critical investment in america national security. i recognize that the doctor and his team has made tough choices in this year's request, and i look forward to hearing more about those in our discussion today. i believe this is a budget that protects america's security interests and maintains global leadership while encouraging more efficient use of taxpayers' dollars. development along with defense and diplomacy is one of the three critical bronx that help to ensure america's national security. as chairman of the foreign relations committee subcommittee, i know first hand how assistance and development projects are not only the right thing to do, but they have a profound impact on global stability. often americans don't understand how the work affects their lives. aside from the humanitarian and moral imperative of improving lives in the world's neediest places, i would also like to

underscore how our develop assistance helps export markets and ultimately strengthens our job market. we have an economic interest in what we do globally as far as our development assistance is concerned. well continue to champion programs that bring transparency and good governance to the countries in which they are implemented. good governance is a critical part to our international involvement objectives. i also hold that empowering women is one of the most critical tools in our tool box to fight poverty and injustice. gender integration in the field and planning in d.c. must be a central part of any program. i defy anyone's assertion that women's empowerment should take a backseat to any other

requirement. many women around the world are doing the agricultural work and not getting the benefits of it. land reform is a critical part of our objectives. dr. smp hah i want to praise you for your release last week of female empowerment, making women and girls central to all assistance. this policy, which updates guidelines over 30 years old recognizes that the integration of women and girls is a basic thing across all things. it aims to increase the capacity of women and girls, decreasing inequality between genders and to decrease gender-based violence. as secretary clinton .the out 15 years ago, women's rights are human rights. i will continue to oversight

and advocate the programs under the jurisdiction of the subcommittee to receive appropriate funding and implementation with regards to these priorities and look forward to working with the department to achieve these goals. america's active engagement abroad serves our economic and strategic purposes but it rooted in our national values. under the bipartisan initiatives, we have battled the spread of h.i.v. in africa. today in conjunction with the global fund to fight aids, malaria and tuberculosis, 7.4 million people are receiving aids treatment. the focus of global health highlights the administration's commitment to creating sustainable solutions to development challenges. with more than $15 million spent in development programs in afghanistan since 2002, it

provides its largest programs to that country. with that money and effort, afghanistan has achieved some notable gains. we should give credit to the men and women of usaid. improvements in maternal and infant mo talt rates, new women-owned small enterprises. all of these underscore that when executed properly in close alignment with the people, the united states can make a huge difference in development. the challenge is to learn lessons from these and focus on what is sustainable given the resources and changeable environment in afghanistan. i have concerns that increasing those standards is increasingly slipping out of our grasp. our civilians are operating in a challenging environment and have an sumed considerable

risk. since 2003, 387 usaid partners have been killed in action, and another 658 wounded in action. moving forward, their safety must be our up most concern. unity of effort across government will be critical to getting it right. if a civilian program lacks achievable goals, it should be scaled back. we must keep good governance, fighting corruption and gender integration at the core of our work. u.s. spending of international affairs has been a target of budget cutting. if the united states is to remain a global power, it must sustain our global efforts. as secretary clinton put it last week, this is a down payment on america's leadership in a fast changing world. rather than salasing the budget, we in congress should

work on reforming the international affairs budget, especially to ensure foreign aid is used more efficiently. i look forward to working with you and your team, and i look forward to your testimony. with that let me turn to senator lugar. >> thank you. i join you in your praise and memory of our colleague, congressman donald payne of new jersey. we both had the privilege of being with don payne and his brother during conferences abroad and other instances of his service in the foreign policy of our country and especially of africa. we will miss him. it is a joy to welcome you, doctor. i admire you very much as i have told you from the beginning. your willingness to undertake this awesome responsibility, we are grateful.

