Mitt Romney pledged Tuesday to shift foreign aid toward the private sector and deprioritize humanitarian aid in favor of promoting free enterprise and business development around the world.

In remarks at the Clinton Global Initiative, Romney laid out his most detailed proposals on foreign aid thus far, including his plan to move foreign aid to rely more on public-private partnerships that enlist American corporations to the cause of helping the developing world.

"Free enterprise has done more to bless humanity than any other economic system not only because it is the only system that creates a prosperous middle class, but also because it is the only system where the individual enjoys the freedom to guide and build his or her own life. Free enterprise cannot only make us better off financially, it can make us better people," Romney said.

He said that America was a compassionate nation but that Americans wonder why foreign aid often falls victim to corruption and doesn't seem to solve the problems of the developing world. Romney believes that is because the private sector is now playing a much larger role in the developing world than foreign governments.

"If foreign aid can leverage this massive investment by private enterprise, it may exponentially expand the ability to not only care for those who suffer, but also to change lives," Romney said. "For American foreign aid to become more effective, it must embrace the power of partnerships, access the transformative nature of free enterprise, and leverage the abundant resources that can come from the private sector."

Romney then said he would lower the priority of foreign aid as a means to address humanitarian needs, such as health, as well as foreign aid as a means to promote U.S. strategic interests. He said the foreign aid goal that will receive "more attention and a much higher priority" if he is elected would be "aid that elevates people and brings about lasting change in communities and in nations."

Romney invoked the name of Muhammed Bouazizi of Tunisia, "the street vendor whose self-immolation sparked the Arab Spring," and said his protest was based on his desire to work to provide for his family.

"Work. That must be at the heart of our effort to help people build economies that can create jobs for people, young and old alike," Romney said. "Work builds self-esteem. It transforms minds from fantasy and fanaticism to reality and grounding. Work will not long tolerate corruption nor quietly endure the brazen theft by government of the product of hard-working men and women."

A Romney administration would initiate "Prosperity Pacts" through which the U.S. government would work with the private sector to eliminate trade and investment barriers in developing nations in exchange for U.S. aid packages that focus on "developing the institutions of liberty, the rule of law, and property rights," he said.

"The aim of a much larger share of our aid must be the promotion of work and the fostering of free enterprise," said Romney. "Nothing we can do as a nation will change lives and nations more effectively and permanently than sharing the insight that lies at the foundation of America's own economy--free people pursuing happiness in their own ways build a strong and prosperous nation."

"I've laid out a new approach for a new era," he said. "We'll couple aid with trade and private investment to empower individuals, encourage innovators, and reward entrepreneurs."

Romney started his speech with a joke about Clinton's speech endorsing President Barack Obama during the Democratic National Convention in Charlotte.

"If there's one thing we've learned this election season, it's that a few words from Bill Clinton can do any man a lot of good," Romney said. "After that introduction, I guess all I have to do is wait a day or two for the bounce."

Note: The headline on this story has been changed to better reflect Romney's proposals.

The Palestine Liberation Organization has denied recent reports that the White House issued a notice threatening to cut all aid to the Palestinian Authority if it launches a renewed drive for recognition at the United Nations.

"This is absolutely not true," PLO representative to Washington Maen Rashid Areikat told The Cable this week. "We do not know what they are saying. It's unfounded."

According to numerous online sources, Palestine National Council political chairman Khaled Mesmar, an Obama administration envoy issued the threat during a recent visit to Ramallah, and Areikat's comments come just days after senior Palestinian negotiator Saeb Erekat announced that the Palestinian Authority plans to ask the U.N. General Assembly  to recognize Palestine as an observer state. Last year's bid for statehood membership was blocked by the United States, and the top foreign aid leaders in the House of Representatives issued a similar threat in August 2011. 

On Capitol Hill, the Palestinian Authority has faced increasing scrutiny since it sought U.N. recognition last September. House Foreign Relations Committee chairwoman Ileana Ros-Lehtinen (R-FL) has spearheaded congressional efforts to prevent federal budgetary allocations to the Palestinian Authority -- which have averaged nearly $600 million since Fiscal Year (FY) 2008 -- from being released, along with House Appropriations State and Foreign Ops subcommittee chairwoman Kay Granger (R-TX). In March, Ros-Lehtinen agreed to release $88.6 million of $147 million slated for Palestinian development aid in the West Bank and Gaza that Republican lawmakers had placed on hold in August 2011, but Secretary of State Hillary Clinton overruled the decision and notified Congress in April that the entire package would be disbursed.

"On the congressional level I think that what we are facing is a total ignorance and lack of understanding of the political dynamics and variables that are involved in U.S. assistance to the Palestinians," Areikat said in a short interview. "We are shocked to know that these members of Congress don't even have the minimum knowledge or understanding of Palestinian positions or the impact of U.S. assistance on improving the living, economic, and humanitarian positions of the Palestinian people. Resorting to this tool to try to influence Palestinian leaders into changing their political position is something that has proven in the past to be counterproductive, and it will not lead to a change in the Palestinian political position."

As Ros-Lehtinen continues to place holds on FY2012 funds, however, the Palestinian Authority is facing financial collapse. Saudi Arabia transferred $100 million in aid to the Palestinian Authority after Israel applied for a $100 million International Monetary Fund loan on its behalf and was refused, but the PA's budget deficit for the current year has already surpassed the $1 billion mark. Palestinian Prime Minister Salam Fayyad said Monday that the PA is unable to pay about 150,000 of its employees.

The House's stance on foreign aid to the Palestinians has drawn the attention and ire of Senate Foreign Relations Committee chairman John Kerry (D-MA).

"House Republicans want to cut off aid to the Palestinian Authority," he said during a speech at the U.S. Global Leadership Coalition's annual conference on Tuesday. "I can't imagine anything that would tumble the Middle East more rapidly into a radical tailspin."

Rep. Adam Smith (D-WA), a co-signatory of the Cohen-Yarmouth-Connolly letter, which stresses the importance of American leadership to resolve the Israeli-Palestinian conflict, agrees.

"No, I do not support cutting off funds to the Palestinian Authority," he said in an emailed statement Tuesday. "I oppose them unilaterally seeking statehood, the deal should be bilateral, but cutting them off would lead to more conflict not less."

