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Briefing on the FY 2008 Budget

Randall L. Tobias, Director for U.S. Foreign Assistance and USAID Administrator
Bradford R. Higgins, Assistant Secretary of State for Resource Management
Washington, DC
February 5, 2007

2:02 p.m. EST

MR. GONZALES: Hi. Good morning, you all. This morning we have Randall Tobias, Director U.S. Foreign Assistance and USAID Administrator and Brad Higgins, Assistant Secretary, Resource Management and Chief Financial Officer for the Department. This will be on the record and they will both have some brief comments and then we'll take questions after that.

ADMINISTRATOR TOBIAS: Thank you, Gonzo and thanks to all of you for being here. As -- if you will excuse me, in my other life, I live in Indianapolis and I was doing a little yelling last night, so. As Sean mentioned I think a couple of hours ago, and as you probably know, earlier today at the White House the Office of Management and Budget released the Administration's Fiscal Year 2008 Budget Request and that of course includes our foreign assistance budget request.

As many of you know, I have been serving as the first-ever director of United States Foreign Assistance and concurrently as the head of USAID. And during the past year or so that I have been in this role, I have been focused on trying to bring coherence and strategic focus to the way we approach foreign assistance at both State and USAID and beyond. And a significant amount of my time has been spent putting together this first-ever integrated foreign assistance budget request.

The fiscal year 2008 foreign assistance request for State and USAID is $20.3 billion and that represents a 12 percent increase over the fiscal year 2006 enacted levels. And as you know, that is the last year for which we have a budget. This reflects the critical role that our security and development assistance play in our national security strategy. I think there is no doubt that foreign assistance makes the United States safer. In fact, just last week, Congresswoman Nita Lowey, the chairwoman of the House Appropriations Subcommittee on Foreign Operations told one of your colleagues at The New York Times and I quote, "There is a growing recognition among the public and policymakers that foreign assistance is critical to stability around the world."

Our men and women of the State Department and USAID in addition to many contractors and NGO staff are literally putting their lives on the line every day to implement programs in some of the most difficult places of the world -- places which take their greatest toll in human suffering.

In this budget, you will find a 20 percent increase in resources for low and lower middle income countries over 2006 levels. You'll find a 54 percent increase in assistance to Africa over fiscal year 2006 and that will bring the total to a quadrupling of assistance to Africa during the course of this Administration. There's a 4 percent increase for the Near East as a vital investment in winning the global war on terror and empowering the people of this critical region. There's a 6 percent increase in South and Central Asia, highly concentrated in states like Afghanistan and Pakistan which are of critical importance to our national security and are also among the very poorest nations in that region. And if Congress funds this request, aid to the Western Hemisphere will have nearly doubled since the beginning of this Administration from $862 million to $1.66 billion, including the work of the Millennium Challenge Corporation.

The approach that we have taken to putting this year's budget together has really been quite different from previous years. For example, our efforts have been guided by the following six principles. First, we have integrated our planning based on looking across the totality of U.S Government assistance resources for each country. The fragmentation of our approach across multiple agencies and offices and bureaus has risked uncoordinated strategies, inadequate accountability, and indeed, the misdirection of resources. And so in building this budget, our planning has taken into account the most complete possible picture of all U.S. activities and programs on a country-by-country basis.

Second, we have focused relentlessly on the specific gaps and obstacles each country faces in making progress toward the ultimate goal of moving from a relationship defined by dependence on traditional United States foreign assistance to a relationship defined by graduating the recipient countries from the need for receiving U.S. foreign assistance.

Third, we have focused investment in states that are critical to long-term regional stability and prosperity, countries that are critical barriers to regional stability and success in the war -- in the global war on terror. 51 percent of State and USAID resources are, in fact, concentrated in rebuilding and developing countries, the countries that are the farthest away from the transformational diplomacy goal as measured by such indicators as their current level of instability, by measures of poverty and human capacity, life expectancy, governance and barriers to economic growth. We have also focused on selected developing states and sustaining partnership countries that can serve as anchors for regional stability and prosperity.

