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THE DEVELOPMENT CHALLENGE
The Asia and Near East (ANE) region is home to 800 million impoverished
people, more than Africa and Latin America combined. Inadequate economic
opportunity at both the national and local level is a problem throughout
the region, and is of particular concern in South Asia and the Middle
East. The ANE region has the highest levels of illiteracy, with over
600 million uneducated people-four times the totals for Africa, Latin
America, and Europe/Eurasia combined. Illiteracy in the region disproportionately
affects women and girls. South Asia has the highest rate of female illiteracy
in the world at 57 percent, and in East Asia illiteracy is two and a
half times higher among women than men. The region is also governed by
some of the world's most closed and repressive regimes. Over half of
all ANE countries are considered "not free."1 Inadequate
economic opportunity, the lack of education and skills training, together
with corrupt and authoritarian governance, contribute to a disillusioned,
isolated, and under-employed populace. In combination with high illiteracy
rates-and with post-9/11 hindsight-it seems clear why the region became
a nexus of intolerance and an exporter of terror.
Foreign assistance to the Asia and Near East region is one of the United
States’ most effective foreign policy tools for promoting regional
stability. A prosperous, healthy, educated population able to participate
in democratic processes reduces the risk of terrorism, civil conflict,
and regional instability. A robust foreign assistance program will help
invigorate economic growth and opportunity; tackle illiteracy and skills
development; and promote inclusive, representative, and transparent governance.
USAID’s ANE Bureau, by addressing priority development needs, will
also work to alter the social and economic geography upon which terrorism
has grown.
The ANE Bureau proposes a comprehensive agenda to address the development
needs of key frontline states in the war against terrorism by bringing
resources to new initiatives that reduce poverty and hopelessness. These
initiatives include expanding economic opportunity by developing trade
capacity and invigorating economic opportunity at the local level; improving
education in the region through programs that address illiteracy, gender
disparities, and out-of-work youth; and working with governments and
civil society to advance democratic reforms and make governments more
representative, transparent, and responsive to their constituents.
Implementing these new initiatives and core programs will require (as
compared with FY 2002 levels) expanding the DA and CSH budgets by a combined
total of $176.3 million, expanding the ESF budget by $121.3 million (excluding
Egypt, Israel, and cash transfer programs in Pakistan), and increasing
OE by $9.2 million. The bureau plans to hold its USDH level constant
at the FY 2002 number.
1. Middle East and North Africa
In the Middle East and North Africa sub-region, the need for robust
foreign assistance has never been more compelling. September 11 pointed
out the need to address the root causes of regional instability. In countries
across the Middle East, economic hopelessness and political stagnation
are breeding extremism, providing fertile ground for those seeking to
fill the ranks of terrorist groups. Over the last 25 years, economic
performance in the Middle East has fallen behind that of most other regions
of the world. The economic situation is exacerbated by the demographic
conditions, with a majority of the population in many of these countries
below the age of 25. Each year millions of young people enter the labor
market with no prospect of finding a job.
Governments in the Middle East face crucial choices on issues of economic
development and policy reform. If they do not make the right choices,
the region will continue to fall farther behind, potentially strengthening
the hand of the extremists and increasing the threat to stability. Economic
assistance is critical to fostering the correct choices and providing
the means to implement them. By addressing the major development problems
of economic stagnation, lack of participatory government, competition
over water resources, and high population rates, USAID can help to create
the conditions necessary for regional peace and stability. To accomplish
these objectives, the ANE Bureau is working closely with the Department
of State to adjust the structure of all USAID programs in the sub-region
to correspond closely with the objectives of the Middle East Partnership
Initiative (MEPI) announced by Secretary of State Powell.
Those objectives include:
- Ensuring that our assistance is focused on economic reform
and private sector development, increasing educational opportunity,
strengthening civil society and the rule of law, and increasing
the participation of women in political and economic life;
- Expanding the reach of our assistance to more directly improve
the lives of more people in the Middle East;
- Improving the efficiency of our assistance; and
- Monitoring and measuring the results more effectively.
MEPI now forms the thematic construct around which all of our programs in
the region will be organized; it may also serve as a source of funding for
activities undertaken by or in collaboration with these programs. The Department
of State and USAID are conducting a joint review of the overall strategic direction
of the Middle East and North Africa portfolio and its specific programs to
ensure that USAID efforts are reaching as many people as possible, with a particular
emphasis on women and youth, and that we are providing the most effective and
efficient assistance possible. This review will ultimately entail significant
changes in the level of funding of the programs, projects, and activities described
in this Budget Justification. After completion of the joint review, USAID will
notify the Congress through established procedures prior to obligating funds
for any revised efforts.
