U.S. Foreign Assistance to Latin America and the Caribbean

Order Code RL32487

CRS Report for Congress

Received through the CRS Web

U.S. Foreign Assistance to

Latin America and the Caribbean

Updated March 28, 2006

(name redacted), Coordinator

Analyst in Foreign Affairs

Foreign Affairs, Defense and Trade Division

Clare M. Ribando

Analyst in Latin American Affairs

Foreign Affairs, Defense and Trade Division

(name redacted)

Specialist in Latin American Affairs

Foreign Affairs, Defense and Trade Division

Congressional Research Service ˜ The Library of Congress

U.S. Foreign Assistance to

Latin America and the Caribbean

Summary

Trends in U.S. assistance to the Latin America and Caribbean region generally

reflect the trends and rationales for U.S. foreign aid programs globally. Aid to the

region increased during the 1960s with the Alliance for Progress and during the

1980s with aid to Central America. Since 2000, aid levels have increased, especially

in the Andean region as the focus has shifted from Cold War issues to

counternarcotics and security assistance. Current aid levels to Latin America and the

Caribbean comprise about 11.8% of the worldwide FY2006 bilateral aid budget.

Amounts requested for FY2007 would reduce this ratio to 10.6%. Two countries —

Honduras and Nicaragua — have signed compacts for Millennium Challenge

Account (MCA) funds. Aid levels to the region could increase further as more

countries become eligible for MCA. Both Haiti and Guyana are focus countries for

the President’s Emergency Plan for AIDS Relief (PEPFAR).

For FY2006, U.S. assistance to Latin America and the Caribbean is estimated

at $1.68 billion, the largest portion of which is allocated to the Andean region —

$919 million. Mexico and Central America are slated to receive $292 million, while

the Caribbean would receive $307 million. Brazil and the Southern Cone of South

America are to receive an estimated $36 million. The United States also maintains

programs of a regional nature that total an estimated $133 million in FY2006.

Aid programs are designed to achieve a variety of goals, from poverty reduction

to economic growth. Child Survival and Health (CSH) funds focus on combating

infectious diseases and promoting child and maternal health. Development

Assistance (DA) promotes sustainable economic growth in key areas such as trade,

agriculture, education, the environment, and democracy. The Economic Support

Fund (ESF) assists countries of strategic importance to the United States, and funds

programs relating to justice sector reforms, local governance, anti-corruption, and

respect for human rights. P.L. 480 food assistance is provided to countries facing

emergency situations, such as natural disasters. Counternarcotics programs seek to

assist countries to reduce drug production, interdict trafficking, and promote

alternative crop development. Foreign Military Financing (FMF) provides grants to

nations for the purchase of U.S. defense equipment, services and training.

The annual Foreign Operations Appropriations bills are the vehicles by which

Congress provides funding for foreign assistance programs. The FY2006 Foreign

Operations Appropriations Act (P.L. 109-102) provided $20.9 billion for the foreign

assistance budget worldwide. In the second session of the 109th Congress, Members

of Congress will likely continue to be interested in a number of related issues,

including the general effectiveness of foreign aid programs, and how best to address

the HIV/AIDS problem and poverty issues. Congress may also debate the U.S. role

in fighting narcotics trafficking and illegally armed groups in Colombia and

stabilizing the situation in Haiti. This report will be updated as events warrant.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Assistance by Subregion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

South America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Andean Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Brazil and The Southern Cone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Mexico and Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Cuba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Regional Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Additional Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Effectiveness of Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Article 98 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

HIV/AIDS in the Caribbean and Central America . . . . . . . . . . . . . . . . . . . . 20

Millennium Challenge Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Appendix. Types of Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Economic Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Child Survival and Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Development Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Transition Initiatives (TI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Economic Support Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

P.L. 480 Title II Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Migration and Refugee Assistance (MRA) . . . . . . . . . . . . . . . . . . . . . 26

Peace Corps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Inter-American Foundation (IAF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Millennium Challenge Account (MCA) . . . . . . . . . . . . . . . . . . . . . . . 27

Global HIV/AIDS Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Counternarcotics Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

International Narcotics and Law Enforcement (INL) . . . . . . . . . . . . . 27

Andean Counterdrug Initiative (ACI) . . . . . . . . . . . . . . . . . . . . . . . . . 28

Military and Terrorism Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Foreign Military Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

International Military Education and Training . . . . . . . . . . . . . . . . . . 29

Anti-Terrorism Assistance (ATA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Multilateral Economic Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Inter-American Development Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Organization of American States (OAS) . . . . . . . . . . . . . . . . . . . . . . . 30

Other Types of Foreign Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Highly-Indebted Poor Countries (HIPC) Initiative . . . . . . . . . . . . . . . 30

Trade Capacity Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Democracy Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

List of Figures

Figure 1. U.S. Foreign Assistance to Latin America and Caribbean: Annual

Average, 1960 to 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Figure 2. U.S. Assistance to Latin America by Subregion, FY2006 . . . . . . . . . . 4

Figure 3. The Andean Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Figure 4. Mexico and Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

List of Tables

Table 1. U.S. Foreign Assistance, Western Hemisphere: Major

Assistance Accounts, FY2004-FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Table 2. U.S. Foreign Assistance to the Andean Region:

FY2006 Estimates and FY2007 Funding Request . . . . . . . . . . . . . . . . . . . . . 7

Table 3. U.S. Foreign Assistance to Brazil & the Southern Cone:

FY2006 Estimates and FY2007 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Table 4. Mexico and the Central America: FY2006 Funding Estimates

and FY2007 Funding Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Table 5. U.S. Foreign Assistance to the Caribbean: FY2006 Estimates

and FY2007 Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Table 6. Western Hemisphere Regional Programs: FY2006 Estimates

and FY2007 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

U.S. Foreign Assistance to Latin America

and the Caribbean

Introduction

Trends in U.S. foreign assistance to Latin America generally reflect the trends

and rationales for U.S. foreign aid programs globally. U.S. assistance spiked in the

1960s during President Kennedy’s Alliance for Progress, reflecting an interest in

preventing the spread of Soviet and Cuban influence in the region, and recognizing

poverty as one possible root cause of popular discord. In the 1980s, the U.S. focus

shifted to the Central American isthmus where leftist insurgencies were challenging

friendly governments, and where a leftist movement in Nicaragua had taken control

of government through armed combat. Substantial amounts of U.S. assistance were

provided to support Central American governments and the U.S.-backed Contras

seeking to overthrow the Sandinista government in Nicaragua.

In the aftermath of the 1989 U.S. military intervention in Panama, and the 1990

electoral defeat of the Sandinista government in Nicaragua, U.S. assistance to these

two countries increased substantially. Central America resolved many of its political

problems since the 1980s, although it is still one of the least developed areas in the

hemisphere. With the dissolution of the Soviet Union in 1991, U.S. concerns about

spreading communist influence lessened, and so too did levels of U.S. assistance.

Since 2000, U.S. assistance has focused on support for counter-narcotics activities,

largely in the Andean region.

Figure 1 indicates trends in U.S. assistance since 1960 in 2007 constant U.S.

dollars. U.S. assistance has not reached levels attained during the Alliance for

Progress. The annual average since 1990 is approximately half of what it was in the

1960s. The amounts requested for FY2007 represent the lowest level in more than

four decades. Some countries are benefitting from two new Presidential foreign aid

initiatives. Haiti and Guyana — identified as focus countries by the President’s

Emergency Plan for AIDS Relief (PEPFAR) — have received increased assistance

for HIV/AIDS programs. Nicaragua and Honduras have signed Millennium

Challenge Compacts.

U.S. support for development is identified by President Bush as one of the three

pillars, with defense and diplomacy, of the National Security Strategy, developed

after the terrorist attacks of September 11, 2001. The U.S. Agency for International

Development (USAID) identifies five challenges to which U.S. assistance programs

are designed to respond: promoting transformational development;1 strengthening

1

USAID defines transformational development as “development that does more than raise

(continued...)

CRS-2

fragile states; providing humanitarian relief; supporting U.S. geostrategic interests;

and mitigating global and transnational ills. USAID identifies the main security

threats to the United States as the confluence of terrorism and the proliferation of

weapons of mass destruction, and global criminal networks. The focus has shifted

to strengthening the institutions of weak states, rather than on just economic growth,

because weak states are seen as permissive environments for terrorist and criminal

activities.

Figure 1. U.S. Foreign Assistance to Latin America and

Caribbean Annual Average, 1960 to 2007

Source: U.S. Agency for International Development, U.S. Overseas Loans and Grants

(Greenbook), Latin America and the Caribbean, U.S. Department of State, Congressional

Budget Justification, Summary Tables, FY2006 and FY2007.

1

(...continued)

living standards and reduce poverty. It also transforms countries, through far-reaching,

fundamental changes in institutions of governance, human capacity, and economic structure

that enable a country to sustain further economic and social progress without depending on

foreign aid.” U.S. Foreign Aid: Meeting the Challenges of the Twenty-first Century, January

2004.

CRS-3

With regard to Latin America and the Caribbean, U.S. assistance levels

requested for FY2007 show a marked decrease compared to the annual average from

FY2000 to FY2006, although it represents just a 3% decrease from FY2006

appropriated levels. The largest decrease occurs in the Development Assistance

account, which sustains a 28% reduction. The largest increase is for Economic

Support Funds (up 26%) and the Global HIV/AIDS Initiative (up 35%). The Child

Survival and Health account would be cut by 9%. When compared to other regions

of the world, Latin America has received between 9.5% and nearly 12% annually

since FY2002. In addition to traditional economic and military assistance, two

countries — Nicaragua and Honduras — have signed compacts with the Millennium

Challenge Corporation (MCC) worth $175 million and $215 million respectively

over five years. These two countries would also see the largest cuts in Development

Assistance in the FY2007 budget request.

