[Congressional Record Volume 140, Number 4 (Friday, January 28, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: January 28, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                         PRIVILEGE OF THE FLOOR

  Mr. SPECTER. Mr. President, before consideration of this amendment 
commences, I ask unanimous consent that Ms. Angela Stinchcomb, a 
staffer of mine, be permitted to come to the floor.
  The PRESIDENT pro tempore. Without objection, it is so ordered.
  Mr. SPECTER. She is a newly arrived staff member from Russell, KS, my 
hometown and the hometown of our distinguished Republican leader.
  The PRESIDENT pro tempore. The Senator from Pennsylvania is 
recognized.
  Mr. SPECTER. Mr. President, this amendment provides that there shall 
be collateral security on loans made by the United States to the newly 
independent states, formerly of the Soviet Union. The amendment applies 
most specifically to Russia. It is a very simple amendment in that its 
purpose is to guarantee--that is, to make certain--to the maximum 
extent possible, that money which the United States loans to Russia and 
the other former Republics of the Soviet Union will be repaid. It is in 
accordance with customary commercial transactions. It is the way a bank 
would loan money to a husband and wife who seek to have a mortgage on a 
house. It is the way that good friends handle their businesses, and 
sometimes even within a family context.
  The United States has committed to a policy to assist the former 
Soviet Republics, and that is a policy with which I very much agree. As 
we have seen perestroika and glasnost come to the Soviet Union and as 
we have seen the disintegration of the Soviet Union, it is the judgment 
of our country--very sound judgment--that the new Government of Russia, 
led by President Boris Yeltsin, should be encouraged and supported. The 
disintegration of the Soviet Union is the major international political 
event of the 20th century. It rivals World War II and World War I as 
the major events of the 20th century. It does so in the context that 
the demise of the Union of Soviet Socialist Republics [U.S.S.R.] 
signifies the victory of capitalism over communism and democracy over 
totalitarianism. It has been a marvelous result for freedom, and it has 
been achieved, unlike the two world wars, without the firing of a shot.
  As former President Gorbachev had instituted perestroika and 
glasnost, President Boris Yeltsin is moving ahead with democracy and 
economic reforms in efforts to try to democratize Russia and create a 
market economy: Those are objectives which the United States should 
support. Without dwelling on them at any great length, they are 
important objectives for the United States because they will limit, and 
perhaps ultimately even eliminate, much of the necessity for U.S. 
expenditures on the arms race. Democratization of the former Soviet 
Union is very important as an example to other Communist nations that 
democracy is the right course.
  Recently, I had the opportunity to travel to China, Vietnam, 
Indonesia, and Thailand with a Senate delegation of the Senate Energy 
Committee. The revelations in China and Vietnam are profound in that 
these Communist countries are moving toward capitalism. They call it a 
``socialist market economy,'' which is really an oxymoron, inconsistent 
on its face. But capitalism is burgeoning in those traditionally 
Communist countries.
  While their once closed economies are moving toward a free market, 
toward capitalist institutions, their political structure continues to 
be Communist. It is obvious to me that Russia has set a very good 
example for the development of democracy in those countries. Along with 
our delegation, I had a chance to discuss that issue with the Secretary 
General of the Communist Party of Vietnam, Secretary General Muoi.
  I asked a question about whether Vietnam might be looking to the 
Russian model for glasnost, perestroika, and democracy. Secretary 
General Muoi responded that his country was not about to copy Russia 
and, interestingly, talked about Lincoln and the ``government of the 
people by the people and for the people.'' Quite a compliment to the 
United States that Secretary General Muoi is looking to the U.S. model.
  But I do believe in the long run that China, Vietnam, and other 
Communist countries, perhaps even North Korea, will be profoundly 
influenced by the Russian experiment. Therefore, this provides another 
very good reason why we ought to do our utmost to see democracy 
flourish in Russia to the maximum extent possible.
  In that context, Mr. President, it is my judgment that we cannot give 
President Boris Yeltsin and his government, or any other government of 
the former Soviet Union, or even private institutions in these 
countries, a blank check. Many grave concerns about the current status 
of the Russian economy have been suppressed. We see daily reports in 
the media about Russian officials resigning because they are frustrated 
in their attempts to curtail inflation and move Russia closer to a 
market economy.
  There are many diverse, in fact, turbulent forces at work in Russia. 
Therefore, it is a difficult judgment call as to precisely how far 
President Boris Yeltsin can go on free market activities and the 
suppression of inflation. But those are pressures, Mr. President, which 
I think have to be maintained by the United States on Russia as we move 
forward with the very substantial loans which our Government is talking 
about.
  Aside from the economic context, I have great concerns about the 
events in Russia last fall; the firing on the Russian parliament, and 
the disbanding of the constitutional court.