2. South Asia
South Asia is the frontline in the war on terrorism. The events of September
11 highlighted the strategic importance of this subregion to the United States,
and the importance of improving economic and social conditions in South Asia
to U.S. national security. South Asia faces some of the most daunting development
problems in the world. The region is home to one-fifth of the world's population
and 40 percent of the world's poor. More than half of the region's children
under the age of five are malnourished. South Asia has the world's highest
adult illiteracy rates, second highest fertility levels, a rapidly growing
HIV/AIDS epidemic, widespread prevalence of infectious diseases, low socioeconomic
status for women and girls, increasing urbanization and pollution, and staggering
infant and child mortality. Each of these contributes to political instability.
In Afghanistan, years of civil war, compounded by Taliban rule and the worst
drought in recent history, have devastated the country. While significant progress
has been made in the past year (return of three million children to school,
return of two million refugees, a successful Loya Jirga, and an increase in
wheat production of 82 percent), approximately half of Afghanistan's 22 million
people live in absolute poverty. Malnutrition is widespread. Fifty percent
of the people are unemployed, while 70 percent are illiterate. Despite the
significant increase in donor contributions, the slow pace of demonstrated
improvements in people’s lives continues to threaten the country’s
stability.
In Nepal, a Maoist insurgency has gained increasing control over rural areas
and escalated dramatically in intensity. While the Government of Nepal controls
all 75 district centers, Maoists now basically control seven of Nepal’s
75 districts. In these districts, they have declared people’s governments,
established people’s courts, and maintained or allowed the provision
of basic health and education services. Maoists have significant presence in
17 additional districts and have carried out violent activities - e.g., attacks on government offices,
hydropower plants, telecommunications, and bridges - in 74 districts.
Pakistan, a key partner of the U.S. in the international campaign against
terrorism, faces serious challenges to correct its social inequities, devolve
political and economic authority to its provinces, and raise its basic health
and education indicators. Next door in India, the world’s largest democracy
and home of the second largest Muslim population, the U.S. and India are seeking
to transform their strategic relationship across military, security, economic
and development lines. Bangladesh, although recognized for its continued democratic
transfer of power and its significant social development progress in recent
years, remains one of the poorest, most corrupt and most disaster-prone countries
in the world. Finally, the issue of Kashmir represents a political and military
tinderbox between the nuclear weapon states of India and Pakistan, which in
the past year helped to lead to one million soldiers facing off with each other
across the Line of Control.
On a positive note, Sri Lanka, for the first time in almost twenty years,
now enjoys a cease-fire between the government and the Liberation Tigers of
Tamil Eelam (LTTE). Considerable work now must be done to advance post-conflict
reconciliation, inter-ethnic tolerance and respect, and a renewed commitment
to development.
3. East Asia
While nations in East Asia continue to struggle to emerge from a legacy of
financial and political crises, East Asia has also been affected by the network
of terrorism that became evident after September 11. This was made tragically
clear by October bombing in Bali, Indonesia, which killed 300 people and precipitated
the ordered evacuation in the U.S. Mission, as well as a series of bombings
and kidnappings in the Philippines. With increasing evidence of terrorist networks
in Southeast Asia, combating their operations, addressing the root causes of
terrorism, reinforcing the influence of moderate Islam and supporting democracy
and stability in the region are important U.S. priorities. At the same time,
fragile post-conflict situations, including Mindanao in the Philippines and
Aceh in Indonesia, require sustainable improvements in people’s lives
to improve the chances for lasting peace
Levels of development in East Asia vary widely. Some countries are in a state
of economic and political transition; intrastate conflict threatens fragile
democracies in several East Asian nations; and authoritarian regimes persist.
The effects of the Asian financial crisis of the late 1990s linger across the
region, while the spread of HIV/AIDS threatens all East Asia. Burma and Cambodia
have the highest rates of HIV infection in Asia, and HIV crosses borders easily
and rapidly in Southeast Asia.
