In addition to the goals of alleviating poverty, encouraging democratic social and political forces, fostering economic growth and stability, and cultivating bilateral relations in Asia, since September 2001, the United States has redoubled its efforts in fighting terrorism in parts of the region. This report discusses changing U.S. aid programs for 16 East Asian and South Asian countries. After the war on terrorism began, the United States promised increases of 17% and 250% to East Asia and South Asia, respectively. In South Asia, Pakistan and India have become "front line" states in the U.S. campaign against terrorism. For years, the United States has restricted foreign assistance to many countries in East and South Asia in order to encourage democracy and reduce the spread of nuclear weapons capabilities.

This report analyzes annual budget justifications and legislation for foreign operations appropriations and discusses U.S. foreign aid trends, programs, and restrictions in 16 East Asian and South Asian countries. It does not cover aid to Pacific Island nations, North Korea, and Afghanistan. Country tables do not include assistance from U.S. State Department programs funded outside the foreign operations budget, such as educational and cultural exchange programs, and assistance from other departments and agencies. Since the war on terrorism began in 2001 and the Millennium Challenge Account (MCA) and Global HIV/AIDS Initiative (GHAI) were launched in 2004, the United States has increased foreign aid spending dramatically in some regions, including East and South Asia. The United States has raised military, economic, and development assistance primarily for counterterrorism objectives in the East Asia- Pacific (EAP) and South Asia regions, with Pakistan, India, the Philippines, and Indonesia receiving the bulk of the increases. In 2007, the Bush Administration restructured U.S. foreign aid programs to better serve the goal of transformational development, which places greater emphasis on U.S. security and democracy building as the chief goals of foreign aid. In the past decade, the United States government has restricted foreign assistance to many countries in East and South Asia in order to encourage democracy and respect for human rights. Some sanctions have been waived or lifted. The Consolidated Appropriations Act for FY2008 (P.L. 110-161) placed human rights conditions upon portions of the U.S. military assistance grants to Indonesia, the Philippines, Pakistan, and Sri Lanka. Since 2003, President Bush has annually exercised the waiver authority on coup-related sanctions against Pakistan. In 2005, the United States government resumed full military assistance to Indonesia, based upon the satisfaction of legislative conditions and national security grounds.

Contents: (1) U.S.-Israeli Relations and the Role of Foreign Aid; (2) U.S. Bilateral Military Aid to Israel: A 10-Year Military Aid Agreement; Foreign Military Financing; Ongoing U.S.-Israeli Defense Procurement Negotiations; (3) Defense Budget Appropriations for U.S.-Israeli Missile Defense Programs: Multi-Layered Missile Defense; High Altitude Missile Defense System; (4) Aid Restrictions and Possible Violations: Israeli Arms Sales to China; Israeli Settlements; (5) Other Ongoing Assistance and Cooperative Programs: Migration and Refugee Assistance; Loan Guarantees for Economic Recovery; American Schools and Hospitals Abroad Program; U.S.-Israeli Scientific and Business Cooperation; (6) Historical Background. Illustrations.

How US foreign policy affects state repression