Members of the House Committee on Foreign Affairs, meanwhile, worry increasingly about corruption within the Palestinian government, as a committee oversight hearing last week about the Palestinian Authority's "chronic kleptocracy" demonstrated.

"As a major political donor to the Palestinians, we need to be extremely concerned that our aid will be construed as support for a corrupt regime," House Foreign Relations Committee senior member Gary Ackerman (D-NY) said during the hearing. "If they unintentionally wind up enriching loathsome regime figures ... then we have a hard choice as our support for the people is outweighed by unintended, undesirable consequences of that flow."

Areikat dismissed the hearing as a politically motivated smear tactic.

"By holding these hearings all the time, the House Foreign Relations Committee is ignoring an important fundamental principle in the U.S. system, which is giving the other party the chance to present its case," he told The Cable. "They have been holding all these hearings on the Palestinian Authority while the Palestinian Authority and its representatives are absent, so it's only a charade. It's a politically motivated campaign that has nothing to do with transparency and accountability."

The Obama administration quietly announced this week that it is scrapping the office of the Global Health Initiative and abandoning plans to move the whole project over to USAID, creating anger and frustration in the non-government organization community.

Following what administration sources described as a knock-down drag-out interagency fight between USAID and CDC over whether the Global Health Initiative, a huge $63 billion project to help the world's poorest announced by President Barack Obama in 2009, would actually be moved to USAID as promised in the State Department's Quadrennial Diplomacy and Development Review (QDDR), the administration has decided to forgo what the QDDR directed and stop trying to consolidate the leadership of the multi-billion dollar program at USAID.

"As a result of our analysis and conclusions, we have made a collective recommendation to close the QDDR benchmark process and shift our focus from leadership within the U.S. Government to global leadership by the U.S. Government. This recommendation has been accepted," read a July 3 blog post by USAID Administrator Rajiv Shah, Ambassador Eric Goosby, Director Thomas Frieden, and Executive Director Lois Quam.

"At the State Department, the GHI Office (S/GHI) will close and the Office of Global Health Diplomacy (S/GHD) will be stood up. Unlike S/GHI's focus on interagency coordination, the S/GHD office's mandate will be to champion the priorities and policies of GHI in the diplomatic arena.... Global Health Initiative will continue as the priority global health initiative of the U.S. Government.... GHI country teams and GHI planning leads will continue to work to implement GHI strategies under the leadership of the U.S. Ambassador."

The Modernizing Foreign Assistance Network (MFAN), an umbrella group representing development organizations co-chaired by David Beckmann, George Ingram and Jim Kolbe, today issued a harsh criticism of the administration's decision. 

"The Obama Administration unfortunately yielded to inertia and interagency turf battles in deciding not to move leadership of the Global Health Initiative (GHI), America's largest development program, to the United States Agency for International Development (USAID), our premier development agency," MFAN wrote. "We are concerned that our partners on the ground will continue to be confused about global health leadership and coordination, which will hamper efforts to effectively transition ownership of development programs to recipient countries.... Viewed through these lenses, the Administration may have undermined its own landmark efforts to increase development effectiveness and accountability."

Development experts Amanda Glassman and Rachel Silverman wrote about the backstory in a blog post on the website of the Center for Global Development. They said the administration has dramatically scaled back its ambitions for GHI by deciding not to consolidate its leadership at USAID.

"The news is deeply disappointing and frustrating on a number of levels. The announcement reflects a breakdown of the inter-agency process. It demonstrates a continued lack of political will to address the hard questions that hamper integration, particularly separate earmarked funding streams and parallel, competing institutions within the U.S. government that had different strategies and relationships with recipient country governments," they wrote. "The bottom line: GHI 1.0 failed on the hard questions, and GHI 2.0 isn't even trying."

The Obama administration is planning to release more than $1 billion of held-up funds to the Pakistani government this month, following Pakistan's opening of the supply lines to Afghanistan. But Congress can thwart that plan and at least one senator is going to try.

Pentagon spokesman Capt. John Kirby confirmed to The Cable on Friday that the Pentagon is planning to give Pakistan $1.1 billion in Coalition Support Funds (CSF), reimbursement money that Pakistan has already spent in the joint effort to fight al Qaeda and the Taliban. The U.S. government has been holding up the money over the past six months while the supply lines were closed. Pakistan closed those supply lines after NATO forces killed 24 Pakistani soldiers near the Afghan border in November, but opened them up again this week after Secretary of State Hillary Clinton finally, publically, said "we're sorry" for the mistakes that led to those killings.

Clinton didn't mention the funds when she announced the deal to re-open the supply lines. Kirby didn't say the money was a quid pro quo deal in exchange for opening up the Ground Lines of Communication (GLOC), as other officials and experts allege, but he did acknowledge that the two issues are linked.

"Now that the GLOCs are open, we intend to submit the approximately $1.1 billion in approved receipts under the Coalition Support Fund for costs associated with past Pakistani counter-terrorism operations," Kirby told The Cable. "Now that the GLOCs are open, we are prepared to move forward with these claims."

Kirby said that congressional leadership was kept in the loop during the discussions with Pakistan about re-opening the supply lines. "We look forward to working closely with Congress to process these claims," he said.

Multiple Senate offices told The Cable that the notification for releasing the $1.1 billion to the Pakistan military has not yet reached Capitol Hill but is expected in the coming days. After Congress receives the notification, lawmakers have 15 days to object to the release or the funds will go through.

Congressional anger at Pakistan is at an all-time high, and not just because of the closing of the supply lines, which have cost U.S. taxpayers about $100 million extra per month, according to Kirby. Lawmakers are upset that the Pakistani military can't or won't eliminate the safe havens in Pakistan where insurgents live and from where they launch cross-border attacks on U.S. forces in Afghanistan.

Lawmakers are also upset that the Pakistani courts have condemned Shakil Afridi, the doctor who worked with the CIA to help positively identify Osama bin Laden. Afridi was sentenced last month to 33 years in jail for treason. Last week, before the deal over the supply lines was announced, Sen. Rand Paul (R-KY) told The Cable he would force a vote on an amendment to halt all aid to Pakistan this month, due to the Afridi case.

