Order Code RL31362
CRS Report for Congress
Received through the CRS Web
U.S. Foreign Aid to East and South Asia:
Selected Recipients
Updated August 27, 2006
Thomas Lum
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
U.S. Foreign Aid to East and South Asia:
Selected Recipients
Summary
This report analyzes annual budget justifications and legislation for foreign
operations and discusses U.S. foreign aid trends, programs, and restrictions in 16 East
Asian and South Asian countries. This report does not cover aid to Pacific Island
nations, North Korea, and Afghanistan.
Since the war on terrorism began in 2001, and the Bush Administration’s
Millennium Challenge Account (MCA) and Global HIV/AIDS Initiative (GHAI)
were initiated in 2004, the United States has increased foreign aid spending
dramatically in some regions. The United States has raised military, economic, and
development assistance primarily for anti-terrorism objectives in the East Asia-
Pacific (EAP) and South Asia regions, with Pakistan, India, the Philippines, and
Indonesia receiving the bulk of the increases. Average annual funding for the EAP
region (excluding North Korea) during 2002-2006 was $494 million compared to
$368 million in 2001. Annual foreign aid spending for South Asia (excluding
Afghanistan) during 2002-2006 averaged $953 million compared to $201 million in
2001. The United States government has acknowledged other aid recipients,
particularly Malaysia, Mongolia, and Thailand, for cooperating with global
counterterrorism efforts and for making progress in developing their economies and
democratic institutions.
The Bush Administration has emphasized using foreign aid to promote
democracy which it sees as advancing global development and U.S. strategic
interests. The United States restricts foreign assistance to many countries in East and
South Asia in order to encourage democracy and discourage the spread of nuclear
weapons capabilities. Several countries in Asia — including Burma, Cambodia,
Indonesia, and Pakistan — face constraints or conditions on U.S. bilateral assistance
because of past or ongoing human rights violations. In February 2005, the Secretary
of State determined that the Indonesian government and armed forces had satisfied
legislative conditions for the resumption of full International Military Education and
Training (IMET). In November 2005, the Bush Administration waived restrictions
on Foreign Military Financing to Indonesia on national security grounds pursuant to
Section 599F(b) of P.L. 109-102. The FY2006 foreign operations appropriations
measure renewed the President’s waiver authority on coup-related sanctions against
Pakistan. The President again certified the waiver on February 8, 2006, thus making
U.S. foreign assistance available to Pakistan for another year.
For 2007, the Senate Appropriations Committee (S.Rept. 109-277 on H.R. 5522,
the foreign operations appropriations measure for FY2007) recommends increasing
the amount of democracy assistance from the Bush Administration’s budget request
for several countries, including Burma, Cambodia, China, East Timor, Indonesia, the
Philippines, Thailand, and Pakistan. H.R. 5522, as passed by the House on June 9,
2006, would suspend IMET funds to Nepal and reduce FMF to Pakistan by one-third
below the budget request.
This report will be updated periodically.
Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
New Approaches to Foreign Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Conflicting Policy Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Funding Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2007 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regional Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
East Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indian Ocean Earthquake and Tsunami . . . . . . . . . . . . . . . . . . . . . . . . . 9
Country Aid Levels and Restrictions — East Asia . . . . . . . . . . . . . . . . . . . . . . . 10
Regional Development Mission-Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Burma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 12
Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 13
People’s Republic of China (PRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FY2006 Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 15
East Timor (Democratic Republic of Timor-Leste) . . . . . . . . . . . . . . . . . . . 16
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Military Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2004 Tsunami Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Laos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mongolia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 22
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Environmental and Disaster Assistance . . . . . . . . . . . . . . . . . . . . . . . . 23
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 23
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
South Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Disaster Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Country Aid Levels and Restrictions — South Asia . . . . . . . . . . . . . . . . . . . . . . 28
Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Non-Proliferation Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Nepal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 32
Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Foreign Aid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Lifting of Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FY2007 Foreign Operations Appropriations Legislation . . . . . . . . . . 35
Sri Lanka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2004 Tsunami Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix. Selected Acronyms for U.S. Foreign Aid
Accounts and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
List of Figures
Figure 1. Major U.S. Aid Recipients in Asia, by Aid Amount
(millions of current U.S. dollars), 2001-2006 . . . . . . . . . . . . . . . . . . . . . . . . 5
Figure 2. Health and Development Assistance (CSH and DA) by Region,
FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 3. Economic Support Funds by Region, FY2005 . . . . . . . . . . . . . . . . . . . 7
Figure 4. Military Assistance by Region, FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 5. U.S. Foreign Aid (Non-food) to East Asian Countries, FY2005 . . . . . 8
Figure 6. U.S. Assistance to South Asia (Excluding Food Aid), 2001-2006 . . . 26
List of Tables
Table 1. U.S. Foreign Assistance by Region (Excluding Food Aid), 2001-2007 . 6
Table 2. Regional Development Mission-Asia, 2003-2007 . . . . . . . . . . . . . . . . 10
Table 3. U.S. Assistance to Burma, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 4. U.S. Assistance to Cambodia, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . 12
Table 5. U.S. Assistance to China, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 6. U.S. Assistance to East Timor, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . 16
Table 7. U.S. Assistance to Indonesia, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . 17
Table 8. U.S. Assistance to Laos (LPDR), 2003-2007 . . . . . . . . . . . . . . . . . . . . 19
Table 9. U.S. Assistance to Malaysia, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . 20
Table 10. U.S. Assistance to Mongolia, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . 20
Table 11. U.S. Assistance to Philippines, 2003-2007 . . . . . . . . . . . . . . . . . . . . . 21
Table 12. U.S. Assistance to Thailand, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . 23
Table 13. U.S. Assistance to Vietnam, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . 24
Table 14. U.S. Assistance to Bangladesh, 2003-2007 . . . . . . . . . . . . . . . . . . . . 28
Table 15. U.S. Assistance to India, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table 16. U.S. Assistance to Nepal, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table 17. U.S. Assistance to Pakistan, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . . 33
Table 18. U.S. Assistance to Sri Lanka, 2003-2007 . . . . . . . . . . . . . . . . . . . . . . 36
U.S. Foreign Aid to East and South Asia:
Selected Recipients
Overview
New Approaches to Foreign Aid
The United States acts to advance U.S. foreign policy and national security goals
and respond to global development and humanitarian needs through its foreign
assistance programs. Traditionally, U.S. foreign aid has emphasized economic and
social development as foundations for democracy and regional stability. Following
the September 2001 terrorist attacks, foreign aid gained importance as a “vital
cornerstone,” along with diplomacy and defense, in U.S. national security strategy.1
Within this context, the Bush Administration reoriented U.S. foreign assistance
programs: aid to “front line” states in the war on terrorism has been directed at the
conditions that may make radical ideologies and religious extremism attractive, such
as poverty, limited educational opportunities, and ineffective or unaccountable
governance; special attention has been placed upon “fragile states” that may allow
international security threats, particularly terrorist ones, to spread; promoting
democracy has become key to advancing global development and U.S. strategic
interests. In addition, foreign aid now aims to help achieve “transformational
development” — development that “transforms countries, through far-reaching,
fundamental changes in institutions of governance, human capacity, and economic
structure that enable a country to sustain further economic and social progress
without depending on foreign aid.”2 This objective is reflected in the Millennium
Challenge Account (MCA), established in 2004, which rewards countries that
demonstrate good governance, investment in health and education, and sound free
market policies.
1 See CRS Report RL33491, Restructuring U.S. Foreign Aid: The Role of the Director of
Foreign Assistance, by Larry Nowels and Connie Veillette.
2 Another State Department initiative,”transformational diplomacy,” involves restructuring
and repositioning U.S. diplomatic resources in order to achieve the objective of working
“with our many partners around the world to build and sustain democratic, well-governed
states that will respond to the needs of their people and conduct themselves responsibly in
the international system.” See U.S. Agency for International Development, “U.S. Foreign
Aid: Meeting the Challenges of the Twenty-first Century,” January 2004; U.S. Department
of State, Fact Sheet: Transformational Diplomacy, January 18, 2006; Roger Winter,
Statement before the Committee on International Relations, Subcommittee on International
Terrorism, Nonproliferation and Human Rights, July 7, 2004.
CRS-2
Conflicting Policy Objectives. Some policy-makers have expressed
concern that the emphasis on fighting terrorism may conflict with other U.S. foreign
aid objectives, such as promoting democracy and funding development programs.
Administration officials suggest that the Millennium Challenge Account — a
separate assistance program that conditions U.S. foreign aid on social, economic, and
political criteria — provides a means of rewarding or encouraging effective and
accountable government independently of U.S. efforts to garner international
cooperation in the war on terrorism. Furthermore, they contend, the MCA’s
emphasis upon good governance in developing countries supports U.S. economic and
security interests around the globe. Some foreign aid experts contend that new
programs, such as the MCA and Global HIV/AIDS Initiative, are making U.S.
foreign aid increasingly incoherent and ad hoc.3 Others argue that development
programs may suffer a lack of U.S. support in countries that neither play a role in
U.S. global counterterrorism efforts nor meet MCA criteria.
Foreign Aid Restrictions. The United States has imposed restrictions on
non-humanitarian development aid, Economic Support Funds (ESF),4 and military
assistance to some Asian countries in order to pressure them to improve performance
related to democracy, human rights, weapons proliferation, foreign debt payments,
and other areas. Several countries in Asia, including Burma, Cambodia, China,
Indonesia, and Pakistan, have faced congressional restrictions on U.S. bilateral
assistance because of human rights violations. However, the United States continues
to fund non-governmental organizations (NGOs) that run development and
democracy programs in some of these countries.5 Most sanctions on aid to Indonesia
and Pakistan have been lifted.6
Funding Trends
Foreign operations appropriations declined from a peak of $35 billion in 1985
to $15.3 billion in 1997 (in constant 2007 dollars). Many of the fluctuations in aid
flows over the past 25 years can be attributed to U.S. foreign policy responses to
events such as natural disasters, humanitarian crises, and wars and to U.S. military
3 Harold Molineu, “Linking Aid to Democracy Will Be a Challenge,” Newsday, March 5,
2003; Paolo Pasicolan, “How to Prevent the Millennium Challenge Account from Becoming
Like Traditional Foreign Aid,” Heritage Foundation Executive Memorandum, no. 892, July
14, 2003; Emad Mekay, “War Spending Expected to Cut into Foreign Aid,” Global
Information Network, September 17, 2003; InterAction Policy Paper, “Foreign Assistance
in Focus: Emerging Trends,” November 2003. For further information, see CRS Report
RL32427, Millennium Challenge Account, by Curt Tarnoff.
4 Economic Support Funds (ESF) programs involve a wide range of uses (except military)
that support U.S. security interests and promote economic and political stability in the
recipient countries and regions.
