I
107TH CONGRESS
2D SESSION
H. R. 3836
To establish a Russian Federation debt reduction for nonproliferation
program.
IN THE HOUSE OF REPRESENTATIVES
MARCH 4, 2002
Mrs. TAUSCHER (for herself, Mr. MCHUGH, and Mr. SCHIFF) introduced the
following bill; which was referred to the Committee on International
Realations
A BILL
To establish a Russian Federation debt reduction for
nonproliferation program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Russian Federation
Debt Reduction for Nonproliferation Act of 2002’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—Congress finds the following:
(1) It is in the vital security interests of the
United States to prevent the spread of weapons of
mass destruction to additional states or to terrorist
organizations, and to ensure that other nations’ obli-
gations to reduce their stockpiles of such arms in ac-
cordance with treaties, executive agreements, or po-
litical commitments are fulfilled.
(2) In particular, it is in the vital national secu-
rity interests of the United States to ensure that—
(A) all stocks of nuclear weapons and
weapons-usable nuclear material in the Russian
Federation are secure and accounted for;
(B) stocks of nuclear weapons and weap-
ons-usable nuclear material that are excess to
military needs in the Russian Federation are
monitored and reduced;
(C) any chemical or biological weapons, re-
lated materials, and facilities in the Russian
Federation are destroyed;
(D) the Russian Federation’s nuclear
weapons complex is reduced to a size appro-
priate to its post-Cold War missions, and its ex-
perts in weapons of mass destruction tech-
nologies are shifted to gainful and sustainable
civilian employment;
(E) the Russian Federation’s export con-
trol system blocks any proliferation of weapons
of mass destruction, the means of delivering
such weapons, and materials, equipment, know-
how, or technology that would be used to de-
velop, produce, or deliver such weapons; and
(F) these objectives are accomplished with
sufficient monitoring and transparency to pro-
vide confidence that they have in fact been ac-
complished and that the funds provided to ac-
complish these objectives have been spent effi-
ciently and effectively.
(3) United States programs should be designed
to accomplish these vital objectives in the Russian
Federation as rapidly as possible, and the President
should develop and present to Congress a plan for
doing so.
(4) Substantial progress has been made in
United States-Russian Federation cooperative pro-
grams to achieve these objectives, but much more re-
mains to be done to reduce the urgent risks to
United States national security posed by the current
state of the Russian Federation’s weapons of mass
destruction stockpiles and complexes.
(5) The threats posed by inadequate manage-
ment of weapons of mass destruction stockpiles and
complexes in the Russian Federation remain urgent.
Incidents in years immediately preceding 2001,
which have been cited by the Russia Task Force of
the Secretary of Energy’s Advisory Board, include—
(A) a conspiracy at one of the Russian
Federation’s largest nuclear weapons facilities
to steal nearly enough highly enriched uranium
for a nuclear bomb;
(B) an attempt by an employee of the Rus-
sian Federation’s premier nuclear weapons fa-
cility to sell nuclear weapons designs to agents
of Iraq and Afghanistan; and
(C) the theft of radioactive material from
a Russian Federation submarine base.
(6) Addressing these threats to United States
and world security will ultimately consume billions of
dollars, a burden that will have to be shared by the
Russian Federation, the United States, and other
governments, if this objective is to be achieved.
(7) The creation of new funding streams could
accelerate progress in reducing these threats to
United States security and help the government of
the Russian Federation to fulfill its responsibility for
secure management of its weapons stockpiles and
complexes as United States assistance phases out.
(8) The Russian Federation suffers from a sig-
nificant foreign debt burden, a substantial propor-
tion of which it inherited from the Soviet Union.
The Russian Federation is taking full responsibility
for this debt, but the burden of debt repayment
could threaten Russian Federation economic reform,
particularly in 2003 and beyond.
(9) The Russian Federation’s need for debt re-
lief has been the subject of discussions between the
United States and the Russian Federation at the
highest levels and is cited by United States officials
as one reason why the Russian Federation has rec-
ognized that its future lies with the West.
(10) Past debt-for-environment exchanges, in
which a portion of a country’s foreign debt is can-
celed in return for certain environmental commit-
ments or payments by that country, provide a model
for a possible debt-for-nonproliferation exchange
with the Russian Federation, which could be de-
signed to provide additional funding for non-
proliferation and arms reduction initiatives.
