FY 1986 request for foreign assistance programs - transcript

It is a pleasure to appear before you to present the Administration's FY 1986 proposed program for foreign economic assistance.

This is a difficult and challenging year--from a budgetary standpoint--for the development of a foreign assistance program which meets our foreign policy objectives within the tight fiscal constraints facing us. The executive branch and Congress are together confronted with the need to sharply restrain spending in order to gain better control of the Federal deficit and to keep the U.S. economic recovery on a sound footing. A healthy American economy is important fore reasons of foreign policy as well as domestic considerations. Our success in maintaining the strength of our economy is important to developing countries--which depend on the United States as an important trading partner.

Notwithstanding the need to restrain the growth of the Federal budget, requirements for resources to pursue foreign policy objectives continue to increase. Our challenge is to find a way to meet these growing demands, and respond to new opportunities, with limited foreign assistance resources. We believe the FY 1986 foreign assistance request we bring before you does that. We have carefully focused our program on the highest priority foreign policy objectives.

In the face of proposed cut-backs in many domestic programs, it is more important than eve that we justify to the American people the reasons why a strong foreign assistance program is crucial to the national interest. The FY 1986 request reflects our view, based on experience, that foreign assistance has proven to be an important tool in achieving foreign policy objectives.

As the Secretary has already testified, the foreign assistance program is critical to the achievement of some of our highest foreign policy priorities--the promotion of peace in the Middle East, assuring access to such strategically important regions as the Persian Gulf and Southeast Asia, and support for democracy in Latin America. Economic growth in the Third World is also directly linked to the growth of our foreign trade and export capacity.

The foreign assistance program has also produced notable achievements in accomplishing our humanitarian objectives of helping developing countries to improve their own development prospects and to meet the basic needs of their people. I would like to cite some examples.

Notable Achievements

Especially promising are initiatives to transfer new health technology to the Third World. From the very gratifying results we have seen to date--particularly in the area of improved child survival--and research which holds promise of new breakthroughs in the near future, I believe it is fair to say, in fact, that we are on the verge of a "health revolution."

By teaching families how to use life-saving oral rehydration salts, we have demonstrated--in country after country--that the use of this new technology can produce a dramatic reduction in infant mortality rates. Similarly, our support for expanded immunizations has the potential for overcoming what are now major causes of death and diminished quality of life each year for millions of children in the Third World.

In addition, our support for key research is permitting AID to stay on the cutting edge of technology for child survival. The United Staes deserves, and has received, a great deal of credit for the technological breakthroughs on which our child survival action program depends. AID is committed to maintaining this leadership, specifically focusing on the rapid development and improvement of vaccins against the major killers of infants and children--such as measles and malaria.

A second area, where I think there is both an acute need and the possibility of solutions through our technology transfer efforts, is the reversal of the long- erm trend of declining per capita food production in Africa. Through the foreign assistance program, we have already successfully developed and released the first commercial hybrid of sorghum--a major staple food crop in Africa. This new sorghum variety produces a 50% increase in yields. We are now funding part of a broad multidonor research effort in Africa to develop new methods of dryland farming. We expect this effort to point the way to increased grain production under the semiarid conditions widespread in the sub-Saharan region. And we are funding the development of new types of maize, tubers, and other crops, as well as new methods of pest control, all of which hold the possibility of dramatically improving food production.

A second major element of the food production problem in Africa is governmental policy. It is clear that inappropriate policies on the part of African governments have held down food production. As a result, coupled with our agricultural research, we have initiated policy dialogue efforts in a number of African countries, as well as elsewhere. These efforts have helped focus attention on the need to change inappropriate poliies and eliminate controls on market incentives to incresaed production. Through AIDhs successful policy dialogue efforts, a number of African countries--such as Zambia, Somalia, and Uganda--have already made difficult but important policy reforms. And coupled with these continuing policy dialogue efforts, we are planning to use the $75 million that was included in the fY 1985 continuing resolution for new programs in Africa for programs that will encourage further policy changes. We have included an additional $75 million in our FY 1986 economic support fund (Esf) request to be used to encourage further economic policy reforms in Africa aimed at increasing food production.

Another major area where we have had some particular success and on which we need to continue to focus resources is that of family planning. Successful AID programs in Asia have demonstrated our ability to assist developing countries in their efforts to implmeent voluntary family planning programs when there is commitment on the part of the government. Our recent experience with contraceptive social marketing shows promise of becoming an effective new way to increase the distribution of population commodities.

other areas of success in our foreign assistance proram included increased involvement of the private sector in development. We have had particular success in stimulating the incresaed role of small and medium-sized agro-businesses in the development process in a number of developing countries. And we have incresaed the involvement of historically black colleges and universities in this country in the training of developing country participants from government and the private sector.

