Middle East: U.S. Foreign Assistance, FY2001, FY2002, and FY2003 Request

Middle East: U.S. Foreign Assistance, FY2001, FY2002, and FY2003 Request

Order Code RL31342
CRS Report for Congress
Received through the CRS Web
Middle East: U.S. Foreign Assistance,
FY2001, FY2002, and FY2003 Request
March 28, 2002
Clyde Mark
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Middle East: U.S. Foreign Assistance,
FY2001, FY2002, and FY2003 Request
Summary
The report describes some aspects of U.S. foreign assistance to the Middle East
and includes tables showing U.S. funding of the Wye agreement, and U.S. assistance
to the Middle East and North Africa for FY2001, an estimated level for FY2002, the
President’s request for supplemental assistance for FY 2002, and the President’s
request for FY2003. Congress may decide if it will retain the cap or ceiling it placed
on U.S. assistance to Israel, Egypt, Jordan, Lebanon, the Palestinians and several
multilateral operations, set at $5.1 billion for FY2002, or if it will provide the $5.3
billion for FY2003 requested by the Bush Administration. Also, Congress may
reconsider restrictions and conditions on U.S. assistance for the Palestinians. The
report will not be updated.

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Middle East Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reduced Funding for Israel and Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Wye Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
President Clinton’s Request for Supplemental Aid, FY2001 . . . . . . . . . . . . . . . . 3
U.S. Assistance to the Palestinians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
U.S. Assistance to Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
President Bush’s Supplemental Request for Foreign Operations, FY2002 . . . . . 4
U.S. Foreign Assistance for FY2001, FY2002, and the Request for FY2003 . . . 5
List of Tables
Table 1. Intended Disbursal of Wye Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Table 2. U.S. Foreign Assistance to the Middle East, FY2001 Actual,
FY2002 Estimated, and FY2003 Requested by the President . . . . . . . . . . . 5

Middle East: U.S. Foreign Assistance,
FY2001, FY2002, and FY2003 Request
Background
Following is a discussion of some aspects of current U.S. foreign assistance to
the Middle East and tables showing the actual aid levels for FY2001, the estimated
levels for FY2002, the supplemental request for FY 2002, and the President’s request
for FY2003. Congress has placed a ceiling on aid to some Middle Eastern countries
(See Middle East Cap, below), and is reducing assistance to Egypt and Israel
according to a ten-year plan (See Reduced Aid to Israel and Egypt).
The request for FY2002 supplemental assistance is intended to strengthen
“frontline states” in the war on terrorism. Turkey, Jordan, Bahrain, and Oman, among
others, will benefit from the increased assistance. The supplemental request is listed
as a separate column in Table 2. Congress will consider President Bush’s request for
supplemental assistance for the current year, FY2002.
Data are taken from the Summary and Highlights, International Affairs Function
150, Fiscal Year 2003 Budget Request, Office of the Secretary of State, Resources,
Plans, and Policy.
Other CRS reports dealing with U.S. foreign assistance to Middle Eastern
countries include:
CRS Issue Brief IB85066, Israel: U.S. Foreign Assistance
CRS Issue Brief IB89118, Lebanon
CRS Issue Brief IB93087, Egyptian-United States Relations
CRS Issue Brief IB93085, Jordan: U.S. Relations and Bilateral Issues
CRS Issue Brief IB92052, Palestinians and Middle East Peace: Issues for the
United States
CRS Issue Brief IB89140, Cyprus, Status of U.N. Negotiations

Middle East Cap
In FY1998, Congress established a ceiling, or cap, on funding for the Middle
East in order to ensure that adequate funding was available for other countries.
Congress did not include all Middle East countries or programs under the cap. The
cap for FY2002 is $5,141,150,000 for Israel, Egypt, Jordan, Lebanon, West
Bank/Gaza Strip, and funds for the Israel-Lebanon Monitoring Group, Middle East
Regional Democracy, Middle East Regional Cooperation, and the Middle East
Multinational Working Group (Section 558, P.L. 107-115, H.R. 2506). The
President’s request for FY2003 for the same recipients is $5,264,200,000. Congress