Fourth, we have focused on demand-driven, rather than supply-driven, interventions. And we have done that based on the expertise of our people with country-specific knowledge and experience, in order to identify interventions that are the critical levers for sustainable progress and transformation. In fact, the resources targeted to the three broad development objectives that encompass these kinds of programs -- investing in people, governing justly and democratically, and economic growth -- the combination of those three increased by 14 percent in this budget over fiscal year '06 levels. And when you include the projected MCC disbursements in '08, then the resources focused in these areas increased by 24 percent.

Fifth, in order to ensure a coordinated response and effective and sustainable impact, to the maximum extent possible, we have sought to bring all of the resources implemented at the country level down to the country level budgets. And therefore, resources within global or regional budgets have been allocated to specific countries where accordingly, they have been shifted to specific country programs and planned together with the rest of the support activities for those countries. At the same time, we have also recognized that not all foreign assistance is implemented on the country level. And therefore, some issues, some security initiatives, some trade capacity initiatives, for example, may best be addressed as part of a regional or global strategy. And the monies for those have been left in regional or global programs.

Finally, we have tried our best to match accounts with the country circumstances and intent that those accounts are actually designed to address by maximizing the use of account authorities to support effective implementation of foreign assistance programs.

I want to take just another minute to talk a little more about this first principle, because the allocation process was country-focused and therefore, our planning was not driven by a sector-focused approach to budgeting. Rather, we asked teams of experts from USAID and State in Washington, in consultation with their field counterparts, to build country budgets that would advance each individual country's progress. The result was a budget that carefully tailors funds to development needs of each individual country through a concentration of resources on those areas where we believe our assistance can make the most difference, but without global sectors being the initial drivers of the allocations of the resources within the country budgets.

At the same time, we have built the analytical capability to understand the resulting impact on various sectors like aspects of health care or education or family planning when we add together all of the country budgets and see where did the sectors come out.

Over the weekend, I found myself trying to explain to someone just how integrated and interconnected this year's budget is as compared to the way in which we have done it in prior years. And the image came to my mind of the country -- that the country focus of this budget is very much like a solved Rubik's Cube, where each of the faces of the cube have all of the boxes lined up with a solid color on each side of the cube. And therefore, when a program is cut, it is like moving one part or one side of the cube and causing the colors to begin to get fragmented and mixed up.

And the total picture of the programs designed to help a country not only are intended to address its current challenges, but to do so in an integrated way that will better ensure that we have sustainability of these programs going forward. And so if the programs begin to get jumbled, that's going to force us to compensate for a cut in one country's programs by reaching into and cutting other countries' programs and then the various supportive relationships among the coordinated pieces of this budget are going to begin to fall out of balance.

The United States has been a leader in championing human dignity and human potential. In fact, during this Administration the United States has made a tremendous commitment to global development, nearly tripling our official development assistance from approximately $10 billion in 2000 to $28.5 billion in 2005. And official development assistance counts a number of things that go beyond this budget.

This budget request continues that commitment but it does so in what we believe is a much improved and much more strategic way.

Now, I think Brad has some comments.

ASSISTANT SECRETARY HIGGINS: Looks like a couple of you already have discovered the website. Our Budget in Brief is on the website today so you can look it up and get the specific numbers and some of the things we've been talking about.

Let me just start off. The President's FY 2008 budget request for the Department of State reflects the Department's critical national security role. The funding increase is commensurate with the tremendous responsibility it brings. This is perhaps, from my perspective, having spent two tours of duty over in Iraq, perhaps the most important change in our budget. Going forward, the President's budget will under the national security budget will include State Department, DOD and Homeland security, reflecting on the real need that we're looking at in terms of the importance of diplomacy and development in our efforts to combat terrorism. I think that to me is really one of the fundamental developments that we see today.

Going back to State ops appropriation, it sustains the platform for which the United States executes its diplomatic and foreign assistance efforts in more than 180 countries, serving as the base not only for the State Department but for over 40 other departments and agencies of the U.S. Government. These resources are critical: one, to our success in the global war on terror where the State Department serves as the front line in the protection of our border and national security; two, to provide our dedicated men and women operating overseas the necessary tools to accomplish their difficult mission in the most safe and secure environment possible in a very dangerous world; three, to the Secretary's transformational diplomacy initiative dealing with the challenges of the 21st century and redistributing our overseas personnel to regions and cities of the world where they are most needed; four, and finally, to our public diplomacy efforts which promote a better appreciation and understanding for our values and our way of life.

