U.S. Export-Import Bank: Process in Place to Ensure Compliance With
Dual-Use Export Requirements (Letter Report, 07/17/97, GAO/NSIAD-97-211).

The Export-Import Bank of the United States (Eximbank) has authority to
finance exports of defense items and services, provided that it
determines that these exports are nonlethal and for primarily civilian
use. Such exports are referred to as "dual-use" exports. GAO found that
Eximbank's support for dual-use exports has increased during the last
three years, but it has remained well under the annual 10-percent cap
set by law. GAO also found that Eximbank's process for financing and
monitoring dual-use exports should provide a sound basis for determining
whether these exports are nonlethal and primarily used for civilian
purposes.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-97-211
     TITLE:  U.S. Export-Import Bank: Process in Place to Ensure 
             Compliance With Dual-Use Export Requirements
      DATE:  07/17/97
   SUBJECT:  Foreign military sales
             Foreign trade policies
             Off-budget federal entities
             Export regulation
             Dual-use technologies
             International trade restriction
             Bank loans
             Technology transfer
             Monitoring
IDENTIFIER:  Romania
             Brazil
             Venezuela
             Jakarta (Indonesia)
             Malang (Indonesia)
             Indonesia
             Eximbank Application Processing System
             
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Cover
================================================================ COVER


Report to Congressional Committees

July 1997

U.S.  EXPORT-IMPORT BANK - PROCESS
IN PLACE TO ENSURE COMPLIANCE WITH
DUAL-USE EXPORT REQUIREMENTS

GAO/NSIAD-97-211

U.S.  Export-Import Bank

(711210)


Abbreviations
=============================================================== ABBREV

  APS - Application Processing System
  NAC - National Advisory Council on International Monetary and
     Financial Policies
  SIC - standard industrial classification

Letter
=============================================================== LETTER


B-277356

July 17, 1997

Congressional Committees

Since October 31, 1994, the Export-Import Bank of the United States
(Eximbank) has had statutory authority to finance exports of defense
articles and services, provided that it determines that these items
are nonlethal and for primarily civilian use.  These exports,
referred to by the Eximbank as "dual-use" exports, include such items
as air traffic control systems that have military applications but
will be primarily used for civilian purposes. 

The Eximbank is authorized to use up to 10 percent of its total
annual export financing authority to support the sale of dual-use
exports.  For fiscal year 1997, the Eximbank projects that this
10-percent cap on dual-use financing will amount to about $1.6
billion. 

The 1994 legislation (P.L.  103-428) that authorizes Eximbank
financing of dual-use exports also directs our office to report to
the Congress not later than September 1, 1997, on the end uses of
dual-use exports financed by the Eximbank.  This report responds to
our statutory mandate and specifically discusses the results of our
efforts to

  -- determine the nature and extent of the Eximbank's financing of
     dual-use exports,

  -- identify the actions the Eximbank has taken to help ensure that
     the dual-use exports it finances are nonlethal and will be
     primarily used for civilian purposes, and

  -- assess whether the actions provide a sound basis for determining
     that the dual-use exports it finances are nonlethal and will be
     primarily used for civilian purposes. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The Eximbank supplements and facilitates private sector financing of
U.S.  exports of articles and services through its loan, loan
guarantee, export credit insurance, working capital guarantee, and
project financing programs.\1 The Eximbank projects that, under these
programs, its total export financing commitments for fiscal year 1997
will reach over $16.5 billion. 

With limited exceptions, the Eximbank is prohibited by law from
financing the sale of defense articles and services.  Under these
exceptions, the Eximbank may provide financing to export (1) items on
the U.S.  munitions list that will be used for primarily drug
interdiction purposes and whose sale the President determines to be
in the national interest and (2) nonlethal defense items to be
primarily used for civilian purposes, that is, dual-use items. 


--------------------
\1 Loans provide direct financing to foreign buyers of U.S.  exports. 
Loan guarantees provide repayment protection to lenders for loans
made to foreign buyers of U.S.  exports.  Export credit insurance
provides repayment protection to lenders and exporters for
transactions involving U.S.  exports sold to foreign buyers.  Working
capital guarantees provide repayment protection to lenders that
provide working capital to U.S.  businesses for the production of
exports.  Based on the revenues that major overseas capital projects
are expected to generate, project financing provides loans, loan
guarantees, or both, to finance these projects. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

The Eximbank's support for dual-use exports has increased during the
last
3 fiscal years but has remained well under the annual 10-percent cap
established by law.  As of June 1997, the Eximbank had made
commitments totaling $226.1 million in loans and loan guarantees to
support 10 dual-use exports to four countries.  However, only one of
the dual-use exports--involving aircraft parts and services to
Indonesia--has actually been delivered overseas.  Also, according to
the Eximbank, 1 of the 10 exports will be used by a civil aviation
authority; the other nine exports will be used by military
organizations for primarily civilian purposes. 

