Statement of the Administrator Summary of FY 2001 Budget Request Summary of FY 2000 Emergency Supplement Request Program Performance & Prospects Table of FY01 Budget by Agency Strategic Goal Management Improvements & Challenges Operating Expenses, USAID Operating Expenses, Inspector General Foreign Service Disability and Retirement Fund Summary Tables Regions    Africa,    Asia & the Near East,    Europe & Eurasia,    Latin America & the Caribbean Central Programs BHR, Global, PPC Glossary Abbreviations & Acronyms Friday, 03-Aug-2001 23:37:58 EDT

Program Performance and Prospects

Mission and Goals

Americans have long been known for their generosity in providing assistance to those in need. The U.S. Agency for International Development (USAID) is the primary federal government agency that helps people living in other countries improve their own lives. This assistance goes from meeting humanitarian needs in times of crisis, to providing long term assistance to combat many of the scourges of modern times: poverty, bad government, illiteracy, disease, overpopulation and environmental degradation. USAID has always supported U.S. national interest goals, whether it was to combat the spread of communism during the cold war or working to achieve or maintain greater global stability in more recent years.

USAID's Mission Statement is as follows:

"The mission of the United States Agency for International Development is to contribute to U.S. national interests by supporting the people of developing and transitional countries in their efforts to achieve enduring economic and social progress and to participate more fully in resolving the problems of their countries and the world."

USAID pursues this mission through six strategic development goals and one management goal, outlined below.

• Encouraging broad based economic growth and agricultural development.
• Strengthening democracy and good governance.
• Building human capacity through education and training.
• Stabilizing the world's population and protecting human health.
• Protecting the world's environment for long-term sustainability.
• Saving lives, reducing suffering associated with disasters, and re-establishing conditions necessary for political and economic development.
• Maintaining USAID as the premier bilateral development agency.

These goals, defined in the Agency's 1997 Strategic Plan, are reflected in the International Affairs Strategic Plan (IASP) prepared under the leadership of the Department of State. The IASP establishes linkages between USAID goals, other agencies' goals, and U.S. national security interests. Department of State reports and the Agency's Annual Performance Report (APR) together provide an account of Agency contributions to these larger ends. The Annual Performance Plan (APP) and this budget presentation to Congress, reviewed together, provide a comprehensive picture of how the Agency has and will continue to respond to U.S. foreign policy, Administration and Congressional priorities. USAID's programs directly support the following National Interests as articulated in the IASP:

• Promoting U.S. economic security by creating markets abroad for U.S. goods and services through programs that support broad-based and lasting economic growth in developing countries.
• Enhancing for peace and stability in such areas as the Middle East, Eastern Europe and the developing world by helping build institutions that support democracy, free enterprise, the rule of law and a strengthened civil society.
• Preventing and mitigating prospects humanitarian and other complex crises, in an effort to stem the high financial and human costs of peacekeeping, refugee crises, and emergency relief operations.
• Protecting the United States from such specific global threats as unchecked population growth, disease, the loss of biodiversity, global warming and narcotics trafficking.

Program Execution and Performance Management

USAID does not work alone to achieve its goals. Almost all work is done in partnership with the countries themselves, and, in most cases, the contribution a country makes to help itself far exceeds USAID's direct contribution. In addition, USAID works with other assistance agencies: Multilateral agencies such as the World Bank and IMF or the United Nation family of organizations like the United Nations Development Program, UNICEF or the World Health Organization. USAID also works with other countries that provide development assistance, such at Japan, Great Britain, the European Union and a host of others. Further, USAID is always on the watch for opportunities to cooperate with other U.S. Government agencies in the execution of the program.

USAID's work is done in tandem with a variety of partner organizations including country agencies, U.S. Private and Voluntary Organizations such as CARE, World Vision, U.S. contractors, indigenous non-governmental organizations (NGOs), universities, international agencies, and other U.S. government agencies. While much of USAID's work is done with U.S. based organizations, USAID is increasing the amount of work that is done through voluntary organizations. This spreads to the rest of the world one of the fundamental values of American culture--people getting together to help themselves and others.

