# U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends, and the FY2011 Request > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3ARL32260 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** June 15, 2010 - **Citation:** RL32260 ## Text U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends, and the FY2011 Request /name redacted/ Specialist in Middle Eastern Affairs June 15, 2010 Congressional Research Service 7-.... www.crs.gov RL32260 CRS Report for Congress Prepared for Members and Committees of Congress U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Summary This report is an overview of U.S. foreign assistance to the Middle East from FY2006 to FY2010, and of the FY2011 budget request. It includes a brief history of aid to the region, a review of foreign aid levels, a description of selected country programs, and an analysis of current foreign aid issues. It will be updated periodically to reflect recent developments. For foreign aid terminology and acronyms, please see the glossary appended to this report. For details on U.S. reconstruction aid for Iraq, please see CRS Report RL31339, Iraq: Post-Saddam Governance and Security, by (name redacted) . For policymakers, foreign assistance plays a key role in advancing U.S. foreign policy goals in the Middle East. The United States has a number of interests in the region, ranging from support for the state of Israel and Israel’s peaceful relations with its Arab neighbors, to the protection of vital petroleum supplies and the fight against international terrorism. U.S. assistance helps to maintain the 1979 peace treaty between Israel and Egypt and the continued stability of the Kingdom of Jordan, which signed its own peace treaty with Israel in 1994. U.S. funding also works to strengthen Palestinian institutions, and aid officials have worked to ensure that U.S. aid to the West Bank and Gaza Strip is not diverted to terrorist groups. Since the attacks of September 11, 2001, the United States has established region-wide aid programs to promote democracy and encourage socio-economic reform in order to undercut the forces of radicalism in some Arab countries. U.S. aid policy has gradually evolved from a focus on preventing Soviet influence from gaining a foothold in the region and from maintaining a neutral stance in the Arab-Israeli conflict, to strengthening Israel’s military and economy and using foreign aid as an incentive to foster peace agreements between countries in the region. When adjusted for inflation, annual U.S. assistance to the Middle East in the decades following World War II was only a small fraction of current aid flows. However, beginning in the early 1970s, the United States dramatically increased its foreign assistance to the Middle East. After the U.S. withdrawal from South Vietnam, the Middle East as a whole began to receive more U.S. foreign aid than any other region of the world, a trend that has continued to this day. Congressional Research Service U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Contents Introduction ................................................................................................................................1 Foreign Aid to Support Key U.S. Interests.............................................................................1 Country Summaries ....................................................................................................................2 Israel.....................................................................................................................................3 Overview ........................................................................................................................3 Military Assistance..........................................................................................................3 Egypt ....................................................................................................................................4 Overview ........................................................................................................................4 Economic Assistance.......................................................................................................4 The Endowment..............................................................................................................5 Military Assistance..........................................................................................................6 Jordan ...................................................................................................................................7 Overview ........................................................................................................................7 Economic Assistance.......................................................................................................8 Military Assistance..........................................................................................................8 Palestinians—West Bank/Gaza..............................................................................................9 Overview ........................................................................................................................9 U.S. Contributions to UNRWA...................................................................................... 10 Lebanon.............................................................................................................................. 12 Other Recipients and Programs ........................................................................................... 13 Foreign Aid Issues .................................................................................................................... 15 Promoting Democracy and Reform ..................................................................................... 15 Overview ...................................................................................................................... 15 U.S. Programs............................................................................................................... 16 Restrictions on Aid to the Palestinians ................................................................................. 20 U.S. Support for Arab-Israeli Cooperation........................................................................... 21 Historical Background .............................................................................................................. 21 U.S. Assistance to the Middle East Since 1950 .................................................................... 21 1950-1970..................................................................................................................... 21 1971-2001..................................................................................................................... 23 Tables Table 1. U.S. Foreign Assistance to the Middle East: FY2008-FY2011 Request...........................2 Table 2. U.S. Assistance to Israel, FY2006-FY2011 Request .......................................................4 Table 3. U.S. Assistance to Egypt, FY2006-FY2011 Request.......................................................7 Table 4. U.S. Assistance to Jordan, FY2006-FY20011 Request....................................................9 Table 5. U.S. Bilateral Assistance to the Palestinians, FY2006-FY2011 Request ........................ 11 Table 6. U.S. Assistance to Lebanon, FY2006-FY2011 Request ................................................ 13 Table 7. U.S. Contributions to UNIFIL...................................................................................... 13 Table 8. Other Regional Recipients, FY2006-FY2011 Request .................................................. 14 Table 9. Middle East Partnership Initiative Appropriations, FY2003-FY2011 Request .............. 18 Congressional Research Service U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Table 10. Total U.S. Foreign Assistance to the Middle East, 1950-1970 ..................................... 23 Table 11. Total U.S. Assistance to the Middle East: 1971-2001 .................................................. 25 Appendixes Appendix. Glossary................................................................................................................... 26 Contacts Author Contact Information ...................................................................................................... 27 Congressional Research Service U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Introduction This report is an overview of U.S. foreign assistance to the Middle East.1 It includes a brief historical review of foreign aid levels, a description of specific country programs, and an analysis of current foreign aid issues.2 Congress both authorizes and appropriates foreign assistance and conducts oversight on executive agencies’ management of aid programs. As the largest regional recipient of U.S. economic and military aid, the Middle East is perennially a major focus of interest as Congress exercises these responsibilities. In the Middle East, the United States has a number of strategic interests, ranging from support for the state of Israel and Israel’s peaceful relations with its Arab neighbors, to the protection of vital petroleum supplies and the fight against international terrorism. U.S. assistance continues to support the 1979 peace treaty between Israel and Egypt and the continued stability of the Kingdom of Jordan, which signed its own peace treaty with Israel in 1994. U.S. funding also has focused on strengthening Palestinian governance and civil society, and aid officials have worked to ensure that U.S. aid to the West Bank is not diverted to terrorist groups, such as Hamas, which controls the Gaza Strip. Since the attacks of September 11, 2001, the United States has established region-wide aid programs that increase the focus on democracy promotion and encourage socio-economic reform in an attempt to undercut the forces of radicalism in some Arab countries. Foreign Aid to Support Key U.S. Interests Despite changing geopolitical conditions, U.S. foreign aid to the Middle East has historically been a function of U.S. national security interests in the region. The United States has pursued a foreign policy that seeks stability in a region with abundant energy reserves but volatile interstate relationships. Policymakers have often employed foreign aid to achieve this objective. Foreign aid has been used as leverage to encourage peace between Israel and her Arab neighbors, while strengthening bilateral relationships between the United States and Israel and between the United States and moderate Arab governments. Foreign aid has worked to cement close military cooperation between the United States and governments in the region, discouraging local states from engaging in uncontrollable arms races. Economic aid also has had an underlying strategic rationale, as U.S. funds have been employed to promote development in an attempt to undercut radicalism in partner countries. The degree to which foreign assistance has contributed to the achievement of U.S. objectives in the Middle East is difficult to measure, but the consensus among most analysts seems to be that U.S. economic and security aid has contributed significantly to Israel’s security, Egypt’s stability, and Jordan’s friendship with the United States. The promise of U.S. assistance to Israel and Egypt during peace negotiations in the late 1970s helped to enable both countries to take the risks needed for peace, and may have helped convince both countries that the United States was committed to supporting their peace efforts. Excluding Iraq, Israel and Egypt are the largest two recipients of U.S. aid respectively. 