Contents

• Recent Developments
• Congressional Action
• Regular State-Foreign Operations Appropriations
• Previous House Action
• Previous Senate Action
• The Economic Stimulus Package, H.R. 1, the American Recovery and Reinvestment Act of 2009
• The FY2009 Supplemental Request and the Remaining FY2008 Supplemental
• International Affairs FY2009 Budget Overview
• Background and Trends
• FY2009 Budget Request Overview
• FY2009 Budget Request: State Department and Related Agencies
• Civilian Stabilization Initiative
• State Department—Administration of Foreign Affairs
• Diplomatic and Consular Programs (D&CP)
• Embassy Security, Construction and Maintenance (ESCM)
• Educational and Cultural Exchanges
• The Capital Investment Fund (CIF)
• International Organizations and Conferences
• Contributions to International Organizations (CIO)
• Contributions to International Peacekeeping Activities (CIPA)
• International Commissions
• Related State Department Appropriations
• The Asia Foundation
• The International Center for Middle Eastern-Western Dialogue Trust Fund
• National Endowment for Democracy (NED)
• East-West Center
• U.S. Institute of Peace
• Broadcasting Board of Governors
• FY2009 Budget Request: Foreign Operations
• Top Ten U.S. Foreign Aid Recipient Countries
• Foreign Aid Reform
• FY2009 Foreign Operations Budget Details
• Major Changes
• Regional Distribution
• Sector Distribution
• Use of Supplementals

Summary

On February 4, 2008, President Bush sent his FY2009 budget request to Congress. The House Appropriations State-Foreign Operations Subcommittee marked up its then-unnumbered bill on July 16. The Chairwoman's Mark totaled $36.62 billion, $3.82 billion more than FY2008 enacted levels. No further action on that bill occurred. The Senate took up its State Department-Foreign Operations appropriation bill (S. 3288) on July 18; the full Senate Appropriations Committee reported it out the same day with $36.78 billion for FY2009. With no further progress on several appropriations bills, on September 24, the House approved a continuing resolution (H.R. 2638) that continued most funding through March 6, 2009, at FY2008 levels. The President signed the bill into law (P.L. 110-329) on September 30. The 111^th Congress passed another CR on March 6, 2009 (P.L. 111-6) funding the government through March 11, 2009.

On May 2, 2008, the Administration requested supplemental funds for FY2009. Congress took action on both the pending FY2008 and newly requested FY2009 supplemental appropriations (H.R. 2642) in May and June. Congress passed the supplemental at the end of June; the President signed it into law (P.L. 110-252) on June 30, 2008. (For more detail, see CRS Report RL34451, FY2008 Spring Supplemental Appropriations and FY2009 Bridge Appropriations for Military Operations, International Affairs, and Other Purposes (P.L. 110-252), by [author name scrubbed] et al.)

This report analyzes the FY2009 request, recent-year funding trends, and congressional action for FY2009. This report will be updated to further reflect congressional action.

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State, Foreign Operations, and Related Programs: FY2009 Appropriations

Recent Developments

On April 9, 2009, the White House sent Congress a request for supplemental appropriations for the remainder of FY2009, which included $7.1 billion for the Department of State and USAID. For details of the request and related legislative action, see CRS Report R40531, FY2009 Spring Supplemental Appropriations for Overseas Contingency Operations.

On March 11, 2009, President Obama signed the Omnibus Appropriations Act, 2009, into law (P.L. 111-8). The House had introduced H.R. 1105 on February 23, 2009, passed it on February 25, and sent it to the Senate, where it was passed by voice vote on March 10. The bill included $36.8 billion for Division H—Department of State, Foreign Operations, and Related Programs Appropriations, 2009. (For account-by-account details, see the funding tables in Appendix C and Appendix D.)

As part of H.R. 1, The American Recovery and Reinvestment Act of 2009, the House of Representatives and the Senate each provided funding for programs generally included in the State-Foreign Operations appropriations legislation. In the version of H.R. 1 passed by the House on January 29, 2009, the House provided a total of $500,000,000 for programs under the Department of State and the United States Agency for International Development (USAID). The Senate, in its version of H.R. 1, which it passed on February 10, 2009, provided for $602,000,000 for State and USAID programs. A House-Senate conference committee on H.R. 1 met and recommended a compromise $789 billion bill of which $602 million was for programs generally covered under the State-Foreign Operations appropriations. Both the House and the Senate adopted the conference recommendations on February 13, and sent the bill to the President. The President signed H.R. 1 on February 17, 2009.

With regard to the regular appropriations, Congress had passed two continuing resolutions including State, Foreign Operations appropriations. Most recently, the 111^th Congress passed a continuing resolution (P.L. 111-6) to provide funding through March 11, 2009. The 110^th Congress had passed P.L. 110-329, which continued funding for most State-Foreign Operations through March 6, 2009, at FY2008 levels. President Bush signed it into law on September 30, 2008. It included up to $5.0 million to help Liberia in debt reduction; and an increase from $631.2 million to $670.65 million of Foreign Military Financing (FMF) funds to be made available for procurement in Israel of defense articles and services in FY2009. The measure also provided $37.5 million for emergency repair and construction for the United States-Mexico International Boundary and Water Commission water quantity program, with no deadline for expenditure. P.L. 110-329 also contained some FY2008 supplemental funding, as well. Among these are $9.0 million to be transferred to the Special Inspector General for Afghanistan Reconstruction to remain available until September 2010 and $465.0 million within the Economic Support Fund (ESF), of which $365.0 million is for Georgia for humanitarian, economic, and relief assistance, and the remainder for hurricane relief in the Caribbean.

Congressional Action

Regular State-Foreign Operations Appropriations

The House introduced H.R. 1105 on February 23, 2009. It included $36.8 billion for the Department of State, Foreign Operations, and Related Programs, $1.6 billion below the Bush Administration request for FY2009. The bill contained $11.3 billion for the Department of State, $709.5 million for international broadcasting, and $24.7 billion for Foreign Operations. The Senate passed the bill with those same funding levels on March 10, 2009, and President Obama signed the bill into law on March 11, 2009. (More details will be provided in the next update of this report.)

