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December 23, 2016
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February 21, 2014
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August 3, 1964
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Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090007-4 17142 CONGRESSIONAL RECORD ? SENATE. located to the terminating employees. The reinsurance would then pick up any addi- tional liability on behalf of those employees. The employer would continue operation of his plan, with the remaining assets, on be- half of the continuing employees. Where there is no termination, the pro- gram would not be applicable but the per capita past service amortization payment on a plan exceeds some specified percentage (e.g., 200 percent) of the initial per .capita past service amortization payment, usually as a result of a severe reduction in the work force, the reinsurance would assume any past serv- ice liability financing required which is in excess of the specified percentage. The second type of risk different from those which we have been discussing and which should be insured against, is the risk of depreciation of the funded assets. The risk involved in the situation is probably very slight and is not dependent on the size of the unfunded liability. The premium for this risk is, therefore, computed separately than the premium for insuring the unfunded liabilities. While the risk here would de- pend upon the types of assets, it would prob- ably be administratively unfeasible, as well as undesirable to set reinsurance premiums for individual investments at the same time consideration might be given to vary the premium by class of assets; i.e., Government bonds, stocks, mortgages, etc. Since the premiums established, particu- larly with respect to the second risk out- lined above, may eventually prove to be excessive, the legislation includes a provi- sion authorizing the administrator to pro- vide for the suspension or reduction of either type of premium for a period of time. F. ESTABLISHMENT AND ADMINISTRATION OF REINSURANCE SYSTEM The most logical existing agency to ad- minister the system of reinsurance for pri- vate pension plans would be the Social Secu- rity Administration in the Department of Health, Education and Welfare. In addition to having the actuarial and technical per- sonnel who are engaged in a similar opera- tion, the administration by the social secu- rity offices would provide an opportunity for automatic notification to a prospective pen- sioner under a private plan at the time he files an application for social security bene- fits. The legislation authorizes the Secretary to borrow moneys from the Treasury for the ? establishment of a reinsurance fund. This money would be repaid by the premiums which the fund would receive and the legis- lation would thereby achieve a self-financing status at no cost to the public. SOCIAL SECURITY AMENDMENTS OF 1964?AMENDMENT (AMEND- MENT NO. 1174) Mr. RIBICOFF. Mr. President, pen- sion and retirement programs for fire- men and policemen have traditionally been considered separately from other employees. These men face unusual hazards in their daily work, and because of the nature of their jobs, often retire at an earlier age than the rest of the work force. As a result their pension and retirement plans have been developed with regard to their special needs, par- ticularly the likelihood of early retire- ment. The social security system is based on a general pattern of retirement at age 65, with the choice in recent years of re- tiring at age 62 and accepting reduced benefits. Because these retirement ages are generally unrealistic for firemen and policemen, these employees have not previously been included as a class within the social security system if covered by State or local government retirement systems. In some States a decision has been made that it would be advantageous to extend social security coverage to fire- men and policemen, and where this is true, Congress has extended coverage on a State-by-State