Foreign Affairs, Defense, and Trade Policy: Key Issues in the 107th Congress

CRS Report for Congress
Foreign Affairs, Defense, and Trade Policy:
Key Issues in the 107 Congress
Updated February 27, 2001
Valerie Bailey Grasso and Susan B. Epstein, Coordinators
Foreign Affairs, Defense, and Trade Division

Congressional Research Service The Library of Congress

Foreign Affairs, Defense and Trade Policy:
Key Issues in the 107th Congress
Among the 107th Congress’ first orders of business will be dealing with the
initiatives–both domestic and foreign policy–proposed by President Bush throughout
his presidential campaign.
The 2000 congressional campaigns suggested that the agenda of the 107th
Congress will be largely domestic: Social Security, health care, education, taxes, and
military pay were prominent in campaigns across America and on post-election news
programs. Indeed, many issues discussed in this report will be affected by the
resolution of a contentious battle for the presidency. In the Congress, the 50-50 split
in the Senate and the close party ratio in the House, along with new House committee
chairmen, also will affect the agenda. With less time to organize the presidential
transition, and with upcoming Senate votes on executive branch nominations, the
107th Congress will have to split its time between administrative actions and policy
The 107th Congress will help define the U.S. role in the world within the
framework of increasing globalization and its effects on U.S. foreign and security
policy. A key issue on the congressional agenda will be a debate over how and when
to use economic aid and sanctions to achieve U.S. foreign policy goals and objectives.
Another focus will continue to be the extent of U.S. involvement in conflicts and
crises worldwide, and under what conditions the U.S. is willing to commit military
forces and resources to such conflicts. A third category of concerns is the post-Cold
War proliferation of weapons of mass destruction, and the related debate over the
development, testing, and possible deployment of national and theater missile defense
Numerous other foreign affairs, trade, and defense issues will face the 107th
Congress. In addition to those mentioned above, important themes may include the
U.S. role in international peacekeeping; emerging economic globalization and its
effect on trade and finance issues facing the United States; and a debate over the state
of military readiness, proposed force structure increases, how much to spend on
defense and how to set priorities among major defense programs, as well as defense
spending in general.
The first session of the 107th Congress may act on the FY2002 budget resolution,
defense authorization and appropriation bills, and will consider legislation to authorize
spending for Department of State and other foreign policy programs and personnel
by passing or waiving the biannual foreign relations re-authorization legislation. The
107th Congress will review U.S. foreign aid priorities and participation in international
organizations, participate in Quadrennial Defense Review 2001 and the
Administration’s plans for weapons modernization and achieving efficiencies in
defense operations.

Overview–Globalization and International Security......................1
U.S. Foreign and Security Policy....................................3
Economic Sanctions and U.S. Foreign Policy.......................3
Foreign Assistance Budget and Policy Issues.......................5
Foreign Debt Reduction: the Heavily Indebted Poor Country
(HIPC) Initiative........................................6
Foreign Policy Management and the Budget........................7
International Family Planning: Abortion Policy and Funding Issues......9
International Financial Institutions..............................10
Peacekeeping .............................................. 11
Security Threats: Nuclear, Biological, and Chemical Weapons ........13
United Nations Reform ......................................15
Global Issues..................................................16
Global Climate Change......................................16
International Disease Response................................17
International Narcotics Control................................18
International Organized Crime.................................19
International Terrorism......................................20
Regional Issues................................................21
Africa ................................................... 21
HIV/AIDS ............................................ 21
Trade and Development..................................22
Other Issues...........................................22
Asia ..................................................... 23
China ................................................ 23
India and Pakistan......................................24
Indonesia ............................................. 25
Japan ................................................ 26
Korean Peninsula.......................................27
Vietnam .............................................. 27
The Balkans...............................................27
Latin America.............................................29
The Middle East...........................................31
Peace Process.........................................31
Persian Gulf Issues......................................32
Russia ................................................... 33
Trade and Finance..............................................35
Export-related Issues........................................35
Export Administration Act Renewal.........................35
Export-Import Bank Reauthorization........................36
Foreign Sales Corporation................................37
Import-related Issues........................................37
Andean Trade Preference Act (ATPA).......................37
Cuba ................................................ 37

Renewing the Generalized System of Preferences...............39
Trade Adjustment Assistance (TAA) Renewal.................39
Trade Remedy Reform...................................40
Negotiations and Agreements..................................40
Bilateral and Regional Free Trade Agreements.................40
Fast-Track Negotiating Authority...........................41
A Free Trade Area of the Americas (FTAA)...................41
Vietnam Trade Agreement................................42
Defense Policy.................................................43
The Defense Budget........................................43
Efficiencies in Defense Operations..............................44
The Changing U.S. Defense Industrial Base...................44
Military Base Closures...................................45
Outsourcing, Privatization, and Infrastructure Initiatives..........46
Military Readiness..........................................47
Personnel-related Concerns in Recruitment and Retention........49
Missile Defense............................................50
NMD and the ABM Treaty...............................50
Modernization Issues........................................51
Personnel, Pay, Benefits, Quality of Life.........................53
Abortion ............................................. 53
Health Care...........................................53
Homosexuals in the Military...............................53
Military Family Housing..................................53
Quality of Life Issues....................................54
Women in the Military...................................54
Quadrennial Defense Review..................................55
Transformation ............................................ 56
Army Transformation....................................56
Information Warfare (IW)................................56
Tactical Aviation.......................................57
Use of Force and Contingency Operations........................58

Foreign Affairs, Defense and Trade Policy:
Key Issues in the 107 Congress
Overview–Globalization and International Security
Francis T. Miko, Specialist in International Relations
Robert L. Goldich, Specialist in National Defense
The new President and the 107th Congress are facing early challenges in foreign,
defense and trade policy, including unfinished business from the last Congress, a new
election in Israel, and ongoing transboundary concerns. Congressional action will be
shaped by competing visions of the appropriate U.S. role in the world. The decade
since the collapse of the Soviet Union has brought profound changes in the
international environment. The United States has been left as the sole superpower in
a less predictable world than the one defined for a half century by the U.S.-Soviet
balance of power. Years of uninterrupted U.S. economic expansion have
strengthened the U.S. position as the dominant world power, with an unprecedented
ability to exert its influence. U.S. leadership is sought and welcomed, even as it
arouses wariness of U.S. hegemony. At the same time, the world is not static and we
are witnessing the rise of new power centers in Asia and Europe. Chinese power is
on the rise, even as Russian power seems to be waning, and Europe continues fitfully
towards integration.
The emerging global economy, built on a revolution in science, technology,
communications, and the unprecedented movement of people, ideas, and goods across
national boundaries, has profoundly changed international relations and the ability of
governments to control developments even within national borders. International
developments have an impact on domestic policy as never before. The benefits of
globalization are far reaching, spurring world productivity, economic growth, and
access to information. Advances in communications, information technology, science,
and medicine are likely to continue and even accelerate in the coming years. Along
with the benefits come significant new challenges that may require further legislative
action. Globalization brings economic dislocations in some areas and activates
political, environmental, and cultural concerns. Transnational threats such as
terrorism, cyber-terrorism and warfare, international crime, the spread of weapons
of mass destruction, the spread of contagious diseases, environmental problems, and
the potential for financial instability are on the rise. Global developments lend
themselves less and less to control or influence by individual governments, yet
mechanisms to act jointly and across borders are still weak, as countries are reluctantth
to cede sovereignty to international entities. The 107 Congress will address many
issues associated with globalization.
How Congress deals with specific problems of national security, foreign policy
management, foreign aid, relations with international organizations, regional hot

spots, trade and economic policy is closely tied to the unresolved debate over the
appropriate U.S. role in the world at the beginning of the 21st Century. Profound
differences on this question are mirrored in congressional debate. Many believe that
strong U.S. leadership within multilateral institutions will be necessary to find
cooperative solutions to world problems. Others are suspicious of these organizations
and reluctant to compromise U.S. freedom of action. The debate extends to issues
such as the role of U.S. alliances and the question of when and where the United
States should intervene with military force. Should U.S. forces be used only in
defense of vital national interests or as a broader policy instrument? Should they
participate in peacemaking, peacekeeping, nation-building, or humanitarian
There is more consensus than many realize among politicians and analysts about
the broad outline of U.S. defense policy in the early 21st Century: continuing and
somewhat increasing the small upturn in defense spending which began in FY1999;
maintaining nuclear weapons capabilities needed for a decreased, but still required,
deterrence regime; containing potential adversaries with forward-deployed forces in
Europe, Northeast Asia, and the Persian Gulf; and adapting the theories and concepts
of the computer-driven “Revolution in Military Affairs” (RMA) to actual forces and
operations, so as to maintain and increase our already formidable military-
technological and organizational superiority over our adversaries.
Expressing these principles in specific programs and budgets generates
controversy. How, for instance, are even modest increases in defense spending to be
carved out of predicted budget surpluses already marked for Social Security
protection, tax reduction, debt retirement, and other domestic legislation? Are the
forces we have, even if their readiness is improved, sufficient to fight one, let alone
two, major theater wars without incurring tremendous casualties, and possibly
temporary defeats, in the process? Is, in fact, the requirement that the U.S. forces be
sized and structured to fight and win two nearly simultaneous major theater wars a
valid one? Many wish to deploy ballistic missile defense (BMD) systems, but
reconciling development of a BMD capability with great reluctance to let this
particular “genie” out of the arms control “bottle” will be difficult.
Too little spent on new technologies from the RMA, and we risk being saddled
with obsolete hardware later in the century. Too much, and for all of the dazzling
experimentation and future promise being shown, we might not have enough force
structure in the “here and now” to go to war and win. In short, the defense issues
facing the 107th Congress will be ones of deciding how to do what the Congress, the
new Administration, and the American public want to do. This will become apparent
as Congress acts on the FY2002 budget resolution, foreign relations authorization,
defense authorization, and appropriation bills for DOD, State Department, and foreign
operations throughout 2001.

U.S. Foreign and Security Policy
Economic Sanctions and U.S. Foreign Policy
Dianne E. Rennack, Specialist in Foreign Policy Legislation
The 107th Congress inherits from its predecessors a continuing debate about how
and when to use economic sanctions in furtherance of foreign policy or national
security goals. The use of economic sanctions – coercive economic measures taken
against one or more countries or entities to force a change in policies, or at least to
demonstrate a country’s opinion about the other’s policies1 – has generally been
supported by both the Congress and the President as an option to combat proliferation
of weapons of mass destruction, terrorism, aggression, drug trafficking, or human
rights abuses. In the 105th and 106th Congress, however, legislation was introduced
to reform the way economic sanctions are used in foreign policy. Reform proposals,
advocated by U.S. business and farm lobbyists, would require or encourage the
President or Congress to exhaust other foreign policy tools – diplomatic, political or
cultural – first; to make the use of sanctions more transparent, so that the anticipated
costs and benefits are understood beforehand; to engage Congress more fully in the
decisionmaking process heretofore left primarily to the Executive Branch; to target
the sanctions to minimize the impact on people in a targeted country who are not
viewed as part of the problem; and to require a regular review of sanctions regimes
with an eye toward easing or lifting the restrictions.
The 106th Congress considered more than 150 legislative proposals to impose
new sanctions, ease current regimes, or overhaul the entire process that the legislative
and executive branches employ when considering the use of sanctions in nationalth
security or foreign policy. The 106 Congress enacted legislation to ease sanctions,
including (1) authorizing the President to lift or modify sanctions imposed against
India and Pakistan in the wake of their nuclear weapons tests, (2) granting normal
trade relations status to Albania and Kyrgyzstan, and (3) granting permanent normalth
trade relations status to China. Most notably, the 106 Congress passed the Trade
Sanctions Reform and Export Enhancement Act of 2000 (P.L. 106-387) to limit the
President’s authority to impose sanctions that would restrict the export of food,
agricultural commodities, medicines, or medical devices to targeted countries.
The 106th Congress also enacted legislation to impose new sanctions or fine-tune
existing sanctions regimes, including (1) the Iran Nonproliferation Act; (2) the North
Korea Threat Reduction Act, also pertaining to Nonproliferation; (3) the Foreign
Narcotics Kingpin Designation Act, to freeze U.S.-based assets; (4) the Trafficking
Victims Protection Act, targeting those involved in trafficking of women and children
for sex or slavery; and (5) new restrictions on travel to Cuba. (See sections on the
Persian Gulf and Cuba, below)
Expectations for sanctions consideration in the 107th Congress derive from a
combination of unfinished work and current world events. In each of the following
instances, a larger question of engagement vs. isolation as a viable foreign policy

1As generally defined in Carter, Barry E., International Economic Sanctions: Improving the
Haphazard U.S. Legal Regime. Cambridge: Cambridge University Press, 1988. p. 4.

strategy likely will affect the debate. Legislation to reform the way sanctions are
imposed, implemented, and lifted is expected to be introduced early in the 1st session.
Advocates for sanctions reform, in the Congress and in the business community, have
stated their continued resolve to enact legislation. Nonproliferation watchdogs
promise to be active. Nonproliferation issues are considered unfinished by many vis-
a-vis the People’s Republic of China, for example, included in the debate in the 106th
Congress over that country’s permanent normal trade relations status. Recent
proliferation-related events in North Korea and Russia also might lend themselves to
legislation early in the 107th Congress.
U.S. foreign policy toward Iran and Libya will have renewed attention in 2001,
at a minimum when reauthorization of the Iran and Libya Sanctions Act is raised.
Some amount of discontent was stirred when, as a compromise to enact the food and
medicine exemption from sanctions policy, travel to Cuba was further restricted. (See
Cuba , below.) Advocates supporting more normal or open relations with Cuba may
introduce legislation to lift the travel ban or, at least, rededicate the new restriction
imposed in 2000. Each year for the past several Congresses, legislation has been
introduced to normalize all aspects of U.S.-Cuba relations.
In mid-2000, the State Department announced that it would no longer use the
term “rogue state” to describe “countries of concern.” Some perceive this as a
beginning of a process of revamping the U.S. approach to countries judged to be
supporters of international terrorism. If such a reorganization is undertaken,
Congress could play a significant role in defining what constitutes a “terrorist state.”
At a minimum, the 107th Congress is likely to take up a reauthorization of the Export
Administration Act (EAA), in which basic components of the current policy toward
terrorist states are found.
In 2000, the Supreme Court ruled against states and localities making foreign
policy by imposing their own sanctions regimes. Late in the 106th Congress,
legislation was introduced to reinforce this ruling. The issue of state and localthth
sanctions may continue in the 107 Congress. The 105 Congress enacted the
International Religious Freedom Act to incorporate standards of religious freedom
and protection of religious minorities in U.S. foreign policy. The Act established,
within the State Department, the Office of International Religious Freedom. Someth
anticipate that the Members of the 107 Congress will give great attention to the
Office’s annual report, due September 1, and recommendations for imposing
sanctions against transgressor states. Finally, events in the Middle East resulted in the
106th Congress, in its waning days, considering legislation to “oppose the unilateral
declaration of a Palestinian state, to withhold diplomatic recognition of any Palestinian
state that is unilaterally declared, and to encourage other countries and international
organizations to withhold diplomatic recognition of any Palestinian state that is
unilaterally declared.”2 The issue may invite legislative action early in the 107th

2S. 3250, Peace through Negotiations Act of 2000, introduced on October 26, 2000. See also
H.R. 5522, introduced on October 19, 2000.

CRS Products
Economic Sanctions to Achieve U.S. Foreign Policy Goals: Discussion and Guide to
Current Law, by Dianne E. Rennack and Robert D. Shuey, CRS Report 97-949
Economic Sanctions: Legislation in the 106th Congress, by Dianne E. Rennack, CRS
Report RL30384
Nuclear, Biological, Chemical and Missile Proliferation Sanctions: Selected Current
Law, by Dianne E. Rennack, CRS Report 98-116
Foreign Assistance Budget and Policy Issues
Larry Q. Nowels, Specialist in Foreign Affairs
U.S. foreign assistance programs support a broad range of American foreign
policy interests, including promoting the expansion of democracy and open market
economies, combating global health challenges, fighting poverty and other causes of
instability in developing nations, countering terrorism, drug trafficking, weapons
proliferation, and other transnational threats, supporting peace efforts in the Middle
East and elsewhere, contributing to humanitarian needs of victims of natural disasters
and conflict, and advancing U.S. economic opportunities in emerging economies.
Congress plays an important role in shaping American foreign aid policy and spending
priorities through annual enactment of the Foreign Operations Appropriations bill.
Moreover, the legislation frequently becomes an important instrument for
congressional participation in broad aspects of U.S. foreign policy decision-making
on numerous issues.
Over the past decade, American policymakers and Congress have struggled in
their attempt to agree on a new core foreign aid rationale to replace the strategically-
oriented justification of the Cold War. In the recent past, the President and Congress
have shared common priorities for using foreign aid to respond to humanitarian and
emergency global requirements, counter global health problems, including HIV/AIDS,
and support Middle East peace initiatives. On other issues, however, there is far less
agreement. Among the most contentious matters in recent foreign aid debates are
international family planning policy and whether abortion restrictions should be
incorporated, aid conditions for Russia, Yugoslavia and other recipients, strategies for
blocking North Korea’s nuclear weapons development, and the organizational
structure of the U.S. Agency for International Development (USAID).
Overall foreign assistance funding levels have also been a source of sharp
disagreement between the two branches. In FY1996/97, Congress cut foreign aid
spending by over 10% to about $12.3 billion. Resources have increased to nearly
$16.5 billion in FY2000, after President Clinton vetoed the original foreign aid
appropriations because of inadequate funding. Much of the higher spending,
however, has been concentrated on unforseen international emergencies or one-time
special initiatives, such as Central American hurricane relief, Kosovo humanitarian
assistance, Colombia counternarcotics aid, or Middle East peace-related transfers.
Except for global health programs and poor country debt relief initiatives, few longer-
term, continuing foreign aid objectives have received increased funding in recent

