US Department of State Dispatch Supplement
FY 1994 International Affairs Budget Request
Volume 4, Number 1, April 1993
Published by the Bureau of Public Affairs


ARTICLES IN THIS ISSUE:
1.  Statement by the Secretary of State
2.  FY 1994 International Affairs Budget:  Promoting peace, Prosperity, 
and Democracy
3.  Budget Highlights by Major Area
          Building Democracy
          Promoting and Maintaining Peace
          Promoting Economic Growth and Sustainable Development
          Addressing Global Problems
          Promoting Humanitarian Assistance
          Advancing Diplomacy


FY 1994 International Affairs Budget Request

ARTICLE 1:

Statement by the Secretary of State

President Clinton has summoned us to national renewal with a call for 
innovation, investment, and a new partnership between the American 
people and their government.  Our foreign policy must play a vital part 
in that renewal.  It must reflect the realities of the post-Cold War 
era.  It must be more closely integrated with our domestic priorities.  
And it must directly serve the prosperity, security, and values of all 
Americans.

The FY 1994 budget is a transitional budget.  It marks a first but 
important step toward accepting the very new challenges we face abroad.  
It begins the process of redirecting our foreign policy, refocusing our 
foreign affairs budget, and reforming our foreign policy institutions.  
Each of these will promote the three overarching goals that President 
Clinton has set for American policy in the post-Cold War era.

First, we must revitalize the American economy.  This hinges, above all, 
on prompt congressional passage of the President's economic program.  As 
the world's most powerful economy, its largest market, and its leading 
exporter, we must use all the tools at our disposal to generate growth 
here at home and bring down barriers to our goods and services 
worldwide.  This includes macroeconomic coordination among the 
industrial democracies, the negotiation of a new accord of the General 
Agreement on Tariffs and Trade, the speedy conclusion of the North 
American Free Trade Agreement with protection for workers and the 
environment, and vigorous export promotion.

Second, we must modernize our security structures to mirror post-Cold 
War realities.  We must adapt our military forces to address enduring 
and emerging threats to our national security.  With our partners, we 
must reshape old alliances, like NATO, to meet new missions.  We need 
more robust international peace-keeping capabilities to face the 
challenges to international peace posed by ethnic and regional 
conflicts.  We must work closely with our partners to confront the 
global threat of international crime.  And we require stronger non-
proliferation regimes if we are to stem the spread of dangerous weapons 
and technology.

Third, we must encourage the democratic revolution that has swept much 
of the world.  By strengthening democracy, respect for human rights, and 
free markets, we do more than honor the universal values upon which our 
nation is founded.  We help  ensure our own security and prosperity.  
Democracies make more reliable partners in diplomacy, trade, arms 
agreements, and cooperation on global environmental protection.  
Democracy cannot be imposed from above; by its very nature, it must be 
built, often slowly, at the grassroots level.  We should embrace and 
encourage this process by patient support for democratic institution-
building around the world.

All three goals are vitally at stake in the former Soviet Union.  If the 
forces of freedom prevail in Russia, Ukraine, and the other newly 
independent states, we will acquire partners in peace, open vast new 
markets for our goods and services, and see our national ideals flourish 
on once hostile soil.  Americans have a real material and moral stake in 
the future of the former Soviet Union.  Aid to the forces of freedom in 
Russia and elsewhere is not just a helping hand:  It is an investment in 
American security, American prosperity, and American values.

Achieving our goals, in the former Soviet Union and around the world, 
will require more than a declaration of principles.  Success will 
require a sustained diplomacy that looks beyond this week's or next 
month's crisis; a flexible diplomacy that uses the full range of 
bilateral, regional, and multilateral tools at our disposal; and an 
activist diplomacy that puts a premium on timely prevention, rather than 
costly cure.

We present the FY 1994 budget at a time of fiscal austerity.  We see 
this austerity, not as a hardship to be endured, but as a challenge to 
innovate.  In the months and years ahead, we will redouble our efforts 
to realign our priorities, reorient our budget, and restructure our 
institutions in ways that will promote the well-being of our citizens.

This budget presentation is not meant to foreclose options or preclude a 
full debate.  We look forward to full partnership with the Congress as 
we fundamentally restructure our foreign affairs programs and 
institutions over the next years.  But the Administration intends to do 
more:  We will take foreign affairs to the American people, explaining 
our initiatives, justifying our expenditures, and seeking their support 
as we craft a new course through the end of this century and beyond.

In both foreign and domestic affairs, we must put people--the American 
people--first.

--Warren Christopher (###)


ARTICLE 2:

FY 1994 International Affairs Budget:  Promoting Peace, Prosperity, and 
Democracy

Summary
The President's FY 1994 International Affairs Budget* signals important 
new directions and re-orients resources toward meeting new challenges in 
the post-Cold War environment.  At the same time, funds will be 
redirected toward programs that yield more direct benefits to the 
American people.

* Some funding categories within the total FY 1994 International Affairs 
Budget Request contain preliminary estimates.  Estimates may change once 
final foreign assistance allocations re determined.