you are here before the committee again today. as i emphasized to skt clinton at her hearing last week, we received budget testimony amid continued challenges here at home with the unemployment rate for americans at 8.3% nationally, 9% in my home state of indiana. our national debt has grown to more than $15 trillion. this scenario brings great pressure on our government's financial obligations and places our entire economy at some risk. in this context, the dollars available for global developments will necessarily be limited. the task before us today is to ask whether our government is using those dollars as efficiently as possible to achieve the most benefits for u.s. foreign policy and development goals. our foreign assistance should be targeted at sustainable development that promotes self stishes -- sfishes and produces

demonstrable results. and support the strengthening of democracies and promote the rule of lows in those democracies. as a path allows nations to become effective trading ar partners on a world stage, it is very important that we be of assistance. the administration has identified global food security, global health and global climate change as the highest priorities for our development assistance this year. historically there has been broad support for the united states participation in efforts to field vulnerable populations and to combat infectious diseases. i will be interested to learn from the administration the degree to which our food programs have engaged our own farmers and our agricultural research institutions to achieve greater productive and

higher yields with countries struggling with food insecurity, global health investments raise several questions. the priority of the global health initiative in combatting infectious diseases, or is it building structures. how is the agency setting a priority? in what ways are policies moving to country ownership? what is our strategy and time table for turning those responsibilities over to recipient countries? as administrator shah knows, i have had misgivings about usaid's global climate change initiative, which under this budget would receive $470 million. i have raised questions about the rationale behind the program and a number of projects proposed under this nish it have, especially in the

subcategory of aadaptation. my concern is it is being asked to devote resources to a politically determined objective rather than to maximizes development impact. in other words, if there were not a climate change basket to fill, with all these projects be truly worthy on their developmental merits. we should recognize that $470 million worth of projects is not going to yield global benefits. so the benefits of these projects are meant to be local, and if that is the case, then we should be applying rigorous standards on that basis to every development dollar spent. hunger and disease are so fundamental to the human condition and so on instructive to the advancement of society that in most cases their connection to basic development goals is apparent.

in my observation, adaptation projects under the climate change initiative have a weaker connection to basic developments and their results. it would be more difficult to measure. my intent would be to ask the general accountability office to examine the project and where it would yield results at a time of diminishing resources. as i did with second clinton last week, i would like to express appreciation to the men and women of usaid, who toil under difficult and sometimes thrillening conditions to carry out our nation's programs abroad. they are dedicated public servants, and we are grateful for their willness to serve. i look forward to hearing from the administrator and our further discussion. thank you. >> dr. shah, i would be glad to

hear from you. >> thank you chairman and members of the committee. i am honored to have the opportunity to be here and look forward to your guidance and our discussion. on the president's budget request for usaid. i want to take a moment to recognize representative payne. he took time to offer specific counsel to me and our staff on regular basis. he has visited nearly every african mission, and we were proud to support a modest fellowship to improve our efforts to build a diverse work force in partnership with his efforts and ideas. two years ago we were asked to elevate development as a core part of our national security and foreign policy strategy. we recognize that this work is so important that is has required us to do things

differently. it has required us to be more responsive to national security priorities, more effective in foreign policy priority contexts, while being much more results oriented and efficient in achieving core development results in food, security, health, water and sanitation, education, humanitarian assistance, resistance to climate change, governance and basic respect for human rights. in this budget request we believe we have made tough choices, choices that are leading us to focus and concentrate our investments where we can generate the most value for every taxpayer dollar invested. in priority areas like food and health, we have taken extra efforts to cut programs and reallocate resources to those specific countries where we think we can get the most results for every dollar that we invest. our maternal health program,

for example, has been reduced to 24 priority countries in order to support those places where the burden of disease is highest and where we can get the most results. our feed the future health have closed out places like kosovo. this approach has been the hallmark of our usaid forward. very difficult settings are already making a big difference. we focus more on monitoring and

evaluation. the american evaluation association has recognized our efforts and called them a gold standard for the federal government and suggested that other part of the federal government may take a similar approach. we are proud of that, and this year we will be publishing more than 200 independently peer reviewed evaluations on our website so taxpayers and everyone else can see what results we are getting for the resources we invest. fundamental to our reforms, we have changed our model of partnership to work more effectively with faith-based institutions, private sector companies, with universities that have technology and ideas to add, and most importantly with a broad range of local institutions, local civil society groups, businesses, banks and more directly with governments. they are designed to help us be more efficient and to provide just one example in senegal by

restructuring your education program to work with local institutions, we brought the cost down by almost 55% and allowed us to build twice as many schools for the stame amount of money, which results in more girls getting an education. this budget include a focus on our top priorities. the state aid budget request includes a $770 million fund to support and provide the responsiveness necessary to respond to the situation in the arab spring. in states like iraq, afghanistan and pakistan, we continue to implement our reforms based on accountability, making sure we are making the footprint of our work sustainable and doing what we can to ensure that the societies and countries have a pathway to success without long-term u.s. assistance and engagement at current levels. in each of these areas, we believe there have been

