More Required Reading 2003
Harry Singer Foundation Essay Contest  

On March 14, 2002, President Bush proposed a $5 Billion Plan to Help Developing Nations during an address to the Inter-American Development Bank in Washington, D.C.  The first document in the Required Reading is the transcript of that speech with personal reference to members of the audience omitted. We also edited comments relevant only on the date of the speech. The proposal has come to be known as the Millennium Challenge Account (MCA).

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As you all know and we all know, America is engaged in a global struggle, a mighty struggle against the forces of terror. Yet, even as we fight to defeat terror, we must also fight for the values that make life worth living: for education, and health, and economic opportunity. This is both the history of our country and it is the calling of our times.

In World War II we fought to make the world safer, then worked to rebuild it. As we wage war today to keep the world safe from terror, we must also work to make the world a better place for all its citizens.

The advances of free markets and trade and democracy and rule of law have brought prosperity to an ever-widening circle of people in this world. During our lifetime, per capita income in the poorest countries has nearly doubled. Illiteracy has been cut by one-third, giving more children a chance to learn. Infant mortality has been almost halved, giving more children a chance to live. Nations from India to Chile have changed old ways and, therefore, found new wealth. Nations from Turkey to Mali have combined Islam with progress.

Yet in many nations, in many regions, poverty is broad and seemingly inescapable, leaving a dark shadow -- a dark shadow -- across a world that is increasingly illuminated by opportunity. Half the world's people still live on less than $2 a day. For billions, especially in Africa and the Islamic world, poverty is spreading, and per capita income is falling.

In Malawi, thousands of teachers die each year from AIDS, and life expectancy has fallen to only 38 years. In Sierra Leone, nearly one-third of all babies born today will not reach the age of five. And in Sudan, only half the children attend school.

This growing divide between wealth and poverty, between opportunity and misery, is both a challenge to our compassion and a source of instability. We must confront it. We must include every African, every Asian, every Latin American, every Muslim, in an expanding circle of development.

The advance of development is a central commitment of American foreign policy. As a nation founded on the dignity and value of every life, America's heart breaks because of the suffering and senseless death we see in our world. We work for prosperity and opportunity because they're right. It's the right thing to do. We also work for prosperity and opportunity because they help defeat terror.

Poverty doesn't cause terrorism. Being poor doesn't make you a murderer. Most of the plotters of September 11th were raised in comfort. Yet persistent poverty and oppression can lead to hopelessness and despair. And when governments fail to meet the most basic needs of their people, these failed states can become havens for terror.

In Afghanistan, persistent poverty and war and chaos created conditions that allowed a terrorist regime to seize power. And in many other states around the world, poverty prevents governments from controlling their borders, policing their territory, and enforcing their laws. Development provides the resources to build hope and prosperity, and security.

Development is not always easy, but the conditions required for sound development are clear. The foundation of development is security, because there can be no development in an atmosphere of chaos and violence. Today, the United States is leading a broad and vast coalition defending global security by defeating global terror. Meeting this commitment is expensive, but securing peace and freedom is never too expensive.

Development also depends upon financing. Contrary to the popular belief, most funds for development do not come from international aid -- they come from domestic capital, from foreign investment, and especially from trade. America buys and imports over $450 billion in products from the developing world every year -- $450 billion of purchases every single year. That is more than eight times the amount developing countries receive in aid from all sources. Trade is the engine of development. And by promoting it, we will help meet the needs of the world's poor.

Successful development also requires citizens who are literate, who are healthy, and prepared and able to work. Development assistance can help poor nations meet these education and health care needs. That's why the United States provides more than $10 billion a year for development assistance for food and for humanitarian aid. That is also why my administration has committed $500 million to the global fund to fight aids and other infectious diseases.

And we will work with Congress to increase this commitment, to show our love and compassion by increasing our commitment as the fund gets organized, develops a strategy, and shows success. We're spending billions more on AIDS research and other programs, to fight the disease around the world.

Yet many of the old models of economic development assistance are outdated. Money that is not accompanied by legal and economic reform is oftentimes wasted. In many poor nations, corruption runs deep. Private property is unprotected. Markets are closed. Monetary and fiscal policies are unsustainable. Private contracts are unenforceable.

When nations refuse to enact sound policies, progress against poverty is nearly impossible. In these situations, more aid money can actually be counterproductive, because it subsidizes bad policies, delays reform, and crowds out private investment.