Previous House Action

The House passed the continuing resolution, or CR (The Department of Homeland Security Act, 2008/H.R. 2638), on September 24, 2008, by a vote of 370 to 58 with one present.

The House Appropriations Subcommittee on State, Foreign Operations, and Related Programs marked up the international affairs (Function 150 account) regular appropriation on July 16, 2009. According to the subcommittee's press release, the Chairwoman's Mark totals $36.62 billion for State-Foreign Operations in FY2009, $3.82 billion more than the enacted FY2008 level, including $2.38 billion for Israel, $1.041 billion for Afghanistan, $1.5 billion for Egypt, and $696.9 million for Jordan. The subcommittee approved $7.278 billion for global health programs and $1.728 billion for the Development Assistance account. In addition to providing $809 million for USAID operating expenses, this bill, combined with the FY2008 supplemental funding, will fund 400 new USAID employees. For the Department of State, combined with the staffing increases in the FY2008 Emergency Supplemental Act, P.L. 110-252, the legislation increases State Department staffing by 1,061 new positions. The bill also meets the Administration's request of $522.4 million for educational and cultural exchanges.¹

Previous Senate Action

The Senate passed the CR (H.R. 2638) on September 27, 2008, with a vote of 78 to 12.

The Senate State-Foreign Operations Subcommittee and full Appropriations Committee marked up and reported out its bill (S. 3288/S. Rept 110-425) on July 18. It provides $36.78 billion for State-Foreign Operations in FY2009. (For account-by-account detail, see the funding tables in Appendix C and Appendix D.)

The Economic Stimulus Package, H.R. 1, the American Recovery and Reinvestment Act of 2009

On January 31, 2009, the House of Representatives passed H.R. 1, the American Recovery and Reinvestment Act of 2009, an $819 billion bill to stimulate the economy. Of the total, the House version of H.R. 1 contained $500 million of funding for programs generally covered under the State-Foreign Operations appropriations. On February 10, 2009, the Senate amended and passed H.R. 1. The Senate's $838 billion version of the legislation contained $602 million for programs generally covered under the State-Foreign Operations appropriations legislation. The conference committee on H.R. 1 recommended a $789 billion bill of which $602 million was for programs generally covered under the State-Foreign Operations appropriations legislation. The House and Senate adopted the conference recommendations on February 13, and on February 17, the President signed H.R. 1. The State Department estimated that the additional funding would create about 1,460 jobs in the United States.

The FY2009 Supplemental Request and the Remaining FY2008 Supplemental

On May 2, 2008, the George W. Bush Administration sent an FY2009 supplemental budget request to Congress amending its FY2009 regular request by a total of $5.12 billion for international affairs accounts—$2.24 billion for the Department of State and $2.88 billion for foreign assistance. The Supplemental Appropriation Act, 2008 (P.L. 110-252) was signed on June 30, 2008, with a total of $6.15 billion in FY2008 supplementals and $3.94 billion in FY2009 supplementals for State, Foreign Operations and Related Agencies. While Division J of the Consolidated Appropriations Act, FY2008 (P.L. 110-161, signed December 26, 2007) contained both regular appropriations and $2.4 billion for FY2008 supplemental funding for international affairs, the Administration stated that $5.4 billion of the FY2008 supplemental request ($2.2 billion for the Department of State and $3.2 billion for foreign assistance) was lacking. (For account-by-account detail, see the tables in Appendix C and Appendix D. Also, for more information on the current supplemental appropriations, see CRS Report RL34451, FY2008 Spring Supplemental Appropriations and FY2009 Bridge Appropriations for Military Operations, International Affairs, and Other Purposes (P.L. 110-252), by [author name scrubbed] et al.)

International Affairs FY2009 Budget Overview

The international affairs budget, also known as Function 150, funds a variety of U.S. government programs and activities, including foreign economic and military assistance, contributions to international organizations and multilateral financial institutions, State Department and U.S. Agency for International Development (USAID) operations, public diplomacy, and international broadcasting programs. Figure 1 provides a percentage breakout of the FY2009 budget request, including international food aid that is appropriated in the Department of Agriculture appropriations bill.

Background and Trends

The rationale for foreign affairs programs has transitioned from a largely anti-communist orientation for some 40 years following World War II to a more recent focus on anti-terrorism in the post September 11, 2001 environment. During the Cold War, foreign aid and diplomatic programs also pursued a number of other U.S. policy goals, such as reducing high rates of population growth, promoting economic development in general, advancing U.S. trade interests, expanding access to basic education and health care, promoting human rights, and protecting the environment. In the 1990s, other goals included stopping nuclear weapons proliferation, curbing the production and trafficking of illegal drugs, expanding peace efforts in the Middle East, achieving regional stability, protecting religious freedom, and countering trafficking in persons.

Figure 1. Composition of Foreign Affairs Budget, FY2009 Request

Source: Fiscal Year 2009 Budget of the U.S. Government and CRS calculations. Note: The total figure of $39.50 billion includes $157.1 million for mandatory retirement accounts.

A defining change in focus came following the September 11 terrorist attacks in the United States. Since then, U.S. foreign aid and diplomatic programs have taken on a more strategic sense of importance, and have been frequently cast in terms of contributing to the war on terrorism. In 2002, President Bush released his National Security Strategy that for the first time established global development as the third pillar of U.S. national security, along with defense and diplomacy. Development was again underscored in the Administration's re-statement of the National Security Strategy released on March 16, 2006.

Also in 2002, foreign assistance budget justifications began to highlight the war on terrorism as the top foreign aid priority, emphasizing amounts of U.S. assistance to 28 "front-line" states—countries that cooperate with the United States in the war on terrorism or face terrorist threats themselves.² Large reconstruction programs in Afghanistan and Iraq are also part of the emphasis on using foreign aid to combat terrorism. State Department efforts focus extensively on outreach in strategically important countries, diplomatic security, and finding new and more effective ways of presenting American views and culture through public diplomacy.