years. House and Senate preliminary approval earlier this year of roughly $13.3
billion in Foreign Operations bills for FY2001 – 12% less than the President’s $15.1
billion request – prompted further veto threats. Congress ultimately agreed to $14.9
billion, including several top Presidential priorities for HIV/AIDS and debt relief.
The 107th Congress will confront a number of foreign aid policy and funding
challenges, including the likely continuation of disputes over international family
planning and congressional earmarks and aid restrictions that the Executive branch
has said undermine the President’s ability to conduct foreign policy. A new
Administration is likely to undertake a review of broad U.S. foreign aid policy
objectives and may seek congressional authorization for alternative approaches. The
organizational structure of agencies managing foreign aid programs, especially the
relationship between USAID and the State Department, might also be revisited in the
new Congress. How much of the budget to allocate for foreign assistance will come
under close scrutiny, and if the experience of the past three years repeats itself,
Congress could confront emergency supplemental foreign aid spending requests early
in the new session. President Clinton asked the 106th Congress to provide an
additional $750 million in military assistance for Israel, Egypt, and Jordan, but a
decision on whether to fund the proposal was pushed into 2001.
CRS Products
Africa: U.S. Foreign Assistance Issues, by Raymond W. Copson, CRS Issue Brief
Appropriations for FY2001: Foreign Operations, Export Financing, and Related
Programs, by Larry Q. Nowels, CRS Report RL30511.
The Former Soviet Union and U.S. Foreign Assistance, Curt Tarnoff, CRS Issue Brief
Multilateral Development Banks: Issues for the 106th Congress, by Jonathan Sanford,
CRS Issue Brief IB96008.
Foreign Debt Reduction: the Heavily Indebted Poor Country
(HIPC) Initiative
Larry Q. Nowels, Specialist in Foreign Affairs
Mounting debt burdens in poor African, Asian, and Latin American nations have
undermined efforts to stimulate economic growth and to finance basic social programs
aimed at poverty reduction. Over the past decade, the United States and other
creditor governments have engaged in numerous debt rescheduling and cancellation
schemes for governments that demonstrate a commitment to sound economic and
social policy reforms. The most recent of these debt relief arrangements – the Heavily
Indebted Poor Country (HIPC) initiative – was launched in 1996, and included for the
first time the participation of the World Bank, the IMF, and other public international
financial institutions that hold more than one-third of debt owed by the 41 HIPC-
designated nations. Critics, including Jubilee 2000 and other religious and non-
governmental organizations, charged, however, that HIPC did not offer sufficient debt

relief, excluded several debt-strapped countries, and required a lengthy qualifying
period during which poverty continued to mount.
In 1999, led by the United States and Great Britain, the G-7, and subsequently
the World Bank and IMF, agreed to significantly expand HIPC terms to roughly
double the costs of the initiative. Under “Enhanced HIPC,” as much as $90 billion
of poor country debt could be cancelled, cutting annual debt service by roughly one-
half and re-directing the debt “savings” to investments in education, health, clean
water and other priority sectors. About 20 countries are expected to qualify at least
at a preliminary stage by the end of 2000, while 32 of the 41 HIPC countries may
eventually receive benefits.
The United States pledged $920 million for the HIPC initiative over four years,
including a $600 million contribution to the HIPC Trust Fund which will facilitate
debt write-offs by regional multilateral financial institutions such as the African
Development Bank and the Inter-American Development Bank. The $435 million
sought by the Clinton Administration for FY2001 became one of the top foreign
assistance funding priorities this year. Congress approved the entire HIPC request,
but required qualifying countries to agree not to borrow at non-concessional interest
rates for two years and directed the Treasury Secretary to explore options at the
World Bank to increase grant assistance to HIPC nations.
During the 107th Congress, lawmakers are expected to consider a $240 million
funding request which would complete the U.S. $600 million commitment to the
HIPC Trust Fund. Congress may also monitor implementation of HIPC agreements
with early qualifying countries, focusing especially on whether governments are
following economic reform conditions and if debt savings are being invested in
poverty reduction programs through a transparent, participatory decision-making
process with the full involvement of civil society.
CRS Products
Debt and Developing in Poor Countries: Rethinking Policy Responses, J.F. Hornbeck,
CRS Report RL30449
Debt Reduction: Initiatives for the Most Heavily Indebted Poor Countries, by Larry Q.
Nowels, CRS Report RL30214
Foreign Policy Management and the Budget
Susan B. Epstein, Specialist in Foreign Policy and Trade
The first session of the 107th Congress will be required to consider legislation for
foreign policy authorization and another for funding the State Department (within the
Commerce, Justice and State and Related Agencies bill). Every two years Congress
must reauthorize spending for the Department of State, foreign policy programs, and
personnel by passing or waiving the biannual foreign relations reauthorization
legislation. In addition, each year Congress must appropriate State Department and
related agency funding. Typically, these bills become vehicles for a full range of

foreign relations-related provisions. For example, foreign policy agency
reorganization was mandated in 1998 by the foreign relations authorization act (P.L.
105-277). The 106th Congress passed its foreign relations authorization legislation
(P.L. 106-113) that included authority for the Department of State to spend
significantly more on embassy security through FY2004.
Throughout the 1990s, both the Administration and Congress sought to
reorganize the U.S. foreign policy agencies with goals of streamlining their work and
attaining budgetary savings. A number of proposals to reorganize the Department of
State culminated in the Foreign Affairs Reform and Restructuring Act of 1998
(division G, P.L. 105-277). The Act required abolishing the U.S. Information Agency
(USIA) and the Arms Control and Disarmament Agency (ACDA), merging their
functions into the Department of State, and maintaining a separate international
broadcasting entity–the Broadcasting Board of Governors (BBG). The Act did not
merge the U.S. Agency for International Development (USAID) into the Department
of State, but did require USAID to reorganize and come under the authority of the
Secretary of State. The 107th Congress could consider renewed proposals to: 1)
merge USAID into State to better coordinate U.S. foreign policy with foreign aid and

2) unify administration of all agencies’ Foreign Service operations.

Annual appropriations issues in the 106th Congress focused on embassy security
(due to the August 7, 1998 bombing of two U.S. embassies in Africa) and possible
budget savings derived from the foreign policy agency reorganization. The FY1999
State Department budget included a budget supplemental of $1.56 billion for overseas
embassy security needs. Since Congress has provided full funding for embassy
security over the past two years, no budget savings resulting from reorganization is
evident. On the contrary, the State Department’s FY2001 appropriation (P.L. 106-
553) represents an increase of $750 million over the FY2000 enacted level and $97
million more than the President requested for the State Department and related
agencies for FY2001.
In response to the 1998 embassy bombing, the State Department established a
review panel, the Overseas Presence Advisory Panel (OPAP), which reported its
concerns and recommendations on how to increase security at U.S. overseas facilities.
The 107th Congress may consider these recommendations, as well as some experts’
concerns that, as security at U.S. government targets is tightened, risks for American
tourists and businesses may grow. In addition to security issues, the Foreign Service
continues to respond to criticisms of inadequate minority hiring and insufficient
foreign language and management skills prior to hiring. Some of these issues also are
being addressed by the Government Performance and Results Act (GPRA) process.
CRS Products
Embassy Security: Background, Funding, and the FY2001 Budget, by Susan B.
Epstein, CRS Report RL30662
State Department and Related Agencies: FY2001 Appropriations, by Susan B.
Epstein, CRS Report RL30591

International Family Planning: Abortion Policy and Funding
Larry Q. Nowels, Specialist in Foreign Affairs
Since 1965, U.S. policy has supported international population planning based
on principles of voluntarism and informed choice that gives participants access to
information on all methods of birth control. This policy, however, has generated
contentious debate for nearly three decades, resulting in frequent clarification and
modification of U.S. international family planning programs. In the early 1970s,
Congress added a provision to the Foreign Assistance Act of 1961 prohibiting the use
of U.S. appropriated funds for abortion-related activities and coercive family planning
programs. During the mid-1980s, in what has become known as the “Mexico City”
policy (because it was first announced at the 1984 Mexico City Population
Conference), the Reagan, and later the Bush, Administrations restricted U.S. funds
for foreign non-governmental organizations (NGOs) that were involved in performing
or promoting abortions in countries where they worked, even if such activities were
undertaken with non-U.S. funds. Several groups, including International Planned
Parenthood Federation-London (IPPF-London), became ineligible for U.S. financial
support. In some years, Congress narrowly approved measures to overturn this
prohibition, but White House vetoes kept the policy in place. President Clinton in
1993 reversed the position of his two predecessors, allowing the United States to
resume funding for all family planning organizations so long as no U.S. money was
used by those involved in abortion-related work.
Since 1995, international family planning policy and the abortion question has
been the most contentious issue in annual congressional foreign aid debates. The
House has routinely voted to reinstate the Mexico City policy while the Senate has
favored a position leaving the decision in the hands of the Administration. Moreover,
President Clinton has threatened to veto any bill that includes the House-passed
Mexico City restrictions. Unable to reach an agreement satisfactory to both sides,
Congress adopted a series of interim arrangements for FY1996-1999 that did not
resolve the broad international family planning controversy, but permitted the stalled
Foreign Operations appropriations measure to move forward. The annual
“compromise” removed House-added Mexico City restrictions, but reduced
population assistance to $385 million, and in several years, “metered” the availability
of the funds at a rate of one-twelfth of the $385 million per month.
The FY2000 debate, however, reached a different conclusion on the international
family planning question. Congressional leaders insisted that if the President wanted
Congress to approve legislation authorizing the payment of nearly $1 billion of U.S.
arrears owed to the United Nations, the White House must also accept revised
Mexico City language adding abortion restrictions to U.S. population assistance
policy. In order to remove the obstacles to U.N. arrears payments, President Clinton
reluctantly agreed to the abortion restrictions, marking the first time that Mexico City
conditions had been included in enacted legislation.
For FY2001, President Clinton sought a substantial increase in population
assistance – $541 million – and vowed to veto any legislation that continued Mexico
City abortion restrictions. Unable to resolve opposing House and Senate positions

on the family planning issue, Congress agreed to leave the decision up to the new
President. Under the terms of P.L. 106-429 (Foreign Operations Appropriations,
2001), none of the $425 million for population assistance may be obligated until
February 15, 2001.
As many expected, on January 22, 2001, President George W. Bush issued a
Memorandum to the USAID Administrator rescinding the 1993 memorandum from
President Clinton and directing the Administrator to “reinstate in full all of the
requirements of the Mexico City Policy in effect on January 19, 1993.” President
Bush further said that it was his “conviction that taxpayer funds should not be used
to pay for abortions or advocate or actively promote abortion, either here or abroad.”
A separate statement from the President’s press secretary stated that President Bush
was “committed to maintaining the $425 million funding level” for population
assistance “because he knows that one of the best ways to prevent abortion is by
providing quality voluntary family planning services.” The press secretary further
emphasized that it was the intent that any restrictions “do not limit organizations from
treating injuries or illnesses caused by legal or illegal abortions, for example, post
abortion care.”
During the next few weeks, USAID, State Department, and Justice Department
officials will draft specific policy language and contract clauses to implement the
President’s directive. The starting point, according USAID, will be regulations in
place on January 19, 1993. Some changes, however, may occur if more recent legal
decisions or statutes require modification. Because some overseas programs are
reported to need immediate financial transfers, officials have expressed hope that the
new policy language can be put into effect by February 15 when funds become
available. Congress will have an opportunity to debate the President’s new policy,
most likely when the Foreign Operations Appropriations bill for FY2002 comes up
for consideration.
CRS Products
International Family Planning: The Mexico City Policy, by Larry Nowels, CRS
Report RL30830
U.S. International Population Assistance: Issues for Congress, by Larry Q. Nowels,
CRS Issue Brief IB96026
International Financial Institutions
Jonathan E. Sanford, Specialist in International Relations
The International Financial Institutions (IFIs) include the World Bank and the
four regional development banks and the International Monetary Fund (IMF). In theth
106 Congress, action on the IFIs occurred on two fronts. The first comprised
funding for the IFIs and for the program aimed at forgiving debt owed by Heavily
Indebted Poor Countries (HIPCs). (See section on debt reduction, above) The second
involved proposals for changing the policies and structures of the IFIs. (See IMF
Reform, below.) In both 1999 and 2000, Congress cut U.S. funding for the World

Bank and other multilateral development bank (MDB) programs substantially from
the President’s request. In 1999, the President vetoed the appropriations legislation
on grounds that he believed the cuts for MDB programs had been too great. In 1999
and 2000, most of the cuts were restored in the final legislation that the President
signed into law.
The Administration also sought authority for a U.S. contribution to the HIPC
trust fund and language which would enable the IMF to use certain blocked funds–
profits from an earlier gold sale– for the HIPC program. Congress withheld this
permission in 1999 but included it in the final 2000 appropriations legislation as part
of a broad agreement on IFI policy issues. Leading Members of the majority had
sought to effect major changes that would make their loans more costly to borrowers
and access to IFI credit more conditioned on countries implementing major market-
oriented economic reforms. Agreement to adopt these changes would have to be
approved before the HIPC contribution and gold sale funds would be approved. In
the end, Congress approved the latter two measures without specific conditions.
However, the Secretary of the Treasury was required to report periodically on the
progress being made towards the implementation of certain reforms or policy goals.
Initiatives may come forward in the 107th Congress that aim to seek major
changes in the IFIs along the lines discussed above. Alternatively, proposals may be
made to include standards associated with environment and labor issues as necessary
factors in the IFI loan process. Strong U.S. initiatives of either type may result in
conflict with other major IFI member countries who have quite different views about
IFI priorities.
CRS Products
International Monetary Fund (IMF), Debt Relief, and Gold: Check List of CRS
Products, by Sherry B. Shapiro, CRS Check List CL40033
IMF Reform and the International Financial Institutions Advisory Commission,
by J. F. Hornbeck, CRS Report RL30636
Multilateral Development Banks: Issues for the 106th Congress, by Jonathan E.
Sanford, CRS Issue Brief IB96008
Nina Maria Serafino, Specialist in International Security
For nearly a decade, Congress has been sharply divided over a broad range of
issues related to U.S. worldwide peacekeeping and related security commitments,th
several of which will most likely be a focus of the 107 Congress’ debate on
international security. The crux of the recent controversy in Congress is the
desirability of U.S. military forces’ participation in such operations, particularly the
9,800 troops serving in two NATO Balkan operations in Bosnia and Kosovo, relative
to the costs and strains of such participation. The issue of positioning U.S. troops
under the operational control of U.N. commanders seems less pressing now, when

some 35 U.S. troops serve in U.N. operations, than during the 1990s, when, at peak,
over 3,000 U.S. did so. (The Bosnia and Kosovo operations are under NATO and
not U.N. control.) However, questions are still raised about the utility of several on-
going U.N. peacekeeping operations (which total 15 operations, involving nearly
38,000 troops from 88 other countries, to which the U.S. contributed almost $500
million in FY2000), particularly those in Kosovo, East Timor, Sierra Leone, and the
Democratic Republic of the Congo.
Debate in the 106th Congress over U.S. peacekeeping deployments centered on
the 4,200 U.S. troops serving in Kosovo under NATO, at an estimated FY2000 cost
of $1.7 billion. Arguing that European nations were not carrying their fair share of
the burden, many Members of Congress made several attempts to limit the length of
and spending on the U.S. deployment there, but these efforts did not prevail. Other
Members countered that European nations were providing over 80% of the assistance
to Kosovo, and worried that attempts to withdraw U.S. forces would undermine
NATO and U.S. leadership. In providing $2.0 billion in supplemental funding for
FY2000 Kosovo costs in the FY2001 military construction appropriations bill (P.L.
106-246), Congress removed House provisions that would have allowed a cutoff in
funding for U.S. deployments in Kosovo after July 1, 2001. However, Congress
subsequently limited FY2001 spending in Kosovo to $1.65 billion, with a waiver
allowed under certain conditions, and required a series of reports on European
assistance and on efforts to resolve the Balkan situations. For a discussion of
congressional actions regarding U.N. Peacekeeping Operations, see the section of this
report on United Nations reform.
Debate over the appropriate U.S. role and amount of U.S. assistance in
peacekeeping efforts in general, and in the Balkans in particular, is expected to
continue, especially given President George W. Bush’s stated reservations regarding
open-ended “nation-building” missions involving U.S. ground forces. The high costs
of international peacekeeping and related U.S. security commitments, which totaled
over $4 billion in FY2000, and their effects on the readiness of U.S. forces will be
other sources of concern. The initiation of a new Quadrennial Defense Review (QDR)
process in early 2001 may provoke an extensive debate on force size and structure
related to peacekeeping activities, also encompassing whether, where, and under what
circumstances U.S. troops should be deployed on such missions. Continuing
congressional scrutiny of issues regarding U.N. operations can be expected, as
discussed below.
CRS Products
Peacekeeping: Issues of U.S. Military Involvement, by Nina M. Serafino, CRS Issue
Brief IB94040
United Nations Peacekeeping: Issues for Congress, by Marjorie Ann Browne, CRS
Issue Brief IB90103
U.S. Forces and Multinational Commands: PDD-25 and Precedents, by Edward F.
Bruner, CRS Report 94-887

Security Threats: Nuclear, Biological, and Chemical Weapons
Robert G. Shuey, Specialist in Foreign Policy and National Defense
Steven R. Bowman, Specialist in National Defense
Congress, the Administration, and our allies are debating the best combination
of policies to counter threats posed by nuclear, biological, and chemical (NBC)
weapons. Those policies include maintaining strong and credible deterrence,
employing active and passive defenses, maintaining alliances and multilateral regimes,
preventing foreign acquisition of dangerous materials and technology, engaging with
potential adversaries, negotiating reductions and control of weapons, neutralizing
terrorist groups, imposing sanctions and providing incentives, and promoting regional
peace. Since the Cold War a number of developments have challenged past policies:
the demise of the Soviet Union as the primary threat; the acquisition of NBC weapons
by more countries; the information technology revolution; the increased availability
of weapons material, technology, and engineers; globalization of business and finance;
and an evolution of missile defense technology. Confronting the 106th Congress were
the 1998 nuclear tests by India and Pakistan, missile tests by North Korea, Iran, and
Pakistan, and continuing transfers of nuclear and missile technology by Russia, China,
and North Korea. Congress acted on a number of issues related to NBC weapons,
as summarized immediately below. Missile defense also was emphasized by the 106th
Congress, as discussed below under Defense Policy.
Russian nuclear and missile technology exports to Iran led Congress to pass the
Iran Nonproliferation Act (P.L. 106-178) authorizing the President to impose aid and
trade sanctions against proliferating companies or organizations. Congress also
supported DOD’s Cooperative Threat Reduction and associated programs to help
secure NBC weapons, material, and technology in states of the former Soviet Union.
One exception to this support, however, has been Congress’s restriction of funds for
a CW destruction facility in Russia, citing a lack of confidence in Russia’s ability to
fund the facility once constructed.
The People’s Republic of China has acquired technology from the United States
that harms U.S. national security, according to the congressional Cox Committee
which released its declassified report in May 1999. The DOD authorization for
FY2000 (P.L. 106-65) included several provisions on export controls that had been
recommended by the report. In 2000, Congress also passed a trade bill to authorize
nondiscriminatory treatment (Permanent Normal Trade Relations) to China and to
establish a framework for trade relations between the U.S. and China (P.L. 106-286).
Although other proposals to restrict trade to China were introduced, none passed.
On North Korea, the Speaker’s Advisory Group issued a detailed report in
November 1999 describing the threat posed by North Korea to U.S. national security.
The North Korean Threat Reduction Act of 1999 (in P.L. 106-113) prohibits a
nuclear cooperation agreement between North Korea and the United States unless the
President determines North Korea is in compliance with certain commitments and
does not have a nuclear weapons program.
Congress also authorized the President to waive economic sanctions on India
and Pakistan for detonating nuclear explosive devices or for other activities related

to nuclear weapons (P.L. 106-79). Though Congress could not agree on a thorough
revision of the Export Administration Act (EAA) of 1979 (S. 1712), it approved a bill
(H.R. 5239) that extends the EAA until August 2001. In October 1999, the Senate
voted against advice and consent to the ratification of the Comprehensive Test Ban
Treaty. The FY2001 defense authorization bill requires the administration to conduct
a comprehensive nuclear posture review and report the results to Congress in
December 2001. It also calls for a plan for the long term sustainment and
modernization of U.S. nuclear forces with a report to Congress by April 15, 2001, and
a report by July 1, 2001 on the requirement and capabilities to defeat hardened targets
and stockpiles of NBC weapons.
It appears likely that in 2001 Congress will review the development, testing, and
perhaps deployment of national and theater missile defense systems. It will probably
again consider ways to prevent countries such as Iran, Iraq, and North Korea from
developing NBC weapons and delivery systems, and ways to prevent entities in
countries such as China, Russia, and North Korea from transferring NBC weapon and
missile technology to other countries. Revisions of the Export Administration Act
and possibly new sanctions and incentives to prevent further proliferation of NBC
weapons and missiles will likely be discussed. Special attention may be focused on
U.S. exports of satellites, high-performance computers, encryption systems, and
conventional weapons. Congress may respond to positive or negative NBC weapons
and missile developments in North Korea, Iran, Iraq, Pakistan, India, or elsewhere.
Programs to counter the threat of NBC weapons in the hands of international
terrorists are likely to be considered (see the Terrorism section, below), as are the
status and credibility of U.S. deterrence against hostile states and terrorist groups.
The States which are parties to the Biological Weapons Convention will meet in 2001,
and are expected to adopt a new protocol intended to enhance convention compliance
and non-proliferation efforts. The protocol has been under negotiation for five years
and is expected to spark significant debate over the issues of international
inspections, export controls, and protection of proprietary commercial information.
If the protocol is adopted, the President will decide when it will be submitted to the
Senate for its advice and consent.
Because recent political, economic, and technological developments have
generated support for significantly different policy approaches for countering the
NBC weapon threat, Congress or the Administration may initiate a broad review of
options, priorities, and their application to geographic regions.
CRS Products
Weapons of Mass Destruction, Nonproliferation, and Arms Control: A Checklist of
CRS Products, by Sherry B. Shapiro, CRS Checklist 40035.