(11) Most of the Russian Federation’s official
bilateral debt is held by United States allies that are
advanced industrial democracies. Since the issues de-
scribed pose threats to United States allies as well,
United States leadership that results in a larger con-
tribution from United States allies to cooperative
threat reduction activities will be needed.
(b) PURPOSES.—The purposes of this Act are—
(1) to recognize the vital interests of the United
States, its allies, and the Russian Federation in re-
ducing the threats to international security described
in the findings set forth in subsection (a);
(2) to facilitate the accomplishment of the
United States objectives described in the findings set
forth in subsection (a) by providing for the allevi-
ation of a portion of the Russian Federation’s for-
eign debt, thus allowing the use of additional re-
sources for these purposes; and
(3) to ensure that resources freed from debt in
the Russian Federation are targeted to the accom-
plishment of the United States objectives described
in the findings set forth in subsection (a).
SEC. 3. DEFINITIONS.
In this Act:
(1) 
AGREEMENT.—The 
term 
‘‘Agreement’’
means the Russian Nonproliferation Investment
Agreement provided for in section 8.
(2) APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘appropriate congressional com-
mittees’’ means—
the administration of debt reduction in accordance with
this Act.
SEC. 5. REDUCTION OF THE RUSSIAN FEDERATION’S SO-
VIET-ERA 
DEBT 
OWED 
TO 
THE 
UNITED
STATES, GENERALLY.
(a) AUTHORITY TO REDUCE SOVIET-ERA DEBT.—
(1) AUTHORITY.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), and subject to section 10,
the President may reduce the amount of Soviet-
era debt owed by the Russian Federation to the
United States (or any agency of the United
States) that is outstanding as of February 1,
2002.
(B) EXCEPTION.—The authority of sub-
paragraph (A) to reduce Soviet-era debt does
not include any debt that is described in section
6(a)(1).
(2) 
CONGRESSIONAL
NOTIFICATION.—The
President shall notify the appropriate congressional
committees of the President’s intention to reduce the
amount of the Russian Federation’s Soviet-era debt
at least 15 days in advance of any formal determina-
tion to do so.
(3) AUTHORIZATION OF APPROPRIATIONS.—
(A) IN GENERAL.—For the cost of the re-
duction of any Soviet-era debt pursuant to this
section, there are authorized to be appropriated
to the President—
(i) $50,000,000 for fiscal year 2002;
and
(ii) $100,000,000 for fiscal year 2003.
(B) LIMITATION.—The authority provided
by this section shall be available only to the ex-
tent that appropriations for the cost of the
modification of any Soviet-era debt pursuant to
this section are made in advance.
(4) CERTAIN PROHIBITIONS INAPPLICABLE.—
(A) IN GENERAL.—A reduction of Soviet-
era debt pursuant to this section shall not be
considered assistance for the purposes of any
provision of law limiting assistance to a coun-
try.
(B) ADDITIONAL REQUIREMENT.—The au-
thority of this section may be exercised notwith-
standing section 620(r) of the Foreign Assist-
ance Act of 1961 or section 321 of the Inter-
national Development and Food Assistance Act
of 1975.
(b) IMPLEMENTATION OF SOVIET-ERA DEBT REDUC-
TION.—
(1) IN GENERAL.—Any reduction of Soviet-era
debt pursuant to subsection (a) shall be—
(A) implemented pursuant to the terms of
a Russian Nonproliferation Investment Agree-
ment authorized under section 8; and
(B) accomplished at the direction of the
Facility by the exchange of a new obligation for
obligations of the type referred to in such sub-
section that are outstanding as of February 1,
2002.
(2) EXCHANGE OF OBLIGATIONS.—
(A) IN GENERAL.—The Facility shall no-
tify the agency primarily responsible for admin-
istering part I of the Foreign Assistance Act of
1961 of an agreement entered into under para-
graph (1) with the Russian Federation to ex-
change a new obligation for outstanding obliga-
tions.
(B) ADDITIONAL REQUIREMENT.—At the
direction of the Facility, the old obligations that
are the subject of the agreement shall be can-
celed and a new debt obligation for the Russian
Federation shall be established relating to the
agreement, and the agency primarily respon-
sible for administering part I of the Foreign
Assistance Act of 1961 shall make an adjust-
ment in its accounts to reflect the debt reduc-
tion.
