Order Code RL31362
U.S. Foreign Aid to East and South Asia:
Selected Recipients
Updated August 22, 2007
Thomas Lum
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

---

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 Millennium Challenge
Account (MCA) and Global HIV/AIDS Initiative (GHAI) were launched 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 counterterrorism 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 new Strategic Framework for U.S. Foreign Assistance groups foreign aid
objectives into five categories as part of the Bush Administration’s overarching goal
of transformational diplomacy: peace and security; governing justly and
democratically; investing in people; economic growth; and humanitarian assistance.
Counterterrorism efforts, democracy building, and the MCA are major,
complimentary components of the Administration’s foreign aid policy, which
promotes good governance as a crucial condition for both development and global
security.
The United States has restricted foreign assistance to many countries in East and
South Asia in order to encourage democracy. Since 2003, President Bush has
annually exercised the waiver authority on coup-related sanctions against Pakistan.
In 2005, the United States government resumed full military assistance to Indonesia,
based upon the satisfaction of legislative conditions and national security grounds.
In response to the September 2006 military coup in Thailand, the Bush
Administration suspended military and peacekeeping assistance pursuant to Section
508 of the Foreign Operations Appropriations Act.
The Administration’s FY2008 foreign operations budget request reduces
assistance to some Asian countries. The Senate report on H.R. 2764, the Department
of State, Foreign Operations and Related Programs Appropriations Act for 2008,
recommends additional FMF for the Philippines and Economic Support Funds (ESF)
for Nepal as well as increased funding for democracy and human rights programs in
Burma, Cambodia, China, Hong Kong, and Taiwan (S.Rept. 110-128). H.R. 2764
as passed by the House recommends more ESF for Burma, East Timor, and Tibet and
greater Development Assistance to India than the amounts provided by the
Administration’s request, and opposes military assistance to Thailand (H.Rept. 110-
197). This report will be updated periodically.

---

Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
New Approaches to Foreign Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Funding Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FY2008 Budget Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regional Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
East Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
September 2006 Military Coup in Thailand . . . . . . . . . . . . . . . . . . . . . 9
Chinese Aid to Southeast Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Country Aid Levels and Restrictions — East Asia . . . . . . . . . . . . . . . . . . . . . . . 11
Burma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
People’s Republic of China (PRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
East Timor (Democratic Republic of Timor-Leste) . . . . . . . . . . . . . . . . . . . 16
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Resumption of Military Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2004 Tsunami Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Laos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mongolia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
September 2006 Military Coup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
South Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Disaster Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Country Aid Levels and Restrictions — South Asia . . . . . . . . . . . . . . . . . . . . . . 28
Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Nepal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Lifting of Foreign Aid Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sri Lanka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Appendix. Selected Acronyms for U.S. Foreign Aid
Accounts and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
List of Figures
Figure 1. Major U.S. Aid Recipients in Asia, by Aid Amount, 2001-2006 . . . . . . 3

---

Figure 2. Health and Development Assistance (CSH and DA) by Region,
FY2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 3. Economic Support Funds by Region, FY2006 . . . . . . . . . . . . . . . . . . . 7
Figure 4. Military Assistance by Region, FY2006 . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 5. U.S. Foreign Aid (Non-food) to East Asian Countries, FY2006 . . . . . 10
Figure 6. Top U.S. Foreign Aid Recipients in East Asia, FY2001-FY2006 . . . . 10
Figure 7. U.S. Assistance to South Asia (excluding Food Aid), 2001-2006 . . . 27
List of Tables
Table 1. U.S. Foreign Assistance by Region (Excluding Food Aid), 2001-2006 . 5
Table 2. U.S. Assistance to Burma, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 3. U.S. Assistance to Cambodia, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . 12
Table 4. U.S. Assistance to China, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table 5. U.S. Assistance to East Timor, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . 16
Table 6. U.S. Assistance to Indonesia, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . 17
Table 7. U.S. Assistance to Laos (LPDR), 2004-2008 . . . . . . . . . . . . . . . . . . . . 19
Table 8. U.S. Assistance to Malaysia, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . 20
Table 9. U.S. Assistance to Mongolia, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . 21
Table 10. U.S. Assistance to Philippines, 2004-2008 . . . . . . . . . . . . . . . . . . . . . 21
Table 11. U.S. Assistance to Thailand, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . 23
Table 12. U.S. Assistance to Vietnam, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . 24
Table 13. U.S. Assistance to Bangladesh, 2004-2008 . . . . . . . . . . . . . . . . . . . . 28
Table 14. U.S. Assistance to India, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table 15. U.S. Assistance to Nepal, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table 16. U.S. Assistance to Pakistan, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . . 32
Table 17. U.S. Assistance to Sri Lanka, 2004-2008 . . . . . . . . . . . . . . . . . . . . . . 35

