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108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-205
======================================================================
 
 MILLENNIUM CHALLENGE ACCOUNT AUTHORIZATION AND PEACE CORPS EXPANSION 
                              ACT OF 2003

                                _______
                                

 July 14, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hyde, from the Committee on International Relations, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2441]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on International Relations, to whom was 
referred the bill (H.R. 2441) to establish the Millennium 
Challenge Account to provide increased support for developing 
countries that have fostered democracy and the rule of law, 
invested in their citizens, and promoted economic freedom; to 
assess the impact and effectiveness of United States economic 
assistance; to authorize the expansion of the Peace Corps, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................    23
Background and Need for the Legislation..........................    24
Hearings.........................................................    32
Committee Consideration..........................................    32
Summary of Amendments............................................    32
Votes of the Committee...........................................    33
Committee Oversight Findings.....................................    34
New Budget Authority and Tax Expenditures........................    34
Congressional Budget Office Cost Estimate........................    34
Performance Goals and Objectives.................................    37
Constitutional Authority Statement...............................    37
Section-by-Section Analysis......................................    37
New Advisory Committees..........................................    55
Congressional Accountability Act.................................    56
Federal Mandates.................................................    56
Changes in Existing Law Made by the Bill, as Reported............    56

                             The Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Millennium 
Challenge Account Authorization and Peace Corps Expansion Act of 
2003''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                DIVISION A--MILLENNIUM CHALLENGE ACCOUNT

                      TITLE I--GENERAL PROVISIONS

Sec. 101. Definitions.
Sec. 102. Sunset.

               TITLE II--MILLENNIUM CHALLENGE ASSISTANCE

Sec. 201. Findings; statement of policy.
Sec. 202. Authorization of assistance.
Sec. 203. Eligibility and related requirements.
Sec. 204. Millennium Challenge Compact.
Sec. 205. Suspension and termination of assistance.
Sec. 206. Annual report.
Sec. 207. Participation of certain United States businesses.
Sec. 208. Authorization of appropriations; related authorities.

              TITLE III--MILLENNIUM CHALLENGE CORPORATION

Sec. 301. Millennium Challenge Corporation.
Sec. 302. Chief Executive Officer.
Sec. 303. Board of Directors.
Sec. 304. Interagency coordination.
Sec. 305. Powers of the Corporation; related provisions.
Sec. 306. Transparency and accountability of the Corporation.
Sec. 307. Detail of personnel to the Corporation; other authorities and 
limitations.
Sec. 308. Millennium Challenge Advisory Council.
Sec. 309. Millennium Challenge seed grants.

   TITLE IV--PROVISIONS RELATING TO UNITED STATES ECONOMIC ASSISTANCE

Sec. 401. Definition.
Sec. 402. Framework for assistance.
Sec. 403. Report relating to impact and effectiveness of assistance.

      DIVISION B--REAUTHORIZATION AND EXPANSION OF THE PEACE CORPS

                      TITLE X--GENERAL PROVISIONS

Sec. 1001. Definitions.
Sec. 1002. Findings.

      TITLE XI--AMENDMENTS TO PEACE CORPS ACT; RELATED PROVISIONS

Sec. 1101. Advancing the goals of the Peace Corps.
Sec. 1102. Reports and consultations.
Sec. 1103. Special volunteer recruitment and placement for certain 
countries.
Sec. 1104. Global Infectious Diseases Initiative; coordination of HIV/
AIDS activities.
Sec. 1105. Peace Corps National Advisory Council.
Sec. 1106. Readjustment allowances.
Sec. 1107. Programs and projects of returned Peace Corps volunteers and 
former staff.
Sec. 1108. Declaration of policy.
Sec. 1109. Peace Corps in Sierra Leone.
Sec. 1110. Authorization of appropriations.

                DIVISION A--MILLENNIUM CHALLENGE ACCOUNT

                      TITLE I--GENERAL PROVISIONS

SEC. 101. DEFINITIONS.

    In this division:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on International Relations and 
                the Committee on Appropriations of the House of 
                Representatives; and
                    (B) the Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate.
            (2) Board.--The term ``Board'' means the Board of Directors 
        of the Corporation established pursuant to section 303 of this 
        Act.
            (3) Compact.--The term ``Compact'' means the Millennium 
        Challenge Compact described in section 204 of this Act.
            (4) Corporation.--The term ``Corporation'' means the 
        Millennium Challenge Corporation established under section 301 
        of this Act.
            (5) Council.--The term ``Council'' means the Millennium 
        Challenge Advisory Council established under section 308 of 
        this Act.
            (6) Millennium development goals.--The term ``Millennium 
        Development Goals'' means the key objectives described in the 
        United Nations Millennium Declaration, as contained in United 
        Nations General Assembly Resolution 55/2 (September 2000), 
        which aim to eradicate extreme poverty and hunger, achieve 
        universal primary education, promote gender equality and 
        empower women, reduce child mortality, improve maternal health, 
        combat HIV/AIDS, malaria, and other infectious diseases, ensure 
        environmental sustainability, and develop a global partnership 
        for development.

SEC. 102. SUNSET.

    All authorities under this division (other than title IV) shall 
terminate on October 1, 2007.

               TITLE II--MILLENNIUM CHALLENGE ASSISTANCE

SEC. 201. FINDINGS; STATEMENT OF POLICY.

    (a) Findings.--Congress finds the following:
            (1) A principal objective of United States foreign 
        assistance programs, as stated in section 101 of the Foreign 
        Assistance Act of 1961, is the ``encouragement and sustained 
        support of the people of developing countries in their efforts 
        to acquire the knowledge and resources essential to development 
        and to build the economic, political, and social institutions 
        which will improve the quality of their lives''.
            (2) The expanding acceptance of free trade and open markets 
        and the spread of democracy and the rule of law have brought a 
        better way of life to an increasing number of people in the 
        world.
            (3) Inequalities between men and women undermine 
        development and poverty-reduction efforts in fundamental ways. 
        A woman's limited access to resources and restrictions on the 
        exercise of her rights, including the right to participate in 
        social and political processes, disables her from maximizing 
        her contribution to her family's health, education, and general 
        well-being.
            (4) On March 14, 2002, the President noted the successes of 
        development assistance programs: ``The advances of free markets 
        and trade and democracy and rule of law have brought prosperity 
        to an ever-widening circle of people in this world. During our 
        lifetime, per capita income in the poorest countries has nearly 
        doubled. Illiteracy has been cut by one-third, giving more 
        children a chance to learn. Infant mortality has been almost 
        halved, giving more children a chance to live.''.
            (5) Development is neither an easy process nor a linear 
        one. There are successes and there are failures. Today, too 
        many people are still living in poverty, disease has eroded 
        many of the economic and social gains of previous decades, and 
        many countries have not adopted policies, for a variety of 
        reasons, that would enable them to compete in an open and 
        equitable international economic system.
            (6) More countries and more people will be able to 
        participate in and benefit from the opportunities afforded by 
        the global economy if the following conditions for sound and 
        sustainable economic development are met:
                    (A) Security.--Security is necessary for economic 
                development. Persistent poverty and oppression can lead 
                to hopelessness, despair, and to failed states that 
                become havens for terrorists.
                    (B) Policies that support broad-based economic 
                growth.--Successful long-term development can only 
                occur through broad-based economic growth that enables 
                the poor to increase their incomes and have access to 
                productive resources and services so that they can lead 
                lives of decency, dignity, and hope.
                    (C) Democracy and the rule of law.--Democratic 
                development, political pluralism, and respect for 
                internationally recognized human rights are 
                intrinsically linked to economic and social progress. 
                The ability of people to participate in the economic 
                and political processes affecting their lives is 
                essential to sustained growth. The rule of law and a 
                commitment to fight corruption is also critical to the 
                development of a prosperous society.
                    (D) Investments in people.--Economic growth and 
                democracy can be sustained only if both men and women 
                have the basic tools and capabilities that foster the 
                opportunity for participation in the economic, social, 
                and political life of their countries. Successful 
                development of countries requires citizens who are 
                literate, healthy, and prepared and able to work.
            (7) Economic assistance programs authorized under part I of 
        the Foreign Assistance Act of 1961, as administered by the 
        United States Agency for International Development and other 
        Federal agencies, are of critical importance in assisting 
        countries to be in a position to maximize the effectiveness of 
        assistance authorized by this title.
            (8) It is in the national interest of the United States to 
        help those countries that are implementing the economic and 
        political reforms necessary for development to occur.
            (9) On March 14, 2002, the President stated that the 
        ``growing divide between wealth and poverty, between 
        opportunity and misery, is both a challenge to our compassion 
        and a source of instability . . . [w]e must confront it . . . 
        [w]e must include every African, every Asian, every Latin 
        American, every Muslim, in an expanding circle of 
        development.''.
            (10) The President has pledged that funds requested for the 
        Millennium Challenge Account shall be in addition to, and not a 
        substitute for, existing development and humanitarian programs.
            (11) Development assistance alone is not sufficient to 
        stimulate economic growth and development. Assistance has been 
        shown to have a positive impact on growth and development in 
        developing countries with sound policies and institutions. If 
        countries have poor policies and institutions, however, it is 
        highly unlikely that assistance will have a net positive 
        effect.
            (12) Economic development, and the achievement of the 
        Millennium Development Goals, must be a shared responsibility 
        between donor and recipient countries.
    (b) Statement of Policy Regarding a New Compact for Global 
Development.--It is, therefore, the policy of the United States to 
support a new compact for global development that--
            (1) increases support by donor countries to those 
        developing countries that are fostering democracy and the rule 
        of law, investing in their people, and promoting economic 
        freedom for all their people;
            (2) recognizes, however, that it is the developing 
        countries themselves that are primarily responsible for the 
        achievement of those goals;
            (3) seeks to coordinate the disparate development 
        assistance policies of donor countries, and to harmonize the 
        trade and finance policies of donor countries with their 
        respective development assistance programs; and
            (4) aims to reduce poverty by significantly increasing the 
        economic growth trajectory of beneficiary countries through 
        investing in the productive potential of the people of such 
        countries.

SEC. 202. AUTHORIZATION OF ASSISTANCE.

    (a) Assistance.--The President, acting through the Chief Executive 
Officer of the Millennium Challenge Corporation, is authorized to 
provide assistance to eligible countries to support policies and 
programs that advance the progress of such countries in achieving 
lasting economic growth and poverty reduction and are in furtherance of 
the purposes of this title.
    (b) Principal Objectives.--Assistance provided under subsection (a) 
should advance a country's progress toward promoting the following 
principal objectives:
            (1) Fostering democratic societies, human rights, and the 
        rule of law.--The assistance should promote--
                    (A) political, social, and economic pluralism;
                    (B) respect for the rule of law;
                    (C) anti-corruption initiatives and law 
                enforcement;
                    (D) development of institutions of democratic 
                governance, including electoral and legislative 
                processes;
                    (E) transparent and accountable public 
                administration at all levels of government;
                    (F) a fair, competent, and independent judiciary; 
                and
                    (G) a free and independent media.
            (2) Fostering investment in education and health 
        infrastructure and systems.--The assistance should foster 
        improved educational opportunities and health conditions, 
        particularly for women and children, including through--
                    (A) support for programs and personnel that promote 
                broad-based primary education, including through the 
                development of academic curricula, by making available 
                textbooks and other educational materials, and through 
                appropriate use of technology;
                    (B) support for programs to strengthen and build 
                institutions, including primary health care systems, 
                infrastructure, facilities, and personnel that provide 
                quality health care;
                    (C) support for improved systems for the delivery 
                of healthy water and sanitation services; and
                    (D) support for programs that reduce child 
                mortality (including those programs that combat HIV/
                AIDS, malaria, tuberculosis, and other infectious 
                diseases, consistent with sections 104(c), 104A, 104B, 
                and 104C of the Foreign Assistance Act of 1961).
            (3) Promoting economic freedom, broad-based economic 
        growth, and fostering free market systems.--The assistance 
        should foster the institutions and conditions needed to promote 
        free market systems, trade, and investment, including--
                    (A) the reform and restructuring of banking and 
                financial systems, including by allowing foreign 
                competition in the banking and financial sectors, where 
                appropriate;
                    (B) the development of transparent and efficient 
                commercial codes and reduction in the regulatory burden 
                on business;
                    (C) the protection of property rights, including 
                private property and intellectual property rights, 
                including through the adoption and effective 
                enforcement of intellectual property treaties or 
                international agreements;
                    (D) support for market-based policies that support 
                increased agricultural production;
                    (E) a strong commitment to sound monetary and 
                budgetary policies;
                    (F) the development of small businesses, private 
                cooperatives, credit unions, and trade and labor 
                unions;
                    (G) the protection of internationally recognized 
                workers' rights; and
                    (H) the capacity of eligible countries to 
                ameliorate damage to the environment and respect other 
                environmental standards.

SEC. 203. ELIGIBILITY AND RELATED REQUIREMENTS.

    (a) Assistance for Low Income Countries.--
            (1) Fiscal year 2004.--A country shall be eligible to 
        receive assistance under section 202 for fiscal year 2004 if--
                    (A) the country is eligible for assistance from the 
                International Development Association, and the per 
                capita income of the country is equal to or less than 
                the historical ceiling of the International Development 
                Association for that year, as defined by the 
                International Bank for Reconstruction and Development;
                    (B) subject to paragraph (3), the country is not 
                ineligible to receive United States economic assistance 
                by reason of the application of section 116, 490, or 
                620A of the Foreign Assistance Act of 1961, or by 
                reason of the application of any other provision of 
                law; and
                    (C) the Chief Executive Officer of the Corporation 
                determines that the country has demonstrated a 
                commitment to--
                            (i) bolster democracy, human rights, good 
                        governance and the rule of law;
                            (ii) invest in the health and education of 
                        its citizens; and
                            (iii) promote sound economic policies that 
                        promote economic freedom and opportunity.
            (2) Fiscal years 2005 and 2006.--A country shall be 
        eligible to receive assistance under section 202 for fiscal 
        years 2005 and 2006 if--
                    (A) the per capita income of the country is equal 
                to or less than the historical ceiling of the 
                International Development Association for the fiscal 
                year involved, as defined by the International Bank for 
                Reconstruction and Development;
                    (B) the country meets the requirements of paragraph 
                (1)(B); and
                    (C) the country meets the requirements of clauses 
                (i) through (iii) of paragraph (1)(C), as determined by 
                the Chief Executive Officer.
            (3) Rule of construction.--For the purposes of determining 
        whether a country is eligible for receiving assistance under 
        section 202 pursuant to paragraph (1)(B), the exercise by the 
        President, the Secretary of State, or any other officer or 
        employee of the United States of any waiver or suspension of 
        any provision of law referred to in such paragraph shall not be 
        construed as satisfying the requirement of such paragraph.
    (b) Assistance for Lower Middle Income Countries.--
            (1) In general.--In addition to countries described in 
        subsection (a), a country shall be eligible to receive 
        assistance under section 202 for fiscal year 2006 if the 
        country--
                    (A) is classified as a lower middle income country 
                in the then most recent edition of the World 
                Development Report for Reconstruction and Development 
                published by the International Bank for Reconstruction 
                and Development;
                    (B) meets the requirements of subsection (a)(1)(B); 
                and
                    (C) meets the requirements of clauses (i) through 
                (iii) of subsection (a)(1)(C), as determined by the 
                Chief Executive Officer.
            (2) Limitation.--The total amount of assistance provided to 
        countries under this subsection for fiscal year 2006 may not 
        exceed 20 percent of the total amount of assistance provided to 
        all countries under section 202 for fiscal year 2006.
    (c) Assistance for Selected Low Income Countries.--
            (1) In general.--A country shall be eligible to receive 
        assistance for any of fiscal years 2004 through 2006 solely for 
        the purpose of becoming eligible to receive assistance under 
        subsection (a) if the country--
                    (A) meets the requirements of paragraphs (1)(B) and 
                (2)(A) of subsection (a);
                    (B) demonstrates a commitment to meeting the 
                requirements of clauses (i) through (iii) of subsection 
                (a)(1)(C), as determined by the Chief Executive 
                Officer; but
                    (C) fails to meet the eligibility criteria 
                necessary to receive assistance under section 202, as 
                established under subsection (e).
            (2) Administration.--Assistance for countries eligible by 
        reason of the application of this subsection shall be provided 
        through the United States Agency for International Development.
            (3) Allocation of funds.--Of the amount authorized to be 
        appropriated under section 208(a) for a fiscal year, not more 
        than 15 percent of such amount is authorized to be appropriated 
        to the President, acting through the Chief Executive Officer, 
        for the fiscal year to carry out this subsection.
    (d) General Authority To Determine Eligibility.--
            (1) General authority.--The Chief Executive Officer shall 
        determine whether or not a country is eligible to receive 
        assistance under section 202.
            (2) Congressional notification.--Not later than 7 days 
        after making a determination of eligibility for a country under 
        paragraph (1), the Chief Executive Officer shall provide notice 
        thereof to the appropriate congressional committees. Such 
        notice shall include a certification of the determination of 
        the Chief Executive Officer that the country meets the 
        requirements of clauses (i) through (iii) of subsection 
        (a)(1)(C) in accordance with such subsection, subsection 
        (a)(2)(C), subsection (b)(1)(C), or subsection (c)(1)(B), as 
        the case may be.
    (e) Eligibility Criteria.--
            (1) Initial criteria and methodology.--At soon as 
        practicable after the date of the enactment of this Act, but 
        not later than 30 days prior to making any determination of 
        eligibility for a country under this section, the Chief 
        Executive Officer--
                    (A) shall consult in-person with the appropriate 
                congressional committees with respect to the 
                establishment of eligibility criteria and methodology 
                that the Chief Executive Officer proposes to use for 
                purposes of determining eligibility under this section;
                    (B) shall establish such eligibility criteria and 
                methodology; and
                    (C) shall prepare and transmit to such committees a 
                written report that contains such eligibility criteria 
                and methodology.
            (2) Revisions to criteria and methodology.--If the Chief 
        Executive Officer proposes to use revised or different criteria 
        from the criteria described in paragraph (1) in making a 
        determination of eligibility for a country under this section, 
        then, not later than 15 days prior to making such 
        determination, the Chief Executive Officer shall consult in-
        person with the appropriate congressional committees with 
        respect to such revised or different criteria and methodology 
        in accordance with paragraph (1)(A) and shall prepare and 
        transmit a written report in accordance with paragraph (1)(C).
    (f) Form of Assistance; Recipients.--
            (1) Form of assistance.--Assistance provided under section 
        202 for a country shall be provided to one or more of the 
        entities described in paragraph (2) on a nonrepayable basis and 
        in accordance with a fair, open, and competitive selection 
        process that results in the awarding of such assistance on a 
        merit basis using selection criteria that are made public by 
        the Corporation in advance and are otherwise in accordance with 
        standard and customary best practices for the provision of 
        similar types of assistance.
            (2) Recipients.--The entities referred to in paragraph (1) 
        are the following:
                    (A) The national government of the country.
                    (B) Regional or local governmental units of the 
                country.
                    (C) Nongovernmental organizations, including for-
                profit, not-for-profit, and voluntary organizations.
                    (D) International organizations and trust funds.
    (g) Congressional Notification.--The Chief Executive Officer may 
not make any grant or enter into any contract for assistance for a 
country under section 202 that exceeds $5,000,000 until 15 days after 
the date on which the Chief Executive Officer provides notification of 
the proposed grant or contract to the appropriate congressional 
committees in accordance with the procedures applicable to 
reprogramming notifications under section 634A of the Foreign 
Assistance Act of 1961.

SEC. 204. MILLENNIUM CHALLENGE COMPACT.

    (a) Compact.--The President, acting through the Chief Executive 
Officer of the Corporation, may provide assistance to an eligible 
country under section 202 only if the country enters into a contract 
with the United States, to be known as a ``Millennium Challenge 
Compact'', that establishes a multi-year plan for achieving shared 
development objectives in furtherance of the purposes of this title, 
and only if the President, acting through the Chief Executive Officer, 
provides to Congress notice regarding such Compact pursuant to 
subsection (h).
    (b) Elements.--
            (1) In general.--The Compact shall take into account the 
        national development strategy of the eligible country and shall 
        contain--
                    (A) the specific objectives that the country and 
                the United States expect to achieve;
                    (B) the responsibilities of the country and the 
                United States in the achievement of such objectives;
                    (C) regular benchmarks to measure, where 
                appropriate, progress toward achieving such objectives;
                    (D) an identification of the intended 
                beneficiaries, disaggregated by income level, gender, 
                and age, to the maximum extent practicable;
                    (E) a multi-year financial plan, including the 
                estimated amount of contributions by the Corporation 
                and the country and proposed mechanisms to implement 
                the plan and provide oversight, that describes how the 
                requirements of subparagraphs (A) through (D) will be 
                met, including identifying the role of civil society in 
                the achievement of such requirements;
                    (F) where appropriate, a description of the 
                responsibility of other donors in the achievement of 
                such objectives; and
                    (G) a plan to ensure appropriate fiscal 
                accountability for the use of assistance provided under 
                section 202.
    (2) Lower middle income countries.--In addition to the elements 
described in subparagraphs (A) through (G) of paragraph (1), with 
respect to a lower middle income country described in section 203(b), 
the Compact shall identify an appropriate contribution from the country 
relative to its national budget, taking into account the prevailing 
economic conditions, toward meeting the objectives of the Compact. Such 
contribution shall be in addition to government spending allocated for 
such purposes in the country's budget for the year immediately 
preceding the establishment of the Compact and shall continue for the 
duration of the Compact.
    (c) Definition.--In subsection (b), the term ``national development 
strategy'' means any strategy to achieve market-driven economic growth 
that has been developed by the government of the country in 
consultation with a wide variety of civic participation, including 
nongovernmental organizations, private and voluntary organizations, 
academia, women and student organizations, local trade and labor 
unions, and the business community.
    (d) Additional Provision Relating to Prohibition on Taxation.--In 
addition to the elements described in subsection (b), each Compact 
shall contain a provision that states that assistance provided by the 
United States under the Compact shall be exempt from taxation by the 
government of the eligible country.
    (e) Local Input.--In entering into a Compact, the United States and 
the eligible country--
            (1) shall take into account the local-level perspectives of 
        the rural and urban poor in the eligible country; and
            (2) should consult with private and voluntary 
        organizations, the business community, and other donors, in the 
        eligible country.
    (f) Consultation.--During any discussions with a country for the 
purpose of entering into a Compact with the country, officials of the 
Corporation participating in such discussions shall, at a minimum, 
consult with appropriate officials of the United States Agency for 
International Development, particularly with those officials 
responsible for the appropriate region or country on development issues 
related to the Compact.
    (g) Coordination with Other Donors.--To the maximum extent 
feasible, activities undertaken to achieve the objectives of the 
Compact shall be undertaken in coordination with the assistance 
activities of other donors.
    (h) Congressional and Public Notification.--Not later than 15 days 
prior to entering into a Compact with an eligible country, the 
President, acting through the Chief Executive Officer--
            (1) shall consult in-person with the appropriate 
        congressional committees with respect to the proposed Compact;
            (2) shall provide notification of the proposed Compact to 
        the appropriate congressional committees in accordance with the 
        procedures applicable to reprogramming notifications under 
        section 634A of the Foreign Assistance Act of 1961;
            (3) shall prepare and transmit to such committees a written 
        report that contains a detailed summary of the proposed Compact 
        and a copy of the full text of the Compact; and
            (4) shall publish such detailed summary and full text of 
        the proposed Compact in the Federal Register and on the 
        Internet website of the Corporation.
    (i) Assistance for Development of Compact.--Notwithstanding 
subsection (a), the Chief Executive Officer may enter into contracts or 
make grants for any eligible country for the purpose of facilitating 
the development of the Compact between the United States and the 
country.

