FY2017 State, Foreign Operations and Related Programs Budget Request: In Brief

Overview

On February 9, 2016, the Obama Administration submitted to Congress its FY2017 budget request that includes $52.78 billion in new budget authority for the State Department, Foreign Operations, and Related Appropriations (SFOPS). Of the total request, $17.05 billion¹ is for programs funded through the State operations and related agencies (a 3.6 % increase over FY2016 estimates), and $35.74 billion is for foreign operations (-1.8 % compared with FY2016 estimates that include emergency Ebola funds). This report provides an overview and highlights of the request with an account-by-account comparison of the FY2017 request to the FY2016 estimates and FY2015 actuals in Appendix A. Appendix B provides the International Affairs 150 function funding levels.

The Bipartisan Budget Act of 2015 and State-Foreign Operations Appropriations

The FY2017 appropriations process is shaped by the Bipartisan Budget Act of 2015 (BBA, H.R. 1314; P.L. 114-74) that Congress passed at the end of October 2015. The law raised the overall revised discretionary spending limits set by the Budget Control Act of 2011 (BCA, P.L. 112-25) from $1.039 trillion to $1.069 trillion for FY2017. The law also increased security funding levels from $536.1 billion to $551.1 billion and nonsecurity funding (that includes SFOPS funding) from $503.5 billion to $518.5 billion for FY2017. It also established for SFOPS a minimum of $14.895 billion in OCO funding.²

FY2017 Enduring and Overseas Contingency Operations Request

In the FY2017 request, as every year since FY2012, the Administration distinguishes between enduring costs versus those to support "overseas contingency operations" (OCO), described in earlier budget documents as "extraordinary, but temporary, costs of the Department of State and USAID in Iraq, Afghanistan and Pakistan."³ The OCO designation gained increased significance in August 2011 with enactment of the BCA that specified emergency or OCO funds do not count toward the budget caps established by the act. For FY2017, to meet the BBA minimum requirement, $14.895 billion, or about 28% of the SFOPS request, is designated as OCO. The FY2017 OCO request is the same as the FY2016 level, which was also set by the BBA, but represents an increase of 59% compared with the FY2015 estimate that included funds for the three frontline states, "other areas of unrest," anti-terrorism activities, and operations to counter the Islamic State (IS). (See Table 1.)

Key Issues for Congress

Within the broad range of activities supported by the SFOPS budget are several programs and focus areas that may be of particular interest to Congress as a result of their size, recent funding or policy changes, or relation to current world events.

State Department Operations

Operations in Frontline States. Operations in the challenging environments of the three countries termed "frontline states"—Afghanistan, Pakistan, and Iraq—continue to be a focus of attention by the department. Together, these three countries alone make up roughly 22% of the department's overall request for operational funding. As the Department confronts a more challenging security environment in Afghanistan and transitions to a civilian lead as U.S. troops draw down, the FY2017 request for operations there seeks a 29% increase above FY2016 estimated levels to $1.24 billion to provide more secure housing for staff in Kabul, among other facilities upgrades. FY2017 funding requested for operations in Iraq—a total of $1.26 billion—represents growth of 49% over the FY2016 estimated levels, and would address previously deferred maintenance, and additional aviation and life support costs. Last year, the request for State operations in Pakistan sought a 21% increase over FY2015 levels, in order to continue "normalizing" operations in that country while taking into account the U.S. military drawdown in neighboring Afghanistan. This year, by contrast, the department seeks 7.7% less than FY2016 estimated levels, or a total of $117.6 million; diplomatic posts would rely more on the local economy and support than is possible in Iraq or Afghanistan.

Cuba. In order to support implementation of its new Cuba policy, $3.8 million is requested within the Diplomatic & Consular Programs account (D&CP) for infrastructure improvements to the U.S. embassy in Havana (converted from an Interests Section last year). The department's funding request would support up to 10 additional U.S. citizen positions (at least 8 foreign service officers and one civil servant), as well as refurbishing workspace, securing communications and updating vehicles for the motor pool.

Contribution for International Peacekeeping Activities. While the FY2016 request sought a jump of 29% in the International Organizations accounts, the FY2017 proposal contemplates a 0.1% increase from FY2016 estimated levels, to $3.93 billion. The Contributions to International Organizations (CIO) account funds the U.S. share of the assessed budgets of 44 international organizations, including the U.N. regular budget and U.N. specialized agencies. The FY2017 CIO request is $1.39 billion, a 4% decrease from the FY2016 estimated level. The reduction is tied to a decrease in the U.N. regular budget projection, as well as the winding down of United Nations Criminal Tribunals for the former Yugoslavia and Rwanda.

