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2004 Request for International Affairs Budget

CORRECTED VERSION...


Special Briefing on 2004 Request for International Affairs Budget

Christopher B. Burnham, Assistant Secretary for Resource Management; Joseph W. Bowab, Deputy Assistant Secretary for Foreign Assistance Programs and Budget; and Sharon A. Nell, Deputy Assistant Secretary for State Programs, Operations and Budget

Washington, DC February 3, 2003

(2:10 p.m. EST)

MR. BOUCHER: Good afternoon, ladies and gentlemen. Welcome back to the State Department briefing room. We'll have a briefing today on the 2004 Request for International Affairs Budget. Your briefers today are Christopher Burnham, our Assistant Secretary for Resource Management. He has brought with him Mr. Joseph Bowab, Deputy Assistant Secretary for Foreign Assistance Programs and Budget; and Sharon Nell, Deputy Assistant Secretary for State Programs, Operations and Budget.

Mr. Burnham will begin with a short statement, and then all of them will be glad to take your questions. Thank you.

Sir.

ASSISTANT SECRETARY BURNHAM: Thank you, Richard. Good afternoon, everybody. The President's 2004 foreign assistance/foreign affairs budget for all agencies amounts to $28.5 billion. Within the State Department's portion of that, the President's and the Secretary's priorities are twofold: one on the foreign assistance side, one on the State operations side.

On the foreign assistance side, there is no doubt that this budget funds the President's commitment to winning the war on terror. It's reflected throughout the numbers, it's reflected throughout the foreign assistance, and this is a very good budget to accomplish that task.

The President's and the Secretary's other priorities include the battle against AIDS and other diseases, and obviously the President in the State of the Union Address raised the new initiatives that we're going to add on to a base of almost a billion dollars that historically has been funded annually within that initiative.

And finally, the war on drugs. You'll find that more than $700 million of this budget is dedicated toward that effort, and that's another war we intend to win.

On the State operations side, the Secretary's highest priority is people. I call it people, places and productivity. People in that the Secretary wants in this budget requests that we complete the third tranche of the diplomatic readiness initiative started in 2002 with 360 people. It's in the request for 2003 that's pending before the Congress at 399 new Foreign Service and Civil Service hires. And again, in 2004, $97 million to complete the third and final tranche.

By places, I mean secure work facilities overseas, Class A space where the men and women of the State Department can go out there and create foreign policy.

We have a history of not building buildings well overseas. Before General Williams took over Overseas Building Operations, the historic high was two buildings in any one year. We are now up to a glide path of eight buildings a year. We currently have over 21 under construction. This budget funds an additional eight buildings, I believe -- is it eight or nine, eight buildings -- and, again, is in keeping with the Secretary's commitment that we're going to have the people, we're going to have the buildings, the places, the platform upon which we can build this diplomacy.

And finally, productivity. By productivity, I mean technology, that the Secretary's commitment to ensuring that we are in the 21st century in terms of our technological capabilities, first and foremost with the 2002 budget, where he insisted that the State Department -- all personnel across the world -- are connected to the Internet. That is nearing completion.

And so the Secretary's second priority within the technology platform is a knowledge management/knowledge collaboration tool that will both, on an intra- and inter-agency basis, bring us up into the 21st century in terms of being able to collaborate, share, store, retrieve, manipulate the information that flows from over 170 embassies around the world.

With that, let me ask Sharon Nell to come up and join me, please. Let me also ask Joe Bowab to come up and join me. And the three of us will be happy to answer your specific questions. Let me also say we have Patrick Cronin from USAID here as well, Assistant Administrator at USAID, and Patrick will also be happy to answer questions.

Come on up here, gang, and we'll answer them right up here.

MR. BOUCHER: George, do you want to start?

QUESTION: 28.5 seems awfully high by standards of just two or three years ago. Do you have a percentage of increase as to -- for comparison purposes?

ASSISTANT SECRETARY BURNHAM: I don't have a percentage of increase. I mean, I could tell you what the request was, at least for the State Department in 2003, although I hesitate. Having served on Wall Street, we're always insistent that we try make an apples to apples comparison in terms of earnings.

In this instance, an apples to apples comparison would tell me that we would subtract out Millennium Challenge, a $1.3 billion additional account new program this year and obviously is the first phase of the President's commitment to bringing in democratic, economically secure countries throughout the world.

So the -- without Millennium Challenge, we're talking about $27.217 billion in 2004 as compared to 2003 $25.6 billion.

QUESTION: Since you mentioned the Millennium Challenge account, how close are you to figuring out which countries will qualify?

ASSISTANT SECRETARY BURNHAM: Well, I think the criteria has been set. I think that there is an initial list of countries, approximately 16. Joe, do you want to add to that?

MR. BOWAB: Patrick could probably do that.

ASSISTANT SECRETARY BURNHAM: Patrick.

MR. CRONIN: It's one step at a time. The next step is to send draft legislation from the White House up to the Congress. Thank you. I'm sorry. Yes. The next step on the Millennium Challenge account is for the White House, with the Secretary of State as the Chairman of the Board of this prospective corporation to send draft legislation up embedding the 16 indicators that you've heard about and that are on the White House website with respect to press releases on the Millennium Challenge account.

After a corporation is set up, after there are new authorities, I think that's when the latest data will be run through the indicators and a judgment will be made by the Review Board, the Cabinet Level Review Board, if the President has his proposal go forward fully this spring. And then those countries would be decided and then there would be an outreach for proposals, and so the process would go from there. Go ahead.