The needs of the developing world demand a new approach. In Monterrey, we have a tremendous opportunity to begin acting on a new vision of development. This new vision unleashes the potential of those who are poor, instead of locking them into a cycle of dependence. This new vision looks beyond arbitrary inputs from the rich, and demands tangible outcomes for the poor.

America supports the international development goals in the U.N. Millennium Declaration, and believes that these goals are a shared responsibility of developed and developing countries. To make progress, we must encourage nations and leaders to walk the hard road of political, legal and economic reform, so all their people can benefit.

Today, I call for a new compact for global development, defined by new accountability for both rich and poor nations alike. Greater contributions from developed nations must be linked to greater responsibility from developing nations. The United States will lead by example. We will increase our development assistance by $5 billion over the three -- over the next three budget cycles. This new money above and beyond existing aid requests -- is above and beyond existing aid requests in the current budget I submitted to the Congress.

These funds will go into a new Millennium Challenge Account. Under this account, among other efforts, we will expand our fight against AIDS; we will bring computer instruction to young professionals in developing nations; we will assist African businesses and their people to sell goods abroad; we will provide textbooks and training to students in Islamic and African countries; we will apply the power of science and technology to increase harvests where hunger is greatest.

These are some of the examples of what we intend to do. The goal is to provide people in developing nations the tools they need to seize the opportunities of the global economy. In return -- in return for this additional commitment, we expect nations to adopt the reforms and policies that make development effective and lasting.

The world's help must encourage developing countries to make the right choices for their own people, and these choices are plain. Good government is an essential condition of development. So the Millennium Challenge Account will reward nations that root out corruption, respect human rights, and adhere to the rule of law. Healthy and educated citizens are the agents of development, so we will reward nations that invest in better health care, better schools and broader immunization.

Sound economic policies unleash the enterprise and creativity necessary for development. So we will reward nations that have more open markets and sustainable budget policies, nations where people can start and operate a small business without running the gauntlets of bureaucracy and bribery.

I've directed Secretary Powell and Secretary O'Neill to reach out to the world community, to develop a set of clear and concrete and objective criteria for measuring progress. And under the Millennium Challenge Account, we will apply these criteria rigorously and fairly. Countries that live by these three broad standards -- ruling justly, investing in their people, and encouraging economic freedom -- will receive more aid from America. And, more importantly, over time, they will really no longer need it, because nations with sound laws and policies will attract more foreign investment. They will earn more trade revenues. And they will find that all these sources of capital will be invested more effectively and productively to create more jobs for their people.

The evidence shows that where nations adopt sound policies, a dollar of foreign aid attracts $2 of private investment. And when development aid rewards reform and responsibility, it lifts almost four times as many people out of poverty, compared to the old approach of writing checks without regard to results.

Marrying good policies to greater aid led Mozambique to a 10 percent growth rate in 2001. This approach help Uganda open its schools to more children, and increased teacher pay by 2,700 percent. Bangladesh, a nation that was once a symbol of famine, has transformed its agricultural economy; rice production is almost up by 70 percent since the mid-'70s.

The new compact I propose would multiply this progress. I challenge other nations, and the development banks, to adopt this approach as well. America's support for the World Bank will increase by almost 20 percent over the next three years. We expect the World Bank to insist on reform and results, measured in improvements in people's lives. All the development banks should adopt a growth agenda, increasing their support for private sector enterprises and focusing more on education, as the Inter-American Development Bank has done.

And I challenge the development banks to provide up to half of the funds devoted to poor nations in the form of grants, rather than loans. Grants instead of loans that may never be repaid. Many have rallied to the idea of dropping the debt. I say let's rally to the idea of stopping the debt.

This new compact for development can produce dramatic gains against poverty and suffering in the world. I have an ambitious goal for the developed world that we ought to double the size of the world's poorest economies within a decade. I know some may say that's too high a hurdle to cross -- I don't believe so, not with the right reforms and the right policy. This will require tripling of current growth rates, but that's not unprecedented. After all, look at the dramatic growth that occurred in Asia in the 1990s.

With the world's help and the right policies, I know ¾I know ¾ that the developing world can reform their own countries. I know it can happen. And, therefore, better their own lives. They can live in a world where their children's dreams are ignited by liberty and learning, not undermined by poverty and disease. They can live under governments that deliver basic service and protect basic rights. The demands of human dignity know no borders and know no boundaries. They are universal. And so are the gifts of creativity and enterprise that lead to prosperity.

When governments repress and punish those gifts, no amount -- no amount of aid is sufficient to lift people from poverty. When governments honor these gifts, every nation can know the blessings of prosperity.