---

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. In the past decade, the main emphasis of U.S. foreign
assistance has evolved from economic and social development to counterterrorism
and “transformational diplomacy.” 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 included both military aid and efforts to mitigate conditions
that may make radical ideologies and religious extremism attractive, such as poverty,
limited educational opportunities, and ineffective or unaccountable governance.
In 2007, the Bush Administration restructured U.S. foreign aid programs to
better serve the goal of transformational diplomacy, which places greater emphasis
on U.S. security and democracy building as major goals of foreign aid. Toward these
ends, the new Strategic Framework for U.S. Foreign Assistance divides aid
programming among five objectives: peace and security; governing justly and
democratically; investing in people; economic growth; and humanitarian assistance.
The Millennium Challenge Account (MCA), established in 2004, promotes these
objectives by rewarding countries that demonstrate good governance, investment in
health and education, and sound economic policies. Some policy-makers have
expressed concern that transformational diplomacy and MCA funding may take
resources away from local development programs, particularly in countries that
contain no security threats to the United States or where the government does not
perform well. Furthermore, according to some analysts, promoting democracy in
some countries prematurely may result in a waste of foreign aid.2
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 Marcela Sanchez, “A Risky Shift in Direction,” South Florida Sun-Sentinel, January 27,
2006; Guy Dinmore, “U.S. Poised for Radical Reform of Foreign Aid Programme,”
Financial Times, January 19, 2006; Guy Dinmore, “Critics of ‘Utopian’ Foreign Policy Fail
to Weaken Bush Resolve,” Financial Times, January 13, 2006.

---

CRS-2
Funding Trends
Foreign operations appropriations declined from a peak in 1985 to a low in
1997, after which they began to rise again. 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 assistance and
other security initiatives in the Middle East. Since 2001, U.S. assistance to front line
states in the global war on terrorism and Iraq war-related funding 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).3
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. 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 counterterrorism 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 $665 million
compared to $3.4 million in 2000-2001. Annual U.S. assistance to India increased
by over 50% in 2002-2006 compared to 2000-2001, while annual U.S. assistance to
the Philippines during the same period 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.
Both the Bush Administration and Congress have supported increased funding
for the Department of State’s Human Rights and Democracy Fund (HRDF).
Spending for HRDF increased from a yearly average of $13 million in 2001-2002 to
$33.7 million in 2003-2005. Congress appropriated $63 million for HRDF in
3 CRS Report RL33262, Foreign Policy Budget Trends: A Thirty-Year Review, by Larry
Nowels.

---

CRS-3
FY2006. For 2005-2006, approximately one-third of the Democracy Fund was
allocated to Asia, mostly for rule of law and civil society programs in China.4
Figure 1. Major U.S. Aid Recipients in Asia, by Aid Amount,
2001-2006 (millions of current U.S. dollars)
1200
1000
800
600
400
200
0
2001
2002
2003
2004
2005
2006
Bangladesh
Cambodia
India
Indonesia
Pakistan
Philippines
Some analysts 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.5 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 call for $1.6 billion.
Congress appropriated $1.5 billion and $1.7 billion for the MCC in 2005 and 2006,
respectively, compared to the President’s requests of $2.5 billion in 2005 and $3
billion in 2006. For FY2008, the Administration has requested $3 billion for the
MCC. Four Asia-Pacific countries are eligible to apply for MCA assistance — East
Timor, Mongolia, Sri Lanka, and Vanuatu — while two countries — Indonesia and
the Philippines — have been designated as “threshold,” qualifying them for
assistance to help them become Millennium Challenge Compact-eligible.
4 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).
5 Murray Hiebert, “More Aid, but Strings Attached,” Far Eastern Economic Review,
February 20, 2003.

---

CRS-4
Foreign Aid Restrictions
The United States has imposed restrictions on non-humanitarian development
aid, Economic Support Funds (ESF),6 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, Thailand, and
Pakistan, have faced congressional restrictions on U.S. bilateral assistance. However,
the United States continues to fund non-governmental organizations (NGOs) that run
development and democracy programs in some of these countries. Most sanctions
on aid to Cambodia, Indonesia, and Pakistan have been lifted.
FY2008 Budget Request
Due to the late enactment of the Continuing Appropriations Resolution for
FY20077 as well as the restructuring of aid and reporting procedures at the State
Department and USAID, some program funding levels and activities for FY2007
have not yet been specified. The Administration’s FY2008 total budget request for
the East Asian countries that are covered in this report ($453 million) would change
little from FY2007 (estimated $442 million). With the exception of Indonesia and
Vietnam, assistance to most EAP countries would decrease or remain about the same
compared to FY2007 appropriations. The budget request for Indonesia includes large
increases in funding for Development Assistance and Foreign Military Financing.
Global HIV/AIDS Initiative funding for Vietnam would grow by 56% under the
FY2008 proposed budget, from $56 million in FY2007 to $87.7 million. The
FY2008 budget would increase assistance to South Asian countries by 8% (from
$900 million to $974 million). This reflects greater proposed funding for Bangladesh
(mostly Development Assistance) and Pakistan (ESF). For FY2008, the
Administration requests new INCLE funding for counter-narcotics programs in
Bangladesh and India and law enforcement enhancement activities in Nepal and Sri
Lanka.
Regional Comparisons
Africa remained the largest regional recipient of Child Survival and Health
(CSH) and Development Assistance (DA) funding in FY2006.8 The largest regional
recipients of Economic Support Funds in FY2006 were Near East Asia (Middle East)
and South and Central Asia (mostly to Afghanistan, with a large portion going to
6 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.
7 P.L. 110-5, the Revised Continuing Appropriations Resolution, FY2007 amends the
Continuing Appropriations Resolution, FY2007 (P.L. 109-289, division B, as amended by
P.L. 109-369 and P.L. 109-383).
8 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).