ASSISTANT SECRETARY BURNHAM: Please.

QUESTION: Yes. Officials have been going on for some months saying that the Millennium Challenge account would start the first year at $1.6 billion and then work up within two years to $5 billion a year. I see that you've cut that back. Why was that and what are the implications for funding in years to come?

ASSISTANT SECRETARY BURNHAM: Well, I don't think there are any implications on that whatsoever. I think the $1.3 billion fully funds the President's priorities for the first year, for the first tranche, that it will ramp up considerably in the second and third year and that the $1.3 billion is already a considerable amount.

Understanding that it takes some lead time before you can develop the kind of pipeline to execute the projects that the administration envisions for Millennium Challenge account.

QUESTION: I've got a couple of extremely brief ones. On the second page of the fact sheet you have $646.7 million for security upgrades to embassies. What -- does that come -- is that part of one of the three lines above it, the $1.15 billion or the -- is that part of that? Is that separate?

ASSISTANT SECRETARY BURNHAM: That's in addition. And it has to do not with new buildings being construction -- new embassies being construction, but the rehabilitation or the refurbishment of old embassy buildings and diplomatic, 85 new diplomatic security agents will be hired out of that money as well.

QUESTION: And then the two -- and these may go to policy more than actual numbers, but why has the contribution to the Iraq War Crimes Commission decreased by $2 million? And on page 79, why is $700,000 being allocated to a UN Guard's contingent in Iraq? Or what is that? What is a UN Guard contingent?

ASSISTANT SECRETARY BURNHAM: I'm going to defer to my very knowledgeable and learned Deputy Assistant Secretary.

MS. NELL: Okay. War Crimes in Iraq was the first question?

QUESTION: Yeah.

MS. NELL: Basically, these are all based on new assumptions for this year, so these are all just cost estimates, and that's the required estimate for this year. So it's not -- it's what we believe is required. It's not really a decrease.

QUESTION: Okay. You believe that it needs less money than obviously this one?

MS. NELL: Right.

QUESTION: And what is the UN Guard Contingent in Iraq?

MS. NELL: UN Guard Contingent. I'm not familiar with that one.

QUESTION: Second to last.

MR. BOUCHER: I think that's security for UNMOVIC.

MS. NELL: Okay. Is that on peacekeeping?

QUESTION: It's in International Organizations and Programs.

MS. NELL: Okay. I'm not too familiar with that one.

MR. BOUCHER: That goes to the people who protect the offices of the inspectors.

QUESTION: Okay.

ASSISTANT SECRETARY BURNHAM: Yes, sir.

QUESTION: I'm looking at $4.7 for counterterrorism and --

ASSISTANT SECRETARY BURNHAM: $4.7 billion?

QUESTION: Right. And there's a qualification here which says, "Countries That Have Joined Us." Is there a schedule of the countries that have joined? My second question is about the AIDS money what is $450 million for Africa and Caribbean. In the President's State of the Union Address, he mentioned $15 billion over five years, which according to my calculation comes to $3 billion a year. But over here I'm looking at $450 million. Is there a new explanation?

ASSISTANT SECRETARY BURNHAM: Well, let me answer the AIDS one first, please, and then I will defer to Joe on the first part of your question, sir.

On the AIDS issue, first of all, the President has said that we are going to combat AIDS/HIV as well as tuberculosis, malaria and other diseases globally with a focus on the Caribbean and on Africa.

It's actually a $2 billion in total funding of which this $450 from the State Department and another $200 million at HHS represents the $650 new money that the President has added in there.

In the past couple of years, we have historically funded our fight against AIDS and other diseases at around the billion dollar level. When you add in the other programs around the government such as Mother-to-Child-Transmission as well as the Global Fund on AIDS and add this money in, it comes out to about $2 billion.

It'll ramp up again from that $2 billion to the full $15 billion amount going forward. Is there any addition on that, Joe?

MR. BOWAB: No.

ASSISTANT SECRETARY BURNHAM: And then on the -- your question about the fight against global terrorism, is there a schedule?

MR. BOWAB: There is a list of countries that we have been using for about the last year. And the list of countries were worked through the inner agency in the White House on those countries that were actively supporting the United States in the war on terrorism.

So the $4.7 billion that you see on the fact sheet represents the funding that we have allocated in this budget to those states.

QUESTION: How many countries did you say?

MR. BOWAB: There's approximately 25 of them.

QUESTION: Do you have an idea how many of them are in Africa?

MR. BOWAB: I believe there's three in Africa. I mean, I can check for you, but I believe there's three.

ASSISTANT SECRETARY BURNHAM: How about in the back here?

QUESTION: Just back on a couple of Iraq details. On page 64 you, under the second line for Iraq opposition, in FY 2003 it was $25 million. Your request is down to $0. Is that because you think it's not necessary to fund the Iraq opposition any longer? What's the reason for that change?

ASSISTANT SECRETARY BURNHAM: Yes. We don't feel it's necessary to fund it any longer. Joe, do you want to add to that?

MR. BOWAB: When we put the budget together and we looked at that line, at the time we put the budget together we felt that in '04 that that line would not be necessary.

QUESTION: Because there'll be -- wait, wait, wait -- let's take some follow-up. Is that because you expect that they'll be able to fund themselves, say, from the oil revenues in Iraq because they'll be ruling the country there? (Laughter.) Why is that that you are so confident that you don't need to support them anymore?