US economic prosperity remains directly tied to world economic growth 
and international peace and stability.  By investing scarce 
international affairs resources in a few priority areas, the United 
States will be investing in its own long-term economic and security 
interests and will avoid far greater costs in the future.  For example, 
modest investments in promoting democratic reforms in Russia; preventing 
regional, religious, and ethnic conflicts; and attacking the problems of 
environmental degradation, unchecked population growth, and the 
proliferation of weapons will reap immeasurable benefits and contain 
federal spending over the long-run.

The FY 1994 budget is based on five overarching, mutually reinforcing 
objectives that reflect vital US interests and fundamental values.  They 
are:

--  Building democracy;
--  Promoting and maintaining peace;
--  Promoting economic growth and sustainable development;
--  Addressing global problems; and
--  Providing humanitarian assistance.

A sixth theme, "advancing diplomacy," refers to one of the most 
important means to achieve progress in the above five areas.  The 
effective use of diplomacy and international organizations is a critical 
and cost-effective ingredient to success in these areas.

The President's FY 1994 budget requests about $21.6 billion in budget 
authority (the authority to commit funds) and $21.3 billion in outlays 
(actual spending) for FY 1994.  This is about $450 million more in 
budget authority and $250 million less in outlays than FY 1993 enacted 
levels.  Compared to the FY 1993 budget, the Administration has 
redirected more than $700 million from existing international affairs 
programs toward higher priorities.  In real terms, the budget is about 
$200 million in budget authority and $100 million in outlays below the 
current services baseline (the current level of spending adjusted for 
inflation).  Over 4 years, the budget reflects the importance of 
containing federal spending by saving nearly $3 billion in outlays from 
the current services (no real growth) level.

Significant changes in the FY 1994 budget from FY 1993 levels are:

--  An increase of more than $300 million in assistance to the former 
Soviet Union;
--  A net increase of nearly $170 million to support multilateral and 
bilateral peace-keeping efforts (this is in addition to increases for 
peace-keeping in the Department of Defense (DOD) budget);
--  About $100 million more for programs addressing the problems of  
population growth;
--  $50 million for a new non-proliferation fund to stem the flow of 
weapons;
--  $35 million more for environmental programs aimed at tackling global 
environmental degradation;
--  $20 million more for the Trade and Development Agency and nearly $1 
billion more in Export-Import Bank guarantees to increase opportunities 
for US business overseas and expand exports;
--  $190 million more for increased commitment to the International 
Development Association for assistance to the poorest and least 
creditworthy countries, in addition to increases for other multilateral 
development banks. 

To offset much of these increases, the FY 1994 budget reduces a number 
of existing programs, the largest being a reduction of more than $400 
million in security assistance programs, including phasing out the 
Special Defense Acquisition Fund.  Other programs have been cut by more 
than $250 million, including a $50 million reduction in development 
assistance by the US Agency for International Development (USAID).

New Budget Presentation
[EDITOR'S NOTE:  Graphs and tables are available in hard copy.]

Table 1 presents the funds requested under each of the six new 
categories and highlights the changes proposed in the FY 1994 budget.  
This new presentation clarifies the link between budget decisions and 
policy objectives.  While actual appropriations continue to be requested 
within the existing account structure (See Tables 2 and 3 and Appendices 
A and B at end of document), the FY 1994 budget represents a first step 
in working with Congress to undertake a more fundamental restructuring 
of international programs.   The objectives listed are preliminary 
pending a more comprehensive review.  While reflecting general 
Administration priorities, the functional categories are intended to 
reflect foreign policy objectives, not programs.

The six categories are mutually reinforcing and interdependent.  For 
example, maintaining peace and addressing global problems are integrally 
linked to economic growth and sustainable development. (###)


ARTICLE 3:

Budget Highlights by Major Area

Building Democracy
Building democracy is a fundamental long-term goal of US foreign policy.  
By promoting and protecting human rights and basic freedoms, the United 
States not only honors the values on which it is founded, but also helps 
ensure the prosperity and security of its citizens.  Democracies are 
more representative of their citizens and are less aggressive abroad.  
They make better partners in diplomacy, trade, arms control, and 
cooperation on global issues such as the environment, narcotics, and 
terrorism.  Americans have a clear moral and material stake in the 
expansion of democratic values.  And that stake is no more vital than in 
Russia and the other new independent states (NIS) of the former Soviet 
Union.  The long-term security of the United States is integrally linked 
to the progress made in Russia and the other new independent states 
toward democracy and the establishment of a market economy.  A 
successful transition also is important to world economic growth and the 
US economic future.

New Independent States of The Former Soviet Union
Supporting reforms in the new independent states is vital to US 
interests, because those reforms offer unique and historic 
opportunities:   

--  Enhancing US security, through weapons reductions agreements and 
peaceful relations with new democratic states;
--  Resolving global problems by engaging the new states as partners, 
rather than as adversaries in foreign policy;
-- Increasing US economic growth by investing more at home while 
spending less on defense; and
--  Strengthening US prosperity as the new states move to become 
attractive markets and prosperous trading partners.