The Eximbank has established a process to help ensure that it can
determine whether the dual-use exports it supports are nonlethal and
primarily used for civilian purposes as required by law.  For
example, this process calls for the Eximbank to (1) review and
approve applications for financing dual-use exports; (2) monitor the
actual end use of these exports overseas; (3) obtain the views of
other federal entities, such as the Departments of State, Treasury,
and Commerce, for the purpose of approving the financing of dual-use
exports and monitoring their end use; and (4) take appropriate
corrective actions if the Eximbank discovers that the dual-use
exports have been misused.  The Eximbank is using electronic data
bases to assist in tracking information on dual-use exports for
monitoring purposes. 

Our review indicated that the Eximbank process aimed at financing and
monitoring dual-use exports, as currently implemented, should provide
a sound basis for determining whether these exports are nonlethal and
primarily used for civilian purposes.  In the spring of 1997, for the
one dual-use export that has taken place, Eximbank officials,
assisted by other U.S.  government officials, were able to verify
that it was being primarily used for civilian purposes.  Also, the
State Department, in response to our request, obtained information
from its pertinent missions overseas confirming that the other nine
dual-use exports financed by the Eximbank were nonlethal and intended
for primarily civilian use. 


   NATURE AND EXTENT OF EXIMBANK
   FINANCING FOR DUAL-USE EXPORTS
------------------------------------------------------------ Letter :3

The Eximbank has used only loans and loan guarantees to finance
dual-use exports.  According to Eximbank officials involved in
reviewing, approving, and monitoring dual-use exports, the Eximbank
could eventually use other financing programs, such as the working
capital guarantee program, to finance these exports. 

The value of the loans and loan guarantees that the Eximbank has
provided to support exports of dual-use items has increased since
fiscal year 1995 but has remained well under the value of the annual
dual-use financing commitment cap.  As shown in table 1, the
Eximbank's dual-use export commitments have grown from $15.4 million
in fiscal year 1995 to $108.3 million in fiscal year 1997, as of June
1997.  Despite this growth, table 1 also indicates that this support
has represented less than 1 percent of the total commitments for
those fiscal years. 



                                     Table 1
                     
                      The Eximbank's Total Export Financing
                        Commitments and Dual-Use Financing
                        Commitments, Fiscal Years 1995-97

                              (Dollars in millions)

                                                                        Dual-use
                                            Amount                     financing
                                           allowed                   commitments
                                       under dual-                  as a percent
                                               use                      of total
                        Total export     financing       Dual-use         export
                           financing    commitment      financing      financing
Fiscal year              commitments           cap    commitments    commitments
---------------------  -------------  ------------  -------------  -------------
1995                       $11,864.9      $1,186.5          $15.4            0.1
1996                        11,516.9       1,151.7          102.4            0.9
1997                      16,521.7\a       1,652.2        108.3\b            0.7
--------------------------------------------------------------------------------
\a Projected. 

\b As of June 1997. 

Source:  Eximbank. 

Table 2 shows that the Eximbank has committed to support, through
loans and loan guarantees, 10 dual-use exports to four countries
during the last
3 fiscal years.  This financing has amounted to $226.1 million.  Of
this financing, Romania received $79.5 million, Venezuela obtained
$74.3 million, Indonesia secured $38.3 million, and Brazil got $34.0
million.  Two of the dual-use exports are intended for civil air
traffic control, although one of them will be operated by a military
organization.  The other eight dual-use exports are intended for
territorial development, which includes activities such as building
schools, roads, and health facilities, and supporting humanitarian
and disaster relief efforts.  The Eximbank has determined that,
although this territorial development is conducted by military
organizations, it is still a civilian activity.  (See app.  I for
further details on individual dual-use loans and loan guarantees.)