MR. BOWAB: Because realistically, in putting the budget together and actually identifying hard funds in a, you know, constrained resource environment, in looking at '04 we just, we believed that with the carry forward money that we would have in '03, that funding the opposition at that level in '04 would not be necessary.

QUESTION: Okay, what about the -- assuming that something might be happening in Iraq in this coming months or years, and assuming that there will be all kinds of costs for humanitarian costs and other type costs that could arise from that, where is it in all of these budget numbers that that money would come from? Or is that simply money you would tack on in some kind of a supplemental request later on?

MR. BOWAB: Obviously, it's not in the '04 budget request. Anything, if hostilities arise in Iraq and we have to, and we have to look at those hostilities, anything that we do we would have to do through another mechanism and of course an '03 supplemental appropriation would be appropriate.

QUESTION: But I guess I'm confused because part of this budget, i.e., the Iraq opposition number, you clearly were adjusting with an eye towards what might happen in Iraq, so why wouldn't you take into account what might happen in Iraq in other categories such as humanitarian?

MR. BOWAB: Because when we go forward with the budget number, you've got to know specific things that are happening at the ground at the time. If you're talking about humanitarian relief/reconstruction, it's kind of hard to understand what that would be at this point in time until actually something happens.

You could be off by a long way, you know, making assumptions now. I mean you have to make those assumptions once it happens.

QUESTION: Can I follow up on that? Are you then assuming as, following on this question, that the oil revenues will pay for a lot of the humanitarian, that you won't need to make this request?

MR. BOWAB: I mean, in making assumptions about oil revenues, I think, you know, you can best case it or worst case as far as oil revenues are concerned. I'm not quite sure that we do know what would happen if hostilities broke out.

Certainly we've looked at the oil revenues and they are a consideration. But we've also looked at the worst case, also.

QUESTION: Which is?

MR. BOWAB: Which is not having access to oil revenues.

(Laughter.)

QUESTION: Yes, in terms of -- this is a broad question and a specific one -- in terms of the President's $15 billion in which he says $5 billion will come from old money --

MR. BOWAB: Right.

QUESTION: What is this old money? Where is this coming from?

MR. BOWAB: We, there's -- we have a base. And in the President's budget you'll see that the base is indicated in the President's budget at $5.2 billion. That is an approximate of the billion dollars that we're going to do annually with what we call old money.

So the base programs, the ongoing programs, the programs that USAID currently does, the programs that Health and Human Services currently do, the programs that Center for Disease Control currently do and the programs for the National Institutes of Health that they currently do -- international programs -- are part of that $5 billion base.

The $10 billion in new money that he mentioned in the State of the Union -- there is a billion of that in '04. That, combined with the billion base will bring us to approximately a $2 billion HIV/AIDS line in '04, including the other agencies.

Now, the $10 billion in new money, with only doing a billion dollars in '04 obviously, over the next four years we're going to have to do more than the billion in new money over the next four fiscal years.

If you do straight-out math, we would have to do $1.25 billion to get there.

ASSISTANT SECRETARY BURNHAM: Do you want to add to that, Patrick?

QUESTION: This doesn't include Millennium Challenge account money or any of that kind of money?

MR. BOWAB: No. No. This is all separate from Millennium Challenge.

ASSISTANT SECRETARY BURNHAM: Right here in the front.

QUESTION: Getting back to the war on terrorism again. I noticed you included in there $296.9 million for public diplomacy efforts to inform and influence foreign publics and it briefly describes that as targeting information and cultural programs to further U.S. policies.

Can you elaborate on that? I mean, what are you -- where's our money going to go to? I mean, what kind of message are you trying to get out there and how are you going to get it out there?

MS. NELL: This is our normal earmark of funding within the State operations program. And it's to inform, influence and engage. And this is basically the same -- a sort of a straight line amount of money for this program over the course of the years. But what we do in this program is basically reprioritize as we find different requirements such as to reach Muslim and Arab worlds. Does that answer your question?

QUESTION: Reach them in what way? I mean, what are you going to do?

MS. NELL: Through the media, through television, through reaching younger audiences, through radio, through special events. All of those types of activities.

QUESTION: Specifically on that, can you be a little more -- can you go into a little more detail about this new Middle East television network? Is this the - this a U.S. Government network?

MS. NELL: This is part of a requirement by the BBG. Is there anybody here from the BBG at all?

(No response.)

MS. NELL: This is -- BBG is an independent agency. We are not really responsible for that portion of the budget so I would not want to comment in any great detail on that. We can get you in contact with someone from the BBG, if you like.

QUESTION: In the 4.7 billion for the 25 countries in the counterterrorism, is that going to include military training and other forms of traditional bilateral support? And could you get into a little bit more detail about what exactly the counterterrorism money is going to be for and sort of how it's changed programmatically from -- in the last year?

MR. BOWAB: The $4.7 billion, of course, does include military assistance to the frontline states, whether it be defense articles, defense services or training.

QUESTION: So it's not in addition to the stuff that we -- the figures we see in military assistance and IMET and these other things?

MR. BOWAB: It would include those figures if the country is a frontline state.

QUESTION: Okay. And could you sort of -- if there's any more detail you can give programmatically about, you know, sort of what each country would be getting of this money.