In the context of the post 9/11 environment, the Bush Administration announced significant initiatives relating to diplomacy and foreign aid. A new transformational diplomacy initiative, announced in 2006, repositioned diplomats to global trouble spots, created regional public diplomacy centers, localized small posts outside of foreign capitals, and trained diplomats in new skills. (See CRS Report RL34141, Diplomacy for the 21^st Century: Transformational Diplomacy, by [author name scrubbed] and [author name scrubbed] for more information.) Also announced in 2006 was the creation of a new position at the State Department, the Director of Foreign Assistance (DFA), who serves concurrently as USAID Administrator. Heading up this new "F bureau" at State, the DFA created a new Strategic Framework for Foreign Assistance with the objectives of providing more coordination, coherence, transparency, and accountability for aid programs. (See CRS Report RL34243, Foreign Aid Reform: Issues for Congress and Policy Options, by [author name scrubbed] and [author name scrubbed] for more information.)

Other presidential initiatives address development and global health concerns. The Millennium Challenge Corporation is an aid delivery concept, proposed by President Bush in 2002, authorized by Congress (Title VI, Division D of P.L. 108-199), and established in early 2004. It is intended to concentrate significantly higher amounts of U.S. resources in a few low- and low-middle income countries that have demonstrated a strong commitment to political, economic, and social reforms. The President initially promised $5 billion annually by FY2006, although funds requested and appropriated have never reached this level.

With regard to global health issues, President Bush announced in 2003 a five-year, $15 billion commitment to combat HIV/AIDS. Known as the President's Emergency Plan for AIDS Relief, or PEPFAR, the initiative has focused significant funds in 15 focus countries, largely in Africa.³ Subsequently, the President launched a new initiative in mid-2005 aimed specifically at malaria (President's Malaria Initiative, or PMI), pledging $1.2 billion in additional resources through 2010. These initiatives, which have benefitted African nations, have contributed to fulfilling the Administration's pledge to double aid to Africa in the 2004-2010 period. In May 2007, the President announced a second phase commitment on HIV/AIDS of an additional $30 billion through FY2013.

Beyond these recently emerging foreign policy goals relating to terrorism and global health concerns, other prominent objectives have continued since the early 1990s including supporting peace in the Middle East through assistance to Israel, Egypt, Jordan, and the Palestinians; fostering democratization and stability for countries in crisis, like Bosnia, Haiti, Rwanda, Kosovo, Liberia, and Sudan; facilitating democratization and free market economies in Central Europe and the former Soviet Union; suppressing international narcotics production and trafficking through assistance to Colombia and the Andean region; and alleviating famine and mitigating refugee situations in places throughout the world.

The international affairs budget can be divided into two components—State Department and Foreign Operations. Both components are analyzed separately in the rest of this report. Taken together, the international affairs budget has fluctuated in real terms in response to changing global events. Table 2 and Figure 2 show appropriations for the last decade in both current and constant dollars.

Figure 2. International Affairs Appropriations, FY1999-FY2009($ Billions)

Source: Summary and Highlights, International Affairs Function 150, FY2009 and CRS Calculations.

FY2009 Budget Request Overview

On February 4, 2008, the President sent his FY2009 regular international affairs (Function 150 account) budget request to Congress. The request seeks a total of $39.5 billion for both the Department of State and foreign operations. This represents an increase from the previous year of 8.5% (excluding recent supplementals) at a time when much of the rest of the budget request is flat. Included in the FY2009 request is a new program referred to as the Civilian Stabilization Initiative (CSI) to help stabilize and transition countries from war to peace. The Omnibus Appropriations Act, FY2009 (H.R. 1105), was introduced in congress on February 23, 2009. The House passed it on February 25, 2009, and the Senate passed it on March 10 without an amendment. It was signed into law (P.L. 111-8) on March 11, 2009.

FY2009 Budget Request: State Department and
Related Agencies

The Administration's FY2009 budget request for the Department of State is $11.456 billion, representing a 5.6% increase over the FY2008 estimate, including rescissions and supplementals enacted in the consolidated appropriation (P.L. 110-161). For international broadcasting, the FY2009 request of $699.5 million represents a 2.6% increase over the FY2008 estimate, including rescissions and supplementals. Related agencies, which are funded in the State and Foreign Operations Appropriations bill, include the Broadcasting Board of Governors (BBG), and U.S. assessed contributions to United Nations (U.N.), International Organizations, and U.N. Peacekeeping. Also included are funding for the Asia Foundation, the National Endowment for Democracy, and several other small educational and exchange organizations, as well as resources for international commissions, and the U.S. Institute of Peace. Table 4 and Figure 3 show appropriations for the last decade in both current and constant dollars.

Figure 3. State Department and Related Agencies Appropriations, FY1999-FY2009 ($ Billions)

Source: The Department of State Congressional Budget Justifications, FY2001 - FY2009 and CRS calculations.

Civilian Stabilization Initiative

More than a year ago, in the President's January 2007 State of the Union Address, he mentioned the idea of establishing a civilian reserve corps (CRC) to be available for work in countries experiencing conflict or post-conflict crises. In subsequent testimony before the House Foreign Affairs Committee, Secretary Rice stated that the Department did not have the personnel or the skill sets required to implement the CRC at that time, but perhaps the Defense Department could help in the short run.⁴ In the FY2007 supplemental (P.L. 110-28), Congress provided $50 million for establishing the CRC, but included language requiring authorization to spend the money. This year the Administration is requesting $248.6 million for the Civilian Stabilization Initiative, including CRC, in FY2009.

DOD's expanding role in traditional civilian overseas activities over the years has led some observers to comment that DOD is not ideally suited, by expertise or training, to perform some of these missions. For example, some observers claim that police training missions are best performed by civilian law enforcement personnel. Others suggest that local-level economic reconstruction initiatives may be more effective when integrated into a broader economic reconstruction and development strategy, guided by civilian experts. Some nongovernmental organizations (NGOs), in turn, have expressed concerns that working closely with the military could affect how the NGOs are perceived by host populations.