"My goal is that the guy who helped us get bin Laden will not be in prison for the rest of his life," Paul said in an interview.

Afridi has an appeals hearing on July 19, so Paul is planning to wait and see if the Pakistani courts reverse themselves before he uses a rare procedural move to force a vote to cut off all aid to Pakistan.

"I've decided to try to have the vote on July 20 to give them one more chance to review his case," Paul said.

Senate leadership is dead set against letting Paul have a vote on his amendment, out of concern that senators won't want to publically stand up in defense of sending more American taxpayer money to our greatest frenemy. But Paul said he plans to use Senate Rule 14 to force a vote and his office has collected 33 signatures from other senators on a petition to push for that vote. It's not clear if this legislative tactic will work, but Paul is confident.

"I can go around the leadership on that. I don't think they can stop me from having a vote. There will be a vote on Pakistan," Paul said. "It doesn't happen very often, but I have the signatures and I can get a vote."

Paul met with the State Department and Pakistani Ambassador Sherry Rehman last week. After the GLOC deal was struck this week, The Cable asked Paul spokeswoman Moira Bagley if the Kentucky senator would also try to stop the release of the CSF money. She said he would.

"Sen. Paul is dedicated to seeing Dr. Afridi -- an integral figure in finding Osama bin Laden -- released from prison in Pakistan. He is prepared to use all legislative tools possible to obtain this goal, including blocking U.S. taxpayer-funded aid to the government of Pakistan until they cooperate with this request," she said. "Should the opportunity to block these ... funds come before the Senate, Sen. Paul will urge his colleagues to do so."

The funding is technically under the jurisdiction of the House and Senate Armed Services Committees, but the leaders of those committees were out of town this week and their offices declined to comment on the CSF funding because they have not yet received the notification.

"Secretary Clinton did a great job negotiating the re-opening of supply routes from #Pakistan to #Afghanistan," Senate Armed Services Committee ranking Republican John McCain (R-AZ) tweeted on July 4, but it's not clear if he will support the release of the $1.1 billion CSF. McCain is currently traveling in Afghanistan and the Middle East, he could not be reached for comment.

If Congress does let the funds go through, that could be a key confidence-building measure between the two countries, which are trying to dig themselves out of the worst period in the bilateral relationship in over a decade.

If Congress halts the funds, the very short uptick in relations will be scuttled and the two nations will return to their all-too-familiar pattern of retaliation and recriminations. But there's little chance that Pakistan will close the supply lines, now that they are open again.

"Several trucks have gone through, and they will continue," Kirby told Pentagon reporters at a Thursday briefing. "I mean, this will continue now that the gates are open."

Secretary of State Hillary Clinton, USAID Administrator Rajiv Shah, Deputy National Security Advisor Denis McDonough, actor Ben Affleck, and Pakistani Ambassador Sherry Rehman are all joining together this week for a major conference devoted to preventing childhood death.

The U.S., Ethiopian, and Indian governments are the hosts of the two-day Call to Action for Child Survival, being held Thursday and Friday at Washington's Georgetown University. Other notable speakers at the conference include Sen. Johnny Isaakson (R-GA), Sen. Mary Landrieu (D-LA), HHS Secretary Kathleen Sebelius, UNICEF Executive Director Anthony Lake, the first lady of Mozambique Maria Da Luz Guebuza, Joseph Potasnik, executive vice president of the New York Board of Rabbis, and many others.

More than 700 leaders from the private sector, government, and civil society will be there, including representation from more than 80 countries, with over 50 countries represented at the ministerial level.

"Every child deserves to have a fifth birthday and even this year more than seven and a half million children will die before their fifth birthday," Shah told The Cable in an interview.

"We've brought together experts around the world to create a new partnership that will be launching to really help eliminate preventable child death," he said. "We think that goal is achievable and we're having this call to action on Thursday."

The event will follow another large development conference going on in Washington this week. Wednesday was the last of three days in the first annual Frontiers in Development conference, also hosted by USAID at Georgetown.

Sen. Richard Lugar (R-IN) spoke at the Monday-morning kickoff session of the conference and made a detailed argument in favor of U.S. foreign aid budgets despite the nation's fiscal woes.

"Amid these financial threats and budgetary realities, it is inevitable that some will question the role of the United States in global development," he said. "But I would assert this morning that development assistance, when properly administered, remains a bargain for U.S. national security and for our own economic and moral standing in the world."

The conference also featured speeches by Joyce Banda, President of Malawi, Ellen Johnson Sirleaf, President of Liberia, Atifete Jahjaga, President of Kosovo, NATO Supreme Allied Commander Europe Adm. James Stavridis, NSC Senior Director Gayle Smith, former Irish President Mary Robinson, Sen. Ben Cardin (D-MD), Deputy Secretary of State Tom Nides, former presidential daughter Barbara P. Bush, and actress Mandy Moore.

"We think development is going through this amazing transformation and it's a transformation based on absolute demand for results when we spend taxpayer dollars and when we work abroad," Shah told The Cable. "This conference is one step in that direction. It's intended to bring thought leaders from around the world together."

No taxpayer dollars are being used for the event, Shah said. It's funded privately by groups such as the Gates Foundation and the Rockefeller Foundation.

"They recognize we are at a pivotal moment where we can either elevate development and make it a serious part of how America projects values abroad in an effort to build a safer and more prosperous world, or we can turn the other way and cede our historic leadership role in this space to other emerging economies in Asia and elsewhere," he said. "It's our choice."

In a rare moment of bipartisan unity in the Senate, Democrats and Republicans joined together to admonish Pakistan for its treatment of the doctor who helped the United States find Osama bin Laden.

At a Senate Appropriations Committee markup this morning, senior senators from both sides of the aisle took turns accusing Pakistan of supporting terrorism, undermining the war in Afghanistan, extorting the U.S. taxpayer, and punishing Shakil Afridi, the doctor who worked with the CIA to find Bin Laden and was sentenced this week to 33 years in jail for treason. One senior senator predicted the Pakistani government was about to fall.

