Statement of Administration Policy: H.R. 2621 - Foreign Operations, Export Financing, and Related Programs Appropriations Bill, FY 1992

(House Floor)
(Sponsors: Whitten (D); Mississippi; Obey (D), Wisconsin)

This Statement of Administration Policy expresses the Administration's views on the Foreign Operations, Export Financing, and Related Programs Appropriations Bill, FY l992, as reported by the House Committee. The Committee bill maintains a number of provisions from last year's bill that the Administration endorsed, including authorities that provide to the President a measure of flexibility in managing foreign aid. However, the bill contains several objectionable provisions and a significant shift of funding priorities that would adversely affect the conduct of foreign policy.

The President stated in a letter to Speaker Foley on June 4th that he would veto any legislation that would weaken current law or existing regulations for abortion-related activities. The Committee bill, which provides funding for the United Nations Population Fund (UNFPA), would weaken current law and would, therefore, lead to a veto of this bill.

The Enterprise for the Americas Initiative (EAI), announced last year, is a key foreign policy priority to promote economic growth and prosperity in our own hemisphere. Our Latin and Caribbean neighbors are engaging in economic reform and have deepened their commitment to the democratic process as part of this change. An important element of the EAI, which provides official U.S. debt reduction for countries implementing these reforms, would foster investment and growth opportunities and encourage new environmental activities. Full restoration of the Committee's $240 million reduction to the $304 million EAI request is essential.

The Administration is very concerned that the Committee did not appropriate any amount for the U.S. share of the International Monetary Fund (IMF) quota increase. The Budget Summit agreement last year made special provision for this funding. The IMF plays a central role in the world economy in helping countries pursue sound economic policies and market- oriented reforms in Eastern Europe, Africa, and Latin America. The quota increase involves no net budgetary outlays because the U.S. receives an interest-bearing reserve asset for any transfer of dollars to the Fund.

The Committee bill reduces by $419 million the requested funding in the Foreign Military Financing program and places country aid restrictions on this funding. These reductions and limitations would hinder the President in fulfilling U.S. commitments to our key friends and allies. Further, this bill reduces by $21.5 million the requested funding for international narcotics control and assistance, which would weaken efforts to combat illegal drug production and trafficking in the Western Hemisphere.

The Administration opposes caps in the Committee bill on Foreign Military Financing funds for Portugal, Greece, and Turkey and the continued imposition of a 7:10 ratio on aid to Greece and Turkey. These provisions affect countries that were important to United States military operations during the Persian Gulf crisis. In addition, the Administration would strongly oppose any amendments reducing or restricting its requested assistance levels to other countries such as Jordan.

The Administration strongly opposes section 586 of the Committee bill, which would bar the use of funds appropriated in the Foreign Operations, Export Financing, and Related Programs Appropriations Bill for the implementation of Public Law 101-576, the Chief Financial Officers Act of 1990 (CFOs Act). This law addresses long-standing Congressional and Administration concerns about financial management deficiencies in the Federal Government.

In passing the CFOs Act (by a voice vote without dissent), the Congress found that "[b]illions of dollars...lost each year through fraud, waste, abuse, and mismanagement...could be significantly decreased by improved management." As a remedy, the CFOs Act: (l) strengthens management capabilities; (2) provides for improved accounting systems, financial management, and internal controls to assure reliable information and deterrence of fraud, waste, and abuse; and (3) provides for reliable financial information, useful to Congress and the Executive Branch in financing, managing, and evaluating Federal programs. Implementation of the CFOs Act is essential to good government.

While the provision on UNFPA will cause a veto, the Administration hopes that the bill will move forward. As the bill moves through Congress, the Administration will work to improve the legislation and make the changes necessary to gain Administration support for the bill.

Additional Administration concerns with the bill are discussed in the attachment.

Attachment

(Senate Floor)

H.R. 2621 — FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1992

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

United Nations Population Fund (UNFPA) Funding That Violates the Kemp-Kasten Provision

Kemp-Kasten states that "None of the funds made available to Population, Development Assistance may be made available to any organization or program which, as determined by the President of the U.S., supports or participates in the management of a program of coercive abortion or involuntary sterilization."