MR. BOWAB: Well, I mean, programmatically it includes the breadth of assistance that we're providing to that country. For example, I mean, pick the Philippines, for example. The Philippines is one of the countries that has been identified as a frontline state. It would include military assistance we provide to the Philippines. It would include development assistance that we provide, economic support assistance that we provide. It would include any type of anti-terrorism assistance that we provide. So, basically, it covers the realm of all assistance that we provide to the country.

Now, in looking at that assistance, we look at it in two ways. One is we look at programs that directly, directly provide the types of articles that they need, the training that they need, to fight the war on terrorism. In other words, it is directly aligned with doing something on the war on terrorism.

Obviously, other programs such as democracy and governance and economic programs, while you don't link them directly to going out and fighting terrorists, you do link it to assisting the country to be able to do that.

MR. BOUCHER: Okay, let's do two more, one here, one over there.

QUESTION: Are you regressing the North Korean package, for example, the KEDO operation and the food aid through the World Food Project?

MR. BOWAB: If you look in the budget for '04, there's no funding in there for the heavy fuel oil that we have normally provided to North Korea.

On the food, I think -- I mean, I think the President has said we're not going to not deny food to North Korea. I don't know if it's part of the P.L. 480 number.

QUESTION: To follow up, could you say why there is no funding for heavy fuel oil? Are you anticipating that you'll never be resuming those shipments?

MR. BOWAB: As you know, KEDO, made up of the United States, the EU, South Korea and Japan, made a decision to discontinue shipments of heavy fuel oil to North Korea. That was a KEDO decision of which the U.S. was part of that. And as of the time we put the budget together, that decision still stands, so naturally we did not request funding for heavy fuel oil in this budget.

QUESTION: Can I just follow up on this one point? Sorry. But I thought they were just suspended. I mean, are you anticipating that there will never be a time where you'll be resuming those fuel shipments?

MR. BOWAB: The secretariat, the KEDO secretariat, is still operational and there is sufficient funding in the KEDO secretariat to continue to operate. We're not -- I mean, we're not saying that through the diplomatic approach that we're taking with the North Koreans that there will never be a day where we would want to resume heavy fuel oil to that country, but when and if that happens is when we would have to address funding for heavy fuel oil.

MR. BOUCHER: Okay, last one.

QUESTION: Is there money for KEDO, just the organization?

MR. BOWAB: Is there money for what?

QUESTION: Just the organization, KEDO. Is the U.S. going to make a contribution to the --

QUESTION: The personnel and operations?

QUESTION: Yeah. Not the fuel oil, but just the organization?

QUESTION: This is your 3.5 million?

MR. BOWAB: In '03, in '03, I mean, what the Congress is looking at is since we did request heavy fuel oil in the '03 budget, and since we suspended fuel oil shipments, the Congress, on both the Senate and the House side, are pulling down that KEDO number. We've asked them to include enough money in the final bills that they pass to be able to provide the admin money that is needed to keep the KEDO secretariat running. So, in other words, we have requested that that money be --

QUESTION: For '04, Mr. Armitage was testifying about that.

MR. BOWAB: Well, okay. '04 we do not have any funding in there for KEDO.

QUESTION: Okay.

MR. BOUCHER: Okay, last one, really.

QUESTION: I just wanted to ask about another item in your anti-terrorism is this nonproliferation and disarmament fund. Can you explain what that is? Is this funding projects like we saw last year with the bringing -- taking radioactive material out of Yugoslavia? Is this the type of thing you're funding?

MR. BOWAB: The NDF -- the NDF for which we've asked for double the funding in '04, let me -- let me tell you why we've asked for double the funding, first.

Historically, this account has had a carry-forward into the next year, and because of the funding that was carried forward, we have maintained it along years at about $15 million. In '04, we will not have any carry-forward coming in to '04 and so we have requested $30 million in the account.

The account does many things, anywhere from a country having a scud that they want us to go in and blow up for them to a host of different types of activities that they do. And it's meant to be -- it's meant to be a nonproliferation tool of the United States in which countries that want us to assist them, and we get a number of projects that come in for this account and the projects are looked at, those countries that are looking for assistance from the United States for us to dismantle or destroy weapons of mass destruction. That's what this account does.

MR. BOUCHER: Okay, thank you.

QUESTION: Just to be completely clear -- I'm sorry -- is the fact that there's no KEDO request for administrative funding for '04, does that mean that you anticipate there won't be a KEDO in '04, just as you anticipate there won't be an Iraqi opposition?

(Laughter.)

QUESTION: It's a serious question. I mean, you know, are you looking towards the fact that there won't be a necessity for KEDO because you don't want it to exist or you don't think it's going to exist in FY '04?

MR. BOWAB: In FY '04, if KEDO survives and KEDO survives as an organization, in FY '04, if that happens, and if we want KEDO to continue to maintain what it is doing right now, and if we are looking at resuming shipments of fuel oil, then we will take care of what needs to be taken care of in '04, whether that be admin expenses or heavy fuel oil expenses.

QUESTION: Even though you haven't requested it?

MR. BOWAB: Even though we haven't requested. We can't request something and actually get money for it unless we're doing it.

QUESTION: But even if there aren't fuel oil shipments, KEDO will continue. It still exists now. So why not ask for administration money?

MR. BOWAB: I'd have to get back to you on why the administration money was not asked for in '04.

