*EPF319 03/26/2003
Text: USAID Urges Strengthening Reforms in East Asia to Combat Terrorism
(March 26 Testimony by USAID's Wendy Chamberlin) (4680)

The war on terrorism is not limited to Iraq and Afghanistan, but extends to the East Asia and Pacific region as well, according to the Assistant Administrator for the U.S. Agency for International Development (USAID) Wendy Chamberlin.

In testimony March 26 before the Senate Foreign Relations Committee, Ambassador Chamberlin said strengthening economic reforms, democracy, education, and health "help address the threat of terrorism directly in East Asia and the Pacific."

Chamberlin, the Assistant Administrator for the U.S. Agency for International Development in Asia and the Near East, in extended testimony outlined the key USAID programs aimed at combating poverty and thereby terrorism in all the area covered by her office, including the East Asia and Pacific region.

Following is the March 26 prepared testimony of Wendy Chamberlin for the Senate Foreign Relations Committee:

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Ambassador Wendy Chamberlin
Assistant Administrator, Bureau for Asia and the Near East
U.S. Agency for International Development

Testimony Before the Senate Foreign Relations Committee

March 26, 2003

East Asia and the Pacific

As our nation is fighting terrorism in Iraq and Afghanistan, we must continue to pay attention to terrorism and other threats to stability in East Asia. Countries like Indonesia and the Philippines are also front line states in the war on terrorism. By strengthening economic reforms, democracy, education, and health, USAID programs help address the threat of terrorism directly in East Asia and the Pacific.

We are on the front lines of the war on terrorism in Southeast Asia. In the Philippines and Indonesia, USAID support has enabled the governments to take a stand against terrorism within their borders. USAID has provided viable alternatives for people who, unable to fulfill basic social and economic needs, might otherwise be drawn into terrorist groups, and has helped the Philippines and Indonesia to take policy decisions and enforce regulations that directly fight terrorism. For example, in both countries, USAID has contributed to successful anti- money laundering legislation.

At the same time, the variety of conditions across the different countries in East Asia means that we must tailor our response to the needs of each country in situations as varied as East Timor, Burma, Vietnam, and Mongolia.

In all of East Asia, USAID's programs address the conditions that provide fertile ground for terrorism: poverty, disease, unemployment, lack of education, economic decay, failing governments, political disenfranchisement, disrespect for human rights, and local conflict. USAID demonstrates to the people of East Asia that the United States is committed to improving their lives for the long term.

Indonesia, the Philippines, and East Timor represent countries where we are working with governments committed to a democratic path, yet which are facing serious internal conflict issues and economic struggles. We are providing direct support in addressing conflicts, for democratic transition and improved governance, and for economic reforms to stimulate trade and investment. We are also providing significant support for improved health and for better environmental practices that lead to better health and sustainable economic opportunities.

In mainland Southeast Asia (Burma and the Burma/Thailand border, Cambodia, Vietnam, and Laos), we are working in countries with governments that have not shown that they are firmly committed to a democratic future. We have therefore designed our strategies to stimulate democratic change, working mostly through non-governmental organizations. Our programs in mainland southeast Asia focus largely on democratic transition, corruption and transparency, health (including HIV/AIDS and other infectious diseases), environment, education and trafficking in persons. These are critical themes in all of the countries.

Democracy and good governance is a common thread running through almost all our programs in East Asia. Corruption drains East Asian economies of millions each year. USAID helps governments to address corruption head-on, while also helping civil society to pressure governments to be transparent and accountable. As Cambodia, Indonesia, Mongolia, and the Philippines move toward elections in 2003 and 2004, the success of the incumbent governments in addressing corruption will become increasingly important.

Because East Asia still has not completely recovered from the 1997 financial crisis and must also deal with the current world economic downturn, its governments are having trouble staying the course on the economic reforms that would have a lasting effect. However, given the world economic situation, East Asia's performance, as a whole, is not bad. USAID is helping with key economic policy decisions and implementation, including bank restructuring in Indonesia, Philippines, Mongolia, and East Timor. We are helping Vietnam to implement the Bilateral Trade Agreement with the U.S. in ways that break new ground in strengthening the rule of law and improve government transparency.