People across the world are working to relieve poverty and suffering, and I'm proud of their efforts. I appreciate Bono. I appreciate groups like the Sisters of Charity. Some were motivated by simple decency, some serve a God who is impatient with injustice. And all have made this commitment. We cannot leave behind half of humanity as we seek a better future for ourselves. We cannot accept permanent poverty in a world of progress. There are no second-class citizens in the human race.

I carry this commitment in my soul. And I'll carry it with me to Monterrey next week. As the civilized world mobilizes against the forces of terror, we must also embrace the forces of good. By offering hope where there is none, by relieving suffering and hunger where there is too much, we will make the world not only safer, but better.

Thank you very much.

President George Bush, March 14, 2002

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Initial Reactions to the Announcement on the MCA

Steve Radelet

Center for Global Development
November 27, 2002

 

On November 25 the Bush administration announced new details for implementing the Millennium Challenge Account.   Overall, the announced steps are very positive.  They underscore the administration’s commitment to making this new initiative work effectively, both in terms of full funding and in reorganizing the way that aid is delivered.  The administration’s fact sheet accompanying the announcement can be found at http://www.cgdev.org/nv/features_MCA.html

Country Selection

The method of choosing the countries is basically sound. The 16 indicators chosen are sensible.  The data are publicly available and the methodology is relatively transparent.  Experts could debate at the margins adding more variables (especially under “investing in people”) and the value of some of the specific indicators, but these kinds of changes would have only a relatively small impact on the countries actually chosen. The fact that countries need only to score in the top half on 8 of the 16 indicators to qualify means that the administration is not demanding that countries be purists in following a particular economic ideology. A preliminary analysis suggests that 13 countries would be eligible during the first year, as shown below. There are as many as 6 others that would have qualified, except they were below the median on the corruption indicator.

Possible Qualifying Countries

Albania
Bangladesh
Bolivia
The Gambia|
Georgia
Ghana
Honduras
India
Malawi
Mongolia
Nepal
Senegal
Sri Lanka

Eliminated by Corruption

Indonesia
Lesotho
Moldova
Nicaragua
Tanzania
Zambia

It is important to note that in all probability, this list differs slightly from the administration’s list because of differing data (one of us using more revised data than the other, etc). Moreover, this list could change in two ways.  First, as new data become available and specific indicators are revised (which will certainly happen before the first countries are declared eligible), this list could change.  Second, the administration has proposed that the MCA’s Board of Director’s can recommend to the President that the list of eligible countries be modified slightly to either remove some countries or add others under specified parameters. (This issue is explained in greater detail in the fact sheet). Some discretion makes sense, given the gaps, lags, and other weaknesses inherent in the data. Care must be taken, however, that this discretion is used very carefully and in only a very limited set of circumstances to guard against too much political influence in the selection process. By next week we will distribute a paper with a more complete analysis of the process of choosing countries for the MCA.

Ownership

The emphasis put on country ownership during the briefing was encouraging.  Although there was nothing on this issue in the fact sheet or the public announcements, it appears that the administration is leaning towards a system in which eligible countries would write proposals (or business plans) describing their objectives and strategy, how they would use the money, the benchmarks used for evaluation. Giving recipient countries this responsibility is a revolutionary change in US foreign assistance. 

Organization

An independent government corporation is a suitable home for the MCA.  Both the oversight board (chaired by the Secretary of State) and the plan to staff the corporation with personnel from a variety of both government and non-government agencies will strengthen its operations.  The biggest advantage of the new corporation is that it can avoid being bogged down by political pressures, bureaucratic procedures and multiple congressional mandates that ultimately weaken other agencies such as USAID.  

Concerns

While the overall direction of the MCA is very positive and deserving of support, I have three concerns.  First, I am not persuaded by the proposal to include lower-middle income countries with incomes between $1,435 and $2,975 starting in the third year. These countries have access to private capital flows, IBRD loans, and other sources of financing that are not available to the poorest countries. While many of these countries have large populations of poor people, their needs are not nearly as great as the low-income countries, and they have more options to address the problem. It seems to me that the US should continue to provide those countries with foreign assistance through traditional channels, but not through the MCA. The simple truth is that as more countries in this income range become eligible, there will be fewer MCA funds available for the poorest countries that are implementing sound development strategies. 

Second, the criterion that a country must score above the median on the corruption indicator raises some statistical difficulties.  Corruption scores are based on survey data, and survey results are always estimated with margins of error.  The corruption indicator used by the administration is the best available, and is compiled in a way to minimize the margins of error, but errors remain.[1]   The problem is that for a country with an observed score just below the median, we cannot be certain that its actual corruption level is below the median.  Margins of error could be the difference between qualifying and not qualifying for some countries. Although I have great sympathy for a high standard on corruption, the make-or-break requirement may unnecessarily eliminate some countries.

