[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3836 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3836

 To establish a Russian Federation debt reduction for nonproliferation 
                                program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 4, 2002

Mrs. Tauscher (for herself, Mr. McHugh, and Mr. Schiff) introduced the 
 following bill; which was referred to the Committee on International 
                               Realations

_______________________________________________________________________

                                 A BILL


 
 To establish a Russian Federation debt reduction for nonproliferation 
                                program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Russian Federation Debt Reduction 
for Nonproliferation Act of 2002''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) It is in the vital security interests of the United 
        States to prevent the spread of weapons of mass destruction to 
        additional states or to terrorist organizations, and to ensure 
        that other nations' obligations to reduce their stockpiles of 
        such arms in accordance with treaties, executive agreements, or 
        political commitments are fulfilled.
            (2) In particular, it is in the vital national security 
        interests of the United States to ensure that--
                    (A) all stocks of nuclear weapons and weapons-
                usable nuclear material in the Russian Federation are 
                secure and accounted for;
                    (B) stocks of nuclear weapons and weapons-usable 
                nuclear material that are excess to military needs in 
                the Russian Federation are monitored and reduced;
                    (C) any chemical or biological weapons, related 
                materials, and facilities in the Russian Federation are 
                destroyed;
                    (D) the Russian Federation's nuclear weapons 
                complex is reduced to a size appropriate to its post-
                Cold War missions, and its experts in weapons of mass 
                destruction technologies are shifted to gainful and 
                sustainable civilian employment;
                    (E) the Russian Federation's export control system 
                blocks any proliferation of weapons of mass 
                destruction, the means of delivering such weapons, and 
                materials, equipment, know-how, or technology that 
                would be used to develop, produce, or deliver such 
                weapons; and
                    (F) these objectives are accomplished with 
                sufficient monitoring and transparency to provide 
                confidence that they have in fact been accomplished and 
                that the funds provided to accomplish these objectives 
                have been spent efficiently and effectively.
            (3) United States programs should be designed to accomplish 
        these vital objectives in the Russian Federation as rapidly as 
        possible, and the President should develop and present to 
        Congress a plan for doing so.
            (4) Substantial progress has been made in United States-
        Russian Federation cooperative programs to achieve these 
        objectives, but much more remains to be done to reduce the 
        urgent risks to United States national security posed by the 
        current state of the Russian Federation's weapons of mass 
        destruction stockpiles and complexes.
            (5) The threats posed by inadequate management of weapons 
        of mass destruction stockpiles and complexes in the Russian 
        Federation remain urgent. Incidents in years immediately 
        preceding 2001, which have been cited by the Russia Task Force 
        of the Secretary of Energy's Advisory Board, include--
                    (A) a conspiracy at one of the Russian Federation's 
                largest nuclear weapons facilities to steal nearly 
                enough highly enriched uranium for a nuclear bomb;
                    (B) an attempt by an employee of the Russian 
                Federation's premier nuclear weapons facility to sell 
                nuclear weapons designs to agents of Iraq and 
                Afghanistan; and
                    (C) the theft of radioactive material from a 
                Russian Federation submarine base.
            (6) Addressing these threats to United States and world 
        security will ultimately consume billions of dollars, a burden 
        that will have to be shared by the Russian Federation, the 
        United States, and other governments, if this objective is to 
        be achieved.
            (7) The creation of new funding streams could accelerate 
        progress in reducing these threats to United States security 
        and help the government of the Russian Federation to fulfill 
        its responsibility for  secure management of its weapons 
stockpiles and complexes as United States assistance phases out.
            (8) The Russian Federation suffers from a significant 
        foreign debt burden, a substantial proportion of which it 
        inherited from the Soviet Union. The Russian Federation is 
        taking full responsibility for this debt, but the burden of 
        debt repayment could threaten Russian Federation economic 
        reform, particularly in 2003 and beyond.
            (9) The Russian Federation's need for debt relief has been 
        the subject of discussions between the United States and the 
        Russian Federation at the highest levels and is cited by United 
        States officials as one reason why the Russian Federation has 
        recognized that its future lies with the West.
            (10) Past debt-for-environment exchanges, in which a 
        portion of a country's foreign debt is canceled in return for 
        certain environmental commitments or payments by that country, 
        provide a model for a possible debt-for-nonproliferation 
        exchange with the Russian Federation, which could be designed 
        to provide additional funding for nonproliferation and arms 
        reduction initiatives.
            (11) Most of the Russian Federation's official bilateral 
        debt is held by United States allies that are advanced 
        industrial democracies. Since the issues described pose threats 
        to United States allies as well, United States leadership that 
        results in a larger contribution from United States allies to 
        cooperative threat reduction activities will be needed.
    (b) Purposes.--The purposes of this Act are--
            (1) to recognize the vital interests of the United States, 
        its allies, and the Russian Federation in reducing the threats 
        to international security described in the findings set forth 
        in subsection (a);
            (2) to facilitate the accomplishment of the United States 
        objectives described in the findings set forth in subsection 
        (a) by providing for the alleviation of a portion of the 
        Russian Federation's foreign debt, thus allowing the use of 
        additional resources for these purposes; and
            (3) to ensure that resources freed from debt in the Russian 
        Federation are targeted to the accomplishment of the United 
        States objectives described in the findings set forth in 
        subsection (a).

