Foreign Assistance
U.S. Funding for Democracy-Related Programs (China) Gao ID: GAO-04-445R February 27, 2004In fiscal year 1999, Congress began authorizing the provision of U.S. foreign assistance funds to support programs aimed at strengthening democracy in China, and, in fiscal year 2002, it began appropriating specific amounts for such programs. However, the provision of foreign assistance funds to programs focusing on China continues to be controversial due to concern about some of the Chinese government's human rights practices and certain of its economic, political, and security policies. The House Committee on International Relations expressed concern about the lack of a complete picture of U.S. funding for democracy-related programs focused on China. In response to this concern, we determined how much funding the U.S. government has provided for programs intended to strengthen democracy in China for fiscal years 1999 to 2003, in total and by year, and identified the agencies responsible for administering the funds, as well as the intended purposes of the programs they support. While we focused primarily on bilateral programs, we also briefly describe democracy-related efforts of multilateral institutions that the United States helps support.
In fiscal years 1999 to 2003, the United States provided more than $39 million in bilateral support for programs intended to strengthen democracy in China, with average annual funding levels increasing from about $2.3 million in 1999 and 2000 to about $14.4 million in 2002 and 2003. State provided about 45 percent of the total funds (nearly $18 million), primarily to support programs to enhance the rule of law. The National Endowment for Democracy provided about 38 percent of the total (more than $15 million) for programs aimed at a variety of purposes, such as strengthening labor rights and reforming electoral systems. Labor provided the remaining 17 percent ($6.4 million) to enhance protection of internationally recognized workers' rights.
GAO-04-445R, Foreign Assistance: U.S. Funding for Democracy-Related Programs (China)
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Washington, DC 20548:
United States General Accounting Office:
February 27, 2004:
The Honorable Henry J. Hyde:
Chairman:
The Honorable Tom Lantos:
Ranking Minority Member:
Committee on International Relations:
House of Representatives:
Subject: Foreign Assistance: U.S. Funding for Democracy-Related
Programs (China):
In fiscal year 1999, Congress began authorizing the provision of U.S.
foreign assistance funds to support programs aimed at strengthening
democracy in China,[Footnote 1] and, in fiscal year 2002, it began
appropriating specific amounts for such programs.[Footnote 2] However,
the provision of foreign assistance funds to programs focusing on China
continues to be controversial due to concern about some of the Chinese
government's human rights practices and certain of its economic,
political, and security policies. In your request to us and in
subsequent meetings with your staff, you expressed concern about the
lack of a complete picture of U.S. funding for democracy-related
programs focused on China.
In response to your concern, we determined how much funding the U.S.
government has provided for programs intended to strengthen democracy
in China for fiscal years 1999 to 2003, in total and by year, and
identified the agencies responsible for administering the funds, as
well as the intended purposes of the programs they support. While we
focused primarily on bilateral programs, we also briefly describe
democracy-related efforts of multilateral institutions that the United
States helps support. Information on these programs is provided in
appendix I.
To address our objective, we reviewed and discussed relevant program
documentation and funding information with cognizant officials
administering democracy-related programs focused on China--primarily
at the Departments of State and Labor and the National Endowment for
Democracy. Also, we met with cognizant officials and reviewed
documentation for democracy-related programs in China under the United
Nations, the Asian Development Bank, and the World:
Bank. (See the scope and methodology section for a more complete
discussion of our approach.):
Results in Brief:
In fiscal years 1999 to 2003, the United States provided more than $39
million in bilateral support for programs intended to strengthen
democracy in China, with average annual funding levels increasing from
about $2.3 million in 1999 and 2000 to about $14.4 million in 2002 and
2003. State provided about 45 percent of the total funds (nearly $18
million), primarily to support programs to enhance the rule of law. The
National Endowment for Democracy provided about 38 percent of the total
(more than $15 million) for programs aimed at a variety of purposes,
such as strengthening labor rights and reforming electoral systems.
Labor provided the remaining 17 percent ($6.4 million) to enhance
protection of internationally recognized workers' rights.