5 Democracy programs are administered by the U.S. Department of State’s Bureau for
Democracy, Human Rights, and Labor (DRL), and by the U.S. Agency for International
Development’s (USAID) Office of Democracy and Governance in the Bureau for
Democracy, Conflict, and Humanitarian Assistance (DCHA).
6 Sanctions against Pakistan related to the 1999 military coup and debt arrearage have been
waived or lifted on an annual basis since 2002.
CRS-3
assistance and other security initiatives in the Middle East. Since 2001, U.S.
assistance to front line states in the war on terror and Iraq war-related aid have
propelled foreign aid funding to new highs. Other sources of growth include the
Millennium Challenge Account, the President’s Emergency Plan for AIDS Relief
(PEPFAR), and U.S. assistance to Africa. Despite the growth in foreign aid spending
since 2001, however, the share of the federal budget allocated for foreign policy
programs has declined (with the exception of FY2004).7
The war on terrorism has reoriented foreign assistance priorities in Asia and
accelerated a trend toward increased aid to the region that began in 2000.
Throughout the 1990s, U.S. assistance to Asia fell due to the ebbing of Cold War
security concerns, nuclear proliferation sanctions, and favorable economic and
political trends in much of the region. For example, the withdrawal of U.S. military
forces from the Philippines, nuclear proliferation and other sanctions against
Pakistan, and the reduced need for economic assistance, particularly in Southeast
Asia, contributed to declines in U.S. aid levels. The Asian financial crisis of 1997-98
reversed the downward trend, as USAID funded a regional economic recovery
program for Indonesia, the Philippines, Thailand, and Vietnam.
Since the war on terrorism began in 2001, and the Bush Administration’s
Millennium Challenge Account (MCA) and Global HIV/AIDS Initiative (GHAI)
were initiated in 2004, the United States has increased foreign aid spending
dramatically in some regions. Pakistan, India, the Philippines, and Indonesia became
the foci of the Bush Administration’s anti-terrorism efforts in South and Southeast
Asia, due to their strategic importance, large Muslim populations, and insurgency
movements using terrorist methods. These countries have received the bulk of the
increases in U.S. foreign aid (non-food) to Asia (excluding Afghanistan). Average
yearly U.S. assistance to Pakistan during 2002-2006 is estimated to be $678 million
compared to $3.4 million in 2000-2001. Annual U.S. assistance to India has
increased by over 50% in 2002-2006 compared to 2000-2001, while annual U.S.
assistance to the Philippines during the same period has tripled compared to 2000-
2001. Beginning in 2004, both Indonesia and the Philippines received new funding
for education programs in order to promote diversity, non-violent resolution of social
and political conflict (Indonesia), and livelihood skills among Muslims residing in
impoverished and conflict-ridden areas (southern Philippines). See Figure 1.
As part of the Bush Administration’s emphasis on, and congressional support
for, democracy-building around the world, the Department of State’s Human Rights
and Democracy Fund (HRDF) has grown significantly. HRDF spending increased
from a yearly average of $13 million in 2001-2002 to $31.4 million in 2003, $34.2
million in 2004, and $35.7 million in 2005. Congress appropriated $63 million for
HRDF in FY2006. The Bush Administration requested $35 million for the
Democracy Fund in 2007. For 2005-2006, approximately one-third of the
7 CRS Report RL33262, Foreign Policy Budget Trends: A Thirty-Year Review, by Larry
Nowels.
CRS-4
Democracy Fund is to be allocated to Asia, mostly for democracy programs in
China.8
Some analysts have estimated that the MCA would substantially bolster U.S.
foreign assistance to Asia, if fully funded and if several candidate countries in Asia
were chosen.9 However, due to competing budget priorities, since the MCA’s
inception in 2004, Congress has not granted the Bush Administration’s full requests
for MCA funding. The Consolidated Appropriations Act, FY2004 (P.L. 108-199)
extended nearly $1 billion to the Millennium Challenge Corporation (MCC) for
development assistance, about one-third less than the Bush Administration’s request
of $1.6 billion. Congress appropriated $1.5 billion and $1.77 billion for the MCC in
2005 and 2006, respectively, compared to the President’s requests of $2.5 billion for
2005 and $3 billion for 2006. For 2007, the House and Senate Appropriations
Committees recommend $2 billion and $1.87 billion, respectively, for the MCC
compared to the Administration’s request of $3 billion. Three Asian countries are
eligible to apply for MCA assistance — East Timor, Mongolia, and Sri Lanka —
while two countries — Indonesia and the Philippines — have been designated as
“threshold” or close to meeting MCA criteria and eligible for assistance in qualifying.
FY2007 Highlights. The FY2007 budget request for foreign operations is
$23.69 billion, 14% above FY2006 appropriations (not including supplemental
appropriations). A large portion of the increase constitutes additional funding for
Iraq, Afghanistan, and anti-terrorism programs, the Millennium Challenge Account,
and HIV/AIDS relief. However, “core” assistance — Child Survival and Health
(CSH) and Development Assistance (DA) — would decrease by 11.8% under the
request.10 The FY2007 budget request for East Asia and the Pacific ($514 million)
is 1.8% less than FY2006 appropriations. Under the FY2007 budget, funding for
South Asia (excluding Afghanistan) would be 2.3% less than FY2006. The Senate
Appropriations Committee (S.Rept. 109-277 on H.R. 5522, the foreign operations
appropriations measure for FY2007) recommends $21.5 billion for foreign aid in
2007. The Senate report would increase the amount of democracy assistance from
the Bush Administration’s FY2007 budget request for several countries, including
Burma, Cambodia, China, East Timor, Indonesia, the Philippines, Thailand, and
Pakistan. The report would raise FMF for the Philippines by $12.4 million over the
Administration’s request of $17.6 million to fight terrorism. The House version of
H.R. 5522 would provide a total of $21.3 billion for foreign assistance in 2007.11
The House would suspend IMET funds to Nepal and reduce FMF to Pakistan by one-
third below the Administration’s budget request.
8 The Human Rights and Democracy Fund, administered by the Bureau of Democracy,
Human Rights, and Labor (DRL) of the Department of State, was established by the Foreign
Relations Authorization Act, FY2003 (P.L. 107-228).
9 Murray Hiebert, “More Aid, but Strings Attached,” Far Eastern Economic Review,
February 20, 2003.
10 CRS Report RL33420, Foreign Operations (House)/State, Foreign Operations, and
Related Programs (Senate): FY2007 Appropriations, by Larry Nowels, Connie Veillette,
and Susan B. Epstein.
11 The House of Representatives passed H.R. 5522 on June 9, 2006.

















































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-5
Figure 1. Major U.S. Aid Recipients in Asia, by Aid
Amount (millions of current U.S. dollars), 2001-2006
1200
1000
800
600
400
200
0
2002
2004
2006 est.
2001
2003
2005
1 - Bangladesh
2 - Cambodia
3 - India
4 - Indonesia
5 - Pakistan
6 - Philippines
Regional Comparisons. Africa remained the largest regional recipient of
Child Survival and Health (CSH) and Development Assistance (DA) funding in
FY2005.12 The largest regional recipients of Economic Support Funds in FY2005
were Near East Asia (Middle East) and South and Central Asia (mostly to
Afghanistan, with a large portion going to Pakistan as well). The largest recipient of
military assistance was Near East Asia followed by South Asia.13 See Table 1,
Figures 2-4, and Appendix.
12 The State Department divides foreign aid allocations into six regions: Africa, East Asia
and the Pacific (EAP), Europe and Eurasia, Near East Asia (Middle East), South and Central
Asia (formerly South Asia), and Western Hemisphere (Latin America and Carribean).
13 Military Assistance includes International Military Education and Training (IMET),
Foreign Military Financing (FMF), and Peacekeeping Operations (PKO).
CRS-6
Table 1. U.S. Foreign Assistance by Region
(Excluding Food Aid), 2001-2007
(millions of current U.S. dollars)
FY06
FY07
FY01
FY02
FY03
FY04
FY05
est.
req.
Africa
1,313
1,481
1,706
2,091
2,795
2,924
3,826
East Asia-
Pacific
368
455
477
474
525
523
514
(excluding
North Korea)
Europe and
2,017
2,435
2,871
1,577
1,323
1,068
900
Eurasia
Near East
5,401
5,567
8,409
5,556
5,755
5,369
6,039
Asia
South Asia
(excluding
201
1,403
785
685
970
966
910
Afghanistan)
Western
749
1,385
1,559
1,545
1,723
1,581
1,512
Hemisphere
Source: U.S. Department of State, Country/Account Summaries (2001-2007)
Note: USAID administers emergency and humanitarian food assistance pursuant to P.L. 480, Title
II (the Agricultural Trade Development Act of 1954, as amended). USDA’s Foreign Agricultural
Service (FAS) administers P.L. 480, Title I — sales of agricultural commodities under concessional
or favorable credit terms, Food for Progress programs (Food for Progress Act of 1985), Food for
Education (Farm Security and Rural Investment Act of 2002), and Section 416(b) (Agricultural Act
of 1949, as amended) — donation of surplus commodities.
Figure 2. Health and Development Assistance
(CSH and DA) by Region, FY2005
(millions of dollars)
total: $1,915 million
Africa 887
EAP 193
Europe 15
Near East 6.5
South and Central Asia 423
Western Hemis 391
(U.S. Department of State)
CRS-7
Figure 3. Economic Support Funds
by Region, FY2005
(millions of dollars)
total: $3,822 million
Near East 1,669
Europe 35
EAP 186
Africa 126
Western Hemis 163
South and Central Asia 1,643
(U.S. Department of State)
Figure 4. Military Assistance
by Region, FY2005
(millions of dollars)
total: $5,273 million
Europe 244
EAP 45
Near East 3,902
Africa 232
Western Hemis 121
South and Central Asia 729
(U.S. Department of State)
CRS-8
East Asia
Major objectives and program areas for U.S. assistance in East Asia include
counterterrorism, economic growth, HIV/AIDS prevention, the development of civil
society, democratization, environmental management, and restricting the
international flow of arms. The United States also sponsors counter-narcotics,
counter-trafficking-in-persons, and de-mining activities in the region. Since 2001,
foreign aid spending in East Asia has grown markedly, largely due to anti-terrorism
efforts in the Philippines and Indonesia. The Philippines, a Major Non-NATO Ally,
and Indonesia, a democratizing nation with the world’s largest Muslim population,
are home to several insurgency movements and radical Islamist organizations, some
with ties to Al Qaeda, such as the Abu Sayyaf Group (Philippines) and Jemaah
Islamiyah (Indonesia).14 USAID’s programs in East Asia aim to address the
conditions that may give rise to radical ideologies and terrorism — poverty and
unemployment, lack of education, failing governments, political disenfranchisement,
and violent conflict. In October 2003, the Bush Administration launched education
programs in Muslim communities in the Philippines and in Indonesia as part of its
regional counterterrorism efforts.