Sens. Lindsey Graham (R-SC) and Patrick Leahy (D-VT), the heads of the State and Foreign Operations subcommittee, co-sponsored an amendment to the fiscal 2013 foreign affairs funding bill that would withhold $33 million in foreign military aid to Pakistan -- one year for each year of Afridi's sentence. That amendment came on top of new restrictions in the bill that would withhold all counterinsurgency aid to Pakistan if Islamabad doesn't reopen trucking routes for supplies for U.S. troops in Afghanistan.

But senators' frustration with Pakistan was not limited to recent events; they piled on with criticism of Pakistan's government, military, and intelligence services' actions throughout the war in Afghanistan. All agreed that the U.S.-Pakistan relationship as currently arranged was dysfunctional and undermining U.S. national security interests.

Graham started by pointing out that the Senate is proposing reductions in next year's emergency funding for Pakistan by 58 percent from the president's request.

"When it comes to Pakistan, every member of this committee is challenged to go home and answer the question, ‘Why are we helping Pakistan?'" he said. "We can't trust Pakistan, but we can't abandon them."

"If we don't get those truck routes open so we can serve our troops in Afghanistan, we're going to stop the funding ... I do not expect Americans to sit on the sideline and watch the negotiations turn into extortion," said Graham.

Senate Intelligence Committee Chairwoman Dianne Feinstein (D-CA) launched into a widespread criticism of Pakistan's Inter-Services Intelligence directorate (ISI), the country's premier spy agency.

"I have long believed that Pakistan, especially the ISI, walks both sides of the street when it comes to terror," she said, noting that most leaders of the Taliban and the Haqqani network are assessed to be living in Pakistan. She also spoke about the Afridi case.

"He was not and is not a spy for our country. This was not a crime against Pakistan. It was an effort and locate and help bring to justice the world's No. 1 terrorist," she said. "This conviction says to be that al Qaeda is viewed by the court to be Pakistan ... I don't know which side of the war Pakistan is on."

Senate Minority Whip Richard Durbin (D-IL) went next and said Feinstein's sentiments about Afridi were shared by many in the Senate. He was followed by Leahy, who said he was "outraged" about the Afridi case and said Pakistan public statements criticizing terrorism don't match its actions.

"It is Alice in Wonderland, at best, but it is outrageous in itself. If this is cooperation, I would hate like heck to see opposition," Leahy said.

"Pakistan is a schizophrenic at best ally," Graham said as he introduced the amendment to cut funding over the Afridi situation. "They are helping the Haqqani network ... which is basically a mob trying to take over parts of Afghanistan. And the ISI constantly provides assistance in Quetta on the Pakistani side of the border."

"The situation with the doctor is a classic example of not understanding the world the way it is," Graham said. "We need Pakistan, but we don't need a Pakistan that cannot see the justice in bringing bin Laden to an end."

Graham then took a shot at Pakistan's civilian government, which is often at odds with the military and the intelligence agencies.

"This government is about to fall. They are not serving their own people," Graham said.

Feinstein did chime in at the end of the debate with praise for Pakistan's new ambassador to Washington, Sherry Rehman.

"To me this is a very sad day. I have met the new Pakistani ambassador," Feinstein said. "She is a brilliant woman, she speaks fluent English, she has had a distinguished career.... This is just very hard to reconcile."

The amendment passed unanimously 30-0.

Syrian government forces continue to attack opposition forces, civilians, and aid volunteers, preventing the international community from getting emergency aid to the Syrian people, USAID has detailed in a series of internal reports obtained by The Cable.

In its latest "humanitarian update," written at the end of April, USAID reported in detail the extensive attacks perpetrated by Syrian Arab Republic Government (SARG) troops, despite an ongoing U.N. monitoring mission and in direct violation of the "cease-fire" there. The USAID report, marked "sensitive but unclassified," sourced its findings to U.N. representatives in Syria as well as representatives of the International Committee for the Red Cross (ICRC), the Syrian Arab Red Crescent (SARC), and other aid groups on the ground.

"U.N.-Arab League Special Envoy to Syria Kofi Annan expressed concerns regarding reports of SARG reprisal attacks in areas where Syrian civilians met with U.N. observers, including in Hamah and Damascus governorates," the report stated. "The observers report that SARG forces have not withdrawn heavy weapons from urban centers -- a condition of the U.N. and Arab League supported ceasefire and peace plan that went into effect on April 12."

Although the U.N. Security Council has authorized the deployment of 300 monitors, the report could only confirm that "at least 11" U.N. monitors had arrived in Syria as of April 24. (Additional monitors have reportedly arrived since then.)

Meanwhile, USAID reported that government forces attacked an SARC vehicle April 24 that was evacuating wounded civilians in Douma, a suburb of Damascus, killing one aid volunteer and injuring three. Twenty-six aid workers were trapped in an SARC building following the attack and the SARC had to negotiate a temporary ceasefire between opposition and government forces to get them out, USAID reported.

Following a request from SARC, USAID contractors have suspended the deployment of mobile medical units that were providing health-care services in and around Damascus, the report said.

"In addition to emergency medical needs resulting from ongoing violence, a USAID/OFDA partner report increasing constraints on the availability of medications for chronic diseases, which are prohibitively expensive for Syrians without financial assistance," the report stated. "In addition, the U.N. World Health Organization representatives have expressed concern about the health of displaced Syrians in Jordan."

A USAID contractor is working to train Syrian doctors in Jordan so they can return to Syria and provide life saving medical care there, and a USAID contractor has procured 10,000 kg of medical supplies for use in Syria and is trying to get those supplies into the country, according to the report.

In an April 26 press briefing, USAD Deputy Assistant Administrator for Democracy, Conflict, and Humanitarian Assistance Christa Capozzola criticized the Syrian regime for not allowing emergency aid supplies to reach the Syrian people and called for more help.

"While some aid is reaching people in need through the Red Crescent, other U.N. agencies, and other international organizations, current humanitarian access restrictions remain a significant challenge to the aid effort," she said. "After months of working under these conditions, the aid organizations working in Syria are extremely stretched. To continue alleviating suffering and saving lives, they need more support and capacity from the international community.

The U.S. government has spent $39.4 million on assistance for Syria in fiscal 2012, the report stated. The report noted that only $33 million of this assistance has been publicly reported before now.