1 For the purposes of this report, the Middle East region, or Near East, is defined as an area stretching from Morocco in the west to the Persian Gulf in the east, but not including Turkey. 2 For assistance with foreign aid terminology and acronyms, please see the glossary appended to this report. Congressional Research Service 1 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends There is debate over using foreign aid more aggressively to pursue various objectives in the Middle East. Some critics of U.S. policy would like to see additional conditions placed on U.S. aid to Egypt, for example, to achieve greater respect for democracy and human rights in that country. Others favor using the aid program more assertively as leverage to restart the Middle East peace process. Some might urge that aid should be conditioned on demonstrable progress in extending full political and economic rights to women and religious minorities. Others, however, assert that the overt use of aid—or the threat of aid reductions—to promote democracy and reform in the Middle East region could lead to a backlash against the United States, as well as to democratic reformers in those countries. Critics of U.S. aid policy, particularly some in the Middle East, have argued that U.S. foreign aid exacerbates tensions in the region. Many Arab commentators insist that U.S. assistance to Israel indirectly causes suffering to Palestinians by supporting Israeli arms purchases. Another common argument asserts that U.S. foreign aid bolsters autocratic regimes with similar strategic interests to the United States. Some observers have called U.S. aid policy “contradictory,” accusing the United States of bolstering its ties with autocratic regimes through military assistance, while advocating liberalization in the region with less funds dedicated to reform and development aid. As noted above, however, other analysts believe aid has helped protect Israel’s security and stabilize the region. Table 1. U.S. Foreign Assistance to the Middle East: FY2008-FY2011 Request (regular and supplemental appropriations; current year $ in millions) Aid Account FY2008 FY2011 Request FY2010 Estimate FY2009 FMF 4,049.955 4,378.155 4,545.370 4,781.650 ESF 1,933.261 2,205.000 1,677.100 1,671.350 MRA/ERMA 342.641 435.440 555.000 NA INCLE 115.356 214.000 180.500 512.960 NADR 56.809 NA NA 68.215 DA 17.914 34.633 71.400 28.495 IMET 12.801 16.265 18.760 18.590 GH 2.833 3.000 4.800 21.000 Total 6,531.570 7,286.493 7,052.930 7,102.26 Source: State Department FY2010 Budget Justification Country Summaries The following section provides funding details on the largest regular aid recipients in the Middle East: Israel, Egypt, Jordan, the Palestinians, and Lebanon. Each country section features a table with a more elaborate breakdown of aid by account over the last five fiscal years. For information on U.S. assistance for Iraqi reconstruction, see CRS Report RL31833, Iraq: Reconstruction Assistance, by (name redacted) and CRS Report RL31339, Iraq: Post-Saddam Governance and Security, by (name redacted). Congressional Research Service 2 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Israel3 Overview Since 1976, Israel has been the largest annual recipient of U.S. foreign assistance and is the largest cumulative recipient since World War II. Strong congressional support for Israel has resulted in Israel’s receiving benefits that may not be available to other countries. For example, Israel can use U.S. military assistance for research and development in the United States and for military purchases in Israel.4 In addition, all U.S. foreign assistance earmarked for Israel is delivered in the first 30 days of the fiscal year. Other recipients normally receive their aid in staggered installments at varying times. According to the Obama Administration’s 2011 Congressional Budget Justification (CBJ) for Foreign Operations, “U.S. assistance is also aimed at ensuring for Israel the security it requires to make concessions necessary for comprehensive regional peace.”5 In August 2007, the Bush Administration announced that it would increase U.S. military assistance to Israel by $6 billion over the next decade. The agreement calls for incremental annual increases in FMF to Israel, reaching $3.1 billion a year by FY2018. Military analysts speculate that the increase in U.S. assistance will facilitate potential Israeli purchases of the most sophisticated U.S. equipment, including a possible sale of the F-35 Joint Strike Fighter (JSF). Under the terms of the agreement, Israel will still be able to spend 26.3% of U.S. assistance on Israeli-manufactured equipment. Military Assistance Congress has taken measures to strengthen Israel’s security and maintain its technological advantage over neighboring militaries. Annual Foreign Military Financing (FMF) grants to Israel represent about 21%-22% of the Israeli defense budget. Israel also is eligible to receive Excess Defense Articles under section 516 of the Foreign Assistance Act. For FY2011, the Administration has requested $3 billion in FMF for Israel. Since FY1988, Congress has allowed Israel to use approximately a quarter of its FMF funds as cash grant to pay for Israeli defense purchases in Israel. Since 1990, Congress has provided for Israel to receive its FMF aid in a lump sum during the first month of the fiscal year, which allows Israel to invest the funds in U.S. Treasury notes and earn interest. 3 In addition to U.S. foreign assistance, Israel also receives funds from annual defense appropriations to support the research and development of new military technologies such as the Arrow anti-missile system. See CRS Report RL33222, U.S. Foreign Aid to Israel , by (name redacted). 4 In FY1977, the Israeli government, for the first time, received special permission to use FMF for research and development in Israel on the Merkava tank. After this precedent was established, Israel has been allowed to spend a set percentage of its annual FMF inside Israel. 5 The FY2010 CBJ stated that “Israel is a critical player in U.S. regional efforts to expand security and stability. Helping Israel maintain its qualitative military advantage enhances security by preventing regional conflict and builds the confidence necessary for Israel to take calculated risks for peace.” Congressional Research Service 3 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Table 2. U.S. Assistance to Israel, FY2006-FY2011 Request (regular and supplemental appropriations; current year $ in millions) Account ESF FMF Humanitarian Migrants to Israel Total FY2006 FY2007 237.6 120.0 FY2008 FY2009 FY2010 FY2011 Request — — — — 2,775.0b 3,000.0 2,257.2 2,340.0 2,380.560 2,550.0a 40 40 39.676 30 25 25 2,534.8 2,500.0 2,420.236 2,580.0 2,800.0 3,025.0 Source: U.S. State Department a. Congress provided FY2009 FMF funds to Israel in two separate bills. Lawmakers appropriated $170 million in FMF to Israel in P.L. 110-252, the FY2008 Supplemental Appropriations Act. Another $2.38 billion was provided in P.L. 111-8, the FY2009 Omnibus Appropriations Act. b. Congress provided $555 million of Israel’s total FY2010 FMF appropriation in P.L. 111-32, the FY2009 Supplemental Appropriations Act. The remaining $2.22 billion was appropriated in P.L. 111-117, the FY2010 Consolidated Appropriations Act. Egypt6 Overview Since 1979, Egypt has been the second largest recipient of U.S. foreign assistance, receiving an annual average of close to $2 billion in economic and military aid. In the past, Congress has earmarked aid to Egypt in annual foreign operations legislation with an accompanying statement calling on Egypt to undertake further economic reforms in addition to reforms taken in previous years.7 In July 2007, as a part of a larger arms package to the region, the United States announced that it would provide Egypt with $13 billion in military aid over a ten-year period. Since Egypt has already been receiving approximately $1.3 billion a year in military assistance, the announcement represented no major change in U.S. assistance policy toward Egypt. Economic Assistance The United States has significantly reduced economic aid to Egypt over the last decade. There are several reasons for the reduction in U.S. assistance. Overall, U.S. economic aid to Egypt has been trending downward due to a 10-year agreement reached in the late 1990s known as the “Glide Path Agreement.” In January 1998, Israeli officials negotiated with the United States to reduce economic aid and increase military aid over a 10-year period. A 3 to 2 ratio similar to total U.S. aid to Israel and Egypt was applied to the reduction in economic aid ($60 million reduction for Israel and $40 million reduction for Egypt), but Egypt did not receive an increase in military assistance. Thus, the United States reduced ESF aid to Egypt from $815 million in FY1998 to 6 For additional information on U.S. aid to Egypt, see CRS Report RL33003, Egypt: Background and U.S. Relations, by (name redacted). 7 In FY2006, Egypt’s FMF earmark was excluded from the Senate-approved version of the annual foreign aid bill but was later reinstated by conferees. Congressional Research Service 4 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends $411 million in FY2008.8 For FY2011, the Administration is requesting $250 million in ESF for Egypt, the same amount it has received since FY2009. The Endowment With the expiration of the Glide Path agreement, the continued expansion of Egypt’s economy, a growing desire for more U.S.-Egyptian trade, and a reluctance by Egypt to accept “conditions” for U.S. aid, U.S. and Egyptian officials have expressed a desire to “graduate” Egypt from U.S. bilateral economic assistance. 