Figure 5. U.S. Foreign Aid (Non-food)
to East Asian Countries, FY2005
(millions of dollars)
total: $451.7 million
Burma 7.9
Vietnam 33
Thailand 11.5
China 24.7
Cambodia 60
E. Timor 26
Philippines 127
Mongolia 13.6
Indonesia 140
Malaysia 3.5
Laos 4.5
(U.S. Department of State)
Among EAP countries (excluding the Pacific Island nations), in FY2005,
Indonesia was the largest recipient of U.S. foreign aid, particularly health and
development assistance (CSH and DA) and ESF, followed by the Philippines. The
Philippines was the region’s largest beneficiary of Foreign Military Financing (FMF)
and International Military Education and Training (IMET). Counter-narcotics and
14 For further information on Southeast Asian terrorist activities, see CRS Report RL31672,
Terrorism in Southeast Asia, by Bruce Vaughn, et. al.
CRS-9
law enforcement assistance (INCLE) were provided to the Philippines, Laos, and
Thailand. Indonesia, Cambodia, and Vietnam were the largest recipients of Non-
proliferation, Anti-terrorism, De-mining, and Related programs (NADR). See
Figure 5. Vietnam, as one of 15 focus countries under the President’s Emergency
Plan for AIDS Relief (PEPFAR), was the only Asian country to receive Global
HIV/AIDS Initiative (GHAI) funding.
Economic Support Funds support several EAP regional programs. These
include the Association of Southeast Asian Nations (ASEAN) Fund, Developing
Asian Institutions Fund, and Regional Women’s Issues. The ASEAN Fund,
introduced in FY2004, promotes regional cooperation on several fronts, including
terrorism, border security, HIV/AIDS and avian influenza, human trafficking,
narcotics, and trade. The Asian Institutions Fund advances U.S. strategic interests
through support of regional, multilateral fora such as the Asia-Pacific Economic
Cooperation (APEC) meeting and the ASEAN Regional Forum (ARF). EAP also
receives assistance through USAID’s Regional Development Mission-Asia, including
programs for reducing trafficking in persons, improved economic policy and
governance, protecting the rights of people with disabilities, and the prevention and
control of HIV/AIDS and other infectious diseases.
Foreign Aid Restrictions. In some East Asian countries, the United States
has withheld assistance or restricted it to non-governmental organizations (NGOs)
or to exiled democratic political groups in response to government actions that the
United States has deemed undemocratic. The Consolidated Appropriations Act for
FY2006 maintained human rights-related restrictions on U.S. foreign assistance to
the governments of Burma, Cambodia, and Indonesia while supporting Burmese
dissident groups and promoting civil society, human rights, and democracy in
Cambodia, Indonesia, East Timor, Thailand, China, and Mongolia.
Between 1993 and 2005, Indonesia faced sanctions on military assistance largely
due to U.S. congressional concerns about human rights violations, particularly those
committed by Indonesian military forces (TNI). In February 2005, Secretary of State
Condoleezza Rice determined that the Indonesian government and armed forces
(TNI) had satisfied legislative conditions and certified the resumption of full IMET
for Indonesia. The foreign operations appropriations act for FY2006 (P.L. 109-102),
Section 599F(a), continued existing restrictions on FMF, stating that such assistance
may be made available for Indonesia only if the Secretary of State certifies that the
Indonesian government is prosecuting, punishing, and resolving cases involving
members of the TNI credibly alleged to have committed gross violations of human
rights in East Timor and elsewhere. Section 599F(b) provided that the Secretary of
State may waive restrictions on FMF for Indonesia if such action would be in the
national security interests of the United States. In November 2005, the Secretary of
State waived restrictions on FMF to Indonesia on national security grounds pursuant
to Section 599F(b).
Indian Ocean Earthquake and Tsunami. The December 26, 2004
tsunami caused catastrophic losses of lives and property in Aceh province, Indonesia,
CRS-10
with nearly 130,000 persons dead and over 500,000 displaced.15 The Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror, and
Tsunami Relief, 2005 (P.L. 109-13) appropriated $631 million for tsunami recovery
and reconstruction in East and South Asia. The Bush Administration pledged $400
million for relief and reconstruction efforts in Indonesia and $5.3 million for
Thailand.16
Country Aid Levels and Restrictions — East Asia17
Regional Development Mission-Asia
USAID’s Regional Development Mission-Asia (RDM-Asia), inaugurated in
2003 to manage regional and country-specific aid primarily in mainland Southeast
Asia, administers the following programs: Vulnerable Populations & Foreign Policy
Interests; HIV/AIDS and Other Infectious Diseases; Improved Environmental
Conditions in Asia; and Regional Governance and Economic Reform. The
vulnerable populations program supports basic education, health care, victims of
war, anti-trafficking, and mass media activities in Burma, Vietnam, Laos, and
Thailand. Regional health programs assist health efforts in China, Laos, Thailand,
and Vietnam. Environmental assistance includes improved access to clean water and
sanitation, sustainable management of natural resources and biodiversity
conservation, and pollution mitigation in Southeast Asia. Regional government
programs focus on commercial legal reforms in Laos, Thailand, and Vietnam.
Funding for RDM-Asia has increased dramatically since 2003. See Table 2.
Table 2. Regional Development Mission-Asia, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
CSH
9,602
17,073
18,511
18,941
20,007
DA
1,969
9,200
10,400
16,446
14,440
ESF
3,720
994
3,472
18,216
11,400
Global
0
0
16,370
8,385
8,385
HIV/AIDS
Totals
15,291
27,267
48,753
61,988
54,232
Source: U.S. Agency for International Development, Budget Justification to the Congress, FY2007.
15 USAID, Fact Sheet #39, Indian Ocean — Earthquakes and Tsunamis (July 7, 2005).
16 USAID, USAID Rebuilds Lives after the Tsunami (April 27, 2006).
17 Including Southeast Asia and excluding North Korea and Pacific Island nations.
CRS-11
Burma
Table 3. U.S. Assistance to Burma, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
CSH
2,000
0
0
0
0
DA
0
0
0
0
0
ESF
6,950
12,923
7,936
10,890
7,000
Other
4,000a
3,000a
—
Totals
8,950
12,923
11,936
13,890
7,000
Sources: U.S. Department of State; USAID
a. Humanitarian assistance for displaced Burmese and host communities in Thailand through an
unspecified account.
Burma has significant foreign aid needs. It has the largest population of
displaced persons in East Asia and one of the world’s highest HIV/AIDS infection
rates. The country is the world’s largest trafficker of methamphetamine and second-
largest producer of opium. According to USAID, ethnic fighting and deteriorating
economic conditions have compelled 1.6 million persons to flee Burma and displaced
1.5 million Burmese within the country. The United States suspended bilateral
assistance to Burma in 1988 and resumed it on a limited basis in 1993. The United
States provides no direct aid to the Burmese government in response to the Burmese
military junta’s (State Peace and Development Council or SPDC) repression of the
National League for Democracy (NLD), failure to honor the NLD’s parliamentary
victory in 1990, and harassment of its leader, Aung San Suu Kyi, who remains under
house arrest.18 In addition, the SPDC reportedly has mismanaged the economy and
has embarked upon a sudden, costly relocation of the capital from Rangoon to
Pyinmana, a remote town in the center of the country. Continuing U.S. sanctions
against Burma include opposition to international bank loans to Burma and a ban on
debt restructuring assistance. In addition, U.S. foreign operations legislation
mandates withholding contributions to the Global Fund to Fight AIDS, Tuberculosis
and Malaria (GFATM) in amounts that correspond to the GFATM’s assistance to the
Burmese government.19 U.S. foreign aid to Burma is limited mainly to Burmese
victims of trafficking, ethnic minorities, displaced persons, refugees along the
Burma-Thailand border, and Burmese pro-democracy students and mass media
personnel living outside the country.20
18 For Burma aid sanctions, see P.L. 104-208, Section 570. For further information on
Burma, see CRS Report RL33479, Burma.-U.S. Relations, by Larry A. Niksch.
19 See P.L. 109-102, Section 526.
20 The State Department has also awarded grants to the National Endowment for Democracy
(NED) for assisting Burmese pro-democracy groups.
CRS-12
On June 11, 2003, the 108th Congress passed the Burmese Freedom and
Democracy Act of 2003 (P.L. 108-61), which bans imports from Burma unless
democracy is restored.
FY2007 Foreign Operations Appropriations Legislation. The Senate
Appropriations Committee (S.Rept. 109-277) recommends $13 million for
democracy and humanitarian programs in Burma, $6 million above the Bush
Administration’s budget request.
Cambodia
Table 4. U.S. Assistance to Cambodia, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004
FY2005 estimate
request
CSH
22,100
29,360
29,300
28,556
27,378
DA
3,687
2,750
8,950
5,487
6,597
ESF
15,000
16,900
16,864
14,850
13,500
FMF
0
0
992
990
500
NADR
2,765
3,916
4,170
3,700
5,050
Totals
43,552
52,926
60,276
53,583
53,025
Food Aid
P.L. 480 Title
II Granta
0
703
0
0
0
FFPb
1,715
3,444
3,643
—
—
FFEb
650
0
0
—
—
Section
416(b)b
0
0
0
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. USAID data — includes freight costs.
b. USDA data — does not include freight costs.
Cambodia ranks 130th out of 175 countries and regions on the United Nations
Development Programme’s Human Development Index, which measures GNP per
capita, life expectancy, and educational attainment. The country’s poverty, primitive
infrastructure, and weak human resource base hinder not only economic but also
political development.
U.S. restrictions on foreign assistance to Cambodia reflect congressional
disapproval of Prime Minister Hun Sen’s seizure of power in 1997 and other
undemocratic political practices. Foreign operations appropriations have barred U.S.
assistance to the central government of Cambodia and to the Khmer Rouge tribunal
and instructed U.S. representatives to international financial institutions to oppose
loans to Cambodia, except those that meet basic human needs. U.S. assistance may
be provided only to Cambodian and foreign NGOs and to local governments.
Statutory exceptions allow for the following categories of U.S. assistance to the
CRS-13
central government of Cambodia: reproductive and maternal and child health care;
basic education; combating human trafficking; cultural and historic preservation; the
prevention, treatment, and control of HIV/AIDS and other infectious diseases; and
counter-narcotics activities.21
Cambodia is the recipient of a relatively large amount of foreign aid from a
variety of sources. External funding accounts for over half of the country’s
government budget. Since 1996, the Consultative Group for Cambodia, a consortium
of seven international financial organizations and 22 donor countries under the
auspices of the World Bank, has met annually to set economic and political reform
guidelines for the Cambodian government and to extend aid packages averaging $500
million per year. Japan, Australia, and the United States are the largest bilateral aid
donors to Cambodia.