The Administration continues to support the Kemp-Kasten provision and opposes funding for the United Nations Population Fund (UNFPA) because the UNFPA supports or participates in the management of a program of coercive abortion or involuntary sterilization in China. Opposition to abortion as a method of family planning is an important matter of principle to this Administration. Stating that none of these funds shall be used for China or crafting other complicated procedures to provide support for UNFPA would be perceived as a transparent bookkeeping transaction and would undermine U.S. opposition to coercion.

If the U.S. provides any funds to the UNFPA, the U.S. would in effect be endorsing China's policy of coercive abortion. U.S. funding for UNFPA would undermine Administration principle and policy and destroy the pro-life and pro-human rights character of U.S. population assistance programs.

Enterprise for the Americas Initiative

The Enterprise for the Americas Initiative (EAI), announced last year, is a key foreign policy priority to promote economic growth and prosperity in our own hemisphere. The program encompasses efforts to promote trade, investment, growth, and environmental protection. Our Latin and Caribbean neighbors are engaging in economic reform and have deepened their commitment to engage in the democratic process as a part of this change. One aspect of this effort involves annual $100 million contributions for five years to the Enterprise for the Americas Investment Fund. The Committee bill provides for this request.

However, another important element of the EAI, which provides official U.S. debt reduction for countries implementing economic reforms has been substantially reduced from the request. This activity would foster investment and growth opportunities and encourage new environmental activities. Full restoration of the $240 million reduction from the $304 million request is essential.

U.S. Share of the International Monetary Fund Quota

The Administration is very concerned that the Committee did not appropriate any amount for the U.S. share of the International Monetary Fund (IMF) quota increase. The Budget Summit agreement last year made special provision for this. The IMF plays a central role in the world economy in helping countries pursue sound economic policies and market- oriented reforms in Eastern Europe, Africa, and Latin America. The quota increase involves no net budgetary outlays because the U.S. receives an interest-bearing reserve asset for any transfer of dollars to the fund.

Reductions in Foreign Military Financing (FMF)

The Committee bill reduces the $4.6 billion request for military assistance grants and loans by $419 million. Given that earmarking for Israel and Egypt constitutes $3.1 billion of the overall program, this is more than a twenty- five percent reduction in all other foreign-country programs. These reductions would impact our ability to fulfill important requirements around the globe. U.S. foreign policy requires cur ability to provide many types of assistance to countries of key interest to the United States.

FMF Country Limitations — Turkey, Greece, and Portugal

The Administration opposes funding caps for Portugal ($100 million), Greece ($350 million), and Turkey ($500 million) and the continued imposition of a 7:10 ratio on aid to Greece and Turkey. The $625 million Administration request for Turkey is based on Turkey's security needs. The special threats Turkey faces were underlined during the Persian Gulf crisis. Given its location, a strong Turkey is an essential element in assuring broader security and stability in the area. The Gulf crisis revealed deficiencies in Turkey's air defenses. Coupled with Turkey's force modernization, these needs justify full funding of the requested $625 million for Turkey.

Reductions in International Narcotics Control Assistance (INM)

The Committee's proposed $21.5 million reduction in funding for International Narcotics Control Assistance would weaken efforts to combat illegal drug production and trafficking in the Western Hemisphere. It would restrict the implementation of plans to operate and maintain additional helicopters to enhance cocaine interdiction efforts. In addition, such a reduction would limit operations in surrounding countries in the Andean region. Further, it would hamper new efforts to reduce opium crop production in Thailand, Laos, and parts of Asia, Africa, and Europe.

Earmarking of Development Assistance and Other Accounts

The Administration opposes the substantial earmarking of the development assistance accounts, though it welcomes the Committee's effort to begin to consolidate the functional accounts. The excessive earmarking would undermine the Administration's effort to provide development aid to sectors and programs that are better designed to promote economic growth in developing countries.

Earmarking in other accounts, including the entire International Organizations and Programs account, is likewise unhelpful. It would limit the flexibility of the President to provide assistance in a manner that would best serve U.S. foreign policy interests and that would provide funding to the highest priority needs.

