The same thing would be true, I think, where our funds have been going to workers' self-management enterprises. These are small factories of workers at the very bottom in the Chilean economy, particularly in the urban sector. So we have been responsive to the poor within those countries and I think we have to be able to recognize that they are, by and large, invisible, out of touch, and out of relationship with most international or national efforts to speak to their problems Senator LEAHY. You understand the committee's concern. There is only so much money to go around. We want it going where it is most useful. Mr. DYAL. I might, Senator, add one other word to that, in that we are responsive to initiatives that are in a natural vein within those countries. We don't program by sectors, either geographically or programmatically, in order to be responsive to the social processes of people. IGA REPORT Senator LEAHY. Along that line, in December of last year, the Inspector General of Foreign Assistance issued a report which recommended, among other things, that the Inter-American Foundation obtain a clearance from the U.S. Ambassador and the government of the recipient country before initiating any specific project. What are your views on that report? Could you operate effectively if you were required to obtain such a clearance? Mr. DYAL. I think if we were involved in that kind of clearance, which I see running counter even to the original creating legislation of the Foundation, that more than likely the projects would not be functioning and would have died for lack of funding by the time clearances of both our embassies and our Government and the clearances of the other government would have been obtained. Our response to the Inspector General's report was to cite the creating legislation that says that we have to fund outside the normal day-to-day operation of government-to-government relationships. Senator LEAHY. How did he respond to that? Mr. DYAL. We have had no response to our response, which I can enter in the record. Senator LEAHY. I think it would be useful. I think I detect a concern on our part and I think in many ways a justifiable concern that perhaps the Department of State is not always able to move as rapidly in nontraditional areas as it might otherwise. I have no further questions. [The information follows:] At its meeting yesterday, the Board of Directors voted to respond to your recent inspection report through the enclosed statement. We will distribute this statement also to the appropriate officers of the State Department and committees of Congress. Since your recommendations all reflect on the creating legislation of the Foundation, it will obviously be the prerogative of the Congress to review their original intent, study the record of the Foundation, and decide on its future. Sincerely, Augustin S. Hart, Jr. Board of Directors January 27, 1977 RESPONSE OF FOUNDATION BOARD OF DIRECTORS OF THE INSPECTOR GENERAL OF FOREIGN ASSISTANCE ON It is the Board's view that this Report which was to concern itself with a "limited review" of IAF-Department of State coordinating procedures primarily in Jamaica (see attached letter) has added a totally new element, namely control and authority over the Foundation and its Board by the Department of State. Indeed on the bottom of page 3, the Report states "The problems arising from coordination procedures between IAF and the State Department ultimately reduce themselves to a single question: Does the American Ambassador have authority over IAF activities in the country to which he is accredited?" "That the IAF not The Report's third recommendation approve any project without first obtaining the appropriate Ambassador's clearance" is in our view in total variance with both the letter and the spirit of the IAF legislation. The enabling legislation in establishing an independent, U.S. Government entity states that "The Board shall direct the exercise of all the powers of the Foundation" (Public Law 91-175). The House Committee Report on the legislation states that the Foundation's effectiveness "will be determined as much by the caliber of its Directors and staff as by this new institution's insulation from the ebb and flow of political currents which are ever present in direct governmentto-government relations". The Report goes on to state that if the Foundation is to make a significant contribution "it has to be independent of the political factors which affect the day-to-day course of government policy." The House Report further emphasizes that independence by explaining that it is the prime reason for having a majority of the Directors from the private sector. The House Report also clearly states that the Foundation is to be "a semi-private agency operating on the people-to-people level, (whose) funds will not and should not be subject to the various restrictions which normally apply to government-to-government programs and their implementation" (House Report 91-611). As to the citation by the IGA of PL 93-475 concerning Ambassadorial authority, Foundation personnel traveling in a country certainly "comply fully with all applicable directives of the Ambassador" but it is the Board's considered opinion that neither this provision nor the others cited grant the Ambassador authority over the independent decision-making authority of the Foundation Board of Directors as set out in the Foundation's legislative mandate. The provision of the Foundation's legislation which the IGA quotes as "being clearly in accord" with its view concerning Ambassadorial authority simply admonishes the Foundation to coordinate its activities to the maximum extent possible with other developmental undertakings in Latin America. It is the Board's view that in order to carry out its mission and policies effectively, and in accordance with legislative intent, the Foundation must continue to operate as an autonomous U.S. Government organization. While both the Congress and those U.S. officials responsible for government-to-government relations must be kept fully informed of the Foundation's policies and while the Foundation will continue to maintain effective liaison with U.S. Embassies overseas, encroachments on the policy-making authority of the Board are unacceptable. The other recommendation that the Board finds disturbing is the one stating "that IAF, in coordination with the Department of State, work out an acceptable method of obtaining 87-640 - 77-30 host government approval before making project commitments". The Board decided early that the Foundation would not fund projects in any country requiring prior host government clearance on a project-by-project basis. In our opinion such a requirement would be inconsistent with the legislative intent and make it impossible to carry out our mission. On the other hand, we have never attempted to circumvent the duly constituted and recognized governments of the hemisphere. From the very beginning we have met with host country officials and explained our goals and purposes and we continue to do so. We also notify each country officially through a letter to their Ambassador in Washington of the details of each grant made in their country at the time of its approval. We also, of course, recognize the right of any sovereign nation to stop any particular grant or ask us to cease funding projects altogether in their country. Our experience has shown that it has been in the interest of both the U.S. Government as well as the host government to be separated from the decision process. We We do not assume a stance that "we know best". But rather than leaving this judgment to the governments involved, we leave it to the local people most directly affected. believe our style is responsive and non-directive, but also active in the sense that we support indigenous initiatives which effectively express self-defined aspirations for justice, dignity and freedom. In our opinion this practice is in total accord with the legislative mandate that the Foundation "encourage the establishment and growth of democratic institutions, private and governmental, appropriate to the requirements of the individual sovereign nations of the hemisphere". We believe recommendations 1, 2 and 5 can be dispensed with more easily. The report clearly shows that it is the Department of State which hasn't followed the jointly worked |