(c) ADDITIONAL TERMS AND CONDITIONS.—The fol-
lowing additional terms and conditions shall apply to the
reduction of Soviet-era debt under subsection (a)(1) in the
same manner as such terms and conditions apply to the
reduction of debt under section 704(a)(1) of the Foreign
Assistance Act of 1961:
(1) The provisions relating to repayment of
principal under section 705 of the Foreign Assist-
ance Act of 1961.
(2) The provisions relating to interest on new
obligations under section 706 of the Foreign Assist-
ance Act of 1961.
SEC. 6. REDUCTION OF SOVIET-ERA DEBT OWED TO THE
UNITED STATES AS A RESULT OF CREDITS
EXTENDED UNDER TITLE I OF THE AGRICUL-
TURAL TRADE DEVELOPMENT AND ASSIST-
ANCE ACT OF 1954.
(a) AUTHORITY TO REDUCE CERTAIN SOVIET-ERA
DEBT.—
(1) AUTHORITY.—Notwithstanding any other
provision of law, and subject to section 10, the
President may reduce the amount of Soviet-era debt
owed to the United States (or any agency of the
United States) by the Russian Federation that is
outstanding as of February 1, 2002, as a result of
any credits extended under title I of the Agricultural
Trade Development and Assistance Act of 1954 (7
U.S.C. 1701 et seq.).
(2) 
CONGRESSIONAL
NOTIFICATION.—The
President shall notify the appropriate congressional
committees of the President’s intention to reduce the
amount of the Russian Federation’s Soviet-era debt
described in paragraph (1) at least 15 days in ad-
vance of any formal determination to do so.
(3) AUTHORIZATION OF APPROPRIATIONS.—
(A) IN GENERAL.—For the cost of the re-
duction of any Soviet-era debt pursuant to this
section, there are authorized to be appropriated
to the President—
(i) $50,000,000 for fiscal year 2002;
and
(ii) $100,000,000 for fiscal year 2003.
(B) LIMITATION.—The authority provided
by this section shall be available only to the ex-
tent that appropriations for the cost of the
modification of any Soviet-era debt pursuant to
this section are made in advance.
(b) IMPLEMENTATION OF SOVIET-ERA DEBT REDUC-
TION.—
(1) IN GENERAL.—Any reduction of Soviet-era
debt pursuant to subsection (a) shall be—
(A) implemented pursuant to the terms of
a Russian Nonproliferation Investment Agree-
ment authorized under section 8; and
(B) accomplished at the direction of the
Facility by the exchange of a new obligation for
obligations of the type referred to in such sub-
section that are outstanding as of February 1,
2002.
(2) EXCHANGE OF OBLIGATIONS.—
(A) IN GENERAL.—The Facility shall no-
tify the Commodity Credit Corporation of an
agreement entered into under paragraph (1)
with an eligible country to exchange a new obli-
gation for outstanding obligations.
(B) ADDITIONAL REQUIREMENT.—At the
direction of the Facility, the old obligations that
are the subject of the agreement shall be can-
celed and a new debt obligation shall be estab-
lished for the Russian Federation relating to
the agreement, and the Commodity Credit Cor-
poration shall make an adjustment in its ac-
counts to reflect the debt reduction.
(c) ADDITIONAL TERMS AND CONDITIONS.—The fol-
lowing additional terms and conditions shall apply to the
reduction of Soviet-era debt under subsection (a)(1) in the
same manner as such terms and conditions apply to the
reduction of debt under section 604(a)(1) of the Agricul-
tural Trade Development and Assistance Act of 1954 (7
U.S.C. 1738c(a)(1)):
(1) The provisions relating to repayment of
principal under section 605 of such Act.
(2) The provisions relating to interest on new
obligations under section 606 of such Act.
SEC. 
7. 
AUTHORITY 
TO 
ENGAGE 
IN 
DEBT-FOR-NON-
PROLIFERATION 
EXCHANGES 
AND 
DEBT
BUYBACKS.
(a) LOANS AND CREDITS ELIGIBLE FOR SALE, RE-
DUCTION, OR CANCELLATION.—
(1) 
DEBT-FOR-NONPROLIFERATION
EX-
CHANGES.—
(A) IN
GENERAL.—Notwithstanding any
other provision of law, and subject to section
10, the President may, in accordance with this
section, sell to any purchaser eligible under sub-
paragraph (B), any loan or credit described in
section 5(a)(1), or any credit described in sec-
tion 6(a)(1), or on receipt of payment from an
eligible purchaser, reduce or cancel any such
loan or credit or portion thereof, only for the
purpose of facilitating a debt-for-nonprolifera-
tion exchange to support activities that further
United States objectives described in the find-
ings set forth in section 2(a).
