FOREIGN ASSISTANCE AND RELATED PROGRAMS APPROPRIATION BILL, 1972

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP74B00415R000600100003-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 44
• Document Creation Date: December 12, 2016
• Document Release Date: December 18, 2001
• Sequence Number: 3
• Publication Date: December 6, 1971
• Content Type: REPORT

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92D CONGRESS 1 HOUSE OF REPRESENTATIVES REPORT
1st Session No. 92-711
FOREIGN ASSISTANCE AND RELATED PROGRAMS
APPROPRIATION BILL, 1972
DECEMBER 6, 1971.-Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
Mr. PASSMAN, from the Committee on Appropriations,
submitted the following
REPORT
The Committee on Appiopriations submits the following report in
explanation of the accompanying bill making appropriations for
Foreign Assistance and related programs for the fiscal year ending
June 30, 1972.
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Title I-Foreign Assistance Act Activities:
Page
Economic assistance-------------------------------------------
9
Military assistance_____________________________________________
Security supporting assistance_____ _____________________________
2
23
Overseas Private Investment Corporation________________________
25
Inter-American Social Development Institute_____________________
27
Title II-Foreign Military Credit Sales_______________________________
28
Title III-Foreign Assistance (other) :
Peace Corps--------------------------------------------------
29
Ryukyu Islands, Army, Administration__________________________
30
Assistance to refugees in the United States_______________________
31
Migration and refugee assistance________________________________
32
Inter-American Development Bank______________________________
34
International Bank for Reconstruction and Development-----------
35
Title IV-Export-Import Bank of the United States ------------------
35
Limitations and legislative provisions________________________________
37
Budget esti- New budget
mates of new (obligational)
(obligational) authority
authority, recommended Bill compared
Title Item fiscal year 1972 in the bill with estimates
I---------- Foreign Assistance Act activities__________________ $3,085,218,000
$2,162,555,000
-$922,663,000
II_________ Foreign military credit sales______________________ 510,000,000
510,000,000
----------------
III -------- Foreign assistance (other)__: ______ ____ -_ _ 747,417,000
172,906,000
-574,511,000
IV---- Export-Import Bank (limitation)___________________r (7, 381, 747, 000)
(7,881,747,000)
-----------------
Total, new budget (obligational) authority- _ _ _ 3 4, 342, 635, 000
2, 845, 461, 000
-1,497,174,000
I Includes $3,690,735,000 submitted as a budget amendment in H. Doc. 92-175.
2 Includes $726,335,000 submitted as budget amendments in H. Docs. 92-93, 92-122, 92-149 and 92-166.
THE BUDGET ESTIMATES
President Nixon submitted estimates for new budget (obligational)
authority based upon his new legislative proposal for the foreign aid
program. Since the budget estimates and the new legislative proposal
were submitted, the authorizing committees of Congress concluded
that greater time was needed to consider the foreign aid reorganization
and it was decided to continue the present program, with certain
modifications, for the time being. The estimates for new budget
(obligational) authority for activities provided in the Foreign Assist-
ance Act of 1961, as amended (Title I of this bill), amount to $3,085,-
218,000 for fiscal year 1972 or some $642,533,000 above what was
appropriated by Congress for the last fiscal year. In addition to the
above request for new budget (obligational) authority, the President
also requested borrowing authority of $1,000,000,000 over the period
of fiscal years 1972-1974 under his new foreign aid legislation but which
was not included in the pending authorization measures.
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In total, the President submitted estimates for new budget (obliga-
tional) authority amounting to $4,342,635,000 for fiscal year 1972 for
all programs considered in the accompanying bill.
The Committee recommends the appropriation of new budget
(obligational) authority of $2,845,461,000 for the programs contained
in Titles I, II, and III of the bill, which is $1,497,174,000 below the
budget estimates and $966,796,000 below the fiscal year 1971
appropriation, including supplementals. The Committee has approved
the total limitations of $7,331,747,000 proposed for the activities of
the Export-Import Bank.
EFFECT OF COMMITTEE ACTION ON PROJECTED BUDGET
EXPENDITURES (OUTLAYS) IN FISCAL YEAR 1972
It is estimated that the action of the Committee as set forth in the
accompanying bill will reduce expenditures (outlays) projected for
fiscal year 1972 by approximately $440,000,000.
PERMANENT NEW BUDGET (OBLIGATIONAL) AUTHORITY-
FEDERAL FUNDS AND TRUST FUNDS
Funds for certain Government activities are authorized by perma-
nent legislation and do not require action by the Congress during the
annual appropriations process. Details of these activities appear in the
appropriate tables at the end of this report.
These activities are estimated to total $1,081,503,000 in fiscal year
1972, which is an increase of $225,000,000 above fiscal year 1971.
STATUS OF AUTHORIZING LEGISLATION
Several items are included in the bill for which authorizing legisla-
tion has not yet been enacted. The items involved are as follows:
1. Foreign Assistance Act Activities-The bill includes $2,127,-
300,000 for the Foreign Assistance Act activities. Excluded from this
total are the following items which are not required to obtain annual
authorizing legislation: Indus Basin Development Fund, loans; Ad-
ministrative expenses, State; and the Overseas Private Investment
Corporation, reserves. The authorization bills are presently pending in
conference.
2. Foreign Military Credit Sales-The bill includes $510,000,000
for the Foreign Military Credit Sales program. The authorization bill
is presently pending in conference.
GENERAL STATEMENT
One of the important factors considered by the Committee in mak-
ing the recommendations contained in the accompanying bill is the
critical financial situation currently facing the United States. The
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Federal public debt presently exceeds $418 billion and the balance of
payments deficit for 1970 exceeded $4.7 billion. Moreover, the balance
of payments deficit in the first 6 months of 1971 exceeded some $9
billion. The Federal budget deficit for fiscal year 1971 amounted to
$23.2 billion and it is currently estimated that the budget deficit for
fiscal 1972 will approximate $28 billion on the unified budget basis.
On the Federal funds basis, the fiscal year 1972 budget deficit will
likely range between $35 billion and $40 billion. Because of this situa-
tion, the Committee feels that Federal expenditures must be reduced
wherever possible in order to help combat the destructive effect of
inflation on the U.S. economy and to help restore the United States to
a more favorable competitive position in the world markets. The Presi-
dent has taken steps designed to curb inflation and to put the U.S.
economy on a truly competitive basis with the economies of other
nations, including a proposal to reduce foreign economic aid spending
in fiscal year 1972 by 10 percent. In order to aid the President in
achieving these desired goals, the Committee has reduced the total
budget requests for new budget (obligational) authority for activities
contained in the accompanying bill by $1,497,174,000.
The Committee has noted the recent action of both Houses of
Congress with respect to authorizing funds to finance the foreign aid
program. On October 29, 1971, the Senate defeated the Foreign
Assistance Act of 1971 (H.R. 9910) and in lieu of that authorization
measure passed two separate authorization bills providing for a greater
reduction of foreign aid funding than was proposed in H.R. 9910.
These measures are presently pending in conference. The House
recently accepted a conference report on the continuing resolution
(H. J. Res. 946) which contained a provision reducing foreign aid
funding to the lower of the rates that obtained during the period
July 1-November 15, 1971 or the lowest rate provided for in foreign
assistance authorization legislation passed by either House at the
present session. This rate applies for the period from November 15
through December 8, 1971 and provides a funding level below that
which was recently passed by the Senate in the two authorization
bills, S. 2819 and S. 2820. The Committee has considered these
recent actions in making the funding recommendations contained
in the accompanying bill.
The Committee feels that the goals of the foreign assistance program
can only be attained by receiving the maximum cooperation of all the
recipient nations. However, in some cases, this cooperation has not
been forthcoming. Several countries have overthrown their constitu-
tional governments and in some instances have imposed very repressive
measures on the population. Other countries, who are recipients of
U.S. aid, have seized, expropriated, or nationalized certain property
owned by U.S. individuals or investors. This particularly applies to
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several countries in Latin America. At times when U.S. property is
taken over by a country and a price is offered for the facility, the price
is often below the U.S. investment and many months of difficult
negotiations are required to reach some type of settlement. The Com-
mittee realizes that nations around the world are sovereign entities
and the U.S. should not try to impose its will over these sovereign
entities, but the Committee is critical of providing increased foreign
aid or continuing present assistance programs to nations who are often
the most flagrant violators of our foreign aid program objectives.
The Committee is particularly concerned over the present situation
existing in Chile. The Government of Chile has recently taken over a
subsidiary of the International Telephone and Telegraph Corporation.
During negotiations with the telephone company concerning a fair
settlement arrangement, the Chilean Government stated they con-
sidered the worth of the subsidiary to be $19 million instead of the
substantiated book value of $150 million presented by company
officials. The Government of Chile also announced recently that
several large U.S. copper companies which were nationalized would
be required to pay Chile $774 million in "excess profits". According
to agency officials, the U.S. Government is honoring existing foreign
assistance agreements with the Chilean Government and other
Chilean institutions, and people-to-people programs are being con-
tinued. Also, the multilateral institutions are continuing to disburse
funds to this country. As of June 30, 1971, approximately $180
million in undisbursed funds (pipeline) for Chile were available
from institutions or activities contained in the accompanying bill.
The practice of providing United States funds to a country which
treats U.S. private investment in such a manner greatly disturbs
the Committee. If the United States does not take strong action
in these cases, such as suspending or terminating foreign assistance,
what is to prevent other countries around the world from being
encouraged to initiate similar procedures against U.S. private in-
vestment?
In this connection, it must be kept in mind that the Overseas
Private Investment Corporation, which was created to insure against
expropriation, among other reasons, has a total potential contingent
liability of over $8.5 billion when all programs are considered
separately. If other countries should decide to proceed as Chile is now
proceeding, the United States would be required to pay out sub-
stantial sums to these private investors. Because of the above facts,
the Committee is of the opinion that United States funds should not
be disbursed to Chile or to any other country while such an unfavora-
ble atmosphere clouds the negotiations between the government of
the country involved and the U.S. private investors.
The Committee also considered the tremendous investment the
United States has in the various countries around the world in recom-
mending the appropriations contained in the accompanying bill. In
the past 25 years, every President (President Truman, President
Eisenhower, President Kennedy, President Johnson and President
Nixon) and every Congress felt that the protection of a country's
freedom justified supplying U.S. assistance (funds and personnel)
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to help in maintaining that freedom. For example, the U.S. invest-
ment in Korea has been considerable:
In billions
Estimated Korean War costs, DOD (fiscal years 1950-54) ------------- $18. 0
Cost of maintaining U.S. military forces in Korea (fiscal years 1954-70)__ 8. 6
Military assistance grant aid program (fiscal years 1950-70) ------------ 3. 0
Economic assistance programs (fiscal years 1946-70) ------------------- 5. 1
Total------------------------------------------------------ 34.7
U.S. MILITARY CASUALTIES IN THE KOREAN WAR
Killed in action------------------------------------------------- 23,300
Dead from other causes------------------------------------------ 10,329
Wounded in action______________________________________________ 105,785
Missing in action------------------------------------------------ 5,866
Captured or interned_________________________________________ 7,140
The U.S. investment in Vietnam is even larger:
In billions
Estimated Vietnam War costs, DOD (fiscal years 1965-71) ------------ $119. 8
Economic assistance programs (fiscal years 1954-70) ------------------- 4. 7
Total----------------------------------------------------- 124.5
U.S. MILITARY CASUALTIES IN VIETNAM (JAN. 1, 1961-Nov. 27, 1971)
Killed in action------------------------------------------------- 38,225
Dead from other causes------------------------------------------ 9,954
Wounded------------------------------------------------------- 307,416
Missing--------------------------------------------------------- 3,239
Captured or interned--------------------------------------------- 487
A large portion of the funds recommended in the accompanying bill
are needed to protect this astronomical U.S. investment and to allow
the countries involved to assume a greater role in their own defense
and development.
The listing of countries and the budget proposals for economic
assistance, military assistance, security supporting assistance, and
military credit sales contained in the report should not be interpreted
as representing the views of the Committee as to recipients and
amounts. These lists merely reflect the tentative allocations proposed
by the Executive Branch in the fiscal year 1972 budget presentation
as can be readily recognized by comparing the totals of the various
lists to the amounts recommended in the bill. Since the budget was
submitted, international conditions have changed and the actual
assistance to any country would be dependent upon decisions as to
the best interests of the United States.