  Senator Robert Bennett and I had an opportunity to visit in Moscow 
briefly and to talk to the former chief justice of the constitutional 
court, Chief Justice Zorkin. I was, frankly, dismayed to see President 
Boris Yeltsin cancel the court, that is by decree to eliminate the 
constitutional court. As we talked to people in Russia, the 
constitutional court was eliminated because they handed down ``unfair 
decisions''--unfair decisions. If that was the standard for continuing 
courts in other countries, I do not know that there would be a judicial 
system anywhere in the world, even in the United States.
  While those actions have been taken by President Boris Yeltsin as he 
sees fit, it is my view that we ought not to condone those practices.
  I was, frankly, disappointed to see our President endorse Boris 
Yeltsin's activities in that respect. I was pleased at least in one 
television interview where I saw the Secretary of State Warren 
Christopher hold back on the endorsement of the cancellation and 
elimination of the constitutional court and firing of the chief 
justice.
  I make reference to those matters, Mr. President, because I think 
that our policy toward Russia must be one where we exert the maximum 
pressure possible to see their economy move toward a free market and to 
see their political system move toward democracy and the recognition of 
the rule of law. Our strategy should also be to employ the maximum 
pressure that can be obtained without seeing a revolution, or President 
Boris Yeltsin's government toppled, or radical forces come to the fore. 
We must be constantly aware that there is the potential for civil 
unrest and perhaps even revolution in the New Independent States.
  But moving more directly to the pending amendment, Mr. President, the 
consideration of asking for collateral security in a regularized 
commercial context, I would submit, is very reasonable. The facts are 
that there is a total outstanding debt to Western banks by Russia at 
the present time of some $80 billion to $85 billion. Some $17 billion 
of that was scheduled to be repaid last year, but NIS repaid only $2 
billion of the loan with the balance being rescheduled. The United 
States' share of the $17 billion is $1.8 billion.
  The administration, Mr. President, has not really focused on the 
scope of the Russian debt. This past week the Foreign Operations 
Subcommittee of the Appropriations Committee held hearings, and 
Ambassador at Large Strobe Talbott testified and was asked about the 
amount of the Soviet debt. I was a little surprised to see that 
Ambassador Talbott did not have those facts at his disposal.
  In an era where the United States is pushing to advance more money to 
Russia, I would think that the key administration official on Russian 
relations would know firmly and precisely what that debt was.
  I should say that Ambassador Talbott made the representation that 
Russia was current on its debt with respect to the Commodity Credit 
Corporation, which brought a response from Senator Leahy, the chairman 
of the Foreign Operations Subcommittee, that it was his understanding, 
at least until recently, that Russia is in arrears some $5 billion in 
payments to the CCC.
  The feel for the testimony by Ambassador Talbott was that there was 
not sufficient concern for how much money Russia owed the United States 
and what Russia was doing to repay these funds.
  Mr. President, in a context where we advance moneys to Russia and the 
other New Independent States, without seeking to obtain collateral 
security, it is a sign that we really are not very serious about 
collecting those moneys. Moreover, it is not that problemsome for 
Russia and the other New Independent States to give collateral 
security. Collateral will not impede the flow of cash because there are 
enormous mineral reserves which Russia could easily use for collateral.
  The estimated resource reserve for Russia and the other New 
Independent States is enormously impressive. In oil, the estimated 
reserves are 57 billion barrels, almost $1.3 trillion; in manganese 
some 500 million short tons, $192\1/2\ billion; in gold 8,710 metric 
tons, a value in excess of $105 billion; in nickel 8.1 million short 
tons, some $57\1/2\ billion in value; in vanadium, some 4 million 
metric tons, more than $30 billion in value; platinum, 6 million 
kilograms, almost $23\1/2\ billion in value; in silver, 50,000 metric 
tons, in excess of $7 billion in value; and in chromite, 129 million 
metric tons, almost $6\1/2\ billion in value, totaling some $1.7 
trillion, almost $1.7 trillion.
  For the New Independent States to make a pledge of those assets in 
order to guarantee payment to the United States of our loans, Mr. 
President, I suggest is very fundamental. Every Member of this body 
knows the difficulties in selling foreign aid to our constituents. In 
my State of Pennsylvania, while there has been an economic upturn, to 
some extent, there are still many coal miners, textile workers, glass 
workers, and many other people who are unemployed. The constant 
question I get when I travel to my open house town meetings turns on 
why the United States is giving so much foreign aid when there is so 
much need in the United States among the poor and the unemployed for 
education, job training, and housing; not to mention the problems of 
the big cities and the problems of the farmers?
  This is not an easy problem to address. When I have been asked about 
my votes in support of the policy of the President, President Clinton, 
and the policy of the former President, President Bush, to make these 
loans to Russia and the other New Independent States, I have said that 
I support those loans because they are in the national self-interest of 
the United States.