For almost two decades, some analysts have judged that the United States needs a broader array of civilian personnel, readily available and trained to work with the military, to deal with the many needs of states emerging from conflict, as well as to prevent conflict. Without such civilian personnel, observers maintain that tasks such as civil administration, policing, political institution building, humanitarian relief, and early reconstruction or construction of physical infrastructure have fallen by default to ad hoc arrangements and to military forces, which as a whole are neither structured nor trained for them. The Bush Administration has moved incrementally to develop a small operational civilian capability that, as stated in the February 2008 announcement of a Civilian Stabilization Initiative (CSI), would serve as "a counterpart to the U.S. military, ready and capable to stabilize countries in the transition from war to peace."⁵

In mid-2004, the Bush Administration established the State Department Office of the Coordinator for Reconstruction and Stabilization (S/CRS) as the first step in operationalizing the State Department and other civilian agencies to undertake reconstruction and stabilization missions, either alone or with the military. Congress endorsed the creation of S/CRS in 2004 (Consolidated Appropriations Act for FY2005, H.R. 4818, P.L. 108-447, signed into law December 8, 2004. Section 408, Division D) and defined its responsibilities. Since then, S/CRS has worked to establish the basic concepts, mechanisms, and capabilities necessary to carry out reconstruction and stabilization missions. Among its principal tasks has been the development of the CRC to undertake reconstruction and stabilization missions.

Senators Lugar and Biden have introduced legislation repeatedly since 2004 to support the creation of civilian capabilities and fund their activities, including a permanent authorization for S/CRS, the authorization and funding of a readiness response corps, and the establishment of a conflict response fund. The latest version of this bill is S. 613, the Reconstruction and Stabilization Civilian Management Act of 2007, reported by the Senate Foreign Relations Committee on April 10, 2007 (S.Rept. 110-50). On February 27, 2008, the House Foreign Affairs Committee approved a similar bill, H.R. 1084. Both bills include the authorization for CRC required by Congress before the Administration can spend the $50 million appropriated in the FY2007 supplemental appropriations bill. Title 16, the Reconstruction and Stabilization Civilian Management Act of 2008, of H.R. 5658/S. 3001, The Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, also contains measures to authorize a Response Readiness Corps and the CRC. On September 27, 2008, Congress cleared this bill for the President. The President signed the Defense Authorization Act on October 14, 2008, with the legislation designated as P.L. 110-417.

With its FY2009 budget request of $248.6 million for CSI, the Bush Administration presented its plans for a 4,250 - person Civilian Response Corps, to be developed over the next few years. The Corps would consist of a 250-member interagency Active Response Corps (ARC) of government personnel who could deploy immediately to a crisis, and a 2,000 - member Standby Response Corps (SRC) of government personnel who could respond next. Those personnel would come from all 15 U.S. government civilian agencies. The third component would be a 2,000-member CRC of citizens who could provide the expertise needed for policing, rule of law, public administration, and infrastructure assistance. The Administration requested $248.6 million for FY2009 to organize, train, equip, and deploy CSI. After receiving an appropriations of up to $75 million in initial funding for the Active and Standby components in the Supplemental Appropriations Act of 2008, P.L. 110-252), on July 16, in ceremonies at the Department of State, the Secretary formally launched the interagency Civilian Response Corps.

State Department—Administration of Foreign Affairs

The State Department's mission is to advance and protect the worldwide interests of the United States and its citizens through the staffing of overseas missions, the conduct of U.S. foreign policy, the issuance of passports and visas, and other responsibilities. Currently, the State Department coordinates with the activities of more than 40 U.S. government agencies in 268 posts in over 180 countries around the world. The State Department employs approximately 30,000 people, about 60% of whom work abroad. The Administration of Foreign Affairs includes funds for salaries and expenses, educational and cultural exchanges, and embassy construction and security. For FY2009, the Administration is seeking $8.217 billion, an increase of more than $690.7 million (a 9.2% increase) over the FY2008 estimate. Highlights follow.

Diplomatic and Consular Programs (D&CP)

The D&CP account funds overseas operations (e.g., motor vehicles, local guards, telecommunications, medical), activities associated with conducting foreign policy, passport and visa applications, regional bureaus, under secretaries, and post assignment travel. Beginning in FY2000, the State Department's Diplomatic and Consular Program account included State's salaries and expenses, as well as the technology and information functions of the former U.S. Information Agency (USIA) and the functions of the former Arms Control and Disarmament Agency (ACDA).

For D&CP's FY2009 budget, the Administration is requesting $5,364.3 million, $37.6 million more than the estimated FY2008 level of $5,326.7 million, including rescissions and supplementals. The D&CP account includes an increase in personnel of 1,149 positions above attrition, with 500 of these positions designated for a new "Critical Skills and Strategic Relationship for Global Engagement" category. Within the FY2009 request, $1,162.8 million is designated for worldwide security upgrades (for increased security personnel, maintenance, and ongoing salaries). This represents a 20% increase over the FY2008 estimated level of $968.5 million.

Embassy Security, Construction and Maintenance (ESCM)

This account supports the maintenance, rehabilitation, and replacement of facilities to provide appropriate, safe, secure and functional facilities for U.S. diplomatic missions abroad. Early in 1998, Congress had enacted $403.6 million for this account for FY1999. However, following the embassy bombings in Africa in August 1998, Congress agreed to more than $1 billion (including a supplemental appropriation of about $627 million) for the Security and Maintenance account by establishing a new subaccount referred to as Worldwide Security Upgrades. This subaccount funds the bricks and mortar type of security needs overseas.

For FY2009, the Administration seeks $841.3 million for regular ESCM and $948.4 million for worldwide security upgrades, for a total account level of $1,789.7 million, a 25.5% increase over the FY2008 estimated level, including rescissions.

Educational and Cultural Exchanges

This account funds programs authorized by the Mutual Educational and Cultural Exchange Act of 1961, such as the Fulbright Academic Exchange Program, as well as leadership programs for foreign leaders and professionals. Government exchange programs came under close scrutiny in past years for being excessive in number and duplicative. After the September 11^th attacks, the Department of State began to emphasize public diplomacy activities in Arab and Muslim populations. The Bush Administration is requesting $522.4 million for exchanges in FY2009. This represents a 4.2% increase over the FY2008 estimate.

Within the D&CP account, Congress, in the FY2008 consolidated appropriation, designated $360.9 million for public diplomacy. The Administration is requesting $394.8 million for this subaccount for FY2009.