basis. Some 19 States are now included. The pending social security bill, how- ever, abandons the State-by-State ap- proach and establishes a uniform pro- gram for all firemen and policemen. It is true that under the new provision, those presently employed could elect to remain outside the social security system, but in any municipality a small minority of the firemen or policemen could elect coverage not only for themselves but for all future employees. The result might well be a substantial impairment of the local pension and retirement rights of firemen and policemen in the years to come. I believe these valiant public servants are entitled to continue under the pro- visions of law now in existence. I see no justification for changing the rules in a way that might be harmful. I therefore submit, for appropriate ref- erence, an amendment to H.R. 11865 to strike out the new section changing the social security status of firemen and po- licemen. The ACTING PRESIDENT pro tern- pore. The amendment will be received, printed, and appropriately referred. The amendment (No. 1174) was re- ferre to the Committee on Finance. A NDME1IT OF FOREIGN ASSIST- ANCE ACT OF 1961?AMENDMENT (AMENDMENT NO. 1175) FOREIGN DEVELOPMENT LOANS SHOULD BE GRANTS OR LOANS?BUT NOT BOTH Mr. GRUENING. Mr. President, I send to the desk an amendment to" the foreign assistance authorization bill, H.R. 11380, which I ask that it lie on the table and be printed at the conclusion of my remarks. My amendment would increase the rate of interest on development loans to the same amount that it costs the United States itself to borrow money. In reporting H.R. 11380 three able and distinguished members of the Senate Committee on Foreign Relations, the senior Senator from South Dakota [Mr. MUNDT], the senior Senator from Oregon [Mr. MoRsE] , and the senior Senator from Ohio [Mr. LAUSCHE], in a cogent mi- nority report, pointed up the problem with our development loans when they stated: We cannot justify making grants and call- ing them loans. This is exactly what we have been do- ing in the foreign aid program to the tune of billions of dollars. The practice has become widespread in - the development loan program of auto- matically granting soft terms on the vast majority of loans made. For example, in the calendar year 1963, $1,057,925,000 in loans were made by the Development Loan Fund at interest rates of three- August 3 fourths of 1 percent repayable in 40 years with a moratorium on the repay- ment of principal for the first 10 years. This amount represents 90 percent of the tOtal amount of loans made under the Development Loan Fund during that year. Even assuming that these loans will be repaid?and that is an assumption that flies in the face of the financial histories of many of these countries?the more than a billion dollars in development loans made by AID last year alone con- tains a hidden grant of approximately. $800 million which the American taxpay- ers will have ,to pay in the many years ahead because we made these soft loans in 1963. I ask unanimous consent that there be printed at the conclusion of my remarks a list of loans made-in calendar Year 1963 alone at the rate of three-fourths of 1 percent service charge, repayable in 40 years, with a moratorium on the repay- ment of principal for the first 10 years. We are told that the low rate of inter- est is necessary because the borrowing countries do not have sufficient foreign exchange to pay a higher rate of interest. A closer examination of the loans made shows that this argument has no substance. Rather it can be said that it has become an almost automatic pro- cedure to grant these loans at these low rates of interest. Consider the loan made on December 4, 1963, to the Government of Tangan- yika for a commodity development train- ing center. The principal sum of this loan was $250,000. Interest on this sum at three-fourths of 1 percent amounts to $1,875. At 4 percent interest per an- num, the interest rate would be $10,000. The difference is $8,125. The Govern- ment of Tanganyika could raise this ad- ditional