The FY 1994 budget requests $704 million for grant assistance for 
democratic and economic reform in the new independent states of the 
former Soviet Union.  This is an increase of  $311 million over last 
year's level.  The Administration intends to focus assistance on 
expediting delivery of emergency humanitarian relief and technical 
assistance in support of democratic and market economic reforms.  
Specifically, the President requests $704 million to provide technical 
assistance to create and strengthen democratic institutions; to 
encourage private sector development; to strengthen key human services 
and to provide medical and food supplies; to promote sectoral reform in 
the areas of agriculture, energy, environment, and housing; and to 
support research and training.  

Resources from other budget functions also will provide support for 
Russia.  For example, the Department of Defense (DOD) will be requesting 
$400 million for dismantlement of weapons.  The FY 1994 request builds 
on the President's commitment at the Vancouver Summit to deliver 
concrete, visible assistance in order to reinforce democratic reforms in 
Russia and the other new independent states at all levels of their 
economies and societies.  The Administration is reviewing additional 
options for expanding these efforts and will work with Congress to 
identify additional support as part of a broad internationally 
coordinated effort.

Central and Eastern Europe
The successful transformation of the democracies in Central and Eastern 
Europe will provide the best proof to reformers elsewhere that 
democracy, along with economic prosperity, can be built on the ashes of 
failed communist systems.  Prosperous, democratic countries in Central 
and Eastern Europe provide more than hope and example for the NIS:  They 
also contribute to Western security by providing stability against the 
spread of further nationalist fighting or of retrenchment further east.

The FY 1994 budget requests $409 million for assistance to Central and 
Eastern Europe.  The program provides assistance to more than a dozen 
new democracies, from Estonia to Albania, with a population exceeding 
135 million.

The program is designed to consolidate and strengthen the new 
democracies of Central and Eastern Europe with three mutually 
reinforcing objectives:

--  Developing and strengthening democratic institutions, including 
national parliaments, local governments, independent media, and other 
key institutions;

--  Developing a market economy and strong private sector through 
removing constraints to entrepreneurship, advancing privatization and 
enterprise restructuring, providing capital and assistance to new 
entrepreneurs, and supporting the development of the financial sector; 
and

--  Improving the basic quality of life in key areas through assistance 
to build cost-efficient health care and housing systems, labor 
retraining and unemployment services, and regulations and policies to 
promote responsible environmental management.

A related objective which applies to all major priorities above is the 
use of US assistance resources whenever possible as leverage to bring in 
US private sector capital, goods, services, and expertise.  The 
involvement of the Western private sector is key to the successful 
transformation of these countries, and the US assistance program can 
help the US private sector take advantage of commercial opportunities in 
the region.

Information and Exchange
The free international exchange of information and ideas is a critical, 
cost-effective, and integral part of the Administration's foreign policy 
strategy.  Two agencies lead US public diplomacy efforts--the United 
States Information Agency (USIA) and the Board for International 
Broadcasting (BIB).

USIA increases international understanding of American society and 
foreign policy through personal contacts, academic and leadership 
exchanges, distribution of books and periodicals, English-language 
teaching, operation of cultural centers abroad, and global satellite 
television and radio broadcasting.  USIA has found ready audiences for 
its programs in democracy-building, rule of law, freedom of the press, 
and free market institutions.  Proposed funding for USIA is about $1.2 
billion in FY 1994.  The budget includes increases for two key 
initiatives:

--  $30 million is requested for the creation of a new "Radio Free Asia" 
operation under the USIA umbrella in FY 1994 to provide surrogate 
broadcasting to China and other communist countries in Asia; and
--  $20 million is requested to increase the budget of the National 
Endowment for Democracy (NED) to $50 million.  NED will provide "venture 
capital" to help nascent democratic movements in non-democratic 
societies overcome social, cultural, political, and historical obstacles 
and will support independent, politically active organizations working 
to broaden democratic participation in newly democratic countries.

Through grants to Radio Free Europe/Radio Liberty, BIB provides 
surrogate broadcasts to the people of Central and Eastern Europe, the 
former Soviet Union, and Afghanistan.  Surrogate broadcasting operates 
as a domestic radio service in the target countries, providing local 
news and analysis of regional developments where independent media are 
weak or do not exist at all.

In light of both the dramatic changes in the world and the need to 
increase government efficiency, the Administration plans to consolidate 
all US-funded, non-military international broadcasting by the end of FY 
1995.  Consolidation will eliminate administrative overlap and save an 
estimated $243 million between 1994 and 1997.  Specific measures to 
effect consolidation are the subject of an Administration review.  

Other Democracy Programs
USAID also will undertake democracy-building programs in Asia, Latin 
America and the Caribbean, and Africa using Economic Support Funds and 
Development Assistance.  More than $100 million in Development 
Assistance will be devoted to democratization and governance projects, a 
$15-million increase over FY 1993.  These longer term investments are 
designed to improve the institutional underpinnings of democracy, from 
reform of judicial systems to decentralized government structures.