SEC. 205. SUSPENSION AND TERMINATION OF ASSISTANCE.

    (a) Suspension of Assistance.--
            (1) In general.--The President shall suspend assistance in 
        whole or in part for a country under this title if the 
        President determines that--
                    (A) the country is engaged in activities which are 
                contrary to the national security interests of the 
                United States;
                    (B) the elected head of state of the country or any 
                member of the country's highest judicial tribunal has 
                been removed from that office or forcibly detained 
                through extra-constitutional processes; or
                    (C) the country has failed to adhere to its 
                responsibilities under the Compact.
            (2) Reinstatement.--The President may reinstate assistance 
        for a country under this title only if the President determines 
        that the country has demonstrated a commitment to correcting 
        each condition for which assistance was suspended under 
        paragraph (1).
            (3) Congressional notification.--A suspension of assistance 
        under paragraph (1), or a reinstatement of assistance under 
        paragraph (2), shall be effective beginning 15 days after the 
        date on which the President transmits to the appropriate 
        congressional committees a report that contains the 
        determination of the President under paragraph (1) or paragraph 
        (2), as the case may be.
    (b) Termination of Assistance.--
            (1) In general.--The President, acting through the Chief 
        Executive Officer of the Corporation, shall terminate all 
        assistance for a country under this title if the President 
        determines that the country has consistently failed to adhere 
        to its responsibilities under the Compact or has significantly 
        failed to meet the requirements of this title.
            (2) Congressional notification.--A termination of 
        assistance under paragraph (1) shall be effective beginning 15 
        days after the date on which the President, acting through the 
        Chief Executive Officer, provides notification of the proposed 
        termination of assistance to the congressional committees 
        specified in section 634A(a) of the Foreign Assistance Act of 
        1961 in accordance with the procedures applicable to 
        reprogramming notifications under that section.

SEC. 206. ANNUAL REPORT.

    (a) Report.--Not later than April 1, 2005, and not later than April 
1 of each year thereafter, the Chief Executive Officer of the 
Corporation shall prepare and transmit to the appropriate congressional 
committees a report on the implementation of this title for the 
preceding year.
    (b) Contents.--The report shall include the following:
            (1) A description and assessment of the eligibility 
        criteria and methodology utilized by the Chief Executive 
        Officer to determine eligibility for each country under section 
        203.
            (2) A description of the agreed upon measures of progress 
        contained in each Compact.
            (3)(A) An analysis, on a country-by-country, project-by-
        project basis, of the impact of assistance provided under this 
        title on the economic development of each country.
            (B) For each country, the analysis shall--
                    (i) to the maximum extent possible, be done on a 
                sector-by-sector basis, gender basis, and per capita 
                income basis, and identify trends within each of these 
                bases;
                    (ii) identify economic policy reforms conducive to 
                economic development that are supported by assistance 
                provided under this title;
                    (iii) describe, in quantified terms to the extent 
                practicable, the progress made in achieving assistance 
                objectives for the country;
                    (iv) describe the amount and nature of economic 
                assistance provided by other major donors which further 
                the purposes of this title; and
                    (v) discuss the commitment and contribution of the 
                country to achieving the assistance objectives 
                contained in its Compact.

SEC. 207. PARTICIPATION OF CERTAIN UNITED STATES BUSINESSES.

    (a) Participation.--To the maximum extent practicable, the 
President, acting through the Chief Executive Officer, shall ensure 
that United States small, minority-owned, and disadvantaged business 
enterprises fully participate in the provision of goods and services 
that are financed with funds made available under this title.
    (b) Report.--The Chief Executive Officer shall prepare and submit 
to the appropriate congressional committees an annual report that 
contains a description of the extent to which the requirement of 
subsection (a) has been met for the preceding year.

SEC. 208. AUTHORIZATION OF APPROPRIATIONS; RELATED AUTHORITIES.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the President, acting through the Chief Executive 
Officer of the Corporation, to carry out this division (other than 
title IV) $1,300,000,000 for fiscal year 2004, $3,000,000,000 for 
fiscal year 2005, and $5,000,000,000 for fiscal year 2006.
    (b) Additional Authorities.--Amounts appropriated pursuant to the 
authorization of appropriations under subsection (a)--
            (1) may be referred to as the ``Millennium Challenge 
        Account'';
            (2) are authorized to remain available until expended; and
            (3) are in addition to amounts otherwise available for such 
        purposes.

              TITLE III--MILLENNIUM CHALLENGE CORPORATION

SEC. 301. MILLENNIUM CHALLENGE CORPORATION.

    (a) Establishment.--There is hereby established in the executive 
branch a corporation to be known as the ``Millennium Challenge 
Corporation'' that shall be responsible for carrying out title II.
    (b) Government Corporation.--The Corporation shall be a Government 
corporation, as defined in section 103 of title 5, United States Code.

SEC. 302. CHIEF EXECUTIVE OFFICER.

    (a) Appointment.--The Corporation shall be headed by an individual 
who shall serve as Chief Executive Officer of the Corporation, who 
shall be appointed by the President, by and with the advice and consent 
of the Senate.
    (b) Compensation and Rank.--
            (1) In general.--The Chief Executive Officer shall be 
        compensated at the rate provided for level II of the Executive 
        Schedule under section 5313 of title 5, United States Code, and 
        shall have the equivalent rank of Deputy Secretary.
            (2) Amendment.--Section 5313 of title 5, United States 
        Code, is amended by adding at the end the following:
            ``Chief Executive Officer, Millennium Challenge 
        Corporation.''.
    (c) Authorities and Duties.--The Chief Executive Officer shall 
exercise the powers and discharge the duties of the Corporation and any 
other duties, as conferred on the Chief Executive Officer by the 
President.
    (d) Authority To Appoint Officers.--The Chief Executive Officer 
shall appoint all officers of the Corporation.

SEC. 303. BOARD OF DIRECTORS.

    (a) In General.--There shall be in the Corporation a Board of 
Directors.
    (b) Duties.--The Board may prescribe, amend, and repeal bylaws, 
rules, regulations, and procedures governing the manner in which the 
business of the Corporation may be conducted and in which the powers 
granted to it by law may be exercised.
    (c) Membership.--
            (1) In general.--The Board shall consist of--
                    (A) the Secretary of State, the Secretary of 
                Treasury, the Administrator of the United States Agency 
                for International Development, the Chief Executive 
                Officer of the Corporation, and the United States Trade 
                Representative; and
                    (B) four other individuals who shall be appointed 
                by the President, by and with the advice and consent of 
                the Senate, of which--
                            (i) one individual shall be appointed from 
                        among a list of individuals submitted by the 
                        majority leader of the House of 
                        Representatives;
                            (ii) one individual shall be appointed from 
                        among a list of individuals submitted by the 
                        minority leader of the House of 
                        Representatives;
                            (iii) one individual shall be appointed 
                        from among a list of individuals submitted by 
                        the majority leader of the Senate; and
                            (iv) one individual shall be appointed from 
                        among a list of individuals submitted by the 
                        minority leader of the Senate.
            (2) Ex-officio members.--In addition to members of the 
        Board described in paragraph (1), the Director of the Office of 
        Management and Budget, the President and Chief Executive 
        Officer of the Overseas Private Investment Corporation, the 
        Director of the Trade and Development Agency, and the Director 
        of the Peace Corps shall be non-voting members, ex officio, of 
        the Board.
    (d) Terms.--
            (1) Officers of federal government.--Each member of the 
        Board described in paragraphs (1)(A) and (2) of subsection (c) 
        shall serve for a term that is concurrent with the term of 
        service of the individual's position as an officer within the 
        other Federal department or agency.
            (2) Other members.--Each member of the Board described in 
        subsection (c)(1)(B) shall be appointed for a term of 3 years 
        and may be reappointed for a term of an additional 2 years, in 
        the same manner in which the original appointment was made.
            (3) Vacancies.--A vacancy in the Board shall be filled in 
        the manner in which the original appointment was made.
    (e) Chairperson.--The Secretary of State shall serve as the 
Chairperson of the Board.
    (f) Quorum.--A majority of the members of the Board shall 
constitute a quorum, which shall include at least one member of the 
Board described in subsection (c)(1)(B).
    (g) Meetings.--The Board shall meet at the call of the Chairperson.
    (h) Compensation.--
            (1) Officers of federal government.--
                    (A) In general.--A member of the Board described in 
                paragraphs (1)(A) and (2) of subsection (c) may not 
                receive additional pay, allowances, or benefits by 
                reason of their service on the Board.
                    (B) Travel expenses.--Each such member of the Board 
                shall receive travel expenses, including per diem in 
                lieu of subsistence, in accordance with applicable 
                provisions under subchapter I of chapter 57 of title 5, 
                United States Code.
            (2) Other members.--
                    (A) In general.--Except as provided in paragraph 
                (2), a member of the Board described in subsection 
                (c)(1)(B)--
                            (i) shall be paid compensation out of funds 
                        made available for the purposes of this title 
                        at the daily equivalent of the highest rate 
                        payable under section 5332 of title 5, United 
                        States Code, for each day (including travel 
                        time) during which the member is engaged in the 
                        actual performance of duties as a member of the 
                        Board; and
                            (ii) while away from the member's home or 
                        regular place of business on necessary travel, 
                        as determined by the Chief Executive Officer, 
                        in the actual performance of duties as a member 
                        of the Board, shall be paid per diem, travel, 
                        and transportation expenses in the same manner 
                        as is provided under subchapter I of chapter 57 
                        of title 5, United States Code.
                    (B) Limitation.--A member of the Council may not be 
                paid compensation under subparagraph (A)(i) for more 
                than thirty days in any calendar year.

SEC. 304. INTERAGENCY COORDINATION.

    In carrying out the functions described in this title, and 
consistent with section 101 of the National Security Act of 1947 (50 
U.S.C. 402), the President shall ensure coordination of assistance 
authorized under title II with foreign economic assistance programs and 
activities carried out by other Federal departments and agencies.

SEC. 305. POWERS OF THE CORPORATION; RELATED PROVISIONS.

    (a) Powers.--The Corporation--
            (1) may adopt, alter, and use a corporate seal, which shall 
        be judicially noticed;
            (2) may prescribe, amend, and repeal such rules, 
        regulations, and procedures as are necessary for carrying out 
        the functions of the Corporation and all Compacts;
            (3) may make and perform such contracts, grants, and other 
        agreements with any individual, corporation, or other private 
        or public entity, however designated and wherever situated, as 
        may be necessary for carrying out the functions of the 
        Corporation;
            (4) may determine and prescribe the manner in which its 
        obligations shall be incurred and its expenses allowed and 
        paid, including expenses for representation not exceeding 
        $95,000 in any fiscal year;
            (5) may lease, purchase, or otherwise acquire, own, hold, 
        improve, use or otherwise deal in and with such property (real, 
        personal, or mixed) or any interest therein, wherever situated, 
        as may be necessary for carrying out the functions of the 
        Corporation;
            (6) may accept gifts or donations of services or of 
        property (real, personal, or mixed), tangible or intangible, in 
        furtherance of the purposes of this division;
            (7) may hire or obtain passenger motor vehicles;
            (8) may use the United States mails in the same manner and 
        on the same conditions as the Executive departments (as defined 
        in section 101 of title 5, United States Code);
            (9) may, with the consent of any Executive agency (as 
        defined in section 105 of title 5, United States Code), use the 
        information, services, facilities, and personnel of that agency 
        on a full or partial reimbursement in carrying out the purposes 
        of this division; and
            (10) may sue and be sued, complain, and defend, in its 
        corporate name in any court of competent jurisdiction.
    (b) Offices.--
            (1) Principal office.--The Corporation shall maintain its 
        principal office in the metropolitan area of Washington, 
        District of Columbia.
            (2) Other offices.--The Corporation may establish other 
        offices in any place or places outside the United States in 
        which the Corporation may carry out any or all of its 
        operations and business.
    (c) Cooperation With Other Federal Departments and Agencies.--In 
order to avoid unnecessary expense and duplication of functions, 
efforts, and activities between the Corporation and other Federal 
departments and agencies the Chief Executive Officer, or the Chief 
Executive Officer's designee--
            (1)(A) shall consult, to the maximum extent practicable, 
        with the Administrator of the United States Agency for 
        International Development, or the Administrator's designee, in 
        order to coordinate the activities of the Corporation and the 
        Agency for International Development; and
            (B) shall consult with the heads of other departments and 
        agencies to ensure similar coordination of activities;
            (2)(A) shall ensure proper coordination of activities of 
        the Corporation with the provision of development assistance of 
        relevant international financial institutions, including the 
        International Bank for Reconstruction and Development, the 
        International Monetary Fund, and the regional multilateral 
        development banks; and
            (B) shall provide to each United States Executive Director 
        (or other United States representative) to the relevant 
        international financial institutions a copy of each proposed 
        Compact between the United States and an eligible country and a 
        copy of each such final Compact.
    (d) Positions with Foreign Governments.--When approved by the 
Corporation, in furtherance of its purposes, employees of the 
Corporation (including individuals detailed to the Corporation) may 
accept and hold offices or positions to which no compensation is 
attached with governments or governmental agencies of foreign countries 
or with international organizations.

SEC. 306. TRANSPARENCY AND ACCOUNTABILITY OF THE CORPORATION.

    The Corporation and its officers and employees shall be subject to 
the provisions of section 552 of title 5, United States Code (relating 
to freedom of information).

SEC. 307. DETAIL OF PERSONNEL TO THE CORPORATION; OTHER AUTHORITIES AND 
                    LIMITATIONS.

    (a) Detail of Personnel.--Upon request of the Chief Executive 
Officer of the Corporation, the head of an agency may detail any 
employee of such agency to the Corporation on a fully or partially 
reimbursable basis. Any employee so detailed remains, for the purpose 
of preserving such employee's allowances, privileges, rights, 
seniority, and other benefits, an employee of the agency from which 
detailed.
    (b) Limitation on Total Service.--
            (1) In general.--Except as provided in paragraph (2), no 
        individual may serve in or under the Corporation (whether as an 
        employee of the Corporation, a detailee to the Corporation, or 
        a combination thereof) for a total period exceeding 5 years.
            (2) Exceptions.--
                    (A) Extension authority.--The Chief Executive 
                Officer may extend the 5-year period under paragraph 
                (1) for up to an additional 3 years, in the case of any 
                particular individual, if the Chief Executive Officer 
                determines that such extension is essential to the 
                achievement of the purposes of this division.
                    (B) Officers.--Nothing in this subsection shall 
                limit the period for which an individual may serve as 
                an officer of the Corporation appointed pursuant to 
                section 302(d) nor shall any period of service as such 
                an officer be taken into account for purposes of 
                applying this subsection.
    (c) Reemployment Rights.--
            (1) In general.--An employee of an agency who is serving 
        under a career or career conditional appointment (or the 
        equivalent), and who, with the consent of the head of such 
        agency, transfers to the Corporation, is entitled to be 
        reemployed in such employee's former position or a position of 
        like seniority, status, and pay in such agency, if such 
        employee--
                    (A) is separated from the Corporation--
                            (i) by reason of the application of 
                        subsection (b); or
                            (ii) for any other reason, other than 
                        misconduct, neglect of duty, or malfeasance; 
                        and
                    (B) applies for reemployment not later than 90 days 
                after the date of separation from the Corporation.
            (2) Specific rights.--An employee who satisfies paragraph 
        (1) is entitled to be reemployed (in accordance with such 
        paragraph) within 30 days after applying for reemployment and, 
        on reemployment, is entitled to at least the rate of basic pay 
        to which such employee would have been entitled had such 
        employee never transferred.
    (d) Basic Pay.--The Chief Executive Officer may fix the rate of 
basic pay of employees of the Corporation without regard to the 
provisions of--
            (1) chapter 51 of title 5, United States Code (relating to 
        the classification of positions), and
            (2) subchapter III of chapter 53 of such title (relating to 
        General Schedule pay rates),
except that no employee of the Corporation may receive a rate of basic 
pay that exceeds the rate for level II of the Executive Schedule under 
section 5313 of such title.
    (e) Assignment to United States Embassies.--An employee of the 
Corporation, including an individual detailed to or contracted by the 
Corporation, may be assigned to a United States diplomatic mission or 
consular post, or United States Agency for International Development 
field mission.
    (f) Privileges and Immunities.--The Secretary of State shall seek 
to ensure that an employee of the Corporation, including an individual 
detailed to or contracted by the Corporation, and the members of the 
family of such employee, while the employee is performing duties in any 
country or place outside the United States, enjoy the privileges and 
immunities that are enjoyed by a member of the Foreign Service, or the 
family of a member of the Foreign Service, as appropriate, of 
comparable rank and salary of such employee, if such employee or a 
member of the family of such employee is not a national of or 
permanently resident in such country or place.
    (g) Responsibility of Chief of Mission.--An employee of the 
Corporation, including an individual detailed to or contracted by the 
Corporation, and a member of the family of such employee, shall be 
subject to section 207 of the Foreign Service Act of 1980 (22 U.S.C. 
3927) in the same manner as United States Government employees while 
the employee is performing duties in any country or place outside the 
United States if such employee or member of the family of such employee 
is not a national of or permanently resident in such country or place.
    (h) Allocation of Funds.--
            (1) In general.--The Corporation may allocate or transfer 
        to the United States Agency for International Development or 
        any other agency any part of any funds available for carrying 
        out the purposes of this division. Such funds shall be 
        available for obligation and expenditure for the purposes for 
        which authorized, in accordance with authority granted in this 
        title or under authority governing the activities of the 
        agencies of the United States Government to which such funds 
        are allocated or transferred.
            (2) Congressional notification.--The Chief Executive 
        Officer shall notify the appropriate congressional committees 
        not later than 15 days prior to a transfer of funds under 
        paragraph (1) that exceeds $5,000,000.
            (3) Use of services.--For carrying out the purposes of this 
        division, the Corporation may utilize the services and 
        facilities of, or procure commodities from, any agency under 
        such terms and conditions as may be agreed to by the head of 
        the agency and the Corporation.
    (i) Funding Limitation.--Of the funds allocated under subsection 
(h) in any fiscal year, not more than 7 percent of such funds may be 
used for administrative expenses.
    (j) Other Authorities.--Except to the extent inconsistent with the 
provisions of this division, the administrative authorities under 
chapters 1 and 2 of part III of the Foreign Assistance Act of 1961 
shall apply to the provision of assistance under this division to the 
same extent and in the same manner as such authorities apply to the 
provision of economic assistance under part I of such Act.
    (k) Applicability of Government Corporation Control Act.--
            (1) In general.--The Corporation shall be subject to the 
        provisions of chapter 91 of subtitle VI of title 31, United 
        States Code, except that the Corporation shall not be 
        authorized to issue obligations or offer obligations to the 
        public.
            (2) Conforming amendment.--Section 9101(3) of title 31, 
        United States Code, is amended by adding at the end the 
        following:
                    ``(Q) the Millennium Challenge Corporation.''
    (l) Inspector General.--
            (1) In general.--The Inspector General of the United States 
        Agency for International Development shall serve as Inspector 
        General of the Corporation, and, in acting in such capacity, 
        may conduct reviews, investigations, and inspections of all 
        aspects of the operations and activities of the Corporation.
            (2) Authority of the board.--In carrying out its 
        responsibilities under this subsection, the Inspector General 
        shall report to the Board of Directors.
            (3) Reimbursement.--The Corporation shall reimburse the 
        United States Agency for International Development for all 
        expenses incurred by the Inspector General in connection with 
        the Inspector General's responsibilities under this subsection.
    (m) Comptroller General.--
            (1) In general.--The Comptroller General shall conduct 
        audits, evaluations, and investigations of the Corporation.
            (2) Scope.--The activities and financial transactions of 
        the Corporation for any fiscal year during which Federal funds 
        are available to finance any portion of its operations may be 
        evaluated, investigated, or audited by the Comptroller General 
        in accordance with such rules and regulations as may be 
        prescribed by the Comptroller General.
            (3) Access and records.--Any evaluation, investigation, or 
        audit shall be conducted at the place or places where pertinent 
        information of the Corporation is normally kept. The 
        representatives of the General Accounting Office shall have 
        access to all books, accounts, financial records, reports, 
        files, and other papers or property belonging to or in use by 
        the Corporation and necessary to facilitate the evaluation, 
        investigation, or audit; and full facilities for verifying 
        transactions with the balances and securities held by 
        depositories, fiscal agents, and custodians shall be afforded 
        to such representatives. All such books, accounts, financial 
        records, reports, files, and other papers or property of the 
        Corporation shall remain in the possession and custody of the 
        Corporation throughout the period beginning on the date such 
        possession or custody commences and ending three years after 
        such date, but the General Accounting Office may require the 
        retention of such books, accounts, financial records, reports, 
        files, papers, or property for a longer period under section 
        3523(c) of title 31, United States Code.
            (4) Report.--A report of such audit, evaluation, or 
        investigation shall be made by the Comptroller General to the 
        appropriate congressional committees and to the President, 
        together with such recommendations with respect thereto as the 
        Comptroller General shall deem advisable.
    (n) Definitions.--For purposes of this section--
            (1) the term ``agency'' means an Executive agency, as 
        defined by section 105 of title 5, United States Code; and
            (2) the term ``detail'' means the assignment or loan of an 
        employee, without a change of position, from the agency by 
        which such employee is employed to the Corporation.