sum by cutting down on the im- port of only two Cadillacs a year. Let us also consider the loan of $350,- 000 to the Government of Turkey. At three-fourths of 1 percent interest or service charge the interest rate per year would be $2,625. At 4 percent interest the amount would be $14,000 per year. The difference would be $11,375 per year. In his report on out-aid program in Tur- key in June 1964, the CoMptroller Gen- eral states: Because neither the Turkish Government nor the (AID) Mission exercised adequate control over commodity imports and the operations and investment programs of state enterprises, aid funds frequently were used for nonessential or low priority purposes. This confirms my own evaluation con- tained in my report of a study of the foreign aid program in 10 Middle Eastern and African countries for the Committee on Government Operations. I stated in my report, with respect to the AID pro- gram: AID dollars are loaned or granted to aid in a particular country's economic develop- ment. To prevent those dollars from being diverted into meeting that country's budget deficit or for the importation of luxury goods, it is essential that firm controls be exercised by AID to follow the dollars and see to it that it is in fact being used for the eco- nomic development of the country to which it is loaned or granted. This study indicated that such firm controls are not being exer- cised. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090007-4 1964 Declassified and Approved For Release 2014/02/21 : CIA-RDP66B00403R000300090007-4 CONGRESSIONAL RECORD - SENATE 17143 It is obvious that with a little austerity in its imports Turkey could have man- aged to discover the additional $11,375 needed to pay the U.S. interest at the rate of 4 percent rather than to expect the United States to make a combined loan-grant to it. In my report, I stated with respect to these three-fourths of 1 percent loans: It is time to stop fooling the American people. These are not loans-they are com- bination loans and grants-with the' grant portion coming close to equaling the amount of the loan. There is great opposition to this amendment-or, for that matter, to any amendment increasing interest rates on loans under our foreign aid program. In the recent disaster which befell the State of Alaska, I tried most unsuccess- fully to persuade the Administrator of the Small Business Administration to re- duce disaster loans from 3 percent to the lesser interest rate we charge under our foreign aid program for loans to aid the private sector of foreign countries- three-fourths of 1 percent. As I said, I did not succeed. My proposal was met with a variety of objections. First, I was told that these loans did not go to the private sector of the foreign countries-they only ended up there after the foreign government had tacked on a tax in the form of an additional in- terest rate. That our money was being used to strengthen the private sector of foreign economies was conveniently for- gotten. Then, I was told that I did not have a full appreciation of the thinking of busi- ness. I was told that to a businessman, the interest rate was of secondary impor- tance when compared to the other terms offered, that is, the repayment period and any moratoriums on repayment. But when we seek to increase the interest rate-as I shall do through this amendment-to a rate equal to that paid by the United States on its own borrow- ings, interest rate becomes a vital mat- ter and we are told that? if the amend- ment succeeds then the foreign nations will be unable to borrow. This I cannot understand. Low interest rates are not necessary and are unimportant when they concern Alaska businessmen, stricken by one of the greatest natural disasters to befall any State. But when they concern for- eign borrowers, low interest rates be- come the be-all and end-all of the entire program and we are warned that the program will fall unless the interest rate is kept at three-fourths of 1 percent per year. This is called having one's cake and eating it, too. This argument I cannot