NUMBER OF COUNTRIES RECEIVING U.S. AID
Since the inception of the foreign aid program, the U.S. has extended
assistance to 127 nations around the world. In fiscal year 1972 alone,
it is anticipated that 102 countries and territories will receive disburse-
ments from prior year programs.
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The fiscal 1972 proposed program indicates the following:
48 countries will receive military assistance,
67 countries will receive economic assistance,
83 countries will receive P.L. 480 assistance, and
53 countries will receive Peace Corps assistance.
Some of these countries receive only one type of assistance-either
economic or military aid; others may receive both economic and
military aid and many may receive assistance from the various aid
programs contained in Titles II, III and IV of the accompanying bill.
TITLE I-FOREIGN ASSISTANCE ACT ACTIVITIES
Fiscal year 1971 appropriation---------------------------- 1
$2,
442,
685,
000
Fiscal year 1972 estimate______________________ ___________
2 3,
085,
218,
000
Recommended in the bill_________________________________
3 2,
162,
555,
000
1 Unobligated balances reappropriated.
2 Unobligated balances requested to be reappropriated.
s Unobligated balances reappropriated.
The Committee recommends an appropriation of $2,162,555,000
for activities funded under the Foreign Assistance Act of 1961, as
amended, a reduction of $922,663,000 below the budget estimates
and $280,130,000 below the fiscal 1971 appropriation level. A more
detailed comparison of the total program appears in the table at the
end of this report.
In addition to the new budget (obligational) authority recom-
mended in the bill for the Foreign Assistance Act activities (Title I),
other funds become available during the fiscal year which can be obli-
gated. In fiscal year 1972, these funds are currently estimated to total
$370,485,000. This total consists of $201,625,000 for receipts and reim-
bursements and $168,860,000 for recoveries.
It should be noted that many assistance programs formerly funded
under the Foreign Assistance Act of 1961, as amended, have been
transferred to other departments and agencies and new programs
have been created. Various examples of this situation can be cited.
Several years ago the Overseas Private Investment Corporation
(OPIC) was created to perform activities which were formerly admin-
istered by the Agency for International Development (AID). The
Department of Defense appropriation estimates also contain $2,250,-
800,000 in military assistance funds and $90,900,000 in economic
assistance funds, which are primarily for countries in Southeast Asia.
During testimony before the Committee, it was brought out that
U.S. foreign assistance of one form or another is provided to countries
which have broken off diplomatic relations with the United States, to
countries that are pro-Communist, and to countries where the present
government in power is being threatened by certain leftist groups.
While the Committee is of course interested in the development of
democratic nations around the world, it is sometimes difficult to
evaluate the success of U.S. efforts in accomplishing this desire. The
Committee feels the U.S. Government should take steps to further
tighten up the aid process so as to assure that all funds made available
for foreign assistance would be allocated only to truly beneficial
projects.
The intent of the accompanying bill is to recommend similar funds
for programs which have been carried out under the Foreign Assistance
Act of 1961, as amended.
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9.
ECONOMIC ASSISTANCE
Fiscal year 1971 appropriation_____________________________
$1,
164,
335,
000
Fiscal year 1972 estimate__________________________________
1,
590,
604,
000
Recommended in the bill__________________________________
1,
010,
555,
000
The Committee recommends an appropriation of $1,010,555,000, a
reduction of $580,049,000 below the budget estimates and $153,780,-
000 below the fiscal year 1971 appropriation.
The Committee was pleased to note that an increased number of
projects presented in testimony this year reflected an estimate of the
date of possible completion and an estimate of the total cost to com-
plete the various projects. The Committee continues to feel that this
information should be provided on all the projects, whenever possible,
and it hopes increased efforts will continue to be made to provide this
data.
In the accompanying bill, the security supporting assistance program
has been withdrawn from the "Economic assistance" category, where
it has been located in past years, and is now carried as a separate
item, which conforms with the authorizing legislation as passed the
House.
During the testimony presented to the Committee, it was brought
out that several requests for funds would not now be needed due to
varying reasons. Specifically, the $15,000,000 requested for transi-
tional costs was able to be eliminated because of the deferment of the
reorganization of the foreign aid program. The Committee has taken
these request withdrawals into consideration in the accompanying bill.
WORLD-WIDE, TECHNICAL ASSISTANCE
Fiscal year 1971 appropriation__________________ ____________ $166,750,000
Fiscal year 1972 estimate ------------------------------------ 232, 929, 000
Recommended in the bill____________________________________ 150, 000, 000
The Committee recommends an appropriation of $150, 000, 000, a
reduction of $82,929,000 below the budget estimate and $16,750,000
below the fiscal 1971 appropriation.
According to the Agency for. International Development (AID),
technical assistance is designed to accelerate the process by which
people are educated, skills transferred, and attitudes changed so that
people can more effectively help themselves, This is accomplished by
(1) modifying existing knowledge and techniques to make them
applicable to the special circumstances of developing countries; (2)
demonstrating how to put the adaptive research findings into actual
operation; (3) fostering the adaptation of new ideas and skills in host
country institutions; (4) providing training by formal education and
skill development; and (5) providing skilled advisers.
The amended budget proposed a total program of $244,220,000-to
be financed by $232,929,000 in new appropriations and $11,291,000,
currently estimated, in deobligations of prior year obligations and
reimbursements and receipts. The total proposed budget program on
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a regional or program basis for both Worldwide and Alliance for
Progress, technical assistance is as follows:
Latin America____________________________________________________ $17,574,000 $80,350,000 $97,924,000
Africa___________________________________________________________ 7,665,000 58,800,000 66,465,000
Near East and South Asia__________________________________________ 6,435,000 31, 150,000 37,585,000
East Asia --------------------------- .---------------------------- 10,325,000 24,300,000 34,625,000
Development research ------------------------------ _---------------------------- 8,500,000 8,500,000
Institutional grant, sec. 211(d)______---------------------------------------------- 4,500,000 4,500,000
Program support andinterregienalactivities-------------------------- 34,085,000 79,690,000 113,775,000
Undistributed____________________________________________________ 13,951,000 -------------- 13,951,000
Total, fiscal year 1972 proposed program_______________________ 90,035,000 287,290,000 377,325,000
Source of funding,
Alliance for Progress, technical assistance__________________ 129,745,000 3,360,000 133, 105,000
Worldwide, technical assistance_________________________________ 232,929,000 11,291,000 244,220,000
I Reimbursement, new appropriations, and deobligations.
The Committee is aware that the United States pays international
travel costs for participants from certain foreign nations to the United
States in order for them to receive selected training which will be of
benefit to their and their country. Where possible, the Committee
feels that a firm policy should be adopted which would require the
country who is sending participants to the United States to pay the
international travel costs involved.
ALLIANCE FOR PROGRESS, TECHNICAL ASSISTANCE
Fiscal year 1971 appropriation_______________________________ $82,875,000
Fiscal year 1972 estimate____________________________________ 129, 745, 000
Recommended in the bill____________________________________ 75, 000, 000
The Committee recommends an appropriation of $75,000,000, a
reduction of $54,745,000 below the budget estimate and $7,875,000
below the fiscal year 1971 appropriation.
The amended budget proposed a total program of $133,105,000-to
be financed by $129,745,000 in new appropriations and $3,360,000 in
receipts and reimbursements and recoveries of prior year obligations.
INTERNATIONAL ORGANIZATIONS AND PROGRAMS 1
Fiscal year 1971 appropriation_______________________________ $103,810,000
Fiscal year 1972 estimate____________________________________ 2 141, 000, 000
Recommended in the bill____________________________________ 41, 000, 000
1 In last year's appropriation bill, this was listed as "Multilateral organizations."
2 Includes $13,300,000 for the United Nations Relief and Works Agency which was funded from "Support-
ing assistance" In fiscal year 1971.
The Committee recommends an appropriation of $41,000,000, a
reduction of $100,000,000 below the budget estimate and $62,810,000
below the fiscal year 1971 appropriation.
The budget proposed a total program of $141,135,000, to be financed
by $141,000,000 in new appropriations and $135,000 in recoveries of
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prior year obligations. Included in the estimate of $141,135,000 are
the following programs:
Proposed fiscal
Item
year 1972
Multilateral technical assistance: program
U.N. development program ------------------------------ $100, 000, 000
U.N. Children's Fund----------------------------------- 13, 000, 000
U.N. population program-------------------------------- 7,500,000
U.N. fund for drug abuse control -------------------------- 2,000,000
International Atomic Energy Agency-operational program--- 1,550,000
World Meteorological Organization-voluntary assistance
program--------------------------------------------- .1,500,000
U.N./FAO world food program--------------------------- 1, 500, 000
U.N. Institute for Training and Research----------------- 400, 000
World Health Organization-medical research-------------- 312, 000
International Secretariat for Voluntary Service------------- 73, 000
U.N. Relief and Works Agency------------------------------ 13, 300, 000
Total, fiscal year 1972 proposed program --------- -------- 141, 135, 000
During Committee hearings, several points of interest were noted
concerning the United Nations Development Program. It was stated
in the hearings that certain recommendations which were suggested
by the so-called "Jackson capacity study" had been implemented but
it would be several years before concrete results could be seen.
The following testimony appeared on page 653, part 2 of'the fiscal
year 1972 hearings :
Mr. LONG. * * * the Jackson report says you are going to
have improved financial and budget planning, at least im-
plementation of it would suggest that and these improve-
ments have been implemented. How long before we see the-
results of this budget planning?
Mr. DE PALMA. Congressman Long, I think in all honesty
I have to say it will take 2 or 3 years to see concrete results.
The results we can show now are the administrative reorgani-
zation, and the start in preparation of country plans. But the
results in terms of accomplishments are going to take at
least 2 or 3 years.
Another point of interest discovered during the testimony before
the Committee was that the United Nations Development Program
had available a large reserve because it had been decided to abandon
the practice of full funding of projects. It was estimated that this
reserve would amount to $343.3 million in 1970. The following testi-
mony appeared on page 675 of part 2 of the hearings:
Mr. PASSMAN.* * * You have built up a $343 million re-
serve. It is so far in excess of your needs until you are going
to pull $150 million out and put that in a single account or
dormant reserve and then you are going to take the other
$193 million in reserve, add that to what you requested, and
enlarge upon the program?
Mr. DE PALMA. Yes, sir.
* * * * * * *
Mr. PASSMAN. How much of the $193 million are you going
to use?
Mr. DE PALMA. I don't know how much of it will be
programmed.
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Mr. PASSMAN. In fact, you could actually operate a full
year without any money? That is just about the present
funding level out of this reserve?
Mr. DE PALMA. Yes, Sir.
The UNDP reserve situation was discussed with the Administrator
of the Agency for International Development (AID) and he categori-
cally stated that no bilateral aid program had this type of reserve on
hand. It was also verified that the UNDP reserve would finance the
expanded UNDP program for one year. The following information
was supplied by the agency concerning this reserve which was created
by switching the project funding to an annual basis:
"The Jackson Capacity Study went on to note that the switch to
an annual basis would `free-on a one-time basis-funds which could
be available for a one-time burst of additional activity.' "
The Committee has specifically denied the entire budget request
of the United Nations Development Program (UNDP) but the budget
requests for all the other programs carried in this appropriation title
have been recommended for approval in the full amount requested
for fiscal year 1972. In denying the funds for the UNDP, the Commit-
tee justified this action on the basis that the practice of fully funding
projects has been abandoned and now these projects will be funded on
an annual basis. This change of funding procedure has resulted in the
"freeing up" of large amounts of funds which the Committee feels
should be utilized before additional contributions are solicited from
the various countries involved.
It should also be noted that the total program levels for the UNDP
have increased over the past several years by substantial amounts.
The program levels are as follows: 1970-$257.3 million, 1971-$308.'3
million, 1972-$358.6 million.
The Committee understands the Executive Branch is studying the
possibility of reducing the U.S. assessed contribution to the regular
budget of the United Nations to no more than 25 percent of the total
assessed cost of all members for any single budget year. The Commit-
tee would also urge the Executive Branch to study the possibility of
reducing the U.S. voluntary contributions to various UN agencies to
25 percent of the total contributions pledged for any single budget
year.