Background:
Advancing democracy is an important overall theme in U.S. foreign
policy--for example, the Strategic Plan 2004-2009 issued by the
Department of State and the U.S. Agency for International Development
identifies democracy, security, and prosperity around the world as the
three key underlying concerns for U.S. foreign operations. Democracy
programs have become a prominent element in U.S relations with many
developing and transition countries.[Footnote 3]
Beginning with fiscal year 1999, Congress began authorizing the use of
Economic Support Funds[Footnote 4] to support China-focused democracy
programs, so long as the funds went to nongovernmental organizations
located outside China.[Footnote 5] In addition, in the October 2000 law
that approved the normalization of U.S.-China trade relations, Congress
authorized the Departments of State, Labor, and Commerce to initiate
rule of law programs in China.[Footnote 6] In appropriations language
for fiscal 2002,[Footnote 7] Congress dropped the limitation that
grants from Economic Support Funds could be provided only to
organizations located outside China and directed that "not less than"
a specific amount ($10 million) be made available for programs aimed
at supporting democracy, human rights, and the rule of law in China.
For fiscal year 2003, Congress appropriated not less than an
additional $15 million for such programs. In appropriations acts and
accompanying congressional committee reports, Congress directed that
certain amounts of these funds be used to expand State and National
Endowment for Democracy[Footnote 8] grants.[Footnote 9]
U.S. Democracy-Related Assistance Has Totaled about $39 Million:
As shown in table 1, during fiscal years 1999 to 2003, the United
States provided more than $39 million for democracy-related programs
focused on China, with average annual funding levels increasing from
approximately $2.3 million in fiscal years 1999 and 2000 to about $14.4
million in 2002 and 2003. These funds have been provided primarily as
grants through State, the National Endowment for Democracy,[Footnote
10] and the Department of Labor.[Footnote 11]
Table 1: U.S. Assistance for China Democracy-Related Programs by Fiscal
Year:
(Dollars in thousands).
Agency/bureau; Department of State[A]; Bureau for Democracy, Human
Rights, and Labor Grants;
Fiscal year 1999: [Empty];
Fiscal year 2000: [Empty];
Fiscal year 2001: [Empty];
Fiscal year 2002: $3,827[B];
Fiscal year 2003: $5,306;
Total: $9,133.
Agency/bureau; Department of State[A]; Bureau for East Asia and
Pacific Affairs Grants;
Fiscal year 1999: [Empty];
Fiscal year 2000: [Empty];
Fiscal year 2001: $2,135;
Fiscal year 2002: $2,300;
Fiscal year 2003: $3,155;
Total: $7,590.
Agency/bureau; Department of State[A]; Bureau for International
Narcotics and Law Enforcement Affairs;
Fiscal year 1999: [Empty];
Fiscal year 2000: [Empty];
Fiscal year 2001: $489;
Fiscal year 2002: $476;
Fiscal year 2003: [Empty];
Total: $965.
Agency/bureau; Total State: $
Fiscal year 1999: [Empty];
Fiscal year 2000: [Empty];
Fiscal year 2001: $2,624;
Fiscal year 2002: $6,603;
Fiscal year 2003: $8,461;
Total: $17,688.
Agency/bureau; National Endowment for Democracy;
Fiscal year 1999: $1,887;
Fiscal year 2000: $2,662;
Fiscal year 2001: $3,096;
Fiscal year 2002: $3,144;
Fiscal year 2003: $4,228;
Total: $15,017.
Agency/bureau; Department of Labor, Bureau for International Labor
Affairs;
Fiscal year 1999: [Empty];
Fiscal year 2000: [Empty];
Fiscal year 2001: [Empty];
Fiscal year 2002: $6,400;
Fiscal year 2003: [Empty];
Total: $6,400.
Total;
Fiscal year 1999: $1,887;
Fiscal year 2000: $2,662;
Fiscal year 2001: $5,720;
Fiscal year 2002: $16,147;
Fiscal year 2003: $12,689;
Total: $39,105.
Source: Prepared by GAO with data from the Departments of State and
Labor and the National Endowment for Democracy.
[A] To avoid double counting and to more accurately show the level of
funds being provided to project implementers, State Bureau for
Democracy, Human Rights, and Labor funds transferred to the Endowment
and allocated to projects are included in the annual totals for the
Endowment.
[B] Includes $75,000 provided by State's Bureau of Oceans and
International Environmental and Scientific Affairs.
[End of table]
Department of State:
As shown in table 1, in fiscal years 1999 to 2003, State administered
about $17.7 million, or more than 45 percent, of total U.S. funding for
programs intended to strengthen democracy in China. Most of this was
provided as grants to nongovernmental organizations, with the largest
share awarded through the Bureau for Democracy, Human Rights, and Labor
beginning in fiscal year 2002. Overall, State's assistance has gone
predominantly to programs to enhance the rule of law--an area where
China's government has acknowledged need for improvement and has
actively sought assistance from the donor community.
