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railroad, repayment to be in U.S. dollars; and $7.8 million to Iran for similar financing of the CENTO railroad, repayment to be in U.S. dollars.50

TABLE 19.—AID supporting assistance and contingency fund loan authorizations, by area, country, terms, and purpose, Jan. 1 to June 30, 1964

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With respect to the terms for 2-step loans, the 2d figure indicates the maturity and grace period to the sub-borrower.

22 percent after expiration of the grace period.

Source: Agency for International Development.

AID INVESTMENT GUARANTEE PROGRAMS

Specific (political) risk guarantees

The Specific Risk Investment Guarantee Program is administered by the Agency for International Development (AID). Requests for protection against the specific risks of inconvertibility and loss from expropriation, war, revolution, and insurrection were received for 306 projects in 37 less-developed countries in the period under review. These applications represented a total value of $3.8 billion. In the same period, 176 guarantee contracts were written, with a total value of 229.7 million. Through June 30, 1964, 969 specific risk guarantees had been issued in the amount of $1.7 billion (see table 20),51 of which $1.3 billion was still outstanding. Total fees collected through June 30, 1964 were $17 million.

Three additional countries-Kenya,52 Mali,53 and the Somali Republic 5-signed bilateral agreements to institute the guarantee program, and two amendments to existing agreements were authorized to allow for complete guarantee coverage under the legislative authority—

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Bolivia 55 and the Sudan.56 As indicated in table 21,51 guarantees were available in 60 less-developed countries, plus overseas territories of certain developed countries.

Among the projects assisted by investment guarantees during the current period were the following: the manufacture of transmissions and axles; mining of bauxite ore; the expansion of textile mill-knitting processes; the mining, processing, and exporting of titanium-bearing ore; the manufacture and sale of pneumatic tires and tubes; the construction of a steel mill; and the construction and operation of a tin smelter.

Extended risk guarantees

Under authority of section 221 (b) (2) of the Foreign Assistance Act of 1961, as amended," the Agency for International Development is authorized to guarantee investors in any type of eligible project against losses up to 75 percent of the investment against any and all risks, except fraud or misconduct on the part of the investor. The Act also authorizes coverage on housing investments on a basis similar to the special housing authority for Latin America under section 224,58 As of the end of the period under review, the AID had authority to underwrite up to $180 million of extended risk coverage outstanding at any one time. Of this amount, $50 million has been reserved for housing projects in areas other than Latin America. However, increased authority up to $300 million was subsequently granted by the Foreign Assistance Act of 1964 (Public Law 88-633).59

Through June 30, 1964, two extended risk guarantees totaling $8,944,000 have been authorized, covering one investment (guaranteed amount $8,325,000) in a petrochemical complex in Argentina, and one investment (guaranteed amount $619,000) in a carbon black project in Colombia. Applications currently at hand for housing and non-housing projects total approximately $75 million.

Latin American housing guarantees

The Foreign Assistance Act of 1961 60 authorized the Agency for International Development to guarantee private U.S. investments in self-liquidating pilot or demonstration housing projects in Latin America. The purpose of the Housing Guaranties Program for Latin America is to stimulate private homeownership and assist in the development of stable economies by offering guarantees of investments in homes for middle- and lower middle-income families in Latin America. The projects which come under the program are of types similar to those insured by the Federal Housing Administration in the United States.

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60

Post, doc. XII-9.

Text in American Foreign Policy: Current Documents, 1961, pp. 1267–1292.

By means of a press release issued March 31,61 and by letter to all those who had shown interest in the program, it was announced that as of May 15, 1964, no further applications for guarantees under this program would be accepted. On that date, the Housing Guaranties Division for Latin America had on hand application for guarantees totaling approximately $525 million compared with the actual guarantee authorization of $150 million then in effect. The Foreign Assistance Act of 1964 (Public Law 88-633) subsequently increased this authorization to $250 million.

As of June 30, 1964, a total of $68.6 million in guarantees for 12 projects was authorized. As of this date, eight Letters of Reservation were issued representing funds of $55.9 million.

TITLE I, PUBLIC LAW 480, FOREIGN CURRENCY LOANS Sections 104(e) loans to private enterprise 62

Local currency (Cooley) loans are extended by the Agency for International Development from U.S.-owned local currency received in payment for surplus agricultural commodities. Under Title I of Public Law 480, loans may be made (a) to qualified U.S. firms or their affiliates to develop business and expand trade or (b) to U.S. firms or firms of the local country if the loan will result in expanded markets for, and consumption of, U.S. agricultural products. These loans are available only in countries where local currencies have been allocated for this purpose under Public Law 480 sales agreements. The loans are made and are repayable in local currency without maintenance of value. Interest is usually comparable to that charged by local development banks and maturities are related to the purpose of the financing.

During fiscal year 1964, AID approved 45 Cooley loans for a total equivalent value of $64.5 million. This compares with 43 loans and a total equivalent value of $38.2 million in fiscal year 1963. The largest number and equivalent value of loans-16 loans totaling $35.2 million-were made to firms in the chemical industry.