Specifically, the funds request for the State operations in FY 2008 will provide security for our personnel, facilities and information in Washington and 260 embassies, consulates and missions worldwide; protect against the legal entry of those who threaten homeland security while facilitating the entry of legitimate foreign visitors and students; support the construction of safe, secure, functional new embassies to replace our most vulnerable facilities; invest in information technology, providing security anywhere, anytime, computing on global classified and unclassified networks; support international peacekeeping efforts which further U.S. goals by ending conflicts, restoring peace and strengthening regional stability; expand and improve our training and professional development programs, including critical foreign language training; support our education and cultural exchange programs; strengthen coordination of civilian efforts to stabilize and reconstruct societies in transition from conflict or civil strife.

Before I finish, I want to assure you that we are making every effort to be good stewards of the money we are appropriated. We are undertaking a variety of reform initiatives to improve the efficiency of our operations. These include regionalization, right-sizing, shared services, State-USAID cooperation in the management area and process standardization.

In conclusion, full funding of the State operations budget is critical to support the people, facilities and programs that provide the base from which the U.S. diplomatic and consular relations and of foreign assistance program operate around the globe. Please provide our -- I think let me just, you know, finalize by saying the -- we need to provide our diplomats the resources they require to be successful. The State Department's operation is primarily about funding our people, to hire them, train them well, give them the tools they need to keep them safe and make them effective in fighting America's interests and values. It is fundamental and key to our national security.

Thank you.

QUESTION: Thank you very much for the briefing and for doing it on the record. For the ordinary American taxpayer to understand where the money is going, can you give us a breakdown of who are the major recipients of Department of State and USAID bilateral economic assistance in FY '08, meaning what countries: Iraq, Afghanistan, Pakistan, Egypt, Israel? And can you tell us what your request is for them for this for the coming budget year and then give us a comparative, either from the estimated FY '07 or for the actual '06?

ADMINISTRATOR TOBIAS: Yes. I'll answer the question. But rather than my getting into all of the numbers, I would draw your attention to the fact that if you go to the State Department website, the material that is in this --

QUESTION: The Function 150?


QUESTION: I've got it and I've read it and I don't see a breakdown on a country by country basis in that way which --

ADMINISTRATOR TOBIAS: Okay. We'll kind of help you --

QUESTION: That'd be great.

ADMINISTRATOR TOBIAS: -- go through that. The top five or six recipients of foreign assistance: Israel is 2.4 billion, Egypt is 1.721 billion. Those are both down a bit from '06 consistent with the glide path that was negotiated almost 10 years ago as part of the Camp David agreement. Afghanistan is $1.067 billion which is up from 968 million and those are -- those dollars are largely focused on programs that are dealing with poppy eradication, the building of alternative livelihoods, the kinds of things that will build capacity in the ministries and the units of both federal and local government. Pakistan is 785 million, which is up from 707 million. And again, that's focused on a variety of activities that will bring about police training, that will develop education programs, health programs and so forth. Sudan is 673 million which is up from 499 million.

And let's see, just to give you some illustrations around the world. In East Asia and Pacific Indonesia, is $158 million. It's an 18 percent increase. Kosovo is 151 million, 95 percent increase and so forth and we'll be glad to go through.

QUESTION: And do you have an Iraq number there?

ADMINISTRATOR TOBIAS: I don't know if I have an Iraq number here, but if I don't, we can get that.

QUESTION: Okay. And just to --

QUESTION: So those were '06 comparisons (inaudible) have an estimate?

ADMINISTRATOR TOBIAS: Very good point. As we have put this together, the '07 number because of the continuing resolution has been very much a moving target. And sometimes in the past, we've had confusion associated with are we comparing this to what the President's budget request was in that year. We're comparing that to what was actually enacted and so forth. So all of the numbers that we are using here are comparing to the 2006 enacted level and I think that gives us all probably a good starting point


QUESTION: You know, of the top few that you mentioned, is that the same order as the previous year in terms of the largest (inaudible) down through Sudan for example?