CRS-2
will decide if it will retain the cap for FY2003, the dollar amount of the cap, and what
countries or programs will be under the cap.
Reduced Funding for Israel and Egypt
Former Israeli Prime Minister Binyamin Netanyahu told a joint session of the
U.S. Congress on July 10, 1996 that Israel intended to reduce its dependence on U.S.
economic assistance in order to increase its self sufficiency. The Israeli Finance
Minister negotiated an arrangement with the two Appropriations Committees in
January 1998 to reduce Israel’s Economic Support Funds (ESF) from the then-current
level of $1.2 billion per year to zero within ten years ($1.2 billion divided by 10 =
$120 million per year reduction). But, according to the Israelis, Israel needed to
increase U.S. military assistance to meet increased military threats. Israel and the
Appropriations Committees agreed to raise Israel’s Foreign Military Financing (FMF)
by one half the amount of the ESF reduction, or $60 million per year. The net effect
is a reduction in total aid by $60 million per year (minus $120 million ESF, plus $60
million FMF = $60 million reduction). The Israeli-U.S. agreement, which remains an
unwritten, uncodified understanding, went into effect with the FY1999 assistance.
Although there is nothing in U.S. law or the 1978 Camp David agreements that
sets a specific ratio between U.S. aid to Israel and U.S. aid to Egypt, it appears that
such a ratio has existed since Egypt and Israel signed the 1979 peace treaty
(approximately 3 to 2 or 10 to7). To maintain balance between Egypt and Israel, the
Appropriations Committees decided to reduce U.S. economic aid to Egypt by one-
half over the same ten-year period, or about $40 million per year through 2008. U.S.
military aid to Egypt has not changed.
Wye Aid
Following the October 1998 Wye River negotiations, President Clinton
requested $1.9 billion in ESF and FMF for Jordan, Israel, and the Palestinians.
Congress appropriated $100 million for Jordan in FY1999 in a supplemental
appropriation. Congress added $25 million in FMF funds for Egypt and appropriated
$1.825 billion in FY2000 to cover the remainder of the President’s request. The Wye
funding was in addition to the “regular” annual assistance to Israel, Jordan, Egypt,
and the Palestinians for the years FY1999, FY2000, FY2001, and FY2002. The funds
were intended to be disbursed as follows:
Table 1. Intended Disbursal of Wye Funds
(Millions of Dollars)
FY1999
FY2000
FY2001
FY2002
Israel FMF
-
600
300
300
Jordan FMF
50
-
50
100
ESF
50
-
50
-
Egypt FMF
-
25
-
-
Palestinians ESF
-
200
100
100

CRS-3
President Clinton’s Request for
Supplemental Aid, FY2001
Israel withdrew its 1,000 troops from southern Lebanon on May 23, 2000, and
requested additional foreign assistance from the United States to pay for the
redeployment. On November 14, 2000, President William Clinton requested a
supplemental assistance package of $450 million for Israel for FY2001 that included
$250 million in a newly created Northern Israel Security Account, and $200 million
in FMF for missile defense and other military needs. In addition, President Clinton
requested $225 million in FMF for Egypt, and $25 Million in FMF and $50 million in
ESF for Jordan for FY2001. The supplemental FY2001 funds would have been in
addition to the regular FY2001 foreign assistance funds for Israel, Egypt, and Jordan,
and in addition to the Wye funds appropriated in FY2000 and scheduled to be
disbursed through FY2002. Accompanying the November 14 request was a
recommendation that additional funding should be considered for FY2002, $350
million in FMF for Israel, and $150 million to be shared among Egypt, Jordan, and the
Palestinians for FY2002. Congress did not act on President Clinton’s supplemental
request or on the recommendation. According to press accounts, Israeli leaders have
reintroduced their request for the $800 million additional assistance to the Bush
Administration and to Members of Congress.
U.S. Assistance to the Palestinians
No U.S. assistance goes the Palestine Liberation Organization (PLO) or to the
Palestinian Authority (PA). All U.S. assistance to the Palestinians goes to private
voluntary organizations (20%) or to contractors (80%), all of which are selected and
monitored by the U.S. Agency for International Development. All U.S. aid to the
Palestinians is economic support funds (ESF) and is not for military purposes.
Congress has placed restrictions on U.S. aid to the Palestinians:
! no assistance to the PLO unless authorized by the President (Section 546 of
P.L. 107-115);
! no funds to the Palestinian Authority unless the restriction is waived by the
President (Section 555);
! the President may close the Palestinian office in Washington, or name
constituent members of the PLO as terrorist organizations, or end assistance
(except humanitarian) to the West Bank and Gaza if the President determines
that PLO and the PA are not meeting their prior commitments (Section 566);
! no funds for the Palestine Broadcasting Corporation (Section 569); and
! stop aid to the Palestinians unless the Comptroller General has access to
information to review U.S. aid uses (Section 571).