  This is not a humanitarian matter. It is a matter of our national 
self-interest. But I would not have an answer, Mr. President, to my 
constituents, as to why I would support such loans if we did not make 
every reasonable effort to collect them. Fundamental to that effort 
should be the requirement of collateral security.
  I daresay that any of our colleagues in this Chamber or in the House 
would have a hard time explaining to their constituents if pointedly 
asked the question: Why do you vote for aid to the New Independent 
States without getting security, just as any lender would insist on 
getting security from any borrower?
  Any American who seeks a loan in a commercial transaction has to put 
up security. If that American does not put up security, that American 
will not get the loan. Russia and the other New Independent States have 
ample reserves, almost $1.7 billion, to secure these loans.
  It seems to me, Mr. President, that this is as close to black and 
white as can be found.
  I understand that there are some who do not wish to place any 
restrictions or any limitations on the aid which we are giving to Boris 
Yeltsin's government--to give him pretty much a free hand. I think that 
is a mistake, as was the administration's condoning of the dissolution 
of the constitutional court. It may also be a mistake not to put more 
pressure on Russia to move to a market economy and curtailing 
inflation.
  But there is no doubt in my mind that it is a mistake if we do not 
take the basic step of getting collateral security where such security 
will not impede the cash flow and extension of loans to Russia and the 
other New Independent States.
  That is the essence, Mr. President.
  And now I turn to my colleague, Senator Kerry, for whatever reply he 
cares to make.
  Mr. KERRY addressed the Chair.
  The PRESIDENT pro tempore. The Senator from Massachusetts [Mr. Kerry] 
is recognized.
  Mr. KERRY. Mr. President, I have listened carefully to the comments 
and argument of the Senator from Pennsylvania. Because of the weather, 
the representatives of the State Department are not yet here, and I 
have not had a chance to talk with them. I do know that they oppose 
this.
  But as I was sitting and listening, a lot of questions were going 
through my own mind about the policy. The Senator suggests that any 
American who gets a loan has to put up collateral and that this is like 
the relationship between the husband and wife who go out and get a loan 
or friends somehow get a loan and it is going to be collateralized.
  Well, as I thought about that, and as I continue to think about it, 
it strikes me that that is not, in fact, what this relationship is or 
what it is like. It is not like a married couple in the United States 
that goes out and gets a loan. It is really about two people who have 
just met. It is about courtship. It is a question of whether or not 
that courtship is going to work and whether or not we are making a loan 
in an effort to perhaps help it work.
  That may be a silly analogy. I do not think it is completely off 
base. I think if you want to take the analogies away and think about it 
as a policy, the question is really not just a straight loan question. 
It is not just about presenting a certain amount of money and saying we 
have to have it collateralized.
  There is a policy here. There is a hope--a hope that is expressed in 
our support of Boris Yeltsin. And the hope is beyond the capacity to 
measure by mere collateral. It is a risk. This is a risk that we take 
in the hope that we do not have to go back and spend $300 billion on 
defense against a future Soviet Union again.
  We do not know the outcome. We do not know if they are going to make 
it. But if you are going to start to treat it in a strictly commercial 
sense, then you begin to have out here the larger policy aspects, the 
risks that are attended this; risks, I might add, that we have taken 
with many, many other countries in the past.
  We did not ask Germany for collateral in the Marshall Plan. We did 
not ask Japan for collateral as we rebuilt it after World War II.
  I would ask the Senator: How much collateral has Israel put up for 
the loans that it makes? How much collateral has Brazil put up? In 
fact, I ask the Senator: How many countries in the world that we give 
loans to do we ask for the collateral of their State resources? I think 
the answer is zero--zero.
  So we are suddenly going to say to Boris Yeltsin and the people of 
the former Soviet Union:

       We want you to be democratic. We want you to take a risk. 
     We want you to give up the safety and the security that you 
     felt under the hammer and the sickle and now we want you to 
     collateralize your resources in order to make us feel good 
     about going back to our constituencies in Pennsylvania and 
     feeling safe as politicians to explain why we are making this 
     risk loan.

  Well, how do they repay the collateral if they do not have a 
democratic system with a system of law that allows them to enforce it? 
You answer me that question. How does a country that falls short on its 
ability to pay the loan in the first place make good on the collateral 
if they are not willing to pay the loan? And what are you going to do? 
Go back there with an army and get the minerals out of the Earth? Are 
you going to go back and pull the gold out that is the collateral?
  The collateral is worthless if they do not succeed in becoming a 
democracy with a legal system that is enforceable. The collateral is 
not as good as the paper it is written on, which is not as good as the 
loan itself if they do not make it.
  This is a risk loan. We all understand that. I would rather make a 
risk loan of $1 billion to a country that wants to be democratic than 
to go back spending $300 billion a year on our defense budget. That is 
a pretty good ratio. We are squabbling about 50 years of cold war and 
we want to hold them up now for some collateral that is not even 
enforcible.
