Fact Sheet: The FY2013 State and Foreign
Operations Budget Request
Susan B. Epstein
Specialist in Foreign Policy
Marian Leonardo Lawson
Analyst in Foreign Assistance
Alex L. Tiersky
Analyst in Foreign Affairs
March 19, 2012
Congressional Research Service
7-5700
www.crs.gov
R42429
CRS Report for Congress
Pr
epared for Members and Committees of Congress

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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

n February 13, 2012, the Obama Administration submitted its FY2013 budget request,
including $54.7 billion for State Department, Foreign Operations, and Related
O Appropriations. Of the total request, $18.6 billion is for programs funded through the
State operations and related agencies (a 4.6% increase over FY2012 estimates), and $36.1 billion
is for foreign operations (a 0.1% increase over FY2012 estimates). This fact sheet provides a brief
overview of the request. A full CRS report on FY2013 State and Foreign Operations budget and
appropriations issues is planned to follow initial congressional consideration of appropriations
legislation.
The Budget Control Act and State-Foreign
Operations Appropriations
FY2013 discretionary appropriations will be considered in the context of the Budget Control Act
of 2011 (BCA, P.L. 112-25), which established discretionary spending limits for FY2012-
FY2021. The BCA also tasked a Joint Select Committee on Deficit Reduction to develop a
federal deficit reduction plan for Congress and the President to enact by January 15, 2012. The
failure of Congress and the President to enact deficit reduction legislation by that date
triggered an automatic spending reduction process established by the BCA, consisting of a
combination of sequestration and lower discretionary spending caps, to begin on January 2,
2013.The sequestration process for FY2013 requires across-the-board spending cuts at the
account and program level to achieve equal budget reductions from both defense and nondefense
funding at a percentage to be announced by the Office of Management and Budget. As a result,
the FY2013 State-Foreign Operations appropriation will be considered by Congress with the
understanding that enacted funding levels will likely be subject to significant cuts in the
nondefense category under the sequestration process unless legislation specifically repealing the
sequestration provisions of the BCA is enacted by Congress before next January.
FY2013 Core and Overseas Contingency Operations Request
In the FY2013 request, as in FY2012, the Administration distinguishes between “core”
international affairs funding and funding to support “overseas contingency operations” (OCO),
described in budget documents as “extraordinary, but temporary, costs of the Department of State
and USAID in Iraq, Afghanistan and Pakistan.”1 The OCO designation gained increased
significance in August 2011 with enactment of the BCA, discussed above, which specified that
funds designated as OCO do not count toward the budget caps established by the act. For
FY2013, $8.24 billion, or about 15% of the international affairs request, is designated as OCO.
This amount is 10% less than was requested for OCO in FY2012, but 40% less than was enacted
in that year, as Congress chose to use the OCO designation to appropriate funds for a broader
range of accounts and countries than was requested by the Administration.
Table 1 compares requested and enacted FY2012 funding designated as OCO with the
FY2013 request.

1 Executive Budget Summary, Function 150 & Other International Programs, Fiscal Year 2013, p. 137.
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

Table 1. Overseas Contingency Operations Funds Within the
International Affairs Budget, FY2012 and FY2013 Request
(in billions of current $)