Table 1. U.S. Foreign Assistance, Western Hemisphere:

Major Assistance Accounts, FY2004-FY2007

(Millions of Current U.S. Dollars)

Account

FY2004

Actual

FY2005

Actual

FY2006

Estimate

FY2007

Request

% (+/-)

FY06FY07

CSH

150.0

144.6

140.9

128.0

- 9%

DA

260.8

247.2

254.4

181.9

- 28%

ESF

148.9

163.0

120.8

152.1

26%

INL

47.4

48.2

60.9

54.8

- 10%

ACI

737.6

725.2

727.2

721.5

- 1%

MRA

21.5

23.8

24.3

22.0

- 9%

GHAI

18.1

58.8

65.3

88.0

35%

IMET

13.4

13.2

13.4

12.6

- 6%

FMF

119.6

108.2

111.7

105.3

- 6%

Total

1,517.3

1,532.2

1,518.9

1,466.2

- 3%

MCC

Compact

390.0

Source: Congressional Budget Justification, Foreign Operations, Summary Tables, Fiscal Years 20042007. The table does not include all assistance; it excludes Peace Corps, P.L. 480 food aid, and some

disaster assistance.

CRS-4

In Congress, the annual Foreign Operations Appropriations bills have been the

vehicles by which Congress provides funding for, and exercises oversight of foreign

assistance programs. Congress has not enacted a comprehensive foreign assistance

authorization bill since 1985. For FY2006, Congress provided $20.9 billion out of

the President’s $22.8 billion international affairs request in the FY2006 Foreign

Operations Appropriations Act (P.L. 109-102). Increases in the FY2006 budget

request were due mainly to the new Millennium Challenge Account (MCA) and the

Global HIV/AIDS Initiative. The MCA, that was unveiled in 2002 and became

operational in 2004, links U.S. assistance with good governance and measures of

performance of recipient nations. The MCA program, if fully funded, represents one

of the few marked increases in U.S. foreign assistance since the Marshall Plan after

World War II, and the Alliance for Progress in Latin America during the 1960s.

Assistance by Subregion

For FY2006, U.S. assistance to Latin America and the Caribbean is estimated

at about $1.68 billion, including Peace Corps and P.L. 480 food aid. The total does

not include two Millennium Challenge Compacts with Honduras and Nicaragua that

were signed in 2005. The largest portion, $919 million, is allocated to the Andean

countries of Bolivia, Colombia, Peru, Ecuador, and Venezuela, and represents 55%

of regional assistance. Another $292 million, or 17%, is allocated to Mexico and

Central America, while the Caribbean would receive $307 million, or 18%. Brazil

and the Southern Cone of South America would receive an estimated $36 million,

or 2%. The United States also maintains aid programs of a regional nature, such as

trade capacity building, and migration and refugee assistance, that total an estimated

$133 million, or 8%, in FY2006.

Figure 2. U.S. Assistance to Latin America

by Subregion, FY2006

CRS-5

For FY2007, the President’s budget request totals $1.63 billion for the region.

This includes $927 million for the Andean region; $278 million for Mexico and

Central America; $321 million for the Caribbean; $35 million for Brazil and the

Southern Cone; and $95 million for regional programs. According to the FY2007

budget request, the Andes would receive 56% of the regional total. The largest

decreases occur in Development Assistance and Child Survival and Health for

Central America, but the isthmus would benefit from increased Economic Support

Funds, largely for trade support for CAFTA countries, and Trade Capacity Building

programs.

South America

The largest recipients of U.S. foreign assistance in South America are the

Andean nations of Colombia, Bolivia, and Peru, where most of the world’s cocaine

originates. These nations receive funding from the Andean Counterdrug Initiative

(ACI), military assistance such as Foreign Military Financing (FMF) and

International Military Education and Training (IMET), as well as bilateral economic

assistance in the form of Development Assistance, Child Survival and Health, and

Economic Support Funds. The Andean countries of Venezuela and Ecuador, and the

non-Andean nations of Brazil and Panama also receive ACI funds but to a smaller

degree than Colombia, Bolivia and Peru. U.S. assistance to Argentina, Brazil, Chile,

Uruguay, and Paraguay amounts to $36 million in FY2006; the FY2007 request is

$35 million.2 By contrast, U.S. assistance to the Andean region totals $919 million

in FY2006, and $927 million requested for FY2007.

The Andean Region. The area is generally known for its rugged terrain, from

Peru’s Pacific coastline to the Andes mountain range that traverses Peru, Bolivia,

Colombia and Ecuador, to Amazonian basin regions marked by tropical rainforests.

The region has large indigenous communities, high levels of poverty, and a history

of political unrest. U.S. assistance to the Andean region has focused on narcotics

trafficking since 2000, when Congress approved $1.3 billion in support of

PlanColombia. The United States had supported counternarcotics issues in the Andes

prior to 2000, but the levels of funding were far less.

Funding for the Andean Counterdrug Initiative (ACI) amounted to $727.2

million in FY2006. The FY2007 request is $721.5 million. The region also receives

economic assistance funds. Bolivia and Peru are major recipients of Development

Assistance, Child Survival and Health Funds, and food aid. Ecuador and Peru

receive sizeable amounts of Economic Support Funds. The Peace Corps maintains

programs in Bolivia, Ecuador, Panama, and Peru. Although Colombia is a major

recipient of ACI funds, it does not receive any economic assistance, although

portions of ACI funds are transferred to USAID for alternative development and

institution-building programs.

2

Brazil receives assistance from the Andean Counterdrug Initiative because it shares a 1,000

mile border with Colombia even though Brazil is not considered an Andean country. This

included $5.94 million in FY2006, and a requested $4 million for FY2007.

CRS-6

Figure 3. The Andean Region

Aruba

(Neth.)

Caribbean Sea

Oranjestad

Willemstad

Bonaire

Curacao

Netherlands Antilles

Golfo de

Venezuela

(Neth.)

Caracas

Lago de

Maracaibo

Panama

Venezuela

Panama

Go l fo

De

Pa n a ma

P a ci fi c

O c ea n

Bogota

Colombia

Quito

Brazil

Ecuador

Pe r u

Source: Map Resources. Adapted by CRS. (K.Yancey 5/20/04)

Andean Counterdrug Initiative. The Andean Counterdrug Initiative (ACI)

is the centerpiece of U.S. policy toward Colombia and the Andean region. It seeks

to curb narcotics production and trafficking, and to promote democracy and

economic development, which it is believed will strengthen regional security.

Colombia, Peru, and Bolivia produce virtually all of the world’s cocaine, and

Colombia has been a source of increasing amounts of high quality heroin destined for

the United States. The two leftist guerrilla organizations and a rightist paramilitary

organization operating in Colombia profit from the drug trade. All three — the

Revolutionary Armed Forces of Colombia (FARC), the National Liberation Army

(ELN), and the United Self-Defense Forces of Colombia (AUC) — have been

designated foreign terrorist organizations by the State Department. The FARC and

AUC have also been designated as Significant Foreign Narcotics Traffickers under

the Foreign Narcotics Kingpin Designation Act (P.L. 106-120).

The United States has made a significant commitment of funds and material

support to help the region fight drug trafficking. Congress passed legislation

providing $1.3 billion in assistance for FY2000 (P.L. 106-246), and has provided a

total of $5 billion from FY2000 through FY2006 in ACI funds. Since 2002, Congress

has granted expanded authority to use counternarcotics funds for a unified campaign

to fight both drug trafficking and terrorist organizations in Colombia. ACI funding

for FY2006 is estimated at $727.2 million. Most of the ACI request is for programs

in Colombia ($465 million) where 80% of the world’s cocaine is produced. Peru

($107 million) and Bolivia ($79 million) are also major recipients. Ecuador is

CRS-7

allocated to receive $20 million in FY2006 funds, Brazil $6 million, Venezuela $2

million, and Panama $4 million. The region would receive an estimated $91 million

in FY2006 in Foreign Military Financing (FMF) funds, most of which are allocated

for Colombia.

Table 2. U.S. Foreign Assistance to the Andean Region:

FY2006 Estimates and FY2007 Funding Request

($ in millions)

Country

DA

Bolivia

FY2006

10.09

FY2007 Req.

10.00

Colombia

FY2006

—

FY2007 Req.

—

Ecuador

FY2006

6.58

FY2007 Req.

5.64

Peru

FY2006

9.44

FY2007 Req.

9.00

Venezuela

FY2006

—

FY2007 Req.

—

Air Bridge*

FY2006

—

FY2007 Req.

—

Critical Flight Safety

FY2006

—

FY2007 Req.

—

Total - FY2006

26.11

Total - FY2007

24.64

CSH

ESF

PL 480 IMET

16.47

14.69

5.94

6.00

15.70

24.00

.79

.05

—

—

—

—

—

—

—

2.00

2.97

6.00

14.21

12.74

ACI

FMF

Other

Total

79.20

66.00

.99

.03

3.13

3.08

132.31

123.85

1.68

1.68

464.78

465.00

89.10

90.00

5.81

3.84

561.37

560.52

—

—

.05

.05

19.80

17.30

.50

.03

3.36

3.08

33.26

34.10

2.97

4.00

9.00

13.00

.05

.05

106.92

98.50

.20

.03

3.02

2.82

145.81

140.14

—

—

—

1.50

—

—

—

.05

2.23

1.00

—

—

2.23

2.55

—

—

—

—

—

—

—

—

13.86

—

—

—

—

—

13.86

0.00

—

—

—

—

30.68 11.88

29.43 17.50

—

—

24.70

37.00

—

—

2.57

1.88

29.97

65.70

716.76

713.50

—

—

90.79

90.09

—

—

15.32

12.82

29.97

65.70

918.81

926.86

Source: Figures are drawn from U.S. Department of State, Congressional Budget Justification,

Summary Tables, Fiscal Year 2007. Updated by CRS, February 27, 2006.

* Because the Air Bridge Denial (ABD) program is only operational in Colombia, the FY2007 budget

requests includes funding for ABD in the Colombia allocation.

Note: ACI totals exclude $5.94 million (FY2006) and $4 million (FY2007) for Brazil and $4.46

million (FY2006) and $4 million (FY2007) for Panama. Both receive ACI funding because they share

borders with Colombia, although neither is considered an Andean nation. “Other” includes Nonproliferation, Anti-terrorism, De-mining and Related Programs (NADR) and Peace Corps.