9 However, neither the United States nor Egypt seem to agree on how aid should be reduced over the coming decade. Egypt would like to establish an endowment to jointly fund development projects.10 The Mubarak government argues that based on current aid levels, Egyptian debt repayments to the United States exceed U.S. foreign assistance. 11 Some analysts believe that the Egyptian government is seeking an endowment in order to shield aid to Egypt from potential conditions mandated by Congress. For several years, there was limited U.S. interest in pursuing an aid endowment. However, S. 1434, the Senate version of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010, included a provision that would provide up to $200 million for an endowment to “further the shared interests of the United States and Egypt.” After several failed attempts to form a new Egypt aid mechanism, Congress passed into law a new provision in P.L. 111-117 (section 7042) that called for the possible establishment of an endowment to “further the shared interests” of the United States and Egypt. Congress specified that up to $50 million in economic aid may be set aside for an endowment, though lawmakers noted the process is in its early stages. Appropriators stated that “the conferees recognize that discussions and negotiations on such an endowment will take time, and direct the Secretary of State to consult with the Committees on these efforts. Consultation should include explanation of the specific definition of shared interests, and how such interests would be furthered through an endowment. The conferees note that such funds are subject to the regular notification procedures of the Committees on Appropriations.” The Obama Administration’s 2011 CBJ for Foreign Operations states that “the U.S. Government is considering a proposal for a bilateral endowment and we are working with the interagency, in consultation with Congress, to develop a vision for it. Discussion will continue with the Government of Egypt to deliver U.S. foreign assistance in ways that reflect both countries’ interests.” As of mid 2010, the U.S. and Egyptian governments have yet to reach an agreement on the contours of an endowment. According to both sides’ proposals, which were published in the media in the spring of 2010, the Egyptian government seeks a “phasing out mechanism [of U.S. assistance] that would be: gradual, over time, predictable, not related to conditionalities.”12 On the 8 In FY2003, Egypt, along with Israel and several other regional governments, received supplemental assistance as part of the FY2003 Iraq Emergency Supplemental Appropriations Act (P.L. 108-11). It included $300 million in ESF for Egypt, which could have been used to cover the costs of up to $2 billion in loan guarantees. The loan guarantees were to be issued over three years. 9 CRS conversation with U.S. and Egyptian officials, January 9, 2008. 10 The Senate version of the FY2008 Foreign Operations bill (H.R. 2764), contained an amendment, entitled “The United States-Egypt Friendship Endowment,” that would have provided up to $500 million in ESF to establish an endowment to “further social, economic and political reforms in Egypt.” 11 Egypt’s debt repayments to the United States, as of 2006, stood at an estimated $370 million a year, based on a total debt estimated at $4.2 billion. 12 See, [http://foreignpolicy.com/files/fp_uploaded_documents/100512_USEconomicAssistance.pdf] Congressional Research Service 5 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends other hand, the U.S. State Department is seeking to “start slowly to test the endowment’s success, and to avoid redirecting significant amounts of ESF funding away from current development programs that further U.S. objectives in Egypt, including democracy programs.”13 There seems to be agreement on both sides that the education and science and technology sectors could be potential areas of cooperation for endowment funding. However, observers note that the seed funding for any U.S.-Egyptian endowment would have to be significant, possibly over at least $1 billion, in order to generate enough interest revenue to fund daily operations and programming. The $50 million in FY2010 ESF set aside for the endowment is available for obligation through FY2011.14 Military Assistance The Administration has requested $1.3 billion in FMF for Egypt in FY2011—the same amount it received in FY2010. FMF aid to Egypt is divided into three general components: (1) acquisitions, (2) upgrades to existing equipment, and (3) follow-on support/maintenance contracts. According to U.S. and Egyptian defense officials, approximately 30% of annual FMF aid to Egypt is spent on new weapons systems, as Egypt’s defense modernization plan is designed to gradually replace most of Egypt’s older Soviet weaponry with U.S. equipment. That figure is expected to decline over the long term due to the rising costs associated with follow-on maintenance contracts. Egyptian military officials have repeatedly sought additional FMF funds to offset the escalating costs of follow-on support. Egypt also receives Excess Defense Articles (EDA) worth hundreds of millions of dollars annually from the Pentagon. Egyptian officers also participate in the IMET program ($1.4 million requested for FY2010) in order to facilitate U.S.-Egyptian military cooperation over the long term. 13 14 See, [http://foreignpolicy.com/files/fp_uploaded_documents/100512_EgyptAssistance.pdf] See, Title III, Bilateral Economic Assistance as contained in P.L. 111-117. Congressional Research Service 6 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Table 3. U.S. Assistance to Egypt, FY2006-FY2011 Request (Regular and Supplemental Appropriations; Current Year $ in millions) Account FY2006 FY2007 FY2008 FY2009 FY2010 Estimate FY2011 Request ESF 490.050 455.0 411.639 250.0a 250.0 250.0 FMF 1,287.0 1,300.0 1,289.470 1,300.0 1,300.0b 1,300.0 IMET 1.208 1.203 1.237 1.316 1.900 1.400 NADR/INCLEc 1.029 1.545 3.545 52.000d 3.80 6.600 1,779.287 1,757.748 1,705.891 1,603.316 1,555.7 1,558.0 Total Source: U.S. State Department. a. Egypt received $200 million in ESF from P.L. 111-8, the FY2009 Omnibus Appropriations Act. It then received an additional $50 in ESF from P.L. 111-32, the FY2009 Supplemental Appropriations Act. b. Congress provided $260 million of Egypt’s total FY2010 FMF appropriation in P.L. 111-32, the FY2009 Supplemental Appropriations Act. The remaining $1.04 billion was appropriated in P.L. 111-117, the FY2010 Consolidated Appropriations Act. c. This category includes funds (INCLE, NADR) for counter terrorism, border control, and technical cooperation. d. P.L. 111-32, the FY2009 Supplemental Appropriations Act, provided $50 million in NADR funds for border security in Rafah, Egypt along the Gaza border. Jordan15 Overview The United States has provided economic and military aid, respectively, to Jordan since 1951 and 1957. Total U.S. aid to Jordan through FY2010 amounted to approximately $11.38 billion. Levels of aid have fluctuated, increasing in response to threats faced by Jordan and decreasing during periods of political differences or worldwide curbs on aid funding. On September 22, 2008, the U.S. and Jordanian governments reached an agreement whereby the United States will provide a total of $660 million in annual foreign assistance to Jordan over a 5year period. Under the terms their non-binding Memorandum of Understanding (MOU), this firstof-its-kind deal commits the United States, subject to future Congressional appropriation and availability of funds, to providing $360 million per year in Economic Support Funds (ESF) and $300 million per year in Foreign Military Financing (FMF). The Administration’s FY2011 request to Congress is $682.7 million for U.S. aid to Jordan. This includes $360 in economic aid and $300 million in military assistance. In addition to funds specifically earmarked for Jordan, previous emergency supplemental bills have contained funds to reimburse Pakistan, Jordan, and other key cooperation states for logistical expenses in support of U.S. military operations in Iraq and Afghanistan. 15 For more information on Jordan, see CRS Report RL33546, Jordan: Background and U.S. Relations, by (name reda cted). Congressional Research Service 7 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends H.R. 4899, the FY2010 Supplemental Appropriations bill, provides an additional $100 million in ESF and $50 million in FMF to Jordan, bringing total FY2010 aid to an estimated $842 million. Economic Assistance The United States provides economic aid to Jordan as both a cash transfer and for USAID programs in Jordan. The Jordanian government uses cash transfers to service its foreign debt (approximately $6.7 billion). Approximately 45% of Jordan’s ESF allotment each year goes toward the cash transfer.16 USAID programs in Jordan focus on a variety of sectors including democracy assistance, water preservation, and education. In the water sector, the bulk of U.S. economic assistance is devoted to optimizing the management of scarce water resources, as Jordan is one of the most water-deprived countries in the world. USAID is currently subsidizing several waste treatment and water distribution projects in the Jordanian cities of Amman, Aqaba, and Irbid. Military Assistance U.S. military assistance is primarily directed toward upgrading Jordan’s air force, as recent purchases include upgrades to U.S.-made F-16 fighters, air-to-air missiles, and radar systems. FMF grants also provide financing for Jordan’s purchase of U.S. Blackhawk helicopters in order to enhance Jordan’s border monitoring and counter-terror capability. In addition, according to the Obama Administration’s 2011 CBJ for Foreign Operations, “FMF will continue to develop counterterrorism capabilities by expanding, training, and equipping small, elite units such as the Special Operations Aviation Brigade and Jordan Special Operations Command.” 