ADMINISTRATOR TOBIAS: I'd have to look to see. We have -- I can tell you this in general terms. We have moved several billion dollars in the budget from where it would have been on a business as usual basis if we had simply taken the previous year's enacted budget and proportionately increased everything in the new year and that is the result of our having looked on a country by country basis to determine, you know, what are the places where we really need to be putting money in order to get countries on a trajectory so they an eventually graduate.


QUESTION: Can I just ask about Sudan? What is the money mostly going to be used for in Sudan because it just strikes me as an unusual country to be a recipient of so much money in U.S. aid when you don't even have full relations in terms of a full ambassador and all that?

ADMINISTRATOR TOBIAS: I don't know if I have the -- well, it's going to humanitarian programs. It's going to, you know, programs that are addressing the near term needs of people who need food, they need water, they need basic, very basic health care. You know, we have a number of programs there that are ongoing and are quite successful under very, very difficult circumstances. I can get you more --

QUESTION: That includes Darfur?


QUESTION: These programs also including in Darfur?


ASSISTANT SECRETARY HIGGINS: I think it also worthwhile to point out that it's -- includes a good amount of the peacekeeping which is in both the -- you know, the CIPA column as well as in the volunteer column on the foreign assistance.

QUESTION: If I can just -- so can we assume that the money that will go to a potential UN force in Darfur would come from here, from this budget?

ASSISTANT SECRETARY HIGGINS: Well, I think at this stage, what we have looked at is the money we have -- we have money in both -- with the flexibility to move it back and forth, depending on what is the most effective way to get the peacekeeping in place.



QUESTION: A couple of questions, first of all, on the integrated planning idea and you said that this is all of the activities going on as far as the U.S. in one country. How does this relate to the Pentagon budget? Did you all kind of sit down with teams of Pentagon teams what their budget was in various countries and how does that all relate?

On the issue of supporting freedom in Iraq, I mean, supposedly what the United -- what the Administration says is that putting together national reconciliation under a political process is the most important thing to ending the violence and the insurgency, so can you talk about -- a little bit more about why there's not more specific money, in terms of the larger Iraqi budget going to that and where some of that money is going? And then also when you say that priority is regionalization --

ADMINISTRATOR TOBIAS: I'm not sure my memory is going to --



QUESTION: What do you mean by a priority is regionalization?


QUESTION: You said one of your priorities was regional -- on the -- when you talked about critical, some of the things that you were moving ahead with was critical language. You know, your broadcasting and you mentioned something about regionalization. I'm just hoping you can expand on that.

ADMINISTRATOR TOBIAS: I have to go back to my remarks. I was talking about --

QUESTION: I think it was --

ADMINISTRATOR TOBIAS: Oh, maybe you were talking about it.

QUESTION: I think it was Brad.

ASSISTANT SECRETARY HIGGINS: Oh, regionalization in terms of state operations.


ASSISTANT SECRETARY HIGGINS: Well, this is -- they're both very good questions. But the one I was talking about is regionalizing our operating facilities rather than having the -- you know, a certain, you know, one person doing the same duty in every embassy, creating a regional center so that we -- you know, can do it more cost effectively. That's really what I was talking about.

QUESTION: Okay, thanks.


ADMINISTRATOR TOBIAS: With respect to Iraq, the role that we are playing is one that's very much linked to what the military is doing in terms of providing the kind of security that can allow civilians to operate, but we're very focused on helping both the local governments and the national government build the kind of expertise and capacity and capability that they need to function, the kinds of skills and infrastructure that are needed in order for government officials to really perform their jobs.

In addition to that, we're doing a number of things focused on helping to build the economy. We have an objective of creating, by mid-year, about 40,000 jobs. Some of these jobs will be associated with people helping to clean up the garbage and clean up the streets and do the things that are necessary to get neighborhoods functioning so that people can live a more regularized life once the security conditions are under control. But we're doing a number of things that involve microeconomics, for example, so that business -- small businesspeople who want to get a business started and want to get back to business can borrow the money in order to get their inventory going and that kind of thing. So it's a variety of those kinds of programs.


QUESTION: Just on the integration, I mean, how is this linked to the Pentagon's budget?

ADMINISTRATOR TOBIAS: Well, there is -- there was a pre -- there has been a pre-established coordination mechanism between the Pentagon and the State Department on those aspects of the State Department budget where the Department of Defense plays a major role in the implementation in the peace and security category. And that process is carrying forward, but as an integrated part of the larger process of looking at the totality of all the things that we're doing on a country-by-country basis, so that it's not now something that's over here, kind of on a standalone basis.