PROGRAMS RELATING TO POPULATION GROWTH
Fiscal year 1971 appropriation________________________________ (1)
Fiscal year 1972 estimate_____________________________________ (E)
Recommended in the bill_____________________________________ $50,000,000
1 In fiscal 1971, this program was estimated to be funded at a level of $100,000,000 mostly from the "Devel-
opment loan" account.
2 In the fiscal 1972 budget request, it was proposed to fund the program at a level of $100,000,000 mostly from
the "Technical assistance" program.
The Committee recommends an appropriation of $50,000,000. As
mentioned in the footnote above, this program was proposed in the
budget to be funded at a level of $100,000,000 mostly from the techni-
cal assistance program. The authorizing legislation as passed the
House created a separate line item for programs relating to population
growth and the Committee agrees the program should be funded as a
separate item instead of receiving funds from some other appropriation
account.
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The details of the proposed fiscal year 1972 budget program follow:
Proposed fiscal
year 1972 Program
Latin America-Total ---------------------------------------- $17, 574, 000
Bolivia------------------------------------------------- 335,000
Central American regional organization (ROCAP)----------- 326, 000
Chile--------------------------------------------------- 60,000
Colombia----------------------------------------------- 510,000
Costa Rica--------------------------------------------- 305,000
Ecuador------------------------------------------------ 818,000
El Salvador--------------------------------------------- 322,000
Guatemala--------------------------------------------- 997,000
Honduras----------------------------------------------- 575,000
Jamaica ------------------------------------------------ .575 000
Nicaragua---------------------------------------------- 590,000
Panama------------------------------------------------ 438,000
Paraguay------------------------------------------------ 427,000
Peru--------------------------------------------------- 350,000
Uruguay----------------------------------------------- 31,000
Regional programs--------------------------------------- 10, 915, 000
Ethiopia------------------------------------------------
Ghana-------------------------------------------------
Central West Africa regional------------------------------
Kenya-------------------------------------------------
Liberia-------------------------------------------------
Morocco------------------------------------------------
Tunisia-------------------------------------------------
Tanzania-----------------------------------------------
Uganda------------------------------------------------
Regional programs--------------------------------------
200, 000
886, 000
700, 000
500, 000
219, 000
600, 000
450, 000
535, 000
336, 000
3,239,000
Near East/South Asia-Total --------------------------------- 6,435,000
Afghanistan--------------------------------------------- 318,000
India-------------------------------------------------- 1,050,000
Nepal-------------------------------------------------- 695,000
Pakistan------------------------------------------------ 2,880,000
CENTO------------------------------------------------ 85,000
Regional programs--------------------------------------- 1,159,000
Turkey------------------------------------------------- 248,000
Indonesia-----------------------------------------------
Korea --------------------------------------------------
Laos---------------------------------------------------
Philippines ---------------------------------------------
Thailand -----------------------------------------------
Regional programs--------------------------------------
1,825,000
800, 000
515, 000
5,400,000
1,600,000
2,300,000
Vietnam---------------------------------------------------- 350,000
U.N. population program------------------------------------- 7, 500, 000
Interregional programs--------------------------------------- 34,085,000
Undistributed_______________________________________________ 13,951,000
Grand total, fiscal year 1972, proposed program----------- 100, 000, 000
Note: Detail may not add to total due to rounding.
The Committee recognizes the fact that the increased rates of
population growth present in certain countries have an effect on
their economic development.
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However during testimony before the Committee, it was revealed
that of the funds provided for population programs in fiscal year 1971,
$4,270,000, remained undistributed or unused as of the end of the
fiscal year. In fiscal year 1972, the Agency for International Develop-
ment indicates that $13,951,000 will be undistributed until additional
requirements can be identified and precisely defined and developed.
It therefore appears that the funds provided for population growth in
the past year and the estimate for this fiscal year are in excess of what
could normally be used by the Agency.
The Committee feels the amount recommended in the accompanying
bill is sufficient to meet the needs of this program. The Committee is
also of the opinion that AID should not be forced to obligate a specific
amount for the population programs because this would cause waste
due to the fact that less desirable projects would be selected in order
to obligate the money. The funds should be spent on projects that
have been properly justified and where a specific need for assistance
has been identified.
Fiscal year 1971 appropriation--_ -------------------- $12, 895, 000
Fiscal year 1972 estimate____________________________________ 10, 175, 000
Recommended in the bill------------------------------------- 17, 200, 000
The Committee recommends an appropriation of $17,200,000, an
increase of $7,025,000 above the budget estimate and $4,305,000 above
the fiscal year 1971 appropriation. The Committee recommendation
includes the following institutions and amounts:
American University of Beirut, Lebanon_______________________ $6,000,000
Feinberg Graduate School of Weizmann Institute, Israel ---------- 1,500,000
University of the Americas, Mexico__________________ ---------------------------- 1,500,000
Robert College, Turkey --------------------------------------------------------------- 1,o00,060
Project HOPE --------------------------------------- 1, 500, 000
American Hospital in Rome, Italy ----------------------------- 300, OQO
Program support-------------------------------------------- 200,000
Unallocated funds appropriated_______________________________ 5,200,000
000
Total ----------------------------- ------------------ 17,200,000
Section 214 of the Foreign Assistance Act of 1961, as amended,
authorizes the President to furnish assistance to schools, libraries, and
hospital centers for medical education and research outside the United
States when these institutions are founded or sponsored by U.S.
citizens and meet various legislative and administrative criteria.
The Committee recommends $1,500,000 for the University of the
Americas in Mexico. Officials of the University and the Agency for
International Development pointed out that the total program request
is for $5,000,000 to be utilized over a period of 3 years or longer and
the funds would be used for capital improvement and not budget
support. Also, in addition to the funds provided by the United States,
it was stated that matching funds would be received from a private
organization called the "Jenkins Foundation". Although the Com-
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mittee considers this to be a good project, it felt, after certain testimony
and discussion, that only $1,500,000 could be effectively utilized the
first year. While the Committee cannot commit subsequent Congresses,
the request for the additional $3,500,000 will be considered, when sub-
mitted, in light of the availability of funds and adequate justification
at the time of consideration.
The Committee has not recommended funds for all of the projects
named in the legislative reports of Congress because many are new and
have not been considered by the Agency. No doubt all the requests
have some merit, but many of the projects have not been considered
by the U.S. Ambassador involved or even the foreign government
where the project is located. While Congress has every right to include
any meritorious project for funding, it is felt that it would be desirable
to have as many projects as possible processed through established
channels and be presented to Congress by the Agency for Interna-
tional Development.
Since many of the projects listed in the various legislative reports
of Congress had not been considered by the AID agency, the Com-
mittee recommended $5,200,000 in unallocated funds which should
be used by the Agency for International Development to fund meri-
torious projects that have been properly justified before the Agency
and meet their criteria. Projects selected for funding should be
limited as near as possible to those discussed with the various com-
mittees of Congress.
INDUS BASIN DEVELOPMENT FUND, GRANTS
Fiscal year 1971 appropriation________________________________
$4,925,000
Fiscal year 1972 estimate_____________________________________
15,000,000
Recommended in the bill_____________________________________
7,500,000
The Committee recommends an appropriation of $7,500,000, a
reduction of $7,500,000 below the budget estimate and an increase of
$2,575,000 above the fiscal year 1971 appropriation.
The Indus Basin Settlement Agreements of 1960 and 1964 provided
for the establishment of the Indus Basin Development Fund to
finance a construction program which ensures an equitable division
of the waters of the Indus Basin between India and Pakistan. The
United States, the World Bank, Australia, New Zealand, Pakistan,
the United Kingdom, Canada, Germany, and India contribute to
the fund.
Due to the recent disruptions in Pakistan and India, the Com-
mittee anticipates that a slowdown in work on the Indus Basin project
may occur which will result in a lower requirement for funds.
INDUS BASIN DEVELOPMENT FUND, LOANS
Fiscal year 1971 appropriation______________________________ $6,980,000
Fiscal year 1972 estimate___________________________________ 12, 000, 000
Recommended in the bill___________________________________ 6,000,000
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This appropriation is part of the previous item discussed above. The
original authorization provided for $51,220,000 to remain available
until expended. In fiscal year 1969, Congress appropriated $12,000,000
for this item and in fiscal year 1971, $6,980,000 was appropriated,
which left a balance of $32,240,000 authorized for future years.
The Committee recommends an appropriation of $6,000,000, a
reduction of $6,000,000 below the budget estimate.
Fiscal year 1971 appropriation------------------------------- 1 $22, 500, 000
Fiscal year 1972 estimate ------------------------------------ 100, 000, 090
Recommended in the bill------------------------------------ 30, 000, 000
Includes $7,500,000 provided in the Supplemental Appropriation Act of 1971 (P. L. 91-665).
The contingency fund is used for assistance needs which are un-
foreseen or cannot be accurately defined at the time the proposed
program is prepared and submitted to Congress.
The Committee recommends an appropriation of $30,000,000, a
reduction of $70,000,000 below the budget estimate and an increase
of $7,500,000 above the fiscal year 1971 appropriation.
During the testimony before the Committee, it was indicated that
the major part of the budget request for the contingency fund would be
used for refugee relief in East Pakistan. However, a subsequent
budget amendment provided a separate line item for East Pakistan
refugee relief and the accompanying bill includes the program as !a
separate item. The total amount requested for the contingency fund
has been recommended to be reduced to reflect this separation.
The following amounts have been appropriated to the contingency
fund for the past 4 fiscal years: 1968-$10,000,000; 1969-$5,000,000;
1970--$12,500,000; and 1971-$22,500,000.
REFUGEE RELIEF ASSISTANCE (EAST PAKISTAN)
Fiscal year 1971 appropriation-------------------------------
----------.-
Fiscal year 1972 estimate------------------------------------
$250,000,000
Recommended in the bill------------------------------------
175, 000, 000
The Committee recommends an appropriation of $175,000,000.
As was mentioned previously, a subsequent budget amendment
provided a separate line item to fund this program since the require-
ment for funds was a known one. The funds are to be used to provide
assistance for the relief and rehabilitation of refugees from East
Pakistan and for humanitarian relief in East Pakistan. Food re-
sources under Public Law 480 will supplement the funds requested
here.
The Agency for International Development estimates the total
U.S. cost in fiscal year 1972 for this refugee assistance will total over
$600,000,000, broken down as follows:
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1. Requested dollar appropriation---------------------------
$250. 0
A. Committed to date:
Refugee relief in India------------------------
20.0
Relief in East Pakistan----------------------
7.0
B. Anticipated:
Refugee relief in India (depending on numbers of
refugees present durin year) ---------------
150.0-200.0
Relief in East Pakistan (for UNEPRO operations,
relief supplies, charter of transport equipment,
etc.) -------
5.0-30.0
Resettlement of refugees (if significant number
return)------------------------------------
50.0-75.0
II. Public Law 480-----------------------------------------
361.0
A. Committed to date:
East Pakistan relief:
500,000 tons of wheat and 25,000 tons of oil
under title I grant---------------------- 40.0
100,000 tons of wheat and 75,000 tons of rice
under title II for free distribution under
U.N.auspices -------------------------- 33.0
35,000 tons of high protein blends under title
II for UNICEF's child feeding program-- 11. 0
Title II foodgrains provided under world food
program----------------------------- 8.0
Refugee relief in India:
90,000 tons of rice, 50,000 tons of oil, and
15,000 tons of bulgar to the Government of
India under title II--------------------- 35.0
Title II commodities provided through vol-
untary agencies------------------------ - 8.0
35,000 tons of high protein foods provided
through UNICEF---------------------- 11.0
B. Anticipated: Title II for refugee relief in India------- 150. 0-220. 0
III. Local currency ------------------------------------------ 4.3
A. Committed to date:
Refugee relief in Pakistan: 104(d) funds to help
pay the local administrative costs of the U.N.
relief operation----------------------------- 3. 5
Refugee relief in India: 104(d) funds to help pay
local costs of Voluntary Agency relief programs- .8
It is estimated by the Agency for International Development that
more than 9.5 million East Pakistanis have fled their homes into India
and additional refugees are continuing to flee. Also, many millions of
Bengalis remaining in East Pakistan are threatened with famine.