FY2012 Request
FY2012 Enacted
FY2013 Request
Core
OCO
Core
OCO
Core
OCO
Foreign Operations
35.82
4.32
29.45
6.58
32.19
3.88
State & Related Accounts
15.12
4.39
13.36
4.63
14.27
4.36
Food Aid
1.89
0.00
1.65
0.00
1.58
0.00
Sources: CRS calculations; Executive Budget Summary, Function 150 & Other International Programs, FY2013.
Key Issues for Congress
Foreign Operations
Frontline States: As has been the case for several years, funding to support both security and
development activities in countries that are considered key U.S. partners in counterterrorism
efforts is a significant part of the State-Foreign Operations budget. The FY2013 request for both
State and foreign operations activities in the frontline states (defined by the Department of State
to be Iraq, Afghanistan, and Pakistan) totals $11.8 billion, or about 22% of the State-Foreign
Operations request. Of this amount, about $5.0 billion is for State operations in these countries
and $6.8 billion is for foreign assistance (not including USAID operating expenses, Migration
and Refugee Assistance, or Food for Peace Title II emergency food aid). These FY2013 requested
levels include core and OCO-designated funding. The Administration is seeking $4.6 billion for
Afghanistan (29.8% more than FY2012 funding estimates), $4.8 billion for Iraq (9.1% below
FY2012 estimates), and $2.4 billion for Pakistan (6.6% more than FY2012 estimates).
Middle East and North Africa Incentive Fund: The Department of State is requesting $770.0
million for a new Middle East and North Africa (MENA) Incentive Fund. Of this, $65 million
will be base funding for USAID’s existing Middle East Partnership Initiative (MEPI) and $5
million will be for its Office of Middle East Programs (OMEP) regional activities. (These
programs were previously funded through regional Economic Support Funds [ESF].) The rest
will be unallocated funds intended to allow for flexibility and transparency in supporting Arab
Spring countries in transition to democracy, eliminating the need to transfer funds from other
programs and accounts to meet evolving circumstances. The MENA Incentive Fund is designed
to complement traditional bilateral aid and, like the Millennium Challenge Corporation (MCC),
would condition U.S. aid to specific governance and policy benchmarks.
Global Health: The budget request includes roughly $7.9 billion for the Administration’s Global
Health Initiative through State-Foreign Operations appropriations, compared to the FY2012
enacted level of $8.2 billion. The proposed cut of approximately $300.0 million would be the
largest foreign operations account reduction requested, in dollar terms, and could represent the
end of a decade-long growth trend in global health funding. Compared to the FY2012-enacted
amount, the request includes decreases for each global health activity area, except for a 1.2%
increase in funding for international family planning and reproductive health and a 57% increase
in funding for the Global Fund to Fight HIV, Tuberculosis and Malaria. The most significant
proposed reductions are for bilateral HIV/AIDS activities. The Administration asserts that current
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

goals can be attained at the lower funding level as a result of program efficiencies and reduced
drug costs.
State Department Operations
Civilian Transition in Iraq: For FY2013, the Administration requests $2.73 billion for State
Operations in Iraq, including $2.26 billion in OCO. This represents a 23% decrease from the
FY2012 estimated funding level. The Administration, in the budget justification, explains the
decrease as reflecting estimated cost reductions in security and sustainment contracts, anticipated
completion of construction that was funded in FY2012, and a reduction in the State Department
footprint following the release of the FY2012 budget request—an embassy branch office
originally planned for Mosul has been postponed, and another in Diyala has been eliminated.
Recent media reports2 have suggested that there will be significant personnel reductions at
Embassy Baghdad in the near future, as State attempts to “rightsize” its presence, but the State
Department has denied that any decisions have been made about such reductions.
State Department and the QDDR: The first Quadrennial Diplomacy and Defense Review
(QDDR) was completed in the fall of 2010 and identified several reforms intended to shift
diplomatic resources towards the highest priority countries and programs. Among the QDDR
reforms were the establishment of a new Bureau of Energy Resources and elevation of the Office
of the Coordinator for Counterterrorism to a Bureau. Both occurred in 2011 without any specific
authorization or additional funding from Congress. Additionally, activities of the Office of
Coordinator for Reconstruction and Stabilization (S/CRS) became subsumed in the renamed
Bureau for Conflict and Stabilization Operations. For FY2013, the State Department has
requested funding for 121 new positions, primarily to support these new bureaus, which falls
short of the number needed to stay on track to achieve State’s Human Resource Initiative goal of
a 25% increase in foreign service capacity between FY2008 and FY2014.
Overseas Comparability Pay: The FY2013 State Department request includes $81.3 million for
phase III of the overseas comparability pay (OCP). Also referred to as overseas locality pay, OCP
is an adjustment intended to bring the base pay of Foreign Service personnel posted overseas to
levels comparable to their Foreign Service colleagues serving in Washington, D.C., who had been
receiving locality pay. OCP advocates argue that the discrepancy weakens morale (especially
when other U.S. government agencies have made the adjustments for their personnel serving
abroad), hinders retention of Foreign Service Officers, reduces potential retirement pay, and acts
as a financial disincentive to serve overseas.