In 2002 and 2003 the Bureau for Democracy, Human Rights, and Labor
approved nearly $9.1 million in China-focused grants through the
Bureau's Human Rights and Democracy Fund.[Footnote 12] According to
State, grants made through this fund are intended to "uphold democratic
institutions, promote human rights, and build civil society in
countries and regions of the world that are geo-strategically critical
to the U.S." State classifies approximately half of the assistance
provided through the fund over the last 2 years as legal reform
programs intended to address, among other things, China's need for
improved court proceedings, increased professionalism among lawyers and
judges, and enhanced capacity for providing legal services to the
disadvantaged. Several of State's grants support work to be undertaken
in cooperation with Chinese government entities and/or with academics,
consulting firms and nongovernmental organizations in China. For
example, one project includes support for working with the Supreme
People's Court, the National People's Congress and other counterparts
to promote criminal defense reforms in China; another project funds a
partnership between an American university and a legal reform
consulting firm operating in China to help develop China's system for
providing legal aid in rural communities.
Other rule of law efforts were funded through the Bureau for East Asia
and Pacific Affairs, which granted about $7 million to the Temple
University School of Law to support legal education activities in
China.[Footnote 13] This Bureau also provided $175,000 to the U.S.
Embassy in Beijing for a small grants program focused on enhancing the
rule of law;[Footnote 14] and, in fiscal year 2001, it provided
$385,000 to the American Bar Association to strengthen the legal
framework for and civil society participation in protecting China's
environment.[Footnote 15] In addition, the Bureau for International
Narcotics and Law Enforcement Affairs provided $965,000 for a resident
legal adviser in the U.S. Embassy in Beijing for a 2-year term, ending
in August 2004.[Footnote 16] The advisor's mission is to engage with
Chinese counterparts to stimulate justice sector reforms through (for
example) bilateral discussions and programs focusing on substantive and
procedural criminal and civil law topics.
National Endowment for Democracy:
During fiscal years 1999 to 2003, the Endowment awarded more than $15
million in grants aimed at enhancing democracy in China--about
38 percent of total U.S.-government funded support for democracy-
related programs during this period. Because appropriations to the
Endowment did not preclude it from making grants focusing on China, it
was able to make grants for such purposes prior to fiscal year 1999.
For example, the Endowment reported granting about $2.5 million for
China programs and projects during fiscal year 1998. Endowment
officials noted that these grants were made using the organization's
"core" appropriations, which are noncountry specific. Since fiscal year
1999, the Endowment has continued to grant more than $2 million per
year (on average) for China-related programs from its annual core
appropriations. In addition, however, State has transferred nearly $8
million to the Endowment for China-specific grants and, beginning in
2001, the Endowment has used these funds to increase its total grant
volume for China-focused projects by about $808,000 per year, on
average. Endowment officials stated that these additional funds have
not dramatically changed the orientation or character of Endowment
support for programs in China. While noting that the Endowment's
highest priorities for China are human rights and the free flow of
information, these officials observed that the Endowment supports
activities in a variety of areas, including human rights (documentation
and advocacy) and independent media, as well as labor rights, electoral
and legal reform, policy analysis by independent think tanks, and
promotion of free markets.[Footnote 17]
Department of Labor:
In fiscal year 2002, the Department of Labor's Bureau for International
Labor Affairs awarded a total of $6.4 million to nongovernmental
organizations to help improve the content and application of labor laws
and regulations and enhance mine safety, with the latter effort to
include measures to strengthen enforcement of worker safety laws and
regulations. As noted with regard to State's grants, Department of
Labor grants have focused on areas where the Chinese government has
acknowledged a need for improved practices and has sought foreign
assistance.
Agency Comments:
Officials at the Departments of State, Labor, Justice, and Treasury;
the U.S. Agency for International Development; the National Endowment
for Democracy; the International Labour Organization; the United
Nations Development Program; and the United Nations High Commissioner
for Human Rights provided oral comments on a draft of this report.
Overall, they found the report to be an accurate description of the
agencies' programs. In addition, these officials provided technical
comments that we have incorporated into this report, as appropriate.
Scope and Methodology:
To determine how much funding the U.S. government has provided for
democracy-related programs in China during fiscal years 1999 to 2003,
and to identify the agencies responsible for administering the funds
and the intended purposes of the programs they support, we reviewed
relevant program documentation and met with cognizant officials at the
Departments of Commerce, Labor, and State; the National Endowment for
Democracy; and the U.S. Agency for International Development. We also
met with officials at several major grantees, including the Temple
University School of Law and the American Bar Association. We asked the
organizations how much funding they had provided based on their
definitions of democracy-related programs.