The United States grant funds for refugees in India are part of the
total international relief effort being coordinated by the UN High
Commissioner for Refugees (UNHCR). Some of these grant funds are
being made available directly to the Indian Government, some directly
to the UN High Commissioner for Refugees, and some directly to other
international voluntary agencies, depending upon the priority of needs
and the capability of the agencies involved.
The relief efforts in East Pakistan focus on the most critical prob-
lems of the supply of food and its distribution. Funds are needed to
help supplement Pakistan's transport capability, primarily on inland
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waterways, since rail and road traffic are largely disrupted. Funds are
needed to purchase or lease coasters, barges, tug boats, trucks and
possibly smaller landing craft necessary to insure an adequate move-
ment of food to major inland distribution points.
While the Committee is deeply concerned over the suffering which
has resulted from the civil disturbances in East Pakistan, it is felt
every effort should be made to obtain contributions from other coun-
tries to help share in the burden of this tragedy. The United States
should not be put in a position of paying most of the bill for this
international disaster.
Since the budget planning for this particular item is tentative at the
present time, the Committee felt the allowance of the full budget
request was not justified.
ALLIANCE FOR PROGRESS, DEVELOPMENT LOANS
Fiscal year 1971 appropriation------------------------------- $287,500,000
Fiscal year 1972 estimate------------------------------------ 235, 000, 000
Recommended in the bill ------------------------------ 150, 000, 000
The Committee recommends an appropriation of $150,000,000, a
reduction of $85,000,000 below the budget estimate and $137,500,000
below the fiscal year 1971 appropriation.
While the President may determine the terns of such loans, in
actual practice the vast majority of the loans have maturity dates of
40 years with a 10 year grace period.. The interest rate has varied since
the inception of this program, from the original three-fourths of one
percent during the life of the loan, up to the present minimum of 2
percent during the 10-year grace period and a minimum of 3 percent
during the balance of the life of the loan.
The total proposed fiscal year 1972 program of $310,200,000 consists
of $235,000,000 in new obligational authority, $36,790,000 in receipts
and reimbursements, and $38,410,000 in recoveries of prior years'
funds. A table showing the proposed fiscal year 1972 budget program
follows:
Bolivia-----------------------------------------------------
10,000, 000
Brazil------------------------------------------------------
60,000,000
Central American Economic Community:
Central America regional organization (ROCAP)------------
10, 000, 000
El Salvador---------------------------------------------
10,500,000
Guatemala---------------------------------------------
15,000,000
Honduras- --------------------------------------
`?),000,000
Nicaragua ------------------------------------
10,000,000
Colombia----------------------------------------------------
75,000,000
Dominican Republic-----------------------------------------
15,000,000
Ecuador----------------------------------------------------
14,000,000
Guyana----------------------------------------------------
3,500,000
Jamaica----------------------------------------------------
10000000
Panama-----------------------------------------------------
25,000,000
Paraguay---------------------------------------------------
6,000,000
Peru-------------------------------------------------------
10,000,000
Uruguay---------------------------------------------------
12,000,000
Eastern Caribbean regional program ----------------
10, 000, 000
Program support and interregional activities--------------------
200, 000
Total, fiscal year 1972 proposed program_________________ 310,200, 000
Proposed fiscal year
Item 1972 program
Regional programs ------------------------------$5, 000, 000
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During fiscal year 1971, $232,460,000 in loans were authorized by
the Agency while the Congress appropriated $287,500,000 in new
obligational authority. The reason for this large difference between
loans authorized and funds appropriated can be explained by the
fact that large amounts were authorized for transfer from this ac-
count to other programs and, also, populations grants were funded
from this loan account. In fiscal year 1972, the population program
is recommended as a separate line item and will not be dependent on
funding from other programs. Transfers are also planned to be kept
to a minimum which means that the funds provided will be used to
a greater extent for strictly development loan purposes. The Coin-
mittee is of the opinion that the development loan fund should be
utilized for that for which it was intended, to make loans, and not be
used to provide grants or transfer funds.
DEVELOPMENT LOANS (WORLDWIDE)
Fiscal year 1971 appropriation-------------------------------
$420,000,000
Fiscal year 1972 estimate------------------------------------
400, 000, 000
Recommended in the bill------------------------------------
250, 000, 000
The Committee recommends an appropriation of $250,000,000, a
reduction of $150,000,000 below the budget estimate and $170,000,000
below the fiscal year 1971 appropriation.
These funds are used to finance loans to the less developed countries
in order to provide capital resources needed for growth. The loans
finance the commodities and technical services necessary for the con-
struction of essential facilities, such as schools, clinics, roads, dams and
irrigation facilities and factories, and the import of a wide range of
products. The terms of the loans are the same as described under the
Alliance for Progress, Development Loans paragraph.
The total proposed program of $605,300,000 consists of $400,000,000
in new obligational authority, $155,595,000 in receipts and reimburse-
ments, and $49,705,000 in recoveries of prior years' funds. A table
showing the proposed fiscal year 1972 budget program follows:
Item
Proposed fiscal
Africa:
year 1972 program
Regional programs--------------------------------------- $16,500,000
Congo--------------------------------------------------
5,000,000
Ethiopia------------------------------------------------
12,000,000
Ghana-------------------------------------------------
15,000,000
Liberia-------------------------------------------------
4,000,000
Morocco------------------------------------------------
11,000,000
Nigeria-------------------------------------------------
16,000,000
Tanzania--------- -------------------------------
3,000,000
Tunisia--------------------------------------------------
10,000,000
Uganda-------------------------------------------------
2,500,000
Near East and South Asia:
India---------------------------------------------------
220,000,000
Pakistan-----------------------------------------------
110,000,000
Turkey-------------------------------------:-----------
40,000,000
East Asia:
Indonesia-----------------------------------------------
100,000,000
Korea--------------------------------------------------
20,000,000
Philippines---------------------------------------------
20,000,000
Program support and interregional activities--------------------
300, 000
Total, fiscal year 1972 proposed program----------------- 605, 300, 000
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With regard to the total availability of funds estimated for fiscal year
1972 to be used strictly for development loan purposes, essentially
the same explanation applies as was discussed under the Alliance; for
Progress, Development Loans heading. In addition to the fact that
transfers are planned to be kept to a minimum and the population
growth item will be funded as a separate prograin in fiscal year 1972,
receipts and unobligated balances brought forward are estimated to in-
crease markedly over fiscal year 1971. These facts were considered by
the Committee in making the funding recommendations for this
program.
As has been the case in the past, the Committee again found that
certain development loans were authorized more than a year ago and
no disbursements had yet been made and others were authorized sev-
eral years ago and very little had yet been disbursed. The Committee
feels these loans should be well planned and prepared to proceed be-
fore the loan is authorized and funds are obligated.
During testimony before the Committee, it was discovered that the
Agency for International Development (AID) was providing an
increased amount of loans to various regional banks and in some cases
it appeared that AID was becoming involved in the same areas which
the Overseas Private Investment Corporation (OPIC) was created to
handle. In several instances, these regional banks would receive loans
from the United States and they would in turn provide loans to finance
specific programs in a certain country. In some cases, the Committee
felt these regional banks had become an unnecessary "middleman": in
the foreign assistance transaction and therefore added to the expense of
administering the overall program. The Committee would also like
to point out that certain overlap exists between the various agencies
providing foreign assistance to the nations of the world. In ohe
instance, it was discovered that AID was providing funds "to en-
courage private investment" which is one of the reasons why OPIC
was created. The Committee feels these situations should be looked
nto and corrective action should be taken where necessary.
ADMINISTRATIVE EXPENSES, A.I.D.
Fiscal year 1971 appropriation_______________________________ 1 $51, 000, 000
Fiscal year 1972 estimate ------------------------------------- 60, 200, 000
Recommended in the bill ---------------------------- _----- 54, 600, 000
I Excludes transfer in of $6,800,000 as provided in the Second Supplemental Appropriation Act of 1971
(P.L. 92-18).
The Committee recommends an appropriation of $54,600,000, a
reduction of $5,600,000 below the budget estimate and an increase of
$3,600,000 above the fiscal year 1971 appropriation.
ADMINISTRATIVE EXPENSES, STATE
Fiscal year 1971 appropriation________________________________ 1 $4, 100, 000
Fiscal year 1972 estimate_______________________________ ____ 4, 555, 000
Recommended in the bill_____________________________________ 4, 255, 000
1 Excludes transfer in of $205,900 as provided in the Second Supplemental Appropriation Act of 1171
(P.L. 92-18).
The Committee recommends an appropriation of $4,255,000, a
reduction of $300,000 below the budget estimate and an increase of
$155,000 above the fiscal year 1971 appropriation.
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This item does not require annual authorization and the details of
the proposed budget program follow:
Proposed fiscal
year 1972
program
U.S. mission to the North Atlantic Treaty Organization-------_-_
$1,921,000
U.S. mission to the Organization for Economic Cooperation and
Development----------------------------------------------
1,195,000
Mutual Defense Assistance Control Act (Battle Act)--------------
1,234,000
Military assistance and arms sales supervision____________________
205,000
Total, fiscal year 1972 proposed program__________________
4,555,000
During the hearings before the Committee, it was noted that
$22,700 was requested for an "environmental protection officer" and
a secretary for the U.S. Mission to the North Atlantic Treaty Orga-
nization (NATO). The Committee could not agree there was a need
for. an environmental protection officer and a secretary for NATO
and has specifically denied these funds.
Fiscal year 1971 appropriation______________________________ 1 $690, 000, 000
Fiscal year 1972 estimate___________________________________ 705,000,000
Recommended in the bill___________________________________ 552, 000, 000
1 Excludes transfer in of $60 000,000 from A.I.D. and includes $340,000,000 provided in the Supplements
Appropriation Act of 1971 (P.L. 91-665).
The Committee recommends an appropriation of $552,000,000,
a reduction of $153,000,000 below the budget estimate and
$138,000,000 below the fiscal year 1971 appropriation.
The proposed program for fiscal year 1972 of $731,500,000 consists of
$705,000,000 in new obligational authority, $4,000,000 in reap-
propriation of unobligated funds, $18,500,000 in recoupments, and
$4,000,000 in reimbursements. The proposed fiscal year 1972 budget
program is outlined in the following table:
Item
East Asia and Pacific:
Proposed fiscal year
1975 program
Cambodia_____________________________________________
$200,
000,
000
China, Republic of_____________________________________
19,
500,
000
Indonesia----------------------------------------------
24,
990,
000
Korea-------------------------------------------------
239,
400,
000
Malaysia----------------------------------------------
134,
000
Philippines____________________________________________
17,000,000
Regional ----------------------------------------------76,000
Near East and South Asia:
Afghanistan-------------------------------------------- (1)
Greece------------------------------------------------ 19,875,000
India-------------------------------------------------- (1).
Iran--------------------------------------------------- 942,000
Nepal------------------------------------------------- (1)
Pakistan----------------------------------------------- (1)
Turkey---------------------------- ------------------- 99,770,000
Regional costs__________________________________________ 900,000
Classified country programs:
Jordan/Lebanon/Saudi Arabia______________________ 45,513,000
Europe :
Austria------------------------------------------------ (2)
Portugal----------------------------------------------- 1,000,000
Spain------------------------------------------------- 13,000,000
Regional costs_________________________________________ 3 82, 000
I Included in regional costs as $881,000 total training only program.
% Under $25,000 included in regional costs.
s Includes classified data.