Unwarranted Increases in Other Programs

The Committee bill provides for significant increases in Development Assistance, the Development Fund for Africa, Refugee assistance accounts, the Trade Development Program, and the International Organizations and Programs appropriations. These increases total over $600 million more than the President's request. This funding shift would endanger the implementation of high priority programs, including the Enterprise for the Americas Initiative. The ability of the President to carry out his foreign policy would be severely constrained by this shift.

Presidential Contingency Fund and Democracy Contingency Fund

The Administration has proposed a new $20 million Presidential contingency fund to provide additional flexibility for the President to respond to changing and unforeseen events. Unfortunately, the Committee did not appropriate any funds for this purpose.

In section 530, the Committee has provided a $25 million cap on a yet-to-be-established democracy contingency fund. This fund would allow the Administration to use existing foreign assistance resources to respond to emergency needs in newly democratic countries. The Administration encourages establishment of this fund and recommends a $100 million limitation to provide a measure of flexibility.

Arms Sales Moratorium in the Middle East

The Administration urges the House to drop Section 589 and, in particular, its requirement for a moratorium on conventional arms transfers from the bill. On May 29th, the President announced his initiative to halt the spread of weapons of mass destruction and to prevent destabilizing transfers of conventional weapons to countries in the Middle East. The proposal focuses on ending all transfers of non- conventional weapons and enhancing transparency of conventional weapons transfers. Through negotiations with the five major arms suppliers, the U.S. hopes to prevent destabilizing transfers.

A blanket moratorium would frustrate the President's effort. It is recognized that nations in the region have requirements for conventional arms to meet their legitimate defense needs. The Administration believes that the U.S. should help our friends meet those needs. A moratorium, by freezing imbalances, could actually increase instability in the region.

Private Contractor Studies for Function 150 Credit Programs

The Administration believes that the provision calling for private contractor studies of repayment probabilities, subsidy elements, and country risk assessments for Function 150 credit programs would result in a wasteful duplication of effort. OMB has already begun consultations with concerned creditor and policy agencies to design a transparent and objective system to determine all of the elements that are to be included in the proposed study. The differences in dealing with official as opposed to private debt are great. The practical implication is that most of a contractor's expertise in dealing with the issues in the study would, in any ease, have to be garnered from official government sources.

Foreign Military Sales (FMS) Administrative Limitation

The Administration opposes the provision that would place a $325 million limitation on the FMS administrative surcharge receipts collected from foreign governments. These receipts are used to reimburse the Department of Defense for personnel and other administrative costs associated with supporting the security assistance program and arms sales cases. For budget execution, this restriction would complicate adjusting reimbursement levels to the level of arms sales cases actually occurring. With arms sales cases, administrative receipts vary from year to year. This limitation could lead to unintended consequences and misunderstanding by foreign buyers.

"Javits Report" to Appropriations Committees

The Administration opposes section 591, which requires that an annual report be submitted to the Appropriations Committees under section 25(a)(1) of the Arms Export Control Act ("Javits Report"). Current law requires that this classified report on pending arms sales be submitted to the Congress. One copy is submitted to each of the House of Representatives and the Senate. Distribution of this report is an issue for the Leadership to resolve. We are opposed to the proliferation of copies of this classified report.

Excess Defense Articles

The Administration opposes section 580, which would repeal the eligibility under the excess defense articles authority of section 516 of the Foreign Assistance Act for Morocco and Senegal. There is no reason to penalize these two countries, each of which contributed armed forces to deter Iraqi aggression in the Gulf.

Eximbank Financing for Narcotics Control Articles and Defense Exports

The Administration opposes the provision in Title IV that would further restrict Eximbank financing sales of munitions lists items. As drafted, this provision could prohibit the financing of items for counter-narcotics purposes, an activity that Congress has previously authorized and supported. Further, the Administration is disappointed that the Committee did not agree to allow Eximbank financing of defense articles and services to selected countries.

International Development Association (IDA) and Asian Development Bank Lending to China

The Administration objects to provisions of the Committee bill that would restrict contributions to the International Development Association and Asian Development Bank appropriations. These provisions would require reductions of U.S. contributions if the banks were to lend to China for activities other than those meeting basic human needs. The restrictions would hinder the Administration's conduct of foreign policy and reduce U.S. influence over bank policies. Further, these restrictions are inconsistent with the multilateral structure and objectives of these institutions.