In the area of institution building, the foreign assistance program has helped significantly increase the level of training of future developing country leaders and the strengthening of their indigenous institutions. In Swaziland, where an expanding health system had outstripped the ability of its administrative systems to staff and support it, the establishment of an AID-funded Institute of Health Sciences has given the country a high-quality institution for training its own nurses and health personnel. The Central American Business School, founded with AID assistance, is now a key technical resource in improving private sector export management capacity. Our foreign assistance program has proven effective, too, as a vehicle for responding to the international humanitarian concerns of Americans--providing worldwide disaster relief and assistance with crises such as that now facing Africa.

I could cite many more such examples. Through successes such as these, our foreign assistance program is effectively helping to meet the basic human needs of the poor majority of the Third World. It is contributing, thereby, to our foreign policy goal of fostering improved stability and progress toward economic self-sufficiency in the developing nations.

And finally, it is important to remember that the foreign assistance program is important from a domestic standpoint as well. A high percentage of the funds authorized and appropriated by the Congress for foreign assistance are spent in the United States, creating jobs and stimulating exports; more than one-third of all U.S exports now go to Third World nations. Funding for crop substitution projects is an important element in our international efforts to counter the production and trafficking of narcotics. In short, our foreign assistance program is on track, producing the intended results.

Demands for Resources

But we are faced with growing demands for the limited foreign assistance resources at our disposal in FY 1986.

* The drought in Africa, besides creating near-term famine, has accelerated the long-term decline in African food production, necessitating a significant increase in aid to that troubled region.

* Many countries are continuing to recover only slowly from the worldwide recession and oil price shock and need continued balance-of-payments support to help them overcome pressing economic problems.

* Continued internal unrest and external aggression threatens the economic and political stability of countries in strategically important regions such as Central America and Southeast Asia.

And we are confronted with new opportunities and challenges. In parts of AFrica, governments need our help in finding solutions--Through economic polkicy reform and structural changes--to complex economic problems that have been in the making for decades. In the Andes, emergin democracies need our assistance in overcoming internal unrest and confronting mounting economic problems.

In short, the combination of incresaed fiscal restraint and the need to apply resources to new demands has forced some very difficult budgetary and programmatic choices for FY 1986.

As a result, the FY 1986 request is a lean budget, closely focused on priorities. In developing this request, we have sought to carefully integrate the various components and programs which make up the overall request in order to achieve the coordination necessary to get the most from our aid.

To do so, we have made very active and, I th ink, effective use of the integrated budget process to strike the right balance in the level and kind of resources within countries and in the overall mix of foreign assistance. The result is a foreign assistance budget request which esentially rtains the existing balance between economic and military assistance.

In addition to holding down our request for program funds, we have sharply limited our request for operating expenses--as part of the government-wide effort to achieve greater economies in the management of Federal programs. To fit within the tight budget request level for operating expenses, we have increased attention to operating efficiency. We are taking advantage of the fact that our major policies are now in place, allowing us to focus our attention, and our resources, on improving program implementation. We have already taken steps to revise the agency's programming system to achieve a more efficient use of staff, both in Washington and the field. We are simplifying and streamlining the planning process. We are eliminating unnecessary elements of the agency's budgetary process. We are increasing the delegation to our field missions of responsibility for project development and approval. We are introducing new procedures to improve our oversight of management performance. We have initiated a new management planning process and regular program implementation reviews to assure that our program objectives are being met and that funds are being obligated in a timely manner. And we are undertaking new arrangements to make more efficient use of resources, such as the new cooperative arrangements we have established with the Peace Corps.

As a result, the FY 1986 program I bring before you has been reduced to its essentials. The request is the very minimum we think we can operate with, given the magnitude of the resource needs confronting us.

Details of FY 1986 Request

Our general approach in developing the FY 1986 request has been to hold levels in total to those in last year's request. Within the overall program, we have made some marginal adjustments among programs to meet prioarity requirements.

The request for development assistance is essentially the same as our FY 1985 request. For the functional accounts, including the Sahel program, the request totals $1.675 billion. Within the functional account request, there has been some shift in the levels for individual programs.

* The request for agriculture is $792.5 million. This level is up about 5% over the FY 1985 level, mainly due to the need for incresaed assistance to Africa.

* The request for population is $250 million. Although down from the 1985 appropriation, due in part to declining requirements in Asia, the level was held to the same as last year's request.

* The health request, $146 million, also is down as a result of forward funding in FY 1985 made possibly by the $75 million increase for new health and child survival activities. To maintain the momentum in health, we have accelerated the development of new health projects to come on line in the coming years.

