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Washington, D.C. - 19 August 2004 U.S. Challenges Other Donors to Support Global Disease
Fund U.S. Global AIDS Coordinator Randall Tobias is challenging other donors to increase their contributions to the Global Fund to Fight AIDS, Tuberculosis and Malaria. If donors respond to his call by September 30, the U.S. contribution to the fund would rise to almost $550 million this year. If they do not respond, the U.S. contribution would be limited to $426 million, in accordance with a Congressional mandate that requires American payments to the global AIDS fund not exceed 33 percent of the fund's total assets. Tobias outlined the status of 2004 U.S. contributions in a letter to Global Fund Executive Director Richard Feachem August 18. U.S. law requires Tobias' office assess the entire flow of contributions to the global fund each year on July 31. If that assessment shows support from the United States has reached 33 percent of the global fund's total holdings, the global AIDS coordinator is to withhold further funding for the remainder of the fiscal year. This year's review shows that the U.S. funding will reach 33
percent with a contribution of $426 million, although the Congress
has approved a $547 million contribution. The law calls for Tobias
to withhold the difference and to devote those dollars to other
programs in the U.S. effort to address the global HIV/AIDS emergency. Following is the text of the Tobias' letter to Feachem: United States Department of State August 18, 2004 Dear Dr. Feachem: I write today to specifically address the United States contribution to the Global Fund. I am aware that a number of interested people around the world have been developing sometimes-conflicting interpretations of our plan and our intentions. I thought it would be useful to describe to you what we are trying to accomplish and how I intend to proceed with my responsibilities. Our plan has two clear objectives. The first is to signal the continuing intention of the United States to be the leader in providing financial and leadership support for the Global Fund, an objective very important to the President's overall strategy in addressing the global HIV/AIDS pandemic. The second is to use the opportunity created by the generosity of the people of the United States to encourage other donors to increase their own contributions to the Global Fund. I appreciate your continuing statements that establishing the ceiling on U.S. contributions to the Global Fund at no more than 33 percent of total contributions is both a reasonable and generous policy, and provides an incentive for other donors. Those words certainly capture our intent. At the same time, please note that this ceiling does not preclude us from choosing to provide a lesser amount than that. To address these companion objectives, the United States Government, through legislation passed by the Congress and signed by President Bush, established a continuous, five-year incentive period, which corresponds to the President's Emergency Plan for AIDS Relief. During this period, October 1, 2003, through September 30, 2008, we will maintain an ongoing assessment of the level of contributions to the Global Fund from all other donors as compared with our own. Let me emphasize that the measurement period for this purpose is continuous, not five, separate, stand-alone years. Within this five-year period, the United States anticipates that the Congress will annually appropriate funding to provide for potential contributions to the Global Fund. These annual appropriations will establish the upper limit for United States contributions in each of the fiscal years within the designated five-year period. During this five-year period, the United States will not transfer any appropriated funds to the Global Fund if such a transfer would cause our cumulative contributions to exceed 33 percent of the total amount contributed to the Global Fund from all sources. For purposes of making these calculations, as a matter of policy we will include only amounts remitted to the Fund's Trustee Account at the World Bank in cash or held in cash equivalents, as defined by the Global Fund Comprehensive Funding Policy. We will include only those contributions from non-U.S. Government donors made after October 1, 2003, and not any contributions made in fulfillment of commitments or pledges generally made prior to October 1, 2003, for calendar year 2003. To determine the level of periodic transfers from the United States to the Fund, my office will periodically compare Global Fund contributions from other donors to contributions from the United States, on a cumulative basis. Beginning this year, and repeating each year through 2008, on July 31st we will take an annual "snapshot" of cumulative contributions. After making this examination, we will then expect to transfer to the Global Fund any eligible United States appropriated funds for that year, consistent with other provisions of U.S. law, that will not put us over the cumulative 33 percent ceiling. Funds withheld because of the 33 percent cap - if any - will then be subject to a provision in statute that allows me to use them at my discretion, a so-called "kick-out" clause. You have noted that the initial snapshot period