United Nations Reform
Marjorie Ann Browne, Specialist in International Relations
United Nations reform, as variously defined, has drawn the attention of many in
Congress and the executive branch as well as in other U.N. member governments.
Congressional views and expectations on the need for United Nations reform have (1)
resulted in significant arrearage in U.S. contributions, especially to U.N. peacekeeping
accounts, and (2) led to Congress’ specifying conditions to be met before the release
of U.S. funds appropriated to reduce most of these arrearages. Two areas of desired
change are: (1) a reduction of U.S. assessment levels for contributions to the U.N.
regular budget and U.N. peacekeeping accounts, and (2) the continuation of
zerobased budgeting both by the United Nations and by certain U.N. specialized
On November 29, 1999, Congress passed, and the President signed, legislation
setting forth the conditions for U.S. payment of its arrears, or outstanding
contributions, to the United Nations for regular budget and peacekeeping accounts
(the oft-called Helms-Biden package). The amount appropriated and subject to these
conditions was $926 million, including $819 million in cash payments and $107
million in credits from the United Nations. As of the start of 2001, the United States
had paid the first increment of $100 million, after certifying that the relevant
conditions had been met.
Congressional funding in 2000 of the President’s full request (FY2000
supplemental request of $107 million and FY2001 request of $738.6 million) for the
Contributions to International Peacekeeping Activities (CIPA) account had been
problematic. Congressional committees had expressed concern over increasing costs
and expanding activities of U.N.-conducted peacekeeping operations and had
disagreed over the use of U.N. peacekeeping operations in internal conflicts in Africa,
including those with cross border impacts. In late October 2000, Congress
appropriated $846 million for CIPA, the amount the President had requested.
On December 23, 2000, U.N. members, during the 55th session of the U.N.
General Assembly reduced the U.N. assessment level for the United States from 25%
to 22% for the U.N. regular budget. It was expected that the assessment level for
U.N. peacekeeping accounts would go down to 28.14% for the January-June 2001
period and further reduce to 25% by 2004. Since the 2001 level was higher than the
25% in the Helms-Biden conditions, Senator Helms introduced legislation, S. 248, to
amend these conditions, increasing the peacekeeping assessment level to 28.15%.
The Senate passed S. 248, by a vote of 99-0, on February 7, 2001. Passage by the
House would clear the way for the release of “traunche 2 funding” of $475 million
for U.S. arrears.
Areas for possible attention in 2001 include continuing congressional review of
the implementation of the reform conditions set forth in the 1999-enacted legislation;
continuing review of the executive branch process for support of new or expanded
U.N. peacekeeping operations, now being conducted by the General Accounting
Office in its report on how Presidential Decision Directive 25 has been applied; and
review of U.N. peacekeeping reform proposals presented in the Report of the Panel

on United Nations Peace Operations (the Brahimi report) and the U.N. Secretary-
General’s plan to implement its recommendations.
CRS Products
United Nations Peacekeeping: Issues for Congress, by Marjorie Ann Browne, CRS Issue
Brief IB90103
U.N. System Funding: Congressional Issues, by Vita Bite, CRS Issue Brief IB86116
Global Issues
Global Climate Change
Susan Fletcher, Senior Analyst in International Environmental Policy
Concerns that the increase in “greenhouse gases” in the atmosphere has caused
warming of the Earth’s climate have led to a number of international responses, as
well as issues of interest to the U.S. Congress. The 1992 United Nations Framework
Convention on Climate Change (UNFCCC), which the United States has ratified,
contained voluntary commitments by all parties to that treaty to take steps to reduce
their emissions of greenhouse gases, primarily carbon dioxide produced by burning
of fossil fuels and wood (as well as five other gases from other sources). Congress
has been primarily concerned with the issues connected with the 1997 Kyoto Protocol
to the UNFCCC, which contains legally binding emission reductions for 38
industrialized nations, including the United States. The Senate passed S.Res.98
before the Kyoto Protocol was completed, warning that the United States should not
sign a treaty that would harm the U.S. economy or did not include commitments for
developing countries. Congress has held oversight hearings on many aspects of the
economic impacts and scientific findings related to climate change generally and the
Kyoto Protocol specifically. Legislation was introduced in previous congresses
related to needed scientific research, policies on domestic credit for activities to
reduce carbon emissions or increase carbon sinks (discussed below), and to limit the
activities of the government that could be regarded as implementing the Kyoto
Protocol before it has been approved.
The United States signed the Kyoto Protocol in 1998, but it was not submitted
to the Senate for its advice and consent by the Clinton Administration in recognition
of S.Res. 98. The United States was seeking to obtain “meaningful participation” of
developing countries, and it had been participating in the continuing negotiations to
agree on rules governing various aspects of how the Protocol would operate. These
rules have key relevance to economic impacts of U.S. commitments, in particular,
how much the United States could rely on “flexibility” mechanisms that would reduce
domestic measures needed to meet its commitments, through trading emission
“credits” with other countries and relying on its extensive forest and agricultural lands
to absorb carbon, acting as “sinks.” In November 2000, negotiations held in The
Hague, Netherlands, were expected to resolve a number of political and operational
issues on how the Kyoto Protocol would work. However, these negotiations
collapsed when some of the key issues regarding flexibility mechanisms and use of

carbon sinks eluded political agreement among ministers from developed countries.
A large congressional delegation attended these negotiations, and it appears likely that
Congress will continue to conduct oversight hearings and consider legislation related
to the issues of climate change generally, and the Kyoto Protocol negotiations
CRS Products
Global Climate Change, CRS Electronic Briefing Book; on the CRS Web site at
International Disease Response
Lois B. McHugh, Analyst in Foreign Affairs
The 106th Congress and the Clinton Administration focused on the growing
threat of infectious disease, especially HIV/AIDS, primarily in Africa. (See Africa,
below.) The United States responds to the health needs of developing countries
primarily through the foreign aid program. But because diseases cross national
borders, other agencies, such as the Center for Disease Control and Prevention (CDC)
and the Department of Defense are also involved in medical programs as part of their
Health expenditures are made through various foreign aid accounts, with the
bulk of aid provided as part of the Child Survival and Disease account. USAID
estimates that health spending provided in all accounts of the foreign aid legislation
(not including population programs) will total $836.9 million in FY2000 and $795.3
million in 2001. This includes $260.2 million for HIV/AIDS, $63 million for
infectious disease, and $110 million for UNICEF.
Congress has been very supportive of international health assistance,
appropriating at the request level or higher with wide bipartisan support. Several
bills adopted in the 106th Congress address international health. P.L. 106-429, the
Foreign Operations Appropriation, enacts by reference legislation providing $860
million for international health programs. This includes $300 million for HIV/AIDS,
and $125 million for infectious disease. In addition, PL 106-259, the Department of
Defense Appropriations Act includes $10 million to be used for HIV prevention
education activities in Africa.
International health issues will continue to be of interest to the 107th Congress
as the world becomes increasingly interconnected. Infectious disease, particularly
HIV/AIDS, has been incorporated into international discussions and activities of many
international agencies and will continue as a major issue worldwide for the foreseeable
Another health issue likely to arise is the proposed Framework Convention on
Tobacco Control. Negotiations on the new treaty began in the fall of 1999. It is
expected to be opened for signature by 2003, but will be debated in the World Health
Organization throughout the next two years.

International Narcotics Control
Raphael F. Perl, Specialist in International Relations
International political and economic instability, especially political turmoil and
ethnic strife in third world and former communist states where police capabilities have
been drastically reduced, provide fertile ground for expansion of a wide range of
criminal activities. One such criminal activity, illicit production and smuggling of
narcotics, remains an important area of concern for Congress.
Increasingly, drug trafficking organizations, terrorist organizations, and other
international criminal groups cooperate with each other to facilitate illicit cross-border
and transnational activities. Intergovernmental cooperative efforts to combat such
criminal enterprises are often slow and cumbersome.
Generic issues likely to be the focus of attention in the upcoming Congress
include (1) the President’s March 1 certifications for major drug producing or
transiting countries (an annual certification as to a country’s cooperation in
international drug control efforts is required of the President under the Foreign
Assistance Act of 1961; a negative certification may result in loss or reduction of
foreign assistance); (2) the effectiveness of current drug interdiction policies; (3) the
rising importance of drug cartels in Mexico and their potential destabilizing effect on
that country; (4) the growing relationships between drug traffickers, terrorists, and
other organized criminal groups; and (5) North Korean drug production and
trafficking activity. Moreover, U.S. relations with Burma, the world’s largest source
of illicit opium and heroin, are strained over lack of narcotics control cooperation and
human rights violations. Prospects for immediate improvement in relations with
Burma do not appear promising.
An issue of growing importance in the 107th Congress is expected to be the
effectiveness of implementation of Plan Colombia, the congressionally funded (fiscal
year 2000-2001) $1.3 billion counter-narcotics effort for Colombia and neighboring
states (P.L. 106-246). The massive aid package reflects U.S. concern that an
increasing supply of heroin and cocaine is undermining demand-reduction efforts in
the United States. Curbing the inflow of these drugs is therefore a key priority for
both domestic and foreign policy. As the largest supplier of cocaine and a major
supplier of heroin, Colombia is central to these efforts. (See Latin America, below)
The U.S. initiative will present major challenges and opportunities to policy
officials in both the United States and the northern Andean countries. U.S. counter-
narcotics policy is unlikely to be completely successful (a victory in the war against
drugs seems unlikely) until the seemingly insatiable demand for drugs in the U.S.
market is curbed. However, if the Colombian initiative is seen as failing completely,
it could undermine U.S. prestige and influence in the western hemisphere. Moreover,
perceived failure might weaken the U.S. public’s willingness to support future foreign
policy and aid initiatives linked to counter-drug objectives.
Assuming that the drug interdiction efforts have at least a modest effect in
reducing the level of coca cultivation and production, the key challenge for
policymakers will be how to adapt to the social and economic consequences of
success. A major challenge is how to ensure that the coca cultivation, trafficking

activities, and insurgent operations from Colombia are not simply displaced into
neighboring states.
CRS Products
Colombia: U.S. Assistance and Current Legislation, by Nina Serafino, CRS Report
Drug Control: International Policy and Options, by Raphael F. Perl, CRS Issue Brief
Ecuador: International Narcotics Control Issues, by Raphael Perl, CRS Report
Narcotics Certification of Drug Producing and Trafficking Nations, by Raphael F.
Perl, CRS Report 98-159
North Korean Drug Trafficking: Allegations and Issues for Congress, by Raphael F.
Perl, CRS Report RS20051
International Organized Crime
Francis T. Miko, Specialist in International Relations
In recent years, Congress has demonstrated its concern over international
organized crime through legislative and oversight activities. The 106th Congress
passed significant legislation targeting the three most lucrative activities of
international organized crime groups: drug trafficking, money laundering, and
international trafficking in humans (especially for the sex trade). P.L. 106-246, the
Columbia Aid Package, was signed into law on July 12, 2000 and provided $1.289
billion in emergency supplemental appropriations for narcotics control. The Victims
of Trafficking and Violence Protection Act of 2000 (P.L. 106-383), a comprehensive
bill related to trafficking in humans, was signed by the President on October 28, 2000.
Neither the 105th nor the 106th Congress enacted a comprehensive package of
legislation proposed by the Clinton Administration in 1998 as part of its announced
“International Crime Control Strategy.”
Whether or not a comprehensive international crime fighting package is taken
up again in the 107th Congress, transnational crime is likely to be on its agenda, given
the scope of the problem. A growing share of organized crime in the United States
has foreign connections. International criminal organizations are forming
opportunistic links across borders, including drug cartels (discussed below) and even
terrorist groups (discussed below). As a result, international organized crime is
viewed increasingly as a national security threat in addition to a law enforcement
The State Department has the lead U.S. role in dealing with international crime
abroad. However the FBI, traditionally a domestic crime fighting agency, is
establishing an increasingly active presence internationally. The FBI now has offices
in many countries and has established an FBI academy in Budapest, Hungary, to train

foreign law enforcement officials. Congress must deal with annual funding and
oversight of these rapidly growing activities.
CRS Products
Trafficking in Women and Children: The U.S. and International Response, by Francis
T. Miko and Grace (Jea-Hyun) Park, CRS Report RL30545
International Terrorism
Raphael F. Perl, Specialist in International Relations
Steven R. Bowman, Specialist in National Defense
The October 12, 2000 terrorist attack on the U.S. Navy destroyer Cole in Aden,
Yemen, has given renewed focus to Administration and congressional concern about
the threat of international terrorism. In the aftermath of the Cole bombing, the
Defense Department and the Navy initiated a number of inquiries. The House and
Senate Armed Services Committee held initial hearings on the incident in lateth
October. The attack raises potential issues for the 107 Congress concerning (1)
procedures used by the Cole and other U.S. forces overseas to protect against
terrorist attacks; (2) intelligence collection, analysis, and dissemination as it relates to
potential terrorist attacks; and (3) U.S. anti-terrorism policy and options for U.S.
response if and when perpetrators are discovered.
The issue of possible terrorist use of nuclear, chemical, or biological weapons
in the United States has attracted great attention in Congress, the Executive Branch,
and among the general public. In FY2000, Congress appropriated $1.45 billion for
defense against weapons of mass destruction, and the FY2001 budget request totaled
$1.55 billion, spread among fourteen federal agencies. The primary focus has been
on assisting state and local emergency response personnel, improving civilian medical
surveillance and treatment capabilities, and intensifying pharmaceutical research, to
counter the effects of these agents. Given the rapid increase in funding and the
unusual range of local, state, and federal agencies involved, the issue of effective
interagency coordination remains a significant legislative concern. There is also a
growing number of critics who maintain that the likelihood of such a terrorist attack
is low, and that over-reaction to this threat has led to excessive and indiscriminate
funding. Low-probability threat estimates notwithstanding, the potentially severe
consequences of a nuclear, chemical, or biological attack make it unlikely that
legislative attention will diminish.
On June 5, 2000, the National Commission on Terrorism (N.C.), a
congressionally mandated bipartisan body, issued a report providing a blueprint for
U.S. counter-terrorism policy with both policy and legislative recommendations. It
generally argues for a more aggressive U.S. strategy in combating terrorism. Critics,
however, argue that N.C. conclusions and recommendations ignore competing U.S.
goals and interests; i.e , that a more “aggressive” strategy might lead to the curbing
of individual rights and liberties, damage important commercial interests, and widen
disagreements between the U.S. and its allies over using the “stick” as opposed to the

“carrot” approach in dealing with states that actively support or countenance
The report’s recommendations were the subject of extensive hearings in the 106th
Congress and could stimulate strong congressional interest in counter terrorism policy
in the first session of the 107th Congress. Likely areas of focus include (1) the pros
and cons of a more proactive counter terrorism policy; (2) possible enhancement of
state sanctions policy; and, (3) the coordination of U.S. federal counter terrorism
response. The Administration and Congress are likely to take up further measures to
deter and punish terrorist acts and to reduce U.S. vulnerabilities, particularly to
potential attacks with chemical, biological, or nuclear weapons, that could cause mass
casualties. A review of U.S. policy, organizational mechanisms, and the adequacy of
consultation with Congress is also possible.
CRS Products
National Commission on Terrorism Report: Background and Issues for Congress, by
Raphael Perl, CRS Report RS20598
North Korea: Terrorism List Removal?, by Larry Niksch and Raphael Perl, CRS
Report RL30613
Terrorism: CRS Electronic Briefing Book; available on the CRS Web site at
Terrorism, the Future, and U.S. Policy, by Raphael F. Perl, CRS Issue Brief IB95112
Terrorism: Near Eastern Groups and State Sponsors, by Kenneth B. Katzman, CRS
Report RL30643
Terrorism: U.S. Response to Bombings in Kenya and Tanzania-A New Policy?, by
Raphael F. Perl, CRS Report 98-733
Terrorist Attack on the USS Cole: Issues for Congress, by Raphael Perl and Ronald
O’Rourke, CRS Report RS20721
Regional Issues
Raymond W. Copson, Specialist in International Relations
HIV/AIDS. The HIV/AIDS epidemic in sub-Saharan Africa, which has already
killed nearly 16 million people, will likely be an important concern in the 107thth
Congress, as it was in the 106. Many involved in the struggle against the epidemic
are advocating a “scaling up” of the international response to HIV/AIDS so that HIV
infection rates can be broadly reduced in Africa through prevention programs, as has
already been achieved in Uganda. Many are urging increased support for preventing
mother to child transmission of the disease and for providing care, including care for
orphans. There is also some backing for expanded HIV/AIDS treatment programs,

particularly programs that prolong lives by treating opportunistic infections with
inexpensive medications. It seems probable that some Members of Congress will
advocate measures to assure that the United States is a leader in “scaling up,”
although others may be skeptical of the chances of success against the disease or may
urge that other donors should share more of the burden. In August 2000, the 106th
Congress enacted the Global AIDS and Tuberculosis Relief Act of 2000 (P.L. 106-
264), which authorized increased development assistance spending for HIV/AIDS
programs worldwide. Contributions were also authorized to the International AIDS
Vaccine Initiative (IAVI) and to a proposed AIDS trust fund administered by the
World Bank. Appropriators provided funding for these initiatives, which some
Members and committees will likely monitor in the 107th Congress.
Trade and Development. The 106th Congress enacted the African Growth
and Opportunity Act as part of the Trade and Opportunity Act of 2000 (P.L. 106-

200), in order to promote African economic development through increased trade.

