Statement of Administration Policy: H.R. 3540 - Foreign Operations, Export Financing, and Related Programs Appropriations Bill, FY 1997

(Senate Floor)
(Sponsors: Hatfield (R), Oregon; McConnell (RJ, Kentucky)

This Statement of Administration Policy provides the Administration's views on H.R. 3540, the Foreign Operations, Export Financing, and Related Programs Appropriations Bill, FY 1997, as reported by the Senate Appropriations Committee.

The Committee bill is a substantial improvement over the House bill in two major respects. First, it does not legislate the Mexico City policy, which would put unwarranted limits on assistance to population programs abroad, nor does it make severe funding reductions and impose other restrictions on spending for these programs. As a result, the Committee bill: reaffirms U.S. leadership in international family planning programs. Second, the bill partially restores the deep funding reductions from the Administration's request made by the House in a number of other assistance programs. The Administration applauds these actions and would strongly oppose any amendments that would reverse these welcome improvements.

Despite the commendable efforts made by the Senate Appropriations Committee to remedy some of the deficiencies of the House bill, the Administration remains deeply concerned about funding and other restrictions on certain key programs. In the Senate Committee bill, funding for the International Development Association (IDA), particularly critical to supporting market reform and poverty reduction in the poorest countries, would be cut deeply, even with the welcome increase above the House bill provided by the Senate Committee. The Administration urges that at least $700 million in funding be provided for IDA.

Key programs affecting the security of the United States have also been cut back significantly or have been prohibited. Specifically, Economic Support Fund (ESF) financing to promote security objectives outside of the Middle East has been cut below the inadequate FY 1996 levels. To assure that the most pressing security assistance needs are met, the total ESF appropriation should be at least $2.38 billion.

The Administration believes that the funding increases proposed for IDA and ESF can be accommodated within the Foreign Operations Subcommittee's 602(b) allocations. Currently, the bill is significantly below the allocation for budget authority and slightly below the outlay allocation. Additionally, if the Senate Committee's appropriation for Foreign Military Financing for loans and the appropriation for International Organizations and Programs were reduced to the amount requested by the Administration, the increases proposed above could be accomplished within the 602(b) limits.

Another key funding concern is the unacceptable restrictions placed on the U.S. contribution to the Korean Energy Development Organization (KEDO), especially the funding cap that reduces requested funds by nearly half. This funding is inadequate to meet our commitment to support the North Korean framework agreement. KEDO is one of the pillars of U.S. nonproliferation policy, which seeks to ensure strategic stability in the Pacific. The Administration's very modest $25 million request for funds helps continue the reduction of North Korea's nuclear weapons capacity, while leveraging strong burden-sharing contributions for this effort from South Korea, Japan, and other countries. The Administration strongly urges the Senate to remove the cap on funding for KEDO and to provide to the new nonproliferation, anti-terrorism, and demining account the additional funds requested for KEDO from the international organizations and programs account.

Moreover, the Committee bill would provide no funds for the new Bank for Economic Cooperation and Development in the Middle East and North Africa, which is critical to the Middle East peace process. United States participation in this landmark institution must be authorized, and provision must be made for the use of available funds appropriated for FY 1996 and prior years for the Economic Support Fund and Foreign Military Financing to be transferred to finance a U.S. contribution to the Bank.

If the changes proposed above on these key programs were made, the Secretaries of State and Treasury would find the funding levels in the bill acceptable.

The Administration also continues to have concerns about funding levels and funding restrictions for other programs in the Senate Committee bill. Meeting our financial commitments to the international financial institutions is essential to U.S. leadership and leverage in these institutions. It is, therefore, important that funding provided for the International Development Association (IDA) be made available to clear existing U.S. commitments to IDA rather than being restricted to funding the new Interim Trust Fund. The Committee bill fails to provide any contribution to the African Development Fund, when $15-25 million would provide much needed support for this lending window, which has at U.S. urging undergone significant management reform. The funding provided by the Committee for debt reduction is below what is needed to complete the debt forgiveness pledged to Jordan, a key element in the Middle East peace process, while also continuing debt relief to the world's poorest countries, which is a small but essential element of a major, multilateral effort to jumpstart growth in those countries. An additional $10 million is needed. Further, the Administration seeks its full, modest request for voluntary contributions to international peacekeeping operations.

The Committee bill is funding restrictions on the office of the Chairman of the Export- Import Bank could have the effect of removing him from office. The Chairman was legitimately appointed to his position under the Constitution. This would create grave constitutional problems by impeding the President's exercise of the recess appointment power. The Constitution provides that a recess appointment lasts until the end of the next session of Congress, and Congress has no power to shorten the constitutional term by legislation. There may also be a claim that the provision is unconstitutional as a bill of attainder. The Administration urges the Senate to remove these provisions.

The Committee bill would slash the Export-Import Bank's operating expenses by 16 percent, an action that would cripple the Bank in supporting U.S. exports in today's competitive environment. At the level in the Committee bill, the Bank would be forced to impose significant furloughs of staff as well as to make other drastic reductions in the support of U.S. exporters. The Administration urges the Senate to remove these provisions affecting the Export-Import Bank.

The Administration is concerned that funding for its major initiative to target better our attack on international narcotics trafficking and crime has been cut by nearly 25 percent. The Administration is similarly concerned by the 10-percent reduction from the request for the highly effective International Military Education and Training program.

In addition to its concerns about funding, the Administration has serious concerns regarding language issues in the bill, discussed below.

The Administration opposes the earmarking of funds in the Committee bill. Given the severe constraint on the amount of funds available, earmarks would be particularly burdensome and could frustrate the achievement of some of the objectives that the earmarks are intended to achieve. For example, Foreign Military Financing earmarks for Poland, Hungary, and the Czech Republic would substantially reduce amounts available for other countries and could thereby prevent the United States from providing critically-needed assistance to other countries seeking membership-in NATO or a strengthened security relationship.

The Administration also opposes the numerous earmarks directed at our programs for the New Independent States. These earmarks would prevent the United States from responding to the crises and unexpected requirements of the post-Cold War world. It is essential that we have the flexibility to apply funds to the programs that provide the best results.

Assistance to Russia and Ukraine provided in the Committee bill is in our national interest. Cutting or restricting this aid would hurt reformers, who have criticized Russia's proposed nuclear sale to Iran or fought for economic reforms in Ukraine. The Administration opposes the Iran- and Libya-related conditions on assistance to Russia and Ukraine contained in the Committee bill.

The Committee bill's requirement that all United States publications refer to the capital of Israel as Jerusalem is ill-advised at this sensitive time in Arab-Israeli negotiations and may raise serious separation of power issues.

The provision of additional sanctions against Burma is currently under review within the Administration. At this time, the Administration opposes the mandatory sanctions provisions on Burma, as mandatory sanctions restrict, rather than maintain or enhance, our freedom of action. The Administration is prepared to explore measures providing for discretionary sanctions that would augment our options.