The environment is another key area for USAID in East Asia. East Asia is home to some of the world's most endangered forests and wildlife. Population growth, poverty and corruption are generating unsustainable demands on natural resources in the region and exacerbating conflict. In response, we are assisting local governments to improve resource conservation through increased transparency, accountability, and improved management. In the Philippines, USAID is supporting local governments in Mindanao and surrounding conflict-affected areas to reduce illegal logging and destructive fishing. The coastal patrols have not only reduced illegal fishing, but also have improved efforts to control smuggling, trafficking and terrorism. We have also integrated the U.S.- Asia Environmental Partnership into our bilateral programs to help continue to promote public-private partnerships to address key urban environmental issues such as air pollution. For example, in Indonesia, USAID, working with the private sector, will reduce air pollution through improving the public bus system and introducing cleaner public buses. Air and water quality are important factors in improving infant and child mortality rates.

Trafficking in persons is one of the most critical and sad areas I would like to highlight. The amount of trafficking from and within Southeast Asia is alarming. Burma, Cambodia and Indonesia are currently ranked at Tier 3, the worst ranking given by the State Department's Global Trafficking in Persons Report. USAID, in partnership with State, is committed to preventing trafficking, protecting the victims, and supporting efforts to prosecute offenders. We have gained experience in this area in recent years and are establishing resourceful partners on the ground. Just last week the prosecution of two sex traffickers in Cambodia resulted in fifteen- year sentences and required compensation to the victims. State Department and USAID support enabled the Cambodian Human Rights Organization to present the case. The State Department and USAID want to keep up the momentum and expand on such progress.

Within this broader context, following is a description of some of the key programs in which we are now engaged in East Asia, and of some of the successes we've achieved - and the challenges we still face.

Indonesia

Indonesia, the largest Muslim country in the world, plays an important role in U.S. efforts to combat terrorism and maintain political and economic stability across Southeast Asia. Indonesia is implementing a major transformation of its political and economic landscape while simultaneously addressing multiple crises - from terrorism and inter-ethnic, sectarian and separatist violence to endemic corruption and rising poverty.

Indonesia has USAID's largest aid program in East Asia. We have reconfigured the program significantly to respond better to the post-9/11 needs, helping moderate Islamic groups to have a bigger voice, to address financial crimes, and to improve basic education. We have played a key role in Indonesia's dramatic move to democracy and decentralized local government, and in restoring macroeconomic stability. We have a comprehensive program improving people's lives every day through health, environment, livelihoods, education, and political participation. We are working in partnership with the private sector to fight illegal logging. We have also ensured a protected habitat for orangutans, one of the world's most endangered species.

We are deeply involved in three important developments in Indonesia today:

Signed on December 9, 2002, Aceh's fragile Cessation of Hostilities Agreement has been successful in greatly reducing the armed conflict. We supported the peace dialogue that led to the agreement and are the lead player in the monitoring. Security throughout the province has improved dramatically and we are working with other donors to ensure reconstruction and responsible governance under special autonomy.

Indonesia continues to recover from the October 12, 2002 Bali bombings that killed over 200 people, including seven Americans. The economic impact devastated tourism revenues. USAID provided rapid emergency response that has helped the local economy to recover, and has worked with local groups to ensure that there are no outbreaks of tensions. Bali continues to display a remarkable coherence and lack of conflict. Generally, the trend line is positive if the tourist industry continues to recover.

Preparations are underway for historic direct elections in Indonesia in 2004, for local and national legislative positions, President and Vice President, and the Parliament. We are working with partners like IRI, NDI, and IFES towards smooth, free and fair elections and full and productive participation by all parties.

