|
This Statement of Administration Policy provides the Administration's views
on H.R. 4569, the Foreign Operations, Export Financing, and Related
Programs Appropriations Bill, FY 1999, as reported by the House
Appropriations Committee. Your consideration of the Administration's views
would be appreciated
The Administration appreciates efforts by the Committee to accommodate
certain of the President's priorities within the 302(b) allocation.
However, the bill is unacceptable to the Administration for the reasons
described in this letter. The President would veto the bill if it were
presented to him in its current form.
This legislation is a critical element of America's national security
budget. At the dawn of a new century, America faces unique challenges and
unprecedented opportunities to strengthen our national security, enhance
our global leadership, extend the reach of our democratic values, and
deepen our own prosperity. The challenges we face are formidable. If this
bill in its current form were to become law, however, it would erode our
ability to promote effectively critical American interests at home and
abroad. It would require us to walk away from problems that can and must
be solved. The responsibility for safeguarding our national security and
exercising U.S. leadership must be foremost when allocating scarce fiscal
resources. We urge the Congress to provide the leadership needed to keep
America safe, strong, and prosperous.
The only way to achieve the appropriate investment level for the programs
funded through this bill is to offset discretionary spending by using
savings in other areas. The President's FY 1999 Budget proposes levels of
discretionary spending for FY 1999 that conform to the Bipartisan Budget
Agreement by making savings through user fees and certain mandatory
programs to help finance this spending. In the Transportation Equity Act,
Congress -- on a broad, bipartisan basis -- took similar action in
approving funding for surface transportation programs paid for with
mandatory offsets. In addition, this year, as in the past, such mandatory
offsets have been approved by the House and Senate in other appropriations
bills. We want to work with the Congress on mutually-agreeable mandatory
and other offsets that could be used to increase funding for high-priority
discretionary programs, including those funded by this bill.
International Monetary Fund
While the Administration welcomes the Committee's efforts to provide
funding for the International Monetary Fund's (IMF's) New Arrangements to
Borrow (NAB), we are extremely concerned by the Committee's failure to
include in its bill the requested appropriation for the $14.5 billion U.S.
share of the IMF's critically needed quota increase. Since February of
this year, the President has repeatedly called on Congress to approve the
full amount of his $18 billion budget request for the IMF. To reject or
delay this funding not only would undermine America's leadership in the
world; it also would expose American workers, savers, farmers, and
businesses to unacceptable economic risks.
The IMF's financial resources are nearing historic lows, necessitating the
recent activation of the IMF's emergency credit lines, the General
Arrangements to Borrow (GAB), for the first time in twenty years. Without
the entire $18 billion in new funding, composed of the quota increase and
the U.S. share of the New Arrangements to Borrow (NAB), the IMF -- and
hence the United States and the world -- will remain vulnerable if new,
escalating, or spreading systemic crises occur. To protect America's
economic strength, Congress must act now to pass the full quota.
The Committee's bill proposes several conditions on IMF funding that, while
directed at objectives we share, are unworkable in their current form and,
therefore, would have the effect of delaying indefinitely the availability
of these critical resources to the IMF. We urge the Congress to respond to
these concerns as the bill moves through the process.
International Family Planning
The Administration strongly opposes the "Mexico City" restrictions that are
included in the Committee bill, which would prohibit foreign
non-governmental organizations from receiving U.S. family planning funds if
the organization uses any of its own funding from non-U.S. Government
sources for abortion-related services or advocacy. The Committee bill's
"Mexico City" language is even more restrictive than the provision
contained in the conference report on the Foreign Affairs Reform and
Restructuring Act. The Administration continues to oppose these
restrictions, which would deny funding to the most experienced and
qualified family planning and maternal-child health care providers. As
stated in past Administration communications, should this language be
included in the final bill presented to the President, the President would
veto the bill.
Korean Peninsula Energy Development Organization (KEDO)
The Administration strongly objects to the Committee action deleting U.S.
funds for KEDO and including language prohibiting the President from
exercising his authority to transfer funds from other sources for this
purpose. The Agreed Framework reached between the United States and the
Democratic Peoples Republic of Korea in 1994 remains the key tool with
which we are able to engage with North Korea on a range of bilateral and
multilateral issues, including missile tests. The Committee's actions
would allow North Korea to blame the United States for not fulfilling our
commitment to the Agreed Framework and, in essence, give the North an "out"
to begin reprocessing fissile material currently monitored under
international safeguards. Such an action would seriously destabilize
security on the Korean peninsula, place U.S. troops in greater danger, and
exacerbate the Korean financial crisis.
