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Congressional Budget Justification for
Foreign Operations, Fiscal Year 2001

Released by the Office of the Secretary of State
Resources, Plans and Policy
U.S. Department of State, March 15, 2000

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GRANT EXCESS DEFENSE ARTICLES

Grant excess defense articles (EDA) enable the United States to meet many of its foreign policy objectives while simultaneously supporting our friends and allies in improving their defense capabilities. Providing EDA on a grant basis, turns U.S. defense items which are in excess of our Approved Force Acquisition Objective and Approved Force Retention Stock, into instruments which meet many of our national security interests. Some of the objectives met by grant EDA are: strengthening coalitions; cementing bilateral foreign military relationships; enhancing interoperability; furthering legitimate modernization efforts of our allies; aiding in multilateral peacekeeping efforts; combating illegal narcotics production and narco-trafficking; and aiding in demining assistance programs. Furthermore, our Partnership for Peace (PfP) initiatives are greatly augmented by providing grant materiel which meets NATO standards; this equipment is readily and immediately accessible, and fulfills valid modernization and standardization needs of eligible PfP partners.

Grant EDA assists in preventing or containing armed conflict and in restoring peace and stability throughout the world; a prudent investment of no-longer needed Department of Defense items. EDA articles are transferred in an "as is, where is" condition to the recipient and are only offered in response to a demonstrated requirement. The grant EDA program operates at essentially no cost to the U.S. with the recipient responsible for any required refurbishment and repair of the items as well as any associated transportation costs. The vast majority of EDA items are of low to medium technologies which takes into account our proliferation concerns.

Each grant eligible country has a justification statement providing the objective and proposed use of potential EDA within each country paper. Eligibility simply permits a nation to be considered for grant EDA and does not guarantee the transfer of any EDA nor does it circumvent or bypass in any way the comprehensive case-by-case review each potential EDA offer receives. Furthermore, all potential EDA transfers are subject to the same rigorous Conventional Arms Transfer Policy interagency review as any other government-to-government transfer.

Grant EDA has contributed to our foreign policy successes. This overage equipment has helped our Latin American and Caribbean friends combat the threat of illegal narco-trafficking, and has permitted many South American and African nations to participate in support of U.S. and UN peacekeeping operations. Grant EDA supports the militaries of the newly democratic nations of Central Europe, and contributes to regional stability by supporting the ongoing military reform efforts of the democratic Central Europe and Baltic governments. Grant EDA has been instrumental in aiding demining activities in Southeast Asia and northern Africa. Finally, grant EDA has a positive global impact--furthering U.S. national security interests and supporting the growth and strengthening of democracies, promoting military reform, and fighting the spread of illicit narcotics.

GRANTS OF EXCESS DEFENSE ARTICLES IN FY 1999
UNDER THE PROVISIONS OF THE FOREIGN ASSISTANCE ACT

($ in thousands)

OFFERED

DELIVERED IN FY 1999

ACQ.

VALUE

CURRENT

VALUE

ACQ.

VALUE

CURRENT

VALUE

Africa:

Ghana

120

18

-

-

Senegal

1,015

240

-

-

Regional Total

1,135

258

-

-

East Asia & Pacific:

Philippines

27,250

8,166

-

-

Regional Total

27,250

8,166

-

-

Europe & Central Asia:

Albania

8,251

831

6,749

663

Bosnia Herzegovina

171

51

-

-

Estonia

14,500

5,614

-

-

FYROM

10,029

2,188

1,882

933

Greece

512,565

96,507

105,156

5,258

Hungary

483

76

483

76

Latvia

13,200

5,280

-

-

Lithuania

1,105

95

-

-

Portugal

41,299

11,102

25,305

10,039

Turkey

191,798

16,476

80,503

5,275

Regional Total

793,401

138,220

220,078

22,244

Near East & South Asia:

Bahrain

80,798

16,962

5,937

930

Egypt

185,472

51,123

18,202

1,001

Israel

90,243

34,751

1,000

300

Jordan

246,864

42,492

-

-

Morocco

17,490

3,660

9,979

2,956

Oman

3,959

672

-

-

Sri Lanka

13,295

5,318

-

-

Tunisia

72,434

25,257

1,510

151

Regional Total

710,555

180,235

36,628

5,338

Newly Independent States

Georgia

9,227

927

-

-

Regional Total

9,227

927

-

-

Western Hemisphere:

Antigua

4

2

-

-

Argentina

84,921

13,329

23,466

5,321

Barbados

41

22

-

-

Bolivia

4,467

1,338

4,445

1,334

Chile

150

15

150

15

Colombia

47

24

-

-

Costa Rica

632

236

632

236

Dominica

2

1

-

-

Dominican Republic

2,635

615

1,685

567

Grenada

8

4

-

-

Honduras

814

153

814

153

Jamaica

1,150

460

1,150

460

Panama

7,673

2,492

5,459

1,385

Peru

31,364

1,568

31,364

1,568

St. Lucia

2

1

-

-

St. Vincent

2

1

-

-

Uruguay

1,440

492

1,080

432

Regional Total

135,352

20,753

70,245

11,471

WORLDWIDE TOTAL

1,676,920

348,559

326,951

39,053

 

SALES OF EXCESS DEFENSE ARTICLES UNDER FOREIGN MILITARY SALES IN FY 1999
($ in thousands)

OFFERED

DELIVERED IN 1999

ACQ.

VALUE

CURRENT

VALUE

ACQ.

VALUE

CURRENT

VALUE

East Asia & Pacific:

Australia

526,375

54,640

1,750

375

Korea

69,859

10,040

-

-

Taiwan

273,790

30,526

-

-

Regional Total

870,024

95,206

1,750

375

Europe & Central Asia:

Belgium

7,868

393

7,868

393

France

6,050

569

-

-

Greece

1,298,493

416,501

-

-

Germany

101

5

101

5

Netherlands

24

10

-

-

Norway

5,294

529

-

-

Spain

42,212

4,688

382

153

Turkey

666,707

112,096

555,474

100,202

United Kingdom

176,944

8,847

-

-

Regional Total

2,203,693

543,638

563,825

100,753

Near East & South Asia:

Lebanon

9,794

977

627

51

Morocco

97

49

-

-

United Arab Emirates

66,945

6,748

-

-

Regional Total

76,836

7,774

627

51

Non-Regional:

NAMSA

3,000

484

3,000

484

Non-Regional Total

3,000

484

3,000

484

Western Hemisphere:

Argentina

14,011

1,290

-

-

Brazil

112,015

11,601

2,010

600

Canada

1,497

595

939

325

Chile

22,803

3,067

22,803

3,067

Mexico

30,194

3,836

-

-

Venezuela

7,486

1,210

-

-

Regional Total

188,006

21,599

25,752

3,992

WORLDWIDE TOTAL

3,341,559

668,701

594,954

105,655

LEASED DEFENSE ARTICLES

Lease of defense articles can be authorized under the Arms Export Control Act (AECA), Chapter 6, if there are compelling U.S. foreign policy and national security reasons for providing defense articles on a lease rather than a sales basis. Defense articles can not be leased if they are needed for public use during the period of the lease.

Except for leases entered into for the purposes of cooperative research or development, military exercises, or communications or electronics interface projects, the country leasing the defense articles must agree to pay, in U.S. dollars, all costs incurred by the United States Government in leasing the articles. These costs include reimbursement for depreciation of the articles while leased. In addition, the country must also pay the cost of restoration or replacement if the articles are damaged while leased. If articles are lost or destroyed while leased, the U.S. requires funds to cover the replacement cost (less depreciation, if any) or an amount equal to the actual value (less depreciation) when the articles will not be replaced in the U.S. inventory.

The President may waive reimbursement of depreciation for any defense article, which has passed three-quarters of its normal service life, if the President determines that to do so is important to the national security interests of the United States. In some cases, the President may waive the reimbursement of all lease charges with respect to a lease that is made in exchange with the lessee for a lease on substantially reciprocal terms of defense articles for the Department of Defense. Waivers for depreciation or reciprocity are made before the implementation of the lease agreement.

Leases are concluded for a fixed duration of time not to exceed five years and provide that, at any time during the lease, the U.S. may terminate the lease and require the immediate return of the defense articles.