                                     Table 2
                     
                       Type of Eximbank Dual-Use Financing
                        Commitments, Fiscal Years 1995-97

                              (Dollars in millions)

                          Type of        Amount
                          Eximbank           of
                          financing/   Eximbank
             Recipient    description  financin                   Intended end
             country      of export           g      End user     use
Fiscal year  -----------  -----------  --------  --  -----------  --------------
1995         Indonesia    Loan/           $15.4      Indonesian   Territorial
                          aircraft                   Air Force    development
                          parts and
                          services

1996         Romania      Guarantee/       79.5      Romanian     Civil air
                          air traffic                civil        traffic
                          control                    aviation     control
                          system                     authority

             Indonesia    Loan/            22.9      Indonesian   Territorial
                          helicopters                Army         development

1997         Venezuela    Guarantee/        8.8      Venezuelan   Territorial
                          radio                      Army         development
                          systems

             Venezuela    Guarantee/        3.4      Venezuelan   Civil air
                          radio                      Air Force    traffic
                          systems                                 control

             Brazil       Loan/            34.0      Brazilian    Territorial
                          aircraft                   Air Force    development
                          components

             Venezuela    Guarantee/       25.5      Venezuelan   Territorial
                          trucks                     Army         development

             Venezuela    Guarantee/       14.1      Venezuelan   Territorial
                          trucks                     Army         development

             Venezuela    Guarantee/       10.1      Venezuelan   Territorial
                          aircraft                   Army         development
                          parts

             Venezuela    Guarantee/       12.4      Venezuelan   Territorial
                          motor                      Army         development
                          vehicles
--------------------------------------------------------------------------------
Source:  Eximbank. 

As of June 1997, only the first of the 10 dual-use exports financed
by the Eximbank had actually been shipped--the 1995 export of
aircraft parts and services to Indonesia. 


   EXIMBANK PROCESS FOR FINANCING
   AND MONITORING DUAL-USE EXPORTS
------------------------------------------------------------ Letter :4

The Eximbank has established a process for financing and monitoring
dual-use exports to help ensure that these exports are nonlethal and
primarily used for civilian purposes as required by law.  This
process involves reviewing and approving applications for financing
these exports and monitoring the actual end use of the exports
through reporting, certifications, and site visits. 


      APPLICATIONS FOR FINANCIAL
      SUPPORT REVIEWED AND
      APPROVED
---------------------------------------------------------- Letter :4.1

The review and approval of each application for supporting dual-use
exports is to start with an examination of the nature of the exports,
their intended end use, and their end users.  The Eximbank's
Engineering and Environment Division has overall responsibility for
determining the eligibility for financing of dual-use exports.  In
this division, applications for financing these exports are to be
reviewed by engineers having expertise in the particular
sector--electronics, air transportation, etc.--under which the
applications fall.  If external assistance is needed, Eximbank staff
may obtain additional information on particular transactions from
other U.S.  agencies, such as the Departments of State, Treasury, and
Commerce.  For example, before approving the loans to finance
dual-use exports to Indonesia, the Eximbank obtained assessments from
the Department of State as to the intended use of these exports. 

According to the Vice President of the Eximbank's Engineering and
Environment Division, in determining that dual-use exports will be
primarily used for civilian purposes, Eximbank engineers are to
recommend approval of financing for dual-use exports only when their
investigations reveal unambiguously that the intended civilian use of
the exports is significantly greater than the intended military use. 

The Eximbank's Board of Directors is to assess and approve
applications for financing dual-use exports based on recommendations
for action and technical evaluations prepared by Eximbank staff.\2 In
addition, as required by the dual-use legislation, the Eximbank must
notify the Congress of dual-use transactions at least 15 calendar
days before approving them.  Also, the Eximbank seeks the advice of
the National Advisory Council on International Monetary and Financial
Policies (NAC) on dual-use transactions before deciding to support
them.\3 According to the Vice President of the Engineering and
Environment Division and the Eximbank liaison at the Department of
State, NAC members regularly receive copies of the memorandums to the
Board of Directors that contain the recommendation for action on a
dual-use export before the board makes a decision.  The Eximbank
liaison noted that he normally sends copies of the memorandums to the
pertinent country desks for review and makes certain that the
appropriate U.S.  missions receive a copy for comment. 