16 According to the Obama Administration’s 2011 CBJ for Foreign Operations, “Cash transfer assistance bolsters Jordan’s short-term stability by helping the GOJ pay down external non-military debt. This program is conditioned on policy reform across sectors and, results in the GOJ programming an equivalent amount of local currency each year for mutually agreed priority development projects.” Congressional Research Service 8 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Table 4. U.S. Assistance to Jordan, FY2006-FY20011 Request (Regular & Supplemental Appropriations; Current Year $ in millions) Account FY2006 FY2007 FY2008 FY2009 FY2010 Estimate FY2011 Request ESF 297.500 255.300 361.412 513.547a 463.000f 360.000 FMF 207.900 252.900 348.380b 335.000c 350.000d 300.000 IMET 3.020 2.922 2.941 3.109 3.800 3.700 CSH — — — 13.144 — — Othere 2.491 26.741 25.059 20.150 26.150 19.000 Total 510.911 537.863 737.792 884.950 842.950 682.700 Source: U.S. State Department a. Congress provided FY2009 ESF aid to Jordan in 3 separate appropriations acts, including: $150 million from P.L. 111-32, $263.547 million from P.L. 111-8, and $100 million from P.L. 110-252. b. Congress provided FY2008 FMF aid to Jordan in 2 separate appropriations acts, including: $298 million from P.L. 110-161 and $50 million from P.L. 110-252. c. Congress provided FY2009 FMF aid to Jordan in 2 separate appropriations acts, including: $235 million from P.L. 111-8 and $100 million from P.L. 110-252. d. Congress provided $150 million of Jordan’s total FY2010 FMF appropriation from P.L. 111-32, the FY2009 Supplemental Appropriations Act. The remaining $150 million was appropriated in P.L. 111-117, the FY2010 Consolidated Appropriations Act. Another $50 million in FMF is being provided to Jordan from H.R. 4899, the FY2010 Supplemental Appropriations bill. e. This category includes funds for counter terrorism, border control, and technical cooperation. f. Jordan is receiving an additional $100 million in FY2010 ESF from H.R. 4899, the FY2010 Supplemental Appropriations bill. Palestinians—West Bank/Gaza17 Overview Since the signing of the Oslo Accord in 1993, the U.S. government has committed more than $3.8 billion in bilateral economic assistance to the Palestinians, of which more than $2.3 billion has been provided since FY2004.18 According to annual foreign operations legislation, congressionally approved funds for the West Bank and Gaza Strip cannot be used for the Palestinian Authority (PA), unless the President submits a waiver to Congress citing that it is in the interest of national security.19 Should the Hamas “government” in Gaza form a unity government with the Palestinian Authority in the West Bank, a provision in the FY2010 Consolidated Appropriations Act (P.L. 111-117) would allow the U.S. government to provide 17 See also CRS Report RS22967, U.S. Foreign Aid to the Palestinians, by (name redacted). The USAID program in the West Bank and Gaza Strip provides assistance to the Palestinian people through contractors and other non-governmental organizations. The PLO, which represents the Palestinian diaspora, has never received funds from the U.S. government. 19 See P.L. 111-117, The Department of State, Foreign Operations, and Related Programs Appropriations Act, 2010, Limitation on Assistance for the Palestinian Authority, sec. 7040(b). 18 Congressional Research Service 9 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends assistance to a power-sharing PA government of which Hamas is a member if the President certifies that such a government, including all of its ministers, acknowledges Israel’s right to exist and commits and adheres to previous international agreements, including the 2003 Roadmap.20 Since the death of Yasser Arafat in November 2004, U.S. assistance to the Palestinians has averaged about $388 million a year. During the 1990s, U.S. foreign aid to the Palestinians averaged approximately $75 million per year. Most U.S. assistance to the Palestinians is provided through USAID’s West Bank and Gaza program. USAID allocates funds for projects in sectors such as humanitarian assistance, economic development, democratic reform, improving water access and other infrastructure, health care, education, and vocational training (currently most, if not all, funds for the Gaza Strip are dedicated to humanitarian assistance and economic recovery needs). By law, U.S. assistance to the West Bank and Gaza Strip, as well as for all other aid recipients, must be vetted and audited to ensure that no U.S. funds are provided to or through any individual, private or government entity, or educational institution that advocates, plans, sponsors, engages in, or has engaged in, terrorist activity. Lawmakers usually include funds in annual foreign operations legislation providing for audits and inspections of USAID projects in the West Bank and Gaza Recent U.S. Contributions to Strip. UNRWA U.S. assistance also reaches Palestinians through contributions to the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which provides humanitarian relief and basic services to Palestinian refugees living in the West Bank, Gaza Strip, Jordan, Syria, and Lebanon. U.S. Contributions to UNRWA FY2003 $134 million FY2004 $127 million FY2005 $108 million FY2006 $137 million FY2007 $154 million FY2008 $184 million FY2009 $267.9 million The United Nations Relief and Works Agency (UNRWA) provides food, shelter, medical care, and education for many of the three million Palestinian refugees from the 1948-1949 Arab-Israeli war.21 U.S. contributions to UNRWA come from the general Migration and Refugee Assistance (MRA) account and also through the Emergency Refugee and Migration Assistance (ERMA) account. The U.S. contribution to UNRWA usually covers 20 to 25% of the UNRWA total budget.22 The United States is the largest bilateral donor to 20 See Section 7040 (f) of P.L. 111-117. This section would prohibit U.S. assistance to Hamas, but, according to Section 7040 (f) (2), “Notwithstanding the limitation of subsection (1), assistance may be provided to a power-sharing government only if the President certifies and reports to the Committees on Appropriations that such government, including all of its ministers or such equivalent, has publicly accepted and is complying with the principles contained in section 620K(b)(1)(A) and (B) of the Foreign Assistance Act of 1961, as amended.” 21 See CRS Report RS21668, United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), by (name redacted). 22 According to the State Department, U.S. contributions in 2008 constituted approximately 17.8% of the UNRWA General Fund budget and a major share (up to 25%) of other UNRWA funds benefitting Palestinian refugees in Lebanon, the West Bank, and Gaza. Aggregate contributions from the European Commission and European states (including both EU members and non-members) and regions constitute approximately 60% of all UNRWA contributions, according to UNRWA’s 2006-2007 financial statement. See UNRWA Financial Report and Audited Financial Statements (for the Biennium Ended 31 December 2007) and Report of the Board of Auditors, U.N. General Assembly Official Records (63rd Session, Supplement No. 5C), 2008. Congressional Research Service 10 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends the UNRWA and second only to the European Commission as a contributor. U.S. support for UNRWA is not treated as bilateral economic aid to the Palestinians. With Hamas in control of the entire Gaza Strip, some lawmakers are concerned that U.S. contributions to UNRWA could inadvertently be used to support Hamas activities in Gaza.23 A May 2009 Government Accountability Office (GAO) report has provided details on how effectively (1) USAID vets its contractors for its West Bank and Gaza program and (2) the State Department monitors UNRWA’s compliance with its requirements (under the 1961 Foreign Assistance Act (P.L.87-195), as amended) that it “take all possible measures” to avoid furnishing assistance to Palestinian terrorists.24 Table 5. U.S. Bilateral Assistance to the Palestinians, FY2006-FY2011 Request (regular and supplemental appropriations; current year $ in millions) Account FY2006 FY2007 FY2008 FY2009 FY2010 Estimate FY2011 Request 148.5 50.0 389.5 776.0a 400.4 400.4 P.L. 480 Title II 4.4 19.488 — — — — INCLE — — 25.0 184.0b 100.0 150.0 Total 152.9c 69.488 414.5 960.0 500.4 550.4 ESF Source: U.S. State Department, USAID. a. Congress provided FY2009 ESF aid to the Palestinians in 3 separate appropriations acts, including: $551 million from P.L. 111-32, $75 million from P.L. 111-8, and $150 million from P.L. 110-252. b. Congress provided FY2009 INCLE aid to the Palestinians in 3 separate appropriations acts, including: $109 million from P.L. 111-32, $25 million from P.L. 111-8, and $50 million from P.L. 110-252. c. Following the formation of the Hamas-led PA government in March 2006, USAID suspended many of its programs in the West Bank and Gaza. However, in order to alleviate a humanitarian crisis in the West Bank and Gaza stemming from the cutoff of aid from Western donors, the State Department and USAID redirected U.S. assistance to the Palestinian groups not affiliated with Hamas. The assistance came from several foreign aid accounts and funds appropriated in prior years, which were reprogrammed and delivered through international organizations such as the United Nations. The State Department also transferred approximately $35 million in appropriated FY2006 ESF funds for the West Bank and Gaza to other foreign aid accounts. In June 2010, the Obama Administration announced that it would provide an additional $400 million in economic aid to Palestinians in the West Bank and Gaza Strip, though only about $70 million represented a new U.S. commitment. According to the U.S. State Department, U.S. funds will be disbursed as follows: 23 Section 301(c) of the 1961 Foreign Assistance Act (P.L. 87-195), as amended, says that “No contributions by the United States shall be made to [UNRWA] except on the condition that [UNRWA] take[s] all possible measures to assure that no part of the United States contribution shall be used to furnish assistance to any refugee who is receiving military training as a member of the so-called Palestine Liberation Army or any other guerrilla type organization or who has engaged in any act of terrorism.” 