  It just does not make sense to me. It is a way of saying to Boris 
Yeltsin:

       We do not trust anything you say. We are really not serious 
     about this. We are going to play politics with these loans so 
     we can go back to our constituents and feel good.

  I do not know how it works. I do not know how you are going to 
enforce the payment on the collateral. I do not know where we have ever 
done this before, so I do not know how you avoid the problem of 
explaining to them that you are suddenly singling them out and treating 
them totally differently.
  I think it diminishes our own policy. It diminishes the 50 years that 
we have said to these people: ``Tear down the Berlin Wall. Free the 
people. Have a democracy.'' And all of a sudden, we are quibbling about 
$1 billion in that effort. It just does not make sense to me. It just 
does not make sense; unenforceable.
  This country of ours has often been willing to make loans that we 
know, because of larger interests, might or might not be repaid. We 
have often been pleasantly rewarded.
  Now, Israel does repay its loans and we can certainly look to a 
wonderful history of a relationship. But, as everybody knows, the loans 
get bigger and bigger and more and more money keeps coming out. And, in 
the end, some people have made the argument that it is repaid through 
the size of the increase of the loans.
  I do not want to get into sort of an examination of every country's 
loans. I just know that it would be an enormous mistake to suddenly 
single out these states that we have given such impetus to succeed, in 
suggesting that they, without even a legal system or enforcement or 
capacity to collect, start making pledges that are unenforceable.
  Let me point out another problem. We are making loans to private 
entities. We are making loans to entities that are transitioning into 
private status.
  Now, I know the Senator from Pennsylvania is a good lawyer, but I am 
not exactly sure how you enforce a private entity that has collateral 
of state resources.
  I am not even sure how you can have state resources collateralizing 
private entities. That is a crazy mix. And that is going to present a 
very interesting enforcement mechanism.
  So I think this is, in the end, leaving aside all those questions--
let us take away all the questions I raised, that I think are 
legitimate--there is the far more fundamental issue of whether or not 
at this point in time the United States wants to treat these states 
differently than we treat all others; whether there is sufficient 
reason to suddenly change this relationship at a time when things are 
fragile enough and when the messages that are sent may, in fact, have a 
detrimental impact and play into the hands of a Zhirinovsky who will 
say,'' You see? We told you so. We told you so. They are not willing to 
respect Russian nationalism. They are going to single us out. The 
imperialists of the West are interested in treating us in a different 
way and we ought to go back to a Russia where the Russian people are 
proud and the Russian people have superpower status. I promise you we 
will never be the vassals of the West. I am going to take us back to 
the greatness of the Russia that was.''
  If you want to weaken Boris Yeltsin, it seems to me, this is one of 
the best ways to do it.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER (Mr. Feingold). The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, I am a little surprised to see the 
Senator from Massachusetts raise a contention that I am quibbling when 
I am talking about repayment of billions of dollars. That hardly sounds 
like a quibble to me.
  Considering the size of the United States deficit and considering the 
shortfall on funding, critical funding, of programs on health, housing, 
job training, environmental protection, crime control, it hardly seems 
to me like it is a quibble when the United States is advancing $2.5 
billion to the former Republics of the former Soviet Union, to ask that 
loans be repaid.
  If that is a quibble, we quibble on the floor of the Senate again and 
again and again and again on much, much lesser subjects.
  Mr. KERRY. Will my colleague yield for a question?
  Mr. SPECTER. As soon as I finish this thought, if it can be so 
denominated.
  We quibbled at great length yesterday over a few million dollars on 
an amendment offered by Senator Bumpers. We have tremendous debates 
over $10 million, as we should; over $50 million, as we should; over 
$100 million, as we should. Here, we are talking about $2.5 billion. I 
hardly think that is a quibble.
  But I would be glad to hear Senator Kerry's response on my contention 
that repayment of aid is not a quibble.
  Mr. KERRY. Let me ask my friend, is he prepared--if he is so 
concerned about the deficit, so concerned about the risky loans --is he 
prepared to put similar conditions on Egypt, Greece, Brazil, Turkey, 
Israel?
  Mr. SPECTER. Absolutely.
  Mr. KERRY. The same conditions?
  Mr. SPECTER. Absolutely, positively. The Senator from Massachusetts 
started off asking about whether I would ask for collateral from 
Israel, one nation very near and dear to me. And the answer is 
absolutely.
  Mr. KERRY. Has the Senator done that previously?
  Mr. SPECTER. What does Israel have to collateralize? Israel has a 
land which is significantly desert. Israel has a land which has been 
turned green by the sweat of its brow, by irrigation. They have turned 
Israel green as much from perspiration coming from the forehead as from 
desalinization coming from the Mediterranean. But if they have assets 
which could guarantee repayment of the loans, then I would be glad to 
ask Israel to put up the assets. But is that a realistic analogy, Mr. 
