The government shutdown that went into effect today will likely not have significant impact on diplomatic and foreign assistance programs in the short-term.  However, major disruption could occur if the closure continues for a prolonged period of time.  The lack of an immediate abrupt effect is due to the fact that many International Affairs appropriation accounts allow funds to be spent over a two-year period or indefinitely (so-called “no-year” funds).  As a result, if any FY13 resources remain unexpended, they can be drawn upon to continue operations and pay staff until they are exhausted.

According to State Department officials, embassies and consulates will remain open.  Passports and visa processing will continue with no threat of suspension since they are funded through fees, not appropriations.  USAID also operates on two-year funds so the Agency and its overseas missions can remain open until FY13 funds are depleted.  USAID has informed its implementing partners – primarily non-governmental organizations and contractors – that most grants and contracts already issued will continue to operate since they are not dependent on additional appropriations.  Humanitarian assistance activities operate under no-year funding, so those programs will continue so long as FY13 and prior-year resources remain.  Some activities are suspended, however: no commitments or obligations for new programs can be made, no hiring can occur, no representation events may be held, and new travel not already planned is prohibited.

As the FY13 residual balances are drawn down over time, however, the consequences would grow if the shutdown continues longer term.  Agencies would have to identify “excepted” staff and activities that may continue while placing non-excepted personnel on furlough.  Staffing-down at embassies and USAID missions would begin with only excepted officers reporting for work.  It is unclear whether under a protracted government shutdown American facilities abroad would totally close, as was the case for some overseas facilities during the last shutdown in 1995-1996.  And as pipelines of FY13 and prior year funds dry up, aid programs would slow or stop.

As of press time, no immediate resolution to the budget impasse is on the horizon.

2. Congress Introduces PEPFAR Reauthorization Legislation

Both the House and Senate introduced legislation to reauthorize the President’s Emergency Program for AIDS Relief (PEPRAR) last week.  In the Senate, Foreign Relations Committee Chairman Robert Menendez (D-NJ) and Ranking Member Bob Corker (R-TN) introduced the PEPFAR Stewardship and Oversight Act (S. 1545), which was approved yesterday in the Committee by voice vote.  At the same time, House Foreign Affairs Committee Ranking Member Eliot Engel (D-NY) introduced a bipartisan companion bill (H.R. 3177) with three co-sponsors: Foreign Affairs Committee Chairman Ed Royce (R-CA), and Committee members Reps. Karen Bass (D-CA) and Ileana Ros-Lehtinen (R-FL).

The bills are narrow in scope and make no changes overall to policy provisions and funding levels, focusing instead on ensuring effective oversight of current programs.  Highlights of the bills include:

• Extends authorities for PEPFAR until 2018 that would otherwise expire;
• Expands and improves monitoring and reporting requirements for programs;
• Updates requirements for annual reporting to reflect PEPFAR’s shift towards more country-owned programs;
• Caps U.S. participation in the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund) at 33%; and
• Extends funding requirements for treatment and orphans and vulnerable children.

In introducing the legislation, Senator Menendez emphasized PEPFAR’s important role in U.S. global health programs, saying, “PEPFAR has saved millions of lives over the last ten years and today we recommit ourselves to this critical fight by extending and enhancing this vital program.”  Senator Corker expressed his support for the country leadership, saying, “As the search for a cure continues, passage of this legislation will aid in PEPFAR’s transition from an emergency U.S-led effort to one increasingly sustained by individual countries.”

Rep. Engel praised the bipartisan legacy of PEPFAR, saying, “From its very inception, PEPFAR has been a testament to the bipartisan efforts of both Republican and Democratic administrations to prevent millions of unnecessary deaths from the global scourge of HIV/AIDS. PEPFAR’s decade-long track record of success has shown that sustained U.S. commitment will have a real impact on the lives of those infected with this disease.”

The House has not yet scheduled a markup of the PEPFAR bill, but House action is anticipated in the coming weeks.

3. State Department Authorization Bill Passes in House

On Saturday during a rare weekend session, the House approved the FY14 Department of State Operations and Embassy Security Authorization Act (H.R. 2848) in a 384-37 vote.  The $15.4 billion bipartisan measure authorizes a subset of the International Affairs Budget, 15 accounts in total (see table below).  The authorization level falls 5.8% below FY13 sequestered levels.  The amount, however, is a significant improvement over State Department funding included in the FY14 House-reported State-Foreign Operations appropriations measure and only 2.3% below the FY14 request.

Highlights of the Authorization bill include:

• Fully funds the President’s FY14 recommendation for Diplomatic and Consular Programs, Embassy Security, and the State Department’s Inspector General.
• Approves $118 million for the National Endowment for Democracy, a $6 million increase over current sequestered spending and nearly 15% above the FY14 request.
• Reduces three areas of the account compared with the FY14 request:
  • Contributions to International Organizations (CIO) would fall by $173 million
    (-11%).  It is likely that the reductions for CIO partially involves the $73 million request for UNESCO, a contribution that would require a legislative waiver of a prohibition on U.S. support for UN agencies granting member status to the Palestinians.
  • Contributions to International Peacekeeping Activities (CIPA) are cut by $153 million (-7.3%).  A portion of this reduction most likely involves removing funding for UN Support Office for the African Union’s Somalia peacekeeping mission.  Congress’ preference the past several years has been to fund the mission out of Peacekeeping Operations, a different account that does not fall under the scope of H.R. 2848.  The request for that contribution totals $136.6 million.
  • Educational and Cultural Exchanges would drop by $28 million (-5%).

The bill also includes a variety of provisions concerning security at high-risk, high-threat posts and the recommendations of the Benghazi Accountability Review Board (ARB).  The ARB, chaired by Ambassador Thomas Pickering, proposed 29 policy changes to minimize risks faced by America’s diplomats and U.S. facilities overseas, all of which the State Department says it has adopted and is in the process of implementing.  The legislation would codify several of these recommendations.

House Foreign Affairs Committee Chairman Royce called the bipartisan bill a “basic Committee responsibility” to ensure effective Congressional oversight of State Department programs and to legislate new activities, save money, and reform existing programs.  If enacted, it would be the first such State Department authorization passed by Congress in over ten years.  Also endorsing the bill, Ranking Member Engel added, “The funds authorized in this bill support all of the State Department’s operations around the world for less than three percent of the Defense Department’s total budget. To me, that’s a very wise investment in U.S. national security.”

Rep. Randy Forbes (R-VA) was the only Member to speak in opposition to the bill, due to concerns about funding for a proposed diplomatic security training center in his district at Fort Pickett that he supports.  Of the 37 votes against passage, eight were members from Virginia.

Senate Foreign Relations Committee Chairman Menendez has not indicated a strong interest in moving a similar State authorization bill through his committee in the near future, preferring instead to limit the focus on embassy security.  The Embassy Security, Threat Mitigation and Personnel Protection Act of 2013 (S. 1386), co-sponsored by Chairman Menendez and Ranking Member Corker, was approved by the Committee on August 1st.

FY14 Department of State Operations and Embassy Security Authorization Act