Finally, and perhaps most importantly, USAID's Strategic Plan and goals must be understood as comprising a "framework" within which decisions are made, rather than a "blueprint." The latter implies with confidence that X can be delivered, with Y amount of resources, with Z amount of time, and this is the amount of progress in the last 12 months. Our strategic plan is a framework for two reasons. First, foreign affairs and USAID's specific contributions to advancing US foreign policy goals typically do not lend themselves to blueprints. Our experience has shown that helping build democracy, improving a girl's access to education, or creating new employment opportunities is not like building roads.

Second, the use of a framework fits with a management structure that helps maximize the effectiveness assistance provided. Experience demonstrates that the more the people with whom USAID works establish "ownership" over the programs, the more likely that US assistance will be used effectively. Achieving strong local ownership requires a management structure that enables front-line managers to adapt and respond to local opportunities and circumstances. USAID's management structure allows this flexibility, but within the bounds of the centrally set framework. All country, regional or global plans (and performance targets) are reviewed and approved centrally with reference to how they help advance the goals in the framework, as well as other US foreign policy priorities.

While USAID management approach supports aid effectiveness and encourages countries to actively participate, it makes the aggregation of results attributable directly to application of USG funds difficult. For example, USAID can and does monitor what is happening to child survival rates in a country. But it is challenging to demonstrate that USAID's contributions can be attributed to some percent of the change observed. If USAID provides the technical assistance and training, other donors provide the vaccines, and communities and local government provide the labor, it is unclear as to how to split the result of fewer child deaths and attribute it to one contributor or another. There are no good answers. One can measure and report how much technical assistance and training USAID provided successfully, but that is an inadequate response to a US taxpayer asking whether children are living longer. One can say the children are living longer, but not easily prove USAID's were the key or what part of the result seen. Given these measurement and reporting challenges for a single program, it is clear that meaningful aggregation of USAID's results across programs becomes even more problematic.

As USAID grapples with these reporting challenges, it will continue to monitor and present details on specific programs in the Budget Justification's Activity Data Sheets (ADS) in the attached volumes. Each USAID objective in each country, regional, or global operating unit is described, its performance and prospects discussed, can be found in the volumes accompanying this Main Volume. (The continued importance of the ADS reflects why the Agency has worked with the oversight committees to improve their usefulness.) Thus, when it is difficult to obtain a sense of USAID's performance in the aggregate, or when there is a question on how a USAID program in a country is doing, the specific programmatic details remain readily available. USAID's FY 2001 Annual Performance Plan (APP) outlines where we are heading and how we are seeking to address the aggregation and attribution issues. The FY 2001 Annual Performance Report (APR) details the Agency's progress relative to agency-wide targets set in 1997. Extracts from the APR and APP are presented in the next section.

Overall Performance and Prospects

Much of this presentation deals with the status, performance and plans for individual operating units and their specific programs in countries. In this section, we will summarize actual and planned performance organized by USAID's goals and relate FY 2001 budget request levels to the goals. The request information is from all accounts of the Foreign Operations Appropriations bill that are appropriated directly to or managed by USAID from "other bilateral economic assistance" with the exception of Economic Support Funds (ESF) which was not available at this writing. At the end of this performance section is a table which breaks-out goal request levels by account (DA, CSD, PL 480, etc.) The ESF request is included in the totals but is not distributed over the goals.

Many performance results described here are from the 2000 Agency Performance Report.

Strategic Goal 1: Encouraging Broad-Based Economic Growth and Agricultural Development FY 2001 Request (all accounts): $3,018 Million

To progress towards this goal, USAID programs are directed at three broad objectives: (1) expanding and strengthening critical private markets; (2) encouraging more rapid and broad-based agricultural development; and (3) enhancing access and economic opportunity for the poor. For each, there is considerable emphasis on policy and institutional strengthening, the key determinant of progress and success.

The performance benchmarks in recent Annual Performance Plans (APP) projected significant improvements in economic performance (relative to performance during the first half of the 1990's) in AFR, LAC, and E&E; and a continuation of relatively good performance in ANE. The most recent data indicates that ANE countries continue to perform relatively well, despite the Asian Financial Crisis and the sharp deterioration of performance in Indonesia. Africa - where performance had been weakest - has achieved striking improvements that are widely credited to better economic management. In E&E, performance has improved markedly, in line with projections. However, the general pattern of strengthening recovery in countries making the transition from communism has started to break down recently. Some countries of the former Soviet Union have faltered, in part reflecting fallout from the economic crisis in Russia. LAC has achieved impressive gains in openness, and moderate growth. However, few LAC countries are growing rapidly enough to achieve substantial reductions in poverty.