The Capital Investment Fund (CIF)

CIF was established by the Foreign Relations Authorization Act of FY1994/95 (P.L. 103-236) to provide for purchasing information technology and capital equipment that would ensure the efficient management, coordination, operation, and utilization of State's resources.

The FY2009 budget request includes $71.0 million for CIF, which is 19.1% higher than the FY2008 estimate of $59.6 million, after rescissions.

International Organizations and Conferences

In recent years, U.S. contributions to the United Nations and its affiliated agencies (Contributions to International Organizations—CIO) and peacekeeping activities (Contributions to International Peacekeeping Account—CIPA) have been affected by a number of issues. These have included the withholding of funds related to international family planning policies; issues related to implementation of the Iraq Oil for Food Program, and the findings and recommendations of the Volcker Committee Inquiry into that program; alleged and actual findings of sexual exploitation and abuse by personnel in U.N. peacekeeping operations in the field and other misconduct by U.N. officials at U.N. headquarters in New York and at other U.N. headquarters venues; and efforts to develop, agree to, and bring about meaningful and comprehensive reform of the United Nations organization, in most of its aspects.

Since 2004, congressional attention has often been directed to ways to ensure comprehensive U.N. reform, through legislative proposals fashioned after extensive hearings. Current legislative issues include followup and oversight of reforms initiated by the United Nations membership in September 2005 and throughout its fall General Assembly session and the possibility of increasing the 25% statutory cap on U.S. contributions to U.N. peacekeeping assessments to 27.1%.⁶

Contributions to International Organizations (CIO)

CIO provides funds for U.S. membership in numerous international organizations and for multilateral foreign policy activities that transcend bilateral issues, such as human rights. Maintaining a membership in international organizations, the Administration argues, benefits the United States by advancing U.S. interests and principles while sharing the costs with other countries. Payments to the United Nations and its affiliated agencies, the Inter-American Organization, as well as other regional and international organizations, are included in this account.

The President's FY2009 request totals $1,529.4 million for this account, representing a 13.8% increase over the estimated FY2008 level of $1,343.4 million, after rescissions.

Contributions to International Peacekeeping Activities (CIPA)

The United States supports multilateral peacekeeping efforts around the world through payment of its share of the U.N. assessed peacekeeping budget. The President's FY2009 request totals $1,497.0 million. This represents an 11.4% decline from the FY2008 estimated level of $1,690.5 million, including supplementals and rescissions. This account received $468.0 million in the FY2008 emergency supplemental, $390.0 million of which was designated for the U.N. mission in Darfur.

International Commissions

The International Commissions account (in the State Department budget, but not in the 150 account) includes the U.S.-Mexico Boundary and Water Commission, the International Fisheries Commission, the International Boundary Commission, the International Joint Commission, and the Border Environment Cooperation Commission. The FY2009 request of $110.0 million represents a 29.1% decrease over the FY2008 estimate of $155.1 million.

Related State Department Appropriations

The Asia Foundation

The Asia Foundation is a private, nonprofit organization that supports efforts to strengthen democratic processes and institutions in Asia, open markets, and improve U.S.-Asian cooperation. The Foundation receives both government and private sector contributions. Government funds for the Asia Foundation are appropriated to, and pass through, the State Department. The Administration request for FY2009 is $10 million, the same as requested a year earlier, but 35.1% below the estimated FY2008 appropriated level of $15.4 million (with rescissions).

The International Center for Middle Eastern-Western Dialogue Trust Fund

Through funded research, collaborative studies, training, conferences, and policy discussions, the Center, a U.S. NGO, seeks to encourage mutual understanding among people who share a Western European tradition, and the peoples of Southeast Europe, the Near and Middle East, and Central Asia, who share cultural and religious traditions of those areas of the world. Conferees added language in the FY2004 conference agreement for the Consolidated Appropriations Act, FY2004, to establish a permanent trust fund for the International Center for Middle Eastern-Western Dialogue. The act (P.L. 108-199) authorized $6.9 million for perpetual operation of the Center, which is to be located in Istanbul, Turkey. From FY2004 to FY2006, appropriations provided $18.75 million as seed money. The Center's funds each year are the total amount of interest and earnings from the Trust. The Administration requested spending $875,000 of interest and earnings from the Trust Fund for program funding in FY2009. For FY2008, the Administration requested appropriation authority to spend $875,000 of interest and earnings from the Trust Fund to be used for programming activities and conferences at the Center, but got $868,000 after rescissions. The FY2009 request is for $875,000.

National Endowment for Democracy (NED)

The National Endowment for Democracy, a private nonprofit organization established during the Reagan Administration, supports programs to strengthen democratic institutions in more than 90 countries around the world. NED proponents assert that many of its accomplishments are possible because it is not a government agency. NED's critics claim that it duplicates U.S. government democracy programs and either could be eliminated or could operate entirely with private funding.

The Administration's FY2009 budget request of $80 million for NED is the same as its FY2005, FY2006, FY2007 and FY2008 requests. The FY2009 NED request, located within the State Department portion of the international affairs budget request, represents an 19.4% decrease from the enacted $99.2 million (after rescissions) for FY2008. The 109^th Congress created a Democracy Fund in the FY2006 Foreign Operations Appropriations (P.L. 109-102) where Congress locates the NED appropriation.

East-West Center

The Center for Cultural and Technical Interchange between East and West (East-West Center), located in Honolulu, Hawaii, was established in 1960 by Congress to promote understanding and cooperation among the governments and peoples of the Asia/Pacific region and the United States. The Administration's FY2009 request is for $10 million for the East-West Center, a decrease of 48.2% from the FY2008 funding estimate of $19.3 million (including rescissions). The FY2007 actual funding level is $19 million.

At one time, Congress also appropriated funds for the North-South Center. The Center for Cultural and Technical Interchange between North and South (North-South Center) is a national educational institution in Miami, Florida, closely affiliated with the University of Miami. It was established to promote better relations, commerce, and understanding among the nations of North America, South America and the Caribbean. The North-South Center began receiving a direct subsidy from the federal government in 1991. Congress has not funded the North-South Center since FY2001, noting that it should be funded by the private sector.