Third, the separation of US foreign assistance into two agencies could lead to a lack of coordination and overlapping functions.  The new agency could also draw staff and resources from USAID.  More broadly, while the MCA is a major step in the right direction, it is only one component of a complete foreign assistance strategy.  Still lacking is a sound strategy to work in the “second tier” countries that don’t quite qualify for the MCA, a strategy to work in weaker countries, and a strategy to work in countries in conflict and failed states.  Importantly, the administration stills lacks a clear strategy for fighting the HIV/AIDS pandemic.  The introduction of the MCA provides USAID with the opportunity to redefine itself with a strong role in confronting these issues.

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Towards Achieving the Millennium Development Goal

Testimony before the Foreign Operations Subcommittee
Appropriations Committee U.S. House of Representatives

Submitted by

Faith Action for People-Centered Development Policy

May 7, 2002  

Faith Action for People-Centered Development Policy represents a spectrum of Protestant and Catholic religious and faith-based organizations that come together to advocate for policies that promote justice, reconciliation, and the reduction of poverty worldwide.

We are convinced that it is both appropriate and necessary to reflect on the moral shape of government policy decisions. These decisions embody values that express our national character. If the United States is to live up to its vision of "liberty and justice for all," U.S. policies must be measured according to moral standards.

With this in mind, all U.S. overseas development efforts, including USAID programs and others, must address the quality, structure, and distribution of the fruits of economic growth. This concern should extend beyond aid programs to market development activities of other U.S. government agencies, including the Departments of Agriculture and Commerce.

In September 2000, over 150 countries endorsed a set of "Millennium Development Goals" (MDG) at the UN Millennium General Assembly in New York. These goals are intended to provide a focus for the efforts of the World Bank Group, governments, and other partners in the development community. The Financing for Development Conference, convened in Monterrey, Mexico in March 2002, discussed the finances and other economic policy arrangements needed to achieve these goals. We were encouraged that just prior to that meeting, President Bush announced his intention to seek greater funding for development. We look forward to working with you and with the Administration in crafting an initiative that will take innovative and effective steps towards achieving these important goals.

We expect that these issues will be part of the conversations around this summer’s meeting of the G-8 in Canada, and at the World Food Summit and the UN Conference on Sustainable Development. All of these gatherings present important opportunities to build international consensus about how to take full advantage of heightened commitment to reducing poverty and hunger in the world.

Members of Faith Action for People-Centered Development Policy support many of these goals as an acceptable minimum by 2015, and are prepared to work with the U.S. government towards their implementation. In specific, we are prepared to help:

1. Eradicate extreme poverty and hunger

• Halve the proportion of people with less than one dollar a day.

• Halve the proportion of people who suffer from hunger.

2. Achieve universal primary education

• Ensure that boys and girls alike complete primary schooling.

3. Promote gender equality and empower women

• Eliminate gender disparity at all levels of education.

4. Reduce child mortality

• Reduce by two thirds the under-five mortality rate.

5. Improve maternal health

• Reduce by three quarters the maternal mortality ratio.

6. Combat HIV/AIDS, malaria and other diseases

• Reverse the spread of HIV/AIDS.

7. Ensure environmental sustainability

• Integrate sustainable development into country policies and reverse loss of environmental resources.

• Halve the proportion of people without access to potable water.

• Significantly improve the lives of at least 100 million slum dwellers.

8. Develop a global partnership for development

• Raise official development assistance.

• Expand market access.

• Reduce debt burdens.

The World Bank has recently issued a report noting that "if countries improve their policies and institutions, the additional foreign aid required to reach the Millennium Development Goals by 2015 is between $40-$60 billion a year." Given the size of the U.S. economy and its wealth relative to other countries, the just and appropriate U.S. share of this amount would be approximately an additional $10-$15 billion annually for these programs.

The report also looks at other income streams possibly available for these countries, including private foreign investment and income from trade. Importantly the Bank notes that "in short, even though it will undoubtedly benefit developing countries by stimulating growth and reducing global poverty, reducing trade barriers is not sufficient, at least for several years, to eliminate the need for aid in those very poor countries with the largest MDG gaps."