Overall, the USAID report concluded that there had been at least 9,000 civilian deaths in Syria as of March 27, according to U.N. figures, although the current number is likely higher. There are between 300,000 and 500,000 internally displaced Syrians, according to the report, 610,000 estimated refuges inside Syria, and approximately 66,000 Syrian refuges who have fled to Turkey, Lebanon, Jordan, and Iraq.

The USAID report was marked sensitive but unclassified (SBU).

The Senate was all set to consider next year's funding bill for the State Department and foreign operations today, but ended up punting on the bill due to a dispute over Cuba policy and a failure to agree on procedure.

Congress has been rushing to complete work on all the appropriations bills for fiscal year 2012, which started almost two months ago, on Oct. 1. The Senate Democratic leadership's strategy was to move the bills in chunks of three at a time, smaller versions of omnibus bills affectionately known as "minibuses." The State Department and foreign ops appropriations bill was part of a minibus that was supposed to be debated beginning today on the Senate floor. But now that minibus has crashed, and Senate consideration of State Department funding has been postponed indefinitely.

Here's what happened. As The Cable reported on Monday, two senators were refusing to give unanimous consent to debate the State Department minibus, which also included the energy and water appropriations and financial services appropriations bills, because of provisions in the financial services bill that would loosen restrictions on U.S. banks doing business in Cuba.

Sens. Marco Rubio (R-FL) and Robert Menendez (D-NJ) don't want any restrictions loosened on doing business with Cuba. They both spoke on the floor today against the Cuba provisions, along with Sen. Bill Nelson (D-FL). But Sen. Jerry Moran (R-KS) spoke in favor of the Cuba provisions, which he had authored, because his state would benefit from the agricultural trade that loosening restrictions would bring.

So even though none of these senators objected to any aspect in the State Department budget, it was caught in the crossfire because it was tied up as part of the "minibus." With Rubio, Menendez, and Nelson objecting to bringing up the minibus with the Cuba language and Moran and Vitter objecting to bringing it up without the language, Senate Majority Leader Harry Reid (D-NV) realized he couldn't get unanimous consent for either version of the bill and pulled it from the floor.

Of course, Reid could just call for a cloture vote on whichever version of the bill he prefers, but that would require time Reid doesn't have. With time running out on the continuing resolution (CR) that is temporarily funding the government until Nov. 18, Reid can't afford to spend floor time on individual bills, amendments, or debate.

Requesting a cloture vote would also have opened up the bill to other amendments, unless there was an agreement to limit amendments, which there wasn't. That is actually how the Senate is supposed to work -- but hasn't, for quite a long time.

"This is a result of a dysfunctional appropriations process," one senior GOP Senate aide told The Cable late on Tuesday. "If you are considering appropriations bills in regular order there wouldn't be a problem, but regular order broke down long ago in the Senate and what we saw today was a direct result of utter disregard for regular order and sheer incompetence in running the Senate."

The Senate did actually use the regular procedure to pass the military construction and veteran appropriations bill earlier this year, so there is precedent.

What happens now? Well, the Senate definitely needs to pass a new short-term CR by Friday, which will probably be combined with a different minibus that has already passed the House, the Senate, and has emerged from a House-Senate conference. That minibus is made up of the Agriculture, Commerce-Justice-Science and Transportation-HUD appropriations bill.

After that, the Senate will move to the defense authorization bill, a policy bill that recommends -- but does not set -- funding levels. The process for that bill is also a mess, because the Senate Armed Services Committee (SASC) had to rewrite it at the last minute to cut about $20 billion to match the figure reached by Senate defense appropriators. SASC also had to change language on detainee policies to assuage the administration.

"I gave my word that we're going to do the defense authorization bill," Reid said on the floor late on Tuesday. "It hasn't been worked out to satisfaction of everyone, but there comes a time when we have to stop negotiating and move to the legislation, and we're going to do that following our finishing the next minibus we have."

But the failure to pass a bill tonight could mean that State Department funding will be put off for months. The debate over the defense authorization bill could take one or two full weeks of floor time, at which point the Senate will probably have to pass another CR to fund the government past the New Year. That CR could also result in a nasty fight. Also, Congress will have to grapple with the supercommittee's actions around that time, for instance working on legislation to undo the "trigger" that would cut $600 billion from defense if the supercommittee fails to strike a deal.

All of this means that there won't be floor time for things like the State Department funding bill until next January, at the earliest.

"If Senate Dem leaders do want to make defense authorization a priority, that's going to take up most of December, and then we have to deal with the supercommittee, sequestration, another CR ... and we're looking at the very serious possibility of another CR fight around Christmas. That is the most likely scenario," the GOP Senate aide said. "But then again it is the Senate, so everything could change again tomorrow."

A group of House lawmakers is making the case for continuing U.S. support to the Palestinian Authority (PA), despite the Palestinian bid to seek full membership in the United Nations.

"Maintaining U.S. assistance to the Palestinian Authority is in the essential strategic interest of Israel and the United States," wrote 44 lawmakers, all Democrats, in a letter today to House Appropriations State and Foreign Ops subcommittee heads Kay Granger (R-TX) and Nita Lowey (D-NY). The letter was spearheaded by Reps. David Price (D-NC) and Peter Welch (D-VT).

Ever since the Palestinians began their statehood drive this summer, Congress has been attacking the $550 million of annual aid given to the PA by U.S. taxpayers. For fiscal 2011, Congress had already provided the Palestinians with about $150 million in direct budget support -- also known as cash -- but $200 million in security funding and about $200 million in humanitarian funding has been held up.

House Foreign Affairs Committee chairwoman Ileana Ros-Lehtinen (R-FL ) released her hold on the security funding last week, but she and Granger are still holding up the non-security funding. Also, Congress is set to consider whether to allocate a whole new tranche of aid to the PA as part of the upcoming negotiations over the fiscal 2012 State and foreign ops spending bill. That bill could come up in the Senate this week or next, leading to a House-Senate conference behind closed doors to iron out a final compromise bill.

"We understand the developments that have led some to call for a suspension or termination of aid to the PA," the 44 lawmakers wrote. "However, these legitimate concerns must be weighed against the essential role that U.S. assistance to the PA plays in providing security and stability for Palestinians and Israelis as well as critical humanitarian relief to the Palestinian people - and the potential consequences if this assistance is terminated."