CRS-4
U.S. Assistance to Israel
Israel receives the ESF during the first month of the fiscal year as a lump sum
grant to be used at the discretion of the Israelis; the aid is not tied to any specific
project. Israel invests the ESF funds in U.S. government bonds until they are needed,
thereby realizing a $60 million annual windfall in interest. One quarter of the military
assistance is in the form of a grant, transferred directly to Israel for purchases of
Israeli military equipment. The remaining FMF is held in the United States for
payment against Israeli expenditures for U.S.-made military equipment or services.
President Bush’s Supplemental Request for
Foreign Operations, FY2002
On March 21, 2002, President George W. Bush submitted a request for
supplemental funding for FY2002 foreign assistance, included funding for eight
Middle Eastern countries and one Middle Eastern regional program. The additional
funds are intended to strengthen “frontline states” in the war on terrorism. The
request is included in Table 2 under FY2002 Supplemental Request.

CRS-5
U.S. Foreign Assistance for FY2001, FY2002, and
the Request for FY2003
Some countries listed in the following table may not fit conventional definitions
of Middle East, but are included here because of membership in the Arab League
(Comoros, Djibuti, Sudan), proximity (Greece, Cyprus, Ethiopia, Eritrea) or their
involvement in regional affairs (Turkey).
Abbreviations and symbols used in the table:
# = Less than $100,000
CS = Child Survival and Disease (Health) Funds
DA = Development Assistance
ESF = Economic Support Funds
FMF = Foreign Military Financing
IMET = International Military Education and Training
Immigrant Settlement = for Soviet and Ethiopian Jews, from the Migration and
Refugee account
ME = Middle East
U.N. = United Nations
Table 2. U.S. Foreign Assistance to the Middle East,
FY2001 Actual, FY2002 Estimated, and
FY2003 Requested by the President
(Millions of Dollars)
Country/Program
FY2001
FY2002
FY2002
FY2003
Actual
Estimated
Suppl.
Request
Request
Algeria IMET
.1
.2
-
.6
Bahrain Total
.2
.4
28.5
.5
IMET
.2
.4
-
.5
FMF
-
-
28.5
-
Comoros IMET
-
-
-
#
Cyprus ESF
15.0
15.0
-
15.0
Djibuti Total
.2
.2
5.0
.2
ESF
-
-
3.0
IMET
.1
.2
-
.2
FMF
.1
-
2.0
-