---

CRS-5
Pakistan as well). The largest recipient of military assistance was Near East Asia
followed by South and Central Asia.9 These rankings were the same as those for
FY2005. See Table 1 and Figures 2-4.
Table 1. U.S. Foreign Assistance by Region
(Excluding Food Aid), 2001-2006
(millions of current U.S. dollars)
FY01
FY02
FY03
FY04
FY05
FY06
Africa
1,313
1,481
1,706
2,091
2,795
2,771
East Asia-
368
455
477
474
525
1,022
Pacific
Europe and
2,017
2,435
2,871
1,577
1,323
1,023
Eurasia
Near East Asia
5,401
5,567
8,409
5,556
5,755
5,217
(Middle East)
South Asia
(excluding
201
1,403
785
685
970
875
Afghanistan)
Western
749
1,385
1,559
1,545
1,723
1,516
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.
9 Military Assistance includes International Military Education and Training (IMET),
Foreign Military Financing (FMF), and Peacekeeping Operations (PKO).

---

CRS-6
Figure 2. Health and Development Assistance (CSH and DA)
by Region, FY2006 ($million)

---

CRS-7
Figure 3. Economic Support Funds by Region, FY2006
($million)
Figure 4. Military Assistance by Region, FY2006 ($million)

---

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
counterterrorism 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). USAID’s programs in East Asia
aim to address the conditions that may give rise to radical ideologies and terrorism,
such as 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.
Among EAP countries (excluding the Pacific Island nations),10 in FY2006,
Indonesia was the largest recipient of U.S. foreign aid, particularly ESF and health
and development assistance (CSH and DA), 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
law enforcement assistance (INCLE) were provided to Indonesia, the Philippines, and
East Timor. Indonesia, Cambodia, and the Philippines were the largest recipients of
Non-proliferation, Anti-terrorism, De-mining, and Related programs (NADR).
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. See Figures 5 and 6.
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
counterterrorism, border security, HIV/AIDS and avian influenza, combating human
trafficking, counter-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, improving
economic policy and governance, protecting the rights of people with disabilities, and
preventing and controlling HIV/AIDS and other infectious diseases.
10 For information on U.S. foreign assistance to the Pacific Island countries, see CRS Report
RL34086, The Southwest Pacific: U.S. Interests and China’s Growing Influence, by Thomas
Lum and Bruce Vaughn.

---

CRS-9
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. Foreign operations appropriations measures have imposed human
rights-related sanctions on U.S. foreign assistance to the governments of Burma and
Cambodia while supporting Burmese dissident groups and promoting human rights,
civil society, and democracy in Cambodia, China, East Timor, Indonesia, Mongolia,
and Thailand.
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. 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).
September 2006 Military Coup in Thailand. In response to the September
19, 2006, military coup in Thailand, the Bush Administration suspended military and
peacekeeping assistance pursuant to Section 508 of the Foreign Operations
Appropriations Act, which provides that such funds shall not be made available to
any country whose duly elected head of government was deposed by military coup.
The U.S. government also suspended funding for counter-terrorism assistance
provided under Section 1206 of the National Defense Authorization Act for FY2006.
Other aid programs not affected by Section 508 or in the U.S. national interest would
continue to receive funding.
Chinese Aid to Southeast Asia
The People’s Republic of China (PRC) has become an important source of
economic assistance to the Southeast Asian least developed countries of Burma,
Cambodia, and Laos. Such assistance includes low-interest loans, trade agreements,
foreign direct investment, technical assistance, and infrastructure and public works
projects. Some analysts have criticized PRC assistance and investments for being
non-transparent, supporting urban “trophy projects” rather than sustainable
development, and lacking performance criteria and environmental safeguards. Others
have argued that the benefits of PRC assistance to these countries, particularly
Cambodia and Laos, have outweighed any adverse effects, and that China has helped
to address needs not met by Western and Japanese aid. Many U.S. observers argue

---

CRS-10
that the United States should bolster its aid programs, trade activities, and diplomatic
presence in the region in order to counteract China’s growing influence.
Figure 5. U.S. Foreign Aid (Non-food) to East Asian Countries,
FY2006 ($million)
Figure 6. Top U.S. Foreign Aid Recipients in
East Asia, FY2001-FY2006 ($million)

---

CRS-11
Country Aid Levels and Restrictions — East Asia11
Burma
Table 2. U.S. Assistance to Burma, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
0
0
0
2,100
1,040
DA
0
0
0
0
800
ESF
12,923
7,936
10,890
10,890
2,790
Other
4,000a
3,000a
—
—
Totals
12,923
11,936
13,890
12,990
4,630
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. Furthermore, 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. 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.12 Ongoing and new U.S. assistance programs in Burma
and to Burmese refugees in Thailand include English language training, civil society
development, HIV/AIDS prevention, care, and treatment, aid to victims of human
trafficking, and basic health care. The appropriations committees of both the House
and Senate favor spending levels above the Administration’s FY2008 budget request
for democracy programs in Burma (H.Rept. 110-197 and S.Rept. 110-128).
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. Additional U.S. foreign aid sanctions against Burma include
opposition to international bank loans to Burma and a ban on debt restructuring
assistance. Since the Office to Monitor and Combat Trafficking in Persons was
established by the U.S. State Department in 2001, Burma has received a “Tier 3”
11 Including Southeast Asia and excluding North Korea and Pacific Island nations.
12 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.