USAID is responding to these challenges with a diverse portfolio of assistance
emphasizing trade, education, health, and democracy. For example, in the Philippines
and Indonesia, USAID continues to provide significant assistance in economic
policy reform and is a catalyst among donors in such areas as anti-money laundering,
bank reform, and customs and procurement reform. In Cambodia, USAID assistance
is focused on human rights and opening up the political system to more than
one party. USAID assistance for Burma is focused on providing education and
health services for refugees along the Thai border. With USAID assistance,
a number of countries are making progress on WTO membership and/or major trade
agreements with the U.S. For example, in Vietnam, USAID is providing important
technical expertise to help the Vietnamese comply with the requirements of
the Bilateral Trade Agreement with the U.S.
PROGRAM AND MANAGEMENT CHALLENGES
USAID continues to face three main program and management challenges in the
ANE region. First, USAID has had to adjust available resources to tackle heightened
foreign policy priorities (e.g., the establishment of new missions in Pakistan,
Afghanistan, and increased efforts in basic education) without jeopardizing
existing bilateral and regional development activities. Existing activities
remain critical to achieving development progress and stability and supporting
broader U.S. foreign policy objectives in the three sub-regions.
Second, USAID must respond to requests to initiate or expand programs in non-presence
countries while identifying better ways to manage assistance in such countries.
USAID must be able to deliver meaningful development results that contribute
to achievement of U.S. foreign policy objectives. To meet this challenge, USAID
will take three major steps in FY 2003:
- The Agency will open a new Regional Development Office in Bangkok, Thailand. This office will be responsible for managing non-presence programs in Burma, China, Laos, and Vietnam, as well as a portfolio of regional programs with activities throughout South and Southeast Asia in the economic growth, health, and democracy sectors. It should be noted that these regional programs are not new; rather, management responsibility for them is simply being shifted from Washington to the field.
- USAID will expand the capacity of the existing bilateral mission in Egypt to serve as a regional support center for programs in presence and non-presence countries throughout the Near East and North Africa sub-region.
- The Agency will establish an office in Yemen to lead the development and management of USAID’s expanding program in that country.
Finally, USAID is taking significant steps toward fulfilling the vision captured by the Global Development Alliance. Considering the daunting problems facing the ANE region, USAID programs alone are not enough. Accordingly, USAID has taken significant steps toward fostering greater collaboration with key bilateral donors and private sector entities (foundations, companies, NGOs, etc.) to mobilize resources in order to maximize efforts in support of U.S. foreign policy objectives. For example:
- USAID, British Petroleum, Great Britain’s Department for International Development, and the Indonesian government have become partners in an effort to train Indonesians to use new income from gas production to prevent environmental damage and social disruption.
- Mirant Philippines partnered with USAID to electrify remote areas of Mindanao by using sustainable renewable energy systems such as solar panels and thereby spur economic development.
- To combat threats to orangutans posed by unsustainable and illegal logging, USAID partnered with the Nature Conservancy, Home Depot, local communities, and the Indonesian government to create economic incentives to manage forests sustainably and protect primate habitat.
OTHER DONORS
Excluding its assistance to Israel, the United States now ranks second among
donors in this region. The top donor is Japan, followed by the U.S., the World
Bank, the European Union, Germany, France, and the Asian Development Bank (ADB).
USAID continues to work with these donors and United Nations agencies to reach
a consensus on development priorities and to coordinate programs in every USAID-assisted
country. In particular, USAID is actively exploring new ways to cooperate with
Japan and the ADB on parallel programs in Asia and the Middle East.
FY 2004 PROGRAM
USAID requests $2,831,595,000 for FY 2004 programs in the ANE region. Of this
amount, $358,888,000 would come from the Development Assistance (DA) account,
$240,318,000 from the Child Survival and Health (CSH) account, $2,130,750,000
from the Economic Support Fund (ESF) account. In addition, USAID is requesting
$101,639,000 from P.L. 480 (Title II) resources.
This FY 2004 request is broken down by sub-region as follows:
- East Asia-$285.8 million
- South Asia-$889.5 million
- Middle East and North Africa-$1,432.9 million
- Regional-$223.4 million
By USAID pillar, the FY 2004 request is as follows:
- Economic Growth, Agriculture, and Trade-$2,157.8 million
- Global Health-$330.4 million
- Democracy, Conflict, and Humanitarian Assistance (which includes $101.6 million
in P.L. 480 Title II)-$343.4 million
1. Source: Freedom House
For a printable version of this section, from the Congressional Budget Justification FY 2004, please click here. (Note: This file is in pdf format.)
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