Vol. 12, No. 3,009 - The American Reporter - October 19, 2006

by Margie Burns
American Reporter Correspondent
Washington, DC

Printable version of this story

WASHINGTON -- A bill pushed by the White House that would let President George W. Bush appoint a foreign aid czar to dole out assistance to poor countries was amended by Republicans on the the Senate Foreign Relations Committee Wednesday after senators expressed skepticism about expanding Executive Branch oversight of foreign aid to the Treasury Dept. and the Office of Management and Budget.

The amended bill is S. 571, dubbed the "Millennium Challenge Act of 2003," or MCA, and now goes to the full Senate. The amendment by Sens. Chuck Hagel (R-Neb.) and Joseph R. Biden (D-Del.), sets the stage for a debate on the Senate floor amid a dispute with the White House and House Republicans who support the proposal.

Committee Chair Senator Richard Lugar (R-Ind.), who introduced the MCA without co-sponsors, warned that the corporation is a "sine qua non for presidential support," suggesting that White House would not support financial aid to the world's poorest countries without the corporation.

Biden and Hagel expressed support for the proposed Millennium Challenge Account (MCA) to alleviate poverty but argued forcefully against the Millennium Challenge Corporation (MCC). The Board of Directors of the proposed corporation would consist of the Secretary of the Treasury and the Director of the OMB along with the Secretary of State.

Biden and Hagel both pointed out that giving foreign-assistance oversight to OMB and Treasury would shift oversight away from the State Department, which is supposed to coordinate foreign policy.

Biden said the proposal would shift policy-making power to the appointed CEO and add "one more player to this intergovernmental [foreign aid] process."

Hagel went farther, while saying that while he supports "more" and "more effective" diplomacy.

"OMB now runs the world," Hagel said, Calling OMB "the most powerful agency" in government. "We can't always get administration officials to testify before this Congress. Imagine trying to get the director of OMB or the director of the budget to come up." The remark drew sympathetic laughter from the audience.

Hagel said he opposed putting the OMB "in a direct line of authority" over foreign aid programs. "To add another layer of authority in the program, and then say that gives ... added flexibility, is laughable," he said.

Asking "what expertise" would be provided in foreign affairs by OMB and Treasury, he answered "[An] accountability increase? I don't think so."

Lugar read aloud a letter from Secretary of State Colin L. Powell in support of the policy. Biden commented that he understood "why letters get written" and suggested that "we help [Powell] in spite of himself."

Debate on the amendment was short. Most of the GOP members of the committee, and several Democrats, were absent. Discussion was interrupted for a roll call vote on the Senate floor regarding White House proposals for "low-level" nuclear weapons development.

Senator Sam Brownback (R-Kan.) repeatedly called President George W. Bush's foreign-aid proposal "noble," but argued that foreign aid is unpopular and said, "We need a fresh start on this." Brownback argued that the MCC would be a "tool for growth" and would have a "different management structure" not controlled by the Secretary of State, "outside the bureaucracy." Brownback suggested that when his constituents heard about money going to some other country, they would ask him, "why can't we get that [money] in Kansas?"

"You do," Biden shot back, "every time there's a crop failure."

Hagel replied that "our amendment [to eliminate the MCC] does nothing to take the focus off the president's intentions."

The amendment passed on a roll call vote, 11-8, with almost all the Republicans voting against, mostly by proxy. All the Democrats voted for the amendment, joined by Hagel, John E. Sununu (R-N.H.) by proxy, and Lincoln Chafee (R-R.I.).

The Senate committee met on the morning of May 21. Battle lines on the proposed corporation were drawn the same day at the afternoon meeting of the House Subcommittee on Foreign Operations. Undersecretary of State Alan Larson, testifying in favor of the MCC, said that "the administration will continue to fight for an independent corporation." Rep. Mark S. Kirk (R-Ill.) called the Senate vote an example of "entrenched bureaucratic interest" and "an interest in delivery rather than performance."

The Senate committee discussion took place in the context of the larger Foreign Assistance Authorization Act for FY 2004, unanimously reported out of committee, to go next to the full Senate. The House subcommittee meeting was held solely to discuss the Millennium Challenge Account.