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Agreement.--The term ``Agreement'' means the Russian 
        Nonproliferation Investment Agreement provided for in section 
        8.
            (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on International Relations and 
                the Committee on Appropriations of the House of 
                Representatives; and
                    (B) the Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate.
            (3) Cost.--The term ``cost'' has the meaning given that 
        term in section 502(5) of the Federal Credit Reform Act of 1990 
        (2 U.S.C. 661a(5)).
            (4) Facility.--The term ``Facility'' means the Russian 
        Nonproliferation Investment Facility established in the 
        Department of the Treasury by section 4.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of State.
            (6) Soviet-era debt.--The term ``Soviet-era debt'' means 
        debt owed as a result of loans or credits provided by the 
        United States (or any agency of the United States) to the Union 
        of Soviet Socialist Republics.

SEC. 4. ESTABLISHMENT OF THE RUSSIAN NONPROLIFERATION INVESTMENT 
              FACILITY.

    There is established in the Department of the Treasury an entity to 
be known as the ``Russian Nonproliferation Investment Facility'' for 
the purpose of providing for the administration of debt reduction in 
accordance with this Act.

SEC. 5. REDUCTION OF THE RUSSIAN FEDERATION'S SOVIET-ERA DEBT OWED TO 
              THE UNITED STATES, GENERALLY.

    (a) Authority To Reduce Soviet-Era Debt.--
            (1) Authority.--
                    (A) In general.--Except as provided in subparagraph 
                (B), and subject to section 10, the President may 
                reduce the amount of Soviet-era debt owed by the 
                Russian Federation to the United States (or any agency 
                of the United States) that is outstanding as of 
                February 1, 2002.
                    (B) Exception.--The authority of subparagraph (A) 
                to reduce Soviet-era debt does not include any debt 
                that is described in section 6(a)(1).
            (2) Congressional notification.--The President shall notify 
        the appropriate congressional committees of the President's 
        intention to reduce the amount of the Russian Federation's 
Soviet-era debt at least 15 days in advance of any formal determination 
to do so.
            (3) Authorization of appropriations.--
                    (A) In general.--For the cost of the reduction of 
                any Soviet-era debt pursuant to this section, there are 
                authorized to be appropriated to the President--
                            (i) $50,000,000 for fiscal year 2002; and
                            (ii) $100,000,000 for fiscal year 2003.
                    (B) Limitation.--The authority provided by this 
                section shall be available only to the extent that 
                appropriations for the cost of the modification of any 
                Soviet-era debt pursuant to this section are made in 
                advance.
            (4) Certain prohibitions inapplicable.--
                    (A) In general.--A reduction of Soviet-era debt 
                pursuant to this section shall not be considered 
                assistance for the purposes of any provision of law 
                limiting assistance to a country.
                    (B) Additional requirement.--The authority of this 
                section may be exercised notwithstanding section 620(r) 
                of the Foreign Assistance Act of 1961 or section 321 of 
                the International Development and Food Assistance Act 
                of 1975.
    (b) Implementation of Soviet-Era Debt Reduction.--
            (1) In general.--Any reduction of Soviet-era debt pursuant 
        to subsection (a) shall be--
                    (A) implemented pursuant to the terms of a Russian 
                Nonproliferation Investment Agreement authorized under 
                section 8; and
                    (B) accomplished at the direction of the Facility 
                by the exchange of a new obligation for obligations of 
                the type referred to in such subsection that are 
                outstanding as of February 1, 2002.
            (2) Exchange of obligations.--
                    (A) In general.--The Facility shall notify the 
                agency primarily responsible for administering part I 
                of the Foreign Assistance Act of 1961 of an  agreement 
entered into under paragraph (1) with the Russian Federation to 
exchange a new obligation for outstanding obligations.
                    (B) Additional requirement.--At the direction of 
                the Facility, the old obligations that are the subject 
                of the agreement shall be canceled and a new debt 
                obligation for the Russian Federation shall be 
                established relating to the agreement, and the agency 
                primarily responsible for administering part I of the 
                Foreign Assistance Act of 1961 shall make an adjustment 
                in its accounts to reflect the debt reduction.
    (c) Additional Terms and Conditions.--The following additional 
terms and conditions shall apply to the reduction of Soviet-era debt 
under subsection (a)(1) in the same manner as such terms and conditions 
apply to the reduction of debt under section 704(a)(1) of the Foreign 
Assistance Act of 1961:
            (1) The provisions relating to repayment of principal under 
        section 705 of the Foreign Assistance Act of 1961.
            (2) The provisions relating to interest on new obligations 
        under section 706 of the Foreign Assistance Act of 1961.