According to 1999 Agency Development Indicators, almost two-thirds of the countries receiving USAID support have achieved at least modest economic growth over the past several years (over 1% annually on a per capita basis). A slightly smaller percentage (56%) attained growth rates that would permit significant reductions in poverty (including some large countries with substantial poverty such as India, Bangladesh, and Ethiopia). In over three-quarters of the low-income recipients, agricultural growth exceeded population growth, and in some where agricultural growth has lagged, overall growth was still significant. Economic Freedom (as measured by the Heritage Foundation) has improved in two-thirds of USAID recipients since the mid-1990's. Direct foreign investment and trade are expanding in almost all (85-95 percent) USAID recipients. Finally, around four-fifths of "advanced" (middle-income) recipients show diminished reliance on foreign aid.

The main programmatic emphases for FY 2001, by program area and region, include the following:

• Private Sector Development: Activities to improve the legal and regulatory enabling environment for foreign and domestic private investment in Africa (AFR) are expanding significantly. In Europe and Eurasia (E&E), getting policies right will remain paramount, but where reforms are blocked at the center (more prevalent in Eurasia than in Eastern Europe), activities will emphasize building local capacities, both governmental and civil society.
• Trade Development: To the extent resources permit, USAID programs in all regions aim to increase trade and investment. Technical assistance is aimed at lowering barriers to trade and investment, supporting trade liberalization and, from that, accession to the World Trade Organization.
• Privatization: While mass privatization is far advanced in many E&E countries, the privatization agenda remains significant, including agriculture, markets for land, municipal services, and "strategic" enterprises in infrastructure and the financial sector. Missions in Egypt, Jordan, and Mongolia are also supporting privatization.
• Fiscal Reform: USAID programs in Africa are emphasizing reform and restructuring of tax policies and decentralization of government expenditure programs. For southern tier countries in Eastern Europe and Eurasia, programs will place greater emphasis on developing the human resource and institutional capacity needed for fiscal sustainability.
• Financial Sector Reform: USAID supports activities in two major areas: banking and capital markets. Activities include legal and regulatory reform, support for key elements of the institutional infrastructure, support for improved accounting practices, and so forth. Financial sector reform is a key element of programs in E&E, and in a number of countries in Asia and the Near-East (ANE) (Egypt, Jordan, Indonesia, and the Philippines).
• Agricultural Development: In Africa a number of programs are promoting agricultural development and food security by focusing on agricultural production; on market efficiency and access to markets; and on expanding trade and investment in agriculture.
• Microenterprise: USAID missions in Ghana and Uganda are active in the financial sector at the micro level, through grants to microfinance institutions. Economic growth activities in Latin America are increasingly oriented toward support for microenterprise finance.

The first five of these program clusters pertain to the Agency objective of strengthening private markets, while the last two pertain to objectives of agricultural development and enhanced access and opportunity for the poor.

Strategic Goal 2: Democracy and Good Governance Strengthened FY 2001 Request (all accounts): $587 Million

USAID promotes democracy and good governance as an integral element of transition and sustainable development and as a means of reinforcing critical U.S. foreign policy objectives. Strengthening democratic processes and practices of good governance is essential to sustainable development. In addition, accountable and transparent political institutions that represent and respond to citizen needs help to consolidate other social and economic gains.

Increasing foreign government adherence to democratic practices and respect for human rights is a fundamental national interest of the United States and a specified goal of the IASP. USAID supports development of democratic institutions; an informed and educated populace; a vibrant civil society; and a relationship between state and society that encourages pluralism, inclusion and peaceful conflict resolution. Democratization mitigates the potential for conflict and establishes a foundation for recovery should conflict occur.

The Agency's strategy for strengthening democracy and good governance has four objectives: (1) strengthening rule of law and respect for human rights; (2) developing more genuine and competitive political processes; (3) fostering development of a politically active civil society; and (4) promoting more transparent and accountable government institutions. The Agency is implementing democracy and governance activities through 72 country and regional programs, with the highest funding allocations directed most recently to Indonesia, Ukraine, Bosnia, Georgia, Haiti, Russia, Egypt, South Africa, Bulgaria, and Poland.