Currently, the House version of next year's foreign aid bill would terminate all aid to the PA unless the Palestinian government drops its statehood bid at the United Nations and enters into direct negotiations with Israel. The Senate version is less strict; it would only withdraw the funding if the Palestinians actually succeed in joining the United Nations, which isn't likely due to the U.S. veto power at the Security Council. The Senate bill would also give the president a waiver over cutting aid to the PA.

"The prospect of continued assistance depends on the actions of Palestinian leadership, which can choose to pursue a path of direct negotiations rather than a counterproductive and destabilizing push for statehood through the UN and affiliated agencies," Matthew Dennis, spokesperson for Lowey, told The Cable.

"The chairwoman takes the views of all members into consideration," said Matt Leffingwell, spokesman for Granger.

President Barack Obama's administration has been clear that it wants U.S. aid to the PA to continue, because the assistance impacts Israeli security. Sen. Lindsey Graham (R-SC), the ranking Republican on the Senate Appropriations State and Foreign Ops subcommittee, told The Cable last week that he agrees that aid to the PA is important but will fight to end it anyway because of the politics surrounding the issue.

"I don't think that's in our near-term or long-term interest, but that's what's going to happen, that's where this thing is headed," Graham said.

The Democratic lawmakers who are making the case for the aid, along with some non-governmental organizations such as J Street, want to make sure top appropriators know that there is some support for aid to the Palestinians in Congress.

"The Price-Welch letter puts down a marker that there is a difference of opinion on whether aid to the PA should continue in Congress," Dylan Williams, J Street's director of government affairs, told The Cable today.

Williams said that many of the letter's signers supported House Resolution 268, passed in June, which threatened to cut off aid to the PA if it continued to seek U.N. membership. But seeing as how the Palestinians were able to join UNESCO with overwhelming international support, forcing the United States to stop contributing to that organization, he said those threats no longer makes sense.

"The situation has changed since HRes 268 and the bid to keep the Palestinians away from the United Nations has failed," Williams said.

The war in Iraq may be ending, but the fight over who gets to oversee the billions of U.S. taxpayer dollars still being spent there is just heating up.

The Office of the Special Inspector General for Iraq Reconstruction (SIGIR) -- led by Stuart Bowen -- has been embroiled in a fight with the State Department, which has blocked SIGIR inspectors from assessing State's multi-billion dollar Iraqi police training program.

The Project on Government Oversight (POGO) reported last week that SIGIR managed to complete the report, which stated that the State Department "does not have a current assessment of Iraqi police forces' capabilities ... such an assessment is essential for effective program targeting."

"The SIGIR audit berated [the State Department] in its first sentence for failing to cooperate in the investigation, which ‘resulted in limited access to key officials and documents,'" POGO noted. "The IG was still able to complete the investigation however, through ‘limited discussions' and ‘documents obtained from other sources.'"

On Tuesday, five U.S. senators wrote to Secretary of State Hillary Clinton to urge her department to cooperate with SIGIR and provide SIGIR with requested information and documents.

"The State Department is explicitly directed to provide whatever information or assistance is needed by SIGIR, so long as SIGIR's request is ‘practicable and not in contravention of any existing law.'  In addition, State Department officials are prohibited from ‘prevent[ing] or prohibit[ing] the Inspector General from initiating, carrying out, or completing any audit' related to funds involved in Iraq reconstruction," the senators wrote. "Despite these requirements, the State Department has failed to provide SIGIR with adequate assistance and access to information and documents."

The letter's signatories were Joseph Lieberman (I-CT), Susan Collins (R-ME), Claire McCaskill (D-MO), Tom Coburn (R-OK), and Lindsey Graham (R-SC).

"SIGIR is perfectly free ... to audit the reconstruction activities in Iraq. They are not free to audit the base element of the State Department. That is within the jurisdiction of three other entities," Under Secretary of State for Management Patrick Kennedy told the Wartime Contracting Commission in a hearing last month.

The senators wrote that SIGIR "has jurisdiction to audit all Iraq reconstruction funds, including those spent on contracts which may also support other State Department activities."

"It is absurd for Under Secretary Kennedy, or whoever it is, to suggest that the State Department is suffering from too much oversight in Iraq," a senior GOP Senate aide told The Cable today. "He should take some time and read the Commission on Wartime Contracting report."

Full text of the senators' letter after the jump:

Read on

Following the State Department's announcement that it had cut off U.S. funding from UNESCO in response to its overwhelming vote in favor of accepting the Palestinian bid for full membership, senators from both parties predicted the United States would cut funding or even withdraw from several other international organizations the Palestinians seek to join.

As The Cable reported last month, the Obama administration is required by existing U.S. law to cut off funding for any international organization that grants the Palestinians full membership. . Membership in UNESCO also grants the Palestinians membership in the World Intellectual Property Organization (WIPO) and the United Nations Industrial Development Organization (UNIDO). The United States is not a member of UNIDO, but will be forced to stop contributing to WIPO.

But that's only the tip of the iceberg. The Palestinians could seek membership in more prominent international organizations, which could result in the United States defunding or even withdrawing from institutions such as the World Health Organization and the International Atomic Energy Agency. The AP reported today that the Palestinian Authority was examining seeking membership in 16 more U.N. organizations.

While leading senators in both parties acknowledge that such an outcome would be negative for U.S. interests and influence, they have no intention of intervening to change the law. To the contrary, several top senators in both parties told The Cable they support the policy and will work to enforce it, despite the consequences.

"This could be catastrophic for the U.S.-U.N. relationship. This could be the tipping point," Sen. Lindsey Graham (R-SC), the top Republican on the Senate Appropriations State and Foreign Ops Subcommittee, told The Cable in an interview on Tuesday.

"There's a lot of bipartisan support for cutting off funding to any political U.N. organization that would do this," he said. "What you are going to do is eventually lose congressional support for our participation in the United Nations. That's what's at risk here. That would be a great loss."

Graham said he believes it is in the U.S. interest to actively participate in these organizations. And yet, he plans to introduce a Senate resolution to formally withdraw U.S. membership in UNESCO -- a more serious action than simply cutting off funds. He intends to do the same for any other international organizations the Palestinians succeed in joining.