Philippines

The Philippines is on the front lines of the war on terrorism in Southeast Asia. Beginning in FY 2002, approximately 60% of our bilateral budget has been directed to addressing social and economic conditions in Mindanao that would make its Muslim population less vulnerable to terrorist influence. USAID-managed assistance has already successfully integrated 13,000 former Moro National Liberation Front (MNLF) combatants, is training an additional 8,000 MNLF former combatants in 2003, and will train the remaining 4,000 in 2004. Complementary programs are helping Mindanao to put into place better health services and educational programs, as well as improve infrastructure and public administration in the Autonomous Region of Muslim Mindanao (ARMM).

In Mindanao and elsewhere in the Philippines, USAID's assistance in health builds on the Government's devolution of its health services to local government levels for general health care, TB and malaria management, immunizations, micronutrient supplementation, and family planning. USAID also focuses on stimulating the private sector to play a greater part in improving access to quality health services.

The Philippines' ability to address conflict in Mindanao is undermined by its worsening economic and fiscal performance. For example, in 2002, the public sector deficit was an alarming six percent of GDP, due to falling tax collections. USAID's Economic Governance program addresses the issues most fundamental to ending the Philippines' pattern of stunted economic growth, conflict and corruption. In 2003-04, special attention is being given to improving tax administration, due to the overwhelming importance of fiscal revenue to economic stability and social infrastructure as well as widespread perception of tax administration as a sore point in Philippine corruption. Other areas of assistance include procurement reform, customs reform, public expenditure reform, improving in-court and out-of-court judicial systems, implementation of Anti-Money- Laundering legislation and protection of intellectual property rights.

Governance is also weak in the regulation of public utilities and environmental management. USAID's program to protect natural resources includes strengthening the ability of national and local governments to address critical threats to marine and forest resources. USAID's work in energy and air quality aims to 1) establish an open, competitive market for generating and distributing electricity; 2) electrify communities of former rebel soldiers using renewable energy in order to promote peace and raise their standards of living; and, 3) reduce vehicle emissions to improve public health.

East Timor (Timor Leste)

East Timor is the world's newest nation, where USAID programs strongly support U.S. interests of democracy, economic development, and regional stability. We are playing a critical role in this exciting time for East Timor. We provide direct support to the Timorese in establishing a democratic government: in drafting and publicly vetting a constitution, in holding free and fair elections for the Constituent Assembly and President, in drafting and holding public hearings on critical legisla tion, and in establishing an independent media and an effective regulatory body to oversee it.

But the majority of Timorese are still very poor and live mostly in rural areas. Today, two in five persons do not have enough food, shelter or clothing. One in two have no access to clean drinking water, and three in four have no electricity. USAID worked in East Timor prior to independence, generating rural employment and raising rural incomes for 20 percent of East Timor's coffee farmers, in a country where 43 percent of the rural population farms coffee. USAID-supported coffee cooperatives broke the monopoly of the Indonesian military on coffee purchasing, enabling the Timorese to find better markets. Our economic development work is also improving food security and increasing rural employment through agricultural diversification and microenterprise development.

We are contributing $12 million over three years to the central government for implementation of key elements of its national development plan. We are the second largest bilateral donor, after Australia. Donor coordination is good, and essential in this new nation. We are committed to a democratic and economically prosperous future for East Timor and will need to responsibly reassess our levels of assistance as expected Timor Gap oil and gas revenues come on line in future years.

In mainland Southeast Asia (Burma and Burma/Thailand border, Cambodia, Vietnam and Laos), we are working in countries with governments that have not shown that they are firmly committed to a democratic future. We have designed our strategies in each country to provide appropriate stimuli towards democratic change, working mostly through non-governmental organizations. Our programs in mainland Southeast Asia focus largely on democratic transition, health (including HIV/AIDS and other infectious diseases), environment, education and trafficking in persons. These are critical themes in all of the countries.