2 DeYoung, Karen, “State Department Seeks Smaller Embassy Presence in Baghdad,” The Washington Post, February
8, 2012; Arango, Tim, “U.S. Is Planning to Cut Its Staff at Iraq Embassy by as Much as Half,” The New York Times,
February 7, 2012.
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

Broader Budget and Historic Context
The FY2013 State, Foreign Operations and Related Accounts budget request, at $54.7 billion,
represents about 1.5% of the $3.7 trillion in total budget authority requested for FY2013, and
about 4.8% of proposed discretionary budget authority. The request is nearly level with the
FY2012-enacted appropriation when adjusted for inflation, and a 35% increase in constant dollars
(inflation-adjusted) from funding levels a decade ago in FY2003. While flat relative to FY2012,
the requested funding level is relatively high in historic terms, driven largely by strategic and
reconstruction aid to Iraq, Afghanistan, and Pakistan, large global health initiatives, and creation
of the Millennium Challenge Corporation in the past decade (see Table 2).
Table 2. State-Foreign Operations Appropriations, FY2003-FY2013
(in billions of current and 2013 constant dollars)

FY03 FY04 FY05 FY06 FY07 FY08
FY09
FY10
FY11
FY12
FY13
Current
$ 31.7 48.3 34.2 34.4 37.2 40.5 50.7 55.1 49.1 53.8 54.7
Constant
40.5 60.2 41.3 40.2 42.4 44.5 55.4 59.4 51.4 54.9 54.7
2013 $
Sources: Executive Budget Summary, Function 150, FY2013; CRS appropriations reports; CRS calculations.
Note: Constant dollars were calculated using deflators from Table 10.1 of the FY2013 Historic Budget Tables.
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

Appendix. State, Foreign Operations and Related
Accounts Appropriations, FY2011-FY2013,
by Account
Table A-1. State, Foreign Operations and Related Accounts Appropriations, FY2011
Actual, FY2012 Enacted, and the FY2013 Request, by Account
(in millions of current $)
FY2012
FY2013
Enacted
Request
% Change,
(of which is
(of which is
FY2013 vs.
FY2011
Actual
OCO)
OCO)
FY2012
STATE OPERATIONS & Related
15,757.9
17,819.5
18,630.4
4.6%
(4,627.5)
(4,361.6)
(-5.7%)
Administration of Foreign Affairs
11,225.9 13,372.5
13,950.5
4.3%
(4,513.3)
(4,361.6)
(-3.4%)
Diplomatic and Consular Programs
8,717.1
10,918.2
11,380.4
4.2%
(4,389.1)
(4,311.7)
(-1.8%)
Capital Investment Fund
59.4
59.4
83.3
40.2%
Embassy Security Construction &
1,631.0 1,570.0
1,637.7 4.3%
Maintenance
(33.0)
Conflict Stabilization Operations
35.2
30.3
56.5 86.5%
(8.5)
Office of the Inspector General
104.8
129.1
115.5
-10.5%
(67.2)
(49.9)
(-25.7%)
Educational and Cultural Exchange
599.6 598.8
587.0 -2.0%
Programs
(15.6)
Representation
Al owances
7.8 7.3 7.5
2.7%
Protection of Foreign Missions and
27.9 27.0 28.2 4.4%
Officials
Emergencies in Diplomatic,
19.4 9.3 9.5
2.2%
Consular Affairs
Buying Power Maintenance Account
—
—
—
—
Repatriation Loans Program
1.6
1.4
1.8
28.6%
American Institute in Taiwan
21.8
21.1
37.2
76.3%
International Chancery Center
0.5
0.5
6.0
1,100.0%
Foreign Service Retirement and
158.9 158.9 158.9
—
Disability (mandatory)
International Organizations
3,462.6
3,379.2
3,668.5 8.6%
(101.3)
Contributions to International
1,578.7 1,551.0
1,570.0
1.2%
Organizations
(101.3)
Contributions to Int’l Peacekeeping
1,883.9 1,828.2 2,098.5 14.9%
Activities
Related
Programs
158.6 153.2 131.8 -14.0%
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