Members who supported this legislation will likely monitor its implementation in
order to assure that Africa benefits from its provisions; and some may advocate
expanding trade benefits for Africa through new legislation. Others will be concerned
with ensuring that new or existing legislation does not harm U.S. business or workers.
As in past Congresses, some may advocate increases in development assistance and
other aid programs for Africa, in view of the region’s serious problems in health,
employment, education, and other sectors. Others will argue that competing
budgetary priorities must constrain aid to Africa and other regions.
Other Issues. Other African topics that might be subjects of hearings and
legislation include the human rights situation in Sudan; peacekeeping and conflict in
several countries, such as Sierra Leone and the Democratic Republic of the Congo
(DRC); and ways to strengthen democratic forces in Nigeria, Zimbabwe, Côte
d’Ivoire, and elsewhere. Allegations that President Charles Taylor of Liberia has
become a source of instability in the West African region could be a source of
concern. As in the 106th Congress, some may support efforts to strengthen control
of the illicit diamond trade, which seems to play a key role in fueling conflicts in West
Africa, the DRC, and Angola.
CRS Products
Africa: U.S. Foreign Assistance Issues, by Raymond W. Copson, CRS Issue Brief
AIDS in Africa, by Raymond W. Copson, CRS Issue Brief IB10050
Congo (formerly Zaire), by Raymond W. Copson, CRS Issue Brief IB96037
Sudan: Humanitarian Crisis, Peace Talks, Terrorism, and U.S. Policy, by Theodros S.
Dagne, CRS Issue Brief IB98043
U.S.-Sub-Saharan Africa Trade and Investment: Programs and Policy Direction, by
Lenore Sek, CRS Report RS20063
Zimbabwe: Current Issues, by Raymond W. Copson, CRS Issue Brief IB10059

Issues concerning U.S.-China relations dominated the Asian policy agenda of the
106th Congress and are likely to do so in the 107th Congress, as well. Underlying this
and other issues related to Asia were a number of ideological and party differences
plus policy struggles with the Administration – many of which are likely to carry overth
into the 107 Congress. Broadly speaking, these differences emanate from four major
developments: (1) the ongoing realignment of security relationships and economic
ties following the end of the Cold War, including the rise of China as an important
regional and economic power that is more open to international trade; (2) the residual
effects of the 1997-1999 Asian financial crisis, as well as Japan’s ongoing economic
and political weaknesses, (3) the unexpectedly rapid pace of change in the Korean
peninsula, which has generated congressional concern and also raised anxiety in the
Northeast Asian region about the future U.S. military role in South Korea and Japan,
as well as broader regional power relationships, and (4) a nuclear arms race between
India and Pakistan.
China. (Shirley A. Kan, Specialist in National Security Policy; Kerry B.
Dumbaugh, Specialist in Asian Affairs; Wayne Morrison, Specialist in
International Trade and Finance; Thomas Lum, Analyst in Asian Affairs)
Long-standing U.S. policy to engage the People’s Republic of China (PRC) politically
and economically may continue to be controversial in Congress. The 106th Congress
enacted legislation in 2000 granting the PRC permanent normal trade relations
(PNTR.), thus providing an end to the rancorous annual debate over China’s trade
status that had continued since 1990. However, the bill also established a new
commission to report annually on the PRC’s human rights record, as well as other
measures designed to improve congressional oversight on U.S. policy toward the
PRC. The 106th Congress also grew increasingly leery of PRC intentions toward
Taiwan. In part, this was due to the island’s watershed presidential election in March
2000, which brought to power Chen Shui-bian, leader of the Democratic Progressive
Party, a party that advocates Taiwan’s independence from China. In February 2000,
PRC leaders issued a new policy statement on Taiwan which some saw as
demonstrating a greater willingness to use force to reunify Taiwan with China. Some
in the 106th Congress came to favor formal efforts to strengthen U.S.-Taiwan relations
in ways sure to antagonize the PRC further, complicating U.S. relations with both
Beijing and Taipei.
The possible accessions of the PRC and Taiwan to the World Tradeth
Organization (WTO) in 2001 are expected to be of major interest to the 107
Congress. P.L. 106-286 grants PNTR status to China once it joins the WTO, as long
as the President certifies in a report to Congress that the terms of PRC’s accession are
at least as favorable as the November 1999 U.S.-China trade agreement. It also
ensures that WTO trade agreements would apply to trade between the United States
and the PRC. Many Members have expressed support for the PRC’s WTO
membership – but under terms that would require it to significantly liberalize its trade
and investment regimes. Additionally, many Members have expressed support for
Taiwan’s WTO membership and have concerns that Beijing might try to block
Taipei’s accession. P.L. 106-286 calls on U.S. trade negotiators to push for a motion
in the WTO General Council to make Taiwan’s WTO entry application the next order

of business following the consideration of the PRC’s application, and to strongly
oppose attempts by any WTO members to block Taiwan’s accession.
Congress may continue to monitor protests in the PRC by Falun Gong
practitioners and demonstrations by laid-off workers that are continuing in 2001.
Rising Internet usage has facilitated communication and information access for a
growing number of PRC citizens. None of these trends, however, is likely to produce
fundamental changes in the political system in the short run. The PNTR bill enacted
in 2000 contains provisions that criticize the PRC government for oppressing Falun
Gong adherents and for denying workers and others basic human rights; it also
authorizes funding to expand Radio Free Asia’s Internet operations.
Finally, the 107th Congress likely will continue to oversee policies to address the
PRC’s challenges to U.S. security interests. Congressional oversight and
investigations, including that by the “Cox Committee,” have covered alleged transfers
of missile technology by U.S. firms in connection with satellite exports and whether
the Justice Department should take further action regarding investigations that began
in 1997. Also, Congress has watched for progress in the counter-espionage probes
into suspected PRC acquisitions of U.S. nuclear weapons and missile secrets.
Congress has increasingly asserted its role in providing for Taiwan’s defense under
the Taiwan Relations Act, including calling for consultations on arms sales and a look
at operational planning, and considering the “Taiwan Security Enhancement Act.”
Congress is expected to continue assessing the PRC’s military strategy and
capabilities, especially the missile buildup. Other issues likely to be considered include
the establishment of the Center for the Study of Chinese Military Affairs (and the
report on its operation due in February 2001); military exchanges subject to
restrictions in the FY2000 National Defense Authorization Act (and the report on
such exchanges); and PRC weapons proliferation (possibly with reconsideration of
legislation like S. 2645, introduced by Senator Thompson in 2000).
CRS Products
China and Falun Gong: Implications and Options for U.S. Policy, by Thomas Lum,
CRS Report RS20333
China -U.S. Relations, by Kerry Dumbaugh, CRS Issue Brief IB98018
China - U.S. Trade Issues, by Wayne Morrison, CRS Issue Brief IB91121
India and Pakistan. (Barbara LePoer, Analyst in Asian Affairs) A major
South Asia issue for the 107th Congress will be reassessment of sanctions imposed
on India and Pakistan following their May 1998 nuclear tests, notably whether the
sanctions should be maintained, eased, or broadened. Despite carrot-and-stick efforts
by Congress and the Administration in 1998 and1999 – which eased some economic
sanctions on the two countries – U.S. nonproliferation efforts in South Asia appear
to be at an impasse. Although both India and Pakistan are under self-imposed nuclear
testing moratoriums, neither has signed the Comprehensive Test Ban Treaty (rejected
by the U.S. Senate in 1999), and both countries are continuing production of fissile
material as well as actively expanding their ballistic missile capability.

Moreover, India-Pakistan relations have continued to deteriorate since the 1998
nuclear tests. In mid-1999, the two countries teetered on the brink of a fourth war.
A military coup in Pakistan in late 1999 appears to have further soured relations.
Clinton Administration policy has centered on thawing the vestiges of Cold War
relations with India, while remaining engaged with former Cold War partner Pakistan.
U.S. relations with Pakistan appear increasingly fragile as a result of political
instability, economic deterioration, and Islamic radical pressure emanating from
neighboring Afghanistan. The 106th Congress has been generally supportive of
Administration initiatives to improve U.S.-India cooperation. President Clinton visited
New Delhi in March 2000, and in September 2000, Prime Minister Atal Bihari
Vajpayee paid a reciprocal state visit to Washington. Administration officials and
congressional leaders continue to press India and Pakistan to return to the negotiating
table and halt their nuclear arms race.
CRS Products
India-Pakistan: Arms Race in South Asia, CRS InfoPack IP5251
India-US Relations, by Barbara Leitch LePoer, CRS Issue Brief IB93097
Indian-Pakistan Nuclear Tests and U.S. Response, Coordinated by Barbara Leitch
LePoer, CRS Report 98-570
Pakistan-US Relations, by Barbara Leitch LePoer, CRS Issue Brief IB94041
Indonesia. (Larry A. Niksch, Specialist in Asian Affairs) Indonesiath
underwent some political changes during the 106 Congress. It lost East Timor when
East Timorese voted for independence in a referendum vote of August 31, 1999, and
United Nations-approved international peacekeepers entered East Timor in October
1999 in response to post-referendum atrocities committed by pro-Indonesia East
Timorese militia. Democratic elections in 1999 appeared to produce a civilian
Indonesian government after more than three decades of authoritarian, military-
backed rule. The new government seemed incapable of containing the escalation of
violence and disorders throughout the country in 2000. The 106th Congress appeared
to indicate support for self-determination for East Timor. H.Res. 292, passed on
September 28, 1999, supported the results of the East Timorese referendum, called
on the Indonesian government to act against the violence of the East Timorese militia,
and supported the international peacekeeping force. Foreign operations
appropriations legislation for fiscal years 2000 (P.L. 106-113) and 2001(P.L. 106-
429) prohibited Indonesian participation in the U.S. International Military Education
and Training (IMET) program and U.S. Foreign Military Financing of U.S. arms sales
to Indonesia. The law provides for resumption of these activities when the President
certifies that the Indonesian government and military have taken judicial action against
East Timorese militia members and Indonesian military personnel responsible for the
post-referendum atrocities and allowed displaced East Timorese in Indonesian West
Timor (over 100,000) to return home. At the end of the 106th Congress, the
Indonesian government and military seemingly had done little to satisfy these
conditions, meaning that the issue possibly could continue into the 107th Congress.

CRS Products
East Timor Crisis: U.S. Policy and Options, by Larry Niksch, CRS Report RS20332
East Timor’s Coming Decision on Autonomy or Independence, by Larry Niksch, CRS
Report RS20256
Indonesian Separatist Movement in Aceh, by Larry Niksch, CRS Report RS20572
Japan. (Richard P. Cronin, Specialist in Asian Affairs) Recent
congressional concerns regarding Japan have centered on allegations of the dumping
of Japanese steel in U.S. markets, the slow progress of deregulation in Japan, and
Tokyo’s inability to revitalize its moribund economy. Other issues of concern to
Congress include court suits by former American civilian prisoners of war seeking
compensation for abuses in Japanese prison camps and forced labor for Japanese
companies, Japan’s decision to expand its whaling activities, and issues in security
cooperation, including the future of U.S. bases in Japan and Japanese participation in
the U.S. Theater Missile Defense (TMD) development program. Partly in response
to a surge in Japanese steel imports, the 106th Congress enacted a provision to the
agriculture appropriations act for FY2001 that requires that antidumping and
countervailing tariff duties be distributed to the affected industries. Given the
apparent slowing of U.S. economic growth in recent months, the 107th Congress can
be expected to give renewed attention to the record U.S.-Japan trade deficit.
Although U.S.-Japan relations remain close, especially at the working level, ties have
been troubled by the inability of a series of unstable coalition governments to reform
the Japanese economy to meet the challenges of economic globalization or to adjust
foreign and defense policy to the realities of a rising China and a possible eventual
reunification of the Korean Peninsula. Japan remains strongly attached to the U.S.-
Japan alliance, but it is also uneasily aware that American perceptions of Japan are in
flux. Meanwhile, younger Japanese leaders from various parties are calling for a more
independent foreign and defense policy within the framework of the alliance.
Opposition is rising in Japan to the cost and inconvenience of hosting U.S. military
bases, and to what the Japanese view as American efforts to dictate the global trade
CRS Products
Japan-U.S. Relations: Issues for Congress, by Richard P. Cronin, CRS Issue Brief
U.S.-Japan Economic Ties: Status and Outlook, by William H. Cooper, CRS Issue
Brief IB97015
U.S. Prisoners of War and Civilian American Citizens Captured and Interned by
Japan in World War II: the Issue of Compensation by Japan, by Gary K.
Reynolds, CRS Report RL30606

Korean Peninsula. (Mark Manyin, Analyst in Asian Affairs) When
dealing with U.S. policy toward the Korean peninsula, the 107th Congress will
primarily be concerned with overseeing U.S.-North Korean relations, which improved
markedly in 2000. Following the dramatic inter-Korean summit meeting in June
2000, the U.S. lifted its trade embargo on North Korea and Secretary of State
Madeleine Albright traveled to Pyongyang. In ongoing bilateral talks, North Korea
is seeking removal from the U.S. list of state sponsors of terrorism, which prevents
U.S. backing of Pyongyang’s membership in international aid organizations. Under
the provisions of the Export Administration Act, Congress could block a Presidential
decision to remove North Korea from the terrorism list. For its part, the United
States is pressing Pyongyang to make permanent its temporary moratorium on missile
programs, to demonstrate a commitment to non-proliferation, and to provide evidence
that it is no longer supporting terrorist groups. If North Korea-U.S. and inter-Korean
relations continue to improve, the 107th Congress is also likely to deal with questions
regarding the size and function of the 37,000 U.S. troops stationed in South Korea.
The 107th Congress also will oversee financial assistance programs to North
Korea, which is the largest recipient of U.S. aid in East Asia. Previous Congresses
tied North Korea-related appropriations to requirements that the President certify
progress in negotiations with Pyongyang. Much of the aid has gone toward the
Korean Peninsula Development Organization (KEDO), the multinational organization
created to implement the obligations assumed by the United States under the October
1994 U.S.-North Korea Agreed Framework. Under the Agreed Framework, the
United States is coordinating the provision to North Korea of two light water nuclear
reactors and 500,000 tons of heavy oil annually, the oil shipments to cease when the
reactors are constructed. In return, North Korea is obligated to suspend the
operations of its nuclear facilities, which the United States believed were for
production of nuclear weapons. Presumably, the next U.S. administration will request
additional aid, if it decides to help South Korea develop North Korea’s economic
infrastructure, and/or to help finance satellite launches (in a third country) for
Pyongyang in return for a North Korean pledge to halt its missile program.
CRS Products
North Korea’s Nuclear Weapons Program, by Larry Niksch, CRS Issue Brief IB91141
North Korea: Terrorism List Removal, by Larry Niksch and Raphael Perl, CRS Report
U.S.-South Korean Relations, by Larry Niksch, CRS Issue Brief IB98045
Vietnam. (See Vietnam Trade Agreement, below)
The Balkans
Steven Woehrel, Specialist in European Affairs
The 106th Congress was faced with dramatic developments in the Balkans. In
1999, NATO conducted a major air campaign against Serbia in response to Serbian
atrocities in Kosovo. After 78 days of bombing, Federal Republic of Yugoslavia

(FRY) leader Slobodan Milosevic pulled his forces out of Kosovo and a NATO-led
peacekeeping force was deployed there. Almost all ethnic Albanians returned to their
homes, but most ethnic Serbs left Kosovo, and the province’s long-term status
remains in doubt. In 2000, elections in Croatia in January-February, the FRY in
September, and Kosovo in October led to the victory of moderates who want close
ties with the West. In Bosnia, where a NATO-led peacekeeping force has been
deployed since 1996, modest progress was made, but a self-sustaining peace is a
distant prospect.
In 1999, the 106th Congress debated whether U.S. and NATO air strikes in
Kosovo were in the U.S. national interest, and whether the President could undertake
them without congressional approval. In the end, Congress neither explicitly approved
nor blocked the air strikes, but after the fact, appropriated funds for the air campaign
and the U.S. peacekeeping deployment in Kosovo. In 2000, Members unsuccessfully
attempted to condition the U.S. military deployment in Kosovo on congressional
approval and on the implementation of aid pledges made by European countries.
The 106th Congress provided funding for reconstruction in Bosnia and Kosovo
(limiting aid to Kosovo to 15% of the total amount pledged by all countries), aid for
the pro-Western governments in Croatia and Montenegro. (Montenegro is part of the
FRY with Serbia, but its leadership was in opposition to Milosevic.) The 106th
Congress prohibited aid to Serbia while Milosevic was in power, with the exception
of humanitarian and democratization aid. However, after Milosevic’s fall in October
2000, the conference committee on the FY2001 foreign operations appropriation bill
(H.R. 4811), inserted language allowing up to $100 million in aid for Serbia. The bill
adds the condition that no funds can be spent after March 31, 2001 unless the
President certifies that the new government in Serbia cooperates with the war crimes
tribunal, implements its obligations under the Bosnia peace accord, and respects
minority rights and the rule of law.
In its first session, the 107th Congress will consider how much aid to provide for
the reconstruction of Serbia, Kosovo and other countries in the region, and how the
burden should be shared with European countries. It will also establish the conditions
under which that aid should be given, including how strongly to condition aid to
Serbia on cooperation with the war crimes tribunal. Another important issue will be
continuing U.S. troop deployments in the Balkans. Members skeptical of what they
view as an open-ended U.S. military deployment to the Balkans may attempt to set
conditions, deadlines or other restrictions on them. Bush Administration officials
have said that they are reviewing U.S. military commitments worldwide, including in
the Balkans, to see whether reductions can be made. They have stressed that they will
not act precipitately and will consult with U.S. allies in Europe during the review.