ESF for Cambodia supports justice system reform, anti-corruption activities,
democratic political parties, and civil society groups that monitor human rights
conditions and investigate allegations of abuse. For FY2007, the Bush
Administrations requests $2.5 million for a garment sector competitiveness program.
Cambodia receives FMF for border control and counterterrorism efforts, subject
to congressional notification requirements. The United States provides small
arms/light weapons destruction (NADR/SALW) funds to stop their proliferation.
The FY2007 Congressional Budget Justification for Foreign Operations requests
terrorist interdiction program (NADR/TIP) funds to help provide for a computerized
system for collecting and analyzing traveler data to identify possible terrorists.
Cambodia is among the top five countries in the world for the number of
landmine casualties (approximately 800 victims per year). Cambodia is to receive
approximately $5 million annually in 2006 and 2007 for de-mining (NADR/HD)
programs. Cambodia participates in a USAID Office of Foreign Disaster Assistance
(OFDA)-funded project (2003-2007) that aims to improve flood forecasting capacity
and communications capabilities in communities in the Lower Mekong River Basin.
On October 12, 2005, U.S. Secretary of Health and Human Services Michael Leavitt,
on a visit to Southeast Asia, signed a cooperation agreement with Cambodian
officials in which $1.8 million was pledged to help the country guard against the
spread of H5N1 (avian influenza).
FY2007 Foreign Operations Appropriations Legislation. The Senate
Appropriations Committee (S.Rept. 109-277) does not continue restrictions on
assistance to the central government of Cambodia, but requests that the State
Department and USAID consult with the Committee when allocating funds for
activities not currently exempt from such restrictions.
21 For most of these activities, USAID collaborates with the central government of
Cambodia but continues to provide funding through the country’s large and vibrant NGO
community.
CRS-14
People’s Republic of China (PRC)
Table 5. U.S. Assistance to China, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
DA
0
0
0
4,950
5,000
ESF
15,000
13,500a
19,000b
23,000c
—
ESF/Tibet
—
3,976a
4,216b
3,960d
—
Peace Corps
977
863
1,476
1,785
1,886
Totals
15,977
18,339
24,692
33,695
6,886
Sources: U.S. Department of State, USAID.
a. P.L. 108-199.
b. P.L. 108-447.
c. House Rpt. 109-265.
d. P.L. 109-102, Section 575.
USAID does not have a presence or mission in the People’s Republic of China
(PRC) and China does not receive development aid, largely stemming from U.S.
objections to human rights conditions in China. However, the Peace Corps has been
involved in English language and environmental education in China since 1993, and
U.S. funding for democracy and Tibet programs has almost doubled since 2003.
Economic Support Funds (ESF) have been appropriated for democracy, human
rights, and rule-of-law programs in China since 2000, primarily to U.S.-based non-
governmental organizations (NGOs) working in the PRC.
China received only Peace Corps assistance prior to 2000. The consolidated
appropriations act for FY2000 appropriated $1 million for foreign-based NGOs
working in Tibet and authorized ESF for foreign NGOs to promote democracy in
China. For FY2001, the United States extended $28 million to the PRC as
compensation for damages caused by the accidental NATO bombing of the Chinese
Embassy in Belgrade in 1999. Since 2002, Congress has increased its annual
earmark for democracy, human rights, and rule-of-law programs in China, from $10
million in 2002 to $23 million in 2006. Appropriations for cultural preservation,
economic development, and environmental conservation in Tibetan communities in
China has also grown. In 2004, the Bureau of Democracy, Human Rights and Labor
(DRL) of the Department of State became the principal administrator of China
democracy programs. Major U.S. grantees have included the National Endowment
for Democracy (NED), the Asia Foundation, Temple University (School of Law), the
American Bar Association, and the Bridge Fund (Tibet).
FY2006 Appropriations. The conference agreement (House Rpt. 109-265)
on the 2006 foreign operations appropriations bill (H.R. 3057, signed into law as P.L.
109-102) authorized $20 million for China/Hong Kong/Taiwan from the Human
Rights and Democracy Fund (HRDF). In addition, Congress provided $3 million to
NED for democracy programs and up to $5 million in Development Assistance to
American educational institutions for programs in China related to democracy, rule
CRS-15
of law, and the environment, subject to the regular notification procedures of the
Committees on Appropriations.22 For Tibet, the FY2006 foreign aid measure
authorized $4 million to NGOs for cultural preservation, sustainable development,
and environmental conservation in the Tibetan Autonomous Region and in Tibetan
communities in China and $250,000 to NED for human rights and democracy
programs related to Tibet. In addition, the National Endowment for Democracy
(NED) provides grants (approximately $2 million per year since 1999) for programs
that promote human rights, labor rights, legal and electoral reforms, and independent
mass media in China from its annual congressional earmark.23
Since 2002, foreign operations appropriations legislation has prohibited funding
to the United Nations Population Fund (UNFPA) because of its programs in China,
which the State Department has determined involve coercive abortion. The United
States continues to impose other restrictions that were put in place in the aftermath
of the 1989 Tiananmen Square military crackdown, including “no” votes or
abstentions by U.S. representatives to international financial institutions regarding
loans to China (except those that meet basic human needs) and a ban on Overseas
Private Investment Corporation (OPIC) programs in the PRC. The Foreign
Operations Appropriations Act for FY2002 (P.L. 107-115) lifted the restrictions
(effective since FY2000) requiring that ESF for China democracy programs be
provided only to NGOs located outside the PRC. However, Tibet programs are still
restricted to NGOs. Congress continues to require that U.S. representatives to
international financial institutions support projects in Tibet only if they do not
encourage the migration and settlement of non-Tibetans (Han Chinese) into Tibet or
the transfer of Tibetan-owned properties to non-Tibetans.24
FY2007 Foreign Operations Appropriations Legislation. The Senate
Appropriations Committee (S.Rept. 109-277) recommends $49 million for
democracy and rule of law programs in the PRC in 2007, an increase of $44 million
above the President’s budget request, as part of the Bush Administration’s
“transformational diplomacy” initiative. Of this amount, the Committee recommends
$14 million in DA funds to American educational institutions and NGOs for
programs and activities related to the environment, democracy, and the rule of law
in the PRC.
22 For descriptions of HRDF projects in China, see U.S. Department of State, Bureau of
Democracy, Human Rights and Labor, FY2005-2006 Human Rights and Democracy Fund
Projects Fact Sheet, December 6, 2005.
23 See General Accounting Office, “Foreign Assistance: U.S. Funding for Democracy-
Related Programs,” February 2004.
24 For further information, see CRS Report RL31910, China: Economic Sanctions, by
Dianne E. Rennack.
CRS-16
East Timor (Democratic Republic of Timor-Leste)
Table 6. U.S. Assistance to East Timor, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
DA
0
0
500
0
0
ESF
24,838
22,367
21,824
18,810
13,500
FMF
1,990
2,420
1,023
990
500
IMET
119
159
364
297
320
INCLE
0
0
0
1,485
0
PKO
3,250
1,050
1,228
0
0
Peace Corps
1,219
1,320
1,372
1,632
1,703
Totals
31,416
27,316
25,811
23,214
16,023
Food Aid
P.L. 480 Title
II Granta
0
669
994
0
0
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. USAID data — includes freight costs.
East Timor (Democratic Republic of Timor-Leste) gained full independence in
May 2002. The United States supports a wide range of aid programs in East Timor,
one of Asia’s poorest countries, with the goal of building a viable economy and
democratic political system. USAID programs in the country support maternal and
child health. Economic programs include commercial law development, private
sector competitiveness, trade and foreign investment. Political aid activities include
building judicial institutions, supporting political parties and the electoral process,
and strengthening governmental capacity. USAID helped to design East Timor’s
constitution and provided assistance for the presidential elections of 2002, which
many international observers reported as free and fair. U.S. military assistance to the
country helps to equip and train the Timor Leste Defense Force, with an emphasis on
maritime security and the transition to a democratic, professional, and effective force.
In November 2005, the Millennium Challenge Corporation selected East Timor as
eligible for MCA assistance. The United States is the third largest bilateral aid donor
to East Timor after Australia and Portugal.
On March 28, 2003, President Bush issued a certification and report pursuant
to Section 637(a)(2) of the Foreign Relations Authorization Act, FY2003 (P.L. 107-
228), granting excess defense articles and International Military Education and
Training (IMET) to East Timor.25
25 The President must certify that East Timor has established an independent armed forces;
and that the provision of defense articles and services is in the national security interests of
the United States, and will promote both human rights and the professionalization of the
armed forces in East Timor.
CRS-17
Indonesia
Table 7. U.S. Assistance to Indonesia, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
CSH
31,955
33,000
37,100
28,017
27,507
DA
39,016
33,291
27,848
33,212
26,724
ESF
59,610
49,705
68,480
69,300
80,000
FMF
0
0
0
990
6,500
IMET
0
599
728
792
1,285
INCLE
0
0
0
4,950
4,700
NADR 1,008
5,998
6,262
6,092
7,771
Totals 131,589
122,593
140,418
143,353
154,487
Food Aid/Disaster Relief
P.L. 480 Title I
0
0
0
—
—
USDA Loan
P.L. 480 Title II
Granta
29,540
4,115
10,489
0
24,000
FFPb
0
5,597
6,194
—
—
Section 416(b)b
7,926
17,700
9,078
—
—
Tsunami Reliefc
—
—
400,000
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. USAID data — includes freight costs.
b. USDA data — does not include freight costs.
c. Tsunami Recovery and Reconstruction Fund, P.L. 109-13.
Indonesia plays an important role in U.S. efforts toward curbing terrorism,
maintaining regional economic and political stability, and promoting democracy in
Southeast Asia and in Muslim countries. According to the Department of State,
Indonesia, as the largest Muslim country in the world, “is known for its moderate,
pluralistic, and tolerant practice of Islam.” The country “continues to cooperate with
the U.S. and regional players on improving its law enforcement capabilities to
counter terrorist attacks and financial crimes associated with them.”26 U.S. assistance
programs target corruption, terrorism, and weak foreign investment inflows. A major
U.S. aid initiative is the six-year, $157 million education program begun in 2004.
The MCC has designated Indonesia as a “threshold” country for 2006, meaning that
the country is close to meeting MCA criteria and may receive assistance in reaching
eligibility status. The United States is the second-largest bilateral donor to Indonesia
after Japan.
Other USAID programs and proposals for Indonesia include the following:
CSH funds for local maternal and child health care, clean water, and HIV/AIDS and
other infectious diseases prevention and treatment; DA allocations for natural
26 U.S. Department of State, FY2006 Congressional Budget Justification for Foreign
Operations.