24 See U.S. Government Accountability Office (GAO), Measures to Prevent Inadvertent Payments to Terrorists Under Palestinian Aid Programs Have Been Strengthened, but Some Weaknesses Remain, GAO Foreign Assistance Report 09-622, May 2009, p. 15, available at http://www.gao.gov/new.items/d09622.pdf. Congressional Research Service 11 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends • $240 million investment by the Overseas Private Investment Corporation (OPIC) in the AMAL mortgage finance program in the West Bank. • $75 million in funding through USAID for infrastructure development in the West Bank and Gaza. • $10 million in USAID-funded activities aimed at enhancing the private sector. • $40 million to support UNRWA's Emergency Appeal for Gaza and the West Bank. • $14.5 million in USAID projects for school rehabilitation, small-scale agriculture, the repair of a hospital facility and other community infrastructure in Gaza. • $10 million for the construction of five new UNRWA schools in Gaza. • $5 million to complete nine USAID-funded projects to repair water distribution and wastewater collection systems in Gaza. Lebanon In recent years, U.S. assistance to Lebanon has increased nearly six-fold due to a strong U.S. commitment to support Lebanon’s internal security and economy in the wake of multiple crises between 2005 and 2009. Syria’s 2005 withdrawal from Lebanon and the election of the March 14th coalition opened the door for an expanded U.S. role in Lebanon. Subsequent domestic and regional events, such as the 2006 Hezbollah-Israel war, Lebanese military operations against militants in Palestinian refugee camps (2007), and Hezbollah activities against the government (2008), all reinforced the need for expanded U.S. support. U.S. economic assistance is used both to strengthen USAID democracy and development programming and to reduce Lebanon’s external debt. Congress also has sought to ensure that U.S. aid supports educational scholarships for students in Lebanon with high financial need. U.S. military aid is used to train and equip the Lebanese Armed Forces (LAF) and the Internal Security Forces (ISF). In annual foreign operations legislation, Congress has sought to ensure that the State Department establish vetting procedures to determine eligibility to participate in U.S. training and assistance programs in order to ensure that U.S. aid does not benefit Hezbollah fighters.25 For FY2011, the Obama Administration is seeking $246.3 million in total aid for Lebanon. According to the U.S. State Department, the FY2011 request, among other things, “will build critical institutions, particularly Lebanon’s security services - the Lebanese Armed Forces (LAF) 25 In conference report language accompanying P.L. 111-32, the Supplemental Appropriations Act, 2009, lawmakers wrote that “no assistance may be made available for obligation until the Secretary of State reports to the Committees on Appropriations on the vetting procedures in place to determine eligibility to participate in United States training and assistance programs funded under this account. The conferees direct the Secretary of State to report on the procedures in place to ensure that no funds are provided to any individuals or organizations that have any known links to terrorist organizations including Hezbollah, and mechanisms to monitor the use of the funds. The conferees direct that the Department of State consult with the Committees on Appropriations prior to the obligation of funds provided for assistance for Lebanon in this title.” See H.Rept. 111-151. Congressional Research Service 12 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends and Internal Security Forces (ISF) - to address border security, counter negative extremist elements, and curb the influence of Syria and Iran.” In addition to bilateral assistance, U.S. aid also supports the United Nations peacekeeping mission in southern Lebanon, known as the UN Interim Force in Lebanon or UNIFIL. Lebanon also is a recipient of Department of Defense Global Train and Equip funds, authorized by Section 1206 of the National Defense Authorization Act for Fiscal Year 2006 (P.L. 109-163). Since its inception in FY2006, DoD has provided $61 million to Lebanon for counterterrorism assistance. Table 6. U.S. Assistance to Lebanon, FY2006-FY2011 Request (regular and supplemental appropriations; current year $ in millions) Account FY2006 FY2007 FY2008 FY2009 FY2010 Estimate FY2011 Request ESF 39.600 334.6 44.636 67.5 109.0 109.0 FMF 3.713 224.8 6.943 159.7a 100.0 100.0 INCLE — 60.0 .496 6.0 20.0 30.0 NADR 2.978 8.5 4.745 4.0 6.8 4.8 IMET .752 .905 1.428 2.278 2.5 2.5 DA 2.000 — — — — — Total 49.043 628.805 58.248 239.478 238.3 246.3 Source: U.S. State Department, USAID. a. Congress provided FY2009 FMF aid to Lebanon in 3 separate appropriations acts, including: $69 million from P.L. 111-32, $32.5 million in P.L. 110-252, and $58.2 million from P.L. 111-8. Table 7. U.S. Contributions to UNIFIL (regular and supplemental appropriations; current year $ in millions) Fiscal Year CIPA Account FY2007 184.0 FY2008 35.628 FY2009 186.4 FY2010 210.914 FY2011 212.0 Source: U.S. State Department Other Recipients and Programs Excluding the region’s top recipients of U.S. assistance (such as Israel, Egypt, and Jordan), the rest of the Middle East receives only a small portion of the total bilateral assistance to the region. The following table provides aid figures for individual countries not listed in the “country summaries” section. Congressional Research Service 13 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Table 8. Other Regional Recipients, FY2006-FY2011 Request (regular and supplemental appropriations; current year $ in millions) FY2010 Estimate FY2011 Request 1.798 2.610 2.770 .813 .500 .950 .550 — .198 — — .870 .823 .840 .696 .898 .950 .950 DA — — — .400 .710 .400 ESF — — .400 — — — Bahrain Total 19.005 17.630 5.840 9.161 20.800 21.700 FMF 15.593 15.750 3.968 8.000 19.000 19.500 NADR 2.761 1.240 1.250 .500 1.100 1.500 IMET .651 .640 .622 .661 .700 .700 Kuwait Total .628 1.090 — .015 .015 .010 NADR .628 1.070 — — — — IMET — .020 — .015 .015 .010 Libya Total — — .633 3.250 .780 .875 NADR — — .300 .750 .300 .275 IMET — — .333 — .330 .350 ESF — — — 2.500 — — FMF — — — — .150 .250 Morocco Total 35.198 40.170 26.661 25.196 35.296 42.500 ESF 10.890 18.000 15.374 — 3.000 3.000 FMF 12.375 12.500 3.625 3.655 9.000 9.000 NADR .775 1.295 1.317 .625 1.200 1.100 INCLE .990 1.000 .496 1.000 .750 3.000 DA 8.284 5.400 4.136 18.000 19.546 24.500 IMET 1.884 1.975 1.713 1.916 1.800 1.900 Oman Total 15.395 16.505 8.229 9.400 15.028 16.150 FMF 13.860 14.000 4.712 7.000 11.848 13.000 NADR .400 1.370 2.089 .950 1.655 1.500 IMET 1.135 1.135 1.428 1.450 1.525 1.650 Qatar Total .906 1.493 .282 — .010 .010 NADR .906 1.493 .268 — — — IMET — — .014 — .010 .010 Saudi Arabia Total 1.576 .420 .113 .361 .208 .370 NADR 1.576 .400 .099 .350 .200 .360 IMET — .020 .014 .011 .008 .010 Country/Account FY2006 FY2007 Algeria Total .888 1.915 2.107 NADR .065 1.075 INCLE — IMET Congressional Research Service FY2008 FY2009 14 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends FY2010 Estimate FY2011 Request 14.600 19.150 7.200 8.345 12.000 15.000 4.900 — .992 .800 2.000 — .025 .755 .497 .100 .200 — INCLE — — .198 — — — IMET 1.847 1.975 1.713 1.700 1.950 2.300 United Arab Emirates Total .961 1.335 .314 .925 .240 .240 NADR .961 1.335 .300 .925 .230 .230 IMET — — .014 — .010 .010 18.700 25.336 18.680 39.925 67.250 106.600 8.415 8.500 3.952 2.800 12.500 35.000 — — 2.833 3.000 8.000 21.000 ESF 7.920 12.00 1.500 19.767 5.000 34.000 NADR 1.441 3.751 4.034 2.125 4.650 4.500 INCLE — — .496 — 1.000 11.000 DA — — 4.913 11.233 35.000 — IMET .924 1.085 .952 1.000 1.100 1.100 Country/Account FY2006 FY2007 Tunisia Total 10.285 11.230 11.475 FMF 8.413 8.500 ESF — NADR Yemen Total FMF Global Health Child Survival FY2008 FY2009 Source: U.S. State Department, USAID. Foreign Aid Issues Promoting Democracy and Reform Overview Since the terrorist attacks of 9/11 and the U.S. invasion of Iraq in 2003, the degree to which the United States promotes democracy, human rights, and reform across the Middle East has been the subject of vigorous debate. Some experts argue that the United States should advocate strongly for democracy in the Arab world and beyond (such as in Iran) as a counterweight to antiAmerican extremism and acts of terrorism. Democracy advocates assert that the lack of good governance in the region is the reason why most Arab countries score low on various socioeconomic development indicators. They suggest that the key to the region’s stability and prosperity, a key U.S. national security interest, is democratization, even if it entails the empowerment of certain Islamist movements that oppose peace with Israel and security cooperation with the United States. On the other hand, foreign policy “realists” insist that the pursuit of U.S. strategic interests should be paramount in dealing with the region’s authoritarian governments. Although most realists Congressional Research Service 15 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends would likely encourage the United States to incorporate a reform strategy into its overall policy for the region, in their view, it should not supersede more vital U.S. goals, such as resolving the Arab-Israeli conflict. As the United States scales back its involvement in Iraq, some experts charge that, short of a policy of regime change, the U.S. government has limited ability to dramatically restructure a foreign nation’s political system, particularly in the Middle East. Overall, many experts have charged that the U.S. commitment to promoting democracy in the Arab world and in Muslim-majority countries has waned and realism has replaced idealism in U.S. foreign policy. Since the 2006 victory of Hamas in Palestinian Authority elections, the 2006 War in Lebanon, and public revelations of Iran’s expanding nuclear program, the United States appears to have less aggressively pursued political reform as a counterweight to Islamist-inspired radicalism. Regional security issues are seen as having returned to the forefront of U.S. policy, as U.S. officials have concentrated more on revitalizing the peace process, stabilizing Iraq, winning the war in Afghanistan and Pakistan, and preventing Iran from developing nuclear weapons. Critics charge that the Obama Administration has downplayed the role of democracy promotion in U.S. foreign policy, while Administration officials suggest that President Obama has attempted to strike a balance between the realist and idealist camps. Some observers believe that the Administration has attempted to repair U.S.-Arab bilateral relations in the wake of the previous Administration’s “freedom agenda.” In his June 2009 Cairo speech, President Obama remarked, “I know—I know there has been controversy about the promotion of democracy in recent years, and much of this controversy is connected to the war in Iraq. So let me be clear: No system of government can or should be imposed by one nation by any other.” Events on the ground, particularly in Egypt where a possible succession to President Mubarak may occur in the near future, will continue to test the United States’ commitment to promoting democracy in the region. Iran, where reformists continue to struggle against an alliance of clerical and military elites, is another country targeted for U.S. support. U.S. Programs26 U.S. officials promote reform both publically through their rhetoric and behind-the-scenes through quiet diplomacy. U.S. financial support to foster reform in the Middle East is a third component of the overall democracy and development approach. Since funding levels are quantifiable, reform programs are often seen as a barometer for an Administration’s commitment to the issue. During the Bush Administration, officials created new regional programs and expanded existing ones to focus U.S. efforts, among other things, on political reform, education, and women’s rights. The Obama Administration has retained aid programs, such as the Middle East Partnership Initiative (see section below) intact, while making certain adjustments in how assistance is delivered, such as channeling some democracy funding away from bilateral programs and into regional accounts where U.S. support is less overt and therefore a target for critics.27 26 U.S. funding for democracy promotion in the Middle East also comes from the State Department’s Bureau of Democracy, Human Rights, and Labor and USAID’s Bureau for Democracy, Conflict, and Humanitarian Assistance. Congress also supports the National Endowment for Democracy. 