CRS Products
Kosovo and U.S. Policy, by Steven Woehrel and Julie Kim, CRS Issue Brief IB98041
Kosovo: Reconstruction and Development Assistance, by Curt Tarnoff, CRS Report
Kosovo: U.S. and Allied Military Operations, by Steven R. Bowman, CRS Issue Brief
Serbia and Montenegro: Current Situation and U.S. Policy, by Steven Woehrel, CRS
Report RL30453
Latin America
Maureen Taft-Morales, Analyst in Latin American Affairs
The 107th Congress is likely to be concerned about three principal areas
regarding Latin America: the stability of the fragile democracies in the region,
cooperation on counter-narcotics efforts, and trade issues. Latin America has made
enormous strides in recent years in democratization, with all but Cuba led by elected
heads of state. Recently, however, tensions in various countries have pointed out
how fragile many of these democracies are. Their weak government institutions are
ill-equipped to deal with challenges to their further development, such as strong, often
autocratic presidents; violent guerrilla conflicts; militaries still uncomfortable with
civilian rule; illegal narcotics trafficking and its corrupting influence; and difficulty in
promoting economic development in the face of widespread poverty and highly
skewed income distributions.
With regard to democracy, Mexico is one country that made great strides in
terms of democratic elections. The party that has ruled Mexico for 71 years lost the
presidential elections in July 2000. The head of the Alliance for Change, Vicente Fox,
took office as President on December 1, 2000. In addition to continued
encouragement of Mexico’s efforts to expand political and human rights, Congress
will monitor trade relations between the two countries under the North American Free
Trade Agreement (NAFTA), and continue to push for greater cooperation on counter
narcotics efforts.
The 107th Congress will continue to conduct oversight on assistance to the
region, and on the implementation of existing restrictions. The new Congress may
debate new conditions or prohibitions on aid to countries such as Peru and Haiti,
where elections have been found to be unfair, and new presidents are assuming office.
For example, former President Jean-Bertrand Aristide was elected again in November
2000 and inaugurated February 7, 2001 in Haiti; and new presidential elections are
scheduled for April 2001 in Peru following the sudden resignation of President
Alberto Fujimori.
Cooperation in counter narcotics efforts is a major issue for Congress in relations
with many Latin American nations, especially Colombia. Having passed the Colombia
Plan, a $1.3 billion counter narcotics package in 2000, Congress will monitor its

implementation and continue to debate whether and how to support Colombia’s
government in its struggle against increasingly powerful guerrilla movements.
Although its assistance to the Colombian military was highly controversial, the plan
as passed by Congress (as part of an emergency supplemental appropriations bill, P.L.
106-246) more than tripled the amount requested for a broad range of human rights
programs, and increased funding for judicial reform and other programs intended to
support the peace process and to strengthen democratic governance in Colombia, with
conferees “...recognizing that protecting human rights and rule of law are central to
the overall goals of Plan Colombia.” Reflecting a concern for regional stability and
a regional approach to counter narcotics efforts, Congress more than doubled the
requested assistance to other countries in the region for counter narcotics activities.
In the area of trade, several issues are likely to be of concern to the new
Congress. The Andean Trade Preference Act is due to expire December 4, 2001.
The 107th Congress will consider the Andean countries’ request to extend the
program, which grants them preferential tariff benefits, and to add Venezuela as a
beneficiary country. A form of NAFTA parity for the Caribbean Basin Initiative
beneficiaries finally passed in the 106th Congress; it will be up to the new Congress
to monitor implementation of the U.S.-Caribbean Basin Trade Partnership Act (P.L.
106-200). The 107th Congress may also monitor ongoing efforts to negotiate a free
trade agreement with Chile, and consider whether to grant the new Administration
fast-track negotiating authority to create a Free Trade Area of the Americas. (See
Trade and Finance, see below)
The 106th Congress passed legislation allowing the sale of agricultural and
medical products to Cuba as part of the FY2001 Agriculture appropriations bill (P.L.
106-387). The bill also placed severe constraints on such sales, however, permanently
prohibiting private financing of agricultural exports to Cuba by U.S. banks or by state
and local governments. Therefore, licensed sales may only occur if Cuba pays in
advance, or if financed by a third country bank. The bill also codified existing
embargo regulations by prohibiting the import of merchandise from Cuba, and travel
for tourism to Cuba. The highly contentious debate over how best to pressure Cuba
to enact democratic and economic reforms is likely to continue in the 107th Congress.
(See Sanctions, above and Cuba, below.)

CRS Products
Colombia: U.S. Assistance and Current Legislation, by Nina Maria Serafino, CRS
Report RL30541
Cuba: Issues for Congress, by Mark P. Sullivan and Maureen Taft-Morales, CRS Report
Cuba Sanctions, CRS Electronic Briefing Book on Trade, available on the CRS Web site
at []
Haiti: Issues for Congress, by Maureen E. Taft-Morales, CRS Issue Brief IB96019
Mexico-U.S. Relations: Issues for Congress, by K. Larry Storrs, CRS Issue Brief
Peruvian Elections in 2000: Congressional Concerns and Policy Approaches, by
Maureen Taft-Morales, CRS Report RS20536
Trade and the Americas, by Raymond J. Ahearn, CRS Issue Brief IB95017
The Middle East
Peace Process. (Alfred B. Prados, Specialist in Middle East Affairs) The
Clinton Administration failed in its efforts to resolve the long-standing Arab-Israeli
conflict. Agreements brokered by President Clinton at Wye River, Maryland in
October 1998 and Sharm al-Shaykh, Egypt in September 1999 resulted in further
Israeli-Palestinian agreements on security measures and phased Israeli withdrawals
from portions of the occupied West Bank. At another conference hosted by President
Clinton at Camp David in July 2000, however, the two sides were unable to resolve
permanent status issues dealing with Palestinian statehood, Israeli-Palestinian borders,
disposition of Palestinian refugees, Jewish settlements in the West Bank and Gaza,
water resources, and Jerusalem. A series of Palestinian-Israeli clashes that began in
late September have further jeopardized the peace talks and fueled anti-Israeli and
anti-U.S. sentiment in the Arab world. Meanwhile, Syrian-Israeli talks, briefly
resumed in December 1999, quickly broke down over questions of Israeli withdrawal
from the occupied Golan Heights. In a nearby area, Israel withdrew unilaterally from
southern Lebanon in May 2000, but some unrest continues on the Israeli-Lebanese
border. All sides await the policies of a new Israeli government under Ariel Sharon,
elected on February 6, 2001.
Congress has continued to appropriate annual foreign aid for Israel, Egypt,
Jordan, and other Middle East entities, while attaching conditions regarding
Palestinian compliance with Israeli-Palestinian agreements. In addition, in February
1999, the President requested $1.2 billion for Israel, $400 million for the West
Bank/Gaza, and $300 million for Jordan to help implement terms of the Wye River
agreement. Of this amount, Congress appropriated $100 million for Jordan under
FY1999 supplemental legislation (P.L. 106-31) and the remaining amounts under
H.R. 3422, the Foreign Operations Appropriations Act for FY2000, which was

passed by reference in P.L. 106-113. Congress also added $25 million for Egypt to
the Wye River funding contained in H.R. 3422 (P.L. 106-113). Congress did not act
on a November 14, 2000 Clinton request for $1.25 billion for Israel, Egypt, Jordan,
and the Palestinians for FY2001 and FY2002.
Should Arab-Israeli negotiations resume, the new Administration might request
additional funding from Congress to help negotiating parties deal with issues of
security and economic stability. For example, Israeli officials have said they might
need multibillion dollar aid grants in the event of a withdrawal from occupied
territories, to cover enhanced security measures and relocation of Jewish settlers in
the West Bank region and Gaza. On the other hand, if the stalemate continues and
tensions increase, unilateral Palestinian steps such as a declaration of statehood would
be likely to prompt initiatives in Congress to ban or restrict aid to Palestinians. In a
related area, Congress is likely to reconsider the U.S.-Jordan Free Trade Agreement,
signed on October 24, 2000 (discussed below).
CRS Products
Israel: U.S. Foreign Assistance, by Clyde R. Mark, CRS Issue Brief IB85066
The Middle East Peace Talks, by Carol Migdalovitz, CRS Issue Brief IB91137
Palestinians and Middle East Peace: Issues for the United States, by Clyde R. Mark,
CRS Issue Brief IB92052
Syria: U.S. Relations and Bilateral Issues, by Alfred B. Prados, CRS Issue Brief IB92075
U.S.- Jordan Free Trade Agreement, by Joshua Ruebner, CRS Report RL30652
Persian Gulf Issues. (Alfred B. Prados, Specialist in Middle East Affairs)
From early indications, it appears the Bush Administration will continue efforts to
enforce economic sanctions against Iraq, contain potential threats from Iran, and
shore up the defensive capabilities of friendly Gulf states. Approximately 25,000 U.S.
military personnel are stationed in the Gulf region to enforce no-fly zones over Iraq,
conduct maritime interception of banned goods to or from Iraq, engage in combined
training activities with Gulf states, supervise prepositioned U.S. military equipment,
and deter threatening moves by Iraq or Iran. Support for sanctions against Iraq has
begun to erode among Arab and some European countries, and the bombing on
October 12, 2000 of a U.S. Navy ship while refueling at the port of Aden in Yemen
underscores the threat posed by terrorist groups to U.S. military personnel and
facilities in the region. Iran, despite a more moderate administration and parliament,
continues to oppose the Arab-Israeli peace process, support terrorist groups, and
develop missile capabilities that could threaten U.S. allies and interests.
In April 1999, the Administration agreed to license sales of food and medical
items on a case by case basis to Iran and other countries affected by a unilateral U.S.
trade ban. Congress included a provision in the conference report on H.R. 4461 (P.L.
106-387, the Agriculture Appropriations Act for FY2001), to authorize credit for
such sales, although Members generally oppose unilateral relaxation of sanctions until

Iran alters its behavior. Regarding Iraq, Congress has included approximately $1.1
billion in FY2001 defense appropriations (P.L. 106-259) to contain Iraq and carry
out related missions. The Foreign Operations Appropriations for FY2001, P.L. 106-
429, contains $25 million to support activities by the Iraqi National Congress, an
umbrella organization of groups opposed to the Iraqi regime, including the
distribution of humanitarian aid inside Iraq. Of these funds, $2 million is to be
devoted to support indictment of Iraqi President Saddam Hussein as a war criminal.
Congress, which has already held hearings on the explosion involving the U.S.S.
Cole, may further scrutinize issues relating to the deployment of U.S. forces in the
Persian Gulf and the nature of bilateral security arrangements with countries in the
region. Depending on the future direction of Iranian regional policies, steps by a
future administration to loosen trade restrictions against Iran or remove it from the
terrorism list would prompt congressional scrutiny and possible legislation to reverse
such action. With the continued erosion of international support for sanctions against
Iraq, possible moves in the U.N. Security Council to alter these sanctions could lead
to congressional debate and, possibly, to legislation calling on the Administration to
oppose such initiatives.
CRS Products
Iran: Current Developments and U.S. Policy, by Kenneth B. Katzman, CRS Issue Brief
Iraqi Compliance with Cease-Fire Agreements, by Kenneth B. Katzman, CRS Issue Brief
The Persian Gulf: Issues for U.S. Policy, 2000, by Kenneth B. Katzman, CRS Report
Stuart D. Goldman, Specialist in Russian Affairs; Jim Nichol, Analyst in
Foreign Affairs; Curt Tarnoff, Specialist in Foreign Affairs
There were a number of developments in Russia and issues in U.S.-Russianthth
relations that engaged the 106 Congress and are likely to be considered by the 107.
Vladimir Putin, who was catapulted into the Kremlin following Boris Yeltsin’s
resignation, was elected President in March 2000 by a solid majority that embraced
his military campaign in Chechnya. The economic upturn that began in late 1999 is
continuing: the GDP and domestic investment are growing after a decade-long
decline, inflation is contained, the budget is balanced, and the ruble is stable. Major
problems remain: 40% of the population lives below the official poverty line, foreign
investment is very low, crime, corruption, capital flight, and unemployment remain
high. Russian foreign policy has become more assertive and anti-American, fueled in
part by frustration over the gap between Russia’s self-image as a world power and its
greatly diminished capabilities and by clashes with Washington over Kosovo, Iraq,
NATO enlargement, and Russian missile technology and nuclear reactor transfers to
Iran, among other issues. The military is in turmoil after years of severe force
reductions and budget cuts. Weapons procurement, readiness, training, morale, and

discipline are down sharply. Putin’s government increased defense spending
substantially in 2000. The Putin regime appears to be trying simultaneously to assert
more authoritarian political control, introduce some economic reforms, get generous
debt forgiveness, and strengthen the military – a problematic mix.
The Russian parliament approved the ratification of the START II Treaty in
April 2000. Russia will not, however, allow START II to enter into force until the
United States approves agreements signed in 1997 that would extend the elimination
period in START II and clarify the 1972 ABM Treaty. Moscow also says it may
withdraw from the START II Treaty if the United States withdraws from the ABM
Treaty. This responds to U.S. interest in modifying the ABM Treaty to deploy a
limited National Missile Defense (NMD) system. The Clinton Administration has not
submitted the 1997 agreements to the Senate for its advice and consent to ratification,
in part out of concern that the Senate could reject them because many Members
strongly oppose the ABM Treaty. In the future, the United States and Russia could
continue to negotiate arms control treaties, reduce their forces through informal
agreements, or forgo coordinated arms control and size their forces according to their
own economic and security interests. If the United States continues to pursue a
limited NMD, Russia, too, may pursue alternatives to the formal arms control process
as well as countermeasures to NMD. Action on these issues is likely to await the next
Administration and Congress.
In September 1999, Russia invaded its breakaway republic of Chechnya to halt
what it claimed was widening brigandage and terrorism. Russia’s offensive has been
characterized by many human rights abuses, including indiscriminate bombing that has
led to thousands of civilian casualties and over 200,000 displaced persons. The 106th
Congress publicized and condemned these abuses and urged the Administration to
strongly press diplomatic and other efforts to convince Russia to open peace talks and
to investigate alleged atrocities committed by its troops (H.Con.Res. 206; S.Res. 223;
S.Res. 262; S.Amdt. 3280 to H.R. 4576). Although Russia declared by mid-2000 that
it had re-occupied Chechnya and suppressed organized military resistance, human
rights abuses by Russian forces and attacks by Chechen guerrillas against them have
The on-going conflict and devastation of the region make most displaced persons
reluctant to return, threatening them with added suffering this winter. Foreign
Operations Appropriations for FY2001 (P.L. 106-429) withholds 60% of planned
funding for Russia until the President determines and certifies in writing that Russia
is cooperating with international efforts to investigate alleged war crimes in Chechnya,
is providing full access to Chechnya for humanitarian aid, and is pulling its weaponry
out of Chechnya in accordance with limits set by the Conventional Armed Forces in
Europe Treaty. It also calls for the obligation of not less that $10 million for
humanitarian aid to displaced Chechens.
During the past decade, the United States has allocated almost $3 billion in
economic assistance to facilitate the transition of Russia to a democratic system and
free market economy. Although most of the aid in recent years has been directed at
developing private sector business and the growth of civil society, the 106th Congress
sought to influence Russia’s actions and make its own policy views known to the
Administration by conditioning aid targeted to the government of Russia. The sale

of nuclear reactor technology to Iran and possible discrimination against religious
minorities were just two of the concerns on which Congress conditioned aid to Russia
during the 106th Congress. During the election campaign, Republican congressional
criticism of the Administration’s implementation of the aid program grew. The 107th
Congress is likely to conduct extensive oversight and review of the Russia aid
program and continue to use aid to influence Russian behavior.
CRS Products
Arms Control after START II: Next Steps on the U.S.-Russian Agenda, by Amy F. Woolf
and Stuart D. Goldman, CRS Report RL30660
The Former Soviet Union and U.S. Foreign Assistance, by Curt Tarnoff, CRS Issue Brief
Russia, by Stuart D. Goldman, CRS Issue Brief IB92089
U.S.-Russia Moscow Summit, June 3-5, 2000: outcome and implications, by James P.
Nichol, CRS Report RS20604
Trade and Finance
Patricia A. Wertman, Specialist in International Trade and Finance
Globalization, as defined by the growing integration of the world economy, has
been accelerating and deepening ever since a more open global trading and financial
system was established following World War II. This postwar system helped raise
economic growth and incomes worldwide. However, changes in the level and
composition of trade and investment flows also create winners and losers as
technologies, industries, and employment opportunities rise and fall in their wake.
With the U.S. trade deficit at an unprecedented level, the United States is now more
open and, thus, more sensitive to shifts in the world economy. In this context, the
107th Congress faces a variety of trade issues – multilateral and bilateral – that are
complex and, often, politically sensitive. In addition, the financial crises of the 1990s
demonstrated that the United States is not immune to the effects of abrupt shifts in
international financial flows. Reform of the International Monetary Fund (IMF) and
of the architecture of the international financial system are, therefore, also important
Export-related Issues
Export Administration Act Renewal. (Ian F. Fergusson, Analyst in
International Trade and Finance) In the 107th Congress, there will be continued
efforts to rewrite The Export Administration Act of 1979 (EAA79). Efforts to
reauthorize the Act, which regulates the export of dual-use goods and technologies,
have been affected by the continuing tension between national security and
commercial concerns. Since the last expiration of EAA79 in 1994, dual-use export
controls on sensitive goods and technology have been continued and modified by the