U.S. Institute of Peace

The U.S. Institute of Peace (USIP) was established in 1984 by the U.S. Institute of Peace Act, (Title XVII of the Defense Authorization Act of 1985 P.L. 98-525). USIP's mission is to promote international peace through activities such as educational programs, conferences and workshops, professional training, applied research, and dialogue facilitation in the United States and abroad. Prior to the FY2005 budget, USIP funding came from the Labor, HHS, Education and Related Agencies appropriation. In the FY2005 budget process, it was transferred to the Commerce, Justice, State and related agencies appropriation primarily for relevancy reasons.

For FY2009, the Administration is requesting $33 million, up $8.2 million (33%) from the FY2008 estimated level of $24.79 million, after rescissions.

Broadcasting Board of Governors

The United States International Broadcasting Act of 1994⁷ reorganized within USIA all U.S. government international broadcasting, including Voice of America radio and television (VOA), Broadcasting to Cuba, Radio Free Europe/Radio Liberty (RFE/RL), Radio Free Asia (RFA), and the Middle East Broadcasting Network. The 1994 act established the Broadcasting Board of Governors (BBG) to oversee all U.S. government broadcasting; abolished the Board for International Broadcasting (BIB), the administering body of RFE/RL; and recommended that RFE/RL be privatized by December 31, 1999. This recommendation was repealed in 1999 by P.L. 106-113.

In 1999 the functions and staff of the United States Information Agency (USIA) and the Arms Control and Disarmament Agency (ACDA) were incorporated into the Department of State. Congress, however, also left the U.S. civilian international broadcasting function outside of State and kept the function under an independent agency, the Broadcasting Board of Governors (BBG) to maintain broadcasting's independence and integrity.⁸ The BBG funds the VOA radio and television, Broadcasting to Cuba, RFE/RL, RFA, and the Middle East Broadcasting Networks (including Alhurra, Alhurra-Iraq, Alhurra-Europe, and Radio Sawa). BBG programming is broadcast to the world through radio, television, the Internet, and other media in 60 languages.

The Administration's FY2009 funding request for the BBG is $699.5 million or $17.5 million above the FY2008 appropriated figure of $682.0, a 3 percent increase. The BBG budget is composed of three elements: the International Broadcasting Operations, Broadcasting to Cuba, and Broadcasting Capital Improvements.

The FY2009 request for the International Broadcasting Operations portion, the largest of the three parts of the BBG budget, is $653.8 million. This is $17.5 million below the FY2008 estimated funding of $671.3 million or a reduction of about 3 percent. Even with reduced funding, the Administration proposes to enhance VOA broadcasts to Somalia and the Horn of Africa, and start a new RFE/RL surrogate Azerbaijani broadcast to Iran. The Administration also seeks to strengthen VOA, RFE/RL, and RFA Internet capability, and improve Alhurra's television production capability. These new initiatives total $8.5 million. In the other portions of the BBG, the Administration's FY2009 request is $34.4 million for Cuba Broadcasting and $11.3 million for Broadcasting Capital Improvements, an increase above FY2008 of $635,000.

While realizing the importance and necessity of voice broadcasting especially in some areas of the world, the BBG notes that one of its highest priorities is to strengthen its capabilities in television and the Internet to accommodate the changing nature of communications in the world.⁹ It proposes reallocating language service radio staff to Web positions and shifting radio transmission funding to the Internet programs and television broadcasting.¹⁰ In order to fund these new initiatives with a reduced resource-request, the Administration proposes to eliminate RFE/RL's South Slavic (Serbian, Bosnian, and Macedonian) and Albanian language programming, and reduce funding in several other areas.¹¹ In FY2008, BBG proposed to reduce or eliminate radio broadcasting in a number of services, including Cantonese, Ukrainian, Tibetan, Portuguese to Africa, Romanian, and Kazakh, as well as broadcasts in Hindi, Russian, English, Croatian, Greek, and Thai. This effort was stopped by an infusion of $12 million in emergency supplemental funding in the Consolidated Appropriations Act, 2008 (P.L. 110-161). The FY2009 request assumes that this funding support would not continue in FY2009, and proposes to implement most of the language service reductions proposed in the FY2008 request by September 30, 2008.¹² The recent fighting between Russia and Georgia refocused attention on BBG plans to end Voice of America (VOA) radio broadcasting to these countries. Critics of the reallocation of resources to other areas and new technologies point to the fighting and the coverage in the Russian press as an example of the need for such broadcasting. BBG states that broadcasting hours were increased to Georgia through the use of VOA-FM, Radio Free Europe/Radio Liberty (RFE/RL), and the use of the Internet.

FY2009 Budget Request: Foreign Operations

The Foreign Operations budget comprises the majority of U.S. foreign assistance programs, both bilateral and multilateral. (See tables at the back of this report for Foreign Operations accounts and funding levels.) The annual Foreign Operations Appropriations bill funds all U.S. bilateral development assistance programs, managed mostly by USAID and the State Department, together with several smaller independent foreign aid agencies such as the Millennium Challenge Corporation, the Peace Corps, and the Inter-American and African Development Foundations. It supports U.S. obligations to major multilateral financial institutions, such as the World Bank, and United Nations activities, such as UNICEF. The Foreign Operations appropriation also includes funds for the Export-Import Bank, whose activities are regarded more as trade promotion than foreign aid. On occasion, the bill replenishes U.S. financial commitments to international financial institutions, such as the World Bank and the International Monetary Fund. International food aid, such as the P.L. 480 Food for Peace program, however, is funded in the Agriculture Appropriations bill, although it is also considered foreign aid. The FY2009 request for food aid programs totals $1.326 billion.

The regular foreign operations budget request for FY2009 totals $26.1 billion¹³ in foreign assistance programs, representing a 8.8% increase from the previous year's enacted level of $24.0 billion, excluding recent supplemental funds. This increase is larger than the overall FY2009 budget increase of 4.9%, and continues the general trend of foreign aid increases since September 11, 2001. Table 5 and Figure 4 provide funding levels, including supplementals and rescissions, for foreign operations since FY1999 in both current and constant dollars. Since 1999, foreign aid funding increased by nearly 86% in current dollars, but by 43% in constant dollars.

Figure 4. Foreign Operations, FY1999-FY2009($ Billions)

Source: The Foreign Operations Congressional Budget Justification, FY2001-FY2009 and CRS calculations.