USAID employs the annual Freedom House survey as one measure by which to assess the state of democratic development around the world. The survey provides three global indices measuring freedom, civil liberties and political rights. On the Freedom index, six USAID-assisted countries registered improvements, most notably Nigeria and Indonesia. No USAID-assisted countries worsened on this scale. On the Civil Liberties scale, eleven USAID-assisted countries registered gains again including Indonesia and Nigeria , while three countries fell in rank including Albania and Kyrgyzstan. The Political Rights scale shows eleven USAID-assisted countries with improved ratings in 1998, while Russia and Kyrgyzstan declined with poorer ratings.

A trend of world-wide political liberalization continues. USAID country assistance and leadership among donors has helped advance accomplishments and encourage new opportunities. Challenges and investment opportunities remain plentiful in the form of weak institutions, stalled democratic transitions, backsliding and manipulation of democratic processes by autocrats, the debilitating effects of corruption, and competition for scarce resources. Demand for USAID assistance in this field is heavy, especially in crisis-prone countries and regions where early intervention is a key to stabilization. Priority setting in democracy and governance assistance programming is done in close collaboration with the State Department.

Demand and opportunities far outstrip current resource availability. Increased resources are needed to keep USAID technical assistance to meet the growing demand of democracy and governance programming, and to buttress the role of the United States as the leading proponent of democracy and human rights.

Strategic Goal 3: Human Capacity Built Through Education and Training FY 2001 Request (all accounts) : $231 Million

USAID promotes human capacity (skills) development both as a developmental end in and of itself and as a means for reducing or eliminating other key development problems. Countries which have made the greatest development strides in recent decades have made significant investments in human capacity development, particularly in basic education. Basic education, although insufficient alone for achieving sustainable development, nevertheless underpins a broad range of key development improvements: increased labor force participation and productivity; poverty reduction; heightened participation in democratic processes, increased understanding of and capacity for environmental protection. For girls and women, basic education also significantly lowers fertility rates and provides mothers with the capacity to improve family health and nutrition. Research shows that each additional year of schooling beyond grade three or four leads to up to 20 percent higher wages, up to 10 percent fewer births, and up to 10 percent fewer infant and child deaths.

USAID's human capacity development goal thus includes two objectives: (1) Expanding access to quality basic education for under-served populations, especially girls and women; and (2) Increasing the developmental contribution of host-country institutions of higher education. Basic education for children, a Congressional directive, receives a sizeable portion of funding available under this Goal. Funds are programmed: to expand access to early childhood development and basic education through improved host-country educational policy, planning and management capacities; to foster measurable improvements in educational quality through teacher training and the extension of improved educational technologies; and to ensure educational quality and relevance through increased community participation in educational decision-making.

USAID basic education programs support progress toward meeting Organization for Economic Cooperation and Development/Development Assistance Committee targets, i.e., progress toward full primary enrollment and elimination of all primary school gender gaps by 2015. Resource limitations cause USAID to focus its efforts at the sub-national level in many countries; as a result, USAID's contributions to national progress cannot be easily isolated from other factors. Nevertheless, there appears to be a correlation between USAID investments and progress. In LAC, where USAID has historically made major investments in education, most countries, with the exception of Haiti and Guatemala, have achieved nearly universal access to primary schooling and a dramatically narrowed gender gap, although poor educational quality continues to hamper completion rates. In AFR five of seven countries with USAID basic education programs could attain full primary enrollment by 2015, with significantly improved gender parity, if recent growth rates are maintained. However, as is the case in LAC, quality issues limit completion rates, particularly for girls. More out-of-school children, particularly girls, live in South Asia than in any other region, but USAID education programs in this region are quite limited for a number of reasons. USAID is examining whether opportunities exist for additional investments in South Asia, particularly for girls' education.

USAID defines higher education as "post-primary", and brings U.S. higher education institutions into partnership with counterpart host country institutions, first and foremost for the resolution of key educational concerns in these countries, e.g., more effective teacher training and higher education reform, and ultimately for resolution of other critical development issues. Workforce development is emerging as a key concern in many countries seeking to compete more effectively in the global marketplace. Formulas for effective workforce development need to include broad and equitable access to quality primary education as a key first step; other steps may include replication of some U.S. models for technical and vocational training, including public- private partnerships at the secondary and tertiary levels. As new programs take shape in FY 2000, USAID will simultaneously develop new methods for effective performance measurement.