As part of the review and approval process, the Eximbank is to
incorporate in financing agreements requirements that must be
satisfied by the buyers before and after loans or loan guarantees are
ready for disbursement.  For example, the financing agreements
pertaining to the first three dual-use exports financed by the
Eximbank contain provisions that allow it, among other things, to
obtain end-use certificates from the buyers before disbursement and
to secure access to exports abroad for monitoring purposes. 


--------------------
\2 The Board of Directors, which manages and sets policy for the
Eximbank, is composed of five full-time members appointed for 4-year
terms by the President of the United States with the advice and
consent of the U.S.  Senate.  In addition, the Secretary of Commerce
and the U.S.  Trade Representative serve as ex officio, nonvoting
members. 

\3 NAC is composed of the following members:  the Secretary of the
Treasury, who is the Chairman of the Council; the Assistant to the
President for Economic Affairs, who is the Deputy Chairman of the
Council; the Secretary of State; the U.S.  Trade Representative; the
Secretary of Commerce; the Chairman of the Board of Governors of the
Federal Reserve System; the Director of the International Development
Cooperation Agency; and the President of the Eximbank. 


      END USE OF DUAL-USE EXPORTS
      MONITORED, AND PENALTIES FOR
      MISUSE OUTLINED
---------------------------------------------------------- Letter :4.2

Until the loans or loan guarantees are repaid, the Eximbank process
requires that the buyers provide periodic reports and certificates
about the actual usage of the dual-use exports.  Also, under this
process, the Eximbank retains the right to send its technical staff
overseas to monitor the actual end use of dual-use exports.  The
Eximbank's Engineering and Environment Division has overall
responsibility for monitoring the actual end use of these exports. 
If further external support is needed in monitoring these exports,
this division may request it from other U.S.  government agencies,
such as the Department of State.  This division recently issued a
guideline on work progress reports and technical operating reports to
help monitor dual-use exports. 

If the Eximbank discovers that the intended use of the dual-use
exports has been misrepresented, it can take appropriate corrective
actions.  These actions can include accelerating repayment of a
transaction, taking administrative steps or imposing punitive
measures according to the nature of the transaction, and/or
suspending the buyer from access to future Eximbank financing. 


      ELECTRONIC DATA BASE SYSTEMS
      USED FOR MONITORING DUAL-USE
      EXPORTS
---------------------------------------------------------- Letter :4.3

To track information on dual-use transactions for monitoring
purposes, the Eximbank has enhanced its Application Processing System
(APS).  The Eximbank uses this system to record information on all of
the export-related transactions, such as dual-use export
transactions.  The Eximbank recently added a data field in the APS to
distinguish its dual-use export transactions from other transactions
contained in the system.  As a result, the Eximbank can now more
readily identify the dual-use export transactions and can regularly
produce reports on these transactions for monitoring purposes. 

The Engineering and Environment Division is also developing a data
base system to process progress and operating reports required by
many Eximbank transactions, especially dual-use transactions.  This
system is expected to collect data such as the type of transaction
involved, the reporting requirements, the scheduled dates on which
the progress and operating reports are due, and the actual dates on
which they are received.  By allowing easy processing of progress and
operating reports, this system is intended to play a major role in
tracking information on dual-use exports and in monitoring the
civilian end use of these exports.  According to the Eximbank's Vice
President of the Engineering and Environment Division, the latter
system is scheduled to be fully operational by the end of fiscal year
1997. 


   EXIMBANK PROCESS PROVIDES A
   SOUND BASIS FOR DETERMINING
   WHETHER DUAL-USE EXPORTS WILL
   BE PRIMARILY USED FOR CIVILIAN
   PURPOSES
------------------------------------------------------------ Letter :5

The Eximbank's process to manage dual-use exports--as currently
implemented--should provide a sound basis for determining whether
these exports are nonlethal and will be primarily used for civilian
purposes.  The Eximbank and the State Department recently verified
the civilian end use of the 1995 dual-use export of aircraft parts
and services delivered to Indonesia. 

The Eximbank's process is designed to help the Eximbank (1) secure
critical information--such as the nature of the dual-use exports and
their intended end use--for the purpose of reviewing and approving
applications for financing these exports; (2) obtain access to the
dual-use exports overseas to monitor their actual end use; and (3)
have a legal basis, based on provisions contained in financial
agreements, to take appropriate corrective actions regarding the
financing involved if the Eximbank discovers that the dual-use
exports are not being used as intended.  This process also allows the
Eximbank to obtain assistance and information from other U.S. 
federal entities, such as NAC and the Department of State, for
reviewing and approving financial applications on dual-use exports
and for monitoring the actual end use of these exports. 