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Item Proposed fiscal year
Africa: 1972 program
Congo------------------------------------------------- $477,000
Ethiopia----------------------------------------------- 12,790,000
Ghana (4)
Liberia------------------------------------------------ 500,000
Mali (9)
Nigeria------------------------------------------------ (4)
Senegal-------------------- (4)
---------------------------
Regionalcosts_________________________________________ 327,000
Classified country programs:
Morocco/Tunisia-------------------------------------- 4,915,000
Latin America:
Argentina--------------------------------------------- 897,000
Bolivia------------------------------------------------ 666,000
Brazil------------------------------------------------- 892,000
Chile-------------------------------------------------- 856,000
Colombia---------------------------------------------- 844,000
Dominican Republic------------------------------------ 539,000
Ecuador----------------------------------------------- 645,000
El Salvador-------------------------------------------- 374,000
Guatemala-------------------------------------------- 336,000
Honduras---------------------------------------------- 467,000
Mexico------------------------------------------------ 107,000
Nicaragua--------------------------------------------- 568,000
Panama----------------------------------------------- 173,000
Paraguay---------------------------------------------- 387,000
Peru-------------------------------------------------- 792,000
Uruguay---------------------------------------------- 400,000
Venezuela--------------------------------------------- 734,000
Regional cost ------------------------------------------ 191,000
Department of Defense nonregional--------------------------- 20, 441, 000
Total, fiscal year 1972 proposed program----------------- 731, 500, 000
Included in regional costs as $227,000 total training only program.
This appropriation estimate does not include funds for Laos, Thai-
land, Vietnam, NATO Infrastructure, support of Free World forces
in Vietnam, and funds for International Military Headquarters. The
budget estimates for these items in fiscal year 1972 total about $2,300,-
000,000. All these programs have been transferred to and are included
in the budget estimates of the Defense Department.
The fiscal year 1972 program proposes to supply materiel and train-
ing programs to 13 countries and training only programs to 33
countries. As was previously mentioned in the general statement, these
funds are needed to hell) protect the large U.S. investment made to
maintain freedom around the world.
During testimony before the Committee, the following statements
were made with regard to the need for the military assistance request
(page 51, part 1 of the FY 1972 hearings) :
Mr. PASSMAN. Mr. Secretary, is it not true that the
majority of this request is needed to implement the Nixon
doctrine?
SECRETARY LAIRD. There is no question about that, Mr.
Chairman, and if we are going to make the Nixon doctrine
work-if we are going to reduce the American military pres-
ense in Asia, to encourage the partnership strength that is the
cornerstone of the Nixon Doctrine and to go forward with
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our programs of negotiation-these funds are needed and
necessary.
MR. PASSMAN, Simply stated, the important part of the
Nixon Doctrine, is that we are willing to furnish the equip-
ment to modernize their countries' military forces, but they
are, going to furnish the men and do the fighting in the
future. It's just that simple, isn't it?
SECRETARY LAIRD. That is it.
In addition, the Committee was supplied with the following infor-
mation which shows what troop reductions have been made possible
as a result of the implementation of the Nixon Doctrine (page 52,
part 1 of the FY 1972 hearings) :
In the past 2 years, plans have been announced to reduce
the U.S. presence in Asia by more than 300,000 personnel.
This reduced presence is being replaced by improved capa-
bilities of nations in the area, both through their own
efforts and through U.S. assistance. The approximate
personnel reductions, by country, include:
South Vietnam---------------------------------------- 260,000
Korea------------------------------------------------- 20,000
Japan------------------------------------------------- 12,000
Thailand---------------------------------------------- 16,000
Philippines-------------------------------------------- 9,000
Subsequent to the hearings, the Committee noted that the troop
level in South Vietnam reached its highest point in fiscal year.1969
at a level of 542,000 and the troop level is estimated to be reduced to
159,000 by December 31, 1971. This is a reduction in personnel of
383,000.
The Committee feels these troop reductions result in a financial
savings to the United States and the funds recommended for this
program will help to bring about these reductions.
Fiscal year 1971 appropriation------------------------------ 1 $569, 600, 000
Fiscal year 1972 estimate------------------------------------ 764, 614, 000
Recommended in thf, bill----------------------------- ------ 575, 000, 000
' Includes $156,000,000 provided in the Supplemental Appropriation Act of 1971 (P.L. 91-665).
The Committee recommends an appropriation of $575,000,000, a
reduction of $189,614,000 below the budget estimate and an increase
of $5,400,000 above the fiscal year 1971 appropriation.
The Committee has taken note of the following statement which
appeared on page 26 of House report 92-380 (House Foreign Affairs
report of the Foreign Assistance Act of 1971) :
"In the judgment of the committee, Israel is fully eligible
to receive assistance under this chapter [Security Supporting
Assistance] . . ."
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This Committee also feels that Israel is eligible for security support-
ing assistance but a recommendation for a specific amount for Israel
is not made because the exact amount required had not been fully
determined when the Committee considered this item.
The amended budget proposed a total program of $809,550,000
which is comprised of $764,614,000 in new obligational authority and
$44,936,000 in reimbursements and recoveries of prior year obliga-
tions. The detail of the proposed fiscal year 1972 budget program
follows:
Proposed
fiscal year
Item 1972 program
Latin America: Haiti--------------------------------------- $3,000,000
Africa:
Nigeria------ ---------------------------------------- 4,100,000
Southern African region________________________________ 300, 000
East Asia:
Cambodia-------------------------------------------- 110,000,000
Laos------------------------------------------------- 50 550,000
Thailand------------------------------------------ -- 40,000,000
Regional--------------------------------------------- 1,400,000
Near East and South Asia: Jordan___________________________ 30, 000, 000
Vietnam___________________ 565, 000, 000
International organizations and programs: U.N. force in Cyprus- 4,800,000
Program support------------------------------------------ 400,000
Total, fiscal year 1972 proposed program --------------- 809, 550, 000
Note: Congressional presentation__________________________ 825, 000, 000
Less:
Administrative expenses_____________________ 10, 000, 000
Public safety (non-Southeast Asia) ------------ 5,450,000
Total---------------------------------------------- 15,450,000
Grand total_________________________________________ 809,550,000
Supporting assistance is designed to affect the economic impact of
extraordinary security or political events and over time to help the
recipient nations achieve the means to support their own security
efforts. Approximately 90 percent of the funds programed for fiscal
year 1972 in this title are estimated to be allocated to Vietnam,
Cambodia, Laos, and Thailand with the largest portion being pro-
gramed for Vietnam.
During the hearings before the Committee, the following exchange
took place on page 414 of part 2 of the fiscal year 1972 hearings
concerning the budget request for Vietnam:
Mr. PASSMAN. . . . I have looked at the statistics and
observe in your statement on page 3:
"Vietnam is now producing enough rice to meet its internal
needs."
Now barring any other considerations, that would be
sufficient for this Congress to make a reduction below that of
last year. I guess there are other factors you would have to
take into account and we would have to take into account,
but comparing the necessities of last year against this year,
... that within itself would indicate they would not need as
much money for food, would it not?
Mr. N00TER. They will not need as much money for the
importation of rice; yes, sir, that is correct.
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Mr. PASSMAN. Is that not their main diet?
Mr. NooTER. That is their principal staple, yes, sir.
Mr. PASSMAN. Yes; thank you.
The Committee realizes that the supporting assistance program is
aimed at the achievement of the central theme of the Nixon Doctrine
which is to have each country assume the primary responsibility for
its own defense thereby reducing the need for U.S. military presence.
However, the Committee is aware that in past years inefficiency and
waste has plagued this program and other programs in Southeast Asia
and the Committee feels that some of this waste can be attributed to
the fact that tremendous amounts of funds were pumped into this
area of the world without adequate controls. This year the budget
request is approximately $195,000,000 above what was appropriated
in fiscal year 1971. It is difficult for the Committee to understand that
program costs or requirements have increased that rapidly in one year
and how this large increase in funds can be expended efficiently.
The Committee expects that the allocation of funds provided in the
accompanying bill will be accomplished in such a manner so as not to
retard the "Vietnamization" of programs in South Vietnam.
OVERSEAS PRIVATE INVESTMENT CORPORATION
Fiscal year 1971 appropriation--------------------------------- $18,750,000
Fiscal year 1972 estimate_____________________________________ 25, 000, 000
Recommended in the bill -------------------------------------
The Committee recommends the full budget estimate of $25,000,000,
which is an increase of $6,250,000 above the fiscal year 1971 appro-
priation.
The Overseas Private Investment Corporation (OPIC) is authorized
to insure investments against inconvertibility, expropriation and war
risks, to guarantee loans and other investments of eligible investors
(not to exceed 75 percent of such investment), to make loans to firms
privately owned or of mixed private and public ownership (excluding
loans for mining or other extraction operations) and to encourage and
support the promotion of private investment opportunities.
The Foreign Assistance Act of 1969 created the Corporation and
authorized the sum of $40,000,000 for the capital of the Corporation
to be derived from repayments of prior development loans. This sum
would be used as a direct investment fund to make loans directly to
borrowers.
At the time the hearings were held in April, no loanshad yet been made
from this fund. In fact on June 21, 1971 in testimony presented by Dr.
John Hannah, Administrator for the Agency for International Devel-
opment, the following exchange was recorded (page 65, part 2 of the
FY 1972 hearings) :
Mr. PASSMAN. Also OPIC makes loans for American busi-
ness people who want to open businesses abroad?
Dr. HANNAH. Yes; but they have a very minimal amount
of money. They have not loaned any yet.
Mr. PASSMAN. From little acorns big trees grow.
Dr. HANNAH. It could.
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Mr. PASSMAN. It does. The record shows how all of these
programs get started. Look at the prior years' appropriations
and what they requested this year. Their purposes, their in-
tent and the legislation sets them up as a lending agency as
well as a guarantee investment agency, does it not?
Dr. HANNAH. Yes; it could Mr. Chairman. I am only say-
ing so long as I am the chairman of the board of OPIC we are
not going into the loaning business.
Mr. PASSMAN. Doctor, you are very fair, but have I made a
fair statement: under the legislation they had a request in for
loans, did they not?
Dr. HANNAH. Yes; they did but they withdrew it. They
have a small sum of money.
Despite the above testimony, the first loan was signed on June 30,
1971 for $2,000,000. The Committee has also been told that OPIC
is presently processing additional loan applications and several are
nearing the approval stage. The loan was made to the Private In-
vestment Company for Asia which is incorporated in Panama and
domiciled in Tokyo. The following fact sheet is supplied concerning
this loan:
PRIVATE INVESTMENT COMPANY FOR ASIA S.A. (PICA)
Amount of loan: $2,000,000.
United States--Directors:
Eugene R. Black.
Emilio G. Collado,* Executive Vice-President, Standard Oil
Company (New Jersey)
Mark C. Feer, General Partner, Kuhn, Loeb & Co.
Jacques G. Maisonrouge, President, IBM World Trade
Corporation.
George S. Moore, Chairman of the First National City Bank.
Stanely de J. Osborne,* Partner, Lazard Freres & Co.
Rudolph A. Peterson,* Chairman of Executive Committee,
Bank of America.
Purpose of the Corporation: It is a multinational corporation or-
ganized to make and facilitate private capital investments in de-
veloping countries of Asia.
Where located: Main office is in Tokyo, head office is in Panama
City, Panama and they have a regional office in Singapore.
When started: They have been in operation for two years as of this
past December 31, 1970.
Capitilization: Initial authorized capital was $40,000,000. As of
December 31, 1970, $24,000,000 had been paid-in.
It appears that OPIC is providing loans to foreign corpora-
tions when U.S. businesses are having a difficult time obtaining
similar loans from the Federal Government.
According to material provided to the Committee, the total potential
contingent liability of OPIC as of September 30, 1971, exceeds
$8,500,000,000 if all the programs administered by OPIC are con-
sidered separately. The potential contingent liability amount is broken
down as follows:
Contracts issued under previous authorities:
Current coverage__________________________________ $3,194,366,891.35
Standby options___________________________________ 3, 130, 313, 034. 61
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Contracts issued by OPIC:
Current coverage__________________________________
924,
983,
489.
77
Standby options___________________________________
1,
252,
971,
053.
95
Total__________________________________________
2,
177,
954,
543.
72
Grand total contracts outstanding :
Current coverage__________________________________
4,
119,
350,
381.
12
Standby options___________________________________
4,
383,
284,
088.
56
Total__________________________________________ 8,502,634,469.68
In this connection, it should be pointed out that the present poten-
tial claims possible as a result of the actions taken by the country of
Chile amount to about $270,000,000 while the total insurance reserve
which can be applied to these claims is estimated to total a maximum
amount of $152,000,000 on June 30, 1972. The total potential claims
of this one country would liquidate the entire insurance reserve of
OPIC which has been built up for the last twenty years and a short
fall of $118,000,000 would result.