President, acting under the authority of the International Emergency Economic
Powers Act. During the 106th Congress, legislation was crafted by the Senate Banking
Committee to rewrite and update EAA79. The Committee held hearings on S.1712,
the Export Administration Act of 1999; it was reported out unanimously in September
1999, but holds were placed on the measure by Senators concerned with national
security aspects of the legislation. Late in the 106th Congress, the Export
Administration Modification and Clarification Act (P.L. 106-508), a measure to
reauthorize and extend EAA79 for one year, was signed into law on November 13,
2000. In the 107th Congress, the Export Administration Act of 2001 (S. 149) was
introduced on January 23, 2001 to rewrite and modernize EAA79. Key issues in the
debate will be the impact of export controls on national security, non-proliferation,
foreign policy objectives and industrial competitiveness; the controllability of
technology; the prospects of multilateral cooperation from our allies; and the most
efficient administrative mechanism to reconcile these different interests.
CRS Products
Encryption Export Controls, by Jeanne Grimmett, CRS Report RL30273
The Export Administration Act: Prospects and Controversy, by Ian F. Fergusson, CRS
Report RL30689
Export Administration Act of 1979 Reauthorization, by Craig Elwell, Jeanne
Grimmett, and Robert Shuey, CRS Report RL30169
Export Controls: An Analysis of Economic Costs, by Craig Elwell, CRS Report
Export-Import Bank Reauthorization. (James K. Jackson, Specialist
in International Trade and Finance) The Export-Import Bank is the chief U.S.
government agency that helps finance American exports. With a budget of nearly $1
billion, the Bank finances around 5% of U.S. exports a year. Eximbank’s main
activity is to provide guarantees and insurance to commercial banks to make trade
credits available to U.S. exporters. Such government-sponsored trade financing,
however, has long been controversial. Eximbank supporters maintain that the Bank’s
programs are necessary for U.S. exporters to compete with foreign subsidized export
financing and also to pressure foreign governments to eliminate concessionary
financing. Eximbank opponents, however, argue that the Bank’s programs serve only
to aid rich multinational firms and that its activities draw from financial resources
within the economy that would be available for other uses. Congress will be faced
with reauthorizing the Bank’s programs before September 30, 2001, which could
spark debate over not only the Bank’s programs, but broader U.S. trade issues as
well, such as the U.S. trade deficit, export promotion, and “corporate welfare.”
CRS Products
Export-Import Bank: Background and Legislative Issues, by James K. Jackson, CRS
Report 98-568

Foreign Sales Corporation. (David L. Brumbaugh, Specialist in Public
Finance) The Foreign Sales Corporation (FSC) provisions of the U.S. tax code
permit U.S. firms to exempt between 15% and 30% of export income from taxation.
In 1998, however, the European Union (EU) complained to the World Trade
Organization (WTO) that FSC is an export subsidy and so violates the agreements on
which the WTO is based. A WTO panel subsequently supported the EU. Under
WTO procedures, the FSC provisions were required to comply with the WTO
agreements by November 1, 2000, or the United States might face compensatory
damages or retaliatory measures. In November, Congress approved H.R. 4986,
which replaces the FSC provision with an export tax benefit intended to achieve WTO
compliance. However, the EU has stated that it does not believe the new provisions
to be WTO-compatible. It has asked the WTO to rule on the matter and to authorize
retaliatory tariffs if the replacement is not WTO-compatible.
CRS Products
The Export Tax Benefits and the WTO: Foreign Sales Corporations (FSCS) and the
Extraterritorial (ET) Replacement Provisions, by David L. Brumbaugh, CRS Report
The Foreign Sales Corporation (FSC) Tax Benefit for Exporting: WTO Issues and an
Economic Analysis, by David L. Brumbaugh, CRS Report RL30684
Import-related Issues
Andean Trade Preference Act (ATPA). (J.F. Hornbeck, Specialist in
International Trade and Finance) The Andean Trade Preference Act (ATPA) was
signed into law in December 1991, allowing tariff reductions on selected products
from four Andean nations: Bolivia, Colombia, Ecuador, and Peru. The purpose of the
Act is to improve access of these countries’ exports to U.S. markets, thereby
encouraging Andean workers to redirect their economic efforts away from illicit coca
cultivation and cocaine production toward legal products such as cut flowers, fish,
metals and related goods. The ATPA will expire in December 2001 and the
congressional debate over whether to extend ATPA trade preferences will likely focus
on two overriding issues: 1) its effects on the U.S. economy; and 2) the extent to
which the act’s provisions can be linked to decreased drug related economic activity
and economic diversification and growth in the Andean countries. (See Latin
America, above)
Cuba. (Ian F. Fergusson, Analyst in International Trade and Finance)
U.S. policy toward Cuba during the 107th Congress is likely again to focus on the
process of economic and political reform. Advocates of the continuation of the
economic embargo and political isolation of the regime maintain that constant
pressure on the Cuban government is necessary to achieve reforms. Others argue that
the embargo has failed, and that the economic sanctions have hurt the Cuban people
and diplomatically isolated the United States without affecting the government. The
106th Congress lifted license requirements for food and medicine to Cuba and other
nations on the list of terrorist entities in the FY2001 Agriculture Appropriation (P.L.

106-387). Purchases of U.S. food and medicine cannot be financed by U.S. banking
institutions under the bill, but third country financing of these purchases are permitted.
Also in the agriculture bill, new restrictions were placed on travel to Cuba.
Legislation likely to be introduced in the 107th Congress may continue to reflect
interest in the economic embargo, including such issues as domestic financing for food
and medicine purchases and travel policies. Other legislation may be proposed to
tighten provisions of the embargo or to lift the embargo entirely. (See sections on
Sanctions, above)
CRS Products
Cuba: Issues for Congress, by Mark P. Sullivan and Maureen Taft-Morales, CRS
Report RL30628
Cuba: An Economic Primer, by Ian Fergusson, CRS Report RL30837
Cuba Sanctions, CRS Electronic Briefing Book on Trade, available on the CRS Web
site at []
Cuba: U.S. Restrictions on Travel and Legislative Initiatives in the 106th Congress, by
Mark P. Sullivan, CRS Report RS20409
International Monetary Fund Reform. (J.F. Hornbeck, Specialist in
International Trade and Finance) In the fall of 1998, the 105th Congress passed
the Omnibus Consolidated and Emergency Supplemental Appropriations Act for
FY1999 (H.R. 4328, P.L. 105-277) in which it increased the U.S. quota of the
International Monetary Fund (IMF) and made a commitment to the New
Arrangements to Borrow (NAB). Given the financial crises in Asia, Russia, and
Brazil, increasing the IMF’s resources was a controversial issue. Many observers
questioned its ability to support international financial stability and doubted the
wisdom of traditional IMF responses to financial crises, particularly IMF
conditionality, or the economic policies it requires of borrowing countries. Congress
created the International Financial Institutions Advisory Commission (the Meltzer
Commission) to evaluate and recommend future U.S. policy toward the global
financial institutions, particularly the IMF. (See International Financial Institutions,
above) The Commission released its final report on March 8, 2000, calling for
clarification of IMF’s mission and operations, enhanced transparency, greater private
sector participation in crisis resolution, deep structural reform of developing country
financial systems, and in particular, restricting lending to very short-term liquidity
needs. How the IMF proceeds to reform internal policies and lending practices likelyth
will be monitored closely by the 107 Congress.

CRS Products
IMF and World Bank Activities in Russia and Asia: Some Conflicting Perspectives,
coordinated by Jonathan E. Sanford, CRS Report RL30467
IMF Reform and the International Financial Institutions Advisory Commission, by J.
F. Hornbeck, CRS Report RL30635
The International Monetary Fund: An Overview of Its Mission and Operations, by J.
F. Hornbeck, CRS Report RL30575
Renewing the Generalized System of Preferences. (Vladimir N.
Pregelj, Specialist in International Trade and Finance) The generalized system
of preferences (GSP), authorizing duty-free importation of most products from less
developed countries (LDCs), with enhanced preferences for least-developed
developing countries (LDDCs), is slated to expire on October 1, 2001, and will
require legislative extension and, if deemed appropriate, some modifications. The
GSP covers 146 LDCs, 39 of them LDDCs, and resulted in 1999 in duty-free imports
amounting to $13,681.0 million, accounting for 10.3% of total imports from the
countries involved and 1.3% of all U.S. imports.
The 107th Congress may also wish to deal with legislation, introduced but not
considered in the 106th Congress, designating Northern Ireland and northern border
counties of the Irish Republic as beneficiary countries of the GSP, and with a measure
providing preferential treatment to countries of Southeast Europe, under a program
closely patterned after the Andean preference.
CRS Products
Generalized System of Preferences, by William H. Cooper, CRS Report 97-389
Generalized System of Preferences, CRS Electronic Trade Briefing Book, available on
the CRS Web site []
Trade Adjustment Assistance (TAA) Renewal. (Mary Jane Bolle,
Specialist in International Trade) Three “Trade Adjustment Assistance” programs
offer either extended unemployment compensation and training benefits to workers,
or technical assistance to firms adversely affected by trade. All three programs were
reauthorized through FY2001 by the Consolidated Appropriations Act, P.L. 106-113,
and will need to be reauthorized by September 30, 2001. The 107th Congress may
consider whether to combine two programs and extend eligibility, so that workers are
eligible for assistance after they lose their jobs because their plant relocates to any
country. Currently only the NAFTA Transitional Adjustment Assistance Program,
(NAFTA-TAAP) offers benefits to workers whose plants relocate – but only if the
plants relocate to Mexico or Canada. Under both NAFTA-TAAP and the original
Trade Adjustment Assistance (TAA) program, workers are eligible for benefits if
imports “contribute importantly” to their job loss. The Administration estimates that

combining the two programs and extending eligibility (plus increasing the spending
cap for training) would add $39 million, or an extra 9% to the projected $415 million
funding for the two programs for FY2001. In 1999, TAA and NAFTA-TAA together
paid unemployment compensation benefits averaging $6632 to 38,000 recipients, and
training benefits averaging $3,133 to 30,000 recipients. The Trade Adjustment
Assistance Program for Firms assisted about 118 businesses in developing and
implementing “recovery strategies” at an average cost of $61,000 per firm.
CRS Products
Trade Adjustment Assistance for Firms, by J.F. Hornbeck, CRS Report RS20210
Trade Remedy Reform. (William H. Cooper, Specialist in International
Trade and Finance) The 106th Congress considered a number of bills that would
have amended U.S. trade remedy programs for U.S. industries injured or threatened
by injury from unfairly or fairly traded imports. The programs authorize remedies in
the form of temporary high tariffs or other measures. A number of bills were
responses to the U.S. steel industry’s concerns about surges in steel imports in 1998
and 1999 and what industry representatives considered to be the failure of U.S. trade
remedy programs to respond adequately to injurious import surges. The 106th
Congress did pass legislation (P.L. 106-387, the Agriculture Appropriations Bill) to
require countervailing and antidumping duties to be distributed to firms injured by
these trade practices. However, the steel industry has indicated that trade remedy
reform needs to go further, and it will probably continue to press Congress for
additional reforms of U.S. trade remedy statutes during the 107th Congress.
CRS Products
Trade Remedy Law Reform in the 106th Congress, by William H. Cooper, CRS Report
Negotiations and Agreements
Bilateral and Regional Free Trade Agreements. (William H. Cooper,
Specialist in International Trade and Finance) Free trade agreements (FTAs) are
arrangements between or among countries that eliminate tariffs and other barriers to
mutual trade. They require congressional approval before going into effect. The
United States has forged several bilateral and regional FTAs, the largest being the
North American Free Trade Agreement (NAFTA) with Canada and Mexico. The
United States also has an agreement with Israel that includes trade with the West
Bank and Gaza. In June 2000, the United States and Jordan began negotiations to
form an FTA, a proposed arrangement that seems to have attracted broad support in
the Congress. The agreement was completed and signed by President Clinton and
King Abdullah on October 24, 2000. But legislation enacting the agreement must
await the next Congress and is expected to be introduced early in the 107th Congress.
On November 16, President Clinton and Singapore Prime Minister Goh Chok Tong
announced that the United States and Singapore would begin negotiations to establish

a FTA. Discussions, but not formal negotiations, have taken place between U.S. and
Chilean officials over establishing an FTA, and some members of Congress have
suggested that the United States should negotiate FTAs with other countries,
including Australia, and New Zealand, and other countries of the Pacific region.
CRS Products
U.S.- Jordan Free Trade Agreement, by Joshua Ruebner, CRS Report RL30652
Fast-Track Negotiating Authority. (Lenore Sek, Specialist in
International Trade and Finance) Fast-track negotiating authority provides that,
if the President consults with Congress during negotiation of trade agreements and
notifies Congress before entering into agreements, Congress will consider and vote
on legislation needed to implement the agreements expeditiously, with limited debate,
and no amendment. This authority was granted several times in the past for major
trade negotiations, but it has expired. No major action to renew the authority was
taken during the 106th Congress, but congressional leaders have said that fast-track
renewal will be one of the leading trade issues in the 107th Congress. The debate over
renewal is expected to include discussion of the role of Congress in trade policy and
whether or not to include labor and environment standards as objectives in trade
CRS Products
Fast Track Negotiating Authority, CRS Electronic Trade Briefing Book, available on
the CRS Web site at [ brbk/html/ebtra9.html].
A Free Trade Area of the Americas (FTAA). (J.F. Hornbeck, Specialist
in International Trade and Finance) At the second Summit of the Americas, which
took place April 18-19, 1998, in Santiago, Chile, 34 Western Hemisphere nations
formally initiated negotiations to create a Free Trade Area of the Americas (FTAA)
by the year 2005. The goal is to establish an agreement that would reduce barriers
to trade region wide, allowing all countries to trade and invest with each other under
the same rules. Nine FTAA working groups are in the process of drafting the text.
A key U.S. challenge involves crafting an agreement that will promote stability and
development in Latin America and also respond to the diverse political and economic
interests of the United States. The FTAA will be a central focus of debate on
hemispheric integration at the upcoming Summit of the Americas scheduled for April
20-22, 2001 in Quebec City, Canada. Because it is a multilateral agreement and
therefore inherently more complicated to negotiate than bilateral agreements, it may
also be closely tied to any future congressional debate over the need for fast-track
trade negotiation legislation.

CRS Products
A Free Trade Area of the Americas: Toward Integrating Regional Trade Policies, by
J.F. Hornbeck, CRS Report 97-762
Trade and the Americas, by Raymond J. Ahearn, CRS Issue Brief IB95017
U.S.-Latin American Trade: Recent Trends, by J. F. Hornbeck, CRS Report 98-840
Vietnam Trade Agreement. (Vladimir N. Pregelj, Specialist in
International Trade and Finance; Mark Manyin, Analyst in Asian Affairs) In
U.S.-Vietnam relations, the primary concern of the 107th Congress will likely be the
U.S.-Vietnam bilateral trade agreement (BTA) which was signed on July 13, 2000.
The agreement provides for the restoration of reciprocal “normal trade relations,”
other bilateral trade-regulating measures as required by law, and comprehensive
additional commitments by Vietnam in the areas of market access, intellectual
property rights, trade in services, and investment. The agreement can enter into force
only if - upon being submitted by the President - it is approved by a joint resolution
of Congress. The language of the resolution is prescribed by law and is to be enacted
by a specific fast-track procedure, applicable to the approval of trade agreements
reinstating NTR on a conditional basis to non-market economy countries. The
procedures involve prescribed, nonamendable operative language, with deadlines for
each legislative stage. After legislative approval (and approval by Vietnam’s National
Assembly), the agreement enters into force by Presidential proclamation and exchange
of notes of acceptance by the parties. Arguments in the congressional debate over the
BTA are likely to focus on Vietnam’s economic and political democratization, human
rights situation, and cooperation in resolving the POW/MIA problem.
CRS Products
Most-Favored-Nation (Normal-Trade-Relations) Policy of the United States, by Vladimir
N. Pregelj, CRS Issue Brief IB93107
Vietnam Trade Agreement: Approval and Implementing Procedure, by Vladimir N.
Pregelj, CRS Report RS20717
The Vietnam-U.S. Bilateral Trade Agreement, by Mark Manyin, CRS Report RL30416
The Vietnam-U.S. Normalization Process, by Mark Manyin, CRS Issue Brief IB98033

Defense Policy
Stephen Daggett, Specialist in National Defense
Congress debates defense policy every year initially in action on defense spending
in the annual congressional budget resolution and, later, when it considers defense
authorization and appropriations bills. Because military readiness was a major issue
in the presidential election campaign, the debate over defense spending may be
particularly significant early in the 107th Congress. Although the military service
chiefs have called for substantial increases in defense spending over the next few
years, congressional action on the defense budget will inevitably be shaped by
competing demands, including tax cuts, Medicare drug benefits, education, and other
priorities. Missile defense may also be on the agenda very early in the 107th Congress
because President Clinton deferred a formal decision on initial deployment of a
nationwide defense in Alaska. The U.S. role in peacekeeping operations in the
Balkans was also a campaign issue, and it raises a number of broader questions,
including relations with allies, and under what circumstances the United States should
be willing to commit its military forces to action in the future. A key defense policy
issue is how to balance funding for short-term readiness, weapons modernization, and
long-term transformation of military forces to cope with future challenges. This issue
may be at the center of a congressionally mandated Pentagon reassessment of defense
policy, called the Quadrennial Defense Review (QDR), that is scheduled to be
completed by September 2001.
The Defense Budget
Stephen Daggett, Specialist in National Defense
In FY1999, funding for national defense increased at a rate greater than inflation
for the first time since FY1985, and spending has continued to climb modestly in
FY2000 and FY2001. The decline in defense spending that began after FY1985, and
that continued for the next thirteen years, was driven initially by pressures to reduce
Federal budget deficits. After the Cold War ended, the Bush Administration proposed
cutting the size of the force from 2.2 million active duty troops to 1.6 million, and, in
a 1990 budget agreement, the Administration and Congress agreed on a cut of about

25% in military spending through FY1995.

The Clinton Administration proposed further cuts in the size of the force,
bringing active duty troop levels to about 1.4 million, and it initially proposed
additional budget cuts totaling about $120 billion over the five years from FY1994-
1999. Subsequently, the Administration periodically added money back to the defense
budget in response to perceived shortfalls, and it allowed the Defense Department to
keep most of the money saved from lower-than-expected inflation. In addition, after
1995, Congress regularly added money to defense budget requests. As a result, after
adjusting for inflation, actual defense spending between FY1994 and FY1999 ended
up being very little different from what the outgoing Bush Administration had
projected over the same period. Much more money, however, went for operation and
maintenance accounts most directly related to short-term readiness, and much less for
weapons acquisition.

