Bangladesh Burma Cambodia China East Timor Egypt India Indonesia Israel Jordan Lebanon Mongolia Morocco Nepal Pakistan Philippines Sri Lanka Vietnam West Bank and Gaza Yemen Asia and Near East Regional Abbreviations and Acronyms Glossary Previous Years' Activities 2000, 1999, 1998, 1997 Last updated: Tuesday, 05-Sep-2000 11:06:57 EDT

INTRODUCTION

Asia and the Middle East are strategically and economically important to the U.S. Over 50% of U.S. foreign trade and investment take place in the ANE region. ANE countries keep the world moving by supplying 50% of the oil to the U.S. and its Asian partners, and control crucial shipping lanes essential for international commerce. Instability in the region threatens U.S. national interests in stemming the proliferation of weapons of mass destruction, combating terrorism, and ensuring access for American business to commercial opportunities. USAID's development programs serve foreign policy objectives within Asia and the Middle East, particularly the promotion of international peace and prosperity, while simultaneously addressing the region's humanitarian needs.

U.S. NATIONAL INTERESTS

USAID programs in the ANE region further all three national security core objectives:

• Enhance American security - Economic assistance in the ANE region can promote regional and international stability by reducing competition for scarce resources that lead to military or civil conflict. Assistance helps bolster countries that neighbor rogue states (ensuring the latter's isolation) while also achieving critical development objectives such as improving access to, and the management and use of, their national and human resources. Through both bilateral and regional USAID activities, the U.S. works to mitigate potential conflicts in Asia and the Middle East.
• Bolster America's economic prosperity - Economic prosperity and growth aided by USAID programs increase demand for imports, thus broadening U.S. export opportunities. ANE countries represent the fastest growing regional market for U.S. merchandise exports, expanding 12% per year between 1987 and 1997. The East Asian financial crisis that began in 1997 created a downturn in demand for imports. U.S. exports to the region fell by more than $4 billion in 1997, putting roughly 50,000 American jobs at risk, and demonstrating the linkage between economic stability and growth in the ANE region to U.S. economic prosperity. USAID seeks to foster stability and peace throughout Asia and the Middle East, and guarantee international access to the region's oil reserves.
• Promote democratic governments and open societies - USAID programs that support the rule of law, good governance, free and fair elections, and civil society in the ANE region spread American values while helping create a more stable, secure, and cooperative global arena. Expanding democracy improves individual opportunity for prosperity. Transparent economic and government institutions and the rule of law encourage foreign investment and trade that benefit both local and American commercial interests.

DEVELOPMENT CHALLENGES

The ANE region faces significant challenges to development that impede progress towards U.S. national security core objectives. These challenges include:

• constraints to economic recovery and growth;
• weak democratic processes and institutions;
• threats to natural resources and the environment;
• socioeconomic inequities and disadvantaged populations; and
• population, health, and nutrition challenges.

Constraints to economic recovery and growth are manifest in different ways in ANE's subregions. In East Asia, the economies show signs of recovery two years after the financial crisis began: inflation has returned to pre-crisis levels and growth in gross domestic product in 1999 reached positive levels after declining sharply in 1997 and 1998. However, more needs to be done to improve financial and economic transparency and accountability before employment and real income can fully recover. In South Asia, economic liberalization swept the subcontinent in the early 1990s, but the pace of economic reform has slowed in recent years. South Asia houses almost 40% of the world's extreme poor, and lacks income-earning opportunities for much of its population. In the Middle East, protectionist economic policies including high tariffs and cumbersome regulations inhibit economic efficiency, foreign investment, access to credit and growth. Compared to all other regions, the Middle East scored lowest on the Trade Component of the Heritage Foundation's Index of Economic Freedom in 1999 (measures tariffs and non-tariff barriers). These barriers impede the area's economic growth and limit U.S. investment and exports to the region.

USAID response - The ANE Bureau will support programs that promote economic opportunities and growth across the region. In many countries, including Jordan, Morocco and West Bank/Gaza, the ANE Bureau has programs that improve access to financial services, help open markets, and help stimulate growth. Programs in Bangladesh, Cambodia and Lebanon focus on microfinance and small to medium-scale income-earning opportunities. In Indonesia, the Philippines, and Thailand, assistance to enhance financial and corporate governance will help protect against future threats to global economic security. Programs in Vietnam and several Middle East countries help open markets. The ANE Bureau has begun a new program in Sri Lanka that focuses on institutional reform, privatization, and industrial clusters that will increase the country's competitiveness in the global market place. The growth, prosperity, and employment opportunities that these programs foster will enhance the stability of these countries and their respective subregions. Economic growth should spur demand for U.S. exports and increase trade opportunities for American companies.