MR. BOUCHER: Okay, thank you. [End]

INITIAL VERSION

Special Briefing on 2004 Request for International Affairs Budget

Christopher B. Burnham, Assistant Secretary for Resource Management; Joseph W. Bowab, Deputy Assistant Secretary for Foreign Assistance Programs and Budget; and Sharon A. Nell, Deputy Assistant Secretary for State Programs, Operations and Budget

Washington, DC
February 3, 2003

MR. BOUCHER: Good afternoon, ladies and gentlemen. Welcome back to the State Department briefing room. We'll have a briefing today on the 2004 Request for International Affairs Budget. Your briefers today are Christopher Burnham, our Assistant Secretary for Resource Management. He has brought with him Mr. Joseph Bowab, Deputy Assistant Secretary for Foreign Assistance Programs and Budget; and Sharon Nell, Deputy Assistant Secretary for State Programs, Operations and Budget.

Mr. Burnham will begin with a short statement, and then all of them will be glad to take your questions. Thank you.

Sir.

ASSISTANT SECRETARY BURNHAM: Thank you, Richard. Good afternoon, everybody. The President's 2004 foreign assistance/foreign affairs budget for all agencies amounts to $28.5 billion. Within the State Department's portion of that, the President's and the Secretary's priorities are twofold: one on the foreign assistance side, one on the State operations side.

On the foreign assistance side, there is no doubt that this budget funds the President's commitment to winning the war on terror. It's reflected throughout the numbers, it's reflected throughout the foreign assistance, and this is a very good budget to accomplish that task.

The President's and the Secretary's other priorities include the battle against AIDS and other diseases, and obviously the President in the State of the Union Address raised the new initiatives that we're going to add on to a base of almost a billion dollars that historically has been funded annually within that initiative.

And finally, the war on drugs. You'll find that more than $700 million of this budget is dedicated toward that effort, and that's another war we intend to win.

On the State operations side, the Secretary's highest priority is people. I call it people, places and productivity. People in that the Secretary wants in this budget requests that we complete the third tranche of the diplomatic readiness initiative started in 2002 with 360 people. It's in the request for 2003 that's pending before the Congress at 399 new Foreign Service and Civil Service hires. And again, in 2004, $97 million to complete the third and final tranche.

By places, I mean secure work facilities overseas, Class A space where the men and women of the State Department can go out there and create foreign policy.

We have a history of not building buildings well overseas. Before General Williams took over Overseas Building Operations, the historic high was two buildings in any one year. We are now up to a glide path of eight buildings a year. We currently have over 21 under construction. This budget funds an additional eight buildings, I believe -- is it eight or nine, eight buildings -- and, again, is in keeping with the Secretary's commitment that we're going to have the people, we're going to have the buildings, the places, the platform upon which we can build this diplomacy.

And finally, productivity. By productivity, I mean technology, that the Secretary's commitment to ensuring that we are in the 21st century in terms of our technological capabilities, first and foremost with the 2002 budget, where he insisted that the State Department -- all personnel across the world -- are connected to the Internet. That is nearing completion.

And so the Secretary's second priority within the technology platform is a knowledge management/knowledge collaboration tool that will both, on an intra- and inter-agency basis, bring us up into the 21st century in terms of being able to collaborate, share, store, retrieve, manipulate the information that flows from over 170 embassies around the world.

With that, let me ask Sharon Nell to come up and join me, please. Let me also ask Joe Bowab to come up and join me. And the three of us will be happy to answer your specific questions. Let me also say we have Patrick Cronin from USAID here as well, Assistant Administrator at USAID, and Patrick will also be happy to answer questions.

Come on up here, gang, and we'll answer them right up here.

MR. BOUCHER: George, do you want to start?

QUESTION: 28.5 seems awfully high by standards of just two or three years ago. Do you have a percentage of increase as to -- for comparison purposes?

ASSISTANT SECRETARY BURNHAM: I don't have a percentage of increase. I mean, I could tell you what the request was, at least for the State Department in 2003, although I hesitate. Having served on Wall Street, we're always insistent that we try make an apples to apples comparison in terms of earnings.

In this instance, an apples to apples comparison would tell me that we would subtract out Millennium Challenge, a $1.3 billion additional account new program this year and obviously is the first phase of the President's commitment to bringing in democratic, economically secure countries throughout the world.

So the -- without Millennium Challenge, we're talking about $27.217 billion in 2004 as compared to 2003 $25.6 billion.

QUESTION: Since you mentioned the Millennium Challenge account, how close are you to figuring out which countries will qualify?

ASSISTANT SECRETARY BURNHAM: Well, I think the criteria has been set. I think that there is an initial list of countries, approximately 16. Joe, do you want to add to that?

MR. BOWAB: Patrick could probably do that.

ASSISTANT SECRETARY BURNHAM: Patrick.

MR. CRONIN: It's one step at a time. The next step is to send draft legislation from the White House up to the Congress. Thank you. I'm sorry. Yes. The next step on the Millennium Challenge account is for the White House, with the Secretary of State as the Chairman of the Board of this prospective corporation to send draft legislation up embedding the 16 indicators that you've heard about and that are on the White House website with respect to press releases on the Millennium Challenge account.

After a corporation is set up, after there are new authorities, I think that's when the latest data will be run through the indicators and a judgment will be made by the Review Board, the Cabinet Level Review Board, if the President has his proposal go forward fully this spring. And then those countries would be decided and then there would be an outreach for proposals, and so the process would go from there. Go ahead.

ASSISTANT SECRETARY BURNHAM: Please.