SEC. 308. MILLENNIUM CHALLENGE ADVISORY COUNCIL.

    (a) Establishment.--There is hereby established in the executive 
branch an advisory council to the Corporation to be known as the 
Millennium Challenge Advisory Council.
    (b) Functions.--
            (1) General functions.--The Council shall advise and 
        consult with the Chief Executive Officer of the Corporation and 
        the Board of Directors with respect to policies and programs 
        designed to further the purposes of this division and shall 
        periodically report to the Congress with respect to the 
        activities of the Corporation. In addition, the Council shall 
        review on an annual basis the criteria and methodology used to 
        determine eligibility of countries for assistance under title 
        II and make recommendations to the Chief Executive Officer and 
        the Board to improve the effectiveness of such criteria and 
        methodology in order to achieve the purposes of this division.
            (2) Additional functions.--Members of the Council shall 
        (subject to subsection (d)(1)) conduct on-site inspections, and 
        make examinations, of the activities of the Corporation in the 
        United States and in other countries in order to--
                    (A) evaluate the accomplishments of the 
                Corporation;
                    (B) assess the potential capabilities and the 
                future role of the Corporation;
                    (C) make recommendations to the Chief Executive 
                Officer, the Board of Directors, and Congress, for the 
                purpose of guiding the future direction of the 
                Corporation and of helping to ensure that the purposes 
                and programs of the Corporation are carried out in ways 
                that are economical, efficient, responsive to changing 
                needs in developing countries and to changing 
                relationships among people, and in accordance with law; 
                and
                    (D) make such other evaluations, assessments, and 
                recommendations as the Council considers appropriate.
            (3) Public participation.--The Council may provide for 
        public participation in its activities, consistent with section 
        552b of title 5, United States Code.
    (c) Membership.--
            (1) In general.--The Council shall consist of seven 
        individuals, who shall be appointed by the Chief Executive 
        Officer, and who shall be broadly representative of 
        nongovernmental entities with expertise and interest in 
        international trade and economic development, including 
        business and business associations, trade and labor unions, 
        private and voluntary organizations, foundations, public policy 
        organizations, academia, and other entities as the Chief 
        Executive Officer determines appropriate.
            (2) Additional requirement.--No member appointed under 
        paragraph (1) may be an officer or employee of the United 
        States Government.
    (d) Compensation.--
            (1) In general.--Except as provided in paragraph (2), a 
        member of the Council--
                    (A) shall be paid compensation out of funds made 
                available for the purposes of this title at the daily 
                equivalent of the highest rate payable under section 
                5332 of title 5, United States Code, for each day 
                (including travel time) during which the member is 
                engaged in the actual performance of duties as a member 
                of the Council; and
                    (B) while away from the member's home or regular 
                place of business on necessary travel, as determined by 
                the Chief Executive Officer, in the actual performance 
                of duties as a member of the Council, shall be paid per 
                diem, travel, and transportation expenses in the same 
                manner as is provided under subchapter I of chapter 57 
                of title 5, United States Code.
            (2) Limitation.--A member of the Council may not be paid 
        compensation under paragraph (1)(A) for more than thirty days 
        in any calendar year.
    (e) Quorum.--A majority of the members of the Council shall 
constitute a quorum for the purposes of transacting any business.
    (f) Financial Interests of Members.--A member of the Council shall 
disclose to the Chairperson of the Council and the Chief Executive 
Officer of the existence of any direct or indirect financial interest 
of that member in any particular matter before the Council and may not 
vote or otherwise participate as a Council member with respect to that 
particular matter.
    (g) Chairperson.--The Chief Executive Officer shall designate one 
of the members of the Council as Chairperson, who shall serve in that 
capacity for a term of two years. The Chief Executive Officer may renew 
the term of the member appointed as Chairperson under the preceding 
sentence.
    (h) Meetings, Bylaws, and Regulations.--
            (1) Meetings.--The Council shall hold a regular meeting 
        during each calendar quarter and shall meet at the call of the 
        President, the Chief Executive Officer, the Chairperson of the 
        Board, the Chairperson of the Council, or two members of the 
        Council.
            (2) Bylaws and regulations.--The Council shall prescribe 
        such bylaws and regulations as it considers necessary to carry 
        out its functions. Such bylaws and regulations shall include 
        procedures for fixing the time and place of meetings, giving or 
        waiving of notice of meetings, and keeping of minutes of 
        meetings.
    (i) Report to the President, Chief Executive Officer, and Board.--
            (1) Report.--Not later than January 1, 2005, and not later 
        than January 1 of each year thereafter that the Corporation is 
        in existence, the Council shall submit to the President, the 
        Chief Executive Officer, and the Board a report on its views on 
        the programs and activities of the Corporation.
            (2) Contents.--Each report shall contain a summary of the 
        advice and recommendations provided by the Council to the Chief 
        Executive Officer and the Board during the period covered by 
        the report and such recommendations (including recommendations 
        for administrative or legislative action) as the Council 
        considers appropriate to make to the Congress.
            (3) Additional requirement.--Not later than 90 days after 
        receiving each such report, the Chief Executive Officer shall 
        transmit to Congress a copy of the report, together with any 
        comments concerning the report that the Chief Executive Officer 
        considers appropriate.
    (j) Administrative assistance.--The Chief Executive Officer shall 
make available to the Council such personnel, administrative support 
services, and technical assistance as are necessary to carry out its 
functions effectively.
    (k) Termination.--Section 14(a)(2)(B) of the Federal Advisory 
Committee Act (5 U.S.C. App.; relating to the termination of advisory 
committees) shall not apply to the Council. Notwithstanding section 102 
of this Act, the authorities of the Council shall terminate on December 
31, 2007.

SEC. 309. MILLENNIUM CHALLENGE SEED GRANTS.

    (a) Findings.--Congress finds the following:
            (1) Many countries in the developing world lack the 
        academic and public policy advocacy base essential to attaining 
        the principal objectives of the Millennium Challenge Account.
            (2) Because of widespread government repression of free 
        speech and poverty, the countries of Africa in particular 
        suffer an acute shortage of nongovernmental organizations which 
        effectively study and promote the principal objectives of the 
        Millennium Challenge Account.
            (3) The Millennium Challenge Account will struggle to reach 
        its goals unless countries in the developing world possess a 
        home grown intellectual commitment and culture of advocacy 
        aimed at promoting its principal objectives.
    (b) Assistance.--The Chief Executive Officer of the Corporation is 
authorized to provide assistance in support of nongovernmental 
organizations, (including universities and independent foundations and 
other organizations) in low income and lower middle income countries, 
which are undertaking research, education, and advocacy efforts aimed 
at promoting democratic societies, human rights, the rule of law, 
improved educational opportunities and health conditions, particularly 
for women and children, and economic freedom.
    (c) Limitation.--Not more than $10,000,000 of the amount made 
available to carry out this division for a fiscal year may be made 
available to carry out this section.

   TITLE IV--PROVISIONS RELATING TO UNITED STATES ECONOMIC ASSISTANCE

SEC. 401. DEFINITION.

    In this title, the term ``United States economic assistance'' means 
any bilateral economic assistance, from any budget functional category, 
that is provided by any department or agency of the United States to a 
foreign country, including such assistance that is intended--
            (1) to assist the development and economic advancement of 
        friendly foreign countries and peoples, including assistance 
        provided under title II (relating to the Millennium Challenge 
        Account);
            (2) to promote the freedom, aspirations, or sustenance of 
        friendly peoples under oppressive rule by unfriendly 
        governments;
            (3) to promote international trade and foreign direct 
        investment as a means of aiding economic growth;
            (4) to save lives and alleviate suffering of foreign 
        peoples during or following war, natural disaster, or complex 
        crisis;
            (5) to assist in recovery and rehabilitation of countries 
        or peoples following disaster or war;
            (6) to protect refugees and promote durable solutions to 
        aid refugees;
            (7) to promote sound environmental practices;
            (8) to assist in development of democratic institutions and 
        good governance by the people of foreign countries;
            (9) to promote peace and reconciliation or prevention of 
        conflict;
            (10) to improve the technical capacities of governments to 
        reduce production of and demand for illicit narcotics; and
            (11) to otherwise promote through bilateral foreign 
        economic assistance the national objectives of the United 
        States.

SEC. 402. FRAMEWORK FOR ASSISTANCE.

    (a) Sense of Congress.--It is the sense of Congress that a coherent 
framework for United States economic assistance should be established 
in accordance with this section.
    (b) Elements.--The framework described in subsection (a) includes 
the following elements:
            (1) The United States Agency for International Development, 
        under the direction and foreign policy guidance of the 
        Secretary of State, should be responsible for--
                    (A) providing assistance to countries that face 
                natural and man-made disasters in order to provide 
                humanitarian relief to the peoples of such countries, 
                in coordination with refugee programs administered by 
                the Department of State;
                    (B) providing assistance to countries that are 
                suffering from conflicts or are in post-conflict 
                situations in order to provide humanitarian relief, 
                transition assistance, and reconstruction assistance;
                    (C) providing assistance to help moderate-to-poorly 
                performing countries achieve development progress in 
                the areas described in part I of the Foreign Assistance 
                Act of 1961, including progress toward becoming 
                eligible for assistance under this title, and to 
                promote international health worldwide, as well as 
                assisting in the development of country and regional 
                development strategies;
                    (D) addressing transnational problems, such as 
                environmental degradation, food insecurity, and health 
                problems; and
                    (E) assisting other Federal departments and 
                agencies, including the Corporation established under 
                title III, to carry out assistance activities abroad, 
                including providing technical assistance and advice to 
                such departments and agencies, coordinating its 
                assistance programs with such departments and agencies, 
                and using its field offices to help implement such 
                assistance.
            (2) The Corporation established under title III should 
        provide assistance to countries that have demonstrated a 
        commitment to bolstering democracy, good governance, and the 
        rule of law, to investing in the health and educations of their 
        people, and to promoting sound economic policies that foster 
        economic opportunity for their people.
            (3) The Department of State should be responsible for 
        allocating security assistance to support key foreign policy 
        objectives of the United States and shall administer assistance 
        in such areas as non-proliferation, anti-terrorism, counter-
        narcotics, and relief for refugees.
            (4) Other Federal departments and agencies with expertise 
        in international development-related activities, such as the 
        Overseas Private Investment Corporation, the Trade and 
        Development Agency, the Department of Agriculture, the 
        Department of Health and Human Services, and the Centers for 
        Disease Control and Prevention, to the extent such departments 
        and agencies have the authority to carry out development-
        related programs, and in coordination with the Department of 
        State and the United States Agency for International 
        Development, should provide expertise in specific technical 
        areas and shall provide assistance, including assistance 
        provided with funds made available from the Corporation to 
        assist United States Government international development 
        activities.

SEC. 403. REPORT RELATING TO IMPACT AND EFFECTIVENESS OF ASSISTANCE.

    (a) Report.--Not later than December 31, 2004, and December 31 of 
each third year thereafter, the President shall transmit to Congress a 
report which analyzes, on a country-by-country basis, the impact and 
effectiveness of United States economic assistance furnished under the 
framework established in section 402 to each country during the 
preceding three fiscal years. The report shall include the following 
for each recipient country:
            (1) An analysis of the impact of United States economic 
        assistance during the preceding three fiscal years on economic 
        development in that country, with a discussion of the United 
        States interests that were served by the assistance. This 
        analysis shall be done on a sector-by-sector basis to the 
        extent possible and shall identify any economic policy reforms 
        which were promoted by the assistance. This analysis shall--
                    (A) include a description, quantified to the extent 
                practicable, of the specific objectives the United 
                States sought to achieve in providing economic 
                assistance for that country, and
                    (B) specify the extent to which those objectives 
                were not achieved, with an explanation of why they were 
                not achieved.
            (2) A description of the amount and nature of economic 
        assistance provided by other donors during the preceding three 
        fiscal years, set forth by development sector to the extent 
        possible.
            (3) A discussion of the commitment of the host government 
        to addressing the country's needs in each development sector, 
        including a description of the resources devoted by that 
        government to each development sector during the preceding 
        three fiscal years.
            (4) A description of the trends, both favorable and 
        unfavorable, in each development sector.
            (5) Statistical and other information necessary to evaluate 
        the impact and effectiveness of United States economic 
        assistance on development in the country.
            (6) A comparison of the analysis provided in the report 
        with relevant analyses by international financial institutions, 
        other international organizations, other donor countries, or 
        nongovernmental organizations.
    (b) Listing of Most and Least Successful Assistance Programs.--The 
report required by this section shall identify--
            (1) each country in which United States economic assistance 
        has been most successful, as indicated by the extent to which 
        the specific objectives the United States sought to achieve in 
        providing the assistance for the country, as referred to in 
        subsection (a)(1)(A), were achieved; and
            (2) each country in which United States economic assistance 
        has been least successful, as indicated by the extent to which 
        the specific objectives the United States sought to achieve in 
        providing the assistance for the country, as referred to in 
        subsection (a)(1)(A), were not achieved.
For each country listed pursuant to paragraph (2), the report shall 
explain why the assistance was not more successful and shall specify 
what the United States has done as a result.
    (c) De Minimus Exception.--Information under subsections (a) and 
(b) for a fiscal year shall not be required with respect to a country 
for which United States economic assistance for the country for the 
fiscal year is less than $5,000,000.

      DIVISION B--REAUTHORIZATION AND EXPANSION OF THE PEACE CORPS

                      TITLE X--GENERAL PROVISIONS

SEC. 1001. DEFINITIONS.

    In this division:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the Committee on 
        International Relations of the House of Representatives and the 
        Committee on Foreign Relations of the Senate.
            (2) Director.--The term ``Director'' means the Director of 
        the Peace Corps.
            (3) Host country.--The term ``host country'' means a 
        country whose government has invited the Peace Corps to 
        establish a Peace Corps program within the territory of the 
        country.
            (4) Peace corps volunteer.--The term ``Peace Corps 
        volunteer'' means a volunteer or a volunteer leader under the 
        Peace Corps Act.
            (5) Returned peace corps volunteer.--The term ``returned 
        Peace Corps volunteer'' means a person who has been certified 
        by the Director as having served satisfactorily as a Peace 
        Corps volunteer.

SEC. 1002. FINDINGS.

    Congress makes the following findings:
            (1) The Peace Corps was established in 1961 to promote 
        world peace and friendship through the service abroad of 
        volunteers who are United States citizens. The spirit of 
        service and commitment to helping others is a fundamental 
        component of democracy.
            (2) Since its establishment, more than 168,000 volunteers 
        have served in the Peace Corps in 136 countries throughout the 
        world.
            (3) The three goals codified in the Peace Corps Act which 
        have guided the Peace Corps and its volunteers over the years, 
        can work in concert to promote global acceptance of the 
        principles of international peace and nonviolent coexistence 
        among peoples of diverse cultures and systems of government.
            (4) The Peace Corps has sought to fulfill three goals--to 
        help people in developing countries meet basic needs, promote 
        understanding abroad of the values and ideals of the United 
        States, and promote an understanding of other peoples by the 
        people of the United States.
            (5) After more than 40 years of operation, the Peace Corps 
        remains the world's premier international service organization 
        dedicated to promoting grassroots development by working with 
        families and communities to improve health care for children, 
        expand agricultural production, teach in schools, fight 
        infectious diseases, protect the environment, and initiate 
        small business opportunities.
            (6) The Peace Corps remains committed to sending well 
        trained and well supported Peace Corps volunteers overseas to 
        promote international peace, cross-cultural awareness, and 
        mutual understanding between the United States and other 
        countries.
            (7) The Peace Corps is an independent agency, and, 
        therefore, no Peace Corps personnel or volunteers should be 
        used to accomplish any goal other than the goals established by 
        the Peace Corps Act.
            (8) The Crisis Corps has been an effective tool in 
        harnessing the skills and talents of returned Peace Corps 
        volunteers and should be expanded, to the maximum extent 
        practicable, to utilize the talent of returned Peace Corps 
        volunteers.
            (9) In fiscal year 2003, the Peace Corps is operating with 
        an annual budget of $295,000,000 in 70 countries, with more 
        than 7,000 Peace Corps volunteers.
            (10) There is deep misunderstanding and misinformation in 
        many parts of the world, particularly in countries with 
        substantial Muslim populations, with respect to United States 
        values and ideals. A new or expanded Peace Corps presence in 
        such places could foster better understanding between the 
        people of the United States and such countries.
            (11) Congress has declared, and the Peace Corps Act 
        provides, that the Peace Corps shall maintain, to the maximum 
        extent practicable and appropriate, a volunteer corps of at 
        least 10,000 individuals.
            (12) President George W. Bush has called for the doubling 
        of the number of Peace Corps volunteers in service.
            (13) Any expansion of the Peace Corps should not jeopardize 
        the quality of the Peace Corps volunteer experience and, 
        therefore, necessitates, among other things, an appropriate 
        increase in field and headquarters support staff.
            (14) In order to ensure that the proposed expansion of the 
        Peace Corps preserves the integrity of the program and the 
        security of volunteers, the integrated Planning and Budget 
        System supported by the Office of Planning and Policy Analysis 
        should continue its focus on strategic planning.
            (15) A streamlined, bipartisan Peace Corps National 
        Advisory Council composed of distinguished returned Peace Corps 
        volunteers, former Peace Corps staff, and other individuals 
        with diverse backgrounds and expertise can be a source of ideas 
        and suggestions that may be useful to the Director of the Peace 
        Corps as the Director discharges the duties and 
        responsibilities as head of the agency.

      TITLE XI--AMENDMENTS TO PEACE CORPS ACT; RELATED PROVISIONS

SEC. 1101. ADVANCING THE GOALS OF THE PEACE CORPS.

    (a) Recruitment of Volunteers.--Section 2A of the Peace Corps Act 
(22 U.S.C. 2501-1) is amended by adding at the end the following new 
sentence: ``As an independent agency, the Peace Corps shall be 
responsible for recruiting all of its volunteers.''.
    (b) Details and Assignments.--Section 5(g) of the Peace Corps Act 
(22 U.S.C. 2504(g)) is amended by striking ``Provided, That'' and 
inserting ``Provided, That such detail or assignment furthers the 
fulfillment of Peace Corps' development and public diplomacy goals as 
described in section 2: Provided further, That''.

SEC. 1102. REPORTS AND CONSULTATIONS.

    (a) Annual Reports; Consultations on New Initiatives.--Section 11 
of the Peace Corps Act (22 U.S.C. 2510) is amended to read as follows:

``SEC. 11. ANNUAL REPORTS; CONSULTATIONS ON NEW INITIATIVES.