significant results, and the challenge will be ensuring that they are sustained through a broad international partnership and more domestic investment and responsibility. our core priorities are represented in this budget. the budget request of $7.9 billion is the largest single item and allows us to achieve the goals we have laid out. the president's program for eights relief will be able to treat more than six million patients, be on a path to put six million patients on treatment, while maintaining international commitment to make sure we reach every pregnant woman that is h.i.v. positive with drugs to prevent the transmission to children. we will be able to meet our program objectives in the malaria program in which we have already seen more than 30% reductions in child mortality related to what i believe is one of the most efficient global health programs out there.

and we believe there are major new opportunities on the horizon with the introduction of new vaccines and the lowers of costs in terms of saving children's lives and saving mothers' lives. we are focused on acheefering those opportunities in a results oriented manner. our food programs have represented a new way of doing business over the past two or three years. the president's program has helped to work in nearly 20 countries to expand acked to development and has done so by engaging local u.s. institutions that have technology to add, including u.s. universities and farmers groups. the program is now generating specific results. in haiti we are seeing rice fields increase by 170%. in kenya we note that 90,000 dairy farm household have experienced an income increase of more than $14 million on an

annual basis. and bangladesh today has enough rice to feed itself. overall since launched, we have seen in the 20 target countries an alcultural productive increase 5.8%, which is more than eight times the global average of 0.7%. and because of a more structured and results oriented focus on nutrition, we are seeing the rate of child stunting in our programs go down. it is those types of results that we hope to speak more about and deliver more effective in a more transparent effort through these initiatives. i would like to close by thinking our staff. we have asked our staff to do extraordinary things in some very challenging and often dangerous environments. we appreciate your mentioning the issue of how many of our staff have lost lives or our partners have lost lives. perhaps the most telling moment for me personally this past year was at the end of a conference we had held, the first one since i have been

administrator with our mission directors, our leaders around the world. they were in, and we had talked through these reforms and initiatives, and this more results oriented approach, and at the end of the conference a number of them stood up and said that they were committed to take these reforms forward even though it often means more work, and it often means more uncertainty, and it means changing the way we work because they saw value in it, and they saw that by doing so, we could become the world's premier agency, and this country deserves to have an institution that performs at that level. thank you. >> dr. doctor, thank you for that update on the budget. i join with senator lugar in complimenting the did dedicated people you have working for you. i had a chance to meet with some of your mission leaders, and they are incredible people, and i applaud you for the people that are working with you on this.

i want to talk a little bit about the overall budget props. you have certainly mahut a good face on this, but the truth is the budget is very tight. it is basically a no-growth budget. you have to make some very difficult decisions. so far you have indicated that you want to be more efficient, and we all want you to be more efficient. your example in senegal was impressive. we also know that you are moving forward with new initiatives, as you indicated, the middle east with arab spring, the initiative there. there are resources made available in several other areas. last year in a speech you made to the center for global development on the modern development enterprise, you mentioned by 2015 usaid could graduate away from assistance in at least seven countries, actually close the emissions in those countries. can you give us an update with this tough budget -- and i am one who would like to have you

-- to see you have a larger budget. what type of programs are likely to see -- might have to be compromised in order to be able to meet the highest priorities that we have, knowing full well that efficiency can only take you so far? >> i think this budget does represent our best effort to focus and concentrate. we have cut or reduced more than 165 specific programs. we have made real reductions in each area where we work to concentrate our resources. i mentioned maternal health where we shut down 20 or 25 country programs in order to reallocate those resource toss places where the burden of disease was higher and where we felt we could generate more lives saved with the investment of the same dollars. we are on past to, as i mentioned in that speech, close out a number of our missions. places like panama and montenegro, that can take the

costs on of doing what we were doing. and that country ownership is a major part of the strategy. we think of that as success when we are able to achieve that outcome. there are 11 more missions where we are actively reducing our expenditures quite significantly and ultimately will go down to zero as those countries take on more responsibility. so part of it is a geographic focus and reallocation. money of the results oriented initiatives by focusing in places where the problem is most acute and most solveable are investing resources in africa, perhaps at the expense of other regions and geographies. these are tough choice toss make. we have reduced in this budget commitments to certain parts of our environmental portfolio in order to focus on delivering human outcomes in a clear and