27 This decision has generated some controversy in the democracy promotion community in the United States, where some critics charge that, in the case of Egypt, the Administration reduced overall funding for International nonregistered NGOs working in Egypt and transferred funding for International unregistered NGOs away from the bilateral (continued...) Congressional Research Service 16 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends There is no single U.S. government agency or office responsible for coordinating democracy promotion in the Middle East. Instead, several agencies and initiatives both at the bilateral and multilateral levels focus on reform. They include the following: The Middle East Partnership Initiative (MEPI) MEPI is an office within the Bureau for Near Eastern Affairs at the U.S. State Department that supports political reform, women’s and youth empowerment, quality education, and developing economic opportunity in the Arab world. Since its inception in 2002, Congress has provided MEPI with over $582 million in Economic Support Funds, although the program rarely receives its full Administration request from Congress. In general, while the program has been praised for helping to elevate democracy promotion in the Arab world to a somewhat higher priority within the U.S. foreign policy bureaucracy, critics occasionally question its impact and whether the program is designed to stabilize or destabilize autocratic regimes in the Arab world. Others assert that its work duplicates much of USAID’s programming in the Middle East region. One of MEPI’s major contributions to U.S. democracy promotion in the Arab world has been to directly fund indigenous Arab non-governmental organizations (NGOs) throughout the Middle East and North Africa in order to amplify their reform agenda in their home countries. In general, Arab regimes severely restrict local NGOs from receiving external support, and sometimes MEPI-funded activities have been obstructed by host governments. In 2004, MEPI began issuing small grants directly to NGOs in the Middle East in order to support political activists and human rights organizations. Congressional action played a large role in facilitating MEPI’s small grants program in Egypt. The FY2005 Consolidated Appropriations Act (P.L. 108-447) stipulated that U.S. funds for democracy and governance activities in Egypt were no longer subject to the prior approval of the Egyptian government. Now, U.S. government agencies can directly fund NGOs in Egypt. Consequently, MEPI grants were awarded to some NGOs to help train election monitors for the 2005 presidential and parliamentary elections in Egypt. MEPI also supported election monitoring efforts for the 2005 elections in Lebanon as well as elections in Yemen, Morocco, and Kuwait. In the past, MEPI has provided grants to fund political activities in Iran and Syria. Recent examples of MEPI-funded programs include: • Saudi Arabia—In April 2009, MEPI began funding a pilot program on women's social entrepreneurship in Jeddah, Saudi Arabia culminating in a conference in March 2010 called the U.S.-Saudi Women's Forum on Social Entrepreneurship. The program’s mission is to teach college-age women in Saudi Arabia how to build their own businesses and leadership skills. In February 2010, Secretary of State Hillary Rodham Clinton spoke at the elite Saudi women’s Dar al Hekma College in Jeddah, one of the partnering organizations for the MEPI program. (...continued) assistance program into regional accounts, thereby symbolically paying deference to Egypt’s authoritarian regime. Supporters of this policy assert that the action simultaneously reduced tensions with a key regional ally without significantly altering U.S. assistance. For further details, see “The Federal Budget and Appropriations for Fiscal Year 2011,” Project on Middle East Democracy, April 2010. Congressional Research Service 17 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends • Israel—In conjunction with the New Israel Fund, MEPI funds the Min Ajlina (“For Us”) Bedouin Women's Empowerment Project in Israel's Negev region. The goal of the project is to strengthen Bedouin women as leaders in order to advance the status and lives of Bedouin women in the Negev. • Egypt—In 2009, MEPI supported the Egyptian Association for Dissemination and Development of Legal Awareness (EADDLA) to train young representatives of Egyptian political parties in political party organization, election organizing and monitoring, campaigning, and holding elections in democratic systems. Table 9. Middle East Partnership Initiative Appropriations, FY2003-FY2011 Request (regular and supplemental appropriations; current year $ in millions) ESF FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 Request 90.0 89.4 74.4 113.8 50.0 49.5 50.0 65.0 86.0 Source: U.S. State Department, USAID. The Millennium Challenge Account28 The Millennium Challenge Account (MCA) is based on the premise that economic development succeeds best where it is linked to free market economic and democratic principles and policies, and where governments are committed to implementing reform measures in order to achieve such goals. MCA funds are available on a competitive basis to a few countries which have demonstrated a commitment to sound development policies and where U.S. support is believed to have the best opportunities for achieving the intended results. These “best-performers” would be selected based on their records in three areas—ruling justly, investing in people, and pursuing sound economic policies. Morocco—Morocco was named eligible for Millennium Challenge Compact assistance on November 8, 2005. In 2007, Morocco signed a five-year $697.5 million agreement with the Millennium Challenge Corporation (MCC). At the time, this was the largest compact agreement the MCC had ever awarded since its establishment in 2004. According to the MCC’s 2008 scorecard for Morocco, the government scores below the median in almost all areas related to political reform but performs better in fields related to economic freedom and investments in people. 29 The Compact agreement has multiple components, all aimed at increasing private sector growth. These include efforts to increase fruit tree productivity ($300.9 million), modernize the smallscale fisheries industry ($116.2 million), and support artisan crafts ($111.9 million). In addition, the Compact will fund financial services to micro-enterprises ($46.2 million) and will provide business training and technical assistance aimed at young, unemployed graduates ($33.9 million). 28 29 For more information on the MCC, see CRS Report RL32427, Millennium Challenge Corporation, by (name redacted). The MCC’s Morocco scorecard is available at http://www.mcc.gov/documents/score-fy08-morocco.pdf. Congressional Research Service 18 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Jordan—In FY2006, Jordan was listed by the Millennium Challenge Corporation (MCC) as a threshold country in the lower middle-income bracket. On September 12, 2006, the MCC’s Board of Directors approved up to $25 million in Threshold Program assistance for Jordan. Even prior to the selection, the possible choice of Jordan had come under severe criticism. Freedom House, the organization whose annual Index of Freedom is drawn upon for two of the “Ruling Justly” indicators, had urged the MCC Board to bypass countries that had low scores on political rights and civil liberties. It argued that countries like Jordan that fall below 4 out of a possible 7 on its index should be automatically disqualified. Jordan, however, did well on three of the six other indicators in this category. Several development analysts further argued that Jordan should not be selected, because the MCA is not an appropriate funding Near East Regional source. They assert that Jordan already is one of the largest Democracy Funding recipients of U.S. aid, has access to private sector capital, and is FY2009 $25 million not a democracy. In selecting Jordan, the MCC Board appears not to have been swayed by these arguments. FY2010 $40 million Jordan’s Threshold assistance is being used to improve water access and quality. USAID is the main U.S. government agency charged with implementing the Jordan Threshold Program. According to the last update, MCC aims to sign a Compact agreement in FY2010. FY2011 Request $40 million Source: U.S. State Department Near East Regional Democracy (NERD) The Near East Regional Democracy fund is considered by many observers to be the Obama Administration’s successor to previous Bush Administration programs to fund democracy in Iran. However, unlike earlier appropriations, the NERD account does not specifically single out Iran for reform programming. In conference report language accompanying P.L. 111-117, the FY2010 Consolidated Appropriations Act, lawmakers specified that $10 million in NERD funding be used “for programs and activities to expand unmonitored, uncensored access to the Internet for large numbers of users living in closed societies that have acutely hostile Internet environments, including in the People's Republic of China and Iran.”30 NERD is managed by the Office of Iranian Affairs inside the Bureau of Near Eastern Affairs at the State Department. According to the FY2011 CBJ, the State Department intends to use NERD funding to “emphasize programs that strengthen local organizations' ability to promote fair electoral processes and legal frameworks for elections. Additionally, the United States will support projects that provide online access to independent information about domestic and international electoral issues, including uncensored information about political competition, in an effort to increase civic participation.” Foundation for the Future The Foundation for the Future (FFF) is a multilateral grant-making organization designed to fund Arab Civil Society Organizations (CSOs) in the Broader Middle East and North Africa (BMENA) region. The FFF was born out of the Bush Administration’s Broader Middle East and North Africa Initiative (BMENA), a 2004 multilateral development and reform plan aimed at fostering economic and political liberalization in a wide geographic area of Arab and non-Arab Muslim 30 P.L. 111-117 Congressional Research Service 19 