The Committee feels OPIC is becoming overextended in its financial
commitments around the world. This can certainly be documented
by the fact that the Overseas Private Investment Corporation has
a total potential liability of over $8,500,000,000 when all programs
administered by OPIC are considered separately and the total
maximum reserves are estimated to amount to only $222,000,000 on
June 30, 1972. In addition, if the situation in Chile went completely
down the drain, OP1C's reserves would not be adequate to meet all
the potential claims for this one country alone. The U.S. must slow
down these programs.
Fiscal year 1971 limitation i--------------------------------
($10,000,000)
Fiscal year 1972 limitation request___________________________
(11, 000, 000)
Recommended in the bill -----------------------------------
-_-______-_-
I Limitation on obligations.
The Committee has denied the budget request for limitation on
obligations.
The Institute was created by the Foreign Assistance Act of 1969.
The President made the following statement about the Institute:
The Institute will provide grant support for innovative,
experimental programs undertaken primarily by private
nonprofit organizations. It is designed as a pilot project to
bring the dynamism of U.S. and Latin American private
groups to bear on development problems through people-to-
people programs, and to help broaden the participation of
individuals in the processes of development.
The authorizing legislation provided that not to exceed $50,000,000
shall be available to the Institute from the economic assistance funds
of the Foreign Assistance Act of 1961, as amended over a two year
period. At the present time, the entire $50,000,000 has been transferred
to the Institute from the Agency for International Development.
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The unobligated balance as of June 30, 1971 was estimated to have
been $49,618,000.
The authorizing legislation also authorizes the Institute to make
direct loans. As was discussed under the previous title concerning the
Overseas Private Investment Corporation, approximately 13 or 14
other foreign assistance loan programs are in existence and another
agency is not needed to perform this function.
The Committee also does not feel another agency is needed to
disburse grant aid to Latin America.
Fiscal year 1971 appropriation------------------------------ 1$700,000,000 Fiscal year 1972 estimate----------------------------------- 510, 000, 000
Recommended in the bill----------------------------------- 510, 000, 000
Includes $600,000,000 for credit sales to Israel provided in the Supplemental Appropriation Act of 1971
(P. L. 91-066).
The Committee recommends the budget estimate of $510,000,000.
The Committee is of the opinion that of this total, $300,000,000 should
be made available for credit sales to Israel. All credit sales for Israel
must meet established criteria, as prescribed for all countries partic-
ipating in this program.
The proposed program for fiscal year 1972 is estimated to bey
$582,000,000, of which $96,000,000 will be privately financed and
$24,000,000 will be set aside as a 25 per cent guaranty reserve for'
this private financing. The details of the proposed fiscal year 1972
budget program are as follows:
Item Proposed fiscal year
East Asia and Pacific: 1972 program
China, Republic of-------------------------------------- $45,000,000,
Korea-------------------------------------------------- 15,000,000'
Malaysia----------------------------------------------- 7,500,000
Singapore----------------------------------------------- 7,500,000,
Near East and South Asia:
Greece-------------------------------------------------
60,000,000
India--------------------------------------------------
5,000,000
Pakistan-----------------------------------------------
5,000,000
Classified country programs:
Israel/Jordan/Lebanon/Saudi Arabia-------------------
350,000,000
Africa:
Congo--------------------------------------------------
2,000,000
Classified country programs-----------------------
15, 000, 000
Latin America:
Argentina----------------------------------------------
15,000,000
Brazil--------------------------------------------------
20,000,000
Chile---------------------------------------------------
5,000,000
Colombia-----------------------------------------------
8,000,000
Guatemala-- -------------------------------------------
5,000,000
Uruguay-----------------------------------------------
2,000,000
Venezuela----------------------------------------------
15,000,000
Total, fiscal year 1972 proposed program----------------- 582, 000, 000,
The present terms on the credit arrangements are as follows: (1)
maximum maturity in 10 years, and (2) the interest rate charged is
not less than the prevailing cost of money to the U.S. Government
at the time of the transaction.
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TITLE III-FOREIGN ASSISTANCE (OTHER)
FUNDS APPROPRIATED TO THE PRESIDENT
PEACE CORPS
Fiscal year 1971 appropriation________________________________
$90,000,000
Fiscal year 1972 estimate_____________________________________
82,200,000
Fiscal year 1972 authorization___________________________`______
77, 200, 000
Recommended in the bill_ ______________________________
60, 000, 000
The Committee recommends an appropriation of $60,000,000, a
reduction of $22,200,000 below the budget estimate and $30,000,000
below the fiscal year 1971 appropriation.
On July 1, 1971, the Peace Corps became a part of the agency
known as "Action." This agency was created by the President's
reorganization plan and consists of the Peace Corps, Volunteers in
Service to America (VISTA), Service Corps of Retired Executives
(SCORE), Active Corps of Executives (ACE), Foster Grandparents,
and the Retired Senior Volunteer Program (RSVP). In addition,
it was proposed to transfer the Teacher Corps to Action.
When you include the budget request of $82,200,000, the total
amount appropriated to the Peace Corps has been in excess of
$993,000,000 since its inception. Even the most ardent supporters of
the Peace Corps would have difficulty in listing the accomplishments
attained from this huge investment.
During the Committee hearings, it was noted that the Peace Corps
program had been terminated in 14 countries for various reasons.
Most of these 14 countries are presently receiving some type of U.S.
technical assistance and Dr. Hannah, the Administrator of the
Agency for International Development (AID), stated the following
in testimony before the Committee concerning the AID technical
assistance program (page 126, part 2, of the FY 1972 hearings) :
Dr. HANNAH. I know of no instance where a country has
specifically requested us to suspend our bilateral technical
assistance program or to recall our U.S. technicians admin-
istering the programs.
These facts raise a basic question; why is the Peace Corps program
being terminated in these countries while the regular bilateral tech-
nical assistance program is being continued, in most instances? Possibly
the answer lies in the fact that the Peace Corps does not respond to
the basic needs of the host country to the same extent as does the
regular bilateral technical assistance program.
The following table lists the 14 countries where the Peace Corps
program has been terminated:
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Country and Date:
1. Cyprus-February, 1964.
2. Indonesia-May, 1965.
3. Pakistan-June, 1967.
4. Mauritania-June, 1967.
5. Gabon-December, 1967.
6. Tanzania-September, 1969.
7. Libya--.September, 1969.
8. Somali Republic-December, 1969.
9. Cev~lon-(This is the second time the program was terminated)
October 1970.
10. Nigeria-December, 1970.
11. Panama-Xlay, 1971.
12. Bolivia-June, 1971.
13. Guyana-July, 1971.
14. Guinea-(This is the second time the program was terminated)
July, 1971.
It should be noted that some terminations were brought about
because of the bad conduct and behavior of some of the Peace Corps
volunteers. Also, some of these terminations can most likely be
attributed to the fact that volunteers are not required to support the
policies of our Government as is the case with other U.S. officials
working abroad.
On page 729 of part 1 of the fiscal year 1972 hearings, the Chairman'
of the Foreign Operations Subcommittee discussed the subject of unob-
ligated balances and as the testimony reveals, in quite a few years
since the inception of the Peace Corps program, a substantial unobli-
gated balance was available at the end of the fiscal year. Also, in.
many of those years, budget amendments were received adjusting they
request, from what was originally submitted in the regular budget.'
These facts indicate that there has been a high degree of uncertainty
in the actual needs of the Peace Corps over the years and as they
record shows, these needs were usually overestimated by the agency.
The Peace Corps estimates that by the end of fiscal year 1972, they
will be operating in 53 countries of the world.
RYUKYU ISLANDS, ARMY, ADMINISTRATION
Fiscal year 1971 appropriation____ _________ 1
$6, 736,
000:
Fiscal year 1972 estimate-------------------------------------
4,564,
000
Recommended in the bill - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
4, 216,
000
I Includes $260,000 provided in the Second Supplemental Appropriation Act of 1971 (P.L. 92-18).
The Committee recommends an appropriation of $4,216,000, a
reduction of $348,000 below the budget estimate and $2,520,000
below the fiscal year 1971 appropriation.
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The proposed program as estimated in the fiscal year 1972 amended
budget request provides for the following:
Btem
year 1972
Administrative activities:
program
Pay of personnel-----------------------------------------
$2,91.3,000
Travel of civilian employees-------------------------------
187, 000
Information materials and services--------------------------
48, 000
Operating expenses---------------------------------------
166, 000
Subtotal-----------------------------------------------
Aid to Ryukyuan economy: Reimbursement for government serv-
3, 314, 000
ices-------------------------------------------------------- 1,250,000
Total, fiscal year 1972 proposed program------------------ 4, 564, 000
It was stated before the Committee that all of the $1,250,000
requested for "Aid to Ryukyuan Economy" will be used to reimburse
the Government of the Ryukyu Islands for public safety operations
performed on behalf of U.S. military forces and their dependents in
the Ryukyus. Upon reversion of the Islands to Japan, the public
safety operations will become the responsibility of the Government
of Japan.
During the hearings before the Committee, it was noted that $48,000
was requested for "Information, materials, and services" which would
be used to maintain and strengthen the U.S. image in the Ryukyus.
The Committee is of the opinion that the U.S. image has already
been "strengthened" as much as possible and additional funds for
that purpose are not justified.
The reversion of the Ryukyu Islands to Japan is scheduled to take
place in 1972.
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
ASSISTANCE TO REFUGEES IN THE UNITED STATES
(CUBAN REFUGEE PROGRAM)
Fiscal year 1971 appropriation------------------------------ 1$112,130,000
Fiscal year 1972 estimate----------------------------------- 144, 103, 000
Recommended in the bill----------------------------------- 100, 000, 000
I Includes $130,000 provided in the Second Supplemental Appropriation Act of 1971 (P.L. 92-18).
The Committee recommends an appropriation of $100,000,000,
a reduction of $44,103,000 below the budget estimate and $12,130,000
below the fiscal year 1971 appropriation.
This program was established in 1961 to alleviate the impact of
Cuban refugees on State and local resources by reimbursing State and
local agencies for certain types of expenditures made on behalf of
the refugees and to aid the refugees in becoming self-supporting
through training, rehabilitative services, and resettlement from the
port of entry (Miami) to opportunities in other parts of the country.
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The proposed budget program is detailed as follows:
Activity
1. Welfare assistance and services: Proposed fiscal
Florida: year 1972 program
a. Financial assistance to needy refugees------------- $27, 078, 000
b. Transitional resettlement allowances-------------- 1,200,000
c. Care of unaccompanied children__________________ 846,000,
d. Distribution of surplus commodities-------------- 116,000,
e. Hospitalization_________________________________ 8,000,000
f. State administration____________________________ 2760000;
Subtotal (Florida)____________________________ 40, 000, 000
States other than Florida:
Financial and medical assistance to needy resettled
refugees________________________________________ 68,000,000.
3. Education:
a. Assistance to public school systems------------------- 14,338,000
b. Vocational and English training for youth and adults--- 1200000
c. Loans to students---------------- ---------------------------------- 6,000,000
d. Professional training and placement__________________ 300000
4. Health services:
a. Refugee health clinic -------------------------------- 2,027,000 b. Outpatient hospital services -------------------------- 1,064,000
c. Maternal and child health, and school health services-- 234, 000
d. Hospitalization for long-term illness------------------- 638, 000
Subtotal, health services--------------------------- 3,963,000,
5. Movement of refugees from Cuba --------------------------- 1,050,000 6. Program administration------------------------------------ 2,914,000
Total, fiscal year 1972 proposed program ----------------- 144, 103, 000
In view of the fact that the Castro government has recently ter-
minated the Cuban airlift for certain periods, the Committee feels
that the reduced inflow of refugees will result in decreased funding
requirements for fiscal year 1972.
Fiscal year 1971 appropriation________________________ ___1$5, 706, 000
Fiscal year 1972 estimate______________________________________ 8,690,000 Recommended in the bill______________________________________ 8,690,000,
1 Includes $57,000 provided in the Second Supplemental Appropriation Act of 1971 (P.L. 92-18) but ex-
cludes $10,000,000 transferred in from A.I.D.