To develop similar information about democracy-related programs
undertaken by multilateral organizations, we reviewed program
documentation and met with cognizant officials from the United Nations,
the Asian Development Bank, and the World Bank. We obtained publicly
available data for programs that these organizations identified as
strengthening democracy, human rights, and/or the rule of law.
The funding data contained in this report were provided by agency
officials at our request. While U.S. agencies and grantees provided
annual funding information, the multilateral organizations we contacted
provided us with life-of-program funding data. Thus, we are reporting
budget data for multilateral organizations in this format. Since State
and the Endowment made multiple grants, we consulted with officials
from both organizations about the methodology they employed to maintain
and report information on their grant awards. Based on our discussions
with U.S. and multilateral organization officials and our examination
of the documentation we were provided, we concluded that the data we
obtained were sufficiently reliable for the purposes of this
engagement. However, because of differences in the definition of
democracy-related programs, the data may not be directly comparable
between the U.S. agencies and multilateral organizations.[Footnote 18]
We conducted our work from August 2003 through February 2004 in
accordance with generally accepted government auditing standards.
We are sending copies of this report to interested congressional
committees; the Secretaries of Commerce, Justice, Labor, State, and
Treasury; and the Administrator of the U.S. Agency for International
Development. We will also make copies available to others upon request.
In addition, this report will be available at no charge on the GAO Web
site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-4128 or at FordJ@gao.gov. Janey Cohen, Simin
Ho, Al Huntington, Michael McAtee, and Richard Seldin made key
contributions to this report.
Signed by:
Jess T. Ford, Director:
International Affairs and Trade:
Enclosure:
Democracy-Related Assistance to China Provided by Multilateral
Organizations Supported in Part by the United States:
Three United Nations' (UN) organizations--the UN High Commissioner for
Human Rights, the International Labour Organization, and the UN
Development Program--support programs in China that are explicitly
aimed at strengthening democracy, human rights, and/or the rule of law.
The Asian Development Bank and the World Bank also support programs
aimed at relevant purposes, such as strengthening the legal system,
although the Banks' articles of agreement preclude interference in the
political affairs of any member country. In total, these agencies
identified more than $82 million in relevant funding for projects
initiated in or continuing from 1999. U.S. support accounts for about
22 percent of the budgets of UN organizations, about 16 percent of the
budget of the Asian Development Bank, and about 18 percent of the
budget of the World Bank.
United Nations Organizations:
The UN High Commissioner for Human Rights and the International Labour
Organization have negotiated Memoranda of Understanding with the
Chinese government through which these organizations provide technical
support for China's ratification and implementation of international
human rights and labor treaties. For 2002 to 2003, the High
Commissioner budgeted $951,820 to provide such support. Officials at
the International Labour Organization identified a total of about
$8.7 million in 1997 to 2004 funding for activities related to
promoting respect for labor rights in China-as well as creating greater
opportunities for employment and enhancing social protection for
workers. Of this amount, about $2.9 million represents funds provided
from the organization's own budget--the remainder was provided by
individual donor countries or organizations.[Footnote 19] Organization
officials could not separate those portions of their programs aimed at
enhancing labor rights from those devoted to other purposes. The UN
Development Program has laid out strategies on promoting human rights,
rule of law and democracy in China, and the organization's budget for
related activities in that country from 1996 through 2007 is about
$38.3 million. These funds support a variety of activities, including
programs aimed at reforming electoral systems and training participants
in the legal system on international best practices in criminal law.
Out of the total amount, the UN Development Program is funding about
$7.2 million while the remainder is being provided by bilateral donors
and the Government of China.
Multilateral Development Banks:
Both the Asian Development Bank and the World Bank have identified
improving the functioning of China's markets as a major point of
emphasis in their country assistance strategies, and both cite
promotion of the rule of law and improved governance as important
concerns. For the period 1999 to 2006 the Asian Development Bank
reports budgeting about $35.5 million for technical assistance to China
on legal systems and governance. These funds support a variety of
efforts, including programs aimed at building a stronger legal and
regulatory framework and efficient judicial system, supporting
financial and fiscal reform, improving local public administration
capacity in less developed provinces, and broadening public
participation in decision-making, particularly among the poor. World
Bank officials could not provide specific funding information, but
commented that the institution has focused its technical assistance
efforts on areas where it has expertise, such as corporate governance,
enterprise reform, fiscal policy reform, land reform and tenure, and
water rights. These officials said that, in areas where the Bank has
relatively little expertise, such as criminal law reform, it defers
efforts to other donors such as the European Union, the United States,
and France.