Cambodia

Cambodia is one of the most compelling cases for development assistance. It ranks among the poorest countries in the world, with an annual per capita GDP of $280, low literacy rates, poor health status, and the highest official HIV/AIDS infection rate in Asia (although Burma's actual rate may be higher). Cambodia suffers from the legacies of war, genocide and corrupt government. U.S. objectives in Cambodia include promoting democratic practices, good governance, protection of human rights, and fighting disease and poverty.

We are there as the count ry takes tentative steps towards a democratic future. This year our focus is on the July 2003 national elections. We are helping the democratic opposition's ability to participate effectively in elections and are working to promote an environment in which voters can make informed decisions without fear of intimidation or reprisals. Years of USAID support have fostered the evolution of strong, motivated NGOs, and now we are working to strengthen their capacity to promote democratic reforms at the national level. After the elections, our support will continue to help build the capabilities of the parties to develop leadership and messages. USAID will help the civil society organizations we support better identify and expose corrupt practices and promote active engagement by the public to monitor government activities and advocate for change, especially in the realm of anti-corruption. USAID also supports indigenous business associations which advocate for improvements in governance and transparency - reforms that will be necessary for Cambodia's accession to the WTO.

Cambodia's health services are still very weak, so we are focusing on the provision of services. This includes rehabilitation of severely- malnourished children, vitamin distribution, life-saving skills training for midwives, bednet impregnation to prevent malaria, improving the availability of treatment for tuberculosis, birth spacing, and immunization outreach. The most significant investment is being made to prevent HIV/AIDS and care for its victims. Cambodia is one of USAID's rapid scale- up countries for HIV/AIDS programming. Since 2000 we have made significant progress in moderating the spread of HIV in Cambodia.

Strong and relevant education is the key to the future of Cambodia. USAID has begun to develop a program to improve the quality and relevance of Cambodian education, with the aim of keeping children in school longer, especially girls.

Consistent with appropriations legislation, we do not contribute funds to any entity of the Royal Cambodian Government (RCG), and we only engage directly with the Government in the areas of HIV/AIDS, primary education, trafficking, and maternal and child health. Although our principal partners in Cambodian development remain international and Cambodian NGOs, this increased flexibility in recent years to work with certain parts of the Government is enhancing our effectiveness.

Vietnam

Vietnam, a country of 80 million people, is key to regional stability in a mainland Southeast Asia that is currently more unstable than it has been for a while. Our interests lie in helping Vietnam make the transition to a more open and market driven economy. This is an economy that has the potential to take off. We want Vietnam as a friend; as a trading partne r and market for U.S. goods. It also occupies a strategic position related to China. Vietnam, at the same time, is a very poor country with great needs for our support.

The main thrust of the USAID program is support for the implementation of the U.S.- Vietnam bilateral trade agreement. Since the signing of the agreement in December 2001, imports from the U.S. have grown by 26 percent and exports to the U.S. by 129 percent. Our assistance, helping with the laws and regulations to enable smooth international trade and investment, improves the rule of law (related to business) and makes government more transparent. We also provide assistance to prevent HIV/AIDS, improve and increase services to the disabled, and protect the environment.

Despite the government's continued hold on power, the younger generation is growing in power. More than 50 percent of the population is too young to remember the war. They are interested in our support, our culture, language, and our goods. They welcome USAID assistance at the official and grassroots levels. Cooperation is positive. The Vietnamese have recently asked for USAID assistance with developing their new securities law and with a new groundbreaking NGO law. Our assistance in economic governance has the potential to grow into more positive work in the rule of law, democracy and civil society. This is a mutually advantageous relationship we should continue to build.

Burma

Burma is an authoritarian state, with serious health, economic indicators, a drug trade, and rampant human rights abuses. U.S. interests lie in promoting democratic practices and universal human rights. Our Burma program is coordinated closely with the State Department. We provide significant humanitarian assistance to displaced Burmese on the Thai-Burmese border, and help groups to promote democracy inside and outside Burma. Our implementing partners have established successful education and health programs on the border; refugees are receiving good health care, and children are getting an education. Our assistance supports scholarships to provide higher education to young Burmese who will help develop a future democratic Burma. Internews has helped opposition groups get out their democratic messages with better media products. Last year we began to address the serious HIV/AIDS situation in Burma, where the infection rates, estimated as high as four percent, may be the highest in all of Asia. We hope to expand this program in FY 04.