CRS-18
resource management and biodiversity conservation; and ESF for several targeted
areas — the justice sector, government accountability, corruption, conflict resolution,
civil society, and economic growth.
INCLE programs aim to help develop the Indonesian National Police “into
modern and effective civilian forces respectful of the rule of law and human rights.”
NADR assistance for Indonesia includes counterterrorism training, counterterrorism
financing, and export control and border security.
Military Assistance. In 2005, the Bush Administration determined that
Indonesia had met legislative conditions for the resumption of full IMET and waived
restrictions on FMF on national security grounds, thus lifting sanctions that were first
imposed in 1993.27 The Consolidated Appropriations Act for 2004 (P.L. 108-199)
made IMET available to Indonesia if the Secretary of State determined that the
Indonesian government and armed forces were cooperating with the United States in
the investigation regarding the August 2002 attack in Timika, Papua, in which three
school teachers, including two Americans, were killed. P.L. 108-199 continued the
ban on FMF unless the President certified that the Indonesian government was
prosecuting and punishing those members of the Indonesia armed forces credibly
alleged to have committed gross violations of human rights, particularly in East
Timor in 1999. The FY2005 foreign operations appropriations measure (P.L. 108-
447) contained similar provisions. In February 2005, Secretary of State Condoleezza
Rice determined that the Indonesian government and armed forces had cooperated
with the FBI’s investigation into the Papua murders, thereby satisfying legislative
conditions, and certified the resumption of full IMET for Indonesia. The foreign aid
appropriations act for FY2006 (P.L. 109-102) continued existing restrictions on FMF
to Indonesia; however, the law provided that the Secretary of State may waive
restrictions if such action would be in the national security interests of the United
States. In November 2005, the Secretary of State exercised the waiver authority and
allowed FMF for Indonesia.
2004 Tsunami Relief. The December 26, 2004 tsunami caused catastrophic
losses of lives and property in Aceh province, Indonesia, with nearly 130,000 persons
dead and over 500,000 displaced.28 The Emergency Supplemental Appropriations
Act for Defense, the Global War on Terror, and Tsunami Relief, 2005 (P.L. 109-13)
appropriated $631 million for tsunami recovery and reconstruction in East and South
Asia. Of this amount, the Bush Administration pledged $400 million for relief and
reconstruction efforts in Indonesia.29
27 Notwithstanding the restrictions on IMET and FMF, from 1997-2004, Congress allowed
Indonesia to participate in Expanded International Military Education and Training (E-
IMET), which emphasizes and teaches human rights, military codes of conduct, and the
principles and practices of civilian control of the military; the FY2005 foreign operations
appropriations measure (P.L. 108-447) allowed FMF to the Indonesian navy to enhance
maritime security.
28 USAID, Fact Sheet #39, Indian Ocean — Earthquakes and Tsunamis (July 7, 2005).
29 USAID, USAID Rebuilds Lives after the Tsunami (April 27, 2006).
CRS-19
Laos
Table 8. U.S. Assistance to Laos (LPDR), 2003-2007
(thousand of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
ESF
0
0
0
0
500
CSH
1,000
0
0
0
0
DA
1,000
0
0
0
0
INCLE
2,500
2,000
1,984
990
900
NADR
1,200
1,412
2,500
3,300
3,400
Totals
5,700
3,412
4,484
4,290
4,800
Food Aid
P.L. 480 Title
II Granta
685
0
0
0
0
Section
416(b)b
0
0
0
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. USAID data — includes freight costs.
b. USDA data — does not include freight costs.
Laos is one of the poorest countries in the world, with a per capita GDP of
$1,900 (purchasing power parity), a life expectancy of 55 years, and a literacy rate
of 66%.30 However, the country does not receive CSH or Development Assistance.
Although there are no formal restrictions, U.S. foreign assistance to Laos remains
relatively limited and channeled through NGOs rather to the government of Laos due
to strained bilateral relations and to the country’s status as a Tier 3 country on the
State Department’s Trafficking in Persons Report (TIP).31 INCLE funding supports
counter-narcotics efforts, such as road construction, which would help enable farmers
to market crops other than opium, and the training of counter-narcotics police units.32
NADR humanitarian demining (HD) assistance is provided in cooperation with
NGOs and UXO Lao, a quasi-governmental entity. Unexploded ordnance from the
Vietnam War has injured over ten thousand Laotians and resulted in over five
thousand deaths and continues to wreak havoc on farmers and children. For FY2007,
ESF would promote economic and judicial reform.
In October 2005, U.S. Secretary of Health and Human Services Michael Leavitt
signed a cooperation agreement with Lao officials in which the United States pledged
$3.4 million to Laos for controlling outbreaks of avian flu.
30 CIA, The World Factbook, 2006.
31 Department of State, Office to Monitor and Combat Trafficking in Persons, Trafficking
in Persons Report, 2006.
32 Laos is the world’s third-largest producer of opium.
CRS-20
The major bilateral donors to Laos are Japan, Germany, Sweden, France,
Australia, and Norway.
Malaysia
Table 9. U.S. Assistance to Malaysia, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003
FY2004
FY2005
estimate
request
IMET
831
939
1,100
891
885
NADR
1,267
230
2,308
1,632
3,465
Totals
2,098
1,169
3,408
2,523
4,350
Sources: U.S. Department of State; USAID
The United States and Malaysia share important interests in Southeast Asia,
including counterterrorism objectives, regional security, trade, and democracy.
Because of its relatively high level of economic development, Malaysia is not a
recipient of U.S. development and economic aid. The United States extends IMET
and NADR funds to Malaysia. IMET helps to familiarize the Malaysian armed
forces with U.S. military doctrine, management techniques, and equipment and
promotes military cooperation between the two countries. IMET also attempts to
impart democratic ideals and norms upon the armed forces of Malaysia. NADR
programs support joint counterterrorism activities, counterterrorism financing, the
Southeast Asia Regional Counterterrorism Center, and export control and border
security.
Mongolia
Table 10. U.S. Assistance to Mongolia, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003
FY2004
FY2005
estimate
request
ESF
10,000
9,941
9,920
7,425
7,500
FMF
990
995
992
2,970
3,000
IMET
767
872
1,009
866
910
Peace Corps
1,765
1,646
1,694
1,876
1,956
PKO
0
1,000
0
0
0
Totals
13,522
14,454
13,615
13,137
13,366
Food Aid
FFPa
3,612
8,572
3,658
—
—
Section 416(b)a
0
0
0
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. USDA data — does not include freight costs.
CRS-21
U.S. assistance programs in Mongolia, a strategically-important nation that has
actively supported U.S. policy goals in the East Asia-Pacific region and in the global
war on terrorism, aim to help the country transform itself into a free market
democracy. Economic Support Funds target private sector development and effective
and accountable governance. FMF supports efforts at controlling Mongolia’s borders
with China and Russia against trafficking in illegal drugs and goods. IMET
objectives include civilian control of the military, respect for international human
rights standards, officer training, military justice, and preparation for participation in
peacekeeping operations. Since 2004, Mongolia has been eligible for MCA
assistance. In September 2005, the government of Mongolia submitted a proposal
to the Millennium Challenge Corporation for several projects to be funded by MCA
funds, including railroad construction, improved housing, and health services.

The top bilateral aid donors to Mongolia are Japan, Germany, and the United
States.
Philippines
Table 11. U.S. Assistance to Philippines, 2003-2007
(thousands of dollars)
FY2003
FY2006
FY2007
Account
FY2003
W.S.a
FY2004 FY2005 Estimate
Request
CSH
22,920
—
28,850
27,050
22,671
21,072
DA
28,209
—
21,568
27,576
25,522
19,603
ESF
15,000
30,000
17,645
30,720
19,800
20,000
FMF
19,870
30,000
19,880
29,760
29,700
17,600
IMET
2,400
—
2,700
2,915
2,871
2,865
INCLE
0
—
2,000
3,968
1,980
1,900
NADR
2,094
—
750
2,257
5,277
5,487
Peace Corps
2,624
—
2,774
2,820
2,776
2,910
PKO
0
—
15,000
0
0
0
Totals
93,117
60,000
111,167
127,066
110,597
91,437
Food Aid
P.L. 480 Title I
40,000
—
20,000
20,000
—
—
USDA Loan
FFPc
0
—
3,517
1,720
—
—
Section 416(b)b
7,936
—
0
5,644
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. Emergency Wartime Supplemental Appropriations (P.L. 108-11).
b. USDA data — does not include freight costs.
The United States shares important security, political, and commercial interests
with the Philippines, a Major Non-NATO Ally and front-line state in the war on
terrorism. Since 2001, the Philippines has received the most dramatic increases in
U.S. foreign assistance in the EAP region. The major program areas of U.S. foreign
aid are corruption and economic governance; basic education; family planning and
CRS-22
health care; and the environment. Most education assistance and 60% of all CSH,
DA, and ESF to the Philippines support programs in Muslim areas of Mindanao. The
MCC has designated the Philippines as a “threshold” country for 2006 or close to
meeting MCA criteria and eligible for assistance in qualifying.
CSH programs in the Philippines support maternal and child health and
nutrition, the prevention and treatment HIV/AIDS and other infectious diseases, and
family planning. Development Assistance targets corruption, economic growth, the
environment, and education. Economic Support Funds promote economic
development and access to education in Mindanao, home of Philippine Muslim
insurgency groups such as the Moro Islamic Liberation Front (MILF) and Abu
Sayyaf, which reportedly have ties to Jemaah Islamiyah (JI). JI is a Southeast Asian
Muslim terrorist organization which purportedly has links to Al Qaeda. FMF
contributes to the military capabilities of the armed forces of the Philippines and to
the Philippine Defense Reform Initiative. IMET promotes military professionalism,
civilian control of the military, and military-to-military contacts between the United
States and the Philippines. INCLE and NADR help to strengthen the anti-narcotics
and anti-trafficking-in-persons capabilities of the Philippines police forces. Other
NADR activities include counterterrorism financing, terrorist interdiction, and export
control and border security. In addition, the Philippines has been made eligible for
priority delivery of Excess Defense Articles (EDA).33
The United States signed a Tropical Forest Conservation Act Agreement with
the Philippines on September 19, 2002.34 This accord cancels a portion of the
Philippines’ debt to the United States. The money saved by this rescheduling —
estimated at about $8 million — is to be used for forest conservation activities over
a period of 14 years.
The United States is the largest grant donor to the Philippines. According to
USAID, other major bilateral donors are Japan, China, Germany, and the United
Kingdom.
FY2007 Foreign Operations Appropriations Legislation. The Senate
Appropriations Committee (S.Rept. 109-277) recommends the following changes to
the Bush Administration’s 2007 budget request for the Philippines: the addition of
$9 million in Democracy Funds to support free mass media; $30 million in FMF for
anti-terrorism efforts ($12.4 million above the President’s request); and $12.3 million
in ESF ($7.7 below the request).