In March 1997, Eximbank officials used this process to obtain a
civilian end-use certificate from the user and to verify that the use
of the 1995 dual-use export of aircraft parts and services to
Indonesia had actually been for primarily civilian purposes.  As part
of this verification, Eximbank officials, accompanied by Department
of State and Department of Defense officials, were able to determine
that this export had been used, as planned, to repair seven aircraft
that were being or would be used for territorial development.  In
this case, territorial development included activities such as
humanitarian aid efforts and relief, air transport of food, and
transportation of civilians to the country's outer islands. 

These officials ascertained that (1) four of the aircraft were
stationed in Jakarta and three in Malang, (2) two of the aircraft
stationed in Jakarta were certified to fly and the remaining two were
undergoing flight certification testing, (3) flight logs for these
two certified aircraft were available for review in Jakarta, and (4)
flight logs for the three aircraft stationed in Malang were not
available for review in Jakarta.  The officials conducted a random
review of the flight logs for the two certified aircraft stationed in
Jakarta and obtained a copy of their flight logs for November 1996. 
According to Eximbank officials responsible for monitoring this
dual-use export, the Eximbank plans to secure additional end-use
information on all of the certified aircraft by the next reporting
milestone in the spring of 1998. 

Also, in the spring of 1997, in response to our request for
information on the end use of the dual-use exports financed by the
Eximbank, the State Department, with information provided by the U.S. 
embassy in Indonesia, reported that it had no information indicating
that this export had been misused. 

In response to our request, the State Department, with information
provided by the U.S.  embassies in Indonesia, Romania, Venezuela, and
Brazil, was able to confirm that the other nine dual-use exports
financed by the Eximbank were intended for primarily civilian
purposes. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :6

The legislation giving the Eximbank the authority to finance exports
of dual-use items required us to report to the Congress on the end
uses of the dual-use items financed during fiscal year 1995.  In
discussions with representatives of congressional committees, we
agreed not only to report on the dual-use export financed in 1995 but
also to provide information on the other nine exports financed during
fiscal years 1996 and 1997.  Also, we agreed to rely on information
collected by the Eximbank and the State Department on the actual end
use of the 1995 dual-use export to Indonesia. 

To determine the nature and extent of the Eximbank financing of
dual-use items, we reviewed pertinent Eximbank documents and
interviewed cognizant Eximbank officials, including the Chief
Financial Officer, the Vice President of the Engineering and
Environment Division, and the engineers having responsibility for
reviewing dual-use export applications and monitoring the end use of
these exports.  To confirm that the Eximbank had identified all of
the dual-use items for inclusion in our review, we performed a
comprehensive file review of fiscal year 1995-97 transactions having
potential military implications.  We identified these transactions in
the Eximbank's export data base system by using the standard
industrial classifications (SIC) employed by the Eximbank and the
U.S.  Bureau of Labor Statistics to identify articles and services
having military implications.  The latter SICs allowed us to
determine whether the SICs the Eximbank used in its export data base
had missed any transactions having military implications.  In
assessing whether the Eximbank had adequately applied its dual-use
exports criteria, we reviewed a number of its transactions having
military implications to learn how the Eximbank had distinguished its
dual-use exports from its other exports. 

To identify the actions taken by the Eximbank for ensuring that the
dual-use exports are primarily used for civilian purposes, we
reviewed pertinent government documents and interviewed public
officials, including the State Department's Eximbank liaison and, in
addition to Eximbank officials previously mentioned, the Eximbank's
Associate General Counsel, the attorneys responsible for the items
financed, the Vice President of the Credit Administration, and the
contract officers responsible for the items financed. 

To assess whether the Eximbank actions previously described provide a
reasonable assurance that it can determine whether its dual-use
exports are nonlethal and will be primarily used for civilian
purposes, we reviewed pertinent government documents and interviewed
public officials, including the State Department's official and the
Eximbank officials previously mentioned.  Also, we asked the State
Department to highlight--after querying cognizant U.S. 
embassies--any concerns it might have regarding the intended end uses
of the 10 dual-use exports financed by Eximbank. 