(320221):
FOOTNOTES
[1] Pub. L. No. 105-277, § 527.
[2] Pub. L. No. 107-115, § 526.
[3] Transition countries are those working to convert their societies
from the command and control model typical of communist states to a
market-oriented model.
[4] Economic Support Funds are dedicated to promoting economic and
political stability in strategically important regions.
[5] In the wake of the Chinese government's 1989 crackdown on
demonstrators in Tiananmen Square, Congress adopted a number of
restrictions on U.S. economic relations with China. Among other things,
Title IX of the Foreign Relations Authorization Act of 1990 (Pub. L.
No. 101-246, 104 Stat. 80) suspended obligations of foreign assistance
funds for new activities of the Trade and Development Program, and
issuance of Overseas Private Investment Corporation guarantees or other
support for investments in China. Also, until recently, annual Foreign
Operations Appropriations Acts prohibited indirect assistance to China-
-for example, Pub. L. No. 105-118, § 523.
[6] Commerce provided us with a list of workshops, seminars and other
types of training conducted in response to this directive, but agency
officials could not provide an estimate of the cost of these
activities.
[7] Pub. L. No. 107-115, § 526.
[8] The National Endowment for Democracy is a nongovernmental
organization that seeks to advance democracy around the world,
primarily through a wide variety of grants to other nongovernmental
organizations. In its annual report for 2002, the Endowment reported
activities in more than 80 countries. Although independently managed,
it receives most of its funding through annual noncountry specific
appropriations by the U.S. government. These appropriations, which are
separate from Economic Support Fund appropriations, amounted to
$42 million in fiscal year 2003, up from an average of about $32
million per year over the previous 2 years.
[9] As we completed our work, Congress approved and the President
signed an omnibus appropriations act for fiscal year 2004 that provided
an additional $13.5 million for such programs, with all of the funds
designated for State and Endowment grants.
[10] Amounts provided through State and Endowment grant programs in
fiscal 2002 and 2003 were less than the $25 million in Economic Support
Fund appropriations described in the background section of this report
because:
The appropriations acts specified that "not to exceed" $6 million of
the total could be made available for programs to preserve cultural
traditions and promote sustainable development and environmental
conservation in Tibetan communities in China, and State responded by
allocating $5.7 million to such programs;
The Endowment retains about 15 percent of the funds it receives to pay
its administrative costs;
Amounts appropriated for fiscal year 2003 were subsequently reduced by
a 0.65 percent rescission; and
As of the end of fiscal year 2003 State and the Endowment retained a
combined unobligated balance of about $3.25 million in monies for China
grants.
[11] Labor funds came from that agency's appropriations, rather than
Economic Support Funds.
[12] In 2003, the Bureau also awarded $50,000 to the U.S. embassy in
Beijing for a project to support media reform. This award was made
through the Bureau's annual diplomatic post competition for democracy-
related grants.
[13] The U.S. Agency for International Development manages the support
provided to Temple University, and it has also participated in
selecting recipients of grant support through the Human Rights and
Democracy Fund.
[14] Funds for the small grants program were from State's
appropriations for public diplomacy, rather than Economic Support
Funds.
[15] This project subsequently received $650,000 in additional support
through the Human Rights and Democracy Fund and (as noted in table 1)
the Bureau of Oceans and International Environmental and Scientific
Affairs.
[16] Funds for the legal adviser did not come from Economic Support
Funds, but rather from appropriations to support the operations of this
Bureau. As of December 2003, State reported funding 21 resident legal
advisers in embassies around the world. While funded by State, the
Department of Justice's Office of Overseas Prosecutorial Development
Assistance and Training selects the advisers and provides
administrative support.
[17] The Endowment has devoted a portion of each year's grant program
to supporting projects promoting human rights and democracy in Tibetan
areas of China. For example, in fiscal year 2002, the Endowment awarded
seven such grants, totaling about $223,000.
[18] Data are also not directly comparable because the U.S. government
and the multilateral organizations discussed in this report define
their fiscal years differently. For example, while the U.S. government
fiscal year ends on Sept. 30, the United Nations' fiscal year ends on
June 30.
[19] These were Japan, Switzerland, the United Kingdom, Denmark, the
Netherlands, and the Joint UN Program on HIV/AIDS.