DA - Development Assistance

CSH - Child Survival and Health

ESF - Economic Support Funds

PL 480 - emergency food aid

IMET - International Military Education and Training

ACI - Andean Counterdrug Initiative

FMF - Foreign Military Financing

CRS-8

For FY2007, the Administration proposes spending a total of $721.5 million,

with Colombia receiving the same amount as in the previous year and neighboring

countries receiving cuts. Bolivia would receive $66 million, Peru $98.5 million,

Brazil $4 million, Ecuador $17.3 million, Venezuela $1 million, and Panama $4

million. According to State Department officials, the Air Bridge Denial Program,

that is operational only in Colombia, would be funded out of the Colombia

allocation. For a second year, the Administration is requesting funds for a Critical

Flight Safety Program to upgrade and refurbish aging aircraft used for eradication

programs.

For more information, see CRS Report RL33253, Andean Counterdrug Initiative (ACI)

and Related Funding Programs: FY2006 Assistance, by (name redacted); CRS Report

RL32250, Colombia: Issues for Congress, by (name redacted); and CRS Report

RL32774, Plan Colombia: A Progress Report, by (name redacted).

Brazil and The Southern Cone. The countries of Brazil, Argentina, Chile,

Paraguay, and Uruguay are considered middle- income countries and therefore

receive lower levels of assistance. The area is estimated to receive nearly $36 million

in FY2006, while $35 million is requested for FY2007. Most of this funding goes

to Brazil for Development Assistance and Child Survival and Health, and Paraguay

for Development Assistance, Child Survival and Health, and Economic Support

Funds. The Peace Corps maintains a program in Paraguay. As mentioned earlier,

Brazil receives ACI funding because it shares a long border with Colombia. The

focus in Brazil is on generating sustainable economic growth and addressing

extensive poverty and social inequality. Nearly one-third of Brazilians live below the

international poverty line.3 With regard to health issues, nearly 60% of all HIV/AIDS

cases in South America are in Brazil, while the country also ranks high in malaria

and tuberculosis cases. Another area of focus is environmental degradation,

particularly in the Amazon region, where deforestation is a problem. Paraguay, the

region’s second largest recipient of aid, has suffered multiple years of stagnant

growth and a large external debt. U.S. programs focus on economic growth,

reproductive health, the environment, and democracy.

3

The World Bank defines the international poverty line as U.S. $1 and $2 per day in 1993

Purchasing Power Parity (PPP), which adjusts for differences in the price of goods and

services between countries. The $1 per day level is generally used for the least developed

countries, such as in Africa, while the $2 per day level is used for middle income countries

such as in Latin America.

CRS-9

Table 3. U.S. Foreign Assistance to Brazil & the Southern Cone:

FY2006 Estimates and FY2007 Request

($ in millions)

Country

Argentina

FY2006

FY2007 Req.

Brazil

FY2006a

FY2007 Req.

Chile

FY2006

FY2007 Req.

Paraguay

FY2006

FY2007 Req.

Uruguay

FY2006

FY2007 Req.

S. Am. Reg.

FY2006

FY2007 Req.

Total - 2006

Total - 2007

DA

CSH

ESF

ACI

FMF

IMET

Other

Total

—

—

—

—

—

—

—

—

.05

.04

1.09

1.14

.77

.25

1.91

1.43

8.01

8.00

3.07

5.99

—

—

5.94

4.00

—

—

.05

.05

1.05

.99

18.12

19.03

—

—

—

—

—

—

—

—

.59

.50

.64

.69

.47

.20

1.70

1.39

4.39

4.13

2.88

2.11

1.98

2.00

—

—

—

—

.05

.05

3.01

2.97

12.31

11.26

—

—

—

—

—

—

—

—

—

—

.05

.05

—

—

0.05

0.05

1.49

2.00

13.89

14.13

—

—

5.95

8.10

—

—

1.98

2.00

—

—

5.94

4.00

—

—

0.64

0.54

—

—

1.88

1.98

—

—

5.30

4.41

1.49

2.00

35.58

35.16

Source: Figures are drawn from Congressional Budget Justification, Foreign Operations, Summary

Tables, Fiscal Year 2006 U.S. Department of State. Table updated, March 10, 2006. “Other” includes

Non-proliferation, Anti-terrorism, De-mining and Related Programs (NADR) and Peace Corps.

a. Brazil receives ACI funding because it shares a 1,000 mile border with Colombia, although it is not

considered an Andean nation.

Figure 4. Mexico and Central America

G

Source:Map Resources. Adapted by CRS. (K.Yancey 4/18/04)

r e

a

t e

r

Le

ss

er

An

ti

ll e

s

CRS-10

Mexico and Central America

Mexico. Although Mexico has a stronger bilateral relationship with the United

States than any other country in Latin America, it is a middle-income nation that has

not been a traditional recipient of U.S. foreign assistance. With the entry into force

of the North American Free Trade Agreement (NAFTA) in 1994, Mexico became the

United States’ second largest trading partner in 1999. Burgeoning trade ties

coincided with the election of new administrations in both countries in 2000 and

promises of greater U.S.-Mexico cooperation in the areas of counter-narcotics,

immigration, law enforcement, and trade.

Foreign aid allocations to Mexico totaled only $31 million in FY2001, but rose

to a high of nearly $74 million in FY2005. Total aid to Mexico decreased slightly

in FY2006 to $69 million and the Administration has requested $63 million for

FY2007. The higher total assistance figures have been primarily the result of large

increases in counter-narcotics (INL) funding, used since 2001 to improve Mexico’s

interdiction capacity, surveillance, and intelligence capabilities. INL funding rose

from only $12 million in FY2003 to close to $40 million in FY2005 and have

remained level since that time. Mexico usually receives a small amount of

International Military Education and Training (IMET) funds for military training, as

well as economic assistance to promote growth, accountable governance and rule of

law, infectious disease prevention and control, and educational exchange and

scholarships. For FY2006, Mexico was slated to receive $30 million in counternarcotics funding, and Congress provided $40 million. The FY2007 request in

counter-narcotics funding is $39 million. The Administration also requested about

$15 million in DA, CSH, and Peace Corps funding.

In October 2005, Mexico ratified its membership of the International Criminal

Court. Mexico does not have a Bilateral Immunity (Article 98) Agreement

exempting U.S. military personnel from the jurisdiction of the ICC and thus became

subject to a suspension of IMET funds under the ASPA and of ESF funds under the

Nethercutt Amendment. Mexico received $1.3 million in IMET funding in FY2005,

but was slated to receive only $50,000 in IMET funds in FY2006. Mexico could lose

that IMET funding in FY2006 and the FY2007 IMET request of $45,000. In addition,

Mexico was to have received FMF funding for the first time in FY2006 totaling $2.5

million, but that funding was frozen after the ICC ratification and was not included

in the FY2007 budget request. Mexico could also potentially lose $9 million in ESF

funds in FY2006 and FY2007.

Central America. Central America is a region comprised of seven small

countries with limited populations and economic resources. Although Panama and

Belize are on the Central American isthmus and receive small amounts of U.S. aid,

their distinctive histories distinguish them from the five core countries — Guatemala,

El Salvador, Honduras, Nicaragua, and Costa Rica — generally referred to as

“Central America.” Belize is considered a Caribbean nation because of its history and

linkages with the English-speaking Caribbean. Panama has a history of extensive

economic linkages with the United States because of the Panama Canal. Among the

five core Central American countries, Costa Rica enjoys a long history of stable

democracy and a per capita income that is 10 times greater than that of Nicaragua.

The other four countries, although posting significant democratic and economic

CRS-11

improvements in the 1990s, are still recovering from decades of civil war and trying

to confront high levels of poverty and violent crime. Despite these differences, each

of the countries in Central America is highly dependent on trade with the United

States, and that trade is likely to increase significantly with implementation of the

U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA).

In order to assist with implementation of DR-CAFTA, the FY2005 Consolidated

Appropriations Act (P.L. 108-447) included $20 million for trade capacity building.

In FY2006, Congress set aside $40 million for trade capacity building, $20 million

ESF and $20 million in DA funds. In addition, the Central America Regional

program, for which Congress provided an estimated $12 million in FY2006 and the

Administration requested $18.7 million for FY2007, has focused on fostering

regional trade integration, democracy programs, immigration issues, organized crime

(including gangs), and drug trafficking. The FY2006 Consolidated Appropriations

Act (P.L. 109-102) provided that CSH and DA funding for Central America should

not be less than what was provided in FY2005.

The major recipients of U.S. foreign assistance in Central America include El

Salvador, Guatemala, Honduras, and Nicaragua. These nations receive Development

Assistance (DA) to fund economic growth, justice sector reform, and other

democracy programs. FY2007 funding for the five core Central American countries

would decline by 9% from FY2006, with the largest cuts occurring in Development

Assistance. The Central American countries received an estimated $90.6 million in

FY2006, but the Administration has requested only $66.2 million for FY2007. Some

of that funding would be shifted to the Economic Support Fund (ESF) account for

trade capacity building that was included in Development Assistance in previous

years. In FY2006, ESF funds were slated for Guatemala, Nicaragua, and Panama,

totaling an estimated $8.8 million. The FY2007 Administration request includes ESF

funds for El Salvador, Guatemala, and Nicaragua totaling an estimated $26 million.

All four countries (El Salvador, Guatemala, Honduras and Nicaragua) continue to

receive between $7 million and $12 million in Child Survival and Health (CSH)

funds, which are especially focused on the prevention and treatment of HIV/AIDS

and other infectious diseases. Possessing high levels of poverty and unsustainable

levels of foreign debt, Honduras and Nicaragua have additionally qualified for debtrelief under the Highly Indebted Poor Country (HIPC) initiative.

In 2004, Nicaragua and Honduras were selected as countries eligible to receive

grants from the new Millennium Challenge Corporation. In June 2005, Honduras

signed a five-year, $215 million Compact with the MCC to promote rural

development and road construction. In July 2005, Nicaragua signed a five-year, $175

million Compact with MCC to strengthen property rights, construct roads, and

improve rural business productivity and profitability. El Salvador became eligible

to receive MCA funds in FY2006. Although Millennium Challenge funds were

supposed to be in addition to, not a substitute for, traditional aid programs, all three

countries that have either signed, or been deemed eligible for MCC Compacts, would

have their DA and CSH funds cut under the FY2007 request.