QUESTION: Yes. Officials have been going on for some months saying that the Millennium Challenge account would start the first year at $1.6 billion and then work up within two years to $5 billion a year. I see that you've cut that back. Why was that and what are the implications for funding in years to come?

ASSISTANT SECRETARY BURNHAM: Well, I don't think there are any implications on that whatsoever. I think the $1.3 billion fully funds the President's priorities for the first year, for the first tranche, that it will ramp up considerably in the second and third year and that the $1.3 billion is already a considerable amount.

Understanding that it takes some lead time before you can develop the kind of pipeline to execute the projects that the administration envisions for Millennium Challenge account.

QUESTION: I've got a couple of extremely brief ones. On the second page of the fact sheet you have $646.7 million for security upgrades to embassies. What -- does that come -- is that part of one of the three lines above it, the $1.15 billion or the -- is that part of that? Is that separate?

ASSISTANT SECRETARY BURNHAM: That's in addition. And it has to do not with new buildings being construction -- new embassies being construction, but the rehabilitation or the refurbishment of old embassy buildings and diplomatic, 85 new diplomatic security agents will be hired out of that money as well.

QUESTION: And then the two -- and these may go to policy more than actual numbers, but why has the contribution to the Iraq War Crimes Commission decreased by $2 million? And on page 79, why is $700,000 being allocated to a UN Guard's contingent in Iraq? Or what is that? What is a UN Guard contingent?

ASSISTANT SECRETARY BURNHAM: I'm going to defer to my very knowledgeable and learned Deputy Assistant Secretary.

MS. NELL: Okay. War Crimes in Iraq was the first question?

QUESTION: Yeah.

MS. NELL: Basically, these are all based on new assumptions for this year, so these are all just cost estimates, and that's the required estimate for this year. So it's not -- it's what we believe is required. It's not really a decrease.

QUESTION: Okay. You believe that it needs less money than obviously this one?

MS. NELL: Right.

QUESTION: And what is the UN Guard Contingent in Iraq?

MS. NELL: UN Guard Contingent. I'm not familiar with that one.

QUESTION: Second to last.

MR. BOUCHER: I think that's security for UNMOVIC.

MS. NELL: Okay. Is that on peacekeeping?

QUESTION: It's in International Organizations and Programs.

MS. NELL: Okay. I'm not too familiar with that one.

MR. BOUCHER: That goes to the people who protect the offices of the inspectors.

QUESTION: Okay.

ASSISTANT SECRETARY BURNHAM: Yes, sir.

QUESTION: I'm looking at $4.7 for counterterrorism and --

ASSISTANT SECRETARY BURNHAM: $4.7 billion?

QUESTION: Right. And there's a qualification here which says, "Countries That Have Joined Us." Is there a schedule of the countries that have joined? My second question is about the AIDS money what is $450 million for Africa and Caribbean. In the President's State of the Union Address, he mentioned $15 billion over five years, which according to my calculation comes to $3 billion a year. But over here I'm looking at $450 million. Is there a new explanation?

ASSISTANT SECRETARY BURNHAM: Well, let me answer the AIDS one first, please, and then I will defer to Joe on the first part of your question, sir.

On the AIDS issue, first of all, the President has said that we are going to combat AIDS/HIV as well as tuberculosis, malaria and other diseases globally with a focus on the Caribbean and on Africa.

It's actually a $2 billion in total funding of which this $450 from the State Department and another $200 million at HHS represents the $650 new money that the President has added in there.

In the past couple of years, we have historically funded our fight against AIDS and other diseases at around the billion dollar level. When you add in the other programs around the government such as Mother-to-Child-Transmission as well as the Global Fund on AIDS and add this money in, it comes out to about $2 billion.

It'll ramp up again from that $2 billion to the full $15 billion amount going forward. Is there any addition on that, Joe?

MR. BOWAB: No.

ASSISTANT SECRETARY BURNHAM: And then on the -- your question about the fight against global terrorism, is there a schedule?

MR. BOWAB: There is a list of countries that we have been using for about the last year. And the list of countries were worked through the inner agency in the White House on those countries that were actively supporting the United States in the war on terrorism.

So the $4.7 billion that you see on the fact sheet represents the funding that we have allocated in this budget to those states.

QUESTION: How many countries did you say?

MR. BOWAB: There's approximately 25 of them.

QUESTION: Do you have an idea how many of them are in Africa?

MR. BOWAB: I believe there's three in Africa. I mean, I can check for you, but I believe there's three.

ASSISTANT SECRETARY BURNHAM: How about in the back here?

QUESTION: Just back on a couple of Iraq details. On page 64 you, under the second line for Iraq opposition, in FY 2003 it was $25 million. Your request is down to $0. Is that because you think it's not necessary to fund the Iraq opposition any longer? What's the reason for that change?

ASSISTANT SECRETARY BURNHAM: Yes. We don't feel it's necessary to fund it any longer. Joe, do you want to add to that?

MR. BOWAB: When we put the budget together and we looked at that line, at the time we put the budget together we felt that in '04 that that line would not be necessary.

QUESTION: Because there'll be -- wait, wait, wait -- let's take some follow-up. Is that because you expect that they'll be able to fund themselves, say, from the oil revenues in Iraq because they'll be ruling the country there? (Laughter.) Why is that that you are so confident that you don't need to support them anymore?

MR. BOWAB: Because realistically, in putting the budget together and actually identifying hard funds in a, you know, constrained resource environment, in looking at '04 we just, we believed that with the carry forward money that we would have in '03, that funding the opposition at that level in '04 would not be necessary.

