The new measures were to have taken effect this week. On Thursday, a USAID spokesman said the program remained a proposal and would not be implemented until after the completion of public comment and consultation with groups likely to be affected by the new rules.
"We are not moving forward with any implementation of this program," said the spokesman, David Snider.
Charities, businesses, and some lawmakers said the scheme -- known by its initials PVS -- was unnecessary and burdensome and, despite its stated purpose, could place U.S. lives at increased risk.
"Implementation of the PVS will jeopardise the lives of American citizens engaged in humanitarian relief activities abroad," said Samuel Worthington, chief executive of InterAction, an association of 160-plus U.S. nongovernmental organizations (NGOs) working in or with developing countries.
"If they are perceived to be extension [sic] of the U.S. intelligence community, terrorist attacks against them can only increase," Worthington wrote in an Aug. 17 letter to USAID. He added that he had told the agency this on previous occasions when such information-gathering requirements were proposed.
The vetting also would be cumbersome, Worthington said. Some aid groups have as many as 20,000 employees and many work with local affiliates and partners in countries deemed sensitive by U.S. officials.
For all the trouble PVS might cause, "USAID has not demonstrated a need for such a system," he said. U.S. government inspectors had yet to turn up any evidence that the agency's funds had flowed to terrorist organizations through nongovernmental organizations, he added.
Businesses appeared anxious to avoid the added burden of the new rules, saying higher administrative overheads could squeeze smaller players out of competition. They also voiced concerns similar to Worthington's.
"Business entities receiving contracts from USAID are already subject to a wide range of requirements to ensure that USAID funds are not provided to individuals or entities associated with terrorism," said Alan Chvotkin, senior vice president at the Professional Services Council business association.
"This proposed agency-wide PVS program does not and need not apply to companies awarded acquisitions from USAID" except in the West Bank and Gaza, he said. In agency jargon, acquisitions are contracts.
Chvotkin's group represents 225-plus technology, logistics, and other firms working under contract for USAID.
"By focusing on only two elements of the agency's overall interests -- security and privacy -- to the exclusion of due process and fundamental fairness, the agency risks reducing competition for opportunities, excluding small business, and minimising its ability to execute its developmental assistance programs," he wrote in an Aug. 27 letter to USAID.
Although the council does not represent private voluntary organizations, Chvotkin said, its members "recognize the deleterious effect such a broad-based vetting program as the PVS could have on achieving the United States' program goals around the world through assistance agreements entered into with these partner organizations."
USAID maintains a vetting system it introduced for the West Bank and Gaza in 2003, when Congress mandated such an effort. Contrary to some reports, it has not begun to roll out PVS -- which would toughen the rules and their enforcement -- on a trial basis in the Palestinian territories, said Snider.
"There is no implementation anywhere," he told IPS.
In fiscal year 2006, which ended on Sep. 30, 2006, USAID managed some $9.2 billion, Snider said.
"The purpose of USAID's work in development joins diplomacy and defense as one of three key pieces of the nation's foreign policy apparatus," the agency stated on its Web site. It said it has working relationships with more than 3,500 U.S. companies and more than 300 U.S.-based private voluntary organizations.
Groups seeking money or in-kind support from U.S. government agencies and private philanthropies already are required to certify that they are free of ties to individuals and organizations officially deemed as terrorists. Rather than rely on such certification, the new scheme would involve active vetting by U.S. intelligence and law enforcement agencies.
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