SEC. 6. REDUCTION OF SOVIET-ERA DEBT OWED TO THE UNITED STATES AS A 
              RESULT OF CREDITS EXTENDED UNDER TITLE I OF THE 
              AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 
              1954.

    (a) Authority To Reduce Certain Soviet-Era Debt.--
            (1) Authority.--Notwithstanding any other provision of law, 
        and subject to section 10, the President may reduce the amount 
        of Soviet-era debt owed to the United States (or any agency of 
        the United States) by the Russian Federation that is 
        outstanding as of February 1, 2002, as a result of any credits 
        extended under title I of the Agricultural Trade Development 
        and Assistance Act of 1954 (7 U.S.C. 1701 et seq.).
            (2) Congressional notification.--The President shall notify 
        the appropriate congressional committees of the President's 
        intention to reduce the amount of the Russian Federation's 
        Soviet-era debt described in paragraph (1) at least 15 days in 
        advance of any formal determination to do so.
            (3) Authorization of appropriations.--
                    (A) In general.--For the cost of the reduction of 
                any Soviet-era debt pursuant to this section, there are 
                authorized to be appropriated to the President--
                            (i) $50,000,000 for fiscal year 2002; and
                            (ii) $100,000,000 for fiscal year 2003.
                    (B) Limitation.--The authority provided by this 
                section shall be available only to the extent that 
                appropriations for the cost of the modification of any 
                Soviet-era debt pursuant to this section are made in 
                advance.
    (b) Implementation of Soviet-Era Debt Reduction.--
            (1) In general.--Any reduction of Soviet-era debt pursuant 
        to subsection (a) shall be--
                    (A) implemented pursuant to the terms of a Russian 
                Nonproliferation Investment Agreement authorized under 
                section 8; and
                    (B) accomplished at the direction of the Facility 
                by the exchange of a new obligation for obligations of 
                the type referred to in such subsection that are 
                outstanding as of February 1, 2002.
            (2) Exchange of obligations.--
                    (A) In general.--The Facility shall notify the 
                Commodity Credit Corporation of an agreement entered 
                into under paragraph (1) with an eligible country to 
                exchange a new obligation for outstanding obligations.
                    (B) Additional requirement.--At the direction of 
                the Facility, the old obligations that are the subject 
                of the agreement shall be canceled and a new debt 
                obligation shall be established for the Russian 
                Federation relating to the agreement, and the Commodity 
                Credit Corporation shall make an adjustment in its 
                accounts to reflect the debt reduction.
    (c) Additional Terms and Conditions.--The following additional 
terms and conditions shall apply to the reduction of Soviet-era debt 
under subsection (a)(1) in the same manner as such terms and conditions 
apply to the reduction of debt under section 604(a)(1) of the 
Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C. 
1738c(a)(1)):
            (1) The provisions relating to repayment of principal under 
        section 605 of such Act.
            (2) The provisions relating to interest on new obligations 
        under section 606 of such Act.

SEC. 7. AUTHORITY TO ENGAGE IN DEBT-FOR-NONPROLIFERATION EXCHANGES AND 
              DEBT BUYBACKS.