---

CRS-12
assessment annually by the Office for failing to make significant efforts to bring itself
into compliance with the minimum standards for the elimination of trafficking in
persons. The Tier 3 ranking could serve as a basis for withholding non-humanitarian
aid.
Cambodia
Table 3. U.S. Assistance to Cambodia, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004
FY2005 FY2006 estimate
request
CSH
29,360
29,300
28,556
27,826
24,700
DA
2,750
8,950
5,483
7,597
1,056
ESF
16,900
16,864
14,850
14,850
12,170
FMF
0
992
990
990
200
IMET
0
0
54
43
70
INCLE
0
0
0
0
200
NADR
3,916
4,170
5,000
3,838
2,510
Peace Corps
0
0
1,081
—
1,379
Totals
52,926
60,276
54,933
55,144
42,285
Food Aid
P.L. 480 Title
II Granta
703
0
0
—
0
FFPb
3,444
3,643
—
—
—
FFEb
0
0
1,257
—
—
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.
Cambodia ranks 129th out of 175 countries and regions on the United Nations
Development Program’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.
In February 2007, the United States government lifted a decade-long ban on
direct bilateral aid to Cambodia. The U.S. government had imposed restrictions on
foreign assistance to Cambodia following Prime Minister Hun Sen’s unlawful seizure
of power in 1997 and in response to other abuses of power under his rule. Foreign
operations appropriations 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
met basic human needs. U.S. assistance was permitted only to Cambodian and
foreign NGOs and to local governments. Statutory exceptions allowed for the
following categories of U.S. assistance to the central government of Cambodia:

---

CRS-13
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.13
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. The European Union, 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. 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 control their proliferation.
In other U.S. assistance programs, Cambodia, one of the top five countries in
the world for the number of landmine casualties (approximately 800 victims per
year), is to receive approximately $5 million annually in 2006 and 2007 for
humanitarian de-mining activities (NADR/HD). In addition, in the past decade,
USAID has supported programs worth $13 million providing for prostheses, physical
rehabilitation, employment for persons with disabilities, and coordination of services
using Leahy War Victims Funds. 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).
In January 2007, the Peace Corps launched programs in Cambodia to teach
English and develop sustainable community activities.
The Senate Committee on Appropriations recommends $57 million for
assistance to Cambodia in FY2008, $15 million above the Administration’s request,
including funding for HIV/AIDS, democracy and rule of law programs that were
trimmed in the President’s budget proposal (S.Rept. 110-128).
13 For most of these activities, the U.S. government has collaborated with the central
government of Cambodia but continued to provide funding through the country’s large and
vibrant NGO community.

---

CRS-14
People’s Republic of China (PRC)
Table 4. U.S. Assistance to China, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
0
0
0
4,800
7,290
DA
0
0
4,950
5,000
0
ESF
13,500a
19,000b
23,000c
N/Ae 2,000
ESF/Tibet
3,976a
4,216b
3,960d
3,960
0
Peace Corps
863
1,476
1,683
1,886
1,953
Totals
18,339
24,692
33,593
15,646
11,243
Sources: U.S. Department of State, USAID.
a. P.L. 108-199.
b. P.L. 108-447.
c. Authorized by H.Rept. 109-265.
d. P.L. 109-102, Section 575.
e. Not yet determined
USAID does not have a presence or mission in the People’s’s Republic of China
(PRC). However, the Peace Corps has been involved in English language and
environmental education in China since 1993, and United States funding primarily
to U.S.-based non-governmental organizations (NGOs) for democracy and Tibet
programs has grown substantially since 2002 (approximately $15 million per year).

China received only Peace Corps assistance prior to 2000. The consolidated
appropriations act for FY2000 provided $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. Congress has increased its annual appropriation for democracy,
human rights, and rule of law programs in China from $10 million in 2002 to $23
million in 2006. Amounts for FY2007 and FY2008 have not yet been determined or
authorized.14 Appropriations for cultural preservation, economic development, and
environmental conservation in Tibetan communities in China have 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.15 Major
U.S. grantees have included the National Endowment for Democracy (NED), the
Asia Foundation, Temple University (School of Law), the American Bar Association,
14 For further information, see CRS Report RL33662, U.S.-Funded Assistance Programs in
China, by Thomas Lum.
15 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.