Weak democratic processes and institutions

Most of the countries in the ANE region have weak or nascent democratic institutions. Elections are often times not fair or held infrequently. Civil society is feeble and cannot hold governments accountable for human rights violations and respect for the rule of law. Improving transparency and accountability in government institutions, making governments more responsive to the needs of their citizens, and strengthening NGOs are crucial development tasks. Each subregion offers different opportunities for the U.S. to promote more democratic and open societies. In the Middle East, although countries such as Jordan and Morocco have shown some signs of improvement, more needs to be done to encourage respect for human rights and religious freedom, government transparency and accountability. Countries in this subregion are mainly considered "partly free" or "not free," according to a 1997 Freedom House survey. In East Asia, the U.S. must protect the newly democratic transitions in Indonesia and East Timor, and continue to help maintain the democratic transition in Cambodia. In South Asia, civil society groups must play a more robust role in their democratic societies.

USAID response - In Egypt, Mongolia and West Bank/Gaza, USAID programs strengthen the rule of law through judicial and legislative reform. Programs that encourage civil society and local governance are being undertaken in Bangladesh, Cambodia, Indonesia, the Philippines and West Bank/Gaza. USAID was instrumental in helping assure free and fair elections in Indonesia. The goal of all these USAID programs is to create and/or reinforce democratic institutions and promote American interests abroad.

Threats to natural resources and the environment

Large populations, industrialization, and economic growth have all put tremendous pressure on natural resources in the ANE region, threatening air quality, fresh water resources, forests, oceans, and plant and animal species. Thirteen of the fifteen most polluted cities in the world are in ANE, causing at least 1.5 million premature deaths every year. Another 500,000 Asians die each year from polluted water and poor sanitation. The UN projects that five of the world's megacities will be in South Asia by the year 2015 - making investment in cleaner energy and efficient industrial processes and technologies essential for successful development. Asian countries have had difficulty balancing industrial growth and natural resource management; for example, the region has lost 30% of its tropical forests over the past 30 years. Much of the Middle East and North Africa face an acute shortage of fresh water, which acts as an obstacle to development and to progress towards a comprehensive peace settlement.

USAID response - USAID environmental protection and natural resource management programs reflect specific country and regional needs. In India, Bangladesh, Nepal, and Sri Lanka, where rapid industrialization and economic growth have spawned pollution problems that threaten health and contribute to global warming, USAID is leading donors in the development of win/win approaches to reduce industrial pollution, mitigate the growth of greenhouse gases, and improve the economic efficiency of energy and industrial processes. These programs focus on the development of policies and incentives that encourage private sector investment in cleaner energy and industrial technologies. In the Middle East, USAID-supported programs work to resolve subregional water conflicts by merging best practices from consensus-based collaborative planning and local conflict management with technical expertise in water resources in Egypt, Jordan, Lebanon, and the West Bank/Gaza. USAID is helping improve the management of critical coastal and forest reserves, and promoting the transfer of U.S. environmental technology that mitigates land, water and air pollution in East Asian countries like Indonesia, the Philippines, Thailand and Vietnam. Foreign assistance in these areas leads to sustainable development, promotes stability, and protects Americans from transnational threats such as pollution and global warming.

Socioeconomic inequities and disadvantaged populations

Gender and socioeconomic disparities compound the challenges of grinding poverty in the ANE region. Poverty levels have remained relatively constant at about 40% in South Asia. These inequities keep disadvantaged populations from having a greater voice in their government's affairs, and are reinforced by lack of educational and economic opportunities. The inferior socioeconomic status of women in South Asia and the Middle East/North Africa contributes to a low value placed on female children and high female illiteracy rates. In India and Nepal, for example, adult male literacy is nearly 30% higher than that of adult women. When combined with intense economic pressures, these inequities contribute to high death rates among infant girls, trafficking in women and children, and child labor. The resulting poverty and gender gaps can feed disillusionment that provides fertile ground for political instability, terrorism and potentially war to take root.

USAID response - USAID supports literacy campaigns in Nepal and increased participation of girls in basic education in Egypt, India, and Morocco. These programs are the first steps in expanding women's participation in the economies and civil societies of the region. In Bangladesh, India, and Nepal, USAID has begun an anti-trafficking initiative that seeks to increase the capacities of regional and national organizations to sustain more effective prevention programs that will protect women and children. In Bangladesh and India, USAID has effectively integrated Title II and Development Assistance resources to improve the nutrition and household income of disadvantaged populations. These programs will help reduce the socioeconomic inequities that may eclipse other economic and political gains if not addressed.