We conducted our work from September 1996 to June 1997 in accordance
with generally accepted government auditing standards. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We requested comments on a draft of this report from the Chairman and
President of the Eximbank, or his designees.  On July 8, 1997, we
obtained oral comments from Eximbank officials, including the
Executive Vice President and the Associate General Counsel.  These
officials generally agreed with the information presented in the
draft report.  Also, they provided some technical comments, which we
incorporated in the report where appropriate. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to other appropriate
congressional committees, the Chairman and President of the Eximbank,
and the Secretaries of State and Defense.  We will also make copies
available to others upon request. 

This review was done under the direction of Jess T.  Ford, Associate
Director.  If you or your staff have any questions concerning this
report, please contact Mr.  Ford at (202) 512-4268.  Major
contributors to this report are listed in appendix II. 

Benjamin F.  Nelson
Director, International Relations
 and Trade Issues

List of Recipients

The Honorable Alfonse M.  D'Amato
Chairman
The Honorable Paul S.  Sarbanes
Ranking Minority Member
Committee on Banking, Housing
 and Urban Affairs
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Robert C.  Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable James A.  Leach
Chairman
The Honorable Henry B.  Gonzalez
Ranking Minority Member
Committee on Banking and
 Financial Services
House of Representatives

The Honorable Bob Livingston
Chairman
The Honorable David R.  Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives


U.S.  EXPORT-IMPORT BANK-FINANCED
DUAL-USE LOANS AND LOAN GUARANTEES
=========================================================== Appendix I

Since fiscal year 1995, the Export-Import Bank of the United States
(Eximbank) has provided 10 loans and loan guarantees to finance
exports of nonlethal defense articles and services primarily intended
for civilian use--referred to by the Eximbank as "dual-use" exports. 
The following provides a brief description of these loans and loan
guarantees. 


   FINANCIAL SUPPORT FOR DUAL-USE
   EXPORTS IN FISCAL YEAR 1995
--------------------------------------------------------- Appendix I:1

On September 26, 1995, the Eximbank approved a $15.4-million, 10-year
loan to finance a dual-use export of aircraft parts and overhaul
services to Indonesia (Case No.  AP 68716).  This loan would allow
the Indonesian government to refit, refurbish, and overhaul five
C-130 and two L-100 aircraft that the Indonesian Air Force intended
to use for primarily civilian purposes, such as humanitarian aid
efforts and relief; air transport of food, water, and medical
supplies; search and rescue missions; transportation of civilians to
the country's outer islands; maritime and pollution surveillance;
weather monitoring; and air traffic control.  Derco Industries, Inc.,
Milwaukee, Wisconsin; National Airmotive Corp., Oakland, California;
and Pacific Propeller, Inc., Kent, Washington, would provide the
aircraft parts and services for this dual-use export. 


   FINANCIAL SUPPORT FOR DUAL-USE
   EXPORTS IN FISCAL YEAR 1996
--------------------------------------------------------- Appendix I:2

On October 26, 1995, the Eximbank approved a $79.5-million, 13-year
loan guarantee to finance a dual-use export of air traffic control
systems to Romania (Case No.  AP 68527).  This loan guarantee would
allow the Romanian government to procure five FPS-117 radar systems
for modernizing the air traffic control system operated and
maintained by the civil aviation authority.  Lockheed Martin
Corporation, Liverpool, New York, would provide the radar systems for
this dual-use export. 

On December 5, 1995, the Eximbank approved a $22.9-million, 5-year
loan to finance a dual-use export of refurbished Bell helicopters to
Indonesia (Case No.  AP 69128).  This loan would allow the Indonesian
government to acquire 21 refurbished Bell 205-A1 helicopters,
including spare parts, ground support equipment, and support
services, for use by the Indonesian Army for primarily civilian
purposes.  The army would use the helicopters to promote the
Indonesian government's territorial development mission, which
includes building schools, roads, churches, and health facilities,
and supporting humanitarian and disaster relief efforts.  Southwest
Florida Aviation, Punta Gorda, Florida, would provide the refurbished
helicopters for this dual-use export. 


