[Congressional Record Volume 141, Number 54 (Thursday, March 23, 1995)]
[Senate]
[Page S4487]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                        RUSSIA CREDITWORTHINESS

  Mr. LEAHY. Mr. President, today, I am releasing a GAO report that I 
requested when I was chairman of the Agriculture Committee.
  The report concludes that the Bush administration inappropriately 
used USDA's export credit guarantee programs to expedite billions of 
dollars in loans to the Former Soviet Union [FSU] and its successor 
states.
  This misuse of taxpayers funds leaves me deeply concerned.
  I have said time after time that the GSM-102 export credit guarantee 
program is not a foreign aid program. It is a U.S. commercial program 
that allows creditworthy countries to use short-term debt to finance 
the purchase of quality U.S. agricultural products.
  But, eligible countries must be determined capable of repayment.
  This was not the first time that the Bush administration chose 
foreign policy objectives over creditworthiness considerations in the 
use of this program. Throughout the late 1980's, foreign policy 
considerations were the prevailing criteria.
  I am all too familiar with the Government of Iraq's receipt of 
billions of dollars through the GSM-102 Program.
  When we responded to Iraq's invasion of Kuwait, Iraq defaulted on 
these loans forcing the USDA to pay claims of over $2 billion with 
taxpayer money.
  That is why, in the 1990 farm bill, I inserted a provision that 
requires the Secretary of Agriculture to determine that a prospective 
borrowing country is capable of adequately servicing the debt it incurs 
under these export credit guarantee programs.
  It is also why in 1992, at my request, the Senate struck a Bush 
administration proposal that would have allowed USDA to balance 
creditworthiness against market development objectives in using the GSN 
programs.
  I made it very clear on the floor, in committee, and in statements 
that the law did not permit loans to countries that were not 
creditworthy. Other foreign aid programs serve that purpose.
  This GAO report confirms my suspicions about the Bush 
administration's use of the GSM-102 Program. When these loans were 
financed, the FSU was not creditworthy and should not have qualified 
for GSM-102 Program.
  Instead, funds from one Government agency were allocated to support 
other administrative objectives. In a similar way, the Bush 
administration loaned money to help Saddam Hussein just before Iraq's 
invasion of Kuwait.
  The Clinton administration understands the distinction between 
foreign aid and commercial trade.
  Under this administration, no additional credit guarantees have been 
allocated for the Russian public sector.
  In the spring of 1993, when Russian President Boris Yeltsin requested 
additional foreign aid, President Clinton simply supplied the import 
needs of Russia by using the Food for Progress Program--a foreign 
assistance program that I have long supported.
  The Bush administration should have told taxpayers what was going on. 
If the executive branch wishes to provide foreign aid to another 
country they should at least say that to taxpayers. The aid could have 
been provided through established aid programs.
  The Bush administration did a disservice to the taxpayers by hiding 
foreign aid under the guise of a commercial export program.
  The GAO report comes too late to stop the Bush administration's 
inappropriate use of a commercial export program to help the states of 
the Former Soviet Union. But, it serves as a reminder that our 
agriculture programs are most effective when used for the purpose for 
which they are designed.
  As we proceed through the 1995 farm bill debate, it will be important 
to create and enhance agricultural policies that best enable U.S. 
farmers, ranchers, and agribusiness to compete in the new world trade 
regime.
  As part of that debate, we will examine the trade title closely to 
determine what programs are most effective in developing U.S. 
agricultural export markets.
  And, we will ensure that sufficient safeguards are in place so that 
the experiences with Iraq and the FSU are not repeated.
  I am confident that the Clinton administration will continue to do 
its utmost to ensure that all moneys borrowed under this and other USDA 
loan programs are repaid in full.


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