By Susan Cornwell
(Reuters) - The U.S. State Department and foreign aid budget escaped devastating cuts in a fiscal 2012 spending plan that Congress has approved.
Aid in war zones helped boost the overall amount the United States was willing to commit to foreign assistance in a time of budget scarcity, despite deep cuts advocated by budget hawks in the Republican-controlled House of Representatives.
But numerous countries still could see a decline or even a halt to U.S. foreign assistance if they do not meet conditions attached to the legislation.
Here are some details of the foreign aid section of the new U.S. spending plan for fiscal 2012, which began October 1. The House of Representatives approved the bill on Friday and the Democratic-run Senate approved it on Saturday.
BASE BUDGET VERSUS WAR-RELATED FOREIGN AID
The legislation provides $42.1 billion in regular funding for the State Department and foreign aid in 2012, which is a cut of more than $6 billion from the 2011 level.
But when another $11.2 billion in war-related foreign aid for Afghanistan and Iraq is added in, such as money for counterterrorism and humanitarian assistance, the total for 2012 is $53.3 billion. That total is actually an increase of some $5 billion over the comparable amount for 2011.
House and Senate aides said the increase was partly fueled by more spending in Iraq, where U.S. troops are leaving and the State Department is taking over pay for some security forces and police training previously funded by the Pentagon.
Foreign aid not related to war spending was cut by $2.2 billion from 2011. The budget for operational costs of the State Department and related agencies was slashed $2.6 billion from last year, and operations at the U.S. Agency for International Development (USAID) were cut by $258 million from 2011.
For the second year in a row, the pay of U.S. foreign service officers was frozen.
The 2012 spending plan is a mixed bag, said Liz Schrayer, the executive director of the U.S. Global Leadership Coalition, which advocates for diplomacy and development aid.
"In the short term, we are pleased the agreement avoids the deep and disproportionate cuts to these programs from earlier versions of the bill ... However, in the long-run, the cuts to funding for non-war related program is of grave concern given the challenges and turbulence in the world today."
John Norris of the Center for American Progress think-tank said the cut to USAID operations was significant, "but it doesn't look like a cut that would grind operations to a halt, bringing messy contingency planning and staff reductions."
Still, he said "there is a great deal of uncertainty hanging over" U.S. foreign aid.
The legislation allocates $850 million for a fund to help Pakistan's military develop counter-insurgency capabilities to fight Islamist militants within its borders. This is actually a slight increase from last year's $800 million but less than the $1.1 billion President Obama requested for the fund in 2012.
However, a massive defense bill Congress passed on Thursday freezes 60 percent of this amount, or $510 billion, until the U.S. defense secretary provides lawmakers with assurances that Pakistan is working to counter improvised explosive devices (IEDs). U.S. lawmakers say that many Afghan bombs that kill U.S. troops are made with fertilizer smuggled by militants across the border from Pakistan into Afghanistan.
No number was included for economic aid to Pakistan, leaving the Obama administration to specify the amount in consultation with Congress. This is a comedown for Pakistan; in each of the past three years, about $1 billion or more in economic aid for Pakistan was written into spending bills, in part to meet pledges made under 2009 legislation sponsored by Senators John Kerry and Richard Lugar.
Economic as well as security aid was made conditional on Pakistan's cooperation in fighting militants such as the Haqqani network. Many lawmakers have been calling for aid to Pakistan to be reduced since U.S. special forces found and killed al Qaeda leaders Osama bin Laden in a Pakistani military town May 2.
The legislation would allow the United States to waive restrictions on aid to Uzbekistan if the Secretary of State certifies this is needed to obtain access to and from Afghanistan. U.S. military aid to Uzbekistan has been restricted since 2004 because of its poor human rights record. But the United States is also expanding U.S. use of the central Asian country as a route to supply troops in Afghanistan.
The legislation also included a requirement that the Secretary of State report to Congress on any diversion of U.S. aid for "corrupt purposes" in Uzbekistan.
The legislation allows U.S. economic aid to the Palestinians to continue next year so long as Palestine is not admitted as a state to any more U.N. organizations. It ignores the U.N. organization they have already joined -- the United Nations Educational, Scientific and Cultural Organization (UNESCO).
"It is linked to the U.N. because what we've said ... If the Palestinians went to the United Nations, it means they walked away from the negotiating table (with Israel)," Representative Kay Granger, Republican chairman of the House subcommittee on foreign aid, said recently in explaining the conditions.
Aid to Egypt is set at $1.3 billion, similar to previous years, but with conditions attached. Secretary of State Hillary Clinton is required to certify that the Egyptian government is supporting the transition to a civilian government, including holding free and fair elections.
The secretary of state also must certify that Egypt's government is meeting its obligation under the 1979 peace treaty with Israel. She can waive the requirements if she feels it is in the U.S. national security interests.
Another new provision requires the State Department to submit a report on crowd control items such as tear gas that were "made available with appropriated funds or through export licenses to foreign security forces that the secretary of state has credible information have repeatedly used excessive force to repress peaceful, lawful, and organized dissent."
This provision was put forward by Senator Patrick Leahy, Democratic chairman of the Senate foreign aid subcommittee, after reports this year of tear gas canisters labeled "Made In USA" being used by Egyptian security forces against demonstrators in Cairo's Tahrir Square.
The provision does not ban U.S. sales of such materials to foreign governments, but requires a report that would publicize their sale and use.
INTERNATIONAL MONETARY FUND
The bill did not include a Republican-sought provision to snatch back a $100 billion line of credit the United States approved in 2009 for a crisis fund at the International Monetary Fund. Republicans said they didn't want this money spent on European bailouts, but Democrats blocked the rescission.
But Representative Cathy McMorris-Rodgers, a Republican who met IMF head Christine LaGarde this week, told Reuters afterwards that she intended to keep pushing separate legislation in the House to rescind the 2009 credit.
(Reporting by Susan Cornwell; editing by Bill Trott)
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