President, when we are talking about a country which has $1.7 trillion 
in minerals and metals? Is that an apt analogy?
  Let me return the favor of the question to Senator Kerry.
  What assets does Israel have to collateralize?
  Mr. KERRY. See, I am not asking for it. I do not want to ask Israel 
to do that. Nor have we ever.
  The reason is that at the outset we were willing to take a risk. We 
wanted Israel to survive. We wanted Israel to thrive. We wanted Israel 
to make green out of the desert. We did not know for sure it would 
happen, but we wanted it to. There was no collateral.
  If we want to use my colleague's analogy of collateral, a husband and 
wife, the average American, cannot get a loan without collateral. But 
we gave it to Israel. We gave it to all these other countries. Of 
course we give it, and we should.
  Why should we suddenly change the policy for the emerging independent 
states?
  Mr. SPECTER. I am glad to yield for a question--Mr. President, may I 
have the floor?
  Mr. KERRY. I will be glad to ask a question----
  Mr. SPECTER. I will be glad to yield for questions. I am delighted 
to, in fact, maybe even yield for short speeches, but not for long 
speeches when I have the floor.
  Mr. KERRY. That is certainly fair and I will entertain to have a 
dialog and not a long statement. The Senator from Pennsylvania----
  Mr. SPECTER. Wait a minute. The Senator took the floor just to make a 
quick point.
  Mr. KERRY. Will the Senator yield for a quick question?
  Mr. SPECTER. Just a minute. As soon as I respond to the last 
question, the Senator's last comment.
  When the Senator from Massachusetts responds to my inquiry about what 
assets Israel has, he says that is not the point. I would respectfully 
rejoin by saying the Senator from Massachusetts is missing the point.
  I am prepared to see the United States adopt a policy, applicable to 
all, to obtain collateral security if collateral security is available.
  Then I come back to saying I have elaborated, enumerated, articulated 
assets in the former Soviet Union totaling $1.7 trillion. If we are 
loaning them $2.5 billion, why not get collateral security?
  Then the first question the Senator from Massachusetts raises is 
asking this Senator, ``Why not collateral security from Israel?'' And I 
say I am prepared to ask for collateral security. But what is the 
collateral security going to be? What does Israel have to give by way 
of collateral security?
  So I think it is a very, very germane point.
  When the Senator from Massachusetts talks about two people who have 
just met and this is a courtship, in a reference to two countries which 
have just met, the United States and Russia, and this is a courtship--I 
find it hard to conceive of any relationship which would be less likely 
to be characterized as a courtship than the relationship between Russia 
and the United States. We have gone through virtually an entire 
century, or decades, at least since 1945, as cold war adversaries with 
the necessity for spending tremendous sums of money--$300 billion a 
year as the Senator are from Massachusetts knows. This is hardly a 
courtship relationship.
  I want to be friends with Russia and the New Independent States. I 
want to help Russia and the New Independent States. But I am not 
courting Russia and the New Independent States. I am prepared to loan 
money to the New Independent States but I want to get it repaid. I want 
to take whatever steps we can to secure loan repayment.
  When the Senator from Massachusetts says, ``It is unenforceable. How 
is it going to be enforced?'' Very simply. Under the terms of this 
amendment when there are proceeds from the sale of these resources, we 
can take Russia's creditors, who owe Russia the money, and say, ``Pay 
us.'' That is how you enforce an agreement with collateral security. 
When the debtor, that is Russia, sells these assets and a third party 
owes Russia the money, we say to the third party, ``Russia has not paid 
us. You pay that money to us.''
  That is the way you enforce it.
  And when you raise a question about how can we get enforcement where 
there are loans to private entities? There again, it is very 
fundamental. You can have a requirement that the Russian Government be 
a guarantor of those obligations, just as the United States is a 
guarantor of many advances in loans made to other parties. If they 
default, then the United States pays them. If Russia wants to see a 
loan made to a private entity in Russia, then Russia can guarantee it. 
Then if the borrowing private party does not repay it, it is Russia's 
obligation to repay it. That can be enforced when Russia sells some of 
these assets--and they are selling a lot of these assets on the market 
today--where we would go to the purchaser of the assets and say Russia 
has defaulted on its obligation, we call for payment. That is the way 
it is enforceable.

  I will be glad to yield for a question.
  Mr. KERRY. Mr. President, I will wait and then respond to a number of 
points made by the Senator.