Finally, the United States provides small amounts of IMET funding to all

countries in Central America so that both civilian and military leaders can participate

in professional training programs. El Salvador, Honduras, Nicaragua and Panama

CRS-12

also receive Foreign Military Financing (FMF) funding. On March 24, 2005, the

United States announced that it was releasing $3.2 million of Military Assistance

Program (MAP) funds, a program later supplanted by the FMF program, to

Guatemala that had been withheld since 1990 because of human rights concerns.

However, the FY2006 Foreign Operations Appropriations Act (P.L. 109-102)

maintained a prohibition on FMF funding to Guatemala. El Salvador is the only

country in Latin America that has sent troops to Iraq. It is also home to one of the

three counter-narcotics Cooperative Security Locations (CSLs), formerly known as

Forward Operating Locations (FOLs), in the region, and a new International Law

Enforcement Academy (ILEA). The FY2006 estimated provision of $9.9 million in

Foreign Military Financing for El Salvador was substantially higher than the $1.5

million allocated in FY2005. The FY2007 Administration request for FMF for El

Salvador is $5.5 million. Costa Rica is the only country in Central America that may

be subject to sanctions on military aid and ESF funds in FY2006 for failing to

conclude and Article 98 agreement with the United States.

For more information, see CRS Report RL32724, Mexico-U.S. Relations: Issues for the

109th Congress, by (name redacted); CRS Report RL30981, Panama: Political and

Economic Conditions and U.S. Relations, by Mark Sullivan; CRS Report RS21655, El

Salvador: Political and Economic Conditions and Relations with the United States, by

Clare Ribando; CRS Report RS21103, Honduras: Political and Economic Situation and

U.S. Relations, by Mark Sullivan, CRS Report RL32124; Guatemala: Political

Conditions, Elections and Human Rights, by (name redacted); and CRS Report

RS21943, Costa Rica: Background and U.S. Relations, by (name redacted).

CRS-13

Table 4. Mexico and the Central America:

FY2006 Funding Estimates and FY2007 Funding Request

($ in millions)

Country

DA

Mexico

FY2006

14.08

FY2007 Req.

9.28

Costa Rica

FY2006

—

FY2007 Req.

—

El Salvador

FY2006

22.51

FY2007 Req.

7.56

Guatemala

FY2006

9.70

FY2007 Req.

7.52

Honduras

FY2006

18.82

FY2007 Req.

13.29

Nicaragua

FY2006

20.84

FY2007 Req.

12.99

Panama

4.34

FY2006a

FY2007 Req.

3.18

Central America Regional

FY2006

5.88

FY2007 Req.

13.00

Total - FY2006

96.17

Total - FY2007

66.82

CSH

ESF

PL 480

INL

INCLE FMF

Other

Total

3.99

3.72

9.01

9.00

—

—

.05

.05

39.60

39.00

—

—

2.13

1.84

68.86

62.89

—

—

—

—

—

—

.05

.05

—

—

—

—

1.79

1.84

1.84

1.89

8.14

7.35

—

10.0

—

—

1.78

1.83

—

—

9.90

5.50

2.79

2.86

45.12

35.10

12.04 4.46

10.84 13.00

21.61

18.50

.40

.49

2.48

2.20

—

—

3.84

3.80

54.53

56.35

13.14

12.17

—

—

10.39

16.00

1.09

1.29

—

—

.89

.68

3.34

3.34

47.67

46.77

7.70

6.66

3.37

3.00

11.73

12.50

.59

.59

—

—

.59

.50

2.65

2.58

47.47

38.82

—

—

.99

—

—

—

.79

.65

4.46

4.00

.99

.78

3.31

3.14

14.88

11.75

6.04

—

5.70

—

51.05 17.83

46.44 35.00

—

—

43.73

47.00

—

—

4.75

4.95

—

—

—

—

46.54 12.37

45.20 7.46

—

11.92

—

18.70

19.85 292.29

19.40 272.27

Source: Figures are drawn from Congressional Budget Justification, Foreign Operations, Summary

Tables, Fiscal Year 2007, U.S. Department of State. Table updated by CRS, March 2, 2006.

a. International Narcotics and Law Enforcement (INL) funding for Panama is from the Andean

Counterdrug Initiative account. Panama shares a border with Colombia, although it is not

considered an Andean nation.

CRS-14

Caribbean

With some 35 million people and 16 independent nations sharing an African

ethnic heritage, the Caribbean is a diverse region that includes some of the

hemisphere’s richest and poorest nations. In addition to the 13 island nations, the

Caribbean region also includes two countries located on the northern coast of South

America, Guyana and Suriname, and one country, Belize, located in Central America,

that historically and culturally share similar backgrounds with the Caribbean.

The United States has provided considerable amounts of foreign assistance to

the Caribbean over the past 25 years. U.S. assistance to the region in the 1980s

amounted to about $3.2 billion, with most concentrated in Jamaica, the Dominican

Republic, and Haiti. An aid program for the Eastern Caribbean also provided

considerable assistance, especially in the aftermath of the 1983 U.S.-led military

intervention in Grenada. In the 1990s, U.S. assistance to Caribbean nations declined

to about $2 billion, or an annual average of $205 million. Haiti was the largest

recipient of assistance during this period, receiving about $1.1 billion in assistance

or 54% of the total. Jamaica was the second largest U.S. aid recipient in the 1990s,

receiving about $507 million, almost 25% of the total, while the Dominican Republic

received about $352 million, about 17% of the total. Eastern Caribbean nations

received about $178 million in assistance, almost 9% of the total. The bulk of U.S.

assistance was economic assistance, including Development Assistance, Economic

Support Funds, and P.L. 480 food aid. Military assistance to the region amounted to

less than $60 million during the 1990s.

Since FY2000, U.S. aid to the Caribbean region (including FY2006 aid

estimates) has amounted to almost $1.6 billion, because of increased HIV/AIDS

assistance to the region (especially to Guyana and Haiti), disaster and reconstruction

assistance in the aftermath of several hurricanes and tropical storms in 2004, and

increased support for the interim government in Haiti following the departure of

President Jean-Bertrand Aristide from power. Haiti accounted for some 51% of

assistance to the Caribbean region during this period. As in the 1990s, the bulk of

assistance to the region consisted of economic assistance. With regard to hurricane

disaster assistance, Congress appropriated $100 million in October 2004 in

emergency assistance for Caribbean nations (P.L. 108-324), with $42 million for

Grenada, $38 million for Haiti, $18 million for Jamaica, and $2 million for other

countries affected by the storms.

For FY2007, the Administration has requested about $321 million in assistance

for the Caribbean, with about $198 million or almost 62% of the total for Haiti, $35

million for the Dominican Republic, $31 million for Guyana, and almost $17 million

for Jamaica. Assistance to the small nations of the Eastern Caribbean (Antigua and

Barbuda, Barbados Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St.

Vincent and the Grenadines) is provided through USAID’s Caribbean Regional

program, which also funds some region-wide projects; for FY2007, the

Administration requested $11.6 million for the program. The Eastern Caribbean

would also receive about $1.5 million in military assistance and $3.2 million to

support a Peace Corps presence. The request of $3 million for the “Third Border

Initiative” (TBI) would fund regional projects for the 14-nation Caribbean

Community (CARICOM) plus the Dominican Republic that focus on improving

CRS-15

travel and border security in the region, disaster preparedness, and greater business

competitiveness. A request of $4 million for Operation Enduring Friendship, a

military assistance program, would support efforts to increase maritime security in

the Dominican Republic, Honduras, Panama, the Bahamas, and Jamaica.

Looking ahead to future years, several Caribbean nations are potential recipients

for Millennium Challenge Account (MCA) assistance, an initiative to target foreign

assistance to countries with strong records of performance in the areas of governance,

economic policy, and investment in people. While Haiti and Guyana were potentially

eligible for MCA funds in FY2004 (because their per capita income was below

$1,415) neither country was approved to participate. Guyana was designated a MCA

threshold country for FY2005 and FY2006, and could be approved in future years for

MCA funding, but Haiti would likely have difficulty meeting MCA criteria. In

FY2006, the per capita income level for MCA-eligibility increased to $3,255 or

below, and as a result, three additional Caribbean countries — the Dominican

Republic, Jamaica, and Suriname — could become eligible for MCA funding.

For more information, see CRS Report RL32160, Caribbean Region: Issues in U.S.

Relations, by Mark Sullivan, and CRS Report RL32001, AIDS in the Caribbean and

Central America, by Mark Sullivan.

Cuba. Over the past several years, the United States has provided assistance to

increase the flow of information on democracy, human rights, and free enterprise to

Communist Cuba. The assistance has been part of the U.S. strategy of supporting the

Cuban people while at the same time isolating the government of Fidel Castro

through economic sanctions. USAID’s Cuba program supports a variety of U.S.based nongovernmental organizations to promote rapid, peaceful transition to

democracy, help develop civil society, and build solidarity with Cuba’s human rights

activists. These efforts are largely funded through Economic Support Funds (ESF),

but in FY2006 also included some Development Assistance funds. Funding for such

projects amounted to $6 million in FY2003, $21.4 million in FY2004 (because of reprogrammed ESF assistance to fund the democracy-building recommendations of the

Commission to Provide Assistance for a Free Cuba), $9 million in FY2005, and an

estimated $10.9 million in FY2006.

The FY2007 request is for $9 million in ESF for Cuba. According to the

request, ESF funds will be used to implement the recommendations of the

Commission for Assistance to a Free Cuba. The goals of the assistance are to

augment current activities in support of the Cuban people, to “undermine the survival

strategies of the Castro regime,” and “to contribute to conditions that will help the

Cuban people hasten the dictatorships’s end.” ESF will also continue to support

USAID-administered programs with democracy and human rights groups. Key

groups targeted for assistance include women, Afro-Cubans, and youth as well as

libraries, labor organizations, human rights groups, and other independent nongovernmental organizations in Cuba.

U.S. democratization assistance for Cuba is also provided through the National

Endowment for Democracy (NED), which traditionally has been funded in State

Department appropriations bills. NED-funded Cuba projects amounted to $1.1

CRS-16

million for each of FY2003 and FY2004. For FY2005, NED funded 17 Cuba

projects with $2.4 million. This included grants to support a variety of undertakings,

such as assistance to Cuba’s independent libraries; the promotion of general human

rights, labor rights, and women’s rights; and support for the work of the Varela

Project and National Dialogue that emphasize a peaceful democratic transition.