Graham also said that Congress is poised to cut off U.S. funding for the Palestinian Authority (PA), which totaled $550 million in fiscal 2011, despite the fact that he still thinks financial support for the PA is a good idea.

"I don't think that's in our near-term or long-term interest, but that's what's going to happen, that's where this thing is headed," Graham said.

But isn't the United States just spiting itself by withdrawing from organizations in order to punish them for recognizing the Palestinians?

"Not really," Graham replied. "The world has to make a decision.... If the U.N. is going to be a body that buys into Palestinian statehood ... then they suffer. It's a decision they make."

Graham is seen as the most important GOP lawmaker in the fight to maintain foreign aid and U.S. involvement in international organizations, because of his subcommittee position and his genuine support for such issues. But when it comes to the issue of Palestinian recognition, the politics just don't allow any room for compromise, he said.

"I'm the closest thing to a friend [U.N. supporters] have [in the GOP]," he said. "But if the Palestinians continue to go to more organizations, such as the World Health Organization, well -- it's just going to be politically impossible for a guy like me to support a body who's playing a destructive game with the peace process."

Most of Graham's GOP colleagues are not as conflicted as he is with the idea of U.S. withdrawal from U.N. organizations.

"They've made a decision and they will pay the consequences for their decision," Sen. John McCain (R-AZ) told The Cable, referring to UNESCO. "And that is that U.S. tax dollars are not going to be spent, if I have anything to do with it, on organizations that take the measures they've taken."

Will senior Senate Democrats intervene on behalf of the U.S. role in international organizations? Not likely. Democratic senators told The Cable they either support cutting funds to U.N. organizations that grant membership to the Palestinians, or at least don't plan to do anything about it.

"We've put a very clear marker down in terms of what would be the result if there was an effort to prematurely declare a Palestinian state and [the administration] is implementing what they said they would do," said Senate Armed Services Committee chairman Carl Levin (D-MI). "It was the right thing to do and they should be implementing it."

Levin said that he hoped U.S. retaliatory action would slow down the Palestinian drive for recognition, and maintained that the United States would increase its influence by carrying through on its threats. The vote in UNESCO's General Conference was 107 to 14 in favor of Palestinian membership, with 52 abstentions.

Senate Appropriations State and Foreign Ops subcommittee chairman Patrick Leahy (D-VT) told The Cable today he was fine with the cutting off of funds to UNESCO.

"That's what the law requires. It's been there for 20 years and whether I support it or not, that's the law," he said.

The senators don't blame the Obama administration for what is happening at the United Nations, because the administration has consistently called for the Palestinians to stop their statehood bid there. But Hill staffers in both parties have complained that the administration doesn't seem to have a plan to get out of the crisis or find a way around the law.

One Senate Republican staffer close to the issue told The Cable, "The administration is behaving just like a deer frozen in the headlights on this."

The Obama administration is scrambling right now to find a way around the fact that existing U.S. law could force the United States to stop participating in the U.N. cultural agency UNESCO if the Palestinians are given member state status, setting a precedent that could repeat itself in a host of other U.N. organizations.

The administration is contending with a 1994 law (P.L. 103-236, Title IV), which would bar U.S. contributions "to any affiliated organization of the United Nations which grants full membership as a state to any organization or group that does not have the internationally recognized attributes of statehood."

Another law (P.L. 101-246, Title IV), from 1990, states that, "No funds authorized to be appropriated by this act or any other act shall be available for the United Nations or any specialized agency thereof which accords the Palestine Liberation Organization the same standing as member states."

The Palestinians cleared a hurdle this week when the UNESCO executive board approved their bid to join the organization, sending the matter to a vote by UNESCO's 193-nation General Conference. Secretary of State Hillary Clinton criticized UNESCO on Wednesday for taking up the issue.

"I think that that is a very odd procedure indeed and would urge the governing body of UNESCO to think again before proceeding with that vote," Clinton told reporters in the Dominican Republic.

She acknowledged the "strong legislative prohibition that prevents the United States from funding organizations that jump the gun, so to speak, in recognizing entities before they are fully ready for such recognition."

The U.S. has not yet paid their bills on UNESCO for 2011, about $80 million, which is 22 percent of UNESCO's budget. If the law is triggered and the U.S. does not pay in 2012, the U.S. would lose its vote in the organization. Plus, UNESCO officials have told the U.S. that if U.S. funds are not expected over the next two years, they may have to initiate massive layoffs beginning in January to account for the shortfall in funds.

Palestinian membership in UNESCO would also grant them immediate membership in the World Intellectual Property Organization (WIPO) and the United Nations Industrial Development Organization (UNIDO). The U.S. would have to stop contributing to WIPO but America is not a member of UNIDO.

We're told that the State Department is currently having their attorneys draft a legal opinion on how U.S. laws would affect U.S. participations in U.N. bodies that grant the Palestinians member state status. Their ruling will have ramifications not only for UNESCO, but for all other U.N. specialized agencies that the PLO is expected to submit their application to, such as the IAEA, WTO, WHO, World Bank, and others.

State Department spokeswoman Victoria Nuland said Thursday that the administration was "still working" on what the legislative triggers regarding funding would mean. But a State Department official said that the administration has not been able to find a way around the law.

"We have a suicide vest padlocked around our torso and the Palestinians have the remote control," the State Department official said. "They get to decide whether they blow us up or not. It's 100 percent up to them."

Meanwhile, Congress is ratcheting up its own involvement on the issue. Later today, 10 House appropriators will call on UNESCO not to move forward with consideration of Palestinian membership, in a letter to UNESCO Executive Director Irina Bokova obtained by The Cable.

"We... respectfully request that you do everything in your power to ensure that the Palestine Liberation Organization's application to become a Member State does not come before the UNESCO General Conference," states the letter, prepared by the office of Rep. Steve Rothman (D-NJ). "Any recognition of Palestine as a Member State would not only jeopardize the hope for a resumption of direct Israeli-Palestinian negotiations, but would endanger the United States' contribution to UNESCO."