Promoting and Maintaining Peace
For 40 years, containing the Soviet threat defined US national security.  
With the demise of the Soviet Union and the Warsaw Pact, America entered 
into a new more complicated and unstable security environment.  Now, 
more than ever, the United States must be engaged in promoting peace.  
The lesson of this century and its two great wars is clear:  The cost of 
American neglect is high, not just for the world, but also for 
Americans.

The US approach must take into account the complex post-Cold War 
security environment.  Americans must work to adapt US military forces 
to new challenges.  The United States must give sustained attention to 
advancing peace processes in vital regions like the Middle East.  But 
above all, the United States must work collectively with other nations 
to solve conflicts and crises, promote peace, and combat proliferation 
of dangerous weapons and technologies.  The FY 1994 budget reflects 
these new realities.

The end of the Cold War has unleashed long-suppressed ethnic, religious, 
and regional conflict in the former Soviet bloc and elsewhere.  But it 
also has opened up new possibilities for international cooperation.  Our 
task is to harness that cooperation to contain and, far more 
importantly, to prevent conflict.

The FY 1994 budget shifts more than $200 million of resources from 
traditional security programs to peace-keeping and non-proliferation.

Peace-Keeping And Related Programs
The President's FY 1994 federal budget will request more than $1 billion 
in State and Defense Department accounts to support international peace-
keeping.  Significant increases are requested to support assessed UN 
peace-keeping operations and other regional peace-keeping efforts that 
are funded on a voluntary basis.  Some security assistance funding 
supports the goals of peace-keeping.  The President's budget also funds 
peace-keeping in a new, separate, DOD account of $300 million.

About $700 million is requested in the International Affairs function of 
the budget for assessed and voluntary contributions for peace-keeping 
activities.  This includes:

--  $445 million for the Contributions for International Peace-keeping 
Activities (CIPA) account to pay the US share of UN assessed peace-
keeping costs in FY 1994, including large UN operations in Somalia and 
the former Yugoslavia.  About $22 million will be used to pay arrears to 
the United Nations.  

--  $175 million in "no-year contingency funds" requested in the FY 1994 
CIPA account for unanticipated peace-keeping activities (assessed and 
voluntary) and related activities of the United Nations and other 
multinational organizations.

--  $77 million for the peace-keeping operations account to make 
voluntary contributions to multinational peace-keeping efforts, such as 
the Conference on Security and Cooperation in Europe (CSCE) in the 
former Soviet Union and the UN/Organization of American States (OAS) 
observer mission in Haiti.  This is $50 million above FY 1993 enacted 
levels.  Voluntary contributions can be a cost-effective alternative to 
paying 30.4% of UN peace-keeping costs, because the Administration can 
determine the extent of its financial involvement on a case-by-case 
basis.

In addition, security assistance programs will provide bilateral support 
to peace-related efforts in Africa, Southeast Asia, El Salvador, and 
Cyprus. 

Non-Proliferation and Arms Control
One of the main security problems of the post-Cold War era is the risk 
of proliferation of deadly weapons--nuclear, chemical, biological, and 
enhanced conventional weapons--as well as their delivery systems.  This 
Administration gives high priority to preventing proliferation.  Our 
task is to fulfill President Clinton's promise to the American people in 
his campaign ". . .to clamp down on countries and companies that sell 
proscribed technologies, punish violators, and work urgently with all 
countries for tough, enforceable, non-proliferation agreements."

To help achieve this, the FY 1994 federal budget request includes almost 
$600 million to support non-proliferation programs; $441 million of this 
amount will be requested by DOD, and $3 million will be a part of the 
Department of Energy's budget request.  Within the International Affairs 
function of the budget, the State Department and the Arms Control and 
Disarmament Agency (ACDA) will request $197 million for these purposes, 
including the US contribution to the International Atomic Energy Agency 
and a new Non-Proliferation and Disarmament Fund.  ACDA requests an 
incremental $16 million for expenses related to implementation of the 
Chemical Weapons Convention Preparatory Commission in The Hague, which 
commenced in February 1993.  These costs include both the US shared 
contribution and the administrative support costs for the US delegation.

Together, these programs are designed to:

--  Support weapons reductions agreements with Ukraine, Belarus, and 
Kazakhstan during the 7-year implementation period of the Strategic Arms 
Reduction Treaties (START), or sooner if possible, and to reduce and 
restructure the Russian strategic nuclear force into a smaller and less 
destabilizing force;

--  Support and enhance US bilateral and multilateral efforts to 
establish effective controls on destabilizing weapons systems and 
materials;

--  Dismantle existing systems and create effective export controls on 
related technologies and materials; and

--  Increase the effectiveness of existing non-proliferation and arms 
control agreements, particularly in the states of the former Soviet 
Union and in Central and Eastern Europe.

The funds will support four primary program areas:

Education and training programs to fund education of foreign government 
officials about non-proliferation issues and instruction in the creation 
and implementation of effective export control mechanisms in areas of 
high proliferation concern;

Destruction/conversion programs aimed at eliminating activities of 
"proliferation concern" as well as implementation of global conventions 
and treaties, such as the Chemical Weapons Convention and START;

Enforcement and interdiction programs to help curb illicit trade in 
materials related to weapons of mass destruction; and

Safeguards and verification programs to assist international agencies in 
application of Non-Proliferation Treaty safeguards and in the 
verification of international non-proliferation regimes.