  Mr. SPECTER. Mr. President, when the Senator from Massachusetts makes 
a comment that Zhirinovsky would be strengthened by this request, I 
would say that among the comments which Mr. Zhirinovsky has made, this 
one would not even get on the radar screen. We approach the Russians on 
arms control hardly trustingly. President Reagan put it in a nutshell 
when he said as to arms control, ``trust but verify.'' I would say as 
to loans, trust but collateralize.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, let me say to my friend, I understand and 
sympathize with what he is trying to do. We all sympathize with the 
amount of money being spent. All of us vote holding our political 
hearts in our hands a little bit when we vote loans or aid to other 
countries. We understand that.
  But I must say to my friend from Pennsylvania that I really believe 
this will not help our effort with Russia and that it is not 
enforceable in the manner that he has described.
  Second, Israel was not the first country I mentioned. I mentioned 
Brazil, but I mentioned Greece, Turkey, and a host of other countries. 
They do have assets, and I can guarantee I can find some assets in 
Israel. But that is not the point. The point is, do we want to go to 
Russia that is struggling to privatize and ask them to pledge state 
resources as they try to privatize? That creates a confusion and a 
difficulty in the privatization process that will slow down the very 
thing we are trying to encourage.
  It will seriously complicate the IMF, World Bank, and other 
institutions' loan process, because all of a sudden the superpower of 
the world, the United States, will be viewed as jumping into line with 
security, so to speak, with its loans and the rest of the nations that 
we are struggling to get to make loans will say, ``Hey, wait a minute 
now, the United States of America is jumping in line to protect its 
loans. Why should we make any loan at all, particularly if we are 
second in line?''
  So you will have a disastrous impact on the notion that there is 
something bigger than just getting your money back at stake here. I am 
as sensitive as the Senator is to the question of getting our money 
back. I want to get it back, but I also want Russia to succeed in this 
process. I am not going to be party to a process that starts putting 
roadblocks in front of the very process that we are trying to 
encourage. It does not make sense.
  Moreover, the Senator has in section 2, page 3 of his amendment a 
direction to the Secretary of the Treasury to instruct the U.S. 
executive directors to the International Bank for Reconstruction and 
Development, the European Bank for Construction and Development to 
establish policies in opposition to the extension of credit or any 
guarantee with respect to credit for the purpose of assisting that 
state or entities in the state unless those guarantees are 
collateralized.
  So not only are we going to do this for ourselves, he wants it to be 
U.S. policy to do this with respect to the international lending 
institutions. Let me tell you something, if the world gets into a 
situation where states are beginning to line up according to collateral 
and starting to battle in some court somewhere over who is going to pay 
whom for the loan that the other state defaulted on, we are going to 
have such a mixed message and such a mishmash in the effort to enforce 
our foreign policy, which is difficult enough today.
  There is no question but that this will set back the privatization 
process in Russia. It will send a horrendous message of singling out 
these states for different treatment at the very moment we are trying 
to most encourage them. When Boris Yeltsin has his greatest 
difficulties, it will send a message to Zhirinovsky that he has one 
more chink in the armor and one more thing to exploit in a very, very 
volatile situation.
  I do not believe this is sensible foreign policy. I do not believe it 
acts in the interest of the United States. And our goal of achieving an 
end to 50 years of spending billions of dollars every year, which 
Americans, frankly, are tired of, and I think are equally as sensitive 
to are the $2.5 billion the Senator is talking about.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, when the Senator from Massachusetts 
characterizes this amendment as a roadblock, it is hardly even a 
pothole. It does not impede Russia's reform effort at all. It will 
continue to go along very smoothly.
  When he talks about this being contrary to the policy of the IMF and 
impeding the International Monetary Fund, I wonder if he has considered 
the provisions of article 5, section 4 which provides, as represented 
to me:

       Funds shall also take into consideration a member's 
     willingness to pledge as collateral security acceptable 
     assets having sufficient value in the opinion of the funds to 
     protect its interest and may require as a condition of waiver 
     the pledge of such collateral security.

  Contrary to what the Senator from Massachusetts asserts, the IMF 
looks for collateral security, just as the amendment which I have 
offered looks for collateral security.
  There is an overriding sense, Mr. President, of lack of seriousness 
on the intent to collect these loans when we do not take a basic, 
prudent, reasonable step like asking for collateral security where it 
is available. If you talk about other countries, let us see what assets 
they have. If they have assets and we loan the money, then it is just 
basic prudence to get collateral security.
  I will ask the Senator from Massachusetts just a very direct 
question, if I may have the attention of the Senator from 
Massachusetts.
  I ask Senator Kerry a very direct question. How difficult is it for 
Russia, which has more than $1 trillion in minerals, to say if we do 
not repay the loan, you can collect on collateralized assets?
  Mr. KERRY. Mr. President, I think I have answered that in a number of 
differ ways. What I would like to do is lend greater credibility to the 
answer than just the description I have given. I think I said exactly 
what the problem is. The Senator says what is the problem in the 
country with these assets doing this. I have explained the problem.