---

CRS-15
and the Bridge Fund (Tibet). In addition, NED provides grants (approximately $2
million per year since 1999) for programs that promote human rights, labor rights,
electoral and legal reforms, and independent mass media in China from its annual
congressional appropriation.16
The Department of State, Foreign Operations and Related Programs
Appropriations Act for 2008 (H.R. 2764), as passed by the House, and the Senate
report on the bill (S.Rept. 110-128) recommend $5 million for Tibet as well as
assistance to Tibetan refugees in Nepal and India.17 The Senate Committee on
Appropriations also recommends $15,000,000 for democracy, human rights, and rule
of law programs in the People’s Republic of China, Hong Kong and Taiwan (S.Rept.
110-128).
In 2006, Congress appropriated $5 million in Development Assistance (DA) to
American educational institutions for exchange programs related to democracy, rule
of law, and the environment in China. In 2007, DA is to be used for higher education
exchanges, environmental protection, and natural resource management. Beginning
in 2007, the U.S. government has funded HIV/AIDS programs in China through the
CSH account.
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.18
16 See General Accounting Office, “Foreign Assistance: U.S. Funding for Democracy-
Related Programs (China),” February 2004.
17 The House Report on H.R. 2764 recommends $2.5 million for Tibetan refugees in Nepal
and India (H.Rept. 110-197).
18 For further information, see CRS Report RL31910, China: Economic Sanctions, by
Dianne E Rennack.

---

CRS-16
East Timor (Democratic Republic of Timor-Leste)
Table 5. U.S. Assistance to East Timor, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
0
0
0
1,000
0
DA
0
500
0
0
0
ESF
22,367
21,824
18,810
18,810
8,640
FMF
2,420
1,023
990
475
0
IMET
159
364
193
307
400
INCLE
0
0
1,485
0
1,010
PKO
1,050
1,228
0
0
0
Peace Corps
1,320
1,372
827
0
0
Totals
27,316
25,811
22,305
21,964
10,050
Food Aid
P.L. 480 Title
II Granta
669
994
1,182
—
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. Aid for developing political
institutions includes 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.
In May 2006, the Peace Corps suspended its programs in East Timor due to civil
and political unrest in the country.

---

CRS-17
Indonesia
Table 6. U.S. Assistance to Indonesia, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006
estimate
request
CSH
33,000
37,100
28,017
27,507
32,060
DA
33,291
27,848
33,199
29,524
60,950
ESF
49,705
68,480
69,300
69,300
60,000
FMF
0
0
990
6,175
15,700
IMET
599
728
938
1,234
974
INCLE
0
0
4,950
4,700
10,050
NADR 5,998
6,262
6,888
8,881
5,905
Totals 122,593
140,418
144,282
147,321
185,639
Food Aid/Disaster Relief
P.L. 480 Title
II Granta
4,115
10,489
12,886
10,951
0
FFPb
5,597
6,194
—
—
—
Section 416(b)b
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 maintaining political
and economic stability in Southeast Asia, combating terrorism, and promoting
democracy in the region and the Islamic world. 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 deter terrorist attacks and financial crimes associated with them.”19
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
19 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.
Resumption of 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 1993.20 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.21 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.22
20 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 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.
21 USAID, Fact Sheet #39, Indian Ocean — Earthquakes and Tsunamis (July 7, 2005).
22 USAID, USAID Rebuilds Lives after the Tsunami (April 27, 2006).

---

CRS-19
Laos
Table 7. U.S. Assistance to Laos (LPDR), 2004-2008
(thousand of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006
estimate
request
CSH
0
0
0
1,000
1,051
ESF
0
0
0
375
470
INCLE
2,000
1,984
990
900
1,580
NADR
1,412
2,500
3,300
2,550
1,400
Totals
3,412
4,484
4,290
4,825
4,501
Food Aid
FFEa
0
0
289
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture.
a. 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%.23 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.24 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. Humanitarian
demining (NADR/HD) assistance is provided in cooperation with NGOs and UXO
Lao, a quasi-governmental entity. In addition, USAID has administered two projects
to assist victims of UXO accidents in Laos using Leahy War Victims Funds
($917,000 in 2004-2007). 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. New program areas include public health,
economic development, judicial reform, and civil society.
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.
The major bilateral donors to Laos are Japan, Germany, Sweden, France,
Australia, and Norway.
23 CIA, The World Factbook, 2006.
24 Department of State, Office to Monitor and Combat Trafficking in Persons, Trafficking
in Persons Report, 2006.

---

CRS-20
Malaysia
Table 8. U.S. Assistance to Malaysia, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004
FY2005
FY2006
estimate
request
IMET
939
1,100
891
850
920
INCLE
0
0
0
0
800
NADR
230
2,308
1,526
2,401
2,010
Totals
1,169
3,408
2,417
3,251
3,730
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 provides 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 based in the country, and export
control and border security.
The U.S. State Department’s 2007 Trafficking in Persons Report placed
Malaysia in the “Tier 3” category for failing to “make significant efforts to bring
itself into compliance with the minimum standards for the elimination of trafficking
in persons.” Such an assessment could trigger the withholding of non-humanitarian,
non-trade-related U.S. foreign assistance.