We are sadly aware that such a budget increase is very unlikely in the short term. In that light, we urge you to seriously assess the programs currently funded under the 150 account for their potential to help reach these goals. We ask that to the greatest extent possible, funding should be shifted to humanitarian and sustainable development programs that address the Millennium Development Goals. We also urge you to work to raise levels of development assistance incrementally over the next several years to eventually reach the aid levels targeted by this report.

We make this request for increased assistance because we think these goals are the right thing to do, and also because we know these programs make a real difference. Many of our organizations either support or actually implement their own humanitarian and development programs across the globe, some using additional funds from the US government, and others using their own resources alone.

In Madagascar a new health initiative is being supported through the "Stand with Africa Campaign" of Lutheran World Relief and the Evangelical Lutheran Church in America. This endeavor, a long-term component primary health care project among the rural people of Madagascar called "Fahasalamana aty Avaratra (FAV) or "Health up here in the North", was started in 1994 as a collaborative effort with the Malagasy Lutheran Church and the Antakarana kingdom. The ultimate target population of the project is the approximately 400,000 people (18 percent under the age of five) living in the four fivondronana of North Madagascar: Antsiranana II, Ambilobe, Amganja, and Vohemar. The region is rural with very difficult roads and limited accessibility during the rainy season (Dec.-Mar.). The people, who are largely Antakarana Muslim, live in unqualified poverty with limited access to primary health support, prenatal care, or curative medical facilities.

Church World Service has been active in numerous humanitarian relief efforts in Afghanistan for many years prior to the current conflict. The CWS medical program based in Jalalabad has been widely praised for its compassionate care of those suffering from the effects of severe drought. By the end of 2001, CWS had assisted 6,000 internally displaced families inside Afghanistan and 3,000 refugee families in Pakistan. In addition, an innovative CWS program has helped more than 400 Afghan refugee women support themselves and their children by making 60,000 quilts for other refugee families. The quilts are being used in CWS shelter kits and are also being purchased by the United Nations for use in their emergency programs.

In Jordan, the Mennonite Central Committee (MCC) continues to assist farmers in Jordan through revolving loan funds and extension services. MCC added two communities to its program in 2000. MCC is now active in five rural communities with a total of nearly $100,000 U.S. available for loans. The small loans help farmers purchase seasonal irrigation supplies. In addition, MCC, with Canadian Foodgrains Bank support, cooperates with local farmers in the southern Jordan Valley to construct cement-lined water catchments. These provide secure water storage for many years and allow farmers to expand their cultivation and therefore also their food security.

In the West African country of Benin, Catholic Relief Services established the An tii sua Community Bank, which pro-vides the self-employed poor—especially women—with access to reliable financial services. The bank helps these budding entrepreneurs to expand their small businesses to meet the needs of their families through increased access to food, better health care, and meeting children’s school fees.

In Vietnam, the American Friends Service Committee reestablished an office in 1990, known as Quaker Service Vietnam (QSV). Since hunger is a major problem in areas where storms and floods cripple rice production, a primary focus of QSV development assistance work is to increase food production for the rural poor. Child malnutrition in the highland areas is as high as 50 percent, and seasonal hunger is chronic in weather-vulnerable coastal areas. Managed completely by Vietnamese staff, QSV projects have doubled local food production. In Thanh Hoa province, QSV assists four or five communities (each with a population of 5,000 to 7,000) to achieve year-round food security. At the local government level, more officials now understand, appreciate, and support small-scale development projects. They are also more willing to provide information and technical assistance and to accept the value of conducting community surveys before project development. These officials now see QSV as a partner in trying to improve living conditions of the needy, and they are willing, even eager, to engage in discussions of development issues.

In 1986, World Vision launched what has become one of its premiere development programs--the Ghana Rural Water Project. Each year, hundreds of thousands of people in Africa, mostly children, died from waterborne illnesses such as diarrhea, malaria, and were tormented by the dreaded guinea worm. The simple solution of clean water immediately prevents thousands of deaths.

In Liberia, the United Methodist Committee on Relief is working hand in hand with the United Methodist Church of Liberia to provide essential health services, primary education, and food security to the rural community surrounding Ganta. Among other programs, the United Methodist Church Hospital in Ganta runs a weekly pre-natal clinic for mothers. It also undertakes a community-based primary health care outreach program to provide education on preventive health and sanitation measures to surrounding communities. With support from the US Agency for International Development, UMCOR also manages a prostethics and orthotics workshop which has equipped and rehabilitated over 500 people who were disabled as a result of injuries sustained during the civil war, as well as from other disabling accidents and birth defects. The United Methodist Church also operates a primary school, which, as one of the very few schools operating in the area, serves a critical role of educating children. UMCOR and the United Methodist Church are also in the process of rehabilitating agricultural land in Ganta that fell into disuse during the war. The rice, vegetable and fruit that are now grown on this rehabilitated fertile land are being used to feed patients of the hospital who would otherwise go hungry.