FY2012
FY2013
Enacted
Request
% Change,
(of which is
(of which is
FY2013 vs.
FY2011
Actual
OCO)
OCO)
FY2012
The Asia Foundation
17.9
17.0
15.4
-9.4%
Center Middle East-West Dialogue
1.3
0,8
0.8
—
Eisenhower
Exchange
Fel owship
0.3 0.5 0.4
-20.0%
Israeli Arab Scholarship Program
0.4
0.4
0.4
—
East-West
Center
21.0 16.7 10.8
-35.3%
National Endowment Democracy
117.8
117.8
104.0
-11.7%
International Commissions
132.6
124.2
122.1
-1.7%
Int’l Boundary /Water Commission
69.6
76.2
77.1
1.2%
American
Sections
12.6 11.7 12.2 4.3%
Int’l Joint Commission
8.0
7.0
7.4
5.7%
Int’l Boundary Commission
2.4
2.3
2.4
4.3%
Border Environment Coop.
2.2 2.4 2.4 —
Commission
Int’l Fisheries Commission
50.4
36.3
32.8
-9.6%
Broadcasting Board of
738.8 751.5
720.1
-4.2%
Governors
(4.4)
International Broadcasting
732.3 744.5
711.6 4.4%
Operations
(4.4)
Capital
Improvements
6.4 7.0 8.6
22.9%
U.S. Institute of Peace
39.4
39.0
37.4
-4.1%





FOREIGN OPERATIONS
33,297.5
36,025.7
36,070.9
0.1%
(6,575.3)
(3,882.9)
(-40.9)
U.S. Agency for International
1,528.4 1,528.0
1,532.4
0.3%
Development
(259.5)
(84.0)
(-208.9)
USAID Operating Expenses
1,347.3
1,347.3
1,347.0
-
(255.0)
(84.0)
(-67.1)
Conflict Stabilization Operations
5.0
—
—
—
USAID Capital Investment Fund
129.7
129.7
134.9
(4.0%)
USAID Inspector General
46.4
51.0
50.5 -1.0%
(4.5)
Bilateral Economic Assistance
19,805.4
20,207.8
19,787.1
-2.1%
(3,217.0)
(1,037.9)
(-67.7%)
Global Health and Child Survival
7,832.3
8,167.9
7,854.0
-3.8%
Development
Assistance
2,520.0 2,520.0 2,525.5 0.2%
International Disaster Assistance
863.3
975.0
960.0 -1.5%
(150.0)
Transition Initiatives
54.9
56.7
57.6 1.6%
(6.6)
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