The Contributions for International Peacekeeping Activities (CIPA) request, which funds U.N. peacekeeping missions and the two international war crimes tribunals, is $2.39 billion, a decrease of 2.7% from the FY2016 level. The request is based on the U.N. peacekeeping assessment for the United States of 28.56% (rather than the amount recognized by U.S. law of 27.14%). It also reflects the possible closure of the U.N. Mission in Liberia. In addition, the Administration's FY2017 request includes $150 million Mechanism for Peace Operations Response (MPOR), a repeat proposal from the FY2015 and FY2016 requests intended to support urgent—but as yet undefined—peacekeeping needs. The proposal was not funded by Congress in prior years.

Diplomatic Security. The FY2017 request for Worldwide Security Protection (WSP), which supports the Diplomatic Security Bureau's functions around the world, would grow by 9.4% over FY2016 estimated levels to $3.71 billion. Much of the increase in requested funding is for security measures in Afghanistan and Iraq. Physical security upgrades at diplomatic facilities, which are mostly funded through Worldwide Security Upgrades (WSU) under the Embassy Security, Construction and Maintenance (ESCM) account, are managed by the Bureau of Overseas Building Operations. The WSU request for FY2017 is for $1.6 billion, an 11% increase from FY2016 estimated levels. Within the ESCM request is $1.0 billion to provide for the Department of State's share of the Capital Security Cost Sharing (CSCS) program, which is an interagency-shared funding mechanism designed to ensure each U.S. government agency represented abroad is paying its fair share of construction costs for new and more secure facilities; it is unclear whether other agencies are fulfilling their commitments under the program.

Cuts to NED, Asia Foundation, East-West Center. The FY2017 request repeats the administration's FY2015 and FY2016 request for deep budgetary cuts to a number of State Department-funded institutions. An overall cut of 43% to these accounts would mean significant reductions in funding for, among other institutions, the East-West Center, the Asia Foundation, and the National Endowment for Democracy (cuts of 35%, 29%, and 39% respectively).

Passport Surge. The Department anticipates a 37% increase over FY2015 in passport applications in the coming year, or an estimated 20 million requests. The increased load is due to the 10-year expiration of some 18 million passports issued in 2007 as the Western Hemisphere Travel Initiative was being implemented. That measure for the first time required passports for Americans returning by air from Mexico, Canada, the Caribbean and Bermuda. Nearly 10 years later, those passports are beginning to expire, increasing demand for passport renewals. The Department issued 14 million passports in 2014 and the increased demand is expected to continue through 2018.

Foreign Operations

Foreign Operations accounts, which fund foreign assistance activities, would total about $35.74 billion under the FY2017 request, comprising about two-thirds of the international affairs budget. As in recent years, the FY2017 funding would be allocated largely to major Obama Administration foreign aid initiatives and support to strategic allies. In addition, notable focus areas within the FY2017 request include countering ISIS, humanitarian assistance, responding to Russian aggression, Central American migration, and food aid reforms.

Administration Initiatives. The Obama Administration's four broad foreign assistance initiatives would continue to play a major role under the FY2017 foreign operations request, accounting for about 30% of the total foreign operations request.