to be used for meeting the requirements for us to transfer the entire U.S. Fiscal Year (FY) 2004 appropriation to the Global Fund will not be twelve months. While this is true, I would point out that the Congress clearly anticipated that the various donor calendars will not always be symmetrical. Specifically, in the conference report following passage of "The United States Leadership Against HIV/AIDS, Tuberculosis and Malaria Act of 2003," P.L. 108-25, the Congress stated that it "recognize[s] that funding cycles for donors vary and that the application of the above provision may cause a portion of funds allocated for a United States contribution to the Global ATM Fund to remain unspent." In fact, the requirement under U.S. law does not correspond to any 12-month period, but, rather, is cumulative from October 1, 2003. On July 31st of 2005, when we take the second annual snapshot, this time for assessing the final distribution of the FY2005 appropriation, we will be looking at contributions made over a twenty-two month period. In the third year, we will be looking at a thirty-four month period, and so it will go. Prior to July 31, 2004, the United States had transferred $360 million to the Global Fund from our FY2004 appropriation. According to the Global Fund's accounting of contributions received by July 31st, non-U.S. Government donors have remitted $866 million to the Trustee, which would enable an additional eligible contribution to the Global Fund for FY2004 of approximately $66 million. This would bring our total contribution for this year to approximately $426 million, or 33 percent of all attributable contributions from the beginning of the U.S. Fiscal Year. As you know, further adjustments to U.S. contributions will be required under the law if the Global Fund has provided assistance to a program in a country whose government has been determined to have repeatedly provided support for acts of international terrorism, or, if the Fund's expenses for its governing, administrative and advisory bodies are in excess of 10 percent of the total expenditures of the fund. We have not yet made those calculations. Therefore, while we will need to confirm and calculate the final numbers precisely, the best information currently available indicates the balance subject to my discretion in FY 2004 will be approximately $120 million. There are a number of options available to me to use these funds, including holding them in abeyance for future contributions to the Fund. My responsibilities are perhaps best summarized in the Congressional conference report. The report makes reference to the potential use of these funds in United States bilateral programs, notes the expectation of the conference that I will "bear in mind the Manager's support for the Global Fund," and then concludes with the instruction that I "judiciously use the flexibility provided by this kick-out clause to ensure that funds are allocated to the most effective uses." In considering the alternatives available to me for distribution of the funds subject to the "kick-out" provision this year, I have taken into account a number of factors. Among them, I have noted that there might have been some misinterpretation or misunderstanding of U.S. law and the way in which we would apply the relevant provisions. The issues in question all seem to be one-time in nature, and have to do with determining which contributions would be eligible for inclusion in the calculations, and the applicable deadlines. Having addressed those questions in an effort to make the provisions of the plan totally clear for all involved, there should now be certainty when we approach the July 31, 2005, evaluation, and each year beyond. Because the issues raised involve what I expect to be a one-time occurrence, I have decided to use my discretion to create a one-time response. I therefore intend to hold in abeyance the approximately $120 million in funds that will likely revert to me, for the purpose of creating a new incentive opportunity for the Global Fund to generate new and unanticipated contributions. On September 30, 2004, we will take an additional snapshot of cumulative contributions to the Global Fund, by using the same procedures and considerations we applied for the period ending on July 31st. Up to the maximum of the funds held in abeyance, and judging against the contributions made up to that date by non-U.S. donors, we will then contribute an amount that will keep the U.S. share of contributions at or below 33 percent. At the same time, this new challenge period will permit the Fund a full twelve-month window in this initial year, as well as the ability to take advantage of transfers during this new period from any donor who might have anticipated that we would treat a contribution made prior to the end of the U.S. FY2004 as if it had been made prior to the window that actually closed on July 31st. I am taking this action as an affirmation of our strong desire
to help the Global Fund achieve success. I believe my decision
is not only consistent with that objective, but also consistent
with the guidance the Congress has provided me. I certainly want
to urge all involved to take full advantage of this new, one-time
opportunity. Sincerely,
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