Population and health challenges

Rapid population growth and the spread of infectious diseases represent a daunting challenge to development in the ANE region. Although nine countries have implemented successful USAID-led family planning programs (Nepal, Bangladesh, India, Cambodia, Indonesia, West Bank/Gaza, Jordan, Morocco, and Egypt) and achieved an average 16% decline in fertility between 1990 and 1998, the region still has some of the highest fertility rates in the world. In addition to population pressures, the 122% increase in the number of HIV cases between 1994 and 1997 in Cambodia, Vietnam and India (an estimated 8.2 million people were infected in 1997 in these three countries) and the re-emergence of drug resistant malaria and tuberculosis represent serious threats in South and East Asia.

USAID response - USAID is supporting population and health programs in almost every country in which it works. These programs are helping to slow population growth that puts additional pressures on scarce natural, economic and social resources, and can contribute to instability, migration and regional conflict. Where population pressures are most acute, in India and the Middle East countries of Egypt, Jordan and Morocco, the ANE Bureau has programs that are helping to stabilize population growth. Countries in all three subregions have implemented USAID programs to improve maternal and child health, including Cambodia, Egypt, India, Nepal and West Bank Gaza. USAID is designing a new regional infectious disease initiative that will address the specific threats of malaria and tuberculosis. This program builds on the experience gained from USAID regional HIV/AIDS prevention programs that address the cross-border spread of this disease in East and South Asia. These activities support America's national interests and security by helping to stem the spread of infectious diseases.

PROGRAM AND MANAGEMENT CHALLENGES

The development business is becoming increasingly complex. Development professionals today realize that solutions to critical challenges like slowing population and pollution growth, and promoting broad and fair participation in a country's political and economic systems are interlinked and require cross-sectoral responses. Similarly, challenges like the re-emergence and spread of deadly diseases, the growing worldwide threat from air and water pollution, ensuring participation in the globalizing economy, combating the trafficking of women and children are transnational in nature and demand transnational solutions. In response to these challenges, the ANE Bureau has undertaken several innovations. For example, virtually all country-level strategies now link efforts across sectors. In addition, ANE has developed and launched several regional initiatives to more effectively address transnational development challenges.

Managing these complex programs, with limited staff and budget resources, has demanded that ANE more effectively coordinate its efforts with those of other major donors, and more efficiently use its staff and the resources of its for-profit and non-profit consulting and NGO partners. In addition, the Bureau has reached out to partner with other U.S.G. agencies and the commercial private sector to mobilize and channel their expertise and resources towards these development challenges. While these efforts are beginning to show impressive results, they have required the Bureau to rethink its role from that as a leading practitioner of development to that of an innovator and mobilizer of other development resources. Making this change, and training staff to effectively assume this role, is probably the greatest management and program challenge faced by the ANE Bureau today.

OTHER DONORS

FY 2001 PROGRAM

In general, the bulk of ESF funds will continue supporting the Middle East Peace process and new programs under the Wye River accords. They will also fund bilateral programs in Cambodia and Mongolia; and contribute to democratic transitions in East Timor and Indonesia; economic recovery in East Asia; regional trade and investment in North Africa; child labor and anti-trafficking activities in South Asia; and regional democracy and environmental programs across the region. PL-480 Title II funds will support programs to improve child survival and nutrition in India, and enhance rural incomes and nutritional status in Bangladesh. The need for a new program in East Timor is under review.

On DA and CSD funding, this $369 million request represents $70 million above the FY 2000 appropriated level. As shown in the accompanying charts, these additional funds will first and foremost enable ANE to broaden our support for economic growth and democracy/governance programs that are critical to fostering competitiveness in the region while promoting U.S. economic and business interests.

The funds and their distribution will enable USAID to ensure balance and integration across sectors within its bilateral programs, and initiate new and continue ongoing regional initiatives that address critical transnational development challenges. For example, with the resources, the ANE Bureau will:

• Continue to play a catalytic role in the economic reforms taking place in East Asia and the Middle East through the AERA and North Africa Trade and Investment initiatives.
• Assist Indonesia, the Philippines and Thailand analyze their competitiveness in the regional and global economies as they recover from the financial crisis, and better identify the types of reforms that will attract long-term investment and ensure sustained economic growth.
• Continue and initiate new efforts to broaden and deepen economic governance reform across the three subregions through both bilateral and regional programs.
• Initiate the South Asia Regional Initiative/Energy Program to spur the integration of energy systems and investment in cleaner energy technologies in this part of the world.
• Launch a new private sector-led family planning program in the Philippines that will serve as a model for public-private sector partnership and re-energize reproductive health efforts.
• Launch a new regional infectious disease initiative that will complement bilateral programs and specifically address the re-emerging threats of malaria and tuberculosis.
• Build upon the successful regional HIV/AIDS program in East Asia through increased efforts in Cambodia and South Asia.
• Expand ANE's innovative and successful U.S.-Asian environmental partnership program to the Middle East.