Middle East Peace
The search for peace in the Middle East has challenged every US 
Administration since 1948.  This is one of the Clinton Administration's 
highest foreign policy priorities.  The more than $5 billion requested 
for Middle East peace supports the long-standing foreign policy goal of 
seeking a just, lasting, and comprehensive peace between Israel and its 
Arab neighbors, including the Palestinians.  Secretary of State 
Christopher, in his confirmation hearings, reaffirmed this commitment 
and promised to "build upon the considerable accomplishments" of 
previous Administrations in the quest for Middle East peace.

To this end, this budget reflects the Administration's unshakable 
commitment to Israel's security and to preserving its qualitative edge 
over any likely combination of aggressors and to support Egypt's vital 
role in regional stability, security, and the promotion or peace.  For 
the past several years, roughly $3 billion in security assistance has 
been provided to Israel and $2.1 billion to Egypt annually.  Because of 
declining overall levels, these programs have grown from 70% of total US 
security assistance in the late 1980s to almost 85% in FY 1993 and 87% 
in the FY 1994 budget.  A new request for $5 million to support the 
multilateral working groups of the peace process will help fund 
activities agreed upon in the groups and augment progress in the 
bilateral talks.

Middle East peace assistance will support economic growth and stability 
while helping these countries meet their legitimate defense needs.  Over 
time, economic reforms being undertaken will strengthen their economies 
so that they can meet their own economic and security needs.

Defense Cooperation And Regional Security
About $260 million is requested to support key countries which have 
close cooperative defense relations with the United States and provide 
access by US forces to important military facilities which are essential 
to US power projection capabilities.  Significant economic assistance 
will be requested for Turkey, an important ally which plays a 
constructive role in several areas of strategic importance, such as the 
Middle East, the Balkans, the Caucasus, and Central Asia.  Most of the 
Foreign Military Financing is for loan programs for Greece, Turkey, and 
Portugal which finance the purchase of defense equipment and services 
from US sources, bolstering the security of the recipient countries.  

The FY 1994 International Affairs function requests about $50 million in 
Foreign Military Financing and Economic Support Funds to promote 
regional stability and to assist key friends and allies in meeting their 
critical defense and economic needs.  In recognition of generally 
reduced levels of tension throughout the world and the need to invest 
greater resources in promoting sustainable economic growth, the amounts 
requested for military assistance represent a substantial reduction from 
the levels requested in prior years.  A savings of $266 million also is 
realized by a proposal to terminate the Special Defense Acquisition Fund 
beginning in FY 1994.


Promoting Economic Growth and Sustainable Development
Growing global economic interdependence has brought down forever the 
wall between foreign and domestic economic policy.  US policy goals and 
mechanisms are being redesigned to keep the US secure and competitive in 
a global economy. 

Prompt congressional passage of the President's economic renewal program 
is but the first, most critical step toward improving America's 
competitive position in the international economy.  His program 
challenges American firms and workers to win in world markets, while it 
seeks to support these efforts by reducing barriers--those of trade, of 
poverty, and the waste of underdevelopment--and by engaging in 
cooperative activities with other nations to support international 
growth and stability.

This budget signals the President's commitment to a comprehensive 
approach to the global economy that promotes: 

--  Macroeconomic policy coordination among industrial nations; 

--  Hemispheric trade and investment through implementation of the North 
American Free Trade Agreement and the Enterprise for the Americas 
Initiative (EAI); 

--  Successful conclusion of a new multilateral trade agreement under 
the General Agreement on Tariffs and Trade (GATT) accord;

--  Vigorous promotion of US trade opportunities, including funding 
efforts by existing programs to identify markets for and finance US 
exports (e.g. Export-Import Bank (Eximbank), the Overseas Private 
Investment Corporation (OPIC), the Trade Development Agency (TDA), and 
the Commodity Credit Corporation--a program in the domestic budget;

--  Targeted provision of funds to support economic development; and

--  Support for international institutions, both those which help 
strengthen the international financial system and also generate 
development and trade benefits (the International Monetary Fund and 
multilateral development banks) and those with a specific focus on 
economic development issues (e.g., the UN Development Program).

Bilateral Economic Development Programs
The FY 1994 budget requests about $1.7 billion for human capital 
development, building markets and income opportunities, and expanding 
science and technology efforts in developing countries.  This includes 
funding from a number of accounts, including development assistance, 
Economic Support Funds, PL-480 Title III food aid, OPIC, the Peace 
Corps, and debt restructuring under the EAI (see Appendix A).

Human Capital Development.  To contribute to a dynamic and growing world 
economy, countries must have a strong human capital base.  Countries 
lacking this resource have fallen further behind in efforts to achieve 
strong economic growth and to increase the standard of living for their 
citizens.  Without basic health and nutrition, competence in both 
literacy and numeracy, as well as a set of productive skills, it is 
nearly impossible for people to create and/or to take advantage of 
opportunities to better their own lives.  Technical skills and 
professional competencies in management, research, and science also are 
of growing importance in today's dynamic global economy.  Thus, US 
programs will include efforts to enhance these human resources by 
"investing in people."  