The success of these programs above indicates to us that development assistance programs, if carefully designed and implemented, do make a difference in the world. We ask you to support funds for similar development programs as a critical investment in our common future. If we truly achieve the Millennium Development Goals in the agreed upon timeframe, we will have brought about a better and more secure world.

Priority Issues for Fiscal Year 2003

As noted above, our highest priority is increasing funding for humanitarian and development programs to the greatest level possible. We urge that you increase funding for these areas over the level requested by the Administration for this year, and to bear in mind that we would seek even greater increases in the future than President Bush has suggested in announcing the Millennium Challenge Account.

Hunger and Poverty
We urge you to give the highest priority to programs and institutions whose mandate is to combat poverty and hunger globally. Priority in funding should go towards bilateral programs that specifically target impoverished communities, such as the Africa: Seeds of Hope Initiative, the African Development Fund, and the InterAmerican Development Fund. We recommend that development aid not be provided solely on a government-to-government basis; but that funds also go to NGOs and grassroots organizations. The African Development Foundation, for example, makes small grants and micro-finance loans to African NGOs, cooperatives, youth groups, women’s organizations, and various self-help structures. The ADF is an excellent example of how the US is providing development assistance creatively. We urge you to work with the Administration this year, to follow through on last year’s commitment to address hunger and poverty in Africa, which Congress affirmed through the passage of the "Hunger to Harvest Act." We would hope to see implementation of this commitment to increase funding to Africa by at least and additional $1 billion begin as soon this fiscal year.

Besides bilateral programs of the US, we also urge increased support for multilateral institutions such as UNICEF and the UN Development Programme, the International Fund for Agricultural Development (IFAD), and the World Food Programme. The multilateral efforts of these agencies can help to support donor coordination in responding to development and humanitarian needs. The programs of these institutions also serve to reach marginalized and impoverished communities. For example, IFAD’s mission is to work with the poorest populations in rural areas of developing countries to eliminate hunger and poverty; enhance food security, raise productivity and incomes; and improve the quality of life through improved access to productive resources; and empowerment. Among international financial institutions, it is the most successful in underwriting initiatives that successfully reach poor grassroots communities in rural areas. Headquartered in Rome, IFAD accomplishes its mission by working in partnership with governments, donors, and NGOs. It provides highly concessional loans for agricultural and rural development projects within low-income countries and grants to NGOs and agricultural research institutions experimenting with innovative approaches to rural poverty alleviation. Since its establishment, IFAD has financed 578 projects in 115 countries for a total commitment of approximately $6.9 billion in loans and grants. As you consider this year’s budget, we urge you to fully fund the Administration’s FY03 request of $15,003,667 for IFAD. We would also recommend that the Committee consider including report language that calls upon the Administration to make a strong pledge to IFAD’s 6^th resource replenishment and also suggest that the Committee call on the Administration to ensure that IFAD’s participation in the HIPC [heavily indebted poor countries] debt relief initiative does not reduce IFAD’s future lending levels.

Global Health and HIV/AIDS
AIDS threatens the fabric and well-being of entire countries. As more people lose their ability to provide for themselves and ultimately perish, the cost of the response required to halt societal disintegration increases. Rapid interventions to scale up the AIDS response must occur in 2003 and become a sustained and collaborative international effort for at least twenty years. Only $1.5 billion from all sources globally was dedicated to global AIDS programs in 2001.

Estimates of the appropriate level of funding needed for an adequate response to this pandemic vary somewhat, but all are clear that more funding is urgently needed now. In April 2001, U.N. Secretary General, Kofi Annan, called for $7-10 billion over and above current spending to fight AIDS. A costing study published in Science Magazine (June 2001) calculates $9.2 billion needed annually by FY 2005 for AIDS prevention, care and modest treatment coverage (excluding infrastructure investments). The Commission on Macroeconomics and Health (CMH) (December 2001) calculates $15.5 billion needed annually by FY 2007. This higher figure includes programs for prevention, care and treatment, with some investments to improve and expand existing infrastructure. Neither the study published in Science Magazine nor the CMH estimate includes additional development assistance funding which should be made available for education, clean water, and sanitation in affected countries.

