NATO Defense Financing Act

I 116TH CONGRESS 1ST SESSION H. R. 3194 To provide financial lending mechanisms to assist North Atlantic Treaty Organization allies in modernizing their military forces, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 11, 2019 Mr. ENGEL (for himself and Mr. MCCAUL) introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL To provide financial lending mechanisms to assist North Atlantic Treaty Organization allies in modernizing their military forces, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘NATO Defense Fi- 4 nancing Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 (1) Many United States allies, including some 8 North Atlantic Treaty Organization (NATO) mem- 9 VerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3194.IH H3194 kjohnson on DSK79L0C42 with BILLS 2 •HR 3194 IH bers, continue to operate Soviet era military equip- 1 ment. This equipment is outdated, unreliable, in- 2 creasingly unsafe and is unable to effectively inte- 3 grate and operate jointly with United States military 4 forces. 5 (2) The inability of some NATO allies to fully 6 operate alongside United States military forces de- 7 creases NATO combat effectiveness and places addi- 8 tional strain on the United States military. 9 (3) Some NATO allies are compelled to buy 10 spare parts and services from Russian providers to 11 keep their Soviet-designed equipment functional. 12 These NATO allies desire to operate modern West- 13 ern military equipment, but have limited financial 14 resources available to purchase expensive new equip- 15 ment. 16 (4) Following the end of World War II, the 17 United States faced a need to help allies rebuild 18 their militaries, which it addressed by providing sub- 19 stantial financial assistance through the Mutual De- 20 fense Assistance Act of 1949 (22 U.S.C. 1571 et 21 seq.) and the Mutual Security Act of 1951 (Public 22 Law 82–165; 65 Stat. 373). However, the United 23 States has not provided similar assistance to new 24 NATO allies following the end of the Cold War. 25 VerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3194.IH H3194 kjohnson on DSK79L0C42 with BILLS 3 •HR 3194 IH (5) Given the return of ‘‘great power competi- 1 tion’’ and an aggressive Russia, there is a pressing 2 need to assist NATO allies to modernize their forces 3 and replace their obsolete Soviet military equipment. 4 (6) The United States does provide some mili- 5 tary equipment to NATO allies through the foreign 6 military financing program and other grant assist- 7 ance, but that assistance is insufficient to meet al- 8 lies’ needs. 9 (7) To supplement existing grant assistance, 10 providing foreign military financing loans to allies— 11 at rates competitive with those already available on 12 commercial markets—to purchase NATO interoper- 13 able military equipment supports allies’ moderniza- 14 tion requirements. 15 (8) As described in Article 2 of the North At- 16 lantic Treaty, in addition to providing security to al- 17 lies, NATO was established to promote democratic 18 institutions and values ‘‘by strengthening their free 19 institutions, by bringing about a better under- 20 standing of the principles upon which these institu- 21 tions are founded, and by promoting conditions of 22 stability and well-being’’. 23 SEC. 3. STATEMENT OF POLICY. 24 It is the policy of the United States to— 25 VerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3194.IH H3194 kjohnson on DSK79L0C42 with BILLS 4 •HR 3194 IH (1) deter aggression against North Atlantic 1 Treaty Organization (NATO) allies by Russia or any 2 other adversary; 3 (2) assist NATO allies in acquiring and deploy- 4 ing modern, NATO interoperable military equipment 5 and reducing their dependence on Russian or former 6 Soviet-era defense articles; 7 (3) ensure that NATO allies meet alliance de- 8 fense commitments, including through adequate in- 9 vestments in national defense; and 10 (4) work to maintain and strengthen the demo- 11 cratic institutions and practices of all NATO allies, 12 in accordance with the goals of Article 2 of the 13 North Atlantic Treaty. 14 SEC. 4. FOREIGN MILITARY LOAN AUTHORITY. 15 (a) IN GENERAL.—Subject to the notification re- 16 quirements under subsection (b), the President, acting 17 through the Secretary of State, is authorized— 18 (1) to make direct loans under section 23 of the 19 Arms Export Control Act (22 U.S.C. 2763) to mem- 20 ber countries of the North Atlantic Treaty Organiza- 21 tion (NATO) that joined after March 1, 1999, not- 22 withstanding the minimum interest rate required by 23 subsection (c)(1) of such section; and 24 VerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3194.IH H3194 kjohnson on DSK79L0C42 with BILLS 5 •HR 3194 IH (2) to charge fees for such loans under para- 1 graph (1), which shall be collected from borrowers in 2 accordance with section 502(7) of the Congressional 3 Budget Act of 1974, and which may be used to 4 cover the costs of such loans as defined in section 5 502 of the Congressional Budget Act of 1974. 6 (b) NOTIFICATION.—A loan may not be made under 7 the authority provided by subsection (a) unless the Sec- 8 retary of State submits to the appropriate congressional 9 committees a certification, not fewer than fifteen days be- 10 fore entering into an agreement to make such loan, that— 11 (1) the recipient country is making demon- 12 strable progress toward meeting its spending com- 13 mitments in accordance with the 2014 NATO Wales 14 Summit Declaration; 15 (2) the government of such recipient country is 16 respecting that country’s constitution and upholds 17 democratic values such as freedom of religion, free- 18 dom of speech, freedom of the press, the rule of law, 19 and the rights of minorities; and 20 (3) the recipient country has demonstrated fis- 21 cal stability, a commitment to a free market econ- 22 omy, and the financial capacity to meet the terms of 23 the loan proposed to be provided by the United 24 States. 25 VerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3194.IH H3194 kjohnson on DSK79L0C42 with BILLS 6 •HR 3194 IH (c) REPAYMENT.—A loan made under the authority 1 provided by subsection (a) shall be repaid in not more than 2 12 years, but may include a grace period of up to one 3 year on the repayment of the principal. 4 (d) APPROPRIATE CONGRESSIONAL COMMITTEES 5 DEFINED.—In this Act, the term ‘‘appropriate congres- 6 sional committees’’ means— 7 (1) the Committee on Foreign Affairs and the 8 Committee on Appropriations of the House of Rep- 9 resentatives; and 10 (2) the Committee on Foreign Relations and 11 the Committee on Appropriations of the Senate. 12 Æ VerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H3194.IH H3194 kjohnson on DSK79L0C42 with BILLS