President and Congress differ on amount of funding for NIS (09/13/98)

President and Congress differ on amount of funding for NIS

by Michael Sawkiw Jr.
Ukrainian National Information Service

WASHINGTON - Though the president of the United States has requested increased funding for the new independent states (NIS) in his budget for 1999, the House of Representatives and Senate subcommittees that deliberate these proposals have different views: the House of Representatives has suggested a decrease in foreign aid, including assistance to the NIS, while the Senate has proposed a slight drop from the previous year's levels of assistance to the NIS.

President Bill Clinton's request for foreign aid for fiscal year (FY) 1999, which begins on October 1, was $20.2 billion, which does not include a supplemental International Monetary Fund (IMF) payment by the U.S. The president requested expanded funding for the NIS, proposing an increase from last year's appropriated level of $770 million to $925 million, with a designated amount (though not an earmark) of $223.5 million for Ukraine.

Following several hearings in the Senate and House of Representatives, the Foreign Operations Subcommittees of both houses held their respective mark-up sessions in late July.

House recommends cuts

On July 15, the House Foreign Operations Subcommittee agreed on a total of $16.2 billion (which includes $3.4 billion for IMF payments) for overseas spending. The House proposal also reduces assistance to the NIS by $180 million below last year's levels and $335 million below the president's request, bringing the FY 1999 funding level to $590 million.

Furthermore, the House Foreign Operations Bill limits the amount of assistance to any one country of the NIS to $147.5 million - a devastating drop in suggested levels of aid to Ukraine.

The language in the House version of the bill addresses many of the issues affecting the NIS, specifically Ukraine. The subcommittee carefully examined funding levels for the NIS and reported its findings in the bill language as follows: "Because of the overall budget situation and specific negative developments in several nations [of the NIS], the committee [on Appropriations] is unable to recommend the 20 percent increase in this account [the NIS] requested by the president."

Commenting on the certification process for the continuance of foreign assistance to Ukraine in this fiscal year (FY 1998), the subcommittee "recommended language that withheld one-half of Ukraine's assistance and made it available for obligation only when the secretary of state had certified certain actions by the government of Ukraine. Strenuous efforts by senior administration officials to resolve the cases [U.S. investor business disputes] of primary concern to the committee were unsuccessful, but the certification was made." In this fiscal year, however, the subcommittee will continue to support humanitarian assistance aimed at improving the lives of the Ukrainian citizens.

Agricultural development in Ukraine was highlighted in the House bill as fundamental to regional stability and economic prosperity. In its comments, the committee directed "USAID [United States Agency for International Development] and the Peace Corps to expand technical exchanges in agriculture, making use of experienced American private farmers, land-grant colleges and other agricultural experts. These exchanges should focus on helping individual private smallholders, fledging commercial farmers, private village farmers' associations and agri-credit union institutions." Also high on the list of priorities for U.S. foreign assistance to Ukraine are cooperative programs in law enforcement to combat international organized crime and narcotics trafficking.

Given the devastating economic and financial crisis in Russia and its ramifications worldwide, the minuscule level of funding for the IMF is causing several leaders in the House of Representatives to re-examine the foreign aid bill. Thus, a vote on the House floor is not expected until a consensus can be reached regarding IMF funding levels. Members of the House of Representatives returned to Washington on Wednesday, September 9, following their August recess.

Senate for maintaining aid

The Senate Foreign Operations Subcommittee, under the leadership of Sen. Mitch McConnell, held its mark-up meeting on July 21. The Senate's version of the bill recognizes the strategic importance of maintaining assistance to the new independent states (NIS), particularly Ukraine, and has suggested a funding level of $740 million to the NIS, with a $210 million earmark for Ukraine.

The Senate foreign aid bill also stipulates that "50 percent of the amount made available in this subsection, exclusive of funds available for nuclear safety, free market democracy fund activities and law enforcement reforms, shall be withheld from obligation and expenditure until the secretary of state reports to the Committee on Appropriations that Ukraine has undertaken significant economic reforms." According to the bill, the secretary of state shall report to the Congress within 120 days from the enactment of the proviso.

The Senate version also provides funding for "comprehensive legal reform in Ukraine necessary to support a decentralized market-oriented economic system, and the implementation of reforms necessary to establish an independent judiciary, including the education of judges, attorneys and law students"; the support of law enforcement programs; nuclear reactor safety issues; and the establishment of a "Free Market Democracy Fund" to be administered by the U.S. ambassador to Ukraine.

Like the House, the Senate expressed firm support for innovative methods of agricultural development in Ukraine. The Senate bill language reported that, "the committee directs [US] AID to report within 60 days on prospects for developing a small farm business initiative ... to generate local reforms and agricultural growth and income."

Economic and military-type support is provided in the Senate bill for other countries in Central and East Europe, as well as the NIS. Of the $740 million allocated for the NIS, $95 million and $90 million, respectively, have been earmarked for Georgia and Armenia. Countries classified within Central and East Europe are provided $432.5 million in assistance, of which not more than $200 million is designated for Bosnia and Herzegovina.

The Baltic republics were accorded security assistance in the amount of $15.3 million "to accelerate the Baltic states' integration into NATO." This particular line item supplements assistance to the three democratic states as they enhance their military structures and modernize to attain NATO defense standards.

On September 2, following floor amendments offered by several senators, the Senate voted 90-3 in an overwhelming show of support for U.S. programs abroad. The bill remains tabled until the House of Representatives votes on its respective bill; then both subcommittees will meet in conference to resolve any differences.

Caucus supports Ukraine

The co-chairs of the Congressional Ukrainian Caucus (CUC) also penned a letter to the chairmen of the respective Foreign Operations Subcommittees to express their support for continued assistance to Ukraine in view of the strategic partnership formed.

"Congress has played a key role in the positive development [of U.S.-Ukrainian relations] through its stewardship of U.S. foreign assistance," wrote the co-chairs of the CUC, Reps. Jon Fox (R-Pa.), Marcy Kaptur (D-Ohio), Sander Levin (D-Mich.), Bob Schaffer (R-Colo.), and Louise Slaughter (D-N.Y.).

The caucus co-chairs further stated: "As the Ukrainian government continues to reform its internal structures and introduce further economic reforms, it is vital for U.S. foreign assistance to continue. The U.S. is well-positioned to play a key leadership role in assisting Ukraine to further establish a pluralistic and democratic society based upon the principles of law and on the free-market system."

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