QUESTION: Okay, what about the -- assuming that something might be happening in Iraq in this coming months or years, and assuming that there will be all kinds of costs for humanitarian costs and other type costs that could arise from that, where is it in all of these budget numbers that that money would come from? Or is that simply money you would tack on in some kind of a supplemental request later on?

MR. BOWAB: Obviously, it's not in the '04 budget request. Anything, if hostilities arise in Iraq and we have to, and we have to look at those hostilities, anything that we do we would have to do through another mechanism and of course an '03 supplemental appropriation would be appropriate.

QUESTION: But I guess I'm confused because part of this budget, i.e., the Iraq opposition number, you clearly were adjusting with an eye towards what might happen in Iraq, so why wouldn't you take into account what might happen in Iraq in other categories such as humanitarian?

MR. BOWAB: Because when we go forward with the budget number, you've got to know specific things that are happening at the ground at the time. If you're talking about humanitarian relief/reconstruction, it's kind of hard to understand what that would be at this point in time until actually something happens.

You could be off by a long way, you know, making assumptions now. I mean you have to make those assumptions once it happens.

QUESTION: Can I follow up on that? Are you then assuming as, following on this question, that the oil revenues will pay for a lot of the humanitarian, that you won't need to make this request?

MR. BOWAB: I mean, in making assumptions about oil revenues, I think, you know, you can best case it or worst case as far as oil revenues are concerned. I'm not quite sure that we do know what would happen if hostilities broke out.

Certainly we've looked at the oil revenues and they are a consideration. But we've also looked at the worst case, also.

QUESTION: Which is?

MR. BOWAB: Which is not having access to oil revenues.

(Laughter.)

QUESTION: Yes, in terms of -- this is a broad question and a specific one -- in terms of the President's $15 billion in which he says $5 billion will come from old money --

MR. BOWAB: Right.

QUESTION: What is this old money? Where is this coming from?

MR. BOWAB: We, there's -- we have a base. And in the President's budget you'll see that the base is indicated in the President's budget at $5.2 billion. That is an approximate of the billion dollars that we're going to do annually with what we call old money.

So the base programs, the ongoing programs, the programs that USAID currently does, the programs that Health and Human Services currently do, the programs that Center for Disease Control currently do and the programs for the National Institutes of Health that they currently do -- international programs -- are part of that $5 billion base.

The $10 billion in new money that he mentioned in the State of the Union -- there is a billion of that in '04. That, combined with the billion base will bring us to approximately a $2 billion HIV/AIDS line in '04, including the other agencies.

Now, the $10 billion in new money, with only doing a billion dollars in '04 obviously, over the next four years we're going to have to do more than the billion in new money over the next four fiscal years.

If you do straight-out math, we would have to do $1.25 billion to get there.

ASSISTANT SECRETARY BURNHAM: Do you want to add to that, Patrick?

QUESTION: This doesn't include Millennium Challenge account money or any of that kind of money?

MR. BOWAB: No. No. This is all separate from Millennium Challenge.

ASSISTANT SECRETARY BURNHAM: Right here in the front.

QUESTION: Getting back to the war on terrorism again. I noticed you included in there $296.9 million for public diplomacy efforts to inform and influence foreign publics and it briefly describes that as targeting information and cultural programs to further U.S. policies.

Can you elaborate on that? I mean, what are you -- where's our money going to go to? I mean, what kind of message are you trying to get out there and how are you going to get it out there?

MS. NELL: This is our normal earmark of funding within the State operations program. And it's to inform, influence and engage. And this is basically the same -- a sort of a straight line amount of money for this program over the course of the years. But what we do in this program is basically reprioritize as we find different requirements such as to reach Muslim and Arab worlds. Does that answer your question?

QUESTION: Reach them in what way? I mean, what are you going to do?

MS. NELL: Through the media, through television, through reaching younger audiences, through radio, through special events. All of those types of activities.

QUESTION: Specifically on that, can you be a little more -- can you go into a little more detail about this new Middle East television network? Is this the - this a U.S. Government network?

MS. NELL: This is part of a requirement by the BBG. Is there anybody here from the BBG at all?

(No response.)

MS. NELL: This is -- BBG is an independent agency. We are not really responsible for that portion of the budget so I would not want to comment in any great detail on that. We can get you in contact with someone from the BBG, if you like.

QUESTION: In the 4.7 billion for the 25 countries in the counterterrorism, is that going to include military training and other forms of traditional bilateral support? And could you get into a little bit more detail about what exactly the counterterrorism money is going to be for and sort of how it's changed programmatically from -- in the last year?

ASSISTANT SECRETARY BURNHAM: The $4.7 billion, of course, does include military assistance to the frontline states, whether it be defense articles, defense services or training.

QUESTION: So it's not in addition to the stuff that we -- the figures we see in military assistance and IMET and these other things?

ASSISTANT SECRETARY BURNHAM: It would include those figures if the country is a frontline state.

QUESTION: Okay. And could you sort of -- if there's any more detail you can give programmatically about, you know, sort of what each country would be getting of this money.

ASSISTANT SECRETARY BURNHAM: Well, I mean, programmatically it includes the breadth of assistance that we're providing to that country. For example, I mean, pick the Philippines, for example. The Philippines is one of the countries that has been identified as a frontline state. It would include military assistance we provide to the Philippines. It would include development assistance that we provide, economic support assistance that we provide. It would include any type of anti-terrorism assistance that we provide. So, basically, it covers the realm of all assistance that we provide to the country.