understand and will not support. If interest rates are unimportant to Alaska businessmen seeking to borrow money from the United States in time of disaster, then they are unimportant to foreign govern- ments seeking to borrow money from the United States to aid the private sectors of their economies. If the AID administrators are trying to tell the Congress that Tanganyika would turn down the loan of $250,000 from the United States merely because of an annual inttrest rate increase of $8,105 then they are asking the Congress to believe something that is well-nigh unbelievable. If there is to be equality of treatment both here at home and abroad then my interest rate amendment should be en- acted. The ACTING PRESIDENT pro tern- pore. The amendment will be received and appropriately referred; and, without objection, the amendment and list of loans will be printed in the RECORD. The amendment (No. 1175) submitted by Mr. GRUENING, was received, and or- dered to lie on the table, as follows: On page 1, between lines 6 and 7, insert the following: "TITLE 1-DEVELOPMENT LOAN FUND "SEC. 101. Section 201(d) of the Foreign Assistance Act of 1961, as amended, which relates to the Development Loan Fund, is amended to read as follows: "'(d) Funds made available for this title shall not be loaned or reloaned at rates of interest excessive or unreasonable for the borrower and in no event shall such funds (except funds loaned under section 205 and funds which prior to the date of enactment of the Foreign Assistance Act of 1964 were authorized or committed to be loaned upon terms which do not meet the minimum terms set forth herein) be loaned at a rate of interest of less than the rate arrived at by adding one-quarter of 1 per centum per annum to the rate which the Secretary of the Treasury determines to be equal to the average annual interest rate on all interest- bearing obligations of the United States then forming a part of the public debt, as com- puted at the end of the fiscal year next pre- ceding the date the application for the loan is approved and by adjusting the result so obtained to the nearest one-eighth of 1 per centum.'" Redesignate the succeeding sections under part I, accordingly. The list of loans presented by Mr. GRUENING is as follows: Loans made by the Agency for International Development to foreign countries during calendar year 1903 at % of 1 percent for 40 years' (repayable in dollars) Country, borrower, and purpose Date of loan agreement Num- ber of years re- pay- ment Inter- est rate Amount of loan Country, borrower, and purpose Date of loan agreement Num- ber of years re- pay- ment Inter- est rate Amount of loan LATIN AMERICA Argentina: Government of Argentina: Central Housing Bank Route 12 road project Road program loan Feasibilities studies Grain storage facilities Bolivia: Government of Bolivia: Access roads La Paz-El Alto Highway El Alto Customs Center" Banco Industrial, S.A.: Assist in financing subloans Government of Bolivia: Argricutural Bank Brazil: Credito & Financiamento S.A.: De- velopment bank Cia. de Carbonos Coloidois: Carbon black plant Government of Brazil: Emergency stopgap assistance Super Desenvolvimento, N.E.: Emergency electric power Chile: Government of Chile: Development program Colombia: Government of Colombia: Feasibility studies - National Housing Institute of Colom- bia: Self-help housing Colombia Institute of Agrarian Re- form: Supervised agricultural credit Government of Colombia: Mineral June 3,1963 Jan. 21,1963 Mar. 18,1961 June 3,1963 Oct. 10,1923 Aug. 1,1923 Aug. 17, 1963 do do do Mar. 6, 1963 Mar. 11,1963 Apr. 24, 1963 Oct. 29, 1963 Jan. 31,1963 June 26, 1963 do do O...