Title: NATO Defense Financing Act
Policy area: International Affairs

Summary:
NATO Defense Financing Act
This bill authorizes the President to make direct loans to countries that joined the North Atlantic Treaty Organization (NATO) after March 1, 1999, for the purchase of U.S. defense articles. The President may (1) make such loans with lower interest rates than required by statute, and (2) charge fees associated with such loans. Before making such a loan, the Department of State shall certify to Congress that the receiving country (1) is making demonstrable progress toward meeting its NATO defense-spending obligations, (2) is respecting the country's constitution and upholding democratic values, and (3) has demonstrated a commitment to a free market economy and the capacity to meet the loan's terms.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3194 Introduced in House (IH)]

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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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``NATO Defense Financing Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Many United States allies, including some North 
        Atlantic Treaty Organization (NATO) members, continue to 
        operate Soviet era military equipment. This equipment is 
        outdated, unreliable, increasingly unsafe and is unable to 
        effectively integrate and operate jointly with United States 
        military forces.
            (2) The inability of some NATO allies to fully operate 
        alongside United States military forces decreases NATO combat 
        effectiveness and places additional strain on the United States 
        military.
            (3) Some NATO allies are compelled to buy spare parts and 
        services from Russian providers to keep their Soviet-designed 
        equipment functional. These NATO allies desire to operate 
        modern Western military equipment, but have limited financial 
        resources available to purchase expensive new equipment.
            (4) Following the end of World War II, the United States 
        faced a need to help allies rebuild their militaries, which it 
        addressed by providing substantial financial assistance through 
        the Mutual Defense Assistance Act of 1949 (22 U.S.C. 1571 et 
        seq.) and the Mutual Security Act of 1951 (Public Law 82-165; 
        65 Stat. 373). However, the United States has not provided 
        similar assistance to new NATO allies following the end of the 
        Cold War.
            (5) Given the return of ``great power competition'' and an 
        aggressive Russia, there is a pressing need to assist NATO 
        allies to modernize their forces and replace their obsolete 
        Soviet military equipment.
            (6) The United States does provide some military equipment 
        to NATO allies through the foreign military financing program 
        and other grant assistance, but that assistance is insufficient 
        to meet allies' needs.
            (7) To supplement existing grant assistance, providing 
        foreign military financing loans to allies--at rates 
        competitive with those already available on commercial 
        markets--to purchase NATO interoperable military equipment 
        supports allies' modernization requirements.
            (8) As described in Article 2 of the North Atlantic Treaty, 
        in addition to providing security to allies, NATO was 
        established to promote democratic institutions and values ``by 
        strengthening their free institutions, by bringing about a 
        better understanding of the principles upon which these 
        institutions are founded, and by promoting conditions of 
        stability and well-being''.

SEC. 3. STATEMENT OF POLICY.

    It is the policy of the United States to--
            (1) deter aggression against North Atlantic Treaty 
        Organization (NATO) allies by Russia or any other adversary;
            (2) assist NATO allies in acquiring and deploying modern, 
        NATO interoperable military equipment and reducing their 
        dependence on Russian or former Soviet-era defense articles;
            (3) ensure that NATO allies meet alliance defense 
        commitments, including through adequate investments in national 
        defense; and
            (4) work to maintain and strengthen the democratic 
        institutions and practices of all NATO allies, in accordance 
        with the goals of Article 2 of the North Atlantic Treaty.

SEC. 4. FOREIGN MILITARY LOAN AUTHORITY.

    (a) In General.--Subject to the notification requirements under 
subsection (b), the President, acting through the Secretary of State, 
is authorized--
            (1) to make direct loans under section 23 of the Arms 
        Export Control Act (22 U.S.C. 2763) to member countries of the 
        North Atlantic Treaty Organization (NATO) that joined after 
        March 1, 1999, notwithstanding the minimum interest rate 
        required by subsection (c)(1) of such section; and
            (2) to charge fees for such loans under paragraph (1), 
        which shall be collected from borrowers in accordance with 
        section 502(7) of the Congressional Budget Act of 1974, and 
        which may be used to cover the costs of such loans as defined 
        in section 502 of the Congressional Budget Act of 1974.
    (b) Notification.--A loan may not be made under the authority 
provided by subsection (a) unless the Secretary of State submits to the 
appropriate congressional committees a certification, not fewer than 
fifteen days before entering into an agreement to make such loan, 
that--
            (1) the recipient country is making demonstrable progress 
        toward meeting its spending commitments in accordance with the 
        2014 NATO Wales Summit Declaration;
            (2) the government of such recipient country is respecting 
        that country's constitution and upholds democratic values such 
        as freedom of religion, freedom of speech, freedom of the 
        press, the rule of law, and the rights of minorities; and
            (3) the recipient country has demonstrated fiscal 
        stability, a commitment to a free market economy, and the 
        financial capacity to meet the terms of the loan proposed to be 
        provided by the United States.
    (c) Repayment.--A loan made under the authority provided by 
subsection (a) shall be repaid in not more than 12 years, but may 
include a grace period of up to one year on the repayment of the 
principal.
    (d) Appropriate Congressional Committees Defined.--In this Act, the 
term ``appropriate congressional committees'' means--
            (1) the Committee on Foreign Affairs and the Committee on 
        Appropriations of the House of Representatives; and
            (2) the Committee on Foreign Relations and the Committee on 
        Appropriations of the Senate.
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