LEASES UNDER THE ARMS EXPORT CONTROL ACT
IMPLEMENTED FY 1999

($ in thousands)

REPLACEMENT

VALUE

TOTAL

RENTAL VALUE

       

American Republics:

     

Chile

187

 

3

       

Regional Total

187

 

3

     

East Asia & Pacific:

     

New Zealand

224,000

 

19,494

Singapore

55,334

 

2,213

     

Regional Total

279,334

 

21,707

       

Europe & Canada:

     

Greece

202,300

 

8,812

Italy

303

 

25

Netherlands

6,457

 

120

Spain

10,997

 

5,947

Turkey

22,220

 

11,499

       

Regional Total

242,277

 

26,403

       

Near East & South Asia:

     
       

Egypt

607

 

7

Israel

59,113

 

611

Morocco

188

 

7

United Arab Emirates

736

 

62

     

Regional Total

60,644

 

687

       

WORLDWIDE TOTAL

582,442

 

48,800

STOCKPILING OF DEFENSE ARTICLES FOR FOREIGN COUNTRIES

Section 514(b) of the Foreign Assistance Act of 1961 (FAA), as amended, establishes annual ceilings on the value of additions of defense articles located abroad that may be set aside, reserved, or otherwise earmarked from U.S. military inventories for use as War Reserves Stocks by Allies (WRSA) or other foreign countries (other than NATO). Most defense articles added to stockpiles under this ceiling will come from existing stocks.

The Foreign Operations Appropriations Act for Fiscal Year 2000 (P.L. 106-113) authorized additions of $40M for Korea, and an additional $20M for Thailand in order to fulfill U.S. obligations under the Memoranda of Understanding establishing the Korea-Thailand WRSA programs.

In FY01, an additional $50M is required for the Korean program. This authorization is required to transfer excess items (U.S.-titled material) to the WRSA program. Recently, U.S. Forces Korea reviewed its munitions assets, updated weapons systems, and its fire support plan. It was determined that large amounts of excess and obsolete munitions exist in U.S. inventories. As a result of this review, U.S. Forces Korea seeks an increase in authority to transfer $50M in additions to the FY01 WRSA-K. The additions include primarily excess munitions, with the remainder being other supply-type items.

While alternative disposition authority for excess and obsolete munitions exists in the form of foreign military sales (FMS) and demilitarization, FMS to other countries is limited due to the extra cost incurred by the buyer to transport the munitions off the Korean peninsula, and demilitarization is a very slow and expensive process for the U.S. Transfer of excess and obsolete munitions to the WRSA-K from the U.S. inventory will result in the avoidance of maintenance, storage, transportation, and demilitarization costs by the U.S., resulting in increased storage space for U.S. Forces Korea, and improvement in ROK readiness. [By agreement with the Government of Korea, the U.S. does not pay for the storage of assets designated as WRSA, although the assets remain under U.S. title.]

In FY 2001, authority may be requested to transfer certain obsolete or surplus defense articles in the WRSA to Israel. These items are munitions such as armor, artillery, automatic weapons ammunition, missiles, and other munitions that are obsolete or surplus items, are in the inventory of DoD, are intended for use as reserve stocks for Israel, and are located in a stockpile in Israel. The value of concessions negotiated pursuant to Sec 514(a) of the FAA is expected to be at least equal to the fair market value of the items transferred. The concessions may include cash compensation, services, waiver of charges otherwise payable by the U.S. and other items of value. The President will notify the Congress 30 days in advance of such transfers.

VALUE OF ANNUAL CEILINGS FOR STOCKPILING
($ in thousands)

FISCAL YEAR

AMOUNT

STOCKPILED

1976 AND 1977

96,750

1977

152,000

1978

270,000

1979

90,000

1980

95,000

1981

85,000

1982

130,000

1983

125,000

1984

125,000

1985

248,000

1986

360,000

1981

125,000

1988

116,000

1989

77,000

1990

165,000

1991

378,000

1992

300,000

1993

389,000

1994

292,000

1995

250,000

1996

50,000

1997

50,000

1998

60,000

1999

340,000

2000

60,000

2001

50,000

[end document]

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