yourself, Senator Kasten. The process of hearings, leading to I would mention also Section 720 of PL 97-113, which began I firmly believe that whatever Congress can do to communicate its active concern with the behavior of other states in the U.N. and in other multilateral gatherings is going to help. Conversely, it damages our participation in the UN whenever Congress makes decisions on matters which importantly affect other nations for example on economic or military assistance without taking into account and giving weight to their treatment of important U.S. interests in the UN. - - Let me be clear about this. I do not suggest that other nations should in their UN votes place our national interest above their own. In fact, we would never ask a country to vote in a way contrary to its own national interest. And I don't believe that how a country votes in the U.N. should be the only or the determining criterion for U.S. assistance and support. However, when our own national interest is very deeply involved and the other country's is not for example, when Cuba tried to mobilize the General Assembly to interfere in our relationship with Puerto Rico - or when a very basic matter of principle is involved such as the attempt to deny Israel's right to participate in the UN, then I think it is reasonable to expect our friends to give weight to our views. give weight to their actions. And reasonable as well for us to Senator Kasten: Certainly the primary founding principle of the United Nations is the principle of universality of membership in the organization. That principle has taken somewhat of a beating over the years. Could you tell the Subcommittee what your assessment is currently of the membership's view of that principle? Do they, in fact, support the universality of membership principle any more? Ambassador Kirkpatrick: I think you would find that an over whelming majority in the United Nations would claim to support the principle of universality. Yet at the same time, there has been a successful attempt to deprive South Africa of its ability to participate in the work of the U.N., and a number of attempts to deny Israel the ability to participate in the General Assembly and some of the specialized agencies. So it is clear that some member states which claim to support universality as a principle, in fact do not do so as a practice. As far as we are concerned, there can be no doubt of U.S. support for the principle of universality. We made this clear last year both before and after the International Atomic Energy Agency rejected Israel's credentials at its September 1982 General Conference, and when further attempts - fortunately were made to block Israeli participation in the International Telecommunications Union, and even in the General Assembly itself. Reflecting the sense of Congress as it was expressed in Senate concurrent resolution 68 and House concurrent resolution 322, on October 16, 1982 Secretary Shultz made an unequivocal statement that if Israel were denied its right of participation in any UN body, the United States would cease its own participation in and financial support for that body. This was subsequently made a matter of law by PL 97-322. These forthright statements had the necessary effect. The moves to expel Israel from the ITU and to reject its delegates credentials in the General Assembly were stopped in their tracks, just as a few years earlier by withholding our payments to UNESCO we ended a situation in which parliamentary maneuvering had been used to keep Israel from full participation. SUBCOMMITTEE RECESS Senator KASTEN. This concludes our hearing. The subcommittee will stand in recess until tomorrow morning when we will hear from Mr. William Draper, President of the Export-Import Bank. Thank you very much, Ambassador Kirkpatrick. Ambassador KIRKPATRICK. I thank you, Mr. Chairman. [Whereupon, on Monday, March 7, the subcommittee was recessed, to reconvene Tuesday, March 8, 1983.] FOREIGN ASSISTANCE AND RELATED PRO GRAMS APPROPRIATIONS FOR FISCAL YEAR 1984 TUESDAY, MARCH 8, 1983 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D.C. The subcommittee met, at 10:03 a.m., in room S-126, the Capitol, Hon. Robert W. Kasten, Jr. (chairman), presiding. Present: Senator Kasten. EXPORT-IMPORT BANK OF THE UNITED STATES STATEMENT OF WILLIAM H. DRAPER III, PRESIDENT AND CHAIRMAN, EXPORT-IMPORT BANK OF THE UNITED STATES ACCOMPANIED BY: WARREN W. GLICK, GENERAL COUNSEL, EXIMBANK JAMES K. HESS, ACTING TREASURER-CONTROLLER, EXIMBANK INTRODUCTION OF WITNESS Senator KASTEN. The subcommittee will come to order. This morning we continue the hearings on the administration's fiscal year 1984 budget requests with testimony from Mr. William Draper, Chairman and President of the Eximbank. Mr. Draper, as you know, your full statement will be entered in the record. In order to have time for questions, we are hopeful you will summarize your statement, and you will have an opportunity to respond to questions. Thank you very much for joining us this morning. I look forward to your statement. Please proceed. FISCAL YEAR 1984 BUDGET REQUEST Mr. DRAPER. Mr. Chairman, and members of the subcommittee, once again it is a pleasure for me to appear before your subcommittee to discuss Eximbank's budget for fiscal year 1984. Our budget request is based upon the assumption that the economic climate in the United States will improve throughout 1983 and into 1984. We foresee an increased demand for U.S. exports and a continued decline in interest rates. The recovery of the U.S. economy, which we expect to occur this year, should be reflected globally in fiscal year 1984. There should be an increase in demand for exports in most capital goods. Our total budget request for fiscal year 1984 reflects these assumptions. It consists of the following: $3,830 million for direct loan obligations, which includes $3,730 million for regular loans, and $100 million for discount loans; $10 billion for guarantees and insurance; and $16,899,000 for administrative expenses. The $3,730 million being requested for regular loans will be used to support exports of items requiring repayment terms of 5 years or more. It will also be used to fund a new facility, the mediumterm credit program. The purpose of this program is to fill a gap long existing in the coverage under our other programs. Specifically, we will now provide support for medium-term export sales that are facing subsidized, officially supported export credit competition from abroad. In addition, the Bank is budgeting $100 million for the discount loan program for fiscal year 1984, as we did in fiscal year 1983. Funds under this program are targeted toward small manufacturers. The total $3,830 million figure requested for direct loan applications in fiscal year 1984 is the same as we estimated for fiscal year 1983. Because U.S. market rates of interest should be below the minimum OECD arrangement rates of interest now charged by Eximbank and other official export credit agencies, we think that many U.S. exporters will be able to compete using commercial financing with our guarantee. That is, private lenders will provide the financing, and we will give them a comprehensive guarantee. Thus, the $3,830 million when coupled with our increased guarantee authority of $10 billion, should be adequate even with an upsurge in demand for U.S. exports. However, if market rates go back up or if we are unsuccessful in negotiations with our major trading partners, the administration is committed to making competitive financing available to U.S. exporters, and the President has expressly stated in his budget message to Congress that he will request supplemental direct credit authority of up to an additional $2,670 million "if necessary to meet subsidized foreign officially supported competition." EFFORTS TO ELIMINATE SUBSIDIES Under all of our programs, we are mindful of our basic objective to provide financing on terms and conditions which are competitive with those of the Government-supported financing available to exporters from other countries. At the same time, we have been trying to do away completely with the subsidy element in export credit financing. Our efforts over the past 2 years have been successful in this regard. We were able to negotiate a common-line agreement on aircraft financing with the governments that comprise the Airbus Consortium. The result of this agreement has been largely to eliminate financing as a sales tool for aircraft sales. Most recently, we have been exploring, within the OECD framework, the possibility of further raising minimum interest rates for aircraft but allowing longer terms. We have also reached agreement with other OECD countries regarding financing for nonaircraft capital goods. The result of these |