January 23, 2008

Questions Remain about Iran Democracy Fund

Washington DC – In a controversial move last month, Congress appropriated $60 million for a package of State Department programs designed to “promote democracy, human rights, and the rule of law in Iran,” in part, by funding the activities of Iranian dissident groups.

While the numerical value does not differ significantly from prior appropriations, the changes in this year’s bill may reflect an attempt by members to broaden the scope of the program mandate. In addition, the rising criticism of the Iran “democracy” program was likely behind a recent State Department shake-up in which the administration of the funding was taken out of the hands of political appointees and moved to another agency at State.

Still, this year’s legislation provides no indication where more than half of the $60 million will go. High level Congressional staff and State Department officials cannot account for the other $30.2 million. While some speculate that the money has gone to support public broadcasting in Iran, the Broadcasting Board of Governors (BBG) told NIAC that it does not expect to receive any of the $60 million account. A spokesperson for Representative Nita Lowey, who chairs the committee charged with oversight of State Department spending, said only “the remainder of the funds has been embedded into other accounts.” (1)

Iran “Democracy Promotion”: A Re-Cap

Secretary of State Condoleezza Rice first announced the inception of the Iran Democracy Program (IDP) – the infamous “$75 million” – in February 2006. (2) The administration appointed David Denehy and Scott Carpenter to spearhead President Bush’s “democracy promotion” agenda at State. Carpenter served as Deputy Assistant Secretary at the Bureau of Near Eastern Affairs (NEA) and directed the Middle East Partnership Initiative (MEPI). Denehy worked under Carpenter and headed the Iran Democracy Program (IDP).

Of the $75 million request for 2006, Congress provided $66 million. (3) The bulk of the funding was innocuous. The controversial part was the $20 million provided to MEPI for “democracy programs in Iran” under Denehy’s charge.

$36.1 million of the FY 2006 appropriation went to supplement the Iran programs at the BBG, the agency that handles Radio Farda and Voice of America Persian. Small portions of the fund were earmarked for educational and cultural exchanges as well as for “internet and other interactive programming.”(4)

Denehy resigned in late October 2007 at the apex of the public debate over the future of the controversial program. The outcry from Iranian activists, American and Iranian-American groups, and foreign policy experts may have precipitated his ouster and inspired the State Department’s decision to shift the administration of the funds.

According to the State Department, groups interested in receiving Iran democracy funding must go through a rigorous application process; each grant proposal is closely vetted both internally at State and by outside agencies. The Iran Desk must notify the State andForeign Operations Sub-committee before a grant is issued.

Yet, in the short period separating the House committee audit (May 2007) and his own resignation (October 2007), Denehy obligated all of the remaining FY2006 account – between $23 and $25 million – largely through MEPI grants. There are currently 26 grantees receiving this funding.

Carolyn Coberly assumed the role of interim coordinator of IDP at the Iran Desk in September. Coberly is a Foreign Service officer who previously served in Turkey and Afghanistan.

The Iran Democracy Program Today

This year’s figure – while $15million less than the proposed $75 million administration request – is far more than the sum recommended by the House and Senate sub-committees charged with oversight of State Department spending.

Indeed, the appropriations committees in both chambers rejected the FY08 budget request, citing inadequate justification for the funding and the State Department’s inability to spend the amount appropriated for FY 2006. As of May 2007, the House reported, only $2 million had been obligated. (5) As a result, the original Senate (6) and House bills provided only $25 million for Iran democracy programs.

Later, amendments by Senator Joe Lieberman (I-CT) and Representative Ander Crenshaw (R-FL) upped the funding in the House and Senate bills to $50 and $75 million, respectively. The final figure of $60 million is the result of a compromise between the House and Senate in conference (Section 693).

Ultimately, $21.8 million was provided to the Bureau of Near East Affairs (NEA) and no money was appropriated to the Middle East Partnership Initiative (MEPI). $8 million was given to the Bureau of Democracy, Human Rights and Labor (DRL). DRL is also charged with administering a $15 million grant program for anti-censorship or internet freedom projects in the Middle East and Asia. The grants will go to software programmers to develop programs that thwart internet firewalls erected by the governments of Iran, Syria and China.(7)

Both IDP and DRL administer grants for civil society, human rights, rule of law, anti-censorship, and public opinion projects. But DRL can only work with US non-profits, while the Iran Desk can work with groups from outside the US.

Congress also recommended that State use an unspecified amount “to support groups, organizations, and individuals in the Middle East who adhere to democratic principles and who may counter in a non-violent manner the meddling of Iran in the domestic political affairs of neighboring countries.”

The change in the distribution of the funds from MEPI to the more generalized Economic Support Funds (ESF) administeredby NEA may reflect an effort by some members of Congress to broaden the scope of the activities funded in hopes of mitigating the ill effects of the program.

But with $30.2 million of the appropriation unaccounted for, serious questions remain.

The future of this funding has elicited passionate arguments from all sides. Proponents say the funding is necessary to support internal dissidents and exiled groups that want US-supported regime change. Opponents argue that it is precisely because of this “regime change” sub-text that this program is problematic. Prominent Iranian democracy activists say that acceptance of US funds would delegitimize the indigenous, grassroots nature of the democracy movement and to quote Human Rights Watch, would “paint a target on their backs.”

The Bush administration is slated to request additional Iran “democracy” funds for FY2009 State Department budget this February.


(1)Unlike the FY 2006 emergency supplemental, in which the entire sum appropriated was accounted for.

(2) Although a skeletal version the Iran democracy programming had been around since 2004.

(3) An additional $10 million was appropriated in the regular FY2006 budget for the State Department.

(4) State Department press release from June of 2007

(5) Page 75 of the House Appropriations Committee Report submitted by Representative Nita Lowey on June 18, 2007 reads: “The Committee recommendation includes $25,000,000 for programs in Iran, which is $50,000,000 below the request. The Committee is concerned that of the $25,000,000 appropriated for democracy programs in Iran in fiscal year 2006, less than $2,000,000 had been expended as of the end of May 2007. The Committee is further concerned at the lack of adequate justification for the funds that have been requested in fiscal year 2008. The Committee urges that within the amount provided, $5,000,000 be provided for women’s rights and support programs with a particular focus on minority communities. The Committee is aware of the work of the National Endowment for Democracy on these issues and encourages support for such programs.”

(6) Page 48 of the Senate Appropriations Committee Report submitted by Senator Patrick Leahy on July 10, 2007 reads “The Committee supports the goals of promoting democracy in Iran, but received a total of only one page of justification material for the request of $75,000,000 for this program. The Committee is particularly concerned that grantees suspected of receiving U.S. assistance have been harassed and arrested by the Government of Iran for their pro-democracy activities. The Committee provides $25,000,000 for democracy programs in Iran, and recommends the administration seek future funding for these activities under a different appropriations function. The Committee also provides $22,287,000 for broadcasting, includingRadio Farda, to Iran by VOA and RFE/RL in title I of the act.”

(7) The conference report reads: “The Appropriations Committees endorse concerns with internet freedom contained in House Report 110-197 and provide $15,000,000 for a competitively awarded grant program to provide anti-censorship tools and services for the advancement of information freedom in closed societies, including the Middle East and Asia.” Several sources confirm that this program is specifically for Iran, China and Syria.




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