New Independent States
As recent events have indicated, the incomplete, peaceful transition of the
New Independent States (NIS) to stable, market democracies is vital to the
U.S. national security. The Congress has shared this view and provided
considerable support for this program in the past. The current
political/economic situation in Russia highlights how great the stakes are
for the United States to continue to help Russia achieve this peaceful
transition. The enormous economic potential of the Caspian Basin
represents great opportunities to advance our mutual goals. Therefore, the
cuts embodied in the Committee's funding level for USAID assistance
programs to the NIS are especially unfortunate. These cuts would make it
extremely difficult to push for market reforms and support democratic
forces across the region. The Administration welcomes and strongly
supports the Committee's action to repeal restrictions on U.S. assistance
to Azerbaijan and would strongly oppose any efforts to overturn the
Committee's action. These restrictions have been a disincentive for
securing peace in the Caucasus and do not serve U.S. national interests.
Middle East Assistance
The Administration welcomes the efforts of the Committee to work with us in
encouraging changes in traditional levels of assistance to countries in the
Middle East. We believe that Israel's initiative to reduce Economic
Support Fund (ESF) assistance provides an important basis on which to build
future assistance programs that meet our needs in the Middle East and
beyond. However, due to the very constrained funding levels for
international affairs programs, the Administration has proposed an
accelerated approach to the reduction of Israel's ESF. We would encourage
the Committee to give strong consideration to such an approach as the bill
proceeds through the process.
Economic Support Fund
The Administration is concerned with the overall funding level for the
Economic Support Fund (ESF) account. At the Committee mark, the account
would not nearly have sufficient resources to continue supporting economic
and political stability in Latin America, and in other emerging democracies
in Africa and Asia. We strongly encourage the Committee to support a
higher funding level for the ESF account as the bill moves forward. In
addition, the restrictions on assistance to Haiti need to be balanced with
a national interest waiver to ensure that the President has sufficient
flexibility to pursue our national interests.
Global Environment Facility
The Administration is concerned with the refusal of the Committee to fund
the President's request for the Global Environment Facility (GEF), which is
helping to reduce long-term environmental risks that will affect all
Americans. The $300 million request for GEF (of which $192.5 million is
arrears) is needed to assure that the GEF does not run out of resources in
FY 1999. Concerns that funding the GEF would prejudge debate on the Kyoto
Climate Protocol are misplaced: the new replenishment agreement is funded
at the same level as the prior one, and the GEF will continue with
precisely the same broad work program that it had prior to Kyoto. The GEF
is among the best vehicles that the United States has to encourage
developing countries to shoulder greater responsibility for protecting both
the local and global environment. It is manifestly in our interests to
clear our arrears and keep the GEF running, and the Administration strongly
urges the Committee to restore funding for this critical program.
Nonproliferation, Anti-terrorism, Demining, and Related Programs
(NADR)
The Administration is concerned with the $64 million, or 30 percent, cut to
the $216 million request for NADR. This reduction would undermine the
multi-prong effort that NADR supports to reduce the proliferation threat to
U.S. national and global security. Lack of funding for the Comprehensive
Test Ban Treaty (CTBT) Preparatory Commission would harm U.S. national
security interests as it would eliminate planned improvements in our
ability to monitor nuclear testing worldwide. The recent Indian and
Pakistani tests are a stark reminder of the importance of this monitoring.
As well, we would be forced to reduce support for NIS science centers,
demining efforts, and other related activities.
Peacekeeping Operations
The Committee has reduced the $83 million request for Peacekeeping
Operations (PKO) by 25 percent. PKO provides vital assistance and support
for many important national security and foreign policy activities,
including commitments in Bosnia and Haiti, conflicts in Africa, and
potential trouble spots such as in the Balkans. This reduction would
severely limit the President's ability to respond to these and other
evolving events.
Trade and Investment Financing
The Administration appreciates the Committee's effort to increase
substantially the funding for the Export-Import Bank and to support the
Overseas Private Investment Corporation and the Trade and Development
Agency (TDA). However, Export-Import Bank funding still falls short of the
level needed to meet the expected demand of U.S. exporters in FY 1999.
Support for TDA, at 17 percent below the President's request, is
insufficient to allow the agency to remain engaged around the world,
especially given its growing program in the Caspian region.
U.S. Agency for International Development (USAID)
The Administration is concerned with the $24 million cut in the request for
USAID Operating Expenses. This reduction would not only make it impossible
for USAID to carry out Presidential initiatives in Africa and Latin
America, but also would interfere with the agency's ability to manage its
ongoing programs effectively, including congressional priorities in areas
such as infectious diseases and child survival, as well as to address
management priorities. In particular, this reduction, combined with the
House action striking the emergency fund in the Treasury and General
Government Appropriation bill, would make it difficult for USAID to
implement fully its Year 2000 conversion. Even if USAID were to begin
closing missions and eliminating additional positions immediately, the
fixed costs of doing so would prevent AID from achieving the savings
necessary in FY 1999 to respond to this cut. For these reasons, we urge
the Committee to restore funding for USAID Operating Expenses.
