Czech Republic, Estonia, Georgia, Greece,
Because of congressional concerns about
Hungary, Jordan, Kazakstan, Kyrgyzstan,
the creditworthiness of loan recipients and
Latvia, Lithuania, Macedonia, Moldova,
the soundness of requirements for borrowers
Poland, Romania, Russia, Slovakia, Slovenia,
to obtain credit in the FMF program, new
Turkey, Turkmenistan, Ukraine, and Uzbe-
funding for the loan portion of FMF is sched-
kistan. In addition, regional funds were allo-
uled to be phased out in the FY 2000 budget.
cated for the Caribbean and Africa.
(But key states in Eastern and Central Europe
The FMF programs outside of the Middle
will still have access to the hundreds of mil-
East are relatively modest in size, ranging
lions of dollars in lending authority that have
from $450,000 for Turkmenistan to $15.7
been built up in the Central European
million for Poland. However, once the aid
Defense Loan fund over the past few years.)
spigot is opened, it can be extremely hard to
In place of the loan funding, prospective
turn it off.11 NATO politics, pressure from
NATO member states are slated for an
increase in grant funding--up to $81 million
ethnic and military lobbies, and the desire of
for FY 2000 alone. That sum represents near-
ambassadors and State Department desk
ly half of the grant funding allocated to those
officers to "please" their client states can all
countries during the three years from 1996 to
combine to turn a modest new program into
During FY97,
1998.14
an expensive, long-term commitment. For
under its Excess
example, the $3 billion-plus annual FMF
At a time when new NATO members
commitments to Israel and Egypt, initially
Poland, Hungary, and the Czech Republic
Defense Articles
set two decades ago at the time of the Camp
have been lagging behind in their commit-
program, the
David peace accords, are maintained to this
ments to bring their forces up to NATO stan-
Pentagon gave
day.
dards and have put off major weapons pur-
Of the new commitments undertaken by
chases for 5 to 10 years, it is questionable
away military
the FMF program, those most likely to grow in
whether maintaining the Central European
equipment with
the coming years involve support for new and
Defense Loan fund is desirable. What good
prospective members of NATO. In FY96
purpose is being served by stockpiling subsi-
an original acqui-
through FY98, the U.S. government autho-
dized loans to help NATO members and can-
sition value of
rized over $1.2 billion in grants, loans, and
didates upgrade their armed forces when
$973 million.
financing for military training and exercises
those nations are not ready to commit their
designed to prepare allied nations in Eastern
own resources to meet that objective? Does it
and Central Europe and the former Soviet
really make sense to use U.S. taxpayers as the
republics for possible entry into NATO. The
lenders of first resort for weapons sales to
bulk of those funds came from the Pentagon's
Eastern and Central Europe?
FMF program, including $187 million in
The Defense Export Loan Guarantee FundOn
grants and $644.5 million in lending authority
the Brink. The Defense Export Loan Guar-
under the newly created Central European
antee (DELG) fund is a stand-alone program
Defense Loan fund. That fund was created to
that is authorized to make up to $15 billion
"assist in the gradual enlargement of NATO by
in U.S.-government-guaranteed loans to over
providing FMF loans to creditworthy Central
three dozen nations in Europe and Asia.
European and Baltic states for acquisition of
DELG has long been viewed by the arms
NATO-compatible equipment."12 To accom-
industry and the Pentagon as an added
source of subsidized loans for countries that
modate the Central European Defense Loan
are not serviced by the FMF program. In June
program, loans under the Pentagon's FMF
1997 Deputy Under Secretary of Defense for
program increased from $544.1 million in
International and Commercial Programs
FY96 to $657 million in FY98. The share of
Page Hoeper underscored the potential
FMF loans allocated for prospective NATO
importance of DELG in financing NATO
members rose even more dramatically, from
expansion: "We see a tremendous opportuni-
nothing in FY96 to 61.2 percent in FY98.13
6