* The other functional accounts--education and selected development activities--are down just slightly from last year's request levels.

* The functional account request also includes $20 million for the third year of capitalization of the private sector revolving fund through which we are helping finance increased involvement of private enterprises in development.

Also within the development assistance program, we have requested $10 million for American schools and hospitals and $25 million for disaster assistance--the same levels as we requested last year.

For the ESF, we are requesting a total of $2.824 billion. This represents a slight increase from last year's request, excluding funding for Israel on which a decision has yet to be made. The increase is principally to accommodate the planned increase in Pakistan and some new requirements in Latin America, which I will detail in just a moment, plus continuation of the African economic reform program.

From a geographic standpoint, the allocation of development assistance and ESF represents some shifts among countries and regions compared to amounts we currently have budgeted for FY 1985.

* In Africa, the request for development assistance and ESF is up by a total of $42 million over current FY 1985 levels--principally in ESF--distributed among several countries including Kenya, Zambia, Somalia, and Liberia. As I said, the request also includes $75 million for African economic reform. And of course, we are proposing a large food aid supplemental for FY 1985 to help meet immediate food needs.

* In Asia, total development assistance and ESF is down about $45 million from current levels, due principally to the reduction in ESF--back to our original 1985 request level--for the Philippines, which had been increased this year as a result of the limitation on military assistance. Development assistance reductions would also occur in Bangladesh, Indonesia, Sri Lanka, and Pakistan, the latter offset by our planned ESF increase in Pakistan.

* In Latin America, the combined development assistance and ESF request is up about $100 million from the FY 1985 appropriated level, excluding amounts carried forward from last year's supplemental. This is due mainly to the $70 million total ESF program proposed for economic stabilization purposes for the Andean region--Peru, Ecuardor, and Bolivia. In addition, levels for El Salvador and for the regional programs in Central America and the Caribbean are slated to rise to a total of $52 million to provide sorely needed support through projects resulting from the Kissinger commission recommendations as well as the Caribbean Basin Initiative.

* In the Near East, leaving aside the question of funding for Israel and excluding amounts budgeted in Lebanon from an earlier supplemental development assistance and ESF is down a total of $18 million from currently budgeted FY 1985 levels. The net decrease is due mainly to a proposed $25 million reduction in ESF for Turkey, where economic progress is moderating the need for continuing high levels of assistance. This cut is partly offset by a $7.5 million increase in ESF for Morocco, which is taking hard measures to bring about a positive economic reversal of their troubled economy.

* Centrally funded development assistance programs are down from FY 1985 levels by a total of roughly $65 million. The decrease is due mainly to the forward funding of population and health activities which has occurred during the current year as a result of the increase in those programs.

For PL 480, the total budget authority request, excluding the World Food Program, is $1.307 billion. The Title I request of $657 million in budget authority will support a program level of $1.030 billion, sufficient to provide 5 million metric tons to 33 countries. The request includes a new $35 million program for the Philippines, provided discussions with the Philippine policy reform prove successful.

For Title II, we are requesting $650 million, with we project will enable us to provide almost 2 million metric tons of food. Our FY 1985 request of $650 million at this time last year was projected to enable us to provide 1.7 million metric tons. So while our request is the same as last year in dollar terms, because of lower estimated commodity prices we will be able to provide more food. The Title II regular voluntary agency programs for Africa have been increased from the FY 1985 level, and we have designated at least $25 million from the unallocated reserve for enhancement of these programs to help rehabilitate Africa from the effects of the current drought.

We believe our FY 1986 request, along with our FY 1985 reprogramming efforts and supplemental request, will allow us to meet current projected food aid needs for Africa. Obviously, should conditions require an extraordinary U.S. food aid response to Africa in FY 1986, and available resources prove inadequate, we will consider requesting a supplemental appropriation.

For the trade and development program, we are requesting $20 million, nearly the same level as last year's request.

Under multilateral assistance, we are requesting a total $1.348 billion for scheduled replenishments of the multilateral development banks. In addition, we have requested an FY 1985 supplemental appropriation to cover unfunded prior year replenishment payments. For the international organizations and programs account, we are requesting $196 million, up slightly from last year's request, excluding International Fund for Agricultural Development (IFAD), for which funding of the first replenishment was completed in Fy 1985. We have not yet concluded negotiations on a second IFAD replenishment.

The FY 1986 for the Peace Corps includes $2.8 million for a new African food initiative aimed at improving food availability at the community level. AID and the Peace Corps are jointly planning the initiative which will offer new potential for enhanced field coordination between the two agencies. The first year of the program is slated for two countries--Mali and Zaire--and eventually we plan to expand it to include between six and twelve African countries.

COPYRIGHT 1985 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group