    ``(a) Annual Reports.--The Director shall transmit to Congress, at 
least once in each fiscal year, a report on operations under this Act. 
Each report shall contain information--
            ``(1) describing efforts undertaken to improve coordination 
        of activities of the Peace Corps with activities of 
        international voluntary service organizations, such as the 
        United Nations volunteer program, and of host country voluntary 
        service organizations, including--
                    ``(A) a description of the purpose and scope of any 
                development project which the Peace Corps undertook 
                during the preceding fiscal year as a joint venture 
                with any such international or host country voluntary 
                service organizations; and
                    ``(B) recommendations for improving coordination of 
                development projects between the Peace Corps and any 
                such international or host country voluntary service 
                organizations;
            ``(2) describing--
                    ``(A) any major new initiatives that the Peace 
                Corps has under review for the upcoming fiscal year, 
                and any major initiatives that were undertaken in the 
                previous fiscal year that were not included in prior 
                reports to the Congress;
                    ``(B) the rationale for undertaking such new 
                initiatives;
                    ``(C) an estimate of the cost of such initiatives; 
                and
                    ``(D) the impact on the safety of volunteers;
            ``(3) describing in detail the Peace Corps plans, including 
        budgetary plans, to have 14,000 volunteers in service by 2007 
        while maintaining the quality of the volunteer experience, 
        ensuring the safety and security of all volunteers, and 
        providing for appropriate administrative and other support; and
            ``(4) describing standard security procedures for any 
        country in which the Peace Corps operates programs or is 
        considering doing so, as well as any special security 
        procedures contemplated because of changed circumstances in 
        specific countries, and assessing whether security conditions 
        would be enhanced--
                    ``(A) by co-locating volunteers with international 
                or local nongovernmental organizations; or
                    ``(B) with the placement of multiple volunteers in 
                one location.
    ``(b) Consultations on New Initiatives.--The Director of the Peace 
Corps shall consult with the appropriate congressional committees with 
respect to any major new initiatives not previously discussed in the 
latest annual report submitted to Congress under subsection (a) or in 
budget presentations. Whenever possible, such consultations should take 
place prior to the initiation of such initiatives, or as soon as 
practicable thereafter.''.
    (b) One-Time Report on Student Loan Forgiveness Programs.--Not 
later than 30 days after the date of enactment of this Act, the 
Director shall submit to the appropriate congressional committees a 
report--
            (1) describing the student loan forgiveness programs 
        currently available to Peace Corps volunteers upon completion 
        of their service;
            (2) comparing such programs with other Government-sponsored 
        student loan forgiveness programs; and
            (3) recommending any additional student loan forgiveness 
        programs which could attract more applications from low- and 
        middle-income individuals who are carrying considerable 
        student-loan debt burdens.
    (c) Annual Report to Congress on the Federal Equal Opportunity 
Recruitment Program (FEORP).--Not later than 90 days after the date of 
enactment of this Act and annually thereafter, the Director shall 
report on the progress of the Peace Corps in recruiting historically 
underrepresented groups. The Director shall prepare this report in 
accordance with section 7201 of title 5, United States Code, and 
subpart B of part 720 of title 5, Code of Federal Regulations.
    (d) Report on Maintaining the Integrity of the Medical Screening 
and Medical Placement Coordination Processes.--Not later than 120 days 
after the date of enactment of this Act, the Director shall prepare and 
submit to the appropriate congressional committees a report that--
            (1) describes the medical screening procedures and 
        standards of the Office of Medical Services/Screening Unit of 
        the Peace Corps to determine whether an applicant for Peace 
        Corps service has worldwide clearance, limited clearance, a 
        deferral period, or is not medically, including 
        psychologically, qualified to serve in the Peace Corps as a 
        volunteer;
            (2) describes the procedures and criteria for matching 
        applicants for Peace Corps service with a host country to 
        ensure that the applicant, reasonable accommodations 
        notwithstanding, can complete at least two years of volunteer 
        service without interruption to host country national projects 
        due to foreseeable medical conditions; and
            (3) with respect to each of fiscal years 2000 through 2002 
        and the first six months of fiscal year 2003, states the number 
        of--
                    (A) medical screenings conducted;
                    (B) applicants who have received worldwide 
                clearance, limited clearance, deferral periods, and 
                medical disqualifications to serve;
                    (C) Peace Corps volunteers who the agency has had 
                to separate from service due to the discovery of 
                undisclosed medical information; and
                    (D) Peace Corps volunteers who have terminated 
                their service early due to medical, including 
                psychological, reasons.

SEC. 1103. SPECIAL VOLUNTEER RECRUITMENT AND PLACEMENT FOR CERTAIN 
                    COUNTRIES.

    (a) Report.--Not later than 60 days after the date of enactment of 
this Act, the Director shall submit to the appropriate congressional 
committees a report that--
            (1) describes the recruitment strategies to be employed by 
        the Peace Corps to recruit and train volunteers with the 
        appropriate language skills and interest in serving in host 
        countries; and
            (2) lists the countries that the Director has determined 
        should be priorities for special recruitment and placement of 
        Peace Corps volunteers.
    (b) Use of Returned Peace Corps Volunteers and Former Staff.--The 
Director is authorized and strongly urged to utilize the services of 
returned Peace Corps volunteers and former Peace Corps staff who have 
relevant language and cultural experience and may have served 
previously in countries with substantial Muslim populations, in order 
to open or reopen Peace Corps programs in such countries.

SEC. 1104. GLOBAL INFECTIOUS DISEASES INITIATIVE; COORDINATION OF HIV/
                    AIDS ACTIVITIES.

    (a) Initiative.--
            (1) In general.--The Director, in cooperation with 
        international public health experts, such as the Centers for 
        Disease Control and Prevention, the National Institutes of 
        Health, the World Health Organization, the Pan American Health 
        Organization, and local public health officials, shall expand 
        the Peace Corps' program of training for Peace Corps volunteers 
        in the areas of education, prevention, and treatment of 
        infectious diseases which are prevalent in host countries in 
        order to ensure that the Peace Corps increases its contribution 
        to the global campaign against such diseases.
            (2) Additional requirement.--Activities for the education, 
        prevention, and treatment of infectious diseases in host 
        countries by the Peace Corps shall be undertaken in a manner 
        that is consistent with activities authorized under sections 
        104(c), 104A, 104B, and 104C of the Foreign Assistance Act of 
        1961.
    (b) Coordination of HIV/AIDS Activities.--
            (1) In general.--The Director should designate an officer 
        or employee of the Peace Corps who is located in the United 
        States to coordinate all HIV/AIDS activities within the Peace 
        Corps. Such individual may be an individual who is an officer 
        or employee of the Peace Corps on the date of the enactment of 
        this Act.
            (2) Field coordination.--In addition to the position 
        established under paragraph (1), the Director should designate 
        an individual within each country in sub-Saharan Africa, the 
        Western Hemisphere, and Asia in which Peace Corps volunteers 
        carry out HIV/AIDS activities to coordinate all such activities 
        of the Peace Corps in such countries.
    (c) Definitions.--In this section:
            (1) AIDS.--The term ``AIDS'' means the acquired immune 
        deficiency syndrome.
            (2) HIV.--The term ``HIV'' means the human immunodeficiency 
        virus, the pathogen that causes AIDS.
            (3) HIV/AIDS.--The term ``HIV/AIDS'' means, with respect to 
        an individual, an individual who is infected with HIV or living 
        with AIDS.
            (4) Infectious diseases.--The term ``infectious diseases'' 
        means HIV/AIDS, tuberculosis, and malaria.

SEC. 1105. PEACE CORPS NATIONAL ADVISORY COUNCIL.

    Section 12 of the Peace Corps Act (22 U.S.C. 2511; relating to the 
Peace Corps National Advisory Council) is amended--
            (1) in subsection (b)(2)--
                    (A) in subparagraph (C), by striking ``and'' after 
                the semicolon;
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E); and
                    (C) by inserting after subparagraph (C) the 
                following:
            ``(D) make recommendations for utilizing the expertise of 
        returned Peace Corps volunteers and former Peace Corps staff in 
        fulfilling the goals of the Peace Corps; and'';
            (2) in subsection (c)(2)--
                    (A) in subparagraph (A)--
                            (i) in the first sentence--
                                    (I) by striking ``fifteen'' and 
                                inserting ``eleven''; and
                                    (II) by striking ``President, by 
                                and with the advice and consent of the 
                                Senate'' and inserting ``Director of 
                                the Peace Corps''; and
                            (ii) by striking the second sentence and 
                        inserting the following: ``Six of the members 
                        shall be former Peace Corps volunteers, at 
                        least one of whom shall have been a former 
                        staff member abroad or in the Washington 
                        headquarters, and not more than six shall be 
                        members of the same political party.'';
                    (B) by striking subparagraph (B);
                    (C) by amending subparagraph (D) to read as 
                follows:
    ``(D) The members of the Council shall be appointed to 2-year 
terms.'';
                    (D) in subparagraph (H), by striking ``nine'' and 
                inserting ``seven'';
                    (E) in subparagraph (I), by striking ``President 
                shall nominate'' and inserting ``Director shall 
                appoint''; and
                    (F) by redesignating subparagraphs (C), (D), (E), 
                (F), (G), (H), and (I) as subparagraphs (B), (C), (D), 
                (E), (F), (G), and (H), respectively; and
            (3) by amending subsection (g) to read as follows:
    ``(g) Chair.--The Director shall designate one of the voting 
members of the Council as Chair, who shall serve in that capacity for a 
term of two years. The Director may renew the term of a voting member 
appointed as Chair under the preceding sentence.''.

SEC. 1106. READJUSTMENT ALLOWANCES.

    The Peace Corps Act is amended--
            (1) in section 5(c) (22 U.S.C. 2504(c)), by striking ``$125 
        for each month of satisfactory service'' and inserting ``$275 
        for each month of satisfactory service during fiscal year 2004 
        and $300 for each month of satisfactory service thereafter''; 
        and
            (2) in section 6(1) (22 U.S.C. 2505(1)), by striking ``$125 
        for each month of satisfactory service'' and inserting ``$275 
        for each month of satisfactory service during fiscal year 2004 
        and $300 for each month of satisfactory service thereafter''.

SEC. 1107. PROGRAMS AND PROJECTS OF RETURNED PEACE CORPS VOLUNTEERS AND 
                    FORMER STAFF.

    (a) Purpose.--The purpose of this section is to provide support for 
returned Peace Corps volunteers to develop and carry out programs and 
projects to promote the objectives of the Peace Corps Act, as set forth 
in section 2(a) of that Act (22 U.S.C. 2501(a)).
    (b) Grants to Certain Nonprofit Corporations.--
            (1) Grant authority.--
                    (A) In general.--To carry out the purpose of this 
                section, and subject to the availability of 
                appropriations, the Director may award grants on a 
                competitive basis to private nonprofit corporations for 
                the purpose of enabling returned Peace Corps volunteers 
                to use their knowledge and expertise to develop and 
                carry out the programs and projects described in 
                paragraph (2).
                    (B) Delegation of authority and transfer of 
                funds.--The Director may delegate the authority to 
                award grants under subparagraph (A) and may transfer 
                funds authorized under this section subject to the 
                notification procedures of section 634A of the Foreign 
                Assistance Act of 1961 to the Chief Executive Officer 
                of the Corporation for National and Community Service 
                (referred to in this section as the ``Corporation'').
            (2) Programs and projects.--Such programs and projects may 
        include--
                    (A) educational programs designed to enrich the 
                knowledge and interest of elementary school and 
                secondary school students in the geography and cultures 
                of other countries where the volunteers have served;
                    (B) projects that involve partnerships with local 
                libraries to enhance community knowledge about other 
                peoples and countries; and
                    (C) audio-visual projects that utilize materials 
                collected by the volunteers during their service that 
                would be of educational value to communities.
            (3) Eligibility for grants.--To be eligible to compete for 
        grants under this section, a nonprofit corporation shall have a 
        board of directors composed of returned Peace Corps volunteers 
        and former Peace Corps staff with a background in community 
        service, education, or health. If the grants are made by the 
        Corporation, the nonprofit corporation shall meet all 
        appropriate Corporation management requirements, as determined 
        by the Corporation.
    (c) Grant Requirements.--Such grants shall be made pursuant to a 
grant agreement between the Peace Corps or the Corporation and the 
nonprofit corporation that requires that--
            (1) the grant funds will only be used to support programs 
        and projects described in subsection (a) pursuant to proposals 
        submitted by returned Peace Corps volunteers (either 
        individually or cooperatively with other returned volunteers);
            (2) the nonprofit corporation will give consideration to 
        funding individual programs or projects by returned Peace Corps 
        volunteers, in amounts of not more than $50,000, under this 
        section;
            (3) not more than 20 percent of the grant funds made 
        available to the nonprofit corporation will be used for the 
        salaries, overhead, or other administrative expenses of the 
        nonprofit corporation;
            (4) the nonprofit corporation will not receive grant funds 
        for programs or projects under this section for a third or 
        subsequent year unless the nonprofit corporation makes 
        available, to carry out the programs or projects during that 
        year, non-Federal contributions--
                    (A) in an amount not less than $2 for every $3 of 
                Federal funds provided through the grant; and
                    (B) provided directly or through donations from 
                private entities, in cash or in kind, fairly evaluated, 
                including plant, equipment, or services; and
            (5) the nonprofit corporation shall manage, monitor, and 
        submit reports to the Peace Corps or the Corporation, as the 
        case may be, on each program or project for which the nonprofit 
        corporation receives a grant under this section.
    (d) Status of the Fund.--Nothing in this section shall be construed 
to make any nonprofit corporation supported under this section an 
agency or establishment of the Federal Government or to make the 
members of the board of directors or any officer or employee of such 
nonprofit corporation an officer or employee of the United States.
    (e) Factors in Awarding Grants.--In determining the number of 
nonprofit corporations to receive grants under this section for any 
fiscal year, the Peace Corps or the Corporation--
            (1) shall take into consideration the need to minimize 
        overhead costs that direct resources from the funding of 
        programs and projects; and
            (2) shall seek to ensure a broad geographical distribution 
        of grants for programs and projects under this section.
    (f) Congressional Oversight.--Grant recipients under this section 
shall be subject to the appropriate oversight procedures of Congress.
    (g) Funding.--
            (1) In general.--There is authorized to be appropriated to 
        carry out this section up to $10,000,000. Such sum shall be in 
        addition to funds made available to the Peace Corps under this 
        division.
            (2) Availability.--Amounts appropriated pursuant to 
        paragraph (1) are authorized to remain available until 
        expended.
    (h) Crisis Corps.--
            (1) Statement of policy.--Congress states that the Crisis 
        Corps has been an effective tool in harnessing the skills and 
        talents of returned Peace Corps volunteers.
            (2) Increase in number of crisis corps assignments.--The 
        Director, in consultation with the governments of host 
        countries and appropriate nongovernmental organizations, shall 
        increase the number of available Crisis Corps assignments for 
        returned Peace Corps volunteers to at least 120 assignments in 
        fiscal year 2004, 140 assignments in fiscal year 2005, 160 
        assignments in fiscal year 2006, and 165 assignments in fiscal 
        year 2007.

SEC. 1108. DECLARATION OF POLICY.

    Congress declares its support for the goal announced by President 
Bush of doubling the number of Peace Corps volunteers to 14,000 by 2007 
and supports the funding levels necessary to accomplish this growth.

SEC. 1109. PEACE CORPS IN SIERRA LEONE.

    (a) Findings.--Congress makes the following findings:
            (1) Peace Corps service to Sierra Leone was suspended in 
        1994 due to a brutal civil war between the government and the 
        Revolutionary United Front (RUF).
            (2) Backed by British military intervention and a United 
        Nations peacekeeping operation, government authority has been 
        reestablished throughout the country and ``free and fair'' 
        national elections took place in May 2002.
            (3) Sierra Leone is a majority Muslim country.
            (4) The Peace Corps has given the safety and security of 
        its volunteers high priority.
    (b) Sense of Congress.--It is the sense of Congress that the Peace 
Corps should return its program to Sierra Leone as soon as security 
conditions are consistent with the safety and security of its 
volunteers.

SEC. 1110. AUTHORIZATION OF APPROPRIATIONS.

    Section 3(b)(1) of the Peace Corps Act (22 U.S.C. 2502(b)(1)) is 
amended by striking ``and $365,000,000 for fiscal year 2003'' and 
inserting ``$365,000,000 for fiscal year 2003, $366,868,000 for fiscal 
year 2004, $411,800,000 for fiscal year 2005, $455,930,000 for fiscal 
year 2006, and $499,400,000 for fiscal year 2007''.

                          Purpose and Summary

    The purpose of ``The Millennium Challenge Account 
Authorization and Peace Corps Expansion Act of 2003'' (H.R. 
2441) is twofold: to authorize the establishment of a new 
program of foreign assistance for countries that meet and 
maintain certain eligibility criteria; and to reauthorize and 
expand the Peace Corps, supporting the President's proposal to 
double the number of volunteers from 7,000 in FY2003 to 14,000 
in FY2007.
    ``The Millennium Challenge Account Authorization and Peace 
Corps Expansion Act of 2003'' is divided into two parts. 
Division A consists of the Millennium Challenge Account 
Authorization Act, and is subdivided into four titles: title I 
(``General Provisions''); title II (``Millennium Challenge 
Assistance''); title III (``Millennium Challenge 
Corporation''); and title IV (``Provisions Relating to United 
States Economic Assistance''). The Millennium Challenge Account 
Authorization Act authorizes a new program of assistance of 
$1.3 billion in FY2004, $3 billion in FY2005 and $5 billion in 
FY2006 for eligible countries for programs that help such 
countries achieve lasting economic growth and poverty 
reduction. The assistance will be administered by the 
Millennium Challenge Corporation, a new government-owned 
corporation that is created in title III of the act.
    Division B of H.R. 2441 is the Peace Corps Expansion Act of 
2003, and is subdivided into two titles: title X (``General 
Provisions'') and title XI (``Amendments to Peace Corps Act; 
Related Provisions''). The Peace Corps Expansion Act contains a 
Congressional Declaration of Policy in support of the goal 
announced by the President of doubling the number of Peace 
Corps volunteers to 14,000 volunteers by 2007. The bill also 
makes necessary amendments to the Peace Corps Act and 
authorizes a gradual expansion of the budget of the Peace 
Corps, from $366.8 million in FY2004 to $411.8 million in 
FY2005, to $455.9 million in FY2006, and to $499.4 million in 
FY2007.