(B) ELIGIBLE
PURCHASER.—A loan or
credit may be sold, reduced, or canceled under
subparagraph (A) with respect to a purchaser
who presents plans satisfactory to the President
for using the loan or credit for the purpose of
engaging in debt-for-nonproliferation exchange
to support activities that further United States
objectives described in the findings set forth in
section 2(a).
(C) CONSULTATION
REQUIREMENT.—Be-
fore the sale under subparagraph (A) to any
purchaser eligible under subparagraph (B), or
any reduction or cancellation under subpara-
graph (A), of any loan or credit made to the
Russian Federation, the President shall consult
with that country concerning the amount of
loans or credits to be sold, reduced, or canceled
and their uses for debt-for-nonproliferation ex-
changes to support activities that further
United States objectives described in the find-
ings set forth in section 2(a).
(D) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—For the cost of the reduction of any
debt pursuant to subparagraph (A), amounts
authorized to be appropriated under sections
5(a)(3) and 6(a)(3) shall be made available for
such reduction of debt pursuant to subpara-
graph (A).
(2) DEBT
BUYBACKS.—Notwithstanding any
other provision of law, the President may, in accord-
ance with this section, sell to the Russian Federation
any loan or credit described in section 5(a)(1) or any
credit described in section 6(a)(1), or on receipt of
payment from the Russian Federation, reduce or
cancel such loan or credit or portion thereof, if the
purpose of doing so is to facilitate a debt buyback
by the Russian Federation of its own qualified debt
and the Russian Federation uses a substantial addi-
tional amount of its local currency to support activi-
ties that further United States objectives described
in the findings set forth in section 2(a).
(3) LIMITATION.—The authority provided by
paragraphs (1) and (2) shall be available only to the
extent that appropriations for the cost of the modi-
fication of any debt pursuant to such paragraphs are
made in advance.
(4) TERMS AND CONDITIONS.—Notwithstanding
any other provision of law, the President shall, in ac-
cordance with this section, establish the terms and
conditions under which loans and credits may be
sold, reduced, or canceled pursuant to this section.
(5) ADMINISTRATION.—
(A) IN GENERAL.—The Facility shall no-
tify the Administrator of the agency primarily
responsible for administering part I of the For-
eign Assistance Act of 1961 or the Commodity
Credit Corporation, as the case may be, of pur-
chasers that the President has determined to be
eligible under paragraph (1)(B), and shall di-
rect such agency or Corporation, as the case
may be, to carry out the sale, reduction, or can-
cellation of a loan pursuant to such paragraph.
(B) ADDITIONAL
REQUIREMENT.—Such
agency or Corporation, as the case may be,
shall make an adjustment in its accounts to re-
flect the sale, reduction, or cancellation.
(b) DEPOSIT OF PROCEEDS.—The proceeds from a
sale, reduction, or cancellation of a loan sold, reduced, or
canceled pursuant to this section shall be deposited in the
United States Government account or accounts estab-
lished for the repayment of such loan.
SEC. 
8. 
RUSSIAN 
NONPROLIFERATION 
INVESTMENT
AGREEMENT.
(a) AUTHORITY.—Subject to section 10, the Sec-
retary is authorized, in consultation with other appro-
priate officials of the Federal Government, to enter into
an agreement with the Russian Federation concerning the
use of the funds saved by that country as a result of any
debt relief provided pursuant to this Act. An agreement
entered into under this section may be referred to as the
‘‘Russian Nonproliferation Investment Agreement’’.
(b) CONTENT OF AGREEMENT.—The Russian Non-
proliferation Investment Agreement shall ensure that—
(1) a significant proportion of the funds saved
by the Russian Federation as a result of any debt
relief provided pursuant to this Act is devoted to
nonproliferation programs and projects;
(2) funding of each such program or project is
approved by the United States Government, either
directly or through its representation on any gov-
erning board that may be directed or established to
manage these funds;
(3) administration and oversight of non-
proliferation programs and projects incorporate best
practices from established threat reduction and non-
proliferation assistance programs;
(4) each program or project funded pursuant to
the Agreement is subject to audits conducted by or
for the United States Government;
(5) unobligated funds for investments pursuant
to the Agreement are segregated from other Russian
Federation funds and invested in financial instru-
ments guaranteed or insured by the United States
Government;
(6) the funds that are devoted to programs and
projects pursuant to the Agreement are not subject
to any taxation by the Russian Federation;
(7) all matters relating to the intellectual prop-
erty rights and legal liabilities of United States
firms in a given project are agreed upon before the
expenditure of funds is authorized for that project;
and
(8) not less than 75 percent of the funds made
available for each nonproliferation program or
project under the Agreement is spent in the Russian
Federation.