---

CRS-21
Mongolia
Table 9. U.S. Assistance to Mongolia, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004
FY2005
FY2006
estimate
request
ESF
9,941
9,920
7,425
6,625
6,200
FMF
995
992
2,970
2,970
1,000
IMET
872
1,009
866
874
970
INCLE
0
0
0
0
670
Peace Corps
1,646
1,694
1,747
1,694
1,995
PKO
1,000
0
0
0
0
Totals
14,454
13,615
13,008
12,163
10,835
Food Aid
FFPa
8,572
3,658
5,375
—
—
Section 416(b)a
0
0
—
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture.
a. USDA data — does not include freight costs.
U.S. assistance programs in Mongolia, a strategically-important nation which
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 aimed 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 10. U.S. Assistance to Philippines, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
28,850
27,050
24,651
24,362
17,510
DA
21,568
27,576
24,212
14,998
22,900
ESF
17,645
30,720
24,750
24,750
25,996

---

CRS-22
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
FMF
19,880
29,760
29,700
29,700
11,100
IMET
2,700
2,915
2,926
2,750
1,550
INCLE
2,000
3,968
1,980
1,900
1,150
NADR
750
2,257
4,968
4,573
4,463
Peace Corps
2,774
2,820
2,767
2,820
2,753
PKO
15,000
0
0
0
0
Totals
111,167
127,066
115,954
105,853
87,422
Food Aid
P.L. 480 Title I
20,000
20,000
—
—
—
USDA Loan
FFPa
3,517
1,720
6,335
—
—
Section 416(b)a
0
5,644
—
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture.
a. 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
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
Islamist 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).25
25 Excess Defense Articles consist of used U.S. weapons and equipment given away for free.

---

CRS-23
For FY2008, the Administration requests $11.1 billion in FMF for the
Philippines, about $18 million below 2005-07 levels. The Senate Committee on
Appropriations, in its report on the FY2008 foreign operations appropriations bill,
recommends $30 million in FMF for the Philippines (S.Rept. 110-128).
The United States signed a Tropical Forest Conservation Act Agreement with
the Philippines on September 19, 2002.26 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.
Thailand
Table 11. U.S. Assistance to Thailand, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
0
0
0
1,400
1,040
ESF
0
992
990
990
0
FMF
881
1,488
1,485
0
500
IMET
2,572
2,526
2,369
2,275
1,200
INCLE
2,000
1,608
990
900
2,300
NADR
1,380
1,782
3,989
2,100
2,500
Peace Corps
1,840
2,143
2,212
2,144
2,278
PKO
500
0
0

0
0
Totals
9,173
10,539
12,035
9,809
9,818
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. In 2006, the U.S. State
Department declared, “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.”27 CSH programs include HIV/AIDS activities related to prevention,
care, and treatment. FMF programs help to boost the counterterrorism capabilities
of Thailand’s Special Forces units. Thai IMET graduates hold a majority of senior
26 The Tropical Forest Conservation Act (P.L. 105-214).
27 U.S. Department of State, FY2006 Congressional Budget Justification for Foreign
Operations.

---

CRS-24
military positions. INCLE activities help Thailand fight corruption in its criminal
justice system as well as organized crime in the region. NADR assistance supports
Thai police against terrorist activities in majority-Muslim provinces of the south,
where a separatist insurgency has claimed the lives of 1,300 Thais since 2004.
September 2006 Military Coup. In response to the September 19, 2006,
military coup in Thailand, the U.S. State Department announced the suspension of
nearly $24 million in U.S. foreign assistance to the country, including military and
peacekeeping assistance and training under foreign operations appropriations ($7.5
million) and counterterrorism assistance under Section 1206 of the National Defense
Authorization Act for FY2006 ($16.3 million).28 The bans were imposed pursuant
to Section 508 of the Foreign Operations Appropriations Act, which provides that
such funds shall not be made available to any country whose duly elected head of
government was deposed by a military coup. Under Section 508, the funds can be
reinstated once a democratically-elected government is in place. Other aid programs
not affected by Section 508 or in the U.S. national interest would continue to receive
funding. The House Committee on Appropriations, in its report on the FY2008
foreign aid bill (H.Rept. 110-197), rejects the Administration’s request for FMF and
IMET funding for Thailand. The Senate report on the bill (S. Rept.110-128) opposes
FMF for Thailand.
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.
Vietnam
Table 12. U.S. Assistance to Vietnam, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
6,100
1,200
0
0
0
DA
3,000
4,750
3,818
2,440
0
ESF
0
0
1,980
1,000
5,700
GHAI
10,000
24,044
31,214
54,000
87,700
IMET
0
50
49
95
195
INCLE
0
0
0
0
200
NADR
3,214
3,331
3,770
3,700
920
Totalsa
22,314
33,375
40,831
61,235
94,715
28 For further information, see CRS Report RL32593, Thailand: Background and U.S.
Relations, by Emma Chanlett-Avery.

---

CRS-25
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
Food Aid
FFPb
7,898
0
—
—
—
FFEb
0
0
—
—
—
Section
416(b)b
6,170
0
—
—
—
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture.
a. 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.
b. USDA data — does not include freight costs.
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. assistance provided to Vietnam
focuses on the following: accelerating Vietnam’s transition to an open and market-
based economy; upgrading access to government 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, a new member of the WTO, supports the
country’s efforts to promote trade, investment, and the private sector. 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.29
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.
29 Sharon Behn, “U.S. Military Specialists Headed to Vietnam,” Washington Times, June 23,
2005.

---

CRS-26
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
(OEF) in Afghanistan, the country became the largest beneficiary of U.S. foreign
assistance in the region after Afghanistan, followed by India. See Figure 7.
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.30 Since 2005, Bangladesh, India, and Nepal have received significant
increases in Anti-Terrorism Assistance (NADR/ATA).
USAID’s South Asia Regional Initiative for Energy promotes international
energy cooperation, infrastructure investment, and regulatory reform. The South
Asia Regional fund ($4.9 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 the South and Central Asia Regional fund,
which supports programs related to good governance, economic development, civil
society, health, and education.
30 See CRS Report RL32259, Terrorism in South Asia, by K. Alan Kronstadt and Bruce
Vaughn.

