32
29 Global Fund, “The Global Fund Replenishment: First Meeting (Stockholm, 15-16 March
(continued...)

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Table 2. Global Find Estimates of Need v. Pledges
($billions)
2005
2006
2007
New grants
1.0
1.1
2.6
Renewal of existing grants
1.3
2.4
1.0
Operating expenses
<.05
.1
.1
Less funds from prior year
-.1
Total GF Need Estimate
2.2
3.6
3.7
Pledges
1.4
.7
.4
Gap as of March 2005
.8
2.9
3.3
Source: Global Fund, Addressing HIV/AIDS, Malaria, and Tuberculosis” the Resource
Needs of the Global Fund, 2005-2007, (February 2005); and Pledges at the Global
Fund website, March 18, 2005.
The extent to which new resources will be made available to the Global Fund
remains to be seen, although some countries are responding. In December 2004, the
Fund announced that Germany would more than double its 2005 contribution. In
March 2005, Italy announced that it would release 100 million Euros already pledged
and contribute another 80 million Euros later in the year. Meanwhile, there is
support in the U.S. Congress for increasing the U.S. 2006 contribution beyond the
$300 million requested by the Administration (see below). According to one study,
a number of countries are contributing considerably less than the United States and
several European donors, when these contributions are measured in terms of their
ability to pay. Some, such as Finland, Brunei, Greece, and Israel have not
contributed at all to date (although Greece has pledged $300,842), while others, such
as Singapore, South Korea, and Japan were found to be contributing less than an
“equitable” share.30 There is also some disappointment that corporations, which have
contributed $1.9 million to date, have not done more.
Some are proposing that the Global Fund modify its Comprehensive Funding
Policy, noted above, which requires that funds be on hand to cover two years of a
grant before it is approved. Through March 21, 2005, the Global Fund had disbursed
just over $1 billion, compared to the more than $3.3 billion that has been paid in,
leading some to argue that its cautious funding policy is causing money to pile up in
the Fund’s account at the World Bank instead of going to help those in need. Others
argue that modifying the Comprehensive Funding Policy, which was set by the board
29 (...continued)
2005), Chair’s Summary.”
30 “An Updated Analysis of the Equitable Contributions Framework Regarding the Global
Fund,” Aidspan, May 21, 2004. Available at [http://www.aidspan.org].

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when the Fund was launched, poses too great a risk of project interruption. At its
November 2004 meeting, the board agreed to examine the policy by appointing a
commission to study fiscal management options and report back at the April 2005
meeting.
U.S. Contributions and Policy
U.S. contributions to the Global Fund are provided through the Child Survival
and Health Programs Fund, which is funded by the Foreign Operations
appropriations, and through the Department of Health and Human Services (HHS)
appropriations. Table 3 shows that approximately $1.52 billion has been made
available to the Global Fund through these bills through FY2005. This figure takes
into account $87.8 million that was not provided in FY2004 because of legislation
requiring that the U.S. contribution for fiscal years 2004 through 2008 not exceed
33% of contributions from all sources.31 The FY2005 Consolidated Appropriations
(P.L. 108-447/H.R. 4818) carries over this amount and adds it to the 2005
contribution, subject to the same 33% limitation. The United States would be able
to pay in the full amount of the FY2005 appropriation if other countries meet their
pledges, now totaling $1.4 billion, but whether they will do so remains to be seen.
Table 3. Funding for U.S. Contributions to the Global Fund
($ millions)
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
Actual
Actual
Actual
Actual
Approp.
Request
1. Foreign Operations
100
50.0
248.4
397.6
248.0
200.0
2. Labor/HHS
125.0
99.3
149.1
99.2
100.0
3. FY2004 Carryover
-87.8
87.8
TOTAL
100
175
347.7
458.9
435.0
300.0
The Administration had requested $200 million for the Global Fund in FY2005,
the same amount requested for FY2003 and FY2004. In each of these years,
however, Congress provided considerably more than requested. The United States
Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 (P.L. 108-25),
which was signed into law on May 27, 2003, authorized “up to” $1 billion as an
FY2004 contribution to the Global Fund. Although President Bush praised this
legislation, his Emergency Plan for AIDS Relief envisaged an annual contribution of
$200 million through FY2008.32 This level of proposed funding drew criticism,33 but
at the same time appropriators warned that it would be difficult to meet the
31 P.L. 108-25, United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act
of 2003, as amended, Sec. 202.
32 See “U.S. Commits $1.65 Billion to the Global Fund” and “Fact Sheet: U.S. Actions at
G8 Summit, Day One,” White House, Office of the Press Secretary, June 2, 2003.
33 See, for example, “Keeping an AIDS Promise,” Boston Globe, June 10, 2003.