In light of the continuing needs created by both natural disasters and
ongoing civil conflicts, we urge the Committee to provide a higher level of
funding for international disaster assistance. The Committee mark would
cripple our efforts to respond expeditiously and effectively to countries
in transition from crisis caused by political and ethnic conflict and could
undercut our ability to address man-made and natural disasters.
The Administration is concerned that the Committee has not funded the
modest $6 million request for credit subsidy for the Urban Environment (UE)
credit program, or provided transfer authority for USAID's Development
Credit Authority (DCA). As the Congress and the Administration agreed in
the FY 1998 appropriations legislation, USAID has taken substantial steps
towards developing the capacity to manage both its existing and future
credit portfolios. We urge the Committee to restore the transfer authority
for the DCA and the subsidy request for the UE program. Failure to do so
would limit the ability of USAID to use credit to promote development in
urban areas and to encourage the development of needed private sector
financial mechanisms.
The prohibition on the use of funds from the Child Survival and Disease
Programs Fund for non-project assistance, which is specifically authorized
in the Foreign Assistance Act, would weaken USAID's current leadership
position with bilateral and multilateral donors to encourage and support
policy reforms in sub-Saharan African countries.
Exchange Stabilization Fund
The Committee bill contains a provision that would limit the President's
flexibility to utilize the Exchange Stabilization Fund as necessary to
protect America's economic and security interests. For this reason, and
because the Exchange Stabilization Fund is not germane to the purposes of
this appropriations bill, the Administration opposes this provision.
Treasury International Affairs Technical Assistance Program
The Administration is disappointed that the Committee has not funded the $5
million request for this program, which could significantly enhance the
transition to stronger private sector-led growth and more efficient,
transparent, and better supervised financial institutions in emerging
economies, including reforming countries in Africa and financial crisis
countries in Asia. Given the large potential benefits and modest cost of
this program, which provides technical assistance in tax policy,
development of domestic capital markets, and privatization of state
enterprises, we urge the Committee to fund the request.
International Organizations and Programs (IO&P)
The Committee bill reduces the request for IO&P by $55 million and,
unfortunately, eliminates funding for the U.N. Population Fund (UNFPA),
which provides support for women in family planning matters in a number of
countries not served by U.S. assistance programs. UNFPA does not fund
abortions. The overall reduction in IO&P would limit U.S. ability to
participate and support a number of international organizations.
Peace Corps
The Administration regrets that the bipartisan Peace Corps initiative to
fund 10,000 volunteers by the year 2000 has not received the full request
of $270 million from the Committee. However, we are heartened by report
language stating that the Committee is prepared to approve a further
increase should there be a reallocation of funds later in the
appropriations process.
Community Adjustment and Investment Program (CAIP)
The Administration is concerned with the Committee's failure to fund the
Community Adjustment and Investment Program, a program initially funded
through the North American Development Bank, a multilateral development
bank. The CAIP was established to help communities affected by adverse
trade patterns associated with implementation of the North American Free
Trade Agreement. To date, the program has assisted in more than 120 loans
in 20 states, leveraging private sector financing of over $70 million. The
$37 million requested would significantly bolster the CAIP's ability to
continue this work, as well as to support technical assistance, grants, and
micro-lending. The Administration urges the Committee to restore funding
for this innovative program.
Year 2000 Conversion
In the FY 1999 Budget, the President requested more than $1 billion for
Year 2000 (Y2K) computer conversion, including specific amounts in the
requests for the agencies funded in this bill. In addition, the budget
anticipated that additional requirements would emerge over the course of
the year and included an allowance for emergencies and other unanticipated
needs. On September 2nd, the President transmitted to the Congress a
request for $3.25 billion in FY 1998 contingent emergency funding for Y2K
computer conversion activities. This supplemental request would create a
funding mechanism that is consistent with both the needs anticipated in the
President's budget and the Senate's action creating a $3.25 billion
contingent emergency reserve to provide the resources and the flexibility
necessary to respond to critical unanticipated Y2K-related requirements.
It is essential that this contingent emergency funding be enacted as
quickly as possible, whether through the Treasury/General Government bill
or another legislative measure moving through the process earlier,
particularly in light of the decision of several Subcommittees, including
the Subcommittee on Foreign Operations, not to fully fund the base requests
of a number of agencies for Y2K conversion. We urge Congress to leave as
much as possible of the reserve unallocated so that funds are available to
address emerging needs.
| 
