House committee backs bill to create new foreign aid organization

The House International Relations Committee Thursday approved legislation to dramatically increase U.S. foreign aid to the world's poorest nations, and set up a new government corporation to oversee the funding.

In a 31 to 4 vote, the committee approved the bill with only four fiscally conservative Republicans opposing the new funds. The bill, if approved by the Senate and signed by President Bush, would create a Millennium Challenge Corporation to oversee $1.3 billion in foreign aid in 2004, $3 billion in 2005, and $5 billion in 2006. In 2004 and 2005, only countries designated the poorest in the world-with median per capita incomes below $1,500 a year-would be eligible. In 2006 and thereafter, the corporation could provide funding to nations with per capita incomes as high as $3,000 a year.

President Bush initially proposed the new funding, called the Millennium Challenge Account, in March 2002. The goal, the president said, was to change the way the United States provides foreign aid. Many people believe that a great deal of U.S. foreign assistance has been wasted by corrupt foreign governments. But the Millennium Challenge funding will only go to countries that have demonstrated a commitment to battling corruption, strengthening democratic institutions, boosting economic development and improving human rights. The new agency would determine which countries were eligible for funding, and then would evaluate their progress on an annual basis.

The bill has widespread support and its new approach to distributing foreign aid and evaluating its impact have won over many past detractors of U.S. foreign aid. The Bush administration won over other skeptics by promising that the Millennium Challenge funding would not displace existing foreign aid distributed by the U.S. Agency for International Development and the Health and Human Services Department.

Rep. Henry Hyde, R-Ill., said the Millennium Challenge Account was a "revolutionary idea that countries are responsible for their actions . . . and must show results" for the aid they receive.

But the creation of the Millennium Challenge Corporation has sparked some concern on Capitol Hill, especially in the Senate, where some members believe that the U.S. Agency for International Development, which oversees the majority of U.S. foreign development assistance, is best suited to oversee the new funding. The House bill approved Thursday deviated from the Bush administration's original proposal by adding the administrator of AID to the new corporation's oversight board. Under the House plan, that board will also include the secretaries of State and of the Treasury.

At the committee meeting, Rep. Barbara Lee, D-Calif., successfully pushed through an amendment to require that the new corporation look to minority and women-owned businesses when it hires private firms to oversee its development aid. Otherwise, the bill exempts the new corporation from typical government procurement and personnel rules.

But Rep. Robert Menendez, D-N.J., failed in his attempt to amend the bill to allow more well-off countries to be eligible for funding in 2004 and 2005. Those lower-middle income countries do become eligible in 2006. But Menendez said that the bill sent the wrong message to countries in Latin America, some of whom fall into the lower-middle income category.