Strategic Goal 4: World Population Stabilized and Human Health Protected FY 2001 Request (all accounts): $1,224 Million

In stabilizing the world's population and protecting human health in a sustainable fashion, USAID has objectives in five areas: population and family planning; child health and survival; maternal health; HIV/AIDS; and infectious diseases. Research, policy dialogue, sector reform, systems strengthening, and capacity-building are significant cross-cutting activities necessary for ensuring long-term availability, accessibility, efficiency and quality of Population, Health, and Nutrition (PHN) services. Moreover, USAID approaches population and health interventions in an integrated manner, with proven cost-effective country-level, regional, and global interventions.

Population and Family Planning: USAID has been involved with population and family planning in developing countries for over thirty years. Its programs have had a significant impact, helping to bring the average number of children per family in developing countries (excluding China) from over 6.0 in 1960s to the current 3.6. In 1999, approximately 36 percent of married women used modern contraceptives based on estimates drawn from Demographic and Health Surveys undertaken in 46 USAID-assisted countries. This translates into an annual increase of an estimated 10.5 million contraceptive users.

USAID will continue to improve access, quality, and sustainability of services to help men and women, especially young adults, make free and informed decisions about their reproductive lives. We will emphasize reaching the unmet need of an estimated 150 million couples that want to delay or complete childbearing. New approaches to reducing adolescent fertility and delaying the birth of the first child are needed to improve the continuing decline in worldwide fertility. In addition, the Agency will continue implementing key actions identified at the International Conference on Population and Development such as expanding access to reproductive health services, promoting gender equity, and better integrating the problems of sexually transmitted infections into standard family-planning services. In addition, USAID will pioneer research on new contraceptive methods (male hormonal and female barrier methods) and will seek approval of the Food and Drug Administration for a female barrier method that offers dual protection against pregnancy and sexually transmitted diseases.

Child Health and Survival: The combined effect of immunization, vitamin A, diarrheal disease control, and other USAID-supported child survival programs has been millions of lives saved. The estimated trends in mortality of children under five in USAID-assisted countries indicate a continuing decrease in mortality overall from approximately 105 per 1,000 live births in 1985 to approximately 87 in 1999.

To continue progress in improving children's health and survival, USAID will support the expanded use of life-saving therapies such as oral dehydration therapy and treatment for pneumonia through the "Integrated Management of Child Illness" strategy, which has been adopted by over 50 countries. USAID will join with other partners including UNICEF, WHO, the World Bank, and the Gates Foundation, in the new Global Alliance for Vaccines and Immunization (GAVI), to revitalize immunization programs in countries and to support the introduction of new life-saving vaccines to support GAVI, USAID has launched a new initiative to strengthen immunization programs in approximately 15 countries where program coverage is lagging. The commitment to eradication of polio will be continued as the goal draws nearer, and USAID will also step up its actions to deliver the health benefits of vitamin A to greater numbers of children. USAID will work with countries and other partners to address remaining major threats to children, including new approaches to increase breastfeeding and improve child nutrition, and the interventions to reduce mortality in newborn infants - now the greatest component of infant mortality in many countries. Finally, new challenges to children, including the effects of HIV on children and their care, will be addressed.

Maternal Health: Child health and family well-being are so directly related to and powerfully dependent on maternal health that USAID has increased its efforts to reduce maternal deaths and disabilities and to protect women during this important time. USAID recently identified a set of feasible, low-cost interventions and best practices that result in the greatest impact in reducing mortality among mothers and newborns. These interventions include improvements in maternal nutrition, birth preparedness, deliveries attended by medically trained personnel, management of complications, and postpartum care.

USAID will continue to refine and develop specific programmatic strategies, concentrate on essential obstetric care in priority countries, scale up its initial pilot successes and utilize lessons learned. USAID will endeavor to prove the access and quality of maternal care and nutrition by emphasizing client needs, community-level and facility-based training, and community involvement. USAID will develop standards of care; improve provider capabilities, systems, and services; and better monitor and evaluate programs. The Agency will conduct activities to improve the policy environment for maternal health and nutrition.