33 Excess Defense Articles consist of used U.S. weapons and equipment given away for free.
34 The Tropical Forest Conservation Act (P.L. 105-214).
CRS-23
Thailand
Table 12. U.S. Assistance to Thailand, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
DF
—
—
—
1,980
—
CSH
1,500
0
0
0
0
DA
1,250
0
0
0
0
ESF
0
0
992
990
0
FMF
1,990
881
1,488
1,485
1,300
IMET
1,768
2,572
2,526
2,376
2,370
INCLE
3,700
2,000
1,608
990
900
NADR
200
1,380
1,782
4,301
2,134
Peace Corps
1,818
1,840
2,143
2,190
2,185
PKO
0
500
0
0
0
Totals
12,226
9,173
10,539
14,312
8,889
Sources: U.S. Department of State; USAID
Thailand is one of five U.S. treaty allies in Asia and was designated a Major
Non-NATO Ally in 2003. Thailand has sent troops to both Afghanistan and Iraq and
has aggressively pursued terrorist cells within its borders. According to the State
Department, “U.S. government assistance to Thailand enhances U.S. influence in a
strategically important region, strengthens Thailand’s efforts to combat terrorism,
narcotics trafficking and other international crime, and reinforces military
cooperation.”35 FMF helps to boost the counterterrorism capabilities of Thailand’s
Special Forces units. Thai IMET graduates hold a majority of senior military
positions. INCLE programs help Thailand fight corruption in its criminal justice
system as well as organized crime in the region. NADR assistance helps Thai police
counter terrorist activities in majority-Muslim provinces of the south, where a
separatist insurgency has claimed the lives of 1,300 Thais since 2004.
Environmental and Disaster Assistance. In 2001, the United States and
Thailand signed an agreement pursuant to the Tropical Forest Conservation Act (P.L.
105-214), providing $11 million in debt relief to Thailand. In return, Thailand is to
contribute $9.5 million over 28 years toward the protection of its mangrove forests.
Since 2003, Thailand has participated in an OFDA-funded, five-year Mekong River
flood early warning project. The United States government pledged $5.3 million in
relief and reconstruction assistance for areas in Thailand affected by the December
2004 tsunami.
FY2007 Foreign Operations Appropriations Legislation. The Senate
Appropriations Committee (S.Rept. 109-277) recommends $5 million in Democracy
35 U.S. Department of State, FY2006 Congressional Budget Justification for Foreign
Operations.
CRS-24
Funds for Thailand. Some observers have criticized Prime Minister Thaksin for
weakening democratic institutions through his authoritarian style of leadership and
harsh measures against Muslims in the southern part of the country.36
Vietnam
Table 13. U.S. Assistance to Vietnam, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
CSH
5,300
6,100
1,200
0
0
DA
7,671
3,000
4,750
2,818
2,440
ESF
0
0
0
1,980
1,000
GHAI
0
10,000
24,044
31,214
54,000
IMET
0
0
50
50
95
NADR
2,527
3,214
3,331
3,690
3,700
Totals37
15,498
22,314
33,375
39,752
61,235
Food Aid
FFPa
15,122
7,898
0
—
—
FFEa
4,796
0
0
—
—
Section
416(b)a
0
6,170
0
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture
a. USDA data — does not include freight costs.
The United States is not a major aid donor to Vietnam. However, Vietnam, with
over 200,000 HIV-positive persons and a higher HIV infection rate than India and
China, is the only Asian country to receive assistance through the President’s
Emergency Plan for AIDS Relief (PEPFAR) using Global HIV/AIDS Initiative
(GHAI) funds. When PEPFAR is included, Vietnam is one of the largest recipients
of U.S. assistance in East Asia. Other U.S. bilateral assistance to Vietnam focuses
on the following: accelerating Vietnam’s transition to an open and market-based
economy; upgrading access to services for selected vulnerable groups; and
developing sustainable urban and industrial environmental management.
CSH and NADR support programs for war and land mine victims.
Development Assistance for Vietnam supports the country’s efforts to implement the
2001 Bilateral Trade Agreement with the United States and prepare for World Trade
36 See CRS Report RL32593, Thailand: Background and U.S. Relations, by Emma Chanlett-
Avery.
37 These totals do not include other U.S.-sponsored programs in Vietnam funded outside the
foreign operations budget, such as Department of Defense de-mining assistance, Department
of Labor, Bureau of International Labor Affairs projects in Vietnam, Centers for Disease
Control (CDC) HIV/AIDS programs, and Fulbright educational exchanges.
CRS-25
Organization (WTO) accession, which is expected in 2006 or 2007. ESF supports
development projects in the Central Highlands, where many reported human rights
abuses against the Christian, ethnic minority Montagnards allegedly have occurred.
In June 2005, the United States and Vietnam concluded an agreement whereby the
United States would establish an IMET program in Vietnam involving medical,
technical, and language support.38
Political and security relations between Hanoi and Washington have improved
markedly in recent years, as symbolized in 2005 by the signing of a bilateral IMET
agreement and the sending of Vietnamese officers to the United States for English
language training. During a trip to Hanoi in June 2006, Secretary of Defense Donald
Rumsfeld and his Vietnamese counterpart discussed expanding the IMET program.
Reportedly, the Vietnamese also inquired about acquiring certain U.S. military
equipment and spare parts.
Many Members of Congress have supported placing conditions upon U.S.
assistance to Vietnam. The Vietnam Human Rights Act of 2005 (H.R. 3190) would
prohibit non-humanitarian assistance to the government of Vietnam unless the
President certifies to Congress that Vietnam has made substantial progress regarding
freedom of religion, the human rights of ethnic minority groups in the Central
Highlands, and combating trafficking in persons.39 At present, the bilateral IMET
agreement is the only aid program that would be affected, because it is the only U.S.
non-humanitarian assistance that is given directly to the government of Vietnam.
In 2004, USAID’s Office of Foreign Disaster Assistance provided $700,000 to
the U.N. Development Program for flood and storm early-warning systems in
Vietnam. Vietnam also participates in OFDA-funded activities that increase flood
forecasting capacity and early-warning information transfer to communities in the
Lower Mekong River Basin.
South Asia
Key U.S. foreign aid objectives in South Asia include combating terrorism,
developing bilateral military ties, reducing poverty and disease, spreading secular
education, fostering political stability, and strengthening democratic institutions.
Prior to September 2001, South Asia was the smallest regional recipient of U.S. non-
food assistance. Since the war on terrorism began, counterterrorism and related
funding for South Asia, especially Afghanistan and Pakistan, have made the region
a relatively large recipient of humanitarian, development, and economic assistance
and the second-largest beneficiary of military assistance after the Middle East.
Before 2002, India and Bangladesh were the largest recipients of U.S. bilateral aid
in South Asia. Following Pakistan’s participation in Operation Enduring Freedom
38 Sharon Behn, “U.S. Military Specialists Headed to Vietnam,” Washington Times, June 23,
2005.
39 For further information about United States foreign aid to Vietnam and proposed
sanctions, see CRS Report RL33316, U.S.-Vietnam Relations: Background and Issues for
Congress and CRS Report RL32636, U.S. Assistance to Vietnam, both by Mark E. Manyin.





























































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-26
(OEF) in Afghanistan, the country became the largest beneficiary of U.S. foreign
assistance in the region after Afghanistan, followed by India. See Figure 6.
South Asia faces daunting development challenges, including poverty,
HIV/AIDS and childhood diseases, illiteracy, and fast-growing populations. These
conditions in turn threaten political stability and, according to some observers, create
fertile ground for the rise of radical religious thinking and political ideologies. India,
Nepal, Pakistan, and Sri Lanka and have long dealt with terrorist and insurgent
groups to varying degrees, while some Al Qaeda forces are believed to have fled to
Bangladesh.40 Since 2005, Bangladesh, India, and Nepal have received significant
increases in Anti-Terrorism Assistance (ATA).
USAID’s South Asia Regional Initiative for Energy promotes international
energy cooperation, infrastructure investment, and regulatory reform. The South
Asia Regional Fund (an estimated $900 million in 2006) addresses “the conditions
that breed extremism as well as the perceptions that feed extremism” with programs
that advance economic opportunity, democracy projects that foster government
accountability and citizen participation, and education initiatives that aim to enhance
tolerance, critical thinking, problem solving, and employment skills. South Asian
countries also receive assistance through USAID’s Asia Near East (ANE) regional
programs, including workforce development, democracy building, and education
programs for promoting social tolerance and political moderation.
Figure 6. U.S. Assistance to South Asia
(Excluding Food Aid), 2001-2006
(millions of current U.S. dollars)

1400
1200
1000
800
600
400
200
0
2002
2004
2006 (est.)
2001
2003
2005
Pakistan
Sri Lanka
Nepal
Bangladesh
India
40 See CRS Report RL32259, Terrorism in South Asia, by K. Alan Kronstadt and Bruce
Vaughn.
CRS-27
Foreign Aid Restrictions. Both India and Pakistan faced sanctions on non-
humanitarian aid for conducting nuclear weapons tests in 1998. The United States
imposed additional restrictions on aid to Pakistan because of its delinquency on
foreign loan payments and because of the military coup that took place in October
1999. Many of the nuclear test-related sanctions were lifted soon after they were
imposed, and the United States reportedly was prepared to normalize relations with
India in the first half of 2001.
On September 22, 2001 President Bush issued a final determination removing
all nuclear test-related sanctions against India and Pakistan pursuant to the
Department of Defense Appropriations Act, 2000 (P.L. 106-79). On October 27,
2001, the President signed S. 1465 into law (P.L. 107-57), exempting Pakistan from
coup-related sanctions through FY2002, providing waiver authority on the sanctions
through FY2003, and granting an exemption from foreign aid prohibitions related to
the country’s loan defaults.41 Congress has extended the waiver authority on coup-
related sanctions and the exemption regarding loan arrearage on a yearly basis
through FY2006. Since 2003, President Bush has annually exercised the waiver
authority on coup-related sanctions against Pakistan. The President again certified
the waiver on February 8, 2006. A crucial challenge for the United States, according
to some U.S. leaders, is how to assist Pakistan in its anti-terrorism activities and
reward its cooperation in Operation Enduring Freedom while still applying pressure
regarding democratization, nuclear non-proliferation, and other U.S. foreign policy
imperatives.