---

CRS-27
Figure 7. 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
2001
2002
2003
2004
2005
2006
India
Bangladesh
Nepal
Sri Lanka
Pakistan
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. In subsequent years, Congress has extended the waiver
authority on coup-related sanctions. Since 2003, President Bush has annually
exercised the waiver authority. A crucial challenge for the United States, according
to some U.S. leaders, is how to assist Pakistan in its counterterrorism 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

---

CRS-28
India.31 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.32
Country Aid Levels and Restrictions — South Asia
Bangladesh
Table 13. U.S. Assistance to Bangladesh, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004
FY2005
FY2006
estimate
request
CSH
35,500
33,412
31,509
29,935
39,615
DA
18,200
16,535
10,889
10,400
39,650
ESF
4,971
4,960
4,950
3,750
0
FMF
0
248
990
990
875
IMET
862
1,035
930
946
800
INCLE
0
0
0
0
1,500
NADR
0
893
5,094
2,575
6,350
Peace Corps
1,566
1,773
706
0
0
Totals
61,099
58,856
55,068
48,596
88,790
Food Aid
P.L. 480 Title
II Granta
33,451
22,122
30,207
35,618 31,000
Section
416(b)b
53
3,257
3,833
—
—
FFEb
0
0
2,868
—
—
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
31 USAID, Fact Sheet no. 39, Indian Ocean — Earthquake and Tsunamis (July 7, 2005);
USAID, Tsunami Assistance, One Year Later (December 21, 2005).
32 USAID, Fact Sheet no. 44, South Asia — Earthquake (August 25, 2006).

---

CRS-29
advancing development in Bangladesh are, therefore, essential to promoting stability
and preventing the spread of terrorism in South Asia.”33 CSH funding supports the
following efforts: child, maternal, and reproductive health; family planning;
HIV/AIDS programs; and TB and Avian Influenza prevention. Development
Assistance (DA) 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,
counterterrorist financing, and terrorist interdiction.
In March 2006, the Peace Corps suspended its programs in Bangladesh due to
concerns that volunteers might become targets of terrorists.
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.34
The major bilateral aid donors to Bangladesh are Japan, the United Kingdom,
and the United States.
India
Table 14. U.S. Assistance to India, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005
FY2006 estimate
request
CSH
47,800
53,222
52,815
53,411
62,200
DA
22,539
24,856
19,700
10,804
900
ESF
14,912
14,880
4,950
4,875
0
IMET
1,366
1,502
1,272
1,421
1,300
INCLE
0
0
0
0
400
NADR
685
4,181
2,711
1,108
2,700
Totals
87,302
98,641
81,448
71,619
67,500
Food Aid
P.L. 480 Title II
Granta
40,869
35,763
43,501
31,033
13,500
Section 416(b)b
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.
33 U.S. Department of State, FY2007 Congressional Budget Justification for Foreign
Operations, February 2006.
34 Pursuant to the Tropical Forest Conservation Act (P.L. 105-214).

---

CRS-30
The United States significantly increased bilateral aid to India in FY2002 and
FY2003, largely as part of its counterterrorism efforts in the region. Both
counterterrorism efforts and daunting economic and social problems remain 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. Development Assistance (DA)
initiatives include water and sanitation programs, basic education, disaster
management, and economic growth programs that may 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 explosives detection and counter
measures. NADR/EXBS funding for the Export Control and Related Border Security
Assistance program assists India in strengthening its export control system in order
to help stem the spread of weapons of mass destruction.
The House report on the FY2008 foreign operations appropriations bill (H.Rept.
110-197) opposes the cut in Development Assistance to India under the FY2008
budget justification. The report provides $10 million for clean energy development,
water and sanitation programs, women’s rights programs, and basic education
programs in India.
The United States is the fifth-largest bilateral aid donor to India, after Japan, the
United Kingdom, and Germany.
Nepal
Table 15. U.S. Assistance to Nepal, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
24,840
25,165
18,613
17,940
17,985
DA
8,874
10,000
8,393
9,201
4,000
ESF
4,971
4,960
4,950
6,250
0
FMF
3,975
0
—
1,435
0
IMET
546
648
644
758
790
INCLE
0
0
0
0
2,700
NADR
0
2,771
0
840
1,150

