I 

116TH CONGRESS 

1ST SESSION H. R. 3194 

To provide financial lending mechanisms to assist North Atlantic Treaty 

Organization allies in modernizing their military forces, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 11, 2019 

Mr. ENGEL (for himself and Mr. MCCAUL) introduced the following bill; which 

was referred to the Committee on Foreign Affairs 

A BILL 

To provide financial lending mechanisms to assist North 

Atlantic Treaty Organization allies in modernizing their 

military forces, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘NATO Defense Fi5 nancing Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Many United States allies, including some 

9 North Atlantic Treaty Organization (NATO) memVerDate Sep 11 2014 04:23 Jun 14, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3194.IH H3194

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1 bers, continue to operate Soviet era military equip2 ment. This equipment is outdated, unreliable, in3 creasingly unsafe and is unable to effectively inte4 grate and operate jointly with United States military 

5 forces. 

6 (2) The inability of some NATO allies to fully 

7 operate alongside United States military forces de8 creases NATO combat effectiveness and places addi9 tional strain on the United States military. 

10 (3) Some NATO allies are compelled to buy 

11 spare parts and services from Russian providers to 

12 keep their Soviet-designed equipment functional. 

13 These NATO allies desire to operate modern West14 ern military equipment, but have limited financial 

15 resources available to purchase expensive new equip16 ment. 

17 (4) Following the end of World War II, the 

18 United States faced a need to help allies rebuild 

19 their militaries, which it addressed by providing sub20 stantial financial assistance through the Mutual De21 fense Assistance Act of 1949 (22 U.S.C. 1571 et 

22 seq.) and the Mutual Security Act of 1951 (Public 

23 Law 82–165; 65 Stat. 373). However, the United 

24 States has not provided similar assistance to new 

25 NATO allies following the end of the Cold War. 


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1 (5) Given the return of ‘‘great power competi2 tion’’ and an aggressive Russia, there is a pressing 

3 need to assist NATO allies to modernize their forces 

4 and replace their obsolete Soviet military equipment. 

5 (6) The United States does provide some mili6 tary equipment to NATO allies through the foreign 

7 military financing program and other grant assist8 ance, but that assistance is insufficient to meet al9 lies’ needs. 

10 (7) To supplement existing grant assistance, 

11 providing foreign military financing loans to allies— 

12 at rates competitive with those already available on 

13 commercial markets—to purchase NATO interoper14 able military equipment supports allies’ moderniza15 tion requirements. 

16 (8) As described in Article 2 of the North At17 lantic Treaty, in addition to providing security to al18 lies, NATO was established to promote democratic 

19 institutions and values ‘‘by strengthening their free 

20 institutions, by bringing about a better under21 standing of the principles upon which these institu22 tions are founded, and by promoting conditions of 

23 stability and well-being’’. 

24 SEC. 3. STATEMENT OF POLICY. 

25 It is the policy of the United States to— 


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1 (1) deter aggression against North Atlantic 

2 Treaty Organization (NATO) allies by Russia or any 

3 other adversary; 

4 (2) assist NATO allies in acquiring and deploy5 ing modern, NATO interoperable military equipment 

6 and reducing their dependence on Russian or former 

7 Soviet-era defense articles; 

8 (3) ensure that NATO allies meet alliance de9 fense commitments, including through adequate in10 vestments in national defense; and 

11 (4) work to maintain and strengthen the demo12 cratic institutions and practices of all NATO allies, 

13 in accordance with the goals of Article 2 of the 

14 North Atlantic Treaty. 

15 SEC. 4. FOREIGN MILITARY LOAN AUTHORITY. 

16 (a) IN GENERAL.—Subject to the notification re17 quirements under subsection (b), the President, acting 

18 through the Secretary of State, is authorized— 

19 (1) to make direct loans under section 23 of the 

20 Arms Export Control Act (22 U.S.C. 2763) to mem21 ber countries of the North Atlantic Treaty Organiza22 tion (NATO) that joined after March 1, 1999, not23 withstanding the minimum interest rate required by 

24 subsection (c)(1) of such section; and 


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1 (2) to charge fees for such loans under para2 graph (1), which shall be collected from borrowers in 

3 accordance with section 502(7) of the Congressional 

4 Budget Act of 1974, and which may be used to 

5 cover the costs of such loans as defined in section 

6 502 of the Congressional Budget Act of 1974. 

7 (b) NOTIFICATION.—A loan may not be made under 

8 the authority provided by subsection (a) unless the Sec9 retary of State submits to the appropriate congressional 

10 committees a certification, not fewer than fifteen days be11 fore entering into an agreement to make such loan, that— 

12 (1) the recipient country is making demon13 strable progress toward meeting its spending com14 mitments in accordance with the 2014 NATO Wales 

15 Summit Declaration; 

16 (2) the government of such recipient country is 

17 respecting that country’s constitution and upholds 

18 democratic values such as freedom of religion, free19 dom of speech, freedom of the press, the rule of law, 

20 and the rights of minorities; and 

21 (3) the recipient country has demonstrated fis22 cal stability, a commitment to a free market econ23 omy, and the financial capacity to meet the terms of 

24 the loan proposed to be provided by the United 

25 States. 


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1 (c) REPAYMENT.—A loan made under the authority 

2 provided by subsection (a) shall be repaid in not more than 

3 12 years, but may include a grace period of up to one 

4 year on the repayment of the principal. 

5 (d) APPROPRIATE CONGRESSIONAL COMMITTEES

6 DEFINED.—In this Act, the term ‘‘appropriate congres7 sional committees’’ means— 

8 (1) the Committee on Foreign Affairs and the 

9 Committee on Appropriations of the House of Rep10 resentatives; and 

11 (2) the Committee on Foreign Relations and 

12 the Committee on Appropriations of the Senate. 

Æ 


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