                Background and Need for the Legislation

    In its 108th Congress, the United States of America has 
entered a period of unmatched and unprecedented relative power 
and influence in the world. Key leaders in the House of 
Representatives, both Republican and Democratic, agree that 
with such power and influence comes the responsibility and 
obligation to assist those less fortunate in the developing 
world. The assistance furnished by the Millennium Challenge 
Account and an expanded Peace Corps will support this vision. 
H.R. 2441 is the latest in a series of legislative initiatives 
important to the national security of the United States to 
originate in the Committee on International Relations.
    During the first 3 years of the 21st century, the Congress 
of the United States has met new challenges with decisiveness 
and resolve, providing unwavering support to the President and 
the American people in the fight against terrorism at home and 
abroad. The Congress has acted with alacrity, by authorizing 
the new Department of Homeland Security to protect the homeland 
and to face squarely the transnational threats of this era. The 
Committee on International Relations has authorized the use of 
force against the terrorists who perpetrated the September 11, 
2001 attacks and in Iraq; has initiated and crafted a new 
program of assistance to fight the global AIDS pandemic; and 
has originated legislation that will assist the people of 
Afghanistan and Iraq emerge from decades of tyranny, war, and 
oppression.
    While the Committee can be responsive to world events, it 
does more than prepare for and respond to imminent threats and 
crises. In January 2002, President Bush proposed that the 
United States double the size of the Peace Corps, an 
institution that since its inception has created opportunities 
for nearly 170,000 Americans to learn about the world and 
represent their Nation in service to peoples in friendly 
countries around the globe who seek advancement, education, 
equality, and development.
    In March, 2002, President Bush boldly proposed the further 
expansion of United States foreign assistance, through the 
establishment of the ``Millennium Challenge Account,'' now 
known widely as the ``MCA.'' He did so in a revolutionary 
manner--by proposing a new and additional assistance program 
only for those countries that meet certain standards of 
respecting human rights, investing in the future of their 
peoples, and promoting economic opportunity and freedom. In 
both announcements, the President issued a challenge to help 
those less fortunate, to promote universal human rights and 
values around the world, and to be part of the spread of 
democracy and freedom to the far corners of the globe.
    On June 12, 2003, after extensive consultation with the 
White House, the Committee on International Relations reported 
favorably ``The Millennium Challenge Account Authorization and 
Peace Corps Expansion Act of 2003,'' answering the President's 
call to authorize these two initiatives, but also acting on 
behalf of the American people who from their beginnings have 
sought to assist those less fortunate and to spread the light 
of democracy, accountability, and progress.
Goals of the Millennium Challenge Account
    Introduced by Chairman Hyde and Ranking Member Lantos, 
``The Millennium Challenge Account Authorization Act of 2003'' 
is a legislative initiative that authorizes the expansion of 
United States economic assistance to a limited number of high-
performing countries in the developing world. This new form of 
assistance will require a proven track record of accomplishment 
by potential recipients in the areas of economic freedom, 
democracy, and investments in a country's people, principally 
in the health and education sectors.
    The Millennium Challenge Account is an initiative based on 
the idea that countries must be accountable for their actions, 
be responsible for developing and advancing their own plans of 
progress, and must be able to show results in order to receive 
economic assistance from the American taxpayer. The program, 
the President announced, would be above and beyond existing aid 
programs--for which the President pledged ongoing support--and 
will distribute U.S. economic aid to developing countries that 
have demonstrated a commitment to govern justly, invest in 
their people and encourage economic freedom. Not only is the 
program designed to accelerate economic development and reduce 
poverty in countries that are performing well across a spectrum 
of criteria, but it also provides assistance, and thus an 
incentive, to countries that are not doing as well, but, 
nevertheless, demonstrate a commitment to the same performance 
criteria.
    In March 2003, the Committee on International Relations 
held a hearing on the Administration's MCA proposal, and heard 
from three administration witnesses on the proposed structure 
and organization of the Millennium Challenge Corporation, the 
new organization proposed to manage MCA assistance. Members 
also heard testimony and had the opportunity to question 
witnesses from the respected charities Save the Children and 
Bread for the World, as well as experts from the Heritage 
Foundation and the Center for Global Development on eligibility 
criteria for the MCA.
    At that hearing, witnesses did not dispute that many U.S. 
assistance programs have not achieved fully desired results 
over the years. Some assistance has allowed corrupt leaders to 
amass personal fortunes and remain in power beyond the will of 
the citizenry. Other aid has allowed leaders and governments to 
abdicate responsibility for effective governance and pursue 
detrimental, self-destructive, or personally self-enriching 
policies, with little results to show in the end. The 
politicization of assistance programs during the Cold War and 
the continued need for economic assistance for strategically 
important countries in the War on Terrorism have clouded the 
development effectiveness of U.S. assistance programs. While 
there is a clear national security interest in maintaining 
assistance to advance such political and security imperatives, 
it is also clear that a new and separate performance-based 
assistance program is needed to advance economic growth and 
development, separate from strategic considerations that have 
characterized other forms of assistance.
    At the March hearing, Members of the Committee expressed 
that that the mixed results of the past should not lead us to 
turn our backs on the developing world, but rather just the 
opposite. Members of the Committee agreed then, and again on 
June 12, that now is the time for United States leadership and 
for the United States to recognize and help those countries 
that respect the rights of citizens, promote democracy, and 
encourage economic freedom and prosperity. In this process, the 
Committee intends to reward those governments and leaders who 
choose the right path of reform. Many people in the developing 
world live under governments that do not meet such standards, 
and the President has made clear his intention that the MCA 
will not replace existing development assistance programs or 
subtract from their budgets. The Committee supports this view, 
and the act specifically endorses it.
    Development and humanitarian assistance, as administered by 
the Agency for International Development, is one of the pillars 
of our foreign policy and diplomacy, as noted in the 
President's National Security Strategy. Such assistance 
programs implemented by USAID are responsible for addressing 
critical humanitarian emergencies, preventing conflict and 
promoting stability as well as promoting development at the 
national, regional and community levels. Furthermore, the MCA 
is a reward and incentive for countries that meet a higher 
standard of performance. The traditional assistance programs 
are needed to help countries that do not qualify. It is 
imperative that the President continue to request adequate sums 
to promote American interests through development aid and 
disaster relief, and it is equally essential that the Congress 
appropriate such sums that may be necessary for this purpose. 
To fund the MCA, the President has proposed an additional $5 
billion to the current development assistance budget phased in 
over a 3-year period. The President's FY 2004 budget requests 
$1.3 billion for the first year of the initiative, and our 
proposal calls for MCA funding to increase to $3 billion in FY 
2005 and $5 billion in FY 2006. The Committee supports this 
plan.
    The Committee believes that its overriding principle should 
be to ensure success of the Millennium Challenge Account 
initiative from the start, demand results from its endeavors, 
and receive value for taxpayer dollars. As proposed by the 
President and contained in H.R. 2441, MCA assistance will 
reward only those recipients that willingly adopt good policies 
and institutions. Of the approximately 70 countries currently 
eligible for development assistance, it is possible that not 
many countries will meet such strict criteria stipulated by the 
President and contained in the bill that accompanies this 
report. At the funding levels proposed, this will enable the 
United States to provide a very high level of assistance for 
MCA-eligible countries. The assistance will be implemented in a 
manner to give greater ownership and responsibility to the 
recipient countries than is the case with traditional bilateral 
development programs. The Committee believes that this will 
create a competition among ``cusp'' countries to qualify for 
the assistance which may accelerate reforms and the adoption of 
good policies.
    Development assistance alone is not sufficient to stimulate 
economic growth and development. The Committee agrees with the 
President that the MCA will allow the United States to be more 
selective in aid distribution and potentially more effective in 
development. MCA assistance must reward only those recipients 
that willingly adopt good policies and institutions. If the 
President's proposal is implemented, traditional bilateral 
assistance programs would continue for countries who do not 
meet the criteria. The Administration believes that this will 
create a competition among ``cusp'' countries which may 
accelerate reforms and the adoption of good policies.
The Legislation
    Consistent with the White House proposal, H.R. 2441 places 
responsibility for administration of MCA assistance with a new 
entity to be known as the Millennium Challenge Corporation. 
This corporation will not be bound by the same policies and 
procedures that govern other forms of U.S. foreign aid. It will 
have flexible authorities and a clear mandate--to negotiate 
``Compacts'' with foreign governments that will require such 
governments to demonstrate continued progress in certain areas.
    The Millennium Challenge Account is a bold experiment that 
will reward those that are on the right path of economic 
development and freedom. At the Inter-American Development Bank 
on March 14, 2002, President Bush called for ``a new compact 
for global development, defined by new accountability for both 
rich and poor nations alike. Greater contributions from 
developed nations must be linked to greater responsibility from 
developing nations.''
    The President pledged that the United States would lead by 
example and increase its core development assistance by 50 
percent over the next 3 years, resulting in an annual increase 
of $5 billion by FY 2006. Because sound policies are an 
essential condition of development, the President proposed the 
creation of ``the Millennium Challenge Account'' that would be 
``devoted to projects in nations that govern justly, invest in 
their people and encourage economic freedom.''
    The Millennium Challenge Corporation will be headed by a 
Chief Executive Officer, nominated by the President and 
confirmed by the Senate, and its programs will be reviewed and 
approved by a Board of Directors chaired by the Secretary of 
State.
    H.R. 2441 calls for the Board of Directors to consist of 9 
voting members: four individuals who are not officials of the 
government, and five individuals who shall sit on the board by 
virtue of their position as officers in the government. The 
four members from outside the government shall be nominated by 
the President from four separate lists, one each submitted by 
the majority and minority leaders of the House of 
Representatives and the Senate, respectively. The five members 
from within the government shall be the Secretary of State, the 
Administrator of the United States Agency for International 
Development, the Secretary of the Treasury, the United States 
Trade Representative, and the Chief Executive Officer of the 
Corporation. In addition to the voting members, H.R. 2441 calls 
for an additional five nonvoting members, by virtue of their 
position as officials of the government: the Director of the 
Office of Management and Budget, the President and Chief 
Executive Officer of the Overseas Private Investment 
Corporation, the Director of the Trade and Development Agency, 
and the Director of the Peace Corps.
    In his March 14 speech, President Bush proposed that the 
MCA, as a separate and distinct development assistance program, 
will be available only to countries which meet three criteria: 
they must display good governance, invest in the health and 
education of their people, and enact sound policies which 
promote economic freedom.
    President Bush proposed that eligible countries be 
identified based on ``a set of clear and concrete and objective 
criteria'' that would be applied ``rigorously and fairly.'' In 
receiving this new assistance, the President stated that the 
Millennium Challenge Account will ``reward nations that root 
out corruption, respect human rights, and adhere to the rule of 
law . . . invest in better health care, better schools and 
broader immunization . . . [and] have more open markets and 
sustainable budget policies, nations where people can start and 
operate a small business without running the gauntlets of 
bureaucracy and bribery.''
Eligibility Criteria and Methodology
    On February 5, 2003, the President transmitted the text of 
his proposed legislation to Congress. In the following 
communication accompanied the proposed legislation:
    ``The Millennium Challenge Account (MCA) represents a new 
approach to providing and delivering development assistance. 
This new compact for development breaks with the past by tying 
increased assistance to performance and creating new 
accountability for all nations. This proposal implements my 
commitment to increase current levels of core development 
assistance by 50 percent over the next 3 years, thus providing 
an annual increase of $5 billion by fiscal year 2006. To be 
eligible for this new assistance, countries must demonstrate 
commitment to three standards--ruling justly, investing in 
their people, and encouraging economic freedom. Given this 
commitment, and the link between financial accountability and 
development success, special attention will be given to 
fighting corruption. The goal of the Millennium Challenge 
Account initiative is to reduce poverty by significantly 
increasing economic growth in recipient countries through a 
variety of targeted investments. The MCA will be administered 
by a new, small Government corporation, called the Millennium 
Challenge Corporation, designed to support innovative 
strategies and to ensure accountability for measurable results. 
The Corporation will be supervised by a Board of Directors 
chaired by the Secretary of State and composed of other 
Cabinet-level officials. The Corporation will be led by a Chief 
Executive Officer appointed by the President, by and with the 
advice and consent of the Senate. This proposal provides the 
Corporation with flexible authorities to optimize program 
implementation, contracting, and personnel selection while 
pursuing innovative strategies. The Millennium Challenge 
Account initiative recognizes the need for country ownership, 
financial oversight, and accountability for results to ensure 
effective assistance. We cannot accept permanent poverty in a 
world of progress. The MCA will provide people in developing 
nations the tools they need to seize the opportunities of the 
global economy. I urge the prompt and favorable consideration 
of this legislation.''
    In materials accompanying the draft legislation, the 
Administration has proposed important principles to guide the 
creation of a system to determine country eligibility, based on 
a transparent process and indicators for which data is publicly 
available, objective, and comprehensive. The Committee is aware 
and generally supportive of the indicators and methodology 
proposed by the Administration for identifying better-
performing countries.
    The Millennium Challenge Account Authorization Act of 2003 
does not include the 16 specific indicators proposed by the 
White House. Instead, the bill provides greater flexibility to 
the President and the Corporation in developing and determining 
which indicators should be employed in the selection process, 
in close consultation with the Committee.
    While generally accepted, the Committee notes that the 
quality and coverage of the data supporting the 16 indicators 
is somewhat inconsistent, and that most of the criteria measure 
accomplishments of the past rather than current commitment. 
Other data is subjective. In meetings with the Committee, 
Administration officials have acknowledged these shortcomings, 
and have indicated that criteria will be adjusted to reflect 
practical experience and improvements in data.
    The eligibility criteria proposed by the Administration 
include six criteria in each of the two categories of 
``Governing Justly'' and ``Promoting Economic Freedom,'' but 
only four in the category of ``Investing in People.'' This 
imbalance in the number of criteria in this last category 
likely skews the outcome: In dry runs of the data by 
researchers outside of government, most countries that just 
miss qualifying fail in the category of ``Investing in 
People.'' Furthermore, to the extent that the criteria are an 
important signal as to what is important and in which areas 
countries should concentrate in order to qualify for MCA 
assistance, the bias is against these important social 
indicators. Resource strapped countries may find it difficult 
to reach targets in the area of spending on health and 
education, so it is important to add other criteria that can 
capture government commitment and efforts to reach poor people. 
Also, none of the criteria measure the difference in status 
between men and women, although such differences could be 
expected in each category, with women typically faring worse 
than men. Given the steadily mounting evidence of the benefits 
to the development process as a whole through improving the 
status of women and girls, this is a serious shortcoming in the 
proposed criteria. Inclusion of criteria that can provide a 
measure of a country's commitment in this regard is likely to 
improve the overall effectiveness of the initiative.
    Under the eligibility system as outlined by the 
Administration, countries would qualify for consideration for 
MCA assistance if they rank ``above the median'' on the 
corruption index and on half the criteria in each of the three 
categories. Setting the bar above the median has several 
shortcomings. First, several of the criteria use a ranking 
scale (1-5 or 1-7), and, because of the narrowness of the 
scale, there is a grouping of countries at the median. These 
countries are automatically eliminated under the proposed 
system even if they are likely to be just as qualified as a 
country slightly above the median. Second, some of the criteria 
are based on subjective discretion (such as the corruption 
index) and because some country data coverage is incomplete, 
certain countries unnecessarily miss eligibility. The degree of 
arbitrariness would be reduced by setting the hurdle for 
eligibility ``at the median,'' which would bring in an 
additional set of countries as candidates. An additional but 
related problem with the median approach is that over time, 
median scores would change as qualified countries make progress 
and the data is updated. So, a country that just misses 
qualification in one year may not qualify again the next year, 
despite efforts to improve policies because other countries' 
achievements (including progress which is fostered by MCA 
assistance) and new data have raised the median scores. For the 
MCA to be an incentive for countries to improve policies, it is 
necessary for countries to be assured that if they reach 
certain targets, they will qualify. To the extent that the 
median approach is adopted as the methodology for applying the 
criteria, the committee recommends that the MCA adopt stable 
standards for each indicator after the first year.
    The Committee also believes that in determining 
eligibility, the President, acting through the Chief Executive 
Officer of the Corporation, should compare indicators among 
countries that have the lowest per capita income, as one group, 
and among countries that have higher per capita income but 
still fall below the threshold described in section 203 for 
lower income countries, as another. The Committee is concerned 
that the countries with the lowest per capita income would 
otherwise have to compete for MCA assistance with countries 
that have substantially higher economic activity and government 
services. These countries will undoubtedly have better scores 
on eligibility indicators than the countries with the lowest 
per capita incomes. A mechanistic approach to application of 
the Administration's proposed eligibility criteria and 
methodology could result in excluding or providing relatively 
little MCA assistance to the countries with the lowest per 
capita income in favor of low income countries with higher per 
capita incomes. In order to avoid this ``crowding out,'' the 
Committee believes that, particularly as the program starts up, 
comparison among countries with like per capita income levels 
would be wise.
    Lastly, the Committee understands the need for flexibility 
and discretion in determining final country selection in light 
of the imperfect nature of the data. However, in order to 
preserve the transparency and integrity of the selection 
process, the Committee includes a requirement for the 
Administration to notify all relevant congressional committees 
in writing (prior to notification of recipient countries) of 
the countries selected and the basis for their selection. To 
the extent that selection deviates from the indicators and 
criteria put forth by the Administration, an explanation of the 
need to deviate from such indicators should be included.
Establishment of Corporation
    The Committee is very concerned about the rapid 
establishment of the Corporation once the legislation is 
enacted. Because of the delays in submitting legislation to 
Congress and because of the difficulties in arriving at the 
consensus described in division A of this act, the Committee is 
concerned that the Administration will not have the time that 
it needs to implement division A of this act at the beginning 
of fiscal year 2004. The Committee expects that upon enactment, 
the President will move rapidly to nominate a Chief Executive 
Officer of the Corporation. However, the nomination, advice and 
consent process itself may take some time. Any such delays 
would be significant, since the Corporation cannot function 
without its Chief Executive Officer. The Chief Executive 
Officer, for example, appoints all executive officers of the 
Corporation and is responsible for consulting with Congress on 
the eligibility criteria.
    In order to minimize the impact of any such delay, the 
Committee encourages the Administration to establish an office 
to begin planning for the establishment of the Corporation, the 
administrative arrangements for details and hiring, the 
operation of the Board, and the bylaws, regulations, and 
operating procedures of the Corporation, so that once the Chief 
Executive Officer has been confirmed, the Chief Executive 
Officer can immediately start implementing the provisions of 
division A of this act after an appropriate review of the work 
done prior to that appointment. In order for the MCA program to 
build credibility, it must act decisively, and the Committee 
believes that timely hard work prior to the appointment of the 
Chief Executive Officer is needed to accomplish this purpose.
    Moreover, the Committee believes that the Millennium 
Challenge Corporation will face a variety of management issues 
as it begins to administer the Millennium Challenge Account. It 
is critical that the Corporation have access to the best advice 
available to help frame its initial organizational structure 
and guide its subsequent operations, especially in developing 
and fine tuning policies, procedures and processes. Obtaining 
the best advice in early stages should be a high priority for 
the Corporation. The Committee encourages the Corporation to 
seek advice from organizations with managerial expertise, such 
as the National Academy of Public Administration (NAPA), in 
designing and launching the Millennium Challenge Corporation.
Authorization of the Peace Corps
    Division B of H.R. 2441 reauthorizes the Peace Corps 
through fiscal year 2007, and in particular, authorizes the 
President's proposal to double the number of Peace Corps 
volunteers. In addition to reauthorizing the Peace Corps, the 
legislation makes several amendments to the Peace Corps Act.
    The Peace Corps was established during the administration 
of President Kennedy to promote world peace and friendship 
through the service of American volunteers in the developing 
world. The original Peace Corps Act established three goals for 
the Peace Corps: to help people in developing countries meet 
basic needs, to promote understanding aboad of the values and 
ideals of the United States, and to promote an understanding of 
other peoples by the people of the United States.
    Since its establishment in 1961, more than 168,000 
volunteers have served in 136 different countries throughout 
the world. As of the date of this report, there are 
approximately 7,000 volunteers in 70 different countries. The 
President, in his State of the Union address in January 2002, 
announced his goal of doubling the size of the Peace Corps by 
2007. The Committee wholeheartedly endorses this bold vision 
and supports the continued work of the Peace Corps.
    As our Nation fights global terrorism, extremism, and 
forces inimical to our way of life, the American people can and 
must fight on many fronts to protect our interests, promote our 
values, and to provide hope to captive, destitute and 
vulnerable people across the globe. The President's proposal 
for a Millennium Challenge Account and for an expanded Peace 
Corps deserves the support of the Congress. The Committee 
embraces the idea of increasing U.S. economic assistance for 
those countries that demonstrate a commitment to human rights, 
democratic ideals and practices, and investment in people.

                                Hearings

    The Committee held a hearing on the Millennium Challenge 
Account on March 6, 2003 at 10:00 a.m. The hearing consisted of 
two panels; a panel representing the Administration and a panel 
representing the non-governmental community. The first panel 
included three witnesses: Andrew S. Natsios, Administrator of 
the U.S. Agency for International Development; Alan Larson, 
Under Secretary for Economic Affairs, Department of State; and 
John B. Taylor, Under Secretary for International Affairs, 
Department of the Treasury. The second panel consisted of four 
witnesses: David Beckmann, President, Bread for the World; 
Charles MacCormack, President and CEO, Save the Children; 
Steven Radelet, Senior Fellow, Center for Global Development; 
and Brett Schaefer, Senior Fellow, The Heritage Foundation. The 
Committee did not hold a hearing on the Peace Corps during the 
108th Congress prior to consideration of H.R. 2441.

                        Committee Consideration

    The President's proposed legislation was transmitted to the 
Congress on February 5, 2003. The text of the President's 
proposed legislation was introduced by Chairman Hyde by request 
on May 6, 2003 as H.R. 1966, and was referred to the Committee 
on International Relations. A second bill, H.R. 2441, was 
introduced on June 12, 2003, by Chairman Hyde and 
Representatives Lantos, Green of Wisconsin, Harris, Lee, 
Crowley, LaHood, and Janklow. On June 12, 2003, the Committee 
met in open session, pursuant to notice, to consider the bill. 
A motion offered by Chairman Hyde to favorably report H.R. 2441 
to the House of Representatives, as amended, was agreed to by a 
record vote of 31 ayes to 4 noes, a quorum being present.

                         Summary of Amendments

    The Committee adopted four amendments and defeated one.
    Rep. Royce (R-CA) offered an amendment (#1) to encourage 
the return the Peace Corps to Sierra Leone. The Royce amendment 
includes a Sense of Congress that the Peace Corps should return 
its program to Sierra Leone as soon as security conditions 
permit. Four findings in the Royce amendment recount the 
history of Peace Corps service in Sierra Leone, and recent 
progress in that country since the deployment of peacekeeping 
forces and conduct of elections in 2002. The Royce amendment 
was agreed to by voice vote.
    Rep. Lee (D-CA) offered an amendment (#2) to ensure the 
participation of small, minority-owned, and disadvantaged U.S. 
businesses in the contracting of the Millennium Challenge 
Corporation. The Lee amendment requires that, ``to the maximum 
extent practicable, the President, acting through the Chief 
Executive Officer, shall ensure that United States small, 
minority-owned, and disadvantaged business enterprises fully 
participate in the provision of goods and services that are 
financed with funds made available under this subtitle.'' The 
Lee amendment also requires the Chief Executive Officer to 
prepare and submit to the appropriate congressional committees 
an annual report that contains a description of the extent to 
which this requirement has been met for the preceding year. The 
Lee amendment was agreed to by voice vote.
    Rep. Royce offered amendment (#3), to shift $10 million 
allocated for data collection in the introduced version of H.R. 
2441 and instead allocate it for seed grants for indigenous 
organizations. The Royce amendment strikes Section 309 from the 
introduced version of H.R. 2441 and inserts a new Section 309, 
``Millennium Challenge Seed Grants.'' This amendment authorizes 
the Chief Executive Officer to provide assistance not to exceed 
$10 million ``in support of nongovernmental organizations in 
low-income and lower middle income countries which are 
undertaking research, education, and advocacy efforts aimed at 
promoting democratic societies, human rights, the rule of law, 
improved educational opportunities and health conditions, 
particularly for women and children, and economic freedom. The 
second Royce amendment was agreed to by voice vote.
    Rep. Payne (D-NJ) offered amendment (#4) regarding the 
Millennium Challenge Compact. The Payne amendment changes 
Section 204, ``Millennium Challenge Compact,'' by requiring, 
with respect to lower middle income countries, that the 
Compacts of such countries ``identify an appropriate 
contribution from the country relative to its national budget, 
taking into account the prevailing economic conditions, toward 
meeting the objectives of the Compact,'' and that the 
contribution ``shall be in addition to government spending 
allocated for such purposes in the country's budget for the 
year immediately preceding the establishment of the Compact.'' 
The Payne amendment was agreed to by voice vote.
    Rep. Menendez (D-NJ) offered an amendment (#5) which would 
have extended eligibility of lower middle income countries to 
the fiscal years 2004 and 2005. The introduced version of H.R. 
2441 limits eligibility of lower middle income countries to the 
fiscal year 2005, and at that, to not greater than 20 percent 
of the total amounts appropriated pursuant to the authorization 
of appropriations in that fiscal year. The Committee defeated, 
by a record vote of 26 ayes to 10 noes [Record Vote #1], the 
Menendez amendment.
    The Committee favorably reported to the House H.R. 2441, as 
amended.by a record vote of 31 ayes to 4 noes [Record Vote #2].

                         Votes of the Committee

    There were two record votes.
    The first was on the Menendez amendment to allow lower 
middle income countries to be eligible for assistance in each 
of the three fiscal years 2004, 2005 and 2006. This amendment 
was defeated by a vote of 26-10.
    Voting yes: Menendez, Wexler, Engel, Delahunt, Crowley, 
Hoeffel, Berkley, Napolitano, Schiff and Bell.
    Voting no: Leach, Bereuter, Ballenger, Rohrabacher, Royce, 
Chabot, Houghton, Tancredo, Paul, Smith (MI), Davis, Green, 
Weller, Pence, McCotter, Janklow, Lantos, Berman, Faleomavaega, 
Payne, Lee, Blumenauer, McCollum, and Hyde.
    Present: Harris.
    The second record vote was on the Motion to report H.R. 
2441 favorably, as amended. This motion was agreed to by a vote 
of 31-4.
    Voting yes: Leach, Bereuter, Ros-Lehtinen, Ballenger, 
Rohrabacher, Royce, Houghton, Green, Weller, Pence, McCotter, 
Janklow, Harris, Lantos, Faleomavaega, Payne, Menendez, Brown, 
Wexler, Engel, Delahunt, Lee, Crowley, Hoeffel, Blumenauer, 
Berkley, Napolitano, Schiff, McCollum, Bell and Hyde.
    Voting no: Chabot, Paul, Smith (MI) and Davis.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R.1298, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 17, 2003.
Hon. Henry J. Hyde, Chairman,
Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2441, the 
Millennium Challenge Account Authorization and Peace Corps 
Expansion Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill, who can be reached at 226-2840.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable Tom Lantos
        Ranking Member
H.R. 2441--Millennium Challenge Account Authorization and Peace Corps 
        Expansion Act of 2003.