  The Senator has never addressed the question of the private entity 
being collateralized by state resources with respect to the failure of 
the entire government. If the entire government fails and Zhirinovsky 
takes over, these collateralizations are absolutely worthless. How are 
you going to collect on the minerals from President Zhirinovsky?
  Mr. SPECTER. Mr. President, when the Senator from Massachusetts says 
I have not addressed the private loan issue, he is precisely wrong. I 
have addressed the private loan issue and given a conclusive answer to 
the effect that if the Russian Government guarantees the loan, then 
collateral security can be foreclosed on in the hands of the Russian 
Government, just like our Government can as to a direct loan to the 
Russian Government.
  But I agree with the Senator from Massachusetts that if there is a 
revolution and a dictator comes to power, the United States may not be 
able to collect on the collateral security. I agree with that, and also 
the fact that the United States will not go to war to collect on the 
loan anymore than we went to war to collect the billions of dollars 
which the U.S.S.R. owed us. I agree with that.
  But why not take advantage of an opportunity for collateral security 
where it exists and where we may be able to use it?
  Mr. KERRY. Mr. President, I have described, as I said, a series of 
problems that exist with respect to the whole effort to secure other 
nations in making loans. There is going to be a race to see who is 
first in line for what asset and so forth. It sets back the process of 
policy ahead of just money.
  But I want to, as I said, lend greater expertise than the recitation 
I have already presented, and what I am trying to do is secure now the 
testimony of Strobe Talbott, Ambassador Talbott, secretary designate, 
because he discussed this issue at great length in the Foreign Ops 
Appropriations Committee and has laid out a rationale of considerable 
years of expertise and, frankly, with great understanding of the 
current intricacies. I think that ought to be part of the record. I am 
trying to get that at this moment in time, and I wish to share that 
with my colleague.
  Mr. SPECTER. I thank my colleague for sharing it with me. I was there 
for the entire hearing and heard all of his testimony.
  Mr. KERRY. I want it to be part of the record.
  Mr. SPECTER. That is fine. I certainly would have no disagreement 
with that. Ambassador Talbott was not even sure as to how much money 
Russia owed the United States, and on the issue of collateral security 
his argument was about as effective as the argument of the Senator from 
Massachusetts.
  Mr. KERRY. I might point out if that is true, then it won.
  Mr. SPECTER. Or it could be two times zero.
  Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. KERRY. Mr. President, I ask unanimous consent that the Talbott 
testimony to which I previously referred be printed in the Record.
  There being no objection, the testimony was ordered to be printed in 
the Record, as follows:

       Senator Specter. Let me move to another subject, since 
     there are only a few minutes remaining, and that is the 
     overall problem of foreign aid a very difficult one, given 
     the tremendous budgetary problems in the United States and 
     the tremendous deficit. And we have enormous problems 
     everywhere, additional costs incurred with the earthquake in 
     California, tremendous unemployment in my home state of 
     Pennsylvania, difficulties with health care--it's an enormous 
     litany.
       I offered an amendment last year that Russia ought to be 
     required to put up collateral security for the funds which 
     are being advanced. There is quite a large Russian debt which 
     has not been repaid. Russia has very large reserves of gold, 
     large reserves of oil, minerals. Why shouldn't there be 
     collateral security, Ambassador Talbott, to guarantee the 
     repayment of any US loans to Russia?
       Mr. Talbott. Generally speaking, in order for the 
     collateralization of particularly government debt to work, it 
     would require that the Russian government reestablish a 
     degree of control over the allocation of resources and what 
     happens to those resources, and that is a trend that I don't 
     think we want to encourage. We want, overall, for Russia to 
     move towards private sector economics and market economics.
       It is, of course, true that Russian debt has been an 
     issue, both in our bilateral relations and also in 
     Russia's relationship with the international community as 
     a whole. However, as regards Russia's debt to the United 
     States government, it is no longer in arrears on its 
     responsibilities under the commodity--through the 
     Commodity Credit Corporation, and loans per se; that is, 
     U.S. government loans to Russia are practically nil in our 
     overall program.
       We do, of course, back up loans that American companies 
     make to Russia so that Russia can buy American exports. 
     That's good for American jobs. And speaking of that, let me 
     just make a very general comment in response to your 
     question, and that is we would not ask this committee or the 
     Congress as a whole or the American taxpayer to support one 
     penny of assistance to Russia or the other new independent 
     states if we did not feel that it was in the national 
     interests of this country to do so and in the long-term 
     interests of the American economy and American workers. And 
     we feel very strongly that it is, for reasons that I outlined 
     in my opening statements.
       Senator Specter. Well, I understand your commitment to your 
     policy, but I must say I do not understand the major thrust 
     of your response that we're trying to encourage control of 
     the Russian economy and the private sector. That does not 
     deal with the hard fact of life that the Russian government 
     has ownership and control over vast mineral resources--coal, 
     oil, gold, et cetera--where there could be collateral 
     security to guarantee repayment of the loans.