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expectations raised by P.L. 108-25 in view of budgetary constraints.34 Moreover, the
33% limitation could continue to limit contributions unless other donors boost their
contributions, although this provision may be waived if the President determines that
an international health emergency threatens U.S. national security interests. Table
4 shows proportionate giving in 2004 and 2005, according to information available
through March 18, 2005.
AIDS activists and others have continued to press for a substantially larger U.S.
contribution to the Global Fund on grounds that the organization has performed well
to date and in their view continues to have a key role in scaling up prevention, care,
and treatment.35 Many also praise the Global Fund’s approach to fighting the three
diseases, arguing that making grants in response to applications from CCMs tends
to encourage governments and health ministries in the recipient countries to assume
responsibility in the struggle against AIDS, TB, and malaria, while at the same time
promoting national planning and empowering affected groups as well as domestic
NGOs. Administration supporters argue that the United States is making a massive
contribution to the struggle against the three diseases through the President’s
Emergency Plan for AIDS Relief (PEPFAR), a bilateral initiative intended to focus
$15 billion on fighting AIDS, tuberculosis, and malaria in fiscal years 2004 through
2008. They point out that PEPFAR brings to bear the resources, experience, and
capabilities of U.S. Government agencies, as well as U.S. academic institutions,
NGOs, and faith-based organizations, in fighting the three diseases in 15 heavily
HIV-affected focus countries.
Table 4. Global Fund Contributions 2004 and 2005
2004 paid
2004
2005 pledged
2005
$ millions
%
$ millions
%
United States
458.8
31.9
435.0
31.1
European Union and Members
727.6
50.6
760.5
54.3
Other National Donors
201.4
14.0
204.9
14.6
Gates Foundation
50.0
3.5
0
0
Other
.9
<.1
<.1
<.1
Total
1,438.7
100
1,400.4
100
Source: Global Fund, Contributions to Date, at the Global Fund website, March 18, 2005.
U.N. Secretary General Kofi Annan suggested at the July 2004 international
AIDS conference in Thailand that both Europe and the United States contribute $1
billion in 2005, with another $1 billion to come from other sources. U.S. Global
AIDS Coordinator Randall Tobias responded with respect to the U.S. share that “It’s
34 Congressional Record, May 1, 2003, p. H3584.
35 See, for example, Global AIDS Alliance, Fund the Fund to Save Families and
Communities, May 27, 2003. Available at [http://www.globalaidsalliance.org.]