                                SUMMARY

    H.R. 2441 would create a new foreign assistance agency, the 
Millennium Challenge Corporation, to provide economic 
assistance to developing countries that have demonstrated a 
commitment to a just and democratic government, economic 
freedom, and improved educational opportunities and health care 
for its citizens. The bill would authorize the appropriation of 
$1.3 billion in 2004 and $9.3 billion over the 2004-2006 period 
for the new corporation. The bill also would authorize 
appropriations totaling $1.7 billion for the Peace Corps over 
the 2004-2007 period. In addition, the bill would authorize the 
appropriation of $10 million to the Corporation for National 
and Community Service. CBO estimates that implementing the bill 
would cost $9.1 billion over the 2004-2008 period, assuming the 
appropriation of the authorized amounts. The bill would not 
affect direct spending or receipts.
    H.R. 2441 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 2441 is shown in the 
following table. The costs of this legislation fall within 
budget functions 150 (international affairs) and 500 
(education, training, employment, and social services).

                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                              2003     2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for the Peace Corps                  295        0        0        0        0        0
  Budget Authority\1\
  Estimated Outlays                                             288       59        7        1        0        0
 Proposed Changes                                                  0    1,677    3,412    5,456      499        0
  Authorization Level
  Estimated Outlays                                               0      418    1,211    2,439    3,335    1,691
 Spending Under H.R. 2441 for the Peace Corps                    295    1,677    3,412    5,456      499        0
and the Millennium Challenge Corporation
  Authorization Level\1\
  Estimated Outlays                                             288      477    1,218    2,440    3,335    1,691
----------------------------------------------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year for the Peace Corps.

                           BASIS OF ESTIMATE

    The estimate assumes H.R. 2441 will be enacted late in 
fiscal year 2003; that the amounts authorized for 2004, 2005, 
2006, and 2007 will be appropriated near the start of each 
fiscal year; and for existing programs, that spending will 
follow historical patterns.
    Millennium Challenge Corporation. Division A of the bill 
would establish a new Millennium Challenge Corporation to 
provide assistance to developing countries. The bill would 
authorize the appropriation of $1.3 billion in 2004, $3 billion 
in 2005, and $5 billion in 2006 to fund the corporation.
    CBO estimates that outlays from the Millennium Challenge 
Corporation will be low during the first few years because of 
the normal delays in starting a new agency and the multiyear 
character of the program as authorized. CBO estimates that it 
would take three to six months to select a Chief Executive 
Officer to manage the Millennium Challenge Corporation, hire 
staff, write the necessary rules and regulations to administer 
the program, and establish interagency coordination. Only then 
would eligible countries be invited to submit a multiyear plan 
detailing how they would use the funds provided by the new 
program. CBO expects that the effort to develop such plans 
would require considerable time since each country's plan must 
specify the objectives it would achieve with Millennium 
Challenge funds, describe the actions it would undertake to 
achieve those objectives, provide a time schedule for achieving 
those objectives, and identify benchmarks for assessing whether 
the country has achieved its objectives.
    In addition, the bill also would require eligible countries 
to involve private-sector and voluntary organizations in 
preparing their plans. Thus, CBO estimates that few grants 
would be extended before the last quarter of fiscal year 2004. 
Moreover, because the bill would require periodic evaluations 
to determine whether the country is meeting its commitments, 
CBO believes that this multiyear program would probably have a 
spending pattern similar to existing development assistance 
programs.
    Peace Corps. Division B of the bill would authorize the 
appropriation of $367 million in 2004 and $1.7 billion over the 
2004-2007 period for the Peace Corps. It also would require the 
Director of the Peace Corps to develop a plan to increase the 
number of volunteers in service to 14,000 by 2007 and would 
increase the readjustment allowance authorized to returning 
volunteers from $125 for each month of service to $275 for each 
month of service in 2004 and $300 a month for service 
thereafter. CBO estimates implementing these provisions would 
cost $280 million in 2004 and $1.6 billion over the 2004-2008 
period, assuming the appropriation of the authorized amounts.
    Corporation for National and Community Service. Section 
1107 would authorize the appropriation of $10 million to the 
Corporation for National and Community Service for grants to 
organizations that use returning Peace Corps volunteers for 
educational programs in local schools and libraries. CBO 
assumes, for this estimate, that these funds will be 
appropriated for fiscal year 2004.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 2441 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments.

                         PREVIOUS CBO ESTIMATES

    On May 28, 2003, CBO transmitted a cost estimate for the 
Millennium Challenge Act of 2003, as ordered reported by the 
Senate Committee on Foreign Relations on May 21, 2003. On April 
24, 2003, CBO transmitted a cost estimate for the Foreign 
Relations Authorization Act, Fiscal Year 2004, as ordered 
reported by the Senate Committee on Foreign Relations on April 
9, 2003. Title IX of that bill would authorize appropriations 
for the Peace Corps over the 2004-2007 period. The differences 
between our estimate for H.R. 2441 and the estimate for the two 
Senate bills reflect the higher amounts authorized for 
appropriation in H.R. 2441, and other changes.

                    Performance Goals and Objectives

    The goals and objectives of this legislation are to promote 
economic growth, support policy reform, alleviate poverty, and 
provide for the national security of the United States and 
other nations by increasing assistance to certain worthy 
countries which meet specified performance standards.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clause 18 of the 
Constitution (relating to making all laws necessary and proper 
for carrying into execution powers vested by the Constitution 
in the Government of the United States).