For more information, see CRS Report RL32730, Cuba: Issues for the 109th Congress,

by Mark Sullivan.

Haiti. Following a period of political discord and violence, President JeanBertrand Aristide resigned under disputed circumstances in February 2004, and an

interim government was established. The United Nations authorized an international

force, mainly composed of U.S. Marines, and French and Canadian police and

military forces, to help restore order. This was subsequently replace by a U.N.

peacekeeping force, the U.N. Stabilization Mission in Haiti (MINUSTAH) beginning

in June 2004, with the objective of securing a stable and secure environment and

advancing the rule of law. After being postponed several times because of political

instability and technical problems, new elections were ultimately held February 7,

2006. Former president Rene Preval was declared the winner after several days of

protests by his supporters when it appeared that a run-off election would be

necessary. U.S. foreign aid to Haiti increased significantly in support of the interim

Haitian government. Assistance increased from about $72 million in FY2003 to

$132 million in FY2004, and $183 million in FY2005. Because Haiti is a focus

country under the President’s Emergency Plan for AIDS Relief (PEPFAR), it has

benefitted from increased assistance to combat HIV/AIDS under the Global

HIV/AIDS Initiative (GHAI) account.

The FY2006 Foreign Operations Appropriations Act (P.L. 109-102) provided

Haiti with a total of $194 million in assistance, largely in CSH, ESF, DA, and

counternarcotics funds. It also received $47.3 million for HIV/AIDS programs. For

FY2007, the Administration requested $198 million in assistance for Haiti, including

$63 million in GHAI funding, $50 million in ESF, $34.5 million in food aid, $23

million in Development Assistance, $15 million in Child Survival and Health

assistance, and $10 million in International Narcotics Control and Law Enforcement

funding.

For more information, see CRS Report RL32294, Haiti: Developments and U.S. Policy

Since 1991 and Current Congressional Concerns, by (name redacted).

CRS-17

Table 5. U.S. Foreign Assistance to the Caribbean:

FY2006 Estimates and FY2007 Requests

($ in millions)

Country

DA

CSH GHAI ESF

Bahamas

FY2006

—

—

FY2007 Req.

—

—

Belize

FY2006

—

—

FY2007 Req.

—

—

Cuba

FY2006

1.98

—

FY2007 Req.

—

—

Dominican Republic

FY2006

7.07 12.72

FY2007 Req.

6.01 11.34

Guyana

FY2006

3.96

—

FY2007 Req.

4.00

—

Haiti

FY2006

29.70 19.80

FY2007 Req.

23.14 15.81

Jamaica

FY2006

9.58 4.47

FY2007 Req.

7.39 2.81

Suriname

FY2006

—

—

FY2007 Req.

—

—

Trinidad & Tobago

FY2006a

—

—

FY2007 Req.

—

—

Third Border Initiative

FY2006

—

—

FY2007 Req.

—

—

Operation Enduring Friendship

FY2006

—

—

FY2007 Req.

—

—

Caribbean Region

FY2006

4.89 6.44

FY2007 Req.

6.00 5.64

Eastern Caribbean

FY2006

—

—

FY2007 Req.

—

—

Total - FY2006

57.18 43.43

Total - FY2007

46.54 35.60

PL

480

IMET

INL

FMF Other Total

—

—

—

—

—

—

0.39

0.23

0.50

0.50

0.10

0.08

1.53

—

2.52

0.81

—

—

—

—

—

—

0.20

0.25

—

—

0.20

0.18

1.86

1.87

2.26

2.30

—

—

8.91

9.00

—

—

—

—

—

—

—

—

—

—

10.89

9.00

— 1.98

— 12.00

—

—

1.29

1.09

—

—

0.94

0.73

3.12

3.85

27.12

35.02

—

—

0.30

0.32

—

—

0.10

0.08

1.61

1.61

23.97

31.01

47.30 49.50 31.48

63.00 50.00 34.50

0.21

0.25

14.85

10.00

0.99

0.78

.55 194.38

.56 198.04

18.00

25.00

—

—

—

—

—

—

—

—

0.89

0.75

0.99

0.90

0.59

0.50

2.95

4.27

19.47

16.62

—

—

—

—

—

—

0.15

0.15

—

—

0.10

0.08

1.38

1.47

1.63

1.70

—

—

—

—

—

—

0.05

0.05

—

—

—

—

0.98

2.85

1.03

2.90

—

—

2.97

3.00

—

—

—

—

—

—

—

—

—

—

2.97

3.00

—

—

—

—

—

—

—

—

—

—

3.96

4.00

—

—

3.96

4.00

—

—

—

—

—

—

—

—

—

—

—

—

—

—

11.33

11.64

—

—

—

—

—

—

65.30 63.36 31.48

88.00 74.00 34.50

0.76

0.77

4.24

3.86

—

—

16.34

11.40

0.89 3.16

4.81

0.78 3.23

4.78

8.76 17.14 307.23

7.21 19.71 320.82

Source: Figures are drawn from U.S. Department of State Congressional Budget Justification,

Summary Tables, Fiscal Year 2007. Table updated by CRS, February 28, 2006. Operation Enduring

Friendship includes activities in Panama.

CRS-18

Regional Programs

The United States also provides assistance for programs that have a regional

scope. The Latin America and Caribbean (LAC) program is the largest regional

program and provides Child Survival and Health, Development Assistance, and

Economic Support Funds for a number of purposes, such as justice and health-related

programs. Funds are used to strengthen democratic institutions and processes,

improve education and health, and protect biodiversity and support new

environmental technologies. Anti-Terrorism funding for the Western Hemisphere

focuses mainly on Colombia, and the tri-border region of Argentina, Brazil and

Paraguay. INCLE funding is also provided to the region centering on drug transit

zones in Central America and the Caribbean.

Table 6. Western Hemisphere Regional Programs:

FY2006 Estimates and FY2007 Request

($ in millions)

Program

Anti-Corruption (ESF)

FY2006

FY2007

Latin America/Caribbean Regional

FY2006

FY2007

Latin America Regional (INCLE)

FY2006

FY2007

Migration/Refugee Assistance

FY2006

FY2007

OAS Demining

FY2006

FY2007

OAS Development Assistance

FY2006

FY2007

OAS Fund for Strengthening Democracy

FY2006

FY2007

Summit of the Americas Support

FY2006

FY2007

Trade Capacity

FY2006

FY2007

Western Hemisphere Regional (NADR)

FY2006

FY2007

Caribbean/Central America Regional

FY2006

FY2007

Funding level

0.99

—

70.82

38.20

2.48

—

24.34

21.98

1.74

1.80

4.70

5.23

2.48

2.50

2.97

2.00

19.80

20.00

2.65

1.49

—

1.70

CRS-19

Program

Funding level

Anti-Terrorism

FY2006

FY2007

Total - FY2006

Total - FY2007

12.30

11.90

145.27

106.80

Source: Figures are drawn from U.S. Department of State Congressional Budget Justification,

Summary Tables, Fiscal Year 2007. Table updated by CRS, February 28, 2006.

Additional Issues for Congress

Effectiveness of Programs

Congressional debate on foreign aid issues has often focused on whether it is

effective in reducing poverty, and promoting U.S. interests abroad. Critics argue that

aid is often wasted on countries that do not responsibly use the assistance to promote

the welfare of their citizens. Others argue that programs are often ill-designed in

relation to their goals. Proponents of foreign aid argue that development is a long

term process that must be consistently implemented to see results. Recent studies

have noted a marked lack of progress in reducing global poverty, and question the

correlation between levels of development assistance and program success.4 Others

argue that U.S. assistance, as currently structured, does not contribute as much to

sustainable economic growth as does trade.5 One of the reasons suggested to explain

this perceived lack of success is that aid programs often have objectives other than

pure development, such as national security, environmental or human rights

considerations. Another reason often pointed to is the nature and extent of corruption

in societies that have little history of transparency.

The newly created Millennium Challenge Account (MCA) seeks to address

some of these concerns, in the view of the Bush Administration. The MCA links

assistance to recipients’ performance on a number of good governance and sound

economic policy criteria. (See discussion below.) Proponents of the MCA view it as

a way to reform foreign aid programs by rewarding good performers and by focusing

on the objectives of poverty reduction, with limited consideration of strategic or

political objectives. Critics raise concerns that by creating new aid programs,

including the HIV/AIDS initiative, which coexist with traditional aid programs, there

is a fragmentation of resources, and potentially a lack of coordination among the

various entities administering the programs.6

Secretary Rice’s announcement of a newly created position — Director of

Foreign Assistance — that will be held concurrently by the USAID Administrator,

4

Paul Collier and David Dollar, “Aid Allocation and Poverty Reduction,” The World Bank,

January 1999; Foreign Assistance in Focus: Emerging Trends, InterAction, November

2003; and William Easterly, “The Failure of Development,” Financial Times, July 3, 2001.

5

Evan Osborne, “Rethinking Foreign Aid,” Cato Journal, fall 2002.

6

Foreign Assistance in Focus: Emerging Trends, InterAction, November 2003.

CRS-20

was unveiled as a way to better coordinate aid programs government-wide. There

has been much debate as to whether this reorganization of foreign aid will be

effective, and some observers believe it is not ambitious enough, advocating a

complete restructuring of foreign aid accounts. Any such reform would require

legislation. It is possible that further reforms could be proposed for FY2008.

For more information, see CRS Report 98-916, Foreign Aid: An Introductory Overview

of U.S. Programs and Policy, by (name redacted) and (name redacted).

Article 98 Agreements

A further concern of policymakers has centered on current U.S. policy opposing

the application of jurisdiction of the International Criminal Court to U.S. citizens.

Countries who have not agreed to sign so-called Article 98 agreements with the

United States are subject to a cutoff of U.S. military assistance, comprising Foreign

Military Financing, and International Military Education and Training funds. (Such

agreements, referring to Article 98 of the Rome Treaty on the International Criminal

Court, prevent the ICC from proceeding with a request for the surrender of U.S.

personnel present in the country.) These agreements are required under the American

Services Members Protection Act of 2002, that was incorporated as Title II of H.R.