    (a) Loans and Credits Eligible for Sale, Reduction, or 
Cancellation.--
            (1) Debt-for-nonproliferation exchanges.--
                    (A) In general.--Notwithstanding any other 
                provision of law, and subject to section 10, the 
                President may, in accordance with this section, sell to 
                any purchaser eligible under subparagraph (B), any loan 
                or credit described in section 5(a)(1), or any credit 
                described in section 6(a)(1), or on receipt of payment 
                from an eligible purchaser, reduce or cancel any such 
                loan or credit or portion thereof, only for the purpose 
                of facilitating a debt-for-nonproliferation exchange to 
                support activities that further United States 
                objectives described in the findings set forth in 
                section 2(a).
                    (B) Eligible purchaser.--A loan or credit may be 
                sold, reduced, or canceled under subparagraph (A) with 
                respect to a purchaser who presents plans satisfactory 
                to the President for using the loan or credit for the 
                purpose of engaging in debt-for-nonproliferation 
                exchange to support activities that further United 
                States objectives described in the findings set forth 
                in section 2(a).
                    (C) Consultation requirement.--Before the sale 
                under subparagraph (A) to any purchaser eligible under 
                subparagraph (B), or any reduction or cancellation 
                under subparagraph (A), of any loan or credit made to 
                the Russian Federation, the President shall consult 
                with that country concerning the amount of loans or 
                credits to be sold, reduced, or canceled and their uses 
                for debt-for-nonproliferation exchanges to support 
                activities that further United States objectives 
                described in the findings set forth in section 2(a).
                    (D) Authorization of appropriations.--For the cost 
                of the reduction of any debt pursuant to subparagraph 
                (A), amounts authorized to be appropriated under 
                sections 5(a)(3) and 6(a)(3) shall be made available 
                for such reduction of debt pursuant to subparagraph 
                (A).
            (2) Debt buybacks.--Notwithstanding any other provision of 
        law, the President may, in accordance with this section, sell 
        to the Russian Federation any loan or credit described in 
        section 5(a)(1) or any credit described in section 6(a)(1), or 
        on receipt of payment from the Russian Federation, reduce or 
        cancel such loan or credit or portion thereof, if the purpose 
        of doing so is to facilitate a debt buyback by the Russian 
        Federation of its own qualified debt and the Russian Federation 
        uses a substantial additional amount of its local currency to 
        support activities that further United States objectives 
        described in the findings set forth in section 2(a).
            (3) Limitation.--The authority provided by paragraphs (1) 
        and (2) shall be available only to the extent that 
        appropriations for the cost of the modification of any debt 
        pursuant to such paragraphs are made in advance.
            (4) Terms and conditions.--Notwithstanding any other 
        provision of law, the President shall, in accordance with this 
        section, establish the terms and conditions under which loans 
        and credits may be sold, reduced, or canceled pursuant to this 
        section.
            (5) Administration.--
                    (A) In general.--The Facility shall notify the 
                Administrator of the agency primarily responsible for 
                administering part I of the Foreign Assistance Act of 
                1961 or the Commodity  Credit Corporation, as the case 
may be, of purchasers that the President has determined to be eligible 
under paragraph (1)(B), and shall direct such agency or Corporation, as 
the case may be, to carry out the sale, reduction, or cancellation of a 
loan pursuant to such paragraph.
                    (B) Additional requirement.--Such agency or 
                Corporation, as the case may be, shall make an 
                adjustment in its accounts to reflect the sale, 
                reduction, or cancellation.
    (b) Deposit of Proceeds.--The proceeds from a sale, reduction, or 
cancellation of a loan sold, reduced, or canceled pursuant to this 
section shall be deposited in the United States Government account or 
accounts established for the repayment of such loan.

SEC. 8. RUSSIAN NONPROLIFERATION INVESTMENT AGREEMENT.

    (a) Authority.--Subject to section 10, the Secretary is authorized, 
in consultation with other appropriate officials of the Federal 
Government, to enter into an agreement with the Russian Federation 
concerning the use of the funds saved by that country as a result of 
any debt relief provided pursuant to this Act. An agreement entered 
into under this section may be referred to as the ``Russian 
Nonproliferation Investment Agreement''.
    (b) Content of Agreement.--The Russian Nonproliferation Investment 
Agreement shall ensure that--
            (1) a significant proportion of the funds saved by the 
        Russian Federation as a result of any debt relief provided 
        pursuant to this Act is devoted to nonproliferation programs 
        and projects;
            (2) funding of each such program or project is approved by 
        the United States Government, either directly or through its 
        representation on any governing board that may be directed or 
        established to manage these funds;
            (3) administration and oversight of nonproliferation 
        programs and projects incorporate best practices from 
        established threat reduction and nonproliferation assistance 
        programs;
            (4) each program or project funded pursuant to the 
        Agreement is subject to audits conducted by or for the United 
        States Government;
            (5) unobligated funds for investments pursuant to the 
        Agreement are segregated from other Russian Federation funds 
        and invested in financial instruments guaranteed or insured by 
        the United States Government;
            (6) the funds that are devoted to programs and projects 
        pursuant to the Agreement are not subject to any taxation by 
        the Russian Federation;
            (7) all matters relating to the intellectual property 
        rights and legal liabilities of United States firms in a given 
        project are agreed upon before the expenditure of funds is 
        authorized for that project; and
            (8) not less than 75 percent of the funds made available 
        for each nonproliferation program or project under the 
        Agreement is spent in the Russian Federation.
    (c) Use of Existing Mechanisms.--It is the sense of Congress that, 
to the extent practicable, the boards and administrative mechanisms of 
existing threat reduction and nonproliferation programs should be used 
in the administration and oversight of programs and projects under the 
Agreement.

