398. Letter From the Director of the Office of Management and Budget (Miller) to Senator Robert Dole1
As the House and Senate prepare to go to conference on the FY 1989 Foreign Operations, Export Financing and Related Agencies Appropriations Bill, I would like to bring to your attention the Administration’s concerns about Congressional action to date.
At the outset, I would like to note that both bills strike a balance between the U.S. economic and security assistance concerns worldwide and represent a highly commendable effort to produce a truly bipartisan foreign policy appropriation. At a time when U.S. leadership is more critical than ever, the bills provide the Administration with most of the basic tools with which to respond to the challenges of aggression, as well as the opportunities for peace, economic development and export promotion.
Of particular importance, the bill is responsive to the needs of the four democracies in Central America and the need to promote democracy in Nicaragua. The Administration is pleased that the House and Senate bills provide funds and authority to enable the National Endowment for Democracy to promote democracy in Nicaragua through assistance to the civilian opposition. The Administration strongly urges the conferees to adopt the Senate’s higher funding level of $2 million.
The Administration supports the Senate provision financing the General Capital Increase (GCI) of the World Bank,2 a program vital to the Bank’s lending in middle-income developing nations. In negotiating the GCI, the Administration secured agreement regarding the priority of World Bank policy objectives in its lending program, including environmental issues and greater reliance on market incentives. Failure to pass our legislative request would damage our national economic interests and cause us to lose substantial leadership on these and other important issues, a situation that could not be easily reversed.
The Administration opposes the Senate provision that requires that U.S. contributions to multilateral institutions be the first to be cut if a Gramm-Rudman-Hollings sequester is necessary. Support of [Page 963] multilateral institutions is critical to the recovery of the developing world from its serious economic problems, and sequestration should not serve as the vehicle to change spending priorities in the budget.
Despite its support for several of the funding allocations in the Senate bill, the Administration is opposed to a number of the bill’s restrictive language provisions. The most objectionable provision prohibits the sale of Maverick missiles to Kuwait. Enactment of this provision would necessitate termination of the sale, could result in U.S. liability for termination costs, and would seriously damage U.S. foreign policy interests in Kuwait and with the other moderate Gulf states. I understand, however, that the Administration’s modifications to the sale have satisfied Congressional concerns, and that the prohibition is expected to be removed in conference. The Administration strongly urges such an outcome. Without it, it would be difficult for the President’s advisors to recommend his signature of the bill.
A major problem with both bills is the extensive earmarking of funds, though this practice is greater in the Senate bill in which several bilateral aid accounts are now almost entirely earmarked. The Migration and Refugee Assistance account is also heavily earmarked in the Senate bill and, if not modified, will require extensive cutbacks in a number of critical refugee assistance programs. The Administration strongly urges substantial reduction of the number and amount of earmarkings to increase funding flexibility. By reducing the number of earmarks in the military assistance accounts and in the other foreign assistance programs, the Administration will have critically needed flexibility to allocate scarce funds to meet a larger number of priority national security and foreign policy needs. The Administration notes that the committee approval requirement in section 514 of the bill3 is unconstitutional and urges that the section be revised to preserve funding flexibility in a manner consistent with the principles enunciated in INS v. Chadha, 462 U.S. 919 (1983).
The Administration strongly supports the Senate’s provision of $8.1 billion for security assistance programs, which is $26 million more than the House provided. The Administration further supports the Senate’s provision of military financing in the form of forgiven loans, allowing essential flexibility at a time of overall program cuts. The Administration would not object to the inclusion of a MAP program in the bill as was proposed by the House. If this is done, however, it is extremely important that the military financing program be on an [Page 964] all-grant basis and that the MAP component not exceed the amount requested in the President’s budget.
A highly objectionable Senate provision requires 30 day notification to Congress before the Executive could consummate any sales of missiles, rockets and launchers, and artillery ammunition. This provision would impede legitimate and non-controversial sales to friends and allies and would create an onerous paperwork burden rather than enhance Congressional oversight. A study of notifications under Section 36(b) of the Arms Export Control Act (AECA) covering FY 1985–87 indicated that of 378 total cases of rockets, launchers, missiles and artillery projectiles, 73 percent of the dollar value was notified under the AECA. Only 27 percent of the dollar value would have required notification under this provision, but would have represented 343 cases worth only about $2.1 million per case. Moreover, this new provision equates sales of ammunition with transfers of sophisticated weaponry—a premise that the Administration does not support.
The Administration also supports the House provision for IMET. The Senate bill contains a restriction that would eliminate IMET programs for eighteen countries. The Administration opposes the Senate provision. IMET has proven to be an extremely effective, low cost program that provides access to promising military officials and also provides a valuable channel of communication to both military and civilian institutions.
We are deeply disturbed by Senate action to reduce funding for the International Atomic Energy Agency (IAEA) to $13.5 million from the House level of $22 million. IAEA has long served critical U.S. national security and non-proliferation interests, especially its safeguards program. Failure to provide funding at the House level could seriously weaken vital U.S. interests.
Where there are differences between the House and Senate bills, the Administration urges the conferees to choose the alternative that minimizes the language and funding restrictions identified above and in the enclosure.4 We hope that we can work together with the bipartisan leadership of Congress to address these concerns.5
Sincerely yours,
Director
- Source: Reagan Library, Alison Fortier Files, Subject File, Foreign Aid/Earmark. No classification marking. Identical letters were sent to the following members of Congress: Silvio Conte, David Obey, Mickey Edwards, John Stennis, Mark Hatfield, Jamie Whitten, Daniel Inouye, and Robert Kasten. (Ibid.)↩
- For documentation covering the GCI negotiations, see the International Debt compilation of this volume.↩
- Section 514 of P.L. 100–461, the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1989, reads: “None of the funds made available by this Act may be obligated under an appropriations account to which they were not appropriated without the prior written approval of the Committees on Appropriations.”↩
- Attached but not printed is the enclosure, entitled “FY 1989 Foreign Operations, Export Financing and Related Agencies Appropriations Bill Objectionable Provisions.”↩
- Reagan signed the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1989, (P.L. 100–461; HR 4776) into law on October 1. For his statement on signing into law the Fiscal Year 1989 Appropriation bills, see Public Papers: Reagan, 1988, Book II, p. 1262.↩