Building Markets and Income Opportunities.  Some of the fastest-growing 
markets for US goods are the emerging economies of developing countries.  
Programs in the FY 1994 budget will encourage policies that provide 
incentives for investment (public and private) and production, while 
protecting the natural and social environment.  Programs will help 
transfer the know-how and materials for technological improvements and 
increase the flow of and broad access to financial capital.  The 
Administration recognizes the need to use resources more effectively to 
eliminate the bottlenecks to individual initiative and to allow 
"spontaneous" and "demand-driven" change to take place from the 
grassroots to the national level.

Expanding Science and Technology.  If developing countries are to 
contribute to global prosperity in the 21st century, greater access to 
and better management of science and technology will be essential.  US 
programs aim to uncover ways to identify and adapt new and existing 
knowledge to increase economic productivity in specific sectors such as 
agriculture (where there have been many breakthrough successes), health 
care, environmental conservation and protection, manufacturing, 
telecommunications and other key utilities, and transportation 
throughout the world.  The advancement of technology and science, along 
with development of human and other economic capital, is a critical 
element in creating the resources to improve people's standard of 
living.

Building Institutions.  Funding also will support the development and 
strengthening of those key economic, political, and social institutions-
-both micro and macro--which are vital contributors to achieving 
sustainable economic development.  Institutions that promote market-
driven growth are particularly critical.  Examples include credit 
unions, chambers of commerce, research institutes, and other non-
governmental community organizations. 

Multilateral Development Programs
In an era of tight government budget constraints and heavy demands on 
world capital markets, multilateral institutions are key to the 
continuing ability of the international financial system to support and 
encourage economic reform and development in a fast-changing world.  
Each taxpayer dollar invested in the multilateral development banks 
(MDBs) generates more than $20 in the same year.  The US economy also 
benefits from the long-term growth and stability that MDB lending and 
advice foster.  More immediately, US companies receive a larger share of 
MDB procurement contracts than any other donor country.   

The need for international resources and cooperation and the US stake in 
the success of these efforts, also have increased as a result of the 
economic transformations being undertaken in the countries of Central 
and Eastern Europe and the former Soviet Union. 

Multilateral Development Banks.  The FY 1994 budget requests $1.9 
billion for contributions to the MDBs.  About $1.2 billion of the 
request is for the US contribution to the recently negotiated 10th 
replenishment of the International Development Association.  Resources 
will be targeted on poverty alleviation and the enhancement of good 
governance and sustainable development in the world's poorest countries. 

UN Development Program (UNDP).  The FY 1994 request also includes about 
$127 million for the UNDP.  It provides technical assistance with an 
emphasis on building recipient country capacities to manage their own 
development, policy planning, human resource development, and 
environmental protection.  Public and private follow-up investment 
exceed UNDP contributions.

Trade Promotion
Trade promotion aims to create new markets for US goods and services, 
thus generating new jobs.  In addition, it enables the United States to 
forge market ties to facilitate developing new product lines and 
processes, thus speeding US technological and commercial advancement.  
Many federal programs contribute to enhancement 
of US trade, but targeted efforts are being made in large part through 
the programs described below.

US Export-Import Bank.  Eximbank finances US exports to developing 
country and emerging markets through direct loans, loan guarantees, and 
insurance programs.  Eximbank programs assist US exporters by absorbing 
reasonable credit risks that are beyond the current reach of the private 
sector and by matching officially supported foreign credit competition.  
The Administration's FY 1994 request of $752 million will support an 
increase of more than $1 billion in export financing to support a 
significant expansion of US exports, stimulating economic growth and job 
creation.

Through Eximbank and other federal agencies, developed countries have 
agreed to reduce subsidies for "tied aid" credits (export credits 
offered in combination with direct foreign aid grants).  By reducing 
trade-distorting tied aid, this agreement helps US exporters compete in 
expanding global markets.

Trade and Development Agency.  TDA funds feasibility studies and other 
project planning services on major infrastructure and industrial 
projects in developing and middle-income countries.  By positioning a US 
firm at the initial planning stages of a project, TDA increases the 
likelihood that US equipment and services will be used in the 
implementation of the project.  Through this process, TDA leverages its 
funds for the benefit of both the recipient country and the US private 
sector.  The Administration's request of $60 million will enable TDA to 
provide greater assistance to developing and middle-income countries, 
while at the same time increasing US exports and jobs.

Overseas Private Investment Corporation.  OPIC supports, finances, and 
insures sound business projects that positively affect US employment, US 
global competitiveness, and the host countries' economy and development.  
OPIC participation promotes privatization and market-oriented economic 
reforms in Central and Eastern Europe; it is expected to play a similar 
role as US investors seek participation in the emerging market economies 
of the former Soviet Union.

