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Washington Journal: U.S. Budget Finally Approved

Washington, 22 October 1998 (RFE/RL) -- In one massive bill, with thousands of provisions on everything from restrictions on aid to Russia to banning drug addict's needle exchange programs, the U.S. Government has approved the final one-third of its $1.7 trillion budget for the current financial year.

Covering what was originally eight of the necessary 13 appropriations bills to operate the U.S. Government, the final budget segment was delayed by protracted disagreements between the Republican party leadership of the Congress and the administration of President Bill Clinton, a Democrat.

They finally reached a compromise agreement for the final $500 billion of spending and other measures last week. The bill was passed by both houses of the Congress this week and Clinton is to sign the measure by today (Thursday).

Since the current fiscal year began October 1, the American government was kept operating by a series of quickly approved laws to continue at last year's levels until the new budget was in place.

The final bill, running nearly 4,000 pages and weighing over 18 kilograms, covers operations both foreign and domestic, large and extremely small.

Among the more significant parts is ratification of the U.S. share of the increase in quotas (membership fees) of the International Monetary Fund (IMF). The 182 members of the fund last year approved a 45 percent increase in the quotas to bring the fund's capital base more into line with the size of the global economy.

Quota increases require ratification by 85 percent of the members, so without the U.S. share of around 17 percent, the general raise could not take effect.

U.S. approval was held up for months by congressional leaders who blamed the IMF for causing the current financial crises. But in finally approving the U.S. share of around $14.5 billion, they said the money will not be immediately available.

The law demands a special certification by the U.S. Treasury Secretary before any of the American quota share, or of an additional $3.4 billion for the U.S. share of a special facility held by the richest nations for emergency IMF borrowing, can be released.

A number of conditions in the original bill, which might have ended special programs for poorer nations, including several former Soviet republics, were removed from the final bill and senior IMF officials say they can see no problem with those remaining.

The IMF's Director of External Relations, Shailendra Anjaria says many of the ideas, particularly on greater transparency for IMF operations and the terms of loans to certain troubled countries, are already being adopted by the fund and its members.

Other fund officials, speaking on condition of not being named, say the law's requirement that loans be shorter and with higher interest rates for countries which suffer from a sudden loss of market confidence, merely catches up with provisions adopted last December.

The emergency rescue loans for Russia and South Korea were granted under those conditions, the officials point out.

Further U.S. requirements that borrowing country's liberalize trade, eliminate market distorting subsidies, and give foreign creditors equal standing with domestic lenders, are already part of almost every IMF negotiated lending reform program.

U.S. treasury department officials say that Secretary Robert Rubin will have little trouble certifying within 30 days that the G-7 group of major industrial nations -- the largest voting powers in the fund -- publicly support and will act to implement these changes in the IMF.

The fund's Anjaria says that as in any membership organization, the Board of Executive Directors representing all members, will have the final say on any reforms.

The other major area of foreign operations covered in the final U.S. budget bill is $2.6 billion in foreign assistance, $801 million of it for the former Soviet republics and $430 million in aid for central and eastern Europe.

The bill sets aside $228 million for a Caucasus region fund. From that total, Georgia is to receive about $84 million in aid. Armenia will receive a bit more than $79 million. The Caucasus fund also includes $40 million for what the legislation calls the American share of the international effort to restore peace between Armenia and its neighbors.

That sum could be withdrawn and returned to the general fund for aid to all of the former Soviet republics if the U.S. determines that no progress has been made in settling conflicts in the region, including Armenia's dispute with Azerbaijan over Nagorno-Karabakh, by May 30.

There is no specific money set aside for Russia. However, Moscow will receive only 50 percent of any aid until Clinton certifies that Russia has halted all deals that would help Iran develop a nuclear reaction. The President can override the restriction if he determines the aid is "vital to the national security" of the U.S.

There are no specific amounts for the nations of Central/East Europe. The funds support a variety of U.S. economic assistance programs in the region.

Among other parts of the last budget bill, it:

-- begins a multi-year phase-out of economic assistance to Israel and Egypt,

-- contains no funding for military aid for Turkey or Greece, the first time in more than 20 years,

-- approves $1 million less than last year for the U.S. share of global peacekeeping operations,

-- increases U.S. contributions to UNICEF, but withholds payment of America's huge arrears to the United Nations itself until reforms are implemented and the U.S. share is reduced,

-- pays the full U.S. arrears of $193 million for the Global Environmental Facility (GEF),

-- approves U.S. funding for the European Bank for Reconstruction and Development (EBRD), and the Asian Development Fund, and

-- increases support for the U.S. Export-Import Bank.

Among thousands of domestic provisions, the bill:

-- prohibits top government officials from getting cost of living pay raises,

-- funds the Census bureau only through next June while awaiting a court decision on using sampling as a technique in the next census,

-- prohibits the District of Columbia, where Washington is located, from spending money on a referendum on legalizing marijuana for medical purposes, and

-- prohibits using money to provide abortions for federal prisoners.

The congress has now adjourned to allow members to finish campaigning for the November 3 elections.