Acting Chair Jim Kolbe (R-Ariz.) convened the hearing shortly after 2:00. Larson and Andrew Natsios, administrator of the U.S. Agency for International Development (U.S.AID), were the only witnesses testifying.

Kolbe opened by saying that the MCC would have "autonomy" and "seeks to avoid traditional aid preferences" in choosing which countries to give money to.

Referring to "nation reinforcing," Kolbe said that "partnership" with some of the stronger poor countries, chosen through a process "transparent" to Congress, would "reduce poverty through economic growth." Kolbe said the proposal represented a change in "management relations" between Congress and the executive branch, with the President asking for unprecedented "flexibility" and "freedom of the rhythms of the congressional budget cycle." Kolbe noted that the MCC had already been defeated in the Senate Foreign Relations Committee.

Rep. Nita Lowey (D-N.Y.) supported the "fundamental concept" of foreign assistance to poor countries, but wondered if executive management should be increased at the expense of Congress and expressed skepticism about funding a proposed corporation "yet to be formed, under the shadow of the OMB, operating outside congressional oversight," and said "We don't [even] know how many people will be involved." Lowey added that the new corporation would not get going until October 2003 at the earliest, "when there are so many immediate needs," including hunger.

Lowey also mentioned that "OMD, DoD, Commerce, Treasury" all joined with the White House in "attacking" U.S.AID. Pointing out gaps in U.S.AID senior management, Lowey asked whether the proposed corporation is "the beginning of an effort to get rid of U.S.AID." Lowey expressed concern over a proposal "to corporatize foreign aid, from the top down," and "to centralize [foreign aid], under a few White House and OMB officials."

Larson, reading from a prepared statement, called for an effort "to target countries [for aid] that are governing justly, investing in their own people, and encouraging economic freedom." The "lean" MCC would work with "100 people or fewer," through "businesslike contracts with countries." There would be "publicly available indicators" to select countries, Larson said. He emphasized a "flexible personnel authority" for President Bush, and "flexible" contracts for services with the corporation.

Natsios, also reading from a prepared statement, said that countries receiving foreign aid could be chosen from four categories: "(1) countries that just miss getting into the MCA; (2) the mid-range performers with the will to reform; (3) failed or failing states that need post-conflict, transition or humanitarian assistance; and (4) countries requiring assistance for strategic national security interests."

Natsios said that those four categories would "categorize our portfolio of 79 [poor] countries."

Natsios and Larson declined to specify which countries might be chosen under the indicators proposed. Natsios, who left the hearing early to catch a plane, said, "we won't be handling as many countries in 04 [as now]" but did not specify which countries might lose assistance. He emphasized "contracting locally" for services with the corporation, with a new focus on "host country contracting."

Larson, who remained alone to testify, did not say whether countries now receiving aid would lose it if they received MCC assistance.

Acknowledging that country-selection indicators would not be "utterly objective," Larson said, "The selection process can't be run on automatic pilot."

Rep. Marcy Kaptur (D-Ohio) pointed out that poor rural women are responsible for over half of the world's food production and asked whether there is any guarantee that over half of MCC funds would actually go to poor women. Larson did not give an assurance but mentioned "indicators" and "opportunities for women."

Questioned repeatedly by committee members as to which countries would now be categorized as "failing," Larson declined to say directly but mentioned that "many cite Egypt" as an example of failed transfer programs. Rep. Mark S. Kirk (R-Ill) brought up Tanzania and Zimbabwe as examples of possible "failed" countries.

In further discussion, Lowey said that "the MCA contains no provisions for congressional oversight," and pointed out that provisions for oversight in the proposed legislation had been removed by the White House. Larson answered that "Congress would have every right to believe that the CEO" and other personnel of the corporation would be "available" to Congress. Acknowledging that there was no requirement for mandatory notification of Congress [on country selection for foreign aid], Larson said, "That's a detail I don't have an answer for you today."

Who might head the corporation was not discussed. However, it has been reported that George Herbert Walker III, a first cousin of President Bush, is being quietly vetted through background checks for a possible ambassadorship or similar appointment.

Walker, 72, is chairman emeritus of St. Louis-based Stifel Financial, formerly Stifel Nicolaus, an investment management firm.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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