   FINANCIAL SUPPORT FOR DUAL-USE
   EXPORTS IN FISCAL YEAR 1997
--------------------------------------------------------- Appendix I:3

On February 20, 1997, the Eximbank approved an $8.8-million, 7-year
loan guarantee to finance a dual-use export of high frequency radio
systems to Venezuela (Case No.  AP 69097).  This loan guarantee would
allow the Venezuelan government to procure a communications network
of high frequency radio systems for use by the Civil Action
Communications Division of the Venezuelan Army for primarily civilian
purposes in remote areas of the country.  The army would use the
equipment to provide, for example, disaster relief, environmental
protection, medical assistance, and border control in frontier
regions, especially along the border with Brazil.  Harris
Corporation, Rochester, New York, would provide the radio systems for
this dual-use export. 

On February 20, 1997, the Eximbank approved a $3.4-million, 6-year
loan guarantee to finance a dual-use export of radio systems to
Venezuela (Case No.  AP 70876).  This loan guarantee would allow the
Venezuelan government to upgrade existing radio systems used by the
air force in the country's air traffic control system.  This export,
as part of the modernization of the Venezuelan air traffic control
system, would permit the air force to track and control unauthorized
flights and increase the safety of civilian air traffic.  Comtech
Systems, Inc., St.  Cloud, Florida, would provide the radio systems
for this dual-use export. 

On March 4, 1997, the Eximbank approved a $34-million loan to finance
a dual-use export of aircraft components to Brazil (Case No.  AP
67303).  This action amended a loan initially approved on September
30, 1994, to support an infrastructure project for the development
and protection of the Amazon region in Brazil.  This loan would allow
the Brazilian government to procure components for five Embraer 145
aircraft for use by the air force for primarily civilian purposes,
such as communication relays for civilian agencies, support for law
enforcement and smuggling control activities by federal and local
police, and environmental monitoring activities.  Raytheon Company,
Lexington, Massachusetts, would provide the aircraft components for
this dual-use export. 

On March 4, 1997, the Eximbank approved a $25.5-million, 7-year loan
guarantee to finance a dual-use export of trucks to Venezuela (Case
No.  AP 70223A).  This loan guarantee would allow the Venezuelan
government to procure 450 remanufactured M-35, 2-1/2 ton trucks for
use by the Venezuelan Army for primarily civilian purposes.  The army
would use the trucks for transporting army personnel in situations
involving disaster relief, medical assistance, environmental
protection, border control, and other civilian missions.  Commercial
Military Systems Co., Augusta, Georgia, would provide the trucks for
this dual-use export. 

On March 20, 1997, the Eximbank approved a $14.1-million, 5-year loan
guarantee to finance a dual-use export of trucks to Venezuela (Case
No.  AP 69893).  This loan guarantee would allow the Venezuelan
government to procure trucks and other vehicles, including jeeps,
tractors, and construction equipment for use by the Division of
Construction and Maintenance of the Engineering Department of the
army for primarily civilian purposes.  These include the construction
and maintenance of roadways, buildings, schools, and construction
improvements for the population living in the frontier regions of the
country.  ATN Industries Inc., Miami, Florida, would provide the
trucks for this dual-use export. 

On March 20, 1997, the Eximbank approved a $10.1-million, 6-year loan
guarantee to finance a dual-use export of aircraft and helicopter
spare parts to Venezuela (Case No.  AP 70049).  This loan guarantee
would allow the Venezuelan government to refurbish a number of small
aircraft, such as Beechcraft, Cessna, Arava, Augusta, Bell 4125P,
UH-1H, and Sikorsky, for use by the army for primarily civilian
purposes.  The army would use the aircraft to provide civilian
support in activities related to disaster relief, medical assistance,
border control, water contamination, and environmental protection. 
Horizon Aircraft Sales, Inc., Miami, Florida, would provide the
aircraft and helicopter spare parts for this dual-use export. 

On March 20, 1997, the Eximbank approved a $12.4-million, 6-year loan
guarantee to finance a dual-use export of motor vehicles to Venezuela
(Case No.  AP 71127).  This loan guarantee would allow the Venezuelan
government to procure 720 vehicles--150 cars, 170 trucks, and 400
utility vehicles--for use by the army for primarily civilian
purposes.  The army would use these vehicles to support civilian and
humanitarian activities, such as medical aid, natural disaster
relief, protection of the environment, border patrol, and
antinarcotics efforts.  ATN Industries Inc., Miami, Florida, would
provide the vehicles for this dual-use export. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Virginia C.  Hughes
Juan F.  Tapia-Videla
Arthur L.  James, Jr. 

OFFICE OF THE GENERAL COUNSEL,
WASHINGTON, D.C. 

Ernie E.  Jackson


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