Section 104(g) 63

Local currency loan funds generated under this section of Title I of Public Law 480 are used to finance the local costs of economic development. This is one of the largest and most important uses of local currency funds generated by Title I. Loan (or credit) agreements establish lines of credit up to the amounts planned in sales agreements, and the loans are negotiated by the AID in accordance

Alliance for Progress, Agency for International Development press release A-64-45.

2 I.e., sec. 104(e) of the Agricultural Trade Development and Assistance Act of 1954, as amended (7 U.S.C. § 1704 (e)).

63 Of the Agricultural Trade Development and Assistance Act of 1954, as amended (7 U.S.C. § 1704(g)).

with terms and conditions previously approved by the Council. Loan agreements provide that loans may be repaid in U.S. dollars or in the currency of the borrower, ordinarily at the borrower's option. The equivalent of $167 million in foreign currency was provided for in Title I agreements signed during the 6-month period under review— an increase of $75 million equivalent over the preceding half year. During the first half of calendar 1964, loan agreements, and amendments to agreements, in the equivalent of about $34 million were signed with 7 countries-Iceland, Israel, Ivory Coast, Peru,68 Sudan, the United Arab Republic," and Uruguay.

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Since the beginning of the program in fiscal 1955 through June 30, 1964, approximately $4.4 billion equivalent in foreign currency has been earmarked for economic development loans to governments receiving Public Law 480 commodities.

Document XII-8

Conference on International Rural Development, Washington, July 27-28, 1964: ADDRESS BY THE ADMINISTRATOR OF THE AGENCY FOR INTERNATIONAL DEVELOPMENT (BELL), JULY 27, 1964 71

Document XII-9

The Foreign Assistance Act of 1964: PUBLIC LAW 88-633, APPROVED OCTOBER 7, 1964 72

AN ACT

To amend further the Foreign Assistance Act of 1961, as amended," and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Foreign Assistance Act of 1964".

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See American Foreign Policy: Current Documents, 1963, pp. 1246-1253. TIAS 5525; 15 UST 111.

TIAS 5557; 15 UST 314; TIAS 5596; 15 UST 730.

67 TIAS 5552; 15 UST 273.

6 TIAS 5539; 15 UST 187.

"TIAS 5541; 15 UST 217.

70 TIAS 5579; 15 UST 527; TIAS 5617; 15 UST 1437.

"Department of State Bulletin, Sept. 14, 1964, pp. 376-383. For the text of an address of July 27, 1964, to the conference by Secretary of Agriculture Orville L. Freeman, see ibid., pp. 383-388. The conference was sponsored by the Agency for International Development, the Department of Agriculture, and the Association of State Universities and Land-Grant Colleges in a joint effort toward improving the effectiveness of U.S. assistance to rural development in the less developed countries.

778 Stat. 1009.

3 Cited post, doc. XII-11.

PART I

CHAPTER 2-DEVELOPMENT ASSISTANCE

TITLE I-DEVELOPMENT LOAN FUND

SEC. 101. Section 201 (d) of the Foreign Assistance Act of 1961, as amended, which relates to the Development Loan Fund, is amended as follows: 74

(a) Strike out "Foreign Assistance Act of 1963" and substitute "Foreign Assistance Act of 1964”.

(b) Strike out "2 per centum" and substitute "212 per centum". (c) Strike out "three-fourths of 1 per centum" and substitute "1 per centum".

TITLE II-TECHNICAL COOPERATION AND DEVELOPMENT GRANTS

SEC. 102. Title II of chapter 2 of part I of the Foreign Assistance Act of 1961, as amended, which relates to development grants and technical cooperation, is hereby amended as follows:

(a) Amend the title heading to read as follows: "TITLE II-TECHNICAL COOPERATION AND DEVELOPMENT GRANTS".

(b) Amend section 212, which relates to authorization, by striking out "1964" and "$220,000,000" and substituting "1965" and "$215,000,000", respectively.75

(c) Amend section 214(c), which relates to American schools and hospitals abroad, by striking out "1964, $19,000,000" and substituting "1965, $18,000,000", and by striking out the second sentence.76

(d) Amend section 216 (a), which relates to voluntary agencies, by inserting after "ports" the first time it appears, the words "or, in the case of excess or surplus property supplied by the United States, from foreign ports".""

(e) Add the following new section at the end thereof:

"SEC. 217. USED EQUIPMENT.-The President is authorized to use funds made available for the purposes of section 211 78 to conduct a study and investigation to determine the feasibility of establishing programs for the furnishing to less developed friendly countries and areas of used tools, machinery, and other equipment to be donated by private enterprises, or acquired through normal channels of trade, and the extent to which such programs are likely to be utilized by and contribute to the economic development of the receiving country. The President shall submit to the Congress at the earliest practicable date a report of the results of such study and investigation, together with such recommendations for legislation as he deems advisable." 79

TITLE III-INVESTMENT GUARANTIES

SEC. 103. Title III of chapter 2 of part I of the Foreign Assistance

74
"22 U.S.C. § 2161 (d).

TB 22 U.S.C. § 2172.
76 22 U.S.C. § 2174 (c).
7722 U.S.C. § 2176(a).
78 22 U.S.C. § 2171.
79 22 U.S.C. § 2177.

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