Signatories of the letter include the heads of the House Appropriations State and Foreign Ops subcommittee, Kay Granger (R-TX) and Nita Lowey (D-NY), Jerry Lewis (R-CA), Tom Cole (R-OK), Jesse Jackson Jr. (D-IL), Steve Austria (R-IL), Charles Dent (R-PA), Mario Diaz-Balart (R-FL), and Adam Schiff (D-CA).

One senior Republican staffer pointed out the irony that it was President George W. Bush who brought the United States back into UNESCO, and now the United States might be forced to leave the organization by Obama -- a president who came to office promising to reverse what he argued was Bush's tendency to ignore the international community.

"Remember, we joined UNESCO in part because we needed them to help de-radicalize textbooks particularly in the Muslim world after 9/11 and as a platform to counter expanding anti-American attitudes in academia," the staffer said "And now, by de-funding UNESCO, we lose all the leverage we had gained."

USAID Administrator Rajiv Shah is on a plane right now on the way to Kenya and Ethiopia, where he will be touring areas affected by the worst drought the region has seen in over six decades.

"I'm going to Kenya and Ethiopia to visit with heads of state and senior leadership as well as to pull together the humanitarian and NGO communities to assess progress on the challenges that the drought has brought to the Horn of Africa," Shah said in an interview with The Cable on his way to the airport.

He won't be going to Somalia, however, which has been ravaged by a famine that shows little sign of abating. Shah said there are good reasons why Ethiopia and Kenya are doing better than Somalia -- beyond the fact that the al-Shabab extremist group in Somalia is getting in the way of delivering aid.

"In Kenya and Ethiopia, because of constructive investments in protecting communities dependent on livestock, we know more than four and half million people stayed in their communities and have weathered this drought.... In Somalia the opposite has taken place," he said.

Shah said that more than 30,000 people have died, mostly children, due to Somalia's failure to prepare for and deal with the crisis, and the State Department estimates another 750,000 are at risk over the next four to six months, Shah said.

The United States has provided more than $640 million to date in response to the Horn of Africa crisis, including a new announcement of $42 million late last month.

The focus of this trip will be to recommend policy reforms  in Kenya and Ethiopia to better handle the crisis. Those governments are taking some steps, such as ensuring the safe passage of aid and making sure refugees are accepted and assisted, but the problem continues and more government action is needed, Shah said.

Shah will meet with the humanitarian organization leaders in both Kenya and Somalia to help coordinate emergency action inside Somalia. The State Department has removed some restrictions on contractors and aid workers in Somalia, in recognition of the fact that strict rules preventing interactions with groups like sl-Shabab were impossible to enforce in Somalia.

"We have made exceptions on a range of policies that have allowed credible partners to be aggressive in their efforts to try to save lives," Shah said. "At the same time, we've asked for all of our partners to track and monitor the flow of food and benefits, commit themselves not to pay bribes, and we continue to watch that."

"Unfortunately, though, that's not the key to saving lives inside Somalia. The key is actions taken by leadership inside Somalia and that's what we'll be talking about in this visit."

In Kenya, Shah will attend a health conference along with Ambassador and former Special Envoy Scott Gration and in Ethiopia he will attend an agricultural conference. Shah is traveling with Ertharin Cousin, ambassador to U.N. agencies for agriculture

The White House today adopted Rep. Paul Ryan's dubious claim that winding down the wars in Iraq and Afghanistan would save $1 trillion over the next decade.

"The plan produces approximately $4.4 trillion in deficit reduction net the cost of the American Jobs Act," the White House said in a fact sheet issued to accompany President Barack Obama's new plan to cut the deficit. "$1.1 trillion from the drawdown of troops in Afghanistan and transition from a military to a civilian-led mission in Iraq."

The more than $1 trillion in defense "savings" that the White House claims is based on a projection the Congressional Budget Office (CBO) put out last March, which found  that war costs would top $1.7 trillion over the next ten years. However, that projection was never meant to accurately forecast the costs of the wars over the next decade. The report just took this year's costs for Iraq and Afghanistan ($159 billion) and added inflation for every year in the future.

In other words, the CBO number was the projection if the United States kept the current number of troops in Iraq and Afghanistan until 2020. However, nobody ever thought that was the plan. The CBO was required to do the math that way, as they do with all such projections.

At today's White House briefing, reporters were quick to point out that Obama never planned to keep that many troops in Iraq and Afghanistan for the next ten years. Office of Management and Budget (OMB) Director Jack Lew's response was to point out that the House GOP had used the same faulty logic in Paul Ryan's budget plan.

"There is no doubt that those are going to be savings when presented to Congress. The Republican budget in the House took account of them," Lew said, referring to the Ryan budget plan that the House passed in April.

It's also true that Senate Majority Leader Harry Reid (D-NV) claimed the same "savings" in the plan he released to avert a debt ceiling crisis, although that plan never got any traction. But the CBO issued a report on the day Reid's plan was released to make it clear that its projection should not be used in this way.

"It is important to note that the administration projection is not really a policy-based estimate -- CBO takes the most recent number and that becomes their baseline," said the report, which was crafted for congressional offices and obtained by The Cable.

The White House's gambit is only its latest attempts to claim savings from cutting defense when actually no cuts exist. The White House claimed it had cut $350 billion from defense over ten years as part of the debt ceiling deal, but actually there are no defense cuts in the bill.

What the bill does is set spending caps for "security" spending, which the administration defines as defense, homeland security, intelligence, nuclear weapons, diplomacy, and foreign aid. There's no breakdown that defines which of these agencies get what, so there's no way to be sure that all the cuts would come from "defense." Moreover, the spending caps are split between "security" and "non-security" discretionary spending only for fiscal 2012 and fiscal 2013.

If the next five Congresses actually cut the defense budget by $350 billion and if the Congressional supercommittee fails to find another $900 billion in discretionary cuts, that would "trigger" another $600 billion cuts in defense over ten years. Added to the $350, that would total about $1 trillion in defense "savings."

But Lew was clear that the trigger, which officials are now referring to as "sequestration," is not something the administration wants to happen.

"I don't know any serious policymakers on either side of the aisle who think sequestration is a good place to go," he said. "It was designed to be something that would have bad consequences wherever you look because it is not a serious set of policies."