CRS-6
Country/Program
FY2001
FY2002
FY2002
FY2003
Actual
Estimated
Suppl.
Request
Request
Egypt Total
1,991.7
1,956.2
-
1,916.2
ESF
693.5
655.0
-
615.0
IMET
1.1
1.2
-
1.2
FMF
1,297.1
1,300.0
-
1,300.0
Eritrea Total
10.3
11.0
-
9.4
DA/CS
10.1
10.3
-
8.5
IMET
.2
.4
-
.4
FMF
-
.3
-
.5
Ethiopia Total
40.6
46.8
11.0
51.1
ESF
-
-
8.0
-
DA/CS
40.6
46.0
-
50.1
IMET
-
.5
-
.5
FMF
-
.3
3.0
.5
Greece IMET
#
.5
-
.6
Iraq Opposition ESF
24.9
25.0
-
25.0
Israel Total
2,873.8
2,848.0
-
2,760.0
ESF
838.2
720.0
-
600.0
Immigrant
60.0
60.0
-
60.0
Settlement
FMF
1,975.6
2,040.0
-
2,100.0
Counter Terror
-
28.0
-
-
Jordan Total
226.2
227.0
125.0
450.4
ESF
149.7
150.0
100.0
250.0
IMET
1.7
2.0
-
2.4
FMF
74.8
75.0
25.0
198.0

CRS-7
Country/Program
FY2001
FY2002
FY2002
FY2003
Actual
Estimated
Suppl.
Request
Request
Lebanon Total
36.0
36.2
-
33.2
DA
.6
.6
-
.5
ESF
34.9
35.0
-
32.0
IMET
.5
.6
-
.7
Mauritania IMET
#
.1
-
.1
Morocco total
14.1
14.8
-
13.2
DA
10.6
10.3
-
6.7
IMET
1.0
1.0
-
1.5
FMF
2.5
3.5
-
5.0
Oman Total
.3
.5
25.0
20.8
IMET
.3
.5
-
.8
FMF
-
-
25.0
20.0
Saudi Arabia IMET
-
#
-
#
Somalia DA/CS
3.0
3.0
-
2.9
Sudan Total
4.5
11.4
4.0
22.3
DA/CS
4.5
11.4
-
22.3
ESF
-
-
4.0
-
(Southern Sudan)
Tunisia Total
4.5
4.5
-
6.5
IMET
1.0
1.0
-
1.5
FMF
3.5
3.5
-
5.0
Turkey Total
1.7
22.7
228.0
20.3
ESF
-
-
200.0
-
IMET
1.7
2.7
-
2.8
FMF
-
-
28.0
17.5
FMF Emergency
-
20.0
-
-
Response

CRS-8
Country/Program
FY2001
FY2002
FY2002
FY2003
Actual
Estimated
Suppl.
Request
Request
West Bank-Gaza
84.8
72.0
-
75.0
Strip ESF
Yemen Total
4.2
5.5
25.0
12.7
ESF
4.0
5.0
5.0
10.0
IMET
.2
.5
-
.7
FMF
-
-
20.0
2.0
Regional
ME Economic
-
-
50.0
-
Initiative
ESF
ME Democracy
4.0
5.0
-
5.0
ESF
ME Fact Finding
2.8
-
-
-
ESF
ME Multilaterals
3.0
3.0
-
3.0
ESF
ME Regional
5.0
5.0
-
5.0
Cooperation
ESF
U.S.-North Africa
4.0
4.0
-
4.0
Economic
Partnership ESF
Locherbie Trial
15.0
-
-
-
Support

CRS-9
Country/Program
FY2001
FY2002
FY2002
FY2003
Actual
Estimated
Suppl.
Request
Request
Peacekeeping
15.0
-
-
-
Multinational
16.0
16.4
-
16.4
Force and
Observers (Sinai)
U.N.
8.0
10.4
-
8.4
Disengagement
Observer Force
(Golan
Heights)
U.N. Interim
59.9
25.0
-
33.5
Force In
Lebanon
U.N. Iraq-Kuwait
4.8
5.3
-
4.5
Observation
Mission
U.N. Mission for
11.5
13.5
-
11.8
the Referendum in
Western
Sahara
U.N. Force in
5.6
6.7
-
5.2
Cyprus
U.N. Mission in
71.3
57.3
-
55.6
Ethiopia
and Eritrea