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends countries. The FFF itself was launched in 2005. It is based in Amman, Jordan with a satellite office in Washington, D.C. At the second Forum for the Future31 in Bahrain in 2005, the United States pledged $35 million to help establish the FFF. In 2007, the State Department obligated $21.3 million from the MEPI program (see above) to help seed the FFF’s endowment.32 Restrictions on Aid to the Palestinians33 Annual Foreign Operations Appropriations measures include several limitations on funding for Palestinian organizations and institutions including the following provisions: • Limitation on Assistance to the Palestinian Authority. Bans direct U.S. assistance to the Palestinian Authority (PA) unless the President submits a waiver to Congress citing that such assistance is in the interest of national security. The waiver can be for up to one year, and must be accompanied by a report to the appropriate congressional committees on PA actions to stop terrorism. • Limitation on Assistance for the PLO for the West Bank and Gaza. Bans aid to the Palestinian Liberation Organization (PLO) for the West Bank and Gaza. No U.S. aid has ever been provided to the PLO. This provision states that no funds may be provided to the Palestine Liberation Organization for the West Bank and Gaza unless the President has waived Section 307 of the Foreign Assistance Act of 1961,34 as amended. • Restrictions Concerning the Palestinian Authority. Bans using U.S. funds for a new office in Jerusalem for the purpose of conducting diplomatic business with the “Palestinian Authority over Gaza and Jericho.” • Prohibition on Assistance to the Palestinian Broadcasting Corporation. Bans U.S. assistance to the Palestinian Broadcasting Corporation (PBC). Israel accuses the PBC of inciting violence against Israelis. • Auditing USAID’s West Bank and Gaza Program. Calls for annual audits of all U.S. assistance to the West Bank and Gaza Strip in order to ensure that funds are not being diverted to terrorist groups. This provision also states that the Secretary of State shall certify to Congress that the Comptroller General of the United States has access to financial data on the Economic Support Funds (ESF) for the West Bank and Gaza. And, the Secretary of State “shall take all appropriate steps” to ensure that no U.S. assistance is provided to any person or 31 The annual Forum for the Future is a conference that brings together Arab civil society activists and regional governments to discuss issues of political and economic reform. It was first held in Morocco in 2004. Since then, the forum has convened in Bahrain (2005), Jordan (2006), Abu Dhabi (2008), and Morocco again in 2009. The 2007 forum did not take place, though the parallel civil society forum was held. 32 CRS interview with Foundation for the Future staff, May 2010. 33 For additional detail, see CRS Report RS22967, U.S. Foreign Aid to the Palestinians, by (name redacted). 34 Section 307 (P.L. 87-195. Section 307 is at 22 U.S.C. 2227) withholds a proportionate share of U.S. contributions to international organizations for programs benefitting the PLO. Section 3 of the Middle East Peace Facilitation Act of 1993 provided a presidential waiver for Section 307 (extended in the Middle East Peace Facilitation Act of 1995) that is the same waiver referred to in annual foreign operations appropriations bills. Congressional Research Service 20 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends group engaged in terrorism. The Section states that the USAID Administrator should ensure that all contractors and sub-contractors are audited annually, and sets aside ESF funds for the USAID Inspector General to conduct audits. • Palestinian Statehood. Bans U.S. assistance to a future Palestinian state unless the Secretary of State certifies, among other things, that the leadership of the new state has been democratically elected, is committed to peaceful coexistence with Israel, and is taking appropriate measure to combat terrorism. The President can waive the certification if he determines that it is important to U.S. national security interests. U.S. Support for Arab-Israeli Cooperation For decades, Congress has appropriated funds to support programs encouraging Arab-Israeli cooperation. The following is a list of several active programs funded in the annual foreign operations appropriations bill: • Middle East Regional Cooperation (MERC)—The Middle East Regional Cooperation (MERC) program promotes normalized relations and science and technology in the Middle East by supporting joint projects, such as those addressing water issues, of Arab and Israeli scientists. MERC is a long-standing program initiated by Congress in 1979 after the Camp David Accords and subsequently expanded beyond Israeli-Egyptian cooperation to include participation from Morocco, Jordan, Tunisia, Lebanon, and the West Bank and Gaza. In FY2010, MERC is receiving $4 million in Economic Support Funds (ESF). The FY2011 request is for $1.5 million. • USAID’s Middle East Regional Program (OMEP)—The Office of Middle East Programs is funded through appropriations from both the Development Assistance account (DA) and ESF. On average, this office obligates between $2 to $4 million annually to “carry out activities to support trans-boundary cooperation over water and improve water management and water-use efficiency.” • Middle East Multilaterals (MEM)—MEM was established after the 1991 Madrid Peace Conference as part of the multilateral track of the peace process. MEM provides funding and support for cooperative projects that support important aspects of a comprehensive peace, such as water management and environmental activities. It is receiving $1 million in FY2010 ESF. MEM grants help support the work of the Middle East Desalination Center located in Oman. Historical Background U.S. Assistance to the Middle East Since 1950 1950-1970 Even when adjusted for inflation, annual U.S. assistance to the Middle East in the decades following World War II was only a small fraction of current aid flows to the region. Under vastly Congressional Research Service 21 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends different geopolitical circumstances, U.S. policy was geared toward supporting the development of oil-producing countries, maintaining a neutral stance in the Arab-Israeli conflict while supporting Israel’s security, and preventing Soviet influence from gaining a foothold in Iran and Turkey. U.S. policymakers used foreign aid in the 1950s and 1960s to support these objectives. U.S. aid to Israel was far less in the 1950s and 1960s than in later years.35 Although the United States provided moderate amounts of economic aid (mostly loans) to Israel, at the time, Israel’s main patron was France, which supported Israel by providing it with advanced military equipment and technology. 36 In 1962, Israel purchased its first advanced weapons system from the United States (Hawk antiaircraft missiles). 37 In 1968, a year after Israel’s victory in the Six Day War, the Johnson Administration, with strong support from Congress, approved the sale of Phantom fighters to Israel, establishing the precedent for U.S. support for Israel’s qualitative military edge over its neighbors.38 Between 1950 and 1967, the United States courted Egypt using foreign aid as a bargaining chip. Cold War competition for Egypt was fierce during this time period, as Egypt received a steady stream of surplus U.S. wheat shipments under the Food for Peace Program (P.L. 480). Despite these measures, offers of additional economic aid failed to convince Egypt to abandon a parallel relationship with the Soviet Union, as Egypt pursued a strict Arab nationalist and neutral policy that shunned close alliances with Western powers and cooperation and peace with Israel. Internationally, after 1955, Egypt obtained military aid mainly from the Soviet Union. Beginning in 1965, foreign assistance levels to the region began to decline considerably, culminating in an almost 80% drop in economic aid to the Middle East by 1970. A host of factors, most notably the June 1967 War and the rising cost of the war in Vietnam, led Congress to cut funding for a number of countries. Egypt, which had already seen its annual aid reduced, lost food aid entirely after it severed relations with the United States during the 1967 War. Jordan and other Arab states also saw their aid reduced. By 1970, annual appropriations to Iran were close to being phased out, as many policymakers considered Iran to be a middle-income state that was economically self-sufficient. 35 In 1948, President Harry Truman, who sympathized with the plight of Israel in its early days, placed an arms embargo on Israel and her Arab neighbors in order to keep the United States neutral in the ongoing Arab-Israeli conflict. 36 France supplied Israel with military equipment mainly to counter Egyptian power in the region. In the 1950s and early 1960s, Egypt antagonized France by providing arms and training to Algerian fighters in Algeria’s war for independence against France. 37 “America’s Staunchest Mideast Ally,” Christian Science Monitor, August 21, 2003. 38 Section 651 of P.L. 90-554, The 1968 Foreign Assistance Act, expresses the sense of Congress to see the United States negotiate the sale of supersonic aircraft to Israel. Congressional Research Service 22 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Table 10.Total U.S. Foreign Assistance to the Middle East, 1950-1970 (Loans & Grants; Current Year $ in millions) Country/Region Economic Military Total Iran 750.9 1,396.7 2,147.6 Israel 986.0 277.3 1,263.3 Egypt 884.1 0.0 884.1 Jordan 601.0 95.0 696.0 Libya 220.6 17.4 238.0 Lebanon 111.0 9.6 120.6 Iraq 45.2 50.0 95.2 5,610.4 2,244.4 7,854.8 Total Near East (including other recipients not listed) Source: U.S. Agency for International Development (USAID), Overseas Loans and Grants, Obligations and Loan Authorizations July 1, 1945 - September 30, 2001. The report is commonly known at USAID as “The Greenbook.” 1971-2001 The decade of the 1970s witnessed a dramatic increase in U.S. foreign assistance to the Middle East. After the U.S. withdrawal from South Vietnam, the Middle East as a whole began to receive more U.S. foreign aid than any other region of the world, a trend that has continued to today. U.S. foreign aid programs became more comprehensive in nature driven by large assistance packages to Israel and later to Egypt and other Arab governments. Large-scale U.S. assistance for Israel increased considerably after a series of Arab-Israeli wars created a sense among many Americans that Israel was continually under siege. 