+ IQ 1003 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 An 34 % % 94 .8/, % % % yi % % % % :34 % % % % 8/ $12, 500, 000 6,700, 000 30, 500, 000 3, 000, 000 21, 700, 000 7, 200, 000 3, 400, 000 2, 200, 000 2,400, 000 3, 700, 000 4, 000, 000 2, 000, GOO 25, 500, 000 2, 400,000 35, 000, 000 4, 000, 000 7, 500, 000 10,000, 000 9 AAA non LATIN AMERICA-COD. Costa Rica: Banco Nacional de Costa Rica: Agri- cultural development Republic of Costa Rica: Slum replacement housing Cachi hydroelectric project Metro emergency water supply IIIRC/AIC highway program COFISA: Financing subloans Dominican Republic: National Housing Bank: Savings & Loan Association Ecuador: Government of Ecuador: Quito-Quevedc road Economic and engineering studies_ Administrative and fiscal reform El Salvador: - Republic of El Salvador: Primary school construction Agricultural loan program INSAFI Honduras: Government of Honduras: Small water systems Jamaica: Government of Jamaica: Project assistance Nicaragua: Government of Nicaragua: Las Mercedes Airport Panama: Instuto de Acuedlctos: Water supply and sewerage system Peru: Government of Peru: Lima water, sewerage Feasibility studies Uruguay: Banco Hipotecaric del Uru- guay: Home construction . July 23, 1963 do do do do Dec. 23, 1963 Jan. 2, 1963 , Sept. 1,1923 Sept. 4, 1963 Sept. 2,1963 Sept. 18, 1963 do do Aug. 22, 1963 Nov. 29, 1963 July 25, 1963 Feb. 6, 1963 Mar. 15, 1963 do Feb. 28,1963 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 40 % % 34 % Vi % % Yi N % .% Vi % 3% % % % 94 .% .54 $5, 000, 000 2, 000, 000 1, 500, 000 1, 400, 000 2, 100,000 5,000, 000 2, 100, 000 2,700, 000 2, 000, 00C 1, 600, 00C 2, 400,006 8, 900, 00( 4,500, 00( 1, 050, 001 1, 600,001 1,000, 001 6, 000, 001 8, 600, 001 3, 000, 00: 6, 000, 001 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090007-4 Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090007-4 17144 CONGRESSIONAL RECORD - SENATE August 3 Loans made by the Agency for International Development to foreign countries during calendar year 1963 at % of 1 percent for 40 years' (repayable in dollars)-Continued Country, borrower, and purpose Date of loan agreement Num- ber of years re- pay- ment Inter- est rate Amount of loan Country, borrower, and purpose Date of loan agreement Num- ber of years re- pay- ment Inter- est rate Amount of loan LATIN AMERICA-COIltilltled AFRICA Venezuela: Cameroon: Government of Cameroon: C.A. Bank for Economic Integration: Extension of railway system Aug. 27, 1963 40 94 $9, 200,000 Feasibility studies Nov. 29,1963 40 % $2, 500,000 Ethiopia: Government of Ethiopia: 3d Home loan department do 40 94 10, 000, 000 highway program Dec. 2, 1963 40 34 4,000,000 Ivory Coast: Government of Ivory FAR EAST Coast: Highway equipment Nov. 29, 1963 40 % 1, 700, 000 Liberia: Korea: Government of Korea: Changsong Government of Liberia: National . Coal Mine District Dec. 7,1963 40 94 9,500, 000 ., medical center Monrovia Power Authority: MT Dec. 5, 1963 40 % 5, 300, 000 NEAR EAST AND SOUTH ASIA coffee hydroelectric project Government of Liberia: Monrovia Sept. 26,1963 40 94, 24,300, 000 Afghanistan: Junior-Senior High School Oct. 23,1963 40 94 1, 700, 000 Government of Afghanistan: Mali: Ariana Afghan Airlines Mar. 23,1963 40 54 2, 625, 000 Government of Mali: Transport equipment Dec. 3,1963 40 91 2,000,000 Teachers Training College Dec. 4, 1963 40 % 2, 100,000 India: Central Veterinary Laboratory at Government of India: Bamako do 40 % 1, 100, 000 Ramagundam thermal power_____ May 21,1963 40 Yt 8, 400, 000 Niger: Government of Niger: Develop- Delhi C thermal power Satpura thermal power Mar. 8,1963 do 40 40 94 i4 16, 000, 000 25,100, 000 ment bank Nigeria: Dec. 14,1963 40 94 500, 000 Central Ropeway F project Oct. 21, 1963 40 % 7, 700, 000 Government of Nigeria: Nonproject imports Feb. 25, 1963 40 94 240, 000, 000 Ibadan water supply Dec. 4,1963 40 % 12,100, 000 Chandrapura thermal stage IL___ Oct. 21,1063 40 % 16, MO, OW Calabar-IKCM Road do 40 % 8, 600, 000 Fifth railway loan do 40 94 15, 850, 000 Somalia: Government of Somalia: Chisi- Cucga coal washery plant Tarapur nuclear power Nov. 29, 1963 Dec. 7,1063 40 40 VI 94 5, 100, 000 80, 000, 000 maio port Sudan: do 40 94 3, 600, 000 Nepal: Government of Nepal: Nepal In- Dec. 8, 1963 40 94 1, 000, 000 Government of Sudan: dustrial Development Corp. Industrial development bank July 14,1963 40 9.4 2,000,000 Pakistan: Khartoum sewerage Dec. 7,196.3 40 94 3, 800, 000 Government of Pakistan: Tanganyika: Sawmill and timber extraction_ _ _ Oct. 23, 1963 40 94 2, 200,000 Government of Tanganyika: Malaria eradication program_ _ _ __ Fob. 28, 1963 40 94 3, 800, 000 Cares Salaam water supply system May 20,1063 40 94 2,200, 000 Airport and airways equipment. _ Mar 22, 1963 40 94 2, 100,000 Urban water supplies Dec. 4,1963 40 % 1, 300, 000 Salin content and reclamation University college Oct. 9,1963 40 94 800, 000 project No. 2 do 40 % 10, 800, 000 Teacher training college Dec. 4,1963 40 % 850,000 General commodities, 2d Chains anchorage project Mar 27, 1963 Mar 22, 1963 40 40 % 94_ 30, 000, 000 3, 600,000 Commodity development train- ing center. do 40 % 250, 000 Feasibility studies__ Mar 27, 1963 40 '74 2, 000, 000 Agricultural college do 40 94 1,250, 000 CPS and Maini-Recbna DCAB Program loan Dec. 6,1963 40 % 1,000, 000 project Coastal embankment project Aug. 15, 1963 do 40 40 94 %. 750,000 6, 500, 000 Electrical equipment Tunisia; do 40 % 300, 000 General consultants do 40 ri,. 4, 400, 000 Government of Tunisia: 3d commodity loan_ Sept. 28, 1963 40 %''4 70, 500, 000 Water and irrigation projects Feb. 15, 1963 40 94 2,400, 000 General services in public Health__ Dec. 9, 1963 40 VI, 1,500, 000 Commodity assistance June 20,1963 40 % 15, 000,000 Investigative services Nov. 20, 1963 40 9'4, 5, 600, 000 Construction of university Oct. 31,1963 40 1,800, 000 5th railway loan Telecommunication expansion Machinery pool Organization do Oct. 23,1963 Dec. 9, 1963 40 40 40 % % 94. 14, 500, 000 4, 700, 000 5, 000, 000 Agricultural equipment Uganda: Government of Uganda: do_ ' 40 ,94 94 6,500, 000 WAP CA . Development bank Oct. 4,1963 40 y 2, 000, 000 Mechanical equipment Turkey: Nov. 20, 1963 40 % 1,100, 000 Secondary schools Oct. 11, 1963 40 8 2,400, 000 Government of Turkey: Keban and Ciceroz feasibility studies. July 15, 1963 40 94 350,050 -). Grand total for all countries 1, 057, 925, 000 Feasibility studies Oct. 15, 1963 40 ii, 3, 000, 000 General commodities Sept. 11, 1963 40 35, 000, 000 United Arab Republic-Egypt: Government of United Arab Re- public: Cairo West power project Feb. 20, 1963 40 94 30, 600,000 Cardboard project Nov. 12, 1963 40 % 5, 700, 000 I Source: "Status of Loan Agreements" (W-224), Agency for International Development, as of Mar. 31, 1964, Office of the Controller, AID. Total amount Total amount Argentina $74, 400, 000 Ethiopia _ $4, 000,000 Bolivia 18, 900, 000 Ivory Coast 1, 700, 000 Brazil 33, 900, 000 Liberia 31, 300, 000 Chile 35, 000, 000 Mali 3, 200, 000 Colombia 23, 500, 000 Niger 500, 000 Costa Rico 17, 000, 000 Nigeria 20, 700, 000 Dominican Republic 2, 100, 000 Somalia 3, 600, 000 Ecuador 6, 300, 000 Sudan 5, 800, 000 El Salvador 15, 800, 000 Tanganyika 7, 900, 000 Honduras 1, 050, 000 Tunisia ,_ 25, 700, 000 Jamaica 1, 500, 000 Uganda 4, 400, 000 Nicaragua 1, 000, 000 Total 1, 057, 925, 090,?, Panama 6, 000, 000 Peru 11, 600, 000 Uruguay 6, 000.000 Venezuela Korea 12, 9, 500, 000 500, 000 INTEREST EQUALIZATION TAX Afghanistan 4, 625, 000 ACT-AMENDMENTS (AMEND- India 414, 150, 000 MENT NO. 1176) Nepal Pakistan 1., 169, 000, 000 450, 000 Mr. GORE submitted amendments, in- Turkey United Arab Republic 38, 350, 000 tended to be proposed by him, to the bill (H.R. 8000) to amend the Internal Reve- (Egypt) 36, 300, 000 nue Code of 1954 to impose a tax on ac- Cameroon 9, 200, 000 quisitions of certain foreign securities in order to equalize costs of longer term financing in the United States and in markets abroad, and for other purposes, which were ordered to lie on the table and to be printed. NOTICE OF HEARINGS ON SENATE RESOLUTION 204, RELATING TO PERSECUTION BY THE SOVIET UNION OF PERSONS BECAUSE OF THEIR RELIGION Mr. FULBRIGHT. Mr. President, as chairman of the Committee on Foreign Relations, I desire to announce that the committee will hold a public hearing on the resolution (S. Res. 204) , condemning persecution by the Soviet Union of per- sons because of their religion, beginning at 10:30 a.m. in room 4221, New Senate Office Building, on Monday, August N. Declassified and Approved For Release 2014/02/21: CIA-RDP66B00403R000300090007-4