For FY 1994, the Administration requests $17.9 million for OPIC, $8.1 
million for credit, related administrative expenses, and $9.8 million of 
subsidy budget authority to support loans and guarantees.  These funds 
will support $20.7 million of direct loans and $375 million of loan 
guarantees.


Addressing Global Problems
The FY 1994 budget also reflects the Administration's strong commitment 
to demonstrating US leadership on pressing global concerns.  Protecting 
the environment, reducing rapid population growth, suppressing narcotics 
trafficking, and combatting terrorism are essential to US domestic and 
international future.  Addressing these problems today will be of 
fundamental importance to the well-being of all Americans as the United 
States prepares for the 21st century.  Budget increases are proposed for 
population and environment programs.

Population Programs
The Administration proposes a $100-million funding increase for 
population programs over FY 1993 enacted levels.  Enhanced funding will 
help position the United States to broaden the scope of its efforts to 
address population growth and to exert strong leadership for the 1994 
International Conference on Population and Development.  This includes a 
State Department request for a $50 million contribution to the UN 
Population Fund (UNFPA) and a $50 million increase, over the FY 1993 
level of $420 million, for population programs funded from USAID's 
Development Assistance and Development Fund for Africa programs.  

Global Environment
The Administration request includes enhanced funding to address global 
environmental concerns such as global warming, ozone depletion, ocean 
pollution, and biodiversity conservation.  Key multilateral initiatives 
include a proposed $31 million contribution for the Global Environmental 
Facility, which provides grants to developing countries for projects 
that benefit the global environment.  Funding also is requested for 
international funding mechanisms designed to combat ozone depletion and 
strengthen environmental capabilities in developing nations.  A $25 
million contribution is requested for the UN Environment Program.

Bilateral initiatives include a $10 million request for the Department 
of State's environmental and scientific grants program and increased 
funding for USAID's environmental assistance efforts.  USAID 
environmental funding will increase to $304 million, from the FY 1993 
level of $279 million, to support ongoing international forestry, 
pollution,  and soil and water conservation initiatives, as well as new 
efforts to preserve biodiversity and stem desertification abroad.

Combatting AIDS, Narcotics, Terrorism, and Crime
International affairs resources also will be devoted to other priority 
global issues, such as fighting the spread of AIDS and combatting 
international crime, terrorism, and narcotics production and 
trafficking.

Strengthening Institutions
In addition to the resources being devoted to these global problems, the 
Administration is committed to making US institutions more effective in 
dealing with global problems.  The Administration has proposed creating 
an Under Secretary for Global Affairs in the Department of State to give 
greater voice to these priority issues.


Providing Humanitarian Assistance
America's conscience always has been a fundamental part of America's 
character.  During FY 1993, US Government foreign humanitarian 
assistance programs will provide relief to refugees and victims of 
poverty, natural disasters, and crises, such as war, famine, and drought 
in Africa, Asia, Europe, and Latin America and the Caribbean.  Large 
amounts of humanitarian assistance will be directed to the Horn of 
Africa and Southeastern Europe in response to events in Somalia and the 
former Yugoslavia.  Alleviating human suffering remains a high priority 
in the FY 1994 budget, and the Administration is committed to continuing 
the high funding levels that Congress has provided for these activities 
in FY 1993.  At the same time, achievements in other programs designed 
to promote peace, economic growth, and the spread of democracy abroad 
(addressed above) should work to reduce the need for humanitarian 
assistance in the future.

Refugee Programs
The Administration's FY 1994 budget request includes nearly $641 million 
for Migration and Refugee Assistance (MRA) and $49 million to replenish 
the US Emergency Refugee and Migration Assistance Fund.  MRA includes 
$353 million to support international efforts to provide protection, 
care and maintenance, local resettlement, and repatriation assistance to 
refugees and conflict victims abroad.  It also includes $221 million to 
support the admission of about 120,000 refugees for resettlement in this 
country; $55 million is requested to support the resettlement of 
refugees in Israel.

Disaster Assistance
The Administration requests $149 million for USAID's Disaster Assistance 
Program.  This level continues the FY 1993 combined funding level for 
the worldwide program and the separate appropriation for disaster 
assistance to Sub-Saharan Africa.  The FY 1994 request consolidates 
disaster assistance into one account to allow for its use where the need 
is greatest worldwide.

Food Aid
Title II of the PL-480 Food Aid program administered by USAID supports 
emergency and humanitarian food aid programs sponsored by private 
voluntary organizations, the UN's World Food Program, and foreign 
governments in emergency situations.  The Title II request, by the US 
Department of Agriculture, will total $832 million, a $22 million 
increase over the FY 1993 enacted level reflecting the continuing need 
for significant levels of emergency feeding in Africa and elsewhere.

Development Assistance
USAID's Development Assistance program funds humanitarian assistance in 
the form of child survival interventions (aimed at reducing child 
mortality through immunizations, oral rehydration treatment for 
diarrheal diseases, and improvements in child nutrition) through related 
health efforts to deal with the spread of tropical diseases such as 
malaria, to increase the capacity of health care systems, and to improve 
women's health and nutrition.  Funding for this program will be 
maintained at roughly last year's level.


