INTRODUCTION

The levels recommended in the following tables were agreed to by the Committee on International Relations in meetings held on March 9, 10, and 11, 1976. For the most part, they are based on (a) completed authorization action by the Congress or by the Committee on International Relations, (b) the President's budget requests which the Committee on International Relations supports, and (c) reductions or increases in the President's budget requests consistent with previous positions of the Committee on International Relations.

The Committee on International Relations wishes to point out that estimates of outlays for items which are contained in the Foreign Assistance and Related Programs Appropriation bill for fiscal year 1976 and the transition quarter are based on budget request levels. After final passage of fiscal year 1976 and transition quarter appropriation legislation, the fiscal year 1977 outlay levels for these items will have to be adjusted to reflect the actual appropriation amounts contained in that legislation.

The Committee on International Relations also wishes to note that while it does not have legislative jurisdiction over international financial institutions-such as the International Development Association (IDA), the Inter-American Development Bank (IDB), and the Asian Development Bank-it is interested in the budgetary aspects of these institutions for several reasons.

First, this committee has specific oversight responsibility with respect to these institutions.

Second, the committee has a strong interest in all facets of international development and relations with the developing countries. Third, and most important from the standpoint of this report, the committee would like to assure that the ceilings and targets established in the congressional budget process take into account all the funds which are likely to be requested and appropriated for these institutions in fiscal year 1977. The committee expresses this concern because in fiscal year 1976 the first budget resolution did not reflect amounts which were requested but which were not appropriated for the previous fiscal year. As a result, items that slipped from fiscal year 1975 to fiscal year 1976 had to be accommodated in target and ceiling levels which were established without regard to those items.

Therefore, the committee strongly urges that, this year, the Committee on the Budget specifically take into account the probability that substantial portions of the amounts requested for international financial institutions for fiscal year 1976 will not be appropriated in this fiscal year and will, therefore, slip into fiscal year 1977. Unless the congressional budget process does take this probability into account in establishing targets and ceilings for fiscal year 1977, it will foster a perpetuation of the delays in appropriations which have in turn delayed the U.S. contributions to various international institutions, to the detriment of the foreign policy interests of the United States. It will, in addition, add to the pressure-already substantial— to reduce other items in the international affairs function.

PRESIDENT'S BUDGET REQUESTS FOR EXISTING PROGRAMS WHICH REQUIRE REENACTMENT OR MODIFICATION OF AUTHORIZING LEGISLATION FOR FISCAL YEAR 1977

The recommended levels for the grant military assistance program are consistent with both the House and Senate versions of fiscal year 1976 authorizing legislation for security assistance. Both bills contain provisions which terminate grant military assistance programs at the end of fiscal year 1977, except where specifically authorized by the Congress.

The recommended level for budget authority in fiscal year 1977 would provide $152.5 million for the eight countries specified in pending fiscal year 1976 authorizing legislation, $25 million for nine unspecified countries, and $45 million for support costs.

(3)

Pending fiscal year 1976 authorizing legislation for security assistance retains the grant military education and training program as a separate authority. Because of the program's value to U.S. interests, it was decided by the committee that grant training should not be phased out in conjunction with the grant materiel assistance program. The recommended reduction in the President's request would permit the grant training program to continue at the level approved by the House in the fiscal year 1976 authorization bill which deletes Brazil and Venezuela from the list of participating governments.

A major consideration involved in the committee's decision to terminate grant military assistance programs at the end of fiscal year 1977 was that, in lieu of this source of military equipment, recipient governments should have access to U.S. defense articles and services on a basis that will maintain a credible defense capability for our friends and allies while facilitating a smooth transition from grants to sales. The most equitable way to provide such access is through the military sales credit program.

The President's request for budget authority and outlays would support a total program of $2,179,600,000, as compared to a program level of $2,374,700,000 in fiscal year 1976. The largest single portion of the total program, $1 billion, is planned for Israel, for which repayment of $500 million would be forgiven.

The bulk of the President's budget authority request, $1.7 billion, would go to the following Middle East countries: Israel, $785 million; Egypt, $750 million; Jordan, $77.5 million; and Syria, $90 million.

The committee believes this emphasis is justified in view of the relationship of such assistance to peace efforts in the Middle East, a region of vital importance to the United States.

The balance of the request is programed for Portugal, Cyprus, Bahrain, and Malta.

The committee, and Congress as a whole, have approved the full executive branch request for the Fund during its 2-year existence. The executive branch plans for the Fund in fiscal year 1977 are as follows: (1) $15 million is programed for the American Sinai Early Warning Support Mission; (2) $3 million will be used for development activities on the West Bank and in Gaza in accordance with the committee's report which accompanied the Foreign Assistance Act of 1974; (3) the remaining $17 million will be used on a contingency basis.