Top Ten U.S. Foreign Aid Recipient Countries

Prior to 9/11 and the wars in Iraq and Afghanistan, Israel and Egypt typically received the first and second largest amounts of U.S. foreign aid. In recent years, after supplementals are added, Iraq or Afghanistan have moved Egypt to third or fourth place. Except for FY2004 when funding to Iraq jumped to more than $18 billion, Israel and Egypt typically are at the top of the list for receiving the most aid from the United States in recent years. See Table 6 for top U.S. aid recipients from FY2008 to the FY2009 request.

Foreign Aid Reform

Since the terrorist attacks of September 11, 2001, the role of foreign assistance as a tool of foreign policy has come into sharper focus. President George W. Bush elevated global development as a third pillar of national security, with defense and diplomacy, as articulated in the U.S. National Security Strategy of 2002, and reiterated in 2006. At the same time that foreign aid is being recognized as playing an important role in U.S. foreign policy, it has also come under closer scrutiny by Congress, largely in response to a number of presidential initiatives, and by critics who argue that the U.S. foreign aid infrastructure dates back to the Cold War era, is cumbersome and fragmented, and that a national aid strategy is lacking.

In recent years, several initiatives have heightened congressional interest in, and caused a re-examination of, U.S. foreign assistance policy and programs, including organizational structure. In January 2006, Secretary of State Rice announced an initiative to bring coordination and coherence to U.S. aid programs. The Secretary created a new State Department position—Director of Foreign Assistance (DFA)—the occupant of which serves concurrently as Administrator of the U.S. Agency for International Development. A new Bureau of Foreign Assistance (F Bureau) was created to coordinate assistance programs, led by the DFA, who in 2006, developed a Strategic Framework for Foreign Assistance to align U.S. aid programs with strategic objectives. The Framework guided the writing of the FY2008 and FY2009 budget requests.

This year a number of Members of Congress and nongovernmental organizations have indicated an interest in exploring greater reforms including the establishment of a national strategy on U.S. foreign aid policy, elevating the importance of foreign aid as a foreign policy tool to more closely align with that of diplomacy and defense, and rewriting the Foreign Assistance Act of 1961 to change the emphasis from the Cold War era to the post-9/11 era, among other things.

FY2009 Foreign Operations Budget Details

Despite a proposed 8.8% increase in the Bush Administration's FY2009 regular foreign aid budget request, most of the additional funds are concentrated in a few areas. The FY2009 budget continues to focus on the war on terrorism and reconstruction in Afghanistan and Iraq, as well as assistance to front-line states. Other areas that would see significant increases include two of the President's cornerstone initiatives—the Millennium Challenge Corporation (up 44%) and the President's Malaria Initiative (up 9.3%). The President's Emergency Plan for AIDS Relief (PEPFAR), which in the past also addressed treatment and prevention of malaria, increased by .5%. Africa and the Near East continue to see higher levels of assistance than other regions, but for Africa, most of the funds are concentrated in HIV/AIDS programs, with other types of assistance, such as basic education, decreasing. For the Near East, the aid increases are primarily for Iraq reconstruction. (See Appendix D for account-by-account funding levels for FY2007, FY2008 estimates, and the FY2009 request.)

Major Changes

The Bush Administration's FY2009 foreign aid request would increase the Millennium Challenge Corporation by 44%, the International Narcotics Control and Law Enforcement by116%, the Andean Counterdrug Program by 27%, and Debt Restructuring by 368%. Smaller increases in the budget request include the Child Survival and Health Programs (CSH) up 16%, the Economic Support Fund (ESF) up 5.5%, Peace Corps up 3.8%, the Global HIV/AIDS Initiative (GHAI) up 2.5%, and Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR) up 3.3%.

The Administration's FY2009 foreign aid budget request would reduce some programs from the FY2008 level, including International Disaster Assistance (IDA), down 30.6%, Migration and Refugee Assistance (MRA), down 25.3%, and Peacekeeping Operations (PKO), down 5.4%. The Administration has requested FY2009 supplemental funds which include additional funding for IDA, MRA, and PKO, however.

Regional Distribution

Comparing the FY2009 request to the FY2008 funding estimates, Figure 5 shows that U.S. foreign assistance would increase to all regions except East Asia and Pacific (EAP), which would decline by 18.7% and Europe (EUR), which would decline by 6.4%. The EAP decline is due in part to accounting—the Administration moved some funds to the Department of State budget and others to USAID's global programs. The decline in aid to Europe reflects the graduation from development assistance of 11 countries in the region and the critical need for aid elsewhere in the world.

The Western Hemisphere (WH) region would receive more U.S. aid in the FY2009 request than any other region—up by 39.7% over the FY2008 estimates. The increase is largely due to the Mérida Initiative which, for Mexico, includes $477.8 million in the FY2009 request, up from $26.6 million the year before. Without Mérida, the funding level would be similar to that of the previous year.

Africa would benefit from a 2% increase in FY2009, with no increase over the FY2008 level in Global HIV/AIDS (GHAI) funds. (In FY2008, GHAI funds to Africa increased by 39%, with other programs reduced.) South and Central Asia would see a increase of nearly 3.3% in FY2009, largely due to increased ESF assistance to Pakistan. The Near East would receive a 5.1% increase, mainly due to Iraq assistance.

Figure 5. Regional Distribution of Foreign Aid

Source: Foreign Operations Congressional Budget Justification, FY2009. Note: EAP=East Asia and Pacific; EUR=Europe and Eurasia; NE=Near East; SCA=South and Central Asia; LAC=Latin American and Caribbean=Western Hemisphere.

Sector Distribution

Over the years, Congress has expressed interest in various aid sectors, such as education, democracy, human rights, trade, maternal and child health, family planning and reproductive health, agriculture and environment. Table 7 provides FY2008 funding estimates and the FY2009 budget request for many of these sectors. Some sectors are cut significantly by the FY2009 request, as listed below, while others receive sizeable increases. Increases in counter narcotics programs in the regular budget request are up 54.3%, for example. Establishment of the Mérida Initiative, a program that supports Mexico and Central America in combating drug activity throughout the region, is the primary reason for the large increase in the counter narcotics sector. In addition to the FY2009 request for Merida funds, the FY2008 supplemental request includes $500 million for Mexico and $50 million for Central America for the Mérida Initiative.