Advancing Diplomacy
The effective use of diplomacy and international organization is 
critical to success in achieving all US goals.  This budget is based on 
the need for timely prevention, rather than costly cure, in US foreign 
policy.  The tragedies of Somalia and the Balkans bear grim witness to 
the price of international delay--a human price paid daily by their 
inhabitants in pain, privation, and death.  But Americans, too, pay a 
price if US diplomacy is reactive, rather than active.  By spending 
millions on peace-keeping today, we may save hundreds of millions in 
humanitarian relief tomorrow.  By combatting proliferation now, we can 
avoid rising defense expenditures later.  And by aggressively moving to 
arrest environmental degradation, we can dispense with heavy clean-up 
costs during the years to come.  In short, assertive, preventive 
American diplomacy, especially in the multilateral realm, constitutes an 
investment in America's future.

State Department
The State Department provides the diplomatic and operational support to 
advance US foreign policy leadership.  Its people and missions are 
crucial components of US efforts to promote peace, prosperity, and 
democracy in a changing world.  The Department understands that it must 
change with changing times abroad and at home.  It is moving forward 
aggressively with a broad-based reform of its organization and 
operations.  Streamlining, more efficient decision-making, and a 
division of labor that reflects post-Cold War realities and our new 
global agenda are key elements of this reform.  Within the context of a 
constrained operating budget, the Department will reprogram resources 
when necessary to reflect new priorities and reallocate resources from 
lower priorities to accomplish these tasks.  Above all, however, the 
Department's ability to operate effectively abroad must be preserved.  

In this context, the FY 1994 request of $2.2 billion for the 
Department's salaries and expenses account reflects increased attention 
on emerging diplomatic and economic opportunities in the post-Cold War 
period.  The Department's operating budget is frozen at FY 1993 funding 
levels and is consistent with the President's directive to cut the 
federal work force by 4% over the next 3 years and reduce operating 
expenses by 14% by FY 1997.  In addition, the FY 1994 request reflects 
the closing of a number of posts where it is no longer economically 
feasible or practical for the United States to maintain an on-site 
diplomatic presence.  Finally, the FY 1994 request includes modest 
systems investments to promote less personnel intensive operations.

The FY 1994 budget requests $420 million for the third year of projects 
and activities programmed for the Department's initial 5-year plan for 
the overseas facilities program ("Foreign Buildings").  The funds will 
be used for the acquisition, construction, maintenance, and repair of 
diplomatic facilities abroad in support of State Department and other 
agencies' overseas operations.

International Organizations
In the wake of the Cold War, the United Nations and other multilateral 
bodies are taking on the most intractable problems of the new era, such 
as ethnic conflicts, aggression, genocide, famine, epidemics, refugees, 
population growth, proliferating weapons of mass destruction, global 
warming, grinding poverty, and the survival of democracy in the face of 
tyranny.  With strong US support, the UN can take the lead in responding 
to these international crises.

The President's budget includes $959 million for the US share of 
assessed contributions to international and regional organizations.  The 
request meets our treaty obligations for annual payments to the regular 
budget of the United Nations and such international bodies as the 
International Atomic Energy Agency, International Civil Aviation 
Organization, and GATT.  Other treaty obligations include annual 
assessments for regional bodies like the Organization of American 
States, Asia-Pacific Economic Cooperation, and North Atlantic Treaty 
Organization.

The request also recognizes the President's commitment to restoring the 
financial stability of the United Nations and other multilateral 
organizations and includes a plan to pay off US arrears over the next 2 
years.  The budget includes $98 million for a FY 1994 arrearage payment 
and appropriation language seeking $163 million in advance budget 
authority for completing arrears payments in FY 1995.  Payment of 
arrears will be directed toward activities that are mutually agreed upon 
by the United States and respective multilateral institutions.

The budget also includes a $65-million increase over FY 1993 enacted 
budget levels for voluntary contributions to international organizations 
that serve US interests through their support of development, 
humanitarian, scientific, and environmental activities.  Increases for 
specific programs have been discussed above.

US Agency for International Development Operating Expenses
USAID operating expenses finance salaries and support costs of personnel 
responsible for administering Development Assistance, the Development 
Fund for Africa, the Economic Support Fund, Special Assistance 
Initiatives, and the new Humanitarian Assistance Program in the former 
Soviet Union.  Because of the initiation of programs in Central and 
Eastern Europe and the former Soviet Union, USAID has experienced a 
dramatic increase in the number of countries with operational aid 
programs.  The FY 1994 request for operating expenses is at the same 
level as the FY 1993 enacted level of $512 million.  The Administration 
is working to restructure USAID to enable it to achieve maximum 
development results using the resources available.

Presentation of Request by Appropriation Account
This presentation of the FY 1994 budget is intended to begin the process 
of redefining US international affairs programs and institutions.  The 
Administration views this as a dynamic and cooperative process with 
Congress and public and private groups. 

With a few exceptions, the actual appropriation requests will be within 
last year's appropriation account structure.  Tables 2 and 3 show the 
Function 150 request by subfunction and by appropriation bill. (###)

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