The Commission (CMH) brought together eighteen of the world's leading economists and policymakers from academia, governments and international agencies. Among the members were former ministers of finance, representatives from the World Bank, the International Monetary Fund, the United Nations Development Program, the Economic Commission on Africa, and the Organization for Economic Cooperation and Development. Jeffrey D. Sachs, Director of Harvard University’s Center for International Development, served as chair. The Commission analyzed the impact of health on development and determined that certain health-related investments, including a robust response to the AIDS pandemic, would have a positive effect on economic growth and equity in 83 countries. The CMH was able to make a comprehensive assessment of need, building and improving upon the research models used for the study published in Science Magazine.

The CMH figure calculates the costs of an integrated response that aggressively addresses prevention education, care for those living with the disease, treatment services including the use of generic AIDS drugs and drugs to treat opportunistic infections, and initiatives to expand current health infrastructure. Appendices i-iv. give estimates for HIV/AIDS and other health services by region as projected by the Commission on Macroeconomics and Health. This annual investment will result in the following provision of AIDS services in affected countries:

1. prevention education could reach 70% of the population outside of the health sector;
2. prevention education and services could reach 40% of the population within the health sector;
3. 45% of the population could be reached with programs to address opportunistic infections;
4. 40% of the population could be reached through HIV treatment programs.

2003 is a critical year for beginning in earnest to provide the necessary resources at no less than $10 billion annually. Using the CMH target of $15.5 billion in FY 2007, spending for AIDS globally should rise as health infrastructure is improved and effective programs are expanded so that more people can be reached with prevention, care, support, and treatment interventions.

The CMH found that by 2010, 8 million lives could be saved annually by investing in global AIDS and other health services. Between 2015-2020, $360 billion would be gained annually due to lives saved and increased economic growth. Investing now will more than pay for itself in the long term. Given these costs, the US should commit $2.5 billion in FY03 to the effort to stop global AIDS, based on the U.S. percentage of global GNP (25-30%).

Education

Although by no means a panacea, there are many who would argue that ultimately efforts to reduce hunger and poverty, and to improve health, stall without simultaneously working to ensure the education of all children, and also to promote adult literacy. Unmet education needs are massive; 125 million children – almost half of them in Africa – are not attending primary school. Millions of children receive an education that is too brief or of such poor quality that they acquire few meaningful skills. Almost one billion adults – two thirds of whom are women – are unable to read or write. This education crisis demands urgent and concerted action – without it, the international commitment to achieve Universal Primary Education by 2015 is unattainable. The World Bank estimates that 88 of the world’s poorest countries are off-track on reaching this goal and that as little as $5 billion in additional global aid annually can rectify this. We would urge that Members support efforts to increase funding for education programs sufficient to a level to assist countries in meeting the goals of education for all.

Migration and Refugees

To properly support crucial refugee programs, we request that at least $841 million be appropriated for the Migration and Refugee Assistance (MRA) account, as well as at least $50 million for the Emergency Migration and Refugee Assistance (ERMA) account for Fiscal Year (FY) 2003.

The MRA account funds America's commitment to offering safety and sanctuary to uprooted and persecuted persons, who are in flight around the world, by providing vital protection and assistance to refugees in countries of first asylum and by supporting the U.S. refugee resettlement program.

Resettlement in the U.S. has historically proven to be a highly successful option for MANY thousands of refugees, a boon to our country, and reflective of our core values. As the United States stands as a beacon of safety and freedom for many, it is crucial that we work to reverse the recent downward trend in refugee admissions. in the early 1990S the U.S. resettled over twice as many refugees as it does today, when the numbers have declined from over 130,000 to under 70,000. With the recommended level of funding for MRA, this harmful trend can be reversed and 90,000 refugees can be resettled in FY 2003.

While resettlement is vitally important, it can only be the answer for a small proportion of the world's refugees. Sadly, MRA is the only major State Department account that has not kept pace with inflation, despite the reality that the number of refugees has grown and the need for protection and assistance has substantially increased. It is crucial that our nation's capacity to protect and provide life sustaining food, medicine and other assistance be restored through an appropriation of $841 million for FY 2003.

In addition to MRA, the ERMA account, which is replenished yearly, supplies funds for urgent and unforeseen migration needs. Since $107 million in 13 drawdowns was allocated from ERMA during FY 2001, at least $50 million is needed to assure our capability to respond to an unexpected refugee crisis.