QUESTION: Two questions. First of all, on Iraq refugees, there's some money in the budget to deal with the situation, international organizations. But I wonder if there's any money to allow more Iraq refugees to be admitted to the United States.

And secondly, more generally, can you -- I was going through the budget documents. There's a lot of places where you call for increases in aid. Any particular cuts that you made that you would point to to fund those other things?

ADMINISTRATOR TOBIAS: A lot of the cuts that were made are cuts in programs where we've really gotten to the point where -- India, for example, is a country that has an economy that's growing by 8 percent. India has become a donor country. India is providing like $50 million, I think, in support for Afghanistan. And so India is in a position where they are taking on more of the burden for the problems facing India. We still have a major program in India, but it is reduced in '08 from what it was in '06, as an example.

QUESTION: Figures for that?


QUESTION: Do you have the figures for that?

ADMINISTRATOR TOBIAS: I don't have them off the top of my head, but we'll get them.


QUESTION: And I'm sorry, a question about Iraq refugees. Is there any money to --


QUESTION: -- get those Iraq refugees to the U.S.?

ADMINISTRATOR TOBIAS: Yes, there is money to address the increases in Iraq refugees. But obviously what we're trying to do is to create circumstances to reduce the numbers of refugees who want to come to the United States or elsewhere.


QUESTION: I'm sorry if I missed this. Where does Iraq fall on the list of countries, the breakdown of countries?



ASSISTANT SECRETARY HIGGINS: I think it would be helpful, because one of the things that we've done is we've got the GWOT supplemental for '07 and '08 and that's where the -- you know, the discussion of what's going on in Iraq. And those were both in the Budget in Brief in the summary and highlights. So it's actually separate because we're -- we expect the Congress to look at the '08 budget and the '08 supplemental simultaneously, but for -- because it's -- you know, the (inaudible) is that the global war on terrorism and emergency funding, we have kept it separate. But you'll find the breakouts in terms of -- and the descriptions of where that money is going in both documents.

QUESTION: So there's $1.8 billion to Iraq, there's this sheet we got supporting freedom in Iraq. Where does that fall under?

ASSISTANT SECRETARY HIGGINS: That will fall under -- you'll see that -- you know, when you fall under -- what appropriation --

QUESTION: Whether it's part -- she means whether it's part of Department of State international programs or separate supplemental as you just seemed to say? Yeah.

ASSISTANT SECRETARY HIGGINS: It is -- you know, the vast majority of it is -- speaking for the State office, it's all under the emergency supplemental.

QUESTION: One of the decreases that seems -- I'm looking at page 105 from the budget where it breaks it down and it says development assistance from the -- say, the 2007 estimate -- okay, but it's down also from the 2006 actual -- it goes from 1.5 billion to about a billion, 1 billion -- 1041 is the number. So it's like, about a $500 million cut in development assistance, if you know what I'm referring to.


QUESTION: It's on page 105. I tore it out.



ASSISTANT SECRETARY HIGGINS: I've got my document --

QUESTION: Maybe --

ADMINISTRATOR TOBIAS: I think we're looking at different documents.

QUESTION: Maybe this is the -- I don't know, anyway, one -- it looks like it goes from 1.5 -- unless I'm wrong, 1.5 billion to a billion in development assistance.

ADMINISTRATOR TOBIAS: In my opening comments, I made reference to the fact that we are trying here to use the accounts in the way that matches the accounts to the intent for which they were intended. And that means that if you look at those kinds of development activities -- economic growth, democracy and investing in people kinds of things -- that were paid for in '06 by development assistance dollars, and then you look at those same activities that were paid for in '06 by economic support funds, ESF money, and you add those two things together.

And then you look at the '08 budget and look at the development assistance money and the ESF money. What you will find is that the funding for those three objectives is increased by 63 percent in total, but a big piece of that is moving from the development assistance account to the ESF account because the ESF account really has a lot more flexibility and we can, I think, use the money more effectively.

QUESTION: So it's an accounting problem -- an accounting issue?

ADMINISTRATOR TOBIAS: Yeah, it's an accounting issue.