HIV/AIDS: The rapid spread of the HIV/AIDS epidemic remains a serious threat to both public health and sustainable development in many countries in the developing world. USAID estimates that in 1998, 47.3 million adults and children had been infected with the HIV virus since the disease was first identified in the mid-1980s, with a total of 13.9 million dying and 6 million new infections occurring each year. By 1997, 13 sub-Saharan African countries had higher than 10 percent of the population infected, up from 5 percent in 1994. The majority of HIV infections will occur within the developing world where more than 90 percent of current infections exist.

The Agency will support indigenous public and private sector institutions to provide comprehensive HIV/AIDS prevention and mitigation interventions, reaching high-risk and vulnerable populations through its collaboration with a variety of international, regional, and country organizations. As part of a comprehensive response, USAID will continue to conduct "social-marketing" activities to increase demand for and use of condoms. Through local behavioral research and behavior change interventions, we will promote appropriate awareness of HIV-prevention methods and increased adoption of lower risk behaviors. The range of existing successful programs have still not achieved a scale to impact on global HIV incidence.

The White House LIFE Initiative (Leadership and Investment for Fighting an Epidemic), combined with additional funding from Congress, will facilitate scaling up of primary prevention programs and allow the expansion of activities into critically important new areas. In a set of priority countries, we will develop standards of care for infected persons and survivors (primarily orphans); improve provider capabilities, systems and services; and institute better monitoring and surveillance programs. The Agency will continue to build a global consensus on the priority interventions that will prevent and mitigate the spread of HIV.

Infectious Disease Initiative: In 1998, USAID launched a new initiative to combat infectious diseases. While results cannot be measured yet, the Agency expects to have a significant impact on the control of infectious diseases by combating anti-microbial resistance, preventing and controlling tuberculosis and malaria, and improving disease surveillance and response capabilities. USAID is collaborating actively with the World Health Organization, Centers for Disease Control, and other organizations to develop action plans for the implementation of a global infectious disease strategy.

Given the enormity of the worldwide problem of infectious diseases, funds are very limited. USAID will develop strategies and interventions that can be easy replicated on a national scale with in-country or other donor resources. Therefore, the Agency will focus its efforts, in selected countries, on three main areas: combating antimicrobial resistance; preventing, controlling, and managing malaria and tuberculosis; and developing appropriate surveillance and response mechanisms.

Drug-resistant strains of the microbes that cause common infections, such as pneumonia, malaria, and tuberculosis, threaten the success of the current infectious-diseases programs. The Agency will support research to prevent the emergence of drug resistance. In addition, methodologies to determine the cost effectiveness of interventions to combat drug resistance and models for predicting the course of resistance will be developed and tested. Also, USAID will work with the World Health Organization to ensure that the Antimicrobial Resistance Strategy is ready for technical review and testing.

Strategic Goal 5: The World's Environment Protected for Long-Term Sustainability FY 2001 Request (all accounts): $633 Million

Protecting the environment is a fundamental component of sustainable development, and USAID is the world leader in this regard. The Agency accomplishes its environmental goal through programs carried out in partnership with non-governmental organizations, the private sector, universities, other U.S. government agencies, other donors, and client countries. The main program elements include increasing government commitment to the environment, conserving biological diversity, reducing the threat of global climate change, promoting rational urbanization, increasing energy efficiency and the use of renewable energy, and managing to ensure maintenance of the natural resources base.

It is important to note that the environmental goal's indicators reflect a set of short and medium-term achievements for complex and evolving long-term and cross-sectoral problems and solutions. Indicators include the adoption of national environmental strategies, protected area coverage, carbon emissions per capita, sanitation and freshwater services, energy efficiency and renewable energy services, and forest cover. In FY 2001, over 50 percent of all USAID operating units will have environmental strategic objectives.

Biodiversity is being lost at unprecedented rates, with an estimated 1,000 species per year becoming extinct. USAID works with host countries and partners to improve the management of biologically significant areas both within and outside of officially protected areas. For example, in the LAC region 25 million hectares were conserved in FY 1999 through the "Parks in Peril" program. One example of FY 2001 biodiversity activities is continuing protection of the Meso American biological corridor of the Meso American Coral Reef System.

The Climate Change Initiative (1998?2002) represents a substantial Agency commitment to climate change?related programs in developing and transition nations. It focuses on reducing greenhouse gas (GHG) emissions, protecting natural habitats that sequester carbon, and encouraging developing country policies that support the Framework Climate Change Convention (FCCC). Seventy?five percent of USAID natural resource management activities are considered part of the Initiative because of their role in carbon sequestration, absorbing carbon dioxide, a major GHG. In ANE, USAID continues to support restructuring of the power sector, improving electricity generation efficiency, and moving forward with a South Asia regional energy initiative.