       Mr. Atwood. If I could just briefly comment on that, our 
     Freedom Support Act, of course, provides that we work on a 
     grant basis with Russia. Usually the issue of collateral 
     comes up with respect to loans. Obviously there is a cash-
     flow problem that Russia has at this point. It's in the 
     extreme. Our best interest, it seems to me, is to create the 
     markets that would enable Russia to exploit those mineral 
     resources that you discuss and create the hard currencies 
     that would make them a good partner.
       (Cross talk.)
       Senator Leahy. Thank you, Senator Specter. I was 
     interested in one answer to--your answer to one of Senator 
     Specter's questions about Russia being up to date on their 
     CCC credits under the GSM program.
       Last time I checked over in the Senate Agriculture 
     Committee, where I also spend some time now and then as 
     chairman. I found they were about $5 billion in arrears. Is 
     there something we missed in here during the Christmas 
     recess? Did somebody come down the chimney and leave----
       Mr. Talbott. My understanding is that they are paid up as 
     of within the last----
       Senator Leahy. Could we double check that one for the 
     record because it is a matter of some--and I realize that 
     prior to that was the dispute over what part was Russia's and 
     what was the former Soviet Union's debt. But, as you know, 
     one of the concerns I've expressed in the past is that we've 
     used our food program, our CCC or GSM program as a form of 
     hidden foreign aid. Last year the American taxpayers paid 
     close to $2 billion in foreign aid to Saddam Hussein, 
     something that most people aren't all that aware of, based on 
     co-signing notes for him while he was building up--actually, 
     co-signing notes for him almost right up to the day that he 
     invaded Kuwait, so we got stuck with the paper. He took--
     (inaudible word)--after the Persian Gulf War that he'd let us 
     pay the co-signed notes, not surprising.

  Mr. BURNS. Mr. President, I rise today in opposition to the amendment 
offered by Senator Specter to the Department of State reauthorization 
bill. This amendment will have serious, negative impacts on the 
aluminum industry in Montana and throughout the United States.
  There is merit in having the Independent States of the former Soviet 
Union put up collateral for their loans. But this amendment could mean 
the loss of jobs in Columbia Falls, MT.
  Currently, there is a huge inventory of aluminum in the world. This 
overhang has kept the price of aluminum low. The increase in Russian 
aluminum imports has greatly reduced the price of this commodity. This 
has resulted in the uncertainty of jobs in Columbia Falls.
  This amendment calls for the stockpiling of petroleum products, 
minerals, and other materials. Since the price of aluminum is set on 
the London Exchange, this stockpile overhang will drive the price of 
aluminum down even further. The mere existence of an aluminum stockpile 
in Russia will disrupt international markets. Its potential release 
into markets by the controlling government entities will cause 
disruption. Release of aluminum stockpiles may be the only way these 
countries can generate cash in order to cover their loans. And this 
could hurt communities in the United States, like Columbia Falls.
  In addition, this amendment jeopardizes the international agreement 
which was reached in Brussels this week. We should allow for this 
agreement, which will greatly benefit our domestic producers, to take 
effect.
  The jobs at Columbia Falls support families. Jeopardizing these 
family jobs is unacceptable.
  Mr. President, I yield the floor.


                       specter amendment no. 1287

  Mr. MOYNIHAN. Mr. President, I rise to oppose this well intentioned 
amendment by the distinguished Senator from Pennsylvania. Obviously, 
when the United States does make international loans, we should have 
assurances that the recipient will be able to repay them.
  Granting loans to countries in the former Soviet Union is in our best 
interest. A solvent Russia is imperative if democracy is to flourish 
there. Russia is in serious need of assistance. And we will regret it 
in the long run if we turn our backs on the reformers in that country.
  Adopting this measure, which singles out the countries of the former 
Soviet Union, will lend the appearance that the United States is 
seeking to gain possession of the natural resources of those countries. 
We do not require other countries to use collateral, but the issue is 
beyond that. Nationalists will argue that this provision converts loans 
into a Trojan horse for foreign domination, strengthening the radicals. 
Zhirinovsky will relish this. He will announce that the true aims of 
the United States toward Russia have surfaced; that now that we have 
crippled them we are set to plunder their resources.
  These are clearly not our aims and I would not want them to be 
misconstrued as such. Every effort must be made to encourage democratic 
reforms in the former Soviet Union and to assist in economic reforms. 
This amendment strays from that purpose and must be opposed.
  Mr. KERRY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. Mr. President, I inadvertently omitted submitting the 
amendment on behalf of myself and the distinguished Senator from North 
Carolina [Mr. Helms]. I believe Senator Helms does want to present an 
argument, so while we are in the quorum call that will give him an 
opportunity to come to the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. SIMPSON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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