Debt Relief

As the institutions that organized the Jubilee debt campaign in the United States we remain highly involved in monitoring the outcome of the Heavily Indebted Poor Countries debt relief initiative. We remain concerned that the "sustainability" of this initiative was based on highly optimistic projections of economic growth in these countries, which are now very unlikely to be met due to the post-September 11 economic downturn. We are concerned that the Administration seems to consider this initiative as completed, and therefore has included no request for further funding in this year’s budget. We have been advocating both for 100% debt cancellation from the multilateral lending institutions, which would come at no additional budget cost to the US, and a redefinition of "sustainable" levels of debt that would reflect a ratio of debt payments to overall budget expenditures at a ratio of 10%, or 5% in the case of countries suffering from severe health emergencies such as HIV/AIDS. This model has already been approved by the House Financial Services Committee in its consideration of H.R. 1095 in 1999, and the concept has been reaffirmed with broad bipartisan support in both bodies of Congress with the recent introductions of H.R. 4524 and S. 2210.

International Development Association (IDA)

We support the Administration’s recommendation to increase the U.S. contribution to the World Bank's International Development Association (IDA), while converting some of its lending to a direct grant program. While we continue to work with other organizations to monitor and press for reforms at the World Bank, we believe that IDA financing remains of critical importance to sub-Saharan Africa. At the same time, we continue to have grave concerns about the about the impact of structural adjustment programs and urge that these kinds of anti-development "reforms" be abandoned.

We recognize the importance of IDA as a funding mechanism for creating new opportunities for persons and nations. Congress should maintain and strengthen the provision which directed the Administration to use the U.S. voice and vote to encourage the World Bank and IDA to "systematically consult with local communities on the potential impact of loans as part of the normal lending process, and expand the participation of affected peoples and non-government organizations in decisions on the selection, design, and implementation of policies and projects." Additionally, we recommend that language calling on the U.S. to oppose user fees for basic health and education programs be strengthened, and that there be greater coordination between IDA grants and lending and the Poverty Reduction Strategy Papers process

Middle East Funding

We have grown increasingly concerned about the deteriorating situation in the Middle East. A basic corner stone of any aid package for that region must be promotion of peace and stability among all the countries of the region. Given the limitations to the overall size of the US foreign aid budget, we continue to recommend providing as much assistance as possible to regions where human development needs are the greatest. We commend the Committee for establishing a ceiling earmark in FY 98 for funding for the Middle East Region. Additionally, we are encouraged by the decision of Israel and Egypt to accept annual reductions of economic assistance over the space of a decade. However, we would prefer to see the full amount of these reductions rededicated to sustainable development programs, and do not support the present arrangement by which half of Israel’s reduction in economic assistance is instead redirected into military assistance for that state. We urge the Committee to take the next step this year by shifting funds from high-income countries, particularly in the Middle East, to poor countries in that region and in other parts of the world.

Counter-narcotics

Funding for international narcotics control and law enforcement activities is one of the fastest growing foreign operations accounts. Widespread concern about illicit drug production, trafficking and abuse does not justify increases in programs whose effectiveness has been questioned by, among others, the General Accounting Office. The program focuses increasingly on Colombia. While largely ineffective in reducing overall drug production, the programs have served to strengthen foreign security forces implicated in human rights abuses. Our church partners in Colombia have asked, for the sake of peace, that we urge Congress to oppose military aid to Colombia. We strongly support the law that prohibits assistance to units of foreign security forces that are believed to be responsible for human rights violations.

We urge you to vote against increased U.S. military involvement in Colombia and to vote instead for large scale U.S. support for:

1. A negotiated peace process in Colombia with the active participation of civil society;
2. Reform of Colombia’s judicial system to overcome impunity - including prosecuting within civilian courts of all military personnel implicated in human rights abuses;
3. Programs for the protection of threatened human rights defenders, civic and religious leaders, and judicial investigators;
4. Alternative agricultural and marketing development programs for coca and poppy producers;
5. Increased humanitarian and development assistance to the internally displaced;
6. Drug treatment and prevention programs to reduce the demand for drugs in the U.S.
7. We hope that you will vote for such measures that will help build a just peace in Colombia and reduce the consumption of drugs in the United States.

Conclusion
The Prophet Isaiah reminds us of God's intent: "I am making a new earth and new heavens...Babies will no longer die in infancy, and all people will live out their life span..." The challenge is to create and sustain national and international policies that express these values. We believe our government's foreign assistance program is directly tied to that task. As a prosperous and powerful nation, the United States has the opportunity to assist impoverished peoples and countries to reduce poverty and achieve sustainable development. As Scripture reminds us, "To whom much is given, much shall be required." We pray that you will give careful consideration to our requests, and put the bounty of our country to good use in meeting the critical needs of others.
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