specific way. and when we are forced to do that, we try very hard to make sure we work with our international partners and explore whether others can take up the burdens of those costs and programs so that the benefits don't go away. but we have had to make those types of tough decisions in this budget. >> thank you. the administration has said it wants to make aid more transparent, a goal that i know senator lugar and i both agree. transparency is important so that we can trace how the funds are being used. part of that is to deal with the corruption in countries around the world and to protect whistle blowers who can help us in making sure that our funds are being used for its intended purpose. can you just give us an update as to how you are proceeding on advancing transparency in usaid, and our goal of more sustainable governments where the fund are actually being used for the people? >> thank you.

this has been an area where we have tried to move from being seen as intrance jent in the global community to being the world leader. we have signed on to join the international aid transparency initiative, which sets standards for fiscal and investment transparency. we announced that in south korea recently. we have launched the website which puts all expenditures in the public do main. so there is clarity. we have tested different strategies in our websites and in country to expand transparency, and i would highlight the new pakistan country website that lists every program we support in pakistan. it has a way to go and can get better, and we will be relaunching the site completely this june. people can click through and see every program we have

everywhere. and we will be launching a evaluation database so that all of our program evaluations are made public within three months of the completion of a program. there will be no earth to edit those independently conducted evaluations. they will be a part of a public database and by the end of the calendar year we will have 250 of those evaluations. it will be the largest and most significant repository of any institution worldwide. we are proud of what we are trying to do there, but we know we have a long way to go and will stay focused on that. >> keep us informed on those initiatives. there is a great deal of interest. i mentioned in my opening statement the initiative on gender equality for focus on women and girls. would you bring us up to date briefly as to how you are integrating that priority into all of our usaid programs? >> sure. we have launched a new policy

as you mentioned just last week that is the culmination of more than a year's worth of work to make sure that we integrate gender programming in everything we do. the challenge hasn't been knowing that is the right thing to do. the challenge has been operationalizing it. this was the first operational policy issued in three deck eights to achieve that goal. in agriculture, health, trafficking, in all areas we will be beginning measures the impact of our programs on women and girls. for agriculture we have launched a women's empowerment index, which generates data on how our programs preferentially help women, and where they don't, why. i think those kind of measurement policy tools will make a big difference. that is one part of a sweep of activities that is being

coordinated by our new gender coordinator in the office, and i think it is making a very big difference. >> thank you. >> mr. chairman, are you going to hold the record open for questions? i had several questions. >> yes, we will be holding open the record. >> thank you. >> senator lugar? >> dr. shah, you have mentioned that the great advances in productivity worldwide in countries you have reported, 85% increaseses with rice. one of the great disputes in the past in terms of agricultural advance has been resistance to genetically modified seed. this has come perhaps because of some european influence on some african countries we have found. but that influence was such that productive increaseses

were not much, and in the cases of bad weather, scast reduce. i am curious how you have overcome that resistance, which is still the case in many european economies. i have visited with german farmers and others even in the ukraine, there is the holding to the thought that this generally infects the soils or waters or is an environmental hazard apart from a boost in nutrition. can you describe your success or how you have moved in this case? >> thank you, senator. as we have discussed previously, we have been focused on making sure we use all available appropriate technology to help in particular vulnerable small-scale farmers, 70% of whom in subis a heroin africa are women. we know that is directly

correlated with improved human outcomes and child nutrition. our strategy here has been one of engaging real partnerships with country so that today we are actually testing both a hybrid, conventional and transgeneralic technologies on the ground with countries on their ground with their research stations. i think once scientific institutions develop their own products that have a broad range of technologies, they ought to have the capacity to make their own judgments about what technologies are appropriate as opposed to taking guidance from outside partners, whether it is the european partners or anyone else. i think we have seen in places like transnorth korea where we have been engaging that way -- tanzania, a change in the mindset and even eagerness to use seeds that are

conventionally improved, but yielding results, tripling maze yields in kenya. there are a number of new varieties in tanzania that are ready for introduction. i don't think we have overcome it completely, but we are focused on ensuring that the farmers have the tools and technologies that help them escape poverty. >> thank you. i have an emotional bias. on my own farm, we are getting 400% more production in corn than my dad did 50 years ago. i have seen in my lifetime the change in acreage with the seed, fertilizer and agricultural methods. that kind of change worldwide would make an enormous difference in human kind. but you have an influence to make it through those breakthroughs. i am pleased there is some good data, but more power to you in