Even though funding for readiness-related accounts has continued to climb,
concerns about military readiness have multiplied in recent years. Over the past
couple of years, moreover, Congress has approved substantial pay raises and
expanded personnel benefits in an effort to shore up military recruitment and
retention. The cost of these measures will grow over time. Meanwhile, after several
years of very limited funding for new weapons, senior defense officials, military
service chiefs, and a number of outside analysts argue that money for weapons
procurement, in particular, will have to turn up substantially over the next few years
if the services are to replace rapidly aging weapons as they reach the end of their
planned service lives.
Taken together, all of these factors are creating pressure to increase military
spending substantially. Opinions diverge dramatically, however, on how much more
it is reasonable to invest. For their part, in recent years the military services have
given Congress lists of unfunded priorities, the latest totaling more than $80 billion
over the five years from FY2001-2005. These amounts do not include some very
expensive initiatives, however, including Army proposals to increase the number of
active duty personnel, Navy proposals to add more submarines and surface vessels,
and the full costs of a national missile defense. In view of perceived shortfalls, some
military service chiefs have argued that defense spending should climb from about 3%
of GDP today to 4% or more, an increase of at least $100 billion a year.
Neither the Bush nor the Gore campaigns, however, called for defense increases
of anything approaching that magnitude. Although projected future Federal budget
surpluses appear quite large, competing demands for tax cuts, Medicare prescription
drug coverage, increased education spending, and other priorities also appear
substantial. The need to make choices among proposed force structure increases and
major weapons programs, therefore, may well persist. For Congress, the issue is both
how much to spend on defense and how to set priorities among major defense
CRS Products
Appropriations for FY2001: Defense, by Stephen Daggett, CRS Report RL30505
Efficiencies in Defense Operations
The Changing U.S. Defense Industrial Base. (Daniel H. Else, Analyst
in National Defense; Gary Pagliano, Specialist in National Defense) The end of
the Cold War precipitated one of the greatest reductions in U.S. defense spending
since the final months of World War II. DOD and the U.S. defense industry have
struggled, coping with smaller defense budgets and changing threats to U.S. national
security. The Cold War’s end also transformed the defense business environment,
marking the rapid worldwide globalization of economics and trade and changes in
DOD policy toward the industry itself. Technological change, especially visible in the
information processing and telecommunications industries, has forced convergence
between civilian and military research and applications. Shrinking defense budgets

worldwide have forced manufacturers of defense products into heightened
These factors compelled DOD to reassess its half-century relationship with the
U.S. defense industrial base. As a result, DOD policy is changing in two major ways.
First, because the lead in some state-of-the-art product lines had passed from defense
to the commercial sector of the U.S. economy, DOD is reforming the way it buys
equipment. And second, DOD has sought to reform structural aspects of the defense
industrial base itself. Instead of continuing to support excess production capacity
across the board, DOD has focused on preserving defense-unique manufacturing
capabilities, allowing other U.S. defense firms to respond more freely to conventional
market forces.
Congress has traditionally protected economically vulnerable parts of the defense
industry that are critical to U.S. national security, but global changes in the economicth
and defense environments are posing new issues for the 107 Congress. First,
continued mergers and acquisitions in the U.S. defense industry raise questions about
maintaining competition. Some maintain that surviving firms have emerged healthier
and more competitive, but others worry about the potential loss of technological
innovation and price competition from fewer companies. Second, defense acquisition
reform has encouraged military use of commercial products in military systems.
Proponents of this approach cite the advantages of rapid access to new technologies
for DOD and the adoption of efficient business practices. Others question the
appropriateness of some products for military applications, and the ability of DOD to
cope with the speed of obsolescence for commercial products. Third, globalization
has increased cross-border flows of information and the availability of technology that
could be used for military purposes.
The result has been pressure for the United States to ease defense-related
technology transfer restrictions that could increase exports of U.S. systems, and help
the U.S. defense supplier base. Critics of this logic, however, worry about the extra
vigilance needed to prevent the unauthorized transfer of U.S. defense technology,
potentially increasing U.S. vulnerabilities. This concern was shown when the Security
Assistance Act of 2000 (P.L. 106-280) was passed requiring that countries desiring
relief from some export licensing requirements must first create a domestic export
control scheme conforming to the U.S. model (including the enactment of relevant
local laws, regulations, and policies) and must execute a bilateral agreement with the
United States, enforceable under international law, to compel adherence to its
CRS Products
The U.S. Defense Industrial Base: Trends and Current Issues, by Daniel Else, CRS
Report RL30720
Military Base Closures. (David E. Lockwood, Specialist in U.S. Foreign
Policy and National Defense) A key issue for Members early in the 107th Congress
will be whether or not to authorize new rounds of military base closures. The last

round, initiated in 1995, will be completed by the end of FY2001. For the past four
years, DOD has pleaded for one or two more rounds, but to no avail. The Pentagon
insists that new rounds are necessary in order to bring its base structure reduction
(21%) into equilibrium with its force structure reduction (36%). It argues that
maintaining an excessively large base structure costs money that is desperately needed
to improve military readiness and develop new weapons programs.
Most Members acknowledge the need for additional rounds, but have been
unwilling to authorize establishment of a new base closure commission until
completion of the current congressional term. Two factors have contributed to the
four-year moratorium: (1) continued resentment over President Bill Clinton’s 1995
intervention that prevented the closing of McClellan and Kelly Air Force Bases, and
(2) reluctance to impose hardship on communities that might be targeted for closure
by a new commission. The change in Administrations, however, may provide an
opportunity for Congress to address the issue in a less politically contentious context,
and thereby open the door to one or two new rounds.
CRS Products
Military Base Closures: Time for Another Round?, by David E. Lockwood, CRS
Report RL30051
Military Base Closures: Where Do We Stand?, by David E. Lockwood, CRS Report
Outsourcing, Privatization, and Infrastructure Initiatives. (Valerie
Bailey Grasso, Analyst in National Defense) The Department of Defense (DOD)
is trying to reduce its infrastructure costs to achieve savings that could help finance
future weapons and military equipment modernization. DOD has identified
competitive sourcing competitions between public and private sectors as a key tool
to help reduce costs. Outsourcing and privatization initiatives through the OMB
Circular A-76, and a closely-related initiative, the Federal Activities Inventory Reform
Act (FAIR), have been viewed as one vehicle to improve the efficiency of DOD
business practices, while streamlining their operational capabilities to produce
budgetary savings to fund critical needs in readiness and modernization. Other
innovative strategies, like strategic sourcing, have been pursued in an effort to
generate savings not achieved through the OMB Circular A-76 alone.
Both the 105th and 106th Congresses passed a number of defense reform
provisions that both supported and sought to qualify DOD’s outsourcing and
privatization initiatives. The 105th Congress passed the FAIR Act (P.L. 105-270),
which requires that by June 30thof each year, federal agencies must submit annual lists
of jobs that are potential candidates for outsourcing. Jobs must be classified as either
(1) inherently governmental, (2) commercial, or (3) commercial-exempt. OMB
released the first round of job lists on October 1, 2000. They showed 258,000
employees at 26 agencies, including DOD, qualifying for consideration. According
to OMB, approximately 75% of those jobs could be outsourced. In February 2001,
DOD released its final 2000 inventory of federal jobs that could be performed by
private sector companies. Reportedly, out of some 452,807 civilian jobs that could

be performed in the private sector, approximately 39% of those jobs are likely
candidates for outsourcing.3
The 106th Congress enacted the FY2001 Defense Appropriations Bill (P.L. 106-
259) which prohibits the conversion of DOD functions from government to contractor
performance unless a “Most Efficient Organization” analysis is completed and
certified to House and Senate Defense Appropriations Subcommittees. The bill
authorizes public-private competitions for depot maintenance and repair work, under
certain conditions. The FY2001 Defense Authorization Bill (P.L. 106-398) mandates
that the Comptroller General conduct two studies on (1) the use of “contract
bundling” in military construction contracts (report due February 1, 2001), and (2)
the policies and procedures governing the transfer of federal commercial activities
from the public sector to the private sector (report due May 1, 2002); additionally, the
Secretary of Defense is required to conduct a study on the impact of purchasing
military parts, components and materials from foreign sources (due one year from bill
The 107th Congress will likely face increased calls for a reshaping of the civilian
defense acquisition workforce due to estimates that some 50% of workers will beth
retirement eligible in 2005, and may renew legislative efforts begun in the 106
Congress to analyze whether public-private defense competitions produce real, long-
term savings.
CRS Products
Defense Acquisition Reform: Status and Current Issues, by Valerie Bailey Grasso,
CRS Issue Brief IB96022
Defense Acquisition Workforce: Issues for Congress, by Valerie Bailey Grasso, CRS
Report 98-938
Defense Outsourcing and the OMB Circular A-76 Policy, by Valerie Bailey Grasso,
CRS Report RL30392
Defense Outsourcing and the OMB Circular A-76 Policy and Options for Congress -
Proceedings from a CRS Seminar, by Valerie Bailey Grasso, CRS Report
Military Readiness
Edward F. Bruner, Specialist in National Defense
Readiness was a significant military issue addressed by the 106th Congress, and
may well be a key issue for the 107th Congress. During the 2000 presidential and
congressional campaigns, Democratic candidates argued that the Clinton
Administration had made readiness a priority and that U.S. armed forces were

3 Saldarini, Katy. Final Round of Outsourcing Lists Released. Government Executive.
February 12, 2001.

demonstrably the most powerful in the world. Republican candidates argued that the
Administration was wearing out the forces through over use and had allowed many
pockets of unreadiness to develop. The issue is complicated by the need for policy-
makers to define the “ready for what” questions and military leaders to create
accurate and useful measurements of the situation in the field, where material,
quantifiable factors interact with human, subjective factors. In the last few years,
Congress has legislated that DOD provide monthly readiness reports and the
Pentagon has developed more sophisticated ways to apply unit status reports to
assessments of overall joint force readiness to meet various contingencies. In recent
testimony before Congress, the Joint Chiefs of Staff judged that the force was ready
to execute the national military strategy by winning a first Major Regional
Contingency (MRC), but that the added required ability to win a second MRC would
involve higher risk. Service Chiefs then explained why “first to fight” units were
ready, but that the rest of the force had serious readiness concerns.
The roots of readiness concerns today stem from various defense planning
decisions taken since the end of the Cold War. Notably, the force structure (but not
the infrastructure) was rapidly downsized by more than 30%; the defense budget was
steadily decreased in real terms until FY1999; and military procurement and
recapitalization were significantly reduced in favor of paying for current readiness and
unbudgeted operations in such places as the Persian Gulf, Africa, Haiti, and the
Balkans. A smaller force and greater commitments led to increased operations tempo
for many units and their personnel and equipment.
Even greater stress was felt in high demand, low density specialized units such
as electronic combat aircraft and light infantry. Weapons and vehicles age, require
ever more maintenance, and consume funds that then become unavailable to purchase
new weapons and vehicles – a condition labeled by some as a “death spiral.” Many
training and support facilities have backlogs of deferred maintenance and some
inventories are low; e.g., some fighter pilots are denied realistic training because
equipment such as LANTIRN night navigation pods and selected munitions are not
available at all training ranges. These conditions cumulatively have resulted in
pockets of reduced readiness throughout all Services.
The 107th Congress may consider whether additional measures to improve
readiness are needed and in what priorities. Options include reduction of operational
requirements; increases or decreases in force structure; short term versus long term
readiness; increased funding – for operation and maintenance, procurement, other
procurement, or munitions; or more base closures. All of the material readiness
problems noted above also affect human factors, such as proficiency and morale. For
that reason, the 107th Congress may review or extend actions of the 106th in regards
to personnel recruitment and retention, discussed below.
CRS Products
Appropriations for FY2001: Defense, by Steven Daggett, CRS Report RL30505
Electronic Warfare: EA-6B Aircraft Modernization and Related Issues for Congress,
by Christopher Bolkcom, CRS Report RL30639

Personnel-related Concerns in Recruitment and Retention. (Robert
L. Goldich, Specialist in National Defense) The military services have had
considerable problems since the late 1990s in recruiting and retaining sufficient
numbers of qualified military personnel. Although much less severe than the last
episode of such problems in the late 1970s, these problems have required a great deal
of high-level attention and increased resources before beginning to turn around, at
least in the short run, in late 1999 and 2000. The broad reasons for difficulties in both
attracting new recruits and retaining capable career personnel are similar; in addition,
what a young person hears, accurately or not, about the benefits available to older
career members with families can have an indirect effect on the enlistment decisions
of young, prospective recruits as well. Despite recruiting statistics in 2000 which are
much more encouraging than those of 1999, all of these recruitment and retention
issues will continue to be of great concern to the Congress in 2001, being translated
into legislation in the FY2002 defense authorization and appropriation bills.
Perhaps the single most important immediate factor is the need for the services
to compete with actual and perceived career opportunities in a civilian economy
currently in the midst of an expansion of unprecedented depth and length. To deal
with this problem the Congress increased across-the-board pay levels and a variety of
special pays in bouses–often at a faster pace and with greater concern than that stated
by DOD ( P.L. 106-65, FY2000 National Defense Authorization Act). In 1999, over
DOD objections, Congress also repealed legislation first enacted in 1986 that would
have considerably reduced the retired pay of those career members who would have
begun to retire in 2006, but who were starting to make decisions to stay in or get out
of the service in the late 1990s. In addition to cash compensation, recruiting and
retention are also affected by the extent to which military personnel think they can
afford modern housing of size and sophistication comparable to that in which their
civilian counterparts live; health care for self and family that meets the same criteria;
schools and educational benefits; and a sense of community that, often, civilian
neighborhoods may not provide.
Another major reason for difficulty in recruiting and retention is armed forces
that are too small to provide sufficient units, personnel, and equipment to meet
requirements for both overseas deployments (long-term and unexpected
contingencies) and maintenance of an adequately trained and equipped strategic
reserve in the United States. This has led to overwork, insufficient time for units to
train, and longer periods of family separation, all detrimental to career retention–and
first enlistments, if prospective military recruits get a negative picture from older
family members and friends. Some also suggest that, although it is difficult to
measure, career retention may be affected by concern over “military social issues”
such as DOD policy on homosexual conduct by military personnel and the roles of
women in the military; military deployments for peacekeeping and/or humanitarian
relief purposes; and actions which supposedly make military training insufficiently

CRS Products
Military Health Care: The Issue of “Promised” Benefits, by David F. Burrelli, CRS
Report 98-1006
Military Medical Care Services: Questions and Answers, by Richard A. Best, CRS
Issue Brief IB93103
Military Retirement: Major Legislative Issues, by Robert L. Goldich, CRS Issue Brief
Missile Defense
NMD and the ABM Treaty. (Steven A. Hildreth, Specialist in National
Defense; Amy L. Woolf, Specialist in National Defense) For several years, the
Clinton Administration considered a plan to begin deploying a National Missile
Defense (NMD) system of up to 100 ground-based interceptors, probably in Alaska,
by 2005. In addition to the interceptors, a number of other radars would have to have
been upgraded and a new missile defense radar constructed as part of the overall
system. The official cost estimate for this system was about $36 billion.
The proposed system was controversial. Some critics charged that the system
was not necessary and too expensive, given the low likelihood of ballistic missile
threats to the United States. On the other hand, some believed the system could not
be deployed fast enough to counter imminent ballistic missile threats. Hence, many
argued that other systems, such as a naval NMD could be deployed more easily, more
quickly, and at less cost. Finally, other technical critics (both supporters and
opponents of NMD) charged that the NMD technology envisioned in the plan was
simply not ready for a deployment decision.
On September 1, 2000, President Clinton announced that he had decided not to
authorize deployment of a National Missile Defense (NMD) system. He stated that
he could not conclude “that we have enough confidence in the technology, and the
operational effectiveness of the entire NMD system, to move forward to deployment.”
Consequently, the planned deployment date of 2005 will slip, but research and
development will continue and the United States will continue to discuss this system
and possible changes to the ABM Treaty, with Russia. The President further stated
that the final decision on deployment would be left to the next Administration.
Officials in the Bush Administration have stated that they will support the deployment
of NMD, and will likely develop a more robust architecture that includes land, sea,
and space-based components.
The Clinton Administration’s planned architecture for NMD was inconsistent
with the limits in the 1972 Anti-Ballistic Missile (ABM) Treaty. According to that
Treaty, the United States can deploy a single ABM site, with up to 100 interceptors,
around ICBM silo launchers or its national capital, neither of which are in Alaska. As
a result, the Administration held discussions with Russia in an effort to modify the
Treaty so that the United States could deploy a limited NMD in Alaska. Russia has
refused to accept any modifications or amendments to the Treaty, arguing that any

changes would upset strategic stability and insisting that the U.S. deployment of an
NMD in Alaska would eventually undermine Russia’s nuclear deterrent. The Clinton
Administration indicated that it might consider withdrawing from the Treaty, if Russia
continued to refuse to modify it. That prospect angered many U.S. allies, including
many in NATO, because they fear it could lead to an arms race that could eventually
undermine stability and international nuclear non-proliferation objectives. Some
Members of Congress have expressed similar concerns about the possible demise of
the ABM Treaty. Other Members, however, believe that the ABM Treaty ceased to
exist after the Soviet Union ceased to exist. And others argue that, even if the Treaty
remains legally in force, the United States should withdraw from it so that it can
deploy whatever defenses it needs to protect itself from emerging ballistic missile
threats. Secretary of Defense Donald Rumsfeld has stated that he believes the treaty
is antiquated and out of step with today’s security environment.
The new Congress will face questions as to how best to proceed with NMD,
largely through its oversight function and annual consideration of defense
authorization and appropriations bills. Should NMD be focused on research and
development or deployment? Should the system be ground-based or sea-based?
Which technology path is best and sustainable from a budget perspective? How does
the United States balance perceived threats and technological availability? How does
the United States balance NMD and other foreign and defense policy priorities such
as relations with key allies, adversaries, and competitors?
CRS Products
National Missile Defense and Early Warning Radars: Background and Issues, by
Larry Chasteen, CRS Report RL30654
National Missile Defense: Issues for Congress, by Steven A. Hildreth and Amy F.
Woolf, CRS Issue Brief IB10034
Modernization Issues4
Steven Daggett, Specialist in National Defense
Between FY1985, the peak of the defense buildup of the 1980s, and FY1998,
after which spending began to turn up modestly, overall funding for national defense
declined, after adjusting for inflation, by about 35%. Over the same period, funding
for weapons procurement fell much more precipitously, dropping from $138 billion
(in FY2001 prices) to $47 billion, a decline of almost two-thirds. In effect, defense
policymakers decided to protect funding for short-term readiness at the expense of
weapons acquisition.
In 1995, then-Secretary of Defense William Perry described recent defense
budgets as a “procurement holiday.” To a degree, he argued, the holiday was
warranted, first, because the military services purchased large numbers of new

4For further reading, see Congressional Budget Office, Budgeting for Defense: Maintaining
Today’s Forces, by Lane Pierrot, September 2000.

weapons in the 1980s that were just entering the force; second, because older
weapons were retired first as the size of the force declined, so the average age of
equipment was falling even without new purchases; and, third, because threats to U.S.
technological superiority eased dramatically with the end of the Cold War. The
procurement holiday would have to end soon, Perry warned, because aging equipment
in each of the services needed to be replaced and investments were needed to exploit
rapidly advancing technology.
By the end of 1995, the Joint Chiefs of Staff made a strong pitch for greater
procurement funding, urging an increase to $60 billion a year beginning in FY1998.
The Clinton Administration’s FY2001 budget request included $60.3 billion for
procurement, finally reaching the Joint Chiefs’ target; Congress approved $62.8
billion for procurement in the FY2001 Defense Appropriations Bill (P.L. 106-259).
As it has turned out, many defense proponents now see the $60 billion procurement
level as inadequate. Early in 2000, a study by the Center for Strategic and
International Studies (CSIS), calculated that procurement budgets would have to
average $164 billion per year (in FY2000 prices) over the next decade to replace the
weapons in the current inventory with more advanced versions. The assumptions
underlying the study were widely questioned, but several less extreme estimates still
show a shortfall of some magnitude. Most recently, the Congressional Budget Office
estimated that it would cost about $90 billion a year to sustain a “steady state”
procurement rate – i.e., a rate at which enough major weapons would be bought every
year to maintain roughly the current number of weapons in the stock, on the
assumption that parts of the force will be allowed to grow older than has historically
been the goal.
For its part, the Defense Department has acknowledged that procurement
budgets may have to grow further in the future, even as senior officials have disputed
projections by outside analysts. In congressional testimony in February 2000,
Secretary of Defense Cohen stipulated that procurement budgets will have to grow
substantially beyond $70 billion a year in the period after FY2008, when several
planned weapons programs are scheduled to begin production.
Along with the debate over the amount of money for needed procurement, there
has been a vigorous debate about what kinds of weapons to buy in both the executive
and legislative branches. Some advocates of defense “transformation” argue that
many currently planned systems are inappropriate for the post-Cold War environment.
Heavy armored weapons, like the Army’s Crusader self-propelled artillery system,
they say, are too bulky to transport rapidly enough to future conflicts. Similarly,
some argue that short-range tactical aircraft, like the multi-service Joint Strike
Fighter, which might have been useful for conflicts in Europe or the Persian Gulf, are
ill-suited to possible future conflicts in the broader reaches of the Pacific. In view of
budget constraints and requests for increased troop levels from some of the services,
debates over major weapons programs may intensify in Congress in coming months.