USAID urbanization programs address environmental problems associated with urban growth. The world's urban population is currently growing at four times the rate of the rural population. Currently, 17 of the world's 21 "mega?cities," each with more than 10 million people, are located in developing countries. Unless cities can properly manage their environmental problems, opportunities for sustainable development, economic development, and social equity will be lost. In Alexandria, Egypt, USAID?funded sewage and wastewater treatment facilities will serve 3.8 million urban dwellers. It is estimated that over 1 billion liters of water per day will be treated to design standards in FY 2001. In 2001, the new Ecolinks program in Europe and Eurasia will increase the number of partnerships linking regional businesses, local governments and associations with companies to promote market-based solutions to environmental pollution problems.

Energy is a critical factor of production as well as a major source of pressure on the environment. Energy efficiency and renewable energy sources are therefore critical for achieving environmentally sustainable development. USAID's FY 2001 plans in Europe and Eurasia continue to emphasize energy sector market reform, privatization, rational pricing, and appropriate legal regulatory frameworks.

Maintenance of the natural resource base through improved natural resources management (NRM) is integral to meeting long-term development objectives. Among the problems that USAID programs address are "artisanal fisheries" competition with commercial trawlers; loss of forests affecting watersheds, biodiversity and climate change; water consumption and management difficulties; wildlife utilization; and wildlife population declines.

USAID continues to achieve impressive results in sound coastal resource management (CRM) in the Philippines through partnerships between local governments, communities and the private sector. A minimum of 2,000 km of coastline is expected to be under effective CRM in FY 2001.

Strategic Goal 6: Lives Saved, Suffering Reduced, and Conditions for Political and Economic Development Re-established FY 2001 Request ( all accounts, including PL 480): $1,230 Million

As a result of last year's Humanitarian Assistance Goal Review, the Agency adopted several changes including a new methodology and pilot process for collecting data and a decision to shift from conflict prevention and focus on changes in political rights and economic freedoms in targeted post-conflict countries. The goal area now has two objectives: (1) Meet urgent needs in times of crisis; and (2) Contribute to the re-establishment of personal security and basic institutions which meet critical intermediate needs and protect human rights following emergency situations.

Relief Efforts: Humanitarian crises have increased in scale and complexity while resources remain constrained. In 1998, humanitarian crises affected an estimated 418 million people. Natural disasters affected 315 million while complex emergencies affected 103 million. In 1998, natural disasters created more refugees than wars and conflict. Degradation of the environment caused by a confluence of declining soil fertility, drought, flooding, and deforestation, drove 25 million "environmental refugees" from their land and into already marginal lands and vulnerable squatter communities. They represented 58 percent of total refugee population worldwide in 1998. By analyzing the consequences of Hurricane Mitch, El Nino and La Nina, there is compelling evidence of a trend towards weather triggered super-disasters that have far-reaching economic, social and political consequences of governance.

In 1998, USAID's Office of Foreign Disaster Assistance (OFDA) reported 65 natural disasters compared to 27 the previous year. There is additional evidence that the cycle of disasters is shortening while the severity of the events is increasing dramatically. Several of the emergencies were associated with weather abnormalities related to the El Nino Southern Oscillation (ENSO). ENSO-induced climatic variability has profound effects on the economies and health of populations of affected countries. The 1997/98 ENSO affected virtually every development sector and touched nearly every aspect of USAID's portfolio. The economic impact of the 1997/98 ENSO is estimated at $33.2 billion worldwide. Natural disasters claimed more than 50,000 lives and resulted in economic losses exceeding $90 billion during 1998. Natural disasters, including floods induced by the El Nino phenomenon; the widespread destruction caused by Hurricanes Georges and Mitch; the fires that ravaged Indonesia, Brazil, Mexico and far-eastern Russia - wreaked three times more havoc than in 1997.

Through The World Food Program (WFP) 56 million people were fed in 1998, the highest number in any single year. WFP undertook major operations in North Korea, Bangladesh, Central America, and Indonesia. The United States, the largest food aid donor, provided 921,350 metric tons of Title II emergency food aid, valued at over $481 million to more than 22 countries. The Title II emergency food program, implemented primarily by U.S. PVOs and WFP reached at least 16.4 million beneficiaries. This is an increase of over 42 percent in the number of beneficiaries reached through Title II emergency food aid from the previous year.