QUESTION: It would be good if you could illustrate that.


QUESTION: It would be good if you could illustrate that somehow.


QUESTION: You don't have to do it in front of everybody now. I don't know if people are interested.

ADMINISTRATOR TOBIAS: Yeah, but if you'd look on page -- let's see. If you look on page nine --


ADMINISTRATOR TOBIAS: -- of this document, there's a chart that --

QUESTION: -- that shows that?

ADMINISTRATOR TOBIAS: Yeah, it shows that.



QUESTION: Recently there's been this violence, as you've just explained, in Iraq. We've had numerous bombings, helicopters shot down and so forth. Now, Jonathan Karl of ABC News over the week explored the problems where there was a jobs creation program in Iraq where the people, meaning maintenance crews, were supposed to build some school buses. And I don't know -- in your budget, was this in concrete but it turned out that buses were imported from Jordan. So is virtually everything in a particular budget, especially assistance-wise, what happens when it's just because of the violence or something of that nature curtailed and the people back in Baghdad, meaning the potential employees, are devastated because they don't have any work to do that they were obviously counting on?

ADMINISTRATOR TOBIAS: Well, there is clearly an interrelationship between the level of security and the ability to do the kinds of economic development programs that we're focused on. And conversely, our effectiveness in doing those economic development programs contributes to the level of security, so we've got to work both of those things very, very closely together.

But the kinds of programs we're talking about are programs designed to create employment and build skills of Iraqi people in Iraq. I don't know about the particular instance that you're talking about, but the kinds of programs I'm talking about are on-the-ground programs in Iraq.

MR. GALLEGOS: We've got time for one more.


QUESTION: Can you say how much of the total of your foreign assistance program is spent on military-related?

ADMINISTRATOR TOBIAS: I can. And I don't know if I have the number in front of me, but we can tell you. I don't think I do. No, I don't have that with me. We'll get that for you.

QUESTION: Just a quick clarification. The 20.3 billion figure you gave out at the beginning, is this only the foreign aid figure or is this foreign operations and foreign aid?

ADMINISTRATOR TOBIAS: That's foreign aid.

QUESTION: Okay. And what is the number for foreign operations?

ADMINISTRATOR TOBIAS: Do you have the foreign operations number?

ASSISTANT SECRETARY HIGGINS: It's 10.104; 10 billion, 14 million; which is up 510 million, about 5.4 percent versus the President's request of last year.

QUESTION: You said 5.1 percent?

ASSISTANT SECRETARY HIGGINS: It's 5.4 percent from the President's request of '07.

QUESTION: For the State ops or the foreign aid?


QUESTION: I know, but I don't know what the other --

QUESTION: So what's the figure for the total budget request, the 20.3 plus the 10.35?

ADMINISTRATOR TOBIAS: It's 36. The total of everything, which was on page one of the chart, is 36.186 billion, which is up from 31.389 billion.

QUESTION: That's the 150 account?

ASSISTANT SECRETARY HIGGINS: That's the 150 account.

QUESTION: Okay, thank you.

ASSISTANT SECRETARY HIGGINS: And unfortunately, what you're going to find is when you look at the budget in brief, which is the State ops, it's not exactly the same because we have Function 300 and Function 150. So but it's close and we'll be happy to walk you through it just to make sure it --

QUESTION: I think it's 35.

ASSISTANT SECRETARY HIGGINS: No, it's not. But it is a -- when you start comparing -- as Randy said, when you start comparing, you know, we're still operating on our continuing resolution so we don't know what '07 is. So in terms of coming up with a real comparison, I think Randy's right to look at '06 and saying --

ADMINISTRATOR TOBIAS: You know, just to --

QUESTION: 36.186 is the 150 account, you say? I'm sorry.




ADMINISTRATOR TOBIAS: But you know, if you just think about the totality of the questions here, you can see why we are taking this new approach of looking at the totality of all of our assistance on a country-by-country basis so that we can understand, you can understand, the Hill can understand and the American people are understanding exactly how all the pieces fit together, that we're doing the programming in a complementary way and the whole thing makes strategic sense. And that's the direction we're heading.

Thank you very much.

(The briefing was concluded at 2:40 p.m.)


Released on February 5, 2007

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