(c) USE OF EXISTING MECHANISMS.—It is the sense
of Congress that, to the extent practicable, the boards and
administrative mechanisms of existing threat reduction
and nonproliferation programs should be used in the ad-
ministration and oversight of programs and projects under
the Agreement.
SEC. 9. STRUCTURE OF DEBT-FOR-NONPROLIFERATION AR-
RANGEMENTS.
It is the sense of Congress that any debt-for-non-
proliferation arrangements with the Russian Federation
should provide for gradual debt relief over a period of
years, with debt relief to be suspended if more than two
years’ worth of funds remain unobligated for approved
nonproliferation programs or projects.
SEC. 10. NONPROLIFERATION REQUIREMENT.
(a) PROLIFERATION TO STATE SPONSORS OF TER-
RORISM.—The authorities granted under sections 5, 6, 7,
and 8 may not be exercised, and funds may not be ex-
pended, unless and until—
(1) the Russian Federation makes material
progress in stemming the flow of sensitive goods,
technologies, material, and know-how related to the
design, development, and production of weapons of
mass destruction and the means to deliver them to
countries that have been determined by the Sec-
retary, for the purposes of section 40 of the Arms
Export Control Act, section 620A of the Foreign As-
sistance Act of 1961, or section 6(j) of the Export
Administration Act of 1979, to have repeatedly pro-
vided support for acts of international terrorism;
and
(2) the President certifies to the appropriate
congressional committees that the condition required
in paragraph (1) has been met.
(b) ANNUAL DETERMINATION.—If, in any annual re-
port to Congress submitted pursuant to section 13, the
President cannot certify that the Russian Federation con
tinues to meet the condition required in subsection (a)(1),
then, subject to the provisions of subsection (c), the au-
thorities granted under sections 5, 6, 7, and 8 may not
be exercised, and funds may not be expended, unless and
until such certification is made to the appropriate congres-
sional committees.
(c) PRESIDENTIAL WAIVER.—The President may
waive the requirements of subsection (b) for a fiscal year
if the President determines that imposition of those re-
quirements in that fiscal year would be counter to the na-
tional interest of the United States and so reports to the
appropriate congressional committees.
SEC. 11. DISCUSSION OF RUSSIAN FEDERATION DEBT RE-
DUCTION 
FOR 
NONPROLIFERATION 
WITH
OTHER CREDITOR STATES.
The President and such other appropriate officials as
the President may designate shall institute discussions in
the Paris Club of creditor states with the objectives of—
(1) reaching agreement that each member of
the Paris Club is authorized to negotiate debt ex-
changes with the Russian Federation covering a por-
tion of its bilateral debt, to finance the accomplish-
ment of nonproliferation and arms reduction activi-
ties;
(2) convincing other member states of the Paris
Club, especially the largest holders of Soviet-era
Russian debt, to dedicate significant proportions of
their bilateral debt with the Russian Federation to
these purposes; and
(3) reaching agreement, as appropriate, to es-
tablish a unified debt exchange fund to manage and
provide financial transparency for the resources pro-
vided through the debt exchanges.
SEC. 12. CONSULTATIONS WITH CONGRESS.
The President shall consult with the appropriate con-
gressional committees on a periodic basis to review the op-
erations of the Facility and the Russian Federation’s eligi-
bility for benefits from the Facility.
SEC. 13. ANNUAL REPORT TO CONGRESS.
Not later than December 31, 2002, and not later
than December 31 of each year thereafter, the President
shall prepare and transmit to Congress a report con-
cerning the operation of the Facility during the fiscal year
preceding the fiscal year in which the report is trans-
mitted. The report on a fiscal year shall include—
(1) a description of the activities undertaken by
the Facility during the fiscal year;
(2) a description of any agreement entered into
under this Act;
(3) a description of any grants that have been
provided pursuant to the agreement; and
(4) a summary of the results of audits per-
formed in the fiscal year pursuant to the agreement.
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