SEC. 9. STRUCTURE OF DEBT-FOR-NONPROLIFERATION ARRANGEMENTS.

    It is the sense of Congress that any debt-for-nonproliferation 
arrangements with the Russian Federation should provide for gradual 
debt relief over a period of years, with debt relief to be suspended if 
more than two years' worth of funds remain unobligated for approved 
nonproliferation programs or projects.

SEC. 10. NONPROLIFERATION REQUIREMENT.

    (a) Proliferation to State Sponsors of Terrorism.--The authorities 
granted under sections 5, 6, 7, and 8 may not be exercised, and funds 
may not be expended, unless and until--
            (1) the Russian Federation makes material progress in 
        stemming the flow of sensitive goods, technologies, material, 
        and know-how related to the design, development, and production 
        of weapons of mass destruction and the means to deliver them to 
        countries that have been determined by the Secretary, for the 
        purposes of section 40 of the Arms Export Control Act, section 
        620A of the Foreign Assistance Act of 1961, or section 6(j) of 
        the Export Administration Act of 1979, to have repeatedly 
        provided support for acts of international terrorism; and
            (2) the President certifies to the appropriate 
        congressional committees that the condition required in 
        paragraph (1) has been met.
    (b) Annual Determination.--If, in any annual report to Congress 
submitted pursuant to section 13, the President cannot certify that the 
Russian Federation con tinues to meet the condition required in 
subsection (a)(1), then, subject to the provisions of subsection (c), 
the authorities granted under sections 5, 6, 7, and 8 may not be 
exercised, and funds may not be expended, unless and until such 
certification is made to the appropriate congressional committees.
    (c) Presidential Waiver.--The President may waive the requirements 
of subsection (b) for a fiscal year if the President determines that 
imposition of those requirements in that fiscal year would be counter 
to the national interest of the United States and so reports to the 
appropriate congressional committees.

SEC. 11. DISCUSSION OF RUSSIAN FEDERATION DEBT REDUCTION FOR 
              NONPROLIFERATION WITH OTHER CREDITOR STATES.

    The President and such other appropriate officials as the President 
may designate shall institute discussions in the Paris Club of creditor 
states with the objectives of--
            (1) reaching agreement that each member of the Paris Club 
        is authorized to negotiate debt exchanges with the Russian 
        Federation covering a portion of its bilateral debt, to finance 
        the accomplishment of nonproliferation and arms reduction 
        activities;
            (2) convincing other member states of the Paris Club, 
        especially the largest holders of Soviet-era Russian debt, to 
        dedicate significant proportions of their bilateral debt with 
        the Russian Federation to these purposes; and
            (3) reaching agreement, as appropriate, to establish a 
        unified debt exchange fund to manage and provide financial 
        transparency for the resources provided through the debt 
        exchanges.

SEC. 12. CONSULTATIONS WITH CONGRESS.

    The President shall consult with the appropriate congressional 
committees on a periodic basis to review the operations of the Facility 
and the Russian Federation's eligibility for benefits from the 
Facility.

SEC. 13. ANNUAL REPORT TO CONGRESS.

    Not later than December 31, 2002, and not later than December 31 of 
each year thereafter, the President shall prepare and transmit to 
Congress a report concerning the operation of the Facility during the 
fiscal year preceding the fiscal year in which the report is 
transmitted. The report on a fiscal year shall include--
            (1) a description of the activities undertaken by the 
        Facility during the fiscal year;
            (2) a description of any agreement entered into under this 
        Act;
            (3) a description of any grants that have been provided 
        pursuant to the agreement; and
            (4) a summary of the results of audits performed in the 
        fiscal year pursuant to the agreement.
                                 <all>