Laos

U.S. interests in Laos are largely humanitarian. Serious human rights concerns, widespread acute poverty and disease are major concerns. USAID has a modest program in Laos. We are contributing to employment and economic growth in targeted provinces through a silk production project. We are educating Lao children about unexploded ordnance (UXO), particularly in the most affected provinces. We are also training emergency medical personnel to deal with accidents from unexploded ordnance. With unexploded bombs from the Vietnam war era still on the ground in Laos, in some parts of the country a child is at risk simply playing outdoors. Through our assistance, children are able to identify UXO and know what to do to not get hurt and to safely report the danger. While HIV/AIDS is not yet a severe problem in Laos, we are working hard to make sure it doesn't become one. Maternal and child health is a major concern we are beginning to address, especially for Laos' most vulnerable children.

Mongolia

Mongolia is a separate case. The government has made the transition to democracy and a market economy over the past eleven years, and USAID is instrumental in seeing that those transitions are successful and provide equitable benefits to the Mongolian people.

We are very proud of our Mongolia program. We have helped to rebuild the financial sector, guide responsible privatization, automate the courts, and improve herders' livelihoods. There is still work to be done. The majority of the population is poor, lives in remote rural areas, and is cut off from many of the benefits of the country's advances. The judicial sector is weak and vulnerable to corruption. The economy is far from thriving. The political opposition is weak. Slums outside urban areas are growing, with few employment opportunities. We are addressing all these areas with a well- integrated, streamlined and high-performing program.

China/Tibet

USAID is involved on a limited scale in China. At the request of the State Department, we are managing small programs in rule of law and in Tibet (sustainable development, environmental conservation, and cultural preservation). We are also beginning a modest amount of HIV/AIDS prevention work in two southern provinces as a part of our Greater Mekong HIV/AIDS regional strategy.

Regional programs:

Thailand

We have no bilateral aid programs in Thailand, but there are several regional programs operating in the country. We are opening a new regional support office that will support our bilateral and regional programs (HIV/AIDS, anti-trafficking, environment, and economic growth) in mainland Southeast Asia as well as our Burma border activities. The programs in Vietnam, Laos, and the Burma border, where we currently have no direct hire presence, will be managed from Bangkok. Our fast-growing HIV/AIDS assistance in the region will be directed from this regional platform. The regional office will also be the home for the regional Office of Foreign Disaster Assistance staff.

ASEAN

USAID is playing a key role in support of the U.S. Government's new ASEAN Cooperation Plan. We have arranged for Information, Communication, and Technology (ICT) assistance to the ASEAN Secretariat and key ASEAN members to enable them to communicate effectively within the Secretariat and among member nations via the Internet. We are also providing assistance to the Mekong River Commission to address critical regional environmental management issues. We aim to work with the State Department and ASEAN to address the alarming trafficking in persons problems in the region through a regional, intergovernmental approach.

Regional HIV/AIDS and Infectious Diseases

HIV/AIDS is an extremely serious issue for USAID in East Asia. While HIV prevalence is still very low compared to sub-Saharan Africa, HIV/AIDS crosses borders easily in this part of the world and has reached adult prevalence rate of 2.7 percent in Cambodia and is estimated to be four percent in Burma. There are rates as high as 80% among prostitutes, and 93% among intravenous drug users in some parts of the region. Given these factors, and East Asia's large population, HIV/AIDS is a time bomb. We have initiated a Greater Mekong HIV/AIDS strategy, which includes Vietnam, Laos, Thailand, Burma and two southern provinces in China. Interventions include prevention, care and support, voluntary counseling and testing, prevention of mother-to-child transmission, policy and advocacy, and stigma reduction. USAID has joined forces with UNAIDS, AusAid, DfID, and other donors to advocate for HIV/AIDS at high political levels.