4775, the FY2002 Supplemental Appropriations Act (P.L. 107-206). Section 574 of

both the FY2005 and FY2006 Foreign Operations Appropriation acts extends the

provision of law to include Economic Support Funds. The President may waive the

law if it is in the national interest. Colombia, the major recipient of military

assistance in Latin America, has signed an agreement. Others that have not, such as

Bolivia, Brazil, Costa Rica, Ecuador, Mexico, Paraguay, Peru, Uruguay, and

Venezuela, could see their assistance withheld.

HIV/AIDS in the Caribbean and Central America

The AIDS epidemic in the Caribbean and Central America has begun to have

negative consequences for economic and social development, and continued

increases in infection rates threaten future development prospects. In contrast to

other parts of Latin America, the mode of transmission in several Caribbean and

Central American countries has been primarily through heterosexual contact, making

the disease difficult to contain because it affects the general population. The

Caribbean countries with the highest prevalence or infection rates are Haiti, with a

rate over 3%; the Bahamas, Guyana, and Trinidad and Tobago, with rates over 2%;

and Barbados, Belize, the Dominican Republic, Jamaica, and Suriname, with rates

over 1%. In Central America, Honduras has the highest prevalence rate of 1.8%,

while Guatemala has a rate over 1%.

The response to the AIDS epidemic in the Caribbean and Central America has

involved a mix of support by governments in the region, bilateral donors (such as the

United States, Canada, and European nations), regional and multilateral

organizations, and nongovernmental organizations (NGOs). The World Bank, the

Inter-American Development Bank, and the Global Fund to Fight AIDS,

Tuberculosis, and Malaria have funded numerous HIV/AIDS projects in the

CRS-21

Caribbean and Central America. Many countries in the region have national AIDS

programs that are supported through these efforts.

USAID has been the lead U.S. agency fighting the epidemic abroad since 1986.

USAID’s funding for HIV/AIDS in Central America and the Caribbean region rose

from $11.2 million in FY2000 to $33.8 million in FY2003. Because of the inclusion

of Guyana and Haiti as focus countries in the President’s Emergency Plan for AIDS

Relief (PEPFAR), funded through the Global HIV/AIDS Initiative (GHAI) account,

U.S. assistance to the Caribbean and Central America for HIV/AIDS increased to $47

million in FY2004, $82.5 million in FY2005, and an estimated $92.7 million in

FY2006. For FY2007, the Administration requested $113 million. This request

included $88 million in GHAI funding for Guyana ($25 million) and Haiti ($63

million) and another $25 million for non-focus countries and programs in Central

America and the Caribbean through the Child Survival and Health account.

Some Members of Congress want to expand the list of focus countries to include

14 additional Caribbean countries. In the 109th Congress, S. 600, the Foreign Affairs

Authorization Act, FY2006 and FY2007, contains a provision (Section 2516) that

would add 14 Caribbean countries to the list of focus countries targeted for increased

HIV/AIDS assistance. In other action, the 109th Congress approved H.R. 1409 (P.L.

109-95), which authorizes assistance for orphans and other vulnerable children in

developing countries, including in the Caribbean. Pending legislative initiatives in

the second session include H.R. 164, which would provide for the establishment of

pediatric centers in developing countries, including Guyana, to provide treatment and

care for children with HIV/AIDS; and S. 350 and H.R. 945, which would provide

assistance to combat infectious diseases in Haiti, including HIV/AIDS.

For more information, see CRS Report RL33485, U.S. International HIV/AIDS,

Tuberculosis, and Malaria Spending: FY2004-FY2007, by (name redacted); CRS

Report RL31712, The Global Fund to Fight AIDS, Tuberculosis and Malaria:

Background and Current Issues, by (name redacted) and Tiaji Salaam; and CRS

Report RL32001, AIDS in the Caribbean and Central America, by Mark Sullivan.

Millennium Challenge Account

The MCA initiative differs from traditional USAID programs in a number of

respects, and could have implications for the future of assistance programs in general.

First, funding is linked to performance and results. Second, the conceptualization of

development projects rests with the countries themselves and their national

development strategies, with the United States playing an advisory role. Third, MCA

funds are intended to center exclusively on development goals without regard for

other U.S. foreign policy and geostrategic objectives. While the international

community and NGOs have been generally supportive of the initiative, some

concerns have been expressed that funding for traditional assistance programs (DA

and CSH) could end up being cut to accommodate the increased funding for MCA.

The Administration has stated that it does not intend for the MCA to negatively affect

its other development programs. Despite that assertion, funding for DA and some

health programs under CSH have declined. Development assistance in Latin

America is proposed for FY2007 at 28% less than in FY2006. CSH would also

CRS-22

decline by 9%. The countries most affected by these proposed cuts are in Central

America — two of which have signed MCC compacts (Nicaragua and Honduras) and

one that is eligible for the program (El Salvador).

When fully operational, the MCA initiative will be limited to countries with per

capita incomes below $2,935. But in the first two years (FY2004 and FY2005),

countries with per capita incomes below $1,415, and that can borrow from the World

Bank’s International Development Association (IDA) in FY2004, were eligible to

compete for grants. Beginning in FY2006, low-middle income countries can

participate, but they can only receive 24% of the amount appropriated for the MCA

in that year. However, income level is not the only criteria for participation. Some

countries may not receive funding if they do not meet certain criteria relating to

political rights and civil liberties. Performance indicators fall into three general

categories — ruling justly, investing in people, and economic freedom. Specific

measurements of each category would be taken from the World Bank, the World

Health Organization, and the Freedom House annual study on civil liberties and

political freedom, among others. It is anticipated that the list of eligible countries

could reach 115, although just 20 to 30 may ultimately qualify for MCA grants.

Countries that demonstrate a commitment to meeting the MCA eligibility

requirements can qualify for “threshold assistance.” Both Guyana and Paraguay were

invited to participate in the threshold program in 2005. Paraguay has concluded an

agreement for such assistance in the amount of $37 million.

Congress has been involved in determining the criteria for country eligibility

and performance indicators, and funding levels. Congress passed P.L. 108-199

(Division D) that created the Millennium Challenge Corporation (MCC), the entity

charged with managing the initiative, and appropriated $994 million for the first year,

instead of the $1.3 billion requested by the Administration. For FY2005 and

FY2006, MCC funding was $1.5 billion and $1.7 billion; the FY2007 request is $3

billion.

With regard to Latin America, countries that have per capita incomes of less

than $1,415 and that are IDA-eligible include Bolivia, Guyana, Haiti, Honduras, and

Nicaragua. Of those candidate countries, Bolivia, Honduras and Nicaragua were

deemed eligible to participate after the MCC board met to approve participants on

May 6, 2004. In 2005, two agreements, called compacts, were signed with Honduras

($215 million over five years) and Nicaragua ($175 million over five years).

Paraguay is a ‘threshold’ country that will receive $37 million for anti-corruption and

rule of law programs. Beyond FY2006, when eligible countries can have per capita

incomes up to $2,935, the following additional Latin American countries could

qualify: Brazil, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala,

Jamaica, Peru, St Vincent and the Grenadines, and Suriname. In November 2005, the

MCC named El Salvador as an eligible “lower middle income” country.

For more information, see CRS Report RL32427, The Millennium Challenge Account:

Implementation of a New Foreign Aid Initiative, by (name redacted).

CRS-23

Terrorism

In the aftermath of the September 2001 terrorist attacks on New York and

Washington D.C., U.S. attention to terrorism in Latin America intensified, with an

increase in bilateral and regional cooperation. The State Department, in its annual

report on worldwide terrorism (Country Reports on Terrorism), highlights terrorist

threats in Colombia, Peru, and the tri-border region of Argentina, Brazil, and

Paraguay, which has been a regional hub for Hizballah and Hamas fund-raising

activities. The State Department also has designated four terrorist groups (three in

Colombia and one in Peru) as Foreign Terrorist Organizations, and Cuba has been

listed as a state sponsor of terrorism since 1982.

Through the State Department, the United States has provided Anti-Terrorism

Assistance (ATA) training and equipment to Latin American countries to help

improve their capabilities in such areas as airport security management, hostage

negotiations, bomb detection and deactivation, and countering terrorism financing.

ATA financing is provided through the annual foreign operations appropriations

measure under the Nonproliferation, Anti-terrorism, Demining, and Related

Programs (NADR) account. For FY2005, $7.9 million in ATA was provided for the

Western Hemisphere, with $5.1 million for training anti-kidnapping units in

Colombia and $0.5 million for the tri-border area of Brazil, Paraguay, and Argentina.

For FY2006, an estimated $12.3 million in ATA will be provided for the Western

Hemisphere, with $5.3 million for Colombia and $1.5 million for the Bahamas. The

FY2007 Western Hemisphere request is $11.9 million, with $3.1 million for

Colombia, $2.8 million for Trinidad and Tobago, and $1.4 million for Jamaica.

In addition to ATA assistance, several Latin American countries would receive

small amounts of assistance in FY2007 under NADR’s Export Control and Related

Border Security Assistance (EXBS) program. The program helps strengthen the

countries’ export and border control systems to prevent the proliferation of weapons

of mass destruction, missile delivery systems, and conventional weapons. A total of

$865,000 is requested for Western Hemisphere NADR/EXBS funding in FY2007,

including a regional program and specific assistance for Argentina, Brazil, Chile, and

Panama. In past years, some Latin American nations also received assistance under

the NADR’s Counterterrorism Financing (CTF) program and the Small Arms/Light

Weapons Destruction (SALW) program.

CRS-24

Appendix. Types of Assistance

Economic Assistance

Economic assistance is generally provided by the U.S. government directly to

other foreign governments or to nongovernmental organizations working in those

countries. Bilateral economic aid to Latin America is primarily administered by the

U.S. Agency for International Development (USAID). USAID strives to use that

assistance to alleviate poverty and to address critical transnational issues such as

HIV/AIDS, the environment, and humanitarian relief. Bush Administration officials

have maintained that U.S. policy towards Latin America is based on three broad

objectives — strengthening democracy, encouraging development, and enhancing

security.7 While hemispheric security is addressed by programs funded through

counternarcotics and military accounts, most transformational development programs

aimed at fostering social, political, and economic progress are funded by the Child

Survival and Health (CSH), Development Assistance (DA), and Economic Support

Funds (ESF) accounts.