moving ahead there in a humane way. i am curious on the health front. so what extent, as changes occur there that are wonderful for people, our institutions are changing in terms of the recipients of ussaid support in health. do you see the building of institutions that are going to continue that work after usaid no longer has a flow of cash coming in? i know you are working on this, but what sort of markers can you give us of progress? >> this has been a central part of our health strategy and our entire strategy in terms of how we work with countries. i would providence ace by saying before we invest directly in local institutions for the purpose of building up their capacity and experience in delivering services, and using new vaccines or new improved insecticide treated bed nights, we do a rigorous assessment to make sure we can

vouch for the accountability and resources that they are not lost or stolen and that they are generating results. that is the big defining trend in global health over the next 5-10 years, will be countries taking more direct responsibility for providing health services for their populations. we can play a critical role in starting that process, and so we are very focused on doing that. there are some countries that are doing a particularly effective job of that. one example of success is afghanistan. seven or eight years ago we made the determination to work to build up the capacity of the ministry of public health there. today we now have data that shows over the last eight years, afghanistan has seen the most rapid reduction of maternal mortality on the planet and has a ministry essentially in charge of their health system. they still need a lot of help from outside partners and for securing finance, but that is the pathway to sustain ability.

people would not have thought eight our nine years ago when they had no capacity to do this, that this would have been one of the biggest success stories in the global health arena. >> i hope your reports will give data about the so-called sustainability in afghanistan, and for that matter in iraq, where we still have a program that is important. as opposed to it simply being absorbed in the war efforts and lost in the process in terms of its continuity. i would ask just one controversial country situation now. we have run into a lot of problems with egypt, and we have heard that even polling egyptians that the if the united states may withdrew $1.5 billion in support, and they are saying we don't care.

what is your on the ground situation in egypt at this point? >> well, it has been a challenging few weeks, of course, as you are aware. we took the position that we really wanted to see resolution to the issue with respect to n.d.i., and i.r.i. and their staff. that situation is still active and still being worked. we are pleased to see the u.s. staff be able to leave -- or the international staff. there are still remaining and outstanding issues there we are working through. with respect to the remainder of our problematic approach, we remain focused on trying to make sure that is successful, responsive to the critical needs, but in a context where we are trying to work through some of these issues as a condition to continue that overall approach. >> thank you. >> senator menendez? >> thank you. dr. shah, thank you for your service.

i have to be honest with you, though. i don't understand -- and i know what you answered last year when i raised this question with you, so you are going to have to do better this year and the answer you gave me last year, because i have waited to see. that is my concern about what is happening in latin america and the caribbean. as in many regions of the world where usaid works, the absolute level of u.s. assistance to the countries of latin america and the caribbean has begun to deadline. however, in latin america, unlike africa, south and central asia and the middle east, so, too, has the proportion of u.s. aid going to the region. so that is a compounding factor. between fiscal year 2008 and 2012, u.s. assistance to latin america and the caribbean fell

from $2.1 billion to $1.8 billion, a 13% assistance. latin america now receives only 8% of our lateral aid, where in 2008 it received 10%. looking over this year's funding request, i am alarmed by what i see. the spending request for e.s.f. is down 7% from last year and a whopping 21% from 2008. even direct assistance to guatemala is down slightly even though the "miami herald" shocked no one when it asked the president of guatemala whether his country had the possibility of being the next somalia, knowing the drug cartels are overwhelming not only the government, but several other governments as well. i know you told me last year, and it has only gotten worse,

that your theory of budgeting that gets the best bang for the buck. but not if that means ignoring the areas where some of the need is the greatest. when i look at the western hemisphere, our own front yard, i look at what is happening in undermining these countries through the narcotics trafficking. i look at the resurgence of health issues that were once cured like tuberculosis, and i see the rise of it. of course disease knows no borders. when i talk about undocumented movement to this country, and i look at what creates that movement. when i see movements that are anti-democratic in the region, continuously challenging their citizens in terms of their fundamental rights, and the list goes on and on, i don't quite understand what it is that the administration

. .