World Bank Global Environment Facility (GEF)

The Administration objects to the $50 million appropriation for the GEF at this time. In place of direct CEF funding, the Administration has requested $50 million of parallel financing of environmentally-related projects through AID. The Administration's approach ensures that U.S. funds would be spent for innovative, environmentally sound projects that could become guideposts for multilateral bank (MDB) current and future use. These projects, while in some eases experimental, would provide a demonstration effect that could be incorporated into MDB projects. The Administration shares the Committee's objective of improving the World Bank Croup's efforts in the environmental area and believes the AID funding approach best achieves this goal.

Constitutional Concerns regarding Sections 521, 532, 554, 588, and Similar Provisions

Several provisions in the hill would require the President or other members of the Executive branch to enter into negotiations with foreign governments or to take particular positions in international negotiations. See sec. 521 (instructions from Secretary of the Treasury to United States Executive Directors of various international financial organizations); sec. 532 (instructions to be given by Secretary of the Treasury for United States Executive Directions of multilateral development banks and positions to be taken in International Monetary Fund, with reports to Congress); sec. 554 (instructions from Secretary of the Treasury to United States Executive Directors of International financial institutions); sec. 579 (goals in negotiations concerning European Bank for Reconstruction and Development); see. 589 (convention on multilateral arms transfer and control regime). Section 588 would require the Secretary of the Treasury to consult with Congressional committees before entering into negotiations. Conversely, section 527 forbids negotiations with the Palestine Liberation Organization. All of these provisions would unconstitutionally intrude on the President's authority, because the Constitution commits to the President alone the responsibility for negotiations in the international sphere. See United States v. Curtiss-Wright Export Corp.. 299 U.S. 304, 319-20 (1936). Such provisions should be deleted, or, to avoid ambiguity and unnecessary disputes, clearly drafted as advisory only.

One provision would condition the availability of funds on the Secretary of the Treasury's giving specified instructions regarding international negotiations to the Executive Director of the Inter-American Development Bank. See page five of the Committee bill (no section designation). Congress may not make the availability of funds conditional on the President's (or his delegate's) surrendering discretion in the exercise of his constitutionally conferred powers, just as an individual's receipt of a government benefit ordinarily cannot be conditioned on the surrender of his constitutional rights. See Frost & Frost Trucking Co. v. Railroad Commission. 271 U.S. 583, 594 (1926). This provision should be deleted. For similar reasons, making funds available to the Agency for International Development only on the condition that AID station one professional at either the Consulate General in Jerusalem or the Embassy in Tel Aviv would present constitutional problems. Under Article II of the Constitution, decisions concerning the placement of diplomatic personnel overseas are committed to the President alone and cannot be dictated by legislation. See Statement of President Carter on Signing H.R. 3363 into Law, 15 Weekly Comp. Pres. Doc. 1434 (August 15, 1979). Therefore, this condition for the availability of funds would be unconstitutional and should be deleted.

Section 549 would require the Secretary of State to send the Congress certain international agreements for debt relief thirty days before the agreements enter into force and would mandate that, "in every feasible instance," the Secretaries of State and Treasury notify Congressional committees at least fifteen days before entering into negotiations for debt relief. This provision would intrude upon the President's authority to conclude international agreements and should be deleted. See United States v. Belmont. 301 U.S. 324, 330-31 (1937).

Section 567, which is identical to section 582 of P.L. 101-167, forbids providing funds to foreign governments "in exchange for that foreign government or person undertaking any action which is, if carried out by the United States Government, a United States official or employee, expressly prohibited by a provision of United States law." The section includes further language designed to narrow the scope of this prohibition. When the President signed P.L. 101-167, he observed that although the provision could be construed narrowly in order to avoid constitutional problems, "many routine and unobjectionable diplomatic activities could be misconstrued as somehow involving a forbidden 'exchange,'" and, therefore, "this type of provision can chill U.S. diplomats in the proper discharge of their duties." See 25 Weekly Comp. Pres. Doc. 1810, 1811 (Nov. 21, 1989). Section 569 should be deleted.

The Administration notes, finally, that section 589 would have to be read so as to preserve the President's constitutional authority to withhold state secrets from disclosure. See Department of the Navy v. Egan, 484 U.S. 518, 527 (1988).