Child Survival and Health. CSH funds focus on combating infectious

disease and promoting child and maternal health, family planning, and reproductive

health. For FY2006, the Administration requested $125.3 million for Latin America

out of a total of $1.25 billion in CSH funds globally. Congress provided nearly $1.6

billion globally but did not earmark by region. The FY2006 request for Latin

America reflected a 12.7% decrease from the FY2005 estimated allocation of $143.5

million. Traditional CSH programs are being cut in favor of new initiatives such as

the President’s Emergency Plan for AIDS Relief (PEPFAR), a State Department

administrated program currently targeting two Latin American countries, Haiti, and

Guyana. For FY2006, the Administration estimates spending $140.9 million in the

Western Hemisphere. Its FY2007 request is $128 million, a reduction of 9% from

the previous year’s estimate.

CSH funded HIV/AIDS programs focus on prevention, care, and treatment

efforts, specifically targeting children affected by AIDS. They will be integrated into

the overall policy framework and strategic “prevention-to-care continuum” espoused

by PEPFAR. Child survival and maternal health programs strive to reduce the

number of deaths in children under the age of five and save the lives of women in

childbirth. Interventions used to reduce preventable child deaths include

immunizations, pneumonia and diarrhea prevention and treatment, oral rehydration,

safe birthing and prenatal care, nutrition, and breast-feeding initiatives. The final

major component of CSH funds support expanded access to information and services

concerning family planning and reproductive health.

Development Assistance. DA funds aim to achieve measurable

improvements in key areas to foster sustainable economic growth: trade and

investment, agriculture, education, environment, health, and democracy. The

7

U.S. Department of State, “Pursuit of Three Important Objectives in the Western

Hemisphere,” J. Curtis Struble, Acting Assistant Secretary of State, Bureau of Western

Hemisphere Affairs. Remarks to the Senate Committee on Foreign Relations, April 2, 2003.

CRS-25

Administration requested $223.8 million for Latin America out of a total FY2006

request of $1.1 billion, an 8% decrease from the FY2005 estimated allocation of

$255.5 million. For FY2006, Congress appropriated $1.524 billion for worldwide

programs, but did not earmark DA funds by country or region. The Administration

estimates spending $254.4 million in FY2006 in the Western Hemisphere. Congress

did include report language that Central American countries should receive no less

than they did in FY2005 in CSH and DA funds. Congress also allocated $20 million

in DA funds for labor and environment capacity building programs for CAFTA-DR

countries. For FY2007, the Administration requested $181.9 million for Latin

America, a 28% decrease from the previous year. Some of this decrease is made up

in the ESF account for trade capacity building in Cental America.

DA supports the Opportunity Alliance for Central America, which focuses on

facilitating regional integration and helping the region’s economies recover from

recent natural disasters, declining coffee prices and drought. Specific trade capacitybuilding initiatives were undertaken prior to the negotiation of the Central American

Free Trade Agreement (CAFTA). Agriculture programs seek to promote nontraditional agricultural exports and find agricultural niche markets for local

producers. DA funds basic education programs to strengthen preschool, primary, and

secondary education, as well as the Centers of Excellence in Teacher Training

(CETT) Initiative in Latin America and the Caribbean. USAID manages five

Presidential initiatives addressing various aspects of sustainable development. These

initiatives focus on encouraging natural resource management, developing alternative

energy sources, expanding clean water access, preventing illegal-logging, and

minimizing greenhouse gas emissions. There are justice sector modernization

programs underway in 12 countries in the region, as well as 15 anti-corruption

programs throughout Latin America. DA democracy programs also seek to strengthen

Latin American democracies by supporting elections, strengthening civil society, and

protecting human rights.

Transition Initiatives (TI). For FY2006, the Administration requested

funding for TI previously provided in the Development Assistance Account. The

request for FY2006 was $325 million, of which Haiti was to receive $30 million.

The program would support stabilization, reform and post-conflict reconstruction

programs in fragile states. In FY2005, the State Department estimated spending $25

million in Haiti, and $8.9 million in FY2004. Congress did not fully fund the TI

account, giving it $40 million, and leaving other funds in the DA account. For

FY2007, the Administration has requested $50 million.

Economic Support Funds. Through the security-related ESF program, the

United States provides economic aid to countries of strategic interest to U.S. foreign

policy. Funding decisions are made by the State Department; programs are managed

by USAID and the State Department. Although Israel and Egypt receive the majority

of ESF aid, 11 Latin American countries have received some ESF funding in recent

years, with Bolivia, Cuba, Ecuador, Mexico, and Peru among the largest recipients.

The Administration estimates spending $120.8 million in Latin America in FY2006.

The request for FY2007 is $152.1 million, with most increases for the Dominican

Republic, Ecuador, El Salvador, and Guatemala for trade assistance.

CRS-26

ESF assistance in the Andean region, Mexico, and Central America is used to

pursue justice sector reform, facilitate implementation of free trade agreements,

improve local governance, fight corruption, and promote respect for human rights.

The $3 million requested for the Third Border Initiative, which began in FY2002,

would enhance immigration, border security, rule of law, and disaster preparedness

in the Caribbean. A $9 million FY2007 request for Cuba would continue the

Administration’s efforts to support a transition to democracy there through

information dissemination and support for dissidents and human rights activists.

For FY2006, Congress appropriated $2.634 billion for ESF programs globally

and earmarked $116.4 million for Latin America and the Caribbean. It also directed

that Haiti receive $50 million, Guatemala $5.5 million, Mexico $11.5 million,

Nicaragua $1.9 million, and another $20 million for trade capacity building programs

in the CAFTA-DR countries.

P.L. 480 Title II Food Aid. This account, funded through the annual

Agriculture Appropriations bill, provides the funds for USAID to respond quickly to

the food assistance needs of countries facing emergency situations. Food aid is

targeted at vulnerable populations, especially those coping with, or recovering from,

natural or manmade disasters, including prolonged civil strife. This assistance

program is administered largely by U.S. private voluntary organizations and through

the United Nation’s World Food Program. For FY2005, the United States allocated

an estimated $108 million for P.L. 480 in Latin America, and the Administration

estimates spending $100 million in FY2006. For FY2007, the request is $118.5

million. The largest recipients of food aid in Latin America include Bolivia,

Guatemala, Haiti, Honduras, Nicaragua, and Peru.

Migration and Refugee Assistance (MRA). This program supports

refugee relief activities, and in some cases, helps resettle refugees. FY2006 funding

for MRA in Latin America is an estimated $24.3 million. The Administration

reduced its MRA request for FY2006 to $22 million. Most of the funding will be

used to help the more than 2 million internally displaced persons (IDPs) in Colombia

and thousands of refugees outside of Colombia. The State Department partners with

the International Committee of the Red Cross and the U.N. High Commission on

Refugees to provide refugee assistance.

Peace Corps. The Peace Corps sends U.S. volunteers to developing countries

to provide technical aid and to promote mutual understanding on a people-to-people

basis. Countries in Latin America with Peace Corps programs include countries in

the Eastern Caribbean region and Central America, the Dominican Republic, Guyana,

Jamaica, Suriname, Mexico, Belize, Bolivia, Ecuador, Peru and Paraguay. Funding

in FY2006 totaled $44.5 million; the FY2007 request is $44.8 million.

Inter-American Foundation (IAF). The IAF is a small federal agency that

provides grants to non-profit and community-based programs in Latin America that

promote entrepreneurship, self-reliance, and economic progress for the poor. The

FY2006 estimated allocation for the IAF is 19.3 million, and the FY2007 request

maintains level funding at $19.3 million.

CRS-27

Millennium Challenge Account (MCA). The MCA is a Presidential

initiative announced in 2002 that is intended to increase foreign assistance to

countries below a certain income threshold that are pursuing policies intended to

promote democracy, social development, and sustainable economic growth. If fully

funded, the MCA would increase foreign assistance beginning in FY2004 so that by

FY2006 U.S. foreign aid would be $5 billion higher than three years earlier. The

FY2005 allocation for the MCA was $1.488 billion. The Administration requested

$3 billion in FY2006, and Congress approved $1.77 billion. For FY2007, the request

is $3 billion. This assistance is administered by the Millennium Challenge

Corporation (MCC), in cooperation with USAID. In 2005, the MCC signed

compacts with Nicaragua for $175 million over five years, and with Honduras for

$215 million over five years. (For further information, see the discussion of the

MCA in the “Additional Issues for Congress” section above.)

Global HIV/AIDS Initiative. In 2003, President Bush announced the

President’s Emergency Plan for AIDS Relief (PEPFAR), a new initiative pledging

$15 billion over five years for the prevention and treatment of HIV/AIDS,

tuberculosis (TB), and malaria. This includes $10 billion in new funding of which

$1 billion would be for contributions to the Global Fund to Fight AIDS,

Tuberculosis, and Malaria. The other $5 billion would come from existing programs

managed by other agencies such as USAID and the Department of Health and Human

Services (HHS). The Global AIDS Initiative, which constitutes the bulk of PEPFAR

funding, is a Department of State program currently concentrated on 12 African

countries, as well as Haiti and Guyana. The 2005 funding level for Haiti was

estimated at $39.4 million, and for Guyana, at $13.2 million. The FY2006 estimate

provides $47.3 million for Haiti, and $18 million for Guyana. The FY2007 request

includes $ $63 million for Haiti and $25 million for Guyana. (For further

information, see the discussion on HIV/AIDS in the “Additional Issues for Congress”

section above.)

Counternarcotics Assistance

International Narcotics and Law Enforcement (INL). INL funds

bilateral, regional and global programs to assist foreign governments in strengthening

their law enforcement capabilities, including the ability to destroy drug crops, disrupt

drug production, and interdict drug trafficking. Its largest single program is the

Andean Counterdrug Initiative. Its other programs focus on fighting moneylaundering and terrorist financing, enhancing security along the U.S.-Mexican border,

and fighting trafficking in persons, corruption, and cybercrimes. It also includes

programs to strengthen the rule of law and to promote demand reduction. It provides

some funding to the United Nations Office on Drugs and Crime to provide support

for legal frameworks to prevent and combat organized crime, and the Organization

of American States Drug Abuse Control Commission (CICAD) to strengthen national

drug commissions and to support the Multilateral Evaluation Mechanism (MEM).