Disaster Assistance. In the December 2004 earthquake and tsunami, Sri
Lanka suffered heavy human losses and property damage. The United States
government pledged $134 million in disaster assistance (including USAID disaster
assistance and food aid and USDA food aid) to Sri Lanka and $17.9 million to
India.42 On October 8, 2005, a catastrophic, magnitude 7.6 earthquake struck
Pakistan, killing over 73,000 persons in Pakistan and 1,333 in India and leaving
nearly 3 million people homeless. The United States pledged $300 million in
economic assistance to the affected region.43
41 Pursuant to P.L. 107-57, the President must determine and certify that such a waiver: (a)
would facilitate the transition to democratic rule in Pakistan; and (b) is important to United
States efforts respond to, deter, or prevent acts of international terrorism.
42 USAID, Fact Sheet no. 39, Indian Ocean — Earthquake and Tsunamis (July 7, 2005);
USAID, Tsunami Assistance, One Year Later (December 21, 2005).
43 USAID, Fact Sheet no. 44, South Asia — Earthquake (August 25, 2006).
CRS-28
Country Aid Levels and Restrictions — South Asia
Bangladesh
Table 14. U.S. Assistance to Bangladesh, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003
FY2004
FY2005
estimate
request
CSH
27,600
35,500
33,412
26,384
25,884
DA
21,391
18,200
16,535
10,859
8,400
ESF
4,000
4,971
4,960
4,950
5,000
FMF
0
0
248
990
875
IMET
772
862
1,035
891
985
NADR
0
0
893
200
3,713
Peace Corps
1,248
1,566
1,773
1,804
1,870
Totals
55,011
61,099
58,856
46,078
46,727
Food Aid
P.L. 480 Title
II Granta
38,577
33,451
22,122
29,934
46,000
Section
416(b)b
49
53
3,257
—
—
Sources: U.S. Department of State, USAID, U.S. Department of Agriculture.
a. USAID data — includes freight costs.
b. USDA data — does not include freight costs.
U.S. foreign aid policy emphasizes sustainable economic development and
effective, democratic governance in Bangladesh, one of the poorest and most
populous countries in the world. According to the Department of State, Bangladesh
is a moderate Islamic democracy; however, poverty, political divisiveness, and
corruption, combined with porous borders, have increased the attractiveness of
radical ideologies, including rising Islamist militancy: “Bolstering democracy and
advancing development in Bangladesh are, therefore, essential to promoting stability
and preventing the spread of terrorism in South Asia.”44 CSH funding supports the
following efforts: child, maternal, and reproductive health; family planning;
HIV/AIDS programs; and TB and Avian Influenza prevention. Development
Assistance targets effective and accountable governance, anti-corruption activities,
private sector development, basic education, water and sanitation, and disaster
mitigation. ESF programs support parliamentary reforms and economic initiatives.
FMF helps to build the country’s Coast Guard. IMET aims to promote an apolitical,
professional Bangladeshi military as well as build counterterrorism and peacekeeping
capabilities. NADR programs include anti-terrorist police training, counter-terrorist
financing, and terrorist interdiction.
44 U.S. Department of State, “FY2007 Congressional Budget Justification for Foreign
Operations,” February 2006.
CRS-29
In 2000, the United States signed an agreement with Bangladesh reducing the
country’s debt payments to the United States by $10 million over 18 years. In return,
Bangladesh is to set aside $8.5 million to endow a Tropical Forest Fund to protect
and conserve its mangrove forests.45
The major bilateral aid donors to Bangladesh are Japan, the United Kingdom,
and the United States.
India
Table 15. U.S. Assistance to India, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003
FY2004 FY2005 estimate
request
CSH
47,438
47,800
53,222
47,690
48,366
DA
34,495
22,539
24,856
10,892
10,004
ESF
10,500
14,912
14,880
4,950
6,500
IMET
1,000
1,366
1,502
1,188
1,480
NADR
1,000
685
4,181
2,445
1,478
Totals
94,433
87,302
98,641
67,165
67,828
Food Aid
P.L. 480 Title
II Granta
42,812
40,869
35,763
44,053
45,000
Section
416(b)b
0
0
0
—
—
Sources: U.S. Department of State, USAID, U.S. Department of Agriculture.
a. USAID data — includes freight costs.
b. USDA data — does not include freight costs.
The United States significantly increased bilateral aid to India in FY2002 and
FY2003, largely as part of its anti-terrorism efforts in the region. Both
counterterrorism efforts and daunting economic and social problems remain key
targets of U.S. assistance. Current programs are viewed in the context of a
strengthening strategic partnership between the two countries.
CSH funds target health programs, HIV/AIDS prevention and treatment, and
family planning. According to the Department of State, India is home to one-third
of the world’s poor, and more than half of the country’s children are malnourished.
India has an estimated 5.1 million people infected with the HIV virus, the second
highest national total in the world after South Africa. Many members of Congress
have called for India to be included in the President’s Emergency Plan for AIDS
Relief.46 Development Assistance initiatives include water and sanitation programs,
basic education, disaster management, and economic growth programs that may
45 Pursuant to the Tropical Forest Conservation Act (P.L. 105-214).
46 See 108th Congress, H.R. 4449 and S. 2203 and 109th Congress, H.R. 1408 and S. 674.
CRS-30
provide opportunities for U.S. investment. ESF for India has several components,
including fiscal reform, power sector distribution, vocational education, disaster
mitigation, and urban infrastructure and services. IMET helps to strengthen
professionalism in the Indian military and facilitate cooperation in U.S.-India joint
exercises. NADR Anti-Terrorism Assistance supports training courses related to
explosive detection and countermeasures. NADR funding for the Export Control and
Related Border Security Assistance (EXBS) program assists India in strengthening
its export control system in order to help stem the spread of weapons of mass
destruction.
Non-Proliferation Sanctions. In 1998, the United States imposed sanctions
on India and Pakistan for detonating nuclear devices. Non-humanitarian assistance
was terminated or suspended. India, one of the largest recipients in the world of U.S.
development assistance and food aid, continued to receive funding for health and
food programs. In 1998, Congress passed the India-Pakistan Relief Act of 1998 (P.L.
105-277, Title IX), which authorized the President to waive the sanctions for one
year. On October 25, 1999, Congress provided permanent waiver authority.47 On
October 27, 1999, President Clinton, signaling a warming of bilateral relations,
waived the applicability of nonmilitary aid and IMET restrictions on India. On
September 22, 2001, President Bush issued a final determination removing all
remaining sanctions on India and Pakistan resulting from their 1998 nuclear tests.
The United States government pledged $17.9 million in disaster relief and
reconstruction assistance to India for areas affected by the December 2004 tsunami.
The United States is the fifth-largest bilateral aid donor to India, after Japan, the
United Kingdom, and Germany.
Nepal
Table 16. U.S. Assistance to Nepal, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
CSH
19,899
24,840
25,165
18,613
17,985
DA
10,247
8,874
10,000
7,895
7,051
ESF
4,000
4,971
4,960
4,950
5,000
FMF
2,950
3,975
0
—
1,300
IMET
500
546
648
644
790
NADR
0
0
2,771
991
1,186
Peace
2,624
2,108
179
—
—
Corps
Totals 40,220
45,314
43,723
33,093
33,312
47 Department of Defense Appropriations Act, FY2000 (P.L. 106-79).
CRS-31
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
Food Aid
P.L. 480
Title II
0
0
966
0
0
Grantb
FFEc
2,130
0
3,871
—
—
Section
416(b)c
0
0
0
—
—
Sources: U.S. Department of State, USAID, U.S. Department of Agriculture.
a. Supplemental Appropriations (P.L. 107-206).
b. USAID data — includes freight costs.
c. USDA data — does not include freight costs.
In 2005-2006, Nepal experienced a period of political instability marked by
sharp conflict between King Gyanendra, democratic political parties, students, and
Maoist insurgents. According to the Department of State, U.S. assistance in Nepal
has refocused on democracy and governance objectives: “Working to persuade
Nepal’s constitutional political actors to reconcile in order to counter that Maoist
threat from a position of strength is key to achieving U.S. regional and bilateral
goals.”48 The FY2007 budget request includes a new, multi-pronged development
program which aims to enhance stability and security through addressing “key
sources of fragility” — exclusion, weak governance, lack of economic opportunities
and inequitable growth.”
In 2004, the United States suspended the Peace Corps program in Nepal after
Maoist rebels bombed the United States Information Center in Kathmandu.
IMET helps the Royal Nepal Army (RNA) to conduct disciplined military
operations within the constraints of the rule of law, international human rights
standards, and democratic values. NADR Anti-Terrorism Assistance funds programs
that respond to a resurgent Maoist insurgency. The FY2007 budget request includes
funding for a NADR Terrorist Interdiction Program (TIP).
Since 2005, the United States has placed restrictions upon FMF for Nepal due
to human rights concerns and unless the Secretary of State determines that waiving
such restrictions is in the national security interests of the United States. The Foreign
operations appropriations measure for FY2006 (P.L. 109-102) provided that FMF
may be made available to Nepal only if the Secretary of State certifies that the
Government of Nepal has restored civil liberties, is protecting human rights, and has
demonstrated a commitment to restoring multi-party democratic government. The
FY2007 budget justification states that “FMF is critical, both for combating the
Maoists and for the incentive it provides for the country to improve its record in
human rights and democracy in order to qualify for FMF.”
48 U.S. Department of State, “FY2007 Congressional Budget Justification for Foreign
Operations,” February 2006.
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FY2007 Foreign Operations Appropriations Legislation. The House
Appropriations Committee (H.Rept. 109-486), expressing concern about the alleged
“disproportionate military response” to student democracy demonstrators in 2006 in
Kathmandu, does not recommend IMET funding for 2007 and argues that the
Department of State and Defense should review this matter before implementing
IMET in 2006.

The largest aid donors to Nepal are Japan, the United States, Denmark, the
United Kingdom, and Switzerland.
CRS-33
Pakistan
Table 17. U.S. Assistance to Pakistan, 2003-2007
(thousands of dollars)
FY2003 FY2003
W.S.a
FY2004 FY2004
E.S.b
FY2005 FY2005d
FY2006 est.
FY2007 req.