The Committee recommends the budget request of $8,690,000,
which is all increase of $2,984,000 above the fiscal year 1971 appro-
priation. As noted above, an additional $10,000,000 was transferred
to this account in fiscal year 1971 from the Agency for International
Development for East Pakistan refugee relief.
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The proposed budget program is outlined below:
Item
Proposed fiscal
year 1972
program
1.
Intergovernmental Committee for European Migration ---------
$3,250,000
2.
United Nations High Commissioner for Refugees --------------
1,000,000
3.
Refugees from European Communist Countries (USRP) --------
2,900,000
4.
Refugees from Communist China (FERP) --------------------
500, 000
5.
International Committee of the Red Cross --------------------
50,000
,
6.
Administration --------------------------------------------
990
000
Total, fiscal year 1972 proposed program ------------------
8,690,000
FUNDS APPROPRIATED TO THE PRESIDENT
INTERNATIONAL FINANCIAL INSTITUTIONS
The Committee is deeply concerned over the trend to direct an
increasing amount of U.S. foreign assistance through the multilateral
institutions while at the same time decreasing the bilateral aid pro-
gram. In the next two fiscal years, the Congress could be requested
to appropriate over $2,500,000,000 to the international financial in-
stitutions if all pending and enacted authorization requests are con-
sidered. With the possibility of Congress being confronted with
these large requests for U.S. funds for the multilateral institutions, the
Committee felt certain details should be brought forth. It was indi-
cated in the Committee hearings that the same degree of detailed
examination which is possible in the bilateral foreign assistance pro-
grams is not possible in the multilateral assistance programs. The
Congress does not know when, where or how the budget requests will
be disbursed by these multilateral organizations because they do not
justify their requests by specific project. When information is available
on a. specific project it is usually after the project has already been
approved. In addition, some informed individuals feel the appropria-
tion requests for these multilateral institutions should not be reduced
because agreements have been entered into with the countries involved
and Congress has enacted the required authorizing legislation needed
to enter into these agreements. However, in the Committee hearings,
it was clearly stated that all agreements entered into with these
countries are subject to the condition that a subsequent appropriation
be made. The following excerpts from pages 294 and 295 of part 1 of
the Committee hearings for fiscal year 1972 clarify this situation:
Mr. PASSMAN. Let me ask you this question. If the Con-
gress, in its wisdom, should decide that they are not going to
give you a dollar, we would not be violating any legal
commitment, would we?
Mr. COSTANZO. No, sir. * * *
Mr. PASSMAN. Wait a minute, I want an answer. Would
we violate any legal commitment. He said "no." Are you
saying the same thing?
Mr. PETTY. I am saying the U.S. Government has a
binding obligation on the basis of authorizing legislation.
Congress has authorized us to vote for the resolutions pro-
viding for these subscriptions.
Mr. PASSMAN. Subject to a subsequent appropriation, isn't
that correct?
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Mr. PETTY. Absolutely; yes, sir.
The Committee feels that if it is denied the right to make justified
reductions in the budget requests submitted for the International
Financial Institutions, the established appropriation process will be
voided and the Committee will be only a rubber stamp for these
institutions.
The Committee is of the opinion that if the appropriation requests
were reduced for these international financial institutions, new agree-
ments would not be too difficult to renegotiate. Notwithstanding the
trend toward the multilateral approach to foreign assistance, the
Committee feels that Congress should have control over determining
the amount of U.S. funds to be allocated to these institutions. All
budget requests for U.S. funds must compete on a priority basis taking
into account the then existing financial situation in the U.S. and the
Committee feels the funding requests for the international financial
institutions should not be exempt from this process.
Fiscal year 1971 appropriation______________________________ 1$275,000,000
Fiscal year 1972 estimate___________________________________ 261, 760, 000
Recommended in the bill___________________________________ ------------
I Provided in the Second Supplemental Appropriation Act of 1971 (P.L. 92-18).
The Committee has disallowed the full budget request of $261,760,-
000. The amended budget request of $261,760,000 consists of the
following items: $75,000,000 for paid-in ordinary capital, $136,760,000
for callable ordinary capital, and $50,000,000 for the Fund for Spe-
cial Operations.
It should be noted that as of June 30, 1971, over $1,900,000,000 in
undisbursed loans were held by the Bank. In addition to this budget
request, the Inter-American Development Bank is also requesting an
authorization of $450,000,000 for fiscal year 1972.
Excluding the $50,000,000 requested for paid-in ordinary capital, the
balance of the request ($211,760,000) was submitted as a budget
amendment in H. Doc. 92-149. The budget amendment requested the
exact amount that was reduced by Congress from the Bank's request
in the Second Supplemental Appropriation Act of 1971 (P.L. 92-18).
It should also be noted that the $275,000,000 provided to the Inter-
American Development Bank (IDB) in the Second Supplemental
Appropriations Act, 1971 (P.L. 92-18) approved in May, 1971 has not
been utilized at this time. It would appear to the Committee that the
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Executive Branch is not anxious to renegotiate new agreements in
anticipation that the reductions made in the Second Supplemental
would be reinstated. As has been pointed out above, U.S. funds are
available to the IDB if new agreements are negotiated.
Fiscal year 19.71 appropriation______________________________
------------
Fiscal year 1972 estimate___________________________________
$246,100,000
Recommended in the bill___________________________________
------------
The Committee has disallowed the full budget request of $246,100,-
000. The budget request consists of $24,610,000 for paid-in capital
and $221,490,000 for callable capital.
The request was submitted as a budget amendment and it is the
same request disallowed by the Congress in the Second Supplemental
Appropriation Act of 1971 (P.L. 92-18). During testimony before the
Committee in consideration of the Second Supplemental Appropria-
tion bill, it was stated at that time that the cash position or the money
needs of the World Bank were not the reasons for the supplemental
request. The two reasons given for the request of funds were:
(a) to maintain the U.S. voting position in the Bank, and
(b) since over the years the U.S. has urged other countries
to pay in their special capital increases, we should now provide
funds to pay the U.S. capital increase.
According to U.S. officials at the World Bank, the justifications for
the present request of funds remain essentially the same as they were
when the supplemental request was considered.
The Committee feels the U.S. voting position in the Bank would
not decrease significantly and the U.S. would still be by far the largest
contributor to this institution if these funds are not allowed.
TITLE IV-EXPORT-IMPORT BANK OF THE
UNITED STATES
Fiscal year 1971 limitation on program activity------------ ($4,
075,
483,
000)
Fiscal year 1971 limitation on administrative expenses------
(7,
048,
000)
Total, fiscal year 1971 limitation___________________ (4,
082,
531,
000)
Fiscal year 1972 limitation on program activity------------ 1 (7,
323,
675,
000)
Fiscal year 1972 limitation on administrative expenses----__
(8,
072,
000)
Total, fiscal year 1972 limitation___________________ (7,
331,
747,
000)
1 Includes a budget amendment of $3,690,735,000 submitted in II. Doe. 02-175.
The Committee recommends the full budget request of $7,323,675,-
000 for the limitation on program activity which is $3,248,192,000
above the limitation for fiscal year 1971. The Committee also recom-
mends the full budget request of $8,072,000 for the limitation on
administrative expenses which is $1,024,000 above the limitation for
fiscal 1972:
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36
The following table shows the Bank's estimated activity for fiscal
fiscal 1972:
Itrrn Proposed fiscal year
Loan program: 197z activity
Equipment and services authorizations------------------ $2,765 00000Q
Cormnodity authorizations----------------------------- 75:000:00
'
Medium-term discount authorizations------------------- 862,000,000
Short-term discount authorizations-- ------------------- 3, 600000000
Special foreign trade authorizations--------------------- 50, 000, 000
Subtotal, gross loan authorizations-------------------- 7, 352, 000, 000
Less: Participations in and cancellations of loans author-
ized during fiscal year 1972-------------------------- 802,000,000
Net loan authorizations--------------------------- 6, 550, 000, 000
Guarantee and insurance program:
Authorization of new and renewed policies--------------- 4, 100, 000, 000
Less: Repayment and cancellations on guarantees and
insurance ----- ---------------------------------------- 2,224,000,000
Subtotal---------------------------------- ------ 1, 876, 000, 000
Less: Reduction from use of fractional reserve and ad-
surance-------------------------------------------- 538,575,000
Other charges to program activity:
Interest and nonadministrative expenses 1--------------- 235, 000, 000
Equipment' - -------------------------------------- 100, 000
Total other than for administrative expense: "New
Program Activity"--------------------------------- 7, 323, 675, 000
Administrative expense 1------------------------------ 8,072,000
Total, fiscal year 1972 proposed activity--------------- 7, 331, 747, 000
On the accrual basis.
As has been previously noted, a budget amendment was received by
Congress on November 16, 1971 (H. Doe. 92-175) to increase the
limitation on program activity by $3,690,735,000 for the Export=
Import Bank. According to the budget amendment and material sup;
plied to the Committee, the major part of the amended request
($3,000,000,000) will be used to initiate a new short-term discount
loan program. This program is designed to provide U.S. commercial
banks with assurances that if their liquidity situation tightens, their
short-term export financing commitments can be inet through short-
term loans from Eximbank on their eligible export financing paper:
The interest rate differential between the Eximbank loan and the
underlying export: paper will be sufficient to cover the commercial
bank's cost associated with their loan, but will not provide a profit
incentive to use Eximbank's funds.
According to the Ex-Tin Bank, there is presently a great need for a
program which can assure U.S. commercial banks that adequate
back-up liquidity for short-term financing of U.S. exports will be
available in times of money shortages. Apparently, the absence of
such a facility is hampering our Nation's exporters who rely 'on short-
term financing as an essential part of their export sales package.
justments------------------------------------------ 1,337,425,000
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This program is part of the overall strategy to financially support
U.S. exports and strengthen the U.S. balance of payments position.
The Committee looks upon the operations of the Export-Import
Bank as an asset to American financial operations. Not only does the
Bank promote U.S. exports abroad, it benefits U.S. private business
by allowing them to earn greater profits by increasing their exports
and the inflow of tax revenue to the U.S. Treasury is increased by the
fact that larger corporate profits are being earned.
LIMITATIONS AND LEGISLATIVE PROVISIONS
The following limitations and legislative provisions not heretofore
carried in connection with any appropriation bill are recommended :
On page 10, in connection with General Provisions:
SEC. 112. The funds appropriated or made available pursuant to this
Act are provided notwithstanding the provisions of section 10 of Public
Law 91-672.
On page 10, in connection with General Provisions:
S--c. 113. None of the funds appropriated or made available pursuant
to this Act may be used to provide assistance, except assistance relating to
refugee relief and rehabilitation and humanitarian relief, to India and
Pakistan while these countries are involved in armed conflict with one
another, unless the President determines that the furnishing of such assist-
ance is important to the national security of the United States and reports
within thirty days each such determination to the Congress.
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COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 1971 AND THE BUDGET
ESTIMATES FOR 1972
PERMANENT NEW BUDGET (OBLIGATIONAL) AUTHORITY-FEDERAL FUNDS
[Becomes available automatically under earlier, or "permanent" law without further, or annual, action by the Congress. Thus, these amounts are not
included in the accompanying bill]
Export-Import Bank: Program activity (indefinite authorization to send
debt receipts)P
New budget
(obligational)
authority, 1971
Budget estimates of
new (obligational)
authority, 1972
Increase (-E) or
decrease (-)
+ $225, 000, 000 CO
PERMANENT NEW BUDGET (OBLIGATIONAL) AUTHORITY-TRUST FUNDS
Economic assistance: Technical assistance: U.S. dollars advanced from foreign
governments---------------------------
Military assistance: Advances, foreign military sales (contract authorization)____ 850,000, 000 85500,,000000,,000 000
Peace Corps: Miscellaneous trust funds___________________
503, 000 503, 000
Total, permanent new budget (obligational) authority, trust funds_ - _ _ _ _ _ 856, 503, 000
856, 503, 000 -------------
Note: Amounts as estimated and shown in the January 1971 budget document. Some items are indefinite in amount, and thus are subject to later reestimation.