MEM is the peer review system used to evaluate national anti-drug performance.

INL’s current bilateral assistance to Latin America supports programs in the

Bahamas, Guatemala, Haiti, Jamaica and Mexico.

FY2006 funding is an estimated $61 million for Latin America., and $54.8

million is requested for FY2007. Mexico would receive the most funding in FY2006

CRS-28

($40 million), and Haiti would receive the second highest allocation ($15 million).

Congress included language expressing concern about the rise in gang violence in

Central America and urged the Secretary of State to increase funds for gang-related

programs.

Interregional Aviation Support. INL manages the Interregional Aviation

Support program that operates a fleet of 189 fixed- and rotary-wing aircraft

supporting overflight drug crop imagery and aerial eradication programs in

Colombia, Bolivia, and Peru, as well as border security operations in Pakistan.

FY2006 funding is estimated at nearly $62.9 million, of which approximately half

is allocated for programs in the Andean region. The request for FY2007 is for $65.5

million.

Andean Counterdrug Initiative (ACI). The core of U.S. counternarcotics

programs in Latin America is the ACI. The three primary global producers of

cocaine are Colombia, Peru and Bolivia. The objectives are to eliminate the

cultivation and production of cocaine and opium, build Andean law enforcement

infrastructure, arrest and prosecute traffickers, and seize their assets. The countries

considered a part of the ACI include Bolivia, Brazil, Colombia, Ecuador, Panama,

Peru and Venezuela, with the lion’s share of funding allocated for programs in

Colombia. Funds are divided between programs that support eradication and

interdiction efforts, as well as those focused on alternative crop development and

democratic institution building. On the interdiction side, this includes programs to

train and support national police and military forces, to provide communications and

intelligence systems, to support the maintenance and operations of host country aerial

eradication aircraft, and to improve infrastructure related to counternarcotics

activities. On the alternative development side, funds support economic

development programs in coca growing areas, including infrastructure development,

and marketing and technical support for alternative crops. It also includes assisting

internally displaced persons, promoting the rule of law, and expanding judicial

capabilities.

FY2006 funding for ACI was estimated at $727.2 million, and $721.5 million

is requested for FY2007. In the past, Congress has approved the Administration’s

requests, but often places conditions on U.S. assistance. For FY2006, Congress

changed the allocations slightly among countries and programs. (For further

information, see the discussion of the ACI in the “South America” section above.)

Military and Terrorism Assistance

Military assistance is provided by the State Department through the Foreign

Military Financing (FMF) program and the International Military Education and

Training program (IMET), although both are managed by the Defense Department.

Additional funding is provided from the Department of Defense for both

counternarcotics and military programs. Anti-terrorism assistance is provided

through the State Department.

Foreign Military Financing. FMF provides grants to foreign nations to

purchase U.S. defense equipment, services, and training. The program’s objectives

are to assist key allies to improve their defense capabilities, to strengthen military

CRS-29

relationships between the United States and FMF recipients, and to promote the

professionalism of military forces in friendly countries. In the Western Hemisphere,

a large portion of FMF is allocated for Colombia and the Andean region with the

objective of supporting the efforts of those nations to establish and strengthen

national authority in remote areas that have been controlled by leftist guerrilla

organizations, rightist paramilitaries, and narcotics traffickers. A portion of FMF

funding in Fiscal Years 2002 and 2003 went for infrastructure protection of oil

pipelines in Colombia. The program also seeks to improve foreign military

capabilities of countries that control land approaches to the United States and the

Caribbean, which is referred to as the “third border.” FMF also provides equipment

and training for countries in the region that participate in peacekeeping operations.

In FY2006, FMF funding for programs in Latin America amounted to $111.7

million. The requested FY2007 amount is for $105.3 million. For FY2006, Congress

prohibited FMF to Guatemala, and required notification to Congress before any funds

are allocated to Haiti.

International Military Education and Training. The IMET program

provides training on a grant basis to students from allied and friendly nations. Its

objectives are to improve defense capabilities, develop professional and personal

relationships between U.S. and foreign militaries, and influence these forces in

support of democratic governance. Training focuses on the manner in which military

organizations function under civilian control, civil-military relations, military justice

systems, military doctrine, strategic planning, and operational procedures. The

largest IMET programs in Latin America are for Colombia, El Salvador, and Mexico.

The IMET budget for Latin America in FY2006 was $13.4 million; the FY2007

request is for $12.6 million.

Anti-Terrorism Assistance (ATA). ATA is funded through the State

Department’s Nonproliferation, Anti-terrorism, Demining, and Related Programs

(NADR). Other programs funded by NADR include Nonproliferation, and Regional

Stability and Humanitarian Assistance. The objectives of ATA are to build the

political will and operational capacity of partner countries in the fight against global

terrorism. The program provides training, equipment, and advice to foreign law

enforcement organizations. In the Western Hemisphere, Colombia has received

training and equipment for anti-kidnapping units. Funding has also been provided

for an assessment of needs study for the tri-border region of Brazil, Paraguay, and

Argentina. The State Department proposed using additional funds for training and

for the investigation of terrorist networks. For FY2006, the Administration estimates

spending $$17.9 million in the region; the FY2007 request is $15.3 million. (For

further information, see the discussion of terrorism in the “Additional Issues for

Congress” section above.)

Multilateral Economic Assistance

Latin American countries benefit from a number of multilateral sources of

assistance, including the World Bank, the United Nations and the International Fund

for Agricultural Development (IFAD). There are also regional organizations that

provide various forms of assistance, which are discussed below.

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Inter-American Development Bank. The United States is a major donor

to the Inter-American Development Bank, the primary source of multilateral

financing for economic, social, and institutional development projects in Latin

America and the Caribbean. The IDB makes near-market rate loans through its

ordinary capital (OC) account and concessional loans to poor countries through its

Fund for Special Operations (FSO). Another subsidiary of the IDB, the InterAmerican Investment Corporation (IIC), makes loans and equity investments to

promote the growth of private enterprises. Since 1993, the Enterprise for the

Americas Multilateral Investment Fund (MIF), which is administered by IDB, has

provided both grants and investments to businesses and nongovernmental

organizations (NGOs) in Latin America that have demonstrated new ways to develop

small enterprises, build worker skills, and strengthen environmental management.

The FY2006 estimated U.S. contribution was $1.7 million, while the FY2007

estimate is $25 million. The FY2007 funding will be to replenish the Enterprise for

the Americas Multilateral Investment Fund.

Organization of American States (OAS). The OAS is a regional

organization of 35 countries in Latin America and the Caribbean that have pledged

to promote democracy, advance human rights, preserve peace and security, pursue

free trade, and tackle difficult problems caused by poverty, drugs, and corruption.

The United States contributes roughly 59% of the regular budget of the OAS. For

FY2005, the U.S. contribution to the OAS was $55.7 million. Of the $55.7 million,

$45.9 million was for the regular fund, and $9.8 million was to pay tax

reimbursements for U.S. employees of the OAS. The FY2006 request for the OAS

was $65.9 million. The increase was to cover the cost of taxes owed for U.S.

employees that are likely to retire in the coming year.

The United States has also made substantial contributions to a few specific

funds developed by the OAS through foreign operations appropriations. The OAS

Fund for Strengthening Democracy supports OAS efforts to promote democracy and

the Inter-American Democratic Charter throughout the region; the FY2006 U.S.

contribution, and the FY2007 request, is $2.5 million. OAS Development Assistance

Programs focus on Summit of the Americas mandates pertaining to economic

prosperity, social well being, and environmental health;8 the FY2006 U.S.

contribution was $4.7 million, while the FY2007 request $5.2 million. The OAS Demining Program (AICMA) works to ensure that the Western Hemisphere is cleared

of all land mine devices; the FY2006 U.S. contribution was $1.7 million, while the

FY2006 request was for $1.8 million.

Other Types of Foreign Assistance

Highly-Indebted Poor Countries (HIPC) Initiative. The HIPC initiative

was first launched in 1996 by the IMF and the World Bank to provide relief to

extremely poor countries facing unsustainable amounts of foreign debt. The HIPC

initiative encompasses 41 countries, mostly in Africa, but only those that have

8

The bulk of these contributions support the Inter-American Council for Integral

Development (FEMCIDI). FEMCIDI, financed by voluntary contributions from member

states and other assets, contributes to national and multinational development projects.

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adopted sound fiscal policies and a poverty reduction plan may qualify. As of

January 2004, 27 countries had qualified for at least preliminary debt reduction,

although only 10 have received full HIPC relief. Latin American beneficiaries of the

HIPC initiative include Bolivia, Guyana, Honduras, and Nicaragua. Total costs of

the HIPC initiative are estimated at $51 billion (nominal terms), roughly evenly

divided between bilateral creditors like the United States and multilateral lenders

such as the IMF and World Bank. Because only about 3% of the HIPC debt was

owed to the United States, the U.S. financial commitment has been relatively small

in relation to the cost to all creditors. In FY2005, funding for debt restructuring

amounts to $99.20 million. The FY2006 request totaled $99.75 million, and

Congress provided $65 million. For FY2007, the Administration has requested

$182.8 million, with most of this funding going to cover the cost of completing

bilateral debt reduction for the Democratic Republic of Congo.

Trade Capacity Building. For FY2006, Congress provided a total of $522

million from various accounts, including DA and ESF to assist countries’ abilities to

improve their trading capacities. Congress directed that $20 million in ESF and $20

million in DA be used to assist the CAFTA-DR countries with labor and

environmental issues. For FY2007, the Administration included these funds in the

ESF request.

Democracy Fund. For FY2006, Congress created a new account and

appropriated $95 million for it. The program is to increase the effectiveness and

oversight of programs that promote democracy, governance, human rights, an

independent media, and the rule of law. The $95 million provided is in addition to

other bilateral assistance that promotes democracy. Congress also directed that $3

million be provided for forensic assistance to Central and South America, and $2

million be provided to the National Endowment for Democracy for programs in

Venezuela.

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