               Section-by-Section Analysis and Discussion

    Section 1. Short Title; Table of Contents. Section 1 
contains a short title and table of contents.
Division A--The Millennium Challenge Account
            Title I--General Provisions
    Section 101. Definitions. Section 101 includes several 
definitions of terms used in division A.
    Section 101(6). ``Millennium Development Goals'' by its 
terms is limited to the ``key development objectives'' of the 
United Nations Millennium Declaration, as contained in United 
Nations General Assembly Resolution 55/2 and does not include 
non-development objectives, such as the support for the 
International Olympic Committee.
    Section 102. Sunset. Section 102 provides that all 
authorities under this title shall terminate on October 1, 
2007. The Millennium Challenge Account is a new initiative 
which seeks to provide assistance to countries that meet 
certain eligibility criteria. The Administration has proposed 
and the Committee has provided broad authority and flexibility 
to implement this new initiative including the creation of a 
new government corporation to administer this initiative. 
However, in keeping with the oversight role of Congress, the 
Committee has included a sunset or termination of the authority 
which would require reauthorization of the legislation prior to 
October 1, 2007 for the program to continue. The Committee 
intends that should Congress fail to reauthorize the program 
before that time, any funds already obligated shall remain 
available to be expended, however, no new obligations may be 
made subsequent to the termination of the authority.
            Title II--Millennium Challenge Assistance
    Section 201. Findings; Statement of Policy. Section 201 
includes findings on international economic development and a 
statement that it is the policy of the United States to support 
a new compact for global development which increases support by 
developed countries to those developing countries that are 
fostering democracy and the rule of law, investing in their 
people, and promoting economic freedom for all their people. 
The Committee believes that the primary responsibility for 
economic development lies with developing countries themselves. 
The new compact for global development, as supported by the 
Millennium Challenge Account Authorization Act of 2003, should 
seek to bring coordination and coherence to disparate trade and 
finance policies of donor countries. The Committee recognizes 
that economic growth is essential for poverty reduction. 
However, the experience of recent years suggests that economic 
growth, while necessary, is not sufficient to reduce poverty. 
For long-term, sustainable and equitable economic growth and 
poverty reduction, developing countries should invest in 
sectors that improve the lives and productivity of the broadest 
segment of society, particularly the poor. Critical sectors 
include basic health, education, access to clean water and 
sanitation, and rural development and smallholder farming.
    Section 202. Authorization of Assistance. Section 202 
authorizes the President, acting through the Chief Executive 
Officer of the Millennium Challenge Corporation (established in 
title III) to provide assistance to eligible countries for 
programs that help such countries to achieve lasting economic 
growth and poverty reduction. The assistance should advance a 
country's progress toward fostering democratic societies by 
promoting political, social, and economic pluralism; respect 
for the rule of law; anti-corruption initiatives and law 
enforcement; the development of institutions of democratic 
governance; a fair, competent, and independent judiciary; and a 
free and independent media. Such assistance should also foster 
improved health conditions and educational opportunities. Such 
assistance should foster the institutions and conditions needed 
to promote market-based systems, trade, and investment, while 
protecting workers' rights and environmental standards, and 
should foster employment and increased production for all 
segments of society, including agricultural production. In this 
regard, ``regulatory burden'' in section 202(b)(3)(B) refers to 
undue or unnecessary regulatory burdens.
    The Committee intends that the provision of assistance 
under division A of this act to achieve lasting economic growth 
and poverty reduction in recipient countries is part of the 
contribution of the United States to advance the goals of the 
United Nations Millennium Declaration. To this end, the 
Committee believes that the provision of assistance under 
division A of this act as well as under Part I of the Foreign 
Assistance Act of 1961 shall be utilized to achieve the 
Millennium Development Goals, established by the United Nations 
General Assembly in September 2000, which aim to eradicate 
extreme poverty and hunger, achieve universal primary 
education, promote gender equality and empower women, reduce 
child mortality, improve maternal health, combat HIV/AIDS, 
malaria, and other infectious diseases, ensure environmental 
sustainability, and develop a global partnership for 
development.
    The Committee intends that the term ``Millennium 
Development Goals'' shall refer to the ``key objectives 
described in the United Nations Millennium Declaration, as 
contained in United Nations General Assembly Resolution 55/2,'' 
and does not include, for example, any of the resolved sections 
in Resolution 55/2.
    The Committee also intends that assistance to develop small 
businesses, private cooperatives, and credit unions includes 
assistance to establish and strengthen microfinance 
institutions which support this objective in recipient 
countries. Over the last 2 decades, the field of microfinance 
has demonstrated that it is possible to provide financial 
services on commercial terms to even the poorest members of 
developing societies. Millions of microfinance clients are able 
today to make business investments to increase their household 
incomes, build assets, improve the health of their families, 
keep their children in school and reduce their economic 
vulnerability to crises such as civil conflict and HIV/AIDS. 
Microfinance allows poor people to protect, diversify and 
increase their income sources, and thus access a path out of 
poverty and hunger. Microentrepreneurs also often employ 
several employees and make a significant contribution to 
developing trade in their local economies. Trading between 
villages, secondary towns and cities, is fundamental to 
developing a consumer market in a developing country and 
building a foundation for trade with the international markets. 
The World Bank estimates that less than 1 percent of the 4 
billion people living on less than $3 a day has access to 
financial services. The Millennium Challenge Account can make 
an important contribution to closing the gap by helping to spur 
innovations in financial service technologies and developing 
institutional prototypes for reaching this vast under-served 
market. Thus far, USAID has championed a best practices agenda 
that focuses on building strong retail financial service 
providers that can reach tens of thousands of poor clients in a 
sustainable way. The Millennium Challenge Account can build 
upon the work of USAID.
    Section 203. Eligibility and Related Requirements. Section 
203(a) establishes eligibility requirements for countries that 
may benefit from the assistance authorized in section 202. A 
country shall be eligible to receive assistance under section 
202 for a fiscal year only if the country falls within certain 
income levels as defined by the World Bank; is not ineligible 
to receive United States economic assistance by reason of any 
provision of law; and if the Chief Executive Officer of the 
Corporation determines that the country has demonstrated a 
commitment to bolster democracy, human rights, good governance 
and the rule of law; invest in the health and education of its 
citizens; and promote sound economic policies that promote 
economic opportunity.
    This section makes clear that any country which is 
ineligible to receive assistance under United States law, but 
has such statutory restriction waived by the President, the 
Secretary of State, or any other U.S. official, through a 
waiver authority internal to such statutory provision or 
pursuant to a special waiver authority, shall continue to be 
ineligible to receive assistance under division A of this act. 
As part of the three-part rubric, the Committee intends that 
the Chief Executive Officer of the Millennium Challenge 
Corporation pay particular attention during the selection of 
eligible countries to the performance of each country with 
respect to promoting democracy and human rights, women, the 
rural poor, and trade and labor unions.
    Section 203(a) authorizes assistance for ``low income 
countries'': for fiscal year 2004, such countries are those 
which are eligible to receive assistance from the International 
Development Association (IDA) and whose per capita income is 
equal to or less than the historical ceiling of the IDA for 
that year, as defined by the World Bank. For fiscal years 2005 
and 2006, such assistance is authorized for those low-income 
countries whose per capita income is equal to or less than the 
historical ceiling of the IDA for the fiscal year involved, as 
defined by the World Bank.
    The determination provision in section 203(a)(1)(C)(i) 
should be interpreted to require that a country's human rights 
record is not deemed ``poor'' in the most recent State 
Department Country Report on Human Rights Practices, and the 
government of the country has not committed serious human 
rights abuses such as torture, extrajudicial killings, 
arbitrary and unlawful detention or deprivation of life, 
arbitrary arrest, detention, failing to allow access to 
political prisoners by humanitarian organizations such as the 
International Committee of the Red Cross, persecuting religious 
groups, imprisoning religious leaders, or failing to take 
minimum steps to combat human trafficking.
    The determination provision in section 203(a)(1)(C)(i) 
should also be interpreted to require that a country has not 
been reported on in the State Department's report on the United 
States strategy in promoting human rights and democracy as 
called for in section 655 of Public Law 107-228.
    In addition to the low-income countries made eligible in 
section 203(a), section 203(b) establishes additional 
eligibility for ``lower middle income'' countries; such 
countries which are classified as such in the then most recent 
edition of the World Bank's ``World Development Report.'' 
Section 203(b) requires that the total amount of assistance 
provided to lower middle income countries for fiscal year 2006 
may not exceed 20 percent of the total amount of Millennium 
Challenge Assistance provided to all eligible countries for 
fiscal year 2006. The Committee intends that Section 
203(b)(1)(A) be interpreted to include those countries that 
have an income greater than the historical ceiling for IDA 
eligibility for that fiscal year.
    Section 203(c) establishes additional eligibility for 
``selected low income countries'' to receive assistance solely 
for the purpose of becoming eligible to receive assistance 
under section 203(a). Selected low income countries are those 
countries, for fiscal years 2004 through 2006, which are not 
ineligible to receive U.S. economic assistance (the basic 
eligibility criteria established in section 203(a)(1)(B); which 
have a per capita income which is equal to or less than the 
historical ceiling of the IDA, as defined by the World Bank 
(the income eligibility criteria established in section 
203(a)(2)(A); and which ``demonstrate a commitment to meeting 
the requirements'' of clauses (i) through (iii) of section 
203(a)(1)(C), but fail to meet the eligibility criteria 
necessary to receive assistance under section 202, as 
established under section 203(e). Section 203(c) requires that 
assistance for countries made eligible under that section 
203(c) be provided through USAID. Section 203(c) allocates for 
this purpose not more than 15 percent of the amounts 
appropriated pursuant to the authorization of funds in Section 
208(a) in each of the fiscal years 2004 through 2006.
    Although the Committee agrees with the Administration that 
the Chief Executive Officer of the new Millennium Challenge 
Corporation needs a certain amount of flexibility in 
determining eligibility for ``near miss'' countries, the 
Committee believes that the Chief Executive Officer should 
ensure that a country which is being considered for eligibility 
under section 203(c), at a minimum, meet standards of 
performance in promoting democracy, human rights, and the rule 
of law in that country. A country should not be eligible under 
section 203(c) if the country does not meet these standards of 
performance.
    For the Millennium Challenge Account to be successful as an 
incentive for future reform as well as a reward for past 
reform, it must offer opportunities for those low-income 
countries whose institutions do not yet meet all the 
eligibility criteria but who are demonstrating partial success 
in meeting the eligibility criteria. Section 203(c) was created 
for this purpose, and should have the flexibility to assist 
``near miss'' countries that fail to qualify for the MCA by 
only a relatively small margin, or in criteria that involve 
subjective discretion such as the corruption index, or in 
criteria that are particularly resource-intensive, such as 
education.
    There are a number of reasons why countries might fail the 
Administration's proposed criteria and methodology, but, in the 
Committee's view, should still receive MCA assistance. For 
example, a country may have emerged from a period of marked 
instability, such as a civil war, or a series of natural 
disasters, which have led to a complete disruption in the 
educational and health care systems of that country. While such 
a country may now meet a large number of the Administration's 
proposed criteria, and may be demonstrating a commitment to 
investing in people by making progress from a very low base, it 
may fail to meet all criteria necessary for full assistance. 
Similarly, a country may not be eligible for full assistance 
because there is not sufficient data to demonstrate that it has 
met the proposed criteria. While the Administration may be able 
to fill in such data from its own sources and determine that a 
particular country is nevertheless eligible for full MCA 
assistance, in other cases the Administration may lack 
supplemental databases. In the Committee's view, such a country 
should be able to receive some assistance, particularly in 
those areas which contributed to the country's failure to 
demonstrate a commitment to the criteria of section 202, but 
also for carrying out the other purposes of division A of this 
act.
    The Committee concurs with the Administration's proposal 
that USAID should be responsible for assisting countries to 
qualify for the MCA. However, the Committee feels that the 
existing resources of USAID, particularly Development 
Assistance resources, are insufficient at current levels to 
accommodate this new objective without undermining existing 
programs funded out of these resources. It is for this purpose 
that the Committee authorizes up to 15 percent of MCA resources 
in any given year to be available for section 203(c)), to be 
transferred to USAID for that purpose.
    Section 203(d) provides authority to the Chief Executive 
Officer to determine whether or not a country is eligible to 
receive assistance under section 202, and requires a 
notification to Congress on such determination within 7 days.
    Section 203(e) requires that not later than 30 days after 
the date of enactment of this act and prior to making any 
determination of eligibility for a country under this section, 
the Chief Executive Officer shall prepare and transmit to the 
appropriate congressional committees a report that contains the 
eligibility criteria that the Chief Executive Officer proposes 
to use for purposes of determining eligibility under this 
section. This section further requires the Chief Executive 
Officer to prepare and transmit to the appropriate 
congressional committees a report that contains a description 
of any changes to the eligibility criteria prior to making a 
determination of eligibility for a country under this section.
    Section 203(f) requires that assistance provided under 
section 202 for a country shall be provided on a nonrepayable 
basis to one or more of the following: the national government 
of the country; regional or local governmental units of the 
country; nongovernmental organizations, for-profit corporations 
or private and voluntary organizations; international 
organizations and trust funds; and regional and international 
financial institutions. Section 203(f) requires that the 
assistance furnished under section 202 shall be provided in 
accordance with a fair, open, and competitive selection process 
that results in the awarding of such assistance on a merit 
basis, using selection criteria that are made public by the 
Corporation in advance and are otherwise in accordance with 
standard and customary best practices for the provision of 
similar types of assistance, including such assistance made 
available through grants or contracts or other such fiduciary 
agreements with implementing partners as described in section 
203(e)(2).
    The Committee intends that section 203(f) not preclude the 
provision of small or micro-lending assistance through 
microfinance or microenterprise institutions. In section 203, 
the Committee intends that ``nonrepayable assistance'' refers 
to the terms in which it is furnished from the United States 
Government without repayment to the United States, not through 
the implementing partners as described in section 203(e)(2).
    Furthermore, the Committee believes that credit unions are 
one of the unique features of the democracy and economy of the 
United States, and have provided a safe place to save and 
borrow at affordable rates for more than 80 million people in 
this country. Credit unions, in more than 90 countries in both 
rural and urban areas, help families build assets and are a 
necessary compliment to education, health care, and agriculture 
development programs. The Committee encourages the Millennium 
Challenge Corporation to incorporate the expertise of 
organizations, such as the World Council of Credit Unions, to 
build and strengthen democratically controlled credit unions 
and international remittance networks in recipient countries.
    Also, the Committee believes that ownership by the poor of 
a plot of land, at least sufficient to erect basic shelter and 
have a garden producing food and income, is of fundamental 
importance for empowerment, livelihood, social stability, and 
the creation of wealth. Financing for acquisition of plots to 
be used for such purposes could be on either a repayable or 
nonrepayable basis.
    In order to ensure a fair, competitive process that 
generates innovative, high-quality proposals with strong civil 
society participation, the Corporation must have the 
flexibility to consider and utilize different approaches to 
delivering funds. The Committee supports section 203(f) and 
establishes that the Corporation will consider proposals for 
the administration of Millennium Challenge Account assistance 
from the nongovernmental entities listed in this subsection. 
Congress has long supported the role of U.S. private and 
voluntary organizations and cooperatives in increasing the 
participation of rural and urban poor people in their 
countries' development. Such organizations and cooperatives, 
embodying the American spirit of self-help and assistance to 
others to improve their lives and incomes, constitute an 
important means of mobilizing private financial and human 
resources to benefit poor people in developing countries.
    The Committee believes that in order for Millennium 
Challenge assistance to reduce poverty by promoting economic 
growth, the assistance should target the low-income countries. 
The Committee supports the President's proposal to restrict 
eligibility in the first part of the program to those countries 
eligible to borrow from the World Bank's soft loan window, the 
International Development Association (IDA).
    IDA-eligible countries are among the poorest in the world. 
The average annual gross domestic product among the IDA-
eligible countries is $460 per capita, versus $1965 per capita 
in lower middle-income countries. This is reflected in the lack 
of adequate progress in the social sector--particularly in 
health and education. On average, adult illiteracy is 33 
percent in IDA-eligible countries, versus 14 percent in the 
lower middle income countries; and the infant mortality rate is 
at 69 per 1000 live births in IDA-eligible countries, versus 27 
per 1000 live births in lower middle income countries. The poor 
economic conditions in IDA eligible countries prevent them from 
being able to raise the necessary financing for economic 
development and poverty reduction through private capital, at 
commercial, non-concessional terms and from domestic sources. 
Lower-middle income countries have better access to other 
financial resources. Low-income countries receive less private 
capital (8.7 versus 10.3 percent of GDP); have much less 
capacity to raise tax revenue (12.6 versus 21.8 percent of 
GDP); and are able to save only half as much as lower-middle 
income countries (8.4 versus 16.2 percent of GDP).
    Section 204. Millennium Challenge Compact. Section 204(a) 
provides that the President, acting through the Chief Executive 
Officer of the Corporation, may provide assistance to an 
eligible country under section 202 only if the country enters 
into a Millennium Challenge Contract with the United States 
that establishes a multi-year plan for achieving shared 
development objectives in furtherance of the purposes of this 
title.
    Section 204(b) requires that the Contract shall take into 
account the national development strategy of the country and 
shall contain the specific objectives that the eligible country 
and the United States expect to achieve; the responsibilities 
of the eligible country and the United States in the 
achievement of such objectives; regular benchmarks to measure, 
where appropriate, progress toward achieving such objectives; a 
plan and timeframe that describes how those objectives will be 
met, and mechanisms to implement the plan and provide 
oversight, including identifying the role of civil society in 
the achievement of such objectives; where appropriate, a 
description of the responsibility of other donors in the 
achievement of such objectives; and a plan to ensure 
appropriate fiscal accountability for the use of assistance 
provided under section 202. The Committee urges that, where 
there are quantified objectives, the Compact should call for 
oversight mechanisms including formal, random-sample surveys 
which measure the progress being achieved toward such 
objectives. This section further requires that for lower middle 
income countries, the Compact shall identify an appropriate 
contribution from the country, relative to its national budget, 
toward meeting the objectives of the Compact. The Committee 
intends that the contributions identified in the Compacts of 
lower middle income countries be in addition to government 
spending of the countries for the budget year immediately 
preceding establishment of the Compact. In general, however, a 
Compact shall ensure that the recipient country does not 
decrease its budgetary contributions to the areas which are 
receiving MCA assistance. Overall, MCA assistance in lower 
middle income countries should be used to leverage additional 
resources from the recipient country for the purpose of 
achieving the goals of the Compact. In no instance, should MCA 
assistance relieve the recipient lower middle income country 
from its fiscal responsibility to meet development objectives.
    The Committee believes that for the MCA to achieve its 
stated goal of reducing poverty by significantly increasing the 
economic growth trajectory of beneficiary countries through 
investing in the productive potential of the people of such 
countries, the account must be designed to ensure that the 
benefits of development reach the poor. Women and girls, who 
constitute the vast majority of the poor, face unique barriers 
that prohibit their participation in the development process 
and prevent them from experiencing the benefits of economic 
growth. Excluding women from the process is particularly 
detrimental to development effectiveness as research shows 
consistently that women's participation magnifies the impact of 
development assistance by empowering women to follow through on 
decisions that benefit their families, communities, and 
countries.
    To this end, the Committee expects the Chief Executive 
Officer of the Millennium Challenge Corporation to encourage 
actively eligible countries to design national development 
strategies that specifically focus on the energy, talents, and 
potential of women and that encourage all project proposals 
which are submitted pursuant to the Compact take into account 
the different roles played by and opportunities available to 
women and men. The identification of beneficiaries required in 
section 204(b)(4) provides the Chief Executive Officer with a 
tool for assessing the extent to which proposed projects 
integrate and impact women and men as well different income and 
age groups.
    The Committee understands that the required identification 
of beneficiaries to be the final step in an iterative process 
through which the recipient country and the Millennium 
Challenge Corporation will assess how accessible the benefits 
of proposed projects are to different groups of people and 
improve proposed projects to ensure that they affect poverty 
reduction as effectively as possible. This analysis will 
include an organized approach to considering the relationships 
between men and women, their access to resources, their 
activities, and the constraints they face relative to each 
other in the entire process of development planning, 
implementation, and evaluation. The Committee expects this 
process to yield projects that integrate the efforts and build 
on the potential of women and other people living in poverty. 
In order for the Millennium Challenge Corporation to do this 
effectively, the Committee expects the Chief Executive 
Officer's senior staff to include professionals with 
demonstrable experience in this type of analysis and strongly 
recommends that their analysis be formally included in all 
decisions relating to the selection of proposals, the 
establishment of evaluative benchmarks and mid-course 
adjustments to improve eligible countries' performance in 
achieving project objectives.
    Section 204(c) provides a definition of ``national 
development strategy'' which, in addition to the general 
definition provided in the section, also includes a Poverty 
Reduction Strategy Paper or other such nationally owned 
poverty-reduction strategy that has been subject to wide public 
comment and is designed to achieve progress toward the 
Millennium Development Goals.
    Section 204(d) requires that each Contract contain a 
provision that states that assistance provided by the United 
States under the Contract shall be exempt from taxation from 
any governmental entity of the recipient country.
    Section 204(e) requires that in entering into a Contract, 
the United States and the eligible country shall take into 
account the local-level perspectives of the rural and urban 
poor in the eligible country, and should consult with private 
and voluntary organizations, the business community, and other 
donors, in the eligible country.
    Section 204(f) requires that during any discussions with a 
country for the purpose of entering into a Contract with the 
country, officials of the Corporation participating in such 
discussions shall, at a minimum, consult with appropriate 
officials of the United States Agency for International 
Development, particularly with those officials responsible for 
the appropriate region or country on development issues related 
to the Contract.
    Section 204(g) requires that, to the maximum extent 
feasible, activities undertaken to achieve the objectives of 
the Contract shall be undertaken in coordination with the 
assistance activities of other donors.
    Section 204(h) requires that not later than 15 days prior 
to entering into a Contract with an eligible country, the 
President, acting through the Chief Executive Officer, shall 
consult in-person with the appropriate congressional committees 
with respect to the proposed Compact; shall provide 
notification of the proposed Compact to the appropriate 
congressional committees in accordance with section 634A of the 
Foreign Assistance Act of 1961; shall prepare and transmit to 
such committees a written report that contains a detailed 
summary of the proposed Compact and a copy of the full text of 
the Compact; and shall publish the detailed summary and full 
text of the proposed Compact in the Federal Register and on the 
Internet website of the Corporation. The Committee recognizes 
the President's foreign policy role in entering into agreements 
with other countries. However, as provided in subsection (a), 
should the President fail to follow the requirements of this 
subsection with respect to a particular Compact, the country 
for which the requirements of subsection (a) were not followed 
is ineligible to receive assistance under division A of this 
act.
    Section 204(i) authorizes the Chief Executive Officer, 
notwithstanding the requirements of section 204(a), to enter 
into contracts or make grants for any eligible country for the 
purpose of facilitating the development of the Compact between 
the United States and the country.
    Section 205. Suspension and Termination of Assistance. 
Section 205 requires the President to suspend Millennium 
Challenge Assistance in whole or in part for a country if the 
President determines that the country is engaged in activities 
which are contrary to the national security interests of the 
United States; or the elected head of state, head of government 
or any member of the highest judicial tribunal of the country 
has been removed from that office or forcibly detained through 
extra-constitutional processes. This section authorizes the 
President to reinstate assistance for a country only if the 
President determines that the country has demonstrated a 
commitment to correcting each condition for which assistance 
was suspended. This section also requires the President, acting 
through the Chief Executive Officer, to terminate all 
Millennium Challenge Assistance for a country if the President 
determines that the country has consistently failed to adhere 
to its responsibilities under the Contract; or has 
significantly failed to adhere to its responsibilities under 
the Compact or has significantly failed to meet the 
requirements of title II.
    The Committee intends that assistance under division A of 
this act be suspended under section 205(a) to countries which 
fail to assist and cooperate with the United States, to the 
extent such assistance and cooperation is explicitly requested 
by the United States, in the war on terrorism. Failures to 
assist and cooperate may include failure to extradite or 
prosecute individuals in connection with acts of international 
terrorism, failure to arrest individuals believed to be 
responsible for furthering acts of international terrorism, 
failure to disrupt terrorist activity on the territory of the 
country, and failure to share or act on intelligence 
information regarding terrorist activity. Such lack of 
cooperation and assistance may also be evidenced by a failure 
to adhere to multilateral and bilateral agreements which deal 
with anti-terrorism issues, failure to adhere to relevant 
international law, and failure to take steps to address the use 
of a recipient country's banking and financial services system 
by terrorists to finance their operations. While current law 
already prohibits U.S. foreign assistance to countries which 
are designated as state sponsors of terrorism, the Committee 
believes that section 205(a) should be applied to suspend 
assistance to those countries which, while they do not provide 
state support to terrorists, nevertheless have demonstrated an 
unwillingness to cooperate with the United States in combating 
international terrorism, as determined by the Secretary of 
State.
    The Committee also strongly encourages the President not to 
terminate assistance under this section until the President, 
acting through the Chief Executive Officer, has first attempted 
other remedial action other than termination, and has 
determined that despite these efforts, the recipient country 
meets the standard for termination in this section.
    Section 206. Annual Report. Section 206 requires that not 
later than April 1, 2005, and not later than April 1 of each 
year thereafter, the Chief Executive Officer shall prepare and 
transmit to the appropriate congressional committees a report 
on the implementation of title II. This section requires the 
report to include a description of the agreed upon measures of 
progress contained in each Contract, and an analysis, on a 
country-by-country, project-by-project basis (with an analysis 
of each country receiving assistance under this subtitle being 
included in the report at least once every 2 years), of the 
impact on economic development in each country provided 
assistance under title II. This section requires that for each 
country, the analysis shall to the maximum extent possible be 
done on a sector-by-sector basis, gender basis, and per capita 
income basis, and identify trends within each of these bases; 
identify economic policy reforms conducive to economic 
development that are supported by assistance provided under 
this subtitle; describe, in quantified terms to the extent 
practicable, the progress made in achieving assistance 
objectives for the country; describe the amount and nature of 
economic assistance provided by other major donors in 
furtherance of the purposes of title II; and discuss the 
commitment and contribution of the country to achieving the 
assistance objectives contained in its Contract with the United 
States.
    Section 207. Participation of Certain United States 
Businesses. Section 207 requires that to the extend 
practicable, the President, acting through the Chief Executive 
Officer, shall ensure that small, minority-owned, and 
disadvantaged businesses fully participate in the provision of 
goods and services that are financed with funds from the 
Millennium Challenge Corporation, and that the Chief Executive 
Officer prepare and submit an annual report that describes the 
extent to which this requirement has been met for the preceding 
year.
    Section 208. Authorization of appropriations; related 
authorities. Section 207 authorizes to be appropriated to the 
President to carry out the division $1,300,000,000 for fiscal 
year 2004, $3,000,000,000 for fiscal year 2005, and 
$5,000,000,000 for fiscal year 2006. This section authorizes 
that amounts appropriated pursuant to the authorization of 
appropriations under this section may be referred to as the 
``Millennium Challenge Account''; are authorized to remain 
available until expended; and are in addition to amounts 
otherwise available for such purposes.
            Title III--Millennium Challenge Corporation
    Section 301. Millennium Challenge Corporation. Section 301 
establishes in the executive branch a corporation to be known 
as the Millennium Challenge Corporation that shall administer 
the programs authorized under title II, and that the 
Corporation shall be a Government corporation, as defined in 
section 103 of title 5, United States Code.
    Section 302. Chief Executive Officer. Section 302 describes 
the duties and authorities of the Chief Executive Officer, who 
shall head the Corporation, and includes the authority to 
appoint officers, by which the Committee means senior 
management officers, as distinguished from other officers or 
employees of the Corporation. The Committee strongly encourages 
the Chief Executive Officer to cultivate a professional staff 
at the Corporation who are dedicated to, and experienced in, 
advancing the purposes of division A of this act.
    Section 303. Board of Directors. Section 303 establishes 
within the Corporation a Board of Directors, which is 
authorized to prescribe, amend, and repeal bylaws, rules, 
regulations, and procedures governing the manner in which the 
business of the Corporation may be conducted and in which the 
powers granted to it by law may be exercised. This section 
provides the terms of office of each member of the Board, and 
other provisions relating to the Board, including that the 
Secretary of State shall serve as the Chairperson of the Board. 
The Committee intends that each list submitted by a 
congressional leader for the appointment of a Board member be 
composed of a number of individuals.
    This section also provides that vacancies that are created 
in the Board in the positions held by non-executive branch 
officials shall be filled in the ``same manner'' as the 
original appointment. The Committee intends that if an 
appointee from the list of, for example, the majority leader of 
the House of Representatives resigns, the majority leader would 
send another list of names to the President, from which he 
would make the necessary appointment, with the advice and 
consent of the Senate.
    Section 304. Interagency Coordination. Section 304 requires 
the President to ensure the coordination of Millennium 
Challenge Assistance with foreign economic assistance programs 
and activities carried out by other Federal departments and 
agencies, consistent with section 101 of the National Security 
Act of 1947 (50 U.S.C. 402).
    Section 305. Powers of the Corporation; Related Provisions. 
Section 305 enumerates the powers of the Corporation; 
establishes that the Corporation shall maintain its principal 
office in the metropolitan area of Washington, District of 
Columbia; and authorizes the Corporation to establish other 
offices in any place or places outside the United States in 
which the Corporation may carry out any or all of its 
operations and business. This section also instructs the Chief 
Executive Officer to consult with the Administrator of USAID in 
order to coordinate the activities of the Corporation with 
those of USAID for the purpose of avoiding unnecessary expense 
and duplication of functions, efforts, and activities of the 
two entities. The Committee intends that like other government 
corporations, the Millennium Challenge Corporation and all its 
assets and property should be exempt from taxation now or 
hereafter imposed by the United States, or any territory or 
possession thereof, or by any State, county, municipality, or 
local taxing authority.
    In addition to encouraging the Chief Executive Officer and 
other officials in the Millennium Challenge Corporation to 
coordinate policies and activities under division A of this act 
with USAID and other United States government departments and 
agencies, the Committee directs the Chief Executive Officer, or 
Chief Executive Officer's designee, to coordinate the 
activities of the Corporation with relevant regional and 
international organizations, including the International Bank 
for Reconstruction and Development and the International 
Monetary Fund. The Committee also intends that the Corporation 
coordinate its activities with relevant agencies of the United 
Nations system, such as the United Nations Development Program, 
which has a key role in supporting the formulation and 
implementation of national development strategies, such as the 
Poverty Reduction Strategy Papers, so as to achieve the 
Millennium Development Goals.
    Section 306. Transparency and Accountability of the 
Corporation. Section 306 subjects the Corporation and its 
officers and employees to the provisions of section 552 of 
title 5, United States Code (relating to freedom of 
information).
    Section 307. Detail of personnel to the Corporation; other 
authorities and limitations. Section 307 includes personnel and 
administrative authorities of the Corporation. This section 
authorizes the head of any Federal department or agency, upon 
the request of the Chief Executive Officer of the Corporation, 
to detail to the Corporation any employee of the respective 
department or agency on a fully or partially reimbursable 
basis, and such detail shall be without interruption or loss of 
civil service or Foreign Service status or privilege, or any 
other privilege, right, or seniority of the employee. This 
section authorizes the Corporation to allocate or transfer to 
the United States Agency for International Development or any 
other Federal department or agency any part of any funds 
available for carrying out the purposes of this title. Such 
allocation or transfer may be appropriate for established 
poverty- and hunger-reducing programs, such as the George 
McGovern-Robert Dole International Food for Education and Child 
Nutrition Program. Such funds shall be available for obligation 
and expenditure for the purposes for which authorized, in 
accordance with authority granted in this subtitle or under 
authority governing the activities of the agencies of the 
United States Government to which such funds are allocated or 
transferred. In addition, this section authorizes not more than 
7 percent of such funds to be used for administrative expenses. 
This section also subjects the Corporation to the provisions of 
chapter 91 of subtitle VI of title 31, United States Code. This 
section establishes that the Inspector General of the United 
States Agency for International Development shall serve as 
Inspector General of the Corporation, and provides that the 
Comptroller General shall conduct audits, evaluations, and 
investigations of the Corporation.
    The Committee believes that the Chief Executive Officer of 
the Millennium Challenge Corporation should ensure that 
environmental assessments are conducted of proposals for 
assistance under division A of this act and that these 
assessments are considered by the Millennium Challenge 
Corporation and the recipient country prior to the provision of 
assistance under section 203(f) of this act. The Chief 
Executive Officer also should ensure that, if necessary, 
appropriate environmental safeguards are adopted, including 
regular benchmarks to monitor and evaluate the impact of the 
assistance on the environment generally, and on those 
environment impacts that affect the health and well being of 
the global population as a whole.
    Section 308. Millennium Challenge Advisory Council. Section 
308 establishes within the Corporation an advisory board to 
provide policy guidance to the Corporation, including providing 
on an annual basis a review of the eligibility criteria 
established by the Corporation. The advisory board shall 
consist of not more than 7 members who shall be representative 
of nongovernmental entities with experience and interest in 
international trade and development, including private 
voluntary organizations, foundations, unions, academia, 
business and business associations, public policy 
organizations, and other such organizations, who shall be 
appointed by the Chief Executive Officer.
    Section 309. Millennium Challenge Seed Grants. Section 309 
authorizes the Chief Executive Officer to provide assistance in 
support of nongovernmental organizations in low income and 
lower middle income countries which are undertaking research, 
education and advocacy efforts aimed at promoting democratic 
societies, human rights, the rule of law, improved educational 
opportunities and health conditions, and economic freedom. Such 
assistance may not exceed $10,000,000 of the amounts 
appropriated pursuant to the authorization of appropriations in 
section 208. The Committee intends that research and efforts 
under this section include research aimed at improving the 
quality and the accuracy of the data related to the eligibility 
criteria and methodology described in section 203 with respect 
to low income countries (particularly as the criteria relates 
to women and children as well as to trade) and monitoring and 
evaluating the impact of assistance provided under this act. 
The Committee believes that grant proposals under this section 
made by nongovernmental organizations in such countries could 
include the participation of other eligible organizations 
outside such countries with expertise in the relevant area. The 
Committee encourages the Chief Executive Officer to consult 
with the International Program Center at the U.S. Census 
Bureau, which has been in operation for more than 50 years, 
conducting demographic, geographic, and socioeconomic studies, 
and strengthening statistical development through technical 
assistance, training, and software development.
            Title IV--Provisions Relating to United States Economic 
                    Assistance
    Section 401. Definition. Section 401 defines the term 
``United States economic assistance'' as any bilateral economic 
assistance, from any budget functional category, that is 
provided by any department or agency of the United States to a 
foreign country intended to assist the development and economic 
advancement of friendly foreign countries and peoples, 
including assistance provided under title II (relating to the 
Millennium Challenge Account); to promote the freedom, 
aspirations, or sustenance of friendly peoples under oppressive 
rule by unfriendly governments; to promote international trade 
and foreign direct investment as a means of aiding economic 
growth; to save lives and alleviate suffering of foreign 
peoples during or following war, natural disaster, or complex 
crisis; to assist in recovery and rehabilitation of countries 
or peoples following disaster or war; to protect refugees and 
promote durable solutions to aid refugees; to promote sound 
environmental practices; to assist in development of democratic 
institutions and good governance by the people of foreign 
countries; to promote peace and reconciliation or prevention of 
conflict; to improve the technical capacities of governments to 
reduce production of and demand for illicit narcotics; and to 
otherwise promote through bilateral foreign economic assistance 
the national objectives of the United States.
    Section 402. Framework for assistance. Section 402 contains 
a sense of Congress that a coherent framework for United States 
economic assistance should be established and that describes 
the various roles of agencies which furnish U.S. foreign 
economic assistance, including the United States Agency for 
International Development; the Millennium Challenge Corporation 
(as established under title III); the Department of State; and 
other Federal departments and agencies with expertise in 
international development-related activities, such as the 
Overseas Private Investment Corporation, the Trade Development 
Agency, the Department of Agriculture, the Department of Health 
and Human Services, and the Centers for Disease Control and 
Prevention, to the extent such departments and agencies have 
the authority to carry out development-related programs.
    One danger of the MCA and other recent foreign assistance 
initiatives is the fragmentation of U.S. foreign assistance. In 
addition to USAID, a host of other U.S. agencies are engaged in 
the design and delivery of foreign assistance. Coordination 
among these agencies often is not as extensive or effective as 
it should be. The creation of another agency, whose sole 
responsibility is development, may exacerbate the incoherence 
in U.S. development activities.
    The Committee encourages the President, after extensive 
consultations with appropriate congressional committees, to lay 
out clearly the missions of the relevant agencies, including 
possibly through a new executive order or Presidential 
directive. Correspondingly, the Committee strongly believes, as 
described in this section, that USAID has a wealth of 
experience, unmatched anywhere else in government, in 
delivering effective foreign aid for over 40 years. No other 
existing Federal agency has the number of field missions, the 
depth and breadth of relationships with key partners in 
development, or the personnel to implement development 
assistance successfully, nor aid the emergent Millennium 
Challenge Corporation to fulfill its mission.
    Section 403. Report relating to impact and effectiveness of 
assistance. Section 403 requires the President to transmit to 
Congress on a triennial basis a report which analyzes, on a 
country-by-country basis, the impact and effectiveness of the 
United States economic assistance provided during the preceding 
3 fiscal years. Specifically, the report shall include for each 
country receiving U.S. assistance an analysis of the impact of 
United States economic assistance during the preceding 3 fiscal 
years on economic development in that country, with a 
discussion of the United States interests that were served by 
the assistance. The analysis must be done on a sector-by-sector 
basis and must identify any economic policy reforms which were 
promoted by the assistance. The analysis shall include a 
description, quantified to the extent practicable, of the 
specific objectives the United States sought to achieve in 
providing economic assistance for that country, and specify the 
extent to which those objectives were not achieved, with an 
explanation of why they were not achieved. It must also include 
a description of the amount and nature of economic assistance 
provided by other donors during the preceding 3 fiscal years, 
set forth by development sector to the extent possible; and a 
discussion of the commitment of the host government to 
addressing the country's needs in each development sector, 
including a description of the resources devoted by that 
government to each development sector during the preceding 3 
fiscal years. The report must identify those countries in which 
United States economic assistance has been most successful, and 
those countries in which United States economic assistance has 
been least successful. For each country listed pursuant to 
paragraph (2), the report shall explain why the assistance was 
not more successful and shall specify what the United States 
has done as a result.
Division B--The Peace Corps Expansion Act of 2003
            Title X--General Provisions
    Section 1001. Definitions. Section 1001 includes several 
definitions of terms used in division B.
    Section 1002. Findings. Section 1002 includes numerous 
findings on the Peace Corps.
    The Committee strongly supports the work of the Peace Corps 
and its volunteers who serve in 71 countries around the world. 
The Committee recognizes the President's call to volunteer 
service for all Americans, his commitment to the Peace Corps, 
and his initiative to double the number of volunteers in the 
field to 14,000 by Fiscal Year 2007 as outlined in his 2002 
State of the Union Address.
    The Committee also recognizes American citizens are 
interested in humanitarian service, and the interest on the 
part of countries requesting a Peace Corps presence is strong. 
The Committee notes that at the end of 2002, requests for 
applications were up by 30 percent, new applications rose over 
15 percent, and the Peace Corps website received over 1.8 
million unique visitors. In the most recent months of this 
year, April and May, the Peace Corps website had 1.2 million 
unique visitors. Since January 2002, over 30 countries have 
requested Peace Corps programs, 22 country assessments have 
been conducted, and the Peace Corps has entered or re-entered 
14 countries.
    The Committee recognizes the specific steps the Peace Corps 
has taken to increase the safety and security of volunteers and 
staff. The Committee notes that specifically, the agency has 
created an Office of Safety and Security, which is headed by an 
Associate Director and includes a Chief Compliance Officer, a 
volunteer overseas safety and security coordinator, a safety 
and security specialist, a data analyst, nine overseas 
subregional safety and security officers, three regional safety 
and security officers, plus each Peace Corps post has been 
authorized to hire a safety and security coordinator. In 
addition, the Committee notes that the agency has integrated 
safety and security into all aspects of volunteers recruitment, 
training, and support.
    The Committee supports the Peace Corps' ongoing efforts in 
the area of HIV/AIDS prevention education and recognizes that 
Peace Corps volunteers are making an impact at the grassroots 
level. The Committee endorses the Peace Corps' plans to enhance 
the President's HIV/AIDS initiative by including 1,000 new 
volunteers in HIV/AIDS programs as part of its objective to 
reach 14,000 Volunteers by Fiscal Year 2007.
    To achieve the objectives laid out by the Administration as 
well as the new provisions in H.R. 2441, the Committee fully 
supports the Peace Corps receiving its full budget request.
            Title XI--Amendments to Peace Corps Act; Related Provisions
    Section 1101. Advancing the Goals of the Peace Corps. 
Section 1101 amends the Peace Corps Act to state that as an 
independent agency, the Peace Corps shall be responsible for 
recruiting all of its volunteers. This section also amends the 
Peace Corps Act by clarifying that the detail of Peace Corps 
personnel to other Federal agencies should further the 
fulfillment of Peace Corps goals.
    Section 1102. Reports and Consultations. Section 1102 
amends the Peace Corps Act by requiring the Director to 
transmit to Congress, at least once in each fiscal year, a 
report on efforts undertaken to improve coordination of 
activities of the Peace Corps with activities of international 
voluntary service organizations, such as the United Nations 
volunteer program, and of host country voluntary service 
organizations, including a description of the purpose and scope 
of any development project undertaken by the Peace Corps during 
the preceding fiscal year as a joint venture with any such 
international or host country voluntary service organizations; 
and recommendations for improving coordination of development 
projects between the Peace Corps and any such international or 
host country voluntary service organizations. The report shall 
also describe any major new initiatives that the Peace Corps 
has under review for the upcoming fiscal year, and any major 
initiatives that were undertaken in the previous fiscal year 
that were not included in prior reports to the Congress. The 
report should include the rationale for undertaking such new 
initiatives; an estimate of the cost of such initiatives; and 
the impact on the safety of volunteers. The report shall 
describe in detail the plans by which the Peace Corps will 
deploy 14,000 volunteers in service by 2007 while maintaining 
the quality of the volunteer experience, ensuring the safety 
and security of all volunteers, and providing for appropriate 
administrative and other support. The report shall describe 
standard security procedures for any country in which the Peace 
Corps operates programs or is considering doing so, as well as 
any special security procedures contemplated because of changed 
circumstances in specific countries, and assessing whether 
security conditions would be enhanced by co-locating volunteers 
with international or local nongovernmental organizations; or 
with the placement of multiple volunteers in one location. This 
section also requires the Director to consult with the 
appropriate congressional committees with respect to any major 
new initiatives not previously discussed in the latest annual 
report submitted to Congress or in budget presentations. This 
section requires a one-time report on student loan forgiveness 
programs currently available to Peace Corps volunteers upon 
completion of their service, comparing such programs with other 
Government-sponsored student loan forgiveness programs; and 
recommending any additional student loan forgiveness programs 
which could attract more applicants from low- and middle-income 
individuals who are carrying considerable student-loan debt 
burdens. This section requires that not later than 90 days 
after the date of enactment of the act and annually thereafter, 
the Director shall report on the progress of the Peace Corps in 
recruiting historically underrepresented groups. This section 
also requires that not later than 120 days after the date of 
enactment of the act, the Director shall prepare and submit to 
the appropriate congressional committees a report that 
describes the medical screening procedures and standards of the 
Office of Medical Services/ Screening Unit of the Peace Corps 
to determine whether an applicant for Peace Corps service has 
worldwide clearance, limited clearance, a deferral period, or 
is not medically, including psychologically, qualified to serve 
in the Peace Corps as a volunteer; describes the procedures and 
criteria for matching applicants for Peace Corps service with a 
host country to ensure that the applicant, reasonable 
accommodations notwithstanding, can complete at least 2 years 
of volunteer service without interruption to host country 
national projects due to foreseeable medical conditions.
    Section 1103. Special Volunteer recruitment and placement 
for certain countries. Section 1103 requires that not later 
than 60 days after the date of enactment of this act, the 
Director shall submit to the appropriate congressional 
committees a report that describes the recruitment strategies 
to be employed by the Peace Corps to recruit and train 
volunteers with the appropriate language skills and interest in 
serving in host countries; and lists the countries that the 
Director has determined should be priorities for special 
recruitment and placement of Peace Corps volunteers. The 
Director is authorized and strongly urged to utilize the 
services of returned Peace Corps volunteers who have relevant 
language and cultural experience and may have served previously 
in countries with substantial Muslim populations, in order to 
open or reopen Peace Corps programs in such countries.
    Section 1104. Global Infectious Diseases Initiative; 
coordination of HIV/AIDS activities. Section 1104 requires the 
Director of the Peace Corps, in cooperation with international 
public health experts, such as the Centers for Disease Control 
and Prevention, the National Institutes of Health, the World 
Health Organization, the Pan American Health Organization, and 
local public health officials, to expand the Peace Corps' 
program of training for Peace Corps volunteers in the areas of 
education, prevention, and treatment of infectious diseases 
which are prevalent in host countries in order to ensure that 
the Peace Corps increases its contribution to the global 
campaign against such diseases.
    Section 1105. Peace Corps National Advisory Council. 
Section 1105 amends the relevant section of the Peace Corps Act 
relating to the structure and composition of the Peace Corps 
Advisory Council, notably by reducing the number of Council 
members from 15 to 11, by eliminating the requirement that such 
members be appointed by the President, by and with the advice 
and consent of the Senate, and instead requiring that the 
members be appointed by the Director of the Peace Corps. This 
section also specifies that six of the members shall be former 
Peace Corps volunteers, at least one of whom shall have been a 
former staff member abroad or in the Washington headquarters, 
and not more than six shall be members of the same political 
party.
    Section 1106. Readjustment allowances. Section 1106 amends 
the Peace Corps Act to increase the monthly allowance from $125 
to $275 in FY2004, and $300 per month in FY2005 and beyond. 
Current Peace Corps policy provides a $225 per month, but the 
original act prior to the amendments of this division 
establishes a floor of $125 per month.
    Section 1107. Programs and projects of returned Peace Corps 
volunteers and former staff. Section 1107 establishes a program 
to provide support for returned Peace Corps volunteers to 
develop and carry out programs and projects to promote the 
objectives of the Peace Corps Act, as set forth in section 2(a) 
of that act. Subject to the availability of appropriations, 
this section authorizes the Director to award grants on a 
competitive basis to private nonprofit corporations for the 
purpose of enabling returned Peace Corps volunteers to use 
their knowledge and expertise to develop and carry out the 
programs such as educational programs designed to enrich the 
knowledge and interest of elementary school and secondary 
school students in the geography and cultures of other 
countries where the volunteers have served; projects that 
involve partnerships with local libraries to enhance community 
knowledge about other peoples and countries; and audio-visual 
projects that utilize materials collected by the volunteers 
during their service that would be of educational value to 
communities. This section authorizes the Director to delegate 
the authority to award grants and may transfer funds to the 
Chief Executive Officer of the Corporation for National and 
Community Service. This section also includes a Congressional 
Statement of Policy that the Crisis Corps has been an effective 
tool in harnessing the skills and talents of returned Peace 
Corps volunteers. This section requires the Director, in 
consultation with the governments of host countries and 
appropriate nongovernmental organizations, to increase the 
number of available Crisis Corps assignments for returned Peace 
Corps volunteers to at least 120 assignments in fiscal year 
2004, 140 assignments in fiscal year 2005, 160 assignments in 
fiscal year 2006, and 165 assignments in fiscal year 2007.
    Section 1108. Declaration of Policy. Section 1108 is a 
Congressional Declaration of Policy in support for the goal 
announced by the President of doubling the number of Peace 
Corps volunteers to 14,000 by 2007.
    Section 1109. Peace Corps in Sierra Leone. Section 1109 
includes findings that recount the history of the Peace Corps 
in Sierra Leone. This section also includes a Sense of Congress 
that the Peace Corps should return its program to Sierra Leone 
as soon as security conditions permit.
    Section 1110. Authorization of Appropriations. Section 1109 
amends Section 3(b)(1) of the Peace Corps Act (22 U.S.C. 
2502(b)(1)) to extend and increase the authorization of 
appropriations to carry out the Peace Corps Act through fiscal 
year 2007, to the following levels for each fiscal year: 
$366,868,000 for fiscal year 2004, $411,800,000 for fiscal year 
2005, $455,930,000 for fiscal year 2006, and $499,400,000 for 
fiscal year 2007''.