CRS Products
Tactical Aircraft Modernization: Issues for Congress, by Christopher Bolkcom. CRS
Issue Brief IB92115
Navy Zumwalt (Dd-21) Class Destroyer Program: Background and Issues for
Congress, by Ronald O’Rourke, CRS Report RS20698
Personnel, Pay, Benefits, Quality of Life
Abortion. (David F. Burrelli, Specialist in National Defense) Since the
late-1980s, the Administration and Congress have sparred over modifying the
provisions and/or laws pertaining to the availability of abortion services via the
Department of Defense. Under current law, funds available to DOD may not be used
to perform abortions except where the life of the mother would be threatened if the
fetus were carried to term. Further, DOD facilities may not be used to provide
abortions except for the same “life of the mother clause” or in cases of rape or incest.
Legislative attempts to modify, strike, or strengthen this language have become a
routine part of the process of considering the National Defense Authorization Act.
Health Care. (David F. Burrelli, Specialist in National Defense) As a result
of legislative initiatives in the FY2001 National Defense Authorization Act, military
beneficiaries (especially retirees) will have greater access to health care benefits
provided by the Department of Defense. These initiatives include “TRICARE for life”
(access to health care after age 65 at a level exceeding most civilian programs),
expanded pharmacy benefits, as well as the implementation of a funding mechanism
known as accrual accounting. As a large and growing constituency, it is expected that
military retirees will continue to seek greater benefits. Such benefits include but are
not limited to long-term care.
Homosexuals in the Military. (David F. Burrelli, Specialist in National
Defense) As implemented, following the enactment of the law barring open
homosexuality in the military, the policy of “Don’t Ask, Don’t Tell” has remained
contentious. Homosexual rights advocates claim that the policy is little more than a
restatement of its predecessor in which homosexuals continue to be discharged for
revealing their sexuality. Other critics contend that the policy is not consistent with
the spirit of the enacted law and seeks to undermine the military’s efforts to maintain
good order and discipline. Furthermore, local schools and college campuses have
threatened to deny or limit military recruiters’ access as a result of this policy. Finally,
a number of lawsuits exist challenging the policy. Efforts to change either the policy
or the law should be anticipated in the 107th Congress.
Military Family Housing. (Mary Theresa Tyszkiewicz, Analyst in
National Defense) DOD and the Congress have considered military family housing
a key issue in their ongoing efforts to improve the service members’ quality of life.
The problem is that approximately two-thirds of DOD’s nearly 300,000 family
housing units need extensive renovation or replacement. The DOD has estimated that

fixing this problem using only traditional military construction methods would take

30 years and cost as much as $16 billion.

DOD has embarked on a three-part program to fix the DOD family housing
problem by 2010. Important authorities for the program were approved by Congress
in the Military Housing Privatization Initiative (MHPI), in the FY1996 Defense
Authorization Act (P.L. 104-106) and extended to December 2004 by the FY2001
Defense Authorization Act (P.L. 106-398). MHPI gave the Pentagon authority to
obtain private sector financing by using such business tools as loan and rental
guarantees; conveyance or leasing of existing property and facilities; differential lease
payments; limited partnerships and stock/bond ownership; and direct loans. The two
other important components of the program are to increase housing allowances to
reduce demand for on-base housing and to enhance the traditional government-funded
military construction program that will continue to fix on-base housing.
Progress of the MHPI has been slow and the 106th Congress was disappointed
with the pace of privatization implementation. In evaluations of the MHPI in 1998
and 2000, the General Accounting Office (GAO) highlighted some concerns with the
privatization initiative. The GAO recommended that the DOD create a privatization
evaluation plan to be used consistently by all the Services. This plan should include
performance measures, such as evaluation of each authority, comparison of actual to
estimated costs of projects, assessment of developer performance, and collection of
data on the use of and satisfaction with housing by service members. DOD agreed
with GAO’s recommendations and has begun to create an evaluation plan for
The 107th Congress will likely continue to monitor the progress of the MHPI, the
effect of increasing housing allowances on the demand for on-base housing and the
improvement of the traditional military construction program for family housing.
Quality of Life Issues. (David F. Burrelli, Specialist in National Defense)
It is expected that legislative initiatives will be offered to increase benefits provided
to surviving dependents under the Survivor Benefit Plan, increase basic pay to close
the so-called “pay gap” between military personnel and civilians, and to reduce or
eliminate the reduction of military retired pay when a retiree accepts disability benefits
from the Department of Veterans’ Affairs. Continued support for renovating and
building new, privatized military housing can also be expected.
Women in the Military. (David F. Burrelli, Specialist in National Defense)
Efforts to expand the role of women in the military continued under the Clinton
Administration. Efforts to reinstitute and expand the training of men and women in
basic training continued as well, except in the Marine Corps. Attempts to open
certain military occupations and environments to women have not always been
successful. For example, the FY2001 Defense Authorization Act (P.L. 106-398)
requires Congress to be notified before any changes are made concerning the
assignment of women to submarines. Proponents view these as equal rights issues.
Conversely, critics note the numerous cases of disruptive behavior brought about by
co-mingling the sexes and the changes in training standards. These arguments
support limiting the roles of women and/or returning to training standards in force
before the reinstitution of “gender-integrated” training.

CRS Products
Abortion Services and Military Medical Facilities, by David F. Burrelli, CRS Report
Appropriations for FY2001: Military Construction, Mary T. Tyszkiewicz, CRS Report
Homosexuals and U.S. Military Policy: Current Issues, David F. Burrelli and Charles
Dale, CRS Report RL30113
Military Health Care: The Issue of “Promised” Benefits, by David F Burrelli, CRS
Report 98-1006
Military Medical Care Services: Questions and Answers, by Richard Best, CRS Issue
Brief IB93103
Military Personnel and Food Stamps, by David F. Burrelli and Adrej Divis, CRS
Report RL30529
Quadrennial Defense Review 5
Stephen Daggett, Specialist in National Defense
Since the end of the Cold War, the Defense Department has undertaken three
major reassessments of defense policy – the Bush Administration’s “Base Force”
analysis of 1990-1991; the Clinton Administration’s “Bottom-Up Review” of 1993;
and the most recent Quadrennial Defense Review (QDR) of 1997. Now a fourth
review – the second Quadrennial Defense Review – has been mandated by Congress
and is due to be completed in September 2001. Like the 1997 QDR, QDR 2001 is
likely to be partly a reaction to criticisms of earlier statements of strategy and partly
an effort to reshape long-term defense plans in view of changing perceptions of
international security challenges. The 1997 QDR put much greater emphasis than the
Bottom-Up Review on assessing the impact of smaller scale contingency operations
on the force. The new QDR may focus more on the prospects for a significant
“transformation” of U.S. military forces. One key issue may be how to cope with a
widely perceived mismatch between strategy and resources – many critics of the
Bottom-Up Review and of the 1997 QDR have complained that both were “budget-
driven” rather than “strategy-driven.” Another key issue may be whether the very
inclusive, consensus-oriented process of the first QDR, which is being repeated in the
new one, can lead to sufficiently far-reaching changes in defense policy. Although
congressional reaction to previous defense policy reviews was mixed, Congress
mandated the 2001 QDR in the FY2000 defense authorization bill, and many

5For further reading, see Report of the National Defense University Quadrennial Defense
Review 2001 Working Group, by Michele Flournoy, November 2000, and General
Accounting Office, Quadrennial Defense Review: Opportunities to Improve the Next Review,
Report Number NSIAD-98-155, June 25, 1998.

Members of Congress will be following the results closely. The outcome of the QDR
is likely to shape upcoming debate about defense policy in Congress and elsewhere.
Army Transformation. (Edward F. Bruner, Specialist in National
Defense) Army transformation as a congressional issue first appeared in the second
session of the 106th Congress and will likely also engage the 107th. As background,
U.S. Army heavy armored forces were victorious in the Persian Gulf War of 1991 and
impressive in almost all facets – one exception being the length of time it took to
deploy the force. During 1999, heavy force elements were deployed to Albania for
possible combat alongside NATO in Serbia. Again, critics complained that the
deployment took too long. Assessing this criticism and the most likely types of
operations facing the Army in the post Cold War environment, the Army Chief of
Staff initiated a program of transformation to provide the Army a new capability;
namely, formations as deployable as light forces and as lethal and tactically mobile as
heavy forces. Recognizing that fielding new technologies would take ten or more
years, General Eric Shinseki, Army Chief of Staff, ordered the Army immediately to
begin forming Interim Brigade Combat Teams based on existing equipment. By
November 2000, contracts were ready to begin purchasing enough 20-ton Interim
Armored Vehicles (IAV – deployable in C-130 aircraft) to outfit six to eight of the
new brigades, at an estimated cost that could exceed $7 billion.
The 106th Congress endorsed Army Transformation plans by appropriating some
$1.6 billion in FY2000 emergency supplemental funding, roughly twice the
Administration’s request. Congress did, however, caution against too much speed,
by mandating a study that would consider using vehicles already in the inventory for
the IAV requirement. The 107th Congress will likely review this fast moving program,
not only on the IAV selection issue, but also as Army Transformation projects
compete for funds with other Army programs. Army Transformation may also
compete indirectly with programs in other Services or become embroiled in larger
issues emerging from the Quadrennial Defense Review (discussed above).
CRS Products
Army Aviation: The RAH-66 Comanche Helicopter Issue, by Christoper Bolkcom,
CRS Report RS20522
Army Transformation and Modernization: Overview and Issues for Congress, by
Edward F. Bruner, CRS Report RS20787
Information Warfare (IW).6 (Steven A. Hildreth, Specialist in National
Defense) In light of modern reliance on information and computer networks, IW
raises issues of growing national importance. Some argue information warfare

6Information warfare can be used to describe the various aspects of defending and attacking
information and computer networks, as well as denying an adversary’s ability to do the same.

promises to bring about a revolution in the way war is fought in the 21st century;
others believe it will play an important, but less decisive role in future conflicts. Some
analysts estimate that more than 20 countries have directed various kinds of
information operations against the United States, prompting some to argue we are
essentially at “war” in cyberspace.7 In addition, a number of observers raise concerns
over the potential for cyberterrorism.
Although the United States has sought to consolidate responsibility for
information warfare, it is not clear how successful this effort will be. Congress may
choose to examine critically the policies, organization, and legal framework that
guides executive branch decisionmaking on IW issues. Additionally, two billsth
affecting cyberterroism were introduced in the 106 Congress: H.Con.Res. 282, a bill
that would have designated cyberterroism as an emerging national threat, and S. 2448,
the “Internet Integrity and Critical Infrastructure Protection Act of 2000.” Although
neither bill was enacted into law, similar legislation is likely to be considered in theth

107 Congress.

CRS Products
Critical Infrastructures: Background and Early Implementation of PDD-63, by Jack
Moteff, CRS Report RL30153
Cyberwarfare, by Steven A. Hildreth, CRS Report RL30735
Tactical Aviation. (Christopher Bolkcom, Analyst in National Defense)th
The 107 Congress is likely to face a broad range of military aviation issues as part
of its role in the defense budget process. Procurement of new aircraft, the
modernization and maintenance of current capabilities, and spending on science and
technology will be issues. However, the larger issue likely to face Congress is the
friction caused by making tradeoffs between these areas as it determines the
investment priorities for military aviation in a fiscally constrained environment.
A noteworthy characteristic of current air power investment priorities is that
DOD is spending a relatively large portion of its budget to procure just a few new
types of fighter aircraft – the F-22 Raptor, F/A-18E/F Super Hornet, and Joint Strike
Fighter. Many analysts assert that while DOD focuses on these procurement
programs, much of the air component is aging and wearing out quickly due to low
numbers and high operational tempo: examples include the EA-6B electronic warfare
aircraft, the U-2 surveillance aircraft, the EP-3E electronic intelligence aircraft, and
the E-3 AWACS.
In addition to questions about the need to replenish these overworked aircraft,
there has been discussion about aircraft readiness and reliability. Chief of Staff of the
Air Force, General Michael Ryan testified that, despite spending an additional $2.5

7Cyberspace is the total interconnectedness of human beings through computers and
telecommunication without regard to physical geography. The term is often used as a
metaphor for describing the non-physical terrain created by computers systems and networks.

billion per year since 1998 to reverse near term readiness declines, Air Force near-
term readiness has not turned around.8 Decreases in readiness are caused by past
under funding of spares, high operations tempo, loss of experienced airmen, and an
aging aircraft fleet. Readiness concerns are not confined to the Air Force. Army
officials have also expressed concern about lack of funds to keep the helicopter fleet
reliable. Furthermore, a recently completed study found that the Air Force’s strategic
airlift fleet is roughly 10 million ton miles per day short of the current requirement.
This shortfall may most heavily affect the Army.
There were expressions of concern in the 106th Congress over Air Force science
and technology funding. A bill (H.R. 5490) was introduced late in the legislative
calendar to address this perceived shortfall. Again, the Air Force’s emphasis on near
term procurement at the expense of science and technology was at the root of the
concern. However, those in favor of spending on new fighter aircraft procurement
argue that unless the United States is able to achieve and maintain air superiority, it
will not be able to conduct any of the other air operations described above. They
contend that because the current fighter aircraft fleet is aging and will increasingly be
unable to guarantee air superiority, relatively high levels of fighter aircraft
procurement are critical to overall warfighting capabilities.
CRS Products
Electronic Warfare: EA-6B Aircraft Modernization and Related Issues for Congress,
by Christopher Bolkcom, CRS Report RL30639
Joint Strike Fighter Aircraft Program, by Christopher Bolkcom, CRS Report RL30563
Tactical Aircraft Modernization Issues, by Christopher Bolkcom, CRS Issue Brief
Use of Force and Contingency Operations
Steven R. Bowman, Specialist in National Defense
Richard F. Grimmett, Specialist in National Defense
The use of U.S. military forces abroad in the post-Cold War era has become a
topic of notable controversy in recent years. Congress has debated the purpose,
scope, funding, and duration of foreign military operations, from Somalia to Haiti to
the former Yugoslavia. The President’s decisions to introduce U.S. armed forces into
various operations abroad have been challenged, especially when it might lead to their
involvement in hostilities. Congressional debates have been especially intense over use
of American military forces in peacekeeping operations such as those in the former
Yugoslavia in support of NATO and UN operations. In the 106th Congress some
House Members brought suit in federal court seeking a judgement that the President
had acted unconstitutionally in using military forces against Serbia, in violation of the
War Powers Resolution. The courts dismissed the suit on grounds of standing. There
have been serious disagreements between the President and the Congress over what

8Testimony before the Senate Armed Services Committee, September 27, 2000.

constitutes a proper use of American military force abroad in the service of U.S.
foreign policy goals. Equally significant has been the lack of consensus on what
constitutes a vital U.S. national security interest abroad. Until a broader degree of
agreement on the appropriate use of U.S. military force abroad is achieved, there are
likely to be periodic clashes between the President and Congress over the wisdom of
given foreign military operations and the funding necessary to carry them out.
Aside from the constitutional issues, Congress has raised a number of other
concerns arising from the dramatically increased number and duration of contingency
operations in the last decade. Perhaps paramount has been the concern over the
impact on unit readiness for engagement in a larger conflict. Peace-keeping
assignments entail special training, then deployment, followed by retraining for
combat missions upon return – often a 15-month cycle during which the unit is not
available or “ready” for combat operations. Repeated and/or lengthy overseas
deployments are believed to be contributing to personnel retention problems,
particularly among Air Force pilots. Increased operational tempo has raised
equipment maintenance costs and shortened equipment life-spans, thereby increasing
the need for recapitalization of procurement programs. Peacekeeping operations in
hostile areas (e.g., the Persian Gulf) have increased the exposure of U.S. personnel
to terrorist acts (e.g., the Khowar Towers and U.S.S. Cole bombings), and
necessitated greatly increased force protection efforts. All of these concerns have
raised congressional interest in ways to encourage U.S. allies to assume greater
responsibilities in contingency operations, particularly those of long duration that
present little likelihood of major combat.
The version of the FY2001 DOD Authorization Act (H.R. 4205) passed by the
House included a provision that could have required the withdrawal of U.S. troops
from the Balkans. This provision was removed in the House-Senate conference.
However, extensive reporting requirements on allied burden-sharing in the Balkans
were established in the final act signed by the President (P.L. 106-398). In
consideration of the FY2002 DOD budget request, it is likely the 107th Congress will
continue to scrutinize contingency operations and their impact on U.S. armed forces.

CRS Products
Bosnia: U.S. Military Operations, by Steven R. Bowman, CRS Issue Brief IB93056
Iraq - U.S. Confrontation, by Alfred B. Prados and Kenneth B. Katzman, CRS Issue
Brief IB94049
Kosovo: U.S. and Allied Military Operations, by Steven R. Bowman, CRS Issue Brief
Peacekeeping: Issues of U.S. Military Involvement, by Nina Maria Serafino, CRS
Issue Brief IB94040
The War Powers Resolution After Twenty-five Years, by Richard F. Grimmett, CRS
Report RL30308
War Powers Resolution: Presidential Compliance, by Richard F. Grimmett, CRS Issue
Brief IB81050