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not going to happen.”36 Tobias told the San Francisco Chronicle that “ the United
States is urging the Global Fund to slow down” and that the Fund already had a
“large pipeline” of approved grants. Tobias added that “If we put more money into
the Global Fund right now ... that money is going into an account at the World Bank.
I believe they have adequate resources on hand.”37 Stephen Lewis, U.N. Special
Envoy for HIV/Aids in Africa, reacted to Tobias’s remarks by saying “Slow down?
It needs to speed up. It’s the most effective instrument against the epidemic.”38
For FY2006, the Administration has requested $300 million for the Global
Fund, which some observers noted exceeds the $200 million called for in the
PEPFAR plan and is the largest amount requested to date. Others are concerned that
other donors, aware of the one-third rule regarding U.S. contributions, might feel
obligated to contribute just $600 million, for a total Global Fund budget of $900
million in 2006, compared with the $3.6 billion the Global Fund says it needs. On
March 17, 2005, in acting on its version of the budget resolution (S.Con.Res. 18), the
Senate accepted an amendment by Senator Santorum and Senator Durbin stating that
the United States will need to contribute $500 million beyond the President’s $300
million request for a total of $800 million. Under the one-third rule, this amount
would require other countries to contribute $1.6 billion for a total budget of $2.4
billion — the amount needed to renew existing Global Fund grants — before the full
$800 million could be paid in. S.Con.Res. 18, as amended, passed the Senate on
March 17, but there is no comparable language in the House budget resolution
(H.Con.Res. 95). Moreover, any actual increase in the U.S. contribution would have
to be provided through the appropriations process.
In a September 21, 2004, briefing for congressional staff, Administration
officials reportedly raised a number of concerns about the Global Fund, including a
slow rate of disbursements, insufficient staff, and a large initial disbursement to
Ethiopia despite the Fund policy linking disbursements to performance. Global Fund
grants to programs in countries governed by repressive regimes also reportedly came
in for criticism.39 Subsequently, three Senate Committee and Subcommittee chairs
wrote Executive Director Feachem questioning a Global Fund grant for a program
in Burma, as well as funding for programs in Cuba, Sudan, Iran, and North Korea.40
These developments prompted a 10-page response by Global Fund Executive
Director Feachem to the Senators41 as well as a visit to Washington and several
briefings by the Fund’s Chief of Operations, Brad Herbert. Feachem argued that
36 “At AIDS Parley, U.S. Balks at $1 Billion Donation,” Associated Press, July 5, 2004.
37 “International AIDS Conference, U.S. Takes Solo Course in Global AIDS Fight,” San
Francisco Chronicle, July 15, 2004.
38 Ibid.
39 Global Fund Observer Newsletter (Issue 34), November 8, 2004.
40 Letter dated September 28, 2004, from Senator Judd Gregg, Chairman of the Committee
on Health, Education, Labor and Pensions; Senator Mitch McConnell, Chairman of the
Senate Appropriations Subcommittee on Foreign Operations; and Senator Sam Brownback,
Chairman of the Senate Foreign Relations Subcommittee on East Asia and Pacific Affairs.
41 Letter dated October 14, 2004.

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there were emergency humanitarian needs in each of the authoritarian countries
where grants had been approved, and that special safeguards, including detailed
reviews of all sub-recipients, contractors, and sub-contractors, were being
implemented to assure that funds were not misused. In Burma, the initial
disbursement of $2.4 million out of a two-year grant of $7 million, was necessary,
he argued, so that the United Nations Development Program (UNDP), the principal
recipient, could purchase automobiles to deliver DOTS tuberculosis therapy to
patients.
Supporters of the Global Fund maintained that the large initial disbursement to
Ethiopia had been required so that the government there could obtain the best price
on a large purchase of antiretrovirals to launch its AIDS treatment program. They
insisted that the purchase was being closely monitored by the local funding agent,
and that no problems had arisen. The Global Fund was perfectly capable of
suspending disbursements should irregularities arise, some pointed out, as it had done
in the case of the Ukraine program in February 2004. It was also noted that the
Global Fund was expanding its staff, and that disbursements were increasing.
Whether the criticisms of the Global Fund voiced in September signal a rift
between the Fund and the United States has been the subject of much debate and
speculation among observers. Administration criticisms were reportedly not renewed
at the November 2004 board meeting.42 Moreover, the Global Fund seems anxious
to avoid any breach. On March 10, 2005, Executive Director Feachem praised both
the President’s bilateral program and the efforts of Senator Santorum and Senator
Durbin to increase support for the Global Fund:
The United States helped found the Global Fund and has consistently been its
most generous supporter. Together with the President’s Emergency Plan, we are
rolling out treatment and prevention programs on an unprecedented scale. To
keep our promise to the world’s poor, we must sustain this momentum. We need
more money to do so, and I applaud Senators Santorum and Durbin for their
leadership to help meet our fundraising needs. I look forward to the U.S. and all
our donors working together this year to ensure the Global Fund’s success.
Nonetheless, the FY2005 Consolidated Appropriations (P.L. 108-447/H.R.
4818) includes a number of provisions reflecting concerns about the Global Fund.
Section 525 requires that 25% of the FY2005 contribution be held back until the
Secretary of State certifies that a number of conditions have been met. For example,
the Secretary must certify that an independent office has been established to report
to the Global Fund board on the integrity of processes for considering applications
as well as for implementing, monitoring, and evaluating grants. The Secretary must
also certify that the Fund has established progress indicators for determining the
release of incremental disbursements, and is releasing those disbursements only when
progress has been achieved. Section 531(c) requires the President to withhold from
the U.S. contribution an amount equal to any Global Fund expenditure that reaches
the Burmese government, directly or indirectly.
42 Global Fund Observer Newsletter (Issue 36), November 21, 2004.