• For the Global Health Initiative, the request is $8.58 billion, about a 0.9% increase from the FY2016 estimate. The request would continue to focus resources primarily on HIV-AIDS treatment and prevention (70%), as well as maternal and child health, and stopping infectious diseases. The Administration proposes boosting malaria funding by about 11% in FY2017, compared to FY2016 estimates, in part by seeking authority to reprogram unobligated emergency funds appropriated for Ebola response in FY2015, and includes $275 million for GAVI, the vaccine alliance, a 17% increase over the FY2016 estimate.
• Feed the Future, the Administration's food security initiative, would receive $1 billion under the FY2017 request, level with FY2015 funding (a FY2016 estimate is not available). Funds would be focused on accelerating the impact of programs demonstrating progress in reducing poverty and stunting in focus countries.
• Global Climate Change Initiative funding would increase 62% from the FY2015 funding level to $1.33 billion in FY2017, consistent with the FY2016 request. The increase is largely attributable to a proposed contribution ($750 million) to a multilateral Green Climate Fund (GCF), to which the Administration pledged $3 billion in November 2014. This request would be partially offset by the ending of U.S. contributions to the Strategic Climate Fund (funded at $60 million in FY2016) and the Clean Technology Fund (which received $171 million in FY2016). U.S. commitments to both funds were fulfilled with FY2016 appropriations. The Administration made the same request in FY2016, but Congress appropriated no funds for the GCF. Compared with FY2015, the request would increase funding for clean energy programs (+11%) while decreasing funds for sustainable landscapes (-14%).
• Africa initiatives would also grow significantly under the request, together totaling $596 million, more than double the FY2015 funding level (an FY16 estimate is not available). Most of the increase would be for Power Africa, for which $300 million is requested ($291.3 within State and USAID), a 120% increase over FY2015 funding. Trade in Africa would receive $77 million and the Young African Leaders Initiative $10 million. The Administration also requests $119 million for the African Peacekeeping Rapid Response Partnership and $83 million for the Security Governance Initiative.

Top Country Recipients. In the FY2017 request, top foreign assistance recipients would not differ much from FY2015 (FY2016 country allocations are not yet available). Israel would continue to be the top recipient, with a requested $3.1 billion (level with FY2015) in Foreign Military Financing (FMF) funds, followed by Egypt, for which $1.46 billion is requested (almost level with FY2015), primarily in FMF to support shared security interests. Afghanistan would receive $1.25 billion (+11% from FY2015), primarily to help build sustainable institutions and help the newly elected government protect development gains, and Jordan would receive $1.0 billion (1% below FY2015) to promote security and stability in the region as well as economic and security strains related to the crisis in Syria. Pakistan would get $742 million (a 7.6% cut from FY2015), to continue ongoing efforts to increase stability, counter violent extremism, and support economic growth. Other top recipients include Kenya ($626 million), Nigeria ($606 million), and Tanzania ($575 million), all of which are top recipients of global health funds. Ethiopia would receive $514 million, a mix of security, development, and governance assistance. Iraq would re-join the top recipient list in FY2017, after a few years absence, with a requested $510 million (more than double FY2015 funding) for security and stabilization activities, as well as support for a $1 billion sovereign loan guarantee.

Focus Areas. In addition to foreign assistance initiatives and support to strategic allies, there are a number of priority issues and objectives identified in the FY2017 request.

• Syria/Counter-ISIL. The FY2017 request identifies $4.05 billion, a 19% increase over FY2015, for activities to counter ISIL and respond to regional instability stemming from the crisis in Syria. About half of this funding is to address humanitarian needs, with the rest to address development and security challenges in Jordan, Iraq, Syria and Lebanon.
• Humanitarian assistance. The total humanitarian assistance request is for $6.156 billion, which is about 20% less than the FY2016 estimate, in part because FY2016 funding was relatively high, and because the response to current high level crisis in Yemen and South Sudan are expected to be scaled back in FY2017.
• Countering Russian Aggression. Total funding identified by the Administration for the purpose of "countering Russian aggression" would decrease about 22% from FY2015, to $952 million, under the FY2017 request. The decrease is the result of loan guarantees not being requested for Ukraine, as they were in FY2015. Aside from loan guarantees, bilateral and regional assistance to Ukraine, Georgia, and Moldova would increase by about 25%.
• Central America. As in FY2016, the Administration is again requesting increased funding to support the U.S. Strategy for Engagement in Central America. The $751 million requested (+34% from FY2015), would focus on addressing the underlying causes of migration from El Salvador, Guatemala and Honduras.
• Democracy, Human Rights and Governance (DRG). The request includes $2.72 billion for DRG assistance, a 41% increase over FY2015 and 18% over a FY2016 congressional directive. The increase would be spread across several regions and be used to promote government accountability, empower democratic voices, and respond to and support democratic transitions.
• Countering Violent Extremism (CVE). The request includes $187 million across several accounts for the purpose of countering violent extremism, a category that has not been highlighted in previous budget requests. The request is more than double the $92.2 million attributed to this purpose in FY2015. CVE activities include addressing conditions that drive terrorist recruitment, mitigating political and social marginalization, and countering violent extremist propaganda, among other things.

Appendix A. State-Foreign Operations Appropriations, by Account

Appendix B. International Affairs (150) Function Account, FY2015 Actual, FY2016 Estimate, and FY2017 Request