President Clinton's budget includes $21.3 billion in discretionary funding for international affairs in 2000. This level is a decrease of $1.1 billion (4.6 percent) from the 1999 level, which included $1.8 billion in emergency funding (primarily to enhance and improve embassy security). As the graph on the next page indicates, funding for all activities in the International Affairs function State Department diplomatic and consular operations (including embassies and consulates throughout the world), military assistance to allies, assistance to underdeveloped nations, economic assistance to fledgling democracies, promotion of U.S. exports abroad, U.S. payments to international organizations, peacekeeping efforts, and more amount to less than one percent of all federal outlays.2

According to the most recent foreign aid figures from the Organization for Economic Cooperation and Development (OECD), the U.S. has fallen behind Japan as the largest provider of foreign aid in absolute terms, and ranks 21st in the world in terms of foreign aid as a percent of gross national product (GNP). Countries that provide more foreign aid as a percent of GNP than the U.S. include Australia, France, Ireland, Italy, Luxembourg, New Zealand, Portugal, and Spain.3

·Embassy Security The budget includes $3 billion in advance, non-emergency appropriations for 2001-2005 (no funding for 2000) to enhance and improve embassy security in the wake of the devastating terrorist attacks against U.S. embassies in Kenya and Tanzania. The advance appropriations package provides $300 million for embassy security improvements for 2001, and increases funding by increments of $150 million per year until $900 million is provided for embassy security for 2005.

·Middle East Peace Process The budget includes $1.9 billion to implement the Wye River Memorandum, which is an agreement between Israel and the Palestinians as part of the Oslo Peace Accord. The Wye River package represents a $900 million emergency supplemental for 1999, $500 million for 2000, and a $500 million advance appropriation for 2001. The Administration requests that the entire package be enacted prior to the regular appropriations process.

The $900 million emergency supplemental package for 1999 is distributed as follows:

$600 million in Foreign Military Financing (FMF) for Israel;
$200 million in Economic Support Funds (ESF) for the Palestinians; and
$100 million in FMF for Jordan.

The $500 million packages for 2000 and 2001 are distributed identically as follows:

$300 million in FMF for Israel;
$100 million in ESF for the Palestinians;
$ 50 million in ESF for Jordan; and
$ 50 million in FMF for Jordan.

Although the 1999 supplemental is designated as an emergency, and does not require offsets under budget rules, the Administration offsets the package. The offsets for this spending include rescinding:

$652 million of 1999 emergency funding for classified programs;
$230 million of 1999 emergency funding for ballistic missile defense; and
$ 18 million of prior-year FMF assistance for Eastern Europe.

The budget provides an advance appropriation of $230 million in 2001 to "repay" the Department of Defense for the ballistic missile defense funding, and "repays" the classified programs within the budget over 2001-2005.

·Economic Support Fund (ESF) and Foreign Military Financing (FMF) Last year, Israeli Prime Minister Benjamin Netanyahu proposed phasing out ESF assistance to Israel if half of the reductions was used to increase FMF assistance. In the negotiations over ESF and FMF levels that ensued, the traditional earmarks of $1.2 billion in ESF and $1.8 billion in FMF for Israel were changed in 1999 for the first time since 1986. The 2000 budget includes $930 million in Israeli ESF assistance, and $1.920 billion in FMF assistance for Israel. The ESF assistance is $150 million below the 1999 level, and the FMF assistance is $60 million more than the 1999 level. These funds are in addition to the assistance associated with the Wye River Memorandum.

The ESF level for Egypt had been $815 million since 1986, but was lowered to $775 million in 1999 and is $715 million for 2000. Egypt's traditional earmark of FMF assistance is unchanged, and remains at $1.3 billion in 2000.

The budget includes a total of $2.4 billion in ESF assistance for 58 countries and organizations, which is slightly below the 1999 level. Total FMF assistance for 2000 is $3.4 billion (slightly above the 1999 level), and goes to 30 countries and organizations.

·Agency for International Development The budget includes $2.6 billion for the Agency for International Development (AID), which is $90 million (3.6 percent) above the 1999 level. The budget includes $1.8 billion for Sustainable Development programs, which is $59 million (3.3 percent) above the 1999 level. Included within this amount is $555 million for Child Survival and $513 million for the Development Fund for Africa.

·New Independent States and Eastern Europe The budget includes a little more than $1.0 billion for New Independent States (NIS) that were part of the former Soviet Union. Included in this assistance is $241 million to help prevent the spread of weapons of mass destruction and their components. (See Function 050: National Defense for further discussion.) The budget also includes $393 million in funding for the Support Eastern European Democracy program, which includes $175 million for Bosnia. Total funding for these efforts for 2000 is $148 million (11.6 percent) more than the 1999 level.

1. Excludes the U.S. contribution to the International Monetary Fund. U.S. contributions to the International Monetary Fund are exchanges of equal-value assets and thus do not represent an increase in costs. Discretionary budget authority is recorded for these transactions, but primarily for Congressional jurisdiction purposes.

2. Outlays, rather than budget authority, were used because some programs, notably in the transportation function, are not measured in terms of budget authority.

3. Data is from the OECD 1998 Development Cooperation Report, February, 1999. The OECD measurement is based on its definition of "official development assistance," consisting of grants or concessional loans to developing countries to promote economic development. Military assistance is not considered official development assistance.