CSH
15,645
—
25,600
—
21,000
—
32,172
21,700
DA
34,500
—
49,400
—
29,000
—
40,590
29,000
ESF
188,000
—
—
200,000c
297,600
—
337,095
350,000
FMF
49,500
175,000
74,560
—
148,800
150,000
297,000
300,000
IMET
990
—
1,384
—
1,885
—
2,024
2,075
INCLE
6,000
25,000
31,500
—
32,150
—
37,620
25,500
NADR
717
—
4,930
—
7,951
—
7,800
10,920
Totals 295,352
200,000
187,374
200,000
538,386
150,000
754,301
739,195
Food Aid
P.L. 480 Title IIe
6,792
—
13,067
—
0
—
3,427
0
FFEf
4,200
—
0
—
5,796
—
—
—
FFPf
8,977
—
5,980
—
10,170
—
—
—
Section 416(b)f
0
—
9,583
—
1,972
—
—
—
a. Emergency Wartime Supplemental Appropriations Act, 2003 (P.L. 108-11).
b. Emergency Supplemental Appropriations for Iraq and Afghanistan Security and Reconstruction Act, 2004 (P.L. 108-106).
c. Economic grants that can be used to cancel a total of approximately $2 billion in debt owed by Pakistan to the U.S. government. Amounts for FY2004 “shall not be considered
‘assistance’ for the purposes of provisions of law limiting assistance to a country” (P.L. 108-106).
d. Emergency Supplemental Appropriations Act, 2005 (P.L. 109-13).
e. USAID data — includes freight costs.
f. USDA data — does not include freight costs.
CRS-34
Foreign Aid Programs. The State Department’s FY2007 congressional
budget justification states that “Pakistan is a front-line state and firm ally in the
global war on terrorism.” Most U.S. assistance programs in the country claim to
directly or indirectly serve U.S. counterterrorism goals. To offset the costs of
ongoing military operations, Pakistan has received emergency economic aid and
bilateral debt reduction assistance. Programs supporting health care, education,
economic development, and democratization aim to promote social and political
moderation. Since 2002, USAID has carried out a $100 million, five-year education
program, especially in Baluchistan and Sindh provinces in southern Pakistan.49 ESF
and DA funds support activities to improve and strengthen elections processes,
political parties, legislative functions, local government, and human rights. The
United States government has committed over $69 million in humanitarian assistance
to Pakistan in response to the devastating October 2005 earthquake centered in
Pakistan-administered Kashmir.50 In addition, in 2006, USAID implemented an
earthquake reconstruction program with planned and proposed expenditures of $55
million and $50 million in FY2006 and FY2007, respectively.
According to the State Department, in 2007, FMF is to be used for Pakistani
military modernization, including the acquisition of helicopters, vehicles, spare parts,
communications and surveillance equipment, and night vision gear. IMET supports
education in professional military conduct and increasingly technical training in
information and financial management, logistics, and weapons operation and
maintenance. INCLE programs focus on reversing the recent growth in opium
production, after almost eradicating poppy cultivation in 2000, providing economic
alternatives, and reducing demand for heroin. NADR programs include anti-
terrorism assistance, including crisis response training, terrorist interdiction software,
counterterrorism finance capabilities, and reform of export control laws.
Lifting of Foreign Aid Restrictions. Pakistan received limited U.S.
assistance during the 1990s — counter-narcotics support, food aid, and Pakistan
NGO Initiative programs51 — due to congressional restrictions in response to
Pakistan’s nuclear weapons program. In 1985, the Pressler Amendment to the
Foreign Assistance Act of 1961 (Section 620e) barred U.S. foreign assistance to
Pakistan unless the President determined that Pakistan did not possess nuclear
weapons and that U.S. assistance would reduce the risk of Pakistan’s obtaining them.
In 1990, President George H. W. Bush declined to make such determinations and
imposed Pressler Amendment sanctions against Pakistan. This restriction was eased
in 1995 to prohibit only military assistance.52 In 1998, following nuclear weapons
49 Pakistan’s literacy rate, at 49%, ranks among the world’s lowest.
50 The United States government pledged a total of $300 million in economic assistance to
the areas affected by the disaster. See USAID, South Asia — Earthquake, Fact Sheet #44
(August 25, 2006).
51 The USAID Pakistan NGO Initiative delivered education and health services primarily
through the Asia Foundation and Aga Khan Foundation USA and independently of the
government of Pakistan. Total funding for the program (1994-2003) was $10 million.
52 The Brown Amendment to the Foreign Assistance Act (1995) narrowed the prohibition
to military assistance only.
CRS-35
tests carried out by India and Pakistan, President Clinton imposed restrictions on
non-humanitarian aid to both countries pursuant to the Arms Export Control Act of
1968 (Section 102). Furthermore, Pakistan continued to be ineligible for most forms
of U.S. foreign assistance due to its delinquency in servicing its debt to the United
States and to the 1999 military coup.53 Although the Department of Defense
Appropriations Act, 2000 (P.L. 106-79) gave the President authority to permanently
waive all nuclear test-related sanctions, President Clinton waived few restrictions on
Pakistan (e.g., USDA credits and U.S. commercial bank loans) as compared to India.
Following the September 2001 terrorist attacks on the United States, Pakistan
was designated as a front-line state in the war on terrorism and received dramatically
increased U.S. aid levels. In late September 2001, President George W. Bush waived
nuclear weapons sanctions that prohibited military and economic aid to India and
Pakistan. The Bush Administration also rescheduled $379 million of Pakistan’s $2.7
billion debt to the United States so that Pakistan would not be considered in arrears,
a requirement for further foreign assistance. On October 27, 2001, President Bush
signed S. 1465 into law (P.L. 107-57), allowing the United States government to
waive sanctions related to the military coup and authorizing presidential waiver
authority through 2003, provided the President determined that making foreign
assistance available would facilitate democratization and help the United States in
its battle against international terrorism. P.L. 107-57 also exempted Pakistan from
foreign assistance restrictions related to its default on international loans.54 The
Emergency Supplemental Appropriations for Iraq and Afghanistan Security and
Reconstruction Act, 2004 (P.L. 108-106) amended P.L. 107-57 by extending the
President’s waiver authority and loan payment exemption through 2004. P.L. 108-
447 and P.L. 109-102 extended the provisions of P.L. 107-57 through FY2005 and
FY2006, respectively. Since 2003, President Bush has annually exercised the waiver
authority on coup-related sanctions against Pakistan.55 The United States is the major
bilateral aid donor to Pakistan, followed by Japan and the United Kingdom.
FY2007 Foreign Operations Appropriations Legislation. The House
Appropriations Committee (H.Rept. 109-486) recommends $300 million for ESF
programs for Pakistan and $200 million in FMF, decreases of $50 million and $100
million from the Bush Administration’s FY2007 request, respectively. The Senate
Appropriations Committee (S.Rept. 109-277) would significantly increase
53 See CRS Report RS20995, India and Pakistan: U.S. Economic Sanctions, by Dianne E.
Rennack. The Foreign Operations Appropriations Act, FY2001 (P.L. 106-429), Section
508, denies foreign assistance to any country whose duly elected head of government is
deposed by military coup or decree. Sec. 620(q) of the Foreign Assistance Act of 1961
denies foreign assistance to any country that is in default for more than six months in
servicing or repaying loans to the United States. The President may waive this restriction
if he finds that assistance is in the national interest and so notifies Congress. P.L. 106-429,
Section 512 (the Brooke Amendment), prohibits assistance to any country that is in default
on loan payments to the United States for over one year. This latter restriction includes no
waiver authority for the President.
54 See P.L. 107-57, Sections 1(b) and 3(2).
55 For additional information, see CRS Report RL33498, Pakistan-U.S. Relations, by K.
Alan Kronstadt.
CRS-36
Democracy Fund support ($30 million) as well as health and development assistance
but reduce ESF by $94 million from the Administration’s budget request.
Sri Lanka
Table 18. U.S. Assistance to Sri Lanka, 2003-2007
(thousands of dollars)
FY2006
FY2007
Account
FY2003 FY2004 FY2005 estimate
request
CSH
300
300
300
0 0
DA
6,150
4,750
6,774
3,465
3,500
ESF
3,950
11,929
9,920
3,690
4,000
FMF
0
2,495
496
990
900
IMET
307
553
461
445
540
NADR
2,400
1,775
2,700
4,075
1,200
Totals
13,107
21,802
20,651
12,665
10,140
Food Aid/Disaster Assistance
P.L. 480 Title
II Granta
596
4,190
1,996
0
0
FFPb
2,775
0
9,690
—
—
Section
416(b)b
0
923
0
—
—
Tsunami
Reliefc
—
—
134,600
—
—
Sources: U.S. Department of State, USAID, U.S. Department of Agriculture.
a. USAID data — includes freight costs.
b. USDA data — does not include freight costs.
c. Tsunami Recovery and Reconstruction Fund, P.L. 109-13
USAID programs aim to promote the peace process between the government of
Sri Lanka and Tamil separatists led by the Liberation Tigers of Tamil Eelam (LTTE).
In 2006, the 2002 ceasefire agreement showed signs of unraveling. U.S. assistance
also helps to promote economic growth and advance democracy and human rights.
Sri Lanka suffered a major setback from its reconstruction efforts due to the 2004
tsunami disaster. Since 2004, Sri Lanka has been eligible for MCA assistance. The
United States ranks fourth after China, Japan, and Germany in foreign aid assistance
to the country.
ESF and DA funding support programs that foster non-violent dispute
resolution, reconstruction, economic reintegration and growth, local democratic
processes and institutions, political party development, civil society, and objective
mass media. FMF enables the Sri Lankan military to purchase non-weapon items
such as uniforms, flack vests, night vision goggles, and communications equipment.
IMET helps to professionalize the Sri Lankan military, build the capabilities of its
officers in combat against the LTTE and in global anti-terrorism activities, and
CRS-37
enhance interoperability with U.S. forces. NADR programs include de-mining
activities and non-proliferation efforts.
2004 Tsunami Relief. Sri Lanka suffered heavy human losses (an estimated
31,000 dead, 4,100 missing, and 519,000 displaced) and property damage worth
approximately $1 billion (or 4.4% of GDP) in the December 2004 earthquake and
tsunami.56 The Bush Administration pledged $134.6 million for disaster relief and
reconstruction to Sri Lanka.
56 USAID, Fact Sheet no. 39, Indian Ocean — Earthquake and Tsunamis, July 7, 2005
CRS-38
Appendix. Selected Acronyms for U.S. Foreign Aid
Accounts and Programs
CSD: Child Survival and Disease
CSH: Child Survival and Health (replaces CSD)
DA: Development Assistance
DF: Democracy Funds
EDA: Excess Defense Articles
ERMA: Emergency Migration and Refugee Assistance
ESF: Economic Support Funds
FFP: Food for Progress
FFE: Food for Education
FMF: Foreign Military Financing
GHAI: Global HIV/AIDS Initiative
IMET: International Military Education and Training
INCLE: International Narcotics Control and Law Enforcement
MCA: Millennium Challenge Account
MCC: Millennium Challenge Corporation
MRA: Migration and Refugee Assistance
NADR: Non-proliferation, Anti-terrorism, De-mining, and Related Programs
OFDA: Office of Foreign Disaster Assistance
PKO: Peace-keeping Operations
P.L. 480 Title I: Food Aid (USDA loans)
P.L. 480 Title II: USAID emergency food program
Section 416(b): Surplus Food Commodities
USDA: United States Department of Agriculture