East Asia is also the home of seven countries with high tuberculosis burden and countries with multi-drug resistant malaria that is becoming increasingly difficult and expensive to treat. The regional program also addresses these diseases by strengthening training, policy, advocacy, and surveillance systems.

US-AEP

Through the U.S. - Asia Environmental Partnership (US-AEP), USAID has developed innovative and successful government-business partnerships to address key environment issues and create markets for U.S. businesses. We have integrated the most successful elements of US-AEP into our bilateral programs and will no longer request funding as a separate line item.

Public-Private Partnerships

The ANE Bureau established a public-private alliance mission incentive fund (MIF) in FY02 to encourage missions to seek out partnerships with private sector enterprises, donors, host country counterparts foundations, and local non-governmental organizations (NGOs), among others. A competitive process resulted the award of $17.5 million to 12 projects in six countries with an average mobilization of more than four alliance partner dollars to each USAID dollar. In other words, the bureau's $17.5 million investment in these activities are expected to yield over $70 million in outside resources being applied to our development objectives. Examples of the types of programs supported by the MIF include:

Working with Mirant Philippines and the Philippine Department of Energy on a solar energy project in Mindanao which is delivering electricity to over 3,000 people in remote areas to promote peace and prosperity;

In Morocco, over 300 girls are assured a middle school education by providing scholarships and safe housing through a partnership with Coca Cola and the Moroccan Ministry of National Education;

An alliance with British Petroleum in a remote province in Indonesia is working with civil society groups, private firms, and local governments to put natural resources to work for the economic and social betterment of the region while protecting a unique environment; and

A timber alliance to combat illegal logging in Indonesia which harnesses resources from The Nature Conservancy, the World Wildlife Foundation, and Home Depot. The latter is groundbreaking because it builds on the strengths and talents of government, the private sector, and NGOs to confront the challenges to forest conservation in Indonesia.

These FY02 alliances were so successful that the bureau is supporting a similar exercise this year, and will endeavor to identify funds with which to promote a third and final round next year.

USAID Challenges

One of the Committee's objectives in holding these hearings is to consider possible adjustments to our basic authorizing legislation, the Foreign Assistance Act of 1961. USAID has put forward several suggestions in this regard, and I hope that you and your staffs are consulting with our leadership about these suggestions. The demands on USAID to support new mandates to address global challenges -- Afghanistan, Iraq, HIV/AIDS, education, MEPI, and other pressing priorities - have increased exponentially, as have the costs of providing security for (and occasionally funding the evacuation of) our personnel and their families in this part of the world. Meanwhile, our ability to fund and staff these operations has reached its limit. The solution will have to involve not only the identification and provision of adequate resources, but also the need for new personnel and procurement authorities that will streamline and create more responsive systems. In this context, I am pleased to report that ANE is part of an Agency-wide process to analyze what it really costs for us to do business overseas. With this analysis in hand, we look forward to demonstrating our capacity and resolve to implement high priority USG programs throughout the ANE region in a cost effective and successful manner.

Conclusion

We applaud the leadership of this Committee in addressing many key issues such as HIV/AIDS, tuberculosis and malaria as well as your work on promoting international religious freedom, combating the crime of trafficked persons and preventing famine. We look forward to continued close cooperation with you and your committee as USAID implements its development programs based on the President's vision of foreign aid as articulated in the Millennium Challenge Account and in Administrator Natsios' vision for the Agency, Foreign Aid in the National Interest.

In conclusion, I would cite President Bush's words: "we fight against poverty because hope is an answer to terror. We fight against poverty because opportunity is a fundamental right to human dignity. We fight against poverty because faith requests it and conscience demands it. And we fight against poverty with a growing conviction that major progress is within our reach". We look forward to joining with you and your committee in that fight.

Thank you.

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(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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