While natural disasters are on the rise, complex emergencies continue to drain OE and program resources. Although there were more natural disasters than complex emergencies in 1998, the majority of funding was devoted to complex emergencies. Most of the Title II food assistance to complex emergencies was directed to African countries including Angola, Liberia, Sierra Leone and Sudan. This follows the trend since at least 1995, with the majority of emergency food aid (58 % to 78 %) directed to African countries. OFDA's relief assistance in health, shelter, water, and sanitation has followed a similar trend.

The growing health impact of civil strife and war on the spread of global disease is of great concern. In 1990, war ranked last among sixteen identified causes of disease. In 2020, war is projected to rank number eight among all causes. In Africa, decrepit health systems are being shattered by civil wars. The risk of spreading of infectious diseases within a country and region is growing. The ability to maintain national and international surveillance systems has been seriously compromised due to lack of information and access to populations in times of insecurity.

While humanitarian crises become increasingly protracted and complex, overall resource levels are constrained. The Agency's ability to manage humanitarian resources is declining with staff stretched to the limit.

Countries in Transition: There have been marked improvements in the Agency's ability to provide more timely analysis of transition country situations and to begin to apply more appropriate programmatic interventions. USAID is taking a more strategic approach in addressing post-conflict and crisis situations in countries such as Angola, Cambodia and Kosovo. Our experience has shown that program impacts can be quickly lost in fluid environments where key actors can come and go very quickly, the security environment deteriorates with little or no warning, and the degree of commitment to a peace agreement is not always entirely clear.

Experience gained in assessing an environment in the early stages of a transition has helped USAID develop a better sense of the overall direction that a political transition process is taking and, determine whether and how our assistance will affect the prospects for a successful transition. This approach has helped to curtail proposed assistance programs in countries such as Indonesia and sustain or expand those in the Great Lakes Region of Africa. The key tool used in conducting these assessments is the Strategic Assessment Tool and Post-Conflict Checklist.

During the past year, the Agency shifted priorities towards that of mitigating the potential for conflict using a broad array of development and humanitarian assistance tools. From trend analysis and early warning system, forecasts are increasingly grim on conflict projections. Not only are pre-conflict situations, active conflicts, and armed conflicts escalating in the post-Cold War era, but inter-state conflicts are also on the rise. Analyses of trends indicate that armed conflicts have doubled since 1995, with more than 100 "political tension situations" that could develop into violence. Active intra-state conflicts are increasing, leading to state collapse in countries such as the former Yugoslavia or near-state failure in countries such as Angola, Colombia, Cambodia, Haiti, Lebanon, Liberia, Sierra Leone, Somalia, Sudan and Congo-Zaire.

Strategic Goal 7: Improved Management of USAID FY 2001 (USAID and IG Operating Expenses and credit admin.): $555 Million

The developing world is highly volatile. Change is the norm for good and for bad. To remain relevant in the sphere of foreign policy and succeed in advancing economic development in a changing world, USAID must ensure it maintains a culture of continuous learning, adapting, and improving. USAID must also increasingly emphasize ways to work more efficiently. In FY 2001, USAID will fund activities in nearly 125 countries, including 75 with resident staff.

The Agency has been a strong proponent of the Government Performance Results Act (GPRA). USAID's reform effort has brought about new energy and direction underscored by compelling core values: managing for results, customer focus, teamwork and participation, empowerment with accountability, and valuing diversity. At the same time, staff reductions over the past six years of 35 percent have made the Agency increasingly vulnerable to management weaknesses. The Agency is continually tightening up its management structure in response to staffing constraints.

Great strides have been made over the past four years, but the desired improvements in performance require continual change and consolidation. Ongoing reform initiatives include refinements to strategic planning and performance monitoring, cost-effective performance management and reporting, greater information sharing about decision-making in the strategy and budgets and lessons learned, strengthening partnerships and donor coordination, harmonizing and standardizing donor procedures, reviewing checks and balances in planning and performance management, and improvements in the operations system to gain greater transparency and flexibility, among others. These are discussed in detail in the following chapter on "Management Improvements and Challenges."