                        New Advisory Committees

    H.R. 2441 establishes a new advisory committee (the 
Millennium Challenge Advisory Council), and amends the 
provisions within the Peace Corps Act regarding an existing 
advisory committee, the Peace Corps National Advisory Council.

                    Congressional Accountability Act

    H.R. 2441 does not apply to the legislative branch.

                            Federal Mandates

    H.R. 2441 imposes no Federal mandates.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

              SECTION 5313 OF TITLE 5, UNITED STATES CODE

Sec. 5313. Positions at level II

    Level II of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
            Deputy Secretary of Defense.

           *       *       *       *       *       *       *

            Chief Executive Officer, Millennium Challenge 
        Corporation.
                              ----------                              


              SECTION 9101 OF TITLE 31, UNTED STATES CODE

Sec. 9101. Definitions

    In this chapter--
            (1) * * *

           *       *       *       *       *       *       *

            (3) ``wholly owned Government corporation'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (Q) the Millennium Challenge Corporation.

           *       *       *       *       *       *       *

                              ----------                              


                            PEACE CORPS ACT



           *       *       *       *       *       *       *
                  peace corps as an independent agency

    Sec. 2A. Effective on the date of the enactment of the 
International Security and Development Cooperation Act of 1981, 
the Peace Corps shall be an independent agency within the 
executive branch and shall not be an agency within the ACTION 
Agency, the successor to the ACTION Agency, or any other 
department or agency of the United States. As an independent 
agency, the Peace Corps shall be responsible for recruiting all 
of its volunteers.

                             authorization

    Sec. 3. (a) * * *
    (b)(1) There are authorized to be appropriated to carry out 
the purposes of this Act $270,000,000 for fiscal year 2000, 
$298,000,000 for fiscal year 2001, $327,000,000 for fiscal year 
2002, [and $365,000,000 for fiscal year 2003] $365,000,000 for 
fiscal year 2003, $366,868,000 for fiscal year 2004, 
$411,800,000 for fiscal year 2005, $455,930,000 for fiscal year 
2006, and $499,400,000 for fiscal year 2007.

           *       *       *       *       *       *       *


                         peace corps volunteers

    Sec. 5. (a) * * *

           *       *       *       *       *       *       *

    (c) Volunteers shall be entitled to receive a readjustment 
allowance at a rate not less than [$125 for each month of 
satisfactory service] $275 for each month of satisfactory 
service during fiscal year 2004 and $300 for each month of 
satisfactory service thereafter as determined by the President. 
The readjustment allowance of each volunteer shall be payable 
on his return to the United States: Provided, however, That, 
under such circumstances as the President may determine, the 
accrued readjustment allowance, or any part thereof, may be 
paid to the volunteer, members of his family or others, during 
the period of his service, or prior to his return to the United 
States. In the event of the volunteer's death during the period 
of his service, the amount of any unpaid readjustment allowance 
shall be paid in accordance with the provisions of section 
5582(b) of title 5, United States Code. For purposes of the 
Internal Revenue Code of 1954 (26 U.S.C.), a volunteer shall be 
deemed to be paid and to receive each amount of a readjustment 
allowance to which he is entitled after December 31, 1964, when 
such amount is transferred from funds made available under this 
Act to the fund from which such readjustment allowance is 
payable.

           *       *       *       *       *       *       *

    (g) The President may detail or assign volunteers or 
otherwise make them available to any entity referred to in 
paragraph (1) of section 10(a) on such terms and conditions as 
he may determine: [Provided, That] Provided, That such detail 
or assignment furthers the fulfillment of Peace Corps' 
development and public diplomacy goals as described in section 
2: Provided further, That not to exceed two hundred volunteers 
may be assigned to carry out secretarial or clerical duties on 
the staffs of the Peace Corps representatives abroad: Provided, 
however, That any volunteer so detailed or assigned shall 
continue to be entitled to the allowances, benefits and 
privileges of volunteers authorized under or pursuant to this 
Act.

           *       *       *       *       *       *       *


                     peace corps volunteer leaders

    Sec. 6. The President may enroll in the Peace Corps 
qualified citizens or nationals of the United States whose 
services are required for supervisory or other special duties 
or responsibilities in connection with programs under this Act 
(referred to in this Act as ``volunteer leaders''). The ratio 
of the total number of volunteer leaders to the total number of 
volunteers in service at any one time shall not exceed one to 
twenty-five. Except as otherwise provided in this Act, all of 
the provisions of this Act applicable to volunteers shall be 
applicable to volunteer leaders, and the term ``volunteers'' 
shall include ``volunteer leaders'': Provided, however, That--
            (1) volunteer leaders shall be entitled to receive 
        a readjustment allowance at a rate not less than [$125 
        for each month of satisfactory service] $275 for each 
        month of satisfactory service during fiscal year 2004 
        and $300 for each month of satisfactory service 
        thereafter as determined by the President;

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                                [reports

    [Sec. 11. The President shall transmit to the Congress, at 
least once in each fiscal year, a report on operations under 
this Act. Each report shall contain information describing 
efforts undertaken to improve coordination of activities of the 
Peace Corps with activities of international voluntary service 
organizations, such as the United Nations volunteer program, 
and of host country voluntary service organizations, 
including--
            [(1) a description of the purpose and scope of any 
        development project which the Peace Corps undertook 
        during the preceding fiscal year as a joint venture 
        with any such international or host country voluntary 
        service organizations; and
            [(2) recommendations for improving coordination of 
        development projects between the Peace Corps and any 
        such international or host country voluntary service 
        organizations.
The President shall also include in the report a description of 
any plans to carry out the policy set forth in section 2(b) of 
this Act.]

SEC. 11. ANNUAL REPORTS; CONSULTATIONS ON NEW INITIATIVES.

    (a) Annual Reports.--The Director shall transmit to 
Congress, at least once in each fiscal year, a report on 
operations under this Act. Each report shall contain 
information--
            (1) describing efforts undertaken to improve 
        coordination of activities of the Peace Corps with 
        activities of international voluntary service 
        organizations, such as the United Nations volunteer 
        program, and of host country voluntary service 
        organizations, including--
                    (A) a description of the purpose and scope 
                of any development project which the Peace 
                Corps undertook during the preceding fiscal 
                year as a joint venture with any such 
                international or host country voluntary service 
                organizations; and
                    (B) recommendations for improving 
                coordination of development projects between 
                the Peace Corps and any such international or 
                host country voluntary service organizations;
            (2) describing--
                    (A) any major new initiatives that the 
                Peace Corps has under review for the upcoming 
                fiscal year, and any major initiatives that 
                were undertaken in the previous fiscal year 
                that were not included in prior reports to the 
                Congress;
                    (B) the rationale for undertaking such new 
                initiatives;
                    (C) an estimate of the cost of such 
                initiatives; and
                    (D) the impact on the safety of volunteers;
            (3) describing in detail the Peace Corps plans, 
        including budgetary plans, to have 14,000 volunteers in 
        service by 2007 while maintaining the quality of the 
        volunteer experience, ensuring the safety and security 
        of all volunteers, and providing for appropriate 
        administrative and other support; and
            (4) describing standard security procedures for any 
        country in which the Peace Corps operates programs or 
        is considering doing so, as well as any special 
        security procedures contemplated because of changed 
        circumstances in specific countries, and assessing 
        whether security conditions would be enhanced--
                    (A) by co-locating volunteers with 
                international or local nongovernmental 
                organizations; or
                    (B) with the placement of multiple 
                volunteers in one location.
    (b) Consultations on New Initiatives.--The Director of the 
Peace Corps shall consult with the appropriate congressional 
committees with respect to any major new initiatives not 
previously discussed in the latest annual report submitted to 
Congress under subsection (a) or in budget presentations. 
Whenever possible, such consultations should take place prior 
to the initiation of such initiatives, or as soon as 
practicable thereafter.

                 peace corps national advisory council

    Sec. 12. (a) * * *
    (b) Functions.--(1) * * *
    (2) Members of the Council shall (subject to subsection 
(d)(1)) conduct on-site inspections, and make examinations, of 
the activities of the Peace Corps in the United States and in 
other countries in order to--
            (A) * * *

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            (C) make recommendations to the President, the 
        Director of the Peace Corps, and, as the Council 
        considers appropriate, the Congress, for the purpose of 
        guiding the future direction of the Peace Corps and of 
        helping to ensure that the purposes and programs of the 
        Peace Corps are carried out in ways that are 
        economical, efficient, responsive to changing needs in 
        developing countries and to changing relationships 
        among people, and in accordance with law; [and]
            (D) make recommendations for utilizing the 
        expertise of returned Peace Corps volunteers and former 
        Peace Corps staff in fulfilling the goals of the Peace 
        Corps; and
            [(D)] (E) make such other evaluations, assessments, 
        and recommendations as the Council considers 
        appropriate.

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    (c) Membership.--(1) * * *
    (2)(A) The Council shall consist of [fifteen] eleven voting 
members who shall be appointed by the [President, by and with 
the advice and consent of the Senate. At least seven of such 
members shall be former Peace Corps volunteers, and not more 
than eight of such members shall be members of the same 
political party.] Director of the Peace Corps. Six of the 
members shall be former Peace Corps volunteers, at least one of 
whom shall have been a former staff member abroad or in the 
Washington headquarters, and not more than six shall be members 
of the same political party.
    [(B) The first appointments of members of the Council under 
this paragraph shall be made not more than sixty days after the 
date of the enactment of this section and, solely for purposes 
of determining the expiration of their terms, shall be deemed 
to take effect on the sixtieth day after such date of 
enactment.]
    [(C)] (B) No member appointed under this paragraph may be 
an officer or employee of the United States Government.
    [(D) Of the members initially appointed under this 
paragraph, eight shall be appointed to 1-year terms and seven 
shall be appointed to 2-year terms. Thereafter, all appointed 
members shall be appointed to 2-year terms.]
    (C) The members of the Council shall be appointed to 2-year 
terms.
    [(E)] (D) A member of the Council appointed to fill a 
vacancy occurring before the expiration of the term for which 
the member's predecessor was appointed shall be appointed only 
for the remainder of that term.
    [(F)] (E) No member of the Council may serve for more than 
two consecutive 2-year terms.
    [(G)] (F) Members of the Council shall serve at the 
pleasure of the President.
    [(H)] (G) An appointed member of the Council may be removed 
by a vote of [nine] seven members for malfeasance in office, 
for persistent neglect of or inability to discharge duties, or 
for offenses involving moral turpitude, and for no other cause.
    [(I)] (H) Within thirty days after any vacancy occurs in 
the office of an appointed member of the Council, the 
[President shall nominate] Director shall appoint an individual 
to fill the vacancy.

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    [(g) Chair and Vice Chair.--At its first meeting and at its 
first regular meeting in each calendar year thereafter, the 
Council shall elect a Chair and Vice Chair from among its 
appointed members who are citizens of the United States. The 
Chair and Vice Chair may not both be members of the same 
political party.]
    (g) Chair.--The Director shall designate one of the voting 
members of the Council as Chair, who shall serve in that 
capacity for a term of two years. The Director may renew the 
term of a voting member appointed as Chair under the preceding 
sentence.

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