39 Consequently, Congress, supported by broad U.S. public opinion, committed to strengthening Israel’s military and economy through large increases in foreign aid. In 1971, the United States provided Israel with military loans of $545 million, up from $30 million in 1970. Also in 1971, Congress first designated a specific amount of aid for Israel (an “earmark”). Economic assistance changed from project aid, such as support for agricultural development work, to the Commodity Import Program (CIP) for the purchase of U.S. goods. 40 In effect, the United States stepped in to fill the role that France had relinquished after French President Charles De Gaulle refused to supply Israel with military hardware to protest its preemptive launch of the June 1967 War. Israel became the largest recipient of U.S. foreign assistance in 1976. From 1971 to the present, U.S. aid to Israel has averaged over $2 billion per year, two-thirds of which has been military assistance. Just as Israel’s long-standing relationship with the United States was in its incipient stages, Egypt, its economy in desperate need of investment and capital after two wars, began to look to the United States to help stimulate economic growth. Egypt’s new leader, Anwar Sadat, who had 39 Between 1967 and 1973, Israel and its Arab neighbors fought the June 1967 War, the ensuing War of Attrition (1969), and the October 1973 War. Israel also was engaged in continual low level guerrilla warfare with the Palestinian Liberation Organization and other guerilla groups, which had bases in Jordan and later in Lebanon. The 1974 emergency aid for Israel, following the 1973 war, included the first U.S. military grant aid. 40 The Commodity Import Program for Israel ended in 1979 and was replaced with direct, unconditional cash transfers. Congressional Research Service 23 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends been eager to rid Egypt of excessive Soviet influence and embark on a program of economic liberalization, improved U.S.-Egyptian relations in the mid 1970s, leading to a resumption in economic aid in 1975, and the signing of two disengagement agreements with Israel concerning the Sinai desert. To a lesser extent, the United States significantly increased its economic and military aid to Jordan after the 1970-1971 civil war, in which the Jordanian Armed Forces expelled Palestinian guerrillas from Jordan where they had seriously threatened stability. The 1979 peace treaty between Israel and Egypt ushered in the current era of U.S. financial support for peace between Israel and her Arab neighbors. In exchange for a complete cessation of hostilities and Israel’s return of the Sinai Peninsula, the United States provided a total of $7.3 billion to both parties in 1979. The “Special International Security Assistance Act of 1979” (P.L. 96-35) provided both military and economic grants to Israel and Egypt at a ratio of 3 to 2, respectively. 41 From the Egyptian standpoint, U.S. funds helped to subsidize its defense budget and upgrade its aging Soviet hardware. Egypt became the second largest recipient of U.S. aid after 1979. Since the Camp David Accords, U.S. assistance levels have remained relatively consistent, and the United States has continued to support the peace process and the strengthening of Israel. Israel and Egypt have been the top two regional recipients of U.S. aid for more than two decades, while Jordan became a leading recipient in the 1990s. Notable events involving significant transfers of U.S. aid since the 1979 Camp David Accords include the following: • In 1985, Congress approved a $2.25 billion supplemental funding package for Israel, Egypt, and Jordan to help stabilize their deteriorating economies. • In 1991, Egyptian support for the U.S.-led international coalition against Iraq’s invasion of Kuwait led Congress to authorize the cancellation of Egypt’s $6.7 billion military debt. Congress also provided Israel $650 million in emergency ESF grants to pay for damage and other costs from the war. In addition, Israel was given Patriot missiles during the Persian Gulf war. Aid to Jordan was reduced significantly (nearly a 75% overall decrease) after the late King Hussein was unwilling to join the allied coalition against Iraq. • In October 1992, Congress approved $10 billion in loan guarantees for Israel to help it absorb a massive influx of Jews from the former Soviet Union.42 The approval of the loan guarantees was delayed due to disagreements between the George H.W. Bush Administration and Israel over use of U.S. funds in the West Bank and Gaza Strip. Of the $10 billion authorized, the United States deducted $774 million as a penalty for Israeli settlement construction in the West Bank and Gaza Strip, leaving $9.226 billion available to cover Israeli loans. • In September 1993, after Israel and the Palestinian Liberation Organization (PLO) accorded mutual recognition of each other in a step intended to lead to a 41 This ratio is not found in the text of the 1979 Israel-Egypt Peace Treaty. U.S. officials have not officially recognized the ratio. The Egyptian government claims that a 3 to 2 ratio between Israel and Egypt was established during the negotiations. 42 The U.S. loan guarantee to Israel is not a direct transfer of U.S. government funds to Israel’s treasury. Rather, it is a guarantee on a commercial loan between the borrower (Israel) and a private lender. A U.S. subsidy may be appropriated and set aside in a Treasury account, held against a possible default or may be paid by the borrower (Israel). The subsidy usually is a percentage of the total loan based in part on the credit rating of the country. Congressional Research Service 24 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends future peace agreement, the United States offered $500 million ($125 million in loans or loan guarantees and $375 million in grants) over five years for economic development of the Palestinian entity.43 • In 1994, in recognition of Jordan’s signing a peace treaty with Israel, President Clinton asked Congress to pass legislation to forgive Jordan’s $702.3 million debt to the United States (approximately 10% of Jordan’s worldwide debt). Congress appropriated a total of $401 million in subsidies, which under pertinent budgetary procedures were sufficient to forgive the entire $702.3 million owed to the United States at the time. • In November 1999, Congress approved $400 million in grants for the Palestinians, $300 million for Jordan, and $1.2 billion for the Israelis in 2000 to fund the implementation of the Wye River Agreement.44 Table 11.Total U.S. Assistance to the Middle East: 1971-2001 (loans and grants; current year $ in millions) Country/Region Economic Military Total Israel 28,402.9 50,505.7 78,908.6 Egypt 25,095.8 27,607.0 52,702.8 Jordan 2,440.1 2,137.2 4,577.3 Lebanon 470.5 273.7 744.2 Palestinians 703.4 0.0 703.4 Syria 539.0 0.0 539.0 62,449.8 82,519.2 144,969.0 Total Near East (including other recipients not listed) Source: U.S. Agency for International Development (USAID), Overseas Loans and Grants, Obligations and Loan Authorizations July 1, 1945 - September 30, 2001. The report is commonly known at USAID as “The Greenbook.” 43 See CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy, by (name redacted). 44 Signed on October 23, 1998, the Wye River Agreement delineated steps to complete the implementation of 1993 Oslo Peace agreement between Israelis and Palestinians. See CRS Report RL33530, Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy, by (name redacted). Congressional Research Service 25 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Appendix. Glossary Bilateral assistance Economic aid provided by the United States directly to a country or through regional programs to benefit one or more countries indirectly. Development assistance (DA) Aid provided under Chapters I and 10 of the Foreign Assistance Act primarily designed to reduce poverty and promote economic growth. Economic Support Fund (ESF) An appropriation account for funding economic assistance to countries based on considerations of special economic, political or security needs and U.S. interests. Foreign Assistance Act, 1961 (FAA) The primary, permanent authorization for conducting U.S. foreign assistance programs. Foreign Military Financing (FMF) The major U.S. military aid program extending credits on a grant basis to finance U.S. overseas arms transfers. International Military Education and Training (IMET) A U.S. military aid program providing grant military training to selected foreign military and civilian personnel. Iraq Relief and Reconstruction Fund (IRRF) A catch-all development and security account controlled by the President containing funds for reconstruction activities in Iraq. Middle East Partnership Initiative (MEPI) A State Department program to encourage political, economic, and educational reforms in Arab countries. Multilateral assistance Assistance which the United States provides to developing nations through multilateral development banks, United Nations agencies, and other international organizations with development purposes. Non-governmental organizations (NGOs) Organizations that are independent of government. NGOs are frequently funded to implement foreign aid programs. Palestinian Authority The Palestinian National Authority is a semi-autonomous quasi-state institution nominally governing the Palestinians in West Bank and the Gaza Strip Pipeline The amount of economic assistance that has been obligated by U.S. agencies but has not yet been expended. P.L. 480 Refers to the Agricultural Trade Development and Assistance Act of 1954, which governs administration of the U.S. food aid program. The Department of Agriculture manages title I of P.L. 480 (food aid provided on concessional loan terms) and USAID manages title II (food grants provided for development and humanitarian purposes). Private Voluntary Organizations (PVOs) Non-profit, tax-exempt and nongovernmental organizations established and governed by a group of private citizens whose purpose is to engage in voluntary charitable and development assistance operations overseas. United Nations Relief and Works Agency for Palestine Refugees (UNRWA) UNRWA provides relief and social services, including food, housing, clothing, and basic health and education to over 4.1 million registered Palestine refugees living mostly in the West Bank and Gaza Strip, but also in Jordan, Lebanon, and Syria. U.S. Agency for International Development (USAID) An independent government agency under the direction of the Secretary of State that manages most U.S. bilateral economic assistance programs. Congressional Research Service 26 U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends Author Contact Information (name redacted) Specialist in Middle Eastern Affairs [redacted]@crs.loc.g ov, 7-.... 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