Now, in looking at that assistance, we look at it in two ways. One is we look at programs that directly, directly provide the types of articles that they need, the training that they need, to fight the war on terrorism. In other words, it is directly aligned with doing something on the war on terrorism.

Obviously, other programs such as democracy and governance and economic programs, while you don't link them directly to going out and fighting terrorists, you do link it to assisting the country to be able to do that.

MR. BOUCHER: Okay, let's do two more, one here, one over there.

QUESTION: Are you regressing the North Korean package, for example, the KEDO operation and the food aid through the World Food Project?

ASSISTANT SECRETARY BURNHAM: If you look in the budget for '04, there's no funding in there for the heavy fuel oil that we have normally provided to North Korea.

On the food, I think -- I mean, I think the President has said we're not going to not deny food to North Korea. I don't know if it's part of the P.L. 480 number.

QUESTION: To follow up, could you say why there is no funding for heavy fuel oil? Are you anticipating that you'll never be resuming those shipments?

ASSISTANT SECRETARY BURNHAM: As you know, KEDO, made up of the United States, the EU, South Korea and Japan, made a decision to discontinue shipments of heavy fuel oil to North Korea. That was a KEDO decision of which the U.S. was part of that. And as of the time we put the budget together, that decision still stands, so naturally we did not request funding for heavy fuel oil in this budget.

QUESTION: Can I just follow up on this one point? Sorry. But I thought they were just suspended. I mean, are you anticipating that there will never be a time where you'll be resuming those fuel shipments?

ASSISTANT SECRETARY BURNHAM: The secretariat, the KEDO secretariat, is still operational and there is sufficient funding in the KEDO secretariat to continue to operate. We're not -- I mean, we're not saying that through the diplomatic approach that we're taking with the North Koreans that there will never be a day where we would want to resume heavy fuel oil to that country, but when and if that happens is when we would have to address funding for heavy fuel oil.

MR. BOUCHER: Okay, last one.

QUESTION: Is there money for KEDO, just the organization?

ASSISTANT SECRETARY BURNHAM: Is there money for what?

QUESTION: Just the organization, KEDO. Is the U.S. going to make a contribution to the --

QUESTION: The personnel and operations?

QUESTION: Yeah. Not the fuel oil, but just the organization?

QUESTION: This is your 3.5 million?

ASSISTANT SECRETARY BURNHAM: In '03, in '03, I mean, what the Congress is looking at is since we did request heavy fuel oil in the '03 budget, and since we suspended fuel oil shipments, the Congress, on both the Senate and the House side, are pulling down that KEDO number. We've asked them to include enough money in the final bills that they pass to be able to provide the admin money that is needed to keep the KEDO secretariat running. So, in other words, we have requested that that money be --

QUESTION: For '04, Mr. Armitage was testifying about that.

ASSISTANT SECRETARY BURNHAM: Well, okay. '04 we do not have any funding in there for KEDO.

QUESTION: Okay.

MR. BOUCHER: Okay, last one, really.

QUESTION: I just wanted to ask about another item in your anti-terrorism is this nonproliferation and disarmament fund. Can you explain what that is? Is this funding projects like we saw last year with the bringing -- taking radioactive material out of Yugoslavia? Is this the type of thing you're funding?

ASSISTANT SECRETARY BURNHAM: The NDF -- the NDF for which we've asked for double the funding in '04, let me -- let me tell you why we've asked for double the funding, first.

Historically, this account has had a carry-forward into the next year, and because of the funding that was carried forward, we have maintained it along years at about $15 million. In '04, we will not have any carry-forward coming in to '04 and so we have requested $30 million in the account.

The account does many things, anywhere from a country having a scud that they want us to go in and blow up for them to a host of different types of activities that they do. And it's meant to be -- it's meant to be a nonproliferation tool of the United States in which countries that want us to assist them, and we get a number of projects that come in for this account and the projects are looked at, those countries that are looking for assistance from the United States for us to dismantle or destroy weapons of mass destruction. That's what this account does.

MR. BOUCHER: Okay, thank you.

QUESTION: Just to be completely clear -- I'm sorry -- is the fact that there's no KEDO request for administrative funding for '04, does that mean that you anticipate there won't be a KEDO in '04, just as you anticipate there won't be an Iraqi opposition?

(Laughter.)

QUESTION: It's a serious question. I mean, you know, are you looking towards the fact that there won't be a necessity for KEDO because you don't want it to exist or you don't think it's going to exist in FY '04?

ASSISTANT SECRETARY BURNHAM: In FY '04, if KEDO survives and KEDO survives as an organization, in FY '04, if that happens, and if we want KEDO to continue to maintain what it is doing right now, and if we are looking at resuming shipments of fuel oil, then we will take care of what needs to be taken care of in '04, whether that be admin expenses or heavy fuel oil expenses.

QUESTION: Even though you haven't requested it?

ASSISTANT SECRETARY BURNHAM: Even though we haven't requested. We can't request something and actually get money for it unless we're doing it.

QUESTION: But even if there aren't fuel oil shipments, KEDO will continue. It still exists now. So why not ask for administration money?

ASSISTANT SECRETARY BURNHAM: I'd have to get back to you on why the administration money was not asked for in '04.

MR. BOUCHER: Okay, thank you.

[End]

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