---

CRS-31
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
Peace
2,108
179
0
0
0
Corps
Totals 45,314
43,723
32,600
36,424
26,625
Food Aid
P.L. 480
Title II
0
966
1,213
—
0
Granta
FFEb
0
3,871
—
—
—
Section
416(b)b
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.
In 2005-2006, Nepal experienced a period of political instability marked by
sharp conflict between King Gyanendra, democratic political parties, students, and
Maoist insurgents. In February 2005, the King dismissed parliament and assumed
absolute powers. During this period, the United States placed restrictions upon some
military assistance (FMF) to Nepal due to human rights concerns. The foreign
operations appropriations measure for FY2006 (P.L. 109-102) provided that FMF
may be made available only if the Secretary of State certified that the Government
of Nepal was protecting human rights and had restored civil liberties and
demonstrated a commitment to restoring multi-party democratic government.35 In
April 2006, King Gyanendra reinstated parliament, which then stripped the monarch
of his major powers in June 2006. In November 2006, a coalition government
reached a peace agreement with the Maoists. The State Department supports FMF
to Nepal both for combating continued Maoist violence and as an incentive to the
government to improve human rights conditions.36 The Administration’s FY2008
request does not include ESF for Nepal. The Senate Committee on Appropriations
recommends providing $10 million in ESF to Nepal with the following aims:
“building democratic institutions, disarming and reintegrating Maoist combatants,
and overcoming centuries of caste discrimination, corruption, poverty and injustice”
(S.Rept. 110-128).
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 helps the
military respond to continued Maoist violence. In 2004, the United States suspended
35 These restrictions could be waived if the Secretary of State determined that removing
them was in the national security interests of the United States.
36 State Department, Bureau of Political-Military Affairs, Nepal: Security Assistance, July
11, 2007.

---

CRS-32
the Peace Corps program in Nepal after Maoist rebels bombed the United States
Information Center in Kathmandu.
The largest aid donors to Nepal are Japan, the United States, Denmark, the
United Kingdom, and Switzerland.
Pakistan
Table 16. U.S. Assistance to Pakistan, 2004-2008
(thousands of dollars)
FY2007
FY2008
FY2004 FY2005 FY2006
estimate
request
CSH
25,600
21,000
22,757
22,385
39,800
DA
49,400
29,000
26,990
95,327
18,000
ESF
200,000
297,600
296,595
283,677
382,900
FMF
74,560
298,800
297,000
297,000
300,000
IMET
1,384
1,885
2,037
1,992
2,000
INCLE
31,500
32,150
34,970
24,000
32,000
NADR
4,930
7,951
8,585
9,977
10,300
Totals 187,374
688,386
688,934
734,358
785,000
Food Aid
P.L. 480 Title II
Granta
13,067
0
17,675
—
0
FFPb
5,980
10,170
11,197
—
—
FFEb
0
5,796
5,169
—
—
Section 416(b)
9,583
1,972
—
—
—
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 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 related 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

---

CRS-33
has carried out a $100 million, five-year education program, especially in Baluchistan
and Sindh provinces in southern Pakistan.37
In other programs, 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.38 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.
FMF assists Pakistan’s 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 programs39 — 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.40 In 1998, following nuclear weapons
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
37 Pakistan’s literacy rate, at 49%, ranks among the world’s lowest.
38 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).
39 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.
40 The Brown Amendment to the Foreign Assistance Act (1995) narrowed the prohibition
to military assistance only.

---

CRS-34
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.41 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.42
Since 2003, President Bush has annually exercised the waiver authority on
coup-related sanctions against Pakistan.43 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. The
Implementing the 9/11 Commission Recommendations Act of 2007 (P.L. 110-53)
extended the waiver authority allowing for foreign assistance to Pakistan through
FY2008. The Foreign Operations and Related Programs Appropriations Act for 2008
(H.R. 2764), as passed by the House, would authorize the President’s waiver
authority and an exemption from restrictions on foreign aid to Pakistan related to
default on debt.
The United States is the major bilateral aid donor to Pakistan, followed by Japan
and the United Kingdom.
41 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.
42 See P.L. 107-57, Sections 1(b) and 3(2).
43 For additional information, see CRS Report RL33498, Pakistan-U.S. Relations, by K.
Alan Kronstadt, and CRS Report RS20995, India and Pakistan: U.S. Economic Sanctions,
by Dianne E Rennack.

---

CRS-35
Sri Lanka
Table 17. U.S. Assistance to Sri Lanka, 2004-2008
(thousands of dollars)
FY2007
FY2008
Account
FY2004 FY2005 FY2006 estimate
request
CSH
300
300
0 0
0
DA
4,750
6,774
3,705
3,500
4,000
ESF
11,929
9,920
3,960
3,000
0
FMF
2,495
496
990
990
850
IMET
553
461
529
518
600
INCLE
0
0
0
0
350
NADR
1,775
2,700
3,615
1,350
1,150
Totals
21,802
20,651
12,799
9,358
6,950
Food
Aid/Disaster
Assistance
P.L. 480 Title
II Granta
4,190
1,996
0
—
—
FFPb
0
9,690
8,798
—
—
Section
416(b)b
923
0
70
—
—
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).
U.S. assistance also helps to promote economic growth and advance democracy and
human rights. 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 counterterrorism activities, and

---

CRS-36
enhance interoperability with U.S. forces. NADR programs include de-mining
activities and non-proliferation efforts.
The United States ranks fourth after China, Japan, and Germany in foreign aid
assistance to the country. Since 2004, Sri Lanka has been eligible for MCA
assistance. In 2006, Sri Lanka received Transition Initiative (TI) funding ($1.7
million) for the peace process and $1.1 million in disaster assistance.
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.44 The Bush
Administration pledged $134.6 million for disaster relief and reconstruction to Sri
Lanka.
44 USAID, Fact Sheet no. 39, Indian Ocean — Earthquake and Tsunamis, July 7, 2005

---

CRS-37
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

---