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COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 1971 AND BUDGET
ESTIMATES AND AMOUNTS RECOMMENDED IN THE BILL FOR 1972
New budget
New budget
Bill compared with-
(obligational)
Budget estimates of new
(obligational)
Item
authority,
(obligational) authority,
authority
New budget
Budget estimates of
fiscal year 1971
fiscal year 1972
recommended
(obligational) authority,
new (obligational)
(includes supps.)
in the bill
fiscal year 1971
authority,
(includes supps.)
fiscal year 1972
(1)
(2)
(3)
(4)
(5)
(6)
TITLE I-FOREIGN ASSIST-
ANCE ACT ACTIVITIES
FUNDS APPROPRIATED TO THE
PRESIDENT
ECONOMIC ASSISTANCE
Worldwide, technical assistance------
$166,750,000
1$232,929,000
$160,000,000
-$16, 750, 000
-$82, 929, 000
Alliance for Progress, technical
assistance _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
82, 875, 000
2 129, 745, 000
75, 000, 000
-7,875,000
- 54, 745, 000
International organizations and
programs _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
103, 810, 000
3 141, 000, 000
41, 000, 000
-62, 810, 000
-100, 000, 000
Programs relating to population
growth_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(4)
(5)
50, 000, 000
+50, 000, 000
+50, 000, 000
American schools and hospitals
abroad_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
12. 895. 000
10. 175. 000
17. 200, 000
+4,305,000
+7,025,000
See footnotes at end of table, p. 45.
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COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 1971 AND BUDGET
ESTIMATES AND AMOUNTS RECOMMENDED IN THE BILL FOR 1972-Continued
New budget
New budget
Bill compared with-
Item
(obligational)
authority,
fiscal year 1971
Budget estimates of new
(obligational) authority,
fiscal year 1972
(obligational)
authority
recommended
New budget
(obligational) authority,
Budget estimates of
new (obligational)
(includes supps.)
in the bill
fiscal year 1971
authority,
(includes supps.)
fiscal year 1972
(1)
(2)
(3)
(4)
(5)
(6)
TITLE I-FOREIGN ASSIST-
ANCE ACT ACTIVITIES-Con.
FUNDS APPROPRIATED TO THE
PRESIDENT-Continued
ECONOMIC ASSISTANCE-Continued
Indus Basin Development Fund,
grants__________________________
$4,925,000
$15, 000, 000
$7,500,000
+$2,575,000
-$7, 500, 000
Indus Basin Development Fund,
loans___________________________
6,980,000
12, 000, 000
6,000,000
-980,000
-6,000,000
United Nations Relief and Works
Agency (Arab refugees) -----------
1,000,000
_
Contingency fund__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
22, 500, 000
100, 000, 000
30, 000, 000
+ 7, 500, 000
- 70, 000, 000
Refugee relief assistance (East
Pakistan)_______________________
_________________
250, 000, 000
175, 000, 000
175, 000, 000
-75, 000, 000
Alliance for Progress, development
loans___________________________
287, 500, 000
235, 000, 000
150, 000, 000
-137, 500, 000
-85, 000, 000
Developmenoan
44, 090, 004
4OQ,04Q1Q
250, 000, 000
-7.0, 000, 00U.
15Q__000. 000
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Administrative expenses:
A.I.D.------------------------
State-------------------------
Subtotal, economic assistance_
MILITARY ASSISTANCE
Military assistance-----------------
SECURITY SUPPORTING ASSISTANCE
Security supporting assistance-------
Subtotal--------------------
OVERSEAS PRIVATE INVESTMENT
CORPORATION
Overseas Private Investment Cor-
poration,reserves --------------
INTER-AMERICAN SOCIAL DEVELOP-
MENT INSTITUTE
Inter-American Social Development
Institute (limitation on obligations)
Total, title I, new budget
(obligational) authority,
Foreign Assistance Act
Activities----------------
See footnotes at end of table, p. 45.
51, 000, 000
7 60, 200, 000
54, 600, 000
+3,600,000
-5,600,000
4, 100, 000
8 4, 555, OOC
4,255,000
+155,000
- 300, 000
1, 164, 335, 000
1, 590, 604, 000
1, 010, 555, 000
-153, 780, 000
- 580, 049, 000
690, 000, 000
705, 000, 000
552, 000, 000
-138, 000, 000
-153, 000, 000
569, 600, 000
0 764, 614, 000
575, 000, 000
+5,400,000
-189, 614, 000
2, 423, 935, 000
3, 060, 218, 000
2, 137, 555, 000
-286, 380, 000
-922, 663, 000
18, 750, 000
25, 000, 000
25, 000, 000
+6,250,000
-----------------
(10,000,000)
(11, 000, 000)
-----------------
(-10,000, 000)
(-11, 000,000)
Io 2, 442 685, 000
II 3, 085, 218, 000
12 2, 162, 555, 000
-280, 130, 000
-922 663, 000
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COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 1971 AND BUDGET
ESTIMATES AND AMOUNTS RECOMMENDED IN THE BILL FOR 1972-Continued
[Note-All amounts are in the form of "appropriations" unless otherwise indicated]
Item
New budget
Budget estimates of new
New budget
(ob '
Bill compared with-
authority, Y,
fiscal year 1971
(includes supps.)
(obligational) authority,
fiscal fiscal year 1972
authority
recommended
New budget Budget estimates of
(obligational) authority, new (obligational
in the bill
fiscal year 1971 authority,
(includes supps.) fiscal year 1972
(1)
(2)
(3)
(4)
(5) (6)
TITLE II-FOREIGN MILITARY
CREDIT SALES
Foreign military credit sales ---------
$200,000,000
$510,000,000
$510,000,000
+$310, 000, 000
-----------
-
Military credit sales to Israel --------
500, 000
000
--
-
----
,
---------------
-----------------
-500, 000, 000
-----------------
Total, title II, new budget
(obligational) authority
Foreign military credit
L
sales- - - - - - - - - - - - - - - - - - - - -
700, 000, 000
510, 000, 000
510, 000, 000
-190, 000, 000
TITLE III-FOREIGN
ASSISTANCE (OTHER)
FUNDS APPROPRIATED TO THE
PRESIDENT
Peace Corps-----------------------
Limitation on administrative
90, 000, 000
13 82, 200, 000
60, 000, 000
-30, 000, 000
- $22, 200, 000
expenses--------------------
(31, 400, 000)
(28, 400, 000)
(24, 000, 000)
(-7,400, 000)
(-4,400, 000)
DEPARTMENT OF THE ARMY-
CIVIL FUNCTIONS
Ryukyu Islands, Army, Administra-
736, 000 _
14 4, 564, 000 7
. _ -4, 216, 000
- 2 520,
000
- 348 000
,
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DEPARTMENT OF HEALTH, EDU-
CATION, AND WELFARE
Assistance to refugees in the United
States (Cuban program)________
DEPARTMENT OF STATE
Migration and refugee assistance_____
FUNDS APPROPRIATED TO THE
PRESIDENT
INTERNATIONAL FINANCIAL INSTITU-
TIONS
Asian Development Bank (paid-in
capital)-------------------------
Inter-American Development Bank:
Paid-in capital_________________
Callable capital________________
Fund for special operations______
Subtotal, IDB_______________
International Bank for Reconstruc-
tion and Development:
Paid-in capital----------------
Callable capital________________
Subtotal, IBRD_____________
See footnotes at end of table, p. 45.
112, 130, 000
15 144, 103, 000
100, 000, 000
-12, 130, 000
-44, 103, 000
5,706,000
16 8, 690, 000
8,690,000
+2,984,000
-----------------
20,000,000
-----------------
-----------------
-20, 000, 000
-----------------
25,000,000
75, 000, 000
-----------------
-25, 000, 000
-75, 000, 000
200, 000, 000
136, 760, 000
-----------------
-200, 000, 000
-136, 760, 000
50, 000, 000
50, 000, 000
------------------
-50, 000, 000
-50, 000, 000
275, 000, 000
17 261, 760, 000
-----------------
-215, 000, 000
-261, 760, 000
-----------------
24,610,000
-----------------
-----------------
-24, 610, 000
-----------------
221,490,000
-
-----------------
18 246, 100, 000
-----------------
-----------------
-246, 100, 000
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COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 1971 AND BUDGET
ESTIMATES AND AMOUNTS RECOMMENDED IN THE BILL FOR 1972-Continued
[Note-All amounts are in the form of "appropriations" unless otherwise indicated]
New budget
bli
t
New budget
Bill comp
ared with-
Item
ga
(o
ional)
authority,
fiscal
ear 1971
Budget estimates of new
(obligational) authority,
f
l
(obligational)
authority
New budget
Budget estimates of
y
(includes supps.)
isca
year 1972
recommenjed
in the bill
(obligational) authority,
fiscal year 1971
new (obligational)
authority,
(includes supps.)
fiscal year 1972
(1)
(2)
(3)
(4)
(5)
(6)
TITLE III-FOREIGN ASSIST-
ANCE (OTHER)-Continued
FUNDS APPROPRIATED TO THE
PRESIDENT-Continued
NTERNATIONAL FINANCIAL INSTITU-
TIONS-Continued
International Development Associa-
tion----------------------------
$160,000,000
---------
000,000
-----------------
[nternational Monetary Fund
(Quota increase)_________________
(1, 540, 000, 000)
_
(-1,540,000, 000)
-
Total, title III, new budget
(obligational) authority,
Foreign Assistance (other) ---
669, 572, 000
$747,417,000
$172,906,000
-496, 666, 000
-$574, 511, 000
TITLE IV-EXPORT-IMPORT
BANK OF THE UNITED STATES
Limitation on program activity__--__
($4, 075, 483, 000)
i9($7, 323, 675, 000)
($7,323,675,000)
(-E-$8,248,192,000)
-----------------
Limitation on administrative
expense- ----------------------
(7, 048, 000)
29 (8, 072, 000)1
(8, 072, 000)
(+1, 024, 000)
-----------------
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Total, title IV, Export-
Import Bank of the
United States, limitations
on use of corporate funds---
Grand total, new budget
(obligational) authority, titles I,
II, and III______________________
Reappropriation of unobligated
balances:
(a) Economic assistance--------
(b) Military assistance ---------
(c) Security supporting
assistance_______________
(4, 082, 531, 000)
(7, 331, 747, 000)
(7, 331, 747, 000)
(+3, 249, 216, 000)
-----------------
3,812,257,000
4, 342, 635, 000
2, 845, 461, 000
-966, 796, 000
-1, 497, 174, 000
(26, 503, 000)
(25, 149, 000)
(25, 149, 000)
(-1,354, 000)
_
(6, 300, 000)
(4, 000, 000)
(4, 000, 000)
(-2, 300, 000)
-----------------
(768,000)
(2, 721, 000)
(2, 721, 000)
(+1, 953, 000)
-----------------
I Includes an increase of $1,654,000 contained in H. Doc. 92-93.
2 Includes an increase of $745,000 contained in H. Doe. 92-93.
3 Includes $13,300,000 for UN RWA which was funded in fiscal year 1971 from "Support-
ing assistance."
4 In fiscal year 1971, this program was funded at a level of $100,000,000 mostly from the
"Development loan" accounts.
5 In the fiscal year 1972 budget, this program was proposed to be funded at a level of
$100,000,000 mostly from the "Technical assistance" accounts.
6 Submitted as a budget amendment in H. Doc. 92-166.
7 Includes an increase of $2,600,000 contained in H. Doe. 92-93.
e Includes an increase of $155,000 contained in H. Doe. 92-93.
9 Includes an increase of $2,064,000 contained in H. Doe. 92-93.
10 Unobligated balances as of June 30, 1970, reappropriated.
11 Unobligated balances as of June 30, 1971, requested to be reappropriated.
12 Unobligated balances reappropriated.
13 Includes an increase of $11,000,000 contained in H. Does. 92-93 ($1,100,000) and 92-
122 ($9,900,000).
14 Includes an increase of $114,000 contained in H. Doc. 92-93.
15 Includes an increase of $103,000 contained in H. Doe. 92-93.
16 Includes an increase of $40,000 contained in H. Doe. 92-93.
17 Includes an increase of $211,760,000 contained in H. Doe. 92-149.
18 Submitted as a budget amendment in H. Doc. 92-149.
19 Includes an increase in limitation of $3,690,735,000 contained in H. Doe. 92-175.
20 Includes an increase in limitation of $373,000 contained in H. Doe. 92-93.
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