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Absorptive Capacity Issues
The Government Accountability Office and others have raised concerns about
whether poor countries affected by AIDS will have the capacity to absorb the new
resources becoming available through the Global Fund and other sources.43 Facing
shortages of health care workers and an inadequate health infrastructure, such
countries could be hard pressed to make effective use of increased supplies of
medicines and other inputs for preventing and treating AIDS, tuberculosis, and
malaria. The long-term solution to this problem, analysts note, is for the Global Fund
and other donors to support the expansion of health sector capacity in poor countries
through training and investment. In the short term, the GAO points out, the Global
Fund is dealing with the absorptive capacity issue by requiring that applications
describe national health capacity — and that LFAs “preassess” the ability of PRs to
handle funds effectively.44 Other concerns are that large inflows from the Global
Fund and other sources of assistance to combat AIDS could distort economic
priorities in poor countries and lead to inflation. Some experts doubt, however, that
inflows from the Global Fund will be large enough to have major economic
impacts.45 Some also argue that the economic dangers posed by HIV, which
currently infects 38 million people worldwide, and of malaria and tuberculosis, are
far greater than any risks that might be posed by increased assistance, whether from
the Global Fund or from other donors.
Experts are also concerned that the Global Fund might place additional
pressures on countries struggling to fulfill the various requirements of burgeoning
foreign aid programs, particularly those related to HIV/AIDS. Each program has its
own reporting, monitoring, and budgeting requirements. Some argue that the Global
Fund is yet another organization that has created its own set of guidelines that
recipient countries must follow, and many have called for increased coordination
among donors. In response, the Global Fund has bolstered its relationship with the
United Nations Joint Program on AIDS (UNAIDS), the Stop TB Partnership, the Roll
Back Malaria Initiative, and the World Health Organization’s (WHO) 3x5 Initiative,
which seeks to facilitate the delivery of AIDS treatment to 3 million people by 2005.
The Fund has also announced that it has strengthened its bilateral partnerships,
including those with the U.S. Centers for Diseases Control and Prevention (CDC),
as well as French, German, and British aid agencies. Fund officials report that these
efforts, along with stronger alliances with non-governmental organizations, have
enhanced the Fund’s ability to provide technical and managerial support for project
implementation, as well as to scale-up current efforts, rather than creating parallel
programs.46
43 Global Health: Global Fund to Fight AIDS, TB, and Malaria, p. 41-44.
44 Ibid., p. 41.
45 Ibid., p. 43.
46 The Global Fund, “Report of the Executive Director: Ninth Board Meeting.” November
18-19, 2004.

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