Another key country receiving increased counter-narcotics support is Pakistan, under the President's commitment to support the Federally Administered Tribal Areas.¹⁴ The FY2009 budget reflects decreases in global health-related programs, including a decline in funding for tuberculosis, maternal and child health, family planning and reproductive health, and water supply and sanitation.¹⁵ The FY2009 request also decreases funding levels for education and civil society.

Mérida Initiative

In October 2007, the United States and Mexico announced the Mérida Initiative, a multi-year proposal for $1.4 billion in U.S. assistance to Mexico and Central America aimed at combating drug trafficking, gangs, and organized crime. The first year of funding for this initiative—$500 million for Mexico and $50 million for Central American countries—is included in the Administration's FY2008 supplemental appropriation request. In latest legislative actions, on June 19 and 26, 2008, the House and Senate approved compromise language on the FY2008 supplemental, H.R. 2642, that would provide $465 million in FY2008 supplemental and FY2009 supplemental assistance for the Mérida Initiative, with softened human rights conditions compared to earlier House and Senate versions. For Mexico, $400 million would be provided, with $352 million in FY2008 supplemental assistance (within the INCLE, FMF, and ESF accounts) and $48 million in FY2009 supplemental assistance (within the INCLE account). For Central America, $65 million would be provided for Central America, Haiti, and the Dominican Republic (within the INCLE, NADR, ESF, and FMF accounts), with Haiti and the Dominican Republic receiving $2.5 million each in FY2008 INCLE funding and none for FY2009.

The FY2009 budget request also includes another $550 million—$450 million for Mexico and $100 million for Central American countries—within the INCLE account.¹⁶

HIV/AIDS

In launching in 2003 the President's Emergency Plan for AIDS Relief (PEPFAR), President Bush pledged to provide this five-year initiative with a total of $15 billion by FY2008. Congress appropriated an estimated $5.97 billion in FY2008 which met total pledged funding over the five year period. On May 30, 2007, President Bush announced a follow-on plan to provide a total of $30 billion through FY2013. The FY2009 request of $6.0 billion begins the new five-year $30 billion program. Of the $6.0 billion requested, $4.8 billion is within the Department of State budget and $439.1 million is within USAID's budget. The remaining funds are within the Department of Health and Human Services.¹⁷

Malaria

The President's Malaria Initiative was announced in 2006 to provide an increased focus on malaria, pledging that the United States would spend an additional $1.2 billion over a five-year period (FY2006-FY2010). Congress appropriated $122 million in FY2006 and $248 million in FY2007. The President's request for FY2008 is $388 million, keeping the pledge on target. Including supplementals and rescissions, Congress provided $352 million for PMI in FY2008. The FY2009 request is $385 million, within the Child Survival and Health Programs account.

MCC

In announcing the creation of the new independent Millennium Challenge Corporation (MCC), the President pledged $5 billion annual funding by FY2006. In fact, requests have never topped $3 billion a year. Congress has consistently cut the MCC request with some Members expressing concern that the program was slow to get started, and has not disbursed much of its existing funding. In the FY2008 Consolidated Appropriations Act (P.L. 110-161, H.R. 2764), Congress provided $1.544 billion, almost half of the Administration's request. The FY2009 MCC budget request is for $2.225 billion, reflecting a 44% increase over the FY2008 level.¹⁸

Use of Supplementals

Supplemental resources for Foreign Operations programs, which in FY2004 exceeded regular Foreign Operations funding, have become a significant source of funds for U.S. international activities, especially those related to reconstruction efforts in Iraq and Afghanistan. Supplemental appropriations bills have often been used as vehicles to provide additional funding to respond to unanticipated emergencies or natural disasters.

There has been some criticism that the Administration has relied too heavily on supplementals, keeping funds off budget and difficult for year-to-year comparisons or future-year planning. Some supplemental appropriations, particularly those relating to Iraq, should be incorporated into the regular appropriations cycle if they are going to be on an annual basis, according to critics. The Administration counters that given the nature of rapidly changing overseas events and unforeseen emergencies, it is necessary to make supplemental requests for unexpected and non-recurring expenses.

Iraq and Afghanistan Share of Total Aid Budget

Including both base budgets and supplemental appropriations, the share of U.S. bilateral foreign assistance going to Iraq and Afghanistan has increased sharply since FY2002. Foreign aid to Afghanistan mushroomed from $590 million in FY2003 to $1.799 billion the next year. For Iraq, assistance consisted of small sums to support Iraqi opposition groups in the early 2000s, but picked up precipitously in FY2004 to more than $17 billion, and then fell to $1.6 billion in FY2006 and roughly $2.2 billion in FY2007. Table 8 tracks funding to both countries from FY2002 through the FY2009 and includes both regular budgets and supplemental funds. Amounts for FY2009 represent requested amounts.

FY2007 regular and supplemental funding for Iraq and Afghanistan together comprises about 16% of total foreign aid spending. The share of the FY2008 budget is just under 13%. The FY2009 aid requested for Iraq and Afghanistan, before supplementals, is 5.3%.

Appendix A. Abbreviations

Appendix B. Foreign Aid Country Categories

Rebuilding: Countries in or emerging from internal or external conflict.

Transforming: Low or lower-middle income, meeting performance criteria.

Sustaining Partnership: Upper-middle income; aid sustains partnerships.

Developing: Low or lower-middle income, not yet meeting performance criteria.

Restrictive: Significant freedom and human rights issues; legislative and/or Secretarial-designated limitations on assistance.

The Restrictive country category includes those countries that have restrictions on the receipt of U.S. assistance either by statute or Secretarial determination. The State Department does not provide a list of restrictive countries, although the FY2008 Foreign Operations Congressional Budget Justification lists certain countries with no categorization: Belarus; Burma; China; Cuba; Iran; Libya; North Korea; Venezuela; West Bank and Gaza; and Zimbabwe.

Appendix C. State Department and Related Agencies Appropriations

Appendix D. Foreign Operations Appropriations¹⁹