FY2012
FY2013
Enacted
Request
% Change,
(of which is
(of which is
FY2013 vs.
FY2011
Actual
OCO)
OCO)
FY2012
Complex Crisis Fund
39.9
40.0
50.0 25.0%
(30.0)
Development Credit Authority–
[30.0] [40.0] [40.0]
—
Subsidy
Development Credit Authority–
8.3 8.3 8.2
-1.2%
Admin.
Economic Support Fund
5931.7
5,796.2
5,886.4
1.6%
(2,801.5)
(1,037.9)
(-63.0%)
Democracy Fund
114.8
114.8
—
—
Assistance for Europe, Eurasia and
695.7 626.7
—
—
Central Asia
Migration and Refugee Assistance
1,694.6
1,875.1
1,625.4 -13.3%
(229.0)
Emergency Migration and Refugee
49.9 27.2 50.0
83.8%
Assist.
Middle East & North Africa
—
—
770.0
—
Incentive Fund
Independent
Agencies
1,324.3 1,325.7 1,314.8 -0.8%
Peace
Corps
374.3 375.0 374.5 -0.1%
Millennium Challenge Corporation
898.2 898.2 898.2
–
Inter-American
Foundation
22.5 22.5 18.1
-19.6%
African Development Foundation
29.4
30.0
20.0
-33.3%
Department of Treasury
75.3
39.0
275.4 606.2%
(1.6)
Treasury Technical Assistance
25.4
27.0
25.4 -5.9%
(1.6)
Debt Restructuring
49.9
12.0
250.0
1,983.3%
International Security
8,414.0 10,367.1
10,702.2
3.2%
Assistance
(3,097.3)
(2,761.0)
(-10.9%)
Int’l Narcotics Control and Law
1,593.8 2,004.7
2,506.5
25.0%
Enforcement
(943.6)
(1,050.0)
(11.3%)
Nonproliferation, Antiterrorism,
738.5 710.8
635.7 -10.6%
Demining and Related Programs
(120.7)
Peacekeeping Operations
304.4
383.8
249.1 -54.1%
(81.0)
Int’l Military Education and Training
105.8 105.8 102.6 -3.0%
Foreign Military Financing
5,374.2
6,312.0
6,383.3
1.1%
(1,102.0)
(911.0)
(-17.3%)
Pakistan Counterinsurgency
297.2a 800.0
800.0
—
Capability Fund
(800.0)
(800.0)
Global Security Contingency Fund
—
50.0
25.0 50.0%
(50.0)
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

FY2012
FY2013
Enacted
Request
% Change,
(of which is
(of which is
FY2013 vs.
FY2011
Actual
OCO)
OCO)
FY2012
Special Defense Acquisition Fund
—
—
—
—
Multilateral Economic Assist
2,299.5
2,971.1
2,952.6
-0.6
Int’l Organizations and Programs
351.3
348.7
327.3
-6.1%
Global Environment Facility
89.8
89.8
129.4 44.1%
Int’l Clean Technology Fund
184.6
184.6
185.0
0.2%
Strategic Climate Fund
49.9
49.9
50.0
0.2%
Int’l Bank for Recon. and
—
117.4 187.0 59.3%
Development
Int’l Development Association
1,232.5
1,325.0
1,358.5
2.5%
Inter-American Development Bank
—
75.0 102.0 36.0%
Inter-American Investment Corp
21.0
4.7
—
—
Enterprise for the Americas—MIF
25.0 25.0 —
—
Asian Development Fund
—
100.0 115.3 15.3%
Asian Development Bank
106.4
106.6
106.8
0.2%
African Development Bank
—
32.4 32.4 —
African Development Fund
109.8
172.5
195.0
13.0%
Multilateral Debt Relief Initiative
—
174.5
—
—
Int’l Fund for Ag Development
29.4
30.0
30.0
—
Global Ag and Food Security
99.8
135.0
134.0
-0.7%
Export and Investment
-149.4 -413.0 -493.6 -19.5%
Assistanceb
Export-Import
Bank
2.6 -266.0 -359.1 -35.0%
Overseas Private Investment
-201.9 -197.0 -192.1 -2.5%
Corporation
Trade and Development Agency
49.9
50.0
57.6
15.2%
TOTAL State & Foreign Ops
49,055.4
53,845.2
54,701.3
1.6%
Source: Executive Budget Summary, Function 150 & Other International Programs, Fiscal Year 2013.
a. This reflects a $297.22 million transfer to the Pakistan Counterinsurgency Capability Fund from the
Department of Defense Pakistan Counterinsurgency Fund.
b. Negative numbers in this section reflect net revenues from receipts/offsetting collections.
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Fact Sheet: The FY2013 State and Foreign Operations Budget Request

Author Contact Information

Susan B. Epstein
Alex L. Tiersky
Specialist in Foreign Policy
Analyst in Foreign Affairs
sepstein@crs.loc.gov, 7-6678
atiersky@crs.loc.gov, 7-7367
Marian Leonardo Lawson

Analyst in Foreign Assistance
mlawson@crs.loc.gov, 7-4475


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